2023
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Småkraft Annual Report 2023
Contents
About Småkraft
Sustainability
Management team
Annual accounts and notes - Småkraft Group
2023 in brief
Our business
Corporate governance report
Annual accounts and notes - Småkraft AS
CEO letter
Board of Directors
Board of Directors’ report
Independent auditor’s report
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Småkraft Annual Report 2023
About
Småkraft
Småkraft is a producer of renewable energy. Our fleet of 231 hydropower
plants is spread across Norway and Sweden and delivers a mean annual
production capacity of 2.1 TWh, making Småkraft the Nordic’s largest owner
and operator within its space.
Small-scale hydropower borrows water which naturally flows 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 Småkraft’s stakeholders including owners, creditors and debt
investors, local landowners, local municipalities and local societies. For more than 20 years,
Småkraft has invested in the generation of new renewable energy. Småkraft’s 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.
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Småkraft Annual Report 2023
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, and improved
planning and security.
Our mission is to create sustainable values for the next generation by
investing, developing and operating small-scale hydropower plants.
Corporate strategy
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Småkraft Annual Report 2023
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Småkraft Annual Report 2023
Core values
Småkraft has identified three core values that help define and lead our business:
• think and act long term
• care about both local and global
environment
• conclude our decisions on facts
and knowledge
• prioritise security for our
employees and business partners
Sustainable
• seek new and better solutions
• maintain proven processes
• create added value
Creative
• be consistent in our
communication and share
knowledge
• deliver as promised
• tell the truth
Honest
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Småkraft Annual Report 2023
2023 in brief
2020
1,381
263
2021
1,697
243
2022
2,002
233
2023
2,090
227
Production capacity
GWh, year-end
Signed contracts for new powerplants
Current production capacity
2022
1 470
2023
1 504
Production volume
GWh
Net production delivered on the grid, excl. grid
losses, consumption, and bilateral agreements
+2%
44%
56%
Equity
Debt
* Adj. EBITDA = operating profit + impairment +
depreciations + unrealized hedge gain or loss
2022
38.5
2023
22.4
Adjusted EBITDA
EUR million
Equity ratio
Book value as per 31.12.2023
Adjusted power revenue
EUR million
Adjusted EBITDA
EUR million
-36% y/y
-42% y/y
50.5
22.4
Key metrics
Amounts in EUR million Amounts in EUR million 20232023 20222022
Power revenue 67 758 133 559
Profit (loss) before tax 34 876 -84 340
Cash flow from operations -32 277 38 581
Production volume GWh 1 504 1 470
Avg. prices (EUR/MWh) 45.1 90.9
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Småkraft Annual Report 2023
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Småkraft Annual Report 2023
2023 in brief
Achieving ambitious growth
targets and record results
Renewable power production
Higher production capacity of 88 GWh in 2023 through
acquisitions and newbuild. Total production of 1,504 GWh
in 2023, 2% higher than 2022.
Market update
Nord Pool system prices decreased from 91 EUR/MWh in 2022 to
45 EUR/ MWh in 2023. Limited interconnector capacity from the
northern parts to the southern parts still give significant price
difference between the price zones in Norway.
Sustainability
During 2023, 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 2023, Småkraft acquired and constructed 12 powerplants,
adding capacity of 88 GWh to the Småkraft production portfolio.
One of the powerplants with an annual capacity of 7 GWh
was acquired in Sweden.
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Småkraft Annual Report 2023
CEO Letter
Småkraft constructs 24% of all new renewable energy
projects in Norway
Autumn 2023, the Norwegian Water Resources and Energy Directorate (NVE)
informed that only 1,120 GWh of new renewable energy is currently being
constructed in Norway. Over the next years, our Scandinavian home market,
will electrify transportation, properties, and industry. We need much more
renewable energy production to match the increased demand. It is sad that
Norway with its vast resources is not able to ramp up its investments and
construction activities to match its ambitions.
As CEO in Småkraft, it is a pleasure for me to see how our employees,
partners and landowners manage to lead the way and ‘walk the talk’. Year after
year, we continue to create, invest, and grow. As NVE presents their statistics,
Småkraft was constructing 24% of all renewable projects currently under
construction in Norway. This is a remarkable achievement for a team of 32 men
and women.
We will continue to grow. At year end, we had 18 power plants with annual
production capacity of 227 GWh under construction. We have a great pipeline
of projects that we are working to mature into investment ready power
plants in the next years. However, Småkraft’s history since 2002 proves that
constructing renewable energy is consistent hard work over time. We need to
plan today for the investments we will do in three to five years from now. Thus,
we have focused on expanding our project pipeline with great success. During
2023, we signed 26 contracts with landowners for development of small-scale
power plants on their properties. The Group applied for 20 new permits with a
total production capacity of 236 GWh.
One of Småkraft’s main strategic goals over the last years has been to
industrialize the company. No matter how hard our 32 employees work, we
will not be able to continue our growth path without great partners, robust
processes and supporting technology. We are blessed with more than 900
landowners who challenge us, support us, and bring us local competence and
new ideas. World- class specialized and generalized suppliers within small-
scale hydro work side by side with our operations and technical department.
Our goal is always to tear down the barriers between the suppliers and
Småkraft. We believe that robust processes combined with our main value
‘Honesty’ will make the unique teamwork Småkraft has with its partners even
more valuable in future.
We have come a long way in industrializing Småkraft, but we still have a lot to
do. This is work that we take on with great enthusiasm.
Terje Vedeler
CEO
Småkraft
constructs 24%
of all renewable
projects currently under
construction in Norway.
This is a remarkable
achievement for a team
of 32 men and women.
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Småkraft Annual Report 2023
Industrializing small-scale hydro power is necessary
for profitability in a complex renewable energy sector
Complexity within the renewable energy sector increases. Because of interconnectivity
of the energy system, geopolitical changes and climate changes that influence the
precipitation patterns, we see more volatile prices and production that may influence
profitability.
To face these challenges and grasp the opportunities that they represent, small scale
hydro power companies need to invest in technology, systems, and knowledge. This is
challenging for single small scale hydro power plants or companies with small portfolios of
power plants, as the investments and know-how needed are significant compared to the
value of a small or few power plants. To Småkraft, this represents great opportunities, as
we are big enough to have economies of scale and synergies. Utilizing the scale effects
of large portfolios has always been a part of Småkraft’s investment strategy. In the current
environment, these effects will be even more important for profitability than before.
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,
as well. And it will pay better land lease returns to our landowners. 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 technical team and its
local partners, and the centralised operations centre. During 2023, 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.
In addition to scale effects and operational synergies, portfolio diversification is risk
reducing in the current market environment. The production of a single runoff power
plant is more volatile than the production of a portfolio of power plants, both on hourly
basis and on yearly basis. Adding new power stations in different hydrological zones with
different production patterns than the majority of our portfolio will have a positive impact
on volatility. This reduces balancing costs and improves predictability. We see that our
Swedish power plants match the rest of our portfolio in a very good way.
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Småkraft Annual Report 2023
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 its portfolio diversifying its debt maturities. This US private placement debt 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.
The last two years, interest rates have increased significantly. As Småkraft is investing in
hydropower that last for decades, we have tried to find a good balance between fixed and
floating interests that suits our long-term focus.
During 2023, Småkraft has worked with all legs of its financing strategies. We have
issued a 7-year bilateral US Private Placement of EUR 40 million. We use this financing
source for long-term financing. Secondly, we successfully refinanced our first Green
Bond in the Nordic Bond market. We found great interest for this investment opportunity.
Thirdly, we have worked with local banks that contribute with construction financing
in the very important and dynamic financing face, where the power stations are being
constructed. Here we have found new and flexible ways to finance construction structures
in partnership with great local financing partners. Finally, we have been working and
continue to work on the refinancing of our main bank facility with Nordic banks, which
gives us sufficient flexibility in cash management and financing of the group.
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.
Technology team
• Yearly inspections
• Initiate and follow
up modifications,
upgrades and repairs
Centralised operations
• Monitoring Norway and Sweden
• Optimising production
• Reducing costs
Local operators
• Daily maintenance
• Operations in emergency mode
DIGITAL INFORMATION
35,000 tags per second
ANOMALIES
1 tag per second
AUTOMATION
INSTRUCTIONS
DECISIONS
Local contractors
and suppliers
• Modifications
• Upgrades
• Repair
Småkraft’s operational model
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Småkraft Annual Report 2023
Sustainability
Over the last years, Småkraft and its peer companies have faced increasing reporting requirements related
to Environmental, Social and Governance topics (“ESG”). Småkraft works to align its processes to the
EU Taxonomy, EUs Sustainable Financial Disclosure (“SFDR”), changes in the reporting standards such
as the Global Reporting Initiative (“GRI”) and Task Force for Climate Change (“TCFD”). Increased reporting
requirements tend to lead companies focus towards reporting and compliance and away from materiality
and actions.
Småkraft is proud of its achievements within Sustainability Reporting. This work has been recognized. During 2023,
Småkraft has yet again achieved the highest score in the annual ESG benchmark of the leading GRESB Infrastructure
Asset Assessment within its peer group. We will continue to put in work to make our interactions with the environment
and society as transparent as possible. We describe how we work with sustainability in our Sustainability Report.
However, sustainability is not about reporting. It is about risk, investments, processes and opportunities. During 2023,
Småkraft prioritized investing in topics we have identified as the most material to Småkraft and its stakeholders.
We have put down most efforts in the following four topics:
Småkraft’s production history shows that climate change
leads to more precipitation and more extreme weather.
This influences our production, and it may increase the
forces our installations need to sustain. In 2023, Småkraft
has faced the continued tendency of more extreme
weather in the Nordics. The storm Hans had significant
negative impact on infrastructure in the eastern part of
Norway and the southern part of Sweden. While most of
Småkraft’s power stations proved resilient to the storm,
the power station Hølera in Valdres, Norway was flooded
and had damages on the turbine and power station. The
power station Byro in Ullensvang, Norway faced similar
stress because of a landslide in January 2024 that caused
significant damages. Both power stations are or will be
back in operation only a few months after the incidents
and represent a very small part of Småkraft’s portfolio.
Hølera and Byro show why it is essential to Småkraft
to understand how future climate change is likely to
influence our power stations. Together with other leading
companies, Småkraft has joined forces with the leading
Norwegian research institute NORCE. During 2023,
Småkraft has continued its work with this research. The
knowledge we accumulate has changed how we are
thinking around some key topics:
• We are working to change our short-term production
forecasting
• We have increased our focus on reservoir capacity
• We have increased our focus to have power stations
with diverging seasonal and hydrological production
patterns
• We have changed our hedging activities to better align
with increased volatility
1. Understanding and adopting to Climate Change
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Småkraft Annual Report 2023
Producing renewable energy has little carbon emissions
compared to other sources of energy. Additionally,
because of its long lifetime, small scale hydro is efficient
compared to other sources of renewable energy. It has
little carbon emissions per production unit of energy.
Still, when discussing with our key stakeholders what ESG
topics they see as most important for Småkraft, several
of them state that life cycle emissions are important. As
almost 100% of the life cycle emissions from small scale
hydro come during the construction phase, Småkraft has
increased its focus on understanding emissions during
the construction phase of our power stations. During
2023, Småkraft has analysed the emissions during the
construction phase on power stations, both new and
old power stations. This gives us valuable insight that
we could use to reduce emissions in future construction
projects, in close cooperation with our partners. We are
currently in the initial process of this work and expect this
to be an important topic in the coming years.
2. Life Cycle Emissions
Small scale hydro power plants in Norway and Sweden
hold very different standard. Some power stations are
modern and built in line with the current environmental
standards, while others are old with different requirements.
Especially the Norwegian concession system requires
updates of the permits periodically. Old power plants
are required to adapt to updated environmental and
social standards. Småkraft has specific internal working
processes to monitor, update and, if necessary, upgrade
old power stations.
In some instances, Småkraft invest in power stations that
are not in line with the minimum requirements we have
to our power stations. This is reflected in the investment
process, where Småkraft makes a plan on how to upgrade
the power stations to meet our requirements. In most
cases, these investments are minor. However, in some
cases, Småkraft needs to invest significantly to increase
the environmental standards sufficiently.
The power station Fosstveit in Tvedestrand municipality in
Southern Norway is the best example of this during 2023.
For years, Fosstveit has had challenges with migrating
fish and eel that were wounded and killed in the turbine of
the power station. The technical challenges leading to this
are complex. During 2022, Småkraft acquired the power
station and immediately stopped its production to plan and
perform significant upgrades to the intake of the power
station. The new solution had a cost of approximately EUR
1 million in addition to significant production loss. Småkraft
looks forward to test the solution during the spring flood
in 2024. The investments on Fosstveit show Småkraft’s
commitment to act sustainable and meet environmental
standards beyond minimum governmental requirements.
3. Investing in improved environmental footprint
Illustrations: Fosstveit power station upgrade plans. 3D illustrations of upstream (left) and downstream (right).
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Småkraft Annual Report 2023
Energy production from small-scale hydropower plants
will have an impact on the local environment around the
power station, the penstock and the intake. These are not
a natural part of the surrounding environment, and some
parts may act as physical barriers for life in and life that
depends on the river. Småkraft borrows water from the
river between the intake and the power station. This may
affect the biodiversity in and around the river.
The majority of our power plants are governed by
restrictions on water flow for energy production. This
implies that our power plants have to release water
4. Biodiversity
to the river (minimum water flow) as long as water is
flowing. This is a license requirement laid down to protect
biodiversity in the river and reduce negative impacts.
Other key license requirements are bypass valves that
ensure sufficient water in the river during an immediate
production stop or specific water flow requirements.
During 2023, Småkraft has worked to improve and update
the work processes to ensure that the environmental
requirements are met efficiently and safely.
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Småkraft Annual Report 2023
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.
