Quarterly Report • Nov 8, 2022
Quarterly Report
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Magnora originates, develops, and invests in clean energy companies and projects that can benefit from the combination of funding and support for development and growth. We invest across several geographic markets and renewable energy segments.
MAGNORA ASA | Q 3 REPORT 2022 1
| ABOUT MAGNORA | 3 |
|---|---|
| THIRD QUARTER IN BRIEF |
4 |
| DEVELOPMENTS DURING THE QUARTER | 5 |
| INVESTMENT PORTFOLIO | 9 |
| INTERIM FINANCIAL STATEMENTS | 211 |
| SELECTED NOTES TO THE FINANCIAL STATEMENTS | 234 |
After selling our main assets and intellectual property rights in 2018, the Group has focused on building a diversified investment portfolio of companies and projects within several renewable segments and markets. The initial investments have been projects in early development phase. Magnora also has a unique perovskite solar cell technology company in our portfolio.
The Group and our portfolio companies have benefited from the green shift enabling high growth, and some investments are already providing dividend, while others are approaching a possible exit through IPO or sale of our shares in projects or companies.
Magnora's team of well-respected specialists enable us to identify, select, and develop suitable investments while maintaining a small corporate team. Our strategy is to invest in the right renewable energy projects and companies, and to provide support through our experienced team through active ownership and network.
The third quarter continued the positive momentum across our portfolio companies, with new investments identified, new funding, and important milestones reached.
We see stronger interest of doing business with our portfolio companies compared to previous quarters, and our portfolio companies continued origination of more land and grid connections, instrumental for our value creation.
We received our first dividend from our Swedish solar project development company Helios in August, and it is a significant milestone for our company less than 18 months from first investment into Helios.
In September we successfully closed a seven times oversubscribed private placement raising a total of NOK 200 million at a price of NOK 22.35 per share, of which NOK 100 million was preallocated to Hafslund.
We started to provide financial targets in our Q2 report and expect our net share of asset sales in the portfolio companies to be 150-250 MW for the full year 2022. The price range per MW is expected to be NOK 0.5-1.5 million depending on the risk profile and unit economics in the projects sold. In certain segments and private platform transactions we have seen prices both higher and lower than this range.
Magnora is still considering solar PV opportunities in other markets in Northern Europe and beyond.
» Magnora South Africa continues to explore new expansion opportunities within the country and has already engaged in several commercial discussions.
» Magnora Offshore Wind is progressing through consenting phase for Scotwind N3 area (495 MW), according to plan and preparing for the leasing rounds for the Celtic Sea, and for Utsira Nord in Norway.
* See definition in note 1
» The Group adds a 80MW/160MWh Battery Energy Storage System (BESS) project to its UK portfolio.
The figures are unaudited.
Magnora maintained a high activity level throughout the third quarter, progressing development of its portfolio companies.
Magnora closed an equity private placement of 8,950,000 new shares with a subscription price per share of NOK 22.35 and a total offer size of NOK 200 million. Hafslund was pre-allocated 100 MNOK in the share issue and the remaining 100 MNOK was seven times oversubscribed by mutual funds and reputable investors. Hafslund effectively became Magnora's largest single shareholder.
Evolar continued to mature its solar PV enhancing perovskite technology in parallel with discussions with several new potential customers for its technology and production line. The company has reached several key milestones related to durability, cost and efficiency. Evolar's technology can both be used directly on the glass on the modules as well as directly on silicone solar cells. The company has received its first payments from customers partnering in its development projects. Due to external interest, we are considering various financial and strategic alternatives for the company.
The Group received its first dividend payment from Helios during the quarter.
In Magnora South Africa, one of its solar PV projects has been granted Environmental Authorization, a major milestone for the project. The approved project will have a total installed capacity of approximately 260 MW of solar PV, with an estimated production of over 600 GWh per year. Overall, the project portfolio continues to show good progress, and some projects are expected to be ready for sale by second half of 2023. The market is gaining increasing interest from investors as it further opens up for private capital and there is a growing interest for platform companies in the region. Different strategies for Magnora South Africa are under consideration, in order to further utilize the market potential.
Magnora Offshore Wind is progressing with its ScotWind project and is already conducting bird and mammal aerial surveys and several flights have been completed since it started this spring. The company is also working closely with the local community to investigate how local supply chain can be developed.
Partner discussions are on-going for both offshore wind and solar PV projects, and there is good interest from established industry players.
The Group established Neptun Tromsø AS during the quarter together with Prime Capital and Troms Kraft. The company is established to develop a largescale production facility of green hydrogen and ammonia (NH3) to serve the maritime industry. The project has signed several LOIs with potential off-takers, all representing significant volume.
Magnora entered the UK Solar PV and battery storage market during the quarter through partnering with an experienced local developer. Heads of Terms is signed with landowners for a 60 MW solar PV and a 40 MWh battery storage projects. Grid offer is already received for both projects and preapplication submission fee paid. The first projects were initiated during the quarter and are expected to be at ready-to-build stage during 2023. The developer margins in UK have historically been higher than what we currently see in the Nordics. During the first six months of 2022, the UK posted 80% growth in new solar PV installations compared with last year with 556 MW of capacity installed. The ground mounted market accounted for approximately 1/3 of new installed volumes during first half of 2022*
The Group sees a price range between NOK 0.5 to 1.5 million per MW depending on the size of the project, unit economics (grid connection, long term price outlook), soil conditions, the amount of risk we assume, and EPC offers.
In addition, the Group delivers vital services such as company management of Engineering, Procurement and Construction (EPC) as well as several aftermarket services. The Helios team delivers integrated and highly sophisticated services for owners of solar or wind parks. If current electricity prices stay at these levels longer term, there is upside to' developer margins.
*Source: Solarpowerportal.co.uk
MW, net share of project capacity 1 for projects under development
MW, net share of project capacity 1 for projects under development
| Market | Net share of project capacity (MW) | Technology |
|---|---|---|
| Sweden | 1,010 MW | $\overline{\overline{\mathbb{H}}}$ |
| Scotland | 396 MW | |
| England | 50 MW | $\overline{\mathbb{A}}$ D |
| Norway 52 |
1,000 MW ambition | Ť∰ |
| South Africa | 1,851 MW | $\overline{\mathbb{F}}$ |
1 ) MW x Magnora Ownership = Net share
2 ) Economic interest, currently own 37.5% with option to increase to 50%
Market Cap* MNOK 1 514
*As of market close 31 October 2022
Share Price* NOK 22.65
Total Shares 66 822 679
Magnora provides capital, management and strategic support to its portfolio companies to help them develop and grow.
We look for companies with result-oriented and humble teams, with high integrity and a proven track-record.
The Group has the following financial targets for its net share from the portfolio companies:
1) MW x Magnora Ownership = Net share
PROJECTS SOLD & GUIDANCE
GW, net share of project capacity 1
Commercialising disruptive solar PV efficiency enhancing perovskite technology through turnkey solution
Magnora acquired 28.44 percent of the shares in Evolar through a share issue in the fourth quarter of 2020 and has since increased its ownership to 63.5 percent through additional share issues.
