Good morning, welcome to the Q1 update for Arendals Fossekompani. My name is Benjamin Golding, and I'm the CEO of Arendals Fossekompani. Together with me here today is CFO Lars Peder Fensli. Arendals Fossekompani is a long-term industrial investment company. We invest in B2B growth companies operating within the energy and/or technology space. We drive sustainable value creation in our portfolio companies through active ownership. Today, Arendals Fossekompani holds six main investments in addition to a number of smaller assets. Our companies have presence across the globe. Over time, AFK has built a diversified portfolio of B2B companies focused on industrial technology and energy. Volue is a software company operating in the intersection of technology and energy. ENRX and Tekna are world leaders in cutting-edge industrial technologies related to advanced materials, additive manufacturing, and induction heating solutions. NSSLGlobal delivers secure satellite communications and services.
Hydropower is our oldest business, producing a yearly output of around 500 GWh . In addition to this, AFK also owns a real estate portfolio consisting of properties related to our businesses, as well as local real estate development projects. Our portfolio is well-positioned vis-à-vis megatrends shaping global markets. The energy transition is driving Volue, ENRX, and our hydropower business. Digitization and AI are accelerating growth in Volue and NSSLGlobal, while de-globalization and rising defense spending is supporting demand for both NSSLGlobal's secure communications and Tekna's advanced materials. We have controlling interests in all our companies except Volue, where we hold a 40% and co-own the company together with Advent International and Generation Investment Management. The current portfolio spans the entire life cycle from startup through growth equity to mature companies. In the middle, we find our growth companies.
These are material in size, have mature business models, and access to a wide range of financing options to fuel growth. Our priority for these companies is to develop value using a typical private equity toolbox, while at the same time maintaining the unique benefits that come with our long-term ownership horizon, our deep industrial roots, and our flexibility in terms of partnership models. The mature businesses on the right-hand side generate cash to be used for dividends, acquisitions, and driving organic and inorganic growth in the rest of our portfolio. Our business model is to create value through forward-looking investment, disciplined capital allocation, and active ownership. On the left-hand side, we find our startup companies. Our strategy is to reduce our exposure to such early-phase businesses over time. We divest when we assess that we are no longer the best owners.
We continuously work to optimize this picture to ensure sustainable balance between cash generation on the one hand and attractive capital allocation options on the other. Let's take a look at the highlights from the quarter. Q1 was marked by strong performances across all our portfolio companies. Group revenue ended at NOK 929 million. The 4% decline year- on- year was primarily driven by softer markets for ENRX. Operating profit, on the other hand, came in at NOK 155 million, corresponding to a 17% profit margin. The strong result was due to improved profitability in all companies, and particularly driven by hydropower and ENRX. Volue delivered 19% growth in recurring revenues and an adjusted pro forma cash EBITDA margin of 17% while continuing to deliver on its M&A agenda.
ENRX operational focus is paying off with significant profitability improvement despite a somewhat lower top line. NSSLGlobal also delivered a strong quarter with an 18% operating margin. Tekna delivered a positive adjusted EBITDA and revenue growth of 19%, and the hydropower business delivered an operating profit of NOK 131 million, corresponding to an operating margin of 81%. Let's take a closer look at our main portfolio companies. Volue is one of Norway's largest software companies and a leading provider of software solutions for energy and grid in Europe. The company aims to become the number 1 technology provider for the European energy system before 2030. Volue delivered another strong quarter, with revenue up 17% year-on-year to NOK 402 million and recurring revenue growing 19%, reflecting continued SaaS expansion across Europe and Japan.
Profitability improved meaningfully as adjusted cash EBITDA rose to NOK 69 million, with margins lifting from 12%-17%. Growth in the quarter was broad-based across all three business units. Operational intelligence grew recurring revenue by 25%, commercial operations 27%, and technical operations 8%. The company also added 46 new customers in the quarter, supported by strong upsell into the existing base. Volue announced two smaller acquisitions in the quarter, Optimeering and dispoEnergy. Together, they strengthened Volue's multimarket trading and optimization portfolio. Closing of the TA Associates transaction announced in February is also progressing according to plan. Looking ahead, Volue expects organic growth in line with current rate, continue margin uplift year-on-year, and an active M&A agenda. ENRX is a leading manufacturer of industrial heating solutions based on induction technology. The strategic milestone this quarter was the completion of the Charge divestment.
