Annual Report • Apr 4, 2012
Annual Report
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Arise Windpower AB | Annual Report 2011
| Message from the CEO 4 |
|---|
| Arise Windpower in brief 6 |
| Description of the operations 8 |
| Wind farms in operation and under construction10 |
| Project development14 |
| Market 18 |
| Directors' Report22 |
| Consolidated 'nancial statements 29 |
| Notes for the Group33 |
| Financial statements of the Parent Company 50 |
| Notes for the Parent Company53 |
| Proposed appropriation of pro'ts57 |
| Audit Report 58 |
| Corporate Governance Report 59 |
| Ownership structure 63 |
| Board of Directors64 |
| Senior Management 65 |
| Annual General Meeting and Financial Calendar66 |
This document is a translation from Swedish. In the event of any di,erences between this version and the Swedish original, the Swedish original shall govern.
Q Cooperation agreement signed regarding the construction of the Jädraås wind farm, approx. 200 MW
Q Decision to start construction of 6 Vestas V 90 turbines in Gettnabo, Torsås (12 MW–29 GWh/year)
Q Takeover of 7 GE turbines in Kåphult, Laholm (17.5 MW–47 GWh/year)
Q Acquisition of project company JVAB and financing and construction of northern Europe's largest onshore wind power project, Jädraås (203 MW– 570 GWh/year), together with Platina Partners. The total amount of the investment was SEK 3.1 billion.
Q Takeover of 6 Vestas V 90 turbines in Gettnabo, Torsås (12 MW– 29 GWh/year)
Q Takeover of 12 Vestas V100 turbines in Södra Kärra, Askersund and Blekhem, Västervik (21.6 MW–65 GWh/year)
At the end of 2011, Arise Windpower had initiated the construction of approximately 342 MW, including Jädraås, of which Arise, directly or indirectly, owns approximately 241 MW.
-e Company reported a pre-tax pro.t during all four quarters of the year. In total, pro.t before tax amounted to MSEK 65 during 2011.
Arise Windpower AB is now Sweden's leading company in onshore wind power measured in terms of production capacity (MW). -e goals we established for 2011 in conjunction with the listing of the Company have been met. -e Company is pro.table and last year reported earnings of approximately MSEK 65 before tax and a pro.t margin of close to 23%. Despite this, the share price has declined in comparison to the listing price in March 2010.
What can be the reason for this and what is happening in Sweden and Europe in terms of wind power development? Is the industry sustainable and pro.table or simply a "green" bubble? What makes a wind power company pro.table, how will electricity and electricity certi.cate prices develop and is there a future for a company such as Arise? -ese are certainly issues which you as a current, or prospective, shareholder have in mind.
Wind power development in Sweden has tripled during the period 2009 to 2011 and will, according to the calculations of the Swedish Energy Agency, account for more than 5% of Sweden's electricity sales in 2012.
In Germany, Portugal, Spain and Denmark, the position of wind power is signi. cantly more developed, between 10 and 25%. In those countries, wind power has become an established part of the power system and an important production resource. Dependence on imported fuel for power production is decreasing, as are emissions into the air and water.
In Germany, wind power is also playing an increasingly important role after the decision to close all of the country's 17 nuclear power stations by 2022.
Sweden is, together with Norway and possibly also Scotland, one of the countries in Europe with the most favourable premises for wind power, with good wind conditions and good access to regulating power in the form of hydro power.
-at Sweden also has an excellent transmission network, a well-developed road network and a relatively small population, are additional advantages.
As wind turbines have become more e3 cient, they can now seriously compete with both nuclear power and new coal power in terms of cost per produced kWh. It is true that the wind does not blow all the time, but wind power stations produce electricity approximately 6,000 hours per year, which is 68% of the total number of hours in a year. -is is even slightly better than the utilisation ratio for Swedish nuclear power in 2010.
Our understanding is that the wind power industry is here to stay and that an e3cient wind power company with a suf- .ciently large installed capacity can deliver excellent results and returns to its shareholders. -e key factors facilitating this are having a large number of MW and wind turbines in operation, maintaining a high availability for these and hedging the major cost item, interest, as well as income in the form of electricity and electricity certi.cates.
Why so many MW in operation? Well, the answer is major economies of scale on the purchasing side. -e .xed costs for administration and maintenance of su3cient resources and competence in order to ensure that the turbines function well are also largely the same, regardless of whether 50 or several hundred MW are in operation. Each new MW which is added implies that overhead costs can be allocated over a larger number of kilowatt hours, with improved results as a consequence.
For this reason, it is important that expansion takes place rapidly and that the Company achieves a critical mass at an early stage, in which the cash 5ow from the wind farms in operation pays for the cost of the ongoing operations. Arise has reached and gone beyond this point.
The largest cost item in wind power operations is the cost of borrowed capital. -e fuel, that is to say, the wind, is free of charge. -e capital cost is highest during the .rst few years and declines as the loan is amortised. An investment in a wind farm is, however, a long-term investment which, if handled correctly, results in a recurring and strong cash 5ow over a number of years and provides a good return to the investor.
How, then, can the pro.t in a newly established company such as Arise be enhanced as early as during the .rst operating years of the wind farms? -e solution is the combination of development and investments in the Company's own project portfolio with development income generated by the sale of shares of the projects.
An example is the Jädraås project. Jädraås is northern Europe's largest wind power project, with a planned installed capacity of approximately 203 MW. Arise acquired the project after the permit had been granted, further developed the project to the construction stage, then sold on half of the project at a pro.t of slightly more than MSEK 45 before tax.
-e experience from the Jädraås project has resulted in that the Company's business model has devloped further. -e strategy to establish and build the Company's own wind farms in southern Sweden has been supplemented with the ambition to acquire larger sites which have already been granted the necessary permits and which are ready to be developed in other parts of the country and in Norway. -e farms should have been granted approval for an output of at least 100 MW.
-e advantage of a larger project is that it can be undertaken by a separate project organisation with only a minor strengthening of personnel. -e projects can also generate good opportunities for development fees, as demonstrated by the Jädraås project. -e large projects contribute, thereby, to both short-term pro.ts as well as promise longterm pro.tability and a good cash 5ow over time.
On the basis of the above, and given that the electricity certi.cate market is now common for both Sweden and Norway, the Company's home market has been rede.ned to include all of Sweden and Norway.
Regarding the price development for electricity and electricity certi.cates, the Company expects the prices to rise from their current low levels. -e price of electricity certi.cates is under pressure by the current imbalance between supply and demand, as supply is 1.5 times greater than demand. A massive surplus lowers the prices of electricity certi.cates, which has also taken place.
-ere are three factors which, based on the
Company's assessment, point to rising electricity certi.cate prices:
-e shared electricity certi.cate system with Norway adds new buyers, whilst the expansion of Norwegian renewable energy is unlikely to progress as fast as expected. -is can be seen not least in past experience from the Swedish permits system. Norwegian buyers of electricity certi.cates must, therefore, turn to Swedish producers, which leads to a decrease in the Swedish surplus.
At the end of 2012, as well as in 2014, a large part of the older electricity production eligible for certi.cats will be phased out of the system.
-e quota curve, that is, the proportion of electricity certi.cates that an electricity consumer must possess each year, will increase in 2013 as a result of the Parliamentary decision from July 2010.
-e above factors are all expected to reduce the surplus of electricity certi.cates in forthcoming years, leading to an increase in prices.
Electricity prices are seasonal and can 5uctuate signi.cantly. -ey are also a6ected by the hydrological pattern and the economy in Sweden and Europe. At the moment, prices are being forced down by mild weather, combined with a substantial hydrological surplus in Norway and Sweden, and relatively low prices in other parts of Europe. -e surplus in water reservoirs can quickly change to normal levels or to a de.cit, resulting in increasing prices. -ere are, in our view, no macroeconomic trends suggesting that electricity prices will be lower in the future compared to the average price in recent years. -e opposite conclusion is more likely to be drawn, namely that the price of electricity will increase, with regard to the increase in oil prices.
Overall, the Company delivered an average price of approximately SEK 750/MWh during the period 2009–2011. Price hedges for the years 2012–2014 are above SEK 800/MWh for a portion of the planned production, see table on page 6. -is allows the Company to deliver positive cash 5ows even if the low electricity and electricity certi.cate prices should remain in place for a longer period of time.
As regards capitalisation, the Company has encountered no problems, to date, in raising either borrowed or equity capital for new projects. -is is demonstrated not least by the loan .nancing of SEK 2.1 billion which was secured for the Jädraås project in the midst of the EU crisis in the autumn of 2011. Acquisition of equity always implies a balance between dilution and the increased pro.t and cash 5ow generated by the new investment. For this reason, in March 2012 we launched an unsecured bond of MSEK 350 before issue expenses. -e issue was oversubscribed within one day.
-e funds will be used as equity in new projects, thus replacing the need to issue shares in the same amount. -e bond carries an interest rate of around 7% which, compared to the required return on equity, may be considered as favourable.
Although knowledge regarding planning, procurement and installation of wind turbines is a prerequisite for the business, much more is required to reach pro.tability in a large-scale wind power investment. A thorough understanding of the electricity market in Scandinavia and Europe, combined with a prudent hedging strategy, is essential to achieve a good level of earnings. It is also essential to be able to attract borrowed funds and equity, to develop and improve their e3ciency and to have a good interest hedging strategy.
Being an attractive client results in purchasing advantages and lower investment costs. Operating wind turbines in an e3cient manner and with a high quality enables them to last longer and provides good earnings and good cash 5ow for years to come.
Arise Windpower has all these qualities, as well as the objective to grow and deliver a strong and increasing pro.t for our shareholders.
In brief, the focus of the Company for 2012 is as follows:
So how did the share price develop? It is worth considering whether the weak share price performance is due to the weak share price performance of the renewable energy sector in Europe in general, whether the low electricity and certi.cate prices have in5uenced the price negatively or whether it is simply a result of bad market communica-
tion. Our communication strategy has been focused on keeping a relatively low pro.le, not in5ating expectations and only communicating what we know we can or have delivered.
We will continue on the path we have taken, but will attempt to become better at explaining the .nancial situation in a fastgrowing wind power company and to provide valuable key ratios which you, the investors, can monitor and make use of.
Communication is also much more interesting now that we have a large number of MW in operation and under construction, as well as having an exciting phase of expansion ahead.
Our medium-term goal, to reach 700 MW in operation or under construction by the end of 2014 remains unchanged. -e Company is already a leader in the onshore wind power industry in Sweden and there is room for an increased level of ambition.
We, therefore, wish to return with an exciting new target for 2015 and beyond.
Halmstad , March 2012 Peter Nygren CEO Arise Windpower
Arise Windpower is a leading player in the rapidly-expanding Swedish wind power market.
-e Company's business concept and strength lie in its management of the entire value chain through the application of its fully integrated organisational model. -is includes the identi.cation of suitable land areas or projects, project development, .nancing, construction, operation and maintenance, as well as the ownership and management of wind farms and the sale of electricity and certi.cates. Consequently, the Company is able to bene.t from economies of scale in the form of lower investment and operating costs.
-e Company has a strong project portfolio of more than 1,000 MW in southern Sweden where the preconditions for wind power plants are particularly attractive. -e Company's business concept is to sell green electricity generated by its own onshore wind turbines.
Wind farms are built to have a useful life of 20 years or more. Focus is placed on cost e3ciency and pro.tability with high levels of quality and availability.
A well-developed hedging strategy in terms of electricity and electricity certi.cates facilitates the borrowing of capital and stabilises income.
-e pro.tability requirement is strict: no wind farms are to be built unless the return is estimated at a minimum to be 10% of total invested capital. Expected returns in the Company's portfolio exceed this requirement.
| Hedged production | 2012 | 2013 | 2014 | 2015 |
|---|---|---|---|---|
| Total hedges electrical production (GWh) | 138 | 123 | 66 | 35 |
| Weighted average price electrical hedges (SEK/MWh) | 459 | 473 | 425 | 572 |
| Total CFD hedged production (GWh) | 395 | 420 | 61 | 0 |
| Weighted average price CFD hedges (SEK/MWh) | 53 | 52 | 88 | 0 |
| Total certi'cate hedged production (GWh) | 172 | 182 | 179 | 0 |
|---|---|---|---|---|
| Weighted average price certi'cate price hedging (SEK/MWh) | 320 | 322 | 257 | 0 |
SEK/MWh
6
Arise Windpower's objective is to have a production capacity of approximately 700 in operation or under construction by the end of 2014 through the use of wind turbines ranging in size from 1.6 to 3.0 MW. -is represents a total investment of approximately SEK 10 billion.
To achieve this objective, the Company has, since start of operations in 2006, signed around 350 leases for land in southern Sweden, and has established an extensive portfolio of more than seventy projects. In addition, the Company's intention is to acquire and complete one major project (+100 MW) every year.
In order to ensure future delivery of essential materials, Arise Windpower has concluded a framework agreement with GE Energy. Supply contracts have also been signed for concrete and road-building materials in southern Sweden. In addition, long-term agreements with respect to electrical equipment and electrical connections for the new farms have been concluded. Arise Windpower has, thereby, secured the major part of its material needs for intermediate goods in 2012 and 2013.
companies increase e8ciency In addition to wind turbines, the Group builds the transmission capability required to connect the Company's wind farms to the public grid.
Using in-house resources and competence means lead times are cut back and costs for electrical connections are reduced. In order to avoid delays in connection with the construction of wind turbines, the Company acquired its own specially-adapted mobile crane in the
summer of 2010 for the erection of wind turbines.
Arise Windpower's income is generated from sales of electricity and electricity certi.cates. In order to manage the risk that arises when market prices 5uctuate, Arise Windpower's policy is to hedge up to 60% of expected future production in a falling price hedging channel for up to .ve years.
Price hedging for the period 2012–2014 ensures good earnings levels from operational wind farms, even during periods of lower electricity and electricity certi.cate prices. -e Company's hedges as per the end of December 2011, and the historical outcome compared to spot market prices and average rates for total hedges, are shown in the table and graph on page 6.
| MSEK | 2011 | 2010 | 2009 | 2008 |
|---|---|---|---|---|
| Income Statement (Summary) | ||||
| Net sales | 180 | 67 | 27 | — |
| Operating pro't before depreciation (EBITDA) | 177 | 35 | 2 | – 15 |
| Operating pro't (EBIT) | 104 | – 2 | – 11 | – 16 |
| Financial items, net | – 38 | – 22 | – 1 | 10 |
| Pro't before tax | 65 | – 24 | – 11 | – 7 |
| Net pro't | 47 | – 18 | – 8 | – 3 |
| Balance Sheet (Summary) | ||||
| Total non-current assets | 2,615 | 1,734 | 918 | 355 |
| Cash and cash equivalents | 137 | 250 | 341 | 409 |
| Equity | 1,243 | 1 195 | 680 | 374 |
| Total assets | 2,880 | 2,075 | 1,348 | 824 |
| Interest-bearing net liability | 1,203 | 536 | 259 | – 119 |
| Cash Flow (Summary) | ||||
| Cash 7ow from operations | 200 | 32 | – 120 | 71 |
| Cash 7ow from investments | – 822 | – 812 | – 568 | – 334 |
| Cash 7ow from 'nancing activities | 509 | 688 | 620 | 627 |
| Key Ratios | ||||
| Operational capacity at period end, MW | 136.1 | 46.5 | 34.0 | — |
| Electricity production during period, GWh | 246.6 | 88.5 | 36.0 | — |
| Basic earnings per share, SEK | 1.46 | neg | neg | neg |
| Diluted earnings per share, SEK | 1.46 | neg | neg | neg |
| EBITDA margin, % | 98.1 | 52.6 | 6.4 | neg |
| Return on capital employed, % | 8.7 | 2.8 | 0.3 | neg |
| Return on equity, % | 3.9 | neg | neg | neg |
| Equity/assets ratio, % | 43.2 | 57.6 | 50.5 | 45.3 |
| No. of employees at end of period | 35 | 27 | 21 | 15 |
De!nitions, see page 32
Arise Windpower is one of the leading companies in the rapidly-expanding Swedish wind power market. -e Company manages all of the stages of the value chain connected to the construction of new wind farms, from project development to the sale of renewable electricity produced by its onshore wind turbines.
-e Company's approach is industrial, large-scale and results-oriented. -is implies that the business has been built up methodically, e3ciently and via multiple parallel projects. -e organisation possesses all the key resources required for a rapid and e3cient project development.
In view of the current trend towards renewable solutions in all areas of society, the Company strongly believes in its business concept.
Arise Windpower has worked with the establishment of wind power since 2006 and has developed into one of the leading wind power players on the Swedish market.
Arise Windpower's vision is to be one of Sweden's leading companies providing onshore wind power in terms of size, as well as competence, and, consequently, contribute to the global move towards sustainable societies. -e Company intends to take an active part in the development and consolidation of the emerging wind power sector in Sweden.
Arise Windpower aims to have approximately 700 MW in operation or under construction by the end of 2014. -is represents an investment of approximately SEK 10 billion, of which approximately 25–30 % is expected to be equity capital. With approximately 700 MW in operation, the Company will produce about 2 TWh of renewable electricity annually.
2011
2008
Arise concludes lease agreements and project development begins (June 2006)
New CEO and new o8ces (June 2007)
Arise Elnät AB is formed (July 2007)
Wind measurements begin (July 2007)
Crane for construction of turbines ordered (Dec 2007)
Board is strengthened
The 'rst wind turbines are purchased and electricity grid construction begins (May 2008) Financing for the 'rst turbines is secured (May
2008) Construction of the 'rst Arise project – Oxhult – begins (May 2008–March 2009)
Board is strengthened
Arise receives a grant of MSEK 50 from the Swedish Energy Agency (March 2009)
Oxhult goes live (March-
2009
May 2009)
Permit granted for 48 MW, construction start for Råbelöv and Brunsmo (June 2009)
Framework agreement with GE Energy for 52 turbines to be delivered in 2010-2012 (Jul 2009)
MSEK 328 share o,ering (Sep 2009)
Framework agreement with Vestas for 60 turbines to be delivered in 2010– 2012 (Oct 2009)
Move into new o8ces in Halmstad (Dec 2009)
Råbelöv goes live (Dec 2009)
Board is strengthened
2010 Decision to start construction in Mönsterås, 16 MW (Feb 2010)
Brunsmo goes live (March 2010)
IPO on NASDAQ OMX Stockholm (March 2010)
10 year cooperation agreement signed with EON in conjunction with the sale of the Knäred Station (May 2010)
Fröslida, Idhult and Kåphult go live (Dec 2010)
Decision to start construction in Kåphult, 17.5 MW, and agreement with Swedbank on funding for project (June 2010)
Decision to build 3 more turbines at Fröslida, bringing total capacity to 22.5 MW (June 2010)
Decision to start construction in Askersund and Västervik, 22 MW (Oct 2010)
Loan agreement concluded with DnB NOR for Fröslida wind farm (Dec 2010)
Takeover of 16 MW at Idhult (March 2011)
MW (Feb 2011)
Takeover of 22.5 MW at Fröslida (March 2011)
Decision to start construction in Gettnabo, 12 MW (April 2011)
Takeover of 17.5 MW at Kåphult (May 2011)
Acquisition of project company JVAB and !nancing and construction start of northern Europe's largest onshore wind power project, 203 MW in Jädraås with Platina Partners. Total investment SEK 3.1 billion (Oct 2011)
Takeover of 12 MW at Gettnabo (November 2011)
Takeover of 21.6 MW at Södra Kärra and Blekhem (Dec 2011)
Arise Windpower's business concept is to sell electricity generated by Company-owned onshore wind turbines. -e Company exercises control over all aspects of the value chain; from prospecting and permit management to funding, construction and operation of turbines, as well as the sale of renewable electricity and the maintenance of long-term ownership.
Arise Windpower is an experienced and reputable company with 38 employees. -e Company uses an industrial approach which provides economies of scale and good cost and quality control.
-e applied fully-integrated business model which includes having our own electric grid company, crane and internal service organisation implies that the Company can manage all of the critical steps in the value chain cost e3ciently, using in-house resources. Furthermore, bottlenecks are reduced, which provides security for expansion plans.
-e Company's organisational structure is shown in the chart to the right.
Arise Windpower applies the following strategies to maximise value for its shareholders:
-e Company has broadened its strategy to include, in addition to its own portfolio of projects, the ambition to undertake large projects in Sweden and Norway. Large projects are de.ned as cohesive wind farms with a potential installed capacity of 100 MW or more.
-e Company's project portfolio is concentrated to southern Sweden. -is part of the country has good wind conditions and a strong grid, with lower electricity feed and transit costs for the electricity produced. -ese are all considerable advantages compared to the more northern regions of the country.
Since Sweden was divided into four price areas, the price of electricity in southern Sweden has been higher than in the country as a whole. In addition, the road network and infrastructure are well developed, which results in relatively lower investment costs in conjunction with the construction of wind farms.
-e southern part of Sweden is, however, more densely populated than the northern part. Consequently, wind farms in the South tend to contain fewer turbines than their northern equivalents. In order to enable the establishment of larger-scale projects, the Company's strategy now encompasses projects in other parts of Sweden and Norway.
In all such cases, the Company intends to acquire Projects which already have been granted, or are close to being granted, permits.
-e Company has chosen to expand its strategy to include large projects in other parts of Sweden and Norway in order to generate even greater returns from its industrial approach and organisation, achieve good project pro.tability and create additional sources of income.
As Norway joined the joint certi.cate market for Sweden and Norway on 1 January 2012, the Company has decided to regard Norway as its home market, together with Sweden.
Objectives for 2012
-e Company's objectives for 2012 are to start construction on 50–100 MW from its own portfolio and to start up another major project (+100 MW).
With regard to large-scale projects, in 2012 the Company signed a Letter of Intent with Platina Partners for the Lingbo Project, which will include up to 85 wind turbines (160–250 MW) just west of Gävle. -is project has been granted a permit and the Company has the right to acquire between 12.5% and 50.0% of the project, the equivalent of 20 to 125 MW installed capacity. Planning is underway, as is the procurement of contractors and suppliers. Construction is planned for winter 2012/2013.
In order to .nance the planned expansion, a bond issue was undertaken in 2012 and has provided the Company with MSEK 350. -e full proceeds from this issue will be available for use as equity in new projects.
-e Company further believes that the 2012 expansion can be .nanced through the Company's cash 5ow, through the release of capital as a result of a more e3cient capital structure in existing and new projects and through the sale of individual, or groups of, turbines.
| MSEK | 2011 | 2010 |
|---|---|---|
| Production, GWh | 246.6 | 88.5 |
| Total income | 188 | 74 |
| Income SEK/MWh | 762 | 836 |
| Operating expenses | – 32 | – 19 |
| Expenses SEK/MWh | 130 | 215 |
| EBITDA | 156 | 55 |
| EBITDA margin | 83% | 74% |
During 2011, Arise produced a total of 246.6 GWh from the Company's wind farms, compared to 88.5 GWh in 2010. -e total wind energy output for the year was within the normal range of the past thirty years according to the Danish Wind Energy Index.
In total, six wind farms totalling 89.6 MW were taken over during the year, which means that the number of installed MW producing energy gradually increased from 46.5 MW at the beginning of the year to 136.1 MW by the end of 2011.
