Annual Report 2015

WE LIKE WIND HOWEVER THE WINDS BLOW CONTENTS

About Rabbalshede Kraft Financial calendar Rabbalshede Kraft in brief 3 Annual General Meeting for the 2015 fiscal year June 1, 2016 Vision, business concept and objectives 3 Interim report January–June 2016 August 18, 2016 Performance during the year 4 Interim report January–September 2016 November 17, 2016 Significant events during the year 4 Year-end report for 2016 February 23, 2017 2015 in four graphs 5

CEO’s statement 7 Annual General Meeting Operations in 2015 8 The Annual General Meeting for the 2015 fiscal year will be Sustainability and the environment 11 held at 4:00 p.m. on June 1, 2016, in Gothenburg, Sweden. Asset management 12 The notification will be published in due course. Project portfolio 14 Rabbalshede Kraft’s wind farms 15 Financial statements Establishing a wind farm 16 Annual reports, interim reports, press releases, etc. History and networks 17 can be downloaded from Rabbalshede Kraft’s website: The market 19 www.rabbalshedekraft.se. Rabbalshede Kraft’s share 24 You can order a printed Annual Report via email (only available in Swedish): [email protected]

Administration report and financial statements

Contents 27 Administration report 28 Consolidated income statement 34 Consolidated statement of comprehensive income 34 “We are and will remain a driving Consolidated balance sheet 35 force behind renewable energy Consolidated statement of changes in in the Nordic region” shareholders’ equity 36 Consolidated cash-flow statement 37 Parent Company income statement 38 Parent Company’s statement of comprehensive income 38 Parent Company balance sheet 39 Changes in Parent Company’s shareholders’ equity 41 Parent Company cash-flow statement 42 Notes to the financial statements 43 Auditors’ Report 70

Senior executives and auditor 72 Board of Directors 73 Wind power – capacity and energy 74 Glossary 75

2 ABOUT RABBALSHEDE KRAFT ANNUAL REPORT 2015

RABBALSHEDE KRAFT IN BRIEF

Rabbalshede Kraft plans and establishes land-based invested in proprietary operational wind farms that wind farms for sales of electricity and for sales of together produce approximately 0.5 TWh of electricity entire wind farms or individual wind turbines. The per year. Investments have also been made in an company also offers asset management services, and extensive project portfolio that forms the foundation procures and manages the construction of wind for growth. Around 250 turbines have applied for per- farms. mits or are in the planning phase, and together they The company has asset management agreements have the potential to produce 3 TWh of electricity with Power Wind Partners AB (PWP), LEVA i Lysekil annually. AB and Göteborg Energi, to name a few. An agree- Rabbalshede Kraft’s owners comprise the majority ment was also signed with Mölndal Energi at the shareholder the industrial company Manor Investment beginning of 2016. In total, the company manages S.A., the property company Ernst Rosén, Nordea 134 wind turbines, of which 71 wind turbines in 8 Investment Funds and some 1,100 private sharehol- wind farms are proprietary. The electricity produced ders and companies. In addition, the Chalmers Uni- by our own wind farms is sold on the open electricity versity of Technology Foundation became a market, Nord Pool. significant owner in January 2016. From when the company was founded in 2005 up Rabbalshede Kraft is certified in accordance with until December 2015, a total of SEK 3 billion has been ISO 9001 and ISO 14001.

VISION, BUSINESS CONCEPT AND OBJECTIVES

VISION To be a leading player in terms of developing renewable energy in the Nordic region

“We are and will remain a driving BUSINESS CONCEPT force behind renewable energy • To plan and establish land-based wind farms in Sweden – for sales of renewable energy in the Nordic region” – for sales of wind farms • To offer asset management services, and procure and manage the construction of wind farms

FINANCIAL OBJECTIVES • Return on capital employed before taxes: 10 percent • Return on new projects through total capital invested before taxes (IRR): 10 percent • Equity/assets ratio: 30 percent • Debt service ratio: Multiple of 1.25

3 ABOUT RABBALSHEDE KRAFT ANNUAL REPORT 2015

PERFORMANCE DURING THE YEAR

KEY FIGURES Full-year 2015 Full-year 2014 Full-year 2013 Full-year 2012 Full-year 2011

Electricity production, MWh 576,412 314,665 189,431 159,785 149,203 Net sales, KSEK 264,204 146,161 104,694 85,269 91,207 EBITDA, KSEK 169,655 81,270 77,821 43,215 71,617 EBIT, KSEK –110,669 14,325 38,027 –7,619 33,318 Installed capacity at the close of the period, MW 190 190 89 66 61 Equity/assets ratio, % 45 37 58 45 48 Return on capital employed before taxes, % - 0.7 2.6 –0.5 3.6 Debt service ratio 1.1 1.4 0.7 1.0 0.9 Cash flow for the period, KSEK 105,738 –14,134 46,218 22,037 14,088

During 2015, the company conducted impairment of wind farms and projects, which had a negative earnings impact of KSEK 182,650 in addition to planned depreciation.

ELECTRICITY EQUITY/ GENERATION NET SALES EBITDA ASSETS RATIO 576,412 264 170 45 PERCENT MWh SEK M SEK M

SIGNIFICANT EVENTS DURING THE YEAR

FIRST QUARTER FOURTH QUARTER The Swedish government appointed a parliamentary The Swedish Riksdag (parliament) decided to increase energy commission to prepare a basis for a broad politi- electricity production within the electricity-certificate sys- cal agreement regarding the direction of energy policy, tem by 2 TWh per year, which will accelerate the develop- with a focus on 2025 and beyond. ment of renewable energy. At the UN’s climate summit in Paris, countries agreed • Rabbalshede Kraft’s largest project thus far, put into on a new global climate change agreement valid from commercial operation in December 2014, is now run- 2020. The new agreement mainly focuses on reducing ning at full capacity. It comprises the Årjäng Nordväst, emissions that have an impact on the climate. Årjäng Sydväst and Skaveröd/Gurseröd wind farms. • Rabbalshede Kraft signed an asset management SECOND QUARTER agreement with Power Wind Partners, PWP. The agree- Swedish energy statistics confirmed that wind power is ment means Rabbalshede Kraft is responsible for the now the third largest type of power after hydro and asset management and operational supervision of nuclear power. PWP’s 47 wind turbines. • Building permits were obtained for two wind turbines Rabbalshede Kraft was strengthened by the addition of • at Vetteberget in Strömstad Municipality. Britta Ersman as IR and Financial Manager, and Lars Larsson as Operation Manager. • Permits were obtained from the County Administrative Board of Västernorrland County for the Åndberg wind farm comprising 57 wind turbines in Lillhärdal, Härjedalen Municipality. The project has not yet gained legal effect. • SEK 312 M was raised through a new share issue.

4 ABOUT RABBALSHEDE KRAFT ANNUAL REPORT 2015

2015 IN FOUR GRAPHS

The four graphs below illustrate developments at Rabbalshede Kraft. The Production and Installed capacity graphs show figures from the start in 2008, when the first wind farm was put into operation – HudElectricity in Tanum price Municipality. (SEK/MWh) The 2015 substantial increase in electricity production during 2015 is linked to SEKElectricity price (SEK/MWh) 2015 500threeSEK farms being put into operation at the end of 2014, which almost doubled the company’s capacity. Electricity500 price (SEK/MWh) 2015 400SEK 500400 300Electricity price (SEK/MWh) 2015 SEK 200400300 500 200 100300 400 200100 Rabbalshede Kraft continuously hedges the sale of electricity, which 0 300 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec meant in 2015 that the company obtained a higher price per mega- 1000 watt hour of electricity than the daily Nord Pool power market price. Spot price for electricity, Nord Pool (system price) 200 JanTheFeb company’sMar salesApr priceMay Jun Jul Aug Sep Oct Nov Dec The lower curve indicates the Nord Pool energy market’s system 0 The company’s sales price Spot price for electricity, Nord Pool (system price) price (a weighted spot price for all participating countries). This indi- 100 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec cates the electricity price for the following day. Electricity price hed- The company’s sales price Spot price for electricity, Nord Pool (system price) 0 ging takes place through the conclusion of contracts for the sale of Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec future electricity production at preestablished prices. ElectricityThe company’s certificates sales price (SEK/MWh)Spot price for electricity, 2015 Nord Pool (system price) See “The electricity market” on page 19. SEKElectricity certificates (SEK/MWh)No. of 2015 electricity certificates sold 250 250,000 SEK No. of electricity certificates sold Electricity250 certificates (SEK/MWh) 2015 250,000 200 200,000 SEK No. of electricity certificates sold 250200 250,000200,000 150Electricity certificates (SEK/MWh) 2015 150,000 200SEK150 No. of electricity certificates200,000150,000 sold 100 100,000 250 250,000 150100 150,000100,000 50 50,000 200 200,000 10050 100,00050,000 Electricity certificates provide financial support for renewable electri- 0 0 150 150,000 Jan Feb Mar Apr May Jun jul Aug Sep Oct Nov Dec city producers. The system has existed in Sweden since 2003 and 500 50,0000 been managed jointly with Norway since 2012. Rabbalshede Kraft JanElectricityFeb Mar certificatesApr MaySalesJun pricejul Aug SpotSep priceOct electricityNov Dec 100,000 100 and other approved renewable electricity producers receive a certifi- sold (units) certificates SKM 0 0 Electricity certificates Sales price Spot price electricity 50 Jan Feb Mar Apr May Jun jul Aug Sep Oct Nov Dec 50,000 cate for each MWh electricity sold. Electricity certificates are traded sold (units) certificates SKM in the same way as electricity but much more infrequently. Electricity certificates Sales price Spot price electricity 0 0 sold (units) certificates SKM See “The electricity certificate market” on page 23. Jan Feb Mar Apr May Jun jul Aug Sep Oct Nov Dec

Production,Electricity certificates MWh Sales price Spot price electricity sold (units) certificates SKM MWhProduction, MWh 700MWh Production,600700 MWh Rabbalshede Kraft’s electricity production increased sharply in 2015 MWh 500600 and reflects the build-out of the company’s wind farms. At the end of 700 Production,400500 MWh 2014, the company’s largest project to date was put into commercial 600 MWh operation – the three wind farms, Årjäng Nordväst, Årjäng Sydväst and 300400 500700 Skaveröd/Gurseröd with a total of 33 wind turbines. This is the key 200300 400600 underlying reason for electricity production almost doubling in 2015. 100200 Favorable winds also contributed to the increase in production 300500 1000 during the year. 200400 2008 2009 2010 2011 2012 2013 2014 2015 0 See Rabbalshede Kraft’s wind farms on pages 14–15 and The wind 100300 2008 2009 2010 2011 2012 2013 2014 2015 power market on page 21. 2000 2008 2009 2010 2011 2012 2013 2014 2015 100 Installed0 capacity, MW Installerad effekt, MW 2008 2009 2010 2011 2012 2013 2014 2015 MWhInstalled capacity, MW MWhInstallerad effekt, MW Antal 250 250 100 MWh MWh Antal Installed250 capacity, MW Installerad250 effekt, MW 100 200 200 80 MWh MWh Antal 250200 250200 10080 150 150 60 Installed capacity, MW Since 2008,Installerad Rabbalshede effekt, Kraft has MW installed 71 proprietarily mana- 200MWh150 200MWh150 Antal8060 100 ged wind100 turbines. The total capacity, 190 megawatts (MW), is a 40 250 250 100 measure of the capacity of the company’s wind turbines. Together, 150100 150100 6040 50 50 20 200 they can200 produce slightly more than half a terawatt hour (TWh) elec- 80 10050 tricity. See10050 Rabbalshede Kraft’s wind farms on pages 14–15 and the 4020 0 0 0 150 150 60 2008 2009 2010 2011 2012 2013 2014 2015 explanation of2008 capacity2009 and energy2010 on2011 page 201221. 2013 2014 2015 500 500 200 40 100 2008Installed capacity2009 2010 2011 2012 2013 2014 2015 100 2008Installerad2009 effek 2010 Antal2011 verk 2012 2013 2014 2015 0 0 0 50 2008Installed2009 capacity 2010 2011 2012 2013 2014 2015 50 2008Installerad2009 effek 2010 Antal2011 verk 2012 2013 2014 2015 20 5 5 0 Installed capacity 0 Installerad effek Antal verk 0 2008 2009 2010 2011 2012 2013 2014 2015 2008 2009 2010 2011 2012 2013 2014 2015

Installed capacity Installerad eﬀek Antal verk Rabbalshede Kraft’s production almost doubled in 2015 to slightly more than half a terawatt hour. This was attributable to the three new wind farms, Årjäng Nordväst, Årjäng Sydväst and Skaveröd/Gurseröd with a total of 33 wind turbines. The farms became operational in late autumn 2014. In the image, CEO Thomas Linnard is speaking at the inauguration of the new wind farms.

6 CEO’S STATEMENT ANNUAL REPORT 2015

CEO’s statement

2015 was an intensive and eventful year for Rabbalshede Kraft. During the year, we continued to focus on strengthening our project portfolio and developing our operational and asset management operations. We worked hard to strengthen the company both financially and operationally by broadening our service offering and strengthening our organization.

In autumn 2015, Rabbalshede Kraft signed an asset ”Our wind farms have management agreement with Power Wind Partners, PWP, which entails Rabbalshede Kraft assuming responsibility very high availability” for the asset management and operational supervision of PWP’s 47 wind turbines. Following a procurement pro- The company faces a period of growth and development. cess, an agreement was also signed in the autumn with Our continuous and unending focus on quality and effi- the municipal enterprise, LEVA, in Lysekil, regarding the ciency has generated results during the year. Despite management of its wind farm. We are extremely pleased 2015 having some of the lowest electricity prices in 15 by the confidence PWP and LEVA have vested in us and years, EBITDA was SEK 169.7 M, which can be compa- note that these types of partnerships will strengthen our red with SEK 81.3 M in 2014. market position. Including these agreements, Rabbals- All our wind farms posted strong production figures in hede Kraft now manages 134 wind turbines, of which 71 2015, which generated revenue in line with or beyond are proprietary. expectations. The company has been able to maintain a In the autumn, the company conducted a preferential high level of availability of nearly 98 percent, which rights issue whereby the company raised SEK 312 M, means that, essentially, as long as the wind blows our which will be used to reduce the company’s loans and wind turbines produce electricity. Production increased thereby also its financial expenses. The project portfolio strongly compared with 2014, which was largely due to undergoes continuous development and in the autumn, our largest project to date entering commercial operation the company received building permits for two wind tur- at the end of 2014 (the Årjäng NV, Årjäng SV and Skaver- bines at Vetteberget in Strömstad. The year ended with öd/Gurseröd wind farms). the Åndberg wind farm at Lillhärdal in Härjedalen recei- The market is currently sending several favorable sig- ving permits in December from the Västernorrland County nals, and we are well aware that it could take time before Administrative Board. The permit comprises up to 57 we receive any positive effects in the form of price wind turbines with a total height of 180 meters, and has increases. For the near future, highly positive signals are not yet gained legal effect. coming from the raised aims for the electricity-certificate system, the quota increase decided by the government “All our wind farms posted in autumn 2015 and the announcement that Sweden will become one of the world’s first fossil-free developed strong production figures in countries. On a global level, we have the results from the 2015” climate summit in Paris, where it was resolved to limit global warming to less than 2 degrees Celsius by 2100. 2015 was a challenging year for all electricity producers, To achieve this, greenhouse-gas emissions must with exceptionally low prices at times. The average spot decrease by 40–70 percent by 2050 and achieve a zero price was nearly 30 percent lower than 2014. A number level by 2100. of combined factors contributed to the low electricity pri- We are very pleased to be able to report that 2016 ce, namely: abundant rain resulted in a large surplus of started with us signing an agreement to build a new wind hydropower; low fuel prices, particularly oil and coal turbine for Mölndal Energi. The wind turbine will be loca- power; and mild weather which was responsible for a ted adjacent to Rabbalshede Kraft’s existing wind farm in decline in the demand for heating. Due to prevailing market conditions and continued Hällevadsholm, and will provide the customer with elec- weak electricity and certificate prices, the company deci- tricity for around 4,600 apartments. ded to conduct an impairment of already operational I would also like to take this chance to thank all of our assets. Some of the assets were commissioned under shareholders and employees for their commitment and other market conditions and with a different revenue and support during an intense year. I look forward to continu- expense scenario to that prevailing today. The value of ing to drive the company forward together. fixed assets were depreciated by a total of SEK 182.6 M in addition to planned depreciation. Thomas Linnard CEO of Rabbalshede Kraft AB 7 ABOUT RABBALSHEDE KRAFT ANNUAL REPORT 2015

Operations in 2015

Rabbalshede Kraft plans and establishes land-based wind farms for sales of electricity and for sales of entire wind farms or individual wind turbines. The company also offers asset management services, and procures and manages the construction of wind farms.

Frank Mattsson, Operation and Maintenance Technician, maintains the measuring equipment 140 meters up in the air.

Rabbalshede Kraft’s operations are located in Sweden, Revenue is currently largely generated through sales of with a head office in Rabbalshede, Tanum Municipality. electricity, which is an area growing in pace with the This location has consistent and stable wind resources, expansion of Rabbalshede Kraft’s wind farm. The basis making it highly suitable for wind-power production. The for growth also consists of sales of turnkey facilities and company’s main operations are located in Västra Göta- the offering of asset management services, along with land and Värmland. offering procurement and management of the construc- The company has 25 employees with expertise in areas tion of wind farms. such as the environment and quality, environmental inqui- Rabbalshede Kraft’s strength consists of efficient ries, permit inquiries, meteorology, surveying, calculations planning and construction of wind farms with cost-effec- of sound and shadows, purchasing, construction, trans- tive production, a broad project portfolio with optimum portation, technology, electricity, high tension electricity, wind locations and structured sales of electricity and ser- reporting, financing and investor relations. In addition, services. vices are purchased and personnel are contracted. At the A sound financial base is essential to safeguard the end of 2015, the average age among employees was 49 development of existing wind power projects in the (45). The gender distribution was 36 percent (36) women company’s project portfolio and the development of new and 64 percent (64) men. The company’s presenteeism projects. This explains why Rabbalshede Kraft has been remained high at 99 percent (99). preparing a listing on Nasdaq OMX for the past few Since 2010, the company’s net sales have grown years. This listing will be carried out when it is deemed to from SEK 47 M to SEK 264 M. benefit both the company’s long-term stable growth and its shareholders.

8 ABOUT RABBALSHEDE KRAFT ANNUAL REPORT 2015

RABBALSHEDE KRAFT’S OPERATIONS CAN BE DESCRIBED AS FOLLOWS:

Owner Services Production Projects

Activity Sales of services Power production New projects

Assets Know-how, processes and systems Eight wind farms Ongoing projects in different phases

Financing – Shareholders’ equity Shareholders’ equity Bank loans

Revenues Sales of services Sales of energy Sales of projects

• OWNER SERVICES tion comprises a core strategic competence that has for- Rabbalshede Kraft is an independent service company mulated procedures that are certified in line with ISO 9001 that has long been active in the Swedish renewable ener- and ISO 14001. gy market. The operation and maintenance organization Although electricity production is generally a capital- has detailed know-how of established procedures certi- intensive operation, it is not personnel-intensive. Dou- fied in accordance with ISO 9001 and ISO 14001. bling or multiplying the number of wind turbines in Rabbalshede Kraft offers technical, economic and operation requires few new employees, which means that financial asset management services for entire wind farms the cost per MWh produced can be reduced sharply. or individual wind turbines. By packaging and offering Accordingly, growth provides economies of scale that investors wind power projects that encompass the entire benefit both the company and its customers. Nor does chain, from construction to operation, and then combining energy production through wind power entail costs for this with operating services, the company’s customers are fuel or waste management. given access to proprietary production of renewable ener- The electricity that is produced is sold continuously on gy without having to build an organization of their own. the Nord Pool power market. A portion of future electrici- Professional operation and maintenance are offered to ty production is hedged continuously, which means that extend technical and economic lifespans. Rabbalshede contracts are signed at a fixed price per MWh for the Kraft also manages administration relating to authorities production that is achieved (fixed price and variable volu- and secures expertise regarding laws and regulations. me). During 2015, 71 percent of the company’s electricity Alongside the management of the company’s own production was hedged. Sales of electricity certificates wind farms, the wind farms of other owners such as are also hedged, with 53 percent being hedged in 2015. Power Wind Partners AB (PWP) are managed, including wind farms from Dorotea in the north and Jönköping in • PROJECTS the south, LEVA in Lysekil AB, with wind turbines The Project Unit comprises the management and deve- in Brastad and Göteborg Energi with wind turbines in Töf- lopment of the project portfolio. tedal, Ed Municipality. An agreement was also signed There are 171 turbines in the application and planning with Mölndal Energi at the beginning of 2016. stages, with a combined capacity of 506 MW. Each pro- Rabbalshede Kraft is also responsible for a service ject is evaluated based on its prerequisites in terms of offering that entails the procurement of individual wind wind conditions, proximity to a grid connection and other turbines or procurement and construction of entire wind factors. The focus is on delivering efficient and profitable farms as assigned by customers. turnkey projects. Today’s low electricity price level is placing considera- • PRODUCTION ble demands on all electricity producers in the Nordic The Production Unit comprises operational wind farms, region. It is therefore important to identify synergies, both proprietary and farms operated in collaboration with which are achieved by procuring a number of projects others, and sales of electricity from these farms. simultaneously. This offers advantages in dialogues with Rabbalshede Kraft has wind turbines with a combined financiers, suppliers, contractors and future partners. capacity of 190 MW and an annual production of around One example of this is Rabbalshede Kraft’s largest 500,000 MWh (0.5 TWh) in eight proprietary wind farms. A investment so far; the 33 wind turbines in the Årjäng total of 134 wind turbines are managed, of which 71 are Nordväst, Årjäng Sydväst and Skaveröd/Gurseröd wind proprietary turbines and 63 are managed for other com- farms, which were assembled and commissioned during panies. 2014. These new wind farms have a normal production of Stringent requirements are imposed on the operation of 289,400 MWh, which increased the company’s produc- both its proprietary wind farms and those managed by tion capacity by 130 percent. During 2015, the Årjäng partners. The internal operation and maintenance organiza- Nordväst, Årjäng Sydväst and Skaveröd/Gurseröd wind farms produced 314,171 MWh.

9 A total of wind turbines are managed, of which134 63 are managed for other companies.

Rabbalshede Kraft’s wind farms: 8 wind farms, 71 wind turbines 190 MW Estimated production, normal year: 0.5 TWh

Authorized wind farms: 11 wind farms, 133 wind turbines 424 MW

xxxxxx xxxxxx xxxxxxx

10 SUSTAINABILITY AND THE ENVIRONMENT ANNUAL REPORT 2015

Sustainability and the environment

Sustainability and the environment are central to Rabbalshede Kraft’s construction and management of wind farms. Sustainability entails seeking the best possible solutions for unifying the social, environmental and financial challenges.

When a wind farm is established, it leads to positive It is important for Rabbalshede Kraft that the effect on effects locally, regionally and globally. Examples of this the local natural environment is as small as possible include job creation, improved infrastructure for forestry when land is utilized for wind turbines and roads. The and, of course, the production of renewable electricity. size of the wind farms and their boundaries are determi- Rabbalshede Kraft’s wind turbines represent an important ned by such factors as wind conditions, sound, nature addition to renewable electricity production in the Nordic values and cultural values. The conditions governing the region. This increases opportunities for exports of rene- establishment of wind farms are stated in the permit. wable and carbon-free electricity. When the construction phase starts for a prospective However, there are also negative local effects. Wind wind farm, a control plan is prepared to ensure complian- turbines affect the landscape locally and create noise ce with the conditions stated in the permit. and shadows. Choosing a good location for the wind tur- When a wind turbine has served its useful life after bines is therefore an important part of our planning. approximately 25 years and is no longer profitable, it is Exploiting an area’s potential to ensure favorable produc- dismantled and sold on the secondary market or is tion while limiting the impact on the surrounding environ- scrapped for materials recycling. The concrete founda- ment as far as possible is always a balancing act. tions are demolished or covered. The environmental per- It is also important to minimize the environmental mits from the County Administrative Board include impact during the operational phase. Improvements can requirements for financial undertakings that are to gua- be made continuously thanks to the expertise and expe- rantee that the turbines are dismantled and that the foun- rience our employees have built up. There is a control dations and locations of wind turbines are adapted to the plan for each wind farm to ensure that the conditions set surrounding environment. by the permits are adhered to. Funds are set aside for It takes about 6–8 months for a wind turbine to gene- future dismantling of wind turbines in accordance with the rate electricity that corresponds to the amount of energy requirements imposed by authorities on our operations. used for the manufacture, transportation and assembly of Rabbalshede Kraft’s most important environmental the wind turbine (footnote: www.vindlov.se) contribution is to increase the share of electricity produced Rabbalshede Kraft has introduced industrial proces- by wind power. Technical developments are progressing ses in all areas of operation, from the preplanning to the rapidly and higher, larger and more efficient turbines could operation and maintenance of wind turbines. The compa- enable the establishment of wind farms that are profitable ny conducts its environmental work with the support of even at ever-lower electricity prices. Land-based wind an environmental management systems and is certified in power is increasingly competitive and is currently an accordance with ISO 14001. obvious alternative for investors in the electricity market.

To optimize a wind turbine’s electricity production, Rabbalshede Kraft installs equipment to measure the wind using lasers, known as lidar. 11 11

Karolina Tisell, Health, Safety, Quality

and Environmental Coordinator at Rabbalshede Kraft ABOUT RABBALSHEDE KRAFT ANNUAL REPORT 2015

Asset management

Rabbalshede Kraft offers a growing number of partners the opportunity to own wind turbines with out a needing to have their own asset management organization. The company is a major player in the wind power market and offers economies of scale and bargaining power to partners. 134 wind turbines are currently managed, of which 63 are owned by partners of the company.