Småkraft secures competitive,
responsible and long-term capital
Småkraft operates the power
plants efficient and safe
Småkraft enhances the output and
values for landowners and investors
INVESTOR
SMÅKRAFT AS
LOCAL COMMUNITY
Småkraft develops new power plants
together with the local community
Our business model is to bring long-term capital and competence to
landowners who want to use their own land to create renewable energy
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Småkraft Annual Report 2023
Board of Directors
• 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
• Chair and Board Member of several listed and private companies
• Degree in law from TU Dresden
• 7 years’ experience with hydropower as an Investment Manager at Aquila Capital
• 15+ years’ experience from legal sector, financial industry and renewables
• LL.M. in Dutch Civil Law, Leiden University, and MBA, St. Gallen University
• 9 years’ experience with hydropower as Co-Head of Hydropower and asset
management roles at Aquila Capital
• Advisor and board member to international private companies
• LL.M. in corporate law, mergers and acquisitions, FOM University
• 10 years’ experience in the renewable energy industry
• Head of Asset & Fund Management, Hydropower, Aquila Capital
• 2 years’ consulting experience at PwC
Annette Malm Justad
Chair
Claudia Ahnert
Board Member
Oldrik Verloop
Board Member
Felix Renneke
Board Member
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Småkraft Annual Report 2023
Management team
• MSc in Hydropower Engineering from Norwegian University of Sciences and
Technology (NTNU)
• 30 years’ experience in leading positions in companies including Framo, FMC,
Aker Solutions and Frydenbø Industrier
• Certified Public Accountant, Master of Accounting and Auditing, Norwegian
School of Economics (NHH), and Dipl. Kaumf. Business and Administration,
University of Passau
• 7 years as CFO at Småkraft and Norsk Grønnkraft, and 6 years at PwC
• MSc in Electrical Energy Engineering from Norwegian University of Science and
Technology (NTNU)
• 20 years’ experience in energy companies including Statkraft, Scanenergy and
Captiva
• 21 years’ experience as Head of Hydro at Brødrene Dahl AS
• 2 years as Chief Executive Officer at Hywer
Terje Vedeler
Chief Executive Officer
Erik Røysem Sterud
Chief Financial Officer
David Inge Tveito
Chief Operational Officer
Bjarte Skår
Chief Commercial Officer
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Småkraft Annual Report 2023
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 organization 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 259,051,600
divided among 5,181,032 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 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 market 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.
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.
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Småkraft Annual Report 2023
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
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Småkraft Annual Report 2023
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.
Småkraft emphasizes 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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Småkraft Annual Report 2023
Board of Directors’ report
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 in, 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, Dale and Gävle. The Group employs 32 people.
Småkraft’s power plants are located in all price zones in
Norway and in two zones in Sweden.
Småkraft was established in 2002 and celebrated its
20
th
year anniversary in 2022 as the largest small-scale
hydropower company in Norway. By year end of 2023,
Småkraft had 231 operating hydropower plants (219
at year end 2022), with a total accumulated production
capacity of 2,090 GWh (2,002 by end of 2022).
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
20 and Related parties at Note 24.
Equity and shares
The Group had a book equity of EUR 386 million and a
book equity ratio of 44% as of 31 December 2023.
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 registered ordinary shares issued in
Småkraft AS as of 31 December 2023 is 5,181,032.
ESG and quality
In total, Småkraft has acquired and constructed 12 power
stations that add 88 GWh annual capacity to the Småkraft
portfolio during 2023. Furthermore, Småkraft managed
to maintain and expand its pipeline of power stations it
constructs together with its partners. Småkraft signed
contracts that add 227 GWh of renewable energy over the
next couple of years, and it has a significant pipeline of
further projects to mature to formal investment decisions.
The Småkraft business model creates significant value
for multiple stakeholders. Småkraft will pay out more than
EUR 6 million in land lease based on the 2023 results.
Småkraft maintained good performance on key quality
indicators. Short-term sick leaves have been stable below
2.0% the last years. Småkraft monitors incidents that lead
to lost time of work for both employees and its partners/
suppliers. During 2023, 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
implemented the Transparency Act and associated due
diligence assessments and reports during 2023. The
company has already implemented the Transparency
Act’s requirements in its internal governing documents.
Småkraft is currently working with suppliers to obtain
documentation that defined requirements are met by the
suppliers. Småkraft’s sustainability reports are published
on company website (https://smaakraft.no/).
Please refer to Småkraft’s Sustainability Report 2023 for
further details about ESG and social responsibility
in general.
21
Småkraft Annual Report 2023
Work environment and personnel
Småkraft AS seeks to be an attractive employer focused
on employee retention and maintaining a good working
environment. Diversity of background, interests and
knowledge is important to form the most varied and best
possible competencies to conduct Småkraft’s operations in
the best possible way. 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. We are working
systematically to improve diversity.
One out of five new employees in Småkraft in 2023 is
female. In total, 16% of Småkraft’s full time employees
are female. The Board has four Directors, out of which
two are female. The chair is female.
Outlook
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.
Elevated price levels and increased volatility persisted
during the first part of 2023, while prices dropped
significantly in the third quarter. The Nordic commodity
markets remain less liquid than historically, which leads
to more challenging financial hedging activities. Småkraft
halted its hedging activities during the summer 2021 and
2022, while in 2023 Småkraft only adjusted its hedges to
match its production volatility.
The production is expected to increase in line with full year
production from power plants acquired in 2023 and new
plants coming on stream in 2024. The Småkraft Group
pursues a growth strategy and intends to invest further in
new production capacity over the next years.
During 2023, Småkraft has continued to look for
operational improvement and explore growth and
diversification opportunities. Projects have been initiated
to ensure that Småkraft adapts 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 are therefore affected by
currency exchange fluctuations between NOK and EUR.
Key metrics
Alternative Performance Measures (APM) - ref. note 8
EUR ’000 2023 2022
Power revenue 67 758 133 559
Profit (loss) before tax 34 876 -84 340
Cash flow from operations -34 235 38 581
Production volume (GWh) 1 504 1 470
Avg. prices (EUR/MWh) 45 91
EUR ’000 2023 2022
Adjusted power revenue 50 482 78 651
Adjusted EBITDA 22 396 38 513
EBITDA 95 529 -44 780
Income Statement
Småkraft generated power revenue of EUR 68 million in
2023 (EUR 134 million), a decrease of EUR 66 million or
49%. The decrease is explained by halved power prices.
Production was 1,504 GWh, an increase of 2%
compared to 2022. Average obtained spot prices per
MWh decreased by 50% to 45 EUR / MWh in 2023
compared to 2022. 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.
In 2023 the mark to market valuation of energy derivatives
hedging about ¼ of the expected production for 2024
caused a positive unrealized value change of EUR 73
million (negative EUR 83 million in 2022). 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.
22
Småkraft Annual Report 2023
Småkraft is focusing on selected Alternative Performance
Measures (APMs) to measure performance from
operational activities, please refer to appendix detailing
these APMs. Adjusted power revenue showed a decrease
of 36% for 2023 compared to 2022 underlining the impact
of lower power prices in 2023.
Payroll and related costs increased from EUR 3.7 million
to EUR 4.6 million in 2023 mainly due to increase in
personnel cost and headcount. Depreciations for 2023
were EUR 20 million (EUR 21 million). The decrease is
explained by a weaker NOK compared to EUR in 2023
in addition to a reversal of historical minor value for one
power plant. There is a decrease in other operating
expenses from EUR 39 million to EUR 25 million in 2023,
explained by a reduction in land lease expenses of EUR
14 million from 2022 directly linked to lower power prices
in 2023.
The operating profit for 2023 was EUR 76 million (loss
of EUR 66 million in 2022). Excluding unrealized value
change on energy derivatives, Småkraft would have
reported an operating profit of EUR 2 million (EUR 18
million). Adjusted EBITDA is EUR 22 million (EUR 39
million).
Net financial items for 2023 reported a loss of EUR 41
million (EUR 19 million). The main explanation is a loss
of EUR 6 million of fair value changes of interest and
currency derivatives compared to a profit of EUR 7 million
in 2022. Furthermore, currency development EUR / NOK
and the fact that the majority of long-term financing is
granted in EUR Implied a disagio on borrowings in 2023 of
EUR 23 million (EUR 15 million).
Income tax expenses reports to EUR 8 million in 2023
compared to an income of EUR 13 million in 2022.
Total comprehensive income 2022 was EUR 7 million
in 2023 compared to a loss of EUR 89 million in 2022.
Alternative Performance Measures 2023
Illustrated
Power revenue
EUR 68 million
Southern mid
Sweden (SE3)
Northern mid
Sweden (SE2)
Western Norway
(NO5)
Northern Norway
(NO4)
Mid Norway
(NO3)
Southwest
Norway (NO2)
Southeast
Norway (NO1)
7%
5%
34%
16%
6%
30%
2%
OPEX
EUR 19 million
Realised value change (non-
cash) on energy derivatives
EUR 17 million
Water right lease
EUR 4 million
Payroll
EUR 5 million
Adjusted power revenue
EUR 50 million
Adjusted EBITDA
EUR 22 million
23
Småkraft Annual Report 2023
Balance sheet
Consolidated total assets as of 31 December 2023
amounted to EUR 874 million (EUR 936 million).
Total non-current assets amounted to EUR 812 million
(EUR 809 million).
Current assets amounted to EUR 62 million
(EUR 127 million).
Total equity amounted to EUR 386 million (EUR 352
million) an increase of EUR 34 million. The equity ratio
was 44% (38%).
Total liabilities amounted to EUR 489 million (EUR 584
million). Total borrowings amounted to EUR 441 million
(EUR 434 million) reflecting an increase in interest bearing
borrowings of EUR 7 million. Net interest-bearing debt
amounts to EUR 401 million (EUR 319 million).
Cash flow
Cash flow from operating activities amounted to negative
EUR 34 million (EUR 39 million). The major explanations
behind this is a cash outflow to landowners in 2023 based
on high revenues earned in 2022.
The cash outflow from investing activities amounted
to EUR 62 million (EUR 109 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
29 million (EUR 143 million). The shareholders contributed
new capital of EUR 68 million (EUR 105 million). The
Group received inflows from loan raising of EUR 123
million (EUR 128 million) and paid EUR 121 million (EUR
83 million) in instalments on credit facilities and leases.
Dividends of EUR 38 million (EUR 6 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 - Key
accounting estimates and judgements in the Consolidated
Financial Statements for further information.
24
Småkraft Annual Report 2023
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 30 million
in 2023 (EUR 61 million), a decrease of EUR 31 million or
51%. The decrease is explained by lower power prices in
2023 compared to very high prices in 2022.
Småkraft AS has production in all price areas in Norway.
In 2023 the mark to market valuation of energy derivatives
hedging about ¼ of the expected production for 2024
caused an unrealized value change of EUR 73 million
(EUR -83 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. Reference is made to appendix
to this report, detailing the APMs. Adjusted Power revenue
showed an increase of 115% for 2023 compared to 2022
explained by the impact of changes in realized value
change on energy derivatives in 2023.
Payroll and related costs increased from EUR 3.7 million
to EUR 4.4 million in 2023 mainly due to increased
number of personnel and higher hired personnel cost.
Depreciation for 2023 was EUR 7.9 million (EUR 8.4
million) explained by a weaker NOK compared to EUR.
The growth in the group as such has a direct impact on
the increase in other operating expenses, however there
was a decrease comparing 2023 with 2022 especially due
to lower land-lease expenses.
The operating profit for 2023 was EUR 66 million (EUR
-107 million). Excluding unrealized value change on
energy derivatives, Småkraft AS would have reported an
operating loss of EUR 7 million (EUR 23 million). Adjusted
EBITDA excluding same MTM adjustment is a profit of
EUR 1 million (EUR -15 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 2023 reported a profit of EUR 7
million. In 2022 net financials reported a loss of EUR 7
million. Main explanation for this difference is recognized
distributions from subsidiaries which is EUR 30 million
higher in 2023 compared to 2022. Reducing this positive
development is negative fair value changes on interest
and currency derivatives of EUR 12 million compared
to 2022. Currency fluctuations EUR / NOK explains
currency losses on borrowings in 2023 of EUR 17 million,
compared to EUR 13 million in 2022.
Income tax expenses was EUR 14 mill in 2023 compared
to an income of EUR 25 million in 2022.
Total comprehensive income 2023 was a profit of
EUR 40 million (EUR -104 million).
Balance sheet
Total assets as of 31 December 2023 amounted to
EUR 692 million (727 million).
Total non-current assets amounted to EUR 657 million
(EUR 656 million).
Current assets amounted to EUR 25 million
(EUR 71 million).
Total equity amounted to EUR 390 million (EUR 322
million) an increase of EUR 68 million. The equity ratio
was 57% (44%).
Total liabilities amounted to EUR 292 million (EUR 405
million), reflecting a decrease in liabilities of EUR 113
million. The major part of the reduction is explained by
reduced MTM value of derivatives EUR 82 mill. Net
interest-bearing debt amounted to EUR 237 million
(EUR 194 million).
Cash flow
Cash flow from operating activities amounted to
EUR 6 million (EUR -6 million).
The cash outflow from investing activities amounted to
EUR 40 million (EUR 56 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 11 million in 2023 (EUR 53 million).
The cash outflow from financing activities amounted to
EUR 5 million (inflow of EUR 109 million in 2022). The
shareholders contributed new capital of EUR 65 million
25
Småkraft Annual Report 2023
(EUR 105 million). Received inflows from loan raising of
EUR 54 million (EUR 18 million) and paid EUR 88 million
(EUR 8 million) in instalments on credit facilities and
leases. Dividends of EUR 37 million (EUR 5 million) were
paid to the shareholders.
Risk review
Operational risk factors
Risk management is important for value creation and is an
integral part of the business activity in Småkraft.
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, power prices and capture rates remain the
main risk factors for the upcoming periods.
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 2023
Småkraft has mainly adjusted its current hedges to match
its production volatility during the year better.
Increased future power prices increase indirectly
unrealized hedge loss. When the prices are increasing
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. The
development in 2023 has been the opposite. A decrease
in future prices has decreased the unrealized losses and
consequently improved Småkraft’s equity ratio.
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 production is
covered by interruptions insurance. Significant emphasis
has been dedicated to manage the QHSE risks in the
company.
Småkraft may also be affected by a changing climate,
and the company has initiated several measures to
identify potential risks and opportunities. Evaluation of
new acquisitions and development opportunities are
assessed in light of the expected changes in hydrology.
During detailed planning of new plants, we 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 minimize 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’s shareholders have committed equity for at least
50% of the agreed price for coming investments. Småkraft
is working actively with banks and debt investors to
finance the remaining part of the investments. 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 40 million at the end of 2023. This is deemed to be
sufficient funding for the Group’s current activity levels and
committed capital expenditures during 2024. 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.
26
Småkraft Annual Report 2023
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 2023 is
approximately 65%.
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 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,
Småkraft’s 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.
