Småkraft Annual Report 2022
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2022
Annual Report
Småkraft Annual Report 2022
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WHAT WE DO
Småk
raft is a producer of
renewable energy. Our fleet of
219 hydropower plants is
spread across Norway and
Sweden and delivers a mean
annual production capacity of 2
TWh, making Småkraft the
Nordic’s largest owner and
operator within its space.
Small-scale hydropower
borrows water which naturally
flow in the river and utilizes the
topography of the landscape to
produce renewable and
sustainable electricity. A
minimum water level is
maintained in the original river
and the water used to produce
electricity is returned once it
passes through the turbine. The
electricity grid transports and
distributes our electricity out to
consumers.
The value created is shared
with our stakeholders including
owners, creditors & debt
investors, local landowners,
local municipalities and local
societies. For 20 years,
Småkraft has invested in the
generation of new renewable
energy. Our contribution to one
of the biggest challenges of our
time, the transformation to a
renewable and sustainable
society powered by renewable
energy, is to continue our
commitment to grow.
Bergstø powerplant, Vestland
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Småkraft Annual Report 2022
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SMÅKRAFT AT A
GLANCE
Adj. EBITDA increased by 128% due to
higher power prices and capacity growth
*Adj. EBITDA = operating profit + impairments +
depreciations + unrealized hedge gain or loss
32% production increase compared to
2021
Net production delivered to the grid,
excluding grid losses, consumption, and
bilateral agreements.
Equity ratio (book values) decreased
because of unrealized hedge loss
Equity
Subordinated Shareholder Loan
Debt
48%
52%
31.12.2021
38%
2%
60%
31.12.2022
2 TWh capacity reached end of 2022 in
line with strategic goal
1133
1381
1697
2002
224
263
243
233
0
500
1000
1500
2000
2500
31.12.201931.12.202031.12.202131.12.2022
GWh
Signed contracts for new powerplants (GWh)
Current production capacity (GWh)
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HIGHLIGHTS
2022
Renewable Power Production
Higher production capacity of 305 GWh in 2022
through acquisitions and newbuild. Total
production of 1,470 GWh in 2022, 32% higher
than 2021.
Market update
Fueled by the war in Ukraine and Russian
limitation on gas, the average monthly Nord Pool
system prices increased from 50 EUR/ MWh in
2021 to 91 EUR/ MWh in 2022.
Limited interconnector capacity from the northern
parts to the southern parts also gave significant
price difference between the northern and
southern price zones in Norway. The difference
between the price zones has never been higher.
Sustainability
During 2022, Småkraft experienced no material
Health, Safety and Environmental (HSE)
incident. Småkraft reports sustainability in line
with GRI and TCFD standards. Achieved 5 out
of 5 stars in GRESB survey.
Company Developments
During 2022, Småkraft acquired and constructed
55 powerplants, adding capacity of 305 GWh to
the Småkraft production portfolio. 32 of the
powerplants with a capacity of 54 GWh were
acquired in Sweden.
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CONTENT
What we do ............................................................................................................................................................. 2
Småkraft at a glance .............................................................................................................................................. 4
Highlights 2022 ...................................................................................................................................................... 5
CEO letter ............................................................................................................................................................... 8
Corporate strategy ............................................................................................................................................ 10
Core values ....................................................................................................................................................... 11
Sustainability ....................................................................................................................................................... 13
Our business ........................................................................................................................................................ 14
Småkraft Board of Directors ............................................................................................................................... 15
Småkraft Management Team .............................................................................................................................. 16
Corporate governance report ............................................................................................................................. 17
Report from board of directors .......................................................................................................................... 20
Financial Reviews ............................................................................................................................................. 21
Småkraft AS - parent company accounts .......................................................................................................... 24
Risk review ........................................................................................................................................................ 25
Going concern ................................................................................................................................................... 26
Annual accounts and notes Småkraft group .................................................................................................... 29
Annual accounts and notes Småkraft AS parent company ............................................................................. 64
Independent Auditor’s Report ............................................................................................................................ 96
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CEO LETTER
2022 was an extraordinary year in the power market and for Småkraft.
The war in Ukraine halted European access to Russian gas. This resulted in an energy deficit in Europe. Energy
security gained importance in most European countries. Volatile and high energy prices pose challenges to
European households and businesses.
Norway and Sweden are connected to the European power market with interconnectors that transfer electricity
between regions. Different parts of Norway and Sweden are not fully connected with sufficient grid capacity to
transport electricity to the regions where the consumers demand electricity at any given time. A dry year with low
precipitation in the eastern and southern parts of Norway and the southern parts of Sweden gave limited
electricity supply in these regions. This situation combined with the large demand for electricity in the rest of
Europe led to high electricity prices in these Nordic regions during 2022. In contrasts, the northern parts of
Norway and Sweden had a very strong hydrology and high production supply. Without sufficient capacity to
transfer this electricity to the areas demanding the electricity, these regions experienced very low electricity
prices.
Consequently, the Nordic electricity market was divided into two zones. The southern zones were seeing record
high prices at European levels, while the northern zones were seeing prices close to zero for several months.
While Småkraft has spread its power stations equally distributed in south and north, the power stations based in
the south generated 88% of the total revenue, while the power stations in the north generated 12%.
Figure 1: While some regions in the Nordic region experienced massive electricity price increases in 2022
compared to 2019, other regions faced some of the lowest electricity prices ever. Annualized prices in
EURO/MWh. Source: Nord Pool.
Terje Vedeler,
CEO Småkraft
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Our landowner families were seeing the same, as some of them were facing increased revenue on their power
stations with corresponding record land lease pay-outs. Other were facing deficits and low to zero- pay- outs. In
total, Småkraft will pay out EUR 18 million in land-lease to its landowners for 2022. The fair revenue share model
is the cornerstone of our operating model and partnering landowners.
Strong land-lease performance is directly interlinked with the financial performance for Småkraft. In total,
Småkraft had a record year with its highest adjusted EBITDA ever. However, the large volatility, price differences
and high prices gave significant hedge losses to Småkraft dampening our EBITDA.
Successful achievement of growth objective
Since 2017, Småkraft has had a long-term growth strategy to achieve 2 TWh of production capacity within the
end of 2022. We are very proud that we managed to secure this goal. Reaching its 2 TWh goal, Småkraft has
established itself as one of the major power producers in the Nordic region. It is also one of the companies to
have added the most renewable energy capacity into the Nordic energy system over the last years.
Figure 2: Since 2015, Småkraft has grown its portfolio from 440 to 2002 GWh. It is now established in two
countries. Source: Småkraft AS
Building on operational excellence
We strongly believe that our operational performance is what differentiates us from others. Improved operational
performance will give better financial performance yielding better returns for our investors. It will offer improved
downside protection for our creditors aswell. And it will pay better land lease returns to our land-owners. Finally,
getting more electricity out of the natural resources available to us is probably one of the most sustainable ways
to get more renewable energy.
Our operations are essential to meet these goals.
Our operational model is set up as a digital and physical loop between the local operators living next to our power
stations, the internal Småkraft tech team and its local partners, and the centralised operations centre. During
2022, Småkraft invested significantly into this operational model. We have professionalised our operational centre
with technological and human resources we did not have before. Our inhouse tech team has identified the best
local and regional partners to perform modifications, upgrades and repair. We have invested in training and
equipment for our local operators who are more professional than ever. And finally, we have invested in new
equipment on power stations and upgraded several of these.
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Figure 3: Småkraft's operational model consists of a digital and a physical loop. The digital loop goes
automatically between various components in the power producing installation and to the operational centre. The
physical loop goes from the centralised operational centre out to the internal tech. team, to local partners and to
the operators. Source: Småkraft AS.
Diversifying financing sources
New power stations demand large investments. Building renewable energy requires capital. Småkraft has a
strategy to work closely with partners that offer competitive and responsible financing, both equity and debt.
Småkraft has added a new financing source to our portfolio diversifying our debt
maturities. This strengthens the financial prowess of Småkraft. Having built trust over the last ten years with
financing partners such as specialized, local Norwegian banks, larger Nordic banks, institutional Nordic Green
Bond Investors and large private debt investors offers diversified financing opportunities that help us achieve our
goals.
Corporate strategy
The mission of Småkraft is to create sustainable values for the next generation by investing, developing and
operating small-scale hydropower plants.
Quality, Health, Safety and Environment Management are of critical importance to Småkraft, and we strive for
high quality performance and safe and secure operations through continuous improvement programs. We aim for
organisational robustness, zero injuries and failures, strong cyber and physical security, delivered by a competent
and motivated workforce both at Småkraft and by our partners.
We have invested in an operational surveillance centre to operate our power plants, providing technological and
management support to back-up operations. This integrated approach delivers tangible benefits, such as:
Increased efficiency
Reduced down-time
Reduced costs
Improved planning and security
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Core values
Småkraft has identified three Core Values that help define and lead our business.
By Sustainable we;
– think and act long-term
– care about both local and
global environment
– conclude our decisions on
facts and knowledge
– prioritize security for our
employees and business
partners
By Creative we;
– seek new and better
solutions
– maintain proven
processes
– create value added
By Honest we;
– are consistent in our
communication and share
knowledge
– deliver as promised
– tell the truth
Fit for the future
2022 was a very successful year for Småkraft. We reached our ambitious growth targets while we at the same
time achieved record results. To continue our journey, we have successfully diversified our financing and invested
in our operational model. Our knowledgeable employees and our great partners will use the financing and
operations platform to continue working towards our vision: create more renewable values for the next generation.
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SUSTAINABILITY
We describe how we work with sustainability in our Sustainability Report. We are proud that this work is
recognized. During 2022, Småkraft has achieved the highest score in the annual ESG benchmark of the leading
GRESB Infrastructure Asset Assessment within its peer group. Småkraft extends its trailblazing role within the
industry for incorporating Environmental Social and Governance (ESG) matters and systematically reporting
parameters. In the annual peer benchmarking, Småkraft receives the highest rating of 98 of 100 points, and once
again achieves the highest score among participating hydro-power companies. GRESB Assessments are guided
by what investors and the industry consider to be material issues in the sustainability performance of real asset
investments.
“The GRESB acknowledgment of Småkraft’s efforts is very exciting”, says CEO Terje Vedeler. “We are proud for
this recognition of Småkraft’s operating model and how we interact with the environment and society around our
power plants. The annual GRESB review helps us improve and communicate our business model in a
transparent, objective and compelling way to those around us to understand how we work.”
Articulating one’s contribution to Environmental, Sustainability and Governance metrics is on the forefront of the
industry, policy makers and investors. That participating in this objective assessment is increasingly becoming an
important competitive advantage, is reflected in the growing number of participating assets and funds in the the
GRESB assessment. The GRESB organisation performs annual evaluations of how well both large and small
infrastructure companies around the world are faring on a set of sustainability indicators. The assessments are
based upon internationally recognised reporting standards such as GRI, PRI, SASB, DJSI, TCFD
recommendations, the Paris Accord and the UN’s Sustainable Development Goals in addition to national and
regional guidelines. The extensive analysis reviews documented replies to a series of questions covering nearly
117.000 assets internationally.
For the fifth year in a row, Småkraft articulates its sustainability goals, how the firm refines the measurement of
metrics and anticipates how climate change is to affect its operations in its annual Sustainability Report. As
operator of over 200 small hydropower plants in Norway and Sweden, Småkraft’s generates renewable energy
with small plants that blend in with the environment while partnering with local communities. Småkraft embeds
objective and transparent sustainability metrics in its governance framework, while the firm publishes its
Sustainability Report in accordance with the highest industry standards of the Sustainability and Climate
Standards Global Reporting Standards (GRI) and Task Force on Climate-Related Financial Disclosures (TCFD).
Furthermore, an assessment on the green EU- taxonomy is published.
17
66
73
83
94
98
2017 2018 2019 2020 2021 2022
Leap of Småkraft to #1 among peers in past 6 years
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OUR BUSINESS
Småkraft’s business model is to bring capital and competence forward to communities that own natural resources
they want to utilize to create renewable energy. Our access to competence and capital combined with the
commitment from the communities give us a unique position to create long- term partnerships between long- term
investors and the communities around our installations.
We enter long- term lease contracts with the landowners who own the rights to utilize the rivers as part of their
property. During this lease period, Småkraft operates the power stations as safe, efficient and sustainable as
possible. The profits we generate are shared between Småkraft and the landowners in line with the contract. After
the land- lease period is finalized, the landowners have the rights to get the power station back at predefined
terms.
During the operational phase, the power stations feed electricity into the grid. The grid transfers the electricity to
the consumers.
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SMÅKRAFT BOARD OF DIRECTORS
Annette Malm Justad
Chai
r
Master in Technology Management and Master in
Chemical Engineering
More than 25 years of operational experience from Yara
and Norsk Hydro, including shipping, and as CEO of listed
EMS ASA. Today, chair and board member of several
listed and private companies
Claudia Ahnert
Board membe
r
Degree in law from TU Dresden
7 years of experience with hydropower as an Investment
Manager at Aquila Capital
15+ years of experience from the legal sector, financial
industry and renewables
Oldrik Verloop
Board membe
r
LL.M. in Dutch Civil Law, Leiden University and MBA from
St. Gallen University
9 years at Aquila Capital until 2018, Co-Head of
hydropower and with asset management roles
Advisor and board member to international private
companies
Christian Heidfeld
Board membe
r
MSc in Management and Technology from TU Munich
5 years experience within hydropower as Head of Asset
Management Hydropower at Aquila Capital
9+ years of experience in advisory, financial industry and
renewables
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SMÅKRAFT MANAGEMENT TEAM
Terje Vedeler
CEO
MSc in Hydropower Engineering from Norwegian
University of Science and Technology
30 years of experience in leading positions in companies
as Framo, FMC, Aker Solutions and Frydenbø Industrier
Erik Røysem Sterud
CFO
Certified Public Accountant, Master of Accounting and
Auditing, Norwegian School of Economics and Dipl.
Kaufm. Business and Administration from the University of
Passau
7 years as CFO at Småkraft and Norsk Grønnkraft
6 years at PWC within auditing, accounting, tax and law
David Inge Tveito
COO
MSc in Electrical Energy Engineering from Norwegian
University of Science and Technology
20 years of experience in energy companies such as
Statkraft, Scanenergy and Captiva
Bjarte Skår
CCO
21 years as head of hydro in Brødrene Dahl AS
2 years as CEO of Hywer
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CORPORATE GOVERNANCE REPORT
The corporate governance statement clarifies the distribution of roles between the
owners, the board and the management in the company.
Efficient and transparent management and control of the business forms the basis for creating long-term value for
the owners, employees, other stakeholders and society in general, and as a result, contributes to sustainable and
lasting value creation. The distribution of roles inspires confidence among stakeholders through predictability and
credibility. Open and accessible communication from the company ensures that the Group maintains a good
relationship with society in general and with all stakeholders affected by the company’s activities.
Corporate governance statement
Småkraft AS is the parent company for an underlying Group structure, the Småkraft Group. Småkraft adheres to
the Norwegian Code of Practice for Corporate Governance (NUES) within the framework established by the
company's organisation and ownership.
Småkraft is subject to reporting requirements relating to corporate governance according to Section 3-3b of the
Accounting Act.
The company's annual report includes a statement on corporate responsibility.
Business
The objective of Småkraft AS, alone, or through participation in, or cooperation with other companies, is to
operate, maintain, and optimize energy facilities, conduct physical and financial energy trading, and perform
naturally related operations. Growth is handled through acquisitions and turnkey contracts, and Småkraft AS is
registered in Norway and its management structure is based on Norwegian company legislation. Småkraft is also
subject to the Norwegian Securities Trading Act and stock exchange regulations associated with the company’s
debt obligations.
Equity and dividends
Småkraft AS’ share capital totals NOK 245,513,250 divided among 4,910,265 shares of NOK 50 each. Capital
increases are processed through the General meeting of shareholders in Småkraft AS. The Companies Act states
that the general meeting cannot adopt a higher dividend than that proposed or accepted by the Board of
Directors.
The Board of Directors maintains a continuous focus on adapting the company's objectives, strategy and risk
profile to the company's capital situation. Småkraft's investments are financed through a combination of retained
capital, borrowings and any new equity contributed by the owner.
Equal treatment of shareholders and transactions with related parties
Småkraft engages in some transactions with companies that are closely related to Småkraft's shareholder. All
transactions are based on regular commercial terms and principles.
The instructions to the Board of Directors state that neither board members nor the CEO may participate in the
processing or resolution of issues that are of substantial personal or financial interest to them or closely related
parties. Any persons in such a situation must, on their own initiative, disclose any interest they or their closely
related parties may have in the resolution of an issue.
General meetings
The owners exercise their authorities in the General Meeting of Småkraft. Before the general meetings the Board
of Directors decides in matters assumed to be of significant importance for the purpose of the
enterprise/company, or which will significantly change the character of the activities.
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Nomination committee
Småkraft AS has no nomination committee. The election of the board members appointed by the owners in
Småkraft AS will take place in the general meeting.
Board of directors: composition and independence
Småkraft AS has four board members. The goal is for the board to collectively represent the desired expertise
based on the company’s objective, business area, challenges and the owners goals.
The work of the board of directors
The Board of Directors usually meets eight to ten times a year. The Chair of the Board of Directors will call for
board meetings as often as is required. The Board of Directors has stipulated board instructions with guidelines
for the work and case processing of the board. The instructions also cover the CEO. The instructions define the
work scope, duties and authorities of the CEO in more detail than follows from the legislation.
The Board of Directors prepares an annual agenda for its work, with a special emphasis on goals, strategies and
implementation. The Board of Directors informs the boards of subsidiaries of matters of potential significance for
the subsidiary in question. The Board of Directors evaluates its own performance and expertise annually.
The board’s Audit Committee comprises three of the Board of Director’s members. The committee functions as a
preparatory body for the board's management and supervision work, and at least one member of the Audit
Committee shall have experience in accounts management, financial management or auditing.
Risk management and internal control
The internal control concept includes compliance with the company's value base and guidelines for ethics and
corporate responsibility. Risk management is an integral part of all activities across the organisation and of the
decision-making process. It supports the decision makers to prioritise their actions. Managers at all levels of the
organisation are responsible for appropriate risk management. Risk management is regulated by mandates,
requirements and guidelines. Follow-up of risk and risk management are incorporated in the daily business
operations.
Risk management and internal control are integral parts of the Board of Directors work. To ensure that Småkraft
has suitable and efficient systems in place for risk management and internal control, the Board of Directors shall:
– Review the Group’s most important risk areas.
– Ensure that the systems are adequately established, implemented and followed up, e.g. through processing
of reports submitted to the board by the CEO.
– Ensure that risk management and internal control are integrated in the Group's strategy and business
plans.
Furthermore, the Board of Directors shall ensure that the CEO has:
– Stipulated instructions and guidelines for how the Group's risk management and internal control will be
carried out in practice.
– Established adequate control processes and functions.
– Ensured that Småkraft's risk management and internal control are carried out, documented, monitored, and
followed up in a prudent manner.
– The Group's CFO is responsible for the process for Internal Control in the Financial Reporting (ICFR) in
Småkraft.
Remuneration of the board of directors
The Board of Directors do not get remunerated for their work as Directors by Småkraft AS.
Information and communication
The Board of Directors has stipulated guidelines for financial reporting and other information. Småkraft AS
publishes its annual financial statement. Each year, Småkraft AS releases two interim reports and one annual
report.
The financial calendar, press releases and stock exchange notices, interim reports and annual reports and other
relevant information are published on Småkraft's website.
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Småkraft emphasises transparent communication with all stakeholders. The information the company provides to
its owners, lenders and the financial markets in general shall provide sufficient details to permit an evaluation of
the company’s underlying values and risk exposure. The owner and the financial markets shall be treated equally,
and information shall be communicated in a timely manner.
Auditor
The General meeting appoints the auditor based on the Board of Directors proposal and stipulates the auditor’s
fee. The auditor serves until a new auditor is appointed.
The Board of Directors and the auditor hold at least one meeting annually where the CEO and other Group
executives are not present. The Audit Committee evaluates the external auditor’s independence and has
established guidelines for use of the external auditor for consultancy purposes.
As part of the ordinary audit, the auditor presents an audit plan to the Audit Committee including a summary of
the audit from last year. The auditor reports in writing to Småkraft's Audit Committee concerning the company's
internal control, applied accounting principles, significant estimates in the accounts and any disagreements
between the auditor and the administration. The Board of Directors is briefed on the highlights of the auditor's
reporting. At the end of the audit the auditor performs a summary meeting with the Audit Committee.
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REPORT FROM BOARD OF DIRECTORS
Småkraft AS (the “Company”) is the ultimate parent of the Småkraft Group, comprised of the Company and its
subsidiaries (the “Group”). Småkraft is a power generation company, which invests, develops, and operates
small-scale, hydropower plants in cooperation with local landowners.