Evolar is developing a unique perovskite-based PV power booster technology with potential to increase efficiency of conventional silicon-based solar panels at low cost. The investment in Evolar gives Magnora access to a unique technology in a growing solar cell market due for efficiency innovation. The Evolar team holds several world records within its previous thin film niche such as a copper indium gallium selenide (CIGS) solar cell with several world records historically, an efficiency of 24 percent and a thin film module record of 21 percent efficiency. The Evolar team has previously developed multiple factories in Germany and China and sold solar cells directly in Europe through IKEA.
The company has a unique industrial scale R&D prototype production line, which is fully operational in Evolar's manufacturing facilities in Uppsala, Sweden. This allows the team to quickly scale and test solar cells and modules and thereby shorten the time-to-market. Perovskite can have a transformational effect on the solar cell market as well as the green transition due to its potential disruptive performance compared to conventional solar cells. Evolar's business model is to develop and sell design, hardware, software and consumables for solar cell manufacturers which want to implement Perovskite tandem technologies to their current offerings
The Evolar team is in discussions with several industry players across the value chain who are eager to investigate the use of their perovskite technology for potential cooperation, testing, and scale-up of technology to capitalise on the USD multi-billion solar cell market.
Evolar's organisation is growing according to strategy, with key personnel successfully hired during the quarter. The company maintains an advisory board, where one of the members is the Dean of Uppsala University, Anders Hagfeldt, a leading expert within the global perovskite community.
More details are available on Evolar's home page: www.evolarab.se.
Greenfield developer of large-scale solar PV projects in the Nordics and Baltics
Magnora participated in a share issue acquiring 25 percent of Helios Nordic Energy AB (Helios) in February 2021 and increased its ownership to 40 percent in the third quarter 2021.
Helios is a greenfield developer of large-scale PV projects in the Nordics and Baltics. The company has developed a project portfolio by signing options for land leases in well suited locations and subsequently obtained grid connection agreements and building permits to install utility scale PV plants. The company has land lease agreements for 47 projects with a total installed capacity potential of approximately 2 GW.
Helios has sold almost a dozen projects totaling more than 370 MW to reputable companies such as OX2, Commerz Real, Nordic Solar, and Solgrid. The company has received good interest from potential buyers for several of the other projects in its project portfolio. We note a significant interest in the marketplace for solar PV projects and expect several projects in Helios' development pipeline to be sold during second half of 2022 as well.
More details are available on Helios' home page:| www.heliosnordic.com.
Magnora South Africa Projects AS - Solar and wind project company;
Magnora South Africa Development AS - Renewable development company; African Green Ventures (AGV)
Magnora entered the South African market in 2021 by acquiring 100 percent of the shares in a South African company with a potential 850 MW greenfield renewable development portfolio consisting of approximately 550 MW wind power and 300 MW solar PV.
In Q1 2022, Magnora acquired 92 percent of African Green Ventures (AGV), a renewable energy development company. With the acquisition, Magnora has a local project development team in South Africa to develop existing projects and expand the portfolio of wind and solar PV projects in South Africa. The portfolio is by Q3 2022 at 1850 MW, expected to increase into next quarter.
The project development continues to show good progress, and one of the solar PV projects has during Q3 2022 been granted Environmental Authorization, a major milestone for the project. The project will have a total installed capacity of approximately 260 MW of solar PV.
South Africa plans to source minimum 20-30 GW of renewable projects over the next decade to decrease the current power shortage. The government is continuing to invite private investments, with the 100 MW limit for corporate and industry (C&I) project now being removed and permitting processes under evaluation to become more efficient. High interest from investors is experienced and different strategies for Magnora South Africa is under consideration. Management is continuing discussions with potential partners, investors and PPA customers to secure the commercial aspects of the projects.
The development activities are increasing throughout the project portfolio, with several projects entering permit application phase and new met masts to be installed during H2 2022. All projects under development are expected to meet the criteria needed in public tender rounds ("REIPPP") and potential C&I power purchasing agreements (PPAs).
Shallow water offshore wind project of 500 MW located in southern Sweden
37.5% Magnora ASA
*Option to increase ownership to 50%
www.kustvind.se
Magnora holds 37.5 percent ownership in Kustvind AB (Kustvind) and has an option to acquire up to 50 percent of the company.
Kustvind is a 500 MW shallow water offshore wind project located in an area with attractive wind conditions 8 - 15 km offshore the southern coast of Sweden. The wind park has a potential to produce 2 TWh annual green electricity and can potentially serve 250 000 homes with electricity.
The project is close to relevant infrastructure and in an area of Sweden with very attractive electricity prices both historically and recently. The project is about to finalize environmental impact assessments and technical design. The work is progressing as planned, with results from wildlife and marine environmental studies as expected so far and without red flags. Permit application is anticipated to be ready for submission in Q4 2022. Development work for the grid connection route is also progressing according to plan, in cooperation with the local grid operator.
More details are available on the project's home page: www.kustvind.se.
OWNERSHIP
» Exploring new markets for development of offshore wind
Magnora established Magnora Offshore Wind in partnership with TechnipFMC, and the company submitted its first applications for licenses to develop offshore wind farms in the ScotWind leasing round.
In April 2022, Magnora Offshore Wind signed an Option Lease Agreement with the Crown Estate Scotland for area N3. The planned development will have a total capacity of 495 MW which is estimated to produce 2.4 TWh per year.
Magnora Offshore Wind has also entered into a cooperation agreement with Hiraeth Energy for participation in the upcoming leasing round for floating offshore wind projects in the Celtic Sea, targeting exclusivity for a 1000 MW project.
The company plans to participate in the first offshore wind application round in Norway, and other markets are under consideration. TechnipFMC has already played a key role in the floating wind industry since inception and has participated in developments such as the Hywind projects.
The partnership with TechnipFMC has already provided several synergies in the ScotWind project. TechnipFMC has over 4,500 employees in England, Scotland, and Norway, with several of the key resources available locally.
MAGNORA ASA | Q1 REPORT 2022 12
www.hafslundmagnorasol.no
Magnora has joined forces with Hafslund and Helios for development of large-scale solar parks in Norway. The company is under establishment and will be owned 40 percent by each of Hafslund and Magnora, and the remaining 20 percent by Helios.
Magnora therefore holds in total 48 percent ownership including its indirect ownership through Helios. The parties have an ambition for the company to develop 1,000 MW of solar power to ensure more renewable energy for Norway.
The new company will develop solar power projects from the start until they are ready for construction, after which Hafslund will have a first right to buy the projects.
Hafslund is one of Europe's largest and Norway's second largest producer of renewable power, and wholly or partially owns more than 80 hydropower plants in Norway. The company's own power production is approx. 18 TWh and in total the group operates a production of over 21 TWh. Hafslund has more than 100 years of experience in hydropower, owns half of Norway's largest grid company, Elvia, and also invests heavily in heating, cooling, carbon capture and offshore wind, among other things.
Helios Nordic Energy AB is one of the leading PV developers in Sweden, and the Nordics, with a project pipeline exceeding 2 GW. Helios has in the past eleven months concluded four transactions with reputable investors. In total, 10 large scale PV solar plants (including the latest transaction with the leading European IPP) will be delivered within the next years with a combined expected capacity of approx. 370 MWp. Helios has already commenced construction works of the first solar park being delivered to Commerz Real located in the municipality of Västerås.
