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 comprehen- sive 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.