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EAM Solar
Annual / Quarterly Financial Statement • Feb 28, 2023
3583_rns_2023-02-28_582d161a-a5d6-4a6a-b2be-6bbfbce804ea.pdf
Annual / Quarterly Financial Statement
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EAM SOLAR ASA Q4 REPORT 2022
Interim condensed consolidated financial statements for the period ended 31 December 2022
CONTENTS
Financial report
| Highlights Q4 2022 | 3 |
|---|---|
| Key figures | 3 |
| Interim report | 5 |
| Strategic review and outlook | 5 |
| Solar PV power plant review and outlook | 6 |
| Litigation activity review | 6 |
| Subsequent events | 10 |
| Financial review | 10 |
| Balance sheet | 10 |
Financial statements
| Consolidated statement of comprehensive income | 12 | |
|---|---|---|
| Consolidated statement of financial position | 13 | |
| Consolidated statement of cash flow | 14 | |
| Consolidated statement of changes in equity | 15 | |
| Notes to the interim consolidated financial statements | 16 | |
| Note 01 | Basis for preparation | 16 |
| Note 02 | Significant accounting judgements | 16 |
| Note 03 | Currency exposure | 16 |
| Note 04 | Transactions with related parties | 17 |
| Note 05 | Segment information | 17 |
| Note 06 | Financial income and expenses | 17 |
| Note 07 | Cash and cash equivalents | 17 |
| Note 08 | Accounts receivables | 17 |
| Note 09 | Property, plant and equipment | 18 |
| Note 10 | Short- and long-term debt | 18 |
| Note 11 | List of subsidiaries | 19 |
| Note 12 | Operational costs break-down FY 2022 | 20 |
| Note 13 | Events after the balance sheet date | 20 |
HIGHLIGHTS Q4 2022
- EBITDA for the quarter was minus EUR 477 thousand and accumulated for the year minus EUR 1 051 thousand. Normal operations, adjusted for legal costs resulted in an EBITDA of minus EUR 118 thousand for the quarter and EUR 27 thousand accumulated for the year, equivalent to an adjusted EBITDA margin of minus 54 per cent and 2 per cent respectively.
- Cost of operations and SG&A were EUR 59 thousand and EUR 280 thousand for the quarter and EUR 244 thousand and EUR 950 thousand accumulated for the year respectively.
- Legal costs were EUR 359 thousand in the quarter and EUR 1 078 thousand accumulated for the year.
- On 31 January 2023 the Company announced the resignation of the Chair of the Board of Directors, Mrs. Ragnhild Wiborg. The resignation comes as consequence of her assuming the role as Chair of the Board of Directors in Energeia AS, the manager of the Company.
Key figures
| Unaudited | Unaudited | Unaudited | Audited | |
|---|---|---|---|---|
| EUR 000' | Q4 2022 | Q4 2021 | 2022 | 2021 |
| Revenues | 220 | 303 | 1 221 | 1 334 |
| Cost of operations | (59) | (72) | (244) | (237) |
| Sales, general and administration expenses | (280) | (279) | (950) | (890) |
| Legal costs | (359) | (847) | (1 078) | (2 499) |
| EBITDA | (477) | (895) | (1 051) | (2 292) |
| Depreciation, amortizations and write downs | (141) | (141) | (564) | (562) |
| EBIT | (619) | (1 036) | (1 614) | (2 854) |
| Net financial items | (108) | (303) | 428 | (836) |
| Profit before tax | (727) | (1 339) | (1 187) | (3 690) |
| Income tax gain/(expense) | (115) | (41) | (152) | (85) |
| Net income | (842) | (1 380) | (1 339) | (3 774) |
| Earnings per share (fully diluted): | (0.12) | (0.20) | (0.20) | (0.55) |
| Distribution to shareholders per share | - | - | - | - |
| Dividend yield | - | - | - | - |
| Million no of shares (fully diluted) | 6.85 | 6.85 | 6.85 | 6.85 |
| EBITDA adjusted | (118) | (48) | 27 | 207 |
INTERIM REPORT
EAM Solar ASA ("EAM", "EAM ASA", or "the Company") is a company listed on the Oslo Stock Exchange under the ticker "EAM". The Company's primary business is to own solar power plants and sell electricity under long-term fixed price sales contracts, and to pursue legal proceedings in order to restore company values. The Company owns four power plants in Italy, which are located in the Puglia and Basilicata regions in Southern Italy. Energeia AS manages EAM under a long-term management agreement.
This interim report should be read in combination with the Annual Report 2021 and stock exchange notices in the reporting period.
Strategic review and outlook
The company is in its ninth year of litigation activity following the P31 fraud. Consequently, the company have lost out on opportunities within its initial core business activity in renewable energy.
Following the decision by the Criminal Appeal Court of Milan in January 2021, where the appeal court decided to revoke the first instance judgement of the Criminal Court of Milan, the Board and management of the company deemed it appropriate to conduct a strategic review of the litigation activities and its initial core business activities. The decision in the appeal court was later overturned by the supreme court, see more details below.
Litigation activities
Although criminal complaints have been lodged in relevant jurisdictions against the involved parties in the P31 fraud, the various national police authorities seem to have a challenge in pursuing and investigating cross-border economic crime.
As of today, to our knowledge, no police authority has conducted an appropriate investigation of the fraud of EAM Solar ASA. Therefore, the Board and management has over a period been evaluating the alternative legal measures to be taken to hold the joint venture partners Enovos and Renova/ Avelar et.al. responsible for the P31 fraud. As a result of this evaluation the Company
has decided to file a private criminal proceeding against the company Enovos Luxembourg SA in Oslo District Court.
On Friday 28 May 2021, EAM Solar ASA filed a private criminal proceeding for the crime of serious fraud against the company Enovos Luxembourg SA in Oslo District Court. The private criminal proceeding is initiated in accordance with section 402 of the Norwegian Criminal Procedure Act.
The criminal proceedings are formally initiated by the Oslo District Court. Originally a hearing was set for 31 January and 1 February 2022, but it was later postponed due to illness at the court. A new hearing date was set for 21 April and 22 April 2022.
The hearing took place as scheduled and Oslo District Court will, following the hearing, decide if the fraud charges shall go to main trial proceedings or be rejected.
On 1 July 2022 Oslo District Court, by Judge Flaterud, dismissed EAM Solar ASA's request for a Private Criminal Proceeding against Enovos Luxembourg SA. On 15 July the Company filed an appeal of the decision by the Oslo District Court to the Borgarting Appellate Court. On 21 October Borgarting Court of Appeal rejected EAM Solar ASA's appeal against Oslo District Court's decision to reject the start of a private criminal proceedings against Enovos Luxembourg S.A.
Business development activities
EAM Solar ASA was established by Energeia AS in 2011 and the development of the company EAM Solar ASA and the Energeia
group have been inseparably linked since that time.
As Energeia's shareholders are well aware, the fraud EAM Solar ASA was exposed to in 2014, and which is still subject to prosecution, has had a strictly negative effect on the business development of the Energeia group since that time.
Now that the Energeia Group, through the investments and the work carried out in parallel with the management of EAM Solar ASA, will develop its business within the same business areas that originally and naturally was within the scope EAM Solar ASA, the board in the two companies and the administration are of the opinion that for the sake of the Energeia Group's reputation, and also based on the moral values and obligations that are the basis for the operations in Energeia, it is desirable to offer EAM Solar ASA's shareholders the opportunity to participate in the business development of the Energeia Group independently of the business in EAM Solar ASA.
