First half of 2025Småkraft Group

In 1H 2025 production in Småkraft was 785 GWh compared to 860 GWh in 1H 2024, a decrease of 9 percent. The average spot prices obtained per MWh decreased by 19 percent to 31.3 EUR/MWh, compared to the first half of 2024. Småkraft has production capacity in seven different price areas in Norway and Sweden, and the spot prices obtained per MWh varied significantly between these areas. As a consequence of low and also negative prices in NO4 during 1H 2025, Småkraft has stopped production in NO4 in May and June. This is explaining the majority of the lower production in 1H 2025 compared to 1H 2024. Reference is made to Note 3.

Recognised total power revenue for 1H 2025 was EUR 25 million, down from EUR 33 million in 1H 2024.

In 1H 2025, the mark-to-market valuation of energy derivatives resulted in an unrealised negative value change of EUR 1 million, compared to positive EUR 17 million in 1H 2024. According to IFRS, these future hedge contracts, which will be realised in the coming years, are recognised in the Financial Statements at market value at period end. However, production and revenues are not recognised until the date of production. Therefore, in the first half of 2025, the EBITDA includes negative unrealised hedge revenues with no cash effect.

Net financial items amounted to EUR 11 million in 1H 2025, compared to EUR 16 million in 1H 2024, reflecting a positive change of EUR 5 million. This improvement is attributed to lower disagio related to external financing in EUR in 1H 2025 compared to the same period in 2024 due to a more stable EUR/NOK exchange ratio. Additionally, a reduction in EURIBOR explains the decrease in interest expenses of EUR 0.8 million compared to the first half of 2024.

Småkraft focuses on selected Alternative Performance Measures (APMs) to measure performance from operational activities. Please refer to the Appendix for detailed information.

Adjusted power revenues, which includes realised financial power hedges, decreased by 19 percent for 1H 2025 compared to 1H 2024.

Adjusted EBITDA, which isolates operating profit from the unrealised value change of energy derivatives, was EUR 7 million in 1H 2025, which is nearly halved compared to 1H 2024.

Cashflow from operations was EUR 8 million in 1H 2025, the same as reported in 1H 2024.

Investment cash flows increased from EUR 22 million in 1H 2024 to EUR 36 million in 1H 2025, due to acquired and constructed power plants. The investments were mainly financed by capital injections from owners amounting to EUR 30 million in 1H 2025 and EUR 26 million in 1H 2024. Net inflows from loan raising were EUR 5 million in 1H 2025

As of 30 June 2025, total cash deposits were EUR 24 million, plus time deposits of EUR 6 million. Småkraft also has an undrawn revolving bank loan facility of EUR 20 million, providing the company with a solid cash position.

The strong cash position allows Småkraft to fund upcoming investments, meet financing obligations and navigate the current volatile power price environment.

The group’s total assets as of 30 June 2025 were EUR 874 million. The equity ratio at the end of June 2025 was 42 percent, which comfortably exceeds the external debt covenant requirement.

In recent years, Småkraft has acquired and constructed several operating hydro power plants. During the second half of 2024, the company maintained its focus on the construction and development of new power plants. According to the Norwegian Energy Regulatory Authority (NVE), the Norwegian power balance is expected to weaken in the coming years. As society’s demand for renewable energy continues to grow, Småkraft has intensified its efforts to develop renewable energy projects in collaboration with its suppliers and partners.

As of 30 June 2025, Småkraft had 18 power stations under construction, with a total production capacity of 258 GWh. These hydro power plants are scheduled to commence operations with 55 GWh in rest of 2025 and 200 GWh in 2026. In total, these projects represent investments amounting to EUR 135 million. Småkraft AS’s investors have committed approximately EUR 70 million of equity related to these projects, which will be injected into Småkraft before the projects are finalised. The remaining investments will be financed through external debt.

For the past few years, Småkraft has been the largest contributor of new renewable energy to the Norwegian grid, to a large degree due to a halt in large-scale wind and hydropower development according to NVE statistics. The company continues to have the highest capacity of renewable energy (hydro, solar and wind) under construction in Norway.

Småkraft is committed to advancing these projects towards investment decisions, with several opportunities, including acquisitions and new construction projects, approaching final approval.

During the first half of 2025, Småkraft signed 9 new contracts with landowners who wish to build power stations in collaboration with Småkraft. Småkraft is dedicated to progressing these contracts to formal investment decisions.