“We offer asset management to our customers”

Running wind farms entails a long list of commitments in addition to the obvious aspect of ensuring that the turbines produce electricity. Lars Larsson summarizes: ”We work with operational optimization, financial management, trading electricity and electricity certificates, along with a range of other services that also include the dismantling and replacement of old wind turbines with new ones. We also manage many different contracts for our customers, such as leases with land owners, service agreements with turbine suppliers, connection to the power grid, guarantees, property taxes, insurance, compliance with regulations, snow clearing in the winter and also electricity and electricity certificate trading.”

Ideally, a wind turbine should produce electricity whenever the wind blows. Rabbalshede Kraft manages different generations of wind turbines from Siemens, Vestas, Nordex and Enercon. Lars Larsson explains how this affects daily operations: ”We are well aware of the different manufacturers’ strengths and weaknesses. We have learnt to optimize electricity production compared with turbine wear, and Lars Larsson, Operation Manager with responsibility for we continuously deploy individual turbines based on everything from planning new wind farms to operation how the wind is blowing and its direction. This is an and maintenance of existing wind farms. example of Rabbalshede Kraft’s constant balancing act while considering opportunities for revenues in both the long and short term.”

Rabbalshede Kraft signed a four-year management agreement with Power Wind Partners (PWP). The agreement means Rabbalshede Kraft is responsible for the asset management and operational supervision of PWP’s 47 wind turbines.

”We consider a high level of availability and low life cycle costs to be important and, therefore, Rabbalshede Kraft was a natural choice for us when choosing an asset manager in autumn 2015. They now manage our 47 wind turbines located in six farms ranging from Dorotea in the north to Jönköping in the south.”

Tord Östlund, CEO of Power Wind Partners AB

12 ABOUT RABBALSHEDE KRAFT ANNUAL REPORT 2015

RABBALSHEDE KRAFT’S MONITORING SYSTEM

Rabbalshede Kraft’s monitoring system presents data informed and the turbine is either restarted remotely or from each individual wind turbine. The information is by service personnel heading out and remedying the fault used in part to monitor operations, but also to analyze on site. The monitoring system provides a basis for wor- and report on production. If a turbine stops and cannot king pro-actively and is a powerful tool for reducing be restarted automatically, the personnel concerned are downtimes and increasing production.

Example image from the monitoring system that shows in real time how well each wind turbine at each wind farm managed by Rabbalshede Kraft is producing. This information is also available for each individual wind turbine. The image shows that all the farms combined in this snapshot are producing an capacity of 190 MW out of a total potential of 295 MW. This means that if this same wind strength were maintained over a whole hour, the farms would produce 190 MWh of renewable energy in one hour.

Rabbalshede Kraft has signed a three-year asset management agreement with LEVA in Lysekil. The agreement means that Rabbalshede Kraft is responsible for service and corrective maintenance of LEVA’s wind farms.

”At LEVA in Lysekil, we are extremely satisfied with the outcome of the procurement of suppliers for the service and maintenance of our two wind turbines. Rabbalshede Kraft is an experienced and competent operator in the wind power industry, which means we feel more secure as wind power owners.”

Susanne Malm, CEO of LEVA i Lysekil AB.

13 ABOUT RABBALSHEDE KRAFT ANNUAL REPORT 2015

Project portfolio (at December 31, 2015)

No. of Capacity Estimated normal annual Phase Project name Municipality turbines (MW) production, MWh

OPERATION Hud Tanum 6 15 38,400 Kil Tanum 4 8 20,000 Brattön Munkedal 6 15 35,100 Töftedalsfjället Dals-Ed 10 23 66,000 Dingle-Skogen Munkedal 12 28 67,800 Årjäng Nordväst Årjäng 9 28 78,700 Årjäng Sydväst Årjäng 13 40 116,500 Skaveröd/Gurseröd Tanum 11 33 94,000 Total in operation 71 190 516,500

AUTHORIZED Brattön Sälelund Munkedal 14 42 - Sögårdsfjället Tanum 14 42 - Femstenaberg Strömstad 15 45 - Hällevadsholm phase 2 Tanum 1 3 - Lursäng Tanum 5 10 - Lyrestad Mariestad 8 24 - Årjäng NV phase II Årjäng 8 28 - Vetteberget Strömstad 2 6 - Holmevattnet1) Dals-Eds 6 18 - Sköllunga1) Stenungsund 3 9 - Lillhärdal1) Härjedalen 57 197 - Total authorized 133 424 Total applications2) 57 164 Total in planning2) 57 171 Total 318 949

1) Authorized projects that have not yet gained legal force. County administrative boards give permission for a new wind farm following an assessment in line with the Environmental Code. An assessment requires approval from the municipality, otherwise the application is rejected automatically. There is an opportunity for appeal following the County Administrative Board’s permit decision. If no appeal is submitted then the decision gains legal force after three weeks.

2) The projects that are under planning or application are subject to evaluation and assessment by the municipality and/or county administrative board or higher authorities. Accordingly, there may be some uncertainty as to whether or not the company will receive the permits for the projects that are under planning and the projects for which the company has submitted applications. Projects that have not been granted permission are moved from the application phase to the planning phase for review or are closed.

14 ABOUT RABBALSHEDE KRAFT ANNUAL REPORT 2015

RABBALSHEDE KRAFT’S WIND FARMS

Hud Dingle-Skogen Årjäng Sydväst Municipality Tanum Municipality Munkedal Municipality Årjäng Operations started 2008 Operations started 2012-2013 Operations started 2014 Manufacturer Nordex Manufacturer Enercon Manufacturer Vestas Capacity (no. of turbines) 15 MW (6) Capacity (no. of turbines) 28 MW (12) Capacity (no. of turbines) 40 MW (13) Estimated annual Estimated annual Estimated annual production1) 38 GWh production1) 68 GWh production1) 117 GWh Production in 2015 42 GWh Production in 2015 81 GWh Production in 2015 127 GWh

The wind farm comprises a total of 14 Kil wind turbines, of which 12 are proprietarily Årjäng Nordväst Municipality Tanum managed. Rabbalshede Kraft, together Municipality Årjäng Operations started 2009 with the supplier, is responsible for the Operations started 2014 Manufacturer Enercon operation and maintenance of the entire Manufacturer Vestas Capacity (no. of turbines) 8 MW (4) wind farm. Capacity (no. of turbines) 28 MW (9) Estimated annual Estimated annual production1) 20 GWh production1) 79 GWh Production in 2015 23 GWh Töftedalsfjället Production in 2015 89 GWh Municipality Dals-Ed Operations started 2011 Manufacturer Siemens Capacity (no. of turbines) 23 MW (10) Estimated annual production1) 66 GWh Production in 2015 76 GWh

Brattön Skaveröd/Gurseröd Municipality Munkedal Municipality Tanum Operations started 2010 Operations started 2014 Manufacturer Nordex Manufacturer Vestas Capacity (no. of turbines) 15 MW (6) Capacity (no. of turbines) 33 MW (11) Estimated annual The wind farm comprises a total of 21 Estimated annual production1) 35 GWh wind turbines, of which 10 are proprietarily production1) 94 GWh Production in 2015 40 GWh managed. Rabbalshede Kraft, together Production in 2015 101 GWh with the supplier, is responsible for the operation and maintenance of the entire wind farm.

1 Estimated annual production for all wind farms corresponds to the estimated production during a normal year. 15 ABOUT RABBALSHEDE KRAFT RABBALSHEDE KRAFT

Establishing a wind farm

The first step toward a profitable wind farm is to conduct a thorough analysis of the conditions. The phases, from preplanning to operation and monitoring, are described briefly below.

1. PLANNING 3. PROCUREMENT Preplanning begins the process by identifying suitable When permission or building permits have been granted locations for new wind farms. This is based on the muni- and gained legal force, the wind turbines, electrical and cipalities’ wind-power plans. Next, the prerequisites in contracting work, other engineering works and financing terms of wind, grid connections, opposing interests and are procured. The wind measurements provide a basis other factors are studied more closely. Leasehold agree- for calculations. Agreements are drawn up with electricity ments are signed with land owners, at which point a con- companies to enable connection to the grid. sultation is initiated with authorities, local residents and any interest associations. Biologists, archaeologists and 4. CONSTRUCTION other experts are commissioned for more in-depth stu- Roads and parking areas are built for the wind turbines by dies. If the conditions are correct, wind measurements contractors, ideally those with a local connection as this commence and these can continue for up to two years. leads to local job creation. An internal power grid is built at the wind farm. Connection to the national grid is carried 2 APPLICATION out by the electricity companies that own the adjacent A permit application is submitted to the County Adminis- networks. The turbine suppliers are responsible for trative Board for consideration in accordance with the assembling wind turbines and conducting trial operations. Environmental Code. The municipality must first approve the project, otherwise the application is rejected. In the 5. OPERATION case of smaller wind farms with up to six turbines that Each wind turbine follows a precise service and mainte- have a total height of 150 meters and which cannot be nance plan. Monitoring and operations are performed deemed to have a significant impact on the environment, remotely by both the supplier and Rabbalshede Kraft. municipal approval in line with the Environmental Code Local personnel may also be hired for larger establish- and a building permit are sufficient. ments. This ensures a very high level of operational relia- If no appeal is submitted then the decision gains legal bility to ensure that, if possible, the turbines always force after three weeks. Appeals are sent to the Land and produce electricity when the wind blows. Environment Court and potentially on to the Land and Environment Court of Appeal. See www.rabbalshedekraft.se for a more detailed description of the different phases.

Construction of the wind farm in Årjäng 16 ABOUT RABBALSHEDE KRAFT ANNUAL REPORT 2015

RABBALSHEDE KRAFT’S HISTORY

2005 2012 The entrepreneurs Ingemar Ung and Bertil Jönsson form The first two wind turbines in the company’s fifth wind farm are put Rabbalshede Kraft AB. into operation at Dingle-Skogen in Munkedal Municipality. The wind 2008 farm comprises a total of 14 wind turbines, which were put into The Company’s first wind farm, the Hud wind farm in Tanum operation in stages during 2012–13. Municipality with 6 wind turbines (15 MW), is put into operation. 2013 2009 The Dingle-Skogen wind farm, with 14 wind turbines (32 MW), was The Kil wind farm, with 4 wind turbines (8 MW) in Tanum completed during the second half of the year. Two wind turbines in Municipality, is put into operation. the wind farm were sold to Gothenburg Diocese, which leaves 12 proprietary wind turbines (28 MW) left. 2010 Brattön wind farm, with 6 wind turbines (15 MW) in Munkedal 2014 Municipality, is put into operation. The wind farms Årjäng Nordväst with 9 wind turbines (27 MW) and Årjäng Sydväst with 13 wind turbines (39 MW) in Årjäng Municipa- ISO 9001 quality certification and ISO 14001 environmental certifi- lity as well as the Skaveröd/Gurseröd wind farm with 11 wind turbi- cation are received for procedures and processes in respect of the nes (33 MW) in Tanum Municipality were put into operation. planning, purchasing, operation and maintenance of wind farms and for sales of electricity. 2015 Service agreements are signed with Power Wind Partners AB (PWP) 2011 and LEVA i Lysekil AB to manage the wind farms of these compa- Töftedalsfjället wind farm, with 10 wind turbines (23 MW) in Dals-Ed nies. Permission was obtained for the Åndberg wind farm contain- Municipality, is put into operation. The wind farm comprises a total ing 57 wind turbines (197 MW) in Lillhärdal, Härjedalen Municipality. of 21 wind turbines, of which 10 are owned by Göteborg Energi and The project has not yet gained legal effect. one more is owned by a private landowner. A partnership agreement is signed with Axpo in respect of sales of electricity, electricity certificates and Guarantees of Origin.

RABBALSHEDE KRAFT’S GRID

CUSTOMERS – Partners: Companies and organizations that own wind turbines in Rabbalshede Kraft’s farms or in proprietary parks where the company is responsible for operation, sales of electricity and Wind power Owners suppliers more. These also include companies and organizations that own farms that are planned, built or managed by Rabbalshede Kraft.

Contractors Financiers – Electricity brokers: The electricity (electricity, electricity certificates and Guarantees of Origin) that is produced is sold on Nord Pool via electricity brokers, primarily Axpo Sverige AB, as described on the preceding page. Electricity consumers, households, industries, the public sector and more Grid owners OWNERS, major owners include the industrial company Manor Customers Investment S.A., the property company Ernst Rosén and Nordea Rabbalshede Kraft Electricity Electricity brokers consumers Investment Funds. In addition, the Chalmers University of Technolo- Customers gy Foundation became a significant owner in January 2016. The Authorities company also has some further 1,100 private shareholders and companies.

Partners CONTRACTORS are commissioned for the construction of roads and Local infrastructure. To date, wind turbines have been procured from Ves- business tas, Siemens, Nordex and Enercon. Suppliers of grid connections are operators the owners of the regional power grids: Ellevio, Vattenfall and EON.

Neighboring THE PLANNING and construction of wind farms are conducted in clo- residents Landowners se cooperation with the municipalities, contractors and other business operators concerned, as well as with various interest sociations.

THE WIND FARMS are constructed on leasehold land, for which a portion of the wind farm’s annual revenues are paid as compensation to the landowner.

FINANCIERS

17 17 Wind turbines at the Kil wind farm

18 THE MARKET ANNUAL REPORT 2015

The market

THE ELECTRICITY MARKET LONG AND SHORT-TERM OUTLOOK Price changes have historically occurred at relatively More renewable energy was installed globally in short notice. According to the Swedish Energy Agency’s 2015 than ever before. At the end of the year, at short-term forecast in February 2016, the electricity price the UN’s climate summit in Paris, 195 countries is expected to rise slightly during 2016 and 2017. Similar- ly, both electricity consumption and electricity production agreed to raise investment in carbon-free electri- are expected to rise marginally. The continued build-out city to reduce climate gas emissions. In the short of wind power is expected to account for the increase in term, the rapid expansion of renewable electri- production.1 This forecast is based upon the National Institute of Economic Research’s assessment of econo- city production could in fact slow down due to mic developments, which highlighted consistent growth low electricity prices. Renewable electricity is in Sweden in March 2016.2 expected to represent a much higher share in It is difficult at this point to assess what the electricity price will be in the long term. It will correspond to how the long term. long Swedish nuclear power reactors remain in operation. The owners of the Ringhals and Oskarshamn There was a weak economic trend in 2015, with a conti- nuclear power plants decided in October 2015 to shut nued decline in global market prices for coal and natural down four of six reactors by 2020, which will entail a gas, which are important fuels for electricity production. reduction in electricity production. The general view in Sweden had a warm, windy and rainy year. This led to connection with this news becoming public was that it further downward pressure on electricity prices as hydro- will have a marginal effect on the price of electricity. Vat- power storage reservoirs filled with rain, strong winds led tenfall then warned in January 2016 that high taxes on to higher wind power production than during an average nuclear power could lead to all reactors being shut down, wind year, and the heat contributed to a decline in electri- which would be deemed to lead to considerably higher city consumption. The Nord Pool system price for the electricity prices in the future. No deeper analyses had full-year was SEK 196/MWh (19.6 öre/kWh) which is the been published about future electricity production and lowest in 15 years and was down 27 percent on 2014. future electricity prices in this regard when this Annual The German power market, EEX, reported a similar trend. Report was published. One example of how global factors can also raise electricity prices was the very cold weather early in 2016. The system price rose 57 percent in January to 27.7 öre/ kWh from the low of 17.4 öre/kWh in December. On January 21, 2016, the daily price amounted to 82.4 öre/ kWh in all four bidding areas in Sweden. Electricity was a net export from Sweden for the fifth year in succession. Due to high electricity production and low electricity consumption, exports amounted to 22.6 TWh, which is the highest level ever. This benefits Swe- dish electricity producers as the electricity price is usually somewhat higher in countries to which Sweden exports electricity. As a result, Sweden also contributes to an increase in the share of carbon-free electricity in Europe.

Swedish wind power since 2003, which was the first year of electricity certificates. The rapid pace of technological advancement and price pressure on wind turbines have contributed to extensive expansion in recent years. Source: Swedish Wind Energy.

1 Short-term forecast Energy consumption and energy supply between 2015–2017 (Kortsiktsprognos Energianvändning och energitillförsel år 2015-2017)

2 konj.se/publikationer/konjunkturlaget.html

19 THE MARKET RABBALSHEDE KRAFT

TOMORROW’S ELECTRICITY MARKET MARKET DRIVERS EU ENERGY UNION EU member states have joined the The price of electricity is determined by a series of inte- European Energy Union and are working together ever racting factors that are listed below in three time per- more closely in terms of energy issues.1 Renewable ener- spectives. In the Nordic region, Norwegian and Swedish gy represents only 16 percent of all electricity and heat hydropower can be used to supplement wind power and production in the Union. One focus area is the expansion also as a reserve for cold winter days or in the event that of the electricity and natural gas networks between production at a nuclear power reactor has to be suspen- countries. Reinforced international connections combi- ded. Accordingly, the Nordic production units cooperate ned with continued investment in renewable electricity in an effective way that stabilizes pricing in mainly the could be important for Swedish electricity producers. short and medium term. This is shown in a report for Swedish Wind Energy.2 IN THE SHORT TERM price elasticity for electricity is REGULATORY CHANGES. Parallel discussions are essentially zero. Major price fluctuations only marginally taking place at various levels within the union about how affect consumption. the price of electricity should be set and how best to manage the expansion of renewable energy. The Europe- IN THE MEDIUM TERM with a time horizon of up to five an Commission is making the issue a high priority.3 years, economic conditions will play an important role in Extensive regulatory changes have been made in the UK, setting prices by leading to increased or reduced electri- are about to be made in Germany and are being discus- city consumption. Electricity production is also affected sed in a number of other countries. One of the incentives by the price of coal and natural gas, and by the price of is to guarantee pricing for electricity and national support the EU’s emission rights that are in turn also affected by to facilitate the expansion of renewable energy produc- economy. tion. The British and German regulatory changes are described in the source reference below.4 IN THE LONGER TERM other additional factors will A parliamentary energy commission has been appoin- determine the rate of expansion of new power production ted by the Swedish government with a focus on the peri- in relation to demand and the technology that will be od 2025–2050. Its findings are to be reported no later used. When it is time to replace the aging Swedish than January 1, 2017. According to many analysts, this nuclear power reactors with new forms of electricity pro- means that it is unlikely that the energy commission will duction, this could have an impact on electricity prices. have any impact on energy policy during the current government’s period in office. THE EU’S EMISSION RIGHTS (EU-ETS) play a central role in achieving the EU’s energy and climate targets for COP21. In the long-term, the climate summit in Paris in 2030. A rule of thumb according to Svensk Energi is that autumn 2015 was a key positive signal for investments in a EUR 10 price increase per emission right (one ton of

renewable energy on a global level. Legally binding tar- CO2) increases the price per MWh of electricity by about gets for reductions in climate gas emissions are lacking SEK 80 on the Nord Pool Spot power market, despite the at a national level, but the fact that so many countries fact that fossil fuels account for only a few percent of all were able to agree can be considered unique, and it lays electricity produced in Sweden. A price peak was reached

the foundations for ongoing concrete discussions about in 2008 of around EUR 30 per ton of CO2. At the begin- investment in renewable energy, for example. ning of 2016, the price fell to around EUR 5 per ton of

CO2. One reason is the successful environmental work that has reduced demand for emission rights in the EU. 1 ec.europa.eu/energy/en/news/one-year-energy-union The government’s information memorandum from Sep- 2 Renewable electricity and international connections. tember last year describes the work being carried out in (Förnybar el och utlandsförbindelser) Swedish Wind Energy the EU to restore emission rights as an effective tool in 3 ec.europa.eu/energy/en the transition to renewable energy.5 4 Germany: www.cleanenergywire.org/factsheets/ germanys-new-power-market-design The UK GLOBAL BOOM Electricity Market Reform, EMR Although the price of fossil fuels declined considerably 5 Information memorandum 2014/15:FPM47. See also www. last year, 2015 was a record year globally in terms of miljoborsen.se with pedagogical explanations by EU-ETS investments in renewable energy according to Bloomberg (in Swedish) New Energy Finance. The greatest investment increases were within wind and solar, which increased 64 GW and 57 GW respectively measured by capacity. This can be compared to Sweden which installed 0.6 GW (615 MW) of wind power last year. In Sweden, investments in other types of renewable power than wind were only modest.

20 THE MARKET ANNUAL REPORT 2015

THE WIND POWER MARKET are summarized that predict a cost reduction of 20–30 percent by 2030.2 Wind power posted a new production record in Since national conditions for wind power vary consi- 2015. Favorable winds and the continued build-out derably, Elforsk’s latest cost report 3 is important from a provided 16.6 terawatt hours, which represents an Swedish perspective as it takes national conditions into account. If control instruments such as electricity certifi- increase of nearly 45 percent on an annual basis. cates for renewable electricity and property taxes on Slower growth is expected during 2016. hydro power are included in the calculations, land-based wind power is the cheapest type of power in terms of In 2015, 185 wind turbines were constructed in Sweden, absolute electricity production. which is fewer than the record year of 2014 when 367 new wind turbines were installed.1 However, the turbines POTENTIAL FOR SWEDISH WIND POWER are gradually becoming increasingly efficient and larger. The potential for wind power is greater in Sweden than in This leads to a higher energy exchange per krona many other EU countries. The country is sparsely popula- invested, while the cost per MWh produced declines. At ted, wind conditions are favorable in many places and the end of the year, 3,048 (2,233) wind turbines were in the rate of expansion remains low. Since 2004, there operation with a combined capacity of 6,029 MW (5,425 have been areas of land and water specified as being of MW). An average Swedish wind turbine has been in ope- national interest for the use of wind. The Swedish Energy ration for a number of years and has an average capacity Agency describes them thus: “The status of being of of 1.8 MW. New turbines currently generate around 3 national interest for the use of wind is used for areas that MW, and, moving forward, the turbines will continue to have particularly good conditions for the use of wind grow in size and capacity while the cost per MWh produ- from a national perspective, that are needed for ced will continue to decline. important or necessary functions in society and/or to meet a region’s requirement for a certain level of energy 4 FORECAST FOR 2016 AND BEYOND production.” According to the industry organization Swedish Wind The latest audit identified 313 areas of national inte- 2 Energy, the forecast for 2016 is for lower investments in rest that comprise 7,887 km . This represents slightly new wind turbines while waiting for electricity prices to more than 1.5 percent of the surface of Sweden, inclu- rise and the electricity-certificate system to stabilize. ding 29 areas in Swedish waters. This is considered Wind power will therefore be impacted by the same glo- enough to achieve the highly ambitious expansion plans. bal factors as other renewable types of power, which are In relation to the total land area, there is a lot of distance described in the previous chapter. between the Swedish wind turbines. Both Denmark and Swedish Wind Energy’s forecast for 2016 is for 149 new Germany have about ten times more wind power per wind turbines with a combined capacity of 417 MW. A square kilometer, although significantly more of this is weak pace of expansion could continue into 2019 under sea based. the current conditions, according to the industry organiza- Wind power is considered to have the greatest potential tion. Changes in the global market and support for rene- in terms of future renewable electricity production in Swe- 5 wable energy could rapidly lead to renewed expansion, den, according to the Swedish Energy Agency. The expan- however. The industry association is pleased, for example, sion of hydropower slowed several decades ago and could that there is an extensive list of planned wind farms that decline further if the proposals of the government’s Water- already have permission to build. In total, these planned works Inquiry are implemented. Sweden is far ahead of wind farms will contain around 2,800 wind turbines with a others in terms of biofuel-based electricity production, but combined capacity of 9,000 MW, a number considerably the expansion of this type of power has slowed. Solar elec- higher than the wind turbines currently in operation. tricity is expected increase, but only from a very low level. This type of power produces the most electricity during the WIND POWER FINANCIALLY COMPETITIVE sunny days of the summer season, when electricity con- The price per MWh produced using wind power could be sumption is usually low in Sweden. Wind power produces expected to fall further as technology continues to deve- around 60 percent during the winter season and 40 percent during the summer season. lop. According to the latest wind power analysis performed by the IEA, an OECD agency, a number of reports MARKET PLAYERS When the electricity-certificate system was introduced in 1 Wind power statistics forecast, Quarter 4 2015 (Vindkraftstatistik 2003 (see page 23), it was expected that the build-out of och prognos, kvartal 4 2015), Swedish Wind Energy Swedish wind power would primarily occur under the 2 Technology Roadmap Wind Energy 2013 Edition auspices of the traditional energy companies. Today, sta- 3 Electricity from new and future facilities 2014 te-owned Vattenfall may be largest operator, but a series 4 www.energimyndigheten.se/fornybart/riksintressen-for- of new players are dominating the wind power market. energiandamal/riksintressen-for-vindbruk (In Swedish) 5 Scenarios regarding Sweden’s energy system (Scenarier över Sveriges energisystem), ER 2014:19 21 THE MARKET RABBALSHEDE KRAFT

WIND POWER COMPANIES Such as Rabbalshede least because the boom in China will be linked to less Kraft, Eolus Vind, Arise, OX2, Svevind, Nordisk Vindkraft favorable wind power subsidies from this year forward. and others plan, construct and operate wind farms on a At the end of last year, global wind power represented a proprietary basis, and also on behalf of others. combined capacity of 432,000 MW. This is only 70 times more than Sweden’s capacity, which could be said to OTHER INDUSTRIES Companies active in the forestry, show that wind power is a young technology with consi- real estate, industrial and retail fields, municipalities and derable global potential. others often collaborate with energy and wind power Wind power in the EU accounted for 44 percent of all companies. new electricity production last year. In terms of capacity, this was 12,800 MW of which a quarter was installed at LONG-TERM INVESTORS AND FINANCIAL PLAYERS sea. Germany accounted for nearly half of this capacity, In recent years, wind power has attracted a number of of which around a third was at sea. There is a great varia- industrial and financial players, both Swedish and increa- tion between the 28 member states in terms of how much singly non-Nordic operators. These include investment has previously been installed including during the last companies and pension funds. Rabbalshede Kraft’s prin- year. There are few wind turbines in the eastern member cipal owner, Manor Investment S.A., is a long-term indu- states, for example, with the exception of Poland that strial investor. installed the second highest capacity after Germany last year. Spain, which previously undertook major installa- INTERNATIONAL OUTLOOK tions, does not even figure amongst the 2015 statistics.2 2015 was a record year for the installation of wind power, both globally and in the EU. During 2015, the global mar- Electricity production in Sweden in 2015 ket for wind power grew 22 percent, measured by installed capacity. 63,000 MW was installed in total. China TWh % accounted for almost half of this figure.1 Government Hydropower, 73,9 46,7 Wind power, 16,6 10,5 subsidies for wind power in China will be reduced in Nuclear power, 54,3 34,3 2016, which means development is expected to slow, not Combined heat and power, 13,5 8,5