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.
During 2023 Småkraft successfully refinanced its EUR 50
million Green Bond 1 and issued a new EUR 40 million US
Private Placement. Småkraft’s main facility of EUR 150
million matures in June 2024.
Småkraft progressed commercial discussions with the
company’s banks about refinancing its main facility.
Per date of these financial statements, Småkraft has
commercially agreed terms with banks in a bank syndicate
that will refinance the current debt facility. The term- sheet
has not yet been credit committee approved by all the
bank syndicate members, but the term- sheet is ready to
be presented to the relevant bodies. Based on this the
Board is presenting the financial statements on going
concern.
27
Småkraft Annual Report 2023
Subsequent events
After year end, Småkraft has increased the portfolio of
Powerplants. On 31 January 2024 Småkraft closed the
acquisition of 100% of the shares in Myklebust Energi
AS, which has a powerplant in operation with a capacity
of 7.4 GWh. On 19 February 2024 Småkraft acquired
Meierifossen Kraft AS with one additional power plant
of 5.4 GWh.
In line with the Norwegian Company Act § 8-2 and the
registered Power of Attorney on Power to decide dividend
– registered the 14 September 2022 – the Board decided
to pay out dividend of in total EUR 15,000,000, based
upon the 2022 - Financial Statements. The dividend
payment shall be classified as capital redemption of the
paid “overkurs” in the tax accounts. The dividend was paid
out on 26 March 2024 (the “payment date”).
Bergen, Norway, 5 April 2024
The Board of Directors, Småkraft AS
Felix Renneke
Board Member
Oldrik Verloop
Board Member
Annette Malm-Justad
Chair of the Board
Claudia Ahnert
Board Member
Terje Vedeler
Managing Director
28
Småkraft Annual Report 2023
Annual accounts and notes
Småkraft Group
Consolidated financial statements
Note 3: Key accounting estimates and judgements
Note 6: Management of capital structure
Note 15: Impairment testing
Note 9: Payroll costs and related costs
Note 19: Cash and cash equivalents
Note 18: Receivables; amounts due after more than one year
Note 1: General information
Note 4: Subsequent events
Note 13: Derivatives
Note 7: Financial instruments - Risk Management
Note 16: Property, plant and equipment
Note 10: Other operating expenses
Note 21: Borrowings and guarantees
Note 20: Share capital, ownership structure and dividend
Note 2: General accounting policies
Note 5: Subsidiaries
Note 14: Intangible assets
Note 8: Power revenues and other income
Note 17: Investment, recognized under the equity method
Note 11: Financial items
Note 23: Water and lease agreements
Note 22: Concessions
Note 12: Taxes
Note 24: Related party transaction and balance items
Appendix
29
41
43
56
50
60
60
34
41
54
44
58
51
62
61
34
42
56
49
59
51
63
63
52
64
65
29
Småkraft Annual Report 2023
Amounts in EUR thousand Amounts in EUR thousand NoteNote 20232023 20222022
Power revenue 8 67 758 133 559
Other income 8 1 481 1 430
Fair value change on energy derivatives 13 55 857 -138 201
Unrealized value change on energy derivatives 73 133 -83 293
Realized value change on energy derivatives -17 277 -54 908
Share of the profit (loss) in equity accounted investments 17 118 1 415
Payroll and related costs 9 -4 653 -3 953
Depreciation and impairment of fixed assets and intangible assets 14, 15, 16 -20 010 -20 882
Other operating expenses 10 -25 032 -39 030
Operating profit/(loss) 75 519 -65 662
Financial income 11 1 982 1 252
Net foreign exchange gain (loss) -23 036 -14 769
Fair value changes on interest rate and currency derivatives 7, 13 -6 265 7 116
Financial expenses 11 -13 325 -12 278
Net financial items -40 643 -18 678
Profit/(loss) before tax 34 876 -84 340
Tax income (expense) 12 -7 633 12 884
Profit (loss) 27 243 -71 457
Profit/(loss) is attributable to:
Equity holders of the parent company 27 411 -72 535
Non-controlling interests -167 1 078
Other comprehensive income:
Items that may be reclassified to profit or loss
Currency translation differences on foreign operations 1 692 -715
Items that will not be reclassified to profit or loss
Currency translation differences -21 664 -16 488
Total comprehensive income for the year 7 271 -88 660
Total comprehensive income is attributable to:
Equity holders of the parent company 8 274 -89 009
Non-controlling interests -1 003 349
Consolidated statement of income and consolidated
statement of other comprehensive income
Småkraft Group
30
Småkraft Annual Report 2023
Consolidated statement of financial position
Småkraft Group
Amounts in EUR thousand Amounts in EUR thousand NoteNote 31.12.202331.12.2023 31.12.202231.12.2022
Assets
Non-current assets
Intangible assets 14 231 574 216 263
Property, plants and equipment 16 552 395 545 888
Deferred tax assets 12 16 913 25 245
Investments, recognized under the equity method 17 2 732 3 697
Derivatives 13 714 9 249
Other long-term receivables 18 7 691 8 719
Total non-current assets 812 018 809 061
Current assets
Inventories 1 489 0
Trade receivables 7 4 276 3 567
Other receivables 7 12 285 3 246
Derivatives 13 4 140 4 583
Cash and cash equivalents 19 40 120 115 253
Total current assets 62 310 126 648
Total assets 874 328 935 709
31
Småkraft Annual Report 2023
Consolidated statement of financial position, continued
Småkraft Group
Amounts in EUR thousand Amounts in EUR thousand NoteNote 31.12.202331.12.2023 31.12.202231.12.2022
Equity and liabilities
Shareholders’ equity
Share capital 20 23 046 22 861
Paid-in capital 20 402 500 401 420
Retained earnings -51 912 -86 348
Total shareholders’ equity 373 633 337 933
Non-controlling interest 12 057 14 131
Total equity 385 690 352 064
Non-current liabilities
Deferred tax liability 12 0 26
Borrowings 21 276 512 333 295
Derivatives 13 8 524 49 341
Other non-current liabilities 7 467 2 283
Total non-current liabilities 285 504 384 945
Current liabilities
Accounts payable 7 7 573 4 793
Taxes payable 12 1 257 5 992
Public duties payable 7 0 2 552
Derivatives 13 19 944 60 803
Borrowings 21 164 312 100 772
Other current liabilities 7 10 049 23 787
Total current liabilities 203 134 198 700
Total liabilities 488 638 583 645
Total equity and liabilities 874 328 935 709
Bergen, Norway, 5 April 2024
The Board of Directors, Småkraft AS
Felix Renneke
Board Member
Oldrik Verloop
Board Member
Annette Malm-Justad
Chair of the Board
Claudia Ahnert
Board Member
Terje Vedeler
Managing Director
32
Småkraft Annual Report 2023
Consolidated statement of changes in equity
Småkraft Group
Amounts in Amounts in
EUR thousand EUR thousand
NoteNote Share Share
capital capital
Paid-in Paid-in
capitalcapital
Foreign Foreign
currency currency
translationtranslation
**
Retained Retained
earningsearnings
Total Total
share-share-
holders’ holders’
equity equity
Non-Non-
controlling controlling
interestsinterests
Total Total
equityequity
Equity at 01.01.2022 20 039 321 692 -2 607 -14 185 324 940 14 270 339 210
Net profit -72 535 -72 535 1 078 -71 457
Currency translation
differences
-1 162 -18 290 -16 473 19 452 -16 473 -730 -17 203
Total comprehensive
income for the period
-1 162 -18 290 -16 473 -53 083 -89 009 349 -88 660
Capital increase 20 3 984 100 518 104 502 104 502
Dividend -2 500 -2 500 -487 -2 987
Equity at 31.12.2022 22 861 401 420 -19 080 -67 268 337 933 14 131 352 064
Net profit 27 411 27 411 -167 27 243
Currency translation
differences
-1 483 -25 382 -19 137 26 865 -19 137 -836 -19 973
Total comprehensive
income for the period
-1 483 -25 382 -19 137 54 276 8 274 -1 003 7 271
Capital increase current
period
20 1 669 63 654 65 323 2 381 67 704
Purchase of shares from
non-controlling interests
5 -704 -704 -2 517 -3 222
Dividend -37 192 -37 192 -935 -38 127
Equity at 31.12.2023 23 046 402 500 -38 216 -13 697 373 633 12 057 385 690
* Currency translation differences that can be reclassified through other comprehensive income were EUR 977 thousand per 31.12.2023
and EUR -715 thousand in pr 31.12.2022.
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Småkraft Annual Report 2023
Consolidated statement of cash flow
Småkraft Group
Amounts in EUR thousand Amounts in EUR thousand NoteNote 20232023 20222022
Cash flow from operations
Profit(loss) before tax 34 876 -84 340
Taxes paid for the period -5 079 -1 489
Depreciation, amortization, impairment 14,16 20 010 20 882
Interest paid -11 966 -8 172
Net financial items without cash effect 11 821 7 825
Cash settlement derivatives 13 -17 277 -54 908
Change in unrealized currency gains/losses 25 115 16 349
Change in unrealized derivatives 13 -49 592 131 085
Change in working capital -42 143 11 350
Net cash flow from operations -34 235 38 581
Cash flow from investment activities
Outflows due to purchases of fixed assets and intangibles 14,16 -35 117 -33 876
Outflows due to investments in subsidiaries 5 -29 082 -74 205
Outflows due to investments in other financial assets -42 -2 434
Inflows from sale of other financial assets 1 452 0
Outflows from loans to others 0 -1 159
Inflows from loans to others 0 2 880
Dividend received from equity accounted investments 876 0
Net cash flow from investment activities -61 914 -108 793
Cash flow from financing activities
Capital increases 20 67 704 104 502
Dividend payments -38 127 -5 739
Outflows from transactions with non-controlling interest -3 222 0
Inflows from loan raising 5 123 474 127 611
Outflows from loan payments 5 -120 504 -83 127
Net cash flow from financing activities 29 326 143 246
Currency translation effects -8 311 -2 219
Net change in bank deposits and cash -66 822 73 034
Bank deposits and cash at beginning of period 115 253 44 438
Bank deposits and cash at end of period 40 120 115 253
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Småkraft Annual Report 2023
Notes
Note 1: General information
Note 2: General accounting policies
The Småkraft Group comprises of Småkraft AS and the consolidated subsidiaries (Småkraft Group or the Group).
Småkraft’s head office is located in Bergen, with local offices in Harstad, Flatanger and Oslo, Norway. The Group
employs 32 people. Småkraft is a supplier of renewable energy based on small scale hydro power plants situated in
Norway and Sweden.
The group consists of Småkraft AS and 35 fully or partly owned subsidiaries at year end 2023.
Småkraft’s consolidated financial statements have been prepared in accordance with IFRS® Accounting Standards 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 which 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.
Basis of Consolidation
The consolidated financial statements of the Group for the year ended 31 December 2023 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 unrealized gains on
transactions between group companies. Unrealized losses are eliminated unless the transaction provides evidence of an
impairment of the transferred asset.
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Småkraft Annual Report 2023
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. If the entity acquired includes
the elements (input, process, and output) included in the definition of a business the transaction is accounted for a
business combination, otherwise the transaction is accounted for as an acquisition of asset. In most transactions the
group acquire a powerplant (with land rights) or several power plants, that do not represent a business under the
definition in IFRS 3.
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. Apart from financial instruments the assets acquired in these
transactions is the power plant and the intangible asset relating to the water rights.
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
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Småkraft Annual Report 2023
to invoice the consideration will normally correspond directly with the value to the customer. In 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. Borrowing costs incurred
during the manufacturing of tangible non-current assets are capitalised until the asset is ready for its intended use.
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.
Intangible assets
Intangible assets consist of waterfall rights acquired separately and rights to land acquired as part of the acquisition of a
power plant. In general, the waterfall right is recognised as a separate intangible asset. The cost of the acquired water
right lease is at initial recognition measured as a residual, based on the purchase price on acquisition of a power plant
owning company. Småkraft distinguishes waterfall rights in time-limited and unlimited groups regardless of how they were
acquired. Reference is made to note 14.
Intangible assets are measured at cost less accumulated amortisation and accumulated impairment losses. Costs
relating to intangible assets, 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 are not amortised but are instead tested annually for impairment.
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.
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Småkraft Annual Report 2023
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 landowners, 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 landowner. 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 Group’s Financial Statements.
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Småkraft Annual Report 2023
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 receivables are measured at initial recognition at fair value. Accounts receivables 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.
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Småkraft Annual Report 2023
Financial liabilities
The Group 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 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 payables 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. The initial recognition exemption for the tax effect on temporary differences relating
to purchase of power plants applies if the transaction is treated as an asset acquisition (not a business combination).
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 0.011 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.
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Småkraft Annual Report 2023
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%.
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 01.01.2023:
• 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)
None of the amendments listed above have had any impact on the financial statements.
Standards and amendments issued but not yet effective
Certain amendments to accounting standards have been published that are not mandatory for 31 December 2023
reporting periods and have not been early adopted by the group. These amendments are not expected to have a material
impact on the entity in the current or future reporting periods and on foreseeable future transactions.
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Småkraft Annual Report 2023
Note 4: Subsequent events
After year end, Småkraft has increased the portfolio of powerplants. On 31 January 2024 Småkraft closed the acquisition
of 100% of the shares in Myklebust Energi AS, which has a powerplant in operation with a capacity of 7.4 GWh to our
portfolio in Norway. 19 February 2024 Småkraft AS acquired Meierifossen Kraft AS with one additional power plant of 5.4
GWh.
In line with the Norwegian Company Act § 8-2 and the registered Power of Attorney on Power to decide dividend –
registered the 14 September 2022 – the Board decided to pay out dividend of in total EUR 15,000,000, based upon the
2022 – Financial Statements. The dividend payment shall be classified as capital redemption of the paid “overkurs” in the
tax accounts. The dividend was paid out on 26 March 2024 (the “payment date”).
Note 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 PPE and intangible assets, as disclosed in Note 15,
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 15.
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 13.