Småkraft is headquartered in Bergen, Norway, with presence in Harstad, Flatanger, Lillestrøm, Sandnes, Oslo
and Uppsala., The Group employs 31 people. Småkraft’s power plants are located in all price zones in Norway
and in the two zones in Sweden.
Småkraft was established in 2002 and celebrated its 20th year anniversary in 2022 as the largest small scale
hydropower company in Norway. By year end of 2022, Småkraft had 219 operating hydropower plants (161 at
year end 2021), with a total accumulated production capacity of 2,002 GWh (1,697 in 2021).
Småkraft is a limited liability company incorporated in Norway with its registered address at Solheimsgaten 15 in
Bergen, Norway. The Company is tax resident in Norway. Information related to shareholders can be found at
Note 21 and Related parties at Note 25.
Equity and shares
The Group had a book equity of EUR 352 million and a book equity ratio of 38% as of 31 December 2022.
The Company has only one class of ordinary shares. Each common share in the Company carries one vote, and
all common shares carry equal rights, including the right to participate in General Meetings. All shareholders are
treated equally.
The shares and negotiability section of the Corporate Governance Report details the transferability of common
shares.
The number of ordinary shares issued in Småkraft AS as of 31 December 2022 is 4,910,265.
ESG and Quality
In total, Småkraft has acquired and constructed 56 power stations that add 305 GWh annual capacity to the
Småkraft portfolio during 2022. Furthermore, Småkraft managed to maintain and expand its pipeline of power
stations it constructs together with its partners. Småkraft signed contracts that add 233 GWh of renewable energy
over the next couple of years, and it has a significant pipeline of further projects it works hard to mature to formal
investment decisions.
The Småkraft business model creates significant value for multiple stakeholders. Småkraft will pay out close to
EUR 18 million in land lease based on the 2022 results.
Småkraft maintained good performance on key quality indicators. Short term sick leaves have been stabile below
2,0% the last years. Småkraft monitors incidents that lead to lost time of work for both employees and its
partners/ suppliers. During 2022, Småkraft experienced 3 incidents that led to lost time. All the incidents were
minor.
Collaborating with turnkey contractors with robust ESG practices is essential for sustainable and responsible
operations in the small-scale power industry. Småkraft is working on the implementation of the Transparency Act
and associated due diligence assessments and reports. This work will be completed during the first half of 2023.
The company has already implemented the Transparency Act's requirements in our internal governing
documents.We are currently working with our suppliers to obtain documentation that our requirements are met by
our suppliers. When the work is completed, Småkraft's report will be published on our website.
Please refer to Småkraft’s Sustainability Report 2022 for further details about ESG and social responsibility in
general.
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Work environment and personnel
Småkraft AS seeks to be an attractive employer focused on employee retention and maintaining a good working
environment. We believe that diversity of background, interests and knowledge is important to form the most
varied and best possible competencies to solve the tasks we face. Any form of racism or discrimination is
unacceptable in Småkraft.
The Småkraft Group is committed to provide equal opportunities for men and women. The company
acknowledges that women are under-represented in the company, as well as in the industry. The power sector in
general, and specifically the small- scale hydropower sector, has over time been dominated by men. Småkraft
has an ambition to work against this imbalance, and we encourage women to apply for positions with the
company. We do not practice allocation by gender quotas when recruiting new employees, but have received
applications from highly qualified female applicants. Two out of five new employees in Småkraft in 2022 are
female. In total, 20% of Småkraft’s full time employees are female. The Board has four Directors, out of which two
are female. The chair is female.
Outlook
The forward prices in the energy market indicate that power prices will remain high in 2023. The production is
expected to increase in line with full year production from power plants acquired in 2022 and new plants coming
on stream in 2023. The Småkraft Group pursues a growth strategy and intends to invest further in new production
capacity over the next years.
During 2022, Småkraft has continued to look for operational improvement and explore growth and diversification
opportunities. We have initiated projects to ensure that we adapt to changes in the energy market. Småkraft
strives to be competitive in what we do and to be resilient to external factors affecting the firm.
Financial Reviews
Consolidated Accounts
(Comparable figures in brackets)
Småkraft’s financial statements are presented in EUR. However, the functional currency of the company is NOK.
Småkraft’s financial statements is therefore affected by currency exchange fluctuations between NOK and EUR.
Key metrics
Amounts in EUR thousand
2022 2021
Power revenue
133 559 56 168
Profit (loss) before tax
-84 340 -20 138
Cash flow from operations
38 581 20 806
Production volume GWh 1 470 1 113
Avg. prices (EUR / MWh) 91 50
Alternative Performance Measures – APM ref note 8.
Amounts in EUR thousand
2022 2021
Adjusted Power revenue 78 651 36 644
Adjusted EBITDA 38 513 17 464
EBITDA -44 780 -15 933
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Alternative Performance Measures FY 2022 - illustrated.
Income Statement
Småkraft generated power revenue of EUR 134 million in 2022 (EUR 56 million), an increase of EUR 78 million or
139%. The increase is explained by higher power prices as well as a 18% higher production- capacity.
Production was 1470 GWh, an increase of 32% compared to 2021. Average obtained spot prices per MWh
increased with 68% to 103 EUR / MWh in 2022 compared to 2021. Småkraft has production in seven different
price areas in Norway and Sweden, and the obtained spot prices per MWh varied significantly between the price
areas. For Småkraft, 2022 resulted in an obtained average spot price of 91 EUR / MWh for the year.
In 2022 the mark to market valuation of energy derivatives hedging about ¼ of the expected production for 2023
and 2024 caused an unrealized value change of EUR 83 million (EUR 33 million). According to IFRS, these future
hedge contracts (to be realized in the years to come) are recognized in the Financial Statements at market value
at year end. However, production and revenue are not recognized before the date of production.
Småkraft is focusing on selected Alternative Performance Measures (APMs) to measure performance from
operational activities. Note 8 of this report details these APMs. Adjusted power revenue showed an increase of
115% for 2022 compared to 2021 underlining the impact of higher production and power prices in 2022.
Payroll and related costs increased from EUR 3 million to EUR 4 million in 2022 mainly due to increase in number
of employees and personnel cost. Depreciation for 2022 was EUR 21 million (EUR 16 million). The increase is
explained by a material growth in number of powerplants by acquisitions and new builds during 2021 and 2022.
The growth has also a direct impact on the increase in other operating expenses from EUR 19 million to EUR 39
million in 2022, of which EUR 13 million is increase in expensed land lease cost.
The operating loss for 2022 was EUR 66 million (EUR 32 million). Excluding unrealized value change on energy
derivatives Småkraft would have reported an operating profit of EUR 18 million (EUR 2 million). Adjusted EBITDA
excluding same MTM adjustment is EUR 39 million (EUR 17 million).
Net financial items for 2022 reported a loss of EUR 19 million in 2021 net financials reported a profit of EUR 12
million. The main explanation is currency development EUR / NOK and the fact that the majority of long-term
financing is granted in EUR. Disagio on borrowings is in 2022 EUR 16 million, compared to a positive agio in
2021 of EUR 13 million.
Income tax income reports to EUR 13 mill (EUR 4 million).
Total comprehensive income 2022 was a loss of EUR 89 million (EUR 5 million).
Småkraft Annual Report 2022
23
Balance sheet
Consolidated total assets as of 31 December 2022 amounted to EUR 936 million (712 million).
Total non-current assets amounted to EUR 809 million (EUR 663 million).
Current assets amounted to EUR 127 million (EUR 48 million).
Total equity amounted to EUR 352 million (EUR 339 million) an increase of EUR 13 million. The equity ratio was
38% (48%).
Total liabilities amounted to EUR 584 million (EUR 373 million), reflecting an increase in interest bearing
borrowings of EUR 211 million. Net interest bearing debt amounts to EUR 319 million (EUR 281 million).
Cash flow
Cash flow from operating activities amounted to EUR 39 million (EUR 21 million) underlining improved underlying
positive operational performance in 2022.
The cash outflow from investing activities amounted to EUR 109 million (EUR 115 million), mainly due to
investment in new power production capacity either as acquisitions of operating companies or new builds.
The cash inflow from financing activities amounted to EUR 143 million (EUR 117 million). The shareholders
contributed new capital of EUR 105 million (EUR 146 million). The Group received inflows from loan raising of
EUR 128 million (EUR 56 million) and paid EUR 83 million (EUR 66 million) in instalments on credit facilities and
leases. Dividends of EUR 6 million (EUR 19 million) were paid to the shareholders.
Critical accounting estimates
The Group makes estimates and assumptions concerning the future. These estimates are based on the actual
underlying business, its present and forecasted profitability over time, and expectations about external factors
such as power prices, interest rates, foreign exchange rates and other factors which are outside the Group’s
control.
The resulting estimates will, by definition, seldom equal the related actual results. There is use of judgement in
the considerations related to recognition of deferred tax asset for tax losses carried forward, and considerations
related to contingent liabilities. Please refer to Note - 3 Critical accounting estimates and judgements in the
Consolidated Financial Statements for further information.
Småkraft Annual Report 2022
24
Småkraft AS - parent company accounts
Småkraft AS is owning close to half of the Group’s power plants and all Norwegian employees of the Group.
Småkraft AS generated power revenue of EUR 61 million in 2022 (EUR 31 million), an increase of EUR 30 million
or 99%. The increase is explained by higher power prices as well as a higher production volume.
Småkraft AS has production in all price areas in Norway.
In 2022 the mark to market valuation of energy derivatives hedging about ¼ of the expected production for 2023
and 2024 caused an unrealized value change of EUR 83 million (EUR 33 million). Småkraft AS is the only
company in the Group selling forward power. According to IFRS, these future hedge contracts (to be realized in
the years to come) are recognized in the Financial Statements at market value at year end. However, production
and revenue are not recognized before the date of production.
Småkraft AS is focusing on selected Alternative Performance Measures (APMs) to measure performance from
operational activities. Note 8 of this report details these APMs. Adjusted Power revenue showed a decrease of
45% for 2022 compared to 2021 explained by the impact of changes in realized value change on energy
derivatives in 2022.
Payroll and related costs increased from EUR 3 million to EUR 4 million in 2022 mainly due to increased number
of personnel and higher hired personnel cost. Depreciation for 2022 was EUR 8.4 million (EUR 8.5 million). The
growth in the group as such has also a direct impact on the increase in other operating expenses from EUR 11
million to EUR 18 million in 2022.
The operating loss for 2022 was EUR 107 million (EUR 42 million). Excluding unrealized value change on energy
derivatives Småkraft AS would have reported an operating loss of EUR 23 million (EUR 9 million). Adjusted
EBITDA excluding same MTM adjustment is a loss of EUR 15 million (EUR 0 million). The effects of all value
changes related to energy derivatives in the Group, is incurred in Småkraft AS since all forward contracts have
been entered into by Småkraft AS on behalf of the Group.
Net financial items for 2022 reported a loss of EUR 7 million. In 2021 net financials reported a profit of EUR 14
million. Main explanation is currency development EUR / NOK and the fact that the majority of long-term financing
is granted in EUR. Disagio on borrowings is in 2022 EUR 14 million, compared to a positive agio in 2021 of EUR
12 million.
Income tax income reports to EUR 25 mill (EUR 6 million).
Total comprehensive income 2022 was a loss of EUR 104 million (EUR 12 million).
Balance sheet
Total assets as of 31 December 2022 amounted to EUR 727 million (631 million).
Total non-current assets amounted to EUR 656 million (EUR 608 million).
Current assets amounted to EUR 71 million (EUR 24 million).
Total equity amounted to EUR 322 million (EUR 324 million) a decrease of EUR 2 million. The equity ratio was
44% (51%).
Total liabilities amounted to EUR 405 million (EUR 307 million), reflecting an increase in interest bearing
borrowings of EUR 98 million. Net interest bearing debt amounted to EUR 194 million (EUR 248 million).
Cash flow
Cash flow from operating activities amounted to EUR - 6 million (EUR 7 million).
The cash outflow from investing activities amounted to EUR 56 million (EUR 152 million), mainly due to
investment in new power production capacity either as construction of new plants or acquisitions of operating
companies. Inflow from dividend from subsidiaries is reducing net outflow by EUR 53 million in 2022 (EUR 3
million).
The cash inflow from financing activities amounted to EUR 109 million (EUR 151 million). The shareholders
contributed new capital of EUR 105 million (EUR 124 million). Received inflows from loan raising of EUR 18
million (EUR 56 million) and paid EUR 8 million (EUR 29 million) in instalments on credit facilities and leases.
Dividends of EUR 5 million (EUR 0 million) were paid to the shareholders.
Småkraft Annual Report 2022
25
Risk review
Operational risk factors
Risk management is important for the value creation and is an integral part of the business activity in Småkraft
Group AS.
The company’s result will be influenced by changes in power prices, climate and weather changes, and changes
in currency exchange rates & interest levels.
Significant volume, price, and foreign currency exchange risks are associated with the production and sale of
electric power. 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.
Hydrology and power prices remain the main risk factors for the upcoming periods.
The war in Ukraine led to extremely volatile and high power prices during 2022 and likely also for 2023 onwards.
The Nordic Commodity markets for power have been less liquid than normal. Less liquid markets make financial
hedging activities challenging. Småkraft halted its hedging activities during the summer 2021, and during 2022
Småkraft has only adjusted its current hedges to match its production volatility during the year better.
Increased future power prices increases indirectly unrealized hedge loss. When the prices increase such as
during 2022, this normally leads to stronger financial cash flows for Småkraft. However, it may also lead to large
unrealized losses that have a significant negative effect on Småkraft’s book equity. Over the next year, Småkraft’s
hedge positions will gradually reduce, reducing the likelihood of large negative hedge effects in Småkraft’s profit
and loss.
The company is exposed to operational risks, such as failure of the power producing equipment or other vital
equipment. To limit these risks, the Småkraft Group has well-established procedures and emergency
preparedness plans. All power plants are insured, and the production is covered by interruptions insurance.
Significant emphasis has been put at managing the QHSE risks in the company.
Småkraft may also be affected by 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 now 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.
Financial risk factors
The Group is exposed to a range of financial risks: liquidity risk, market risk (including currency, interest rate, and
price), and credit risk. The financial risk management process focuses on the unpredictability of financial markets
and seeks to minimise potential adverse effects on the Group’s financial performance. To some extent, the Group
uses derivative financial instruments to reduce certain risk exposures. Financial risk management is carried out at
a Group level. The Group identifies, evaluates, and hedges financial risks in close co-operation with the Group's
operational units.
Because of its significant growth, Småkraft is continuously working on financing initiatives with new equity and
debt. Småkraft has signed 233 GWh that it will add to its portfolio over the next years. Småkraft’s shareholders
have committed equity for at least 50% of the agreed price for these investments. Småkraft is working actively
with banks and debt investors to finance the remaining part of the investments. Green Bond I of EUR 50 mill
mature late 2023. In addition, several of the ongoing construction projects will be finalized and construction loan
facilities will be rolled over to and refinanced with long term debt structures.
The board of Småkraft AS has established written principles for risk management of foreign exchange risk,
interest rate risk and the use of derivative financial instruments as an integral part of our risk policy.
Liquidity risk
The Group's objective is to maintain a balance between continuity of funding and flexibility through the use of
credit facilities and to have sufficient cash or cash equivalents at any time to be able to finance its operations and
investments in accordance with the Group's strategic plan. Småkraft held cash and cash equivalents amounting
to EUR 115 million at the end of 2022. This is deemed to be sufficient funding for the Group’s current activity
levels and committed capital expenditures during 2023. The Group seeks to mitigate the market and liquidity risks
by further cost reduction and efficiency improvement programs and a continued focus on capital discipline.
Småkraft Annual Report 2022
26
Foreign exchange risk
The Group operates internationally and is exposed to foreign exchange risk arising from various exposures to
currency fluctuations, primarily with respect to EUR and NOK. The Group seeks to minimize these risks through
currency hedging via financial instruments.
Interest rate risk
The Group's exposure to the risk of changes in market interest rates relates primarily to the Group's long-term
debt obligations at floating interest rates.
The Group evaluates the level of interest rate hedging based on assessment of the Group’s total interest rate risk
and currently has a combination of fixed and floating interest rates in order to limit exposure. The Board of
Directors regularly considers the interest payment hedging of the external financing and mandates administration
to execute necessary changes. Including interest rate swaps entered into, the fixed-rate portion of the Group’s
interest bearing debt as of 31 December 2022 is approximately 70%.
Credit risk
The current main market for the Group’s services is hydro power production through a broker to Nord Pool. The
Group performs ongoing credit evaluations of its power brokers and generally does not request material collateral.
Credit risk is considered to be limited.
Tax and regulatory risks
By introducing new tax measures for Småkraft’s business, such as windfall taxes and the current discussions on
changes in definition of power plants exposed for ground rent taxation, Norwegian and Swedish government
might over time increase tax burden on companies like Småkraft. Pending on new regulations, Småkrafts
profitability over time might be negatively impacted. Shareholders willingness to invest in more green energy in
our home market might be reduced.
Director & Officer’s Liability Insurance
Småkraft has a group insurance policy for the liability of the Company’s and its subsidiaries’ Directors and
Officers. The insurance covers personal legal liabilities including legal costs for defence. The limit of liability is
NOK 30 million per claim and also aggregated per year for the Group.
Going concern
Going concern assumption
The financial statements have been prepared on the basis of the going concern assumption and the Directors
have confirmed that this was realistic at the time the accounts were approved. When assessing the going concern
assumption, the Directors and management have considered cash flow forecasts, funding requirements and
production capacity. Although Småkraft has high geographical diversified production capacity, robust balance
sheet with low leverage, and a long-standing relationship with its key lenders, the market for bank financing might
be more challenging and future funding sources may be somewhat more restricted. The Group's refinancing risk
is diversified with each loan facility maturing at different times until august 2034. The uncertainties and volatility in
today’s financial market represent a risk for the Group with respect to funding, and hence the going concern
principle, should these market conditions continue over time. Taking all relevant risk factors and available options
for financing into consideration, the Board has a reasonable expectation that the Group has adequate resources
to continue its operational existence for the foreseeable future.
Subsequent events
After year end, Småkraft has increased the portfolio of Powerplants. 2 January 2023 Småkraft finalized the
acquisition of 65% of the shares in Svorka Småkraft AS, which has signed construction agreements to build
powerplants with a capacity of 22,5 GWh to our portfolio in Norway.
3 January 2023 Småkraft AB acquired Mustadfors with one additional power plant of 6 GWh in Sweden. The
powerplant was acquired by Småkraft AB. Småkraft AB is 100% owned by Småkraft AS.
Småkraft Annual Report 2022
27
Bergen, Norway, 28 March 2023
The Board of Directors, Småkraft AS
____
_____________________ _________________________
Member of the Board Chairman of the Board
Claudia Ahnert Annette Malm- Justad
____
____________________ _________________________ ________________________
Member of the Board Member of the Board Managing Director
Oldrik Verloop
Chri
stian Heidfeld Terje Vedeler
10 January 2023 Småkraft AS acquired the 9.9% minority interest in the Swedish subsidiary Strömfallet Småkraft
AB from Strömfallet Invest AB. Strömfallet Småkraft AB owns 100% of the shares in Strömfallet AB, Strömfallet
Tunafors AB and Streamgate North AB.
The Board decided ultimo 2022, to pay out a dividend of in total EUR 37.5 million, based upon the 2021- Financial
Statements. The dividend payment shall be classified as capital redemption of the paid “overkurs” in the tax
accounts. The dividend will be paid out on 31 March 2023 (the “payment date”), under condition that the
distribution test, as described in the loan agreement, is met.
Småkraft Annual Report 2022
28
Småkraft Annual Report 2022
29
ANNUAL ACCOUNTS AND NOTES SMÅKRAFT GROUP
Consolidated Statement of Income and Consolidated Statement of Other Comprehensive Income
Amounts in EUR thousand
Note 2022 2021*
Power revenue
9 133,559 56,168
Other operating income
1,430 2,721
Unrealized value change on energy derivatives 14
-83,293 -33,397
Realized value change on energy derivatives
-54,908 -19,524
Share of the profit (loss) in equity accounted investments
1,415 450
Payroll and related costs 10
-3,953 -3,088
Depreciation and impairment of fixed assets and intangible assets 15, 16, 17
-20,882 -15,830
Other operating expenses 11
-39,030 -19,263
Operating profit/(loss) -65,662 -31,763
Financial income
12,331 19,338
Financial expenses
-31,009 -7,712
Net financial items
12 -18,678 11,626
Profit/(loss) before tax
-84,340 -20,138
Tax expense (income) 13
-12,884 -3,974
Profit (loss)
-71,457 -16,164
Profit/(loss) is attributable to:
Equity holders of the parent company
-72,535 -16,619
Non-controlling interests
1,078 456
Other comprehensive income:
Presentation currency effects
-17,203 10,950
Total comprehensive income for the year
-88,660 -5,214
Total comprehensive income is attributable to:
Equity holders of the parent company
-89,008 -6,272
Non-controlling interests
349 1,059
*The comparative figures are restated. Share of the profit (loss) in equity accounted investments was presented as financial income.