In 2014, 150.9 TWh was produced in Sweden. Net exports were 1 Global wind statistics 2015. Global Wind Energy Council, GWEC the second highest level ever at 15.6 TWh. 2 Wind in power. 2015 European statistics. The European Wind Energy Association, EWEA Svensk vindkraft under 13 år MWh 12 000 18 000 16,6 TWh 11 000 16 000 10 000 9 000 14 000 8 000 12 000 7 000 10 000 6 000 5 000 8 000 4 000 6 000 6 029 MW 3 000 4 000 2 000 3 233 verk 1 000 2 000 0 0 03 04 05 06 07 08 09 10 11 12 13 14 15

Produktion Effekt Antal verk Electricity production in Sweden in 2015 Pris på el och elcertiﬁkat 2003–2013 kronor per MWh 600

500

400

300

200

100

0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Eva Ahlström, Planner, works on new wind power projects. Spotpris Sverige Spotpris elområde 3 Systempris Elcertiﬁkatspris (sammanvägt spotpris Nord Pool Spot) 22 THE MARKET ANNUAL REPORT 2015

THE ELECTRICITY The spot price of electricity certificates fell from a peak of more than SEK 300/MWh during a number of months in CERTIFICATE MARKET 2008–2010. In 2015, the average spot prices fluctuated Electricity certificates, as used by Sweden and on a weekly basis between approximately SEK 137–170/ MWh while the futures prices were around 12 öre higher. Norway, provide support to renewable energy. At the beginning of April 2016, the price was around SEK Ambitions within the electricity-certificate sys- 140/MWh. The next review of the electricity-certificate tem will increase from this year. The intention is system will take place in 2017. The Swedish Energy Agency will be presenting several to accelerate the transition to renewable electri- evaluation assignments this summer ahead of the review city production. and this process is expected to have a positive impact on price levels since the aim is to match the price of In the EU, the member countries use various support electricity certificates to the need to expand renewable systems for the expansion of renewable electricity pro- electricity. duction. Electricity certificates (also called renewable In a letter to the Minister for Energy Ibrahim Baylan energy certificates) were introduced in 2003 in Sweden, dated April 1, 2016, the industry association Swedish whereby electricity producers of, for example, wind Wind Energy demanded that a review be carried out this power receive one certificate for every MWh that is pro- year to guarantee the continued rapid expansion of rene- duced for sale in an approved facility over a period of 15 wable electricity production. years. The certificates are then sold on in a manner that resembles how the power companies sell electricity and HOW THE SYSTEM WORKS they thus provide extra revenue. How large a share of the The electricity certificates are paid for via electricity bills, renewable electricity production being expanded in the and demand is determined by how many MWh are con- form of wind power or other approved technologies, such sumed by households, industry and the public sector. In as hydropower and biopower, is determined by the mar- the case of electricity-intensive industries, there is the ket. As noted on page 21, wind power is expected to see option to avoid a certificate in order to safeguard compe- the main share of the continued renewable energy expan- titiveness. sion as other renewable types of energy are considered Demand is shaped by a quota which, for example, to have a more limited potential.1 amounted to 14.3 in Sweden in 2015. In other words, each 100 MWh of electricity purchased by electricity REINFORCED SYSTEM FROM 2016 consumers subject to quota obligations, required that The electricity-certificate system has been shared with they also purchased 14.3 electricity certificates. In 2016, Norway since 2012. The aim was to jointly increase annual the quota will be raised to 23.1 and will increase to 29.1 production of renewable electricity by 26.4 TWh by 2020, by 2019, before gradually declining to 1.3 in 2035. compared with 2012. Last year, Sweden took a further The growing surplus is mainly due to electricity con- step by entering into an agreement with Norway, which sumption being lower than the Swedish Energy Agency means that annual production of renewable electricity in forecasted when the quotas were set. Renewable electrici- Sweden can be increased by a further 2 TWh by 2020 ty production also increased more rapidly than calculated. within the framework of the electricity-certificate system.2 This led to more certificates being created than planned. Accordingly, supply and demand do not match each other, ELECTRICITY CERTIFICATE PRICE TRENDS which means recurrent quota adjustments are required. In autumn 2015, the price of certificates increased According to the Swedish Energy Agency, electricity modestly despite an ever-greater electricity certificate certificates have cost electricity consumers 1.5–5.3 öre surplus. The price then fell slightly due to very high wind per kWh between 2003–2014. In 2016, the cost may be power production in the windy autumn weather that led at the higher end of this interval. The exact cost will be to high allocations of electricity certificates. The surplus revealed by the electricity bill. of certificates was greatest at the turn of the year, but will For Rabbalshede Kraft, electricity certificates and gradually decline throughout 2016 as a result of higher guarantees of origin accounted for 37 percent (32) of net quotas. This means that electricity consumers are requi- sales in 2015. Guarantees of origin represent an extra red to purchase more electricity certificates, which provi- support for electricity producers as they are voluntary, in des more funds for expanding renewable electricity contrast to electricity certificates. This gives households production. The reduced surplus is also expected to lead and companies the option to purchase electricity solely to a higher price per electricity certificate. from renewable energy sources, wind power electricity or some other production mix. 1 www.energimyndigheten.se/fornybart/elcertifikatsystemet (In Swedish) 2 The raised ambitions are explained in Swedish Wind Energy’s document entitled ”What does the parliament decision October 21 mean?” 23 RABBALSHEDE KRAFT’S SHARE RABBALSHEDE KRAFT

Rabbalshede Kraft’s share

The company and its shares are affiliated to the electronic securities system known as the VP system, with Euroclear Sweden AB as the central securities depository.

The company’s Class B shares have been traded since In December 2015, a new share issue was conducted April 1, 2014 on the Alternativa Listan. This list is a mar- whereby the company raised SEK 312 M. The shares ketplace for unlisted shares and has been under the were registered in January 2016 and amounted to supervision of the Swedish Financial Supervisory Autho- 126,843,931 on January 15, of which 1,000,000 were rity since 2003. Class A shares and 125,843,931 were Class B shares. Rabbalshede Kraft’s total number of shares amounted to 74,824,930 shares at the end of 2015. The shares The Board of Rabbalshede Kraft has adopted the follo- were distributed among 1,000,000 Class A shares and wing dividend policy: 73,824,930 Class B shares. Class A shares entitle the When the requisite earnings and cash flow so permit, holder to one vote and Class B shares entitle the holder this is to accrue to the shareholders in the form of a divi- to one-tenth of a vote. dend corresponding to at least 30 percent of profit after tax.

Share capital trend (at December 31, 2015)

Share capital trend Change Accumulated total Class A Class B Class A Class B Quotient Share capital Accumulated Year Event shares shares shares shares value increase share capital

June 2005 Company foundation 1,000 – 1,000 – 100 100,000 100,000 July 2006 Amended quotient value 99,000 – 100,000 – 1 – 100,000 July 2006 New share issue 4,000,000 300,000 4,100,000 300,000 1 4,300,000 4,400,000 Aug 2006 New share issue 1,600,000 – 5,700,000 300,000 1 1,600,000 6,000,000 Dec 2006 New share issue 4,000,000 6,000,000 9,700,000 6,300,000 1 10,000,000 16,000,000 Nov 2007 Non-cash issue – 8,000,000 9,700,000 14,300,000 1 8,000,000 24,000,000 Dec 2007 Stock dividend 3:1 – 72,000,000 9,700,000 86,300,000 1 72,000,000 96,000,000 Jan 2008 Preferential rights issue – 24,000,000 9,700,000 110,300,000 1 24,000,000 120,000,000 May 2008 Preferential rights issue – 39,029,000 9,700,000 149,329,000 1 39,029,000 159,029,000 May 2008 Private placement – 16,671,000 9,700,000 166,000,000 1 16,671,000 175,700,000 June 2008 Preferential rights issue 300,000 – 10,000,000 166,000,000 1 300,000 176,000,000 Jan 2010 New share issue – 46,054,314 10,000,000 212,054,314 1 46,054,314 222,054,314

Apr 2010 Private placement – 6 10,000,000 212,054,320 1 6 222,054,320

May 2010 Reverse split 1:10 – – 1,000,000 21,205,432 10 – 222,054,320

Jan 2011 Share subscription due to warrants – 482,500 1,000,000 21,687,932 4,825,000 226,879,320

Jul 2012 Preferential rights issue – 8,356,845 1,000,000 30,044,777 10 83,568,450 310,447,770

Jun 2013 Private placement – 14,300,000 1,000,000 44,344,777 10 143,000,000 453,447,770

Jul 2013 Preferential rights issue – 29,480,153 1,000,000 73,824,930 10 294,801,530 748,249,300

24 RABBALSHEDE KRAFT’S SHARE ANNUAL REPORT 2015

Largest shareholders (at December 31, 2015)

No. of Class No. of A shares Class B shares Holding, % Votes, % Manor Investment S.A. 347,500 39,350,000 53.05 51.09 Ernst Rosén Invest AB, incl. Reine Rosén and related parties 345,000 8,905,490 12.36 14.74 Thorén-Jönsson family 307,500 5,019,100 7.12 9.66 Nordea Investment Funds – 4,645,471 6.21 5.54 Tibia Konsult AB – 1,830,000 2.45 2.18 SEB Investment Management – 1,769,850 2.37 2.11 SEB Life International Assurance – 1,697,000 2.27 2.02 Ung Ingemar and related parties – 1,175,500 1.57 1.40 Trogen, Karl-Erling with company and related parties – 1,107,500 1.48 1.32 Kullendorff family – 1,020,939 1.36 1.22 Other shareholders – 7,304,080 9.76 8.71 Total 1,000,000 73,824,930 100.00 100.00

From January 2016, the Chalmers University of Technology Foundation became a significant owner.

The holdings encompass personal holdings, or holdings of a wife/husband/cohabitant, sibling or relative in a direct line of ascent as well as legal entities where the person has a controlling influence.

Ylva Abrahamsson, Meteorologist, and Hans Svensson, Construction and Plant Manager, discuss upcoming wind farm projects.

25 MULTI-YEAR REVIEW RABBALSHEDE KRAFT ANNUAL REPORT 2014

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2626 CONTENTS

Administration report 28 -Multi-year review 28 -Rabbalshede Kraft 2015 29 Consolidated income statement 34 Consolidated statement of comprehensive income 34 Consolidated balance sheet 35 Consolidated statement of changes in shareholders’ equity, Group 36 Consolidated cash-flow statement 37 Parent Company income statement 38 Parent Company’s statement of comprehensive income 38 Parent Company balance sheet 39 Changes in Parent Company’s shareholders’ equity 41 Parent Company cash-flow statement 42

NOTES TO THE FINANCIAL STATEMENTS Note 1 Significant accounting policies 43 Note 2 – Net sales 50 Note 3 – Other operating revenues 50 Note 4 – Employees, personnel costs and remuneration of senior executives 50 Note 5 – Other external costs 52 Note 6 – Depreciation, amortization and impairment of tangible and intangible fixed assets 53 Note 7 – Financial income 53 Note 8 – Financial expenses 54 Note 9 – Tax 54 Note 10 – Intangible fixed assets 56 Note 11 – Tangible fixed assets 57 Note 12 – Long-term receivables and other receivables 58 Note 13 – Intangible current assets 58 Note 14 – Prepaid costs and accrued income 59 Note 15 – Shareholders’ equity 59 Note 16 – Interest-bearing liabilities 60 Note 17 – Other liabilities 61 Note 18 – Accrued expenses and deferred income 61 Note 19 – Financial assets and liabilities 62 Note 20 – Financial risks and policies 63 Not 21 – Leasing 65 Note 22 – Investment obligations 66 Note 23 – Pledged assets and contingent liabilities 66 Note 24 – Related parties 67 Note 25 – Group companies 67 Not 26 – Untaxed reserves 68 Note 27 – Cash-flow statement 68 Note 28 – Events after the balance-sheet date 69 Note 29 – Information about the Parent Company 69 Auditors’ Report 70 xxxxxx xxxxxx xxxxxxx

2727 ADMINISTRATION REPORT RABBALSHEDE KRAFT ANNUAL REPORT 2015

ADMINISTRATION REPORT

MULTI-YEAR REVIEW

Project portfolio No. of turbines Total capacity, MW Dec 31, Dec 31, Dec 31, Dec 31, Dec 31, Dec 31, Dec 31, Dec 31, Dec 31, Dec 31, 2015 2014 2013 2012 2011 2015 2014 2013 2012 2011

Operation 71 71 38 26 26 190 190 89 61 61 Construction – – 33 14 14 – – 101 32 32 Permit granted 133 65 49 38 38 194 141 146 94 Preplanning, planning and application phase. 114 195 258 335 356 578 774 988 947 Total in operation and in planning 318 331 378 426 434 962 1,105 1,227 1,134

Sold projects 24 24 24 22 22 52 52 52 47 47

Production Full-year 2015 Full-year 2014 Full-year 2013 Full-year 2012 Full-year 2011

Production outcome, MWh 576,412 314,665 189,431 159,785 149,203 Hedged energy, % 71 71 63 61 44

Condensed income statement and cash flow statement Full-year 2015 Full-year 2014 Full-year 2013 Full-year 2012 Full-year 2011

Net sales, KSEK 264,204 146,161 104,694 85,269 91,207 Operating profit/loss, KSEK –110,669 14,325 38,027 –7,619 33,318 Profit/loss before tax, KSEK –196,729 –32,132 210 –41,055 5,325 Profit/loss for the year, KSEK –171,647 –25,083 117 –30,200 3,895 Cash flow from operating activities before changes in working capital, KSEK 92,006 37,075 36,163 13,506 47,978 Cash flow from operating activities, KSEK 21,138 103,559 –8,627 58,317 82,555

Condensed balance sheet Dec 31, 2015 Dec 31, 2014 Dec 31, 2013 Dec 31, 2012 Dec 31, 2011

Total assets, KSEK 2,562,718 2,647,556 1,938,658 1,277,824 1,139,710 Fixed assets, KSEK 2,183,987 2,422,682 1,611,542 1,095,576 1,015,455 Current assets, KSEK 378,731 224,874 327,116 182,248 124,255 Shareholders’ equity, KSEK 1,145,146 990,369 1,117,952 573,058 550,948 Interest-bearing liabilities, KSEK 1,231,722 1,385,815 751,933 562,969 522,823 Other liabilities, KSEK 185,850 271,732 68,773 141,797 65,939

Key figures Dec 31, 2015 Dec 31, 2014 Dec 31, 2013 Dec 31, 2012 Dec 31, 2011

Return on capital employed before taxes, % neg. 0.7 2.6 neg. 3.6 Debt/equity ratio, multiple 1.1 1.4 0.7 1.0 0.9 Net debt, KSEK 914,788 1,210,382 471,261 416,715 430,921 Equity/assets ratio, % 45 37 58 45 48 Number of shares at the end of the period (thousands) 74,825* 74,825 74,825 31,045 22,688 Shareholders’ equity per share, (SEK) 15.30* 13.24 14.94 18.46 24.48 Earnings per share (SEK) –2.29* –0.34 0.00 –1.13 0.17 Average number of employees 21 21 23 24 24

* Following the end of the year, 52,019,001 Class B shares were registered as a result of the new issue. The key figures above are based on the number of shares registered at the closing date. 28 ADMINISTRATION REPORT RABBALSHEDE KRAFT ANNUAL REPORT 2015

RABBALSHEDE KRAFT 2015

The Board of Directors and CEO of Rabbalshede Kraft AB DEPRECIATION, AMORTIZATION AND IMPAIRMENT (publ.), corporate registration number: 556681-4652, here- Investments, including paid advances, totaled KSEK 23,021 by submit the Annual Report and consolidated financial during the January to December 2015 period. The invest- statements for the January 1, 2015 to December 31, 2015 ments primarily pertained to ongoing planning. Deprecia- fiscal year. tion, amortization and impairment of tangible and intangible fixed assets totaled KSEK 280,324 (66,945), of which BUSINESS ACTIVITIES depreciation of operational wind farms accounted for KSEK The Group comprises the Parent Company, Rabbalshede 95,867 (53,800). During 2015, the Group recognized impair- Kraft AB (publ.) and 18 wholly owned subsidiaries, of whom ment of wind farms and projects of KSEK 182,650. The 12 are directly owned. Refer to Note 25 for further information. useful life of an investment in wind turbines is 25 years. Uti- The Parent Company started operations in 2005 and the lizing a useful life of 25 years for investments in wind turbi- Group was formed in November 2007. Rabbalshede Kraft nes is standard practice among both Swedish and foreign refers to the Group in this report. wind-power companies. Rabbalshede Kraft is a fast-growing player in wind power that plans and constructs land-based wind farms in CASH FLOW Sweden for proprietary operation or in partnership with oth- The Group’s cash flow from operating activities before er operators, or to sell on to other operators. Business acti- changes in working capital was KSEK 88,491 (37,075) and vities are divided into the following phases: preplanning, cash flow from financing activities was KSEK 107,621 planning, application, permits granted, construction and (722,537). Cash flow for the period was KSEK 105,738 finally operation and maintenance. Optimal long and short- (neg: 14,134) and was mainly attributable to a new share term profitability is achieved by being in control of all of the issue whereby the company raised KSEK 312,114 in funds. stages from the initial analysis of suitable areas for the construction of wind farms to their actual operation. Rabbals- FINANCING AND LIQUIDITY hede Kraft also offers full asset management services for Net debt at the end of the year was KSEK 914,788 other owners’ wind turbines. (1,210,382). Cash and cash equivalents amounted to KSEK In 2015, the average number of employees was 21 (21). 226,744 (121,006), of which blocked bank funds accounted for KSEK 90,190 (54,427). The equity/assets ratio was 45 TREND IN THE GROUP’S SALES AND EARNINGS percent (37) at the closing date. Net sales totaled KSEK 264,204 (146,161). Bank loans totaled KSEK 1,255,652 (1,305,020) at The average electricity price per presold MWh for the December 31, 2015. January to December 2015 period was SEK 288/MWh The average interest rate on raised bank loans was 5.33 (315). Average income for electricity certificates was SEK percent (4.69). The fixed-interest period at December 31, 162 per electricity certificate (140) and SEK 8 per guarantee 2015 was 4.47 years (5.08) and the capital maturity term of origin (9) for GoOs during the January to December 2015 was 4.84 (5.35) years. period. The three wind farms Skaveröd/Gurseröd, Årjäng The loan agreements for the Group wind farms include Nordväst (Årjäng NV) and Årjäng Sydväst (Årjäng SV) were conditions known as covenants. The covenants are linked to established in 2014 and switched to commercial operation key figures such as the cash flow, which is to exceed a cer- from December 2014. tain level. If these covenants are not met, the company will EBITDA (operating profit before depreciation/amortiza- be in breach of the requirements under the covenants. As tion) amounted to KSEK 169,655 (81,270) and EBIT (opera- reported in the 2015 year-end report, the company did not ting profit) to KSEK 110,669 (14,325). A loss for the year meet its existing covenant requirements and, therefore, the was posted of KSEK 171,647 (loss: 25,083), corresponding bank loans are recognized as short-term. During the first to a negative earnings per share of SEK 2.29 (neg: 0.34). four months of 2016, the company reached a solution for Net financial items amounted to an expense of KSEK the covenants governing the company’s loan agreements. In 86,060 (expense: 46,457) and the loss before tax was KSEK the first quarter, SEK 171 M from the preferential rights issue 196,729 (profit: 32,132). in December 2015 was used to reduce borrowings for Ska- During the year, the company recognized impairment on veröd Gurseröd Vind AB, Årjäng Sydväst Vind AB, Årjäng wind farms and projects, which had a negative impact of Nordväst Vind AB, Rabbalshede Kraft AB and Töftedal Vind KSEK 182,650, which was the main reason for the KSEK AB. Low electricity and certificate prices after the end of the 164,597 decline in profit before tax for the year. year resulted in the capital from the preferential rights issue Production from the Group’s wind farms amounted to being insufficient to meet the company’s covenants. Bet- 576,412 MWh (314,665). The rate of expansion for wind ween November 2015 and March 2016, electricity prices farms varies from year to year and, accordingly, so does the declined further by about 17%. In April 2016, Manor Invest- increase in production. ment S.A., the company’s principal owner, provided a shareholder loan of SEK 215 M to the Group, which is to be used primarily to amortize the loans for Brattön Vind AB, Kil Vind AB and Dingleskogen Vind AB. 29 ADMINISTRATION REPORT RABBALSHEDE KRAFT ANNUAL REPORT 2015

An additional shareholder loan will be used to reduce bor- Sweden’s trading platform via the Alternativa Listan to replace rowings for Skaveröd Gurseröd Vind AB, Årjäng Sydväst its listing on Mäklarlistan. On the Alternativa Listan, buyers and Vind AB, Årjäng Nordväst Vind AB, Rabbalshede Kraft AB sellers can follow share price information and execute regular and Töftedal Vind AB, to thereby meet all covenants out- trading. Trading on the Alternativa Listan occurs regularly, once standing, which are currently subject to waivers from cre- a month in order to gather transactions and create share liquidi- ditors. ty. Each trading period comprises four days. In October 2015, On March 23, 2016, an agreement was signed with 1,000 Class B shares were traded at a price of SEK 7 each. Swedbank and SEB regarding further amortization of the The Articles of Association do not include any preemp- bank loans for Rabbalshede Kraft AB, Töftedal Vind AB, tion clauses, meaning barriers to transferring shares in the Årjäng Nordväst Vind AB, Årjäng Sydväst Vind AB and company. Skaveröd Gurseröd Vind AB by a total of SEK 140 M. The- se amortizations must be made before September 30, SIGNIFICANT EVENTS DURING THE FISCAL YEAR 2016. Rabbalshede Kraft AB intends to finance these During autumn 2015, Rabbalshede Kraft signed a four-year amortization payments through a shareholder loan. Rab- asset management agreement with Power Wind Partners balshede Kraft AB has pledged wind power projects, with (PWP) to manage their wind farms. The agreement entails a total book value of KSEK 77,942, as collateral with the that Rabbalshede Kraft is responsible for the asset mana- banks to cover the amortization payments. gement and operational supervision of PWP’s 47 wind tur- Refer to Note 16 for further information about the bines. Following a procurement process, the company also Group’s loan agreements. signed a three-year asset management agreement with LEVA in Lysekil. The agreement entails that Rabbalshede PARENT COMPANY Kraft is responsible for service and corrective maintenance The Parent Company, Rabbalshede Kraft AB (publ.), of LEVA’s wind farms. focuses primarily on the management, coordination and In December, the Åndberg wind farm at Lillhärdal in Här- operation of the Hud wind farm and the development of jedalen received permits from the County Administrative the Group. The administration of electricity sales is carried Board in the County of Västernorrland. The permit covers out in the Parent Company. The Parent Company is up to 57 wind turbines with a total height of 180 meters. responsible for issues concerning the equities market, The permit has not yet gained legal effect. such as consolidated financial statements and equity mar- At the end of 2015, Rabbalshede Kraft conducted a pre- ket information, as well as the credit market with matters ferential rights issue whereby the company raised SEK 312 regarding funding and financial risk management. M, which will be used to reduce the company’s loans. Net sales amounted to KSEK 30,268 (29,777) and other During the issue SEK 118 M of the SEK 312 M raised was operating revenues to KSEK 910 (354). EBIT was a negati- used to settle a shareholder loan. ve KSEK 24,565 (neg: 13,789) and the loss after tax was During the year, Rabbalshede Kraft recruited Britta Ers- KSEK 204,266 (loss: 15,072). man as IR and Financial Manager, as well as Lars Larsson as Operation Manager. Britta Ersman and Lars Larsson SHARE CAPITAL AND OWNERSHIP STRUCTURE took up office at Rabbalshede Kraft in July and June 2015, At the end of the fiscal year, the registered share capital respectively, and both are members of the company’s comprised 74,824,930 shares (74,824,930), of which Class management group. A shares comprised 1,000,000 (1,000,000) and Class B The Annual General Meeting (AGM) for the 2014 fiscal shares 73,825,930 (73,825,930). year was held on April 23, 2015, in Gothenburg, Sweden. Class A shares entitle the holder to one vote and Class During 2015, the company conducted impairment of wind B shares entitle the holder to one-tenth of a vote. The quo- farms and projects, which had a negative earnings impact of tient value of the shares is SEK 10 per share. KSEK 182,650 in addition to planned depreciation. At December 31, 2015, the number of shareholders in In 2015, the Swedish Tax Agency notified of their decisi- the share register maintained by Euroclear Sweden AB on to raise the real-estate tax from 0.2 to 0.5 percent for was 1,068 (1,068). At the end of the fiscal year, Manor large-scale wind power operations. The company made a Investment S.A. controlled 51.09 percent of the company’s provision for this increase in 2015. votes, Ernst Rosén Invest AB, including Reine Rosén with companies and family, 14.74 percent, Anna-Lisa Thorén EVENTS AFTER THE END OF THE FISCAL YEAR Jönsson with companies and family 9.66 percent and See Note 28 Nordea Funds 5.54 percent. No other shareholder controls 3 percent or more of the company’s votes. INFORMATION ABOUT RISKS AND UNCERTAINTIES At the end of 2015, a new share issue was carried out Risk management for electricity sales of 52,019,001 Class B shares at SEK 6 per share, which Rabbalshede Kraft has a collaboration in place with Axpo raised funds for the company of SEK 312,144,006. The Sverige AB, one of the leading operators on the Nord Pool share issue was registered in 2016 and has therefore been power market. This partnership provides the company with registered as called-up share capital on the closing date. risk-management support for the sale of electricity. The Rabbalshede Kraft AB’s shares are not listed on any stock partnership aims to secure future production revenue, reach exchange or market. In April 2014, the Board of Directors deci- long-term profitability, reduce the risk of fluctuations in mar- ded to list the company’s share for trading on Alternativa ket prices negatively impacting the company’s revenue, 30 achieving favorable results from price hedges and managing ADMINISTRATION REPORT RABBALSHEDE KRAFT ANNUAL REPORT 2015