Large-scale production facility for green hydrogen and ammonia to be established in Tromsø, Norway.
Magnora holds 33 percent ownership in the newly established company which will develop a large-scale facility for the production of green hydrogen and green ammonia in Tromsø, Norway. Tromsø is a major Norwegian port and marine hub. We see the Neptun project as a significant effort towards the green shift.
The carbon-free ammonia is produced by capturing nitrogen from the air and combining it with green hydrogen. The energy used in the hydrogen (H2) and ammonia (NH3) production processes is supplied from regional hydro and wind power plants providing reliable renewable and clean energy.
Tromsø is an ideal location for the production of green maritime fuels. It is one of Norway's largest ports and hubs for transportation of goods and people, including fisheries, frozen fish export, and tourism. In the coming years, the Northeast Passage is expected to play a large role in maritime traffic.
Tromsø benefits from a strong power surplus from local wind and hydropower plants which gives favorable electricity rates and green energy. It is also Northern Norway's main transport hub with 8,500 annual ship calls. Moreover, the port of Tromsø is Norway's largest fishing port, and has an increasing number of cruise ship calls.
The planned site for the facility is only 10 kilometers from Tromsø city centre and located along the main shipping lane into the port of Tromsø. Port of Tromsø (No: Tromsø Havn) has developed and owns the area, which is regulated for industry. The existing quay at the location offers optimal large deepsea quay and logistic facilities, and it is therefore a natural location for the bunkering of green fuels. The green ammonia can be easily shipped from the production facility to locations in Norway and Europe or loaded on bunkering ships, either for maritime use or to chemical industry.
The project is currently planning for start of operation by 2026 for phase 1 of the project and has signed several letters of intent (LOIs) with potential off-takers, representing 33% significant volumes.
After selling its assets, rights, and intellectual property rights of cylinder vessel design to Sembcorp Marine Integrated Yard Pte. Ltd. (SMIY) in 2018, Magnora retained the financial benefits from the two licensing agreements detailed below.
Magnora is entitled to a license fee of USD 0.50 per barrel produced and offloaded from the Dana FPSO (the "FPSO") for the lifetime of the vessel. The associated license income for the third quarter 2022 was NOK 3.5 million (NOK 3.4 million). The FPSO was completed in 2017 and production started in Q4 2017.
The Western Isles FPSO has a production capacity of 44,000 barrels per day and is expected to have a design life of 20 to 25 years. Magnora´s right to payments is tied to the FPSO, irrespective of operating location and field. Any potential field tied-back to the FPSO or any redeployment, irrespective of location, will also be subject to the payment obligations under the agreement. The Dana agreement is expected to generate income for Magnora for several years. The vessel's production depends on weather, maintenance, decline, timing of production drilling, discoveries and more.
As this is a long-term asset with a considerable value, the Group is considering various exit strategies to maximise value through a sale.
Magnora is also entitled to license fees from a license agreement with Shell for the Shell Penguins FPSO. The remaining license income of the Penguins agreement is approximately USD 16 million and subject to milestone achievements.
Magnora received payment for the first milestone of USD 2.625 million (NOK 20.7million) under the license agreement in Q1 2018. Further payments under the license agreement are subject to three milestones: 1) the completion and sail away of the Penguins FPSO from the construction yard, 2) the installation of the Penguins FPSO at the field and production started, and 3) the successful production, offloading and gas export of 4 million barrels which is estimated to be approximately 6 months after successful start-up.
It is currently anticipated that the sailaway of the Penguins FPSO will take place in the fourth quarter of 2022 according to industry journals and with further milestones achieved thereafter. The Penguins field is currently producing and is hooked up to the last of the remaining Brent platforms
The Group operates with the two segments Corporate and Projects. Both segments engage in business activities with revenues and expenses which are followed up separately.
Magnora recognises its share of the financial results from each of the portfolio companies according to its ownership share in accordance with IFRS. For subsidiaries, the full net profit/loss is recognised as these companies are consolidated into the Group's financial reports. The development costs in these companies are expensed and not capitalised, as they are in an early development phase.
The corporate segment consists of the corporate staff and represents the cost base of the Group. All licensing revenues from legacy oil and gas contracts are managed and reported as part of the corporate segment.
Operating revenue for the corporate segment was NOK 6.1 million (3.5 million NOK from license income and 2.6 million NOK from services tendered to subsidiaries and associated companies), and the operating expense was NOK 6.4 million in the third quarter. EBITDA in the corporate segment in Q3 was negative NOK 0.4 million. The year- to-date operating revenues were NOK 20.8 million and operating expenses NOK 22.3 million in the corporate segment.
The project segment consists of the portfolio companies, projects, and all related activities. Development and M&A related expenses are assigned to the project segment, excluding M&A related expenses for acquisitions that have not materialised. These expenses are assigned to the corporate segment.
In the third quarter, there was NOK 0.3 million from subsidiaries in operating revenue in the project segment. The operating expense was NOK 2.6 million, and the development and M&A expense was NOK 15.6 million. EBITDA in the segment was negative NOK 17.9 million.
Year-to-date, there was NOK 1.9 million from subsidiaries in operating revenues in the project segment. Operating expense was NOK 9.2 million, and development and M&A expense was NOK 46.1 million in the project segment.
Operating revenue in the third quarter 2022 was NOK 3.5 million, NOK 0.8 million lower than the previous quarter. The current operating revenue mainly reflects license income from the agreement with Dana, and the decrease from the previous quarter was largely due to lower offloading volumes. EBITDA was negative NOK 18.2 million (negative NOK 22.7 million) mainly due to consolidating in Evolar, Magnora Offshore Wind, and Magnora South Africa with their respective operating and development costs. EBITDA included NOK 1 million of non-cash option expenses for Q3 2022. See note 3 for further details.
Adjusted EBITDA was negative NOK 1.6 million. The operating expense was NOK 6.4 million. Development and M&A costs were NOK 15.6 million, mainly driven by consolidating in Evolar with its high development costs, development of the projects in South Africa, and the ScotWind project in Magnora Offshore Wind.
With the exception of Helios, financial results from subsidiaries and associated companies continued to be negative, as the companies are in early phase of executing their business plans. Helios has over the last months progressed significantly ahead of its business plan and sold several of the projects developed and part of its project portfolio.
As Magnora is increasing its ownership share in the portfolio companies, it is also recognising an increasing share of the negative financial results for the reporting periods. Portfolio companies are classified subsidiaries when the Group has more than 50 percent ownership and/or considers it has control of the entity as majority shareholder. For subsidiaries, the full net profit/loss is recognised and their balance sheet as these companies are consolidated into the Group's financial reports.
Financial results reflect the activity level and progress in the portfolio companies. Net profit for the quarter was negative NOK 18.3 million, a decrease of NOK 4.8 million compared to the previous quarter (negative NOK 13.5 million). This decrease was mainly due to lower results from associated companies, and a positive effect in the previous quarter from derecognising Evolar as an associated company. Evolar is now fully consolidated in the Magnora financial statement, and its costs reflected in the Group unadjusted EBITDA.