Total income for 2011 in the wind power production segment amounted to MSEK 188 with an EBITDA of MSEK 156. -e fact that Arise was able to maintain a good price level despite falling prices for electricity and electricity certi.cates is a result of the Company's hedging strategy and its ability to implement the strategy successfully.
During Q1 of 2012 the Company expects to take over 3.1 MW which are already in operation. -e Company will then have 139.2 MW of operational capacity and a production of 358 GWh in a normal wind year.
Wind Power Operations 2011 and 2010 Total income for the segment, including other income attributable to electricity certi.cates, was 762 SEK/MWh during 2011, which was signi.cantly above the market price during 2011.
Operating expenses expressed in SEK/MWh have also declined in line with increases in production. Moving forward, Arise will also gradually begin to take over the service at some farms through its own service company, which will lead to cost improvements in these wind farms.
As the Company deployed much of its production capacity during the year, there was also income prior to take over and capitalisation, which provided further positive contributions.
During the year, Arise has implemented a centralised system for the monitoring and maintenance of the turbines. -e system receives production information about the turbines and other vital information in real time. -is allows the Company to streamline operations and to anticipate incidents, thus ensuring a high technical availability and lifespan of the turbines.
During Q1 2012, the Company will have taken over and implemented a total of 139.2 MW, corresponding to an estimated normal annual production of 358 GWh. -e earnings capacity of these wind farms, operating in a year with
normal wind conditions, is illustrated below. -e examples are based on the Company's long-term income targets for electricity and electricity certi.cates of SEK 750 / MWh and a mean income based on the Company's hedges as per year-end 2011 and market prices as in March 2012, corresponding to a total of SEK 660/MWh. Operating costs are based on an average of the range SEK 115–155/MWh.
Based on the Company's long-term income targets, wind farms in operation in a year with normal wind conditions would generate an EBITDA of approximately MSEK 220. Even at current market prices, wind farms in operation in a normal year, combined with the Company's hedges, are expected to generate su3cient cash 5ow to meet administrative costs, project development and other shared functions, as well as interest payments and amortisations. -is estimate has not taken into account income from the Jädraås project, see below for more information.
and under construction
In addition to the Company's wind farms already in operation, an additional 203 MW is currently under construction in the Jädraås project, a joint undertaking with Platina Partners, with an estimated normalised annual production of 570 GWh. Operations are scheduled to start in late autumn of 2012 and the winter/spring of 2013. Arise´s share in the project is 50%, or approximately 101.5 MW and 285 GWh. Pro.ts from the Jädraås project will help to further strengthen the Company's cash 5ows.
Arise´s wind farms can be divided into three generations. It is encouraging that the Company's industrial approach has contributed to the continuous reduction of investment costs as measured in terms of SEK/ KWh per annum. In the most recent project, Jädraåsen, the investment cost is estimated at approximately SEK 5.1/KWh, net after compensation to the owners.
| MSEK | Long-term rev. target |
Market price and hedges |
|---|---|---|
| Production, GWh | 358 | 358 |
| Total income | 269 | 236 |
| Income SEK/MWh | 750 | 660 |
| Op. expenses | – 48 | – 48 |
| Expenses SEK/MWh | 135 | 135 |
| EBITDA | 220 | 188 |
| EBITDA margin | 82% | 80% |
Illustrative example of 139.2 MW/358 GWh in operation.
-ere are several reasons for the decreasing costs. -e falling Euro exchange rate, economies of scale leading to generally lower input prices and contracts, increased technological e3ciency and, not least, the fact that the Company has developed its methods and can, therefore, build more e3cient wind farms, with a strong focus on lower costs for all components.
In 2011, the .rst wind farms using 1.8 MW turbines and larger rotating blades were built. -ese are slightly more expensive in terms of MSEK/MW. However, they have a very favourable capacity factor due to a larger swept area and smaller turbine.
In other words, the new wind turbines are better able to utilise the energy contents of the wind.
-e number of full-capacity hours in the Södra Kärra project, for instance, is estimated at as much as 3,148 MWh per MW and year, in spite of the fact that the average winds are fairly moderate at around 6.6 metres per second at hub height.
-e capacity factor of the new turbines entering the market this year and in the near future is even higher.
-e Company works proactively to reduce operating costs by contracting its own service company and enhancing the availability and e3ciency of the wind farms through realtime surveillance and monitoring.
Overall, with combined total income of SEK 750/MWh, the Company believes that wind farms in operation and under construction will, together, achieve well over the targeted pre-tax return on total assets of 10%, in real terms, over a calculation period of 20 years.
-e estimated average investment costs for the entire portfolio of farms in operation and under construction is approximately SEK 5.5/KWh. -is represents an investment cost of MSEK 14.7/MW. Developments in the Company's estimated investment costs expressed as SEK/KWh and MSEK/MW are illustrated below.
-e estimated average capacity factor for the entire portfolio of wind farms in operation and under construction is approximately 31%, which corresponds to almost 2,700 fullcapacity hours per MW per year.
In relation to the investment cost, the Company has, since its formation, continuously built increasingly e3cient wind farms.
Estimated capacity factor and full-capacity hours per MW
Reaching a high number of full-capacity hours or a high capacity factor is not an end in itself, but must always be considered in relation to the investment cost. For that reason, it is possible that the Company will build both new types of turbines with a higher number of full-capacity hours per MW and per year, and earlier generation turbines which have a lower production output.
-e technology chosen will depend on what generates the highest return on total invested capital in relation to the cost of investment. -e development of the Company's estimated capacity factor and the number of full-capacity hours per MW are illustrated in the tables on page 11.
Operating expenses expressed as SEK/MWh are, on average, within the range SEK 115–155/ MWh. -ese expenses are often higher during the .rst years of operation partly due to .xed service contracts, and also due to the fact that the Company carries out .ne-tuning measures and comprehensive analyses of the wind farms during their .rst years in operation. -e analyses undertaken are important for enabling the Company to take advantage of the opportunities to continuously develop its expertise and, thus, to be able to increase the e3ciency and availability of both existing and planned wind farms.
Owning its own service company allows Arise to either assume the responsibility for the servicing and maintenance of wind farms in operation when the .xed contracts expire, or to choose to continue to outsource the service, whichever provides the highest cost e3ciency and best quality.
Arise is currently analysing the estimated economic life of the wind farms. -is is because the majority of the components are assessed to have a signi.cantly longer life than 20 years.
It should also be added that several major European wind power companies apply an economic life of at least 25 years to wind farms, based on the support of technical investigations. A longer economic life for the wind farms would positively impact the Company's returns.
With regard to investment cost in relation to estimated annual KWh, Arise has concluded that further reductions are possible. Projects which are currently being planned, are around or below SEK 5.0/KWh. -is is made possible by good wind locations and continued economies of scale, with an attractive investment cost in relation to the technology that the Company chooses as a result. -is also means that the Company will continue to build not only new-generation turbines with a higher production per installed MW, but also previous generation turbines provided that the price enables a lower investment cost per KWh.
-e Company's target is an average investment cost of SEK 5.0/KWh or less once the installed capacity reaches 2 TWh.
| Nom. cap. MW |
Exp. prod.1) GWh |
Full cap. hours MWh/year |
Capacity factor % |
In op eration since |
Initial in vestm. MSEK |
Investment cost per year-KWh |
Investment cost MSEK/MW |
Number of turbines |
Make and model |
Municipality | |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Wholly-owned | |||||||||||
| Generation 1 | |||||||||||
| Oxhult | 24.0 | 62 | 2,583 | 29% | 2009 | 415 | 6.7 | 17.3 | 12 | Vestas V 90 | Laholm |
| Råbelöv | 10.0 | 26 | 2,600 | 30% | 2010 | 139 | 5.3 | 13.9 | 5 | Vestas V 90 | Kristianstad |
| Brunsmo | 12.5 | 30 | 2,400 | 27% | 2010 | 197 | 6.6 | 15.8 | 5 | GE 2,5 XL | Karlskrona |
| Generation 1 | 46.5 | 118 | 2,538 | 29% | 752 | 6.4 | 16.2 | 22 | |||
| Generation 2 | |||||||||||
| Kåphult | 17.5 | 47 | 2,686 | 31% | 2011 | 252 | 5.4 | 14.4 | 7 | GE 2,5 XL | Laholm |
| Fröslida | 22.5 | 56 | 2,489 | 28% | 2011 | 327 | 5.8 | 14.5 | 9 | GE 2,5 XL | Hylte |
| Idhult | 16.0 | 35 | 2,188 | 25% | 2011 | 209 | 6.0 | 13.0 | 8 | Vestas V 90 | Mönsterås |
| Generation 2 | 56.0 | 138 | 2,464 | 28% | 788 | 5.7 | 14.1 | 24 | |||
| Generation 3 | |||||||||||
| Södra Kärra | 10.8 | 34 | 3,148 | 36% | 2011 | 179 | 5.3 | 16.6 | 6 | Vestas V 100 | Västervik |
| Blekhem | 10.8 | 31 | 2,870 | 33% | 2011 | 174 | 5.6 | 16.1 | 6 | Vestas V 100 | Askersund |
| Gettnabo | 12.0 | 29 | 2,417 | 28% | 2011 | 150 | 5.2 | 12.5 | 6 | Vestas V 90 | Torsås |
| Skäppentorp2) | 3.1 | 8 | 2,699 | 31% | 2012 | 43 | 5.2 | 14.0 | 1 | Vestas V 112 | Mönsterås |
| Generation 3 | 36.7 | 102 | 2,789 | 32% | 545 | 5.3 | 14.9 | 19 | |||
| Total | 139.2 | 358 | 2,574 | 29% | 2,085 | 5.8 | 15.0 | 65 | |||
| Jointly owned | |||||||||||
| Jädraås3) | 101.5 | 285 | 2,809 | 32% 2012/13 | 1,448 | 5.1 | 14.3 | 33 | Vestas V 112 | Ockelbo | |
| Total | 240.7 | 643 | 2,673 | 31% | 3,533 | 5.5 | 14.7 | 98 |
1) Expected production +/–5% in a normal wind year.
2) In operation but will be taken over in 2012.
3) Corresponds to Arise's share of 50%. The investment is net of development fees and restricted funds.
D uring the year, Arise Windpower con tinued to work on developing and re- .ning the project portfolio to its completed stage. -e e6orts made in 2010 have yielded results this year in the form of decisions from several regional and municipal administrative boards to authorise new wind farms.
-e Company's dedicated work has also resulted in the submission of a number of applications to the authorities for processing and decision-making during the year. -e Company has, thus, secured a continued high expansion rate for the coming years.
-e project portfolio has also expanded and now consists of approximately 70 projects, 10 of which have been implemented and are in operation.
-e Company is working actively on detailed planning for an additional 40 or so projects, whilst 20 projects are still in the developmental stage or dormant due to the decision by the Swedish Armed Forces to fence o6 land areas around air bases, .ring ranges and other military interests including weather radars.
-rough the construction of, to date, 10 pro-
jects, the Company has gained signi.cant experience in project implementation.
Investment costs have been reduced gradually, leading to increased pro.tability in new projects. -e fact that we are large procurers of goods and services creates economies of scale and a strong position in relation to the Company's suppliers. Examples of purchases between 2009 and 2012 (including the entire Jädraås project) include:
-e total value of the completed and contracted purchases from 2009 to 2012, including the entire Jädraås project, is over SEK 5 billion.
Furthermore, Arise's purposeful strategy has been to the map out the wind on each project location.
-e Company has identi.ed the wind potential of all current projects and has created the conditions for both optimal placement and choice of turbines. -ese measures together contribute to reducing uncertainty in planned new investments.
In 2011, Arise also began development work on projects in the 100 to 200 MW class within the context of the broadened strategy. -is strategy means that Arise will achieve an even better allocation of the Company's project development resources and accumulated expertise.
Arise can choose to own large projects wholly or jointly, or to sell them. -e Jädraås project demonstrated the Company's ability to create value through generated project development fees. In this manner, project development now also contributes directly to strengthening the Company's pro.tability.
Society's view of wind power tends to become more positive as more wind farms are built. Experience clearly shows that resistance is greatest before the wind farm is built and that the negative reaction is normally subsequently reversed to a positive view.
Intrusion and interference in the environment can be minimised through ensuring adequate distances to neighbouring properties and the right choice of wind turbines. Sound level measurements shall be made retrospectively and sound levels shall be lower than authorised.
-e visual impact of a wind farm cannot be avoided. -e turbines are large and tall and they remain visible even if Arise chooses to place them primarily in forest environments. Nevertheless, the Company's experience is that wind power is perceived positively, even at the local level, once people become accustomed to the new landscape.
Many authorities have also matured in respect to the way they handle wind energy issues, telecom operators and civil aviation authorities, for example, have become more solution-oriented regarding con5icts between wind energy and air tra3c.
A persistent problem is the National Defence Agency's stance that their technical equipment and JAS military aircraft cannot function as desired within a 40 km radius of a wind turbine, which may seem strange to many.
-e military's position, however, only affects a limited part of the Company's portfolio and is not expected to a6ect the Company's expansion plans.
-e overall trend is to move towards a greater variation in turbine size and power. Consequently, planning and applications are adjusted so that maximum 5exibility is incorporated into the permit. -e regional administrative boards' requirements for investigations and technical reporting are ever increasing and the bar has been raised in some locations to levels which are, in Arise's opinion, overly ambitious.
On the other hand, environmental courts have developed good procedures for handling wind power issues, which together with the society's need for renewable energy has resulted in more legal victories in the courts.
By monitoring court cases, Arise will improve its practices for assessing its own rights. In addition, an increasing number of developers appeal the court rulings and have often won their appeals.
In summary, Arise is in a strong position to provide the Company with permits at rates that are in line with the Company's expansion targets.
Projects are categorised according to the following criteria:
Wind power projects in which the wind farm has been handed over after trial operations and which now produce electricity. During the .rst three months, .ne-tuning of wind turbines, as well as an extensive .rst service, are carried out. In this period, turbine production is not optimal. Full, normal production can, therefore, only be expected three months after the approved trial operation and takeover.
Refers to projects in which the necessary permits have been obtained, the investment decisions have been made by the Board, .nancing in the form of borrowed funds and equity is available, and in which the majority of total project investment costs have been secured.
Projects that have been granted the necessary permits to begin construction, but where construction has not yet started. In some cases, Arise Windpower waits until su3cient wind data has been made available.
Permit applications begin with consulting the relevant authorities to receive approval for the construction of wind farms. If Arise Elnät is involved, the Company also applies for a grid concession from the Energy Markets Inspectorate. -is stage is complete when all permits have been obtained or if a permit has been refused.
-is stage begins when Arise Windpower has signed leases and planning agreements concerning the site's detailed pre-conditions for wind power generation. -e area is thoroughly analysed and the exact coordinates for the proposed wind turbines are determined. Wind studies are initially based on theoretical maps. Subsequently, however, actual wind measurements are done using the Company's wind measuring equipment.
ong-term leases have been signed for the entire project portfolio, providing the Company with the right, but not the obligation, to construct wind turbines on each property. For the majority of projects, planning has been initiated but is not yet complete. -e feasibility study the Company carried out before the lease agreement was signed will lead to the preliminary siting of new wind turbines. Initially, wind studies are based on theoretical maps. Subsequently, however, actual wind measurements are done using the Company's wind measuring equipment.
| Number of pro jects |
Number of tur bines |
Total e,ect (MW) |
Average e,ect per turbine (MW) |
|
|---|---|---|---|---|
| In operation | 9 | 64 | 136 | 2.1 |
| Under construction/commissioning | 2 | 34 | 103 | 3.0 |
| Project portfolio | ||||
| Permits granted | 4 | 12 | 31 | 2.6 |
| Permit applications | 32 | 223 | 593 | 2.7 |
| Project planning completed | 17 | 86 | 258 | 3.0 |
| Leases taken out | 5 | 24 | 72 | 3.0 |
| Total portfolio | 69 | 443 | 1,194 | 2.7 |
Approximately 15% (about 150 MW) of the above project portfolio is a&ected by the Ministry of Defence's advertised limitations due to JAS (jet 'ghter plane) (ights. )e introduction of such limitations does not, however, a&ect the Company's expansion plans as the remaining projects are su*cient for planned expansion and the Company lease portfolio is constantly being complemented. Farms in operation or under construction are not a&ected. )e total number of MW in the portfolio may both increase or decrease over time, which is natural as construction of various projects approaches and as weak wind locations are eliminated. Locations in which con(icts of interest or other problems have arisen are also eliminated. )e project portfolio is consequently renewed with new leases at a steady rate.
According to the Danish 30-year wind in dex (www.vindstat.dk), wind conditions in 2011 were normal.
-e year ended with good wind conditions, which largely compensated for the decrease in wind during the .rst quarter. -e graph below on the left illustrates the wind's energy content between 1979 and 2011, with 100 being the aggregated average over the period. According to the same index, monthly variations in wind energy during 2011 are shown in the right graph below. Although correlation between the Danish wind index and the Company's wind farms provides a rough reference for the wind's energy content, regional and local variations may occur.
Wind power suppliers generally o6er turbines with larger wing diameter and taller tower heights, which result in increased production per installed turbine.
-e acceptance of taller wind turbines at the local levels has also increased, which is positive for the Company. Higher towers imply stronger average winds and, thus, an increased production of electricity. -e Company has, for example, been granted a permit to build, and has subsequently built, a wind farm in Mönsterås with a maximum total height of 198 metres, compared with the maximum total height of 150 metres in the previous projects.
One example of increased production e3 ciency is shown below. -is example is based on an average wind speed of 6.7 meters per second at hub height and 12% total farm losses:
| Turbine – type | MWh/year | Full load hours |
|---|---|---|
| V 90 – 2.0 MW | 5,284 | 2,642 h |
| V 100 – 1.8 MW | 5,986 | 3,326 h |
| Increased e,. | 13 % | 26 % |
As illustrated above, production is signi. cantly greater for a V100 turbine than for a V90 turbine, in spite of the fact that the effect is, at the same time, reduced by 10%. -is is due to the considerably larger swept area of a V100 (100 m rotor diameter) compared with a V90 (90 m rotor diameter). -e current trend is an increased rotor diameter and higher towers, two factors which each lead to increased electricity production as a result of larger swept area and higher wind speeds.
In spite of the economic crisis in many EU countries and the general .nancial turmoil, the Company, together with Platina Partners LLP, has managed to .nance and begin construction on northern Europe's largest land-based wind project, the so-called Jädraås project. An agreement for long-term loan . nancing in the amount of SEK 2.1 billion under at favourable terms was signed in October 2011. -is, more than anything else, proves that wind power investments continue to be of interest to banks and lenders.
A milestone was also reached as, in addition
to commercial banks, funding was provided by EKF (the Danish Export Credit Agency) and PensionDanmark. For large projects in the future, the Company expects to continue to use various forms of public .nancing, such as export credit organisations and state pension funds, in addition to commercial banks.
Another interesting .nancing source is the bond market, where, in March 2012, the Company succeeded in issuing the .rst wind bond in Sweden. -e bond was oversubscribed in just one day, before the Company's road show had even started. -is unsecured bond can, in its entirety, be used as equity in new projects.
Since its founding, the Company has not experienced any signi.cant borrowing di3 culties when .nancing planned construction projects, and has experienced continued good levels of support from the commercial banks it associates with. In addition, the Company has succeeded in diversifying its debt capital base through the Jädraås project.
-e electricity certi.cate system is a marketbased system designed to increase production of renewable electricity in a cost-e6ective manner. From 2002 to 2011, renewable electricity production increased by over 13 TWh, primarily through new biomass power and wind power. 1,500 new facilities have been commissioned, the majority of which are wind power. -e goal of the Swedish electricity certi.cate system is to reach an additional
25 TWh of renewable energy by 2020 as compared with the 2002 numbers.
-e electricity certi.cate system primarily concerns producers of renewable electricity, electricity suppliers, electricity-intensive industries and certain electricity users. -e energy sources entitled to receive certi.cates are wind power, certain hydro power, certain biofuels, solar energy, geothermal energy, wave energy and peat used in combined power and heating plants. -e purpose of the certi.cates is to provide extra income for producers of renewable energy.
Demand for electricity certi.cates is governed by the so-called quota obligation, that is, the number of certi.cates an energy consumer is required to buy in relation to the amount of electricity consumed. -e quota obligation varies from one year to the next and is designed to create a balance between supply and demand for electricity certi.cates.
-e quotient curve can be altered after approval by the Swedish Parliament, which has taken place on one occasion.
-e graph below presents the new quota obligations compared to previous quota obligations after a decision in the Swedish Parliament in 2010, which will apply from 2013. -e blue line represents the Swedish national growth target.
Quota obligations are determined on the basis of a forecast and intended to balance supply and demand. Balance is achieved through the adjustment of the quota obligation which takes place every four years. -e next adjustment will take place in 2015.
Between 2007 and 2010, the surplus of certi.cates remained virtually unchanged at about 5 million certi.cates. In 2011, the surplus increased sharply to almost 9 million certi.cates. -is was partially due to lower levels of power consumption than expected and partially to the vast expansion of wind power.
At the end of 2012, a substantial portion of the older electricity production entitled to certi.cates, primarily bio-based, will be phased out of the system, and further phasing out will take place in 2014. Any accumulated surplus will, thus, be reduced, resulting in a better balance between supply and demand. A more detailed description of the electricity certi.cate system can be found on Arise's website.
Since 1 January 2012, Sweden and Norway have had a common electricity certi.cate market. -is allows trading in electricity certi.cates to take place across national borders. -e aim of the joint electricity certi.cate market is to increase renewable electricity production by 26.4 TWh between 2012 and 2020, which represents approximately 10% of electricity production in both countries. For Sweden, this means that the goal of reaching 25 TWh of new renewable energy by 2020 compared to 2002 levels remains unchanged.
-e market for certi.cates has, thus, doubled compared to when it was previously limited to Sweden. -is is a positive development which leads to increased liquidity and improved pricing in the commercial certi.cate market.
Arise has learned from experience that it takes time to obtain construction permits for new hydro and wind power projects. In many cases, grid reinforcement is also necessary, which requires additional time.
-e expansion of electricity production entitled to new certi.cates in Norway is, thus, likely to be relatively limited in the initial stages. Instead, Norway is likely to become a net importer of Swedish electricity certi.cates, which should lead to a reduction of the Swedish surplus.
As the surplus of certi.cates has grown, their prices have fallen, and, by the end of 2011, the cost of spot supplies were approximately SEK 155/MWh (ref SKM). See the graph below on the right, showing the price in SEK/MWh.
According to the assessment of the Company and the Energy Agency, prices will increase beyond the current levels. -e reasons for this are, as previously mentioned:
Price developments of electricity certi.cates are also closely linked to electricity prices in the Nordic countries. -is is due to the fact that these two income streams must together be at a level allowing the production of new renewable energy sources to be built up at a pace necessary to meet the targets established by Sweden and Norway.
As the situation stands today, the necessary level of income is estimated at between SEK 700–750/MWh. -eoretically, certi. cates should, therefore, be priced according to the di6erence between the price required for a pro.table expansion of wind power and the current price of electricity. In practice,
however, there is a certain inertia experienced resulting in a time lag between changes in the prices of electricity and certi.cates.
It is, therefore, extremely important to implement a functioning, well thought out hedging strategy and to build up total future income over time, at moments when the forward prices for electricity and certi.cates respectively are equal to, or higher than, the calculated price. For further information, see the Company's Hedging Strategy on page 7.