the balance power cost-effectively. Together with Axpo, power plants in Oskarshamn and Ringhals was followed in Rabbalshede Kraft has prepared an electricity trading policy, January by Vattenfall’s announcement that all of Sweden’s which aims to identify risks and set frameworks and limits nuclear plants may be closed. Should the closures be for Rabbalshede Kraft’s risk-taking. The company hedges implemented, this is expected to have a major impact on prices for a proportion of its production volume with fixed electricity prices, which is also indicated by some brief ana- price contracts (PPAs and EPAs), which means that the lyses published in the media. volume risk and profile cost for the hedged portion are elimi- In recent years, the price of electricity certificates was nated. Volume risk is defined as the risk that production negatively impacted by a growing surplus following the volumes do not correspond to the hedged volume. The pro- recent substantial expansion of renewable energy. Rabbals- file risk pertains to the difference between the selling price hede Kraft hedges sales through forward contracts to coun- under futures, which is fixed during the day, and the actual ter variations in the market. In 2016, the surplus in electricity spot price when electricity is delivered during the day. certificates decreased thanks to a considerable increase in quotas to be filled in the electricity-certificate system, which Political risks is ex pected to benefit the price trend. Had the adjustment The electricity market is governed by laws and regulations, occurred earlier, the current substantial surplus in certifica- which in Sweden, partly derive from EU directives. Likewi- tes would not have built up and a higher price level would se, the market for wind power is governed by laws and have been retained. Accordingly, it is positive that the next regulations, both in terms of the support system and the overview of the electricity-certificate system, called control permit process for establishing new wind turbines. station 2017, will take place next year. The Swedish Energy The electricity-certificate system was introduced in Swe- Agency will be presenting several evaluation assignments den in 2003 to promote the expansion of renewable and this summer ahead of the overview and this process is also carbon-free electricity. From 2012, the aim of the system is expected to have a positive impact on the price level since to jointly with Norway increase the annual production of the aim is to better match the price of electricity certificates renewable electricity by 26.4 TWh by 2020, compared with to the need for renewable electricity. 2012. An agreement was signed between countries in autumn 2015, which means that annual production of rene- Competitors wable electricity in Sweden can be increased by a further 2 Over the past few years, interest in wind power has TWh. The reaction to the agreement in the market is positi- increased and competition for areas with favorable wind ve but a large surplus of certificates put a brake on the pri- conditions has intensified. Through its extensive project ce trend for electricity certificates in the autumn. The portfolio, Rabbalshede Kraft already holds a strong position expansion of wind power has progressed rapidly, contribu- in the Swedish wind power market. Rabbalshede Kraft is ting to a wide range of electricity certificates, although elec- positive to partnerships with other operators on individual tricity consumption has not kept pace with increased green projects, which can also enable the establishment of more electricity production. Accordingly, a surplus of certificates and larger wind farms than the company’s own funding has successively accumulated, which decreased the spot allows. Wind farms with favorable wind conditions have a price from a peak of more than SEK 300/MWh during a competitive advantage when applying for financing. Since number of months in 2008-2010 to a level around SEK 140/ the risk taken by the financier is reduced in line with the MWh for extended periods last year. Ahead of the decision financial position of the wind farm, financiers prefer to in autumn, the price rose to approximately SEK 160/MWh finance profitable projects. and remained at that level until the new year. The capacity in the power grid is limited, which entails Another positive trend is the closer collaboration bet- that local wind power projects compete for the available ween the EU countries regarding energy issues. Work to space. shape what has been referred to as an energy union is to lead to more electricity connections between member Exchange-rate movements countries. This will facilitate higher electricity exports, which A substantial portion of the Group’s purchases of wind tur- are also expected to impact electricity prices in Sweden. In bines is made in EUR. Changes in the exchange rate in the long-term, the autumn’s climate summit in Paris is a key relation to the SEK can impact profitability when establis- positive signal for investments in renewable energy in both hing new wind farms. Electricity prices on the spot market the EU and on a global level. are listed in EUR, which results in electricity prices indirectly being dependent on the exchange rate for this currency, Prices for electricity and electricity certificates even though the company receives electricity revenues in General economic conditions impact demand for electricity SEK. Rabbalshede Kraft has an adopted policy for hedging and electricity certificates. The price trends for electricity future payments in foreign currencies. and electricity certificates comprise key operating environment-related risks and the Group’s revenue is negatively Variations in wind impacted by a weak long-term economic trend. Wind-power production varies during the year, normally In the long-term, electricity prices are also impacted by entailing higher electricity production during the winter sea- other factors, particularly the investments made in new son. An average wind year, known as a normal year, is electricity production and the chosen technology. The deci- based on wind measurements over at least a ten-year peri- sion in October to close down Sweden’s four oldest nuclear od. Deviations from a normal year can be substantial during 31 ADMINISTRATION REPORT RABBALSHEDE KRAFT ANNUAL REPORT 2015

certain periods, thus impacting revenues and earnings Environmental information during a single quarter or year. Wind power is a clean and renewable energy source that When making investment decisions about wind farms, has an environmental impact throughout the useful life of a Rabbalshede Kraft takes variations in wind into considera- turbine. Environmental impact under operation is primarily in tion and, furthermore, places great importance on diligent the form of sound and shadow. Through its portfolio of wind wind measurement to optimize the location of wind turbi- power facilities, Rabbalshede Kraft operates a business that nes and, thereby, production. is licensable or notifiable under the Swedish Environmental Code. The company holds all necessary environmental per- Interest-rate trend mits. Where activities are notifiable, application is required Since the loan-to-value ratio generally accounts for 60–70 under the Environmental Code for a building permit to be percent of the investment cost for a wind farm, changes in granted. In 2010, Rabbalshede Kraft secured ISO 9001 qua- market interest rates have a material impact on earnings. lity certification and ISO 14001 environmental certification. Rabbalshede Kraft defines its management of interest-rate risk in its financial policy. Refer to notes 16 and 20 for Financing further information. Rabbalshede Kraft has a goal of financing up to 70 percent of new investments with loans and of maintaining a mini- Economic life and operating costs mum equity/assets ratio of 30 percent. Investment decisions are based on an estimated economic Bank loans totaled KSEK 1,255,652 (1,305,020) at Decem- life of 25 years for wind turbines. If the actual economic life ber 31, 2015, distributed primarily among Swedbank, SEB should be less than the assessed economic life, this will and DNB. negatively impact the Group’s profitability. Such a long investment horizon means that future operating costs may THE BOARD’S WORK deviate from estimated costs and thus impact the earnings The Board of Directors comprises six members. During the trend. The Group established its own operation and main- 2015 fiscal year, the Board held 14 scheduled Board mee- tenance organization in 2010 to increase turbine availability. tings. The Board has a written work plan and an instruction regulating the duties of the Board and the CEO. Accor- Dependency dingly, the Board’s meetings and its work follow an agenda The company uses various suppliers as part of planning program, dedicated to securing the Board’s need for infor- and constructing wind farms. In the assessment of Rabba- mation and control of business activities as well as the lshede Kraft, the company is not dependent on any single Group’s organization. supplier of strategic components such as wind turbines, which means that any break in deliveries does not need to CORPORATE GOVERNANCE REPORT entail any long-term consequences for operations. The cri- Rabbalshede Kraft applies the Swedish Corporate Gover- tical point for bringing new turbines into operation is nance Code (the Code). The Corporate Governance Report whether they can be connected to the Swedish power is presented on the company’s website: www.rabbalshede- grid. On this point, producers of renewable electricity, such kraft.se. as Rabbalshede Kraft, are extremely dependent on grid The Corporate Governance Report contains disclosures companies at a local, regional and national level. Svenska about key elements of the Group’s systems for internal Kraftnät is responsible for the Swedish national grid and control and risk management. has system responsibility for the electricity supply in Swe- den. The agency has been tasked by the government to EXPECTATIONS FOR FUTURE DEVELOPMENT strengthen the national grid with the aim of managing the The assessment of the Board of Directors is that the build-out of wind farms that are often located in sparsely company’s future business activities under normal market populated areas with power grids that are under-dimensio- conditions, meaning when electricity revenues are at histo- ned for large-scale electricity production. The company rically average levels, will generate a cash flow that results expects the connections to be in place in time for those in value growth for the shareholders. turbines planned to be operational over the next few years. A substantial project portfolio has been built up comprising nearly 1,000 MW, represented by some 30 wind farms Employees in favorable wind locations across Sweden. The project The achievement of sustained growth combined with heal- portfolio comprises wind farms with the potential to produ- thy earnings is also dependent on the company’s ability to ce 3 TWh of electricity annually. The company has a broad recruit, retain and develop senior executives and other key strategy for growth with the possibility to plan and con- individuals. At present, the organization is adjusted for struct land-based wind farms for proprietary operation or in continued growth in line with the expansion plan. Additio- partnership with other operators, or to sell them on to other nal key employees may be recruited in pace with the operators. Value growth is created through the sale of pro- company’s growth. prietary electricity production and through divestment, whereby the gain on invested capital is realized. Financial instruments and risk management During 2014, all 33 wind turbines of the Vestas 112-3 Refer to Note 21 for further information about the MW model in the Årjäng NV, Årjäng SV and Skaveröd/Gur- company’s financial instruments and risk management. seröd wind farms were assembled and commissioned. 32 ADMINISTRATION REPORT RABBALSHEDE KRAFT ANNUAL REPORT 2015

The wind farms were transferred to commercial operation vices. In addition to these benefits, company housing and oth- as of December 2014. The three wind farms will increase er benefits may be offered in individual cases, but should only the company’s production capacity by 130 percent. comprise a limited part of remuneration. Seven wind farms have environmental permits that have Pension: The company’s executive management are entered force and for which procurement is ongoing. The offered defined-contribution pension agreements. Premi- company continues to have an agreement to build future ums correspond to the applicable premium provisions wind farms together with Enercon. Refer to Note 24 for under ITP 1 at that time. Under the defined-contribution further information. pension agreement, the pension amounts to the sum of To secure the long-term capital requirement that the paid-in premiums and any return on capital with no guaran- planned expansion requires, since the 2008/2009 fiscal teed pension level. Under the framework of the defined- year, Rabbalshede Kraft has diligently prepared for an app- contribution pension plan, there is no defined date for lication for listing on Nasdaq Stockholm. Due to the low retirement. electricity price, which has in turn negatively impacted the Notice period and severance pay: Notice periods are company’s value, the company has not yet been able to limited to a maximum of one year if notice is served by the realize its listing ambitions. A stock-exchange listing will be company, and a maximum of one year if notice is served by carried out when market conditions are right and the Board the executive. When notice is served by the company, deems it beneficial to existing and future owners. severance pay may be payable in an amount corresponding to a maximum of 12 months’ salary less income earned Future capital requirements from any other employer. If developments follow the predicted expansion plan, a natu- Incentive scheme: A resolution must be taken on share ral need for fresh capital will arise in the future. Additional and share-price-based incentive schemes for the shareholders’ equity in the company is required before a bank company’s executive management by a general meeting. will grant any loans for new wind farms. This means that from Remuneration Committee: The Remuneration Committee time to time the need for liquid funds may be substantial. appointed by the Board is tasked with preparing questions Accordingly, additional share issues may be carried out in pertaining to remuneration policies, remuneration and other parallel with the company continuing to sell entire or parts of terms of employment for the company’s executive manage- existing and future wind farms. To date, Rabbalshede Kraft ment. Detailed policies for setting salaries, pensions and has secured financing for its expansion on an ongoing basis. other benefits must comply with the established salary policy set by the Remuneration Committee for the company’s PROPOSAL FOR GUIDELINES FOR REMUNERATION executive management. TO SENIOR EXECUTIVES The Board is entitled to deviate from these guidelines if Senior executives are defined as the group of individuals specific reasons to motivate this are found in individual for which the company reports salaries and other benefits cases. A disclosure must be made of any such deviation separately in accordance with Chapter 5 in the Swedish and its underlying reason reported at the next AGM. Annual Accounts Act (1995:1554), in other words, Board The above guidelines for remuneration for the Board and members, the CEO and all members of the company’s company management are unchanged from the 2011 fiscal management. The company’s executive management is year. defined as the same group of individuals excluding Board members. PROPOSED APPROPRIATION OF PROFITS The following funds in SEK are at the disposal of the Annual Fees for the Board of Directors General Meeting: Board fees are resolved by the AGM acting on a proposal Share premium reserve 357,959,187 from the Nomination Committee. Retained earnings –9,376,198 Loss for the year –204,266,371 Remuneration of the company’s executive management Total 144,316,617 The Board proposes the following guidelines for setting remuneration and other benefits for the company’s executi- PROPOSED APPROPRIATION OF PROFITS ve management. The guiding principle is to offer remunera- The Board of Directors proposes that unappropriated ear- tion and other terms of employment for the company’s nings and unrestricted reserves be appropriated as follows executive management at competitive market rates in order (SEK): to ensure that the company can attract and retain competent executives. Salaries and other benefits: Remuneration for the To be carried forward –213,642,569 company’s executive management comprises a fixed salary Share premium reserve 357,959,187 and pension. The fixed salary is normally reviewed on an Total 144,316,617 annual basis. In addition to fixed salary, variable salary may be paid under the condition that variable salary never exceeds 50 For information regarding the earnings and financial posi- percent of the annual salary. Furthermore, the company’s exe- tion of the company, please refer to the following financial cutive management is entitled to customary non-monetary statements and balance sheets with accompanying notes. benefits, such as company cars and occupational health ser- 33 CONSOLIDATED INCOME STATEMENT/CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME RABBALSHEDE KRAFT ANNUAL REPORT 2015

CONSOLIDATED INCOME STATEMENT

Jan 1, 2015– Jan 1, 2014– KSEK Note Dec 31, 2015 Dec 31, 2014

Net sales 2 264,204 146,161 Other operating revenues 3 6,388 4,031 Total revenues 270,592 150,192

Personnel costs 4 –15,176 –10,019 Other external costs 3, 5 –85,761 –58,903 Depreciation, amortization and impairment of tangible and intangible fixed assets 6 –280,324 –66,945 Operating profit/loss –110,669 14,325

Financial income 7 100 511 Financial expenses 8 –86,160 –46,968 Loss before tax –196,729 –32,132

Tax 9 25,082 7,049 Loss for the year –171,647 –25,083 Of which attributable to non-controlling interests 0 0

Earnings per share Average no. of shares before dilution, thousands 74,825 74,825

Average no. of shares after dilution, thousands 79,253 74,825

Earnings per share before dilution, SEK –2.29 –0.34

Earnings per share after dilution, SEK –2.17 –0.34

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

Jan 1, 2015– Jan 1, 2014– KSEK Dec 31, 2015 Dec 31, 2014

Loss for the year –171,647 –25,083 Other comprehensive income: Items that can be reclassified to profit or loss when specific conditions have been met: Cash-flow hedges: Change in fair value –5,539 –116,120 Reversals against profit or loss 35,701 14,541 Transferred to cost of hedged item –2,266 –29,830

Tax attributable to cash-flow hedges –6,137 28,909

Total 21,759 –102,500

Items that will not be reclassified to profit or loss:

Total items that will not be reclassified to profit or loss – –

Comprehensive income for the year –149,888 –127,5830

Of which attributable to non-controlling interests 0 0 34 CONSOLIDATED BALANCE SHEET RABBALSHEDE KRAFT ANNUAL REPORT 2015

CONSOLIDATED BALANCE SHEET

KSEK Note Dec 31, 2015 Dec 31, 2014

Assets 22, 23 Intangible fixed assets 10 33,751 34,247 Tangible fixed assets 11, 21 2,088,834 2,348,080 Deferred tax assets 9 61,387 40,340 Long-term receivables 12 15 15 Total fixed assets 2,183,987 2,422,682

Intangible current assets 13 7,737 10,450 Accounts receivable 1,316 1,130 Prepaid costs and accrued income 14 46,010 33,752 Other receivables 12, 19 6,734 4,109 Blocked bank funds 90,190 54,427 Cash and cash equivalents 27 226,744 121,006 Total current assets 378,731 224,874 Total assets 2,562,718 2,647,556

Shareholders’ equity 15 Share capital 748,249 748,249 Other capital contributions 399,527 399,527 Ongoing new share issue 304,665 – Hedging reserve –95,284 –117,043 Retained earnings including profit/loss for the year –212,019 –40,372 Shareholders’ equity attributable to Parent Company’s shareholders 1,145,138 990,361

Non-controlling interests 25 8 8 Total shareholders’ equity 1,145,146 990,369

Liabilities 23 Provisions – rehabilitation costs for wind turbines 6,617 5,252 Interest-bearing liabilities 16 5,400 1,196,619 Other long-term liabilities 17 122,844 261,040 Total long-term liabilities 134,861 1,462,911

Accounts payable 16 5,204 13,221 Interest-bearing liabilities 16 1,226,322 79,385 Other liabilities 17, 19 5,805 9,303 Accrued expenses and deferred income 18 45,380 92,367 Total current liabilities 1,282,711 194,276 Total liabilities 1,417,572 1,657,187 Total shareholders’ equity and liabilities 2,562,718 2,647,556

See Note 23 for information about the Group’s pledged assets and contingent liabilities.

35 CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY ATTRIBUTABLE TO PARENT COMPANY’S SHAREHOLDERS RABBALSHEDE KRAFT ANNUAL REPORT 2015

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY attributable to Parent Company’s shareholders

Retained earnings incl. Total share- comprehen- holders’ Other capital Ongoing new Hedging sive income equity KSEK Note Share capital contributions share issue reserve for the year

Opening shareholders’ equity, Jan. 1, 2014 748,249 399,527 – –14,543 –15,289 1,117,944

Loss for the year – – – – –25,083 –25,083

Other comprehensive income – – – –102,500 – –102,500

Comprehensive income for the year – – – –102,500 –25,083 –127,583 Total changes in equity excluding transactions with the company’s owners 748,249 399,527 – –117,043 –40,372 990,361

Transactions with the Group’s owner

New share issue – – – – – –

Closing shareholders’ equity, Dec. 31, 2014 748,249 399,527 – –117,043 –40,372 990,361

Opening shareholders’ equity, Jan. 1, 2015 748,249 399,527 – –117,043 –40,372 990,361 Loss for the year – – – – –171,647 –171,647

Other comprehensive income – – – 21,759 – 21,759

Comprehensive income for the year – – – 21,759 –171,647 –149,888 Total changes in equity excluding transactions with the company’s owners 748,249 399,527 – –95,284 –212,019 840,473

Transactions with the Group’s owner

Ongoing new share issue – – 312,114 – – 312,114 Expenses attributable to the new share issue – – –9,551 – – –9,551

Tax attributable to the issuance costs – – 2,102 – – 2,102

Closing shareholders’ equity, Dec. 31, 2015 748,249 399,527 304,665 –95,284 –212,019 1,145,138

Holders of non-controlling interests hold only KSEK 8 and, accordingly, only a summary of changes in consolidated shareholders’ equity attributable to Parent Company’s shareholders is reported. The trend for non-controlling interests remained unchanged during the reporting period, January 1, 2014 to December 31, 2015. Provisions consist of the fair value valuation of the derivatives that are included in the hedge accounting after tax effects, refer to Note 15.

36 CONSOLIDATED CASH-FLOW STATEMENT RABBALSHEDE KRAFT ANNUAL REPORT 2015

CONSOLIDATED CASH-FLOW STATEMENT

Jan 1, 2015– Jan 1, 2014– KSEK Note Dec 31, 2015 Dec 31, 2014

Operating activities Loss before tax –196,729 –32,132 Adjustment for non-cash items 27 288,735 69,207

Income tax paid – –

Cash flow from operating activities before changes in working capital 92,006 37,075

Cash flow from changes in working capital

Increase (–)/Decrease (+) in intangible current assets 2,713 –6,389

Increase (–)/Decrease (+) in operating receivables –15,814 –7,265

Increase (+)/Decrease (–) in operating liabilities –57,767 80,138

Cash flow from changes in working capital –70,868 66,484

Cash flow from operating activities 21,138 103,559

Investing activities

Acquisition of intangible fixed assets, including advances –290 –

Acquisition of tangible fixed assets, including advances –22,731 –840,230

Divestment/disposal of tangible fixed assets – –

Cash flow from investing activities –23,021 –840,230

Financing activities

Ongoing new share issue 312,114 –

Issuance costs –9,551 –

Change in shareholder loans –109,811 7,967

Loans raised 25,000 677,000

Amortization of loans –74,368 –53,535

Changes in blocked funds –35,763 91,105

Cash flow from financing activities 107,621 722,537

Cash flow for the period 105,738 –14,134

Opening cash and cash equivalents 121,006 135,140

Closing cash and cash equivalents 226,744 121,006

Blocked funds 90,190 54,427

Total cash and cash equivalents and blocked funds 316,934 175,433

37 PARENT COMPANY INCOME STATEMENT RABBALSHEDE KRAFT ANNUAL REPORT 2015

PARENT COMPANY INCOME STATEMENT

Jan 1, 2015– Jan 1, 2014– KSEK Note Dec 31, 2015 Dec 31, 2014

Net sales 2 30,268 29,777

Other operating revenues 3 910 354 Total revenues 31,178 30,131

Personnel costs 4 –15,871 –12,267

Other external costs 5 –17,622 –11,841

Depreciation, amortization and impairment of tangible and intangible fixed assets 6 –22,250 –19,812

Operating profit/loss 21 –24,565 –13,789

Profit from participations in Group companies 25 –179,169 –

Interest income and similar items 7 1,524 363

Interest expense and similar items 8 –9,115 –5,875

Loss before tax –211,325 –19,301

Tax 9 7,059 4,229

Loss for the year –204,266 –15,072

PARENT COMPANY’S STATEMENT OF COMPREHENSIVE INCOME

Jan 1, 2015– Jan 1, 2014– KSEK Dec 31, 2015 Dec 31, 2014

Loss for the year –204,266 –15,072

Total other comprehensive income – –

Comprehensive income for the year –204,266 15,072

Of which attributable to non-controlling interests 0 0

38 PARENT COMPANY BALANCE SHEET RABBALSHEDE KRAFT ANNUAL REPORT 2015

PARENT COMPANY BALANCE SHEET

KSEK Note Dec 31, 2015 Dec 31, 2014

Assets

Fixed assets Intangible fixed assets 10 16,927 17,880

Tangible fixed assets 11 234,777 235,374

Financial fixed assets

Participations in Group companies 25 825,741 885,276

Other long-term receivables 12 15 15

Deferred tax assets 9 16,969 7,808

Total financial fixed assets 842,725 893,099

Total fixed assets 1,094,429 1,146,353

Current assets

Intangible current assets 13 561 1,676

Accounts receivable 7 367

Receivables from Group companies 8,000 8,253

Other receivables 12 2,580 670

Prepaid costs and accrued income 14 2,859 4,045

Blocked bank funds 6,655 6,355

Cash and bank balances 27 201,686 47,316

Total current assets 222,348 68,682

Total assets 1,316,777 1,215,035

continued on the next page

39 PARENT COMPANY BALANCE SHEET RABBALSHEDE KRAFT ANNUAL REPORT 2015

Parent Company balance sheet, cont’d.

