Arise

Quarterly Report • Nov 9, 2018

INTERIM REPORT 1 JANUARY – 30 SEPTEMBER 2018

Third quarter (1 July – 30 September 2018)

• Net sales for the quarter amounted to MSEK 150 (42).
• Operating profit before depreciation and amortisation (EBITDA) was MSEK 90 (19), of which associates had an impact of MSEK 0 (0) on the Group. Operating cash flow was MSEK 40 (52).
• Operating profit (EBIT) was MSEK 72 (-153).
• Profit before tax amounted to MSEK 53 (-173).
• Profit after tax totalled MSEK 46 (-173), corresponding to SEK 1.38 (-5.19) per share.
• Production totalled 128 GWh (107), of which Own wind power operations accounted for 68 GWh (63) and Co-owned wind power operations for 60 GWh (44). Winds were slightly weaker than normal for Own wind power operations but nevertheless stronger than in the preceding year.
• Average income from Own wind power operations was SEK 575 per MWh (417), of which SEK 367 per MWh (268) pertained to electricity and SEK 209 per MWh (149) to electricity certificates.
• The 45 MW Bröcklingeberget project was divested to a fund managed by re:cap global investors with an expected profit of approximately MSEK 70 between 2018 and 2019.
• The acquisition and subsequent sale was completed of the 37 MW Enviksberget project to a fund managed by BlackRock with an expected profit of about MSEK 40 between 2018 and 2019.
• Arise exceeded 1,000 MW in total managed wind power capacity by being entrusted with the assignment to manage a 235 MW project for Green Investment Group, part of Macquarie Group.

First nine months (1 January – 30 September 2018)

• Net sales for the period amounted to MSEK 253 (197).
• Operating profit before depreciation and amortisation (EBITDA) was MSEK 144 (91), of which associates had an impact of MSEK 0 (0) on the Group. Operating cash flow was MSEK 84 (65).
• Operating profit (EBIT) was MSEK 90 (-120).
• Profit before tax amounted to MSEK 24 (-184).
• Profit after tax totalled MSEK 19 (-184), corresponding to SEK 0.57 (-5.53) per share.
• Production totalled 379 GWh (433), of which Own wind power operations accounted for 210 GWh (241) and Co-owned wind power operations for 169 GWh (193). The decrease was due to weaker winds than in the preceding year.
• Average income from Own wind power operations was SEK 543 per MWh (370), of which SEK 355 per MWh (268) pertained to electricity and SEK 188 per MWh (102) to electricity certificates.

About Arise

Arise is one of Sweden's leading wind power companies, with the business concept of developing, building and managing onshore proprietary wind farms and on behalf of investors. The company is listed on Nasdaq Stockholm.

Arise AB (publ), Box 808, SE-301 18 Halmstad, Sweden tel. +46 10 450 71 00, Corporate Identity Number 556274-6726 E-mail: info@arise.se, www.arise.se

Halmstad, 9 November 2018

Daniel Johansson CEO

"Under the current market conditions, we now expect the company to report a profit before tax for the current year well above MSEK 30 and to report positive and growing underlying earnings in the future"

CEO's statement

We are delighted that we succeeded in selling both the Bröcklingeberget (45 MW) and the Enviksberget (37 MW) projects during the quarter. We are pleased that the Swiss asset manager re:cap global investors carried out its first investment in Sweden with us and that we could complete yet another transaction with the world's largest asset manager, BlackRock.

We successfully acquired new projects for our project portfolio and now seeing how projects are maturing for onward sale in 2019 and 2020.

It appears that our Skaftåsen project, about 150 MW, will be the first to be ready for sale next year. In parallel with developing our projects, we have discussions about several possible acquisitions. The more successful transactions we can report, the more reason there is to consider us a natural partner.

In the summer, we exceeded 1,000 MW in total managed wind power capacity when Green Investment Group (part of Macquarie) gave us the assignment to manage its Swedish Överturingen project (235 MW).

In terms of earnings, the third quarter was one of the best in our history, mainly due to the two sales we completed. The structure of the transactions is that we receive part of the proceeds immediately, while retaining good visibility of future proceeds, meaning that our quarterly profit before tax came in at MSEK 53.

We have great confidence in our business model. We are continuously selling projects and expanding our management operations. We have succeeded in reducing net debt and are comfortable with our debt/equity ratio. At the same time, electricity and certificate prices have improved, which has helped our own wind farms to generate positive cash flow. This was also the case in the third quarter, despite slightly weaker winds and thus lower than normal production.

All in all, this means that our ambition is to continue to grow in both asset management and the development of wind power, and profitability so throughout the Group. Under the current market conditions, we now expect the company to report a profit before tax for the current year well above MSEK 30 and to report positive and growing underlying earnings in the future.

It is natural that a company such as ours endures a certain amount of scepticism since we have not been able to generate a profit for several years. We need to prove that we are now in a brand new situation. Naturally, we are grateful for the patience shown by many investors and we hope now to be able to repay this accordingly.

We are in line with the times. The world and Europe are moving to renewable energy production in response to climate change. At the same time, wind power in countries in northern Europe enjoys a special position in terms of producing renewable electricity at the lowest possible cost. With our highly skilled employees, we are well positioned to capitalise on this.

Net sales and results

	Net sales and results
				9	9
		Q3	Q3	months	months
	MSEK	2018	2017	2018	2017
	Net sales Operating profit before	150	42	253	197
Q3-17 Q4-17 Q1-18 Q2-18 Q3-18	depreciation (EBITDA)	90	19	144	91
	Operating profit/loss (EBIT)	72	-153	90	-120
	Profit/loss before tax	53	-173	24	-184
	Comments on the third quarter

Comments on the third quarter

Quarterly earnings were marked by strong income from project sales and slightly weaker winds than normal for the period for Own wind power operations. However, winds were stronger than in the third quarter last year. Electricity prices were relatively favourable for the time of year, while certificate prices continued to be traded at reasonable levels regarding the short section of the price curve. Total production – including the company's share in the Jädraås project – rose to 128 GWh (107). The average price for the company's own production increased to SEK 575 per MWh (417). As a result, net sales rose MSEK 108.