On 1 November 2011, Sweden was divided into four di6erent price areas. -is means that prices may now di6er in the four areas at a given point in time, on the basis of supply and demand in each area. -e southern area,
known as the Malmö Price Area, normally maintains a higher price than the average of the four areas, while the prices in the northern area, known as the Luleå Price Area, are normally lower than the average price.
As the Company's production is predominantly located in the Malmö Price Area, this price division is usually to the advantage of the Company.
On the futures market, price area di6erences between Malmö and what is referred to as the "system price", that is, the average of all the Nordic countries, including Estonia, which now also belongs to the Nord Pool area, landed at approximately EUR 8/MWh for the years 2013 to 2015. Futures for the year 2012 are lower, at EUR 4 to 6/MWh.
-e outcome of the price di6erence between Malmö and the system price between November 2011 and February 2012 was EUR 1 to 2/MWh.
-e Company has hedged all production in the Malmö area for the period 2012 and 2013 at a price of approximately EUR 5.5 to 6/MWh and a portion (20%) of the year 2014 at a price of approximately EUR 10/MWh.
A combination of the mild winter of 2011/2012 and well-.lled hydro reservoirs in Norway and Sweden has forced down electricity prices down. Price trends for coal, oil, CO2 and gas also strongly in5uence electricity prices, as do developments in industrial production in Europe.
-e graph below on the left shows the price in EUR/MWh.
-e Company's basic price forecast is that the price of electricity in the Nordic countries will be EUR 5–7/MWh below the German electricity prices, which are, to some extent, the benchmark in Europe. In Germany, a major expansion of coal power is currently underway to replace the large amount of nuclear power capacity which has been, or will be closed down.
Historically, electricity prices in Germany, which are based on older coal power, have been around EUR 50–55/MWh which, according to the Company's assumptions, would lead to an electricity price in the Nordic region of around EUR 45–48/MWh.
New coal power increases prices by approximately EUR 10/MWh at the same time as fuel prices will fall slightly as a result of an increase in combustion e3ciency. -e massive expansion of wind and solar power in Germany may, however, prevent a sharp price increase in the country.
Nevertheless, the net e6ect should be a slight increase in the price of German electricity, which could lead to rising prices in the Nordic countries during periods in which the area is dependent on imported energy. Due to the favourable hydrological situation currently prevailing in Sweden and Norway, however, the relationship is actually the reverse: power can be exported from Sweden and Norway, which is also re5ected in the current low spot and forward prices in the Nordic countries.
Wind power in Sweden increased sharply in 2011. -e number of TWh produced by wind power increased by 2.55 TWh to around 6.1 TWh in 2011. 2,039 wind turbines had been installed by the end of 2011, representing an increase of 354. -e number of MW installed totalled 2,899, an increase of 755 MW.
Svensk Vindenergi (Swedish Wind Power) estimates that the annual production from Swedish wind power will amount to almost 8 TWh at the end of 2012. -e Swedish Energy Agency's prediction is for 8 TWh in 2012 and 9 TWh in 2013.
-ere are many operators in the Swedish wind energy market who are active in di6erent parts of the value chain.
Arise Windpower is the market leader among the owners and operators of on-shore Swedish wind power as regards to projects over 10 MW in terms of operating capacity and the combination of operating capacity and construction. Arise's market share of installed capacity amounted to approximately 12% in 2011. Listed below are the operators who have, with projects of at least 10 MW, more than 50 MW in operation or under construction in Sweden.
| Operator | MW in operation + under constr. | |
|---|---|---|
| Arise | 342/241 | |
| Skellefteå Kraft/Fortum | 225 | |
| Statkraft/SCA/Södra | 209 | |
| HG Capital | 181 | |
| PWP | 132 | |
| Eolus | 118 | |
| Svevind | 116 | |
| Jämtkraft/Skanska/O2 | 111 | |
| Vattenfall | 108 | |
| Rabbalshede Kraft | 93 | |
| Vindin | 79 | |
| Stena Renewable | 74 | |
| EON | 55 | |
Source: Svensk Vindenergi and Arise Windpower. Figures from Arise refer to the share of the Jädraås project.
Players in the market include integrated power companies, private equity companies, land owners and wind power developers whose business model, to some extent, includes the ownership of wind turbines. -ere are also other developers whose business model is primarily based on the development of projects for sale.
21
The Board of Directors and the CEO of Arise Windpower AB (publ), Corporate Identity Number 556274-6726, hereby present the annual report and consolidated 'nancial statements for the 'nancial year 1 January 2011 – 31 December 2011.
Arise Windpower AB is the Parent Company of the Group, which includes a number of wholly-owned subsidiaries usually referred to as Arise Wind Farm followed by a number. -ese companies own and manage the parks where the wind turbines are located. In addition, Arise Elnät AB, Arise Service AB and Arise Kran AB have been previously established. During the year, an associated company, Sirocco Wind Holding AB, was acquired and is now co-owned with Sydvästanvind AB, which is controlled by the English .rm, Platina Partners LLP. Sirocco Wind Holding AB owns the Jädraåsen project, which is managed by both Jädraås Vindkraft AB and Hälleåsen Kraft AB.
-e Parent Company performs project planning for suitable wind locations, applies for permission to build turbines, assists in the procurement of .nancing, key components and contracts, plans suitable acquisitions of projects or companies and administers and manages the sale of electricity and certi.cates on behalf of the Group companies.
-e subsidiary Arise Wind Farm 1 AB manages the electricity producing wind farms: twelve turbines in Oxhult outside Laholm, .ve turbines in Råbelöv outside Kristianstad, .ve turbines in Brunsmo outside Karlskrona and seven turbines in Kåphult located in the close vicinity of Oxhult park. -e Kåphult was commissioned in February and the takeover took place at the end of May 2011.
-e subsidiary Arise Wind Farm 3 AB manages the wind farm Fröslida, near Hylte, which includes nine turbines. -e farm was commissioned at the end of 2010 and the takeover took place at the end of March 2011.
-e subsidiary Arise Wind Farm 4 AB manages the wind farm, Idhult, outside Mönsterås, which includes eight turbines. -e farm was commissioned in early 2011 and the takeover took place at the end of March 2011.
-e subsidiary Arise Wind Farm 5 AB manages the wind farm, Gettnabo, outside Torsås, which includes six wind turbines. -e farm was commissioned in September 2011 and the takeover took place at the end of November 2011.
-e subsidiary Arise Wind Farm 6 AB manages the wind farms, Blekhem, outside Västervik and Södra Kärra, outside Askersund. Both farms include six turbines. -e farms were commissioned in November 2011 and the takeovers took place at the end of December 2011.
-e subsidiary Arise Elnät AB focuses on consulting on electricity with responsibility for electrical contracts relating to the Group's wind power construction work. -is responsibility includes, for example, the management of applications for concessions to build transmission networks used to transmit elec-
tricity produced in the wind farms to the overlying electricity networks.
-e subsidiary Arise Service AB has, since the beginning of the year, built up and developed its service operations with the aim of being responsible for and providing maintenance for the Group's wind turbines.
-e subsidiary Arise Kran AB has been responsible for lifting the turbines into place in all of the farms built during the year, except for Fröslida. -e crane has also been leased to other external customers.
All Group operations are conducted in Sweden.
During the year, the Idhult, Kåphult Gettnabo, Blekhem and Södra Kärra farms, totalling 90 MW, have been commissioned and taken over. -e estimated production on an annual basis amounts to approximately 232 GWh for the six farms. -e expansion has, largely, been conducted according to plan, in spite of the fact that the process of obtaining permits has continued at a very slow pace and required a great deal of attention during 2011.
Acquisition, .nancing, investment decisions and construction activities have taken place in conjunction with the Jädraås project. -e total investment, including the expansion and acquisition of 66 V112 turbines from Vestas was SEK 3.1 billion. Arise's 50 % share of the production is estimated at a minimum of 285 GWh per year, based on a normal wind year.
-e Jädraås project has been partly .nanced with own shares, amounting to MSEK 28, and through a directed new share issue, amounting to MSEK 47.
Furthermore, the Company has executed another share issue, as well as issuing warrants to personnel, providing the Company with a total of approximately MSEK 11 before issuing expenses.
Of the maximum 300,000 warrants decided upon at the Annual General Meeting, senior management has subscribed to 112,000 warrants.
During the year, loan agreements have been established with DNB (previously DnB NOR). -e Jädraås project is .nanced via a bank syndicate comprised of DNB, SEB, Eksport Kredit Fonden (EKF) and Pensiondanmark Pensionforsikring.
Net sales for the year amounted to MSEK 180 (67), an increase of 170%. In addition, MSEK 31 (19) was capitalised for the Company's own use, and other operating income amounted to MSEK 74 (22), of which the development fee for Jädraås contributed to MSEK 37. As a result, total sales amounted to MSEK 286 (107), an increase of 166%.
Net sales can be attributed to the production of electricity at the Group's wind farms and are comprised of income from sold electricity, as well as earned electricity certi. cates for the actual produced electricity. -e amount of wind power produced during the year has been in line with the average level of the previous 30 years, according to Danish wind statistics.
Operating income before depreciation (EBITDA) amounted to MSEK 177 (35). Personnel costs amounted to MSEK –45 (–31) and other external expenses totalled MSEK –64 (–41). -e increase can primarily be attributed to the expansion of operations, an increase in the number of employees and the fact that expenses for the crane business are reported in other external expenses.
Operating income (EBIT) was MSEK 104 (–2), including planned depreciation of MSEK –73 (–37). Net .nancial expenses were MSEK –38 (–22) and pro.t before tax, MSEK 65 (–24). Net pro.t was MSEK 47 (–18), which corresponds to earnings of SEK 1.46 (neg) per share both before and after dilution.
-e comprahensive income to MSEK –37 (–19) after cash 5ow hedges against electricity, interests and currencies decreased earnings by MSEK –84 (–1).
Net investments in property, plants and equipment during the year amounted to MSEK 522, and the entire amount of the investment refers to the planned wind farm expansion. In the previous year, investments amounted to MSEK 900, of which MSEK 61 can be attributed to investments in a mobile crane.
Investments in .nancial assets regarding the Jädraås project amounted to MSEK 376 (—).
Arise Windpower's cash 5ow from operating activities before changes in operating capital amounted to MSEK 177 (28) and cash 5ow after investments amounted to MSEK –622 (–780). Current and non-current interestbearing liabilities increased by MSEK 606 (206). Interest payments decreased cash 5ow by MSEK –56 (–23) and payments to blocked accounts totalled MSEK –52 (–20). New share issues contributed a net total of MSEK 11 (525) to the Group, after which cash 5ow for the year amounted to MSEK –113 (–92).
Interest-bearing net liabilities amounted to MSEK 1,203 (536). At the end of the period, the equity/assets ratio was 43.2% (57.6).
Cash and cash equivalents amounted to MSEK 137 (250). In addition, non-utilised credits and grants amounted to MSEK 38 (388) at the end of the period.
Due to the fact that Arise Windpower only has Swedish subsidiaries, tax has been calculated according to the Swedish tax rates, corresponding to 26.3 %.
In 2011, Arise Windpower also engaged in certain research activities by cooperating with, and actively supporting, a professorship at Halmstad University focusing on terrestrial wind analysis.
In addition, the Group conducts development work together with Vestas and GE Energy in order to gain more knowledge about wind behaviour in di6erent environments. Furthermore, internal work on how to improve measurements and the analysis of individual farms and turbines is conducted on an on-going basis.
During the year, the average number of employees in the Group amounted to 32 (24). -e total number of employees at year-end was 35 (27). Additional information on the number of employees and salaries, remuneration and terms of employment is provided in Note 4 of the consolidated .nancial statements.
During the year, the Parent Company continued to develop its operations and contributed to the core activities by making plans for suitable wind locations, signing leases, producing e6ect analyses, local plans and building permits, undertaking purchases and managing the Group's trading activities with regards to electricity and certi.cates and performing administrative services.
-e Parent Company manages the Group's production plans and electricity hedges in accordance with the established .nancial policy. -e subsidiary electricity producers (Arise Wind Farm companies) sell their entire production stock to the Parent Company at agreed prices. -ereafter, the Parent Company sells the electricity to customers through bilateral agreements or on the spot market, in which case the net pro.t of the trade operations is reported in net sales.
-e Parent Company's gross pro.t, which also includes intra-group invoiced expenses, including capitalised work for own use, amounted to MSEK 86 (24) during the year, and the net pro.t after tax amounted to MSEK 13 (–5). On behalf of subsidiaries, the Parent Company has previously made advance payments for certain investments, which has subsequently been repaid with an amount of MSEK 105 (–213). Subsidiaries were capitalised by an amount of MSEK –191 (–248), and MSEK 286 (–) was added to the associated companies.
During the year, the average number of employees was 18 (16) and at year-end, the Parent Company had 23 (20) employees. For more information on the number of employees, salaries, remuneration and terms of employment, please refer to Note 4 in the consolidated .nancial statements on pages 38–39.
-e Group's core business is to produce and transit renewable electricity without releasing dust, carbon dioxide or other emissions into the air, water or ground. Operations include building and construction work, in connection with the production of new wind farms and related electrical systems, complying with the regulations for such operations.
-e Group's administration of oils, chemicals and fuels is limited to oils used for lubricating the mechanical parts of the wind turbines, for necessary usage by external entrepreneurs for ground and construction work and also for providing fuel to suppliers and the vehicles owned by the Group.
-e operations of the wind farms result in a direct impact on the environment in the form of noise, shadows and visual formations.
In owning and operating wind farms and electrical plants, the Group is required to hold all the necessary permits and also make certain registrations, according to the Swedish Environmental Code. -e Group has all of the permits required to conduct its current operations.
Arise Windpower divides risks into external risks (political, cyclical, environmental and competition risks), .nancial risks (energy price, certi.cate price, currency, interest rate, .nancing, capital, liquidity and credit risks) and operational risks (operations, operating expenses, contracts, disputes, insurances and other risk management).
According to Arise Windpower's assessment, the demand for wind produced electricity will remain high for the foreseeable future. -e political objective initiated by the Swedish Energy Agency means that, by 2020, a total of 30 TWh of electricity consumption in Sweden will originate from renewable energy. -is implies a signi.cant need for the construction of wind farms, which produced 6 TWh in 2011.
Sensitivity to market 5uctuations is mainly associated with possibilities of .nding access to equity and debt .nancing. A weaker .nancial market may complicate the raising of capital.
Arise Windpower's income depends on the amount of electricity generated by the installed wind turbines which, in turn, is dependent on the wind speed during the actual period in question at the locations concerned, and the accessibility of the wind farms. Wind speed varies between seasons
and also between individual years. By establishing a portfolio of the projects in various geographical locations and by performing extensive wind measurements prior to making decisions regarding investments, the risk of production volumes variation is reduced. Unfavourable weather conditions and changes in climates may, however, have a negative impact on electricity production which, in turn, would a6ect the Company's income.
In terms of competition, Arise Windpower is one of few players in the market able to provide landowners with an overall concept of wind farm construction including network connections, large-scale procurement of turbines and access to a wheeled crane with the capacity to lift all turbines on the market up to the size bracket 3 MW. An industrial perspective and control over the expansion are some of the most important prerequisites for the Group's future competitiveness.
Energy price risk is caused by 5uctuations in the price of electricity quoted on the market place, Nord Pool. -e Group manages this risk by hedging a certain portion of planned production. Risks associated with the price of electricity certi.cates are managed in a similar manner.
Currency risk in the Group primarily arises due to purchases and sales of turbines on the Nord Pool, both usually priced in EUR. In terms of cash 5ows, this risk will to a certain extent settle itself but, until then, the Group seeks to lower its risk by hedging transactions in foreign currencies. -e interest risk has been managed by binding the interest rates of raised loans, to a large extent, to .xed interests through swap or cap interest rate agreements.
Liquidity risk refers to the risk that Arise Windpower is unable to meet its .nancial commitments as a result of insu3cient liquidity and/or di3culties in raising new loans. Arise Windpower is to maintain . nancial preparedness by holding a liquidity reserve, comprising cash and cash equivalents and non-utilised granted credit, corresponding to a minimum of MSEK 50.
For more information, please refer to Note 11 in the consolidated .nancial statements, on pages 42–45.
-e risk assessment of signi.cant consequences from a complete shutdown of all of the Company's wind turbines, as a result of simultaneous technical failures, is low. -is is partly due to the farms' geographical spread and is also due to the fact that various manufacturers have been used (currently Vestas and GE). -e risk is reduced as the Company continues to build up its production capacity in a variety of locations. Work is in progress to build up a complete maintenance system for all wind turbines including, for example, quali.ed vibration measurement in all key components of each turbine, complete component registration and systems for logging errors and corrective measures in the turbines. -is reduces the dependency on the wind turbine suppliers and will in the long term lead to a increase in accessibility.
According to Arise Windpower's assessment, there are no disputes with potentially signi.cant impacts on the Group's .nancial position. -e Group's insurance program includes business interruption insurance, liability insurance, product insurance, wealth insurance and limited coverage for environmental damage.
According to Arise Windpower's assessment, operational risks are reduced by the size of the operations and the Group management's composition of employees with deep insight into, as well as continuous and close contact with, the operations.
Information regarding corporate governance and the work conducted by the Board during the year is provided in the Corporate Governance Report on pages 59–62.
On 31 December 2011, there were a total of 33,428,070 shares outstanding. Shareholders have the right to vote for all the shares they own or represent. All shares are entitled to equally dividends.
As of 31 December 2011, the existing warrant programs entitled the right to subscribe to an equivalent of 1,262,500 shares which, when fully exercised, will result in a dilution of 3.6 %. However, one of the warrant agreements contains conditions that, according to management's assessment, a maximum of 830,000 shares being subscribed (Note 15), implying a dilution e6ect of 2.4 %.
-ere are no restrictions regarding the transferability of shares in accordance with the Articles of Association or applicable legiskation. Furthermore, the Company is not aware of any agreements between shareholders that would restrict the transferability of shares.
Information on the Company's shareholders is provided on page 63.
Exept customary terms in credit arrangements, the Group has no substantial agreements which could be terminated on the basis of changes in ownership. -ere are no agreements between the Company and members of the Board or employees stipulating remuneration if such individuals give notice of termination, are dismissed without a valid reason or if their employment or contract ceases as a result of a public takeover bid.
Arise Windpower puts major e6orts into conducting operations in agreement with legal requirements and the Company's Code of Conduct. -e code is to be followed by both employees and the Board of Directors. Suppliers, resellers, consultants and other business partners are also expected to follow the Code of Conduct.
-e Code of Conduct stipulates that bribes are not allowed, that the Company is to be restrictive in terms of giving/receiving gifts and that all business transactions are to be clearly stated in the Company's .nancial statements, which are to be prepared in accordance with generally accepted accounting principles in an honest, relevant and comprehensible manner.
Arise Windpower takes a neutral position regarding political issues. Neither the Group's name, nor its assets, may be used for the promotion of political parties or the interests of political candidates.
-e Code of Conduct also includes the Company's work towards a sustainable society, stipulating that the Group's products and processes are to be designed in a manner e6ectively utilising energy and resources and minimising waste and residual products beyond the product's useful lifecycle.
Arise Windpower recruits and treats its employees in a manner ensuring that there is no discrimination on the basis of gender, race, religion, age, disability, sexual orientation, nationality, political belief, origin, etc. -e Group encourages diversity on all levels. Neither child labour, nor work under threat, is tolerated. Freedom of association and the right to collective bargaining and agreements is respected.
Senior management shall be o6ered a .xed, market-based salary, which is to re5ect the individual's responsibilities and performance. Bonuses shall be based on objectives attributable or relevant to the operations. During 2011, senior management can receive a bonus up to a maximum amount of 4 months' salary. For 2012, similar guidelines have been proposed regarding bonuses, but the introduction of an additional warrant program is also encouraged.
A more detailed description of the guidelines can be found on the Company's website under "Corporate Governance".
In mid-March 2012, the Company issued a senior and unsecured bond on the Swedish market. -e bond volume totalled MSEK 350 and the .nal maturity date was set to 2015. -e bond has a variable interest rate of 3 months STIBOR + 5.00 percentage points, and will be listed on NASDAQ OMX Stockholm.
Arise has also signed a Letter of Intent with Platina Partners LLP and the companies have a joint intention to .nance, construct, own and manage the project Lingbo, amounting to a total of 160 to 250 MW.
Lingbo has been developed by Bergvik Skog AB with the permission for Platina to acquire the project in its entirety and Arise, in turn, has the right to acquire a participating interest of between 12.5% and 50% of the project. -e Lingbo project is located 30 kilometres to the north of the Jädraås project and permits has already been obtained for the construction of up to 85 wind turbines to be built.
-e work of creating local plans, as well as other planning and preparations for the start of the construction, is on-going, with an expected initiation autumn 2012 at the earliest.
-e Letter of Intent is contingent on resolutions being adopted by both parties' Boards of Directors, which Arise expects to take place on 25 April this year. To ensure that Arise will obtain a participating interest in Lingbo exceeding 12.5%, a bond issue for MSEK 350 was successfully completed. -e interest share, represented by MSEK 350, depends on the . nal size of the project. -e agreement is an expansion of the parties' successful cooperation in the Jädraås project, 203 MW, which is under construction and progresses according to plan. -rough the extended cooperation with Platina, Arise strengthens its position as the leading company in terms of onshore wind power in Sweden.
-e Company's .nances remain strong and expansion is progressing according to plan, despite the slow process of receiving necessary permits. Including the Jädraås project, Arise has completed, or initiated, the construction of a total of 340 MW, of which 240 comprises to Arise's share, compared to the goal of having 260 MW in operation, or under construction, at the end of 2011. -e Lingbo project will add between 160–250 MW to the total number. In 2012, the Company will use its resources mainly for the Jädraås project, the development of the Lingbo project and the project portfolio. -is will result in the construction of other projects, being initiated during the second or third quarter of 2012 at the earliest.
According to the Company's assessment, the construction of an additional 50 to 100 MW can be initiated during the year, possibly being .nanced with the Company's cash 5ows, a more e6ective capital structure and on the basis of the sales of single turbines or groups of turbines. -e Company intends to continue the development of wind farms in the 100 MW-class and the development of its own project portfolio. -ese .t well into the Company's industrial model and are, at the same time, a good source for raising equity.
-e Company's long-term goal remains unchanged, that is, to have approximately 700 MW (corresponding to approximately 300 wind turbines) in operation, or under construction, by the end of 2014.
| Amounts in MSEK | Note | 2011 | 2010 |
|---|---|---|---|
| Net sales | 180 | 67 | |
| Work performed by the Company for own use and capitalised | 31 | 19 | |
| Other operating income | 74 | 22 | |
| Total income | 2 | 286 | 107 |
| Personnel costs | 4 | – 45 | – 31 |
| Other external expenses | 5 | – 64 | – 41 |
| Operating pro!t before depreciation (EBITDA) | 177 | 35 | |
| Depreciation of property, plant and equipment | 9 | – 73 | – 37 |
| Operating pro!t (EBIT) | 104 | – 2 | |
| Financial income | 6 | 8 | 2 |
| Financial expenses | 6 | – 46 | – 25 |
| Pro!t before tax | 65 | – 24 | |
| Income tax | 7 | – 18 | 6 |
| Net pro!t for the year | 47 | – 18 | |
| Earnings per share (SEK) | |||
| Before dilution | 1.46 | neg | |
| After dilution | 1.46 | neg | |
| Number of shares at the beginning of the year | 30,635,570 | 20,488,570 | |
| Number of shares at the end of the year | 33,428,070 | 30,635,570 |
Earnings per share before dilution are calculated by deviding net pro't for the year by the number of shares. The average number of outstanding shares applied in calculating earnings per share before dilution amounted to 32,031,820 shares (2010: 25,562,070 shares). The Company has issued warrants that could result in dilution, but no dilution is reported when the average price for the year as regards the listed equity value is below the average of the subscription price of the warrants.