As of 30 September 2022, cash and cash equivalents was NOK 196.4 (NOK 10.8 million). The cash flow in the quarter was mainly affected by 1) equity private placement, 2) NOK 6.1 million dividend payment received from Helios, and 3) convertible loan to Evolar. Net cash generated from operating activities was negative NOK 18.9 million for the Group.
The equity ratio was 75 percent as of 30 September 2022. The Group closed an equity private placement of NOK 200 million during the quarter and has loan facilities of NOK 150 million. As of 30 September 2022, NOK 74.6 million was drawn from the loan facility, leaving NOK 75.4 million of the total NOK 150 million loan facility.
Magnora is exposed to market risk, electricity price risk, in-direct equipment price risk, customer risk, project risk, reservoir risk, credit risk, currency risk, renewable license risk, concession risk, interest rate risk, inflation risk, liquidity risk, climate risks, regulatory risks, and other indirect risks. The Group's overall risk management programme focuses on the uncertainty of financial markets and seeks to minimise potential adverse effects on its financial performance.
The Company selects its portfolio projects and companies with emphasis on diversification to mitigate the various inherent risks in each segment of the renewable energy production industry. This does not reduce the individual risks below but makes the Group less vulnerable to the effects of those risks.
The project development process for renewable energy plants is also exposed to risks. The process for obtaining concession from relevant authorities can vary in different countries, but most countries have required local acceptance, and in some countries the local municipality has veto rights. The public opinion and local municipality veto rights can affect the licensing decisions and has in some countries caused changes to the political process determining the regulatory framework for obtaining concession for building and operating renewable energy plants. These uncertainties can cause delays and rejection of the concession applications, and it can cause the economics of the projects to be worsened as the approved size of turbines may not be sufficient for an optimised wind park. There are also risks related to military installations and training areas in addition to wildlife risks.
The profitability and viability of projects can be influenced by outside factors, such as the global transportation constraints during the past months, and the war in Ukraine.
These types of events can have various effects on project costs, access to materials, transportation, and other goods and services relying on the same.
Market price of electricity can influence the profitability and value of Magnora's investments. The price of electricity is influenced by government subsidies, supply and demand, availability of alternative energy sources (oil, coal, natural gas, nuclear plants, etc.), development cost and cost of equipment for power plants, and efficiency improvements within renewable energy plants (wind and solar for Magnora). One significant influencing factor in electricity prices is the political developments pushing for renewable energy to take over for the use of fossil fuels and the shutting down of nuclear plants
Although Magnora's remaining legacy customers are two major companies with a strong financial basis, as with suppliers and customers in general, there is a risk that unforeseen financial difficulties on the counterparty's side may arise and cause material adverse effects on the financial condition, cash flows and/or prospects of Magnora.
The Group is also subject to currency, field development and reservoir risk in situations where the license fee is tied to the field development and production such as the Dana income and Shell Penguins license fee income paid in USD. The company also relies heavily on two customers, Dana Petroleum and Shell for most of its operating revenues over the next two years.
Competition is significant as companies in other industries are trying to benefit from the positive policy support from governments pushing for improvements in CO2 emissions. Several companies Magnora competes with are parts of larger groups, with better access to key personnel and funding.
The recent Covid-19 virus could potentially affect revenues for a short period if the crew on the Western Isles FPSO is dismissed due to infection risk or similar. Magnora could then experience a period without revenues if the Dana FPSO halts production due to the Covid-19 virus. Furthermore, the virus could also delay the construction and commissioning of the Shell Penguins vessel currently being built in China, which would then delay the milestone payments from Shell.
The global climate appears to be changing, and the average temperature is predicted to rise globally, causing more extreme weather conditions, and impacting habitat. Governments are now focusing on reaching a net zero world, which is aligned with the Group's strategy of investing in renewable energy projects and companies developed in a sustainable way.
Regulatory risks can be changes in the regulatory environment that have a material adverse effect on Magnora's operations and financial performance. This could be changes in renewable energy policies, tax policies, or the regulatory environment that could affect the industries the Group operates in. Changes in the licensing regulations can for instance cause delays in development and construction of projects.
The Group derive all its cash flow from financial investments, two legacy agreements and its subsidiaries and associated companies. Negative cash flow and lack of financial performance from those companies therefore affects the Group. The exposure is limited to the Group's invested amount in those companies and is closely linked to the companies' ability to execute its strategy and manage risk. Magnora is represented on all boards of its subsidiaries and associated companies and mitigates risks through normal governance processes.
Liquidity and access to capital is a risk now that the Group is investing in more capital-intensive projects. This is managed through close dialogues with financial institutions and a strict timeline for cash flow that matches future investment payments with investment gains from farm-downs and exits. As a mitigating measure, the Group has replaced the shorter-term overdraft facility with a NOK 100 million loan facility with longer term.
Loss of key personnel is a risk to the Group as it operates with a staff of highly specialised professionals that may take time to replace if needed. Mitigation of this risk is an ongoing process of identifying outsourcing alternatives and potential recruitment to cover the resource needs of the Group.
Sales of projects in the pre readyto-build phase and final payments are typically closed when all permits, grid connections and/or equipment and long lead items are secured. The full payment of a project sale might be at risk depending on the exact contract terms. Lack of progress in a project can lead to a project sale being cancelled if we or a group company are unable to replace it with an alternative project.
Magnora continues to grow its portfolio of renewable energy companies and projects and has expanded into solar PV, offshore wind, onshore wind and solar PV enhancing technology market across the Nordics, UK and South Africa.
The Group is experiencing strong interest in projects and portfolio companies and is considering various financial alternatives for our business. Our first dividend from our portfolio company Helios was paid out in early August. We also notice and experience industrial interest for our various platforms and Magnora ASA. Furthermore, we have good relationships with Nordic banks who have contributed with competitive loan facilities. The Board has also noticed high pricing for private renewable platforms in various transactions over the last few years. Magnora's Board will consider various financial alternatives for the group and our portfolio companies going forward. Magnora continues to see compelling business opportunities in our core markets due to energy prices, energy security, the green transition, high CO2 prices, CO2 footprint and many other factors. The price range per MW is NOK 0.5-1.5 million depending on the risk profile and unit economics in the project. In certain segments and private platform transactions we have seen prices above the levels indicated above.
As all subsidiaries and associated companies are in the early phase of executing their business plans, there is interest from industrial and institutional investors to invest prior to Ready-to-Build phase.
The Group is considering several promising offshore wind projects to develop. The award of the ScotWind project has generated several interests from the industry, banks and investors. Floating wind is becoming increasingly attractive with cost improvements identified in the industry, combined with avoiding the local opposition experienced in many regions against onshore wind installations. The ScotWind lease award achieved by Magnora Offshore Wind demonstrates our ability to select the right investments and provide the needed support for development and growth, with our investment philosophy and lean operating model.
Helios has received positive feedback for several projects from institutional investors. Magnora has noticed an increasing interest for European solar platform companies.
Helios' General Meeting decided to distribute SEK 16 million to its owners in August 2022. The initial dividend from Helios provides Magnora with a direct return of 28.4% on our initial investment in the company.
Evolar continues to explore its financial alternatives and IPO options, while developing industrial partnerships and a strategic customer base. The company has three joint development agreements in place. The company is working with several potential new customers and is experiencing high interest from external financial and industrial investors. Evolar is considering its financial alternatives. Magnora has provided a convertible loan to Evolar which will enable its further development.
