Orrön Energy AB (publ)

Hi, everyone. Welcome to Our Energy's Q2 presentation. Joining us today, we have our CEO, Daniel Fitzgerald, and CFO Espen Henne, who will run us through the presentation and the latest developments of Our Energy. At the end of the presentation, we will have a Q&A session, so feel free to send across questions as we go along. We will collect and go through them at the end. And with that, I'd like to hand over to Daniel Fitzgerald to start off this presentation.

Thank you, Jenny. And good afternoon and welcome to our second quarter results presentation, where Espen and I will give an overview of the performance for the first half of the year, and then also the strategic direction for the company, including the CloudBerry transaction, which we announced during Q2. I wanted to start today with a quick overview of Oron Energy, where we stand today, and then most importantly, where the valuation sits for the company today. And I think that the title on this slide really tells a massive story around the compelling value proposition. And we don't need to go far beyond the transaction with CloudBerry to understand where that and why that value sits within Auron Energy. And for a long period of time, almost since inception of the company, we have traded with a discount to the underlying value of our assets. If I look first at the CloudBerry transaction, which we will touch on in the coming slides in a bit more detail, That transaction will translate into a 27% ownership in CloudBerry, where we have divested a large portion of our Nordic assets with the exclusion of CastGroove, and in return we'll receive shares and cash in CloudBerry. When I look at the value of that share today, so that 27% shareholding, it equates to around 5.7 SEC per share in Auron Energy, and today we're trading close to seven. SEKA share. When I look over to the right-hand side, you see very clearly the value of this shareholding in CloudBerry versus the value of our market capitalization. And today, the value of that share based on closing prices on Monday was 149 million euros against a market cap of 188. And so we believe that the assets we've sold to CloudBerry creates a fantastic company in CloudBerry, which we'll touch on. But even more so, the remaining value inside our own energy implied value as per our market cap today is only 39 million euros. And when I look over to the rest of the slide on the left hand side, I take Karsgrove, which is a good asset in the SE4 price region in southern Sweden. If we look at an electricity price between 70 and 85 euros per megawatt hour, which we've achieved 70 year to date, the futures price for rest of the year is 85, and we expect that to continue into 2027. we are going to generate between 12 and 16 million euros of EBITDA. So even the three years of EBITDA equals the valuation of the remaining company with no value on the rest of it. When I look at where assets trade today, we're more like 10 times EBITDA. We've seen transactions in the market closer to that level. And so the true value of Kars Group is significantly higher than what the remaining value within Oron Energy is. We also then don't need any value for the greenfield business to make up our market cap beyond Karsgrove. The greenfield business, it's starting to get into its regular monetization phase, and you'll see a little bit more today on the data center side where we have some really strong upsides from that business, and we're going to be starting to see that value coming in. And so we see a large benefit, not only from CarScrew, but also from the Greenfield business compared to where the implied value of the remaining company sits. And the final point, which is also really important, is with the CloudBerry transaction, we delever the business. and that means we sit with a clean balance sheet, we have a 50 million euro facility sitting behind it and plenty of liquidity to go and grow the business. Should we need more debt capacity, there is more debt capacity within the business and we have the means of capitalizing the greenfield business should we wish to. So if I put all of that together simply, I think the mark to market on CloudBerry really underpins the core of the value in the company. On top of that, we have some fantastic upsides well beyond where the market cap sits today, which does make our on energy a very compelling value proposition as it stands today. If we spend a few minutes on the CloudBerry transaction, this really is a formative transaction, both for CloudBerry and for Auran Energy. We have a lot of value within our assets in the Nordics, and we had a lot of ambition with them, which doesn't stop on the back of this transaction. We have taken a view for a long period of time that with the increasing complexity in the market, the energy systems, the penetration of renewables, the need to be active in ancillary markets balancing and more diversified, we need a larger scale company. And we've been working down that pathway within Oron Energy for a long period, as have CloudBerry. And now is the right time to combine those two businesses into what is one of the leading Nordic IPPs, Nordic-focused IPPs, and the largest listed one focused solely on the Nordics. We then blend both asset bases and teams, which are very complementary, which gives you a pan-Nordic platform across all of the technologies with the strengths and competence of both Klabri and Oron Energy together. And I'm really excited about what this platform is going to be able to deliver in the coming years. Oren Energy will remain a 27% owner in Cloudberry, will take positions on the board and be very active in their journey going forwards. And we see this platform as a very, very strong platform to go and create value, to consolidate