Treasury shares have not been included in calculating earnings per share in 2010.
| 2011 | 2010 |
|---|---|
| 47 | -18 |
| – 108 | – 1 |
| – 6 | – |
| 30 | 0 |
| – 84 | – 1 |
| – 19 | |
| – 37 |
Comprehensive income is 100 per cent attributable to the shareholders in the Parent Company.
| Amounts in MSEK | Note | 2011 | 2010 |
|---|---|---|---|
| ASSETS | |||
| Fixed assets | |||
| Property, plant and equipment | 9 | 2,127 | 1,678 |
| Investments in associated companies | 10 | 84 | — |
| Receivables with associated companies | 10,22 | 285 | — |
| Deferred tax assets | 7 | 45 | 34 |
| Other 'nancial assets | 12 | 75 | 23 |
| Total !xed assets | 2,615 | 1,734 | |
| Current assets | |||
| Inventories | 13 | 24 | 17 |
| Accounts receivable | 15 | 29 | 3 |
| Other current receivables | 11,14 | 12 | 18 |
| Prepaid expenses and accrued income | 16 | 63 | 53 |
| Cash and cash equivalents | 137 | 250 | |
| Total current assets | 265 | 340 | |
| TOTAL ASSETS | 2,880 | 2,075 | |
| EQUITY | |||
| Share capital | 17 | 3 | 3 |
| Other contributed capital | 1,324 | 1,238 | |
| Hedging reserve | – 95 | – 11 | |
| Retained earnings/Accumulated de'cit | 12 | – 35 | |
| Total equity | 1,243 | 1,195 | |
| Liabilities | |||
| Non-current liabilities | |||
| Non-current interest-bearing liabilities | 18 | 1,330 | 759 |
| Provisions | 19 | 20 | 7 |
| Total non-current liabilities | 1,350 | 766 | |
| Current liabilities | |||
| Current interest-bearing liabilities | 18 | 82 | 47 |
| Accounts payable | 22 | 26 | |
| Other liabilities | 11 | 139 | 23 |
| Accrued expenses and deferred income | 20 | 44 | 19 |
| Total current liabilities | 287 | 114 | |
| TOTAL EQUITY AND LIABILITIES | 2,880 | 2,075 | |
| Pledged assets | 21 | 2,624 | 1,809 |
| Contingent liabilities | 21 | 50 | 58 |
| Amounts in MSEK | Note | 2011 | 2010 |
|---|---|---|---|
| Operating activities | |||
| Operating pro't (EBIT) | 104 | – 2 | |
| Adjustment for non-cash items | 8 | 75 | 30 |
| Tax paid | – 1 | 0 | |
| Cash "ow from operating activities before changes in working capital | 177 | 28 | |
| Cash "ow from changes in working capital | |||
| Increase in inventories | – 7 | – 16 | |
| Increase (–)/Decrease (+) in operating assets | – 14 | 2 | |
| Increase in operating liabilities | 44 | 17 | |
| Cash "ow from operating activities | 200 | 32 | |
| Investing activities | |||
| Acquisition of property, plant and equipment | – 549 | – 900 | |
| Government grants | 27 | — | |
| Investments in associated companies | – 8 | — | |
| Investments in other 'nancial 'xed assets | – 291 | — | |
| Sales of property, plant and equipment | — | 88 | |
| Cash "ow from investing activities | – 822 | – 812 | |
| Financing activities | |||
| Increase in interest-bearing liabilities | 606 | 206 | |
| Deposits into blocked accounts | – 52 | – 20 | |
| Interest paid | – 66 | – 25 | |
| Interest received | 10 | 2 | |
| Issue of new shares | 11 | 525 | |
| Cash "ow from !nancing activities | 509 | 688 | |
| Cash "ow for the year | – 113 | – 92 | |
| Cash and cash equivalents at beginning of year | 250 | 341 | |
| Cash and cash equivalents at end of year | 137 | 250 | |
| Interest-bearing liabilities at end of year | 1,412 | 806 | |
| Blocked cash at end of period | – 73 | – 20 | |
| Interest-bearing net liability | 1,203 | 536 |
| Amounts in MSEK | Share capital |
Other con tributed capital |
Hedging reserve |
Retained earn ings/ accumu lated de'cit |
Total equity |
|---|---|---|---|---|---|
| Opening balance as of 1 Jan 2010 | 2 | 706 | – 10 | – 17 | 680 |
| Pro't/loss for the year | – 18 | – 18 | |||
| Other comprehensive income for the year | – 1 | – 1 | |||
| Total comprehensive income | – 1 | – 35 | – 36 | ||
| Issue of new shares | 1 | 553 | 554 | ||
| Cost of issue of new shares | -29 | – 29 | |||
| Tax regarding cost of issue of new shares | 8 | 8 | |||
| Adjustment in value of issued warrants | 0 | 0 | |||
| Total transactions with shareh., recognised directly in equity | 1 | 532 | 533 | ||
| Closing balance as of 31 Dec 2010 | 3 | 1,238 | – 11 | – 35 | 1,195 |
| Opening balance as of 1 Jan 2011 | 3 | 1,238 | – 11 | – 35 | 1,195 |
| Pro't for the year | 47 | 47 | |||
| Other comprehensive income for the year | – 84 | – 84 | |||
| Total comprehensive income | – 84 | 47 | – 38 | ||
| Issue of new shares | 0 | 11 | 11 | ||
| Issue of new shares upon acquisition of associated companies | 47 | 47 | |||
| Adjustment in value of issued warrants | 0 | 0 | |||
| Utilisation of treasury shares for the acquisition of assets | 28 | 28 | |||
| Total transactions with shareh., recognised directly in capital | 0 | 86 | 86 | ||
| Closing balance as of 31 Dec 2011 | 3 | 1,324 | – 95 | 12 | 1,243 |
DEFINITIONS OF KEY RATIOS
Return on capital employed: EBITDA/average capital employed
Return on equity: Net pro't/average equity
EBITDA margin: Operating pro't before depreciation (EBITDA)/Net Sales
Net pro't/average number of shares outstanding before dilution
Earnings per share, after dilution: Net pro't/average number of shares outstanding after dilution
Interest-bearing net liabilities: Interest-bearing liabilities – cash – blocked accounts
Equity/Assets ratio: Equity/total assets
Arise Windpower AB (publ), Corporate Identity Number 556274-6726, is a limited liability company registered in Sweden. The Company's registered o8ce is located in Halmstad. The Company's and its subsidiaries' primary operations are described in the administration report in this annual report. The consolidated 'nancial statements for the 'nancial year ending on 31 December 2011 were approved by the Board of Directors on 27 March 2012, and will be presented to the Annual General Meeting for adoption on 25 April 2012.
Arise Windpower complies with and has prepared its consolidated ' nancial statements in accordance with International Financial Reporting Standards (IFRS) as issued by International Accounting Standards Board (IASB) and the interpretations of the International Financial Reporting Interpretations Committee (IFRIC) as approved by the EU Commission for application in the EU. The Group also applies recommendation RFR 1 Supplementary Accounting Rules for Groups issued by the Swedish Financial Reporting Board, which speci'es the additional disclosures to IFRS as required according to the regulations of the Swedish Annual Accounts Act.
The Group's reporting currency and the Parent Company's functional currency is the Swedish krona (SEK). Unless otherwise stated, all amounts are stated in millions of Swedish kronor. In the consolidated 'nancial statements, items have been measured at acquisition cost, with the exception of 'nancial instruments, which have been measured at fair value. The applied accounting principles which have been deemed signi'cant to the Group are described below.
None of the IFRS or IFRIC interpretations which, for the 'rst time, were obligatory for the 'nancial year commencing on 1 January 2011, have had a signi'cant impact on the Group.
IAS 19 "Employee Bene'ts" was amended in June 2011. The amendment implies that the corridor method can no longer be applied with regard to de'ned bene't plans: instead, all actuarial pro'ts and losses are reported in other comprehensive income when they arise. This change does not in7uence the Group since it only has de'ned contribution plans. The standard has not yet been adopted by the EU.
IFRS 9 "Financial Instruments" concerns the classi'cation, measurement and recognition of 'nancial liabilities and assets. IFRS 9 was issued in November 2009 for 'nancial assets and in October 2010 for 'nancial liabilities, and it replaces the parts in IAS 39 which relate to classi'cation and measurement of 'nancial instruments. IFRS 9 states that 'nancial assets shall be classi'ed into two categories; measurement at fair value or measurement at amortised cost. Classi'cation is determined at initial recognition based on the company's business model and the individual characteristics in the contractual cash 7ows. No major changes take place with respect to 'nancial liabilities compared with IAS 39. The largest change applies to liabilities designated at fair value. The part of the change in fair value which is attributable to credit risk shall be reported in other comprehensive income instead of pro't or loss, provided that no accounting mismatch arises. The Group intends to apply the new standard during the 'nancial year commencing on 1 January 2015 at the latest, and has not yet assessed the e,ects. The standard has not yet been adopted by the EU.
IFRS 10 "Consolidated Financial Statements" is based on the existing principles as it identi'es control as the determining factor for the determination of whether a company shall be included in the consolidated 'nancial statements. The standard provides further guidance in order to help determine whether control exists when it is hard to assess. The Group intends to apply IFRS 10 in the 'nancial year commencing on 1 January 2013 and has not yet assessed its full e,ects on the 'nancial statements. The standard has not yet been adopted by the EU.
IFRS 12 "Disclosure of Interests in Other Entities" comprises disclosure requirements for subsidiaries, joint arrangements, associated companies and non-consolidated structured entities. The Group intends to apply IFRS 12 in the 'nancial year commencing on 1 January 2013 and has not yet assessed the full e,ects on the 'nancial statements. The standard has not yet been adopted by the EU.
IFRS 13 "Fair Value Measurement" aims to make fair value measurement more consistent and less complex by providing an exact de'nition and a joint source in IFRS for fair value assessments and associated disclosures. The requirement does not extend the scope of the use of fair value but, instead, provides guidance regarding the way in which it shall be applied in instances in which other IFRS standards already require or allow measurement at fair value. The Group has not yet assessed the full e,ect of IFRS 13 on the 'nancial statements. The Group intends to apply the new standard in the 'nancial year commencing on 1 January 2013. The standard has not yet been adopted by the EU.
None of the IFRS or IFRIC interpretations which have not yet entered into force are expected to have a signi'cant impact on the Group.
Subsidiaries are those companies in which the Group, directly or indirectly, holds more than 50 per cent of the votes or, in any other manner, exercises a controlling in7uence. Subsidiaries are included in the consolidated 'nancial statements as of the date on which control is transferred to the Group and deconsolidated as of the date on which control is relinquished.
Subsidiaries are reported in accordance with the purchase method. The acquired identi'able assets, liabilities and contingent liabilities are measured at fair value as of the acquisition date. Any surplus, constituting by the di,erence between the consideration paid for the acquired participation and the sum of fair values of the acquired identi'able assets and liabilities, is reported as goodwill. If the acquisition cost is less than the fair value of the acquired subsidiary's net assets, the di,erence is reported directly in the income statement.
Acquisition-related costs are expensed as they arise. Intra-Group transactions, balance sheet items and income and expenses from transactions between Group companies are eliminated. Pro'ts and losses arising from intra-Group transactions, reported as assets, are also eliminated. Accounting principles for subsidiaries have, if appropriate, been altered in order to guarantee a consistent application of the Group's principles.
Associated companies are the companies in which the Group has a signi'cant in7uence but not a controlling in7uence, which, in principle, applies to a participation amounting to between 20 % and 50 % of the votes. Participations in associated companies are reported in accordance with the equity method. In accordance with the equity method, investments are initially measured at acquisition cost, after which the carrying value is increased or decreased in order to re7ect the Group's participation in the pro'ts or losses of the associated company after the acquisition date. The Group's carrying value of participations in associated companies also includes any goodwill and other surplus values identi'ed in the acquisition.
If the participating interest in an associated company decreases but the investment continues to be de'ned as an associated company, only a proportional amount of the pro't or loss which was previously reported in other comprehensive income is reclassi'ed in the statement.
The Group's share of the pro't arising after the acquisition is reported in the income statement and the share of the changes in other comprehensive income after acquisition is reported in other comprehensive income, with a corresponding change in the participation's carrying value. When the Group's share in the losses of an associated company amounts to, or exceeds, its participation in the associated company, including any receivables without collaterals the Group does not report further losses unless it has assumed legal or informal obligations or made payments on behalf of the associated company.
At the end of each reporting period, the Group assesses whether there is objective proof for impairment regarding investments in associated companies. In such case, the Group calculates the impairment as the di,erence between the recoverable amount of the associated company and the carrying value, and reports the amount in "Pro't participation in associated companies" in the income statement.
In the consolidated 'nancial statements, leases are classi'ed either as 'nancial or operating. Contracts in which the economic bene'ts associated with the commitment have, in all material aspects, been transferred to the lessee, are reported as 'nancial leases. Other contracts are reported as operating leases and are expensed on a straight-line basis over the lease term.
Each lease payment is allocated between amortisation of liabilities and 'nancial expenses. The corresponding payment commitments, after deduction for 'nancial expenses, are included in the balance sheet items Non-current interest-bearing liabilities and Current interest-bearing liabilities. The interest from the 'nancial expenses is reported in the income statement, allocated over the lease term so that each accounting period receives an amount corresponding to a 'xed interest rate for the liability reported in each period. Fixed assets held in accordance with 'nancial lease agreements are depreciated over the asset's useful life or lease term, whichever is the shorter.
The Group signs lease agreements with land owners for periods of 30 years or more for the construction of wind turbines. Lease agreements regarding land are de'ned as operating leases. Lease payments for operating lease contracts are expensed systematically over the lease term.
In each entity, transactions in foreign currencies are reported on the basis of the entity's functional currency, in accordance with the exchange rate applicable on the transaction date. Monetary assets and liabilities in foreign currencies are translated at the closing rate, and the exchange rate di,erences arising are included in income for the period. Exchange rate di,erences between operating receivables and operating liabilities are reported in operating income, whilst exchange rate di,erences between 'nancial receivables and liabilities are reported in net 'nancial income/expenses.
Pro'ts and losses on derivatives for hedging are reported in the income statement items in which the hedged transactions are reported.
Income is recognised in the income statement when the signi'cant risks and bene'ts associated with the sale have been transferred to the purchaser. Income is not reported if it is likely that the economic bene'ts will not accrue to the Group. Income is reported at the fair value of that which has been received, or is expected to be received, with deduction for discounts granted.
Net sales include the sales of generated electricity, earned and sold electricity certi'cates and realisations of electricity and currency derivatives attributable to hedged production. Other operating income comprises development compensation, income for sold but not yet generated electricity, income from crane rental, capital gains from the sales of 'xed assets and other minor items (Note 2).
Income from sales of generated electricity is recognised during the period in which the delivery was performed at the obtained spot price, forward price or other agreed price. Income relating to electricity certi'cates is reconised at the applicable spot price, forward price or other agreed price for the period in which the electricity certi'cate is earned, which is the period in which the electricity is produced.
Electricity certi'cates are reported as inventories in the balance sheet when they are registered in the Energy Agency's account, and as accrued income for any periods during which they have been earned but not yet registered.
Government grants are reported at fair value when it is regarded as reasonably assured that the grants will be received and the Group will ful'l the conditions attached to the grant.
Income from government grants is reported in the income statement in the same period as the expense for which the grant has been received is reported. Government grants received for investments in 'xed assets are reported in the balance sheet by reducing the total investment amount.
Employee bene'ts in the form of salaries, holiday pay, paid sick leave, etc., and pensions are reported as they are earned. With regard to retirement bene't obligations, the Group only has de'ned contribution pension plans which primarily include retirement pension, disability pension and family pension.
Premiums are paid continuously during the year, by each Group company, to separate legal entities, normally insurance companies. The size of the premium is based on the salary level and, other than pension payments, the Group has no obligation to pay further bene'ts. The expenses are charged to the Group's earnings at the same time as the bene'ts are earned, which normally coincides with the time at which premiums are paid. Regarding bene'ts to senior executives please refer to the administration report on page 15.
Tax expense or tax income for the period comprises current tax and deferred tax. Current tax is based on the year's taxable income. The year's taxable income is di,erent from the year's reported pro't as it has been adjusted for non-taxable and non-deductible items. Deferred tax is tax attributable to taxable or deductible temporary di,erences which incur or reduce tax in the future.
Deferred tax is calculated, applying the balance sheet method on the basis of temporary di,erences between the carrying values and taxable values of assets and liabilities. The amounts are calculated based on the manner in which the temporary di,erences are expected to be settled and by applying the tax rates and tax regulations agreed or announced on the balance sheet date.
Deferred tax receivables attributable to 'scal losses and deductible temporary di,erences are reported only to the extent that it is likely that future 'scal surpluses will be accessible, against which temporary di,erences and loss carry-forwards can be o,set.
Deferred tax is reported as an income or expense in the income statement, apart from the cases in which it refers to transactions reported in other comprehensive income or in equity, in which case any tax effects are also reported in other comprehensive income or equity, respectively.
Deferred tax receivables and tax liabilities are o,set when they relate to income tax debited by the same tax authority or when the Group intends to settle tax with a net amount.
Property, plant and equipment is reported at cost less accumulated depreciation and impairment. The cost includes expenditure which is directly attributable to the acquisition of the asset and transfers from equity of earnings from approved cash 7ow hedges relating to purchases of property, plant and equipment in foreign currencies. The cost for wind turbines also includes, in contrast to the cost for other investments, normal expenses for installation. Interest expenses attributable to construction and installation are included in the acquisition value. All expenses for continuous new investments are capitalised.
In conjunction with the permit for the construction of wind turbines, the Group commits to restore land to its original condition after the end of these turbines useful life. The estimated expense for the restoration is reserved in the Group's 'nances and included in the cost for wind turbines.
Subsequent expenditure increases the asset's carrying value or is reported as a separate component only when it is likely that future economic bene'ts associated with the asset will accrue to the Group and the cost of the asset can be measured reliably. All other forms of repairs and maintenance are reported as expenses in the income statement in the period in which they arise.
Land is assumed to have an inde'nite useful life and is, therefore, not depreciated. Depreciation of wind turbines is undertaken on a straightline basis down to the asset's estimated residual value and over the asset's expected useful life. The depreciation of wind turbines is initiated in conjunction with the takeover from the supplier. For the calculation of depreciation according to plan, the following useful lives are applied:
At each reporting date, the assets' useful lives are reviewed and are tested for impairment of the Group's assets. In such cases, the asset's recoverable amounts are calculated.
The recoverable amount is the higher of the asset's value in use and net realisable value. The value in use comprises the current value of all incoming and outgoing payments attributable to the asset during the period in which it is expected to be utilised in the operations, plus the present value of the net realisable value at the end of the asset's useful life. If the calculated recoverable amount is less than the carrying value, the asset is impaired to its recoverable amount.
A previous impairment is reversed when a change has occurred in the assumptions used in the determination of the asset's recoverable amount when it was impaired, and which implies that the impairment is no longer deemed necessary. Reversals of previous impairments are assessed individually and reported in the income statement.
Financial assets can be categorised in the following categories: 'nancial assets valued at fair value through pro't or loss, loans and receivables, investments held to maturity, and 'nancial assets available-forsale. The classi'cation depends on the intention for which the 'nancial asset was acquired. Management determines the classi'cation of the 'nancial assets upon initial recognition. The only category held by the Company is loans and receivables.
Loans and receivables are 'nancial assets which are not derivatives, which have determined or determinable payments and which are not quoted on an active market. They are included in current assets, with the exception of items maturing later than 12 months after the balance sheet date, which are classi'ed as 'xed assets. The Group's loans and receivables comprise receivables from associated companies, accounts receivable and other receivables, as well as cash and cash equivalents in the balance sheet.
Loans and receivables are reported after acquisition date at amortised cost, applying the e,ective interest method, less any reserve for increase in value.
A 'nancial asset or a 'nancial liability is reported in the balance sheet when Arise Windpower becomes a party to the instrument's contractual terms and conditions. A 'nancial asset is derecognised from the balance sheet when the rights of the agreement are realised, expire or the Company loses control over them. A 'nancial liability is derecognised from the balance sheet when the obligations in the agreement are ful'lled or extinguished in a di,erent manner. Acquisitions and sales of 'nancial assets are reported on the transaction date, which is the date on which the Company commits to acquire or sell the asset, except for cases in which the Company acquires or sells listed securities when settlement accounting is applied. On each reporting date, Arise Windpower assesses whether there are objective indicators suggesting that a 'nancial asset or a group of 'nancial assets needs to be impaired.
In determining the fair value of long-term derivatives, o8cial market prices on the balance sheet date are applied. The market values of other 'nancial assets and 'nancial liabilities are calculated through generally accepted methods such as discounting of future cash 7ows to the listed market rate for each maturity. Translation to Swedish kronor is made applying the quoted exchange rate on the balance sheet date.
Financial assets and liabilities are o,set and reported in a net amount in the balance sheet when there is a legal right of o,set and when the intention is to settle the items with a net amount or to realise the asset and settle the liability at the same time.
Cash and cash equivalents include cash and bank balances, which are measured at fair value.
All derivates are reported at fair value in the balance sheet. Measurement of hedging instruments for electricity prices, currencies and interest rates is based on observable data. For derivatives for which hedge accounting is not applied and for derivatives included in a fair value hedge, the changes in value are reported in the income statement. In cash 7ow hedging, the changes in value are reported in speci'c categories within equity until the hedged item is reported in the income statement. Any pro'ts or losses on hedging instruments attributable to the e,ective part of hedging are reported in equity under hedging reserve. Any pro'ts or losses attributable to the ine,ective parts of hedging are reported in the income statement; electricity and currencies in operating income and interest derivatives in net 'nancial income.
When transactions are made, the Group documents the relationship between hedging instrument and the hedged item, as well as the Group's objectives for risk management and the risk management strategy regarding hedging. The Group also documents its assessment, both when the hedging is initiated and on an on going basis, as regards whether the applied derivatives in hedge transactions are e,ective in terms of o,set changes in the fair value or cash 7ows attributable to the hedged items.
Information on the fair value of various derivatives applied in the hedging system can be found in Note 11.
Liabilities to credit institutions and credit facilities are categorised as "Other 'nancial liabilities" and measured at amortised cost, whereby directly attributable expenses such as arrangement fees are distributed over the loan's maturity using the e,ective interest method. Non-current liabilities have an expected maturity longer than 1 year whilst current liabilities have a maturity shorter than 1 year.
