Magnora ASA

Business and Financial Review • Mar 6, 2020

Magnora ASA Strategic Update: The Future is Electric!

Magnora ASA Strategic Update: The Future is Electric!

Oslo, Norway, 6 March 2020: MAGNORA ASA, a leading Norwegian royalty and license revenue company releases a strategic update.

«Europe is facing an extremely large investment growth this decade within «green» electricity production. Coal and nuclear power are materially reduced or eliminated in a number of European countries.

The cost of wind- and solar power has dropped by 50 – 85% during the last 10 years. A wind turbine produces 15 times more than one produced 15 years ago.

New renewable energy is in many markets far more competitive than traditional sources of energy. Furthermore, hydrogen plants will in many cases demand green electricity. Companies and consultants are more and more focusing on delivering sustainable products and services.

EU has established a target that Europe shall become Carbon-neutral by 2050.

MAGNORA will participate in this exciting journey during the years to come»

Executive Chairman Torstein Sanness

For the past 9 months, Magnora ASA has actively analyzed different businesses and energy markets in Norway and the rest of Europe. We have identified a number of green investment opportunities with different degrees of maturity with regard to markets and technologies. Based on this analysis, we have concluded that we will establish a project portfolio of renewable energy production, both on- and offshore based on proven technology in markets with strong growth opportunities. This is based on identified opportunities in the markets and internal competencies.

Primarily, we will invest jointly with individuals and leading industrial and energy enterprises, with proven track-records. Additionally, we consider developing our own projects both in Norway and abroad. In the initial phase, our strategy will be to develop a portfolio of areas onshore, possibly also offshore, that are suitable for green energy production. Our projects will take place in cooperation with landowners, local and national authorities, local communities and NGOs.

Prior to project implementation, we will enter into partnerships with major industrial and financial enterprises who can contribute financially during construction and take over the partial or full ownership when the projects are in operation.

The capital needed for our planned development projects will be covered from existing cash resources and future cashflows from existing contracts. The business model that we will pursue is proven and is common in the market for renewable energy and energy production in general. During the next 2-3 years, we expect to develop, together with partners, a considerable portfolio of projects that we believe will be highly attractive. The 2020s will be a decade where fossile energy and nuclear power for electricity production will be replaced by renewables in high numbers for electricity generation not only in Europe, but on other continents as well.

Public requirements

Electrification is a fundamental requirement in order to obtain a global reduction of emissions. The Norwegian state-owned grid company, Statnett, has recently calculated that a replacement of today’s fossil energy consumption in Norway with green power will demand an large increase of renewable power in order to obtain zero emission in Norway. For instance, production of hydrogen will alone increase the demand for green energy by an additional 40 TWh.

Norway is one of Europe’s countries that are best positioned for the green change due to our exceptionally good wind- and water resources. Electric power constitutes approximately 22% of total energy consumption in Europe today. In Sweden, the contribution is 35%. The EU has a target that by 2030 at least 32% of all energy production shall come from renewable sources. In 2050 EU has targeted that Europe shall be carbon neutral. The demands from EU will mean an enormous restructuring of the European energy sector in the coming years. Both Sweden and Germany have decided to close down their nuclear power plants during the next few years. Germany has recently adopted a financial support scheme for local authorities and coal companies equal to NOK 440 billion in order to phase out coal usage in Germany during the next 20 years.

Companies and consumers

Companies like Google, Facebook, Hydro and Elkem are among Europe’s largest customers for green power, both in Norway and on the continent. This is based on the considerable power needs for servers and data storage. These companies also perceive that their customers increasingly demand green products and services. It is our view that other European companies will follow the trend established by these companies. There will also be an increased demand for green energy connected to possible production of green hydrogen.

The Norwegian offshore sector is currently very active in making their production greener. Norwegian authorities are facilitating increasing green power to installations in the North Sea and Barents Sea. Equinor is planning a further expansion of floating wind turbines at Hywind Tampen. 80% of the Worlds wind resources are located in areas with deep water. Therefore, floating wind turbines may play an important role for the green change on all continents. The wind turbines at Tampen shall produce energy for the oil- and gas fields Snorre and Gullfaks. In October 2019 LUNDIN Energy acquired 50% of a hydropower project in Leikanger, Norway. 50% of the generated power will be used to meet some of the electricity demand at Lundin’s operations at their Johan Sverdrup, Edvard Grieg, Ivar Aasen and the Solveig fields.

Green energy technology has made considerable progress and become much more competitive during the last ten years. This is due to economies of scale as well as major technological breakthroughs. The prices for wind turbines, storage technology and solar panels have dropped by 50-80% during the last 10 years. Today, a wind turbine will produce almost 15 times more energy than one did 15 years ago. This is to a large degree due to the fact that the dimensions like tower height, rotor diameter and power rating have increased, as has the use of lighter materials. In some areas in Europe wind power is the cheapest energy source. The improvements in wind technology combined with increased size of a turbine have led to an improved competitiveness for offshore wind power production. Wind, hydrogen and solar are continuously improving their competitiveness and the profitability will increase during the next 10 years.

Max Planck Institute published recently a study with a conclusion that air pollution may reduce human life expectancy with 3,3 years on average. An electrified society contributes to reduce airpollution and improves the air quality in the community.

The Board of Directors of Magnora is very pleased with the Company’s commitment to renewables is impressed with the numerous relationships that have been established during the analysis period. The company now possesses a very robust and diverse «deal-flow» of projects in a variety of development phases and with varied technologies.

Advisor, Head of Business Development, Theis H. Pedersen says:

-Magnora is a very exciting company to work with going forward. Their approach towards the renewable concept has been diligent and creative. For Norwegian wind developers, Magnora can offer a different financial solution given the OSE stock market listing. I am convinced that Magnora will play an important role in the renewable business segment in the years to come.

Erik Sneve, CEO, is very impressed with the assembled team that has been working on the analysis and investment opportunities. We have an interesting «deal-flow» that will occupy us for some time. The Magnora team of advisors and directors have worked on realizing investment opportunities amounting to tens of billions NOK within the renewable energy segment with focus on wind- and hydropower.

About Magnora (OSE: MGN): Magnora ASA is a royalty and license company looking for profitable investment opportunities. The company is listed on the main list on Oslo Stock Exchange under the ticker MGN.

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For further information, please contact:

Erik Sneve, CEO, Magnora ASA

es@magnoraasa.com

This information is subject to the disclosure requirements pursuant to section 5-12 of the Norwegian Securities Trading Act.