Operating expenses amounted to MSEK 60 (24), of which MSEK 35 (1) was attributable to sales and contracts. The remaining MSEK 25 (23) consisted of personnel and other external expenses. Own capitalised work amounted to MSEK 0 (1). Consolidated profit from associates was MSEK 0 (0), see Note 3.

EBITDA increased MSEK 71 to MSEK 90 (19). EBIT rose to MSEK 72 (-153) since the year-earlier period was charged with impairment. Net financial items improved to MSEK -19 (-20). Accordingly, profit before and after tax totalled MSEK 53 (-173) and MSEK 46 (-173), respectively.

Comments on the first nine months of the year

Development and management income increased during the period due to higher income from project sales. At the same time, weaker winds than normal resulted in total production of 379 GWh (433). The average price for the company's own production increased SEK 173 to SEK 543 per MWh (370), which more than compensated for the lower production. Accordingly, net sales rose a total of MSEK 56 during the period.

Operating expenses amounted to MSEK 110 (112), of which MSEK 37 (41) was attributable to sales and contracts. Remaining expenses increased to MSEK 73 (71) and consisted of personnel and other external expenses, including full-service agreements for operation and maintenance. Own capitalised work was MSEK 2 (2). Consolidated profit from associates was MSEK 0 (0).

EBITDA rose MSEK 53 due to higher revenue recognition in Development and management and a better volume and price mix in production. EBIT increased to MSEK 90 (-120). Net financial items declined to MSEK -67 (- 64) as a result of refinancing costs, after wich profit before and after tax totalled MSEK 24 (-184) and MSEK 19 (-184), respectively.

Cash flow and investments

Comments on the third quarter

Cash flow from operating activities before changes in working capital was MSEK 88 (12). Changes in working capital were MSEK -49 (40), driven by project sales. Accordingly, the total operating cash flow was MSEK 40 (52). Net cash flow from investing activities was MSEK 7 (-1). Cash flow after investments was therefore MSEK 47 (51). Loans were repaid in the amount of MSEK 29 (0), which had a corresponding impact on cash flow. Interest of MSEK -17 (-12) was also paid during the quarter. The increase was mainly due to the quarterly interest payment of the company's convertible loans for the second quarter falling during the third quarter this year compared with in the second quarter last year. No interest was received during the quarter. No net payments to or from blocked accounts took place, after which cash flow for the quarter amounted to MSEK 0 (39). Q3-17 Q4-17 Q1-18 Q2-18 Q3-18 Q3-17 Q4-17 Q1-18 Q2-18 Q3-18

Comments on the first nine months of the year

Cash flow from operating activities before changes in working capital was MSEK 139 (86). Changes in working capital were MSEK -55 (-21), mainly driven by working capital accumulation in ongoing external projects. Accordingly, the total operating cash flow was MSEK 84 (65). Projects were both acquired and divested during the period, bringing net cash flow from investing activities to MSEK -2 (-18). Cash flow after investments was therefore MSEK 82 (47). During the period, the company's secured bond was refinanced through a new secured bond loan, bank loans and cash and cash equivalents. Repayments of MSEK 29 were made after refinancing took place. The net of current and noncurrent interest-bearing liabilities thus reduced cash flow by MSEK -104 (-105). Interest and other financing costs of MSEK -72 (-49) were paid and interest of MSEK 0 (1) was received. Net payments to or from blocked accounts totalled MSEK 0 (3), after which cash flow for the period amounted to MSEK -94 (-103).

Financing and liquidity

Net debt amounted to MSEK 957 (984), of which convertibles comprised MSEK 240. Cash and cash equivalents amounted to MSEK 52 (186). The company has a significant tied-up working capital and remaining revenue recognition in ongoing construction projects. In total, the projects are thus expected to make a net contribution of approximately MSEK 166 to cash flow as these are completed. The equity/assets ratio at the end of the period was 41% (38). Under the assumption that all of the company's convertible bonds would be converted and existing cash netted against interest-bearing liabilities, the equity/assets ratio would correspond to 54%.

Development and management income, MSEK

Divested projects, accumulated, MW

External management assignments, accumulated, MW

Segment – Dev. & management

	Segment – Dev. &			management
management income, MSEK	MSEK	Q3 2018	Q3 2017	9 months 2018	9 months 2017
	Income	112	17	143	113
	Cost of sold projects and
	contracts	-35	-1	-37	-41
Q3-17 Q4-17 Q1-18 Q2-18 Q3-18	Other operating expenses and capitalised work Operating profit before	-7	-6	-21	-21
	depreciation (EBITDA)	70	10	85	51
	Operating profit/loss (EBIT)	70	-3	85	37
	Profit/loss before tax	66	-8	72	20
	Comments on the third quarter
Q3-17 Q4-17 Q1-18 Q2-18 Q3-18 assignments, accumulated,	The Bröcklingberget (45 MW) and Enviksberget (37 MW) projects were divested during the quarter to funds managed by re:cap global investors and BlackRock respectively. Asset management agreements were also signed for both projects. Bröcklingeberget is re:cap's first investment in Sweden while Enviksberget is the third project divested by Arise to BlackRock. Construction of the projects began immediately following the divestment and are expected to be completed during the fourth quarter of 2019. Construction of the Svartnäs project proceeded according to plan. The project is expected to be completed during the first quarter of