The Group capitalises borrowing expenses directly attributable to purchases, construction or production of an asset as it takes time to complete the construction for use, as part of the amortised cost of the asset (Note 9).
Accounts payable are obligations to pay for products or services which have been acquired in the operations from suppliers. Accounts payable are classi'ed as current liabilities if they fall due within one year or earlier. If not, they are recognised as non-current liabilities.
Accounts payable are initially recognised at fair value and thereafter at amortised cost, applying the e,ective interest method.
Inventories are measured at the lower of cost and net realisable value. The net realisable value is equivalent to the listed value on a speci'c exchange for electricity certi'cates or another value if a di,erent agreement has been concluded. The cost for inventories is calculated by applying the 'rst in, 'rst out method (FIFO).
Operating segments are reported in a manner which is consistent with the internal reporting, which for Arise means Wind power operations and Other wind power development.
Ordinary shares are classi'ed as equity. Obligatory redeemable preference shares are to be classi'ed as liabilities; however, this is not applicable for Arise.
Transaction costs which can be directly attributed to the issuing of new ordinary shares or bonds are reported, net after tax, in equity, as deductions from the capital received from the issue.
When a Group company purchases the Parent Company's shares (repurchase of own shares), the paid purchase price, including any directly attributable transaction costs (net after tax), reduces the pro't carried forward, until the shares are withdrawn or sold. If these ordinary shares are, at a later date, sold, the received amount (net after any directly attributable transaction costs and tax e,ects) is reported in pro't carried forward.
In preparing 'nancial statements in accordance with IFRS and generally accepted accounting principles, estimates and assumptions about the future are made, which a,ect balance sheet and income statement items. These assessments are based on past experience and the various assumptions which the management and the Board regard as reasonable under the prevailing circumstances. In cases in which it is not possible to determine the reported value of assets and liabilities on the basis of information from other sources, measurements are based on such estimates and assessments. If other assumptions are made or other conditions arise, the actual outcome may di,er from these assessments. Due to the fact that these types of assessments are normally signi'cant in calculating tax, the assessments made regarding future taxation may have a signi'cant impact on Arise Windpower's income and 'nancial position.
Deferred tax receivables regarding loss carry-forwards reported in the Group amount to MSEK 17 (25), see Note 7. The reported value of these tax receivables has been assessed at year-end and it has been regarded as likely that the losses may be o,set against surpluses in future taxation. The tax receivables refer to Swedish tax losses, which can be utilised for an inde'nite period. The Group's operations, in the form of actual wind farms in operation, are expected to generate signi'cant pro'ts over the next few years, for which reason Arise Windpower believes that there are factors con'rming that it will be possible that the tax losses to which the tax receivables are attributable will be o,set against future taxable surpluses.
The useful life of a wind turbine has been estimated at approximately 20 years, on the basis of which the capital investment appraisal is determined. In cases in which the useful lives prove to be shorter than 20 years, Arise Windpower's pro'ts and cash 7ows can be negatively in7uenced.
The Company has concluded framework agreements regarding the purchase of wind turbines, including clauses regarding cancellation fees under certain circumstances. On the basis of actual purchase plans and forecasts, Company management assesses that no fees will be payable (Notes 9 and 21).
In certain projects there are requirements on the restoration of land after the expiration of the project. The expenses for the dismantling of wind turbines and restoring the land around wind turbines have been estimated to MSEK 20 (7) for turbines in operation, for which a provision har been made in the 'nancial statements (Note 19) and included in the depreciable amount.
Net sales include the sale of generated electricity, earned and sold electricity certi'cates, as well as realisations of electricity and currency derivatives relating to hedged production.
| 2011 | 2010 | |
|---|---|---|
| Electricity | 106 | 38 |
| Electricity certi'cates | 74 | 29 |
| Net sales | 180 | 67 |
Realised derivatives have a,ected net sales positively by MSEK 8 (7).
The Group's electricity production amounted to 246.6 (88.5) GWh. The average income for electricity was SEK 432 (429) per MWh and for electricity certi'cates was SEK 300 (325) per MWh, ie. an average income per produced MWh of SEK 732 (754) per MWh.
The following items are included in Other operating income:
| Other operating income | 74 | 22 |
|---|---|---|
| Other items | 9 | 1 |
| Project management and administrative services | 5 | — |
| Development fee | 37 | — |
| Gains attributable to sales of non-current assets | — | 5 |
| Revenue from crane rental | 16 | 9 |
| Other income attrib. to electricity and certi'cates | 8 | 7 |
| 2011 | 2010 |
Work performed by the Company for its own use and capitalised refers to internal work capitalised at the Group's wind power projects.
The Group's internal reporting system is based on the return and pro'tability of the wind farms built and in operation, for which reason Wind power operations form the primary basis of segment reporting. All other activities of the Group aim to develop wind farms, for which reason these activities have been grouped into Other wind power development. Transfer prices between the various segments are determined on the basis of the "arm's length" principle, that is, between parties who are independent, well informed and with an interest in the transactions made. Segment income, earnings and assets include directly attributable items and items which can be allocated to segments in a reasonable and reliable manner.
| Wind power operations | Wind power developm. | Eliminations | Group | |||||
|---|---|---|---|---|---|---|---|---|
| 2011 | 2010 | 2011 | 2010 | 2011 | 2010 | 2011 | 2010 | |
| Net sales, external | 180 | 67 | — | — | — | — | 180 | 67 |
| Net sales, internal | — | — | 6 | 18 | – 6 | – 18 | — | — |
| Capitalised work on own account | — | — | 31 | 19 | — | — | 31 | 19 |
| Other income | 8 | 7 | 67 | 15 | — | 74 | 22 | |
| Total income | 188 | 74 | 104 | 51 | – 6 | – 18 | 286 | 107 |
| Op. inc. before depreciation (EBITDA) | 156 | 55 | 18 | – 9 | 3 | – 11 | 177 | 35 |
| Operating income (EBIT) | 93 | 22 | 14 | – 12 | – 4 | – 12 | 104 | – 2 |
| Operating pro't (EBT) | 53 | – 1 | 16 | – 12 | – 4 | – 12 | 65 | – 24 |
| Assets | 2,443 | 1,658 | 435 | 417 | — | — | 2,880 | 2,075 |
All operations are conducted in Sweden. In the segment Wind power operations, MSEK 24 (23) refers to sales to a single customer. Eliminations comprise the sale of leases for the exploited land areas, hiring of measuring equipment, consulting services primarily consisting of licensing and planning work, and further charged administrative expenses.
| Average number of employees | 2011 | 2010 | ||||
|---|---|---|---|---|---|---|
| Women | Men | Total | Women | Men | Total | |
| Parent Company | 5 | 15 | 20 | 5 | 13 | 18 |
| Subsidiary | 1 | 11 | 12 | — | 6 | 6 |
| Group total | 6 | 26 | 32 | 5 | 19 | 24 |
| Salaries and other remuneration | ||||||
| Board | of which | Other | Board | of which | Other | |
| and CEO | variable rem. | empl. | and CEO | variable rem. | empl. | |
| Parent Company 1) | 4.0 | 0.5 | 18.4 | 5.3 | — | 8.2 |
| Subsidiaries 2) | 3.4 | 0.7 | 5.6 | 2.1 | 0.2 | 3.0 |
| Group total | 7.4 | 1.2 | 24.0 | 7.4 | 0.2 | 11.2 |
| Salaries and other remuneration | ||||||
| Salaries | Social | of which | Salaries | Social | of which | |
| and remun. | sec. contr. | pens. costs | and remun. | sec. contr. | pens. costs | |
| Parent Company | 22.4 | 9.5 | 3.6 | 13.5 | 7.7 | 2.5 |
| Subsidiaries | 9.0 | 4.3 | 1.8 | 5.1 | 3.4 | 1.3 |
| Group total | 31.4 | 13.8 | 5.4 | 18.6 | 11.1 | 3.8 |
| Remuneration to the Board of Directors, | Directors' | Variable | Other | Pension | ||
| CEO and Senior Management | fees | Salaries | remun. | bene'ts | costs | |
| Pehr G Gyllenhammar, Chairman | 1.0 | |||||
| Birger von Hall | 0.5 | |||||
| Joachim Gahm | 0.7 | |||||
| Jon G Brandsar | — | |||||
| Total remuneration to the Board of Directors | 2.2 | |||||
| Peter Nygren, CEO | 1.8 | 0.4 | 0.1 | 0.6 | ||
| Other senior executives (5 individuals) | 4.9 | 1.1 | 0.2 | 1.3 | ||
| Total remuneration to CEO and senior management |
6.7 | 1.5 | 0.3 | 1.9 |
1) In addition to the reported salaries and remuneration, consulting fees of MSEK 0.4 (1.8) have been paid to the former Board member Ulf Corné, during Q1, 2011 (see Note 16 page 56).
2) In addition to the reported salaries and remuneration, consulting fees of MSEK 0.3 (0.3) have been paid to three directors in a subsidiary.
The Chairman and Members of the Board are paid in accordance with the resolution of the Annual General Meeting. Those Board Members who are employees of the Company have received no remuneration or bene'ts other than those relating to their employment. Remuneration to the CEO and other Senior Executives consists of basic salary, variable remuneration, other bene'ts and pensions. Senior Executives refers to the group of individuals who, together with the CEO, formed the Group Executive Board in 2011
All employees are covered by a collective remuneration program which is directly linked to the quantitative objectives set out within the Group. The targets for 2011 were achieved to some extent and a variable remuneration based upon this remuneration program was paid out in the form of salaries and pensions amounting to MSEK 5.1 (0.8). No other payments were made.
Other bene'ts primarily refer to company cars.
The retirement age for the CEO and other Senior Executives is 65. The pension contribution to the CEO is 35% of the pensionable salary and follows the de'ned contribution plan. Other Senior Executives also have de'ned contribution pension plans and for 2011, the pension premium averaged 28 (26) percent of the base salary. Variable compensation solutions do not form the basis for any pension payments for the CEO or for the Senior Executives. All pensions are vested, meaning that they are not conditional upon future employment.
Remuneration and bene'ts in the form of 'nancial instruments have not been paid out or provided for.
Between the Company and the CEO, a notice period of 6 months has been agreed upon. Notice of termination on behalf of the Company to other Senior Executives is typically between 3 and 6 months. During the notice period, normal salary is paid. No severance payments to the CEO or other Senior Executives are paid.
In 2011, the Remuneration Committee provided the Board with recommendations on principles for remuneration to Senior Executives. The recommendations included the proportions between 'xed and variable remuneration and the size of any increases in salary. The Committee also proposed criteria for the assessment of variable remunderation, pension terms and severance pay. The Board discussed the Committee's proposal and made a recommendation on remuneration policy, which was also approved by the Annual General Meeting.
Remuneration to the CEO for the 'nancial year 2011 was resolved by the Chairman of the Board in accordance with the recommendations
| Sick leave in the Group | 2011 | 2010 |
|---|---|---|
| Total sick leave | 2.2% | 1.0% |
| Short-term sick leave | 0.9% | 0.3% |
| Long-term sick leave | 1.3% | 0.7% |
| Sick leave for men | 1.9% | 1.1% |
| Sick leave for women | 3.3% | 0.6% |
| Sick leave, employees under 30 | 0.4% | 4.7% |
| Sick leave, employees aged 30–49 | 3.8% | 0.1% |
| Sick leave, employees aged 50 or above | 0.7% | 0.3% |
The total sick leave is stated as a percentage of the employees' regular working hours. Long-term sick leave refers to sick leave for a continuous period of 60 days or more.
| 2011 | 2010 | |
|---|---|---|
| Öhrlings PricewaterhouseCoopers | ||
| Audit assignment | 1 | 1 |
| Audit acitivities other than the audit assignm. | 1 | 0 |
| Tax consultancy | 1 | 0 |
| Other services | 0 | 1 |
| Total | 3 | 2 |
of the Remuneration Committee, as approved by the Annual General Meeting. Remuneration to other Senior Executives was determined by the CEO after consultation with the Remuneration Committee, within the framework of the remuneration policy.
In 2011, the Remuneration Committee included Birger von Hall, (Chairman) and Joachim Gahm. The Committee is convened when required, but at least twice a year to prepare proposals on remuneration to the CEO and to accept or reject their proposal for the remuneration and conditions for the Senior Executives who report directly to him. Furthermore, the Committee establishes principles for determining the salaries and conditions of employment for Senior Executives, which are submitted to the AGM for approval. The Remuneration Committee shall make recommendations on the remuneration, terms and principles of the Board which will, consequently, decide on these matters. In 2011, the Committee met on three occasions.
| Women | Men | ||||
|---|---|---|---|---|---|
| No. of | Percent | Percent | |||
| 2011 | |||||
| Board of Directors | 0 | 0% | 4 | 100% | |
| Senior management | 0 | 0% | 6 | 100% | |
| 2010 | |||||
| Board of Directors | 0 | 0% | 6 | 100% | |
| Senior management | 1 | 10% | 9 | 90% | |
| Total !nancial expense | – 46 | – 25 |
|---|---|---|
| Foreign exchange losses | – 6 | – 1 |
| Interest expenses | – 40 | – 24 |
| Total !nancial income | 8 | 2 |
| Foreign exchange gains | 0 | 0 |
| Interest income | 8 | 2 |
| 2011 | 2010 | |
| Tax on pro!t for the year | 2011 | 2010 |
|---|---|---|
| Deferred tax | – 18 | 6 |
| Reported tax | – 18 | 6 |
| Deferred tax | ||
| Attributable to unutilised loss carry-forward 1) | 17 | 25 |
| Derivatives stated at fair value | 30 | 0 |
| Fixed assets | – 2 | 9 |
| Total recognised deferred tax | 45 | 34 |
| Reconciliation of reported tax in the Group | ||
| Pro't/loss before tax | 65 | – 24 |
| Tax 26.3% | – 17 | 6 |
| Tax e,ect of: | ||
| Non-decuctible expenses | 3 | – |
| Correction of tax expense for prior years | 0 | 0 |
| Other additional and removed items | – 4 | – |
| Reported tax on pro!t for the year | – 18 | 6 |
| Change in deferred tax | ||
| Opening value, net | 34 | 20 |
| Reported deferred tax on net pro't/loss for the year | – 18 | 6 |
| Tax items recognised directly in equity 2) | 30 | 8 |
| Closing value, net | 45 | 34 |
1) The Group's total tax loss carry forward amounts to MSEK 66 (96), of which MSEK 37 (37) is blocked from use until the income year 2014. The 'nancial de'cit is expected to be utilised, in its entirety, against future taxable pro'ts.
2) Tax items recognised directly in Other comprehensive income refer to the Group's hedging reserve attributable to 'xed income, electricity and forward currency contracts, as well as to tax e,ects of costs attributable to new share issues.
Note 7 Tax
Cash and cash equivalents comprise cash and bank balances.
| Total | 75 | 30 |
|---|---|---|
| Gain/loss from sale of property, plant and equipment | — | – 5 |
| Impairment of proceeds from warrants | 0 | 0 |
| Unrealised exchange gains | 2 | – 2 |
| Depreciation and impairment of property, plant and equipment | 73 | 37 |
| 2011 | 2010 |
| Buildings and land 1) |
Wind power, foundations and electrical inst. |
Equipment, tools, 'xtures and 'ttings |
Advances and construction in progress 2) |
Total | ||||||
|---|---|---|---|---|---|---|---|---|---|---|
| 2011 | 2010 | 2011 | 2010 | 2011 | 2010 | 2011 | 2010 | 2011 | 2010 | |
| Opening aquisition cost | 6 | 5 | 749 | 470 | 75 | 8 | 897 | 429 | 1,728 | 911 |
| Purchases/investments 3) | — | 2 | 13 | — | 4 | 68 | 506 | 846 | 523 | 916 |
| Grants | — | — | — | — | — | — | — | – 16 | — | – 16 |
| Sales/disposals | — | – 1 | — | – 82 | – 1 | – 1 | — | — | – 1 | – 83 |
| Reclassi'cations | – 3 | — | 1,295 | 361 | 2 | — | – 1,293 | – 362 | — | — |
| Closing aquisition ocst | 3 | 6 | 2,057 | 749 | 80 | 75 | 110 | 897 | 2,250 | 1,728 |
| Acc. depreciation and impair- ment at beginning of the year |
— | — | – 44 | – 12 | – 5 | – 1 | — | — | – 50 | – 13 |
| Depreciation for the year | — | — | – 62 | – 32 | – 11 | – 5 | — | — | – 73 | – 37 |
| Reclassi'cations | — | — | 1 | — | – 1 | — | — | — | — | — |
| Sales/disposals | — | — | — | — | — | — | — | — | — | — |
| Closing accumulated deprecia- tion and amortisation |
— | — | – 105 | – 44 | – 17 | – 5 | — | — | – 123 | – 50 |
| Closing residual value 4) | 3 | 6 | 1,952 | 705 | 63 | 70 | 110 | 893 | 2,127 | 1,678 |
1) Land and buildings includes land with a book value of MSEK 1 (2). The tax assessment value of the Group's properties is MSEK 2 (3) of which MSEK 1 (1) refers to the tax assessment value of land.
2) Constructions in progress include advance payments regarding property, plant and equipment of MSEK 15 (76).
3) Investments for the year include capitalised interest of MSEK 16 (5), calculated at an average interest rate of 4.4% (3.7%).
4) Residual value according to plan includes 'nancial leasing contracts of MSEK 50 (58).
The Company has ful'lled its commitments in accordance with a previous framework agreement signed with Vestas. The framework agreement has therefore ceased to apply. The framework agreement signed previously with GE Energy has been replaced by a new framework agreement which results in a contractual commitment to purchase a certain number of wind turbines during 2012. If these commitments are not met, the Company can become liable for costs to an amount of MSEK 21 (87) in 2012. The Company intends to, on a regular basis enter into new agreements with suppliers for the continued expansion until 2014.
The Company has entered into operating leases, primarily leases of land associated with the construction of wind turbines, with minimum lease payments as described below. The cost of operating leases in 2011 amounted to MSEK 16 (6).
| Total | 54 | 54 |
|---|---|---|
| In 6 to 20 years | 39 | 40 |
| In 2 to 5 years | 12 | 11 |
| Within 1 year | 3 | 3 |
| 2011 | 2010 |
Costs for land leases are based on the minimum lease payments for wind turbines in operation or under construction, and on contracts for which all necessary permits for the construction of wind turbines have been obtained. Minimum lease payments are indexed. In addition, there are variable fees dependent on the income from electricity produced.
| Closing book value | 84 | — |
|---|---|---|
| Elimination internal transactions | – 5 | — |
| Acquisitions | 89 | — |
| Opening book value | — | — |
| 2011 | 2010 |
The Group's pro't participation in associated companies and its share of assets and liabilities is as follows:
| Associated company | Registration country and currency | Assets | Liabilities | Revenue | Pro't/loss | Participating interest |
|---|---|---|---|---|---|---|
| Sirocco Wind Holding AB | Sweden, EUR | 512 | 428 | — | — | 50% |
The most signi'cant 'nancial risks, to which the Group is exposed, include energy price risk, currency risk, interest risk, 'nancing risk, capital risk and credit risk.
The overall goal of the Group's 'nancial risk management is to identify and control the Group's 'nancial risks. Risk management is centralised to the Parent Company's 'nance function. All 'nancial risks that exist or arise in the Group's subsidiaries are managed by the central 'nance function.
The most signi'cant risk and the risk that has the largest impact on consolidated pro't or loss is the energy price risk, which is related to electricity prices and electricity certi'cate prices. The risk arises in cases in which prices for sold energy have not been hedged, which means that changes in prices in the power market have a direct impact on the Group's operating pro't or loss. The purpose of the Group's price hedging strategy is to mitigate the risk of 7uctuations in the Group's pro't or loss through price hedging.
Electricity prices in the power market vary over time, and the Group strives to ensure that the price of delivered electricity is, at the time of delivery, hedged from 30 % to 60 % with a falling price hedging channel for future years, in which the channel in year 5 should be 0 to 10 per cent, see the graph below. The remaining volumes are sold at variable prices. The hedged portion of sales must remain within the de'ned price hedging channel at any given time. Prices can be hedged bilaterally, through physical delivery contracts with major consumers of electricity, and 'nancially, by purchasing electricity derivatives on the Nordic power exchange, Nord Pool. Price risk can be hedged up to 've years prior to the delivery of the same volume.
If the price of electricity to be delivered is hedged before the production capacity concerned has become operational, a volume risk arises, that is, the risk of non-delivery or delays in the delivery. The same risk may also arise in cases in which production, due to weak winds or no wind and/or disruptions in production, falls below 'xed delivery undertakings provided for in bilateral contracts. Consequently, additional electricity has to be purchased on Nord Pool at the prevailing market price, which may be higher than the selling price in the 'xed delivery contract. The Group strives to hedge prices of electricity from facilities that have yet to go into operation; in the 'rst hand, through bilateral contracts which limit the volume risk; in the second hand, through ' nancial hedging on Nord Pool, provided that it results in a higher revenue. However, 'nancial hedging of prices of electricity from facilities that have yet to go into operation is not to exceed 25 % of the planned annual output. The remaining portion, up to the target price hedging level, is hedged through bilateral contracts.
Price hedging through various types of 'nancial derivatives must be performed in a manner that meets the requirements for hedge accounting according to IAS 39. Derivatives are carried at market value in the balance sheet and unrealised changes in value are recognised in the balance sheet and in the hedging reserve in equity. When the hedged position is recognised in the income statement the result from the derivatives transaction is transferred from equity to the income statement to meet result from the hedged position.
Price hedging via Nord Pool is generally undertaken in the Nordic price area, at a so called system price, as compared to actual production and delivery, which are conducted in the Stockholm price area. In conjunction with price hedging on Nord Pool, the Group strives to ensure that the price area risk is also eliminated through trading in CFDs (Contracts For Di,erence).
Regarding issues related to electricity, the Group cooperates with Scandem which, in addition to providing assistance on power trading and other electricity issues, also manages the Group's need for balancing energy. This need arises on occasions in which the actual physical delivery of electricity deviates from the forecasted delivery. The di,erence, positive or negative, is handled by Scandem as so called balancing energy. Through aggregation with Scandem's other customers, a lower balancing energy cost is generally achieved than if Arise Windpower itself had handled this.
The Group's currency risk exposure arises primarily in conjunction with the sales of electricity on the Nord Pool power market (transaction exposure), the purchase of wind turbines and the translation of balance sheet items in foreign currency (translation exposure). The majority of these transactions are made in EUR. The risk on the sales side is managed by hedging the currency portion of hedged power prices using EUR currency futures. Wind turbine investments in foreign currencies are hedged by concluding futures contracts at the time of making the investment decision or by purchasing currency deposited on an account.
Under the Group's adopted 'nancial policy, prices and currencies in contracted and forecasted payment 7ows must be hedged up to 've years in advance in a channel of 30 to 60 per cent. The Group uses currency futures to manage currency risk exposure and applies hedge accounting for contracted future payment 7ows and the translation of 'nancial assets and liabilities. Arise Windpower's net foreign currency 7ow refers almost exclusively to EUR. Exchange di,erences on operating liabilities are booked along with the investment. The result from currency futures held for hedging purposes is recognised in net sales. Exchange di,erences on 'nancial liabilities and receivables are recognised in net 'nancial income.