and grow the business across the Nordics with the local competence that needs to be successful. And so upon closing of the transaction, we see a very bright future and we intend to be a long-term holder of the shares in Cloudberry as part of that. When I look at the consideration for the transaction, so on the left, we start with the assets that we sold, which is the entirety of our Nordic business, excluding the Castgrove asset. With that comes the strength of our team and the competence of our team to blend into CloudBerry's competence and teams. It gives a slightly different flavor and geographical focus to what CloudBerry has. So it's very, very complimentary. When I look at the consideration for that transaction, first and foremost, we will retain a 27% shareholding in CloudBerry and become the largest owner in CloudBerry. And we sit alongside a range of other large and strategic shareholders within that business who share the same ambition to go and grow this company to a much larger size and scale. Secondly, we'll have the repayment of nearly all of our net debt position. And so that will come at closing of the transaction and we have a small payment for the cash remaining in the business. And so when I look at that same picture on the bottom of this slide, we end up with a transaction valuation of around or value of the shares of around 149 million euros against the market cap within our own energy of 188. which is really compelling when you look at the future value of our business. Completion we expect in Q3 of this year. So we have already received some of the regulatory approvals needed in Sweden and we have also yesterday approved the elements necessary at the Klabri EGM. And so we have a few more elements to see through the course of August and I expect this to close before the end of Q3 once we fulfill all of the outstanding conditions. Turning more inside Auran Energy's business, looking at the first six months of this year. And you will have noted in our external reporting now that we talk about the continuing operations and the discontinued operations. The continuing operations are those elements that remain within Auran Energy and exclude the elements that have been sold to CloudBerry. Within our reporting of the continuing business, we also exclude the shareholding in CloudBerry from the performance of that in the historical accounts, and we'll account for that going forwards in a slightly different way, which Espen will touch on. Year-to-date power generation of 113 gigawatt hours leading to revenues including project sales of around 13 million euros and EBITDA of just shy of 3 million euros. Important to note that our EBITDA also includes around 4 million euros worth of spend on the Sudan case. which now drops away almost to zero on the back of the conclusion of the district court trial in May. And so our financial strength as a company, not only will we have a clean balance sheet at closing with zero net debt on it, we will have the reduction in the Sudan costs with a verdict expected end of the year and then strong cash generation both from Karsgrove and the underlying project businesses. For the Sudan case, we obviously finished that in May. Our view all along and still remains today is that we will see a full acquittal of both the defendants and a dropping of the forfeiture related to the court case. And so in December of this year, we expect a verdict as communicated by the judge in the case. And we've also submitted to the court a historical claim for costs incurred for the defense of the individuals and company. And so this amounts to around 76 million euros. And we expect once we have the judgment in December, not only do we expect an acquittal of the individuals, a dropping of the forfeiture, but we also expect an element of a reimbursement of historical costs related to the case. And so that really is an important milestone for the company and we look forward to the outcome from that verdict and have no doubt in what the final judgment will be in the Sudan case. Looking at CastGroove performance, we're in line with where we expect to be with CastGroove, so year-to-date production of around 113, and we expect full-year production somewhere around the 240, 250 gigawatt hours for this year, including weather impacts, price curtailment, ancillary services, and availability warranties. Year-to-date, we have an achieved price on CastGroove of €70 a megawatt hour, and that has underpinned around half of our cash generation for the first half of this year. It really is a strong asset. It's in the SE4 price region, relatively new asset brought online in 2023 and provides significant cash flow for the remaining business to be able to continue to invest in the greenfield development portfolio and also growth for the business. So Castgroove is a core asset. We intend to use that cash flow and the asset value to then continue to grow our business longer term. We're very close to investment decision on a battery project at CarScrew, which will add further flexibility into the CarScrew asset and increase revenues at the same time. Stepping now into our development business, I think it's clear to say that we're not only delivering on the solar and battery side of that business. We've also been building in the background for the last two or three years a data center business out of the same competence that comes from our renewable portfolio. And so as it stands today, we have around 12 gigawatts worth of projects. where around eight gigawatts are sitting in the solar and battery domain and four gigawatts in the data center domain. As we see the evolution of grids, AI, data center markets, renewable penetration across Europe, we see a convergence of these elements all into one space. And I think