Småkraft Annual Report 2022
30
Consolidated Statement of Financial Position
Non-current assets
Amounts in EUR thousand
Note 2022 2021*
Goodwill
15 7,625 7,924
Intangible Assets
15 208,638 155,062
Property, plants and equipment 17
545,888 479,919
Deferred tax assets 13
25,245 7,311
Investments, recognised under the eq.method 18
3,697 2,058
Derivatives 14
9,249 0
Long-term receivables 19
8,719 11,110
Total non-current assets
809,061 663,384
Current assets
Trade receivables 7
3,567 936
Other receivables 7
3,246 1,550
Derivatives 14
4,583 1,492
Cash and Cash equivalents 21
115,253 44,438
Total current assets
126,648 48,415
Total assets
935,709 711,800
Småkraft Annual Report 2022
31
Bergen, Norway, 28 March 2023
The Board of Directors, Småkraft AS
____
_____________________ _________________________
Member of the Board Chairman of the Board
Claudia Ahnert Annette Malm- Justad
____
____________________ _________________________ ________________________
Member of the Board Member of the Board Managing Director
Oldrik Verloop
Chri
stian Heidfeld Terje Vedeler
Shareholders equity
Amounts in EUR thousand
Note 2022 2021*
Share capital
21
22,861 20,039
Paid in capital
401,420 321,692
Retained earnings
-86,348 -16,792
Total Shareholders equity
337,933 324,940
Non-controlling interests
14,131 14,270
Total equity
352,064 339,209
Non-current liabilities
Deferred tax liability 13
26 122
Borrowings 22
333,294 316,047
Derivatives 14
49,341 13,899
Other non-current liabilities 7
2,283 2,545
Total non-current liabilities
384,945 332,613
Current liabilities
Accounts payable 7
4,793 2,886
Taxes payable 13
5,992 1,506
Public duties payable 7
2,552 2,842
Dividends
0 2,703
Derivatives 14
60,803 13,968
Borrowings 22
100,772 8,960
Other current liabilities 7
23,787 7,112
Total current liabilities
198,700 39,977
Total liabilities
583,645 372,590
Total equity and liabilities
935,709 711,800
*The comparative figures are restated. Derivatives have been partly reclassified to non-current liabilities.
Småkraft Annual Report 2022
32
Consolidated Statement of changes in Equity
Amounts in EUR thousand
Note
Share capital Paid-in capital
Retained
earnings
Non-
controlling
interests Total equity
Equity at 01.01.2021 16,706 188,722 798 11,796 218,022
Net profit -16,619 456 -16,164
Currency presentation effect 829 9,785 -267 603 10,950
Total comprehensive income for the period
829 9,785 -16,886 1,059 -5,214
Capital increase 21 2,504 144,909 147,414
Non-controlling interest in acquired subsidiaries 5 1,415 1,415
Dividend -21,724 -21,724
Other changes -704 -704
Equity at 31.12.2021 20,039 321,692 -16,792 14,270 339,209
Net profit -72,535 1,078 -71,457
Currency presentation effect -1,162 -18,290 2,979 -730 -17,203
Total comprehensive income for the period -1,162 -18,290 -69,556 349 -88,660
Capital increase current period 21 3,984 100,518 104,502
Dividend -2,500 -487 -2,987
Equity at 31.12.2022 22,861 401,420 -86,348 14,131 352,064
Småkraft Annual Report 2022
33
Consolidated Statement of cash flow
Amounts in EUR thousand
Note 2022 2021*
Cash Flow from operations
Profit (-loss) before tax
-84,340 -20,138
Taxes paid for the period
-1,489 0
Depreciation, amortization, impairment
15, 17
20,882 15,830
Change in unrealized currency gains/losses
12 16,349 -12,918
Change in unrealized derivatives
14
76,177 33,135
Change in working capital
11,003 4,897
Net cash flow from operations 38,581 20,806
Cash flow from investment activities
Outflows due to purchases of fixed assets and intangibles
-33,876 -15,146
Outflows due to investments in subsidiaries
5
-74,205 -101,183
Outflows due to investments in other financial assets
-2,434 0
Outflows from loans to others
-1,159 0
Inflows from loans to others
2,880 1,249
Net cash flow from investment activities -108,793 -115,080
Cash flow from financing activities
Capital increases
21
104,502 145,561
Dividend payments
-5,739 -18,692
Inflows from loan raising
22 127,611 56,449
Outflows from loan payments
22 -83,127 -65,843
Net Cash Flow from financing activities 143,246 117,475
Currency translation effects
-2,219 1,367
Net change in bank deposits and cash
73,034 23,201
Bank deposits and cash at beginning of period
44,438 19,870
Bank deposits and cash at end of period 115,253 44,438
Småkraft Annual Report 2022
34
Notes
1. General information ...................................................................................................................... 35
2. General accounting policies ........................................................................................................ 35
3. Key accounting estimates and judgements ............................................................................... 41
4. Subsequent events ....................................................................................................................... 42
5. Subsidiaries ................................................................................................................................... 42
6. Management of capital structure ................................................................................................. 44
7. Financial instruments – Risk Management ................................................................................ 45
8. Alternative Performance Measures (APM). ................................................................................ 49
9. Revenues and other income ........................................................................................................ 50
10. Payroll costs, number of employees, loans to employees, etc ............................................... 51
11. Other operating expenses ............................................................................................................ 52
12. Financial result .............................................................................................................................. 53
13. Taxes .............................................................................................................................................. 53
14. Derivatives ..................................................................................................................................... 54
15. Goodwill and Other intangibles ................................................................................................... 55
16. Impairment testing ........................................................................................................................ 56
17. Property, plant and equipment .................................................................................................... 57
18. Investments, recognised under the equity method ................................................................... 58
19. Receivables; amounts due after more than one year ............................................................... 59
20. Cash and cash equivalents .......................................................................................................... 59
21. Share capital, ownership structure and dividend ...................................................................... 59
22. Borrowings and guarantees. ....................................................................................................... 60
23. Concessions .................................................................................................................................. 61
24. Water and lease agreements ....................................................................................................... 61
25. Related party transaction and balance items ............................................................................ 62
Småkraft Annual Report 2022
35
1. General information
The Småkraft group comprises Småkraft AS and the consolidated subsidiaries (Småkraft Group or the Group).
Småkraft is located in Bergen, Norway, with local offices in Harstad, Flatanger, Lillestrøm, Sandnes, Oslo and
Uppsala, and the Group employs 31 people. Småkraft’s business is in Norway and Sweden. Småkraft is a
producer of renewable energy based on small scale hydro power plants.
The group consists of Småkraft AS and 31 fully or partly owned subsidiaries at year end 2022.
Småkraft’s consolidated financial statements have been prepared in accordance with International Financial
Reporting Standards (IFRS) and interpretations from International Financial Reporting Interpretations Committee
(IFRIC), as adopted by the EU and further requirements in Norwegian Accounting Law (Regnskapsloven).
The statement of comprehensive income, statement of financial position, statement of equity, statement of cash
flow and notes provide comparable information in respect of the previous period.
The financial statements have been prepared on a historical cost basis except for financial derivatives witch are
measured at fair value The preparation of financial statements in conformity with IFRS requires the use of certain
accounting estimates. It also requires management to exercise its judgement in the process of applying the
Group’s accounting policies.
Presentation and classification of items in the financial statements is consistent for the periods presented.
Application of the accounting policies by the subsidiaries has been changed where necessary, to ensure
consistency with the Group’s accounting policies.
The functional currency of Småkraft AS is the Norwegian krone (NOK). The Group’s accounts are presented in
EUR. Småkraft AS presents the financial statement in EUR, as most of the lenders and the owners are EUR-
based.
2. General accounting policies
Basis of Consolidation
The consolidated financial statements of the Group for the year ended 31 December 2022 comply with IFRS as
endorsed by the European Union (EU).
The consolidated financial statements are comprised of the financial statements of the parent company Småkraft
AS and its subsidiaries. Subsidiaries are all entities (including structured entities) over which Småkraft Group has
control. Småkraft Group controls an entity when the group is exposed to, or has rights to, variable returns from its
involvement with the entity, and has the ability to affect those returns through its power to direct the activities of
the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the group.
Subsidiaries are no longer consolidated from the date when control ceases.
Profits and losses resulting from intercompany transactions have been eliminated, as well as unrealised gains on
transactions between group companies. Unrealised losses are eliminated unless the transaction provides
evidence of an impairment of the transferred asset.
Småkraft Annual Report 2022
36
Investments in joint ventures
Joint ventures are companies or entities where Småkraft AS has joint control with one or several other investors.
In a joint venture company, decisions related to relevant activities must be unanimous between participants who
have joint control. The Group’s share of the companies’ profit/loss after tax, adjusted for amortization of excess
value and any deviations from the accounting policies, are presented on a separate line in the consolidated
income statement. Investments in joint ventures are recognised in the consolidated accounts using the equity
method and presented as a non-current asset.
Equity method
Under the equity method of accounting, the investments are initially recognised at cost and adjusted thereafter to
recognise the Group’s share of the post-acquisition profits or losses of the investee in profit or loss, and the
Group’s share of movements in other comprehensive income of the investee in other comprehensive income.
Dividends received or receivable from associates and joint ventures are recognised as a reduction in the carrying
amount of the investment.
When the Group’s share of losses in an equity-accounted investment equals or exceeds its interest in the entity,
including any other unsecured long-term receivables, the Group does not recognise further losses, unless it has
incurred obligations or made payments on behalf of the other entity.
Unrealised gains on transactions between the Group and joint ventures are eliminated to the extent of the
Group’s interest in these entities. Unrealised losses are also eliminated unless the transaction provides evidence
of an impairment of the asset transferred. Accounting policies of equity accounted investees have been changed
where necessary to ensure consistency with the policies adopted by the group.
Equity-accounted investments are reviewed each period to determine whether there is any objective evidence
that the net investment is impaired.
Acquisition of controlling interest in other entities – Business combinations or asset
acquisition
When the Group acquired a controlling interest in another entity the transaction is accounted for either as a
business combination or an asset acquisition depending on an assessment of the entity acquired. The Group
applies the voluntary concentration test in allow by IFRS 3. According to the voluntary the transaction can be
treated as an asset acquisition if the fair value of one asset or a group of similar asset equals or almost equals the
transaction price.
Acquisition of controlling interest in other entities - Business combinations
The acquisition method of accounting is used to account for all business combinations. The consideration is
measured at the fair value of any transferred assets, liabilities or issued equity instruments. Identifiable assets
acquired and liabilities and contingent liabilities assumed in a business combination are, with limited exceptions,
measured initially at their fair values at the acquisition date. The Group recognises any non-controlling interest in
the acquired entity on an acquisition-by-acquisition basis either at fair value or at the non-controlling interest’s
proportionate share of the acquired entity’s net identifiable assets.
Acquisition-related costs are expensed as incurred. If the consideration transferred (including any non-controlling
interests and the fair value of previous assets) exceeds the fair value of identifiable net assets acquired, this is
recognised as goodwill. If those amounts are less than the fair value of the net identifiable assets of the business
acquired, the difference is recognised directly in profit or loss as a bargain purchase gain.
Acquisition of controlling interest in other entities – asset acquisition
When the acquisition of a controlling interest in an entity does not constitute a business, the transaction is
accounted for as an asset acquisition. In these transactions the individual identifiable asset acquired, and
liabilities assumed are recognised. The cost of the group of assets and liabilities (purchase price of equity
instruments and transaction costs) are allocated to the individual identifiable assets and liabilities based on their
relative fair values at the date of purchase. Such a transaction or event does not give rise to goodwill. Part from
financial instruments the assets acquired in these transactions is the power plant and the intangible asset relating
to the water rights.
Småkraft Annual Report 2022
37
Foreign currency translation
Functional and presentation currency
The financial statements are presented in EUR. The functional currency of the entities in the group is NOK or
SEK. The subsidiaries in the group are consolidated into the functional currency of the parent (NOK) and then
translated to the presentation currency, EUR. The currency differences arising in the translation to the
presentation currency are presented in Other Comprehensive Incomes. Also, in the statement of equity the
translation difference is included in retained earnings. All amounts are rounded to the nearest EUR thousand.
Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rate at the date of
the transaction. Foreign exchange gains and losses resulting from the settlement of such transactions and from
the translation of monetary assets and liabilities denominated in foreign currencies at year-end exchange rates
are generally recognised in profit or loss. Småkraft uses currency exchange rates from Norges Bank.
Sale of energy
The revenues from sale of energy bear the characteristic of delivering power at a certain price. The performance
obligation is to deliver a series of distinct goods (power) and the transaction price is the consideration expected to
receive, at either spot price, regulated price or contract price. The performance obligation is satisfied over time
which entails that revenue should be recognised for each unit delivered at the transaction price. Småkraft applies
a practical expedient under IFRS 15 whereby the revenue from power for most of the contracts is recognised at
the amount of which the entity has a right to invoice. The right to invoice power arises when power is produced
and delivered and the right to invoice the consideration will normally correspond directly with the value to the
customer and arrangements where Småkraft sells power on an exchange (e.g. Nord Pool), the exchange is
determined to be the customer.
Segments
An operating segment is a component of an entity that engages in business activities from which it may earn
revenues and incur expenses. Furthermore, the entity’s component’s operating results are regularly reviewed by
the entity’s chief operating decision maker to make decisions about resources to be allocated to the segment and
to assess its performance, and thus separate financial information is available. The company has determined that
the board of directors is collectively the chief operating decision maker.
The Group has only one segment: power supply. Småkraft produces renewable energy and sells electricity, el-
certs and guarantees of origin on the Nordic power market.
Property, plant and equipment
Property, plant and equipment is measured at historical cost less accumulated depreciation. Land is not
depreciated. Historical cost includes expenditures that are directly attributable to the acquisition of the item.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate,
only when it is probable that future economic benefits associated with the item will flow to the group and the cost
of the item can be measured reliably. The carrying amount of any component accounted for as a separate asset
is derecognised when replaced. Repairs and maintenance are charged to profit or loss during the reporting period
in which they are incurred.
Depreciation is calculated using the straight-line method to allocate costs over their estimated useful lives. The
assets’ useful lives are reviewed annually and adjusted if appropriate.
Gains and losses on disposals are determined by comparing actual proceeds with the carrying amount. Gains
and losses on disposal are included in profit or loss.
Intangible assets
Intangible assets are carried at cost less accumulated amortisation and accumulated impairment losses. Costs
relating to intangible assets, including goodwill, are recognised in the statement of financial position when it is
probable that the asset will generate future economic benefits and the costs can be measured reliably.
Intangible assets with a definite useful life, such as water rights owned are amortised over the useful life.
Intangible assets with an indefinite useful life, such as goodwill are not amortised but are instead tested annually
for impairment.
Småkraft Annual Report 2022
38
Goodwill
Goodwill represents the excess of the cost of acquisition over the fair value of the Company's share of the net
identifiable assets of the acquired business at the date of acquisition. Goodwill is carried at cost less accumulated
impairment losses. Goodwill is allocated to cash-generating units for the purpose of the impairment testing. The
allocation is made to those cash-generating units or the Company’s of cash-generating units that are expected to
benefit from the business combination in which the goodwill arose.
Goodwill is not amortised but are instead tested annually for impairment.
Leases
The Group’s main lease type of agreements are related to water rights. The rights are considered intangible
assets. Småkraft has elected to not recognise these types of agreements under IFRS 16 leases. The accounting
treatment of the different water right lease agreements are described below:
Water right lease agreements
Småkraft enters into water right lease agreements with landowners, which entitles the company to utilize the
water in the rivers. The agreement typically has a period varying from 40 to 75 years, starting when the power
plant is put into commercial operation.
When Småkraft has a commitment to pay rent to the land owners, we account for this as a regular cost as the
commitment arises. Such commitment arises, when:
1. Gross agreement/ revenue-based agreement: Småkraft pays landowner a percentage of the annual
power plant revenue. Upon expiration of the agreement the landowners have the right to purchase the
power plant with all rights and technical installations at a price based on certain specific conditions.
Småkraft accounts for this land lease when the relevant power plant generates revenue, upon which this
land lease bases.
2. Fixed amount- agreement: Småkraft pays landowner a fixed annual amount. Upon expiration of the
agreement the landowner has the right to purchase the powerplant with all rights and technical
installations at a price based on certain specific conditions.
Småkraft accounts for this land lease monthly based upon the agreed yearly payment.
3. Profit share agreement: Småkraft shares the yearly powerplant- profit with the land owner. Upon
expiration of the agreement the landowners have the right to purchase the power plant with all rights and
technical installations based on certain specific conditions.
Småkraft accounts for this land lease type by calculating the actual profit for each individual power plant
on a monthly basis. Småkraft then calculates the exact share of the profit, that the landowners have the
right to receive. If Småkraft is in a position, where land lease should be paid to landowners, Småkraft
accounts for the estimated payment as a cost.
In the case that Småkraft has a profit share lease agreement, where there (still) is an accumulated loss
on the powerplant, Småkraft has the right to offset all accumulated losses before paying out land lease
rent to the landowners. This will represent a future benefit for the company, that Småkraft does not
recognise as an asset. This asset will be off- balance. Any positive or negative changes in these off-
balance items, will not be recognised in Småkrafts books. In some instances, Småkraft may pay out
loans or minimum payments to landowners. These loans are interest bearing loans and will be
recognised as normal loans in the Group’s Financial Statements.
Other leases
Further, the Småkraft Group has some lease related to office rental of which the following principles applies:
Right-of-use assets
The Group recognises right-of-use assets at the commencement date of the lease, i.e. the date the underlying
asset is available for use. Right-of-use assets are measured at cost, less any accumulated depreciation and
impairment losses, and adjusted for any remeasurement of lease liabilities. The recognised right-of-use assets
are depreciated on a straight-line basis over the shorter of its estimated useful life and the lease term.
Småkraft Annual Report 2022
39
Lease liabilities
At the commencement date of the lease, the Group recognises lease liabilities measured at the present value of
lease payments to be made over the lease term.
In calculating the present value of lease payments, the Group uses the incremental borrowing rate at the lease
commencement date if the interest rate implicit in the lease is not readily determinable.
Estimates and Judgment when calculating Land lease:
Land lease calculations are estimates based on the current revenue and costs related to the specific companies.
While being estimates, there is minimal judgment involved in these estimates, as they are technical calculations
with low complexity based upon the relevant input. Furthermore, most of the input is objective, as the revenue
and most of the costs are known at the time of the estimate.
Financial instruments
Financial instruments are recognised in the financial statements when the Group becomes party to contractual
conditions relating to the financial instrument. Financial assets and financial liabilities are classified based on the
type and purpose for holding the instruments at fair value, amortised cost or as a designated hedge accounting
instrument (e.g. derivatives used for hedging financial risks).
Financial assets
The group classifies its financial assets in the following measurement categories:
– those to be measured subsequently at fair value, and
– those to be measured at amortised cost.
The classification depends on the entity’s business model for managing the financial assets and the contractual
terms of the cash flows.
For financial assets measured at fair value, gains and losses will be recorded in profit or loss. Financial assets
recognised at fair value through profit or loss are initially recognised at fair value, and transaction costs are
expensed in the income statement. Gains or losses arising from changes in the fair value of the financial
instruments at fair value through profit or loss, including interest and dividends, are recognised in the income
statement. Derivatives are always measured at fair value through profit or loss.
Financial assets that are held for collection of contractual cash flows where those cash flows represent solely
payments of principal and interest are measured at amortised cost. Interest income from these financial assets is
included in finance income using the effective interest rate method. Any gain or loss arising on derecognition is
recognised directly in profit or loss.
Regular way purchases and sales of financial assets are recognised on trade-date, the date on which the Group
commits to purchase or sell the asset. Financial assets are derecognised when the rights to receive cash flows
from the financial assets have expired or have been transferred and the Group has transferred substantially all
the risks and rewards of ownership.
Cash and cash equivalents
For the purpose of presentation in the statement of cash flows, cash and cash equivalents includes cash on hand,
deposits held at call with financial institutions, other short-term, highly liquid investments with original maturities of
three months or less that are readily convertible to known amounts of cash and which are subject to an
insignificant risk of changes in value.
Accounts receivables and accrued revenue
Accounts receivable are measured at initial recognition at fair value. Accounts receivable are held with the
objective to collect the contractual cash flows and therefore are subsequently measured at amortised cost using
the effective interest method. For the purposes of impairment, the Group applies the simplified approach
permitted by IFRS 9, which requires expected lifetime losses to be recognised from the date of initial recognition
of the receivables.
Financial liabilities
The Group classifies all financial liabilities at amortised cost, except for derivatives which are at fair value and
financial guarantees (see below).
