Aega ASA Q3 REPORT – 2019

About Aega
CEO letter		4
	Third quarter report	6
	Third quarter in brief	6
	Highlights from the reporting period	6
Financial review		6
	Structural changes	6
	Subsequent events	6
	Financial statement	7
Profit and loss		8
Balance sheet		9
Cash flow		10
	Change in equity	11
Notes		12
Note 1:	Summary of significant accounting policies	12
Note 2:	Breakdown assets and liabilities in discontinued business	12
Note 3:	Group structure	12
Note 4:	Cash and cash equivalents	13
Note 5:	Shares and shareholder information	13
Note 6:	Tax issues	13
Note 7:	Subsequent events	13
	Investor contact	14

About Aega

Aega ASA is a solar utility company listed on the Oslo Axess exchange. It acquires and operates solar power plants, benefitting from government incentives in the form of feed-in tariffs. The company recently sold a portfolio of eight solar parks located in Italy, with a combined generating capacity of about 8MWp or around 10GWh per year. Aega ASA invests mainly in small operating solar parks (below 5MWp capacity) which meet its strict investment criteria. The company's head offices are in Oslo (NO) and Trento (IT).

CEO letter

On 6 August 2019 Aega ASA (the "Company" or "Aega") completed its sale of all its solar parks to Italia T1 Roncolo Srl (the Buyer), a subsidiary of Mareccio Energia ("Mareccio"). Aega received EUR 9.46 million and EUR 0.55 million was paid into an escrow account.

In the third quarter we had no ordinary solar plant operations. The revenue accounted is the preliminary profit calculation of the solar plants sold during the quarter.

The total enterprise value as of the cut-off date (30 June 2018) was EUR 22.6 million and an equity value of EUR 10.6 million. Since 30 June 2018 Aega ASA has taken out more than EUR 0.6 million in dividends and shareholder loan repayments. Due to these payments and other adjustments in the agreement, Aega consideration is EUR 9.96 million where EUR 550 000 of the consideration will be paid into escrow mainly related to a specific tax issue.

Extraordinary capital repayment

In the second quarter 2018 report, Aega's board of directors announced two new key objectives for the Company:

1. Be in a position to reinstate dividends before the annual general meeting in 2019
1. Use the structure already in place and try to grow opportunities

"With the sale of our eight solar parks in Italy we are delivering on the first objective. The board has now paid an extraordinary capital repayment of NOK 0.20 per share. The Company will now focus on the second objective, we have already an attractive pipeline of projects, and the first park has been purchased on 10 October. It's important that we keep buying the right projects." says Halldor Christen Tjoflaat, chairman of the board in Aega.

Markus H Enge Chief Executive Officer

Third quarter report

THIRD QUARTER IN BRIEF

The company had no solar parks during the quarter so we therefore had no exposure to the irradiation in Italy.
The acquisition and transaction cost during the quarter of EUR 638 000 was related mainly to assistance during the sales process and provisions for potential future obligations.
Capital repayment during the quarter of NOK 0.2 per share.
Started new due diligences related to solar parks in pipeline.

HIGHLIGHTS FROM THE REPORTING PERIOD Operations

The company is currently following several investment opportunities in the Italian solar market. Aega has the team and infrastructure on the ground in Italy to find and operate a solar portfolio up to 15MWp.

Outlook

The company does not see investment opportunities as a limiting factor for the company's growth plans, and will continue to screen and evaluate new prospects. At the present Aega has started due diligence on two 1 MWp solar parks and have another 10MWp in immediate pipeline.

FINANCIAL REVIEW

Total revenues in the third quarter was EUR 3.9 million as the gross profit from the sale of the solar parks compared with EUR 500 for the continued business in the same period of last year. Total power generation in the quarter was 0 MWh since the parks was sold with effect from 30 June 2019.

Operating costs for the continued business was 0 as it was in the same quarter of last year. The SG&A cost was EUR 304 000 in the third quarter of 2019 compared to EUR 103 000, the extra cost is related to increased activity looking for new solar parks during the quarter. The level of SG&A is expected to be lower going forward.

The company's non-recurring expenses came to EUR 638 000 in the third quarter of 2019, this is mainly related to the sale process of the Italian portfolio and also some provisions for potential costs. In the same quarter in 2018 the non-recurring cost was EUR 42 000.

The balance sheet contains now mainly cash from the proceed of the sale and some payables. The company has exchanged about EUR 3 million to NOK, however, it keeps the main cash balance in euro, since the plan is to reinvest it in new solar plants in Italy.

STRUCTURAL CHANGES

Aega group has established of Norita Invest Srl, this is the intended Italian holding company for further solar expansion plans in Italy. Having an Italian holding company will make it easier to get a tax group in Italy and give taxable contributions between controlled subsidiaries.