The Penguins FPSO is, according to Shell's Q2 quarterly report, scheduled for sail-away in the second half of 2022 which will release the three remaining license payments from Shell. First payment is USD 7.5 million, and subsequent payments are USD 4.3 million at first oil and USD 4.3 million at 4 million barrels of oil offloaded.
The Group has increased the number of projects with shorter development opportunities which is primarily within solar PV (shorter time-to-market) and expects to exit some investments already next year. Although political and public resistance remains high within onshore wind in Norway and Sweden, the sentiment is changing on the back of record high electricity prices in the region. The Group is following developments in the region closely.
The original strategy of building a robust portfolio across several segments and geographical areas has proven effective, with reduced exposure to political and countryspecific risks. At the same time, we see an increasing appetite for our portfolio companies and projects from leading energy companies and infrastructure funds.
We also see increasing interests from investors and energy companies looking for construction management and operational management, as well as joint ownership structures. Magnora has established a wide platform which can generate earnings far beyond its license revenues.
Opportunities with shorter development cycles such as solar projects and license rounds will be prioritised going forward to maximise value creation in the Group. Solar PV is increasing in the region with less local resistance, as it appears to have less impact on wildlife and local citizens than onshore wind projects. We anticipate favorable developer margins for solar projects in the Nordpool area.
The Group continues to evaluate and investigate a significant volume of investment opportunities introduced, where assistance with funding and management support can help. We continue to receive a steady deal flow and expect to sign more new investments with compelling teams and companies in both the short and long term. We believe the last quarter of 2022 and 2023 will be a very exciting time for Magnora shareholders and expect positive developments within onshore and offshore wind, solar, as well as storage solutions within battery, green hydrogen and green ammonia. Magnora will continuously consider the best financial alternatives for the portfolio companies and the group.
The board of directors launched a new share buyback programme based on authorization from the
annual general meeting ("AGM") held on 21 May 2019 and renewed by the AGM held on 26 April 2022. As of the date of this report, Magnora owns 21,866 of its own shares. Quarterly dividends have
been halted to conserve cash for investments needed as part of the Company's strategy in the short term
Oslo, Norway, 7 November 2022 The Board of Directors of Magnora ASA
Torstein Sanness Chairman
Hilde Ådland Board Member
John Hamilton Board Member
Erik Sneve CEO
Numbers are unaudited
| NOK million | Note | Q3 2022 | Q2 2022 | YTD 2022 | Q3 2021 | YTD 2021 | 2021 |
|---|---|---|---|---|---|---|---|
| Operations | |||||||
| Operating revenue | 7 | 3.5 | 4.3 | 11.2 | 4.2 | 10.9 | 13.8 |
| Other operating revenue | 7, 12 | 0.3 | 1.6 | 2.3 | 0.1 | 1.4 | 1.4 |
| Operating expense | -6.4 | -8.0 | -22.3 | -8.3 | -12.3 | -30.8 | |
| Development and M&A expense | 2 | -15.6 | -20.7 | -46.1 | -5.9 | -15.7 | -22.9 |
| EBITDA | -18.2 | -22.7 | -55.0 | -10.0 | -24.1 | -38.5 | |
| Profit/loss from associated companies | -2.3 | 7.6 | 0.6 | -5.7 | -15.1 | -21.6 | |
| Operating profit/(loss) | -20.5 | -15.1 | -54.3 | -15.6 | -39.2 | -60.1 | |
| Financial income/(loss) | 9 | -1.8 | 0.3 | -0.9 | 0.1 | 5.8 | 5.1 |
| FX gain/(loss) | 3.9 | 1.3 | 4.6 | -0.1 | -0.3 | -0.1 | |
| Net financial items | 2.1 | 1.6 | 3.7 | 0.0 | 5.5 | 5.0 | |
| Profit/(loss) before tax | -18.4 | -13.5 | -50.6 | -15.6 | -33.8 | -55.1 | |
| Tax income/(expense) | 4 | 0.1 | 0.1 | 0.2 | 0.0 | 0.0 | -7.7 |
| Net profit/(loss) continued operations | -18.3 | -13.5 | -50.4 | -15.6 | -33.8 | -62.8 | |
| Net profit/(loss) | -18.3 | -13.5 | -50.4 | -15.6 | -33.8 | -62.8 |
Numbers are unaudited
| Net profit/(loss) | -18.3 | -13.5 | -50.4 | -15.6 | -33.8 | -62.8 |
|---|---|---|---|---|---|---|
| Foreign currency translation | -1.1 | 8.5 | 5.1 | -0.5 | -0.8 | -2.3 |
| Total comprehensive income | -19.4 | -5.0 | -45.3 | -16.1 | -34.6 | -65.1 |
| Profit/(loss) attributable to: | ||||||
| Equity holders of the company | -15.2 | -8.4 | -41.7 | -15.6 | -33.8 | -62.8 |
| Non-controlling interest | -3.1 | -5.0 | -8.7 | 0.0 | 0.0 | 0.0 |
| Total comprehensive income attributable to: | ||||||
| Equity holders of the company | -16.8 | -1.2 | -38.3 | -16.1 | -34.6 | -65.1 |
| Non-controlling interest | -2.7 | -3.8 | -7.1 | 0.0 | 0.0 | 0.0 |
MAGNORA ASA | Q 3 REPORT 2022 21
| NOK million | Note | 30.09.22 | 30.06.22 | 31.12.21 |
|---|---|---|---|---|
| Deferred tax assets | 4 | 23.4 | 23.4 | 23.4 |
| Intangible assets | 12 | 162.2 | 163.1 | 0.0 |
| Fixed assets | 11.6 | 10.8 | 0.0 | |
| Goodwill | 29.7 | 29.5 | 2.0 | |
| Investment in associates | 5, 10 | 34.3 | 36.0 | 61.4 |
| Total non-current assets | 261.2 | 262.9 | 86.8 | |
| Trade and other receivables | 18.2 | 22.0 | 6.8 | |
| Other current financial assets | 9 | 28.7 | 25.1 | 2.1 |
| Cash and cash equivalents* | 196.4 | 10.8 | 96.9 | |
| Total current assets | 243.3 | 58.0 | 105.8 | |
| Total assets | 504.6 | 320.9 | 192.7 | |
| Share capital | 32.7 | 28.3 | 27.9 | |
| Treasury shares | 0.0 | 0.0 | 0.0 | |
| Other equity | 298.3 | 127.3 | 143.8 | |
| Total shareholders' equity | 331.0 | 155.6 | 171.8 | |
| Non-controlling interest | 46.4 | 49.1 | 0.0 | |
| Total equity | 377.4 | 204.7 | 171.8 | |
| Deferred tax liability | 8.7 | 8.7 | 0.0 | |
| Total non-current liabilities | 8.7 | 8.7 | 0.0 | |
| Overdraft facility* | 74.6 | 62.5 | 0.0 | |
| Current liabilities | 43.9 | 45.0 | 20.9 | |
| Total current liabilities | 118.5 | 107.5 | 20.9 | |
| Total liabilities | 127.1 | 116.3 | 20.9 | |
| Total equity and liabilities | 504.6 | 320.9 | 192.7 |
* As of 30 September 2022, NOK 74.6 million was drawn from the loan facility, leaving NOK 75.4 million of the total NOK 150 million loan facility.