Comments on the third quarter

The Bröcklingberget (45 MW) and Enviksberget (37 MW) projects were divested during the quarter to funds managed by re:cap global investors and BlackRock respectively. Asset management agreements were also signed for both projects. Bröcklingeberget is re:cap's first investment in Sweden while Enviksberget is the third project divested by Arise to BlackRock. Construction of the projects began immediately following the divestment and are expected to be completed during the fourth quarter of 2019. Construction of the Svartnäs project proceeded according to plan. The project is expected to be completed during the first quarter of 2019. Work is ongoing to make more projects ready for sale, and the ambition is to sell the Skaftåsen project, approximately 165 MW, in 2019 and the Ranasjöhöjden and Salsjöhöjden projects, totalling about 200 MW, in 2020. Other projects continue to evolve and discussions are also ongoing to further expand the project portfolio. Furthermore, an asset management agreement was signed with Green Investment Group regarding a 235 MW project. As a result of project sales, income increased to MSEK 112 (17) and the cost of sold projects and contracts to MSEK 35 (1) compared with the preceding year. Other operating expenses and capitalised work increased to MSEK 7 (6) compared with the preceding year. EBITDA therefore rose to MSEK 70 (10). EBIT increased to MSEK 70 (-3) as impairment was charged against profit in the preceding year. Net financial items remained unchanged, meaning profit before tax increased MSEK 73 to MSEK 66 (-8). Q3-17 Q4-17 Q1-18 Q2-18 Q3-18

Comments on the first nine months of the year

In addition to events in the third quarter, the Solberg project was completed and financial settlement took place during the period and an option agreement was signed for the right to acquire Krange Vind AB. Income in the segment therefore amounted to MSEK 143 (113), while the cost of sold projects and contracts decreased to MSEK 37 (41) compared with the year-earlier period. Other operating expenses and capitalised work were unchanged compared with the preceding year. EBITDA therefore rose to MSEK 85 (51). EBIT increased to MSEK 85 (37). Net financial items improved to MSEK -13 (-16) as the company's unsecured bond was redeemed last year. Combined, this meant that profit before tax increased MSEK 52 to MSEK 72 (20).

Average prices, SEK per MWh

Specific operating expense, SEK per MWh

	Segment – operations	Own wind power
	MSEK	Q3 2018	Q3 2017	9 months 2018	9 months 2017
	Income	39	26	114	93
Q3-17 Q4-17 Q1-18 Q2-18 Q3-18	Operating expenses Operating profit before	-14	-14	-39	-38
	depreciation (EBITDA)	25	13	75	55
Average prices, SEK per MWh	Operating profit/loss (EBIT)	7	-146	21	-143
	Loss before tax Comments on the third quarter	-8	-162	-34	-191
Q3-17 Q4-17 Q1-18 Q2-18 Q3-18 Specific operating expense,	Winds were slightly weaker than normal. However, winds were stronger than in the year-earlier quarter, which meant production at the company's wholly-owned farms increased to 68 GWh (63). Average income from electricity and certificates was SEK 367 per MWh (268) and SEK 209 per MWh (149), respectively. Electricity (SE4) was 34% and certificates (SKM) 1% below the market price for the period. Compared with the market price for the period, price hedging and the pricing profile of production had an adverse impact on average prices. Net sales rose MSEK 2 due to higher production and MSEK 11 due to a

Comments on the third quarter

Winds were slightly weaker than normal. However, winds were stronger than in the year-earlier quarter, which meant production at the company's wholly-owned farms increased to 68 GWh (63). Average income from electricity and certificates was SEK 367 per MWh (268) and SEK 209 per MWh (149), respectively. Electricity (SE4) was 34% and certificates (SKM) 1% below the market price for the period. Compared with the market price for the period, price hedging and the pricing profile of production had an adverse impact on average prices. Q3-17 Q4-17 Q1-18 Q2-18 Q3-18

Net sales rose MSEK 2 due to higher production and MSEK 11 due to a higher average price compared with the preceding year. The specific operating expense declined slightly to SEK 205 per MWh (216) due to higher production. EBITDA therefore increased MSEK 13 compared with the preceding year.

EBIT increased to MSEK 7 (-146) as impairment was charged against profit in the preceding period. Net financial items improved slightly to MSEK -15 (-16), after which loss before tax improved to MSEK -8 (-162).

Comments on the first nine months of the year

Production in the company's own farms decreased to 210 GWh (241) due to weaker winds than in the preceding year. Average income from electricity and certificates increased to SEK 355 per MWh (268) and SEK 188 per MWh (102), respectively, for the period, which is 22% below and 29% above, respectively, the market price for electricity (SE4) and certificates (SKM).

Net sales decreased MSEK 11 due to lower production, and increased MSEK 36 due to a higher average price, year-on-year. The specific operating expense increased to SEK 185 per MWh (159) due to lower production. Overall, net sales and EBITDA thus increased MSEK 25 and MSEK 21 respectively, year-on-year. In the preceding year, EBITDA was positively impacted by insurance compensation, which was recognised under other income.

EBIT increased to MSEK 21 (-143) since impairment was charged against profit in the preceding year. Net financial items declined to MSEK -55 (- 48) due to refinancing costs during the period. Overall, loss before tax therefore improved to MSEK -34 (-191).

Production, GWh

Average prices, SEK per MWh

Specific operating expense, SEK per MWh

Segment – Co-owned wind power operations

	Segment –	Co-owned wind power
	operations
	MSEK	Q3 2018	Q3 2017	9 months 2018	9 months 2017
	Income	38	28	107	104
Q3-17 Q4-17 Q1-18 Q2-18 Q3-18	Operating expenses Operating profit before	-9	-7	-26	-25
	depreciation (EBITDA)	30	21	81	80
Average prices, SEK per MWh	Operating profit (EBIT)	12	4	28	30
	Profit before tax	0	-6	-4	-2
Q3-17 Q4-17 Q1-18 Q2-18 Q3-18 Specific operating expense,	Comments on the third quarter The figures presented in the segment reporting refer to Arise's 50% stake, or 101.5 MW, in the Jädraås project. For the consolidated results, refer to Note 3. In the third quarter, electricity production totalled 60 GWh (44) due to stronger winds compared with the year-earlier quarter. Average income was SEK 645 per MWh (627), of which SEK 418 per MWh (399) pertained to electricity and SEK 227 per MWh (228) to electricity certificates.
		Net sales rose MSEK 10 due to higher production, and MSEK 1 due to the

