Arise AB (publ)

80 million SEK cash flow after investments minus 13 bearing in mind that the investment activities in the quarter also included a first milestone payment to the seller. So if we look a bit into our segments development posted the DPA of 66 million SEK very strong quarter again driven by as I mentioned previously we also saw continued maturation of projects across all markets and the late stage portfolio increased by a full 400 megawatts which I will get back to on the next slide. Production posted DPA of 15 million SEK in the quarter we increased the production by 10 gigawatt hours compared to the same quarter in 2024 and the realized price however decreased to 352 SEK per megawatt hour as the same quarter last year had favorable price hedges. During this quarter we also entered into a new hedge position in the short term which is for Q3 2025 about 8 gigawatt hours at the price of 48 euros per megawatt hour. The solutions segment pleased to see now that Kölvallen has been taken over and as of June the OMA has come into force for those who remember last quarter was a full quarter where we didn't have any revenue from Kölvallen due to the CMA being kind of cut out, CMA being the construction management and now when we enter into the operations management we will see revenues from Kölvallen going forward. This is a segment where we are well positioned for new assignments as well. On the portfolio side it was largely unchanged in size despite the removal of Piscis Ferre's 125 megawatts 400 megawatt was advanced from early to late stage. Some 30 megawatt is solar and best in Lebo where we are developing that park as a hybrid park. In the UK we have another 100 megawatt or so wind project in Scotland which has been advanced to late stage as well. Also a solar and best portfolio of some 100 megawatts which is new in late stage. Also continued maturation of finished projects both wind and solar as well. All in all very exciting development I would like to say of the late stage portfolio and the prospects to realize projects going forward. Then I'll hand back to you Berk again.

Thank you. Market developments, power markets. If we start with looking at the graphs to the upper left you can see the spot prices in the Nordics. The blue line is the system price, the gray one is SE3 and the orange line is SE4. You can see a quite typical seasonal price profile over the year with the peaks in the winter and the lows in the summertime. What could be highlighted here that we have a quite big gap between summer lows and winter highs. Which has been quite extreme I would say last year and we had quite high prices during this winter. To the bottom left you can see the former prices. You can see the gray line is SE3, black line is the system price in North Pole area and the orange line is SE4 prices. Quite stable or sideways during the year until end of June. You can see also the German price is the blue line which is a quite much higher price actually. If you compare system price calendar year 26 with the German pricing it's more than double the price in Germany. Of course that could be a driver in the long run for higher prices if the fundamentals in the Nordics would improve in terms of hydrology. Looking at the Nordics we see now that the forward market is a bit better supported as the hydrological surplus decreased. We had quite dry weather especially in the southern part of Norway that has been having an impact on the overall hydrological balance in the Nordics. We had as you can see on the spot prices quite fairly strong pricing in the southern part of Nordics and very weak in the north. Very much driven by big hydrological surplus in the northern Scandinavia, the north of Norway and Sweden. We also experienced that the balancing markets still are quite volatile and costly especially in the northern part of Sweden. We have seen quite high costs over time. Looking at continental Europe power prices in general quite stable driven by fuel prices that have been quite stable despite the global economical turbulence. Gas prices have been supported by re-injection to storage starting up during early summer. Year by year we see more influence impact from the solar power circles in continental Europe. One thing to highlight is the question marks when it comes to French nuclear. There are some question marks when it comes to corrosion problems in nuclear power plants and also if we see another heat wave come into hitting continental Europe there might be issues and production limitations due to cooling water as well. So some question marks on a dark horse I would say French nuclear that could have a quite big impact on continental Europe prices in continental Europe and that will have impact in the Nordics as well. Especially if the hydrological surplus in the market will continue to decrease and the current weather forecast point in that direction. With that said we can change slide. I would say the key event this quarter was the fact that we managed to complete the Kjellvala and achieve COD or commercial takeover. This is our largest project so far 42 turbines 277 megawatts installed corresponding to some 950 gigawatt hours a year almost one terawatt hour a year in production. This is the best production asset that we have seen so far in Sweden I must say an extremely good production resource. We had a sales price of 75 million euros that we got paid upfront and now we have managed to achieve an earn out of some 30 million euros. So a really profitable project for us as a company and really a milestone for our rise and on top of that we have also a share now in the project of some 9% corresponding to 85 roughly 85. Gigawatt hours a year. Should be mentioned that we had a quite challenging project when it comes to construction we had a quite challenging overall time schedule and on top of that we have been doing a winter installation and. And also we had quite challenging permit conditions so so quite challenging project which we now managed to complete. By having an excellent performance by our construction team and also we had a very solution oriented corporations with suppliers and also I must say authorities as well that being quite pragmatic and solution oriented when we had some issues during winter. We also had quite good contribution from from our best project or battery stores project by chalan which reduced the grid Capex for for chalan one which also was had a good impact on on the price on the earn out. I also would like to mention I think it's worth mentioning that we have developed free projects in this area and scaffolding chalan wind projects and also pie shell and battery storage. And these three projects have finance some 500 million SEC half a billion SEC in new grid infrastructure including a new 400 KV station in the main grid called the top area so so so I think this is a quite interesting side effect from the project as well. And with that said, I think we move to the last slide. Looking at the 2025 our expectations maybe have a clear financial targets which we expect to deliver on when it comes to produce a some portfolio growth. We have a 10 gigawatt target on product portfolio by year end. We have growth in all markets and we believe that that is a target that we will. Will meet and on top of that we have the 400 megawatt product sales in total for 2024 and 2025 together. We believe that this really stick to meet as well by harvesting on our diversification meaning that we have we have projects maturing in the new markets. We see all in all upside potential short term in the Nordic power market as so we believe that that it will or would benefit our own production for the second half of the year. And if we see spot prices and moving north, we also believe it will have a positive effect or positive. Impact on product valuations as well. So so we are a bit bullish on on on second half, but we are the beginning. We are starting from a quite low level as well. We must say as well. We will continue to deliver profitable growth. We have a really expect to have strong financial results in the end of this year, despite the quite quite the week market conditions. We have an attractive attractive late state portfolio and we believe that will be a good foundation for for the coming years. We have financial targets. So I have a divest or have a FID for for 500 megawatts per year from the years 26 until 2028. So so we believe that we are well positioned for that as well. With that, I think we are through the presentations and leave the floor for questions.