Over time, talks have been held between the board of Energeia AS and the board of EAM Solar ASA about how the companies can jointly ensure that the shareholders of EAM Solar ASA can take part in the future value creation in the Energeia group without creating legal bindings and preventing the normal business development of Energeia AS.
Based on these discussions, the following solution was proposed and executed:
The Company decided on 15 August to
participate in a private placement whereby EAM Solar ASA at the nominal price of NOK 0.02 per share for a total consideration of NOK 137 044.20, subscribed for 6 852 210 new shares in Energeia AS. This number of shares corresponds to the total number of outstanding shares in the Company.
The private placement was conditional upon the board of EAM Solar ASA calling for an extraordinary general meeting of the Company, where the Board suggested that the received shares in Energeia AS would be distributed as dividends to the shareholders of the Company.
In the extraordinary general meeting that took place on 6 September 2022 it was resolved that all shareholders in EAM Solar ASA received 1 share in Energeia AS for each share they own in EAM Solar ASA. As a result of the share issuance, Energeia's outstanding number of shares increased from 38 049 000 to 44 901 210, corresponding to an increase of 14.42 per cent held by the shareholders of EAM Solar ASA at the time of issuance.
The shares in the Company went ex dividend on 7 September 2022 and were transferred to each shareholder on 3 October 2022.
Solar PV power plant review and outlook Power plants in operation
EAM ASA operated 4 power plants in the quarter. The 4 power plants have a combined installed capacity of 4.0 MW with an average annual power production of 5.4 GWh (P50 production).
Power production
Power production in the quarter was 868 MWh, 12.4 per cent below estimated production due to lower capacity of the power plants caused by thefts. Accumulated for the year power production was 4 653 MWh, 14.5 per cent below estimated production.
Cap on the price of electricity from renewable energy sources in Italy
The Italian government has proposed a cap on the price of electricity from renewable sources known as the "Sostegni-ter Decree".
On 27 January 2022, Law Decree No. 4, known as the "Sostegni-ter Decree", (the "Decree") was published in the Italian Official Journal and entered into force on the same date, in order to mitigate, among others, the impact of the recent energy price increases and to protect consumers. One of the most significant measures introduced by the Decree is the limitation of the windfall profits of certain renewable power plants that have been able to benefit from rising energy prices, set out under Article 16.
On 29 March 2022, Law no. 25 (Sostegni ter Decree) entered into force. The Decree is initially intended to apply from February 2022 to the end of the year.
Following the Decree, the achieved market price of electricity has been limited to EUR 56 per MWh for the Company's power plants in the South of Italy. Based on the information received from GSE and the Decree, the Company has had an estimated electricity sales revenue reduction of EUR 998 thousand for the period from 1 February 2022 to 31 December 2022.
FIT revenues
FIT revenues in the quarter were EUR 49 thousand including the reduction in revenue following the implementation of the Sostegni Ter Decree. and accumulated for the year, they were minus EUR 84 thousand, respectively.
Market price development
Market price revenues in the quarter were EUR 170 thousand representing an average market price of EUR 195 per MWh. Accumulated for the year, market price revenues were EUR 1 300 thousand. This represents and average market price for electricity of EUR 279 per MWh for the period.
Litigation activity review
The P31 Acquisition fraud transformed EAM from an operational Solar PV YieldCo to a company where a significant part of the activity and future value is dependent on various litigation processes.
In July 2014 EAM Solar ASA transferred EUR 30 million to Aveleos SA, a Joint Venture investment vehicle owned by the Enovos group in Luxembourg (59 per cent) and Renova/Avelar group in Switzerland/ Cyprus (41 per cent).
The cash transfer was the initial payment in a EUR 114 million transaction of 31 Solar PV power plants constructed by Aveleos et.al in 2010 and 2011, operational since 2011 with long-term subsidised electricity contracts with the State of Italy.
In July 2014 ownership of shares in companies with 21 of the 31 power plants was transferred to EAM Solar ASA, with the remaining 10 power plants to be transferred by December 2014. This transfer was never conducted.
In August 2014, the State of Italy suspended payment of electricity delivered under the long-term subsidy contracts for 17 of the 21 transferred power plants. In June 2016 the competent Italian court ruled that it was a final legal fact that the 17 power plants did not have valid subsidized "feed in tariff" contracts and as such lost all its value.
During the criminal proceedings commencing in 2016, EAM received evidence that the Prosecutors office of Milan already in 2012 had initiated a broad investigation into Aveleos et.al. for fraud against the state of Italy in relation to subsidized electricity contracts. This fact was known to the directors of Aveleos prior to negotiating a sale of the power plants to EAM Solar ASA.
The Enovos/Renova/Aveleos group has failed to honour their contractual obligations and has as such has dragged EAM Solar ASA into a prolonged and costly process of losses, litigations and lawsuits.
EAM Solar ASA filed criminal complaints for fraud to the national police authorities in Italy in 2014, Luxembourg 2016 and in Norway 2018/2019.
Criminal proceedings in Oslo
On Friday 28 May 2021, EAM Solar ASA filed a private criminal proceeding for the crime of serious fraud against the company Enovos Luxembourg SA in Oslo District Court. The private criminal proceeding is initiated in accordance with section 402 of the Norwegian Criminal Procedure Act.
The criminal proceedings are formally initiated by the Oslo District Court. The parties filed their arguments in briefs to the Court.
The Oslo District Court has decided to conduct a court hearing in the fraud case against Enovos Luxembourg SA. The hearing was expected to take place in Oslo District Court on 31 January and 1 February 2022.
On 28 January 2022 EAM Solar ASA was informed by the Oslo District Court administration that the hearing in the private criminal proceedings against Enovos Luxembourg SA in Oslo District Court scheduled for Monday 31 January and Tuesday 1 February 2022 had been postponed due to sickness. A new hearing date was set for 21 April and 22 April 2022.
The hearing took place as scheduled and Oslo District Court will, following the hearing, decide if the fraud charges shall go to main trial proceedings or be rejected.
On 1 July 2022 Oslo District Court, by Judge Flaterud, dismissed EAM Solar ASA's request for a Private Criminal Proceeding against Enovos Luxembourg SA.
On 4 July 2022 the Company decided to appeal the decision by the Oslo District Court to the Borgarting Appellate Court. EAM Solar ASA and its legal counsel deem that the reasons for an appeal are substantiated in both factual errors as well as wrongful interpretation of the law in the decision made by the Oslo District Court on 1 July 2022.
On 15 July, the Company filed an appeal of the decision by the Oslo District Court to the Borgarting Appellate Court. The Company and its legal counsel deem that the decision by the Oslo District court dated 1 July is incorrect in both facts as well as law.
On 21 October Borgarting Court of Appeal rejected EAM Solar ASA's appeal against Oslo District Court's decision to reject the start of a private criminal proceedings against Enovos Luxembourg S.A.
According to the Borgarting Court of Appeal, the fraud against EAM Solar ASA should not be brought before a Norwegian court in a private criminal proceedings since this is not in the public interest. The Court of Appeal concludes that the fraud case falls under the jurisdiction of the Norwegian Criminal Code, and writes in its ruling that:
"The evidence and evidentiary arguments that EAM has shown points overall to the fact that Enovos' representatives on the board of Aveleos had so much information about the suspicion and the investigation related to false documents about the country of origin, which in turn had an impact on the right to subsidies, that it meant that EAM was misled by Enovos in connection with the purchase."