KSEK Note Dec 31, 2015 Dec 31, 2014

Shareholders’ equity and liabilities

Shareholders’ equity 15

Restricted shareholders’ equity

Share capital 748,249 748,249

Ongoing new share issue 312,114 –

Unrestricted shareholders’ equity

Share premium reserve 365,410 365,410

Ongoing new share issue –7,449 –

Retained earnings –9,378 5,696

Loss for the year –204,266 –15,071

Total shareholders’ equity 1,204,680 1,104,284

Untaxed reserves 26 500 500

Liabilities

Interest-bearing liabilities 16 5,400 86,972

Deferred tax liability 9 – –

Total long-term liabilities 5,400 86,972

Current liabilities

Interest-bearing liabilities 16 81,731 9,632

Accounts payable 3,264 2,010

Other liabilities 17 1,566 1,382

Accrued expenses and deferred income 18 19,636 10,255

Total current liabilities 106,197 23,279

Total shareholders’ equity and liabilities 1,316,777 1,215,035

Parent Company’s pledged assets and contingent liabilities KSEK Note Dec 31, 2015 Dec 31, 2014

Pledged assets 23 147,505 154,180

Contingent liabilities 23 370,709 454,105

40 CHANGES IN PARENT COMPANY’S SHAREHOLDERS’ EQUITY RABBALSHEDE KRAFT ANNUAL REPORT 2015

CHANGES IN PARENT COMPANY’S SHAREHOLDERS’ EQUITY

Restricted shareholders’ equity Unrestricted shareholders’ equity Comprehensive Ongoing new Retained ear- income for the Total sharehol- share issue Share premium nings year ders’ equity KSEK Share capital reserve

Opening shareholders’ equity, Jan. 1, 2014 748,249 – 365,410 2,786 2,910 1,119,355

Appropriation of profits – – – 2,910 –2,910 –

Comprehensive income for the year – – – – –15,071 -15,071

Closing shareholders’ equity, Dec. 31, 2014 748,249 – 365,410 5,696 –5,071 1,104,284

Opening shareholders’ equity, Jan. 1, 2015 748,249 – 365,410 5,696 –15,071 1,104,284

Appropriation of profits – – –15,071 15,071 –

Comprehensive income for the year – – – –204,266 –204,266

Ongoing new share issue 312,114 – – – 312,114

Expenses attributable to the new share issue –9,551 –9,551

Tax attributable to the issuance costs – 2,102 – – – 2,102

Closing shareholders’ equity, Dec. 31, 2015 748,249 304,665 365,410 –9,378 –204,266 1,204,680

41 PARENT COMPANY CASH-FLOW STATEMENT RABBALSHEDE KRAFT ANNUAL REPORT 2015

PARENT COMPANY CASH-FLOW STATEMENT

Jan 1, 2015– Jan 1, 2014– KSEK Note Dec 31, 2015 Dec 31, 2014

Operating activities

Loss before tax and appropriations –211,325 –19,301

Adjustment for non-cash items 27 201,578 19,971

Cash flow from operating activities before changes in working capital –9,747 670

Cash flow from changes in working capital

Increase (–)/Decrease (+) in intangible current assets 1,115 –1,010

Increase (–)/Decrease (+) in operating receivables –114 11,083

Increase (+)/Decrease (–) in operating liabilities 10,819 –1,078

Cash flow from changes in working capital 11,820 8,995

Cash flow from operating activities 2,073 9,665

Investing activities

Acquisition of tangible fixed assets, including advances –21,653 –17,809

Acquisition of intangible fixed assets, including advances –290 –

Divestment of intangible fixed assets 1,243 –

Shareholders’ contributions paid –119,634 –1,354

Cash flow from investing activities –140,334 –19,163

Financing activities

New share issue 312,114 –

Issuance costs –9,551 –

Amortization of loans –9,632 –12,241

Changes in blocked funds –300 –25

Cash flow from financing activities 292,631 –12,266

Cash flow for the year 154,370 –21,764

Opening cash and cash equivalents 47,316 69,080

Closing cash and cash equivalents 201,686 47,316

Blocked funds 6,655 6,355

Total cash and cash equivalents and blocked funds 208,341 53,671

42 NOTES TO THE FINANCIAL STATEMENTS RABBALSHEDE KRAFT ANNUAL REPORT 2015

NOTES TO THE FINANCIAL STATEMENTS

Note 1 Significant accounting policies

COMPLIANCE WITH STANDARDS AND LEGISLATION material significance. Impairment testing of the Group’s fix- The consolidated financial statements have been prepared ed assets uses revenue that is based on the average of a in accordance with International Financial Reporting Stan- price curve from the forecasting agencies Pöyrys and Nena, dards (IFRS), published by the International Accounting which is converted to the balance-sheet date’s EUR/SEK Standards Board (IASB). The Group has voluntarily chosen exchange rate. A price curve comprises information on the to apply the rules of the IFRS in accordance with Annual electricity and certificate price trends, indicated as SEK per Accounts Act. In addition, the Swedish Financial Accoun- MWh for a given forecast period. If, for example, global ting Standards Council’s recommendation RFR 1 Supple- economic conditions should take a considerable change for mentary Accounting Rules for Groups is applied. the worse following the reporting period, this could lead to The Parent Company applies the same accounting poli- an impairment requirement that is not reflected in the annu- cies as the Group except in cases listed below in the sec- al accounts.When testing ongoing projects among the tion “Parent Company accounting policies.” Group’s tangible fixed assets for impairment, the carrying The Annual Report and the consolidated financial state- amounts for the projects are compared with their respective ments were approved for issue by the Board of Directors on market values. The market values are mainly based of April 29, 2016. The consolidated income statement and offers received from other market operators.Testing for balance sheet, and the Parent Company’s income state- impairment of deferred tax assets is based on the probabili- ment and balance sheet will be presented to the Annual ty that temporary differences and fiscal deficits will be pos- General Meeting on June 1, 2016 for adoption. sible to utilize. Valuation is carried out by forecasting future taxable profits within a foreseeable future. The value of VALUATION BASIS APPLIED WHEN PREPARING THE deferred tax assets is adjusted when it is no longer deemed FINANCIAL STATEMENTS OF THE PARENT COMPANY probable that they can be utilized. AND GROUP Assets and liabilities are recognized at historical cost, SIGNIFICANT ACCOUNTING POLICIES APPLIED except for certain financial assets and liabilities that are The accounting policies presented below have been app- measured at fair value. Financial assets and liabilities mea- lied consistently in all periods presented in the consolidated sured at fair value consist of derivative instruments. financial statements. The Group’s accounting policies have also been applied consistently by the Group’s companies. FUNCTIONAL CURRENCY AND REPORTING CURRENCY The Parent Company’s functional currency is SEK, which is Classification also the reporting currency for the Parent Company and the Fixed assets and long-term liabilities essentially comprise Group. This means that the financial statements are pre- amounts that are expected to be recovered or paid more sented in SEK. All amounts, unless otherwise stated, are than twelve months after the balance-sheet date. rounded to the nearest thousand. Current assets and current liabilities mainly comprise amounts that are expected to be recovered or paid within ASSUMPTIONS AND ESTIMATES IN THE 12 months of the balance-sheet date or where the liability is FINANCIAL STATEMENTS subject to terms that could require repayment of the debt Preparing financial statements requires management to within 12 months. The company was in breach of its loan make assumptions, estimates and presumptions that affect covenants at the end of the year and, accordingly, the bank the application of the accounting policies and the carrying loans have been classified as short-term; refer to Note 16. amounts for assets, liabilities, revenue and expenses. The actual outcome may diverge from these estimates and SEGMENT REPORTING assumptions. In accounting terms, an operating segment is an identifiable Estimates and assumptions are reviewed regularly and part of the Group that either provides goods or services or revised when necessary. Changes in the estimates are provides goods or services within a particular economic envi- recognized in the period they are made if this is the only ronment that is exposed to risks and opportunities that differ period affected by the change, or in the period the changes from other segments. Since the Group’s operations currently are made and in future periods if they also affect future comprise the production of electricity in a limited geographic periods. market, the Group as a whole is deemed to constitute an For Rabbalshede Kraft, impairment testing of the operating segment. Accordingly, no segment information is Group’s fixed assets comprises the area that requires a presented since it corresponds to the Group as a whole. high degree of assumptions and where estimates are of 43 NOTES TO THE FINANCIAL STATEMENTS RABBALSHEDE KRAFT ANNUAL REPORT 2015

BASIS OF CONSOLIDATION carried out using PPAs. Revenue from electricity sales is Subsidiaries recognized as accrued revenue in the balance sheet until Subsidiaries are companies over which Rabbalshede Kraft payment has been received. AB has a controlling influence. A controlling influence Revenue regarding awarded electricity certificates and entails an entitlement to a variable return from the involve- guarantees of origin (GoO) are recognized in the period in ment with the investee and the ability to exercise its power which the delivery of electricity based on certificates or over the investee to affect the investor’s returns. GoO occurred. Electricity certificates and GoO are recogni- Acquisitions of subsidiaries are recognized using the zed in the balance sheet as intangible assets when they are purchase method. An acquisition is regarded as a transac- registered in the Swedish Energy Agency’s account and tion whereby the Group indirectly acquires the subsidiary’s recognized as accrued revenue provided that they have assets and takes over its liabilities and contingent liabili- been earned but not yet registered. ties. When an acquisition takes place, an acquisition ana- Other revenue from sales of wind turbines is recognized lysis is performed, through which the cost is established during the period in which the purchaser acquires the wind for shares or the business, as well as the fair value of turbines. acquired identifiable assets, and assumed liabilities and contingent liabilities on the acquisition date. Amortized LEASES cost comprises the sum of the fair values on the acquisi- Leased assets tion date of assets acquired, arising or assumed liabilities, Lease agreements are classified in the consolidated finan- and for issued equity instruments submitted as payment in cial statements either as finance leases or operating leases. exchange for the acquired net assets. If in a business com- A finance lease substantially transfers the economic risks bination, the acquisition cost exceeds the fair value of and rewards associated with ownership to the lessee; any acquired assets and assumed liabilities, as well as any other case is an operating lease. contingent liabilities that are recognized separately, the dif- Assets under a finance lease agreement are recognized ference is recognized as goodwill. When the difference is as assets in the consolidated balance sheet. The obligation negative, this is recognized directly in profit or loss. to pay future lease payments is recognized as either a long- The financial statements of subsidiaries are included in term or a current liability. Leased assets are depreciated on the consolidated financial statements as of the acquisition a straight-line basis over the leasing period or useful life, date until the date on which the control ceases. whichever is shorter, while leasing payments are recognized as interest payments and debt amortization. FOREIGN CURRENCIES Costs for operating leases are recognized in profit or Transactions in foreign currency loss on a straight-line basis over the term of the lease. Foreign currency transactions are translated into the fun- Benefits received in connection with signing an agreement ctional currency using the exchange rates prevailing on the are recognized in profit or loss as a reduction of the lease transaction date. Functional currency is the currency of the payment on a straight-line basis across the duration of the primary economic environment in which the entity operates. leasing agreement. Variable fees are expensed in the period Monetary assets and liabilities in foreign currency are trans- in which they were incurred. lated into the functional currency using the exchange rate prevailing on the balance-sheet date. Exchange-rate diffe- FINANCIAL INCOME AND EXPENSES rences arising on translation are recognized in profit or loss Financial income comprises interest income, exchange-rate under net financial items. Exchange-rate differences on gains and divestments of financial instruments. Interest inco- investments are capitalized in the balance sheet. Exchan- me on financial instruments is recognized in accordance with ge-rate differences arising on business combinations are the effective interest-rate method. Gains on the disposal of a recognized in profit or loss. Exchange-rate differences from financial instrument are recognized when the risks and bene- financial items are recognized under net financial items. fits associated with owning the instrument are transferred to Non-monetary assets and liabilities that are recognized at the buyer and the Group no longer controls the instrument. their historic cost are translated to the exchange rate pre- Financial expenses primarily comprise interest expenses vailing on the date of the transaction. for loans, interest derivatives and other financial expenses. Borrowing costs are recognized in profit or loss applying REVENUES the effective interest-rate method. Borrowing costs during Revenue primarily comprises sales of produced electricity, construction are included in the asset’s cost. sales of electricity certificates and remeasurement of awar- Exchange-rate gains and exchange-rate losses are ded electricity certificates. Other operating revenues prima- recognized gross. rily comprises payments for the sale of wind power The effective interest rate is the rate used to discount esti- projects, re-invoiced construction costs and the sale of mated future cash payments or receipts during the expec- asset management services. ted life of the financial instrument to the net carrying Revenue from the sale of produced electricity is recogni- amount of the financial asset or financial liability. The cal- zed in the period in which delivery is made. The unhedged culation includes all fees paid or received by contractual portion of electricity produced is valued at the wind pro- parties that are an integral part of the effective interest rate, duction hour (WPH) price from Nasdaq Commodities and transaction costs and all other fair value adjustments. the hedged portion valued at the hedged price. Hedging is 44 NOTES TO THE FINANCIAL STATEMENTS RABBALSHEDE KRAFT ANNUAL REPORT 2015

TAXES A financial asset is derecognized from the balance sheet Income tax comprises current and deferred tax. Income tax when the rights inherent in the agreement are realized or is recognized in profit and loss, except when the underlying expire or if the company loses control over them. The same transaction is recognized directly against shareholders’ applies to a portion of a financial asset. A financial liability equity or as other comprehensive income, at which time the is removed from the balance sheet when the obligation ari- related tax effect is recognized in shareholders’ equity or sing from the agreement has been met or is extinguished other comprehensive income. for other reasons. The same applies to a portion of a finan- Current tax comprises tax that is to be paid or received cial liability. in the current year, with the application of the tax rates that A financial asset and a financial liability are offset and have been decided or decided in practice on the balance- recognized in a net amount in the balance sheet only when sheet date. Current tax also includes adjustments of current there is a legal right to offset the amounts and there is an tax attributable to prior periods. intention to settle the items in a net amount or to simultaneously realize the asset and settle the liability. Deferred tax is calculated in accordance with the balance- Acquisitions and sales of financial assets are recognized sheet method, proceeding from the temporary differences at the transaction date, which is the date when the compa- existing between the carrying amounts and tax bases of ny commits to acquire or sell the asset. assets and liabilities. Temporary differences are not considered when they arise from the initial recognition of good- Classification and measurement will or from initial recognition of assets and liabilities in a A non-derivative financial instrument is initially recognized transaction that is not a business acquisition and that affect at cost, which corresponds to the instrument’s fair value neither recognized nor taxable earnings at the time of the including direct transaction costs for all financial instru- transaction. Nor are temporary differences attributable to ments except those belonging to the category financial shares in subsidiaries or associated companies that are not assets measured at fair value in profit or loss, which are expected to be reversed in the foreseeable future taken into recognized at fair value excluding transaction costs. When consideration. Measurement of deferred tax is based on entered for the first time, a financial instrument is classified how the carrying amount of underlying assets or liabilities is on the basis of the purpose for which the instrument was expected to be recovered or settled. Deferred tax is cal- acquired. This classification determines how the financial culated using the tax rates and regulations enacted or sub- instrument is measured following the first reporting occa- stantially enacted at the balance-sheet date. sion. Deferred tax assets relating to deductible temporary dif- At inception, derivative instruments are recognized at ferences and loss carryforwards are recognized only insofar fair value. This means that transaction costs are charged to as it is probable that they can be utilized. The value of profit or loss for the year. The main rule is that these finan- deferred tax assets is adjusted when it is no longer proba- cial instruments are recognized on an ongoing basis in pro- ble that they can be utilized. fit or loss at fair value unless hedge accounting is applied. Any additional income tax relating to the dividend is Where derivative instruments are used for hedge accoun- recognized at the same date as the dividend is recognized ting and, insofar as this is efficient, changes in the value of as a liability. derivative instruments are recognized on the same line as the hedged item in profit or loss if it pertains to fair-value FINANCIAL ASSETS AND LIABILITIES indexing. Increases and decreases in the value of derivati- Financial instruments recognized in the balance sheet ves are recognized in profit or loss as income and expen- include, on the assets side, cash and cash equivalents, ses, respectively, or under net financial items based on the loans and accounts receivable, as well as derivatives with a purpose of the holding. Refer also to the heading below positive fair value. “Derivative instruments and hedge accounting.” The liabilities side includes accounts payable and loan Cash and cash equivalents comprise cash and immedia- payables, as well as derivatives with a negative fair value. tely available balances in banks and corresponding institu- At inception, financial instruments are recognized at a tes, as well as short-term investments with a maturity, from cost corresponding to the instrument’s fair value, including the time of acquisition, of less than three months, and direct transaction costs for all financial instruments except which are exposed to a minimal risk of fluctuations in value. those belonging to the category; financial assets measured Blocked funds are excluded from cash and cash equiva- at fair value in profit or loss and all derivatives, which are lents as of fiscal year 2013. The blocked funds are recogni- recognized at fair value less transaction costs. zed under the item blocked liquid bank funds in the balance sheet. Recognition in and derecognition from the balance sheet A financial asset or financial liability is recognized in the Financial assets at fair value through profit or loss balance sheet when the company becomes a party to the This category consists of two subcategories: financial assets instrument’s contractual terms and conditions. Accounts held for trading and other financial assets that the company receivable are recognized in the balance sheet when invoi- initially chooses to put in this category (according to the Fair ces have been sent. A liability is recognized when the coun- Value Option). Financial instruments in this category are mea- terparty has performed and there is a contractual obligation sured continuously at fair value, and the changes in value are to pay, even if the invoice has not been received. Accounts recognized in profit or loss during the period in which they payable are recognized when an invoice has been received. arise. The first sub-category includes derivatives with positive 45 NOTES TO THE FINANCIAL STATEMENTS RABBALSHEDE KRAFT ANNUAL REPORT 2015

fair values. The contractual changes in value are recognized transaction expenses are charged against profit or loss for as financial income. In the balance sheet, derivatives are the year. After initial recognition, derivative instruments are recognized as other current receivables and other long-term measured at fair value and changes in value are reported in receivables, depending on the duration of the agreement. the manner described below. Derivative instruments are recognized in the balance sheet as current receivables and Loan receivables and accounts receivable liabilities, or as long-term receivables and liabilities, depen- Loan receivables and accounts receivable are non-derivati- ding on the duration of the agreement. ve financial assets with payments that are fixed or can be To meet the requirements for hedge accounting in determined and that are not listed on an active market. accordance with IAS 39, a documented connection with the These assets are measured at amortized cost. Amortized hedged item is required. It is also required that the hedge cost is determined based on the effective rate calculated effectively protects the hedged item, that hedge documen- on the acquisition date. Accounts receivable are recognized tation is prepared and that the effectiveness can be measu- at the amounts expected to be received, that is, after red. Gains and losses pertaining to hedges are recognized deductions for doubtful receivables. in profit or loss at the same date that the gains or losses are recognized for the hedged items. Financial liabilities at fair value through profit or loss Derivative instruments are used to hedge interest-rate risk, This category consists of two subcategories: financial liabi- future cash flows from the sale of electricity (where the deri- lities held for trading and other financial liabilities that the vative is settled in cash) and for the hedging of purchases company chooses to put in this category (according to the of wind turbines in foreign currencies. Interest-rate swaps Fair Value Option); refer to above description under “Finan- are used to hedge future interest-rate flows pertaining to cial assets measured at fair value through profit or loss.” loans borrowed at variable interest rates. Interest-rate The first category includes the Group’s derivatives with swaps are measured at fair value in the balance sheet. The negative fair values. Changes in fair value are recognized in interest coupon portion is recognized continuously in profit profit or loss under the period in which they arise. Based on or loss as interest income or interest expense. Other chan- the purpose of the agreement, changes in value are recog- ges in the value of interest-rate swaps are recognized as nized either in operating profit/loss or as a financial expen- other comprehensive income until the time when the hed- se. In the balance sheet, derivatives are recognized as ged item impacts profit or loss and as long as the criteria other current liabilities and other long-term liabilities, for hedge accounting are fulfilled and the hedged is dee- depending on the duration of the agreement. med to be efficient. The gain or loss attributable to any ineffective portion is recognized in profit or loss. Other financial liabilities Cash-flow hedging is applied to derivative instruments Loans and other financial liabilities, such as accounts paya- and electricity futures that are used for the hedging of future ble, are included in this category. Liabilities are measured at electricity sales. Electricity agreements mainly consist of amortized cost. PPA and EPA contracts (refer to glossary on page 71) that are also used to hedge electricity prices and that are not Impairment of financial assets and liabilities settled in cash but through physical deliveries, which is why On each reporting occasion, the company assesses these agreements are not included under hedge accounting. whether there is objective evidence of impairment of a A few electricity futures are settled in cash, which means financial asset or group of assets. Objective evidence com- that they are recognized as financial derivative instruments prises observable circumstances that have occurred and in accordance with IAS 39. Cash-settled electricity futures that have a negative impact on the possibility of recovering are recognized at fair value in the balance sheet. Changes in the cost. Rabbalshede Kraft receives objective evidence of value are recognized in other comprehensive income until any impairment of financial assets through credit-assess- the time when the hedged flow impacts recognized profit/ ment reports on borrowers provided by external parties. loss, at which time the hedge instrument’s accumulated Unforthcoming interest rates or a lack of ongoing commu- changes in value (which are recognized under other com- nication from the borrower may constitute an indication that prehensive income) are transferred to profit or loss in order such a report should be ordered. to match the effects of the hedged transaction. For The recoverable amount of accounts receivable recognized example, if the interest rate has been hedged at 3 percent at amortized cost is calculated as the present value of futu- using a derivative, this means that if the market interest rate re cash flows discounted using the effective interest rate during the interest period is 2 percent, the company will applied when the asset was initially recognized. Accounts need to pay a further 1 percent in interest to the derivative receivable of short maturity are not discounted. An impair- counterparty. If the interest rate conditions had been the ment loss is recognized as an expense in profit or loss. same at the previous balance-sheet date, this takes place long as the criteria for hedge accounting are fulfilled and the DERIVATIVES AND HEDGE ACCOUNTING hedge is deemed to be efficient. The gain or loss attributa- The Group’s derivative instruments have been acquired to ble to the ineffective portion is recognized in profit or loss. financially hedge risks associated with interest-rate expo- The currency forward contracts that are used to hedge sure, and with the selling price or currency exchange rates future cash flows, pertaining to forecast purchases of wind to which the Group is subject. At inception, derivative turbines in foreign currencies, are recognized at fair value in instruments are recognized at fair value, entailing that the balance sheet. Changes in value are recognized in other 46 comprehensive income until the time when the hedged flow NOTES TO THE FINANCIAL STATEMENTS RABBALSHEDE KRAFT ANNUAL REPORT 2015

impacts profit or loss, at which time the hedge instrument’s bly calculated. All other additional expenses are expensed accumulated changes in value are transferred to tangible in the period they are incurred. fixed assets. This takes place as long as the criteria for An additional expense is added to the cost if the expen- hedge accounting are fulfilled and the hedge is deemed to se pertains to the replacement of identified components or be efficient. The gain or loss attributable to the ineffective parts thereof. The expense is also activated in cases where portion of the ongoing hedge, where hedge accounting is new components are created. Any remaining carrying applied, is recognized in profit or loss. amounts for replaced components, or parts of compo- If hedge accounting in the above cases is terminated nents, are retired and recognized in conjunction with the due to the forecast flows no longer being probable or exchange. Repairs are expensed on a current account because transactions will not occur, the items in compre- basis. hensive income will be transferred to profit/loss for the year. Borrowing costs TANGIBLE FIXED ASSETS Borrowing costs directly attributable to the purchase, con- Owned assets struction or production of assets that take a considerable In the Group, tangible fixed assets are recognized at cost, amount of time to complete for their intended use or sale less accumulated depreciation and any impairment. Cost are included in the asset’s cost. Interest expenses are capi- includes the purchase price and expenses directly attribu- talized during the construction phase. table to bringing the asset to where it belongs and in the condition required for it to be used in accordance with the Amortization policies aim of the purchase. When calculating each asset’s depre- Depreciation is applied on a straight-line basis over the ciable amount, consideration is given to the asset’s potenti- estimated useful life of assets, while ongoing planning is al residual value. The estimated residual value and applied not amortized. The Group applies component depreciation, useful life are reviewed continuously and recognition is which means that the components’ estimated useful life adjusted to the extent necessary. provides the basis for the depreciation. However, the useful In the event that tangible fixed assets comprise compo- lives for all components of the wind turbines, foundations nents that are significant in relation to the entire asset’s and electrical installations are deemed to be the same, value, these are processed separately. Each component is which is why there is no further division. recognized and amortized in accordance with individual depreciation schedules. In the case of Rabbalshede Kraft, The applied useful lives of the assets are: differences in the useful life of components may vary bet- – Buildings and land improvements, 20–25 years ween three and 25 years. – Wind turbines, foundations and electrical installations, The carrying amount of a tangible fixed asset is derecog- 25 years nized from the balance sheet when the asset is scrapped or – Equipment, tools, fixtures and fittings 3–5 years divested, or when no future financial benefits are expected from the use or scrapping/divestment of the asset. Gains or INTANGIBLE ASSETS losses arising from the divestment or scrapping of an asset Leasehold agreements comprise the difference between the selling price and the Intangible assets acquired by the Group take the form of asset’s carrying amount, less direct selling costs. Capital leasehold agreements that are recognized at their respective gains are recognized as other operating income and capital cost, less accumulated amortization and impairment losses. losses are recognized as other expenses. Other intangible assets Leased assets Other intangible assets comprise acquired computer soft- Financial leasing agreements, whereby the Group essential- ware and received electricity certificates and guarantees of ly assumes all of the risks and benefits associated with origin (GoO). A certificate system is in place for the purpose ownership of the leased item, are recognized in the balance of promoting the use of renewable electricity. Facilities sheet at the fair value of the leased property or, if the value affected by these systems receive certificates, free of char- is lower, at the present value of minimum lease payments. ge, in pace with the generation of electricity that qualifies Lease payments are divided between financing costs and under the scheme. Received electricity certificates are amortization of rents payable. Financially leased assets are registered in accounts maintained by the Swedish Energy depreciated over the expected useful life. Leasing agree- Agency. Electricity certificates are recognized as intangible ments whereby the lessor essentially retains all of the risks current assets in the balance sheet of the Rabbalshede and benefits of ownership are classified as operating Kraft Group. Whenever certificates are awarded, they are leases. Leasing fees are expensed on a straight-line basis measured at the fair value on the date of receipt and on the in profit or loss during the lease term. The Group has both balance-sheet date. The Group recognizes electricity certi- operating and financial leasing agreements. ficates and their remeasurement as net sales. In connection with measurement, historical daily prices are Additional expenses provided by Svensk Kraftmäkling. Additional expenses are added to the cost only if it is probable that the future financial benefits associated with the asset will accrue to the company and the cost can be relia- 47 NOTES TO THE FINANCIAL STATEMENTS RABBALSHEDE KRAFT ANNUAL REPORT 2015