If you wish to ask a question, please dial pound key five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial pound key six on your telephone keypad. The next question comes from Caleb Solomon from said, please go ahead.

Hi guys, just a few questions from my side. You mentioned that you're expecting to sell early stage battery and solar projects in the UK. Is it fair to assume that's going to be a 50 50 mix?

Yeah, yeah, I think my majority will be PV. So I would say perhaps 70 30 ish.

And we've previously talked about the kind of 1 million per megawatt being some sort of blended average over time. Is it fair to say this means it's going to be quite a bit below that? This year?

Yeah, as we are plan to divest portfolio in a bit earlier stage than we normally do, we expect to have milestone payments as well. We haven't seen a transaction yet, but the most likely it will be some kind of milestone payments, meaning that this year we will have we will have revenues this year, but it will not be on the 1 million level.

And kind of as a follow up to that, can you just comment a bit on the valuation of battery projects in the UK as opposed to the Nordics and how we should kind of think pricing wise?

It's a quite tricky question. So it's a bit of moving targets and it depends on investor appetite and a lot of those things, I would say. But in general, we have looking at the UK market higher power prices, quite strong government ambitions. Valuations are on a higher level versus the Nordics, obviously, and also I would say versus continental Europe as well. It's difficult really to have a clear opinion at this stage where it will end. Think looking at battery storage is you have seen the transactions we done just recently in Finland. 6.7 million euros for 125 megawatt battery storage. Might be that it will be a bit about that in the UK, but difficult to say when it comes to solar. Definitely, if you look at the Nordics, it's quite challenging to do transactions on solar PV in current market. In the UK, definitely, I would say it's I don't dare to say actually that I hope we will present some numbers from reality quite during the second half this year.

Okay, that's clear. And just one question related to the Finnish battery project you closed this quarter. Did you receive the entire payment in Q2 or will there be some spillover in Q3?

No, everything was received in Q2.

Okay, and you also mentioned you signed some hedges for Q3. Have you signed anything else for Q4 this year and Q1 next year?

Nothing except what's stated in the report. So we have some hedges for Q3, some for Q4 and some for Q126.

Yeah, all quite attractive levels as well.