The Borgarting Court of Appeal, however, concludes in its assessment of the case's evidence "at a more general level" that there is "reasonable doubt as to whether EAM will be able to provide sufficient evidence of criminal guilt".
Criminal proceedings in Milan
In January 2015 the prosecutor's Office of Milan filed a request for trial to the Criminal Court of Milan against 9 individuals for fraud against the State of Italy in conjunction with subsidized electricity sales contracts.
The Criminal Court proceedings in Milan involved only the two Avelar appointed directors of Aveleos that was involved in the fraud against EAM. The four Enovos appointed directors active in negotiating with EAM has so far not been subject to any investigation or indictment.
In March 2016 the Criminal Court of Milan accepted the request for trial and decided that EAM Solar ASA should be included as a victim in the criminal proceedings.
The criminal proceedings commenced in June 2016, and on 18 April 2019 the Criminal Court of Milan published its decision. The Criminal Court of Milan found it evidenced in 2019 that the indicted Aveleos directors, Mr Giorgi and Mr Akhmerov, was guilty of criminal contractual fraud against EAM Solar ASA in conjunction with the sale of the P31 portfolio and sentenced them to prison terms and provisional damages of EUR 5 million. Aveleos S.A., as civil liable party, was condemned to be financially responsible for the same provisional damage. The Criminal Court of Milan published a 300-page long detailed reason for their ruling on 15 October 2019.
The ruling by the Criminal Court of Milan was appealed by several parties, and the appeal procedure in the Criminal Court
of Appeal of Milan commenced with one hearing in October 2020 and two hearings in December 2020.
On 20 January 2021, the Criminal Appeal Court of Milan decided to revoke the first instance judgement of the Criminal Court of Milan. Consequently, Akhmerov and Giorgi were acquitted by the Court for all points of indictment related to fraud against the State of Italy and EAM Solar ASA, including the ruling to hold Aveleos financially liable for the acts conducted by Akhmerov and Giorgi.
The Appeal Court's decision was a two-page notice identifying the decisions without presenting arguments or explanations for the revocation of the Criminal Court of Milan decision of April 2019. The arguments and evidence base for the decision by the Criminal Appeal Court was made available to the parties on 20 April 2021, 90 days from the date of the decision.
Following the reception of the full judgement from the Milan Criminal Court of Appeal, EAM Solar ASA decided to join with the Prosecutor's Office in Milan in appealing to the Italian Supreme Court of Cassation. The appeal was submitted on 1 June 2021 to the Supreme Court of Cassation.
EAM Solar ASA seeks to reinstate the convictions of Igor Akhmerov and Marco Giorgi for the crime of fraud against EAM.
The appeal was based on several cases of misinterpretation of facts in the grounds for judgment by the Milan Criminal Court of Appeal.
The Supreme Court of Italy held a hearing on 6 October 2021 on the appeal of the acquittal sentence decided by the Milan Criminal Court of Appeal issued 20 January 2021.
On 7 October 2021, the Company was informed that the Supreme Court of Italy decided to annul the 20 January 2021 judgment of acquittal by the Milan Criminal Court of Appeal in the subsidy fraud case against the State of Italy and contractual fraud against EAM Solar ASA.
Late November 2021 the Supreme Court issued its full decision for the annulment of the acquittal ruling. The short summary of the reason for the Supreme Court to annul the Milan Appeal Court acquittal decision
in its entirety is that the Supreme Court found that the Milan Appeal Court did not fulfil its obligation to conduct a correct and comprehensive review of the factual evidence in the criminal case, resulting in an erroneous evaluation of the evidence with the effect that the acquittal decision was based on obvious inconsistent and illogical arguments.
The Supreme Court is sending the criminal case back to a different chamber of the Milan Appeal Court for a new proceeding in the criminal case with the requirement that the new court proceedings must proceed with a complete review of the evidence, making correct application of the principles of law and the rules of logic as formulated in the Supreme Court decision.
On the fraud of EAM, the Supreme Court concludes that the evidenced withholding of essential information during the contractual negotiations in itself constitute a contractual fraud.
There has still not been a date set for any further appeals following the decision of the Italian court of Cassation.
New criminal investigation for subsidy fraud in Italy
On 28 October 2020, EAM Solar ASA was informed that the Prosecutor of the Criminal Court of Bolzano had ordered Guardia Di Finanza (the financial police) to perform a "search and seizure" of documents from 57 Italian companies owning 58 Solar PV power plants with subsidized electricity sales contracts towards the State of Italy (GSE). The search and seizure were conducted in relation to an ongoing investigation into subsidy fraud against the State of Italy.
The Milan office of EAM Solar ASA's Italian subsidiaries (ENS Solar One Srl, Energia Fotovoltaica 25 Srl and EAM Solar Italy Holding Srl) were visited by officers of Guardia Di Finanza who retrieved documentation related to the above-mentioned companies. In addition, the search and seizure order also identified Energia Fotovoltaica 14 Srl, which already is part of the criminal proceedings in Milan and was sent into bankruptcy in 2016.
The search and seizure order issued by the Prosecutor identified 79 individuals as persons of interest to the public prosecutor. Viktor E Jakobsen, CEO of EAM Solar ASA, holds the position as Sole Managing Director in ENS Solar One Srl, ENFO 14 Srl and ENFO 25 Srl, and is consequently named as one of the 79 individuals.
With this new investigation, and the existing criminal proceedings in Milan, all power plants sold to EAM Solar ASA by Enovos and Avelar through their Joint Venture Aveleos SA, are subject to criminal proceedings or under investigation for subsidy fraud against the state of Italy.
In January 2021, EAM Solar ASA learned that the Bolzano Public Prosecutor requested the Norwegian National Authority for Investigation and Prosecution of Economic and Environmental Crime ("Økokrim") to search the offices of EAM Solar ASA in relation to the above-mentioned investigation.
EAM Solar ASA has been in a continuous dialogue with Økokrim since 2017 in relation to the fraud conducted against the company in 2014.
Following the request from Bolzano, Økokrim was invited to EAM Solar ASA's offices for voluntary transfer of relevant documents. This was conducted on 21 January 2021. EAM Solar ASA will continue to support the investigation to the extent requested by Økokrim and the Prosecutors office of Bolzano.
EAM Solar ASA was informed on 3 March 2021 that the Criminal Court of Bolzano, on the request of the Public Prosecutor, has decided that the Company's CEO, Viktor E Jakobsen, no longer is considered as a "person of interest" (suspect) in the ongoing investigation.
The Norwegian National Authority for Investigation and Prosecution of Economic and Environmental Crime ("Økokrim") is fully informed of the change in status of the Company's CEO.
No provisions are made in the accounts on this matter.
Arbitration
Following the final legal ruling by the Administrative Court of Lazio in June 2016 that the 17 terminated FIT contracts were invalid, the Company summoned Aveleos S.A. in September 2016 to the Milan Chamber of Arbitration requesting the Share Purchase Agreement between the parties to be declared null and void based on fundamental breach of contract.
On 2 April 2019 a final award was made by the Arbitral Tribunal of the Milan Chamber of Arbitration. The Arbitration decision was not unanimous, with one of three arbitrators dissenting to dismissing the claims brought by EAM Solar ASA. The dissenting opinion was published together as an integrated part of the of the arbitration ruling.