Amortization policies and the investment risk (that the investment assets will be Amortization is recognized on a straight-line basis in profit inadequate to provide the expected benefits). The or loss over the estimated useful life of the intangible asset. company’s obligation regarding contributions to defined- Useful lives are reviewed at least on an annual basis. Intan- contribution plans are recognized as an expense in profit or gible assets with determinable useful lives are amortized as loss at the rate at which they are vested by employees per- from the date the asset is available for use. forming services for the company during a period. There The applied useful lives of the assets are: are only defined-contribution pension plans in the Group. – Leasehold agreements, 25 years – Software, 5 years Termination benefits A provision is recognized in connection with termination of INVENTORY employment only if the company is clearly obligated, wit- To the extent that any inventory exists, it is recognized in hout a realistic possibility of reversal, to a formal and detai- accordance with the lowest value principle and the first-in- led plan to terminate employment before the normal time. first-out method (FIFO). When a termination benefit is offered to encourage voluntary redundancy, a cost is recognized if it is probable that Impairment of tangible and intangible assets the offer will be accepted and the number of employees If there is an indication of an impairment requirement, the who will accept the offer can be reliably estimated. recoverable amount of the asset is calculated (see below). If it is not possible to determine essentially independent Short-term benefits cash flows for an individual asset and its fair value less sel- Short-term benefits to employees are calculated without ling expenses cannot be used for impairment testing, the discounting and are recognized as a cost when the related assets are to be grouped at the lowest level at which it is services are received. possible to identify essentially independent cash flows – A provision is recognized for the anticipated cost of pro- this is known as a cash-generating unit (CGU). An impair- fit-share and bonus payments when the Group has a valid ment loss is recognized when the carrying amount of an legal or informal duty to make such payments as a result of asset or CGU exceeds the recoverable amount. An impair- services received from employees and when the obligation ment loss is recognized as an expense in profit or loss. can be reliably calculated. Impairment of assets identified for a CGU is distributed proportionally between other assets included in the unit. PROVISIONS The recoverable amount is the higher of the fair value The agreements and obtained permits are subject to requi- minus selling costs and value in use. When calculating the rements regarding the restoration of land following the value in use, future cash flows are discounted using a dis- expiry of leasehold terms and cessation of production by count factor taking into account risk-free interest and the wind-power plants. This entails an obligation to dismantle risk associated with the specific asset. and remove all facilities, buildings and conduits. The Com- pany recognizes a provision under long-term liabilities; pro- Reversal of impairment losses visions and this has been discounted to present value. An asset’s impairment loss is reversed if there is an indication that impairment no longer exists and also that a chan- CONTINGENT LIABILITIES ge has occurred in the assumptions on which the estimate A contingent liability is recognized when a possible obliga- of recoverable value was based. A reversal is only perfor- tion arising from past events exists whose existence will med to the extent that the asset’s carrying amount after only be confirmed by one or more uncertain future events reversal does not exceed the carrying amount that would or when there is an obligation that is not recognized as a have been recognized, minus appropriate depreciation, if liability or provision since it is not probable that an outflow no impairment loss had been recognized. of resources will be required (see above). Refer to Note 23 for further information. SHAREHOLDERS’ EQUITY Dividends are recognized as liabilities after the Annual EARNINGS PER SHARE General Meeting has approved the dividend. The calculation of earnings per share is based on the Group’s net profit for the year attributable to Parent Com- EMPLOYEE BENEFITS pany shareholders and on the weighted average number of Defined-contribution pension plans shares outstanding during the year. In calculating earnings Plans in which the company’s obligation is limited to the per share after dilution, the earnings and average number contributions that the company undertakes to pay are clas- of shares are adjusted to take into account the effects of sified as defined-contribution pension plans. In such cases, potentially diluting ordinary shares, which derive from the amount of the employee’s pension depends on the con- issued shares and options distributed to employees during tributions that the company pays to the plan or to an insu- the reported periods. Dilution from options impacts the rance company and the return generated by the number of shares and occurs only when the exercise price contribution. Accordingly, it is the employee who bears the is lower than the market price. The larger the difference actuarial risk (that the payment will be lower than expected) between the exercise and market price, the greater the dilution. 48 PARENT COMPANY ACCOUNTING POLICIES of the other new standards, amended standards or IFRIC The Parent Company has prepared its annual accounts in interpretations published by the IASB are expected to have accordance with the Swedish Annual Accounts Act any material impact on the Group’s or the Parent (1995:1554) and the Swedish Financial Reporting Board’s Company’s financial reporting. recommendation RFR 2 Accounting for Legal Entities. Sta- tements issued by the Swedish Financial Reporting Board’s IFRS 9 Financial Instruments emergency group are also applied. RFR 2 means that the IFRS 9 comprises the reporting of financial assets and liabi- Parent Company, in the annual accounts for legal entities, lities and replaces IAS 39 Financial instruments: Recogni- will apply all EU-approved IFRS and statements, as far as tion and Measurement. Similarly to IAS 39, financial assets possible, within the framework of the Annual Accounts Act, are classified under different categories, of which some are the Swedish Pension Obligations Vesting Act and taking measured at amortized cost and others at fair value. IFRS 9 into account the connection between accounting and taxa- introduces new categories that do not exist under IAS 39. tion. The recommendation specifies the exceptions and IFRS 9 also introduces a new model for the impairment of supplements that should be applied in relation to IFRS. The financial assets. The purpose of the new model includes accounting policies for the Parent Company stated below the reporting of credit losses at an earlier stage than under have been consistently applied in all periods presented in IAS 39. IFRS 9 essentially corresponds to IAS 39 in terms the financial statements of the Parent Company. of financial liabilities. However, for liabilities recognized at fair value, the portion of the change in fair value that is attri- Subsidiaries butable to the company’s own credit risks is recognized Shares in subsidiaries are recognized in the Parent Compa- under other comprehensive income instead of profit or loss, ny in accordance with the cost method. Only dividends provided that this does not cause inconsistencies in received are recognized as revenue. reporting. The amended criteria for hedge accounting may result in more financial hedging strategies meeting the Financial instruments requirements on hedge accounting under IFRS 9 than The rules regarding financial instruments in IAS 39 are not under IAS 39. IFRS 9 comes into effect on January 1, 2018. applied in the Parent Company as a legal entity. However, the EU has yet to adopt the standard. No decisi- Financial fixed assets in the Parent Company are mea- on has been made on when the standard will be applied by sured in accordance with the cost method, which means the Group and Parent Company. During the year, the Group that they are measured at acquisition cost less any impair- began assessing the effects of the standard in order to ment losses and financial current assets, in accordance determine how IFRS 9 will impact the financial reporting of with the lowest-value principle. Hedge accounting is not the Group and Parent Company. applied in the Parent Company. IFRS 15 Revenue from Contracts with Customers Anticipated dividends IFRS 15 replaces all of the prior published standards and Anticipated dividends from subsidiaries are recognized in interpretations pertaining to revenue through a collective cases where the Parent Company has sole rights to decide model for revenue recognition. The standard is based on on the size of the dividend and the Parent Company has the principle that revenue is to be recognized when promi- passed a resolution on the size of the dividend prior to the sed goods or services are transferred to the customer, i.e. Parent Company publishing its financial statements. when the customer has obtained control of the said goods or services. This may occur over time or at a specific point Tax in time. IFRS 15 comes into effect on January 1, 2018. The In the Parent Company, untaxed reserves including defer- EU is yet to adopt the standard and no decision has been red tax liability are recognized. However, in the consolida- made on when or how the standard will be applied. During ted financial statements, untaxed reserves are divided into the year, the Group began assessing the effects of the stan- deferred tax liability and equity. dard in order to determine how IFRS 15 will impact the financial reporting of the Group and Parent Company. AMENDED ACCOUNTING POLICIES Changes to existing standards IFRS 16 Leases None of the amendments and interpretations of existing IFRS 16 replaces IAS 17 as of January 1, 2019. In accor- standards that are to be applied as of the fiscal year begin- dance with the new standard, most leased assets are to be ning on January 1, 2015 have any material impact on the recognized in the balance sheet. The EU is yet to indicate financial reporting of the Group or Parent Company. an expected date for adopting the standard. No assessment has been performed on the impacts of the standard. New and amended IFRS yet to be applied A number of new and amended IFRS are yet to come into Amendments to the Swedish regulatory framework effect and have not been applied in advance when prepa- The Swedish Financial Reporting Board’s RFR 2 recom- ring the Group’s and Parent Company’s financial reports. mendation, Accounting for Legal Entities, contains adapta- The following sections describe the IFRS that may impact tions connected to the IFRS changes being implemented. the Group’s or Parent Company’s financial reporting. None The amendments made during 2015 had no impact on Rabbalshede Kraft AB’s financial statements. 49 NOTES TO THE FINANCIAL STATEMENTS RABBALSHEDE KRAFT ANNUAL REPORT 2015

Note 2 Net sales

Group Parent Company KSEK 2015 2014 2015 2014

Income per significant income category Sale of electricity 165,980 99,088 11,799 12,486 Income from electricity certificates 93,609 44,132 7,070 7,204 Income from guarantees of origin 4,615 2,941 553 391 Other income from Group companies – – 10,846 9,696 Total 264,204 146,161 30,268 29,777

The Group’s sales of electricity in 2015 totaled 576,412 MWh (314,665). Other income from Group companies consists of planning services, operation and maintenance services, as well as administrative services.

Note 3 Other operating income

Group Parent Company KSEK 2015 2014 2015 2014

Service and operational supervision 1,047 – 11 – Reinvoiced costs 2,110 2,122 – – Other 3,231 1,909 899 354 Total 6,388 4,031 910 354

Reinvoiced construction costs totaling KSEK 2,110 (2,122) are included as a cost under other external costs.

Note 4 Employees, personnel expenses and remuneration of senior executives

Average number of employees Percentage of Percentage of women/men, women/men, 2015 % 2014 %

Parent Company 21 36/64 21 36/64 Subsidiaries – – – – Group total 21 36/64 21 36/64

2015 2014 Percentage of Percentage of Distribution of company management by gender women/men, % women/men, %

Parent Company Board of Directors 17/83 14/86 Other senior executives 20/80 0/100 Group total Board of Directors 17/83 14/86 Other senior executives 20/80 0/100

50 NOTES TO THE FINANCIAL STATEMENTS RABBALSHEDE KRAFT ANNUAL REPORT 2015

Note 4 Employees, personnel expenses and remuneration of senior executives (cont’d)

Salaries and other remuneration distributed between members of the Board/senior executives and other employees, as well as social security expenses

2015 2014 Board of Board of Directors/ Directors/ Senior exe- Senior executives Other cutives Other KSEK (10 persons) employees Total (10 persons) employees Total

Parent Company Sweden 5,963 8,750 14,443 4,931 8,621 13,552 (of which, bonus, etc.) 540 – 540 – – – Social security expenses 3,091 3,850 6,941 2,461 3,861 6,322 of which, pension costs 1,022 761 1,783 757 877 1,634 Group 5,963 8,750 14,443 4,931 8,621 13,552 (of which, bonus, etc.) 540 – 540 – – – Pension costs 1,022 761 1,783 757 877 1,634

All of the employees are in the Parent Company, and consequently, the Parent Company and the Group’s payroll expenses are the same.

Remuneration to senior executives A fixed monthly salary is paid to senior executives. All of the pension plans in the Group are defined-contribution plans. For senior executives, with the exception of the Board of Directors, a defined-contribution pension agreement is paid into. Premi- ums correspond to the applicable premium provisions under ITP 1 at that time.

Remuneration and other benefits, Parent Company, 2015 Basic salary/ Other remunera- KSEK Board fee tion and benefits Pension cost Total

Karl-Erling Trogen, Chairman of the Board 250 1 – 251 Karin Kronstam, Board member 165 – – 165 Reine Rosén, Board member 125 – – 125

Anders Strålman, Board member 125 – – 125 Jean Baptiste Oldenhove, Board member 145 – – 145 Jérome David, Board member 125 – – 125 Thomas Linnard, CEO1 2,363 137 544 3,044 Other senior executives (3 individuals) 2,665 129 478 3,272 Total 5,963 267 1,022 7,252

1 Including KSEK 540 (excluding social security expenses) pertaining to bonuses attributable to 2015.

Remuneration and other benefits, Parent Company, 2014 Basic salary/ Other remunera- KSEK Board fee tion and benefits Pension cost Total

Karl-Erling Trogen, Chairman of the Board 250 – – 250 Karin Kronstam, Board member 165 – – 165 Reine Rosén, Board member 125 – – 125 Anders Strålman, Board member 125 – – 125 Jean Baptiste Oldenhove, Board member 145 – – 145 Jérome David, Board member 125 – – 125 Thomas Linnard, CEO 1,820 122 365 2,307 Other senior executives (3 individuals) 2,197 157 393 2,747 Total 4,952 279 758 5,989 51 NOTES TO THE FINANCIAL STATEMENTS RABBALSHEDE KRAFT ANNUAL REPORT 2015

Note 4 Employees, personnel expenses and remuneration of senior executives (cont’d)

Notice period and severance pay A mutual notice of termination of 12 months applies between the company and CEO. Upon termination from the Company’s side, the CEO is entitled to remuneration that may correspond to a maximum of 12 months’ salary.

Defined-contribution pension plans There are only defined-contribution pension plans in the Group that are completely paid by the companies. The plans are paid into continuously, according to the rules of each plan.

Group Parent Company KSEK 2015 2014 2015 2014

Costs for defined-contribution pension plans 1,783 1,634 1,783 1,634

Specification of personnel costs Group Parent Company KSEK 2015 2014 2015 2014

Personnel costs

Personnel costs –21,850 –19,457 –21,850 –19,547

Capitalized planning personnel 4,876 6,502 4,181 4,524

Capitalized personnel in management and administration 1,798 3,026 1,798 2,756

Total –15,176 –10,019 –15,871 –12,267

The Company capitalizes all personnel costs for planning personnel. Personnel costs for management/administration (overhead fees) are capitalized at an appropriate percentage for projects that are approved or in the construction phase, and the remaining costs impact earnings.

Note 5 Other external costs

Specification of other external costs Group Parent Company KSEK 2015 2014 2015 2014

Other external costs

Other external costs –87,177 –41,147 –20,953 –15,496

Production-related remuneration to wind-turbine supplier – –19,970 – –

Reinvoiced costs –2,110 –2,122 – –

Capitalized other external costs 3,526 4,336 3,331 3,655

Total –85,761 –58,903 –17,622 –11,841

The Company capitalizes all other external expenses for project-planning personnel. Other external costs for management/ administration (overhead fees) are capitalized at an appropriate percentage for projects in an approved or construction phase, and the remaining costs impact earnings.

Fees and cost reimbursement paid to auditors Group Parent Company KSEK 2015 2014 2015 2014

Ernst & Young Auditing assignments 531 570 330 369 Auditing activities other than auditing assignments 256 158 256 158 Tax advice 247 174 247 174 Other services – – – – Total 1,034 902 833 701 52 NOTES TO THE FINANCIAL STATEMENTS RABBALSHEDE KRAFT ANNUAL REPORT 2015

Note 6 Depreciation, amortization and impairment of tangible and intangible fixed assets

Group Parent Company KSEK 2015 2014 2015 2014

Intangible fixed assets: Leasehold agreements 750 1,202 – – Computer software – 168 – 168 Tangible fixed assets: Wind turbines, foundations and electrical installations 95,867 53,143 7,026 7,022 Buildings and land improvements 887 779 779 779 Equipment, tools, fixtures and fittings 1,028 2,356 920 2,356 Discontinued projects 3,903 14,058 3,903 14,058 Project impairment 17,303 1,476 11,468 1,476 Reversal of previous project impairments –1,025 –3,395 –1,025 –3,395 Impairment of wind farms 162,469 – – – Capitalized depreciation/amortization –858 –2,842 –821 –2,652 Total 280,324 66,945 –22,250 19,812

The Group has performed impairment testing by calculating the value in use of the Group’s wind farms. The anticipated profitability of wind farms has declined due to low electricity prices. As a consequence, significant impairment was reported during 2015.

Note 7 Financial income

KSEK 2015 2014

Group

Interest income 128 511

Exchange-rate difference –28 – Financial income 100 511

Parent Company Interest income – 116 Interest income, Group companies 152 247 Dividends received 1,400 – Exchange-rate difference –28 – Financial income 1,524 363

Interest income for both the Group and the Parent Company are attributable to receivables measured at amortized cost.

53 NOTES TO THE FINANCIAL STATEMENTS RABBALSHEDE KRAFT ANNUAL REPORT 2015

Note 8 Financial expenses

KSEK 2015 2014

Group

Interest expenses 69,011 36,221

Interest expense, shareholder loans 8,273 7,968

Other financial expenses 8,876 2,757

Exchange-rate losses – 22 Financial expenses 86,160 46,968

KSEK 2015 2014

Parent Company Interest expenses 5,170 5,716 Other financial expenses 3,945 159 Exchange-rate losses – – Financial expenses 9,115 5,875

Of the Group’s interest expenses, KSEK 33,310 (21,681) pertains to interest attributable to liabilities measured at amortized cost. The corresponding amount for the Parent Company was KSEK 2,740 (3,640). Remaining interest expenses pertain to current interest attributable to the Group’s interest derivatives.

Note 9 Tax

Recognized in profit or loss Group Parent Company KSEK 2015 2014 2015 2014

Current tax cost (-)/tax revenue(+) 22,785 7,471 4,762 4,651 Deferred tax regarding temporary differences 2,297 -422 2,297 -422 Total tax 25,082 7,049 7,059 4,229

Reconciliation of effective tax Group Parent Company KSEK 2015 2014 2015 2014

Loss before tax –196,729 –32,132 –211,325 –19,301 Tax according to applicable tax rate for the Parent Company, 22% 43,280 7,069 46,491 4,246 Tax effects of non-deductible expenses –181 –22 –39,433 –18 Tax effects of non-taxable revenues 3 2 1 1 Uncapitalized loss carryforwards –18,020 – – – Recognized effective tax 25,082 7,049 7,059 4,229

54 NOTES TO THE FINANCIAL STATEMENTS RABBALSHEDE KRAFT ANNUAL REPORT 2015

Note 9 Tax (cont’d)

RECOGNIZED IN THE BALANCE SHEET CHANGE IN DEFERRED TAX IN TEMPORARY DIFFERENCES AND LOSS CARRYFORWARDS Deferred tax assets and liabilities are attributable to the following:

Group Closing Closing balance at Recognized balance at Jan. 1, in profit/loss Recognized Dec. 31, 2015 for the year in Other 2015 Deferred Deferred tax Net comprehen- Deferred tax Deferred tax Net KSEK tax assets liability balance sive income assets liability balance

Intangible assets – –7,535 –173 – – –7,362 Currency derivatives – –3 – –3 – – Interest derivatives 33,271 – 120 6,140 27,011 – Capitalized exchange-rate gains – –2,867 –129 – – –2,738 Untaxed reserves – –4,605 2,754 – – –7,359 Capitalized Group interest 100 – 8 – 92 – Internal profits 1,013 – 40 – 973 – Provisions for rehabilitation 55 – –115 – 170 – Capitalized loss carryforwards 20,911 – –27,079 – 47,990 – Tax regarding issuance costs – – 2,102 – – – Other temporary differences – – –2,610 – 2,610 – Tax assets/liabilities 55,350 –15,010 40,340 –25,082 6,137 78,846 –17 459 61,387

Group Closing Closing balance at Recognized balance at January 1, in profit/loss Recognized Dec. 31, 2014 Defer- for the year in Other 2014 red tax Deferred tax Net comprehen- Deferred tax Deferred tax Net KSEK assets liability balance sive income assets liability balance

Intangible assets – –7,959 –424 – – –7,535 Currency derivatives – –2,091 – –2,088 – –3 Interest derivatives 6,521 – 72 –26,822 33,271 –2,867 Capitalized exchange-rate gains – –2,995 –128 – – –4,605 Untaxed reserves – –4,225 380 – – – Capitalized Group interest 108 – 8 – 100 – Internal profits 1,016 – 3 – 1,013 – Reversal –55 – 55 – Capitalized tax loss carryforwards 14,004 – –6,907 – 20,911 – Tax assets/liabilities 21,649 –17,270 4,379 –7,051 –28,910 55,350 –15,010 40,340

2015 2014

Parent Company Deferred tax Deferred tax Deferred tax Deferred tax KSEK assets liability Net balance assets liability Net balance

Intangible assets – –3,660 – –3,934

Capitalized loss carryforwards 18,280 – 11,417 –

Other temporary differences 2,349 325

Tax assets/liabilities 20,629 –3,660 16,969 11,742 –3,934 7,808

The Group’s total closing tax loss at December 31, 2015 was KSEK 300,045.

55 NOTES TO THE FINANCIAL STATEMENTS RABBALSHEDE KRAFT ANNUAL REPORT 2015

Note 10 Intangible fixed assets

Leasehold agreements/compu- Leasehold agreements/compu- Group ter software Parent Company ter software KSEK 2015 2014 KSEK 2015 2014

Accumulated costs Accumulated costs Opening balance 42,110 43,673 Opening balance 21,017 22,580 New acquisitions 290 – New acquisitions 290 – Sales/scrappage – – 1,563 Sales/scrappage –1,403 –1,563 Closing balance 42,400 42,110 Closing balance 19,904 21,017

Accumulated amortization and impairment losses Accumulated amortization and Opening balance –7,863 –7,328 impairment losses Amortization for the year –786 –713 Opening balance –3,137 –3,147 Sales/scrappage – 178 Amortization for the year – –168 Closing balance –8,649 –7,863 Sales/scrappage 160 178 Carrying amount 33,751 34,247 Closing balance –2,977 –3,137 Carrying amount 16,927 17,880

56 NOTES TO THE FINANCIAL STATEMENTS RABBALSHEDE KRAFT ANNUAL REPORT 2015

Note 11 Tangible fixed assets

Wind farms under construction phase and Operational wind Equipment, tools, ongoing production Group Land and buildings farms fixtures and fittings planning Total KSEK 2015 2014 2015 2014 2015 2014 2015 2014 2015 2014

Costs Opening balance 24,915 24,942 2,427,642 1,271,094 19,384 19,133 108,754 432,554 2,580,694 1,747,723 Reclassification – – – 1,152,795 – – – –1,152,794 – – New acquisitions – -27 138 3,753 3,160 272 21,368 841,667 24,666 845,666 Sales/scrappage – – –3,515 – – –21 –3,903 –12,673 –7,418 –12,694 Closing balance 24,915 24,915 2,424,265 2,427,642 22,544 19,384 –126,219 108,754 2,597,943 2,580,694

Depreciation Opening balance –4,341 –3,562 –208,380 –154,580 –18,418 –16,084 –1,471 –3,390 –232,610 –177,616 Depreciation for the year –887 –779 –95,858 –53,800 –1,003 –2,355 – – –97,747 –56,935* Impairment losses for the year/ reversal of impairment – – –162,469 – – – –16,282 1,919 –178,751 1,919 Sales/scrappage – – – – – 21 – – – 21 Closing balance –5,227 –4,341 –466,707 –208,380 –19,421 –18,418 –17,753 –1,471 –509,109 –232,610 Carrying amount 19,687 20,574 1,957,558 2,219,262 3,123 966 108,465 107,278 2,088,834 2,348,080

* Of the depreciation for the year, KSEK 822 (2,842) was capitalized in tangible fixed assets pertaining to wind-measurement equipment.

The operational wind farms consist of Hud, Kil, Brattön, Töftedalsfjället, Dingle-Skogen, Skaveröd/Gurseröd, Årjäng NV and Årjäng SV. Capitalized interest expenses under construction for the year totaled KSEK 0 (4,430). Wind farms in a construction phase are reclassified as operational wind farms when wind turbines are taken into operation. Advances paid for the year totaled KSEK 0 (0). Acquisitions for the year include KSEK 1,076 for capitalized reversal expenses.

Wind farms under construction phase and Operational wind Equipment, tools, ongoing production Parent Company Land and buildings farms fixtures and fittings planning Total KSEK 2015 2014 2015 2014 2015 2014 2015 2014 2015 2014

Costs Opening balance 21,116 21,143 185,972 185,972 19,114 18,863 89,918 82,376 316,120 308,354 New acquisitions – –27 – – 2,833 272 19,640 20,216 22,474 20,461

Sales/scrappage – – – – – 21 –3,903 –12,673 –3,903 –12,694 Closing balance 21,116 21,116 185,972 185,972 21,948 19,114 105,655 89,918 334,691 316,120

Depreciation Opening balance –4,341 –3,562 –56,648 –49,625 –18,282 –15,948 –1,471 –3,390 –80,742 –72,525 Depreciation for the year –779 –779 –7,052 –7,022 –894 –2,356 – – –8,725 –10,157 Impairment losses for the year/ reversal of impairment losses – – – – – – –10,447 1,919 –10,447 1,919 Sales/scrappage – – – – – 21 – – – 21 Closing balance –5,119 –4,341 –63,700 –56,648 –19,177 –18,282 –11,918 –1,471 –99,914 –80,742 Recognized residual value 15,996 16,775 122,272 129,324 2,771 832 93,737 88,443 234,776 235,374

* Of the depreciation for the year, KSEK 822 (2,652) was capitalized in tangible fixed assets.

The operational wind farms consist of the Hud wind farm. Wind farms in a construction phase are reclassified as operational wind farms when wind turbines are commissioned. Untaxed reserves consisting of excess depreciation on operational wind farms totaled KSEK 500 (500).