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Småkraft Annual Report 2023
Note 5: Subsidiaries
Småkraft purchased 15 subsidiaries in 2023 (12 in 2022):
Company Date of Registered Ownership Voting acquisition/officeshareshareincorporationSmåkraft AS Bergen Reinli Kraft AS 2005 Bergen 51% 51%Rullestad & Skromme AS 2006 Etne 100% 100%Muoidejohka Kraft AS 2010 Bergen 60% 60%Jorda Kraft AS 2012 Bergen 51% 51%Kvemma Kraft AS 2013 Lærdal 66% 66%Holmen Kraft AS 2016 Bergen 100% 100%Follsjå Kraft AS 2016 Bergen 82% 82%Sigdestad Kraftverk AS 2018 Bergen 52% 52%Holsen Kraft Nordøla AS 2020 Bergen 100% 100%Ytre Kandal Kraft AS 2020 Sandane 61% 61%Fossåa 1 K AS 2020 Sør-Fron 66% 66%Rysna Småkraftverk AS 2020 Bergen 100% 100%Tokheim Kraft AS 2020 Bergen 100% 100%Småkraft Green Bond 2 AS 2020 Bergen 100% 100%Småkraft USPP 1 AS 2022 Bergen 100% 100%Chr Salvesen & Chr Thams’s 2022 Bergen 100% 100%Communications ASSvorka Småkraft AS (Setergrytå AS) 2023 Bergen 65% 65%Småkraft Vekst 2025 AS 2023 Bergen 100% 100%Småkraft Vekst 2026 AS 2023 Bergen 100% 100%Egge Kraftverk AS 2023 Bergen 100% 100%Dalelva Kraft AS (Fjaler) 2023 Bergen 100% 100%Heimseta Kraftverk AS 2023 Bergen 100% 100%Jåstadkraft AS 2023 Bergen 100% 100%Nye Unhjemkraft AS 2023 Bergen 100% 100%Øvre Alsåker Kraftverk AS 2023 Bergen 100% 100%EM Kraftverk Vest AS 2023 Bergen 100% 100%Dalelva Kraftverk AS (Masfjorden) 2023 Bergen 100% 100%Midt Kraft AS 2023 Bergen 100% 100%Myrholten Kraftverk AS 2023 Bergen 100% 100%Småkraft Green Bond 1 AS 2018 Bergen 100% 100%Saksenvik Kraft AS 2016 Bergen 96% 96%Lotsberg Kraftverk AS 2023 Bergen 100% 100%Hovland Kraftverk AS 2023 Bergen 100% 100%Småkraft AB 2022 Uppsala 100% 100%Småkraft Operations AB 2022 Uppsala 100% 100%
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Småkraft Annual Report 2023
Associated companies Date of Registered Ownership Voting acquisitionofficeshareshareLuster Småkraft AS 2005 Gaupne 50% 50%Proxima Hydrotech AS 2021 Seimsfoss 33% 33%Småvirkjanir EHF 2022 Reykjavik 50% 50%Gjerdelva Kraft AS 2023 Dale 50% 50%
Financial initial effect from purchased subsidiaries
Based on the assessment of management none of the subsidiaries (power plants) acquired during 2023 and 2022
constitutes a business as defined in IFRS 3, thus all purchases are treated as acquisition of asset.
Amounts in EUR thousand Amounts in EUR thousand 31.12.2023 31.12.2022Acquisition cost 29 082 74 205Deferred tax asset 160 20Intangible assets 28 383 67 202Property, plant and equipment 26 479 77 191Short term receivables 459 2 925Non-controlling interests -142 0Interest-bearing liabilities, non-current -6 185 -48 228Deferred tax liability 0 -167Other interest-free liabilities -20 072 -24 739Total 29 082 74 205
Overview of capital included in management of capital structure:Amounts in EUR thousand Amounts in EUR thousand 31.12.2023 31.12.2022Total non-current assets 812 018 809 061 Interest-bearing liabilities, non-current 276 512 333 295 Interest-bearing liabilities, current 164 312 100 772 Cash and cash equivalents, excluding restricted cash 40 120 115 253 Net interest-bearing liabilities (NIB) 400 704 318 814 NIB/Total non-current assets 49% 39%
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
Note 6: Management of capital structure
The main aims of the Group’s management of its capital are 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.
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Småkraft Annual Report 2023
Note 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
• 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
• Forward currency contracts
(ii) Financial instruments by category
31.12.2023
Amounts in EUR thousand Amounts in EUR thousand Financial
assets at fair
value
Financial
assets at
amortized cost
Financial
liabilities at fair
value
Financial
liabilities at
amortized cost
Total
Assets
Long-term receivables 7 691 7 691
Trade receivables 4 276 4 276
Other receivables 12 285 12 285
Derivatives non-current 714 714
Derivatives current 4 140 4 140
Cash and cash equivalents 40 120 40 120
Liabilities
Borrowings non-current -276 512 -276 512
Borrowings -164 312 -164 312
Accounts payable -7 573 -7 573
Other non-current liabilities -467 -467
Other current liabilities -10 049 -10 049
Derivatives non-current -8 524 -8 524
Derivatives current -19 944 -19 944
Net financial assets
and liabilities
4 854 64 372 -28 468 -458 913 -418 155
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Småkraft Annual Report 2023
31.12.2022
Amounts in EUR thousand Amounts in EUR thousand Financial
assets at fair
value
Financial
assets at
amortized cost
Financial
liabilities at fair
value
Financial
liabilities at
amortized cost
Total
Assets
Long-term receivables 7 691 7 691
Trade receivables and
other receivables
4 276 4 276
Other receivables 12 285 12 285
Derivatives non-current 714 714
Derivatives current 4 140 4 140
Cash and cash equivalents 40 120 40 120
Liabilities
Borrowings non-current -276 512 -276 512
Borrowings current -164 312 -164 312
Accounts payable -7 573 -7 573
Other non-current liabilities -467 -467
Other current liabilities -10 049 -10 049
Derivatives non-current -8 524 -8 524
Derivatives current -19 944 -19 944
Net financial assets
and liabilities
4 854 64 372 -28 468 -458 913 -418 155
(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 13.
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.
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Småkraft Annual Report 2023
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
2024 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. All energy trading contracts are financial contracts.
Småkraft has hedged a portion of the expected power sale.
Total volume hedged for the future is shown in the table below:
31.12.2023
Year 1 Year 2 Year 3
Hedged volume 441 GWh 385 GWh 193 GWh
31.12.2022
Year 1 Year 2 Year 3
Hedged volume 535 GWh 439 GWh 254 GWh
The energy derivatives are hedged against Nordic system prices. Småkraft also has EPADs for selected price areas.
Both realized cash effects and unrealized non-cash effects from trading are presented in the line item “Fair value change
on energy derivatives” in the consolidated statement of income.
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 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 Småkraft’s 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.
As of 31 December, the Group’s net exposure to foreign exchange risk was as follows:
31.12.2023
Functional currency of individual entity
Amounts in EUR thousand Amounts in EUR thousand NOK
Net foreign currency financial assets/(liabilities)
Currency
NOK
EUR -386 354
SEK -612
Total net exposure -386 966
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Småkraft Annual Report 2023
31.12.2022
Functional currency of individual entity
Amounts in EUR thousand Amounts in EUR thousand NOK
Net foreign currency financial assets/(liabilities)
Currency
NOK
EUR -395 284
SEK 2 462
Total net exposure -392 822
Description of interest rate risk
Småkraft’s interest rate risk is defined as gross interest exposure because of outstanding loans with floating interest rates
as well as undrawn signed financing. As soon as a term sheet is signed, the interest rate exposure from this financing
must be included in the interest rate risk calculation.
The ratio is defined as the expected outstanding loan balance with a fixed interest rate above the total expected
outstanding loan balance. Småkraft must ensure that it stays within the following security level at all times:
Hedge ratio
Avg. year 1 to 3 Avg. year 4 to 5 Avg. year 6 to 10
Max. hedge ratio 100% 100% 100%
Min. hedge ratio 50% 25% 0%
Interest rate exposure for power plants under construction
In the same way that Småkraft does not hedge power prices for signed production during construction, the expected
interest rate exposure for potential future debt linked to development is also not to be included in the interest rate risk
calculations. This interest rate risk shall not be hedged.
Approved instruments
Småkraft can use interest rate swaps, fixed interest rate coupons or interest rate options. Options must only be used for
hedging and stop-loss levels must be defined.
As of December 31, 2023, Småkraft has the following interest rate derivatives.
Interest rate derivatives
Amounts in EUR thousand Amounts in EUR thousand
Maturity dateMaturity date Currency Amount Fixed rate MTM Secured part Equivalent
28.06.2024 EUR 150 000 -0.2787% 3 100 100% 150 000
15.07.2026 EUR 9 307 -0.27% 694 50% 9 307
02.01.2025 NOK 53 480 2.33% 92 100% 4 758
18.08.2025 NOK 17 000 2.01% 49 50% 1 512
The interest rate derivatives are linked to the bank loans. The future development in interest rates will affect the value of
the interest rate derivatives.
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Småkraft Annual Report 2023
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:
Interest rate sensitivity borrowings
Increase/(decrease) in basis points Effect on profit before tax Effect on equity
31.12.2023 100 -4 408 -3 438
31.12.2022 100 -3 541 -2 762
Credit risk
Credit risk is the risk that Småkraft incurs losses due to the failure of counterparties to honour 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, Småkraft’s credit losses have been limited.
All of Småkraft’s 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 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.
31.12.2023
Cash flows including interest
Amounts in EUR thousand Amounts in EUR thousand Carrying amount 1 year 2 years 3 years 4 years >5 years
Borrowings 440 824 177 565 16 554 95 315 10 418 215 515
Accounts payable 7 573 7 573
Derivatives 28 468 19 944 8 094 430
Other current liabilities 10 049 10 049
Total 486 914 215 130 24 648 95 745 10 418 215 515
31.12.2022
Cash flows including interest
Amounts in EUR thousand Amounts in EUR thousand Carrying amount 1 year 2 years 3 years 4 years >5 years
Borrowings 434 067 110 592 184 876 6 517 71 159 110 917
Accounts payable 4 793 4 793
Derivatives 110 144 60 803 34 675 14 666
Other current liabilities 23 787 23 787
Total 572 791 199 975 219 551 21 183 71 159 110 917
Concession and return of right of repatriation
The concession is perpetual. The right of repatriation is not applicable for Småkraft.
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Småkraft Annual Report 2023
Note 8: Power 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 derivatives 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
Amounts in EUR thousandAmounts in EUR thousand 2023 2022Price area NO1 Norway 3 074 7 063 Price area NO2 Norway 21 284 43 446 Price area NO3 Norway 10 072 10 052 Price area NO4 Norway 3 711 3 298 Price area NO5 Norway 18 724 63 165 Price area SE2 Sweden 1 407 1 271 Price area SE3 Sweden 4 223 2 603 *Other green revenue 5 262 2 662 Power revenues 67 758 133 559
*Included in other green revenue is income from EL-certificates of EUR -66 thousand in 2023 and EUR 189 thousand in 2022.
Other income
Guarantees of origin
Introduced with the EU’s first Renewable Energy Directive (Directive 2001/77/EC) in 2001, Guarantees of Origin are
defined as a labelling scheme for electricity to show the electricity customer that a quantity of power has been produced
from a specified energy source. All power producers can receive guarantees of origin corresponding to their power
production. A guarantee of origin corresponds to 1 MWh of electricity produced.
Guarantees of Origin not yet delivered to customers are presented as inventory. Changes in inventory related to origin
guarantees is presented below in the note.
Amounts in EUR thousandAmounts in EUR thousand 2023 2022Guarantees of origin – change in inventory 1 265 Other income 217 1 430 Other income 1 481 1 430
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Småkraft Annual Report 2023
Note 9: Payroll and related costs
Amounts in EUR thousandAmounts in EUR thousand 2023 2022Wages and salaries 3 397 2 904 Payroll tax 695 568 Pension costs 432 344 Other benefits 129 137 Sum 4 653 3 953 Number of full-time employees 32 31
Compensation to the Group Leadership Team
Amounts in EUR thousandAmounts in EUR thousandExecutive Position, period Year Salaries Pensions Other benefits Total compensation Terje Vedeler CEO 2023 320 14 6 341 2022255155276Erik Sterud CFO 2023 211 15 3 229 from 01.07.2220229581103David Inge Tveito COO 2023 169 14 10 192 from 01.07.222022838495Bjarte Skår CCO 2023 130 14 13 157 from 01.01.2320220000Tone Aarø CFO 2023 0 0 0 0 01.01.22-30.06.222022768185Jørgen Hundven COO 2023 0 0 0 0 01.01.22-30.06.222022798188Karina Birkelund CCO 2023 0 0 0 0 01.01.22-31.12.222022150152168
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 recognized 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.
Fees paid to external auditors
Amounts in EUR thousandAmounts in EUR thousand 2023 2022Statutory audit 384 295 Tax counselling 0 2 Other assurance services 107 72 Sum 491 369
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Småkraft Annual Report 2023
Note 10: Other operating expenses
Amounts in EUR thousandAmounts in EUR thousand 2023 2022*Water rights costs3 774 18 343 El-certs costs 152 561 Transmission costs 3 016 3 701 Property tax and license fees 3 004 2 966 Telecommunications 53 61 Rent and related expenses 758 472 Transport 75 40 Purchase of various services 4 238 4 457 IT expenses 720 698 Repair/maintenance regarding equipment, machines etc. 4 635 3 666 Consultant services 1 662 1 401 Other operating expenses 2 943 2 665 Other operating expenses 25 032 39 030
*See also note 23.