Comments on the third quarter

The figures presented in the segment reporting refer to Arise's 50% stake, or 101.5 MW, in the Jädraås project. For the consolidated results, refer to Note 3. In the third quarter, electricity production totalled 60 GWh (44) due to stronger winds compared with the year-earlier quarter. Average income was SEK 645 per MWh (627), of which SEK 418 per MWh (399) pertained to electricity and SEK 227 per MWh (228) to electricity certificates. Q3-17 Q4-17 Q1-18 Q2-18 Q3-18

Net sales rose MSEK 10 due to higher production, and MSEK 1 due to the higher average price, compared with the year-earlier quarter. Overall, the segment's net sales rose MSEK 11 and EBITDA by MSEK 9. The specific operating expense declined to SEK 143 per MWh (159) due to higher production. EBIT increased to MSEK 12 (4). Net financial items declined due to currency effects and profit before tax therefore rose in total MSEK 7 to MSEK 0 (-6).

The company is currently using cash flows generated by the project to repay the project's external loans. Strategic opportunities are currently being evaluated for the project, incl. a potential sale.

Comments on the first nine months of the year

During the nine-month period, electricity production was 169 GWh (193) due to weaker winds compared with the year-earlier period. Average income was SEK 635 per MWh (541), of which SEK 432 per MWh (376) pertained to electricity and SEK 203 per MWh (165) to electricity certificates.

Net sales decreased MSEK 13 due to lower production, but rose MSEK 16 due to the higher average price, compared with the year-earlier period. Overall, the segment's net sales and EBITDA increased MSEK 3 and MSEK 2, respectively. The specific operating expense increased to SEK 154 per MWh (127) due to lower production. Depreciation increased due to currency effects to MSEK -53 (-50). EBIT decreased therefore to MSEK 28 (30). Net financial items declined slightly and loss before tax thus decreased to MSEK -4 (-2).

Project portfolio

At the end of the period, the company had a project portfolio of approx. 1,000 MW, of which approx. 900 MW in Sweden and 70 MW in active phase in Scotland. The carrying amount is approx. MSEK 80. Fully developed, the portfolio would equate to an investment of more than SEK 10 billion. While individual projects may not always be realised, the overall project portfolio represents high potential value for the company, with relatively little capital tied-up and low risk.

Other significant events

There are no other significant events to report.

Related-party transactions

No significant related party transactions took place during the period.

Contingent liabilities

There were no changes to the Group's contingent liabilities. These contingent liabilities are described in more detail on page 72 under Note 21 in the 2017 Annual Report.

Significant events after the end of the period

No significant events occurred after the end of the period.

Outlook

The market for development and management is favourable. We see opportunities to create value with relatively little capital tied-up and strengthen our market position. This is demonstrated in the recent project sales, that we are already procuring in advance of the next project sale and that we continue to secure management tenders. The prevailing forward prices for electricity and electricity certificates are challenging for the profitability of the company's own and co-owned wind farms. A better financial balance means we have greater resilience to lower prices. We are optimistic about the price trend of electricity. Shorter dated certificate prices have stabilised but uncertainty remains for longer dated contracts due to such factors as the need for the introduction of a stopping mechanism in the system. We are maintaining an opportunistic approach to the company's production assets. Under the current market conditions, we now expect the company to report a profit before tax for the current year well above MSEK 30 and to report positive and growing underlying earnings in the future. Net debt is expected to fall well below MSEK 500 by end of 2020 assuming conversion of outstanding convertibles and below MSEK 700 without conversion.

Risks and uncertainties

Risks and uncertainties affecting the Group are described on pages 38- 39 of the 2017 Annual Report, and financial risk management is presented on pages 64-69. No significant changes have taken place that affect the reported risks.

Ownership structure

A presentation of the company's ownership structure is available on the website (www.arise.se)

Parent Company

The Parent Company's operations comprise project development (identify wind locations, signing leasehold agreements, producing impact assessments, preparing detailed development plans and permits), divesting projects, building new projects, managing both internal and external projects (technically and financially) and managing the Group's electricity and electricity-certificate trading activities. The Parent Company manages the Group's production plans and electricity hedges in accordance with the adopted financial policy. Until February 2018, the electricity-generating subsidiaries sold their electricity production to Arise at spot prices, which Arise then sold to the market at spot price. These intra-Group trading activities were recognised on a gross basis in the income statement. From March 2018, the electricitygenerating subsidiaries sell their electricity production directly to counterparties in the market at spot price. During the first nine months of the year, the Parent Company's total income amounted to MSEK 80 (132), and purchases of electricity and certificates, personnel and other external expenses, capitalised work on own account and depreciation of non-current assets totalled MSEK -100 (-170), resulting in EBIT of MSEK -19 (-39). A net financial expense of MSEK -20 (-175) led to a net loss after tax of MSEK -46 (-216). The Parent Company's net investments amounted to MSEK -11 (-21).

Accounting policies

Arise applies the International Financial Reporting Standards (IFRS), as adopted by the EU, and the interpretations of these (IFRIC). This interim report has been prepared in accordance with IAS 34 Interim Financial Reporting. The Parent Company's financial statements have been prepared in accordance with the Swedish Annual Accounts Act and Recommendation RFR 2 of the Swedish Financial Reporting Board. The accounting policies are consistent with those applied in the 2017 Annual Report, with the addition of IFRS 9 and IFRS 15, which have been applied since 1 January 2018. The transition to IFRS 9 and IFRS 15 does not have any material, quantitative effect on the company's accounts other than additional disclosure requirements. The company has selected a prospective transition period that entails that comparative figures are not restated. IFRS 16 Leases is a new standard for the recognition of leases that comes into effect from 2019 and supersede IAS 17 Leases. This requires that the lessee recognises assets and liabilities attributable to leases. On the basis of the company's preliminary analysis, IFRS 16 is not expected to have any material, quantitative effect on the company's accounts, though the analysis is in progress.