SUBSEQUENT EVENTS

Purchase of Produzioni Fotovoltaiche Cori Srl

On 10 October 2019 Aega purchased a 1 MWp solar park in Cori, Latina. The purchase price for the equity (inc. shareholder loan) was set at EUR 420 000 and EUR 160 000 for the working capital. The project has about EUR 3.4 million in loan financing.

The solar park is a single axis tracker plant and has a second conto energia feed-in tariff and is ten years into its 20-year concession period.

Key figures

As Produzioni Energia Cori Srl is a special purpose company established in May 2018 through a transformation, there is only one annual report available for May 2018 until December 2018. The key figures below are estimates for the current year.

	2019E	20181
Operating revenue	€ 530 000	€ 350 376
Operating result (EBITDA)	€ 460 000	€ 257 076
Debt outstanding end of year	€ 3 341 057	€ 3 527 721
Total assets	€ 3 782 731	€ 4 131 925

¹ 2018 from May to December

The revenue and EBITDA contribution from Produzioni Energia Cori Srl in 2019 to AEGA ASA's Revenue and the operating result is estimated to be around 16 per cent of the numbers indicated above since the plant is acquired with effect from Q4 2019. The interest on the loan if approximately 3M EURIBOR + a spread of 1.35 per cent.

Purchase of the shares in Bolshøyden and loan

On 16 October Aega loaned out NOK 3 million to Bolshøyden AS. The loan has a 12 per cent interest rate for the first year and can be prolonged with another year but then with an interest rate of 15 per cent.

The loan is secured with first priority lien in a property of about 55 000 square meters positioned outside Molde on Bolsøya (1502-19/59).

In connection with the loan Aega Management AS has purchased 100 per cent of the shares in Allebo Eiendom AS for NOK 55 000. Allebo eiendom AS controls 100 per cent of the A shares in Bolshøyden AS and about 9 per cent of the outstanding shares in the company. In total Aega Management AS controls 50 per cent of the votes in Bolshøyden AS.

CEO resigns

On 23 October Markus Enge resigned from his role as CEO of Aega ASA. Mr. Enge will continue to work for Aega until the end of his resignation period, 31 January 2020.

The board of directors has initiated a search for Mr. Enge's successor.

Financial statement

Profit and loss
	Balance sheet	9
Cash flow		10
	Change in equity	11

Notes		12
	Note 1: Summary of significant accounting policies	12
	Note 2: Breakdown assets and liabilities in discontinued business	12
	Note 3: Group structure	12
	Note 4: Cash and cash equivalents	13
	Note 5: Shares and shareholder information	13
	Note 6: Tax issues	13
	Note 7: Subsequent events	13

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Profit and loss

Continued operations

- -	- -


	500
500	500
	-
	(396 643)
	(71 287)
	(467 431)
	-
	(467 431)
3 918	3 918
-	-
-	-
	(58 435)
	(521 948)
-	-
	(521 948)
	500 - (396 643) (71 287) (467 431) - (467 431) (58 435) (521 948) (521 948)

Discontinued operations

(EUR)	Q3 2019	Q3 2018	9M 2019	9M 2018	FY 2018
Profit/loss from discontinued operations	219 657	311 009	683 051	588 453	588 453
Profit/loss for the period	3 128 079	121 490	3 224 962	66 506	66 506

Other comprehensive income

(EUR)	Q3 2019	Q3 2018	9M 2019	9M 2018	FY 2018

Currency translation differences	(519 251)	(133 578)	(388 566)	77 369	77 369
Other comprehensive income net of tax	(519 251)	(133 578)	(388 566)	77 369	77 369

Total comprehensive income	2 608 828	(12 088)	2 836 396	143 875	143 875

Profit for the period attributable to:
Equity holders of the parent company	2 608 828	(12 088)	2 836 396	143 875	143 875
Total comprehensive income attributable to:
Equity holders of the parent company	2 608 828	(12 088)	2 836 396	143 875	143 875

Earnings per share	0.054	-	0.059	0.003	0.003
Avgerage no of shares	48 375 949	47 975 949	48 126 135	45 461 400	46 090 037

Balance sheet

(EUR)	Note	30 Sep 2019	31 Dec 2018
ASSETS
Non-current assets		-	-
Receivables		6 478	(504)
Other current assets		570 396	-
Cash and short-term deposits	4	8 196 125	60 088
Assets held for sale	2	-	21 709 116
Current assets		8 772 998	21 768 699
TOTAL ASSETS		8 772 998	21 768 699
EQUITY AND LIABILITIES
Share capital	5	5 296 076	5 255 029
Share premium	5	7 237 469	8 208 942
Paid-in capital		12 533 546	13 463 970
Accumulated profit and loss		(4 355 888)	(6 897 327)
Other equity		(19 336)	(19 809)
Foreign currency translation reserve		165 789	554 355
Other equity		(4 209 435)	(6 362 781)
Total equity		8 324 111	7 101 189
Total non-current liabilities		-	-
Trade payables and other payables		448 888	104 802
Other current liabilities		-	1 568
Liabilities held for sale	2	-	14 561 141
Total current liabilities		448 888	14 667 511
Total liabilities		448 888	14 667 511
TOTAL EQUITY AND LIABILITIES		8 772 999	21 768 700