Note 11: Financial items
Financial income
Amounts in EUR thousandAmounts in EUR thousand 2023 2022Other financial income 1 982 1 252Total 1 982 1 252
Financial expenses
Amounts in EUR thousandAmounts in EUR thousand 2023 2022Interest expense 12 111 7 825Other financial expenses 1 214 4 453Total 13 325 12 278
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Småkraft Annual Report 2023
Note 12: Taxes
Reconciliation of nominal tax rate and effective tax rate
Amounts in EUR thousandAmounts in EUR thousand 2023 2022Profit/(loss) before tax 34 876 -84 340 Tax rate, percent 22% 22%Expected tax expense (income) 7 673 -18 555 Effect on taxes of Permanent differences 259 303 Taxes on resource rent payable 471 4 831 Deferred resource rent tax 84 -49 Changes related to deferred tax on off-balance sheet items -824 619 Other changes, including tax effect of different tax rates in other countries -29 -33 Tax expense (income) 7 633 -12 884 Effective tax rate 22% 15%
Taxes payable in the balance sheet
Amounts in EUR thousandAmounts in EUR thousand 31.12.2023 31.12.2022Tax payable (receivable) from previous years 271 -163 Income tax payable 424 1 512 Taxes on ground rent payable/receivable 478 4 643 Natural resource tax payable 84 86 Used natural resource tax - -86 Taxes payable in the balance sheet 1 257 5 992
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Småkraft Annual Report 2023
Specification of temporary differences and deferred tax
Amounts in EUR thousandAmounts in EUR thousand 31.12.2023 31.12.2022Fixed assets 214 823 197 368 Current assets/current liabilities 632 - Interest deduction carry forward -1 298 -2 113 Unrealized derivatives -22 936 -97 290 Deferred ground rent tax 116 -58 Natural resource rent tax carried forward -115 - Other differences 1 066 1 596 Temporary differences 192 288 99 503Losses carried forward -98 470 -64 851 Differences not affecting deferred tax* -170 568 -149 076 Basis for deferred tax -76 750 -114 424 Net deferred tax assets (-)/liability (+) in the balance sheet, ordinary tax -16 913 -25 219 Deferred tax (assets) -16 913 -25 219
*Deferred taxes are not recognised for temporary differences that arise on initial recognition assets acquired in a transaction which is not a business
combination.
Deferred taxes on ground rent are included in deferred tax. Tax amount is not significant in 2023 and 2022.
Presentation
Amounts in EUR thousandAmounts in EUR thousand 31.12.2023 31.12.2022Deferred tax asset 16 913 25 245Deferred tax liabilities - 26Net 16 913 25 219
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Småkraft Annual Report 2023
Note 13: 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:
31.12.2023
Amounts in EUR thousandAmounts in EUR thousand Energy
derivatives
Interest rate
swaps
Currency
derivatives
Total
Opening balance (net) 31.12.2022 -104 447 9 249 -1 115 -96 312
Additions/sale -1 452 0 0 -1 452
Fair value changes 55 857 -4 762 -1 503 49 592
Cash settlement 17 277 0 0 17 277
Currency translation differences 7 897 -662 48 7 283
Sum -24 869 3 825 -2 570 -23 614
Gross
Non-current asset 0 714 0 714
Current Asset 1 029 3 111 0 4 140
Total asset 1 029 3 825 0 4 854
Non-current liabilities 8 241 0 283 8 524
Current liabilities 17 657 0 2 287 19 944
Total liability 25 898 0 2 570 28 468
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Småkraft Annual Report 2023
31.12.2022
Amounts in EUR thousandAmounts in EUR thousand Energy
derivatives
Interest rate
swaps
Currency
derivatives
Total
Opening balance (net) 31.12.2021 -27 738 127 1 237 -26 374
Additions/sale -1 452 0 0 -1 452
Fair value changes 55 857 -4 762 -1 503 49 592
Cash settlement 17 277 0 0 17 277
Currency translation differences 7 897 -662 48 7 283
Sum -24 869 3 825 -2 570 -23 614
Gross
Non-current asset 0 714 0 714
Current Asset 1 029 3 111 0 4 140
Total asset 1 029 3 825 0 4 854
Non-current liabilities 8 241 0 283 8 524
Current liabilities 17 657 0 2 287 19 944
Total liability 25 898 0 2 570 28 468
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”.
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Småkraft Annual Report 2023
Note 14: Intangible assets
Amounts in EUR thousandAmounts in EUR thousand Waterfall rights Waterfall rights Total *Time-unlimitedTime-limitedCost at 1 January 2022 4 311 163 713 168 024 Additions - 101 101 Acquisition of subsidiaries - 67 202 67 202 Currency translation -215 -10 799 -11 014 Cost at 31 December 2022 4 095 220 217 224 313 Additions - 6 008 6 008 Acquisition of subsidiaries - 28 383 28 383 Currency translation -265 -13 686 -13 951 Cost at 31 December 2023 3 831 240 922 244 753 Acc. deprecations at 1 Jan. 2022 - -5 037 -5 037 Amortisation charge - -3 396 -3 396 Currency translation - 384 384 Acc. depreciations at 31 Dec. 2022 - -8 049 -8 049 Amortisation charge - -3 603 -3 603 Impairment charge - -1 958 -1 958 Currency translation - 431 431 Acc. depreciations at 31 Dec. 2023 - -13 179 -13 179 Balance at 1 January 2022 4 311 158 676 162 986 Balance at 31 December 2022 4 095 212 168 216 263 Balance at 31 December 2023 3 831 227 743 231 574
Intangible assets by country Amounts in EUR thousandAmounts in EUR thousand Norway Sweden Total Balance at 31 December 2022 195 954 20 310 216 263 Balance at 31 December 2023 209 672 21 902 231 574
*Waterfall rights time-unlimited includes rights acquired as part of the acquisition of a power plant and goodwill. Goodwill is as of 31 December 2023 EUR
7,390 thousand. The group’s goodwill originates from historical acquisitions of power plant companies and arose because deferred tax was valued at
nominal amounts whereas discounted amounts were reflected in the purchase amounts. The difference between deferred tax valued at nominal and
discounted amounts was recognised as goodwill.
Non-financial assets are allocated to cash-generating units for the purpose of impairment testing. Each CGU being the
physical power plant installation and the associated water right lease agreement in the same connected water system.
As of year-end management has performed an impairment test for all CGU’s and found that the recoverable amount is
higher than the carrying amount, for all CGU’s with the exception of 4 CGU’s. An impairment was recognised for each of
Note 15: Impairment testing
Goodwill and intangible asset with 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.
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Småkraft Annual Report 2023
the 4 CGUs, amounting to a total impairment of EUR 1,958 thousand. The recoverable amount of the 4 CGUs was based
on the asset’s estimated fair value and amounted to EUR 18,132 thousand. The fair value measurement was level 3
according to the fair value hierarchy.
The recoverable amount has been estimated using the Discounted Cash Flow (DCF) method. The enterprise value (EV)
for each CGU is calculated as the sum of the present values of future cash flows that a business can be expected to
generate over its useful life, discounted by a weighted average cost of capital (WACC).
The most important assumptions behind the valuation are the following:
Power production
• Total yearly production for all power plants with no future increases per plant. All plants are fully operational.
• Production values based on estimates, which rely on historical production values to the extent possible and otherwise
estimates in hydrological reports.
• Normalized yearly production is estimated based on a 30-year average of historical production for as many available
years as possible and technical due diligence assumptions.
Power price
• Future power prices are computed using the following methodology. The first year is based on Nasdaq forward prices,
and from year 2 onwards an average of three different power price curves from power market analysts (SKM, Volue
Insight, and Thema) is applied.
• A capture rate that reflects the discount to the market price the specific power station achieves because of its
production profile. Normally, an average capture rate is used on a portfolio of power stations.
Operational expenses include five main items:
• Grid fee
• Property tax
• Landowner compensation
• O&M
• Overhead costs
Cost of capital
• Weighted Average Cost of Capital (WACC) for the current valuation is 6.7% for the Norwegian part of the portfolio
compared to 6.5% used in the valuation last year. For the Swedish portfolio a WACC of 5.9% has been applied,
compared to 5.5% used in the valuation last year.
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 and is considered not to
have a significant impact on the impairment test.
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Småkraft Annual Report 2023
Note 16: Property, plant and equipment
Amounts in EUR thousandAmounts in EUR thousand Power Inlet and Infra-Other Plant under Total plantswaterwaystructureconstructionsCost at 1 January 2022 212 555 242 013 88 472 6 026 19 399 568 465Additions, purchased, 24 348 35 969 10 670 921 -38 032 33 876reallocationsAcquisition of subsidiaries 28 342 4 407 2 455 31 41 957 77 191Effect of currency movements -12 668 -13 658 -4 929 -338 -1 122 -32 715Cost at 31 December 2022 252 578 268 730 96 667 6 640 22 202 646 817Additions, purchased, -4 837 6 795 14 317 -1 921 14 756 29 109reallocationsAcquisition of subsidiaries 6 480 11 779 4 087 0 4 133 26 479Effect of currency movements -16 303 -17 076 -5 955 -460 -1 133 -40 926Cost at 31 December 2023 237 918 270 228 109 117 4 259 39 958 661 479Acc. depreciations at -40 966 -29 556 -15 536 -1 466 -1 022 -88 5461 January 2022Depreciation charge -8 486 -5 411 -2 826 -762 - -17 486Effect of currency movements 2 376 1 687 886 103 51 5 103Acc. depreciations at -47 076 -33 281 -17 477 -2 125 -971 -100 92931 December 2022Depreciation charge -6 277 -5 276 -2 342 -555 - -14 449Effect of currency movements 2 943 2 067 1 092 128 63 6 294Acc. depreciations at -50 410 -36 490 -18 726 -2 551 -908 -109 08431 December 2023Balance at 1 January 2022 171 589 212 456 72 936 4 561 18 377 479 919Balance at 31 December 2022 205 503 235 449 79 191 4 515 21 231 545 888Balance at 31 December 2023 187 508 233 738 90 391 1 708 39 050 552 395Acc. impairment charge at -879 -353 - - - -1 23131 December 2023Depreciation method Straight-line Straight-line Straight-line Straight-linePercentage 1.2-20% 1.25-2.5% 1.25-2.85% 12.5-20%Economic life 5-75 40-80 35-80 5-8
Leased assets have been included as Other, with a net book value at 31 December 2023 of EUR 439 thousand.
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Småkraft Annual Report 2023
Property, plant and equipment by country
Amounts in EUR thousandAmounts in EUR thousand Norway Sweden Total Balance at 31 December 2022 533 218 12 670 545 888 Balance at 31 December 2023 537 599 14 795 552 395
Contractual obligations in signed Share Purchase Agreements and New-build contracts as per 31.12.2023 are specified
in the table below. Goodwill is as of 31 December 2023 EUR 7,390 thousand.
Note 17: Investments, recognized under the equity method
Date of Registered Ownership Voting acquisitionofficesharerightsLuster Småkraft AS 2005 Gaupne 50% 50%Proxima Hydrotech AS 2021 Seimsfoss 33% 33%Småvirkjanir EHF 2022 Reykjavik 50% 50%Gjerdelva Kraft AS 2022 Dale 50% 50%
Commitments
Amounts in EUR thousandAmounts in EUR thousand 31.12.2023 31.12.2022Short term 43 448 14 884Long term 57 096 80 875Outgoing balance 100 544 95 760
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 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.
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Småkraft Annual Report 2023
Amounts in EUR thousandAmounts in EUR thousand Luster
Småkraft AS
Proxima
Hydrotech AS
Småvirkjanir
EHF
Gjerdelva
Kraft AS
Total
Companies are recorded using the equity method
Acquisition cost 51 380 2 0 433
Share of equity at the time of acquisition 51 190 2 0 243
Excess over book value 0 190 0 0 190
Closing balance at 31 December 2021 2 058 0 0 0 2 058
Investments previous year 0 380 0 0 380
Share of current year net income 1 459 -44 0 0 1 415
Effect of currency movements -160 2 0 0 -158
Closing balance at 31 December 2022 3 359 338 0 0 3 697
Investments current year 0 0 0 43 43
Dividend -876 0 0 0 -876
Share of current year net income 118 0 0 0 118
Effect of currency movements -229 -22 0 0 -251
Closing balance at 31 December 2023 2 373 316 0 43 2 732
Note 18: Receivables; amounts due after more than one year
Long term receivables; amounts due after more than one year
Amounts in EUR thousandAmounts in EUR thousand 31.12.2023 31.12.2022Loans to associatesLoans to associates - R&S Energi AS - 931Provisions for loss on loans to associates - -931Other receivablesDeposit rent 102 108Prepaid water right lease 6 463 7 458Other long-term receivables 1 126 1 152Total 7 691 8 719
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.
Note 19: Cash and cash equivalent
Bank deposits, cash etc. does not include restricted tax deduction funds as of 31.12.2023.
The company has established a bank guarantee for the payment of withholding tax.
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Småkraft Annual Report 2023
Amounts in EUR thousandAmounts in EUR thousand No. of shares Nominal Voting Ownership amount NOK shareshareAquila GAM Fund GmbH 785 744 50 14.9% 14.9%& Co. Geschlossene InvestmentkommanditgessellschaftAquila Capital European Hydropower 1 121 253 50 21.3% 21.3%Fund S.A.ACEH Norway 1 B.V. 2 132 544 50 40.5% 40.5%ACEH Norway 2 B.V. 1 223 126 50 23.2% 23.2% Sum 5 262 667 50 100% 100%
*Includes not registered capital increase.
Note 20: Share capital, ownership structure and dividend
**No. of sharesShare capital2023 2022 2023 2022Ordinary sharesIssued and fully paid 1 January 4 807 092 4 003 361 22 861 20 039 Issued new share capital 373 940 803 731 1 669 3 984 Currency presentation effect -1 483 -1 162 31 December 5 181 032 4 807 092 23 046 22 861
*Number of shares not registered are 81 635 (2022: 103 173) and share capital EUR 363 thousand (2022:EUR 491 thousand).
Share capital is stated in EUR thousand.
Amounts in EUR thousandAmounts in EUR thousand 31.12.2023 31.12.2022Ordinary dividends 37 192 2 703Extraordinary dividends 0 2 500Sum 37 192 5 203
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Småkraft Annual Report 2023
Note 21: Borrowings and guarantees
Borrowings
LendersLenders Currency 31.12.2023 31.12.2022Banks NOK 51 431 38 718 Banks EUR 168 613 200 417 Convertible debt from owners* EUR 3 659 17 639 Bond debt1 EUR - 50 000 Bond debt2 EUR 50 000 50 000 Bond debt3 EUR 50 000 - USPP1 bond EUR 80 000 80 000 USPP2 bond EUR 40 000 - Other debt NOK 21 - Capitalised loan expenses/ fees/ commissions NOK -2 900 -2 707 Total 440 824 434 067 Total long-term debt 276 512 333 295 Total short-term debt 164 312 100 772
*Convertible loan from shareholders will be converted to share capital within Q1 2024 in accordance with loan agreement.
Changes in debt to financial institutions and bond debt during the year
Amounts in EUR thousandAmounts in EUR thousand 31.12.2023 31.12.2022Ingoing balance 434 067 325 007 Repayments/ downpayments: -120 504 -83 127 New debt 123 474 127 611 Debt from purchased subsidiaries 6 185 48 228 Currency exchange rate changes -2 398 16 349 Outgoing balance 440 824 434 067
Secured borrowings etc.