| NOK million | Share capital |
Treasury Shares |
Other equity |
Non-controlling interest |
Total equity |
|---|---|---|---|---|---|
| Equity as of 1 January 2022 | 28.0 | -0.1 | 143.9 | 0.0 | 171.8 |
| Total comprehensive income for the period | 0.0 | 0.0 | -38.3 | -7.1 | -45.4 |
| Acquired treasury shares* | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 |
| Share based payments | 0.0 | 0.0 | 2.9 | 0.0 | 2.9 |
| Capital increase** | 4.4 | 0.4 | 189.8 | 0.0 | 194.5 |
| Non-controlling interest*** | 0.0 | 0.0 | 0.0 | 25.8 | 25.8 |
| Capital increase non-controlling interest in subsidiary**** |
0.0 | 0.0 | 0.0 | 27.7 | 27.7 |
| Equity as of 30 September 2022 | 32.4 | 0.3 | 298.4 | 46.4 | 377.4 |
| Equity as of 1 January 2021 | 25.8 | -0.1 | 92.4 | 0.0 | 118.1 |
| Total comprehensive income for the period | 0.0 | 0.0 | -65.1 | 0.0 | -65.1 |
| Acquired treasury shares* | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 |
| Share based payments | 0.0 | 0.0 | 3.4 | 0.0 | 3.4 |
| Capital increase | 2.2 | 0.0 | 113.2 | 0.0 | 115.4 |
| Equity as of 31 December 2021 | 28.0 | -0.1 | 143.9 | 0.0 | 171.8 |
* Through the share buyback program, Magnora owns 21 866 shares or 0.03 percent of total shares outstanding.
**Capital increase due to board and management exercising options and share issue in September 2022.
***Minority interest Evolar.
****Non-controlling interest Magnora Offshore Wind.
Numbers are unaudited
| NOK million | Q3 2022 | Q2 2022 | YTD 2022 | Q3 2021 | YTD 2021 | 2021 |
|---|---|---|---|---|---|---|
| Cash flow from operating activities | ||||||
| Cash from operations | -18.9 | -22.8 | -51.8 | -11.6 | -20.7 | -23.7 |
| Taxes paid/repaid | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 |
| Net cash generated from operating activities | -18.9 | -22.8 | -51.8 | -11.6 | -20.7 | -23.7 |
| Cash flow from investment activities | ||||||
| Net purchase of marketable securities | 0.0 | 1.3 | 1.3 | 0.0 | 19.2 | 18.9 |
| Investment in fixed assets | -0.8 | -3.9 | -4.7 | 0.0 | 0.0 | 0.0 |
| Dividend received | 6.1 | 0.0 | 6.1 | 0.0 | 0.0 | 0.0 |
| Investment in subsidiary net of cash acquired | 0.0 | 3.8 | 3.8 | 0.0 | 0.0 | 0.0 |
| Net purchase of associated companies | -5.1 | 0.0 | -30.7 | -16.4 | -66.4 | -58.6 |
| ScotWind lease option fee | 0.0 | -94.6 | -94.6 | 0.0 | 0.0 | 0.0 |
| Net cash from investment activities | 0.2 | -93.4 | -118.8 | -16.4 | -47.2 | -39.6 |
| Cash flow from financing activities | ||||||
| Capital distribution/increase | 192.3 | 3.3 | 195.6 | 0.0 | 115.4 | 115.4 |
| Overdraft facility drawn* | 12.1 | 62.5 | 74.6 | 0.0 | 0.0 | 0.0 |
| Net cash from financing activities | 204.4 | 65.7 | 270.1 | 0.0 | 115.4 | 115.4 |
| Net cash flow from the period | 185.7 | -50.5 | 99.6 | -27.9 | 47.5 | 52.1 |
| Cash balance at beginning of period | 10.7 | 61.2 | 96.9 | 120.3 | 44.8 | 44.8 |
| Cash balance at end of period | 196.4 | 10.7 | 196.4 | 92.3 | 92.3 | 96.9 |
* As of 30 September 2022, NOK 74.6 million was drawn from the loan facility, leaving NOK 75.4 million of the total NOK 150 million loan facility.
MAGNORA ASA | Q 3 REPORT 2022 23
Magnora ASA's objective is the conduct of industry, trade and business associated with energy, IT and commodities, and sectors directly or indirectly related to these, in addition to investments in and acquisitions of businesses, securities, financial instruments and other assets, and participating in other businesses, directly or indirectly linked to these.
Magnora ASA is a public limited company, incorporated and domiciled in Norway. The condensed consolidated interim financial statements consist of the company and the company's interests in subsidiaries and associated companies.
The Group prepares its financial statements in accordance with International Financial Reporting Standards (IFRS) as adopted by EU and these financial statements have been prepared in accordance with the International Accounting Standard for Interim Financial Reporting (IAS 34). As the interim financial statements do not include the full information and disclosures as required in the annual financial statements, it should be read in connection with the Annual Financial Statements for 2021.
The European Securities and Markets Authority (ESMA) issued guidelines on Alternative Performance Measures ("APMs") that came into force on 3 July 2016. Magnora has defined and explained the purpose of the following APMs:
EBITDA: EBITDA, as defined by Magnora, includes total operating revenue, and excludes profit/loss from associated companies, depreciation, amortization, and impairment loss.
Adjusted EBITDA: Adjusted EBITDA is a measurement used in internal reporting to management and is considered to also be relevant for external stakeholders. Adjusted EBITDA shows the corporate activities and related expenses to operate the Group. This has been referred to as the Groups' cost base in previous reports. Adjusted EBITDA, as defined by Magnora, excludes development and M&A related expenses, and non-cash items and adjustments, such as options related expenses. Development and M&A related expenses are expenses related to investment transactions and development of projects.
The accounting policies adopted in the preparation of the interim financial statements are consistent with those followed in the preparation of the Annual Financial Statements for the year ended 31 December 2021.
The Group has developed from being a former oil and gas engineering company with license revenues and transformed into a renewable energy development company with several projects and investments in companies in its portfolio. As the Group has grown, it has implemented an updated operating model to manage its increasing portfolio of investments. As part of the new operating model, corporate and project related activities and expenses are followed up and reported separately. This is reflected in the tables below.