Småkraft Annual Report 2022
40
Accounts payables and other financial payables
These amounts represent liabilities for goods and services provided to the Group prior to the end of period which
are unpaid. They are recognised at fair value. Småkraft does not subsequently measure at amortised cost using
the effective interest method, as the difference is insignificant. Trade and other payables are presented as current
liabilities unless payment is not due within 12 months after the reporting period.
Borrowings
Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently
measured at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption
amount is recognised in profit or loss over the period of the borrowings using the effective interest method. Fees
paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is
probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw down
occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the
fee is capitalised as a prepayment for liquidity services and amortised over the period of the facility to which it
relates.
Borrowings are removed from the balance sheet when the obligation specified in the contract is discharged,
cancelled or expired. The difference between the carrying amount of a financial liability that has been
extinguished or transferred to another party and the consideration paid, including any noncash assets transferred
or liabilities assumed, is recognised in profit or loss as other income or finance costs.
Borrowings are classified as current liabilities unless the group has an unconditional right to defer settlement of
the liability for at least 12 months after the reporting period.
Taxes
Group companies that are engaged in energy generation in Norway are subject to the special rules for taxation of
energy companies. The Group’s tax expense therefore includes, in addition to ordinary income tax, natural
resource tax and resource rent tax for those plants exceeding 10,000 KVA, currently only the Holmen power
plant.
Income taxes
Income tax is calculated in accordance with ordinary tax rules and by applying the adopted tax rate. The tax
expense in the statement of comprehensive income comprises taxes payable and changes in deferred tax
liabilities and deferred tax assets. Taxes payable are calculated on the basis of the taxable income for the year.
Deferred tax liabilities and deferred tax assets are calculated on the basis of temporary differences between the
accounting and tax values and the tax effect of losses carried forward. From 2020 and onward, Småkraft uses the
initial recognition exemption for the tax effect on temporary differences relating to purchase of power plants.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets
and liabilities and when the deferred tax balances relate to the same taxation authority.
Tax related to items recognised in other comprehensive income is also recognised in other comprehensive
income, while tax related to equity transactions is recognised in equity.
Natural resource tax
Natural resource tax is a profit-independent tax that is calculated on the basis of the individual power plant’s
average output over the past seven years. Natural resources tax consists of NOK 0.01 per kilowatt hour (KWh) to
the municipality and NOK 0.002 per kwh to the county. Income tax can be offset against the natural resource tax
paid. Any natural resource tax that exceeds income tax can be carried forward with interest to subsequent years,
and is recognised as prepaid tax.
Resource rent tax
Resource rent tax is a profit-dependent tax levied on the net resource rent revenue generated by each power
plant. Resource rent tax is calculated with 57,7% of the resource rent income for each power plant. Negative
resource rent tax is carried forward against future positive resource rent tax interest. Negative resource rent tax is
included in the deferred tax asset, together with temporary differences regarding the power plant. Deferred tax
assets related to negative resource rent tax and temporary tax differences are capitalised if it is probable that the
power plant has resource rent income within a time limit of 15 years, and is settled against future payable
resource rent tax. Deferred tax liabilities/deferred tax assets related to resource rent tax is calculated with a tax
rate of 57,7%.
Småkraft Annual Report 2022
41
Dividends
Provision is made for the amount of any dividend declared, being appropriately authorised and no longer at the
discretion of the entity, on or before the end of the reporting period but not distributed at the end of the reporting
period.
Contributed equity
Ordinary shares are classified as equity. Issuance of new shares are recognised when paid, based upon the
decision by the General Meeting. Incremental costs directly attributable to the issue of new shares are shown in
equity as a deduction, net of tax, from the proceeds.
Adoption of new and revised standards
The following standards and amendments was mandatory application for the first time for the reporting period
commencing 01.01.2022:
– Annual Improvements to IFRS: 2018-2020 Cycle amendmetns to IFRS 1, IFRS 9, IAS 41 and the Illustrative
Examples accompanying IFRS 16
– Conceptual Framework for Financial Reporting (Amendments to IFRS 3)
– IAS 37 Provisions, Contingent Liabilities and Contingent Assets (Amendment – Onerous Contracts – Cost of
Fulfilling a Contract)
– IAS 16 Property, Plant and Equipment (Amendment – Proceeds before Intended Use)
None of the amendments listed above have had any impact on the financial statements.
Standards and amendments issued but not yet effective
The following standards and amendments was mandatory application for the first time for the reporting period
commencing after 01.01.2022:
– IFRS 17 Insurance Contracts
– Disclosure of Accounting Policies (Amendment to IAS 1 and IFRS Practice Statement 2)
– Definition of Accounting Estimates (Amendment to IAS 8)
– Deferred Tax related to Assets and Liabilities arising from a Single Transaction (Amendments to IAS 12)
– Lease Liability in a Sale and Leaseback (Amendment to IFRS 16)
– IAS 1 Presentation of Financial Statements (Amendment – Classification of Liabilities as Current or Non-
Current
None of the amendments listed above is expected to have any material any impact on financial statements.
3. Key accounting estimates and judgements
Introduction
The use of reasonable estimates and judgements is a critical element in preparing the financial statements. Due
to the level of uncertainties inherent in Småkraft’s business activities, management must make certain estimates
and judgements that effect the application of accounting policies, results of operations, cash flows and financial
position as reported in the financial statements.
Areas of significant estimates
Impairment testing of goodwill, property plant and equipment (PPE) and intangible assets
In performing the impairment assessment of the carrying amount of goodwill, PPE and intangible assets, as
disclosed in Note 16, the recoverable amounts of the cash generating units (“CGUs”), are determined based on
fair value less cost of disposal. Significant judgements are used to estimate the long-term price forecast for
power, production volumes and discount rates applied in computing the recoverable amounts of different CGUs.
In making these estimates, management has relied on market development and estimates from external
consultancies as disclosed in note 16.
Fair value measurement of energy derivatives
Significant estimates are applied in the valuation of the Group’s long term power purchase and power sales
contracts. The fair value estimate is based on the amounts for which the assets or liabilities could be exchanged
Småkraft Annual Report 2022
42
at the relevant transaction date on the reporting period end. To the extent possible, the assumptions and inputs
used, take into account externally verifiable inputs. However, such information is by nature subject to uncertainty,
particularly where comparable market-based transactions do often not exist. In such cases Småkraft’s
management is required to make market-based assumptions, see note 14.
4. Subsequent events
After year end, Småkraft has increased the portfolio of Powerplants. 2 January 2023 Småkraft finalized the
acquisition of 65% of the shares in Svorka Småkraft AS, which has signed construction agreements to build
powerplants with a capacity of 22,5 GWh to our portfolio in Norway.
3 January 2023 Småkraft AB acquired Mustadfors with one additional power plant of 6 GWh in Sweden. The
powerplant was acquired by Småkraft AB. Småkraft AB is 100% owned by Småkraft AS.
10 January 2023 Småkraft AS acquired the 9.9% minority interest in the Swedish subsidiary Strömfallet Småkraft
AB from Strömfallet Invest AB. Strömfallet Småkraft AB owns 100% of the shares in Strömfallet AB, Strömfallet
Tunafors AB and Streamgate North AB.
In line with the Norwegian Company Act § 8-2 and the registered Power of Attorney on Power to decide dividend
– registered the 18 August 2022 – the Board decided to pay out dividend of in total EUR 37 500 000,- in addition
to already resolved and paid out EUR 2 500 000,-, based upon the 2021- Financial Statements. The dividend
payment shall be classified as capital redemption of the paid “overkurs” in the tax accounts. The dividend will be
paid out on 31 March 2023 (the “payment date”), under condition that the distribution test, as described in the
loan agreement, is met.
5. Subsidiaries
Småkraft purchased 12 subsidiaries in 2022 (24 in 2021):
*) companies were contributed as equity in kind into a portfolio subsidiary named Småkraft USPP 1 AS and subsequently merged into this company during
2022.
Company Aquiredby Purc hasedate
Voting
rights/shareholding
aquired
SmåkraftAB SmåkraftAS 02.11.2021 100%
SennesetKraftverkAS* SmåkraftAS 05.01.2022 100%
StampaelvaKraftAS* SmåkraftAS 05.01.2022 100%
SmåkraftiØstraGøtalandAB SmåkraftAB 18.02.2022 100%
BångbroKraftAB SmåkraftAB 28.02.2022 100%
SmåkraftUSPP1 SmåkraftAS 28.03.2022 100%
HjortelandKraftAS SmåkraftAS 31.05.2022 100%
SkognesogStordalenKraftlagAS* SmåkraftAS 02.05.2022 100%
SmåkraftPortefølje1AS SmåkraftAS 10.06.2022 100%
ChrSalvesenogCh
rThams'sComAS SmåkraftPortefølje1AS 04.07.2022 100%
RøvassåagaKraftverkAS SmåkraftPortefølje1AS 15.11.2022 100%
Teigd alskraftAS SmåkraftPortefølje1AS 15.11.2022 100%
Småkraft Annual Report 2022
43
Financial initial effect from purchased subsidiaries:
Based on the optional concentration test all transactions are considered not to be business combinations under IFRS 3.
Acquis
itions 2021:
* The companies merged with Småkraft Green Bond 2 AS and deleted during second half 2021.
** The company merged with Andvik Holding and deleted during second half 2021.
*** Owned 100% by Strømfallet Småkraft AB. Hence indirectly owned 90.1% by Småkraft AS.
AmountsinEURthousand
202
2
2021
Acquisitioncost 74205 101183
Deferredtax 20 113
Intan
g
ibleAssets 67202
71672
Property,plantsandequipment 77191 74448
Shorttermreceivables 2925 2475
Non‐controllinginterests 0 ‐1417
Interestbearingliabilities,non ‐current ‐48228 ‐42161
Deferredtax ‐167 ‐
Otherinters‐freeliabilities ‐24739 ‐3947
Total 74205 101183
Småkraft Annual Report 2022
44
Subsidiaries as of 31.12.2022:
6. Management of capital structure
The main aims of the Group’s management of its capital is to maintain a reasonable balance between the
company’s debt and total assets. The Group has a long- term investment horizon, with contractual arrangements
and investments that will last for decades. The reasonable balance between debt and total assets is thus set
based upon the expectations towards short- term and long- term price expectations.
Group companies
Date of
acquisition/
Establishment
Registered
office
Ownership
share
Voting share
Småkraft AS
Bergen
Holmen Kraft AS 2016 Bergen 100 % 100 %
Follsjå Kraft AS 2016 Bergen 82 % 82 %
Muoidejohka Kraft AS 2010 Bergen 60 % 60 %
Reinli Kraft AS 2005 Bergen 51 % 51 %
Jorda Kraft AS 2012 Bergen 51 % 51 %
Sigdestad Kraftverk AS 2018 Bergen 52 % 52 %
Svartefoss Invest AS 2020 Bergen 100 % 100 %
Foldsæ Bergsåi AS 2020 Bergen 100 % 100 %
Holsen Kraft Nordøla AS 2020 Bergen 100 % 100 %
Ytre Kandal Kraft AS 2020 Sandane 51 % 51 %
Fossåa 1 K AS 2020 Sør- Fron 66 % 66 %
Rysna Småkraftverk AS 2020 Bergen 100 % 100 %
Tokheim Kraft AS 2020 Bergen 100 % 100 %
Hjorteland Kraft AS 2022 Bergen 100 % 100 %
Småkraft USPP 1AS 2022 Bergen 100 % 100 %
Småkraft Portefølje 1 AS
2022 Bergen 100 % 100 %
Chr Salvesen & Chr Thams’s Communications AS 2022 Bergen 100 % 100 %
Røvassåga AS 2022 Bergen 100 % 100 %
Teigdalskraft AS 2022 Bergen 100 % 100 %
Småkraft Green Bond 1 AS
2018 Bergen 100 % 100 %
Kvemma Kraft AS 2013 Lærdal 66 % 66 %
Saksenvik Kraft AS 2016 Bergen 96 % 96 %
Småkraft Green Bond 2 AS
2020 Bergen 100 % 100 %
Salvasskardelva Kraft AS 2021 Bergen 100 % 100 %
Strømfallet Småkraft AB
2021 Uppsala 90,1 % 90,1 %
Strømfallet AB 2021 Uppsala 100 % 100 %
Strømfallet Tunafors AB 2021 Uppsala 100 % 100 %
Streamgate North AB 2021 Uppsala 100 % 100 %
Småkraft AB
2022
Uppsala
Bangbro Kraft AB
2022
Uppsala
100% 100%
Småkraft Østra Gøtaland AB
2022
Uppsala 100 % 100 %
Associated company
Date of
acquisition
Registered
office
Luster Småkraft AS 2005 Gaupne
50%
Rullestad & Skromme AS 2006 Etne
35%
Proxima Hydrotech AS 2021 Seimsfoss
33%
Småvirkjanir EHF 2022 Reykjavik
50%
Småkraft Annual Report 2022
45
Overview of capital included in management of capital structure
Småkraft has several debt covenants, which include:
– Equity ratio shall exceed 30%.
– Debt service coverage shall not fall below certain levels.
– Liquidity shall exceed interest payments next six months.
7. Financial instruments – Risk Management
The Group is exposed through its operations to the following financial risks:
– Credit risk
– Interest rate risk
– Foreign exchange risk
– Other market price risk, and
– Liquidity risk.
In common with all other businesses, the Group is exposed to risks that arise from its use of financial instruments.
This note describes the Group's objectives, policies and processes for managing those risks and the methods
used to measure them. Further quantitative information in respect of these risks is presented throughout these
financial statements.
There have been no substantive changes in the Group's exposure to financial instrument risks, its objectives,
policies and processes for managing those risks or the methods used to measure them from previous periods
unless otherwise stated in this note.
(i) Principal financial instruments
The principal financial instruments used by the Group, from which financial instrument risk arises, are as follows:
– Trade receivables
– Cash and cash equivalents
– Accounts payable
– Bank overdrafts
– Floating-rate bank loans
– Fixed rate loans
– Interest rate swaps, and
– Forward currency contracts.
AmountsinEURthousand
202
2
2021
Totalnon‐currentassets 809061 663384
Interest‐beari ngliabilities,non‐current 33 3 295 316047
Interest‐beari ngliabilities,current 1 0 0 772 8960
Cashandcashequival ents, excludingrestricted 115253 44 438
Netinte rest‐bearingliabilitie s(NIB) 318814 280569
NIB/Totalnon‐currentassets 39 %42%
Småkraft Annual Report 2022
46
(ii) Financial instruments by category
2022
AmountsinEURthousand
Financial
assetsatfair
value
Financial
assetsat
amortized
cost
Financial
liabilitiesat
fairvalue
Financial
liabilitiesat
amortized
cost Total
Assets
Investments ‐
Long‐termr eceivables 8719 8719
Tradereceivables 3567 3567
Otherreceivables 3246 3246
Derivativesnon‐current 9249 9249
Derivativescurrent 4583 4583
Cashandcashequivalents 11525
3 115253
Liabilites
Borrowingsnon‐current 333295 333295
Borrowings 100772 100772
Accountspayable 4793 4793
Leaseliability 656
65
6
Othercurrentliabilities 26339 26339
Derivativesnon‐current 49341 49341
Derivativescurrent 60803 60803
Netfinancialassetsandliabilities 13831 130784 11014
4 465856 ‐431385
2021
AmountsinEURthousand
Financial
assetsatfair
value
Financial
assetsat
amortized
cost
Financial
liabilitiesat
fairvalue
Financial
liabilitiesat
amortized
cost Total
Assets
Investments ‐ ‐
Longtermr eceivables 11110 11110
Tradereceivablesandotherreceivables 936
93
6
Othercurrentreceivables 1550 1550
Derivativesnon‐current ‐
‐
Derivativescurrent 1492 1492
Cashandcashequivalents 4443
8 44438
Liabilites
Borrowingsnon‐current 316047 316047
Borrowingscurrent 8960 8960
Accountspayable 2886 2886
Leaseliability 2545 2545
Othercurrentliabilities 9954 9954
Derivativesnon‐current 13899 13899
Derivativescurrent 13968 13968
Netfinancialassetsandliabilities 1492 5803
4 27867 340392 ‐308733
Småkraft Annual Report 2022
47
(iii) Financial instruments not measured at fair value
Financial instruments not measured at fair value includes cash and cash equivalents, trade and other receivables,
trade and other payables, and loans and borrowings. The carrying value approximates their fair value.
(iii) Financial instruments measured at fair value
There were no transfers between levels during the period.
All the derivatives are valued at fair value at level 2 in accordance with the fair value hierarchy. For additional
information see note 14.
Risk and risk management of financial instruments
Småkraft is engaged in activities that entail risk in many areas and has a unified approach to the Group’s market
risks. The Group’s risk management policy is based upon assuming the right risk based on the Group’s ability and
willingness to take risks, expertise, financial strength and development plans. The purpose of risk management is
to identify threats and opportunities for the Group, and to manage the overall risk level to provide reasonable
assurance that the Group’s objectives will be met. In Småkraft, market risk will primarily relate to prices of
energy, interest rates and foreign currency. The following section contains a more detailed description of the
various types of market risks, and how these are managed.
Description of market risk related to prices on energy and commodities
Småkraft is exposed to significant market risk in relation to the generation and trading of power. Revenues from
power generation are exposed to volume and power price risk. Småkraft manages market risk in the energy
markets by trading physical and financial instruments in the Nordic Market.
Risk management in energy trading in Småkraft focuses on residual market exposure after considering land lease
contracts and minority interests. In general, Småkraft enters standard fixed price contracts where Småkraft
agrees to sell a certain production volume at an agreed price in the future. Around 1/4 of the expected annual
production capacity for the next four to five years have such contracts to reduce the residual risk after land lease
and minority interests. Småkraft has set risk- limits within which trading activities are allowed.
Both realized cash effects and unrealized non- cash effects from trading are presented as a part of other
operating income in the profit and loss statement.
Description of foreign exchange
Småkraft incurs currency risks in the form of transaction risk, mainly in connection with energy sales revenue and
investments. Balance sheet risk is related to debt in NOK and EUR.
Småkraft settlement currency at the Nordic power exchange Nord Pool is EUR and NOK, and all power contracts
traded in the Nordic power exchange Nasdaq are denominated in EUR. In addition, most of Småkrafts power
purchase agreements in Norway and all power purchase and sales abroad are denominated in EUR. The
objective of Småkraft’s hedging is to secure the EUR value of future cash flows exposed to changes in foreign
currency rates. Economic hedging is partly achieved by using debt in EUR- currencies as hedging instruments.
For these hedging relationships hedge accounting is not applied.
Småkraft Annual Report 2022
48
As of 31 December, the Group's net exposure to foreign exchange risk was as follows:
Description of interest rate risk
Småkraft’s interest rate exposure is related to its debt portfolio. The management of interest rate risk is based on
a balance between keeping interest cost low over time and contributing to stabilize the Group’s cash flows with
regards to interest rate changes.
Interest rate sensitivity:
The following table demonstrates the sensitivity to a reasonably possible change in interest rates on that portion
of financial assets and liabilities affected, after the impact of hedge accounting. With all other variables held
constant, the Group’s profit and equity before tax is affected through the impact on floating rate borrowings, as
follows:
Credit risk
Credit risk is the risk that Småkraft incurs losses due to the failure of counterparties to honor their financial
obligations. Småkraft is facing credit risk when entering transactions with financial institutions. Credit risk against
financial institutions arises from cash or current account, deposit, investment of interest-bearing securities,
derivative transactions and incoming guarantees. Småkraft also assumes credit risk when providing loans to
associates and joint ventures. In addition, Småkraft assumes credit risk in connection with physical sales
contracts. The total risk of counterparties not being able to meet their obligations is low. Historically, Småkrafts
credit losses have been limited.
2022
AmountsinEURthousand
NOK SEK Total
Netforeigncurrencyfinancialassets/(Liabilites)
Currency
NOK ‐
EURO ‐395284 ‐395284
SEK 2462 2462
Totalnetexposure ‐392822 ‐ ‐392822
2021
AmountsinEURthousand
NOK SEK Total
Netforeigncurrencyfinancialassets/(Liabilites)
Currency
NOK ‐
EURO ‐282455 ‐282455
SEK 43 43
Totalnetexposure ‐282413 ‐ ‐282413
Functionalcurrencyofindividualentity
Functionalcurrencyofindividualentity
Småkraft Annual Report 2022
49
All of Småkraft’s main counterparties with regards to revenue settlement and hedging activities are r
ated as
Investment Grade by well- known rating agencies within the 12 months.
Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Groups
approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet
its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or
risking damage to the Groups reputation.
The table below shows the maturity structure of the Group's financial liabilities
Climate risk
Småkraft's operations are largely dependent on precipitation, and changes in precipitation patterns may affect
both our production and the price picture in the power market. Climate change is unpredictable and different
scenarios will affect Småkraft's production. Colder winters and dry summers may negatively affect Småkraft's
production, while milder winters and wetter summers may have a positive impact on Småkraft's production.