Amounts in EUR thousandAmounts in EUR thousand 31.12.2023 31.12.2022Borrowings from financial institutions and bondholders 443 703 436 774 Agent commission -2 900 -2 707 Total 440 803 434 067
Carrying amount of pledged assets
Amounts in EUR thousandAmounts in EUR thousand 31.12.2023 31.12.2022Operating equipment 1 232 - Accounts receivable 3 324 13 657 Power plants and related water lease agreements 583 598 522 627 Total 588 153 536 283
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Småkraft Annual Report 2023
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.
See note 6 for information on debt covenants and note 7 for maturity structure of the Group’s borrowings.
Note 22: Concessions
As of 31.12.2023, Småkraft AS has concessions for additional 10 power plants with a total annual production of
approximately 153 GWh. In addition to this, there are currently 18 power stations under construction representing an
annual production of 227 GWh both owned by subsidiaries in the group and companies signed to be acquired.
Note 23: 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.
Loans from Småkraft to landowners
Amounts in EUR thousandAmounts in EUR thousand 31.12.2023 31.12.2022Loans to landowners 795 998 Minimum payments to landowners 5 668 6 460 Total 6 463 7 458
Amounts in EUR thousandAmounts in EUR thousand 31.12.2023 31.12.2022Receivables towards landowners, off balance 26 467 26 933 Total 26 467 26 933
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.
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Småkraft Annual Report 2023
Water rights cost
Amounts in EUR thousandAmounts in EUR thousand 31.12.2023 31.12.2022Gross 5 137 12 387 Net 1 841 5 606 Fixed 173 350 Settlements -3 377 - Total 3 774 18 343
The table shows the different water lease agreements with the landowners.
Note 24: 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 17.
Amounts in EUR thousandAmounts in EUR thousand 31.12.2023 31.12.2022Sales of various goods and services 8 - Purchase of services from related party 169 156 Interest bearing loans - 931 Liabilities at the end of the period 59 151
In 2022 Småkraft AS made agreements to acquire 5 companies which Bjarte Skår had indirect ownership in. Bjarte Skår
is employed as Chief Commercial Officer in Småkraft.
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Småkraft Annual Report 2023
Appendix
Alternative Performance Measures (APMs)
Adjusted Power revenues is defined as Power revenues adjusted for Realised 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 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.
Amounts in EUR thousandAmounts in EUR thousand 2023 2022
Power revenue 67 758 133 559
Realized value change on energy derivatives -17 277 -54 908
Adjusted power revenue 50 482 78 651
Amounts in EUR thousandAmounts in EUR thousand 2023 2022
Operating profit (loss) 75 519 -65 662
Depreciation of fixed assets and intangible assets 20 010 20 882
EBITDA 95 529 -44 780
Change in unrealized value change on energy derivatives -73 133 83 293
Adjusted EBITDA 22 396 38 513
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Småkraft Annual Report 2023
Annual accounts and notes
Småkraft AS
Financial statements
Note 3: Key accounting estimates and judgements
Note 6: Management of capital structure
Note 15: Impairment testing
Note 9: Payroll and related costs
Note 19: Cash and cash equivalents
Note 18: Receivables; amounts due after more than one year
Note 1: General information
Note 4: Subsequent events
Note 13: Derivatives
Note 7: Financial instruments - Risk Management
Note 16: Property, plant and equipment
Note 10: Other operating expenses
Note 21: Borrowings and guarantees
Note 20: Share capital and shareholder information
Note 2: General accounting policies
Note 5: Subsidiaries
Note 14: Intangible assets and goodwill
Note 8: Power revenues and other income
Note 17: Associated companies
Note 11: Financial items
Note 23: Water land lease agreements
Note 22: Concessions
Note 12: Taxes
Appendix
Note 24: Related party transaction and balance items
67
77
79
92
86
96
96
72
77
90
80
94
87
97
96
72
78
92
85
95
87
99
98
88
101
100
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Småkraft Annual Report 2023
Statement of income and
statement of other comprehensive income
Småkraft AS
Amounts in EUR thousand Amounts in EUR thousand NoteNote 20232023 20222022
Power revenue 8 30 392 61 010
Other income 8 522 468
Fair value change on energy derivatives 55 857 -138 201
Unrealized value change on energy derivatives 73 133 -83 293
Realized value change on energy derivatives -17 277 -54 908
Payroll and related costs 9 -4 430 -3 743
Depreciation and impairment of fixed assets and intangible
assets
14,15,16 -7 875 -8 440
Other operating expenses 10 -8 686 -17 875
Operating profit/(loss) 65 780 -106 780
Financial income 11 36 814 4 740
Net foreign exchange gain (loss) -16 709 -12 736
Fair value changes on interest rate and currency derivatives 7 -5 906 5 819
Financial expenses 11 -6 917 -4 825
Net financial items 7 281 -7 002
Profit/(loss) before tax 73 061 -113 783
Tax income (expense) 12 -13 712 24 916
Profit (loss) 59 348 -88 867
Profit/(loss) is attributable to:
Equity holders of the parent company 59 348 -88 867
Other comprehensive income:
Items that will not be reclassified to profit or loss
Currency translation differences -19 289 -15 091
Total comprehensive income for the year -19 289 -15 091
Total comprehensive income for the year 40 059 -103 958
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Småkraft Annual Report 2023
Statement of financial position
Småkraft AS
Amounts in EUR thousand Amounts in EUR thousand NoteNote 31.12.202331.12.2023 31.12.202231.12.2022
Assets
Non-current assets
Intangible Assets 14 21 875 19 063
Property, plant and equipment 16 191 753 205 108
Deferred tax assets 12 21 492 37 800
Investments in subsidiaries 5 367 428 315 553
Investments, recognized under the equity method 17 623 1 571
Derivatives 13 0 8 096
Long-term receivables 18 53 517 68 816
Total non-current assets 656 688 656 008
Current assets
Inventories 625 0
Trade receivables 7 1 240 2 425
Other receivables 7 730 2 053
Derivatives 13 4 128 4 579
Cash and cash equivalents 19 18 582 61 777
Total current assets 25 305 70 833
Total assets 681 994 726 842
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Småkraft Annual Report 2023
Statement of financial position, continued
Småkraft Group
Amounts in EUR thousand Amounts in EUR thousand NoteNote 31.12.202331.12.2023 31.12.202231.12.2022
Equity and liabilities
Shareholders’ equity
Share capital 20 23 046 22 861
Paid-in capital 20 402 500 401 420
Other equity -35 442 -102 480
Total shareholders’ equity 390 104 321 801
Non-current liabilities
Borrowings 21 102 755 198 964
Derivatives 13 8 524 49 341
Other non-current liabilities 7 467 656
Total non-current liabilities 111 747 248 961
Current liabilities
Accounts payable 7 1 700 2 428
Public duties payable 7 493 1 669
Derivatives 13 19 944 60 803
Borrowings 21 152 669 74 540
Other current liabilities 7 5 337 16 639
Total current liabilities 180 142 156 079
Total liabilities 291 889 405 040
Total equity and liabilities 681 993 726 842
*The comparative figures are restated. Both the current and the non-current portion of power derivatives were originally presented as current. In the
restated comparatives, the non-current portion is presented as non-current (13.800 as of 31.12.21).
Bergen, Norway, 5 April 2024
The Board of Directors, Småkraft AS
Felix Renneke
Board Member
Oldrik Verloop
Board Member
Annette Malm-Justad
Chair of the Board
Claudia Ahnert
Board Member
Terje Vedeler
Managing Director
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Småkraft Annual Report 2023
Statement of changes in equity
Småkraft AS
Amounts in Amounts in
EUR thousand EUR thousand
NoteNote Share Share
capital capital
Paid-in Paid-in
capitalcapital
Foreign Foreign
currency currency
translationtranslation
**
Retained Retained
earningsearnings
Total Total
equityequity
Equity at 01/01/2022 20 039 321 692 -2 315 -15 660 339 210
Net profit -88 867 -71 457
Currency presentation effect -1 162 -18 290 -15 091 19 452 -17 203
Total comprehensive
income for the period
-1 162 -18 290 -15 091 -69 416 -88 660
Capital increase 20 3 984 100 518 104 502
Dividend -2 500
Other changes -2 987
Equity at 31/12/2022 22 861 401 420 -17 406 -85 076 352 064
Net profit 59 348 27 243
Currency presentation effect -1 483 -25 382 -19 289 26 866 -19 973
Total comprehensive
income for the period
-1 483 -25 382 -19 289 86 214 7 271
Capital increase current
period
20 1 669 63 654 67 704
Effect from merger 5 111 -3 222
Dividend -37 192 -38 127
Equity at 31/12/2023 23 046 402 500 -36 695 1 250 385 690
* There are no currency translation differences that can be reclassified through other comprehensive income.
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Småkraft Annual Report 2023
Statement of cash flow
Småkraft AS
Amounts in EUR thousand Amounts in EUR thousand NoteNote 20232023 20222022
Cash flow from operations
Profit (-loss) before income tax 73 061 -113 783
Taxes paid for the period 0 -14
Depreciation, amortization, impairment 14,16 7 875 8 440
Dividends from investments in subsidiaries -32 843 -3 099
Interest paid -5 440 -4 128
Net financial items without cash effect 784 4 095
Cash settlement derivatives -17 277 -54 908
Change in unrealized currency gains/losses 11 18 621 13 696
Change in unrealized derivatives 13 -49 950 132 382
Change in working capital 10 692 11 022
Net cash flow from operations 5 523 -6 297
Cash flow from investment activities
Outflows due to purchases of fixed assets and intangibles -11 412 -3 683
Outflows due to investments in subsidiaries 5 -48 046 -86 233
Outflows due to investments in associates 0 -398
Outflows due to investments in other financial assets -42 -2 036
Inflows from sale of other financial assets 1 452 0
Inflows from dividend from equity accounted investments 876 0
Inflows from dividend in subsidiaries 11 214 53 420
Outflows from loans to others -2 664 -19 906
Inflows from loans to others 9 071 2 883
Net cash flow from investment activities -39 552 -55 953
Cash flow from financing activities
Capital increases 20 65 323 104 502
Dividend payments -37 192 -5 258
Inflows from loan raising 21 54 426 17 639
Outflows from loan payments 21 -87 810 -8 023
Net cash flow from financing activities -5 253 108 860
Currency translation effects -4 551 -796
Net change in bank deposits and cash -39 282 46 610
Bank deposits from merged companies 639 0
Bank deposits and cash at beginning of period 61 777 15 963
Bank deposits and cash at end of period 18 582 61 777
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Småkraft Annual Report 2023
Notes
Note 1: General information
Småkraft (the Company) is located in Bergen, Norway, with local offices in Harstad, Flatanger and Oslo, and employs 32
people. All of Småkraft’s 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 consolidated financial statements have been prepared in accordance with IFRS® Accounting Standards 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 which 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.
Note 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
recognized 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 recognized 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 recognized 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
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Småkraft Annual Report 2023
right to invoice the consideration will normally correspond directly with the value to the customer. In 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 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. Borrowing costs incurred
during the manufacturing of tangible non-current assets are capitalised until the asset is ready for its intended use.
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
Waterfall right is recognised as a separate intangible asset. Småkraft distinguishes waterfall rights in time-limited and
unlimited groups regardless of how they were acquired. Reference is made to note 14.
Intangible assets are measured at cost less accumulated amortisation and accumulated impairment losses. Costs
relating to intangible assets, 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 are not amortised but are instead tested annually for impairment.
Leases
The Company´s main lease type of agreements is 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.
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Småkraft Annual Report 2023
When Småkraft has a commitment to pay rent to the landowners, 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 landowner. 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.
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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Småkraft Annual Report 2023
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.
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Småkraft Annual Report 2023
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.
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 01.01.2023:
• 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)
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
Certain amendments to accounting standards have been published that are not mandatory for 31. December 2023
reporting periods and have not been early adopted by the group. These amendments are not expected to have a material
impact on the entity in the current or future reporting periods and on foreseeable future transactions.
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Småkraft Annual Report 2023
Note 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 property plant and equipment (PPE) and intangible assets
In performing the impairment assessment of the carrying amount of PPE and intangible assets, as disclosed in Note 15,
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 15.
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 13.
Note 4: Subsequent events
After year end, Småkraft has increased the portfolio of Powerplants. 31 January 2024 Småkraft closed the acquisition
of 100% of the shares in Myklebust Energi AS, which has a powerplant in operation with a capacity of 7.4 GWh to our
portfolio in Norway. 19 February 2024 Småkraft AS acquired Meierifossen Kraft AS with one additional power plant of 5.4
GWh.
In line with the Norwegian Company Act § 8-2 and the registered Power of Attorney on Power to decide dividend –
registered the 14 September 2022 – the Board decided to pay out dividend of in total EUR 15 million, based upon the
2022- Financial Statements. The dividend payment shall be classified as capital redemption of the paid share premium in
the tax accounts. The dividend was paid out on 26 March 2024 (the “payment date”).