57 NOTES TO THE FINANCIAL STATEMENTS RABBALSHEDE KRAFT ANNUAL REPORT 2015

Note 12 Long-term and other receivables

Group KSEK Dec. 31, 2015 Dec. 31, 2014

Long-term receivables classified as fixed assets: Other – 15 Total – 15

Other receivables classified as current assets: Electricity derivatives held for hedging – 734 Currency derivatives held for hedging – 12 Receivables value-added tax 1,072 64 Receivables tax account 1,281 1,299 Preliminary tax 4,340 1,965 Other 41 35 Total 6,734 4,109

Parent Company KSEK Dec. 31, 2015 Dec. 31, 2014

Long-term receivables: Other – 15 Total – 15

Other receivables (current): Other 2,580 705 Total 2,580 705

Note 13 Intangible current assets

Group KSEK Dec. 31, 2015 Dec. 31, 2014

Electricity certificates 7,416 8,859 Guarantees of origin (GoO) 321 1,591 Total 7,737 10,450

Parent Company KSEK Dec. 31, 2015 Dec. 31, 2014

Electricity certificates 561 1,424 Guarantees of origin (GoO) – 252 Total 561 1,676

58 NOTES TO THE FINANCIAL STATEMENTS RABBALSHEDE KRAFT ANNUAL REPORT 2015

Note 14 Prepaid costs and accrued income

Group Parent Company KSEK Dec. 31, 2015 Dec. 31, 2014 Dec. 31, 2015 Dec. 31, 2014

Accrued electricity sales 21,083 16,194 1,442 1,263 Accrued electricity certificates 13,444 7,538 971 724 Accrued guarantees of origin (GoO) 133 631 13 91 Accrued income from insurance – 267 – 267 Prepaid selling expenses 1,867 1,997 – 1,130 Prepaid service contracts 6,480 4,467 239 284 Advance payment spare parts warehouse 2,074 1,520 – – Other 929 1,138 195 286 Total 46,010 33,752 2,859 4,045

Note 15 Shareholders’ equity

Share capital in Rabbalshede Kraft totaled SEK Group 748,249,300 at December 31, 2015. The share capital is KSEK 2015 2014 distributed among 74,824,930 shares, of which 1,000,000 were Class A shares and 73,824,930 Class B shares. Class Opening balance –117,043 –14,543 A shares entitle the holder to one vote and Class B shares Change in fair value –5,539 –116,120 entitle the holder to one-tenth of a vote. The quotient value Reversals against profit or loss; of the shares is SEK 10 per share. Financial expenses 35,701 14,541 GROUP Reversals against balance sheet; Other capital contributions Tangible fixed assets –2,266 –29,830 Pertains to shareholders’ equity contributed by the owners. Includes premiums that are paid in connection with share Tax –6,137 28,909 issues. Closing balance –95,284 –117,043

Earnings brought forward including profit for the year PARENT COMPANY Earnings brought forward including profit/loss for the year Restricted funds include funds earned by the Parent Company and its subsi- Restricted funds are not reduced through dividends. diaries, as well as paid option premiums. Previous statuto- ry-reserve provisions, excluding transferred share premium UNRESTRICTED SHAREHOLDERS’ EQUITY reserves, are included in this shareholders’ equity item. Share premium reserve When shares are issued to premium reserves, meaning Reserves when more than the shares’ quotient value is to be paid for The hedging reserve includes the effective portion of the the shares, an amount corresponding to the amount recei- accumulated net change in the fair value of cash-flow hed- ved in excess of the shares’ quotient value is to be transfer- ging instruments (interest-rate swaps, electricity futures red to the share premium reserve. The amount that was and currency forwards) attributable to hedging transactions provided to the share premium reserve as of January 1, that have not yet occurred. 2006 is included under unrestricted capital. For information on the measurement category of hedging instruments in accordance with IFRS 13, refer to Note 20. RETAINED EARNINGS Amounts that were removed from reserves for cash-flow This consists of the previous year’s unrestricted equity after hedging were recognized in the following items in profit and any dividends payments. Combined with profit for the year loss, and the balance sheet: and the share premium reserve, it constitutes the total unrestricted shareholders’ equity, meaning the amount that is available for dividends to shareholders.

59 NOTES TO THE FINANCIAL STATEMENTS RABBALSHEDE KRAFT ANNUAL REPORT 2015

Note 16 Interest-bearing liabilities

Group Parent Company Collateral for bank loans are issued through what is known Dec. 31, Dec. 31, Dec. 31, Dec. 31, KSEK 2015 2014 2015 2014 as collateral transfer, whereby assets are transferred, as well as mortgage deeds on properties and chattel mortga- Interest-bearing liabilities ges; refer to Note 23. Handling charges in connection with borrowing are Bank loans (incl. current portion) 1,255,652 1,305,020 87,448 97,080 recognized in profit and loss under bank loans. Fees allocated over the duration of the The loan agreements for the Group wind farms include con- loan –23,930 –29,016 –317 –476 ditions known as covenants. The covenants are linked to Total 1,231,722 1,276,004 87,131 96,604 key figures such as the cash flow, which is to exceed a certain level. If these covenants are not met, the company will Group Parent Company be in breach of the requirements under the covenants. Dec. 31, Dec. 31, Dec. 31, Dec. 31, As reported in the 2015 year-end report, the company KSEK 2015 2014 2015 2014 did not meet its existing covenant requirements and, therefore, the bank loans are recognized as short-term. Maturity structure for loan agree- During the first four months of 2016, the company ments reached a solution for the covenants governing the 0–1 year 1,250,252 62,792 82,048 9,050 company’s loan agreements. In the first quarter, SEK 171 M from the preferential rights issue in December 2015 was 2–5 years 2,700 710,926 2,700 88,030 used to reduce borrowings for Skaveröd Gurseröd Vind AB, 6–10 years 2,700 531,302 2,700 – Årjäng Sydväst Vind AB, Årjäng Nordväst Vind AB, Rabbal- 11–15 years – – – – shede Kraft AB and Töftedal Vind AB. Total 1,255,652 1,305,020 87,448 97,080 Low electricity and certificate prices after the end of the year resulted in the capital from the preferential rights issue Group Parent Company being insufficient to meet the company’s covenants. Bet- Dec. 31, Dec. 31, Dec. 31, Dec. 31, ween November 2015 and March 2016, electricity prices KSEK 2015 2014 2015 2014 declined further by about 17%. In April 2016, Manor Invest-

Interest-rate ment S.A., the company’s principal owner, provided a sha- maturity reholder loan of SEK 215 M to the Group, which is to be 0–1 year 350,132 337,059 33,513 34,489 used primarily to amortize the loans for Brattön Vind AB, Kil Vind AB and Dingleskogen Vind AB. 2–5 years 371,566 351,249 53,935 62,591 An additional shareholder loan will be used to reduce 6–10 years 533,955 539,065 – – borrowings for Skaveröd Gurseröd Vind AB, Årjäng Sydväst 11–15 years – 77,647 – – Vind AB, Årjäng Nordväst Vind AB, Rabbalshede Kraft AB Total 1,255,652 1,305,020 87,448 97,080 and Töftedal Vind AB, to thereby meet all covenants outstanding, which are currently subject to waivers from creditors. Refer to Note 28 for information about further events after the end of the fiscal year.

Group Financial liabilities analysis of maturities per December 31, 2015 3 months–1 KSEK Nominal value Total < 1 month 1–3 months year 1–5 years >5 years

Swedbank 584,688 599,018 – 10,212 588,806 – –

Sparbanken Tanum 6,075 6,615 – 193 579 4,225 2,776

DNB 323,077 327,429 3,223 – 3,242 – –

SEB 341,812 349,834 – – 349,834 – –

Shareholder loans – – – – – – –

Financial leasing – – – – – – –

Accounts payable 5,204 5,204 5,204 – – – –

Total 1,260,856 1,288,100 5,204 10,405 942,461 4,225 2,776

60 NOTES TO THE FINANCIAL STATEMENTS RABBALSHEDE KRAFT ANNUAL REPORT 2015

Group Financial liabilities analysis of maturities per December 31, 2014 3 months– KSEK Nominal value Total < 1 month 1–3 months 1 year 1–5 years >5 years

Swedbank 943,703 1,101,420 – 17,847 65,762 552,427 465,383

Sparbanken Tanum 6,750 7,468 – 205 615 3,872 2,776

DNB 354,401 382,147 – – 28,229 353,916 –

Shareholder loans 109,611 147,259 – – – 8,258 139,001

Financial leasing 167 169 84 85 – – –

Accounts payable 13,221 13,221 13,221 – – – –

Total 1,428,052 1,651,683 13,305 18,137 94,606 918,474 607,161

Note 17 Other liabilities

Group Parent Company KSEK Dec. 31, 2015 Dec. 31, 2014 KSEK Dec. 31, 2015 Dec. 31, 2014

Other long-term liabilities Other current liabilities

Interest derivatives 122,844 151,229 Value-added tax 165 483 Shareholder loans – 109,811 Other 1,401 899 Total long-term liabilities 122,844 261,040 Total 1,566 1,382

Other current liabilities Electricity derivatives – 734 Value-added tax 4,397 7,656

Other 1,408 913 Total other current liabilities 5,805 9,303

Note 18 Accrued expenses and deferred income

Group Parent Company KSEK Dec. 31, 2015 Dec. 31, 2014 Dec. 31, 2015 Dec. 31, 2014

Accrued holiday pay 3,290 2,975 3,290 2,975 Accrued social security contributions 498 442 498 442 Accrued interest expense 386 941 25 20 Accrued leasehold payments 13,149 9,171 3,222 4,560 Planning costs – 981 – 720 Accrued investment costs, operational wind farms – 51,661 – – Production-related remuneration to wind-turbine supplier – 19,970 – –

Accrued service costs 2,963 997 1,084 415 Accrued grid fees 167 1,405 –6 32 Accrued property tax 12,570 2,529 1,058 406 Accrued issuance costs 8,025 – 8,025 – Other 4,334 1,295 2,442 685 Total 45,380 92,367 19,636 10,255

61 NOTES TO THE FINANCIAL STATEMENTS RABBALSHEDE KRAFT ANNUAL REPORT 2015

Note 19 Financial assets and liabilities

Group, 2015 Derivative instruments where hedge Accounts and Other receivables Total carrying KSEK accounting is applied loans receivable and liabilities amount Fair value

Cash and cash equivalents and blocked funds – 316,934 – 316,934 316,934 Accounts receivable – 1,316 – 1,316 1,316 Other current receivables – – – – – Total – 318,250 – 318,250 318,250

Other long-term liabilities 122,844 – – 122,844 122,844

Interest-bearing liabilities – – 1,231,722 1,231,722 1,231,722 Accounts payable – – 5,204 5,204 5,204 Other current liabilities – – – – – Total 122,844 – 1,236,926 1,359,770 1,359,770

In the Parent Company, only the accounts receivable, accounts payable, cash and cash equivalents and interest-bearing liabilities have the same recognized and fair value amounts; refer to Parent Company balance sheet.

Group, 2014 Derivative instruments where hedge Accounts and Other receivables Total carrying KSEK accounting is applied loans receivable and liabilities amount Fair value

Cash and cash equivalents and blocked funds – 175,433 – 175,433 175,433 Accounts receivable – 1,130 – 1,130 1,130 Other current receivables 734 – – 734 734 Total 734 176,563 – 177,297 177,297

Other long-term liabilities 151,230 – 109,811 261,041 250,155 Interest-bearing liabilities – – 1,276,004 1,276,004 1,276,004 Accounts payable – – 13,221 13,221 13,221 Other current liabilities 734 – – 734 734 Total 151,964 – 1,399,036 1,551,000 1,540,114

CALCULATION OF FAIR VALUE For derivative instruments used for the hedging of future The following is a summary of the primary methods and electricity sales, the fair value is determined based on the assumptions used to determine the fair value of the financi- prices set in external market places. al instruments that are recognized in the above table. The fair value for interest-rate swaps is based on the measurement of intermediary credit institutions, and its fair- DERIVATIVE INSTRUMENTS ness is tested through a discounting of estimated future For currency contracts, the fair value is determined procee- cash flows in accordance with the contract’s terms and ding from the listed rates, if such rates are available. If such maturities, and based on market interest-rates for similar rates are not available, the fair value is calculated by means instruments on the balance-sheet date. of a discounting of the difference between the agreed for- In the event that discounted cash flows are used, future ward rate and the forward rate that can be attained on the cash flows are calculated based on the best assessment of balance-sheet date for the remaining contractual period. company management. The interest rate used for discoun- Discounting is implemented on risk-free interest rates ting is the market-based interest rate for similar instruments based on government bonds. on the balance-sheet date. When other valuation techniques are used, the input data is based on the balance-sheet date. 62 NOTES TO THE FINANCIAL STATEMENTS RABBALSHEDE KRAFT ANNUAL REPORT 2015

Note 19 Financial assets and liabilities (cont’d)

INTEREST-BEARING LIABILITIES FINANCIAL INSTRUMENTS BY CATEGORY Fair values for financial liabilities that are not derivative According to IFRS 13, financial instruments must be cate- instruments are calculated based on future cash flows of gorized in three levels based on the input data used when capital amounts and interest discounted to current market making the fair-value measurement. The first category per- interest rates on the balance-sheet date. tains to financial instruments that are quoted in an active market. The second category pertains to financial instru- ACCOUNTS RECEIVABLE AND ACCOUNTS PAYABLE ments that are not quoted in an active market, but where For accounts receivable and accounts payable with a other market data can be used to obtain a measurement. remaining economic life of less than six months, the carry- The final category pertains to measurements for which the- ing amount is considered to reflect the fair value. re are no quoted prices or other market data. The methods for obtaining a measurement for category three primarily comprise discounted cash flows. All derivatives (electricity, interest rate and currency) belong to category 2.

Note 20 Financial risks and policies

Through its business operations, the Group is exposed to PRICE RISKS IN ELECTRICITY SALES various types of financial risk. Financial risk pertains to fluc- Rabbalshede Kraft is net producer of electricity, which tuations in the company’s earnings and cash flow arising makes the price of electricity a crucial parameter in the from changes in exchange rates, interest rates and defaul- Group’s profit. A lower electricity price results in direct ted credit. The Group’s financial policy was formulated by negative impact on the Group’s sales and earnings. It is its Board of Directors and constitutes a framework of gui- thus of great importance that electricity price risks are delines and rules in the form of risk mandates and limits for managed in a professional and cost-efficient manner. finance activities for handling financial risks. The CEO is With the aim of achieving stable earnings, Rabbalshede responsible for the Group’s financial transactions and risks. Kraft has prepared a cooperation agreement with Axpo The overall objective of the finance function is to provide Sweden AB, one of the leading players at Nordpool. Axpo cost-efficient financing and to minimize the negative impact assists with consultation concerning the markets for electri- on the consolidated income arising from market risks. city and electricity certificates and functions as a support in Reporting is undertaken on a continuous bases to the Rabbalshede Kraft’s risk management, and offers hedging company’s Board of Directors. products that provide Rabbalshede Kraft with the scope to balance risks and opportunities. The partnership aims to MARKET RISKS secure future production revenue, reach long-term profita- A market risk is the risk that the fair value or future cash bility, reduce the risk of fluctuations in market prices negati- flows of a financial instrument may vary due to fluctuations vely impacting the company’s revenue, achieving favorable in market prices. Market risks are divided by IFRS into three results from price hedges and managing the need for categories: exchange-rate risk, interest-rate risk and other balance power in a cost-efficient manner. Together with price risks. The market risks that primarily impact the Gro- Axpo, Rabbalshede Kraft has prepared an electricity tra- up consist of exchange-rate risk, interest-rate risk, and ding policy and mandate, which are aimed at identifying risks attributable to the price trends of electricity and elec- risks and setting frameworks and limits for Rabbalshede tricity certificates. Kraft’s risk-taking. The Group’s objective is to manage and control market Price risk refers to fluctuations in the price of electricity risks within fixed parameters, while optimizing the profits and electricity certificates and their impact on profit. To from risk taking within given frameworks. The parameters minimize such exposure, derivative instruments are used as are fixed with the aim that short-term (6–12 months) market a hedge against future sales. risks should only marginally impact the Group’s earnings The Group hedges its sale of electricity using forward and position. However, persistent changes to exchange contracts existing in the market, as well as PPA and EPA rates, interest rates and prices for electricity, electricity cer- products. Fixed limits were set on the maximum permitted tificates and guarantees of origin will have an impact on deviations in volume, between normal hedge volumes and consolidated profit in the longer term. price-hedged volumes relating to ongoing electricity sales. Similarly, there are limits on the volumes that may be stored and sold in advance concerning electricity certificates. The Group’s sale of electricity in 2015 totaled 576,412 MWh (314,665).

63 NOTES TO THE FINANCIAL STATEMENTS RABBALSHEDE KRAFT ANNUAL REPORT 2015

Note 20 Financial risks and policies (cont’d)

On the balance-sheet date, the following volume levels per- INTEREST-RATE RISKS taining to the expected future production of electricity were Interest-rate risk is the risk that the value of a financial hedged: instrument may vary due to fluctuations in market interest rates. Interest-rate risks may result in changes in fair value Hedged percentage 2016 2017 2018 2019 2020 and changes in cash flows. A significant factor that impacts Electricity 71% 70% 69% 69% 56% interest-rate risk is the fixed-interest period. The Group’s interest-rate exposure is managed by the The fair value of outstanding forward contracts pertaining Group’s financial control function, which is responsible for to future sales of electricity on the balance-sheet date identifying and handling this exposure. On the balance- amounted to net KSEK 0 (0). sheet date the Group had KSEK 1,255,652 (1,305,020) in loan payables outstanding. SENSITIVITY ANALYSIS The long-term policy is to finance investments in wind A fluctuation of 10 percent in the electricity price results in a turbines with a loan ratio of 70 percent. This will significant- change in the profit for the year of KSEK 2,559 (2,829). The ly increase the Group’s future financial liabilities, which will sensitivity analysis is based on all other factors remaining entail an increased interest-rate risk. Derivative instruments unchanged and the non-application of hedge accounting. such as interest-rate swaps may be utilized to control the Group’s interest-rate risk. According to the financial policy, EXCHANGE-RATE RISKS the norm risk has been set at five years. The company has Exchange-rate risk arises in connection with the planning a mandate to allow the debt portfolio’s average fixed-inte- and ordering of wind turbines, which occurs preferably from rest period to deviate from the norm risk by +/- 12 months. European suppliers in EUR. In most cases, payment occurs A maximum of 50 percent of the total debt portfolio inclu- on a number of predetermined dates. With the aim of res- ding derivatives and a maximum of 50 percent of the loan tricting the currency risk, Rabbalshede Kraft will, early in maturity (tied-up capital) may be converted to interest the process, reduce the uncertainty by hedging the curren- within a 12-month period. cy exposure, in full or in part, when the order is placed, to During the year, the company’s average interest rate on thereby safeguard profits and estimates. This risk is refer- bank loans was 5.33 percent (4.69). There are also share- red to as transaction exposure. holder loans with an average interest of 7.5%. This share- Exchange-rate risks are thus hedged if they are attribu- holder loan was repaid in conjunction with the share issue table to the purchase of future investments in wind turbines in 2015 and totaled KSEK 118,084 at the time. For the for which permits have been obtained. Hedge accounting is maturity structure of interest rates, refer to Note 16. applied in the Group; refer to Note 1. Interest-rate swaps are utilized for switching between The Group’s transaction exposure, on the balance-sheet floating and fixed interest rates with the aim of adapting date, was distributed in the following currencies: interest rates and fixed-interest periods. On December 31, 2015, the average fixed-interest period was 4.47 years Group, KEUR 2015 2014 (5.08) and the average capital maturity term for the debt portfolio was 4.84 years (5.35). On the balance-sheet date, Ordered wind turbines* – 3,820 the company had interest derivatives with a nominal value Of which, hedged – 100% of KSEK 1,109,143 (556,531). The net fair value of outstanding interest derivatives on *Includes investments made during the year and orders of turbines the balance-sheet date totaled KSEK –122,159 (–150,067). where delivery is yet to occur. These figures were recognized as long-term liabilities in the balance sheet. Hedge accounting is applied in the Group; The Group classifies its currency futures that are used for refer to Note 1. the hedging of forecast purchases as cash-flow hedges. Hedge accounting is applied in the Group; refer to Note 1. SENSITIVITY ANALYSIS The net fair value of forward contracts outstanding on A change in interest rates of 100 points would entail a the balance-sheet date totaled KSEK 0 (12). change of KSEK 1,143 (1,853) in profit or loss on the balance-sheet date. The sensitivity analysis is based on all other SENSITIVITY ANALYSIS factors remaining unchanged and the non-application of A change of +/– 5 percent in the SEK against the EUR on hedge accounting. December 31, 2015 would entail a change in costs by KSEK 0 (0). The sensitivity analysis is based on all other LIQUIDITY RISKS factors (such as interest rates) remaining unchanged and Liquidity risk refers to the risk the Group may have pro- the non-application of hedge accounting. blems in meeting its obligations that are associated with financial liabilities.

64 NOTES TO THE FINANCIAL STATEMENTS RABBALSHEDE KRAFT ANNUAL REPORT 2015

Note 20 Financial risks and policies (cont’d)

The Group has a rolling 24-month liquidity planning that is customers is checked, whereby information on the custo- updated monthly. Liquidity planning is used to manage mers’ financial position is obtained from various credit liquidity risks and costs for financing by the Group. The information companies. On the balance-sheet date, no objective is for the Group to be able to manage its financial impairment of accounts receivable was deemed necessary. obligations in upturns and downturns without significant No outstanding accounts receivable are older than 30 days. unpredictable costs. Liquidity risks are managed by the Since sales principally occur at Nord Pool through esta- Group’s financial function. blished electricity suppliers, the credit risk is low in terms of According to the financial policy, there must always be sales revenue. sufficient cash and cash equivalents (liquidity reserves) totaling a minimum of KSEK 50,000 within the Group. CAPITAL MANAGEMENT The liquidity reserve pertains to cash, overdraft facility, The Group’s financial objective of having a solid capital listed investments that can be sold within five days, as well structure and financial stability and to thereby retain inves- as unutilized confirmed lines of credit. In 2015, liquidity tors, credit grantors and the market’s confidence, is a basis reserves comprised bank funds in accounts. In addition, for the continued development of business operations. the due dates for financial liabilities were distributed over Capital is defined as total shareholders’ equity, excluding time in order to limit the liquidity risk. hedge reserves. The objective for the debt/equity ratio is 70 The Group’s financial liabilities at year-end amounted to percent and adaptations toward this objective constitute a KSEK 1,236,926 (1,399,036). For the maturity structure, part of the strategic planning. refer to Note 16. The Board of Directors’ ambition is to maintain a balance between a high return that can be enabled through hig- CREDIT RISK her borrowing, and the benefits and safety that a sound Credit risks in accounts receivable capital structure offers. The Group’s target is to achieve a The risk that the Group’s customers will not fulfil their obli- minimum return on capital employed before tax of 10 per- gations, meaning that payment is not received from the cent. customers, is a credit risk. The credit rating of the Group’s

Note 21 Leasing

The assets that the Group rents through financial leases and which are recognized as tangible fixed assets comprise:

Group Parent Company Group Parent Company KSEK 2015 2014 2015 2014 KSEK 2015 2014 2015 2014

Plant/Equipment Operating leases Cost – 5,563 – 5,563 Within one year 9,950 9,079 1,850 979 Accumulated deprecia- Between one year and tion according to plan – –5,563 – –5,563 five years 36,685 35,038 4,285 2,638 Carrying amount – – – – Longer than five years 150,633 159,327 7,449 8,049 Total 197,268 203,444 13,584 11,666 Lease agreements in which the company is the lessee Non-terminable lease payments amounted to: The cost in 2015 for operational leases totaled KSEK 10,694 (6,413). Operational leasing mainly comprises Group Parent Company leases with landowners, and for cars and the rental of pre- KSEK 2015 2014 2015 2014 mises. Lease agreements comprise no variable fees. No new lease agreements were signed for office premises Financial leasing during 2015. Within one year – 167 – 167 Between one year and five years – – – – Longer than five years – – – – Total – – – –

The cost in 2015 for financial leases totaled KSEK 0 (833). Lease agreements comprise no variable fees. 65 NOTES TO THE FINANCIAL STATEMENTS RABBALSHEDE KRAFT ANNUAL REPORT 2015

Note 22 Investment obligations

Investments, including paid advances, totaled KSEK 23,021 during the January to December 2015 period. In all material respects, the investments pertain to ongoing planning work. No new investment commitments were signed during 2015.

Note 23 Pledged assets and contingent liabilities

Group Parent Company KSEK 2015 2014 2015 2014

Pledged assets In the form of pledged assets for own liabilities and provisions Collateral transferred for ordered wind turbines and leaseholds 1,953,003 2,218,085 122,350 129,325 Mortgage deeds on properties 14,400 13,500 13,500 13,500 Chattel mortgages 5,000 5,000 5,000 5,000 Blocked bank funds 90,190 54,427 6,655 6,355 Total pledged assets 2,062,593 2,291,012 147,505 154,180 Contingent liabilities 209,205 277,565 370,709 454,105

Collateral transferred for ordered wind turbines and lease- 14 wind turbines to the Dingle-Skogen wind farm in Febru- holds mean that the company has transferred to the bank ary 2012. The advance payment in EUR that had previously usufruct to leasehold areas for wind turbines, other rights/ been made for the 29 turbines, corresponding to KSEK permits/agreements, etc. that exist or which will exist to 39,921 (rate 9.23), was used as an installment payment for enable the construction of wind turbines that will subse- 14 turbines. While the remaining agreements for 15 wind quently produce, distribute and sell electricity, and owner- turbines stipulate specific delivery dates, the parties intend ship rights for all buildings, plants, etc. that exist or will be to sign supplementary agreements specifying new delivery constructed within the leased area. The transfer of collate- dates for wind farms that are scheduled further down the ral occurs solely for the bank to obtain security for the line. If the company cancels the remaining 15 wind turbi- borrower’s liabilities with the bank, which after the utiliza- nes, this could cost the company EUR 6.7 M, correspon- tion of the collateral, may sell the transferred assets at a ding to SEK 61.2 M at the closing-date rate. market price in order to assimilate payments from the purchase price. The transfer of collateral falls under Chap- Parent Company guarantee ter 3 Section 37 of the Contracts Act. Although it is a mat- Töftedal Vind AB has a bank loan from Swedbank AB. ter of a formal transfer of property, it is typical for collateral As collateral for the loan, Rabbalshede Kraft AB issued a transfers – unlike real asset transfers – for the transferred Parent Company guarantee to Swedbank AB totaling KSEK property to remain in the transferor’s possession and that it 161,504, which corresponds to the amount of the bank may be utilized by the transferor during the time the colla- loan. The Parent Company guarantee entails that Rabbals- teral is availed and the credit liabilities are contractually ful- hede Kraft AB will take Töftedal Vind AB’s place if it is una- filled. The transferor also retains all its obligations to third ble to pay repay its debt to Swedbank. parties such as shareholders and/or beneficial owners of Brattön Vind AB, Kil Vind AB, Dingleskogen Vind AB, property. No prices are set on the collateral transfer and Skaveröd Gurseröd Vind AB, Årjäng Nordväst Vind AB and there are no tax consequences or register changes as in Årjäng Sydväst Vind AB have electricity and certificate-hed- asset transfers. When the credits are repaid, the bank is to ging contracts with Axpo as the counterparty. As collateral transfer the property back to the transferor without charge. for the fulfillment of these contracts, Rabbalshede Kraft AB In 2008, Rabbalshede Kraft entered into an agreement with issued a Parent Company guarantee of KSEK 148,000. The a supplier relating to the acquisition of a total of 29 wind Parent Company guarantee entails that Rabbalshede Kraft turbines. Of these, the company instructed the delivery of AB steps in for the above-named companies if they are unable to pay Axpo when the hedge contract is due.