Review by the auditor

This report has been reviewed by the company's auditor.

Financial calendar

• Fourth quarter (1 October-31 December) 15 Feb 2019
• First quarter (1 January-31 March) 8 May 2019
• Second quarter (1 April-30 June) 17 July 2019
• Third quarter (1 July-30 September) 8 Nov 2019

Halmstad, 9 November 2018

Daniel Johansson, Chief Executive Officer

For further information, please contact

Daniel Johansson, CEO, Tel. +46 702 244 133

Linus Hägg, CFO, Tel. +46 702 448 916

Auditor's report on review of the interim condensed financial information (interim report) prepared in accordance with IAS 34 and Chapter 9 of the Swedish Annual Accounts Act

Introduction

We have performed a review of the interim condensed financial information (interim report) of Arise AB (publ) at September 30, 201, and the nine-month period ending on that date. The Board of Directors and the CEO are responsible for the preparation and presentation of this interim financial report in accordance with IAS 34 and the Swedish Annual Accounts Act. Our responsibility is to express an opinion on this interim report based on our review.

Direction and scope of the review

We have conducted our review in accordance with the International Standard on Review Engagements ISRE 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity. A review consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review has a different focus and is substantially less in scope than an audit conducted in accordance with the ISA, and with generally accepted auditing practices. The procedures performed in a review do not enable us to obtain a level of assurance that would make us aware of all significant matters that might be identified in an audit. Therefore, the opinion expressed on the basis of a review does not provide the same level of assurance as an opinion expressed on the basis of an audit.

Opinion

Based on our review, nothing has come to our attention that causes us to believe that the interim report has not, in all material aspects, been compiled for the Group in accordance with IAS 34 and the Swedish Annual Accounts Act, and for the Parent Company in accordance with the Swedish Annual Accounts Act.

Malmö, 9 November 2018

Öhrlings PricewaterhouseCoopers AB

Magnus Willfors Authorised Public Accountant

CONSOLIDATED INCOME STATEMENT

		2018	2017	2018	2017	2017
(Amounts rounded to the nearest MSEK)		Q 3	Q 3	9 months	9 months	Full year
Net sales	Note 1	150	42	253	197	257
Other operating income		0	0	0	4	5
Total income		150	43	253	201	261
Capitalised work on own account		0	1	2	2	3
Personnel costs		-8	-8	-27	-27	-36
Other external expenses	Note 2	-52	-16	-83	-85	-105
Profit/loss from associates	Note 3	0	0	0	0	7
Operating profit before depreciation (EBITDA)		90	19	144	91	131
Depr. and imp. of property, plant and equipment	Note 4,6	-18	-172	-54	-212	-230
Operating profit/loss (EBIT)		72	-153	90	-120	-99
Financial income	Note 5,7	2	1	2	3	5
Financial expenses	Note 5,7	-21	-21	-69	-67	-85
Profit/loss before tax		53	-173	24	-184	-178
Tax on profit/loss for the period		-7	0	-4	0	-1
Net profit/loss for the period		46	-173	19	-184	-180
Earnings per share before dilution, SEK		1.38	-5.19	0.57	-5.53	-5.39
Earnings per share after dilution, SEK		1.38	-5.19	0.57	-5.53	-5.39

Treasury shares held by the Company, amounting to 54,194 shares, have not been included in calculating earnings per share.

Earnings are 100% attributable to the Parent Company's shareholders.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

	2018	2017	2018	2017	2017
(Amounts rounded to the nearest MSEK)	Q 3	Q 3	9 months	9 months	Full year
Net profit/loss for the period	46	-173	19	-184	-180
Other comprehensive income
Items that may be reclassified to the income statement
Translation differences for period	0	0	0	1	1
Cash flow hedges	15	7	-36	27	36
Net investment in foreign currency	-3	0	20	4	13
Share of other comprehensive income in associates, net after tax	-7	-40	-12	-40	-42
Income tax attributable to components of other comprehensive income	-5	-2	2	-7	-10
Other comprehensive income for the period, net after tax	0	-34	-26	-15	-2
Total comprehensive income for the period	46	-207	-7	-199	-182

Comprehensive income is attributable in its entirety to the Parent Company's shareholders.

CONSOLIDATED BALANCE SHEET

	2018	2017	2017
(Condensed, amounts rounded to the nearest MSEK)	30 Sep	30 Sep	31 Dec
Property, plant and equipment	1,344	1,411	1,398
Non-current financial assets	483	470	479
Total non-current assets	1,827	1,881	1,878
Inventories	6	4	4
Other current assets	168	101	97
Cash and cash equivalents	52	186	146
Total current assets	226	291	247
TOTAL ASSETS	2,053	2,172	2,124
Equity	837	826	843
Non-current interest-bearing liabilities	983	1,129	1,079
Provisions	46	46	46
Total non-current liabilities	1,029	1,175	1,124
Current interest-bearing liabilities	34	50	50
Other current liabilities	153	121	107
Total current liabilities	187	171	157
TOTAL EQUITY AND LIABILITIES	2,053	2,172	2,124