Climate change may also lead to more extreme precipitation and/or snowmelt, which may increase water loss
over Småkraft's dams. Climate change, as we are experiencing today, is moving in the direction of milder winters
and wetter summers, resulting in increased production from our power plants. Climate risk is discussed in detail in
Småkraft’s Sustainability Report.
Concession and return of right of repatriation
The concession is perpetual. The right of repatriation is not applicable for Småkraft.
8. Alternative Performance Measures (APM).
Adjusted Power revenues is defined as Power revenues and Other operating income adjusted for Realized
value change on energy derivatives. Småkraft uses this APM to visualize cash flow generated from power sales
over time.
EBITDA is defined as operating profit (-loss) + depreciation of fixed assets and intangible assets + impairment of
fixed assets and intangible assets. This APM is widely used by analysts comparing Norwegian Hydropower
companies. Småkraft uses this APM to visualize performance over time irrespective of price.
Adjusted EBITDA is defined as operating profit (-loss) + depreciation of fixed assets and intangible assets +
impairment of fixed assets and intangible assets – unrealised value change on energy derivatives. Småkraft uses
this APM to measure performance from operational activities. Unrealised value on energy derivatives is deducted
in the adjusted figures as the value change on these derivatives usually be negatively correlated to value changes
in future power production that is not recognised, thus creating an accounting mismatch that is not alleviated
through hedge accounting. Adjusted EBITDA should not be considered as an alternative to operating profit/loss
2022
AmountsinEURthousand
Carrying
amount 1year 2years 3years 4years >5years
Debttofinancialinstitutions 434067 110592 184876 6517 71159 110917
Tradepayables 4793 4793
Othershorttermliabilities 23787 23787
Total 462647 139172 184876 6517 71159 110917
2021
Carrying
amount 1year 2years 3years 4years >5years
Debttofinancialinstitutions 325007 18069 14105 213306 3910 93344
Tradepayables 288
6 2886
Othershorttermliabilities 7112 7112
Total 335005 28067 14105 213306 3910 93344
Cashflowsincludinginterest
Cashflowsincludinginterest
Småkraft Annual Report 2022
50
and profit/loss before tax as an indicator of the company’s operations in accordance with generally accepted
accounting principles. Nor is adjusted EBITDA underlying an alternative to cash flow from operating activities in
accordance with generally accepted accounting principles.
*The comparative figures are restated.
Share of the profit (loss) in equity accounted investments was presented as financial income in 2021.
9. Revenues and other income
Sale of electric energy
The revenues originate from the generation of hydropower.
Green revenues
Guarantees of origin and EL certificate schemes are market-based support schemes. In this system, producers of
renewable electricity receive one certificate per MWh of electricity they produce for a period of up to 15 years.
Power and currency derivatives
Småkraft utilise financial hedging contracts to hedge future revenue. The Group does not apply hedge accounting
for the hedging of power revenues. See also note 7 Financial instruments.
Sale of electric energy
AmountsinEURthousand
2022 2021
Powerrevenue 133559 56168
Realizedvaluechangeonenergyderivatives ‐54908 ‐19524
Adjustedpowerrevenue 78651 36644
AmountsinEURthousand
2022 2021*
Operatingprofit(loss) ‐65662 ‐31764
+ Depreciationoffixedassetsandintangibleassets 20882 15830
EBITDA ‐44780 ‐15933
Unr ealisedvaluechangeonenergyd erivatives 83293 33397
AdjustedEBITDA 38513 17464
AmountsinEURthousand
202
2
2021
Powerproductionrevenue 130898 55036
Guaranteesof originandElcertificates 2662 1131
Powerrevenue 13 3559 56168
Småkraft Annual Report 2022
51
Disaggregation of revenues by Price area:
10. Payroll costs, number of employees, loans to employees, etc
Key Personnel consists of the senior management team in the roles as CFO, CCO and COO. The CEO and Key
Personnel are all a part of a bonus program. The bonus remuneration is calculated based on achieved
performance financial, operational and QHSE Key Performance Indicators compared to set targets.
The company has not issued any loans or guarantees in favour of the CEO, directors or shareholders.
AmountsinEURthousand
202
2
2021
Pri ceareaNO1 Norway 7063 2892
Pri ceareaNO2 Norway 43446 13978
Pri ceareaNO3 Norway 10052 10096
Pri ceareaNO4 Norway 3298 5648
Pri ceareaNO5 Norway 63165 20762
Pri ceareaSE2 Swe den 1271 2518
Pri ceareaSE3 Swe den 2603 0
Othergreenrevenue 2662 273
Powerrevenues 133559 56168
AmountsinEURthousand
2022 2021
Wagesandsalaries 2904 1908
Payrolltax 568 495
Pensioncosts 344 690
Otherbenefits 137 ‐5
Sum 3953 3088
Numberoffull‐timeemployees 31 26
ManagingDirectors´remuneration
AmountsinEURthousand
2022 2021
Salaries 255 189
Pensions 15 15
Otherbenefits 5 42
Sum 275 246
Småkraft Annual Report 2022
52
The Board of Directors do not receive any renumeration for its positions as Board Members.
Pension
The Group has an established pension scheme that is classified as a defined contribution plan. The pension
scheme is in line with the requirements of the law. Contributions to the defined contribution schemes are
recognised in the consolidated statement of profit and loss in the period in which the contribution amounts are
earned by the employees. The defined contributions plan does not commit Småkraft beyond the amounts
contributed.
11. Other operating expenses
Purchase of various services consist of external accounting, audit, legal, transactions and operational services.
Feespaidtoexternalauditors
AmountsinEURthousand
2022 2021
Statutoryaudit 295 215
Taxcounsellin g 2 42
Otherassuranceservices 72 34
Sum 369 291
AmountsinEURthousand
2022 2021
Waterrightscosts 18343 4850
El‐certscosts 561 922
Transmissioncosts 3701 3575
Propertytaxandlicencefees 2966 2492
Telecommunications 61 72
Rentandrelatedexpen ses 472 395
Transpo rt 40 10
Travelexpen ses 249 191
Purchaseofvariousservices 4457 4169
ITexpenses 698 473
Repair/maintenanceregarding
equipment,machinesetc.
3666 646
Consultantservices 1401 519
Otheroperatingexpenses 2416 950
Otheroperating
expenses 39030 19263
Småkraft Annual Report 2022
53
12. Financial result
13. Taxes
Financialincome
Amounts inEURthous and
2022 2021
Agioonborrowingsinforeigncurrency 012918
Unrealizednon‐casheffectoninterestswaps 9498 569
Otherfinancialincomeandagio 2832 5850
Total 12331 19338
Financialexpenses
Amounts inEURthous and
2022 2021
Interestexpense 7825 6541
Disagioonborrowingsinforeigncurrency 16349 0
Unrealizednon‐casheffectoncurrencyswaps 2382 307
Foreignexchangelosses 3553 5 291
Otherfinancialexpenses 900 ‐4427
Total 31009 7712
Småkraft Annual Report 2022
54
Differences not affecting deferred tax relates to temporary differences at initial recognition of property plant and
equipment and intangible assets acquired in a transaction that is not a business combination.
14. Derivatives
Derivatives
The Group has derivatives related to the hedging of income from future power production, interests in connection
with interest bearing debt and currency volatility between EUR and NOK.
The table below shows the financial position and profit and loss accounts for the derivatives:
Specificationoftemporarydifferencesanddeferredtax
AmountsinEURthousand
2022 2021
Fixedassets 197368 144196
Currentasse ts/currentliabilities ‐ ‐997
Interestde duction carryforward ‐2113 ‐1398
Unrealizedde rivatives ‐97290 ‐24788
Otherdifferences 1596 1751
Temporarydifferences 99561 118765
Lossescarriedforward ‐64851 ‐53118
Differencesnotaaffectingdeferredtax ‐149076 ‐98284
Basisfordeferredta x ‐114367 ‐32638
Taxrate 22 %22%
Netdeferredtaxbenef it(‐)/liabi lity(+)inthe
balancesheet,ordi narytax ‐25161 ‐7180
Deferredtaxbenefit ‐25161 ‐7180
Specificationofdeferredtaxesongroundrent
AmountsinEURthousand
2022 2021
Fixedassets ‐101 ‐24
Sum 0 ‐24
Taxrate 58%47%
Deferredgroundrenttax ‐58 ‐9
Netdeferredtaxbenefit(‐)/liability(+)in
thebalancesheet,alltax
‐25219 ‐7189
Pres entation
Deferredtaxbenefit 25245 7311
Deferredtax 26 122
Net 25219 7189
Småkraft Annual Report 2022
55
All the derivatives are valued at fair value at level 2 in accordance to the fair value hierarchy: “Fair value is based
on data inputs other than quoted prices included in Level 1, which are observable for the asset, either directly or
indirectly”.
15. Goodwill and Other intangibles
2022
Longterm Shortterm Longterm hortterm P&L
OverFVPL‐Interestratesswaps 9249 9498
OverFVPL‐Currencyderi vatives 1093 21 ‐2382
OverFVPL‐Powerderivatives 4583 48248 60782 ‐83293
Sumderivatives 9249 4583 49341 60803 ‐76177
2021
Longterm Shortterm Longterm hortterm P&L
OverFVPL‐
Interestratesswaps 226 99 569
OverFVPL‐Currencyderi vatives 1237 ‐307
OverFVPL‐Powerderivatives 30 13800 13968 ‐33397
Sumderivatives ‐ 1492 13899 13968 ‐33135
2021
Liabilities
2021
2022
Assets Liabilities
Assets
2021
2022 202
2
AmountsinEURthousand
Waterright Goodwill
Other
intangible
assets Total
Costat1January2021 4112 7605 76192 87909
Additions ‐ ‐ 74563 74563
Effectofcurrencymovements 198 367 4986 5551
Costat31December2021 4311 7971 155742 168024
Additions ‐ 101 67202 67303
Effectofcurrencymovements ‐215 ‐402 ‐10396 ‐11013
Costat31December2022 4095 7670 212547 224313
Acc.depreca tionsat1Jan.2021 ‐ ‐ ‐2530 ‐2530
Amorti s ationcharge ‐ ‐47 ‐2297 ‐2344
Effectofcurrencymovements ‐ ‐1 ‐162 ‐163
Acc.depreciationsat
31Dec.2021 ‐ ‐47 ‐4990 ‐5037
Amorti s ationcharge ‐ ‐ ‐3396 ‐3396
Effectofcurrencymovements ‐ 2 382 384
Acc.depreciationsat31Dec.2022 ‐ ‐45 ‐8004 ‐8049
Balanceat1January2021 4112 7605 73662 85379
Balanceat31December
2021 4311 7924 150752 162987
Balanceat31December2022 4095 7625 204543 216263
Intangibleassetsbycountry
AmountsinEURthousand
Norway Sweden Total
Balanceat31December2021 154761 8226 162987
Balanceat31December2022 195954 20310 216263
Småkraft Annual Report 2022
56
16. Impairment testing
Goodwill that has an indefinite useful life are not subject to amortisation and is tested annually for impairment, or
more frequently if events or changes in circumstances indicate that they might be impaired. The same apply for
intangible assets such as capitalized water fall rights. Småkraft typically tests for impairment at least in Q3 each
year.
Other non-financial assets are tested for impairment whenever events or changes in circumstances indicate that
the carrying amount may not be recoverable. As per 2022 there are no impairment indications related to the
portfolio of power plant stations.
An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable
amount. The recoverable amount is based on the asset’s fair value less costs of disposal, the fair value is
calculated according to IFRS 13. For the purposes of assessing impairment, assets are grouped at the lowest
levels for which there are separately identifiable cash inflows, which are largely independent of the cash inflows
from other assets or groups of assets (cash-generating units). Non-financial assets other than goodwill that
suffered an impairment are reviewed for possible reversal of the impairment at the end of each reporting period.
Cash generating unit
Power plants that are located in the same watercourse and jointly managed are in Småkraft regarded as a single
cash-generating unit.
Budget
The impairment tests carried out for 2022 are based on the budget for 2023 and up to a 100-year period prior to
setting the terminal value. If the power plant has a terminal clause in the land lease agreement, the period of time
up until the date of the clause is used. The power prices used in the forecast are a mix between the actual power
prices traded in the Nordic power market for the first year and power curves from three independent power
consultancies for the entire remaining time. Småkraft uses longer than 5 years forecast- periods, because the
nature of our business is long- term with land- lease periods ranging from 40 to 100 years.
Discount rate
The applied discount rate is based on the company’s cost of capital, which in turn is based on a weighted average
return requirement for equity and loan capital. The return on equity requirement is estimated using the capital
asset pricing model (CAPM). The return on loan capital requirement is estimated based on the long-term risk-free
interest rate plus a credit margin derived from Småkrafts marginal long-term interest rate. The discount rate is
adjusted for the expected debt-to-assets ratio and business risk for the individual cash-generating unit. A discount
rate around 6.5 per cent after tax has been applied for the various cash-generating units.
Sensitivity
Power price based on actual power prices and the estimated forward price curves are the key assumptions in the
calculation of the recoverable amount. Based on the current power price and estimated forward price
management do not believe that a reasonably possible change in the power price would cause the carrying
amount to exceed the recoverable amount with a material amount. The power price used in calculating of
recoverable amount would have to fall with more than 15 % before a material impairment will occur.
Assumption‐parameter Change
Weightedaveragecostofcapital(WACC) 0,5% 8 59,9 1544
1,0% 17 128,9 5647
Downtime 3,0% 2 10,8 179
3,5% 2 10,8 216
Pri ce ‐5,0% 6 29,8 785
‐10,0%14963888
#plants
affe cted
Representing
GWh
Impairment
amount
Småkraft Annual Report 2022
57
17. Property, plant and equipment
Contractual obligations
S
igned Share Purchase Agreements and New-build contracts as per 31.12.2022 have remaining obligations of
EUR 95,8 million, whereof EUR 14,8 million is due within 12 months. Respective figures as per 31.12.2021 were
EUR 77,1 million whereof EUR 52,3 million due within 12 months.
AmountsinEURthousand
Powerplants
Inletand
waterway Infrastructure Other
Plant
under
construct
ion Total
Costat1January20 21 168389 171830 70292 1281 43930 455722
Additions,purchased,reallocations 35 425 60828 14536 4602 ‐26187 89204
Effectofcurrencymovements 8741 9355 3644 143
165
6 23539
Co
stat31December2021 21255 5 242013 88472 602 6 19399 568465
Additions,purchased,reallocations 24 348 35969 10670 921
‐38032 33876
Acquisitionofsubsidiaries 2834 2 4407 2455 31 41957 77191
Effectofcurrencymovements ‐12668 ‐13658 ‐492
9 ‐338 ‐1122 ‐32715
Costat31December2022 252578 268730 96667 6640 22202 646817
Acc.depreciationsat1Jan.2021 ‐32764 ‐23666 ‐12977 ‐999 ‐ 975 ‐71381
Depreciationcharge ‐6238 ‐4668 ‐1900 ‐411 ‐ ‐13217
Impairmentch
arge ‐269 ‐ ‐ ‐ ‐ ‐ 269
Effectofcurrencymovements ‐1694 ‐1223 ‐659 ‐55
‐47 ‐3678
Acc.depreciationsat31 Dec.2021 ‐40966 ‐29556 ‐15536 ‐ 146 6 ‐ 102 2 ‐88546
Depreciationcharge ‐8486 ‐5411 ‐2826 ‐762 ‐ ‐17486
Effectofcurrencymov
ements 2376 1687 886 103 51 5103
Acc.deprecationsat31Dec.2022 ‐47076 ‐33281 ‐17477 ‐ 212 5 ‐971 ‐100929
Balanceat1January2021 135625 148164 57314 282 42955 384341
Balanceat31December2021 171589 212456 7293
6 4561 18377 479919
Balanceat31December2022 205503 235449 79191 4515 21231 545888
Acc.impairmentchargeat31Dec.2022 ‐879 ‐353 ‐ ‐
‐ ‐1231
Depreciationmethod Straight‐line Straight‐line Straight‐line Straight‐line
Percentage 1,2‐20% 1,25‐2,5% 1,25‐2,85% 12,5‐20%
Economiclife 5‐ 75 40‐80 35‐80 5‐8
Le
asedassetshave beenincludedasOther,withanetbookvalueat31December2022ofEUR627thousand.
Property,plantandequipmentbycountry
AmountsinEURthousand
Norway Sweden Total
Balanceat31December2021 469743 10176 47991 9
Balanceat31December2022 533218 12670 54588 8
Commitments
AmountsinEURthousand
2022 2021
Shortterm 14884 55061
Longterm 80875 26090
Outgoingbalance 95760 81151
Småkraft Annual Report 2022
58
18. Investments, recognised under the equity method
Småkraft AS owns 50
% of Luster Småkraft AS. The remaining 50% is owned by Luster Energi AS. The company
successfully operates 3 small- scale hydro power plants: Kvåle, Holen and Vanndøla. Combined they have a
normalized annual production of about 50 GWh.
Småkraft AS owns 35% of Rullestad & Skromme AS, and 65% of this company is owned by local landowners.
The company is established to build small scale hydropower in Rullestad and Skromme, Etne, Hordaland. The
company has water rights in 3 different projects in the area, with a possible annual production up to approximately
66 GWh. There are no employees employed by the company.
Småkraft AS owns 33% in Proxima HydroTech AS which is an independent service provider within operations
and maintenance services. The company is focusing on services to hydropower plants and is developing relevant
surveillance IT systems for the likes of Småkraft power plants.
Småkraft AS entered 23 December 2022 into a Sale and Purchase Agreement for 50% of the shares in Gjerdelva
Kraft AS.
Agreed remuneration for the shares is equivalent to EUR 22 thousand – payment of this amount will take place
after construction of the power plant under construction have been finalized.
The construction activities of the power plant will start up in 2023.
Dateofaquisit
i
LusterSmåkraftAS 2005 Gaupne 50%50%
Rullestad&SkrommeAS 2006 Etne 35%35%
ProximaHydrotechAS 2021 Seimsfoss 33%33%
SmåvirkjanirEHF 2022 Reykjavik 50%50%
Registered
office
Ownership
share Votingrights
AmountsinEURthousand
Luster
SmåkraftAS
Proxima
HydtrotechAS
Rullestad&
SkrommeAS
Sm åv irkjan ir
EHF Total
Companiesarerecordedusingtheequitymethod
Acquisitioncost 51 380 4 2 437
Shareofequityatthetimeofaquisition 51 190 4 2 247
Exc essoverbookvalue 0 190 0 0 190
Clo singbalanceat31December2020 1526 0 0 0 1526
Shareofcurrentyearnetincome 450 0 0 0 450
Effectofcurrencymovements 82 0 0 0 82
Closingbalanceat31December2
021 2058 190 0 0 2058
Investmentscurrentyear 380 0 2 382
Shareofcurrentyearnetincome 1459 ‐44 0 0 1415
Effectofcurrencymovements ‐160 2 0 0 ‐158
Closingbalanceat31December2022 3358 528 0 2 3697
Småkraft Annual Report 2022
59
19. Receivables; amounts due after more than one year
The bank has pledged security in operating equipment and accounts receivable, in addition to first priority to the
power plant and related water lease agreements.
Please see note 24 for further details about prepaid water right lease.
20. Cash and cash equivalents
The company has established a bank guarantee for the payment of withholding tax. Bank deposits, cash etc.
does not include restricted tax deduction funds as of 31.12.2022.
21. Share capital, ownership structure and dividend
The share capital amounts to EUR 22 861 thousand at 31.12.2022.
AmountsinEURthousand
2022 2021
Loanstoassociates:
Loanstoassociates‐LusterSmåkraftAS ‐
801
Loan
stoassociates‐R&SEnergiAS 931 943
Loanstoassociates‐UtbyggingHold ingAS
‐ 2112
P
rovisionsforlossonloanstoassociates ‐931
‐886
Otherreceivables:
Depositrent 108 116
Prepaidwaterrightlease 7458 6953
Otherlongtermreceivables 1152 1070
Total 8719 11110
Småkraft Annual Report 2022
60
All issued shares have equal voting rights and the right to receive dividend.
22. Borrowings and guarantees.
Amounts in EUR thousand
Lenders
Currency 2022 2021
Banks
NOK 38 718 43 892
Banks
EUR 200 417 182 724
Convertible debt from owners*
EUR 17 639 –
Bond debt1
EUR 50 000 50 000
Bond debt2
EUR 50 000 50 000
USPP bond
EUR 80 000 –
Agent commission
NOK –2 707 –1 609
Total
434 067 325 007
Total long term debt
333 295 316 047
Total short term debt
100 772 8 960
*Convertible loan from shareholders will be converted to share capital within Q1 2023 in accordance with loan agreement.