The majority of the Tribunal decided to dismiss EAM's claims for the annulment and termination of the SPA. However, the Tribunal declared the right of the Company to be compensated for losses suffered in connection with the breach of the Representation and Warranties under the SPA within the limits of the liability cap of approximately EUR 3.7 million as defined in the SPA.
On 4 July 2019 EAM Solar ASA filed an appeal against the Arbitration Tribunal decision. The appeal was filed in the civil Court of Appeal of Milan. EAM Solar ASA asks the Civil Court of Appeal of Milan to annul the arbitration award of 2 April 2019 based on 12 different accounts of breach of Italian law in its conclusions and the basis for the arbitration award.
The first hearing in the appeal proceedings was held in January 2020, and the Appeal Court accepted the request for appeal. The first hearing of the appeal process was scheduled to take place in February 2021, but the Appeal Court decided that the hearing would be replaced by submission of briefs by the parties.
On 23 June 2021 the Civil Court of Appeal of Milan decided to dismiss the request for the annulment of the Arbitration award from 2019.
The Arbitration decision of 2019 is still not final since EAM decided to appeal the dismissal by the Civil Appeal Court in Milan to the Supreme Court in Italy within the deadline on 22 September 2021.
New Arbitration in Milan
On 5 October 2020, the Arbitration Chamber of Milan notified EAM Solar ASA and its subsidiary EAM Solar Italy Holding Srl that Aveleos SA had filed for two new arbitration proceedings in relation to the P31 SPA with reference to shareholder loans and corporate guarantees. The two proceedings have later been merged into one proceeding.
Each party has appointed an arbitrator that together has appointed a chairman. A first hearing after the formation of the arbitration panel has been conducted. The proceedings were originally scheduled by the court to end on or about the first quarter 2022. This was later extended by 6 months until the end of September 2022.
The proceedings have been delayed compared to what was originally anticipated. The Arbitration Tribunal has appointed a 3rd party financial evaluator to assess the amounts claimed under this second arbitration, and a final report is expected to be submitted to the Tribunal on or about 28 February 2023.
Further hearings are expected to be scheduled following the submittal of the final report of the evaluator.
No provisions are made in the accounts on this matter.
Civil Court Italy; Aveleos
EAM Solar Italy Holding Srl was on 10 December 2020 notified that Aveleos had filed a petition, without EAM's knowledge, to the Civil Court in Milano claiming payment of shareholder loans in the amount of EUR 12 683 721 under the Sale and Purchase Agreement of the P31 transaction.
EAM Solar ASA and its subsidiary is of the opinion that such claim does not exist and have third party expert opinions supporting this fact. The fact is that Aveleos SA owes EAM Solar ASA money following the SPA due to the non-transfer of 10 power plants.
EAM Solar Italy Holding Srl contested the decision in January 2021 and enrolled the case to Court. A hearing is expected to take place in June 2021 but ended up being scheduled for 7 September 2021. In the meantime, Aveleos adhered to our objection that an arbitration was already pending on the same issue, and accordingly decided to drop the case. This will bring the proceedings to an end.
No provisions are made in the accounts on this matter.
Civil Court Italy; UBI
In November 2018 EAM Solar ASA was served with a notice that UBI Leasing had requested the Court of Brescia for an injunction of EUR 6 million on EAM assets. The court of Brescia granted a preliminary non-enforceable injunction.
EAM challenged the injunction, and the first hearing was scheduled in May 2019. A summary hearing was held, and the case was postponed until November 2019. In December 2019 EAM was informed that the judge in the Civil Court of Brescia dismissed the petition by UBI Leasing to have a provisionally enforceable injunction against the Company.
A further hearing was held in January 2020. In this hearing the judge enabled the parties to submit further briefs in the period until mid-April and the next hearing was set for May 2020. This hearing and filing of briefs were postponed due to Covid-19.
Briefs were filed in May and June 2020 and a hearing was held in September 2020. An order was issued in November 2020 where the Judge accepted EAM Solar ASA's request to examine witnesses. The first witness hearing in this matter was held 1 June 2021. The court set a second hearing to resume the examination of witnesses on 10 November 2021, but this hearing was postponed and held on 31 March 2022. A third witness hearing was held on 12 July 2022. On 10 November 2022 the Judge decided that UBI must submit certain documents on EAM's request. The next hearing is scheduled for 30 March 2023.
No provisions are made in the accounts on this matter.
Civil Court Luxembourg
EAM Solar ASA filed a civil lawsuit in Luxembourg in July 2019 against the Aveleos shareholder, Enovos, along with the four Enovos- employed directors of Aveleos. This civil claim is subordinate to the original criminal complaint with civil action filed in 2016.
A hearing had been scheduled for 12 May 2020 in the commercial court of Luxembourg regarding the Standstill Agreement. However, this hearing has been postponed several times since the Court has decided to stay the proceedings awaiting the final outcome of the Arbitration proceedings, and the arbitration appeal procedure.
Administrative Court Italy – ENFO 25
In September 2019, the Company received notice from GSE that they had suspended payments of electricity delivered under the feed-in-tariff contracts for ENFO 25. The Company appealed shortly thereafter the aforementioned order before the Administrative Court "TAR" in Lazio (Rome).
The hearing held before TAR Lazio in December 2019 was a precautionary hearing in order to evaluate whether there are urgent reasons for GSE to resume payments while waiting for the court hearing of the merits. TAR Lazio denied the request for GSE to resume payments.
The Company consequently decided to appeal the TAR Ordinance before the second instance Court (i.e. Consiglio di Stato) which upheld the appeal.
The lawsuit has been sent back to the TAR waiting the merit phase, and a hearing was scheduled on 4 June 2021. In the meantime, in this case, the GSE will not pay for electricity delivered until the merit phase and ENFO 25 will not have to reimbursement any previously received revenues from GSE.
The Administrative Court of Lazio (TAR) has decided in a court ruling on 12 July 2021 that the termination decision made by GSE on the FIT contract for ENFO25 in September 2019 is invalid and consequently cancelled.
GSE has not paid the FIT tariff for the electricity delivered by ENFO 25 since July 2019, and currently owe approximately EUR 815 000 in unpaid electricity bills to ENFO 25. The Administrative Court also ordered GSE to cover the legal costs of EAM Solar ASA.
How and when GSE will restore their contractual obligations is not yet determined.
Due to the unwillingness by GSE to settle the outstanding amount and resume payment of the Feed-In-Tariff in accordance with the decision by the administrative court of Lazio (TAR), the Company has decided to summon GSE to the higher administrative court (Consiglio di Stato), asking the court to order GSE to immediately resume payment of the Feed-In-Tarff and the outstanding amount. No hearing date has yet been set.
No provisions are made in the accounts on this matter.
Please also see the Annual Report 2021 and previous years for further information on the legal processes.
Subsequent events
Resignation of Chair of the Board of Directors, Mrs. Ragnhild Wiborg
On 31 January 2023 the Company announced the resignation of the Chair of the Board of Directors, Mrs. Ragnhild Wiborg. The resignation comes as consequence of her assuming the role as Chair of the Board of Directors in Energeia AS, the manager of the Company.
The Election Committee has already started to search for a new candidate for the Board of Directors in the Company.