CONSOLIDATED CASH FLOW STATEMENT

Interim Report 1 January – 30 September 2018 Page 12

		2018	2017	2018	2017	2017
(Condensed, amounts rounded to the nearest MSEK)		Q 3	Q 3	9 months	9 months	Full year
Cash flow from operating activities before changes in working capital		88	12	139	86	119
Cash flow from changes in working capital		-49	40	-55	-21	-23
Cash flow from operating activities		40	52	84	65	96
Investments in property, plant and equipment		-20	-1	-28	-55	-60
Sales of property, plant and equipment		27	-	27	38	38
Cash flow from investing activities		7	-1	-2	-18	-23
Change in interest-bearing liabilities		-29	-	-104	-105	-154
Interest paid and other financing costs		-17	-12	-72	-49	-65
Interest received		-	0	-	1	1
Net payment to blocked accounts		-	-	-	3	3
Cash flow from financing activities		-46	-12	-176	-150	-216
Cash flow for the period		0	39	-94	-103	-143
Cash and cash equivalents at the beginning of the period		53	146	146	287	287
Translation differences in cash and cash equivalents		0	1	0	1	2
Cash and cash equivalents at the end of the period		52	186	52	186	146
Interest-bearing liabilities at the end of the period		1,018	1,179	1,018	1,179	1,129
Blocked cash at the end of the period		-9	-10	-9	-10	-10
Net debt	Note 9	957	984	957	984	973

GROUP EQUITY

	2018	2017	2017
(Condensed, amounts rounded to the nearest MSEK)	30 Sep	30 Sep	31 Dec
Opening balance	843	1,020	1,020
Profit/loss for the year	19	-184	-180
Other comprehensive income for the period	-26	-15	-2
New issue / warrants	-	1	1
Convertible loan	-	5	5
Other adjustments	-	-1	-1
Closing balance	837	826	843

KEY PERFORMANCE INDICATORS FOR THE GROUP

	2018	2017	2018	2017	2017
	Q 3	Q 3	9 months	9 months	Full year
Operational key performance indicators
Installed capacity at the end of the period, MW	240.7	240.7	240.7	240.7	240.7
Own electricity production during the period, GWh	68.4	63.0	209.7	240.6	348.4
Co-owned electricity production during the period, GWh	59.7	44.2	169.0	192.6	286.9
Total electricity production during the period, GWh	128.1	107.3	378.7	433.3	635.3
Number of employees at the end of the period	24	26	24	26	26
Financial key performance indicators
Earnings per share before dilution, SEK *	1.38	-5.19	0.57	-5.53	-5.39
Earnings per share after dilution, SEK*	1.38	-5.19	0.57	-5.53	-5.39
EBITDA margin, %	60.0%	45.0%	57.1%	45.5%	50.1%
Operating margin, %	47.9%	neg	35.6%	neg	neg
Return on capital employed (EBIT), %	6.2%	neg	6.2%	neg	neg
Return on adjusted capital employed (EBITDA), %	10.2%	7.6%	10.2%	7.6%	6.8%
Return on equity, %	2.9%	neg	2.9%	neg	neg
Capital employed, MSEK	1,793	1,810	1,793	1,810	1,817
Average capital employed, MSEK	1,802	1,995	1,802	1,995	1,915
Equity, MSEK	837	826	837	826	843
Average equity, MSEK	831	921	831	921	932
Net debt	957	984	957	984	973
Equity/assets ratio, %	40.8%	38.0%	40.8%	38.0%	39.7%
Interest coverage ratio, times	3.5	neg	1.3	neg	neg
Debt/equity ratio, times	1.1	1.2	1.1	1.2	1.2
Equity per share, SEK	25	25	25	25	25
Equity per share after dilution, SEK	25	25	25	25	25
No. of shares at the end of the period, excl. treasury shares	33,373,876	33,373,876	33,373,876	33,373,876	33,373,876
Average number of shares	33,373,876	33,373,876	33,373,876	33,373,876	33,373,876
Average number of shares after dilution**	33,933,876	33,933,876	33,933,876	33,933,876	33,933,876

* Treasury shares held by the Company, amounting to 54,194 shares, have not been included in calculating earnings per share.

** When calculating earnings per share and equity per share after dilution, warrants that were out-of-the-money during the period have not been included.

Note 1 - Net sales	2018	2017	2018	2017	2017
(Amounts rounded to the nearest MSEK)	Q 3	Q 3	9 months	9 months	Full year
Electricity income	25	17	74	65	95
Certificate income	14	9	40	25	38
Development and management income	111	16	139	108	124
	150	42	253	197	257

Net sales include i) Income from electricity (the sale of generated electricity, and gains and losses from electricity and currency derivatives attributable to the hedged electricity production), ii) earned and sold electricity certificates and guarantees of origin, and iii) development income from projects sold and management income. The classification is based on an assessment of the nature of the income, the amount, timing and uncertainty surrounding income and cash flows. Income from electricity and income from electricity certificates are generated by the wind farms owned by the Group, which are recognised under Own wind power operations segment. Development and management income is primarily generated through the company's project portfolio and is recognised under the Development and management segment. In addition, Arise has an associate that is not consolidated in accounting terms and thus does not generate any net sales. This associate is Sirocco Wind Holding AB, which owns the Jädraås project. The associate can be seen in the Co-owned wind power operations segment as if Arise's participation in this operation was consolidated.

Note 2 - Other external expenses	2018	2017	2018	2017	2017
(Amounts rounded to the nearest MSEK)	Q 3	Q 3	9 months	9 months	Full year
Cost of sold projects and construction work	35	1	37	41	42
Other items	17	15	46	44	63
	52	16	83	85	105

Note 3 – Share of profits from associates	2018	2017	2018	2017	2017
(Amounts rounded to the nearest MSEK)	Q 3	Q 3	9 months	9 months	Full year
Share of profits in associates (net after tax, 22%)	-4	-7	-19	-16	-10
Adjustment to consolidated value	1	-11	16	-1	-1
Financial income from associates (gross before tax)	7	7	21	21	27
Less uncapitalised share	-4	11	-18	-3	-10
	0	0	0	0	7

Financial income from associates is attributable to granted shareholder loans.