Oslo, 30 September 2019

Halldor Christen Tjoflaat Chair

Nils Petter Skaset Director

Kathrine Breistøl Director

Kristine Larneng Director

Markus H Enge Chief Executive Officer

Cash flow

(EUR)	Note	Q3 2019	Q3 2018	2018
Profit before tax continued business	2	2 908 422	321 435	(521 948)
Ordinary profit before tax	2	-	-	682 684
Paid income taxes		-	426 632	-
Depreciation		-	-	1 361 009
Changes in trade receivables and payables		52 335	(378 738)	(441 806)
Changes in other accruals		-	233 457	406 234
Cash flow from operations		2 960 757	602 787	1 486 174
Acquisition net of cash acquired		-	-	(260 108)
Cash flow from investments		-	-	(260 108)
Proceeds from issue of share capital		-	-	385 049
Dividends or shareholder distributions		(971 473)	-	-
Cash received from sale ex. Profit element		5 208 858	-	-
Repayment of loans		-	(503 949)	(1 152 174)
Cash flow from financing		4 237 385	(503 949)	(767 125)
Cash at beginning of period		997 983	1 001 751	717 030
Net currency translation effect		-	(133 578)	-
Net increase/(decrease) in cash and cash equivalents		7 198 142	98 839	458 941
Locked cash		550 000	200 000	200 000
Cash at end of period		8 196 124	967 012	975 971

Change in equity

(EUR)	Share capital	Share premium fund	Other equity	Foreign currency translation reserve	Total equity

Equity 2018	5 255 029	8 208 942	(6 917 136)	554 355	7 101 189
Profit (loss) after tax	-	-	2 541 912	-	2 541 912
Other comprehensive income	-	-	-	(388 566)	(388 566)
Capital increase	41 048	-	-	-	41 048
Capital repayment	-	(971 473)	-	-	(971 473)
Adjustment	-	-	-	-	-
Equity 30 September 2019	5 296 077	7 237 469	(4 375 224)	165 789	8 324 110

(EUR)	Share capital	Share premium fund	Other equity	Foreign Currency translation reserve	Total equity

Equity 2017	4 842 179	8 208 942	(7 073 968)	252 429	6 229 582
Loan conversion	432 082	-	-	-	432 082
Other comprehensive income	-	-	-	301 926	301 926
Profit (loss) after tax	-	-	156 832	-	156 832
Own shares acquired	(19 233)	-	-	-	(19 233)
Equity 31 December 2018	5 255 029	8 208 942	(6 917 136)	554 355	7 101 189

Notes

Note 1: Summary of significant accounting policies

Aega ASA is a public limited company, incorporated and domiciled in Norway. The registered office of Aega ASA is Thunes vei 2, NO-0274 Oslo, Norway. Aega Energy Prima AS was the first company in the group, founded on 28 April 2014. Aega ASA sold eight photovoltaic power plants in Italy in August 2019, and its business is to find and invest in new photovoltaic power plants in Italy.

Basis for preparing the interim financial statements

These condensed interim consolidated financial statements are prepared in accordance with recognition, measurement and presentation principles consistent with the International Financing Reporting Standards (IFRS) as adopted by the European Union for interim reporting under the International Accounting Standard (IAS) 34 Interim Financial Reporting. These condensed interim consolidated financial statements are unaudited.

The group's presentation currency is the euro (EUR) and the parent company's functional currency is the Norwegian krone (NOK). Balance sheet items in group companies with a functional currency other than the EUR are converted to EUR by applying the currency rate applicable on the balance sheet date. Currency translation differences are booked against other comprehensive income. Income statement items are converted by applying the average currency rate for the period. The interim financial report has been prepared on the assumption that the company is a going concern.

See the 2018 annual report for a full overview of the accounting principles applied by Aega ASA.

Key risk factors

No significant change has occurred in risk exposures or risks and uncertainties as described in the second quarter report, compared with those described in the annual report. However, after the quarter all the solar parks was sold which has changed the risks somewhat. After the sale the main asset in the company is cash held in NOK and EUR, so the currency development of this will change the underlying values, also the currency risk described in the annual report is larger. Also the availability of good solar parks at attractive prices are now more important to the company to be able to secure future returns on capital.