Mrs. Wiborg has served on the Board of Directors of EAM Solar ASA for almost 10 years since May 2013, and has carried the responsibility of leading the Board since December 2014. EAM Solar ASA shareholders and its management are very grateful for the unwavering and the steady hand by which Mrs. Wiborg has led the Company in trying times.
The War in Ukraine and sanctions against Russia
The war in Ukraine and the sanctions against Russia has had no direct impact on the Company's operations. The war has indirectly together with the sanctions further increased the power prices for renewable energy in 2022.
Financial review Revenues
Revenues in the quarter were EUR 220 thousand, of which FIT revenues were EUR 49 thousand including the reduction in revenue following the implementation of the Sostegni Ter Decree, and EUR 170 thousand were from market sales of electricity. EUR 1 thousand were other revenues.
The quarterly revenues represent approximately 16 per cent of the expected annual revenues of EUR 1 350 thousand.
Accumulated for the year revenues were EUR 1 221 thousand, of which of which FIT revenues were minus EUR 84 thousand including the reduction in revenue following the implementation of the Sostegni Ter Decree, and EUR 1 300 thousand was received from market sales of electricity. EUR 5 thousand were other revenues.
Cost of operations
Cost of operations in the quarter was EUR 59 thousand and accumulated for the year cost of operations was EUR 244 thousand.
SG&A costs
SG&A costs in the quarter were EUR 280 thousand and accumulated for the year SG&A costs were EUR 950 thousand.
Legal costs
The cost item consists almost entirely of legal costs. In the quarter legal costs stemming from the P31 Acquisition were EUR 359 thousand and accumulated for the year EUR 1 078 thousand.
EBITDA
EBITDA in the quarter was minus EUR 477 thousand, representing an EBITDA margin of minus 217 per cent. Accumulated for the year EBITDA was minus EUR 1 051 thousand, representing and EBITDA margin of minus 86 per cent.
EBIT
Depreciation and amortization in the quarter were EUR 141 thousand, resulting
Oslo, 28 February 2023
in an operating profit of minus EUR 619 thousand. Accumulated for the year depreciation and amortization were EUR 564 thousand, resulting in an operating profit of minus EUR 1 614 thousand in the period.
Net financial items
Net financial items in the quarter were negative with EUR 108 thousand. Accumulated for the year net financial items were positive with EUR 428 thousand.
Pre-tax profit, taxes and net profit
Pre-tax profit in the quarter was negative with EUR 727 thousand and accumulated for the year pre-tax profit was negative with EUR 1 187 thousand.
Taxes in the quarter were EUR 115 thousand. Accumulated for the year tax cost was EUR 152 thousand.
Reported net income in the quarter was minus EUR 842 thousand and accumulated for the year net income was minus EUR 1 339 thousand.
Cash flow
Cash flow from operations in the reporting period was negative with EUR 688 thousand. Investment activities were positive with EUR 2 201 thousand in the period. Financing activities were negative with EUR 631 thousand in the period.
Restricted and unrestricted cash at the end of the quarter was EUR 1 464 thousand, of which EUR 626 thousand is restricted and EUR 62 thousand remains seized by the Prosecutors Office in Milan in companies not included in the criminal proceedings.
Balance sheet
On a group level total assets at the end of the quarter were EUR 10.5 million with book equity of EUR 4.7 million representing an equity ratio of 44.9 per cent.
Shares and share capital
The Company's registered share capital at the end of the quarter was NOK 68 522 100 divided into 6 852 210 shares, each with a nominal value of NOK 10.
Stephan Lange Jervell Non-executive director
Pål Hvammen Non-executive director Viktor Erik Jakobsen CEO
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
| Unaudited | Unaudited | Unaudited | Audited | ||
|---|---|---|---|---|---|
| EUR | Note | Q4 2022 | Q4 2021 | 2022 | 2021 |
| Revenues | 5, 12 | 220 270 | 302 979 | 1 221 024 | 1 333 522 |
| Cost of operations | 12 | (59 011) | (72 090) | (244 497) | (236 682) |
| Sales, general and administration expenses | 12 | (279 526) | (278 647) | (949 613) | (889 894) |
| Legal costs | 12 | (359 207) | (847 267) | (1 077 828) | (2 498 623) |
| EBITDA | 5 | (477 475) | (895 025) | (1 050 915) | (2 291 678) |
| Depreciation, amortizations and write downs | 9 | (141 392) | (140 594) | (563 575) | (562 378) |
| EBIT | 5 | (618 867) | (1 035 620) | (1 614 490) | (2 854 055) |
| Finance income | 6 | 3 842 | 3 102 | 1 192 570 | 255 118 |
| Finance costs | 6 | (112 220) | (306 202) | (764 986) | (1 090 812) |
| Profit before tax | (727 244) | (1 338 720) | (1 186 905) | (3 689 749) | |
| Income tax gain/(expense) | (114 999) | (41 111) | (152 332) | (84 583) | |
| Profit after tax | (842 243) | (1 379 831) | (1 339 237) | (3 774 332) | |
| Other comprehensive income | |||||
| Translation differences | 105 026 | 293 452 | (698 109) | 873 349 | |
| Other comprehensive income net of tax | 105 026 | 293 452 | (698 109) | 873 349 | |
| Total comprehensive income | (737 217) | (1 086 379) | (2 037 346) | (2 900 983) | |
| Profit for the year attributable to: | |||||
| Equity holders of the parent company | (842 243) | (1 379 831) | (1 339 237) | (3 774 332) | |
| Equity holders of the parent company | (842 243) | (1 379 831) | (1 339 237) | (3 774 332) | |
| Total comprehensive income attributable to: | |||||
| Equity holders of the parent company | (737 217) | (1 086 379) | (2 037 346) | (2 900 983) | |
| Equity holders of the parent company | (737 217) | (1 086 379) | (2 037 346) | (2 900 983) | |
| Earnings per share: | |||||
| Continued operation | |||||
| - Basic | (0.12) | (0.20) | (0.20) | (0.55) | |
| - Diluted | (0.12) | (0.20) | (0.20) | (0.55) |
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
| Unaudited | Audited | ||
|---|---|---|---|
| EUR | Note | 2022 | 2021 |
| ASSETS | |||
| Property, plant and equipment | 9 | 5 987 981 | 6 538 257 |
| Intangible assets | 9 101 | 9 801 | |
| Other long term assets | 324 297 | 455 020 | |
| Deferred tax assets | 63 476 | 82 862 | |
| Non-current assets | 6 384 854 | 7 085 939 | |
| Current assets | |||
| Trade and other receivables | 8 | 2 036 594 | 5 450 336 |
| Other current assets | 667 357 | 540 782 | |
| Cash and cash equivalents | 7 | 1 464 397 | 581 696 |
| Current assets | 4 168 349 | 6 572 814 | |
| TOTAL ASSETS | 10 553 203 | 13 658 754 | |
| EQUITY AND LIABILITIES | |||
| Equity | |||
| Paid in capital | |||
| Issued capital | 8 126 110 | 8 126 110 | |
| Share premium | 27 603 876 | 27 603 876 | |
| Paid in capital | 35 729 986 | 35 729 986 | |
| Other equity | |||
| Translation differences | (7 826 939) | (7 128 830) | |
| Other equity | (23 169 610) | (21 830 374) | |
| Other equity | (30 996 549) | (28 959 204) | |
| Total equity | 4 733 437 | 6 770 782 | |
| Non-current liabilities | |||
| Leasing | 3 340 536 | 3 771 567 | |
| Deferred tax liabilities | 804 250 | 743 424 | |
| Other non current liabilities | 343 887 | 343 887 | |
| Total non-current liabilities | 10 | 4 488 674 | 4 858 878 |
| Current liabilities | |||
| Leasing | 430 836 | 409 097 | |