66 NOTES TO THE FINANCIAL STATEMENTS RABBALSHEDE KRAFT ANNUAL REPORT 2015

Note 24 Related parties Note 25 Group companies

RELATED PARTIES AND TRANSACTIONS WITH KEY Parent Company INDIVIDUALS IN SENIOR POSITIONS KSEK Dec. 31, 2015 Dec. 31, 2014 For information regarding the remuneration of senior execu- Accumulated costs tives, refer to Note 4. The company’s Board members and their close family On January 1 885,276 885,884 members control 16% of the votes in the company. Purchasing – – Manor Investment S.A. (“Manor”), Corp, Reg. No. B 137 Sales – – 678, is the Parent Company to Rabbalshede Kraft AB and Shareholders’ contributions 119,634 1,354 holds 51 percent of the votes.During the year, Manor Impairment losses –179,169 –1,962 Investment S.A. carried out consulting assignments on Carrying amount 825,741 885,276 Rabbalshede Kraft’s behalf. Accordingly, the company has made a KSEK 1,000 provision in the balance sheet at December 31, 2015.

Note 25 Group companies (cont’d)

Specification of the Parent Company’s direct holdings of shares in subsidiaries Dec. 31, 2015 Dec. 31, 2014 Subsidiaries Corp. reg. no. Domicile Votes, % Carrying amount Carrying amount

Töftedal Vind AB 556753-8599 Rabbalshede 100 98,029 132,200 Rabbalshede Förvaltning 1 AB 556775-1358 Rabbalshede 100 218,424 241,440 Rabbalshede Vind 6 AB 556872-2879 Rabbalshede 100 490,766 490,412 Sögårdsfjället Vind AB 556794-0340 Rabbalshede 100 8,831 12,728 Lygnern Vind AB 556792-4039 Rabbalshede 92 7,242 6,742 Rabbalshede Elnät AB 556865-6069 Rabbalshede 100 2,050 1,050 Lursäng Vind AB 556855-9008 Rabbalshede 100 100 50 Rabbalshede Vind 2 AB 556872-2838 Rabbalshede 100 50 50 Rabbalshede Vind 3 AB 556872-2820 Rabbalshede 100 50 50 Rabbalshede Vind 4 AB 556872-2853 Rabbalshede 100 50 50 Rabbalshede Vind 5 AB 556872-2846 Rabbalshede 100 50 50 Rabbalshede Värdepapper AB 556732-7852 Rabbalshede 100 100 100 Total 825,741 885,276

Pursuant to IFRS 12, item 12, additional information must be provided about significant companies with minority interests. About 8 percent of Lygnern Vind AB is owned by stakeholders outside the Rabbalshede Kraft Group and thereby constitute a company with minority interests. Since sales and total assets are insignificant, no further information about the company is provided.

Shareholdings owned by other Group companies other than the Parent Company Percentage of Dec. 31, 2015 Dec. 31, 2014 Company Corp. reg. no. Domicile votes, % Carrying amount Carrying amount

Kil Vind AB, 556782-8305 Rabbalshede 100 15,546 34,816 Brattön Vind AB 556753-8870 Rabbalshede 100 80,615 95,379 Dingleskogen Vind AB 556840-0864 Rabbalshede 100 122,263 111,219 Skaveröd Gurseröd Vind AB 556809-3453 Rabbalshede 100 174,670 166,201 Årjäng Nordväst Vind AB 556812-2666 Rabbalshede 100 127,175 116,517 Årjäng Sydväst Vind AB 556872-2804 Rabbalshede 100 181,716 172,191

67 NOTES TO THE FINANCIAL STATEMENTS RABBALSHEDE KRAFT ANNUAL REPORT 2015

Note 26 Untaxed reserves

Parent Company Operational wind farms KSEK 2015 2014

Accumulated depreciation/amortization according to plan: Opening balance 500 500 Depreciation for the year in excess of plan – – Divestment and scrappage – – Closing balance 500 500

Note 27 Cash-flow statement

Cash and cash equivalents – Cash and cash equivalents – Group Parent Company KSEK Dec. 31, 2015 Dec. 31, 2014 KSEK Dec. 31, 2015 Dec. 31, 2014 The following sub-components are The following sub-components are included in cash and cash equiva- included in cash and cash equivalents: lents: Cash and bank balances 226,744 121,006 Cash and bank balances 201,686 47,316

Liquidity regulated interest Group Parent Company KSEK 2015 2014 2015 2014

Interest received 100 511 124 116 Interest paid –77,839 –35,405 –5,165 –5,722

Total –77,739 –34,894 –5,041 –5,606

Adjustment for non-cash items Group Parent Company KSEK 2015 2014 2015 2014

Depreciation and impairment losses 280,324 66,945 22,250 19,812 Impairment of participations in subsidiaries – – 179,169 – Capital gain from sales of fixed assets – – – – Inefficient interest-rate hedging –478 –326 – – Capitalized financing expenses 5,086 2,449 159 159 Reversal charges 288 139 – – Divestment/disposal of tangible fixed assets 3,515 – – – Total 288,735 69,207 201,578 19,971

Note 28 Events after the balance-sheet date

A share issue that raised SEK 312,114,001 has been regis- cash flow, which is to exceed a certain level. If these cove- tered and the funds recognized in the share capital. A SEK nants are not met, the company will be in breach of the 299,299,720 reduction in share capital was registered at requirements under the covenants. the Swedish Companies Registration Office to enable a As reported in the 2015 year-end report, the company share issue with a quotient value of SEK 6. The amount did not meet its existing covenant requirements and, the- reduced the share capital and, thereafter increased refore, the bank loans are recognized as short-term. During unrestricted shareholders’ equity.The loan agreements for the first four months of 2016, the company reached a solu- the Group wind farms include conditions known as cove- tion for the covenants governing the company’s loan agre- 68 nants. The covenants are linked to key figures such as the ements. In the first quarter, SEK 171 M from the NOTES TO THE FINANCIAL STATEMENTS RABBALSHEDE KRAFT ANNUAL REPORT 2015

preferential rights issue in December 2015 was used to redu- Vind AB, Årjäng Sydväst Vind AB and Skaveröd Gurseröd ce borrowings for Skaveröd Gurseröd Vind AB, Årjäng Syd- Vind AB by a total of SEK 140 M. These amortizations must väst Vind AB, Årjäng Nordväst Vind AB, Rabbalshede Kraft be made before September 30, 2016. Rabbalshede Kraft AB and Töftedal Vind AB. Low electricity and certificate pri- AB intends to finance these amortization payments through ces after the end of the year resulted in the capital from the a shareholder loan. Rabbalshede Kraft AB has pledged preferential rights issue being insufficient to meet the wind power projects, with a total book value of KSEK company’s covenants. Between November 2015 and March 77,942, as collateral with the banks to cover the amortiza- 2016, electricity prices declined further by about 17%. In tion payments. April 2016, Manor Investment S.A., the company’s principal owner, provided a shareholder loan of SEK 215 M to the Group, which is to be used primarily to amortize the loans for Note 29 Information about the Parent Brattön Vind AB, Kil Vind AB and Dingleskogen Vind AB. An Company additional shareholder loan will be used to reduce borrowings for Skaveröd Gurseröd Vind AB, Årjäng Sydväst Vind AB, Årjäng Nordväst Vind AB, Rabbalshede Kraft AB and Rabbalshede Kraft AB (publ.) is a Swedish limited liability Töftedal Vind AB, to thereby meet all covenants outstanding, company headquartered in Rabbalshede, Sweden. The which are currently subject to waivers from creditors. On address of the head office is Marknadsvägen 1, SE-457 55 March 23, 2016, an agreement was signed with Swedbank Rabbalshede, Sweden. The consolidated financial state- and SEB regarding further amortization of the bank loans for ments for 2015 relate to the Parent Company and its subsi- Rabbalshede Kraft AB, Töftedal Vind AB, Årjäng Nordväst diaries, jointly designated the Group.

The Board of Directors and CEO give their assurance that the consolidated financial statements have been compiled in compliance with International Financial Reporting Standards (IFRS) adopted by the EU and provides a fair and accurate view of the financial position and earnings of the Group. The Annual Report was compiled in compliance with generally accepted accounting policies and provides a fair and accurate view of the financial position and earnings of Parent Company. The administration reports for both the Group and the Parent Company accurately review the Group’s and the Parent Company’s operations, financial positions and earnings and describe the significant risks and uncertainties facing the Parent Company and the companies included in the Group. The Annual Report and the consolidated financial statements were approved for issue by the Board of Directors on April 29, 2016. The Parent Company’s and Group’s balance sheets and income statements will be presented to the Annual General Meeting on June 1, 2016 for adoption.

Rabbalshede April 29, 2016

Karl-Erling Trogen Chairman of the Board

Reine Rosén Karin Kronstam Board member Board member

Jérome David Jean Baptiste Oldenhove Anders Strålman Board member Board member Board member

Thomas Linnard CEO

Our audit report was submitted on May 12, 2016. Ernst & Young AB

Stefan Kylebäck Authorized Public Accountant 69 AUDITOR’S REPORT RABBALSHEDE KRAFT ANNUAL REPORT 2015

AUDITORS’ REPORT

To the Annual General Meeting of Rabbalshede Kraft AB prepared in accordance with the Annual Accounts Act and give (publ.), Corp. Reg. No. 556681-4562 a true and fair view, in all material respects, of the Group’s financial position as of 31 December 2015 and of its financial REPORT ON THE ANNUAL ACCOUNTS AND performance and cash flows for the year according to Interna- CONSOLIDATED ACCOUNTS tional Financial Accounting Standards, as adopted by the EU, We have audited the annual accounts and the consolidated and the Annual Accounts Act. A Corporate Governance Report accounts for Rabbalshede Kraft AB (publ.) for the 2015 fiscal has been prepared. The Administration Report and Corporate year. The company’s annual accounts and consolidated Governance Report are consistent with the other parts of the accounts are included in the printed version of this document annual accounts and the consolidated on pages 27–67. accounts. We therefore recommend that the Annual General Meeting Responsibilities of the Board of Directors and the CEO for of Shareholders adopt the Income Statement and the Balance the annual accounts and the consolidated accounts Sheet for the Parent Company and the Group. The Board of Directors and the CEO are responsible for the preparation and presentation of annual accounts that give a REPORT ON OTHER LEGAL AND REGULATORY REQUIRE- true and fair view in accordance with the Annual Accounts Act MENTS and consolidated accounts that give a true and fair view in In addition to our audit of the annual accounts and the consoli- accordance with International Financial Accounting Standards, dated accounts, we have also examined the proposal for app- as adopted by the EU, and the Swedish Annual Accounts Act, ropriations of the company’s profit or loss and the and for such internal control as the Board of Directors and the administration of the Board of Directors and the CEO of Rab- CEO deem is necessary for the preparation of annual accounts balshede Kraft AB (publ.) for 2015. and consolidated accounts that are free from material misstatement, whether due to fraud or error. Responsibilities of the Board of Directors and the CEO The Board of Directors is responsible for the proposal for app- The Auditors’ responsibility ropriations of the company’s profit or loss, and the Board of Our responsibility is to express an opinion on the annual Directors and the CEO are responsible for the administration of accounts and the consolidated accounts based on our audit. the company under the Companies Act. We conducted our audit in accordance with International Stan- dards on Auditing and generally accepted auditing standards in The Auditors’ responsibility Sweden. These standards require that we comply with ethical Our responsibility is to express an opinion with reasonable requirements and plan and perform the audit to obtain reaso- assurance on the proposed appropriations of the company’s nable assurance that the annual accounts and consolidated profit or loss and on the administration of the company based accounts are free from material misstatement. on our audit. We have conducted the audit in accordance with An audit involves performing procedures to obtain audit evi- generally accepted auditing standards in Sweden. dence about the amounts and disclosures in the annual As a basis for our opinion on the Board of Directors’ propo- accounts and consolidated accounts. The auditor decides sed appropriations of the company’s profit or loss, we exami- which procedures are to be performed by assessing the risks ned whether the proposal is in accordance with the Swedish of material misstatements in the annual accounts and the con- Companies Act. solidated accounts, whether due to fraud or error. In performing As a basis for our opinion concerning discharge from liabili- this risk assessment, the auditor considers those parts of the ty, in addition to our audit of the annual accounts and the con- company’s internal control that are relevant to the preparation solidated accounts, we examined significant decisions, actions of the annual accounts and the consolidated accounts in order taken and circumstances of the company in order to be able to to give a true and fair view for the purpose of designing audit determine the liability, if any, to the company of any Board procedures that are appropriate in the circumstances, but not member or the CEO. We also examined whether any Board for the purpose of expressing an opinion on the effectiveness member or the CEO has, in any other way, acted in contraven- of the company’s internal control. An audit also involves evalu- tion of the Swedish Companies Act, the Annual Accounts Act ating the appropriateness of the accounting policies used and or the Articles of Association. the reasonableness of accounting estimates made by the We believe that the audit evidence we have obtained is suf- Board of Directors and the CEO, as well as evaluating the over- ficient and appropriate to provide a basis for our audit opini- all presentation of the annual accounts and the consolidated ons. accounts. We believe that the audit evidence we have obtained is suf- Opinions ficient and appropriate to provide a basis for our audit opini- We recommend that the Annual General Meeting appropriate ons. the profit in accordance with the proposal in the Administration Report and discharge the members of the Board and the CEO Opinions from liability for the financial year. In our opinion, the annual accounts have been prepared in accordance with the Annual Accounts Act and give a true and Gothenburg, May 12, 2016 fair view, in all material respects, of the Parent Company’s financial position as of December 31, 2015 and of its financial Ernst & Young AB performance and cash flows for the year according to the Annual Accounts Act. The consolidated accounts have been Stefan Kylebäck Authorized Public Accountant 70 Ongoing service on a wind turbine in the Brattön wind farm

71 SENIOR EXECUTIVES AND AUDITOR RABBALSHEDE KRAFT ANNUAL REPORT 2015

SENIOR EXECUTIVES AND AUDITOR

Thomas Linnard Lars Larsson Fredrik Samuelsson CEO Operation Manager Finance Manager Year employed: 2008 Year employed: 2015 Year employed: 2012 Other assignments: - Other assignments: Board member of SVE- Experience: Chief accountant at MQ Experience: CEO of Mjuk Biltvätt Sweden BIO since 2008 Holding AB 2008-2012, Auditor at Ernst & AB (2003-2008) Education: Forest Technician, IFL Entrepre- Young AB 1998-2008 Education: Structural engineer and gradu- neurship course and IHM Product owner Education: Master’s degree in economics ate economist with a focus on marketing course Born: 1972 Born: 1973 Completed assignments in the past five years: Number of shares in Rabbalshede Kraft: 0 Number of shares in Rabbalshede Kraft: Göteborg Energi (2001-2015, Sales Mana- 19,796 Class B shares with related par- ger since 2013), Partille Energi (CEO 2012- ties* 2015), Ale Fjärrvärme (CEO 2006-2015), DinEl AB (Board member 2012-2013), the Swedish Consumer Energy Markets Bureau (Board member 2012-2015). Born: 1962 Number of shares in Rabbalshede Kraft: 1,000 Class B shares

Authorized Public Accountant

At the 2015 AGM, Ernst & Young AB was re- elected as the company’s auditor, whereupon the following person was appointed as the Chief Auditor:

Stefan Kylebäck, born: 1965. Authorized Public Accountant and member of FAR, Active in Ernst & Young AB in Gothenburg

Britta Ersman, Peter Bjelkengren IR and Financial Manager Purchasing and Construction Manager Year employed: 2015 Year employed: 2010 Education: Bachelor’s degree in business Experience:Purchasing consultant 1997– administration from the Gothenburg 2010, Head of Purchasing at Wärtsilä Die- School of Economics selkraftverksenhet 1992–1997 and Completed assignments in the past five years: Manager of Private Equity at the Second Purchaser at SAAB Automobile 1987– Swedish National Pension Fund 1992 Born: 1975 Education: Upper-secondary level mechani- Number of shares in Rabbalshede Kraft: cal engineering 9,900 Class B shares Born: 1958 Number of shares in Rabbalshede Kraft: 0

* The holdings encompass personal holdings, or holdings of a wife/husband/ cohabitant, sibling or relative in a direct line of ascent as well as legal entities where the person has a controlling influence.

The company management’s holdings refer to information at January 31, 2016

72 BOARD OF DIRECTORS RABBALSHEDE KRAFT ANNUAL REPORT 2015

BOARD OF DIRECTORS

Karl-Erling Trogen Karin Kronstam Anders Strålman Elected to Rabbalshede Kraft’s Board of Elected to Rabbalshede Kraft’s Board of Elected to Rabbalshede Kraft’s Board of Directors in 2009, Chairman of the Board Directors in 2007 Directors in 2011 since 2011 Other assignments/positions: Kamarilla AB Other assignments/positions: Axfood AB Other assignments: Elne Consulting AB (Chairman of the Board and CEO, 2001-) (President and CEO 2005-), Svensk Dag- (Chairman of the Board 2013–) Posifon AB Board member (2014-) ligvaruhandel, Bergendahls El Holding AB Education: Master’s in Engineering Praktikertjänst AB (Board member 2009-) (Board member 2010-), Svensk Handel AB Born: 1946 Education: Bachelor of Science in Socio- (Board member 2007-) and Returpack Number of shares in Rabbalshede Kraft: logy, Master of Business Administration Svenska AB (Board member 2008-) 1,435,900 Class B shares through compa- Born: 1950 Education: MSc. Econ. nies and related parties* Number of shares in Rabbalshede Kraft: Born: 1953 73,550 Class B shares Number of shares in Rabbalshede Kraft:

Reine Rosén Jérôme David Jean Baptiste Oldenhove Elected to Rabbalshede Kraft’s Board of Elected to Rabbalshede Kraft’s Board of Elected to Rabbalshede Kraft’s Board of Directors in 2007 Directors in 2014 Directors in 2014 Other assignments/positions: Ernst Rosén AB Other assignments: Treis Partners LLP (Part- Other assignments: Treis Partners LLP (Part- (Chairman of the Board in the Group ner 2012-). Treis Gestion SA (Board mem- ner 2012-), Supervisory Board of CycleEn- 2006-) ber 2013-), Treis Management Limited ergy Biomass Power AG (Board member Education: Structural engineer (Board member 2010-), Treis Asia Private 2012-), Agrinos AS (Board member 2013- Born: 1951 Limited (Board member 2013-), Manor ), Manor Advisory Services Limited(Board Number of shares in Rabbalshede Kraft: Investment SA. (Board member xxx-) and member 2015-) and Manor Investment SA. 345,000 Class A shares and 16,029,882 Manor Estates Holding Proprietary Limited (CEO 2015-) Class B shares through companies and (Board member 2015-) related parties* Education: Master in General Management Education: Master of Science in Enginee- Born: 1971 ring, Master of Business Administration Number of shares in Rabbalshede Kraft: Born: 1976 Number of shares in Rabbalshede Kraft:

The Board of Directors’ holdings refer to information at January 31, 2016

73 WIND POWER – CAPACITY AND ENERGY RABBALSHEDE KRAFT ANNUAL REPORT 2015

WIND POWER – CAPACITY AND ENERGY

Capacity is used as a measurement for how much elec- How capacity is related to energy: Electricity produc- tricity a power plant can produce optimally. Capacity is tion is governed by demand, with a considerable diffe- measured in watts (W). The size of the wind turbine and rence between day and night, weekdays and weekends, other power plants is indicated in capacity units of milli- and particularly summer and winter. The combined ons of watts, meaning megawatts (MW). power requirement varies between 15,000–26,000 MW and, for shorter periods, may be both lower or higher. Energy, in this context, refers to the electrical energy that Hydroelectric power is the primary source used to regu- is produced and subsequently sold to the electricity mar- late production when, for example, the wind drops. ket. Energy refers to electricity production/consumption Over the years, wind turbines have grown in size and per time unit, normally per hour. capacity. Several of Rabbalshede Kraft’s newest plants Electricity bills to households use the energy unit of have a capacity of 3 MW and are capable of producing a kilowatt hours (kWh), a thousand watts per hour. Produc- maximum of 3 MWh per hour, meaning 3,000 kWh. tion uses the larger megawatt hours (MWh) energy unit, Electricity production is often stated in terms of the which is one thousand kilowatt hours. However, even this number of households or detached houses that the elec- unit results in a cumbersome amount of zeros when indi- tricity has the capacity to provide for during a year. Assu- cating a country’s electricity production and consump- ming that a detached house with a heat pump consumes tion. In such cases, a terawatt hour (TWh) unit is used, 15,000 kWh annually, this corresponds to five hours of which is one million megawatt hours and thus a billion production by one of Rabbalshede Kraft’s newest wind kilowatt hours. turbines, providing it is windy and the plant is operating Last year, Sweden consumed 135.7 TWh, while total at full capacity. production was 158.3 TWh, of which 16.6 TWh originated from wind power, meaning about 10 percent. The energy surplus was exported to our neighboring countries.

Unit Number of kWh Comments

kWh (kilowatt hour) 1 Powers an LED bulb with an output of 5W for 200 hours.

MWh (megawatt hour) 1,000 Electricity is traded in energy units of megawatt hours.

Seldom used. On the other hand, capacity units of GW are often used by GWh (gigawatt hour) 1,000,000 power companies to describe total production capacity.

Used for purposes such as describing the country’s total electricity production TWh (terawatt hour) 1,000,000,000 and consumption.

74 GLOSSARY RABBALSHEDE KRAFT ANNUAL REPORT 2015

Glossary

Return on equity: Electricity certificates: Net income for the period/average shareholders’ equity Purchasable and saleable certificates obtained through the production of renewable electricity Return on capital employed: Profit before tax plus financial expenses/average capital employed EPA (Electricity Certificates Purchase Agreement) A fixed price contract for every kWh produced for electricity certificates Total assets: The total value of all of the assets held by the company Peak-load hours: The total number of hours per year that a wind turbine is expected to EBIT: generate electricity corresponding to its full capacity Operating profit before financial items and taxes NCN EBIT margin: Wind-farm electricity grids are Non Concession-bound Networks. In EBIT as a percentage of net sales excluding the sale of projects accordance with Sweden’s Electricity Act, the construction of high-ten- EBITDA: sion power lines requires permits and network concessions. Exceptions Operating profit before depreciation, amortization and impairments are made for wind-farm networks EBITDA margin: Quota curve, quota adjustment: EBITDA as a percentage of net sales excluding the sale of projects Electricity consumers, households, and the industrial and public sectors, are obliged to purchase a specific percentage of electricity certificates in Shareholders’ equity per share: relation to their electricity consumption. This is regulated through quotas Shareholders’ equity divided by the number of shares varying between the years 2012 to 2035, referred to as the quota curve. IRR The Swedish parliament’s raising of the quotas from 2016 are known as Internal rate of return – a measurement of the average annual return quota adjustments from an investment in company EIA Net debt: An Environmental Impact Assessment describes the direct and indirect Interest-bearing liabilities less cash and cash equivalents impact of wind power on natural and cultural environments, recreational Earnings per share: amenities and public health. Profit after tax divided by the number of shares Normal year, average wind year Debt/equity ratio A normal wind-power year (also referred to as an average wind year) is Interest-bearing liabilities/shareholders’ equity the measurement of the average wind energy at a given location. As established based on the Swedish Meteorological and Hydrological Equity/assets ratio: Institute’s ten-year forecast Shareholders’ equity as a percentage of total assets PPA (Power Purchase Agreement) Capital employed: A fixed price contract for every kWh of electricity produced Total assets less non-interest-bearing liabilities Profile risk Profile risk pertains to the difference between the selling price under futures, which is fixed during the day, and the actual spot price when electricity is delivered during the day. SODAR Acronym for Sound Detection and Ranging, a technique for measuring wind speed and direction using sound waves. Spot market/spot price A market for trading through immediate deliveries managed in the Nord- ic region by Nord Pool. System price A weighted spot price at Nord Pool. Forwards market/futures price A market where buyers and sellers agree on a fixed price for a future delivery of, for example, electricity. Managed in the Nordic region by Nasdaq OMX Commodities. Contracts are also directly signed as bilate- ral agreements between buyers and sellers. Emission right Emission rights entitle the holder to discharge a fixed amount of carbon dioxide and may be purchased or sold through channels such as Nas- daq OMX Commodities. Wind farm A grouping of wind turbines within a demarcated area.

75 Rabbalshede Kraft AB (publ) Marknadsvägen 1 SE-457 55 Rabbalshede, Sweden

Switchboard: +46 (0) 525 197 00 Fax: +46 (0) 525 197 99 www.rabbalshedekraft.se

Production: UB Adviser Graphic design: Sjö&Berg Photography: www.töcksfors.se, www.ottossonphoto.com, Jörgen Karlsson Rabbalshede Kraft