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Småkraft Annual Report 2023
Note 5: Subsidiaries
Småkraft AS purchased 15 subsidiaries in 2023 (7 in 2022):
Group companies Date of
acquisition/
incorporation
Registered
office
Ownership
share
Voting
share
Småkraft AS Bergen
Reinli Kraft AS 2005 Bergen 51% 51%
Rullestad & Skromme AS 2006 Etne 100% 100%
Muoidejohka Kraft AS 2010 Bergen 60% 60%
Jorda Kraft AS 2012 Bergen 51% 51%
Kvemma Kraft AS 2013 Lærdal 66% 66%
Holmen Kraft AS 2016 Bergen 100% 100%
Follsjå Kraft AS 2016 Bergen 82% 82%
Sigdestad Kraftverk AS 2018 Bergen 52% 52%
Holsen Kraft Nordøla AS 2020 Bergen 100% 100%
Ytre Kandal Kraft AS 2020 Sandane 61% 61%
Fossåa 1 K AS 2020 Sør-Fron 66% 66%
Rysna Småkraftverk AS 2020 Bergen 100% 100%
Tokheim Kraft AS 2020 Bergen 100% 100%
Småkraft Green Bond 2 AS 2020 Bergen 100% 100%
Småkraft USPP 1 AS 2022 Bergen 100% 100%
Chr Salvesen & Chr Thams’s
Communications AS
2022 Bergen 100% 100%
Svorka Småkraft AS (Setergrytå AS) 2023 Bergen 65% 65%
Småkraft Vekst 2025 AS 2023 Bergen 100% 100%
Småkraft Vekst 2026 AS 2023 Bergen 100% 100%
Egge Kraftverk AS 2023 Bergen 100% 100%
Dalelva Kraft AS (Fjaler) 2023 Bergen 100% 100%
Heimseta Kraftverk AS 2023 Bergen 100% 100%
Jåstadkraft AS 2023 Bergen 100% 100%
Nye Unhjemkraft AS 2023 Bergen 100% 100%
Øvre Alsåker Kraftverk AS 2023 Bergen 100% 100%
EM Kraftverk Vest AS 2023 Bergen 100% 100%
Dalelva Kraftverk AS (Masfjorden) 2023 Bergen 100% 100%
Midt Kraft AS 2023 Bergen 100% 100%
Myrholten Kraftverk AS 2023 Bergen 100% 100%
Småkraft Green Bond 1 AS 2018 Bergen 100% 100%
Saksenvik Kraft AS 2016 Bergen 96% 96%
Lotsberg Kraftverk AS 2023 Bergen 100% 100%
Hovland Kraftverk AS 2023 Bergen 100% 100%
Småkraft AB 2022 Uppsala 100% 100%
Småkraft Operations AB 2022 Uppsala 100% 100%
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Småkraft Annual Report 2023
Associated companies Date of
acquisition
Registered
office
Ownership
share
Voting
share
Luster Småkraft AS 2005 Gaupne 50% 50%
Proxima Hydrotech AS 2021 Seimsfoss 33% 33%
Småvirkjanir EHF 2022 Reykjavik 50% 50%
Gjerdelva Kraft AS 2022 Dale 50% 50%
Note 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:
Amounts in EUR thousand Amounts in EUR thousand 31.12.2023 31.12.2022
Total non-current assets 656 688 656 008
Interest-bearing liabilities, non-current 102 755 198 964
Interest-bearing liabilities, current 152 669 56 901
Cash and cash equivalents, excluding restricted cash 18 582 61 777
Net interest-bearing liabilities (NIB) 236 842 194 088
NIB/total non-current assets 36% 30%
Småkraft has several debt covenants to be calculated at group level, which include:
• Equity ratio shall exceed 30%
• Debt service coverage shall not fall below certain levels
• Liquidity shall exceed interest payments next six months
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Småkraft Annual Report 2023
Note 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
• Market price risk
• 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
(ii) Financial instruments by category
31.12.2023
Amounts in EUR thousand Amounts in EUR thousand Financial
assets at fair
value
Financial
assets at
amortized cost
Financial
liabilities
at fair value
Financial
liabilities at
amortized cost
Total
Assets
Long-term receivables 53 517 53 517
Trade receivables 1 240 1 240
Other receivables 730 730
Derivatives current 4 128 4 128
Cash and cash equivalents 18 582 18 582
Liabilities
Borrowings non-current -102 755 -102 755
Borrowings current -152 669 -152 669
Accounts payable -1 700 -1 700
Other non-current liabilities -467 -467
Other current liabilities -5 337 -5 337
Derivatives non-current -8 524 -8 524
Derivatives current -19 944 -19 944
Net financial assets
and liabilities
4 128 74 069 -28 468 -262 929 -213 200
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Småkraft Annual Report 2023
31.12.2022
Amounts in EUR thousand Amounts in EUR thousand Financial
assets at fair
value
Financial
assets at
amortized cost
Financial
liabilities at fair
value
Financial
liabilities at
amortized cost
Total
Assets
Long term receivables 68 816 68 816
Trade receivables and
other receivables
2 425 2 425
Other current receivables 2 052 2 052
Derivatives non-current 8 097 8 097
Derivatives current 4 579 4 579
Cash and cash equivalents 61 777 61 777
Liabilities
Borrowings non-current -198 964 -198 964
Borrowings current -74 540 -74 540
Accounts payable -2 425 -2 425
Other non-current liabilities -656 -656
Other current liabilities -16 639 -16 639
Derivatives non-current -49 341 -49 341
Derivatives current -60 803 -60 803
Net financial assets
and liabilities
12 675 135 070 -110 144 -293 224 -255 622
(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 13.
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.
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
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Småkraft Annual Report 2023
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.
Småkraft has hedged a portion of the expected power sale.
Total volume hedged for the future is shown in the table below:
31.12.2023
Year 1 Year 2 Year 3
Hedged volume 441 GWh 385 GWh 193 GWh
31.12.2022
Year 1 Year 2 Year 3
Hedged volume 535 GWh 439 GWh 254 GWh
The energy derivatives are hedged against Nordic system prices. Småkraft also has EPADs for selected price areas.
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 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 Småkraft’s 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. Few of these hedging relationships
fulfil the requirements of hedge accounting.
As of 31 December, Småkraft’s net exposure to foreign exchange risk was as follows:
31.12.2023
Functional currency of individual entity
Amounts in EUR thousand Amounts in EUR thousand NOK
Net foreign currency financial assets/(liabilities)
Currency
NOK
EUR -251 261
SEK 15 231
Total net exposure -266 492
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Småkraft Annual Report 2023
31.12.2022
Functional currency of individual entity
Amounts in EUR thousand Amounts in EUR thousand NOK
Net foreign currency financial assets/(liabilities)
Currency
NOK
EUR -284 086
SEK 20 521
Total net exposure -263 565
Description of interest rate risk
Småkraft’s interest rate risk is defined as gross interest exposure because of outstanding loans with floating interest rates
as well as undrawn signed financing. As soon as a term sheet is signed, the interest rate exposure from this financing
must be included in the interest rate risk calculation.
The ratio is defined as the expected outstanding loan balance with a fixed interest rate above the total expected
outstanding loan balance. Småkraft must ensure that it stays within the following security level at all times:
Hedge ratio
Avg. year 1 to 3 Avg. year 4 to 5 Avg. year 6 to 10
Max. hedge ratio 100% 100% 100%
Min. hedge ratio 50% 25% 0%
Interest rate exposure for power plants under construction
In the same way that Småkraft does not hedge power prices for signed production during construction, the expected
interest rate exposure for potential future debt linked to development is also not to be included in the interest rate risk
calculations. This interest rate risk shall not be hedged.
Approved instruments
Småkraft can use interest rate swaps, fixed interest rate coupons or interest rate options. Options must only be used for
hedging and stop-loss levels must be defined.
As of December 31, 2023, Småkraft has the following interest rate derivatives.
Interest rate derivatives
Amounts in EUR thousand Amounts in EUR thousand
Maturity dateMaturity date Currency Amount Fixed rate MTM Secured part Equivalent
28.06.2024 EUR 150 000 -0.2787% 3 100 100% 150 000
The interest rate derivatives are linked to the bank loans. The future development in interest rates will affect the value of
the interest rate derivatives.
Interest rate sensitivity borrowings
Increase/(decrease) in basis points Effect on profit before tax Effect on equity
31.12.2023 100 -2 554 -1 992
31.12.2022 100 -2 735 -2 133
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Småkraft Annual Report 2023
Credit risk
Credit risk is the risk that Småkraft incurs losses due to the failure of counterparties to honour 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, Småkraft’s credit losses have been limited.
All of Småkraft’s 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:
31.12.2023
Cash flows including interest
Amounts in EUR thousand Amounts in EUR thousand Carrying amount 1 year 2 years 3 years 4 years >5 years
Borrowings 255 424 157 658 4 219 53 547 3 281 52 515
Accounts payable 1 700 1 700
Derivatives 28 468 19 944 8 094 430
Other current liabilities 5 830 5 830
Total 291 422 185 131 12 313 53 977 3 281 52 515
31.12.2022
Cash flows including interest
Amounts in EUR thousand Amounts in EUR thousand Carrying amount 1 year 2 years 3 years 4 years >5 years
Borrowings 255 864 73 011 150 940 940 47 180 -
Accounts payable 2 428 2 428
Derivatives 110 144 60 803 34 675 14 666
Other current liabilities 4 599 4 599
Total 373 036 140 842 185 615 15 606 47 180 -
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Småkraft Annual Report 2023
Note 8: Power 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 utilizes 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
Amounts in EUR thousandAmounts in EUR thousand 2023 2022
Price area NO1 Norway 1 730 3 725
Price area NO2 Norway 12 904 28 281
Price area NO3 Norway 3 806 3 660
Price area NO4 Norway 1 786 1 555
Price area NO5 Norway 7 840 22 407
Other green revenue
*
2 326 1 382
Power revenues 30 392 61 010
*Included in other green revenue is income from EL-certificates of EUR -36 thousand in 2023 and EUR 44 thousand in 2022.
Other income
Guarantees of origin
Introduced with the EU’s first Renewable Energy Directive (Directive 2001/77/EC) in 2001, Guarantees of Origin are
defined as a labelling scheme for electricity to show the electricity customer that a quantity of power has been produced
from a specified energy source. All power producers can receive guarantees of origin corresponding to their power
production. A guarantee of origin corresponds to 1 MWh of electricity produced.
Guarantees of Origin not yet delivered to customers are presented as inventory. Changes in inventory related to origin
guarantees are presented below in the note.
Amounts in EUR thousandAmounts in EUR thousand 2023 2022
Guarantees of origin – change in inventory 485
Other income 37 468
Other income 522 468
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Småkraft Annual Report 2023
Note 9: Payroll and related costs
Amounts in EUR thousandAmounts in EUR thousand 2023 2022
Wages and salaries 3 247 2 773
Payroll tax 651 520
Pension costs 405 314
Other benefits 128 136
Sum 4 430 3 743
Number of full-time employees 32 30
Compensation to the Group Leadership Team
Amounts in EUR thousandAmounts in EUR thousand
Executive Position, period Year Salaries Pensions Other benefits Total compensation
Terje Vedeler CEO 2023
2022
320
255
14
15
6
5
341
276
Erik Sterud CFO
from 01.07.22
2023
2022
211
95
15
8
3
1
229
103
David Inge Tveito COO
from 01.07.22
2023
2022
169
83
14
8
10
4
192
95
Bjarte Skår CCO
from 01.01.23
2023
2022
130
0
14
0
13
0
157
0
Tone Aarø CFO
01.01.22-30.06.22
2023
2022
0
76
0
8
0
1
0
85
Jørgen Hundven COO
01.01.22-30.06.22
2023
2022
0
79
0
8
0
1
0
88
Karina Birkelund CCO
01.01.22-31.12.22
2023
2022
0
150
0
15
0
2
0
168
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 recognized 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.
Fees paid to external auditors
Amounts in EUR thousandAmounts in EUR thousand 2023 2022
Statutory audit* 368 118
Tax counselling 66 -
Other assurance services 0 37
Sum 433 155
*As of 2023 audit expenses in Småkraft AS include total expenses for all companies in the group. Expenses are reimbursed by onward billing.
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Småkraft Annual Report 2023
Note 10: Other operating expenses
Amounts in EUR thousandAmounts in EUR thousand 2023 2022
Water rights costs
*
-415 9 589
El-certs costs - -
Transmission costs 1 363 236
Property tax and license fees 1 167 1 321
Telecommunications 51 -
Rent and related expenses 287 304
Transport 67 1
Purchase of various services 2 767 2 272
IT expenses 592 574
Repair/maintenance regarding equipment, machines etc. 360 741
Consultant services 967 107
Other operating expenses 1 482 2 731
Other operating expenses 8 686 17 875
*See also note 23.
Purchase of various services consists of external accounting, audit, legal, transactions and operational services.
Note 11: Financial items
Financial income
Amounts in EUR thousandAmounts in EUR thousand 2023 2022
Income from subsidiaries 32 843 3 099
Other financial income 3 971 1 642
Total 36 814 4 740
Financial expenses
Amounts in EUR thousandAmounts in EUR thousand 2023 2022
Interest expense 5 950 4 050
Other financial expenses 968 775
Total 6 917 4 825
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Småkraft Annual Report 2023
Note 12: 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.
Reconciliation of nominal tax rate and effective tax rate
Amounts in EUR thousandAmounts in EUR thousand 2023 2022
Profit/(loss) before tax 73 061 -113 783
Tax rate, percent 22% 22%
Expected tax expense (income) 16 073 -25 032
Effect on taxes of
Permanent differences -2 361 96
Income from investments in associates -780
Changes related to deferred tax on off-balance sheet items - -515
Other changes - 1 315
Tax expense (income) 13 712 -24 916
Effective tax rate 19% 22%
Taxes payable in the balance sheet
Amounts in EUR thousandAmounts in EUR thousand 31.12.2023 31.12.2022
Taxes payable in the balance sheet - -
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Småkraft Annual Report 2023
Specification of temporary differences and deferred tax
Amounts in EUR thousandAmounts in EUR thousand 31.12.2023 31.12.2022
Fixed assets 8 082 7 163
Group contribution -1 702 -24 661
Interest deduction carry forward -1 298 -2 113
Unrealized derivatives -23 771 -98 391
Other differences -440 -589
Temporary differences -19 129 -118 591
Losses carried forward -76 375 -50 918
Differences not affecting deferred tax -2 188 -2 339
Basis for deferred tax -97 692 -171 849
Tax rate 22% 22%
Net deferred tax asset (-)/liability (+) in the balance sheet, ordinary tax -21 492 -37 800
Deferred tax (asset) -21 492 -37 800
Temporary differences that arise from the initial recognition of goodwill and assets which is not a business combination is
not recognized as a deferred tax liability.