Småkraft adopts a long-term perspective, balancing healthy production and earnings while also prioritizing the preservation of biodiversity and local value creation. Although small-scale hydropower generally has a relatively small environmental footprint, Småkraft continuously strives to limit environmental risks and negative impacts during both construction and production, complying with governmental requirements

In addition to improving the overall sustainability of new development, Småkraft invests in projects to upgrade older power plants, to enhance co-existence and better conserve local ecosystems.

Småkraft collaborates with key stakeholders and the small-scale hydropower industry association, Småkraftforeninga, to share knowledge and build competencies aimed at enhancing environmental and social sustainability across the Nordic hydropower industry.

Småkraft has maintained strong performance on key quality indicators. Short-term sick leave increased to 2.1% in the first half of 2025. Management is closely monitoring this trend and considers the sick leave percentage to be within acceptable levels. Småkraft also tracks incidents that lead to lost time for both employees and its partners/suppliers. In the first half of 2025, there were two incidents resulting in lost time with our suppliers.

Småkraft stands as the leading sustainable hydroelectric power producer in Europe. In 2024, Småkraft once again secured its strong position in GRESB's annual review of companies’ ESG reporting with scoring of 97 out of 100 and earning 5 out of 5 stars.

Hydrology, power prices and capture rates remain the main risk factors for the upcoming periods. Only a few of the Småkraft AS power plants have reservoirs, and unregulated power production is more exposed to fluctuations than regulated production of electric power.

Småkraft may also be affected by a changing climate, and the company has initiated several measures to identify potential risks and opportunities. Evaluation of new acquisitions and development opportunities are assessed in light of the expected changes in hydrology. During detailed planning of new plants, we assess how climate change can affect the design criteria for new installations, both in form of increased run-of, but also the safety of installations in relation to extreme weather.

As of 30 June 2025, Småkraft has signed construction and modification contracts that will add 258 GWh to its portfolio. Småkraft’s shareholders have committed equity for at least 50 percent of the agreed price of these investments. The company is actively working with banks and debt investors to secure financing for the remaining investments. Several ongoing construction projects will be finalised, and construction loan facilities are expected to be transitioned to and refinanced with long-term debt structures. Småkraft AS’s Green Bond 2 of EUR 50 million matures in April 2026. Småkraft has access to multiple capital sources and does not foresee an immediate need to refinance under the current unfavourable conditions.

Changes in interest rates may also influence our financial results. For Småkraft, it is important to reduce interest rate risk through different final maturity dates on all loan facilities as well as interest rate hedging. Småkraft’s current interest rate hedging covers more than 50% of its loan portfolio.

The Nordic commodity markets for power are still less liquid than in the past, making financial hedging activities challenging. Småkraft halted its hedging activities during the summer of 2021. Shifts in future power prices lead to changes in the unrealised value of energy derivatives, which affects equity and the equity ratio.

Småkraft has been sued by a local landowner who claims that the current land lease agreement is disproportionate. The contract in question was signed in 2004 and is one of the first agreements entered into by Småkraft. The case was heard in the district court in April, where the landowner won. With the support of our legal counsel, we firmly believe the verdict is incorrect and have filed an appeal with the Court of Appeal (Lagmannsretten). The appeal hearing is expected to take place early next year. Småkraft’s financial statements are presented in EUR. However, the functional currency of the company is NOK. Therefore, Småkraft’s financial statements are affected by currency exchange fluctuations between NOK and EUR, in addition to interest rate changes. This may lead to changes in equity and equity ratios.

After the half year end, Småkraft has further expanded its portfolio of power plants. On 13 July 2025, Småkraft completed the acquisition of 100% of the shares in Eikemo Kraftverk AS, adding an operating power plant with a capacity of 10 GWh to its portfolio in Norway. Additionally, on 11 August Småkraft AB acquired Småkraft Jokksbäcken AB, which includes an additional power plant of 3 GWh in Sweden.

In July Småkraft has signed a construction contract package for three new powerplants, adding close to 40 GWh in annual production capacity and a share purchase agreement for Sanddal kraftverk (9.3 GWh) which will be closed ultimo August.

The conversion of a shareholder loan of EUR 19.7 million to equity was resolved in an extraordinary general meeting on 8 August 2025. This will improve the current equity ratio by approximately 2.2%

The Board of Directors of Småkraft AS,
Bergen, Norway, 25 August 2025