Financial and other operations-related assets and liabilities in foreign currencies arise almost exclusively in conjunction with the purchase of wind turbines and other electrical installations, which are normally hedged using currency futures. In conjunction with the investment in the Jädraås project, a currency exposure has arisen as the reporting currency of the associated companies is EUR. This exposure is not hedged. Other items are not signi'cant and are not currency-hedged.
Interest risk is de'ned as the risk of a decrease in pro't caused by a change in market interest rates. The Group's 'nancial policy includes guidelines on 'xed-rate periods (duration). The management of interest risk aims to reduce negative e,ects resulting from 7uctuations in market interest rates. The Group strives to achieve a balance between cost-e,ective borrowing and risk exposure, and a negative impact on the result in the event of an unexpected major change in interest rates. The exposure is hedged using interest rate swaps and caps, which cover parts of the Group's long-term borrowing, see Note 16.
A change in any of the variables below has an impact on the pro't before tax 2011 (in MSEK) as follows:
| Variable | Change | Impact on pro!t or loss before tax |
|---|---|---|
| Production | 10% | 16 |
| Electricity price | 10% | 10 |
| Electricity certi'cate price | 10% | 7 |
| Interest expense | 1% point | – 7 |
| Investments | 10% | – 11 |
| EUR/SEK, investments | 10% | – 8 |
| EUR/SEK, electricity prices | 10% | 6 |
| 2011 | 2010 | |||||
|---|---|---|---|---|---|---|
| Interest-bearing | Non-interest- | Interest-bearing | Non-interest | |||
| Fixed rate | Variable rate | bearing | Fixed rate | Variable rate | bearing | |
| Current receivables | 104 | 1 | 73 | |||
| Non-current receivables | 287 | 45 | 34 | |||
| Blocked liquid assets | 73 | 20 | ||||
| Cash and cash equivalents | 137 | 250 | ||||
| Current liabilities | – 82 | – 205 | – 47 | – 67 | ||
| Non-current liabilities | – 1,308 | – 22 | – 579 | – 180 | ||
| Total | – 1,021 | 106 | – 56 | – 579 | 44 | 40 |
The Group's goal for its capital structure is to secure the ability to continue operations with the aim of generating a return for the shareholders and bene'ts for other stakeholders, and to optimise the capital structure with regard to the cost of capital for the issuance of corporate bonds. The issuance of new shares, the issuance of bond loans or sales of assets are examples of measures which can be employed by the Group to adjust its capital structure. For more information on dividend policy and equity/assets target ratio, please refer to page 63. The Group's target equity/assets ratio is 25 per cent. On 31 December 2011, the actual equity/assets ratio was 43.2 (57.6) percent.
Financing risk is de'ned as the risk of not being able to meet payment obligations due to insu8cient liquidity or di8culties in obtaining funding. The Group's aim is to always have more than one lender who is willing to o,er funding at market terms. According to the Group's policy, a liquidity readiness of MSEK 50 must be available at all times.
The Group's expansion plan requires continuous funding. Through issuance of shares, corporate bonds or other forms of capital contribution, continuous loan funding is secured, see Note 18.
Credit risk, or counterparty risk, is the risk of incurring a loss if counterparty fails to meet its obligations. Commercial credit risk, which refers to the solvency of customers, is managed by the Company's central 'nance function by carefully monitoring the track records on payments and customers' 'nancial reports as well as good communications. The Group's total credit risk is distributed across a small number of customers, which accounts for a relatively large share of the Group's trade receivables. All customers have a high level of transparency, including the Nord Pool marketplace, which is the Company's single largest customer in this context.
In periods during which the Company temporarily has excess liquidity, a certain portion of this liquidity may be invested in order to obtain a higher return. Excess liquidity may only be invested in assets with a low counterparty risk, approved by the Board of Directors. These are bank accounts (special savings, business or investment accounts), treasury bills or certi'cates if the counterparty has a credit rating of at least A3/A– from Moody's or Standard & Poor's credit ratings. Investments in complex 'nancial products are not permitted even if they meet the credit rating criteria.
In cases in which the fair value di,ers from the carrying amount, the fair value is disclosed in the associated note. All of the 'nancial instruments measured at fair value belong to level 2 in the fair value hierarchy. The di,erent levels are de'ned as follows:
– Quoted (unadjusted) prices in active markets for identical assets or liabilities (level 1).
– Other observable data for the asset or liability than quoted prices included in level 1, either directly (that is, as quoted prices) or indirectly (that is, derived from quoted prices) (level 2).
– Data for the asset or liability which is not based on observable market data (that is, non-observable data) (level 3).
The hedging reserve consists of interest, electricity and currency futures. According to the 'nancial policy, a certain portion of the transaction exposure must be hedged through hedging of prices and exchange rates in future contracted payment 7ows using electricity and currency future contracts. Contracts have been concluded with maturities matching those of the underlying contracted orders and payment 7ows.
| 2011 | 2010 | |||
|---|---|---|---|---|
| MSEK | Carrying value | Fair value | Carrying value | Fair value |
| Electricity futures | – 11 | – 11 | 9 | 9 |
| Currency futures, EUR/SEK | — | — | – 4 | – 4 |
| Currency futures, SEK/EUR | 3 | 3 | 5 | 5 |
| Interest rate swaps | – 114 | – 114 | – 21 | – 21 |
| Hedging reserve | – 122 | – 122 | – 11 | – 11 |
The fair value is calculated on the basis of market-based quotations and generally accepted valuation techniques. Currency rate futures refer to sales and purchases of EUR for hedging of electricity sales and purchases of wind turbines respectively. For every position, there is a counter7ow in SEK. The ine,ective portion associated with cash 7ow hedges and recognised in pro't or loss constitutes a loss of MSEK 3 (—).
The nominal amount of electricity futures outstanding totals MSEK 69 (54). The hedged, very probable forecasted transactions of electricity sales are expected to take place at varying points in time in the following 've years. Gains and losses from electricity futures recognised in the hedging reserve in equity are recognised in pro't or loss in the period, or periods, in which the hedged transaction a,ects pro't or loss.
recognised in the hedging reserve in equity are recognised in pro't or loss in the period, or periods, in which the hedged transaction a,ects pro't or loss.
in the following two years. Gains and losses from exchange rate futures
Exchange rate future contracts The nominal amount of exchange rate futures outstanding totals
MSEK 42 (–131). The hedged, very probable forecasted transactions in foreign currencies are expected to take place at di,erent points in time The nominal amount of interest rate swaps and cap contracts outstanding totals MSEK 1,394 (717). The 'xed interests vary between 3.2 and 6.3 (3.2 and 6.3) percent. The most signi'cant variable interest rates are Stibor and Euribor. Gains and losses from interest rate swaps recognised in the hedging reserve in equity are continuously transferred to 'nancial expenses in pro't or loss until the loans have been repaid.
The tables below illustrate the classi'cation of the 'nancial instruments in balance sheet in 2011 and 2010.
| Derivatives stated at fair value |
Loans and accounts receivable |
Non-'nancial assets |
Total | |
|---|---|---|---|---|
| Property, plant and equipment | 2,127 | 2,127 | ||
| Holdings in associated companies | – 1 | 85 | 84 | |
| Receivables from associated companies | 285 | 285 | ||
| Deferred tax assets | 45 | 45 | ||
| Other 'nancial assets | 75 | 23 | ||
| Current assets | ||||
| Inventory | 24 | 24 | ||
| Accounts receivable | 29 | 29 | ||
| Other receivables | 4 | 8 | 12 | |
| Prepaid expenses and accrued income | 63 | 63 | ||
| Cash and cash equivalents | – 1 | 138 | 137 | |
| Total current assets | 3 | 175 | 87 | 265 |
| Total assets | 2 | 664 | 2,214 | 2,880 |
| Liabilities 2011 | ||||
| Derivatives stated at fair value |
Other 'nancial liabilities |
Non-'nancial liabilities |
Total | |
| Non-current interest-bearing liabilities | 1,330 | 1,330 | ||
| Provisions | 20 | 20 | ||
| Current liabilities | ||||
| Current interest-bearing liabilities | 82 | 82 | ||
| Accounts payable | 22 | 22 | ||
| Other liabilities | 134 | 5 | 139 | |
| Accrued expenses and deferred income | 44 | 44 | ||
| Total current liabilities | 134 | 109 | 44 | 287 |
| Total liabilities | 134 | 1,459 | 44 | 1,637 |
| MSEK | Within 3 months | Within 1 year | In 2–3 years | In 4–5 years | After 5 years | Total contracted cash 7ow |
|---|---|---|---|---|---|---|
| Currency futures | 1 | 2 | 0 | — | — | 3 |
| Derivatives stated at fair value |
Loans and accounts receivable |
Non-'nancial assets |
Total | |
|---|---|---|---|---|
| Property, plant and equipment | 1,678 | 1,678 | ||
| Deferred tax assets | 34 | 34 | ||
| Other 'nancial assets | 23 | 23 | ||
| Currents assets | ||||
| Inventories | 17 | 17 | ||
| Accounts receivable | 3 | 3 | ||
| Other receivables | 9 | 9 | 18 | |
| Prepaid expenses and accrues income | 53 | 53 | ||
| Cash and cash equivalents | 250 | 250 | ||
| Total current assets | 9 | 262 | 70 | 340 |
| Total assets | 9 | 318 | 1,748 | 2,075 |
| Derivatives stated at fair value |
Other 'nancial liabilities |
Non-'nancial liabilities |
Total | |
|---|---|---|---|---|
| Long-term interest-bearing liabilities | 759 | 759 | ||
| Provisions | 7 | 7 | ||
| Current liabilities | ||||
| Current interest-bearing liabilities | 47 | 47 | ||
| Accounts payable | 26 | 26 | ||
| Other liabilities | 21 | 2 | 23 | |
| Accrued expenses and deferred income | 19 | 19 | ||
| Total current liabilities | 21 | 75 | 19 | 114 |
| Total liabilities | 21 | 840 | 19 | 880 |
The maturity structure of interest-bearing liabilities is presented in Note 18 Interest-bearing liabilities. Other 'nancial liabilities, such as accounts payable and advances to customers, have contractual maturities of 1 – 60 days.
The Company is currently in a strong expansion phase and the objective regarding the capital structure is to secure the funds required to continue the expansion objectives stated in conjunction with the initial public o,ering in 2010. As the Company and its operations are developed, the possibilities to improve the e8ciency and diversi'cation of the capital structure increase through various measures, such as issuance of shares, preference shares, corporate bonds, convertible instruments, disposal of wind turbines or farms, or other measures. The objective is to maintain an optimal capital structure in order to keep the cost of capital low at the same time as required investment capacity must be maintained to secure the Company's expansion rate. Consequently, a trade-o, needs to be made continuously between the cost of capital, 'nancial risk and expected return and cash 7ow in the Company's investments. In the future, dividends and the possibility of repaying capital to the shareholders constitute actions to be taken in order to adjust the capital structure. The capital is assessed based on the equity/assets ratio, in which the key ratio is calculated as shareholders' equity divided by total assets. In 2011, the Company's strategy, unchanged from 2010, was to maintain an equity/assets ratio of at least 25 %. However, an equity/assets ratio exceeding 25 % is the target for the present expansion phase. On 31 December 2011, the equity/assets ratio was 43.2 %, and on 31 December 2010, 57.6 %. The lower equity/ assets ratio was primarily a consequence of planned investments, of which 70–75 % are 'nanced by loaned capital, in accordance with the Company's 'nancial policy.
| 2011 | 2010 | |
|---|---|---|
| Credit fees recognised in accounting period | 1 | 2 |
| Deposited into blocked accounts | 73 | 20 |
| Other receivables | 1 | 1 |
| Total | 75 | 23 |
| 2011 | 2010 | |
|---|---|---|
| Electricity certi'cates | 14 | 7 |
| Electrical equipment | 10 | 10 |
| Total | 24 | 17 |
Inventories are reported in accordance with the Group's accounting principles described in Note 1.
| Total | 12 | 18 |
|---|---|---|
| Other receivables | 5 | 5 |
| Current tax receivables | 2 | 1 |
| Derivatives | 5 | 9 |
| VAT receivable | — | 3 |
| 2011 | 2010 |
| 2011 | 2010 | |
|---|---|---|
| Accounts receivable | 29 | 3 |
| Provision for impairment of accounts receivable | — | — |
| Accounts receivable – net | 29 | 3 |
| Receivables from related parties (Note 22) | 285 | — |
| Other receivables (Note 12) | 1 | 1 |
| Other receivables (Note 14) | 12 | 18 |
| Less non-current portion | – 286 | – 1 |
| Current portion | 41 | 21 |
Non-current receivables from related parties in the form of a shareholder's loan to companies within the Sirocco Group lack a due date. The fair value of these borrowings is based on the discounted cash 7ows at an interest rate of approximately 6%. The discount rate corresponds to the Euribor plus appropriate credit assessment.
On the balance sheet date, MSEK 1 (1) was from accounts receivable past due but without any impairment considered to exist. All accounts receivable have been paid in 2012. Age analysis of these receivables is provided below.
| Total | 29 | 3 |
|---|---|---|
| 3–6 months | — | — |
| Less than 3 months | 29 | 3 |
| 2011 | 2010 |
| Total | 63 | 53 |
|---|---|---|
| Other prepaid expenses | 7 | 5 |
| Prepaid 'nancial expenses 2) | 14 | 4 |
| Other accrued income 1) | 7 | 39 |
| Accrued electricity and certi'cate income | 35 | 5 |
| 2011 | 2010 |
1) A receivable from the Swedish Energy Agency is included amounting to MSEK 7 (35).
2) Refers to expenses associated with assumed loans, amortised over the loan term of the contracts.
| Number of registered shares in the Parent Company | 2011 | 2010 |
|---|---|---|
| Issued as of 1 January | 31,561,070 | 21,426,070 |
| New share issues | 1,867,000 | 10,135,000 |
| Issued as of 31 December | 33,428,070 | 31,561,070 |
All shares have been fully paid. All shares have an equal right to the assets and pro'ts in the Company. The shares' quotient value amounts to SEK 0.08.
In 2008 and 2011, a decision was taken regarding the issuance of warrants for shares in Arise Windpower AB directed to employees and external stakeholders, such as landowners and advisers.
| Employees | External stakeholders | Total | |
|---|---|---|---|
| — | 192,500 | ||
| 300,000 | — | ||
| 300,000 | 962,500 | 1,262,500 | |
Outstanding warrant programs are of two di,erent series. The purchase price of the subscription options to employees (series 6) was based on the estimated market price for each subscription occasion by applying the Black & Scholes valuation model.
Warrants to external stakeholders (series 5) have been allocated free of charge.
| Series 5 | Series 6 | Total | |
|---|---|---|---|
| Warrants 2008, not exercised | 192,500 | — | 192,500 |
| Warrants 2011 | — | 300,000 | 300,000 |
| Entitle to subscribe for number of shares | 962,500 | 300,000 | 1,262,500 |
| Subscription price (SEK) | 45 | 55 |
A warrant entitles the holder to, in speci'ed periods, subscribe for one or 've shares in Arise Windpower AB at an issue price speci'ed in the table above.
The subscription period for series 5 is 1/2 - 28/2 each year from 2009 to 2015 The subscription period for series 6 is 3/3 - 15/3 in 2014
Exercise of warrants in series 5 is conditional upon certain conditions regarding contracts, permits and construction of wind turbines.
Assuming a full exercise of the allotted warrants, the dilution e,ect would amount to 3.6% for both share capital and votes. According to management's assessment, the above conditions in series 5 would result in the exercise of an amount of warrants equivalent to no more than 830,000 shares, representing a dilution of 2.4%.
The Group has signed credit agreements with banks, and the agreements include so-called negative clauses which provide the lender with the option of cancelling loans as a result of changes in Arise Windpower´s 'nancial ratios. These clauses, so called covenants, re7ect the requirements typical of the industry regarding solvency, debt-service ratio as well as provisions for the debt reserve.
The Group's total credit lines amount to MSEK 1,460 (953) as of 31
| Total | 1,330 | 759 |
|---|---|---|
| Current portion of non-current borrowings | – 82 | – 47 |
| Non-current borrowings | 1, 412 | 806 |
| 2011 | 2010 |
| Amounts in MSEK | Within 3 months |
In 3 months – 1 year |
In 2–3 years |
In 4–5 years |
After 5 years |
Total contracted cash 7ow |
|---|---|---|---|---|---|---|
| Bank loans* | 32 | 119 | 310 | 746 | 523 | 1,731 |
| Accounts payable - trade | 22 | 22 | ||||
| Interest rate futures* | ||||||
| Currency futures | 6 | 21 | 14 | 41 | ||
| Total | 60 | 140 | 324 | 746 | 523 | 1,794 |
* When calculating the interest payments on bank loans, the e,ect of interest rate futures have been taken into account in determing the interest based on circumstances at year-end.
Currency futures refer to the sales and purchases of EUR to hedge electricity sales and purchases of wind turbines. For each position, there is a counter-7ow in SEK.
This item relates to a provision for restoration costs concerning wind turbines in operation.
| Total | 44 | 19 |
|---|---|---|
| Other accrued expenses | 26 | 12 |
| Accrued personnel related costs | 15 | 7 |
| Accrued 'nancial costs | 3 | — |
| 2011 | 2010 |
| Pledged assets | 2011 | 2010 |
|---|---|---|
| Pledged shares in subsidiaries | 674 | 626 |
| Security transfer of wind turbines and leases | 1,950 | 1,183 |
| Total | 2,624 | 1,809 |
| Contingent liabilities | ||
| Financial leasing contracts | 50 | 58 |
| Total | 50 | 58 |
The Company has signed a framework agreement for the purchase of wind turbines, which contains a clause on cancellation fees under certain circumstances. Based on current purchasing plans and forecasts and according to management's assessment, no fees will be paid. For further information, please refer to Note 9.
December 2011 and are primarily used to fund the operations in the form of bank loans. Interest payments are hedged through interest rate swaps and interest rate caps. At present, a number of contracts with an average 'xed interest term of 5.4 (3.7) years are held. Financing cost is based on the agreed 'xed interest and agreed margin. The Group's average e,ective interest rate during the year amounted to 4.4 (3.9 percent).
Arise Windpower AB co-owns Sirocco Wind Holding AB together with Sydvästanvind AB, which, in turn, is controlled by the English company Platina Partners LTT.
Sirocco Wind Holding AB owns 100% of the holding company JVAB Holding AB which, in turn, owns 100% of Jädraås Vindkraft AB. Sirocco Wind Holding AB also owns 100% of the holding company HKAB Holding AB which, in turn, owns 100% of Hälleåsen Kraft AB. Together this group of companies form what has been called the "Jädraås project", that is, the construction of 66 wind turbines totalling 203 MW in Jädraås, outside of Gävle.
| Total | 10 | — |
|---|---|---|
| Development fee | 5 | — |
| Project management and administrative services | 5 | — |
| 2011 | 2010 |
Sales of project management and administrative services have been made to internal settlement price without mark-up. No purchases of goods and services have been made.
| At year-end | 285 | — |
|---|---|---|
| Lending paid out during the year | 285 | — |
| At the beginning of the year | — | — |
| Lending to associated companies: | ||
| 2011 | 2010 |
For remuneration to senior executives, see Note 4.
There are no assets or liabilities at year-end to report as a result of the sale and purchase of goods and services.
In mid-March 2012, the Company issued a senior and unsecured bond on the Swedish market. The bond volume totalled MSEK 350 and the 'nal maturity date was set to 2015. The bond has a variable interest rate of 3 months STIBOR + 5.00 percentage points, and will be listed on NASDAQ OMX Stockholm.
Arise has also signed a Letter of Intent with Platina Partners LLP and the companies have a joint intention to 'nance, construct, own and manage the project Lingbo, amounting to a total of 160 to 250 MW.
Lingbo has been developed by Bergvik Skog AB with the permission for Platina to acquire the project in its entirety and Arise, in turn, has the right to acquire a participating interest of between 12.5% and 50% of the project. The Lingbo project is located 30 kilometres to the north of the Jädraås project and permits has already been obtained for the construction of up to 85 wind turbines to be built.
The work of creating local plans, as well as other planning and preparations for the start of the construction, is on-going, with an expected initiation autumn 2012 at the earliest.
