NELJA ENERGIA AS Unaudited interim condensed consolidated financial statements for the semi-annual period ended on 30 June 2018 NELJA ENERGIA AS Interim Condensed Report of the Consolidation Group 2018 Semi-Annual Condensed Report of the Consolidation Group NELJA ENERGIA AS Beginning of the reporting period: 1 January 2018 End of the reporting period: 30 June 2018 Business name: Nelja Energia AS Registry code: 11183009 Address: Regati pst 1 Tallinn 11911 County: Harju County Country: the Republic of Estonia Phone: +372 6 396 610 Fax: +372 6 396 620 2 NELJA ENERGIA AS Interim Condensed Report of the Consolidation Group 2018 Contents Management report ...............................................................................................................................4 Highlights of 2018 H1 ........................................................................................................................4 Corporate overview ...........................................................................................................................7 Operating environment ................................................................................................................... 11 Corporate Governance ................................................................................................................... 12 Risk Management .......................................................................................................................... 14 Management Board’s Confirmation ................................................................................................... 18 Condensed consolidated financial statements .................................................................................. 19 Condensed consolidated statement of comprehensive income ........................................................ 19 Condensed consolidated statement of financial position ................................................................... 20 Condensed consolidated statement of cash flows............................................................................. 21 Condensed consolidated statement of changes in equity ................................................................. 22 Notes to the condensed consolidated financial statements ............................................................... 24 1. Corporate information .................................................................................................................... 24 2.1 Basis of preparation ..................................................................................................................... 24 2.2 Basis of consolidation .................................................................................................................. 24 2.3 Changes in accounting policies and disclosures ......................................................................... 25 2.4 Significant accounting judgements, estimates, assumptions ...................................................... 27 3. Segment information ...................................................................................................................... 28 4. Sale of goods and services ............................................................................................................ 30 5. Other income/expense and adjustments ....................................................................................... 30 5.1 Other operating income ............................................................................................................ 30 5.2 Goods, raw materials and services .......................................................................................... 31 5.3 Employee-related expenses ..................................................................................................... 31 5.4 Finance costs ........................................................................................................................... 31 6. Income tax...................................................................................................................................... 32 7. Property, plant and equipment ....................................................................................................... 33 8. Intangible assets ............................................................................................................................ 33 9. Goodwill ......................................................................................................................................... 34 10. Financial assets and financial liabilities ....................................................................................... 35 10.1 Financial assets ...................................................................................................................... 35 10.2 Financial liabilities .................................................................................................................. 36 10.2.1 Loans from banks ................................................................................................................ 37 10.2.2 Other borrowings ................................................................................................................. 38 10.3 Financial instruments ............................................................................................................. 39 10.4 Fair values .............................................................................................................................. 40 10.5 Financial risk management objectives and policies ............................................................... 40 11. Inventories ................................................................................................................................... 42 12. Cash and short-term deposits ...................................................................................................... 42 13. Issued capital and reserves ......................................................................................................... 42 14. Distributions made and proposed ................................................................................................ 43 15. Government grants ...................................................................................................................... 43 16. Commitments and contingencies ................................................................................................. 44 16.1 Operating lease commitments - Group as lessee .................................................................. 44 16.2 Finance lease commitments .................................................................................................. 44 16.3 Guarantees ............................................................................................................................. 45 17. Related party transactions ........................................................................................................... 46 Statement by the management board ............................................................................................... 48 3 NELJA ENERGIA AS Interim Condensed Report of the Consolidation Group 2018 Management report Highlights of 2018 H1 Production Average wind speed in Nelja Energia wind parks in 2018 H1 were below long-term average. Average wind speed in 2018 H1 at hub height of wind farms in Estonia was 6,0 m/s compared to 6,4 m/s in 2017. Average wind speed in 2018 H1 at hub height of wind farms in Lithuania was 5,9 m/s compared to 6,2 m/s in 2017. Nelja Energia wind farms produced 313,8 GWh in 2018 H1, 14% less than in 2017 H1. Estonian wind farms produced 131,3 GWh in 2018 H1, 21% less than in 2017 H1 and Lithuanian wind farms produced 182,6 GWh, 9% less than in 2017 H1. Production of the wind farms Subsidy start 2018 H1 2017 H1 % change GWh Silute 2016 97,0 104,6 -7% Ciuteliai 2013 41,7 47,6 -12% Silale 2011 18,4 17,8 3% Mockiai 2011 14,4 16,5 -13% Sudenai 2009 11,1 13,9 -20% Ojaküla - 6,8 8,2 -17% Aseri 2012 17,9 23,9 -25% Pakri 2004 19,8 23,7 -17% Paldiski 2013 23,3 26,9 -14% Vanaküla 2010 6,8 9,0 -24% V-Nigula 2013 15,0 21,4 -30% Tooma II 2017 7,3 8,6 -16% Tooma 2010 14,1 18,3 -23% Esivere 2005 6,3 8,7 -28% Virtsu III 2010 6,5 7,7 -15% Virtsu II 2008 6,2 7,7 -19% Virtsu I 2002 1,3 1,6 -17% Total 313,8 366,1 -14% Significant events Nelja Energia AS to be acquired by Enefit Green AS (subsidiary of Eesti Energia AS). The share purchase agreement signed on the 29th of May valued Nelja Energia’s equity at EUR 289 million. Closing of the transaction is pending on customary approvals. As part of the transaction process minority shareholdings in Marble Management and Marble Invest were divested. In April 2018 the management of Latvia’s management company, formerly 4 Energia SIA, exercised its right to acquire 5% of the shares in the firm. To execute the transaction the company’s statute was changed from a private limited company to a public limited company. The firm’s new legal name is 4 Energia AS. Financial results Main factors having impact to the financial results were following: ➢ Wind speed potential is essential for every wind turbine and depends on both average wind speed and availability ➢ Availability along with efficiency and the wind turbines total effect determines the total electricity production ➢ In addition to production volume, revenues are generally a function of the electricity price and other revenue