With 75% of Charge sold, ENRX is a focused pure play heat business going forward. Turning to financials, revenue came in at EUR 30 million, down from EUR 37 million last year, reflecting lower activity across all regions. Operating profit improved meaningfully to EUR 2 million, up from EUR 0.3 million despite lower revenues. This was driven by the cost reduction initiatives executed in the Q4 now flowing through, together with the elimination of Charge's operating losses, and operating costs were down 21% year-on-year. On the market itself, conditions remain challenging. Customers are deferring investment decisions amid political turmoil, unstable tariff regimes, and trade tensions. Global oversupply in automotive production is also dampening demand for hardening machines. That said, other segments, particularly tube and pipe, are holding up better.
Order intake for the quarter was EUR 33 million, broadly in line with last year's EUR 34 million. North America, Europe, and West Asia came in below expectations. The order backlog stands at EUR 58 million, down from EUR 66 million, reflecting softer intake over the past 12 months. Looking ahead, we expect the heating market to remain challenging for the next 12- 18 months. ENRX cost base has been aligned to the current activity level. Further actions will be taken should conditions deteriorate. ENRX is well-positioned to navigate this environment and deliver profitability and cash generation. NSSLGlobal provides secure satellite communication solutions to defense, government, and the maritime sectors. The Q1 delivered a strong financial performance.
Revenue rose to GBP 24.7 million, up from GBP 21.7 million, driven by high airtime traffic and the completion of larger value projects. Operating profit rose sharply to GBP 4.8 million, supported by improved gross margins and favorable FX. Commercially, the quarter was equally encouraging. NSSLGlobal secured GBP 15.8 million in contracts across corporate, government, and maritime sectors, including GBP 4.1 million in new business. The pipeline remains strong with 11 multimillion-pound tender opportunities lined up for 2026 onwards. Looking at the broader industry, the introduction of LEO constellations is putting sustained pressure on airtime margins. In response, NSSLGlobal is shifting its mix toward higher value added services. These are structured lower margins, they strengthen our long-term relevance for military, government, and maritime customers.
Geopolitical dynamics continue to drive elevated government activity, which we expect to persist in the near term. As a result, both revenue and operating profit for 2026 are expected to be in line with 2025 as customers continue to value the resilient and cybersecure solutions offered by NSSLGlobal. Tekna is a leading manufacturer of plasma systems and metal powders for the 3D printing for defense, aerospace, medical, and automotive industries. The company delivered a strong Q1 with revenue up 19% year- on- year to CAD 10 million. Tekna posted its third consecutive quarter of positive adjusted EBITDA at NOK 0.2 million, reflecting a NOK 1 million improvement driven by higher revenue, better contribution margin, and the ongoing cost program. In materials, revenue grew 24%, supported by sustained aerospace, defense, and medical demand.
Order intake came in below the record set in Q1 last year, but the quality of the book improved meaningfully with higher average prices and a landmark $1.5 million order from a Tier-1 U.S. defense customer. Systems revenue was stable, but order intake rebounded sharply, anchored by a $1.5 million order from a leading U.K. university for cyber- hypersonic wind tunnel application. Cash flow from operations also improved significantly to $3.4 million. Looking ahead, reshoring trends, additive manufacturing adoption, and rising defense spending continue to support our long-term ambition of double-digit annual revenue growth toward 2030. Q1 hydropower production was down 10% versus last year due to lower snow reservoirs.
However, the lower production rate was offset by prices which were 56% higher than last year, driven by lower reservoir levels and elevated gas prices linked to Middle East tensions. As a result, revenue increased by 28% and operating profit ended at NOK 131 million, corresponding to an operating margin of 81%. I'll now hand over to CFO Lars Peder Fensli, who will provide additional comments on the financials.
As Benjamin has already commented, we are very pleased to present a solid quarter across all our portfolio companies. Total revenue for the group amounted to NOK 929 million, while consolidated operating profit ended at NOK 155 million, corresponding to an operating margin of 17% on group level. The increase reflects higher revenue levels in AFK Vannkraft, as well as improved profitability in ENRX, NSSLGlobal, and Tekna. Recognized share of loss from Faraday Topco was NOK 32 million, resulting in earnings before tax landing at NOK 126 million, while consolidated earnings after tax came in at NOK 33 million. In summary, a quarter with solid improvements compared to the same quarter last year. Arendals Fossekompani parent company's financial position remains solid. Available cash end of quarter amounted to NOK 568 million.