The Letter of Intent is contingent on resolutions being adopted by both parties' Boards of Directors, which Arise expects to take place on 25 April this year. To ensure that Arise will obtain a participating interest in Lingbo exceeding 12.5%, a bond issue for MSEK 350 was successfully completed. The interest share, represented by MSEK 350, depends on the 'nal size of the project. The agreement is an expansion of the parties' successful cooperation in the Jädraås project, 203 MW, which is under construction and progresses according to plan. Through the extended cooperation with Platina, Arise strengthens its position as the leading company in terms of onshore wind power in Sweden.
| Amounts in MSEK | Note | 2011 | 2010 |
|---|---|---|---|
| Net sales | 68 | 10 | |
| Work performed by the Company for its own use and capitalised | 18 | 13 | |
| Total income | 2 | 86 | 24 |
| Personnel costs | 3 | – 30 | – 22 |
| Other external expenses | 4 | – 17 | – 13 |
| Operating pro!t before depreciation (EBITDA) | 39 | – 12 | |
| Depreciation of property, plant and equipment | 7 | – 3 | – 1 |
| Operating pro!t (EBIT) | 36 | – 13 | |
| Financial income | 5 | 7 | 6 |
| Financial expense | 5 | – 7 | 0 |
| Pro!t after !nancial items | 36 | – 7 | |
| Group contribution | – 18 | – | |
| Pro!t before tax | 18 | – 7 | |
| Income tax | 6 | – 5 | 2 |
| Net pro!t for the year and comprehensive income | 13 | – 5 |
| Amounts in MSEK | Note | 2011 | 2010 |
|---|---|---|---|
| ASSETS | |||
| Fixed assets | |||
| Property, plant and equipment | 7 | 119 | 254 |
| Shares in subsidiaries | 8 | 700 | 509 |
| Holdings in associated companies | 9 | 89 | — |
| Receivables from associated companies | 9 | 285 | — |
| Deferred tax assets | 6 | 17 | 22 |
| Other 'nancial assets | 10 | 10 | 9 |
| Total !xed assets | 1,220 | 794 | |
| Current assets | |||
| Inventories | 11 | 9 | 8 |
| Receivables from Group companies | — | 364 | |
| Accounts receivable | 28 | — | |
| Current tax receivables | 1 | 1 | |
| Other current receivables | 3 | 1 | |
| Prepaid expenses and accrued income | 12 | 28 | 40 |
| Cash and cash equivalents | 96 | 38 | |
| Total current assets | 165 | 452 | |
| TOTAL ASSETS | 1,385 | 1,246 | |
| EQUITY | |||
| Restricted equity | |||
| Share capital | 3 | 3 | |
| Statutory reserve | 0 | 0 | |
| Non-restricted equity | |||
| Share premium reserve | 1,368 | 1 282 | |
| Accumulated de'cit | – 59 | – 53 | |
| Pro't/loss for the year | 13 | – 5 | |
| Total equity | 1,325 | 1,227 | |
| Current liabilities | |||
| Liabilities to Group companies | 33 | — | |
| Account payable | 15 | 7 | |
| Other liabilities | 1 | 6 | |
| Accrued expenses and deferred income | 13 | 12 | 6 |
| Total current liabilities | 60 | 19 | |
| TOTAL EQUITY AND LIABILITIES | 1,385 | 1,246 | |
| Pledged assets | 15 | 700 | 220 |
| Contingent liabilities | 15 | None | None |
| Amount in MSEK | Note | 2011 | 2010 |
|---|---|---|---|
| Operating activities | |||
| Operating pro't (EBIT) | 36 | – 13 | |
| Adjustment for non-cash items | 14 | – 15 | 1 |
| Tax paid | – 1 | 0 | |
| Cash "ow from operating activities before changes in working capital | – 21 | – 12 | |
| Cash "ow from changes in working capital | |||
| Increase in inventories | – 1 | – 7 | |
| Increase (–)/Decrease (+) in operating assets | 347 | – 272 | |
| Increase (+)/Decrease (–) in operating liabilities | 35 | – 14 | |
| Cash "ow from operating activities | 402 | – 305 | |
| Investing activities | |||
| Sales/acquisitions of property, plant and equipment | 105 | – 213 | |
| Government grants | 27 | ||
| Investments in subsidiaries | – 191 | — – 248 |
|
| Investments in associated companies | – 14 | — | |
| Investments in other 'nancial 'xed assets | – 286 | – 1 | |
| Cash "ow from investing activities | – 359 | – 462 | |
| Financing activities | |||
| Lending to Group companies | — | 50 | |
| Interest paid | – 1 | — | |
| Interest received | 7 | 3 | |
| Deposit into blocked accounts | – | – 8 | |
| Issue of new shares | 11 | 525 | |
| Cash "ow from !nancing activities | 16 | 570 | |
| Cash "ow for the year | 58 | – 197 | |
| Cash and cash equivalents at beginning of year | 38 | 235 | |
| Cash and cash equivalents at year-end | 96 | 38 |
| Amount in MSEK | Share capital |
Other con trib. capital |
Hedging reserve |
Accumulated de'cit |
Total equity |
|---|---|---|---|---|---|
| Opening balance as of 1 Jan 2010 | 2 | 0 | 750 | – 53 | 698 |
| Pro't/loss for the year and comprehensive income | – 5 | – 5 | |||
| Issue of new shares | 1 | 554 | 554 | ||
| Cost of issue of new shares | – 29 | – 29 | |||
| Tax costs relating to the issue of new shares | 8 | 8 | |||
| Utilisation of treasury shares for the acquisition of assets | 1 | 1 | |||
| Closing balance as of 31 Dec 2010 | 3 | 0 | 1,283 | – 59 | 1,227 |
| Opening balance as of 1 Jan 2011 | 3 | 0 | 1,283 | – 59 | 1,227 |
| Pro't/loss for the year and comprehensive income | 13 | 13 | |||
| Issue of new shares | 0 | 11 | 11 | ||
| Issue of new shares upon acquisition of ass. companies | 47 | 47 | |||
| Utilisation of treasury shares for the acquisition of assets | 28 | 28 | |||
| Closing balance 31 as of Dec 2011 | 3 | 0 | 1,368 | – 46 | 1,326 |
The Parent Company has prepared its annual accounts in accordance with the Swedish Annual Accounts Act and the Swedish Financial Reporting Board's Recommendation RFR 2, Accounting for Legal Entities, and the applicable pronouncements from the Swedish Financial Reporting Board. RFR 2 implies that, in its preparation of the annual accounts for the legal entity, the Parent Company apply all the IFRS and interpretive statements approved by the EU as far as this is possible within the framework of the Swedish Annual Accounts Act and the Swedish Pension Obligations Vesting Act, giving due consideration to the relationship between accounting and taxation. The Parent Company applies, for the most part, the same principles as outlined regarding the Group. The Parent Company applies the exemption rule in respect of IAS 39 which implies that 'nancial instruments are valued at acquisition cost. Other di,erences between the accounting principles of the Group and the Parent Company are described below.
Income is reported in the income statement when signi'cant risks and bene'ts are transferred to the purchaser. Income is not reported if it is probable that the 'nancial bene'ts will not accrue to the Parent Company. Income is reported at the fair value of the sum received, or expected to be received, after deductions for discounts.
Income arising from the sale of generated electricity is reported in the period in which delivery was made at the spot price, forward price or other agreed price. Income arising from electricity certi'cates is reported at the current spot price, forward price or other agreed price for the period in which the electricity certi'cate was earned, corresponding to the period in which the electricity was produced. The electricity certi'cates are reported in the balance sheet as inventories once they have been registered in the Swedish Energy Agency's account and as accrued income for as long as they are earned but not yet registered. Income from construction in progress and charged to Wind Farm companies is reported net in the income statement.
Tax legislation permits allocation to special reserves and funds which are reported separately in the Parent Company. This allows companies to appropriate and retain reported pro'ts in the business, within certain limits, rather than being taxed immediately. The untaxed reserves are subject to taxation 'rst when they are utilised. However, in the event that the business reports a loss, the untaxed reserves can be appropriated to cover the loss without being subject to tax.
Group contributions and shareholders' contributions are recognised in accordance with the Swedish Financial Reporting Board's pronouncement UFR 2. This implies that Group contributions and shareholders' contributions are reported according to their economic signi'cance. Group contributions and shareholders' contributions are reported in accordance with RFR 2. Group contributions are reported as expenses in the income statement and the tax e,ect is reported, in accordance with IAS 12, in the income statement. Shareholders' contributions are reported as an increase in participations in subsidiaries.
Net sales are comprised of development fees, consulting costs which have been invoiced internally within the Group, net sales and purchases of generated electricity and electricity certi'cates, income from electricity sold but not yet generated, and realisation of electricity and currency derivatives attributable to secured production, as well as to other smaller items.
For personnel information – see Note 4 to the consolidated 'nancial statements.
| 2011 | 2010 | |
|---|---|---|
| Öhrlings PricewaterhouseCoopers | ||
| Audit assignment | 1 | — |
| Audit activities other than the Audit assignment | 0 | 1 |
| Tax consultancy | 1 | 0 |
| Other services | 0 | 1 |
| Total | 2 | 2 |
| 2011 | 2010 | |
|---|---|---|
| Dividend from subsidiaries | 14 | — |
| Impairment of shares in subsidiaries | – 14 | — |
| Interest income | 7 | 6 |
| Total !nancial income | 7 | 6 |
| Interest expenses | – 1 | — |
| Exchange rate losses | – 6 | 0 |
| Total !nancial expenses | – 7 | 0 |
| Tax on pro!t for the year | 2011 | 2010 |
|---|---|---|
| Deferred tax | – 5 | 2 |
| Reported Tax | – 5 | 2 |
| Deferred tax | ||
| Attributable to unutilised tax losses | 17 | 22 |
| Total recognised deferred tax | 17 | 22 |
| Change in deferred tax | ||
| Opening value, net | 22 | 13 |
| Reported deferred tax on net pro't/loss for the year | – 5 | 2 |
| Tax items recognised directly in equity 1) | – | 8 |
| Closing value, net | 17 | 22 |
1) Tax items reported directly against equity refer to tax e,ects on the cost of new share issue.
Translation has taken place to the applicable tax rate for 2011 and 2010 of 26.3% for all deferred taxes.
| Land and buildings 1) |
Equipment, tools, 'xtures and 'ttings |
struction in progress 2) | Adv. paym. and Con | Total | ||||
|---|---|---|---|---|---|---|---|---|
| 2011 | 2010 | 2011 | 2010 | 2011 | 2010 | 2011 | 2010 | |
| Opening acquisition cost | 1 | 1 | 12 | 2 | 244 | 38 | 258 | 42 |
| Purchases/investments | 2 | — | 3 | 4 | 347 | 206 | 351 | 210 |
| Purchases from Group companies | — | — | — | 6 | — | — | — | 6 |
| Sales/disposals | — | — | — | — | – 484 | — | – 484 | — |
| Closing acquisition cost | 3 | 1 | 15 | 12 | 107 | 244 | 125 | 258 |
| Acc. depr. and imp. at beg. of year | 0 | 0 | – 3 | 0 | — | — | – 3 | 0 |
| Depreciation for the year | 0 | 0 | – 3 | – 1 | — | — | – 3 | – 1 |
| Assumed depreciation | — | — | — | – 2 | — | — | — | – 2 |
| Sales/disposals | — | — | 0 | — | — | — | 0 | — |
| Closing acc. depr. and amortisation | 0 | 0 | – 6 | – 3 | — | — | – 6 | – 3 |
| Closing residual value acc. to plan | 3 | 1 | 9 | 9 | 107 | 244 | 119 | 254 |
1) Land and buildings includes land with a book value of MSEK 1 (1). The tax assessment value of the Parent Company's properties is MSEK 2 (0), of which MSEK 1 (0) represents the tax assessment value of land.
2) Constructions in progress include advance payments regarding property, plant and equipment of MSEK 15 (76).
The Company has ful'lled its commitments in accordance with a previous framework agreement signed with Vestas. The framework agreement has therefore ceased to apply. The framework agreement signed previously with GE Energy has been replaced by a new framework agreement which results in a contractual commitment to purchase a certain number of wind turbines during 2012. If these commitments are not met, the Company can become liable for costs to an amount of MSEK 21 (87) in 2012. The company intends to, on a regular basis enter into new agreements with suppliers for the continued expansion until 2014.
| 2011 | 2010 | |
|---|---|---|
| Carrying amount at beginning of year | 509 | 260 |
| Investments in subsidiaries | 205 | 249 |
| Impairment of shares | – 14 | — |
| Carrying amount at end of year | 700 | 509 |
| Name | Corp. Identity No. | Regd. o,. | No. of shares | Owned share, % | Carr. amount of hold. | Equity |
|---|---|---|---|---|---|---|
| Arise Elnät AB | 556747-2641 | Halmstad | 1 000 | 100% | 21 | 21 |
| Arise Service AB | 556756-2730 | Halmstad | 1 000 | 100% | 4 | 4 |
| Arise Kran AB | 556758-8966 | Halmstad | 1 000 | 100% | 7 | 7 |
| Arise Wind Farm 1 AB | 556732-8942 | Halmstad | 1 000 | 100% | 290 | 293 |
| Arise Wind Farm 2 AB | 556758-9113 | Halmstad | 1 000 | 100% | 259 | 282 |
| Arise Wind Farm 4 AB | 556758-8933 | Halmstad | 1 000 | 100% | 117 | 124 |
| Arise Wind Farm 7 AB | 556758-8909 | Halmstad | 1 000 | 100% | 0 | 0 |
| Arise Wind Farm 8 AB | 556758-8891 | Halmstad | 1 000 | 100% | 0 | 0 |
| Arise Wind Farm 9 AB | 556833-5813 | Halmstad | 500 | 100% | 0 | 0 |
| Arise Wind HoldCo 1 AB | 556869-2114 | Halmstad | 500 | 100% | 0 | 0 |
| Arise Wind HoldCo 2 AB | 556867-9913 | Halmstad | 500 | 100% | 0 | 0 |
| Arise Wind HoldCo 3 AB | 556867-9798 | Halmstad | 500 | 100% | 0 | 0 |
| Arise Wind HoldCo 4 AB | 556868-0069 | Halmstad | 500 | 100% | 0 | 0 |
| Arise Wind HoldCo 5 AB | 556867-9764 | Halmstad | 500 | 100% | 0 | 0 |
| Arise Wind HoldCo 6 AB | 556868-0051 | Halmstad | 500 | 100% | 0 | 0 |
| Arise Wind HoldCo 7 AB | 556867-9756 | Halmstad | 500 | 100% | 0 | 0 |
| Arise Wind HoldCo 8 AB | 556868-0010 | Halmstad | 500 | 100% | 0 | 0 |
| Total | 700 | 731 |
The shareholdings in Arise Wind Farm 3 AB, Arise Wind Farm 5 AB and Arise Wind Farm 6 AB have been transferred to Arise Wind Farm 2 AB during the year.
| Carrying amount at end of year | 89 | — |
|---|---|---|
| Investment in associated companies | 89 | — |
| Carrying amount at beginning of year | — | — |
| 2011 | 2010 |
| Name | Corp. Identity No. | Regd. o,. | No. of shares | Owned share, % | Carr. amount of hold. | Equity |
|---|---|---|---|---|---|---|
| Sirocco Wind Holding AB | 556864-8058 | Stockholm | 6 000 | 50% | 89 | 84 |
| JVAB Holding AB | 556864-2069 | Falun | 50 000 | 100% | — | — |
| Jädraås Vindkraft AB | 556733-6481 | Falun | 1 000 | 100% | — | — |
| HKAB Holding AB | 556864-2051 | Falun | 50 000 | 100% | — | — |
| Hälleåsen Kraft AB | 556864-2077 | Falun | 50 000 | 100% | — | — |
| Total | 89 | 84 |
All subsidiaries of Sirocco Wind Holding AB are wholly-owned by this company.
| Carrying amount at end of year | 10 | 9 |
|---|---|---|
| Other shares and participations | 1 | 1 |
| Cash and cash equivalents in blocked accounts | 9 | 8 |
| 2011 | 2010 |
| 8 |
|---|
| 8 |
| 2010 |
Inventories are reported in accordance with the Group's accounting principles as described in Note 1.
| Total | 28 | 40 |
|---|---|---|
| Prepaid expenses | 2 | 1 |
| Accrued interest income | 3 | — |
| Accrued income, Swedish Energy Agency | 7 | 34 |
| Accrued electricity and certi'cate income | 16 | 5 |
| 2011 | 2010 |
| 12 | 6 |
|---|---|
| 2 | |
| 10 | 4 |
| 2011 | 2010 |
| 2 |
Cash and cash equivalents are comprised of cash and bank balances.
| Total | – 15 | 1 |
|---|---|---|
| Other items | 0 | — |
| Group contributions | – 18 | — |
| Depreciation and impairment of property, plant & equipment |
3 | 1 |
| 2011 | 2010 |
| Contingent liabilities | — | — |
|---|---|---|
| Total | 700 | 220 |
| Shares in subsidiaries | 700 | 220 |
| 2011 | 2010 |
The Company has signed a framework agreement for the purchase of wind turbines, which contains a clause covering cancellation fees under certain circumstances. Based on current purchasing plans and forecasts, management's assessment is that no fee will be paid. See Note 7.
During the year, the following transactions with related parties took place:
| 2011 | 2010 | |
|---|---|---|
| Sales of goods and services to subsidiaries | 398 | 60 |
| Purch. of goods and services from subsidiaries | 190 | 68 |
| Transactions with main owners | ||
| Ulf Corné through Forsus AB | 0 | 2 |
| Total | — | — |
| Trans. with other senior executives | — | — |
The Parent Company's transfer of projects and charging of services to its subsidiaries amounted to MSEK 398 (60). Services sold refer primarily to consulting fees in relation to permitting and planning work, and billed administrative expenses. The Parent Company's purchase of goods and services from subsidiaries amounted to MSEK 190 (68) and consists of electricity and electricity certi'cates and the purchase of miscellaneous consulting services.
During the year, Ulf Corné worked with speci'c tasks assigned by the Company on a contract basis, for which market-based remuneration amounted to MSEK 0.4 (1.8). Other than as stated above, no Director or member of senior management engaged, either directly or indirectly, in any business transactions between themselves and the Company which is or was unusual in character with respect to the terms and conditions. Remuneration to directors and senior executives is presented in Note 4 to the consolidated 'nancial statements.
For information regarding related party transactions with the Sirocco Group, see Note 22 for the Group.
| Total unappropriated earnings | 1,296,596 |
|---|---|
| Pro't for the year | 13,153 |
| Share premium reserve, non-restricted equity | 1,368,496 |
| Accumulated de'cit from previous years | – 58,747 |
| Parent Company | TSEK |
The Board of Directors and the Chief Executive O8cer propose to the Annual General Meeting that the earnings be appropriated as follows:
For further information on the result and 'nancial positions of the Group and Parent Company, see the income statements, balance sheets, cash 7ow statements and Notes to the accounts. The income statements and balance sheets will be presented for adoption to the Annual General Meeting on 25 April 2012.
The Board of Directors and Chief Executive O8cer hereby certify that the annual accounts have been prepared in compliance with the Annual Accounts Act and RFR 1 and give a true and fair view of the Company's 'nancial position and result, and that the Directors' Report gives a true and fair view of the development of the Company's business, 'nancial position and result and describes signi'cant risks and uncertainties faced by the Company. The Board of Directors and the Chief Executive O8cer hereby certify that the consolidated accounts have been prepared in compliance with the International Financial Reporting Standards (IFRS), as adopted by the EU, and give a true and fair view of the Group's 'nancial position and result and that the Directors' report for the Group gives a true and fair view of the development of the Group's business, 'nancial position and result, and describes signi'cant risks and uncertainties faced by the companies included in the Group
Pehr G Gyllenhammar Birger von Hall Joachim Gahm Chairman Director Director
Jon G Brandsar Peter Nygren Director Director
CEO
Our audit report was submitted on 27 March 2012 Öhrlings PricewaterhouseCoopers AB
Bror Frid Authorised Public Accountant
Corporate Identity Number 556274-6726
We have audited the annual accounts and the consolidated accounts for Arise Windpower AB (publ) for the year 2011. The annual accounts and consolidated accounts of the Company are included in the printed version of this document on pages 22–57.
The Board of Directors and the Chief Executive O8cer are responsible for the preparation and fair presentation of annual accounts and consolidated accounts in accordance with International Financial Reporting Standards, as adopted by the EU, and the Annual Accounts Act, and for such internal control as the Board of Directors and the Chief Executive O8cer determine is necessary to enable the preparation of annual accounts and consolidated accounts that are free from material misstatement, whether due to fraud or error.
Our responsibility is to express an opinion on these annual accounts and consolidated accounts based on our audit. We conducted our audit in accordance with International Standards on Auditing and generally accepted auditing standards in Sweden. Those standards require that we comply with ethical requirements and plan and perform the audit in order to obtain reasonable assurance about whether the annual accounts and consolidated accounts are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the annual accounts and consolidated accounts. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the annual accounts and consolidated accounts, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company's preparation and fair presentation of the annual accounts and consolidated accounts in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the e,ectiveness of the Company's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Board of Directors and the Chief Executive O8cer, as well as evaluating the overall presentation of the annual accounts and consolidated accounts.
We believe that the audit evidence we have obtained is su8cient and appropriate to provide a basis for our audit opinion.
In our opinion, the annual accounts have been prepared in accordance with the Annual Accounts Act and present fairly, in all material aspects, the 'nancial position of the Parent Company as of 31 December 2011 and of its 'nancial performance and its cash 7ows for the year then ended in accordance with the Annual Accounts Act, and the consolidated accounts have been prepared in accordance with the Annual Accounts Act and present fairly, in all material respects, the 'nancial position of the Group as of 31 December 2011 and of its 'nancial performance and cash 7ows in accordance with International Financial Reporting Standards, as adopted by the EU, and the Annual Accounts Act. The statutory Directors' Report is consistent with the other parts of the annual accounts and consolidated accounts.
We recommend to the Annual General Meeting that the income statement and balance sheet of the Parent Company and the Group be adopted.
In addition to our audit of the annual accounts and the consolidated accounts, we have examined the proposed appropriation of the Company's pro't or loss and the administration of the Board of Directors and the Chief Executive O8cer of Arise Windpower AB for the year 2011.
The Board of Directors is responsible for the proposal for appropriation of the Company's pro't or loss, and the Board of Directors and the Chief Executive O8cer are responsible for administration under the Companies Act.
Our responsibility is to express an opinion with reasonable assurance on the proposed appropriation of the Company's pro't or loss and on the administration based on our audit. We conducted the audit in accordance with generally accepted auditing standards in Sweden. As a basis for our opinion on the Board of Directors' proposed appropriation of the Company's pro't or loss, we examined whether the proposal is in accordance with the Companies Act.
As a basis for our opinion concerning discharge from liability, in addition to our audit of the annual accounts and the consolidated accounts, we examined signi'cant decisions, actions taken and circumstances of the Company in order to determine whether any member of the Board of Directors or the Chief Executive O8cer is liable to the Company. We also examined whether any member of the Board of Directors or the Chief Executive O8cer has, in any other way, acted in contravention of the Companies Act, the Annual Accounts Act or the Articles of Association.
We believe that the audit evidence we have obtained is su8cient and appropriate to provide a basis for our opinion.
We recommend to the Annual General Meeting that the pro't be appropriated in accordance with the proposal in the statutory administration report and that the members of the Board of Directors and the Chief Executive O8cer be discharged from liability for the 'nancial year.
Gothenburg, 27 March 2012
Öhrlings PricewaterhouseCoopers AB
Bror Frid Authorised Public Accountant
Arise Windpower AB (publ) is a Swedish public limited liability company which is quoted on Nasdaq OMX Stockholm. Arise therefore applies the Swedish Corporate Governance Code (the "Code"). -is corporate governance report has been established in accordance with the provisions included in the Code, Chapter 6, Sections 6–9 of the Swedish Annual Accounts Act and Chapter 9, Section 31 of the Swedish Companies Act and refers to the .nancial year 2011. Arise's Articles of Association and other information regarding corporate governance in Arise is available on our website, www.arisewindpower.se.
Corporate Governance in Arise complies with the Code and is, therefore, based on the principles provided in legislation, listing agreements, guidelines and good practice.
It is stated as an explained deviation from the Code that the Chairman of the Board has served as the Chairman of the Nomination Committee. -e reason for this deviation is based on the Chairman's experience on similar assignments, as well as his other merits. Other deviations from the Code are reported continuously in the Corporate Governance Report. In 2011, the Company did not engage in infringements of the regulations applied in the regulated market on which the Company's shares are quoted for trade, or of good practice on the securities market.
According to Euroclear Sweden AB's shareholder register, Arise had approximately 3,354 shareholders on 31 December 2011. -e shareholders with direct or indirect shareholdings representing more than 10 % of the votes are represented by the Tredje AP-fonden.
More information on the major shareholders is also provided on Arise's website, www.arisewindpower.se.
-e share capital in Arise amounted on 31 December 2011 to SEK 2,674,245.60, represented by 33,428,070 shares. All shares are of the same type and thus carry the same rights to the Company's assets, pro.ts and dividends.
Arise's highest decision-making body is the Annual General Meeting of shareholders. Notice of the Annual General Meeting, or an extra general meeting in which issues concerning changes in the Articles of Association are discussed, is given no earlier than six weeks and no later than four weeks before the meeting. All shareholders who are included in the transcript of the shareholder register and who have announced their participation in time, have the right to take part and vote in the meeting. -e number of votes a shareholder is entitled to is not restricted. -e shareholders who are unable to attend the meeting in person may be presented by proxies. -e Company does not apply special arrangements with regard to the function of the general meeting, neither on the basis of regulations in the Articles of Association nor, to the extent they are known to the Company, shareholder agreements. Furthermore, the Articles of Association do not include speci.c regulations relating to changes in the Articles of Association.
-e most recent Annual General Meeting took place on 27 April 2011 in Halmstad. -is
AGM authorised the Board to take decisions regarding the acquisition and transfer of own shares and the issuing of shares. -e minutes from the AGM are available on Arise's website.