GROUP SEGMENT REPORTING

Quarter 3		Develop. and		Own wind power				Unallocated Eliminations		Co-owned wind power				Group
		management		operations		operations		rev./exp.
(Amounts to the nearest MSEK)	Q3-18	Q3-17	Q3-18	Q3-17	Q3-18	Q3-17	Q3-18	Q3-17	Q3-18	Q3-17	Q3-18	Q3-17
Net sales, external	111	16	39	26	38	28	-	-	-38	-28	150	42
Net sales, internal	1	1	-	-	-	-	-	-	-1	-1	-	-
Other operating income	0	0	0	0	-	-	0	-	-	-	0	0
Total income	112	17	39	26	38	28	0	-	-40	-29	150	43
Capitalised work on own account	0	1	-	-	-	-	-	-	-	-	0	1
Operating expenses	-42	-8	-14	-14	-9	-7	-5	-4	10	8	-60	-24
Share of profits from associates	-	-	-	-	-	-	0	0	-	-	0	0
Operating profit/loss before depr./imp. (EBITDA)	70	10	25	13	30	21	-5	-4	-30	-21	90	19
Depreciation/ impairment Note 4	0	-14	-18	-159	-18	-17	-	0	18	17	-18	-172
Operating profit/loss (EBIT)	70	-3	7	-146	12	4	-5	-4	-12	-4	72	-153
Net financial items Note 5	-4	-4	-15	-16	-12	-10	0	0	12	10	-19	-20
Profit/loss before tax (EBT)	66	-8	-8	-162	0	-6	-5	-4	0	7	53	-173
Property, plant and equipment	79	75	1,264	1,336	1,328	1,307	0	0	-1,328	-1,307	1,344	1,411

Fund managed by BlackRock and fund managed by re:cap global investors accounted for more than 10% of development and management income during the quarter and in the corresponding quarter in 2017 Fortum and fund managed by BlackRock accounted for more than 10%. There were no other customers who accounted for more than 10% of this income during the period.

Note 4 - Depreciation and impairment of property, plant and equipment

Depreciation and impairment	0	-14	-18	-159	-18	-17	-	0	18	17	-18	-172
Impairment and reversal of impairment	-	-14	-	-139	-	0	-	-	-	0	-	-152
Depreciation/amortisation	0	0	-18	-20	-18	-16	-	0	18	16	-18	-20

Impairment tests were conducted and indicated no impairment requirement. The tests were based in part on long-term market price forecasts for electricity and electricity certificates and a discount rate of 6.5-6.8%.

Note 5 – Net financial income/expense

Total net financial income	-4	-4	-15	-16	-18	-17	0	0	18	17	-19	-20
Less interest expenses on shareholder loans	-	-	-	-	7	7	-	-	-7	-7	-	-
Net financial income/exp. excl. shareholder loans	-4	-4	-15	-16	-12	-10	0	0	12	10	-19	-20

The Co-owned wind power operations segment is recognised excluding internal interest expenses on shareholder loans.

GROUP SEGMENT REPORTING

9 months	Develop. and		Own wind power		Co-owned wind power		Unallocated		Eliminations			Group
	management		operations		operations		rev./exp.
(Amounts to the nearest MSEK)	2018	2017	2018	2017	2018	2017	2018	2017	2018	2017	2018	2017
Net sales, external	139	108	114	89	107	104	-	-	-107	-104	253	197
Net sales, internal	4	5	-	-	-	-	-	-	-4	-5	-	-
Other operating income	0	0	0	4	-	-	0	-	-	-	0	4
Total income	143	113	114	93	107	104	0	-	-111	-109	253	201
Capitalised work on own account	2	2	-	-	-	-	-	-	-	-	2	2
Operating expenses	-60	-64	-39	-38	-26	-25	-16	-14	30	29	-110	-112
Share of profits from associates	-	-	-	-	-	-	0	0	-	-	0	0
Operating profit/loss before depr./imp. (EBITDA)	85	51	75	55	81	80	-16	-14	-81	-80	144	91
Depreciation/ impairment Note 6	0	-14	-54	-198	-53	-50	0	0	53	50	-54	-212
Operating profit/loss (EBIT)	85	37	21	-143	28	30	-16	-14	-28	-30	90	-120
Net financial items Note 7	-13	-16	-55	-48	-33	-32	1	1	33	32	-67	-64
Profit/loss before tax (EBT)	72	20	-34	-191	-4	-2	-15	-13	5	2	24	-184
Property, plant and equipment	79	75	1,264	1,336	1,328	1,307	0	0	-1,328	-1,307	1,344	1,411

Fund managed by BlackRock and fund managed by re:cap global investors accounted for more than 10% of development and management income during the period and in the corresponding period in 2017 fund managed by BlackRock accounted for more than 10%. There were no other customers who accounted for more than 10% of this income during the period.

Note 6 – Depreciation and impairment of property, plant and equipment

Depreciation/amortisation	0	0	-54	-59	-53	-49	0	0	53	49	-54	-59
Impairment and reversal of impairment	-	-14	-	-139	-	0	-	-	-	0	-	-152
Depreciation and impairment	0	-14	-54	-198	-53	-50	0	0	53	50	-54	-212

Impairment tests were conducted and indicated no impairment requirement. The tests were based in part on long-term market price forecasts for electricity and electricity certificates and a discount rate of 6.5-6.8%.

Note 7 – Net financial income/expense

Total net financial income	-13	-16	-55	-48	-53	-53	1	1	53	53	-67	-64
Less interest expenses on shareholder loans	-	-	-	-	21	21	-	-	-21	-21	-	-
Net financial income/exp. excl. shareholder loans	-13	-16	-55	-48	-33	-32	1	1	33	32	-67	-64

The Co-owned wind power operations segment is recognised excluding internal interest expenses on shareholder loans.