Note 2: Breakdown assets and liabilities in discontinued business

Assets held for sale
(EUR)	30 Sep 2019	31 Dec 2018

Property, plant and equipment	16 643 807	17 548 323
Other long-term assets	200 000	200 000
Non-current assets	16 843 807	17 748 323
Receivables	1 483 833	1 227 182
Other current assets	1 893 694	1 817 727
Cash and short-term deposits	921 486	915 883
Current assets	4 299 013	3 960 792
Total assets held for sale	21 142 819	21 709 116
Liabilities held for sale (EUR)	30 Jun 2019	31 Dec 2018
Long-term loans	4 317 767	4 473 595
Leasing	7 182 396	7 471 673
Other long-term debt	319 557	272 961
Total non-current liabilities	11 819 719	12 218 229
Trade payables and other payables	318 080	307 962
Short-term financing - interest-bearing	1 024 896	1 079 682
Derivative financial instruments	861 672	758 484
Other current liabilities	211 722	196 783
Total current liabilities	2 416 371	2 342 912

Total liabilities held for sale 14 236 090 14 561 141

company at the end of the quarter.

Note 3: Group structure ¹ 2

Note 4: Cash and cash equivalents

(EUR)	9M 2019	2018
Cash continued operations	8 196 125	60 088
Cash discontinued operations	-	715 883
Escrow amount	550 000	-
Locked DSRA	-	200 000
Total cash	8 746 125	975 971

Note 5: Shares and shareholder information

	30 Sep 2019

Aega ASA Shares	48 375 949
Aega ASA warrants 1	2 000 000

Own shares	191 332


	31 Dec 2018

Aega ASA Shares	47 975 949
Aega ASA warrants 1	2 000 000
Aega ASA warrants 2	400 000

The own shares have been bought because the Board felt the price of the stock was attractive. The Board plans to in the future to cancel own shares.

Warrants 1

The warrants are freely tradable non-listed warrants, each of which entitles the holder to subscribe for one share in Aega at an exercise price of NOK 3.10 per share. The exercise price for each warrant is adjusted downwards on a NOK-for-NOK basis by any dividend per share paid by Aega in excess of an annual dividend of seven per cent on NOK 3.10 in the period from 31 January 2017 until the exercise of the warrant.

The warrants are exercisable during exercise periods which last for four weeks from the date of publication of Aega's annual financial statements for the 2017, 2018, 2019 and 2020 fiscal years, provided, however, that the last exercise period ends no later than 30 June 2021. Any unexercised warrants will expire without compensation to Solex on 30 June 2021.

Warrants 2

The warrants was freely tradable non-listed warrants, each of which entitles the holder to subscribe for one share in Aega at an exercise price of NOK 1.00 per share. The deadline for exercising the subscription was 14 days after the AGM in 2019. All the warrants was used during Q2, increasing the share capital with NOK 400 000.

Largest 20 shareholders at 30 September 2019

Shares	Percentage

	6.9%
	4.7%
	3.4%
1 471 926	3.0%
1 371 884	2.8%
1 277 694	2.6%
1 134 890	2.3%
1 085 055	2.2%
1 032 069	2.1%
933 667	1.9%
877 141	1.8%
779 012	1.6%
770 566	1.6%
740 780	1.5%
715 357	1.5%
708 186	1.5%
668 890	1.4%
644 722	1.3%
599 999	1.2%
593 208	1.2%
22 641 351	46.7%
48 375 949	100.0%
	3 359 034 2 250 152 1 627 119

Note 6: Tax issues

Tax dispute in Italy

The group is currently involved in a tax dispute with the Italian tax authorities with respect to two of the group's Italian subsidiaries. The Italian tax authorities have claimed repayment from the group of about EUR 1 500 000. The group has disputed this claim in court, and won in the court of first and second instance related to the year 2012. The Italian tax authorities have appealed for the supreme court.

Should the outcome be unfavourable, the group's view is that any liability deriving from the said claims is covered by the warrants provided for in the share purchase agreements signed with the seller of the relevant plants, as the (potential) tax due dates from the period before Aega purchased the assets, and the warrants in the purchase agreements place liability for any tax claims prior to the acquisition solely on the seller. The company has deemed it necessary to pay instalments on the tax claim until a final ruling is made. So far, the group has paid about EUR 120 000 related to this case to the tax authorities.

As mentioned in the CEO letter following the sale of the solar po the risk is now carried by the Buyer of the solar parks. However, there is an escrow amounting to EUR 550 000 will be held by the Buyer to cover potential future damages.

Note 7: Subsequent events

See page 6.

Investor contact

Markus H Enge

Chief Executive Officer

Mobile: +47 40064820 E-mail: [email protected]

Aega ASA Thunes vei 2 N-0274 Oslo Norway