In addition, the parent company has undrawn credit facilities of NOK 2.1 billion, securing available liquidity close to NOK 2.7 billion. Net debt, which excludes shareholder loans, was NOK 167 million at the end of the quarter. Looking into outlook for the year, total revenue for 2026 is expected to be in line with 2025, whilst operating profit is expected to be significantly higher, driven by expected margin recovery in ENRX and improved operating profits in Tekna and AFK Vannkraft. Looking into the portfolio, NSSLGlobal expects operating profit in 2026 to be in line with 2025, whilst the rest of the portfolio companies expects operating profit to improve compared to last year. With that, I will have Benjamin join me.
Thank you, Lars Peder. Let's recap our priorities. Our overarching goal is to deliver an attractive total shareholder return through actively and systematically building net asset value. We do this by working on three key priorities. We develop value in our existing portfolio companies through active ownership. We also work to optimize the overall portfolio, both to ensure a composition that provides the best possible risk-adjusted return, but also to ensure balance between cash generation on the one hand and attractive capital allocation options on the other. We identify and execute value-creating transactions and structural opportunities, both at the portfolio level and at the parent company level.
An underlying prerequisite for this is a strong balance sheet that gives us financial flexibility to support our existing portfolio but also capture opportunities as they become actionable. We will move to the Q&A session. We will take a couple of minutes to review the questions before we begin.
Okay, welcome back. We have received a few questions. We'll start with the first one, Benjamin. It's a bit of a longer question. NSSLGlobal is shifting its business mix from airtime towards higher value-added services, which you flag a structurally lower margin. At the same time, geopolitical tensions are driving elevated government activity. How do you ensure NSSLGlobal remains the preferred partner for its defense and government customers as the industry moves to LEO?
NSSL's strategy is to move up the value chain, from connectivity and to more integrated mission-critical service offerings. These are lower margin but stickier and harder to displace and more relevant to the customers. I think the results in Q1 speak for themselves with a 14% revenue uplift and 18% operating margin. NSSL is and remains in a good place and has deep and long-standing relationships with government and defense customers, based on multi-year partnership, trust, and also security clearances. The increase in airtime and activity is driven by geopolitical realities and government customers will remain the backbone of NSSL's business. We also have a strong pipeline with 11 multi-million pound tender opportunities lined up for 2026. This gives us confidence in the company's commercial trajectory.
Good. Next one, ENRX. ENRX delivered a surprisingly strong quarter compared to what we saw in 2025. How should we read this? Is this a one-off or structural shift?
Well, I think the structural improvements are real and material. Operating profit did increase from EUR 0.3 million to EUR 2 million, which is driven by and happening despite lower revenues and driven by the divestment of Charge which removed operational drag but also the cost initiatives that were undertaken in 2025 which are now flowing through. As a result, operating costs are down 21% year-on-year which is not a coincidence. The cost base is dimensioned for the current activity levels. I think the good thing is that the profitability and cash generation does not depend on a near-term volume recovery. We will take further action if that is required. We expect the market to remain challenging over the next 12- 18 months, but we believe that ENRX is well positioned to deliver through this cycle and to benefit, as activity levels normalize.
I'll take the last one as well. Rising defense spending was highlighted as a tailwind in your introduction. How should we think about the role of defense-related demand across AFK's portfolio?
It's an interesting question. The geopolitical environment is driving a structural shift in defense spending. A need for more supply chain security and national reliance. These trends are playing directly into our portfolio, in particular for two companies. As mentioned, NSSLGlobal has a deep and long-standing relationships with government and defense customers, and these will remain the backbone of NSSLGlobal's business. Also Tekna is seeing materials growth driven by sustained aerospace and defense demand, in particular from the U.S., where we know defense spending is increasing sharply.
The CAD 1.5 million order from a Tier-1 U.S. customer is a great example of this, and it also illustrates a shift toward larger and more recurring defense accounts. We're also seeing defense OEMs advancing qualification of Tekna's powders for additive manufacturing. All of these positions AFK well to benefit from the elevated defense spending.
Good. I think that was the last one from this session. With that, we end the quarter one session. Thank you all for participating.
Thank you.