Note 8 - Fair value of financial instruments

Fair value hierarchy

All financial instruments that are measured at fair value belong to Level 2 of the fair value hierarchy. Derivatives comprise electricity futures, currency futures and interest-rate swaps. Measuring the fair value of currency futures is based on published forward rates in an active market. The measurement of interest-rate swaps is based on forward interest rates derived from observable yield curves. The discounting does not have any material impact on the valuation of derivatives in Level 2. The recognition of financial instruments is described on pages 64-69 of the 2017 Annual Report. The table below presents the Group's financial assets and liabilities measured at fair value at the balance-sheet date.

	2018	2017	2017
(Amounts rounded to the nearest MSEK)	30 Sep	30 Sep	31 Dec
Assets
Derivatives held for hedging purposes
- Derivative assets	1	1	2
Liabilities
Derivatives held for hedging purposes
- Derivative liabilities	-94	-58	-54

Note 9 – Net debt

	2018	2017	2017
(Amounts rounded to the nearest MSEK)	30 Sep	30 Sep	31 Dec
Non-current liabilities	1,029	1,175	1,124
- of which interest-bearing non-current liabilities	983	1,129	1,079
Current liabilities	187	171	157
- of which interest-bearing current liabilities	34	50	50
Long and short term interest bearing debt	1,018	1,179	1,129
Cash and cash equivalents at the end of the period	-52	-186	-146
Blocked cash at the end of the period	-9	-10	-10
Net debt	957	984	973

PARENT COMPANY INCOME STATEMENT

	2018	2017	2018	2017	2017
(Amounts rounded to the nearest MSEK)	Q 3	Q 3	9 months	9 months	Full year
Sales of electricity and electricity certificates	9	28	61	111	154
Development and management income	6	6	19	21	28
Other operating income	0	0	0	0	0
Total income	16	35	80	132	182
Capitalised work on own account	0	0	0	0	1
Purchases of electricity and electricity certificates	-9	-29	-61	-115	-160
Cost of sold projects and construction work	-1	-1	-3	-5	-7
Personnel costs	-7	-7	-23	-24	-32
Other external expenses	-4	-4	-13	-13	-18
Operating profit/loss before depreciation (EBITDA)	-6	-6	-19	-25	-33
Depr. and impairment of property, plant and equipment	0	-14	0	-14	-14
Operating profit/loss (EBIT)	-6	-20	-19	-39	-47
Financial income1	28	24	320	81	162
Financial expenses2	-43	-217	-340	-255	-271
Profit/loss after financial items	-21	-212	-39	-213	-155
Group contribution	-	-	-	-	-
Profit/loss before tax	-21	-212	-39	-213	-155
Tax on profit/loss for the period	-5	-1	-7	-3	-4
Net profit/loss for the period	-27	-213	-46	-216	-160

1) Includes dividends of MSEK 268 (0) from subsidiaries in 2018. 2017 includes sales of shares in subsidiaries in the fourth quarter of MSEK 131.

2) Includes a write down of shares in subsidiaries in 2018 of MSEK 268 (142) and a conversion of shareholder loans to investment in associates totalling MEUR 1 (6), corresponding to MSEK 10 (58) which were subsequently impaired to SEK 0 (0).

Interim Report 1 January – 30 September 2018 Page 19

PARENT COMPANY BALANCE SHEET

	2018	2017	2017
(Condensed, amounts rounded to the nearest MSEK)	30 Sep	30 Sep	31 Dec
Property, plant and equipment	52	43	46
Non-current financial assets	1,677	2,031	1,940
Total non-current assets	1,729	2,074	1,986
Inventories	4	3	2
Other current assets	104	121	133
Cash and cash equivalents	39	127	81
Total current assets	147	251	216
TOTAL ASSETS	1,876	2,325	2,201
Restricted equity	8	8	8
Non-restricted equity	768	758	814
Total equity	776	765	822
Non-current interest-bearing liabilities	983	1,129	1,079
Total non-current liabilities	983	1,129	1,079
Current interest-bearing liabilities	34	50	50
Other current liabilities	82	380	250
Total current liabilities	117	430	300
TOTAL EQUITY AND LIABILITIES	1,876	2,325	2,201

PARENT COMPANY EQUITY

	2018	2017	2017
(Condensed, amounts rounded to the nearest MSEK)	30 Sep	30 Sep	31 Dec
Opening balance	822	976	976
Other comprehensive income for the period	-46	-216	-160
New issue / warrants	-	1	1
Convertible loan	-	5	5
Closing balance	776	765	822

DEFINITIONS OF KEY RATIOS GENERAL INFORMATION

EBITDA margin

EBITDA as a percentage of total income.

Operating margin EBIT as a percentage of total income.

Return on capital employed Rolling 12-month EBIT as a percentage to average capital employed.

Return on adjusted capital employed Rolling 12-month EBITDA as a percentage to average capital employed. Return on equity

Rolling 12-month net profit as a percentage to average equity.

Equity per share Equity divided by the average number of shares.

Equity per share after dilution Equity divided by the average number of shares after dilution.

Net financial items Financial income less financial expenses.

Average equity Rolling 12-month average equity.

Average capital employed Rolling 12-month average capital employed.

Operating cash flow

Cash flow from operating activities after changes in working capital.

Net debt

Interest-bearing liabilities less cash and blocked cash and cash equivalents.

Interest coverage ratio Operating profit (EBIT) plus financial income in relation to financial expenses.

Debt/equity ratio Net debt as a percentage of equity.

Specific operating expenses, SEK per MWh Operating expenses for electricity production divided by electricity production during the period.

Equity/assets ratio Equity as a percentage of total assets.

Capital employed Equity plus net debt.

ABOUT KEY FIGURES

In its reporting, Arise applies key ratios based on the company's accounting. The reason that these key ratios are applied in the reporting is that Arise believes that it makes it easier for external stakeholders to analyse the company's performance.

ROUNDING

Figures in this interim report have been rounded while calculations have been made without rounding. Hence, it can appear like certain tables and figures do not add up correctly.