Both the project and corporate segments engage in business activities where it earns revenues and incur expenses. The project segment has not earned any revenues yet as all projects are in early-phase development. All licensing revenues from legacy oil and gas contracts are managed and reported as part of the corporate segment, and the renewable activities and investments are reported in the project segment. M&A related expenses for projects and transactions that do not materialise, are reported as an expense in the corporate segment, which is shown separately to show the cost base of the Group. Operating results of the segments are regularly reviewed by the entity's chief operating decision maker, which is the Magnora board, to make decisions about resources allocated to the segment and assess its performance. Segment performance is evaluated based on EBITDA and operating profit/ loss
| NOK million | Note | Corporate | Projects | Elimination | Consolidated |
|---|---|---|---|---|---|
| Operations | |||||
| Operating revenue | 7 | 11.2 | 0.0 | 0.0 | 11.2 |
| Other operating revenue | 7, 11 | 9.6 | 1.9 | -9.2 | 2.3 |
| Operating expense | 2 | -22.3 | -9.2 | 9.2 | -21.7 |
| Development and M&A expense | 2 | 0.0 | -46.1 | 0.0 | -46.7 |
| EBITDA | -1.5 | -53.4 | 0.0 | -55.0 | |
| Profit/loss from associated | 0.0 | 0.6 | 0.0 | 0.6 | |
| companies | |||||
| Operating profit/(loss) | -1.5 | -52.8 | 0.0 | -54.3 |
| NOK million | Note | Corporate | Projects | Elimination | Consolidated |
|---|---|---|---|---|---|
| Operations | |||||
| Operating revenue | 7 | 3.5 | 0.0 | 0.0 | 3.5 |
| Other operating revenue | 7,11 | 2.6 | 0.3 | -2.6 | 0.3 |
| Operating expense | 2 | -6.4 | -2.6 | 2.6 | -6.4 |
| Development and M&A expense | 2 | 0.0 | -15.6 | 0.0 | -15.6 |
| 6BITDA | -0.4 | -17.9 | 0.0 | -18.2 | |
| Profit/loss from associated | 0.0 | -2.3 | 0.0 | -2.3 | |
| companies | |||||
| Operating profit/(loss) | -0.4 | -20.2 | 0.0 | -20.5 |
| NOK million | Note | Corporate | Projects | Elimination | Consolidated |
|---|---|---|---|---|---|
| Operations | |||||
| Operating revenue | 7 | 13.8 | 0.0 | 0.0 | 13.8 |
| Other operating revenue | 7,11 | 4.9 | 0.0 | -3.5 | 1.4 |
| Operating expense | 2 | -30.8 | -3.5 | 3.5 | -30.8 |
| Development and M&A expense | 2 | -0.5 | -22.4 | 0.0 | -22.9 |
| EBITDA | -12.5 | -26.0 | 0.0 | -38.5 | |
| Profit/loss from associated | 0.0 | -21.6 | 0.0 | -21.6 | |
| companies | |||||
| Operating profit/(loss) | -12.5 | -47.6 | 0.0 | -60.1 |
| NOK million | Note | Corporate | Projects | Elimination | Consolidated |
|---|---|---|---|---|---|
| Operations | |||||
| Operating revenue | 7 | 4.2 | 0.0 | 0.0 | 4.2 |
| Other operating revenue | 7,11 | 0.8 | 0.0 | -0.8 | 0.0 |
| Operating expense | 2 | -8.3 | -0.8 | 0.8 | -8.3 |
| Development and M&A expense | 2 | 0.0 | -5.9 | 0.0 | -5.9 |
| EBITDA | -3.3 | -6.7 | 0.0 | -10.0 | |
| Profit/loss from associated | 0.0 | -5.7 | 0.0 | -5.7 | |
| companies | |||||
| Operating profit/(loss) | -3.3 | -12.4 | 0.0 | -15.7 |
As noted in Note 1, adjusted EBITDA, as defined by Magnora, excludes M&A related expenses, expenses from consolidated entities, and non-cash items and adjustments, such as options related expenses. The purpose of this measure is to show the cost base of the Group for the reporting period.
| NOK million | Note | Q3 2022 | Q2 2022 | Q3 2021 | 2021 |
|---|---|---|---|---|---|
| EBITDA | -18.2 | -22.7 | -10.0 | -38.5 | |
| Development and M&A expense | 15.6 | 20.7 | 5.9 | 22.9 | |
| Option expense (non-cash) | 1.0 | 1.0 | 0.9 | 3.4 | |
| Adjusted EBITDA | -1.6 | -1.1 | -3.1 | -12.2 |
Deferred tax assets are recognised for unused tax losses only to the extent that it is probable that taxable profit will be available against which the losses can be utilised in the future. Significant management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and the level of future taxable profits. The recognised deferred tax asset is most sensitive to expected future taxable profits.
The deferred tax asset recognised is expected to be utilised within the next 5 years based upon on the company's contract portfolio and cost base as of today. The book value of the deferred tax asset represents a minor part of the total accumulated tax losses of over NOK 3.5 billion
The Group has a portfolio of companies it has invested in and evaluates each quarter whether it has control in accordance with IFRS 10.
The Group invested in Kustvind AB in March 2020 through a share issue and currently has 37.5 percent ownership. Magnora further has the right to increase its ownership to 50% according to a budget and milestone plan. The option to increase ownership is currently not exercisable, as the increase in ownership must come from a capital call from the Kustvind board due to a capital need in the project. The three founders of Kustvind own equal shares of the remaining shares in the company. Magnora has three out of five board members, and the founders have the remaining two members of the board. The other shareholders have the right to elect its third board member at any time, and it is expected that they will do so shortly. Magnora is a minority owner with three other owners and has significant influence of the company. Hence its ownership is accounted for using the equity method as an associated company.
The Group invested in Evolar AB in November 2020 through a share issue for 28.44 percent ownership, which was increased to 40.7 in June 2021, 50 percent in December 2021, and 63.5 percent in April 2022. The five founders of the company own equal shares of the remaining shares in the company. Magnora has two out of five board members, and the founders have the remaining three members of the board. Significant decisions (e.g., Issues of new shares, mergers or demergers, sale of all or substantially all the assets of a member of the group, amendments and revisions of the business plan) shall always require the consent and approval by the Board members nominated by Magnora. The Group determined it to have significant control in Evolar when the last ownership increase to 63.5 percent took place in April 2022. As of 30 September 2022, this is unchanged and Evolar is therefore consolidated in the Group's financial statements.
The Group invested in Helios AB in February 2021 through a share issue and owns 40 percent of the company at the balance sheet date. The remaining ownership of Helios is divided between the three founders of the company and other early investors. Magnora has one out of five board members, and the founders and other shareholders have the remaining four members of the board. Although Magnora is a majority owner, it exerts no strategic or operational influence on this company, as Helios operates in a segment Magnora has not explored prior to this investment. This company operates fully independent of Magnora. For up to two years after the First Investment from Magnora, significant resolutions (e.g., Annual budgets, amendments in the business plan, any merger/demerger and so on) must be approved by the Board and supported by the director appointed by Magnora. Magnora has
significant influence in the company and its ownership is accounted for using the equity method as an associated company.