Presentation
Amounts in EUR thousandAmounts in EUR thousand 31.12.2023 31.12.2022
Deferred tax asset 21 492 37 800
Deferred tax liabilities - -
Net 21 492 37 800
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Småkraft Annual Report 2023
Note 13: 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:
31.12.2023
Amounts in EUR thousandAmounts in EUR thousand Energy
derivatives
Interest rate
swaps
Currency
derivatives
Total
Opening balance (net) -104 451 8 096 -1 115 -97 470
Additions/sale -1 452 0 0 -1 452
Fair value changes 55 857 -4 403 -1 503 49 950
Cash settlement 17 277 0 0 17 277
Currency translation differences 7 901 -594 48 7 355
Sum -24 869 3 099 -2 570 -24 340
Gross
Non-current asset 0 0 0 0
Current Asset 1 029 3 099 0 4 128
Total asset 1 029 3 099 0 4 128
Non-current liabilities 8 241 0 283 8 524
Current liabilities 17 657 0 2 287 19 944
Total liability 25 898 0 2 570 28 468
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Småkraft Annual Report 2023
31.12.2022
Amounts in EUR thousandAmounts in EUR thousand Energy
derivatives
Interest rate
swaps
Currency
derivatives
Total
Opening balance (net) -27 748 226 1 237 -26 285
Additions/sale 2 036 0 2 036
Fair value changes -138 201 8 201 -2 382 -132 382
Cash settlement 54 908 0 0 54 908
Currency translation differences 4 553 -331 31 4 253
Sum -104 451 8 096 -1 115 -97 470
Gross
Non-current asset 0 8 096 0 8 096
Current Asset 4 579 0 0 4 579
Total asset 4 579 8 096 0 12 674
Non-current liabilities 48 248 0 1 093 49 341
Current liabilities 60 782 0 21 60 803
Total liability 109 030 0 1 115 110 144
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”.
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Småkraft Annual Report 2023
Note 14: Intangible assets
Amounts in EUR thousandAmounts in EUR thousand Waterfall rights
Time-unlimited
Waterfall rights
Time-limited
*
Total
Cost at 1 January 2022 4 300 17 680 21 979
Additions - - -
Currency translation -206 -1 187 -1 392
Cost at 31 December 2022 4 094 16 493 20 587
Additions - 4 179 4 179
Merger 379 379
Currency translation -288 -999 -1 288
Cost at 31 December 2023 4 185 19 673 23 857
Acc. deprecations at 1 Jan. 2022 - -1 153 -1 153
Amortization charge - -298 -298
Currency translation - -74 -74
Acc. depreciations at 31 Dec. 2022 - -1 525 -1 525
Amortization charge - -548 -548
Currency translation - 90 90
Acc. depreciations at 31 Dec. 2023 - -1 983 -1 983
Balance at 1 January 2022 4 311 16 056 20 367
Balance at 31 December 2022 4 094 14 969 19 063
Balance at 31 December 2023 4 185 17 690 21 875
Intangible assets by country
Amounts in EUR thousandAmounts in EUR thousand Norway Sweden Total
Balance at 31 December 2022 195 954 20 310 216 263
Balance at 31 December 2023 209 672 21 902 231 574
*Waterfall rights time-limited includes rights acquired as part of the acquisition of power plants and goodwill. Goodwill is as of 31 December 2023 EUR
2,431 thousand. The company’s goodwill arose from historical acquisitions of power plant companies and arose because deferred tax was valued at
nominal amounts whereas discounted amounts were reflected in the purchase amount. The difference between deferred tax valued at nominal and
discounted amounts was recognised as goodwill.
Note 15: Impairment testing
Goodwill and intangible asset with 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.
Non-financial assets are allocated to cash-generating units for the purpose of impairment testing. Each CGU being the
physical power plant installation and the associated water right lease agreement in the same connected water system.
As of year-end management has performed an impairment test for all CGU’s and found that the recoverable amount is
higher than the carrying amount.
The recoverable amount has been estimated using the Discounted Cash Flow (DCF) method. The enterprise value (EV)
for each CGU is calculated as the sum of the present values of future cash flows that a business can be expected to
generate over its useful life, discounted by a weighted average cost of capital (WACC).
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Småkraft Annual Report 2023
The most important assumptions behind the valuation are the following:
Power production
• Total yearly production for all power plants with no future increases per plant. All plants are fully operational.
• Production values based on estimates, which rely on historical production values to the extent possible and otherwise
estimates in hydrological reports.
• Normalized yearly production is estimated based on a 30-year average of historical production for as many available
years as possible and technical due diligence assumptions.
Power price
• Future power prices are computed using the following methodology. The first year is based on Nasdaq forward prices,
and from year 2 onwards an average of three different power price curves from power market analysts (SKM, Volue
Insight, and Thema) is applied.
• A capture rate that reflects the discount to the market price the specific power station achieves because of its
production profile. Normally, an average capture rate is used on a portfolio of power stations.
Operational expenses include five main items:
• Grid fee
• Property tax
• Landowner compensation
• O&M
• Overhead costs
Cost of capital
• Weighted Average Cost of Capital (WACC) for the current valuation is 6.7% compared to 6.5% used in the valuation
last year.
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 and is considered not to
have a significant impact on the impairment test.
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Småkraft Annual Report 2023
Note 16: Property, plant and equipment
Amounts in EUR thousandAmounts in EUR thousand Power
plants
Inlet and
waterway
Infra-
structure
Other Plant under
constructions
Total
Cost at 1 January 2022 117 463 110 518 53 790 3 194 1 179 286 145
Additions, purchased,
reallocations
2 550 6 43 505 579 3 683
Effect of currency movements -6 346 -5 857 -2 893 -154 895 -14 354
Cost at 31 December 2022 113 667 104 667 50 940 3 545 2 653 275 473
Additions, purchased,
reallocations
2 816 435 159 360 3 465 7 233
Effect of currency movements -7 303 -6 760 -3 291 -223 -116 -17 693
Cost at 31 December 2023 109 179 98 342 47 808 3 681 6 002 265 013
Acc. depreciations at
1 January 2022
-29 753 -21 825 -12 665 -1 484 -759 -66 487
Depreciation charge -3 756 -2 585 -1 344 -456 - -8 142
Effect of currency movements 1 593 1 423 625 216 406 4 263
Acc. depreciations at
31 December 2022
-33 510 -24 410 -14 009 -1 940 -759 -74 628
Depreciation charge -3 365 -2 290 -1 191 -481 - -7 327
Effect of currency movements 3 603 2 872 1 472 320 429 8 696
Acc. depreciations at
31 December 2023
-36 875 -26 700 -15 200 -2 420 -759 -81 956
Balance at 1 January 2022 87 710 88 693 41 125 1 710 420 219 658
Balance at 31 December 2022 81 750 81 679 37 556 1 821 2 301 205 108
Balance at 31 December 2023 75 907 74 513 34 079 1 581 5 672 191 753
Acc. impairment charge at
31 December 2023
-879 -353 - - - -1 231
Depreciation method Straight-line Straight-line Straight-line Straight-line
Percentage 1.2-20% 1.5-2.5% 1.25-2.85% 12.5-20%
Economic life 5-75 40-80 35-80 5-8
Leased assets have been included as Other, with a net book value at 31 December 2023 of EUR 439 thousand.
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Småkraft Annual Report 2023
Contractual obligations
Contractual obligations in signed Share Purchase Agreements and New-build contracts as per 31.12.2023 are specified
in the table below.
Commitments
Amounts in EUR thousandAmounts in EUR thousand 31.12.2023 31.12.2022
Short term 43 448 14 884
Long term 57 096 80 875
Outgoing balance 100 544 95 760
Note 17: Investments, recognized under the equity method
Date of
acquisition
Registered
office
Ownership
share
Voting
rights
Luster Småkraft AS 2005 Gaupne 50% 50%
Proxima Hydrotech AS 2021 Seimsfoss 33% 33%
Småvirkjanir EHF 2022 Reykjavik 50% 50%
Gjerdelva Kraft AS 2022 Dale 50% 50%
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 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.
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Note 18: Receivables; amounts due after more than one year
Amounts in EUR thousandAmounts in EUR thousand 31.12.2023 31.12.2022
Loans to associates
Loans to associates - R&S Energi AS - 969
Provisions for loss on loans to associates - -969
Other receivables
Deposit rent 102 108
Prepaid water right lease 5 958 7 155
Loan to Strømfallet Invest AB - 38
Other long term receivables 1 081 998
Loan to subsidiaries 46 375 60 517
Total 53 517 68 816
Note 19: Cash and cash equivalent
Bank deposits, cash etc. does not include restricted tax deduction funds as of 31.12.2023.
The company has established a bank guarantee for the payment of tax.
Note 20: Share capital and shareholder information
No. of shares
*
Share capital
*
2023 2022 2023 2022
Ordinary shares
Issued and fully paid 1 January 4 807 092 4 003 361 22 861 20 039
Issued new share capital 373 940 803 731 1 669 3 984
Currency presentation effect -1 483 -1 162
31 December 5 181 032 4 807 092 23 046 22 861
*Number of shares not registered are 81 635 (2022: 103 173) and share capital EUR 363 thousand (2022: EUR 491 thousand).
Share capital is stated in EUR thousand.
Amounts in EUR thousandAmounts in EUR thousand No. of shares Nominal
amount NOK
Voting
share
Ownership
share
Aquila GAM Fund GmbH
& Co. Geschlossene
Investmentkommanditgessellschaft
785 744 50 14.9% 14.9%
Aquila Capital European Hydropower
Fund S.A.
1 121 253 50 21.3% 21.3%
ACEH Norway 1 B.V. 2 132 544 50 40.5% 40.5%
ACEH Norway 2 B.V. 1 223 126 50 23.2% 23.2%
Sum 5 262 667 50 100% 100%
*Includes not registered capital increase.
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Dividend paid
Amounts in EUR thousandAmounts in EUR thousand 31.12.2023 31.12.2022
Ordinary dividends 37 192 2 703
Extraordinary dividends 0 2 500
Sum 37 192 5 203
Note 21: Borrowings and guarantees
Borrowings
LendersLenders Currency 31.12.2023 31.12.2022
Banks EUR 150 000 154 000
Banks NOK 2 669 3 394
Convertible debt from owners
*
EUR 3 659 17 639
Bond debt1 EUR - 50 000
Bond debt2 EUR 50 000 50 000
Bond debt3 EUR 50 000 -
Other debt EUR 21 -
Agent commission SEB/Nordea NOK -924 -1 529
Total 255 424 273 504
*Convertible loan from shareholders will be converted to share capital within Q1 2024 in accordance with loan agreement.
Amounts in EUR thousandAmounts in EUR thousand 31.12.2023 31.12.2022
Long term debt 99 097 198 964
Convertible debt from owners 3 659 17 639
Short term debt 152 669 56 901
Total 255 424 273 504
Changes in debt to financial institutions and bond debt during the year
Amounts in EUR thousandAmounts in EUR thousand 31.12.2023 31.12.2022
Ingoing balance 273 503 263 573
Ingoing balance merged company 14 602 -
Repayments/ downpayments: -87 810 -7 818
New debt 54 426 17 639
Currency exchange rate changes 703 110
Outgoing balance 255 425 273 504
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Secured borrowings etc.
Amounts in EUR thousandAmounts in EUR thousand 31.12.2023 31.12.2022
Borrowings from financial institutions and bondholders 252 669 255 865
Agent commission -924 -1 529
Total 251 745 254 336
Carrying amount of pledged assets
Amounts in EUR thousandAmounts in EUR thousand 31.12.2023 31.12.2022
Operating equipment 1 142 1 194
Trade receivable 1 240 2 425
Power plants and related water lease agreements 217 858 236 577
Total 220 239 240 195
The bank and bond holders have pledged security in operating equipment, bank accounts and accounts receivables, 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.
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.
See note 6 for information on debt covenants and note 7 for maturity structure of the Company’s borrowings.
Note 22: Concessions
As of 31.12.2023, Småkraft AS has concessions for additional 10 power plants with a total annual production of
approximately 153 GWh. In addition to this, there are currently 16 power stations under construction representing an
annual production of 227 GWh both owned by subsidiaries in the group and companies signed to be acquired.
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Småkraft Annual Report 2023
Note 23: 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.
Loans from Småkraft to landowners
Amounts in EUR thousandAmounts in EUR thousand 31.12.2023 31.12.2022
Loans to landowners 795 1 039
Minimum payments to landowners 5 163 5 535
Total 5 958 6 574
Amounts in EUR thousandAmounts in EUR thousand 31.12.2023 31.12.2022
Receivables towards landowners, off balance 23 508 24 895
Total 23 508 24 895
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.
Water rights cost
Amounts in EUR thousandAmounts in EUR thousand 31.12.2023 31.12.2022
Gross -2 198 3 655
Net 1 607 5 614
Fixed 100 320
Settlements 76 -
Total -415 9 589
The table shows the different water lease agreements with the landowners.
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Note 24: Related party transaction and balance items
Småkraft and its subsidiaries and associates have seeked to do transactions on commercial terms.
These are shown in the table below.
Counterpart
2023
Amounts in EUR thousandAmounts in EUR thousand Sale Purchase Interest income
Subsidiaries
Norway 1 998 1 491
Sweden 85
Associated companies 8 181 -
Sum 2 006 181 1 575
Counterpart
31.12.2023
Amounts in EUR thousandAmounts in EUR thousand Short term
receivables
Long term
receivables
Payables
Subsidiaries
Norway 523 31 415 -
Sweden 86 14 960 278
Associated companies - 222 59
Sum 609 46 597 337
Counterpart
2022
Amounts in EUR thousandAmounts in EUR thousand Sale Purchase Interest income
Subsidiaries
Norway 853 1 754
Associated companies 176
Sum 853 176 1 754
Counterpart
31.12.2022
Amounts in EUR thousandAmounts in EUR thousand Short term
receivables
Long term
receivables
Payables
Subsidiaries
Norway 1 838 44 423 -
Sweden 326 16 094 -
Associated companies - 943 67
Sum 2 164 61 460 67
Associated companies are listed in note 17. The individuals stated in note 5 are also related parties of Småkraft AS.
Apart from the transactions specified in this note and note 5, there are no significant related party transactions or
balance items.
In 2022 Småkraft AS entered agreements to acquire 5 companies which Bjarte Skår had indirect ownership in.
Bjarte Skår is employed as Chief Commercial Officer in Småkraft.
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Appendix
Alternative Performance Measures (APMs)
Adjusted Power revenues is defined as Power revenues adjusted for Realised 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 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.
Amounts in EUR thousandAmounts in EUR thousand 2023 2022
Power revenue 30 392 61 010
Realized value change on energy derivatives -17 277 -54 908
Adjusted power revenue 13 116 6 102
Amounts in EUR thousandAmounts in EUR thousand 2023 2022
Operating profit (loss) 65 780 -106 780 -65 662
Depreciation, amortization, impairment 7 875 8 440 20 882
EBITDA 73 654 -98 340 -44 780
Change in unrealized value change on energy derivatives -73 133 83 293 83 293
Adjusted EBITDA 521 -15 048 38 513
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Småkraft AS
Postboks 7050
5020 Bergen
Norway
post@smaakraft.no
smaakraft.no
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