| Trade and other payables | 869 230 | 1 619 996 | |
| Tax payables | 31 026 | - | |
| Total current liabilities | 10 | 1 331 092 | 2 029 093 |
| Total liabilities | 5 819 766 | 6 887 971 | |
| TOTAL EQUITY AND LIABILITIES | 10 553 203 | 13 658 754 |
Oslo, 28 February 2023
Stephan Lange Jervell Non-executive director
Pål Hvammen Non-executive director Viktor Erik Jakobsen CEO
CONSOLIDATED STATEMENT OF CASH FLOW
| EUR | Note | 2022 | 2021 |
|---|---|---|---|
| Cash flow from operations | |||
| Profit before income taxes | (1 186 906) | (3 689 749) | |
| Depreciation | 9 | 563 576 | 562 379 |
| Change in trade debtors | 8 | 673 137 | (108 427) |
| Change in trade creditors | 10 | (399 098) | 50 152 |
| Effect of exchange fluctuations | (668 943) | 1 129 784 | |
| Change in other provisions | 330 586 | 365 494 | |
| Net cash flow from operations | (687 648) | (1 690 367) | |
| Cash flow from investments | |||
| Purchase of fixed assets | 9 | (12 600) | - |
| Payment of short term loan /receivables | 2 213 757 | 2 405 121 | |
| Net cash flow from investments | 2 201 157 | 2 405 121 | |
| Cash flow from financing | |||
| Repayment of long term loans | (409 291) | (388 640) | |
| Interest paid | (221 516) | (217 739) | |
| Net cash flow from financing | (630 807) | (606 380) | |
| Exchange gains / (losses) on cash and cash equivalents | |||
| Net change in cash and cash equivalents | 882 702 | 108 374 | |
| Cash and cash equivalents at the beginning of the period | 581 696 | 473 322 | |
| Cash and cash equivalents at the end of the period | 7 | 1 464 398 | 581 696 |
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
| Share | Currency | ||||
|---|---|---|---|---|---|
| Share | premium | Other | translation | Total | |
| EUR | capital | fund | equity | reserve | equity |
| Equity as at 1 January 2021 | 8 126 110 | 27 603 876 | (18 056 042) | (8 002 179) | 9 671 766 |
| Profit (loss) After tax | (3 774 332) | (3 774 332) | |||
| Other comprehensive income | 873 349 | 873 349 | |||
| Equity as at 30 December 2021 | 8 126 110 | 27 603 876 | (21 830 374) | (7 128 830) | 6 770 783 |
| Equity as at 1 January 2022 | 8 126 110 | 27 603 876 | (21 830 374) | (7 128 830) | 6 770 783 |
| Profit (loss) After tax | (1 339 237) | (1 339 237) | |||
| Other comprehensive income | (698 109) | (698 109) | |||
| Equity as at 31 December 2022 | 8 126 110 | 27 603 876 | (23 169 611) | (7 826 939) | 4 733 437 |
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
Note 01 BASIS FOR PREPARATION
General accounting principles
EAM is a public limited liability company, incorporated and domiciled in Norway, with registered office at Bryggetorget 7, 0250 Oslo, Norway. The Company was founded on 5 January 2011 and listed on the Oslo Stock Exchange under the ticker "EAM" in 2013.
The primary business activity of EAM is both to own solar photovoltaic power plants and sell electricity under long-term fixed price sales contracts, and to pursue legal proceedings in order to restore company values. EAM was structured to create a steady long-term dividend yield for its shareholders. Following the P31 Acquisition, the main value of EAM is dependent on the future outcome of litigation activities.
EAM currently owns 4 photovoltaic power plants and 2 subsidiaries in Italy. The Company has no employees.
Energeia AS manages the Company under a long-term management agreement. Energeia AS conducts the day-to-day operational tasks with own employees and through the use of subcontractors.
These interim condensed consolidated financial statements for the quarter have been prepared in accordance with IAS 34 Interim Financial Reporting. The interim condensed consolidated financial statements do not include all the information and disclosures required in the annual financial statements. The quarterly report should therefore be read in conjunction with the Group's Annual Report 2021 that was published on 26 April 2022 and the stock exchange notices in the reporting period.
The accounting policies adopted in the preparation of the interim condensed consolidated financial statements are consistent with those followed in the preparation of the Group's annual financial statements for the year ended 31 December 2021.
Financial risk
The external leasing contracts has a floating interest rate.
Credit risk
Under normal circumstances the risk for losses is considered to be low, since the main commercial counterparty is GSE, owned by the Ministry of Finance in Italy. The Group has not made any set-off or other derivative agreements to reduce the credit risk in EAM.
Asset value risk
EAM Group's cash balance was EUR 1 464 thousand on 31 December 2022, of which EUR 626 thousand are restricted and EUR 62 thousand are seized by the Italian state.
Market and regulatory risk
One of the main risks of operations in Italy is related to regulatory risk. The contractual counterparty, the Government of Italy, has conducted unilateral and retroactive changes to the commercial electricity sales contracts to the detriment of the suppliers and they have also made changes to the operational regulatory regime governing power plants in Italy.
Note 02 SIGNIFICANT ACCOUNTING JUDGEMENTS
In the process of applying the Group's accounting policies according to IFRS, management has made several judgements and estimates. All estimates are assessed to the most probable outcome based on the management's best knowledge. Changes in key assumptions may have significant effect and may cause material adjustments to the carrying amounts of assets and liabilities, equity and the profit for the period. The Company's most important accounting estimates are the following:
Going concern
The board and management consider the Company's ability to operate as a going concern for the next 12 months as secured. The going concern consideration is mainly related to the assessment of adequate liquidity to meet the Company's running operational financial obligations and legal costs.
Covid-19
The outbreak of Covid-19 has during 2020, 2021 and in 2022 not resulted in any major business interruptions or losses, but it has resulted in some delays of the legal processes the Company is involved in. The board of directors does not expect as a result of Covid-19 neither loss of customers nor loss on receivables. The access to spare parts and the ability to maintain the power plants are also expected to be satisfactory. None of the above-mentioned events are expected to significantly affect the entity's operations, the results of those operations, or the entity's state of affairs in future financial years.
The war in Ukraine
The war in Ukraine and the sanctions against Russia has had no direct impact on the Company's operations. The war has indirectly together with the sanctions further increased the power prices for renewable energy in 2022.
Note 03 CURRENCY EXPOSURE
Most of EAM 's economic activities (revenues and costs) are in EUR. Some of the cost base is in NOK. The functional currency for the parent company is NOK.
Note 04 TRANSACTIONS WITH RELATED PARTIES
Related parties
Energeia AS is the manager of EAM. Energeia AS in Norway and Italy employs most of the personnel conducting the administrative services for EAM, whereas the technical services are done by subcontractors. Energeia AS owns 9.5 per cent of the shares in EAM.