Dividendpaid:
AmountsinEURthousand
2022 2021
Ordinarydividends 2703 18692
Extraordinarydividends 2500 0
Sum 5203 18692
Småkraft Annual Report 2022
61
The bank and bondholders have pledged security in operating equipment, bank accounts and accounts
receivable, in addition to 1. priority pledge in the power plants and related water lease agreements.
Småkraft AS has provided a bank guarantee as a security for the payment of withholding tax.
According to the shareholders agreement with Luster Småkraft AS, Småkraft AS is obligated to make capital
available to Luster Småkraft AS.
23. Concessions
As of 31.12.2022, Småkraft AS has concessions for additional 12 power plants with a total annual production of
approximately 102 GWh. In addition to this, there are currently eight power stations under construction
representing an annual production of 108 GWh both owned by subsidiaries in the group and companies signed to
be acquired.
24. Water and lease agreements
As part of several of the net- agreements, Småkraft offers interest bearing loans and/ or minimum payments in
the first years of the land- lease agreements. Net agreements typically have deficits the first years. Småkraft
offers interest bearing loans/ minimum payments to offer more stable payouts to the landowners, while
simultaneously not amending the balance in the land lease agreement between landowner and company.
The loans are normally interest-bearing loans. The minimum payments are interest bearing payments to the
landowners that will be offset against future land lease profits.
Changesindebttofinancialinstitutionsandbonddebtduring theyear
2022 2021
Ingoingbalance 325007 290790
Repayments/downpayments: ‐83127 ‐65843
Newdebt 127611 56449
Debtfrompurchasedsubsidaries 48228 42161
Currencyexc hangeratechanges 16349 1449
Outgoingbalance 434067 325007
Securedborrowingsetc.
AmountsinEURthousand
2022 2021
Borrowingsfromfinancialinstitu tionsandbondholders 436774 326616
Agentcommission ‐2707 ‐1609
Total 434067 325007
Carryingamou ntofpledgedassets
AmountsinEURthousand
2022 2021
Operatingequipment ‐ 1135
Accountsreceivable 13657 310
Powerplantsandrelatedwaterleaseagreements 522627 425695
Total 536283 454140
Småkraft Annual Report 2022
62
When net- agreements have deficit, Småkraft AS finances the landowner share of the deficit. Småkraft AS
accrues a receivable against the landowners, against which future profits will offset. This is an asset to Småkraft,
that according to IFRS is off balance. It represents a future benefit for the company.
25. Related party transaction and balance items
Transactions and balance items between Småkraft AS and its subsidiaries are eliminated in the consolidation and
are hence not presented in this note.
Transactions listed below refer to companies listed in note 18 and 19.
Småkraft AS has strengthened its management capacity and with effect from 1 January 2023 Bjarte Skår took
over the position as Chief Commercial Officer. Bjarte has 20 years’ experience with hydro power plants in Hywer
as CEO 2020-22 and before that from Brødrene Dahl as power plant division director. Bjarte has also per 31
December 2022 indirect ownerships in 5 companies which Småkraft has signed up to acquire. The companies
are all single purpose hydro power plant construction companies which are owning hydro power plants under
construction.
The total acquisition costs for these companies are approximately EUR 50 mill which is included in Småkraft AS’s
commitments as per 31 December 2022.
Gunnar Ulvik commenced from 1 January 2023 a new position in Småkraft as Technical Construction Manager.
Gunnar held per 1 January 2023 board positions in the same companies as controlled by Bjarte Skår.
Loans from Småkraft AS to landowners:
AmountsinEURthousand
2022 2021
Loanstolandowners 998
1010
Mi
nimumpaymentstolandowners 6460 5943
Total 7458 6953
AmountsinEURthousand
2022 2021
Receivablestowardslandowners,offbalance 26933 27979
Total 26933 27979
AmountsinEURthousand
2022 2021
Salesofvariousgoodsandservices
‐
 13
Purchaseof servicesfromrelatedparty 156 7
Interestbearingloans 931 3856
Liabilitiesattheendoftheperiod 151 ‐
Småkraft Annual Report 2022
63
Småkraft Annual Report 2022
64
ANNUAL ACCOUNTS AND NOTES SMÅKRAFT AS
PARENT COMPANY
Statement of Income and Statement of Other Comprehensive Income
AmountsinEURthousand
Note
12months
ended
31.12.2022
12months
ended
31.12.2021
Powerrevenue 9 61 010 30643
Otheroperatingincome 468 2585
Unrealizedvalue changeonenergyderivative s 14 ‐83293 ‐33396
Realizedvalue changeonenergyderivatives ‐54908 ‐19524
Payrollandrelatedcosts 10 ‐3743 ‐3011
Depreciationandimpairme ntoffixe dassetsan
dintangibleassets 15,17 ‐8440 ‐8514
Otheroperatingex penses 11 ‐17875 ‐11093
Operat ingprofit/(loss) ‐106780 ‐42309
Fi nancial income 13945 19982
Fi nancial expenses ‐20948 ‐5945
Netfinancialitems 12 ‐7002 14036
Profit/(loss)beforetax ‐113783 ‐28273
Taxe xpenses (income) 13 ‐2491 6 ‐6238

Profit(loss) ‐88867 ‐22035
Profit/(loss)isattributableto:
Equityholdersofthepare ntcompany ‐88867 ‐22035
Othercomprehensiveincome:
Presentationcurrencyeffects ‐15091 10430
Totalothercomprehensiveincome ‐15091 10430
Totalcomprehensiveincomefortheyear ‐103958 ‐11605
Småkraft Annual Report 2022
65
Statement of Financial Position
Non‐currentassets
AmountsinEURthousand
Note 31.12.2022 31.12.2021*
Goodwill 15 2599 2735
IntangibleAssets 15 16465 17632
Property,plantsandequipmen t 17 205108 220399
Deferredtaxassets 13 37800 14569
Investmentsinsubsidiaries 5,19 331647 276738
Loanstosubsidiaries 25 44423 64524
Loanstoassociates 19 ‐ 3856
Investmentsinassociates 18 1571 1251
Long‐termreceivables 20,24 8299
5819
Derivatives 14 8 096 ‐
Totalnon‐currentassets 656008 607523
Currentassets
Tradereceivables 2 5 2425 5395
Otherreceivables 19 2053 720
Derivatives 14 4 579 1482
CashandCashequivalents 6, 21 61777 15963
Totalcurrentassets 70833 23560
Totalassets 726842 631085
Småkraft Annual Report 2022
66
_________________________ _________________________
Member of the Board Chairman of the Board
Claudia Ahnert Annette Malm- Justad
________________________ _________________________ ________________________
Member of the Board Member of the Board Managing Director
Oldrik Verloop Christian Heidfeld Terje Vedeler
Bergen, Norway, 28 March 2023
The Board of Directors Småkraft AS
Småkraft Annual Report 2022
67
Statement of changes of Equity
Amounts in EUR thousand Note
Share capital Paid-in capital
Re tain e d
earnin
s
Total equity
Equity at 1.1.2021 16 706 188 722 4 244 209 672
Net prof it
-22 035 -22 035
Currency presentation effect
829
9 785
-184 10 430
Total comprehensive incom e for the period 829 9 785 -22 219 -11 605
Capital increase current period 21 2 504 70 750
73 254
Capital increase current period not registered 74 159
74 159
Dividends -21 724
-21 724
Equity at 31.12.2021 20 039 321 692 -17 975 323 757
Net prof it
-88 867 -88 867
Currency presentation effect
-1 162
-18 290
4 361 -15 091
Total comprehensive incom e for the period -1 162 -18 290 -84 505 -103 958
Capital increase current period 21 3 984 100 518
104 502
Dividends -2 500
-2 500
Equity at 31.12.2022 22 861 401 420 -102 480 321 801
Småkraft Annual Report 2022
68
Statement of Cash Flow
AmountsinEURthousand
Note
12months
ended
31.12.2022
12m onths
ended
31.12.2021
CashFlowfromoperations
Profi t(‐loss)before taxation ‐113783 ‐28273
Taxespaidfortheperiod ‐1
4
 ‐
Dividendsfrominvestmentsinsubsid iarie s 5 ‐3099 ‐
Depreciation,amortization,impairment 15,17 8440 8514
Changeinunreal izedcurrencygains/losses 14 13696 ‐11794
Changeinunreal izedderivatives 14 77474 35118
Changeinworki ngcapital 10 989 3879
Netcashflowfromoperations ‐6297 7444
Cashflowfr
ominvestmentactivities
Outflowsduetopurchasesoffixedassetsandintangibles ‐3683 ‐58576
Outflowsduetopurchasesofderivative s ‐2036 ‐
Outflowsduetoinvestmentsinsubsidiaries 5 ‐102327 ‐81517
Outflowsduetoinvestmentsinassociates ‐398 ‐
Outflowsfromloanstoothers 19 ‐3812 ‐2054
4
Inflowsfromdividends insubsi diarie s 5 53420 2656
Inflowsfromloanstoothers 19 2883 5558
Netcashflowfrominvestmentactivities ‐55953 ‐152424
Cashflowfromfinancingactivities
Capitalincreases 20 104502 124213
Dividendpayme nts 20 ‐5258 ‐
Inflowsfromloanraising 22 17639 5570
1
Outflowsfromloanpayme nts 22 ‐8023 ‐29111
NetCashFlowfromfinancingactivities 108 860 150803
Curren cytr anslationeffects ‐796 564
Netchangeinbankdepositsandcash 4 6 610 5823
Bankdepositsandcashatbegi n ningofperiod 15963 9576
Bankdepositsandcashaten
dofperiod 61777 15963
Småkraft Annual Report 2022
69
Notes
1. General information ...................................................................................................................... 70
2. General accounting policies ........................................................................................................ 70
3. Key accounting estimates and judgements ............................................................................... 75
4. Subsequent events ....................................................................................................................... 75
5. Subsidiaries ................................................................................................................................... 76
6. Management of capital structure ................................................................................................. 78
7. Financial instruments – Risk Management ................................................................................ 78
8. Alternative Performance Measures ............................................................................................. 81
9. Revenues and other income ........................................................................................................ 82
10. Payroll costs, number of employees, loans to employees, etc. .............................................. 83
11. Other operating expenses ............................................................................................................ 84
12. Financial result .............................................................................................................................. 85
13. Taxes .............................................................................................................................................. 86
14. Derivatives ..................................................................................................................................... 87
15. Intangible assets and goodwill .................................................................................................... 88
16. Impairment testing ........................................................................................................................ 88
17. Property, plant and equipment .................................................................................................... 89
18. Associated companies ................................................................................................................. 90
19. Receivables; amounts due after more than one year ............................................................... 90
20. Cash and cash equivalents .......................................................................................................... 91
21. Share capital and shareholder information ................................................................................ 91
22. Borrowings and guarantees ........................................................................................................ 92
23. Concessions .................................................................................................................................. 93
24. Water land lease agreements ...................................................................................................... 93
25. Related party transaction and balance items ............................................................................ 93
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70
Notes to the accounts, Småkraft AS
1. General information
Småkraft (the Company) is located in Bergen, Norway, with local offices in Harstad, Sandnes, Liillestrøm,
Flatanger and Oslo, and employs 30 people. All of Småkrafts business is in Norway. Småkraft is a supplier of
renewable energy based on small scale hydro power plants. In addition, Småkraft AS has subsidiaries in the
same industry in Norway and Sweden.
Småkraft’s separate financial statements have been prepared in accordance with International Financial
Reporting Standards (IFRS) and interpretations from International Financial Reporting Interpretations Committee
(IFRIC), as adopted by the EU and further requirements in Norwegian Accounting Law (Regnskapsloven).
The statement of comprehensive income, statement of financial position, statement of equity, statement of cash
flow and notes provide comparable information in respect of the previous period.
The financial statements have been prepared on a historical cost basis except for financial derivatives witch are
measured at fair value. The preparation of financial statements in conformity with IFRS requires the use of certain
accounting estimates. It also requires management to exercise its judgement in the process of applying the
Company’s accounting policies.
Presentation and classification of items in the financial statements is consistent for the periods presented.
2. General accounting policies
Foreign currency translation
Functional and presentation currency
The functional currency of Småkraft AS is the Norwegian krone (NOK). The Company accounts are presented in
EUR. Småkraft AS presents the financial statement in EUR, as most of the lenders and the owners are EUR-
based.
The currency differences arising in the translation to the presentation currency are presented in Other
Comprehensive Incomes. Also, in the statement of equity the translation difference is included in retained
earnings. All amounts are rounded to the nearest EUR thousand.
Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rate at the date of
the transaction. Foreign exchange gains and losses resulting from the settlement of such transactions and from
the translation of monetary assets and liabilities denominated in foreign currencies at year-end exchange rates
are generally recognised in profit or loss. Småkraft uses currency exchange rates from Norges Bank.
Sale of energy
The revenues from sale of energy bear the characteristic of delivering power at a certain price. The performance
obligation is to deliver a series of distinct goods (power) and the transaction price is the consideration expected to
receive, at either spot price, regulated price or contract price. The performance obligation is satisfied over time
which entails that revenue should be recognised for each unit delivered at the transaction price. Småkraft applies
a practical expedient under IFRS 15 whereby the revenue from power for most of the contracts is recognised at
the amount of which the entity has a right to invoice. The right to invoice power arises when power is produced
and delivered and the right to invoice the consideration will normally correspond directly with the value to the
customer and arrangements where Småkraft sells power on an exchange (e.g. Nord Pool), the exchange is
determined to be the customer.
Segments
An operating segment is a component of an entity that engages in business activities from which it may earn
revenues and incur expenses. Furthermore, the entity’s component’s operating results are regularly reviewed by
the entity’s chief operating decision maker to make decisions about resources to be allocated to the segment and
Småkraft Annual Report 2022
71
to assess its performance, and thus separate financial information is available. The company has determined that
the board of directors is collectively the chief operating decision maker.
The Company has only one segment: Power supply. Småkraft produces renewable energy and sells electricity,
el- certificates and guarantees of origin on the Nordic power market.
Property, plant and equipment
Property, plant and equipment is measured at historical cost less accumulated depreciation. Land is not
depreciated. Historical cost includes expenditures that are directly attributable to the acquisition of the item.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate,
only when it is probable that future economic benefits associated with the item will flow to the Company and the
cost of the item can be measured reliably. The carrying amount of any component accounted for as a separate
asset is derecognised when replaced. Repairs and maintenance are charged to profit or loss during the reporting
period in which they are incurred.
Depreciation is calculated using the straight-line method to allocate costs over their estimated useful lives. The
assets’ useful lives are reviewed annually and adjusted if appropriate.
Gains and losses on disposals are determined by comparing actual proceeds with the carrying amount. Gains
and losses on disposal are included in profit or loss.
Intangible assets
Intangible assets are carried at cost less accumulated amortisation and accumulated impairment losses. Costs
relating to intangible assets, including goodwill, are recognised in the statement of financial position when it is
probable that the asset will generate future economic benefits and the costs can be measured reliably.
Intangible assets with a definite useful life, such as water rights owned are amortised over the useful life.
Intangible assets with an indefinite useful life, such as goodwill are not amortised but are instead tested annually
for impairment.
Goodwill
Goodwill represents the excess of the cost of acquisition over the fair value of the Company's share of the net
identifiable assets of the acquired business at the date of acquisition. Goodwill is carried at cost less accumulated
impairment losses. Goodwill is allocated to cash-generating units for the purpose of the impairment testing. The
allocation is made to those cash-generating units or the Company’s of cash-generating units that are expected to
benefit from the business combination in which the goodwill arose.
Goodwill is not amortised but are instead tested annually for impairment.
Leases
The Company´s main lease type of agreements are related to water rights. The rights are considered intangible
assets. Småkraft has elected to not recognize these types of agreements under IFRS 16 leases. The accounting
treatment of the different water right lease agreements are described below:
Water right lease agreements
Småkraft enters into water right lease agreements with landowners, which entitles the company to utilize the
water in the rivers. The agreement typically has a period varying from 40 to 75 years, starting when the power
plant is put into commercial operation.
When Småkraft has a commitment to pay rent to the land owners, we account for this as a regular cost as the
commitment arises. Such commitment arises, when:
1. Gross agreement / revenue-based agreement: Småkraft pays landowner a percentage of the annual
power plant revenue. Upon expiration of the agreement the landowners have the right to purchase the
power plant with all rights and technical installations at a price based on certain specific conditions.
Småkraft accounts for this land lease when the relevant power plant generates revenue, upon which this
land lease bases.
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72
2. Fixed amount- agreement: Småkraft pays landowner a fixed annual amount. Upon expiration of the
agreement the landowner has the right to purchase the powerplant with all rights and technical
installations at a price based on certain specific conditions.
Småkraft accounts for this land lease monthly based upon the agreed yearly payment.
3. Profit share agreement: Småkraft shares the yearly powerplant- profit with the land owner. Upon
expiration of the agreement the landowners have the right to purchase the power plant with all rights and
technical installations based on certain specific conditions.
Småkraft accounts for this land lease type by calculating the actual profit for each individual power plant
on a monthly basis. Småkraft then calculates the exact share of the profit, that the landowners have the
right to receive. If Småkraft is in a position, where land lease should be paid to landowners, Småkraft
accounts for the estimated payment as a cost.
In the case that Småkraft has a profit share lease agreement, where there (still) is an accumulated loss on the
powerplant, Småkraft has the right to offset all accumulated losses before paying out land lease rent to the
landowners. This will represent a future benefit for the company, that Småkraft does not recognise as an asset.
This asset will be off- balance. Any positive or negative changes in these off- balance items, will not be
recognised in Småkraft’s books. In some instances, Småkraft may pay out loans or minimum payments to
landowners. These loans are interest bearing loans and will be recognised as normal loans in the Company´s
Financial Statements.
Other leases
Further, Småkraft has some lease related to office rental of which the following principles applies:
Right-of-use assets
The Company recognises right-of-use assets at the commencement date of the lease, i.e. the date the underlying
asset is available for use. Right-of-use assets are measured at cost, less any accumulated depreciation and
impairment losses, and adjusted for any remeasurement of lease liabilities. The recognised right-of-use assets
are depreciated on a straight-line basis over the shorter of its estimated useful life and the lease term.
Lease liabilities
At the commencement date of the lease, the Company recognises lease liabilities measured at the present value
of lease payments to be made over the lease term.
In calculating the present value of lease payments, the Company uses the incremental borrowing rate at the lease
commencement date if the interest rate implicit in the lease is not readily determinable.
Estimates and Judgment when calculating Land lease:
Land lease calculations are estimates based on the current revenue and costs related to the specific companies.
While being estimates, there is minimal judgment involved in these estimates, as they are technical calculations
with low complexity based upon the relevant input. Furthermore, most of the input is objective, as the revenue
and most of the costs are known at the time of the estimate.
Financial instruments
Financial instruments are recognised in the financial statements when the Company becomes party to contractual
conditions relating to the financial instrument. Financial assets and financial liabilities are classified based on the
type and purpose for holding the instruments at fair value, amortised cost or as a designated hedge accounting
instrument (e.g. derivatives used for hedging financial risks).
Financial assets
The Company classifies its financial assets in the following measurement categories:
– those to be measured subsequently at fair value, and
– those to be measured at amortised cost.
The classification depends on the entity’s business model for managing the financial assets and the contractual
terms of the cash flows.
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73
For financial assets measured at fair value, gains and losses will be recorded in profit or loss. Financial assets
recognised at fair value through profit or loss are initially recognised at fair value, and transaction costs are
expensed in the income statement. Gains or losses arising from changes in the fair value of the financial
instruments at fair value through profit or loss, including interest and dividends, are recognised in the income
statement. Derivatives are always measured at fair value through profit or loss.
Financial assets that are held for collection of contractual cash flows where those cash flows represent solely
payments of principal and interest are measured at amortised cost. Interest income from these financial assets is
included in finance income using the effective interest rate method. Any gain or loss arising on derecognition is
recognised directly in profit or loss
Regular way purchases and sales of financial assets are recognised on trade-date, the date on which the
Company commits to purchase or sell the asset. Financial assets are derecognised when the rights to receive
cash flows from the financial assets have expired or have been transferred and the Company has transferred
substantially all the risks and rewards of ownership.
Cash and cash equivalents
For the purpose of presentation in the statement of cash flows, cash and cash equivalents includes cash on hand,
deposits held at call with financial institutions, other short-term, highly liquid investments with original maturities of
three months or less that are readily convertible to known amounts of cash and which are subject to an
insignificant risk of changes in value.
Accounts receivables and accrued revenue
Accounts receivable are measured at initial recognition at fair value. Accounts receivable are held with the
objective to collect the contractual cash flows and therefore are subsequently measured at amortised cost using
the effective interest method. For the purposes of impairment, the Company applies the simplified approach
permitted by IFRS 9, which requires expected lifetime losses to be recognised from the date of initial recognition
of the receivables.