our ability to go and secure land, secure grids, secure permits, and deliver projects is really important when we look on both sides of this equation, whether it's from the renewable side, the power side, the grid side, or the data center side. There's no doubt today that data centers have a massive value in the market, but that value only exists if you're able to get power to these sites. And I think bringing our renewable competence alongside the data center businesses that we have evolved over the last period gives us a really strong platform when I look towards grid operators, towards grid reform, towards investors, we can tick all the boxes across that portfolio by providing not only standalone power solutions from the grid, which is now congested globally, but also the ability to provide renewable energies, to provide storage into those data centers, and to essentially provide a campus or an energy hub that allows you to have both production, storage, and demand through a data center on the one site. And so we will see the German platform is now in the market with a range of these energy hubs, and we'll start to see the value of those coming forward alongside the traditional standalone data center opportunities. And our teams across certainly UK and France plus Germany have the same skills to provide projects for data centers as we need for renewable power and storage. And so it is really complimentary, and I'm excited to see how that will evolve over the coming weeks and months as we start to step more into the market with some of these newer opportunities. It would be remiss of us not to focus a small amount on our data center business. If I look at the market today, The growth in AI and the growth in the need for computing power and data centers is massive. And with that drives evaluation on data centers that's beyond where we've seen in the markets historically and also in the renewable space. And we're focusing on data centers with three kind of core themes, all centered around power and all centered around our core competence. So firstly, we need the land for the data centers, we need the permits, et cetera, but we have the ability to provide power in three different means. firstly, through a traditional site, which is a standalone grid-connected data center, secondly, through private wire, either through projects that we've generated ourselves or through third-party connections, because we understand that element of power delivery to site, and we have many means of doing that. and then, thirdly, by providing energy hubs, which is essentially that whole package in one, storage, generation, grid connection, and data centers. And today, we have a large portfolio of around four gigawatts. In the UK, we have 1.1 gigawatts at ready to permit. of which 300 megawatts is in an active sales process. In Germany, we have energy hubs where we have co-located batteries, solar and data centers behind the meter. And we're also in the market with a range of those in Germany. So this really is an exciting platform. I think we will ensure that we continue to grow this, and it has a massive value when I look across its peer group that's either in the listed or private domain in the transactions we've seen happening. And so we will be looking at how to best realize the value from this portfolio going forwards, whether that is to capitalize the portfolio, take projects further, whether it's to monetize a portion of the portfolio, or potentially to offer a spin-out or a listing separately of our data center and renewable growth platform. So we'll spend more time on that in the second half of this year and we'll come back to the market when we're ready to share. But really, really exciting to see some of these projects in the market already. And then stepping into the... the sales side of this, which is a really important element of this business. It's great to get the projects maturing, to get the grid and land secured and move into permitting, but we really also need to be monetizing this portfolio. So as of today, we have a range of sold projects totaling around 260 megawatts, 15 million euros. And then if we step into the sales processes that are ongoing now, we have a suite of solar projects, three solar projects in the UK, 1.8 gigawatts in the market. And that portfolio is awaiting the final grid connection dates and details, which is expected in Q4 or early Q1 next year. And so we may see that process, depending on the values on the table, we'll see that process continuing through the second half of this year. The second process in the UK is a 300 megawatt data center site, and that's launched and we'll see more discussion around that in Q3 of this year. Exciting portfolio in Germany is the launch of around three gigawatts of energy hubs, quite early stage, but have the ability to provide renewable power, storage and data centers all behind the meter. And given that combination, we score very, very highly in the the recent grid reform in Germany, which gives us accelerated and preferential access to the grid. And so those projects now are in the market, and we'll see where the opportunity sits in the second half of this year. And that's backed up by further projects totaling around 12 gigawatts across that entire platform. And so with that, I think three key pillars that we focus on in the business now, shareholding in CloudBerry and growing the value of that, the value of CarScrew and then the value of this development portfolio. And I think it becomes a lot easier for investors to understand the true value within our own energy. And we can now clearly see the misplacement of that value relative to where our market cap is. And so with that, I'll pass over to Espen to run through the financials for the second quarter.