Okay, and just one last one from me. After this quarter, you have roughly 9000 megawatts in the development portfolio. And you're maintaining the kind of 10,000 target by the end of this year. Can you achieve that organically or does that sort of imply you're going to make some acquisitions during the second half this year?

No, it's organically.

Okay, that's all for me. Thank you.

Thank you, Caleb.

The next question comes from Orjan Rodian from Carnegie Investimant Bank. Please go ahead.

Hello everyone, this is Orjan Rodian from D&P Carnegie. First question, I realize your central costs were quite high in the quarter. Can you explain what is driving that?

Hi, Orjan. In Q2, we took some extraordinary costs, which is related to Kölvallen in general. It was some 10 million SEK-ish for the sake of kind of accelerating the project and avoid delays over summer and way into the autumn. And the benefit of that is obviously that we get the asset management agreement kicking in and it also definitely optimized or maximized the earn out payment to avoid those kind of delays.

Okay, now when Kölvallen is in production, how will you report the production revenues? Will that come as a full P&L or will you report it as an associated income below the EBTA level?

It's not consolidated into the P&L. It will be a financial asset, which will be revaluated over time and the kind of effect it might get on the P&L would be from dividends.

Okay, so it's only dividends. Thank you very much. Relative to last quarter, how would you say that prices and timelines for your late stage projects on a -to-life basis, how do you feel that this is going right now? Is it improving or deteriorating or staying the same?

Do you mean how the portfolio has developed during this quarter?

Not

in many of

us, but rather in other terms.

Yeah, I think when it comes to, we had a very good development when it is quarter, when it comes to progressing projects from early to late stage, which means that we are closer to transactions. As we have guided before, we are talking about two to three years when we have projects in late stage, two to three years, I think we have them ready to build. And so I think we are quite well positioned now to start delivering in 26 on the targets, 26 on project sales. When it comes to different markets, I think diversification has been the key word for us until now. And I think that has helped us very much and we are harvesting right now and expect to continue to do that for the coming years.

More detail question on the project you have there for Solar and Backwreak. What is the best case timeline for finalizing this project?

Yeah, we have an ambition to have the solar PV part ready to build, sorry, have that permit in place. Basically ready to build during this autumn. So for I would say, let's say quarter four, beginning quarter four. So we are quite well advanced in that development phase. Then the next question is if it's optimal to build it now or later, then that's a decision we take at that time. Looking at the label projects, if solar PV is not financially viable in label, it's very difficult to see any projects that are feasible in the Nordic or in Sweden at the moment. It's a really good, it's a good location for both solar and wind and we have, we can use the same grid connections. So it's really favorable for that. And you're talking about the, there was 33 megawatts installed now and we could add some 20-25 megawatts solar PV. And the next question is if battery storage would add value as well.

Okay, thank you. And finally a question from me. There have been some talks about penalties for overproduction relative to the forecast on the new pricing and volume system from the TSO. Has that had any impact on your financial performance in future and going forward, do you expect this to be mine or is it something that is a concern for you?

Yeah, it has, I would say for the market overall in the Nordics, it had quite great impact and quite, we had some extremes. Looking at the rise, we didn't, as we are in southern Sweden and the impact has been, we didn't have the same level of events in southern Sweden as we had in northern Sweden. I would say that we have so far quite limited impact on the rise operations. Obviously, we will see, most likely see that balancing costs will be higher in the future. We will not come back to the level we had the previous years. Looking on in a bigger context, I would say that the market price development is more important than the increased balancing cost. So, look, it's some percentage of the total cost is balancing, but of course the overall power prices are more important. But it has a negative impact definitely. We also see that all operators now are looking into or already implemented a new way of operating wind farms. You have the possibility to close down and you do close down when you see negative prices. So the market will adjust this as well. But obviously having a change in to changing the way they operate the grid with this new agor, it wasn't perfect to do it in a quite soft market.

Okay, thank you very much. That was all for me.

As a reminder, if you wish to ask a question, please dial pound key five on your telephone keypad. There are no more phone questions at this time, so I hand the conference back to the speakers for any written questions.

Okay, I think we are through and just to sum up, we had a very strong, I think we had a strong second quarter in a quite challenging markets. Really happy to see that our diversification start to pay off with battery storage transaction in Finland. And of course, very satisfying that we managed to complete Kölvallan with a very good result. So with that said, I would say all good for our coming summer break.