Financial liabilities
The Company classifies all financial liabilities at amortised cost, except for derivatives which are at fair value and
financial guarantees (see below).
Accounts payables and other financial payables
These amounts represent liabilities for goods and services provided to the Company prior to the end of period
which are unpaid. They are recognised at fair value. Småkraft does not subsequently measure at amortised cost
using the effective interest method, as the difference is insignificant. Trade and other payables are presented as
current liabilities unless payment is not due within 12 months after the reporting period.
Borrowings
Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently
measured at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption
amount is recognised in profit or loss over the period of the borrowings using the effective interest method. Fees
paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is
probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw down
occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the
fee is capitalised as a prepayment for liquidity services and amortised over the period of the facility to which it
relates.
Borrowings are removed from the balance sheet when the obligation specified in the contract is discharged,
cancelled, or expired. The difference between the carrying amount of a financial liability that has been
extinguished or transferred to another party and the consideration paid, including any noncash assets transferred
or liabilities assumed, is recognised in profit or loss as other income or finance costs.
Borrowings are classified as current liabilities unless the Company has an unconditional right to defer settlement
of the liability for at least 12 months after the reporting period.
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74
Taxes
Income taxes
Income tax is calculated in accordance with ordinary tax rules and by applying the adopted tax rate. The tax
expense in the statement of comprehensive income comprises taxes payable and changes in deferred tax
liabilities and deferred tax assets. Taxes payable are calculated on the basis of the taxable income for the year.
Deferred tax liabilities and deferred tax assets are calculated on the basis of temporary differences between the
accounting and tax values and the tax effect of losses carried forward. From 2020 and onward, Småkraft uses the
initial recognition exemption for the tax effect on temporary differences relating to purchase of power plants.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets
and liabilities and when the deferred tax balances relate to the same taxation authority.
Tax related to items recognised in other comprehensive income is also recognised in other comprehensive
income, while tax related to equity transactions is recognised in equity.
Dividends
Provision is made for the amount of any dividend declared, being appropriately authorised and no longer at the
discretion of the entity, on or before the end of the reporting period but not distributed at the end of the reporting
period.
Contributed equity
Ordinary shares are classified as equity. Issuance of new shares are recognised when paid, based upon the
decision by the General Meeting. Incremental costs directly attributable to the issue of new shares are shown in
equity as a deduction, net of tax, from the proceeds.
Adoption of new and revised standards
The following standards and amendments were mandatory application for the first time for the reporting period
commencing 01.01.2022:
– Annual Improvements to IFRS: 2018-2020 Cycle amendments to IFRS 1, IFRS 9, IAS 41 and the Illustrative
Examples accompanying IFRS 16
– Conceptual Framework for Financial Reporting (Amendments to IFRS 3)
– IAS 37 Provisions, Contingent Liabilities and Contingent Assets (Amendment – Onerous Contracts – Cost of
Fulfilling a Contract)
– IAS 16 Property, Plant and Equipment (Amendment – Proceeds before Intended Use)
None of the amendments listed above have had any impact on the separate financial statements of the Company.
Standards and amendments issued but not yet effective
The following standards and amendments were mandatory application for the first time for the reporting period
commencing after 01.01.2022:
– IFRS 17 Insurance Contracts
– Disclosure of Accounting Policies (Amendment to IAS 1 and IFRS Practice Statement 2)
– Definition of Accounting Estimates (Amendment to IAS 8)
– Deferred Tax related to Assets and Liabilities arising from a Single Transaction (Amendments to IAS 12)
– Lease Liability in a Sale and Leaseback (Amendment to IFRS 16)
– IAS 1 Presentation of Financial Statements (Amendment – Classification of Liabilities as Current or Non-
Current
None of the amendments listed above is expected to have any material any impact on the separate financial
statements of the Company.
Småkraft Annual Report 2022
75
3. Key accounting estimates and judgements
Introduction
The use of reasonable estimates and judgements is a critical element in preparing the financial statements. Due
to the level of uncertainties inherent in Småkrafts business activities, management must make certain estimates
and judgements that effect the application of accounting policies, results of operations, cash flows and financial
position as reported in the financial statements.
Areas of significant estimates
Impairment testing of goodwill, property plant and equipment (PPE) and intangible assets
In performing the impairment assessment of the carrying amount of goodwill, PPE and intangible assets, as
disclosed in Note 16, the recoverable amounts of the cash generating units (“CGUs”), are determined based on
fair value less cost of disposal. Significant judgements are used to estimate the long-term price forecast for power
and pre-tax discount rates applied in computing the recoverable amounts of different CGUs. In making these
estimates, management has relied on market development and estimates from external consultancies as
disclosed in note 16.
Fair value measurement of energy derivatives
Significant estimates are applied in the valuation of the Group’s long term power purchase and power sales
contracts. The fair value estimate is based on the amounts for which the assets or liabilities could be exchanged
at the relevant transaction date on the reporting period end. To the extent possible, the assumptions and inputs
used take into account externally verifiable inputs. However, such information is by nature subject to uncertainty,
particularly where comparable market-based transactions do often not exist. In such cases Småkraft’s
management is required to make market-based assumptions, see note 14.
4. Subsequent events
After year end, Småkraft has increased the portfolio of Powerplants. 2 January 2023 Småkraft finalized the
acquisition of 65% of the shares in Svorka Småkraft AS, which have signed construction agreements to build
powerplants with a capacity of 22,5 GWh to our portfolio in Norway
10 January 2023 Småkraft AS acquired the 9.9% minority interest in the Swedish subsidiary Strömfallet Småkraft
AB from Strömfallet Invest AB. Strömfallet Småkraft AB owns 100% of the shares in Strömfallet AB, Strömfallet
Tunafors AB and Streamgate North AB.
In line with the Norwegian Company Act § 8-2 and the registered Power of Attorney on Power to decide dividend
– registered the 18 August 2022 – the Board decided to pay out dividend of in total EUR 37 500 000,- in addition
to already resolved and paid out EUR 2 500 000,-, based upon the 2021- Financial Statements. The dividend
payment shall be classified as capital redemption of the paid “overkurs” in the tax accounts. The dividend will be
paid out on 31 March 2023 (the “payment date”), under condition that the distribution test, as described in the
loan agreement, is met.
Småkraft Annual Report 2022
76
5. Subsidiaries
Småkraft AS purchased 7 subsidiaries in 2022 (24 in 2021) with this initial effect at the financial position:
Company Aqu iredby Purc hasedate
Voting
rights/shareholding
aquired
SmåkraftAB SmåkraftAS 02.11.2021 100%
SennesetKraftverkAS* SmåkraftAS 05.01.2022 100%
StampaelvaKraftAS* SmåkraftAS 05.01.2022 100%
SmåkraftUSPP1 SmåkraftAS 28.03.2022 100%
HjortelandKraftAS SmåkraftAS 31.05.2022 100%
SkognesogStordalenKraftlagAS* SmåkraftAS 02.05.2022 100%
SmåkraftPortefølje1AS SmåkraftAS 10.06.2022 100%
*) companies were contributed as equity in kind into a portfolio subsidiary named Småkraft USPP 1
A
S and subsequently merged into this company during 2022.
Småkraft Annual Report 2022
77
Subsidiaries as of 31.12.2022:
Group companies
Date of
acquisition/
Establishment
Registered
office
Ownership
share
Voting share
Småkraft AS
Bergen
Holmen Kraft AS 2016 Bergen 100 % 100 %
Follsjå Kraft AS 2016 Bergen 82 % 82 %
Muoidejohka Kraft AS 2010 Bergen 60 % 60 %
Reinli Kraft AS 2005 Bergen 51 % 51 %
Jorda Kraft AS 2012 Bergen 51 % 51 %
Sigdestad Kraftverk AS 2018 Bergen 52 % 52 %
Svartefoss Invest AS 2020 Bergen 100 % 100 %
Foldsæ Bergsåi AS 2020 Bergen 100 % 100 %
Holsen Kraft Nordøla AS 2020 Bergen 100 % 100 %
Ytre Kandal Kraft AS 2020 Sandane 51 % 51 %
Fossåa 1 K AS 2020 Sør- Fron 66 % 66 %
Rysna Småkraftverk AS 2020 Bergen 100 % 100 %
Tokheim Kraft AS 2020 Bergen 100 % 100 %
Hjorteland Kraft AS 2022 Bergen 100 % 100 %
Småkraft USPP 1AS 2022 Bergen 100 % 100 %
Småkraft Portefølje 1 AS
2022 Bergen 100 % 100 %
Chr Salvesen & Chr Thams’s Communications AS 2022 Bergen 100 % 100 %
Røvassåga AS 2022 Bergen 100 % 100 %
Teigdalskraft AS 2022 Bergen 100 % 100 %
Småkraft Green Bond 1 AS
2018 Bergen 100 % 100 %
Kvemma Kraft AS 2013 Lærdal 66 % 66 %
Saksenvik Kraft AS 2016 Bergen 96 % 96 %
Småkraft Green Bond 2 AS
2020 Bergen 100 % 100 %
Salvasskardelva Kraft AS 2021 Bergen 100 % 100 %
Strømfallet Småkraft AB
2021 Uppsala 90,1 % 90,1 %
Strømfallet AB 2021 Uppsala 100 % 100 %
Strømfallet Tunafors AB 2021 Uppsala 100 % 100 %
Streamgate North AB 2021 Uppsala 100 % 100 %
Småkraft AB
2022
Uppsala
Bangbro Kraft AB
2022
Uppsala
100%100%
Småkraft Østra Gøtaland AB
2022
Uppsala 100 % 100 %
Associated company
Date of
acquisition
Registered
office
Luster Småkraft AS 2005 Gaupne
50%
Rullestad & Skromme AS 2006 Etne
35%
Proxima Hydrotech AS 2021 Seimsfoss
33%
Småvirkjanir EHF 2022 Reykjavik
50%
Småkraft Annual Report 2022
78
6. Management of capital structure
The main aim of the Company´s management of its capital is to maintain a reasonable balance between the
Company’s debt and total assets. The Company has a long- term investment horizon, with contractual
arrangements and investments that will last for decades. The reasonable balance between debt and total assets
is thus set based upon the expectations towards short- term and long- term price expectations.
Overview of capital included in management of capital structure:
Småkraft has several debt covenants, which include:
– Equity ratio shall exceed 30%.
– Net debt over EBITDA shall not exceed certain levels.
– Debt service coverage shall not fall below certain levels.
– Liquidity shall exceed interest payments next six months.
7. Financial instruments – Risk Management
The company is exposed through its operations to the following financial risks:
– Credit risk
– Interest rate risk
– Foreign exchange risk
– Other market price risk, and
– Liquidity risk.
In common with all other businesses, Småkraft is exposed to risks that arise from its use of financial instruments.
This note describes Småkraft objectives, policies and processes for managing those risks and the methods used
to measure them. Further quantitative information in respect of these risks is presented throughout these
financial statements.
There have been no substantive changes in the company’s exposure to financial instrument risks, its objectives,
policies and processes for managing those risks or the methods used to measure them from previous periods
unless otherwise stated in this note.
(i) Principal financial instruments
The principal financial instruments used by Småkraft, from which financial instrument risk arises, are as follows:
– Trade receivables
– Cash and cash equivalents
– Trade and other payables
– Bank overdrafts
– Floating-rate bank loans
– Fixed rate loans
– Interest rate swaps, and
– Forward currency contracts.
AmountsinEURthousand
31.12.2022 31.12.2021
Totalnon‐currentassets 656008 607523
Interest‐beari ngliabilities,non‐current 198964 256570
Interest‐beari ngliabilities,current 56901 7003
Cashandcashequivalents,excluding 61777 15963
Netintere st‐bearingliabilities(NIB) 194088 247610
NIB/Totalnon‐currentassets 30%41%
Småkraft Annual Report 2022
79
(ii) Financial instruments by category
(iii) Financial instruments not measured at fair value
Financial instruments not measured at fair value includes cash and cash equivalents, trade and other receivables,
trade and other payables, and loans and borrowings. The carrying value approximates their fair value.
(iii) Financial instruments measured at fair value
There were no transfers between levels during the period.
All the derivatives are valued at fair value at level 2 in accordance with the fair value hierarchy. For additional
information see note 14.
Risk and risk management of financial instruments
Småkraft is engaged in activities that entail risk in many areas and has a unified approach to the Company’s
market risks. The risk management policy is based upon assuming the right risk based on the ability and
willingness to take risks, expertise, financial strength, and development plans. The purpose of risk management is
to identify threats and opportunities, and to manage the overall risk level to provide reasonable assurance that the
Company´s objectives will be met. In Småkraft, market risk will primarily relate to prices of energy, interest rates
and foreign currency. The following section contains a more detailed description of the various types of market
risk, and how these are managed.
31.12.2022
AmountsinEURthousand
Financialassetsat
fairvalue
Financialassets
atamortized
cost
Financial
liabilitiesatfair
value
Financial
liabilitiesat
amortizedcost Total
Assets
Investments ‐
Longtermreceivables 52722 52722
Tradereceivablesandotherreceivables 2425 2425
Othe rcurrentreceivables 2052 2052
Derivatives 12675 12675
Cash 61777 61777
Liabilites
Loansandborrowin gs 255865 255865
Tradepayables 2425 2425
Convertiblede
bt 17639 17639
Othe rcurrentliabilities 16639 16639
Derivativesnon‐current 49341 49341
Derivativescurrent 6080 3 60803
Netfinancialassetsandliabilitiesat31.12.2022 12675 118976 110144 292567 ‐271060
31.12.2021
AmountsinEURthousand
Financialassetsat
fairvalue
Financialassets
atamortized
cost
Financial
liabilitiesatfair
value
Financial
liabilitiesat
amortizedcost Total
Assets
Investments ‐
Longtermreceivables 7 4199 74199
Tradereceivablesandotherreceivables 5395 539 5
Othe rcurrentreceivables 720 720
Derivatives 1482 1482
Cash 15963 15963
Liabilites
Loansandborrowin gs 263573 263573
Tradepayables 1730 173
0
Othe rcurrentliabilities 8940 894 0
Derivativesnon‐current 1380 0 1 3800
Derivativescurrent 13968 13968
Netfinancialassetsandliabilitiesat31.12.2021 1482 96277 27768 274243 ‐204252
Småkraft Annual Report 2022
80
Description of market risk related to prices on energy and commodities
Småkraft is exposed to significant market risk in relation to the generation and trading of power. Revenues from
power generation are exposed to volume and power price risk. Småkraft manages market risk in the energy
markets by trading physical and financial instruments in the Nordic Market.
Risk management in energy trading in Småkraft focuses on residual market exposure after considering land lease
contracts and minority interests. In general, Småkraft enters standard fixed price contracts where Småkraft
agrees to sell a certain production volume at an agreed price in the future. Around 1/4 of the expected annual
production capacity for the next four to five years have such contracts to reduce the residual risk after land lease
and minority interests. Småkraft has set risk- limits within which trading activities are allowed.
Both realized cash effects and unrealized non- cash effects from trading are presented as a part of other revenue
in the profit and loss statement.
Description of foreign exchange
Småkraft incurs currency risks in the form of transaction risk, mainly in connection with energy sales revenue and
investments. Balance sheet risk is related to debt in NOK and EUR.
Småkraft settlement currency at the Nordic power exchange Nord Pool is EUR and NOK, and all power contracts
traded in the Nordic power exchange Nasdaq are denominated in EUR. In addition, most of Småkrafts power
purchase agreements in Norway and all power purchase and sales abroad are denominated in EUR. The
objective of Småkrafts hedging is to secure the EUR value of future cash flows exposed to changes in foreign
currency rates. Economic hedging is partly achieved by using debt in EUR- currencies as hedging instruments.
Few of these hedging relationships fulfil the requirements of hedge accounting.
As of 31 December, the Company’s net exposure to foreign exchange risk was as follows:
Description of interest rate risk
Småkrafts interest rate exposure is related to its debt portfolio. The management of interest rate risk is based on
a balance between keeping interest cost low over time and contributing to stabilize the Company’e cash flows
with regards to interest rate changes.
2022
AmountsinEURthousand
NOK SEK Total
Netforei gncurrencyfinancialassets/(Liabilites)
Currency
NOK ‐
EURO ‐2840860 ‐284086 0
SEK 25863 25863
Totalnetexposure ‐2814997 ‐ ‐281499 7
2021
AmountsinEURthousand
NOK SEK Total
Netforei gncurrencyfinancialassets/(Liabilites)
Currency
NOK ‐
EURO ‐2573277 ‐257327 7
SEK 448 448
Totalnetexposure ‐2572830 ‐ ‐257283 0
Functionalc urrencyofindividualentity
Functionalc urrencyofindividualentity
Interestratesensitivityonborrowings:
Increase/decrease
inbasispoints
Effectonprofit
beforeta x Effectonequity
2022 1% ‐2735 ‐2133
2021 1% ‐2636 ‐2056
Småkraft Annual Report 2022
81
Credit Risk
Credit risk is the risk that Småkraft incurs losses due to the failure of counterparties to honor their financial
obligations. Småkraft is facing credit risk when entering transactions with financial institutions. Credit risk against
financial institutions arises from cash or current account, deposit, investment of interest-bearing securities,
derivative transactions, and incoming guarantees. Småkraft also assumes credit risk when providing loans to
associates and joint ventures. In addition, Småkraft assumes credit risk in connection with physical sales
contracts. The total risk of counterparties not being able to meet their obligations is low. Historically, Småkrafts
credit losses have been limited.
All of Småkrafts main counterparties with regards to revenue settlement and hedging activities are rated as
Investment Grade by well- known rating agencies within the 12 months.
Liquidity risk
Liquidity risk is the risk that Småkraft will not be able to meet its financial obligations as they fall due. The
company’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient
liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring
unacceptable losses or risking damage to Småkraft’s reputation.
The table below shows the maturity structure of the Company’s financial liabilities:
Climate risk
Småkraft's operations are largely dependent on precipitation, and changes in precipitation patterns may affect
both our production and the price picture in the power market. Climate change is unpredictable and different
scenarios will affect Småkraft's production. Colder winters and dry summers may negatively affect Småkraft's
production, while milder winters and wetter summers may have a positive impact on Småkraft's production.
Climate change may also lead to more extreme precipitation and/or snowmelt, which may increase water loss
over Småkraft's dams. Climate change, as we are experiencing today, is moving in the direction of milder winters
and wetter summers, resulting in increased production from our power plants.
8. Alternative Performance Measures
Adjusted Power revenues is defined as Power revenues and Other operating income adjusted for Realized
value change on energy derivatives. Småkraft uses this APM to visualize cash flow generated from power sales
over time.
EBITDA is defined as operating profit (-loss) + depreciation of fixed assets and intangible assets + impairment of
fixed assets and intangible assets. This APM is widely used by analysts comparing Norwegian Hydropower
companies. Småkraft uses this APM to visualize performance over time irrespective of price.
Adjusted EBITDA is defined as operating profit (-loss) + depreciation of fixed assets and intangible assets +
impairment of fixed assets and intangible assets – unrealised value change on energy derivatives. Småkraft uses
this APM to measure performance from operational activities. Unrealised value on energy derivatives is deducted
2022
AmountsinEURthousand
Carrying
amount 1year 2years 3years 4years >5years
Debttofinancialinstitutions 255864 73011 150940 940 47180 0
Tradepayables 2428 2428
Othershorttermliabilities 4599 4599
Total 262891 80038 150940 940 47180 0
2021
Carrying
amount 1year 2years 3years 4years >5years
Debttofinancialinstitutions 263574 10322 7249 203095 1128 50406
Tradepayables 1730 1730
Othershortte
rmliabilities 3443 3443
Total 268747 15495 7249 203095 1128 50406
Cashflowsincludinginterest
Cashflowsincludinginterest
Småkraft Annual Report 2022
82
in the adjusted figures as the value change on these derivatives usually be negatively correlated to value changes
in future power production that is not recognised, thus creating an accounting mismatch that is not alleviated
through hedge accounting. Adjusted EBITDA should not be considered as an alternative to operating profit/loss
and profit/loss before tax as an indicator of the company’s operations in accordance with generally accepted
accounting principles. Nor is adjusted EBITDA underlying an alternative to cash flow from operating activities in
accordance with generally accepted accounting principles.
9. Revenues and other income
Sale of electric energy
The revenues originate from the generation of hydropower.
Green revenues
The EL certificate scheme is a market-based support scheme. In this system, producers of renewable electricity
receive one certificate per MWh of electricity they produce for a period of up to 15 years.
Power and currency derivatives
Småkraft utilise financial hedging contracts to hedge future revenue. The Group does not apply hedge accounting
for the hedging of power revenues. See also note 7 Financial instruments.