Thank you, Daniel, and good afternoon, everyone. I'll go to the financials for Q2. Obviously, this quarter is a bit different compared to the previous quarters due to the CloudBerry transaction. And as Dan already has mentioned, all the part of the business that will be divested to CloudBerry as part of the transaction is now classified as discontinued operations. So the focus on this slide and the coming slides is then now on the continuing operations, which consist of the car screw-in farm, and the European Greenfield Platform. If you want further information on discontinued operations, then I would refer you to our quarterly financial report. And also going forward, post-closing, we will report our net share of the CloudBerry profit into our financial statements according to the equity method of accounting. Looking then at Q2, strong quarterly revenues, €6.2 million for the quarter, which is backed by a very solid performance from project sales, €3.7 million in project sales in Q2, which is a record for the company. So our Q2 revenues then almost at par with Q1, where we saw record pricing in the Nordic region. EBITDA for the quarter 1.1 million euros and as Dan mentioned it's important to keep in mind that this includes a cost of 1.8 million euros related to the Sudan legal case and going forward and our costs related to that will be you know a fraction of what we had in the quarters behind us since that trial ended in May and we now expect a verdict late this year during December Power generation, 46 gigawatt hours, and a cheap price of 56 euros per megawatt hour. We will go into that in a bit more detail at a later slide when we look at the breakdown of the cheap price for carscrew. Net debt at the end of Q2 was, if we include the discontinued operations, was €91 million. And as we have said before, at closing of the CloudBerry transaction, we expect to have a net debt position close to zero, as the €93 million of debt as of year 2025 will be assumed or settled by CloudBerry. living then also in a very robust and healthy financial position and further backed by a 50 million euro credit facility supported by the same group of banks that was in our previous facility, which then provides us with a lot of flexibility and optionality for future business growth. Then I look at our 26 guidance for continuing operations only. So for our car scooter wind farm and the European wind field platform, starting with power generation, we expect that to end up in between 210 and 270 gigawatt hours for the full year. And our first half year actuals were 113. So as I mentioned, we are on track to end up close to the midpoint of that range. and that range also takes into account weather impacts and price containment and ancillary services as Dan said. Operating expenses for the full year, we expect that to total in between €4 and €5 million, and this is then purely related to Kajskruv, and actuals for the first six months were €2.2. G&A for continuing operations, there also we expect full-year costs of in between €4 and €5 million, and here also we had first half actuals of €2.2. sort of supporting our full-year outlook. And so, as you can see, very much delivering in line with full-year expectations on all parameters here. Sudan legal costs, here we expect a full-year cost of €4.5 million. And here it's important to note that our actual cost for the first six months was 4.1 million euros. So implicitly, we only expect 400,000 of cost for the second half, which represents a 90% drop in costs compared to first half, then reflecting that, as I said earlier, the trial has ended, ended in May, and now very, very limited cost exposure. And as I said also, we were expected in December. Capital expenditure, this is investments into our European greenfield platform, just maturing projects and making them ready for divestment processes. We have spent 4.2 million euros year to date and we expect for the full year here to end up close to €8 million. And as you also can see, I mean, year-to-date revenues actually exceed what we have allocated our capital into the Greenfield platform year-to-date. So, as I said before, you know, very strong start of the year from our Greenfield platform. Then I look at some key financial metrics only for continuing operations. As I said before, if you start with revenues, here we are showing quarterly revenues going back to the same quarter last year. And as I said, Q2 revenues almost at par with Q1, where we had record pricing throughout the Nordic region. And if you compare, if you do a year-over-year comparison, you can see a very significant increase to revenues of almost €4 million up, which is unexplained by the contribution from project sales in Q2, whereas back in Q2 last year we had yet to conclude our first divestment, which then started in Q3. And then you're going to see we have had booked revenues in back-to-back quarters since then. We then, like I