Sundt AS and Canica AS are large shareholders in EAM. They are also shareholders in Energeia AS, but not involved in the day-to-day operations of Energeia AS. Sundt AS is represented on the board of directors in Energeia AS. Certain key personnel managing the day-to-day operations of EAM are also investors in Energeia AS.
Transactions with related parties
All the transactions have been carried out as part of the ordinary operations and at arms -length prices.
Energeia AS invoice all billable hours at a predetermined rate for each consultant working on the assignment. Out-of-pocket expenses is billed separately at cost. The hourly rate per consultant will be adjusted yearly in conjunction with the budget process and approval in EAM Solar ASA.
Accumulated for the year Energeia AS' direct costs for the management of EAM was EUR 909 thousand, of which EUR 475 thousand was related to SG&A, and EUR 435 thousand was related to legal and litigation work in conjunction with the P31 Acquisition fraud.
Note 05 SEGMENT INFORMATION
The Group owns and operates four solar PV power plants in Italy at the end of the reporting period. They are reported as one business segment. The business is investing in and operating power plants that have similar economic characteristics.
During the period ended 31 December 2022 approximately minus EUR 84 thousand of the Group's external revenue was derived from sales to the Italian state, represented by GSE for the Feed-In-Tariff contracts.
Due to the implementation of the Sostegni Ter Decree, the achieved market price of electricity has been limited to EUR 56 per MWh for the Company's power plants in the South of Italy. It is still unclear if the reduction will be paid in cash or settled against future Feed-In-Tariff payments, as described in the decree. Based on the information received from GSE and the Decree, the Company has had an estimated electricity sales revenue reduction of EUR 998 thousand for the period from 1 February 2022 to 31 December 2022.
Note 06 FINANCIAL INCOME AND EXPENSES
| 2022 | 2021 | |
|---|---|---|
| Financial income | ||
| Interest income | 3 898 | 6 |
| Foreign exchange gain | 1 188 672 | 255 112 |
| Total financial income | 1 192 570 | 255 118 |
| Financial expenses | ||
| Interest expense | (172 589) | (110 385) |
| Foreign exchange losses | (566 547) | (951 839) |
| Other financial expenses | (25 849) | (28 588) |
| Total financial expenses | (764 986) | (1 090 812) |
| Net financial income (expenses) | 427 585 | (835 694) |
The average exchange rate used for the reporting period is EUR/ NOK 10.1040, whereas the exchange rate used on 31 December 2022 is EUR/ NOK 10.5138.
Note 07 CASH AND CASH EQUIVALENTS
| EUR | 2022 | 2021 |
|---|---|---|
| Cash Norway | 937 904 | 20 970 |
| Cash Italy | 526 494 | 560 726 |
| Cash and cash equivalents | 1 464 397 | 581 696 |
| Restricted cash Norway | 294 851 | - |
| Restricted cash Italy | 331 541 | 443 422 |
| Seized cash Italy | 61 616 | 61 616 |
The Company had no unused credit facilities at the end of the quarter. The Company has a litigation funding agreement with Therium for coverage of legal costs where the Company and Therium will cover 50 per cent each. EAM has nearly exhausted the third and final tranche.
The restricted cash in Norway of EUR 295 thousand is relating to the court case in Oslo District Court against Enovos and was set aside as collateral for the coverage of the legal costs. The restricted cash in Italy of EUR 332 thousand is the debt service reserve account of ENS Solar One Srl. The EUR 62 thousand of the seized cash is taken from companies not included in the criminal proceedings.
Note 08 ACCOUNTS RECEIVABLES
| Receivables | 2022 | 2021 |
|---|---|---|
| Accounts receivables | - | 324 |
| Deferred revenue towards GSE | 81 883 | 754 696 |
| Receivable from sale of subsidiaries | 305 017 | 3 062 910 |
| Other receivables | 1 649 694 | 1 632 406 |
| Accounts receivables | 2 036 594 | 5 450 336 |
Note 09 PROPERTY, PLANT AND EQUIPMENT
| 2022 | Solar power plants | Solar power plants under lease |
Leashold improvements |
Total |
|---|---|---|---|---|
| Carrying value 1 January 2022 | 1 470 610 | 4 755 529 | 312 119 | 6 538 257 |
| Additions | 12 600 | 12 600 | ||
| Depreciation | (113 958) | (412 999) | (35 919) | (562 876) |
| Carrying value 31 December 2022 | 1 356 652 | 4 342 529 | 288 800 | 5 987 981 |
| 2021 | Solar power plants | Solar power plants under lease |
Leashold improvements |
Total |
|---|---|---|---|---|
| Carrying value 1 January 2021 | 1 584 568 | 5 168 528 | 346 840 | 7 099 936 |
| Depreciation | (113 958) | (412 999) | (34 722) | (561 679) |
| Carrying value 31 December 2021 | 1 470 610 | 4 755 529 | 312 119 | 6 538 257 |
Economic life of 20-–25 years and straight-line depreciation.
The implementation of IFRS 16 relates to land rent and surface rights for ENS 1.
Note 10 SHORT- AND LONG-TERM DEBT
| EUR | 2022 | 2021 |
|---|---|---|
| Deferred tax liabilities | 804 250 | 743 424 |
| Other non current liabilities | 343 887 | 343 887 |
| Obligations under finance leases | 3 340 536 | 3 771 567 |
| Total non-current liabilities | 4 488 673 | 4 858 878 |
| Trade and other payables | 678 346 | 1 077 444 |
| Other payables | 181 696 | 523 354 |
| Social security | 7 860 | |
| - | ||
| Taxes other than income taxes | 6 677 | 6 677 |
| Accrued liabilities | 2 511 | 4 661 |
| Trade and other payables | 869 230 | 1 619 996 |
| Current leasing | 430 836 | 409 097 |
| Tax payable | 31 026 | - |
| Related to ordinary operations | 1 331 092 | 2 029 093 |
| Total current liabilities | 1 331 092 | 2 029 093 |
| Total liabilities | 5 819 765 | 6 887 971 |
Equity contribution agreement and patronage letter In conjunction with the "P31 acquisition", EAM Solar Italy Holding Srl entered into a so-called patronage letter and an equity contribution agreement with UBI Leasing and UniCredit respectively. These agreements may under certain circumstances require EAM Solar Italy Holding Srl to inject additional equity into the debt financed SPVs to cover any shortfall or breach of the debt repayment obligations of the SPVs.
The FIT contracts of the SPVs have been terminated by GSE due to a fraud against the State of Italy.
In November 2018 EAM Solar ASA was served with a notice that UBI Leasing had requested the Court of Brescia for an injunction of EUR 6 million on EAM assets. The court of Brescia granted a preliminary non enforceable injunction.
EAM challenged the injunction, and the first hearing was scheduled in May 2019. A summary hearing was held, and the case was postponed until November 2019. In December 2019 EAM was informed that the judge in the Civil Court of Brescia dismissed the petition by UBI Leasing to have a provisionally enforceable injunction against the Company.
A further hearing was held in January 2020. In this hearing the judge enabled the parties to submit further briefs in the period until mid-April and the next hearing was set for May 2020. This hearing and filing of briefs were postponed due to Covid-19.
Briefs were filed in May and June 2020 and a hearing was held in September 2020. An order was issued in November 2020 where the Judge accepted EAM Solar ASA's request to examine witnesses. The first witness hearing in this matter was held 1 June 2021. The court set a second hearing to resume the examination of witnesses on 10 November 2021, but this hearing was postponed and held on 31 March 2022. A third witness hearing was held on 12 July 2022. On 10 November 2022 the Judge decided that UBI must submit certain documents on EAM's request. The next hearing is scheduled for 30 March 2023.