Disaggregation of revenues by Price area:
AmountsinEURthousand
202
2
2021
Powerproducti on revenue 59628 29748
Guaranteesof originandElcertificates 1383 895
Powerrevenue 61011 30643
AmountsinEURthousand
2022 2021
PriceareaNO1 Norway 3725 1661
PriceareaNO2 Norway 28281 9690
PriceareaNO3 Norway 3660 5870
PriceareaNO4 Norway 1555 3435
PriceareaNO5 Norway 22407 9052
Othergreenrevenue 1382 935
Powerrevenues 61011 30643
Småkraft Annual Report 2022
83
10. Payroll costs, number of employees, loans to employees, etc.
Managing Directors’ remuneration
Amounts in EUR thousand
2022 2021
Salaries
255 189
Pensions
15 15
Other benefits
5 42
Sum
275 246
Key Personnels´remuneration
Amounts in EUR thousand
2022 2021
Salaries
483 486
Pensions
47 41
Other benefits
9 5
Sum
539 532
Key Personnel consists of the senior management team in the roles as CFO, CCO and COO. The CEO and Key
Personnel are all a part of a bonus program. The bonus remuneration is calculated based on achieved
performance financial, operational and QHSE Key Performance Indicators compared to set targets.
The company has not issued any loans or guarantees in favour of the CEO, directors, or shareholders. The
Board of Directors do not receive any renumeration for its positions as Board Members.
Pension
Småkraft has an established pension scheme that is classified as a defined contribution plan. The pension
scheme is in line with the requirements of the law. Contributions to the defined contribution schemes are
recognised in the consolidated statement of profit and loss in the period in which the contribution amounts are
earned by the employees. The defined contributions plan does not commit Småkraft beyond the amounts
contributed.
AmountsinEURthousand
2022 2021
Wagesandsalaries 2773 1854
Payrolltax 520 481
Pensioncosts 314 682
Otherbenefits 135 ‐5
Sum 3742 3011
Numberoffull‐timeemployeesasof 31.12. 30 25
Småkraft Annual Report 2022
84
Fees paid to external auditors
11. Other operating expenses
Purchase of various services consist of external accounting, audit, legal, transactions and operational services.
Amountsin EURthousand
2022 2021
Statutoryaudit 118 189
Taxcou nselling ‐ 15
Otherassuranceservices 37 42
Sum 155 246
AmountsinEURthousand
2022 2021
Waterrightscosts 9 589 1940
El‐certscosts ‐ 797
Transmissioncosts 236 1914
Propertytaxandlicencefees 1321 141 8
Telecommunications ‐ 60
Rentandrelatedexpenses 304 230
Transport 1 6
Travelexpenses ‐ 163
Purchase ofvariousservices 2272 2051
ITexpenses 574 376
Repair/maintenanceregardingequipment,machinesetc 741
 377
Consultantservices 107 497
Otherop eratingexpenses 2731 126 3
Otheroperat ingexpenses 17875 11093
Småkraft Annual Report 2022
85
12. Financial result
Financial income
Financial expenses
AmountsinEURthousand
2022 2021
Incomefrominvestmentsinassociates 3 099 ‐
Interestincomefromsubsidiaries 1754 2065
Agioonborrowi ngsinforeigncurrency ‐ 11794
Unrealizednon‐casheffectoninterestswaps 8201 370
Otherfinancialincome 891 5752
Total 13945 19982
AmountsinEURthousand
2022 2021
Inte restexpe nsespaidtosubsidiaries 45 92
Inte restexpe nses 4050 4665
Disagioonborrowingsinforeigncurrency 13 696 ‐
Unrealizednon‐cashe ffectoncurrencyswaps 2382 307
Othe rfinanciale xpense s 775 882
Total 20 948 5945
Småkraft Annual Report 2022
86
13. Taxes
Differences not affecting deferred tax relates to goodwill in connection with former acquisitions and subsequent
mergers with Småkraft AS.
Deferred tax benefit is recognised as Småkraft expects to come in tax position over the next years.
AmountsinEURthousand
Thetaxexpenseintheincomestatement 202
2
2021
Incometax 14 ‐
Changesindeferredtax ‐24930 ‐6238
Taxexpenses(income) ‐24916 ‐6238
Reconciliationofnominalta xrateandeffectiveta xra te 202
2
2021
Profitbeforetax ‐113783 ‐28273
Taxrate,percent 22%22%
Expectedtaxexpense ‐25032 ‐6220
Effe ctontaxesof
Permanentdifferences 96 48
Incomefrominvestmentsinassociates ‐780 ‐
Changesrelatedtodefe rredtaxonoff‐balance sheetitems ‐515 ‐28
Otherchanges 1315 ‐38
Taxexpenses(income) ‐24916 ‐6
238
Effectivetaxrate 22%22%
202
2
2021
Taxespayableinthebalancesheet ‐ ‐
Specificationoftemporarydifferencesanddeferredta x 202
2
2021
Fixedassets 7163 8631
Interestdeductioncarryforward ‐2113 ‐1398
Groupcontributions ‐24661 ‐3366
Unrealizedderivatives ‐98391 ‐24677
Otherdif ferences ‐589 ‐105
Temporarydifferences ‐118591 ‐20915
Lossescarriedforward ‐50918 ‐42847
Diffe re ncesnotaffectingdeferredtax ‐2339 ‐2462
Basisfordeferred
tax ‐171847 ‐66224
Taxrate 22%22%
Netdeferredtaxbenefit(‐)/liability(+)inthebal ance sheet,ordinarytax ‐37800 ‐14569
Deferredtaxbenefit ‐37800 ‐14569
Presentation 202
2
2021
Deferredtaxbe nefi t 37800 14569
Småkraft Annual Report 2022
87
14. Derivatives
This note provides information about the company’s financial instruments:
Derivatives
The Company has derivatives related to the hedging of income from future power production, as well as interest
rate swaps in connection with interest bearing debt.
For the period 2022- 2025, Småkraft AS has hedged part of the estimated production against price fluctuations.
Fair value calculations are based on available year- end market prices, and future price- curve estimates in cases
where there are no official closing prices.
The Company has entered financial currency swaps from EUR to NOK. The Company has entered these
contracts to make sure that the future capital increases in EUR will fully cover future acquisitions in NOK.
The Company does not apply hedge accounting for contracts for power hedging or for currency swaps, meaning
that unrealised changes in value are recognised through the profit or loss and presented on the line ’Other
operating revenue’ and Financial income/expenses respectively.
The table below shows the financial position and profit and loss accounts for the derivatives:
All the derivatives are valued at fair value at level 2 in accordance to the fair value hierarchy: “Fair value is based
on data inputs other than quoted prices included in Level 1, which are observable for the asset, either directly or
indirectly”.
31.12.2022
AmountsinEURthousa nd
Longterm Shortterm Longterm Shortterm P&L
OverFVPL‐Interestratesswaps 8096 ‐ 8201
OverFVPL‐Currencyderivatives ‐ ‐ 1093 21 ‐2382
OverFVPL‐Powerderivative s ‐ 4579 48248 60782 ‐83293
Sumderivatives 8096 4579 49341 60803 ‐77474
Assets
31.12.2022
Liabil ities
202231.12.2022
31.12.2021
AmountsinEURthousa nd
Longterm Shortterm Longterm Shortterm P&L
OverFVP L‐Interestratesswaps ‐ 226 99 ‐ ‐5445
OverFVP L‐Currencyderivatives ‐ 1237 ‐ ‐ ‐63
OverFVP L‐Powerderivative s ‐ 20 13800 13968 ‐33396
Sumderivatives ‐ 1482 13899 13968 ‐38903
Assets
31.12.2021
Liabil ities
31.12.2021 2021
Småkraft Annual Report 2022
88
15. Intangible assets and goodwill
The company’s goodwill comes from historical acquisitions of new power plant companies and mainly arises
because deferred tax is valued at nominal amounts whereas discounted amounts are reflected in the purchase
amount. The difference between deferred tax valued at nominal and discounted amounts is recognised as
goodwill.
16. Impairment testing
Goodwill and intangible assets that have an indefinite useful life are not subject to amortisation and are tested
annually for impairment, or more frequently if events or changes in circumstances indicate that they might be
impaired. Småkraft typically tests for impairment at least in Q3 each year.
Other non-financial assets are tested for impairment whenever events or changes in circumstances indicate that
the carrying amount may not be recoverable.
An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable
amount. The recoverable amount is the higher of an asset’s fair value less costs of disposal and value in use. For
the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately
identifiable cash inflows, which are largely independent of the cash inflows from other assets or groups of assets
(cash-generating units). Non-financial assets other than goodwill that suffered an impairment are reviewed for
possible reversal of the impairment at the end of each reporting period.
Cash generating unit
Power plants that are located in the same watercourse and jointly managed are regarded as a single cash-
generating unit. Impairment tests are carried out by calculating the present value of future cash flows from each
powerplant, which are then tested against associated carrying amounts.
Budget
The impairment tests carried out for 2021 are based on the budget for 2022 and up to a 100 year period prior to
setting the terminal value. If the power plant has a terminal clause in the land lease agreement, the period of time
AmountsinEURthousand
Wate rright Goodwill
Other
intangible
assets Totalt
Costat1January2021 4300 3072 12172 19543
Additions2021 0 0 2436 2436
Costat31December2021 4300 3072 14608 21979
Additions2022 0 0 0 0
Costat31December2022 4300 3072 14608 21979
Acc depreciationsat1Januar
2021 ‐ ‐246 ‐582 ‐828
Amortisationcharge2021 0 0 ‐324 ‐324
Acc depreciationsat31Dec.2021 ‐ ‐246 ‐906 ‐1153
Effe ctofcurrencymovements2021 198 372 ‐96 875
Amortisationcharge2022 0 0 ‐298 ‐298
Acc depreciationsat31Dec.2022 ‐ ‐246 ‐1204 ‐1450
Effectofcurrencymove me nts2022 ‐216
 ‐136 ‐653 ‐1005
Balanceat31December2022 4095 2599 11464 18158
Balanceat1January2021 4113 2609 10657 17379
Balanceat31December2021 4311 2735 13321 20367
Balanceat31December2022 4095 2599 12370 19064
Småkraft Annual Report 2022
89
up until the date of the clause is used. The power prices used in the forecast are a mix between the actual power
prices traded in the Nordic power market for the first years and power curves from three independent power
consultancies for the entire remaining time period. Småkraft uses longer than 5 years forecast- periods, because
the nature of our business is long- term with land- lease periods ranging from 40 to 100 years.
Discount rate
The applied discount rate is based on the company’s cost of capital, which in turn is based on a weighted average
return requirement for equity and loan capital. The return on equity requirement is estimated using the capital
asset pricing model (CAPM). The return on loan capital requirement is estimated based on the long-term risk-free
interest rate plus a credit margin derived from Småkrafts marginal long-term interest rate. The discount rate is
adjusted for the expected debt-to-assets ratio and business risk for the individual cash-generating unit. A discount
rate around 5 per cent has been applied for the various cash-generating units.
Sensitivity
Power price based on actual power prices and the estimated forward price curves are the key assumptions in the
calculation of the recoverable amount. Based on the current power price and estimated forward price
management do not believe that a reasonably possible change in the power price would cause the carrying
amount to exceed the recoverable amount with a material amount. The power price used in calculating of
recoverable amount would have to fall with more than 15 % before a material impairment will occur.
17. Property, plant and equipment
Assumption‐par ameter Change
Weightedaveragecostofcapital(WACC) 0,50% 3 16,8 366
1,00% 4 24,6 940
Downtime 3,00%0 0 0
3,50%0 0 0
Price ‐5,00%2 10,169
‐10,00% 3 16,8 319
Representing
GWh
Impairm ent
am ount
#plants
affected
Småkraft Annual Report 2022
90
Plants under construction are assets that we currently develop and plan to invest in constructions of future power
plants or upgrades of existing power plants.
Contractual obligations
Signed SPA and EPC contracts as per 31.12.2022 have remaining obligations of EUR 95,8 million, whereof EUR
14,8 million is due within 12 months. Respective figures as per 31.12.2021 were EUR 77,1 million whereof EUR
52,3 million due within 12 months.
18. Associated companies
Småkraft AS owns 50
% of Luster Småkraft AS. The remaining 50% is owned by Luster Energi AS. The company
successfully operates 3 small- scale hydro power plants: Kvåle, Holen and Vanndøla. Combined they have a
normalized annual production of about 50 GWh.
Småkraft AS owns 35% of Rullestad & Skromme AS, and 65% of this company is owned by local landowners.
The company is established to build small scale hydropower in Rullestad and Skromme, Etne, Hordaland. The
company has water rights in 3 different projects in the area, with a possible annual production up to approximately
66 GWh. There are no employees employed by the company.
Småkraft AS owns 33% in Proxima HydroTech AS which is an independent service provider within operations
and maintenance services. The company is focusing on services to hydropower plants and is developing relevant
surveillance IT systems for the likes of Småkraft power plants.
Småkraft AS entered 23 December 2022 into a Sale and Purchase Agreement for 50% of the shares in Gjerdelva
Kraft AS.
Agreed remuneration for the shares is equivalent to EUR 22 thousand – payment of this amount will take place
after construction of the power plant under construction have been finalized.
The construction activities of the power plant will start up in 2023
19. Receivables; amounts due after more than one year
AmountsinEURthousand
31.12.2022 31.12.2021
Loanstoassociates:
Loanstoassociate s ‐LusterSmåkraftAS ‐ 801
Loanstoassociate s ‐R&SEnergiAS 969 943
Loanstoassociate s ‐UtbyggingHoldingAS ‐ 2112
Provisi onsforlossonloanstoassociates ‐969 ‐886
Otherreceivables: ‐‐
Depositrent 108 116
Prepaidwaterrightlease 7155 6953
LoantoStrømfalletInve stAB 38 ‐
Otherlongtermreceivables 998 1070
Total 8299
 11109
Småkraft Annual Report 2022
91
20. Cash and cash equivalents
Bank deposits, cash etc. does not include restricted tax deduction funds as of 31.12.2022.
The company has established a bank guarantee for the payment of tax.
21. Share capital and shareholder information
T
he share capital amounts to EUR 22 861 thousand at 31.12.2022
All issued shares have equal voting rights and the right to receive dividend.
Ownershipstructure31.12.2022* Number
Nominal
amount
NOK Sharecapital Votingshare
Ownership
share
AquilaGAMFundGmbH&Co.Geschlosse n
e
760024 50 38001200 15,4%15,4%
AquilaCapi tal EuropeeanHydropowerFun
d
1093704 50 54685200 22,3%22,3%
ACEHNorway1B.V. 2124195 50 10620975 0 43,3%43,3%
ACEHNorway2B.V. 932342 50 46617100 19,0%19,0%
Sum 4 910265 50 245513250 100%100%
*I ncl u desnotregistredcapitalincrease
Småkraft Annual Report 2022
92
22. Borrowings and guarantees
Borrowings
Changes in debt to financial institutions and bond debt during the year
The bank and bond holders have pledged security in operating equipment, bank accounts and accounts
receivable, in addition to 1. priority pledge in the power plants and related water lease agreements.
The bank has pledged security in the shares in Småkraft AS and Småkraft AS' shares in Reinli Kraft AS and
Muoidejohka Kraft AS.
Småkraft AS has provided a bank guarantee as security for the payment of withholding tax.
According to the shareholders agreement with Luster Småkraft AS, Småkraft AS is obligated to make capital
available to Luster Småkraft AS.
AmountsinEURthousand
Lenders Maturity Currency 31.12.2022 31.12.2021
Banks 01.07.2024 EUR 154000 158000
Banks NOK 3394 350 4
Convertibledebtfromowners 31.03.2023 EUR 17639 ‐
GreenBonddebt1 01.11.2023 EUR 50000 50000
GreenBonddebt2 13.04.2026 EUR 50000 50000
AgentcommissionSEB/Norde a NOK ‐1529 ‐160 9
Total 27 3 504 ‐
Totallongtermdebt 1 98964 256570
Convertibledebtfromowners 17639 ‐
Short term
debt 56901 7003
ConvertibleloanfromshareholderswillbeconvertedtosharecapitalwithinQ12023
inaccordancewthloanagreement.
AmountsinEURthousand
202
2
2021
Ingoingbalance 263573 237088
Repayments/dow npayments ‐7818 ‐29111
Newdebt 17639 55701
Currencyexchangeratechanges 110 ‐105
Outgoingbalance 273503 263573
Småkraft Annual Report 2022
93
23. Concessions
As of 31.12.2022, Småkraft AS has concessions for additional 12 power plant with a total annual production of
approximately 102 GWh.
In addition to this there are currently 8 power stations under construction representing an annual production of
108 GWh both owned by subsidiaries in the group and companies signed to be acquired.
24. Water land lease agreements
As part of several of the net- agreements, Småkraft offers interest bearing loans and/ or minimum payments in
the first years of the land- lease agreements. Net agreements typically have deficits the first years. Småkraft
offers interest bearing loans/ minimum payments to offer more stable payouts to the landowners, while
simultaneously not amending the balance in the land lease agreement between landowner and company.
The loans are normally interest-bearing loans. The minimum payments are interest bearing payments to the
landowners that will be offset against future land lease profits.
Loans from Småkraft AS to landowners:
When net- agreements have deficit, Småkraft AS finances the landowner share of the deficit. Småkraft AS
accrues a receivable against the landowners, against which future profits will offset. This is an asset to Småkraft,
that according to IFRS is off balance. It represents a future benefit for the company.
25. Related party transaction and balance items
Småkraft and its subsidiaries and associates have seeked to do transactions on commercial terms The
companies also have business transactions regarding the corporate account. These are shown in the table below.
Luster Småkraft AS og Rullestad & Skromme AS are associated companies (note 19). The individuals stated in
note 11 are also related parties of Småkraft AS. Apart from the transactions specified in this note and note 11,
there are no significant related party transactions or balance items.
Småkraft AS has strengthened its management capacity and with effect from 1 January 2023 Bjarte Skår took
over the position as Chief Commercial Officer. Bjarte has 20 years’ experience with hydro power plants in Hywer
as CEO 2020-22 and before that from Brødrene Dahl as power plant division director. Bjarte has also per 31
December 2022 indirect ownerships in 5 companies which Småkraft has signed up to acquire. The companies
are all single purpose hydro power plant construction companies which are owning hydro power plants under
construction.
Småkraft Annual Report 2022
94
The total acquisition costs for these companies are approximately EUR 50 mill which is included in Småkraft AS’s
commitments as per 31 December 2022.
Gunnar Ulvik commenced from 1 January 2023 a new position in Småkraft as Technical Construction Manager.
Gunnar held per 1 January 2023 board positions in the same companies as controlled by Bjarte Skår.
Short-term Receivables
Småkraft Annual Report 2022
95
Long-term Loans
INDEPENDENT AUDITOR’S REPORT
Postboks 70
50, 5020 Bergen
post@smaakraft.no
smaakraft.no
Urlandaga
549300IG13IP3OK19V412022-01-012022-12-31549300IG13IP3OK19V412021-01-012021-12-31549300IG13IP3OK19V412022-12-31549300IG13IP3OK19V412021-12-31549300IG13IP3OK19V412020-12-31ifrs-full:IssuedCapitalMember549300IG13IP3OK19V412021-01-012021-12-31ifrs-full:IssuedCapitalMember549300IG13IP3OK19V412021-12-31ifrs-full:IssuedCapitalMember549300IG13IP3OK19V412020-12-31ifrs-full:AdditionalPaidinCapitalMember549300IG13IP3OK19V412021-01-012021-12-31ifrs-full:AdditionalPaidinCapitalMember549300IG13IP3OK19V412021-12-31ifrs-full:AdditionalPaidinCapitalMember549300IG13IP3OK19V412020-12-31ifrs-full:RetainedEarningsMember549300IG13IP3OK19V412021-01-012021-12-31ifrs-full:RetainedEarningsMember549300IG13IP3OK19V412021-12-31ifrs-full:RetainedEarningsMember549300IG13IP3OK19V412020-12-31ifrs-full:NoncontrollingInterestsMember549300IG13IP3OK19V412021-01-012021-12-31ifrs-full:NoncontrollingInterestsMember549300IG13IP3OK19V412021-12-31ifrs-full:NoncontrollingInterestsMember549300IG13IP3OK19V412020-12-31549300IG13IP3OK19V412022-01-012022-12-31ifrs-full:IssuedCapitalMember549300IG13IP3OK19V412022-12-31ifrs-full:IssuedCapitalMember549300IG13IP3OK19V412022-01-012022-12-31ifrs-full:AdditionalPaidinCapitalMember549300IG13IP3OK19V412022-12-31ifrs-full:AdditionalPaidinCapitalMember549300IG13IP3OK19V412022-01-012022-12-31ifrs-full:RetainedEarningsMember549300IG13IP3OK19V412022-12-31ifrs-full:RetainedEarningsMember549300IG13IP3OK19V412022-01-012022-12-31ifrs-full:NoncontrollingInterestsMember549300IG13IP3OK19V412022-12-31ifrs-full:NoncontrollingInterestsMemberiso4217:EUR