said, an all-time high of almost €4 million in Q2. Same pattern in EBITDA. close to the Q1 level despite the lower pricing and lower volumes throughout or in the south of Sweden supported by the project sales and if you do a year-over-year comparison you know very very material increase. I think the key takeaway on this slide is the dotted line where we have added back the Sudan legal costs. So it's showing EBITDA excluding Sudan legal costs. And as I said before, since we're now going forward, expect very marginal costs related to to the Sudan case, this is a lot more representative, presents a lot more representative picture of the potential for future EBITDA generation from our continuing operations. And over the last three quarters, That has been in between 3 and 4 million euros on a quarterly basis. And if you do a rolling 12 months, the last four quarters, 11 million euros of EBITDA generation from our continuing operations, which is a very solid EBITDA contribution and provides us then with future growth opportunities and a lot of robustness from a financial perspective. Then I look at achieved price for continuing operations. So this is then the achieved price for our car screw assets. The average system price for the first six months of 26 was 79 euros per megawatt hour. This was supported by very favorable market environment, obviously impacted by the geopolitical situation, a tight gas market, but also some other factors in the Nordic region. namely a very supportive hydrological balance and also nuclear utilization, which has been below the average. And we also expect, you know, these factors we expect to continue also for the coming months. So also strong outlook for pricing. in the Nordics going forward, and maybe especially in the southern part of Sweden, where Karlsruhe is located. If you look at the spot price relevant for Karlsruhe, the average SE4 price during the first six months was €89, so a 12% premium to the average system price. Solid premium, but still actually a low premium in a historical context, but very important for our revenue contribution. And then if you do the breakdown to our achieved price for the first six months, we had one euro of contribution from ancillary services and GOOs. And then we had a negative impact from our hedges due to the very strong pricing. We had a loss on our hedges. Obviously, that is a favourable outcome. That's actually the outcome we want as opposed to the other way around. So that had a negative impact on our achieved prices. As we said before, those hedges are put in place to support the downside. And since we're not fully hedged, to lose on those actually makes us better off than if we are ending up gaining on the hedges. Then we had a small capture price discount, less than 10% capture price discount in the first half year, or 26, resulting in an all-in-achieve price for Karlsgru of 70 euros per megawatt hour. If we take a look back and look at the important variables impacting the achieved price for Karlsruhe, if you look at the right-hand side of the slide here, starting with the premium of the SE4 price region to the average system price in the Nordics, as I mentioned, it was 12% in the first half of 26, which has been, as I said, low in a historical context. In 25, it was more than 50%. 24, almost 40%. And if you look at the long-term average, the 10-year horizon from 2016 to 2025, the average premium has been 31%. So obviously a very favorable location for a wind farm in the Nordics, which we expect to support revenues also going forward. And then capture price discount, another important variable for our revenues. Here we've seen a favourable trend over the last couple of years. In 2024, we had a capture price discount of 22%, which dropped down to 12% in 2025, partly helped by price containment, and then a very low capture price discount of 7% first half of 2026. We have said in the past, prior to the CloudBridge transaction, looking at our portfolio then, including the discontinued operations, that we expected a long-term average for a capture price discount of in between 20 and 25%. CarScrew has always delivered a lower capture price discount, so a more favorable capture price discount than the average of the rest of the portfolio. due to, you know, partly due to location and all, but also due to the curtailment optionality. So on average, you know, that sort of, that low on average cost curve has been in the order of 10 percentage points lower capture price discount compared to the rest of the portfolio. So we think a more representative capture price discount going forward, but also keeping in mind that it will be volatile, especially on a quarterly basis. We think sort of a more A representative expectation for Kajskryv long-term is then more 10-15% as opposed to the 20-25% as we put forward for the portfolio prior to the CloudBridge transaction. So with that, I'll hand the word back to Daniel.