No provisions are made in the accounts on this matter.
Receivable and payable against Aveleos S.A., its directors and its two shareholders Enovos Luxembourg S.A. and Avelar Energy ltd.
On 20 January 2021, the Criminal Appeal Court of Milan decided to revoke the first instance judgement of the Criminal Court of Milan. Consequently, Akhmerov and Giorgi were acquitted by the Court for all points of indictment related to fraud against the State of Italy and EAM Solar ASA, including the ruling to hold Aveleos financially liable for the acts conducted by Akhmerov and Giorgi.
The Appeal Court's decision was a two-page notice identifying the decisions without presenting arguments or explanations for the revocation of the Criminal Court of Milan decision of April 2019. The arguments and evidence base for the decision by the Criminal Appeal Court was made available to the parties on 20 April 2021, 90 days from the date of the decision.
Following the reception of the full judgement from the Milan Criminal Court of Appeal, EAM Solar ASA decided to join with the Prosecutor's Office in Milan in appealing to the Italian Supreme Court of Cassation. The appeal was submitted on 1 June 2021 to the Supreme Court of Cassation.
EAM Solar ASA seeks to reinstate the convictions of Igor Akhmerov and Marco Giorgi for the crime of fraud against EAM.
The appeal was based on several cases of misinterpretation of facts in the grounds for judgment by the Milan Criminal Court of Appeal.
The Supreme Court of Italy held a hearing on 6 October 2021 on the appeal of the acquittal sentence decided by the Milan Criminal Court of Appeal issued 20 January 2021.
On 7 October 2021, the Company was informed that the Supreme Court of Italy decided to annul the 20 January 2021 judgment of acquittal by the Milan Criminal Court of Appeal in the subsidy fraud case against the State of Italy and contractual fraud against EAM Solar ASA.
Late November 2021 the Supreme Court issued its full decision for the annulment of the acquittal ruling. The short summary of the reason for the Supreme Court to annul the Milan Appeal Court acquittal decision in its entirety is that the Supreme Court found that the Milan Appeal Court did not fulfil its obligation to conduct a correct and comprehensive review of the factual evidence in the criminal case, resulting in an erroneous evaluation of the evidence with the effect that the acquittal decision was based on obvious inconsistent and illogical arguments.
The Supreme Court is sending the criminal case back to a different chamber of the Milan Appeal Court for a new proceeding in the criminal case with the requirement that the new court proceedings must proceed with a complete review of the evidence, making correct application of the principles of law and the rules of logic as formulated in the Supreme Court decision.
On the fraud of EAM, the Supreme Court concludes that the evidenced withholding of essential information during the contractual negotiations in itself constitute a contractual fraud.
There has still not been a date set for any further appeals following the decision of the Italian court of Cassation.
The Company estimates its claim to be in excess of EUR 300 million. The claim is a contingent asset that will not be recognised in the balance sheet.
Based on the Share Purchase Agreement and the addendums, the Company is entitled to a payment from Aveleos due to the overpayment for ENS4 and the post-closing adjustments including interest. This amount has been confirmed by EY in a separate audit on the issue which later has been updated and reconfirmed by RSM.
In addition, the company has recognised a loan of EUR 2.5 million given by Aveleos in 2014.
EAM Solar Italy Holding Srl was on 10 December 2020 notified that Aveleos had filed a petition, without EAM's knowledge, to the Civil Court in Milano claiming payment of shareholder loans in the amount of EUR 12 683 721 under the Sale and Purchase Agreement of the P31 transaction.
EAM Solar ASA and its subsidiary is of the opinion that such claim does not exist and have third party expert opinions supporting this fact. The fact is that Aveleos SA owes EAM Solar ASA money following the SPA due to the non-transfer of 10 power plants.
EAM Solar Italy Holding Srl contested the decision in January 2021 and enrolled the case to Court. A hearing was expected to take place in June 2021 but ended up being scheduled for 7 September 2021. In the meantime, Aveleos adhered to our objection that an arbitration was already pending on the same issue, and accordingly decided to drop the case. This will bring the proceedings to an end.
No provisions are made in the accounts on this matter.
Note 11 LIST OF SUBSIDIARIES
The following subsidiaries are included in the interim consolidated financial statements.
| Shareholder | |||||||
|---|---|---|---|---|---|---|---|
| Country | Main operation | Ownership | Vote | EBITDA | EBIT | Equity | loans |
| Italy | Holding company | 100% | 100% | (1 310 355) | (1 310 355) | (1 582 394) | 12 680 818 |
| Italy | Solar power plant | 100% | 100% | 527 060 | 77 443 | 45 232 | 3 359 894 |
| Italy | Solar power plant | 100% | 100% | 185 132 | 71 174 | 298 278 | 1 823 216 |
Note 12 OPERATIONAL COSTS BREAK-DOWN FY 2022
| EAM Solar | ENS1 & | Other & | |
|---|---|---|---|
| EUR | Group | ENFO25 | Eliminations |
| Revenues | 1 221 024 | 1 221 024 | - |
| Cost of operations | (244 497) | (177 971) | (66 526) |
| Land rent | - | - | - |
| Insurance | (106 526) | (40 000) | (66 526) |
| Operation & Maintenance | (58 633) | (58 633) | - |
| Other operations costs | (79 338) | (79 338) | - |
| Sales, General & Administration | (949 613) | (330 884) | (618 729) |
| Accounting, audit & legal fees | (145 226) | (41 374) | (103 852) |
| IMU tax | (12 898) | (12 898) | - |
| Energeia adm costs | (474 855) | (155 586) | (319 269) |
| Other administrative costs | (316 633) | (121 026) | (195 607) |
| Legal costs | (1 077 828) | 24 | (1 077 852) |
| Legal costs | (643 329) | - | (643 329) |
| Energeia legal costs | (434 523) | - | (434 523) |
| Other non-recurring items | 24 | 24 | - |
| EBITDA | (1 050 915) | 712 192 | (1 763 107) |
Note 13 EVENTS AFTER THE BALANCE SHEET DATE
Resignation of Chair of the Board of Directors, Mrs. Ragnhild Wiborg
On 31 January 2023 the Company announced the resignation of the Chair of the Board of Directors, Mrs. Ragnhild Wiborg. The resignation comes as consequence of her assuming the role as Chair of the Board of Directors in Energeia AS, the manager of the Company.
The Election Committee has already started to search for a new candidate for the Board of Directors in the Company.
Mrs. Wiborg has served on the Board of Directors of EAM Solar ASA for almost 10 years since May 2013, and has carried the responsibility of leading the Board since December 2014. EAM Solar ASA shareholders and its management are very grateful for the unwavering and the steady hand by which Mrs. Wiborg has led the Company in trying times.
The War in Ukraine and sanctions against Russia
The war in Ukraine and the sanctions against Russia has had no direct impact on the Company's operations. The war has indirectly together with the sanctions further increased the power prices for renewable energy in 2022.
Front page | Contents | Financial report | Financial statements
EAM SOLAR ASA
Bryggetorget 7 NO-0250 Oslo NORWAY
Phone: +47 916 110 09 E-mail: [email protected] Web: www.eam.no