-e next Annual General Meeting will be held on 25 April 2012 in Halmstad. Shareholders wishing to have issues addressed at the general meeting may send written requests to Arise Windpower AB (publ), Att: Chairman of the Board, Box 808, SE-301 18 Halmstad. -e Board of Directors must receive such requests no later than seven weeks before the meeting, or at least in su3cient time so that the issue can be, if required, included in the notice of the meeting.
At the Annual General Meeting on 27 April 2011, the meeting resolved to establish procedures for the appointment of a Nomination Committee prior to the next elections and for determinations of remuneration. According to the resolution, the Nomination Committee is to comprise .ve regular members, including representatives of the four largest owners as of the beginning of October, together with the Chairman of the Board. -e Nomination Committee prior to the Annual General Meeting 2012 consists of Bengt Hellström (for Tredje AP fonden), Joachim Gahm for the founders including family and corporation (L Energy Holding & Ny Holding AB etc.), Albert Hæggström (for Länsförsäkringar), Peter van Berlekom (for Nordea Fonder) and the Chairman of the Board of Directors, Pehr G Gyllenhammar. -e majority of the Nomination Committee's members are independent in relation to the Company and management.
According to the Code, the Nomination Committee's task is to prepare issues regarding appointments and remunerations prior to the following general meeting. -e Nomination Committee will present a description of their activities at the Annual General Meeting on 25 April 2012. Shareholders wishing to submit proposals to the Nomination Committee are requested to contact the Chairman of the Nomination Committee: Arise Windpower AB (publ), Att: Chairman of the Nomination Committee, Box 808, 301 18 Halmstad.
-e Board of Directors is responsible for the management of the Company, as well as its a6airs and organisation. In accordance with the Articles of Association, the Board of Directors shall comprise at least three and no more than nine board members. -e Articles of Association do not include any speci.c regulations regarding the appointment or the dismissal of board members.
At the most recent Annual General Meeting, held on 27 April 2011, a board was elected consisting of the regular members Pehr G Gyllenhammar (Chairman), Jon G Brandsar, Birger von Hall, Joachim Gahm, and CEO Peter Nygren. No deputy board members were appointed.
In accordance with the formal work plan for the Board of Directors, the Board is to hold at least six scheduled meetings between each Annual General Meeting. In the .nancial year 2011, the Board held eighteen meetings. Minutes were kept for each of them. -e attendance at the meetings by the members is presented in the table below. During the .nancial year 2012, two meetings have taken place thus far.
A description of the Board of Directors including information on their other directorships, independence and relevant holdings of shares and warrants is provided on page 64. Compensations and other bene.ts to the Board of Directors are described in Note 4 on pages 38–39. All members of the Board appointed by a general meeting, except for Peter Nygren, have been independent in relation to the Company and the management (see also page 64). All members of the Board are independent in relation to major owners.
However, it is noted that Peter Nygren, in accordance with a press release, has allowed the re-utilisation of 3,162,498 shares to the Company. More information on the Board of Directors is provided on Arise's website, www.arisewindpower.se.
| Member | Meet ings |
Present at |
Attend ance % |
|---|---|---|---|
| Pehr G Gyllenhammar | 18 | 18 | 100 |
| Birger von Hall | 18 | 18 | 100 |
| Joachim Gahm | 18 | 18 | 100 |
| Peter Nygren | 11 | 11 | 100 |
| Jon G Brandsar | 18 | 18 | 100 |
| Leif Jansson | 7 | 7 | 100 |
| Ulf Corné | 7 | 7 | 100 |
-e meetings of the Board of Directors are preferably to be held by physical attendance at Arise's head o3ce. Additional meetings can, however, be conducted over the telephone. In 2011, many of the Board meetings took the form of a conference call due to practical reasons. -e Chairman of the Board leads and organises the work of the Board. Lawyer Jonas Frii has served as the Board's secretary.
Prior to each meeting, a proposal of the agenda is sent out, along with the documents which are to be addressed in the meeting. -e proposal of the agenda is prepared by the CEO in consultation with the Chairman. Issues presented to the Board are for information, discussion or decision. Decisions are taken after discussions and after all members of the Board attending the meeting have had the opportunity to express their opinions. -e Board's broad experience in various areas often results in a constructive and open discussion. During the year, no member of the Board expressed reservation against any issue regarding which decisions were taken. Objections are recorded in the minutes. Open questions are followed up on a continuous basis. -e Board has not established a division of responsibilities among its members, other than that which is provided in the rules for the Board and its committees.
-e rules of procedure for the Board, which are to be reviewed on an annual basis, regulate the division of duties among the Chairman, the Board and its committees. -e rules of procedure state, for example, the obligatory issues to be addressed at every regular meeting. -e Board has evaluated its own work. -e evaluation has been internal and it has been conducted under the leadership of the Chairman, covering the work of the Board as well as each of its members. -e results of the evaluation have been made available to the Nomination Committee. -e Board has evaluated the work of the CEO.
Up to the Annual General Meeting 2012, the Remuneration Committee comprises the members of the Board Birger von Hall (Chairman) and Joachim Gahm. -e CEO normally presents the matters of the Remuneration Committee, with the exception of issues dealing with their own salary or bene.ts. -e Remuneration Committee convened three times during 2011. All members of the Board participated in all meetings.
-e Committee presents issues regarding remunerations and other terms of employment to the CEO and other senior management, as well as issues regarding any variable compensation programs within the Group. All members of the Committee are independent in relation to Arise and its senior management.
-e Committee's work is based on the decisions taken at the most recent Annual General Meeting, regarding the guidelines for remuneration to senior management.
Until the Annual General Meeting 2012, the Audit Committee consists of the members of the Board, Birger von Hall (chairman), Joachim Gahm and Jon G Brandsar. Issues addressed by the Committee are presented by the CFO, -omas Johansson. -e Audit Committee held seven meetings in 2011. Attendance during the year was high in all meetings.
-e Audit Committee prepares issues concerning, for example, .nancial reporting, risks, governing documents, key .gures, accounting rules and internal control. -e Audit Committee also conducts an on-going dialogue with the auditor. In addition, a specially established .nance committee has prepared certain issues concerning the raising of capital and acquisitions.
| Member | Meet ings |
Present at |
Attend ance % |
|---|---|---|---|
| Birger von Hall | 7 | 7 | 100 |
| Joachim Gahm | 7 | 6 | 86 |
| Jon G Brandsar | 7 | 7 | 100 |
Arise's Group management and the Group management's holdings of shares and warrants are described on page 65.
At the Annual General Meeting in 2008, Öhrlings PricewaterhouseCoopers AB was appointed as the auditor, with authorised public accountant, Bror Frid, as Auditor-in-Charge for the period up to the Annual General Meeting held in the fourth year after this appointment.
-e appointment of auditors is, thus, due to be addressed at the coming Annual General Meeting.
-e goal for the internal control in Arise is to establish an e6ective decision-making process in which requirements, objectives and
limits are clearly de.ned. -e Company and the management apply the internal control system to monitor the operations and the Group's .nancial position.
-e control environment forms the basis for internal control. Arise's control environment comprises, for example, sound core values, integrity, competence, leadership philosophy, organisational structure, responsibility and authorities. Arise's internal rules of procedure, instructions, policies, guidelines and manuals provide guidance to the employees.
In Arise, a clear division of roles and responsibilities for e6ective management of the operational risks is ensured, for example, through rules of procedure for the Board of Directors and committees, as well as through instructions to the CEO.
In the day-to-day operations, the CEO is responsible for the system of internal controls required for the creation of a control environment for signi.cant risks. In Arise, there are also guidelines and policies regarding .nancial governance and evaluation, communication issues and business ethics. All companies in the Group have the same reporting system with the same accounting plan.
-e Board has appointed an Audit Committee which is responsible, for example, for ensuring that adopted policies for .nancial reporting and internal control are complied with. -e CEO or CFO reports the results of their work on internal control to the Audit Committee. -e results of the work of the Audit Committee in the form of observations, recommendations and proposals for decisions and measures are reported to the board on an on-going basis.
-us, Arise's internal control environment is based on the division of work between the company organs, reporting to the Board of Directors, adopted policies and guidelines and on employees' compliance with the policies and guidelines.
Internal control regarding .nancial reporting is part of the internal control within Arise and aims, for example, to provide reasonable reliability in the external .nancial reporting in form of interim reports, annual reports and year-end reports, and to ensure that the external .nancial reporting is prepared in accordance with laws, applicable accounting standards and other requirements for listed companies.
On an on-going basis, Arise performs risk analyses in order to identify potential sources of errors in the .nancial reporting. Relevant procedures are documented so as to increase traceability in accounting as Arise expands. Normal control activities include reconciliation of accounts and supporting controls.
-e purpose of all control activities is to prevent, detect and correct any errors or deviations in .nancial statements. -e most signi.cant risks regarding .nancial reporting in the Group's activities and internal control are managed through control structures which are primarily based on reports on deviations from adopted goals or standards regarding, for example, currencies and hedging.
On an on-going basis, the Board of Directors evaluates the information provided by the management. In the activities of the Board of Directors and the audit committee, great importance is attached to the work on following up the e6ectiveness of internal control. -e activities include, for example, ensuring that measures are taken regarding any proposals for actions arising in external audits.
-e provision of correct information, both internally and externally, implies that all parts of the operations are able to exchange and report relevant and signi.cant information about the business in an e6ective manner. In order to achieve this, Arise has issued policies and guidelines regarding the management of information in the .nancial processes, which has been communicated to the employees by the management group.
Furthermore, for communication with external parties, there is a policy stating guidelines for the way in which such communication is to take place. -e ultimate purpose of the de.ned policies is to ensure that the disclosure requirements are complied with and that the investors receive the correct and timely information.
-e size of the Company, in combination with the Audit Committee's work, and the fact that good control procedures have been prepared and applied, implies that the Board of Directors has not regarded it necessary to prepare a speci.c internal audit function. -e issue of a speci.c internal audit function will, however, be addressed on an annual basis.
In 2011, the focus was placed on .nancing and investing issues, along with the acquisition of the Jädraås project.
Halmstad, 27 March 2012
Pehr G Gyllenhammar Birger von Hall Joachim Gahm Chairman Director Director
Jon G Brandsar Peter Nygren
Director Director and CEO
-e Board of Directors is responsible for the Corporate Governance Report for year 2011 on pages 59–62 and for ensuring that it is prepared in accordance with the Annual Accounts Act.
We have read the Corporate Governance Report and based on this reading and our knowledge of the Company and the Group we believe we have a su3cient basis for our opinions. -is implies that our statutory review of the Corporate Governance Report has a di6erent direction and a signi.cantly narrower scope than the direction and scope of an audit conducted according to the International Standards on Auditing and good auditing practice in Sweden.
We conclude that a Corporate Governance Report has been prepared, and that its statutory content is in accordance with the annual accounts and the consolidated accounts
Gothenburg, 27 March 2012
Öhrlings PricewaterhouseCoopers AB Bror Frid Authorised Public Accountant
The share capital of Arise Windpower AB totals MSEK 2.7, distributed among 33,428,070 shares. Each share entitles to one vote and all shares entitle the right to an equal portion of the Company's assets and pro'ts
The terms and conditions for 'nancing can impact the possibility of distributing a dividend. In conjunction with the issue of a bond in March 2012, the Company has agreed not to pay a dividend until after 31 March 2015. The 'nancial policy states that the consolidated equity/assets ratio is to exceed 25%.
| Ownership structure as of 31 December 2011 | Shares | Share of votes and share of capital |
|---|---|---|
| Tredje AP-fonden | 4,636,363 | 13.87% |
| Founders with families and companies | 3,750,397 | 11.22% |
| Nordea Investment Funds | 3,271,329 | 9.79% |
| Länsförsäkringar Fondförvaltning AB | 2,888,739 | 8.64% |
| Statkraft AS | 2,495,613 | 7.47% |
| Ownpower Projects Europe AB | 2,300,000 | 6.88% |
| Arbejdsmarkedets Tillaegspension | 1,951,071 | 5.84% |
| Alecta Pensionsförsäkring | 1,500,000 | 4.49% |
| Ernström Finans AB | 1,381,818 | 4.13% |
| Vätterledens Invest AB | 734,182 | 2.20% |
| KL Ventures AB | 500,000 | 1.50% |
| Pehr G Gyllenhammar | 446,639 | 1.34% |
| Länsförsäkringar Bohuslän | 400,373 | 1.20% |
| KLP-Pension | 350,000 | 1.05% |
| Ethos Aktiefond | 342,600 | 1.02% |
| Lundaslättens Vindfabrik | 280,165 | 0.84% |
| Avanza Pension | 267,719 | 0.80% |
| Global Wind Energy Fund | 253,621 | 0.76% |
| Hanvad Invest AB | 249,165 | 0.75% |
| Pohjola Bank PLC Client A/C | 205,659 | 0.62% |
| Morgan Stanley and Co LLC | 200,600 | 0.60% |
| Svenska Handelsbanken | 200,000 | 0.60% |
| Other shareholders | 4,822,017 | 14.43% |
| Total number of registered shares | 33,428,070 | 100.00% |
| SHARE CAPITAL HISTORY | Number of shares | Accumulated num- ber of shares |
Share capital, SEK |
Accumulated share capital, SEK |
|
|---|---|---|---|---|---|
| 1986 | Formation of the Company | 50,000 | 50,000 | 50,000.00 | 50,000.00 |
| 1997 | Split | 950,000 | 1,000,000 | 50,000.00 | |
| 1998 | Bonus issue | 1,000,000 | 50,000.00 | 100,000.00 | |
| 2007 | New issue | 473,077 | 1,473,077 | 47,307.70 | 147,307.70 |
| 2008 | New issue | 1,420,000 | 2,893,077 | 142,000.00 | 289,307.70 |
| 2008 | Bonus issue | 2,893,077 | 867,923.10 | 1,157,230.80 | |
| 2008 | Split | 11,572,308 | 14,465,385 | 1,157,230.80 | |
| 2008 | New issue | 51,000 | 14,516,385 | 4,080.00 | 1,161,310.80 |
| 2008 | New issue | 937,500 | 15,453,885 | 75,000.00 | 1,236,310.80 |
| 2009 | New issue | 5,972,185 | 21,426,070 | 477,774.80 | 1,714,085.60 |
| 2010 | Exercise of share warrants | 135,000 | 21,561,070 | 10,800 | 1,724,885.60 |
| 2010 | New issue | 10,000,000 | 31,561,070 | 800,000 | 2,524,885.60 |
| 2011 | Exercise of share warrants | 227,500 | 31,788,570 | 18,200.00 | 2,543,085.60 |
| 2011 | Exercise of share warrants | 15,000 | 31,803,570 | 1,200.00 | 2,544,285.60 |
| 2011 | Exercise of share warrants | 50,000 | 31,853,570 | 4,000.00 | 2,548,285.60 |
| 2011 | New issue | 1,574,500 | 33,428,070 | 125,960.00 | 2,674,245.60 |
Pehr G Gyllenhammar Jon G Brandsar Joachim Gahm Birger von Hall Peter Nygren
Pehr G Gyllenhammar, born 1935 Pehr G Gyllenhammar is a Director and has served as Chairman of the Board since being appointed at the Annual General Meeting on 2 October 2007.
Other directorships and positions: Vice Chairman of Rothschild Europe, Chairman of Rothschild Nordic AB, Chairman of Thomson Reuter Founder Share Company. Education: LL.M. from Lund University (1959).
Holdings: 446,639 shares.
Independence/dependence: Pehr G Gyllenhammar is independent in relation to Arise Windpower, its senior executives and major shareholders.
Jon G Brandsar, born 1954
Jon G Brandsar has been a Director since being appointed by the Annual General Meeting on 16 June 2008.
Other directorships and positions: Executive Vice President, Wind Power and Technologies at Statkraft AS, CEO of Statkraft Development AS and Chairman of Trondheim Energi AS.
Education: Degree in Electrical Engineering from GIH Gjøvik (1977). Holdings: –
Independence/dependence: Jon G
Brandsar can be considered to be an independent member of the Board of Directors in relation to Arise Windpower's major owners, given that Statkraft AS holds 7.5% of the shares in Arise Windpower. Jon G Brandsar is also independent in relation to Arise Windpower and its executive o8cers.
Joachim Gahm has been a Director since being appointed by the Annual General Meeting on 11 July 2007.
Other directorships and positions:
Co-owner and Director of Sustainable Growth Capital SGC AB, Director of Kungsleden AB. Joachim Gahm was previously CEO of E.Öhman J:or Investment AB and Vice CEO and a Director of E.Öhman J:or Fondkommission AB.
Education: M.Sc. in Business and Economics from Stockholm University (1990). Holdings: 10,000 shares.
Independence/dependence: Joachim Gahm is independent in relation to Arise Windpower, its senior executives and major shareholders.
Birger von Hall has been a Director since being appointed by the Annual General Meeting on 11 July 2007.
Other directorships and positions: Chairman of Aktiebolaget Club Avancez, Chairman of Stiftelsen Göteborgs Maritima Centrum, Director of The Local Firm Sweden AB, Director of the Royal Bachelors Club Residence Aktiebolag, Director of A och B von Hall AB, Director of Chalmers Innovation A8liate Fund AB (publ), Director of Emils Kårhus AB.
Education: M.Sc. in Engineering from Chalmers University of Technology (1974). Holdings, own and via company: 40,000 shares.
Independence/dependence: Birger von Hall is independent in relation to Arise Windpower, its senior executives and major shareholders.
Peter Nygren has been a Director since being appointed by the Annual General Meeting on 27 April 2011.
Other directorships and positions:
Chairman of all subsidiaries of Arise Windpower, Chairman of Sirocco Wind Holding AB, Chairman of JVAB Holding AB, Jädraås Vindkraft AB and HKAB Holding AB. Director of Hälleåsen Kraft AB, PLU Energy Holding AB, NyHolding i Motala AB and NyHolding AS. Extraordinary Member of the Board of Zinwin AB.
Education: MBA studies at Uppsala University (2001).
Holdings with family and company: 1,340,187 shares and 17,000 warrants (entitling to subscription of 17,000 shares). Independence/dependence: Peter Nygren is independent in relation to Arise Windpower's major shareholders but is dependent in relation to Arise Windpower and its senior executives through his employment as a senior executive of Arise Windpower.
The information concerning share holdings and warrants refers to the situation as of 31 December 2011.
Peter Nygren, born 1958 CEO since 2007. Peter has extensive experience from major energy projects, notably as head of energy issues in the SCA Group, Vice President Project Financing at NCC, Key Customer Manager at Vattenfall and Project Manager at Calor Industrier. Holdings through family and company: 1,340,187 shares and 17,000 share warrants (entitling to subscription of 17,000
Lars Fröding, born 1963
COO since February 2011. Responsible for permits and detailed development plans. Lars has extensive experience from public administration and is responsible for permit issues and contacts with government agencies regarding planning, building and environment issues relating to planned wind turbines.
Holdings: 20,000 warrants (entitling to subscription of 20,000 shares).
Leif is responsible for leases, the development of new land areas for the establishment of wind farms and, since February 2011, also for investor relations. Leif has extensive business development experience and has previously held several leading positions, including CEO. Holdings with family and company: 1,278,909 shares.
shares).
Thomas Johansson, born 1963 CFO since 2008. Thomas has a broad base of experiences, including the role of General Manager, Director of Finance and Administration, CFO and authorised public accountant.
Holdings: 55,000 shares and 20,000 warrants (entitling to subscription of 20,000 shares).
Gary Ericson, born 1952 Head of Marketing since March 2011. Gary has many years' experience from the energy industry. Before joining Arise Windpower, he worked for Halmstads Energi och Miljö AB. Holdings: 20,000 warrants (entitling to
subscription of 20,000 shares).
Linus Hägg, born 1976
Head of Corporate Finance since October 2011. Linus has extensive experience working in capital markets. Before joining Arise Windpower, he worked at ABG Sundal Collier.
Holdings: 10,000 shares and 20,000 warrants (entitling to subscription of 20,000 shares).
The information concerning share holdings and warrants refers to the situation as of 31 December 2011.
Shareholders are invited to attend Arise Windpower's Annual General Meeting to be held at Scandic Hallandia, Rådhusgatan 4, 302 43 Halmstad, Sweden on Wednesday, 25 April 2012, at 11 a.m. Light refreshments and beverages will be served after the AGM.
Shareholders wishing to attend the Annual General Meeting must be registered in the register of shareholders maintained by Euroclear Sweden AB (formerly VPC AB) on -ursday 19 April 2012 and register their attendance along with that of any assistants no later than -ursday 19 April 2012, before 4 p.m. and preferably by e-mail to info@ arisewindpower.se. It is also possible to register for the Annual General Meeting by telephone, +46 (0)35 20 20 900, fax +46 (0)35 22 78 00 or by post to Arise Windpower AB (publ), Bolagsstämma, Box 808, SE-301 18 Halmstad.
Shareholders registering their attendance are required to state their name, address, telephone number, personal ID or Corporate Identity Number, registered shareholding and details of any advisor. -e attendance and details of any proxies and advisors are registered with Arise Windpower for the purpose of drawing up the electoral roll. Shareholders wishing to be represented by a proxy are required to issue a signed and dated authorisation to their proxy. If the authorisation is issued by a legal entity, a certi.ed copy of the certi.cate of registration or equivalent document for the legal entity must be presented. All authorisations must be made in writing and submitted no later than at the Annual General Meeting, although a copy should be sent in advance, if possible. Authorisation forms will be available at www.arisewindpower.se and from the head o3ce in Halmstad, Kristian IV:s väg 3, or sent to any shareholder who so wishes and provides their address.
Shareholders whose shares are registered with a nominee through the trust department of a bank or individual stockbroker are required to have their shares temporarily registered in their own name in order to be entitled to participate in the Annual General Meeting. Such temporary registration of ownership must be completed no later than -ursday, 19 April 2012. -is means that shareholders need to notify their nominee or bank in good time before the meeting to request
temporary registration of ownership (known also as "registration of voting rights").
Accounting documents, the Audit Report, the auditor's statement in accordance with Chapter 8 Section 54 of the Companies Act, and the Board's proposed appropriation of pro.ts will be sent to shareholders requesting this, and will also be available at www.arisewindpower. se and from the head o3ce in Halmstad. -e full versions of other proposals will be available no later than Wednesday 4 April 2012 at www.arisewindpower.se and from the head o3ce. Copies of the documents will be sent on request to shareholders stating their address.
All .nancial information is published at www.arisewindpower.se as soon as it has been released. In 2012, .nancial information will be published as follows:
-e Annual Report is sent by post to shareholders who have noti.ed the company that they wish to receive a copy. It is also available at www.arisewindpower.se.
Peter Nygren, CEO, and -omas Johansson, CFO, are responsible for Arise Windpower's .nancial information. Leif Jansson is responsible for Investor Relations.
Peter Nygren, CEO: Telephone+46-706 300 680 -omas Johansson, CFO: Telephone: +46 768 211 115 Leif Jansson, IR: Telephone: +46 707 340 554
)e Annual Report is produced by Andrarum CCC AB, Limhamn, Sweden. Photos: Håkan Nilsson (wind farms) and PeO Persson (directors and management). Translated by PriceWaterhouseCoopers Language Services. Printed in Sweden by JMS, Vellinge.
Arise Windpower AB, Box 808, 301 18 Halmstad, Sweden | Telephone +46 35 20 20 900 | www.arisewindpower.se
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