| 20 largest shareholder accounts 1 November 2022 | Number of shares | Percent ownership |
|---|---|---|
| (source: VPS) | ||
| HAFSLUND VEKST AS | 4,474,272 | 6.70 |
| KING KONG INVEST AS | 2,670,995 | 4.00 |
| GINNY INVEST AS | 2,469,144 | 3.70 |
| CARE HOLDING AS | 2,000,000 | 2.99 |
| BEKKESTUA EIENDOM AS | 1,881,860 | 2.82 |
| ALDEN AS | 1,729,829 | 2.59 |
| PHILIP HOLDING AS | 1,648,377 | 2.47 |
| ANDENERGY AS | 1,558,140 | 2.33 |
| F1 FUNDS AS | 1,443,121 | 2.31 |
| F2 FUNDS AS | 1,465,000 | 2.19 |
| INTERACTIVE BROKERS LLC | 1,406,307 | 2.10 |
| CLEARSTREAM BANKING S.A. | 1,340,721 | 2.01 |
| MP PENSJON PK | 1,327,138 | 1.99 |
| NORDNET LIVSFORSIKRING AS | 1,277,870 | 1.91 |
| ALTEA AS | 1,154,944 | 1.73 |
| AARSKOG, PHILLIP GEORGE | 1,000,000 | 1.50 |
| BALLISTA AS | 760,372 | 1.14 |
| BAKLIEN, ÅSMUND | 756,100 | 1.13 |
| DNB BANK ASA | 750,000 | 1.12 |
| VERDIPAPIRFONDET DNB SMB | 694,576 | 1.04 |
| Total, 20 largest shareholders | 31,908,766 | 47.75 |
| Other shareholder accounts | 34,914,000 | 52.25 |
| Total number of shares | 66,822,766 | 100.00 |
| Foreign ownership | 9,949,250 | 14.89 |
| NOK million | Q3 2022 | Q2 2022 | Q3 2021 | 2021 |
|---|---|---|---|---|
| Operations | ||||
| License revenue | 3.5 | 4.3 | 4.2 | 13.8 |
| Other revenue | 0.3 | 1.6 | 0.1 | 1.4 |
| Operating revenue | 3.8 | 5.9 | 4.3 | 15.2 |
Options have been awarded during 2020 and 2021 in accordance with the options programme approved by the AGM in 2019. Both members of the board and members of management have been granted options during 2020 and 2021, and the cost of the options is recorded over the first 36 months following the grant date.
No options were awarded during the quarter. NOK 1 million has been recognised for Q3 2022 and NOK 2.9 million year-to-date 2022 in accordance with IFRS 2.
The Group has sold all shares and holds no marketable securities as of 30 September 2022.
The Group has a receivable of approximately NOK 26.7 million through its subsidiary Magnora Offshore Wind towards TechnipFMC for subscription contribution agreed to when Magnora Offshore Wind was established.
The Group has 37.5 percent ownership in Kustvind AB and has a right to acquire up to 50 percent of the company. As of 30 September 2022, Magnora does not have a controlling share and does not exercise control in Kustvind, and the investment is accounted for using the equity method. The value is adjusted for the Group's share of Kustvind's operating results for the period.
The Group has 40 percent ownership in Helios. As of 30 September 2022, Magnora does not have a controlling share and does not exercise control in Helios, and the investment is accounted for using the equity method. The value is adjusted for the Group's share of Helios's operating results for the period.
| Subsidiaries/ associated companies Registered Office Shareholder interest | Ownership account method | ||
|---|---|---|---|
| Magnora Holding AS | Norway | 100% | Consolidating |
| Magnora Offshore Wind AS | Norway | 80% | Consolidating |
| Magnora South Africa Projects AS | Norway / South Africa |
100% | Consolidating |
| Magnora South Africa Development AS (AGV) |
Norway / South Africa |
92%* | Consolidating |
| Evolar AB | Sweden | 63.5% | Consolidating |
| Hafslund Magnora Sol AS | Norway | 48% | Equity Method |
| Helios Nordic Energy AB | Sweden | 40% | Equity Method |
| Kustvind AB | Sweden | 37.5% | Equity Method |
| Neptun Tromsø AS | Norway | 33.33% | Equity Method |
| Magnora UK PV Holding AS | Norway / UK | 50%* | Equity Method |
| Arendal Brygge AS | Norway | 50% | Equity Method |
*Holding company in Norway is owned 100%
Magnora ASA has an agreement with all subsidiaries and associated companies that allows services to be provided between the companies at agreed upon hourly rates. Magnora has both operating revenues and expenses from services provided between the companies that are considered to be related parties to Magnora. There were NOK 2.6 million in operating revenues from subsidiaries and associated companies in the third quarter and NOK 9.6 million year-to-date. TechnipFMC UK Ltd. invoiced Magnora Offshore Wind NOK 0.6 million for services performed during the third quarter and has invoiced approximately NOK 7 million year-to-date.
The Group manages short-term liquidity through loan facilities established with top tier banks. The existing loan facilities have a maturity of one to three years.
Long-term liquidity is managed through a combination of loan facilities and share issues. The Group performs share issues when there are specific investments requiring capital exceeding the loan facilities. As some projects are entering phases with increasing funding requirements, the Group will also consider syndicated loans that can be held until exit. The Group's current liquidity situation is considered solid given the transactions and funding to our portfolio companies we expect in the near term.
The currency risk related to the USD 16 million revenues from the Shell Penguins contract has been hedged by selling USD 9.5 million and buying NOK. Additional sales of USD are considered to cover the total currency exposure related to the Penguins contract.
The Group acquired in April 2022 13.5% of the shares in Evolar AB, making the total Magnora ownership 63.5%. With this transaction the ownership is fully consolidated in Group financial statements. Until 31 March 2022 Evolar AB was accounted for as an associated company in the Group accounts.
| NOK million | 2022 |
|---|---|
| Consideration paid on 100 percent basis | 75.3 |
| Total value of new subsidiary | 75.3 |
| Identified assets and liabilities on the balance sheet recognised from the acquisition: | 2022 |
| Cash and bank deposits | 20.2 |
| Property, plant and equipment | 7.4 |
| Financial assets | 2 |
| Trade and other receivables | 3.2 |
| Trade and other payables | -6.9 |
| Borrowings | -0.2 |
| Total net identifiable assets | 25.7 |
| Goodwill | 25.6 |
| Intangible assets | 30.2 |
| Deferred tax | -6.2 |
| Total | 75.3 |
| Non-controlling interests | 27.5 |
| Majority interests | 47.8 |
| Book value of Magnora's share before transaction | 43.9 |
| Gain/loss related to realisation of the associated company | 3.9 |
Magnora ASA acquired 92 percent of the shares in the South African company African Green Venture (AGV) in January 2022. The company develops wind and solar PV projects in the region.
| Cash flow regarding the acquisition | |
|---|---|
| Consideration paid | 10.5 |
| Cash and bank deposit in the company at acquisition date | 0.0 |
| Net cash flow regarding acquisition | 10.5 |
| Minority share | 0.5 |
| Total value of acquired company | 11.0 |
| Identified assets and liabilities on the balance sheet recognized from the acquisition | |
| Current assets | 0.2 |
| Property, plant and equipment | 0.2 |
| Current liabilities | 0.6 |
| Total net identifiable assets | 1.0 |
| Intangible assets | 10.0 |
| Deferred tax regarding intangible assets | -2.8 |
| Goodwill | 2.8 |
| Total | 11.0 |
Intangible assets relate to landowner right and wind measurement data. Goodwill is technical goodwill which equals the residual amount of the consideration paid and net of the identifiable assets acquired, and the liabilities assumed. The allocation of the purchase consideration is preliminary and may be changed within one year after the acquisition date.
The Group has added a 80MW/160MWh Battery Energy Storage System(BESS) project to its UK portfolio. The portfolio now consists of a 60 MW solar PV project, and two BESS projects of 200MWh.
Magnora ASA Karenslyst Allé 6, 0277 Oslo, Norway www.magnoraasa.com
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