Magnora ASA

Earnings Release • Nov 16, 2020

Magnora invests in the leading solar cell technology company Evolar AB

Magnora invests in the leading solar cell technology company Evolar AB

Oslo, Norway, 16 November 2020: Renewable energy investment company Magnora ASA (Magnora) has entered into an agreement to participate in a share issue in Evolar AB. Magnora will initially own 28.44 percent of the shares in Evolar AB (Evolar) after the first share issue, with options to increase Magnora’s ownership in Evolar to 63.5 percent ownership. Evolar is developing a unique perovskite-based PV power booster technology that adds 25 percent power to conventional solar panels.

HIGHLIGHTS

• Magnora makes strategic entry into the solar energy space, partnering with a world record holding team of scientists and industrialists in Uppsala, Sweden.

• Magnora has entered into an agreement to subscribe for 28.44% of the shares in Evolar with options to subscribe for further in three tranches for 63.5% of the shares based on a strictly defined milestone plan. The potential commitments are fully financed by Magnora’s existing cash holdings.

• Evolar has developed a unique photovoltaic (PV) booster using perovskite technology that adds 25% power to conventional silicon-based solar panels as the latter technology has stagnated performance wise over last decade.

• The investment gives Magnora instant access to a premium product in a growing solar cell market that is ripe for efficiency innovation.

• Evolar’s shareholders will consider strategic partnerships as well as a future independent listing of the company.

• The Evolar team has achieved several world records within its niche such as a CIGS -solar cell with an efficiency of 24% and a thin film module record of 21% efficiency.

• Evolar has unique industrial size R&D prototype line equipment, which are fully operational in Evolar’s manufacturing facilities. It allows the team to quickly scale and test solar cells and modules and thereby shorten time-to-market.

• The Evolar team also plans to cooperate with several leading players to test and scale up the technology to rapidly capitalise on the USD multi-billion solar cell market.

“Perovskite technology is by far the fastest-advancing solar tandem technology for all crystalline solar cells globally. It has the potential to transform the entire global solar cell market, which is crying out for a product that provides significantly higher efficiency but without adding substantial manufacturing costs. Conventional solar cell technology is close to its practical limit, so we are delighted to become the majority shareholder of Evolar with its unique team and product road-map” says Haakon Alfstad, Investment Director of Magnora.

Magnora’s strategic development

As part of its strategic development process in 2019, Magnora decided to enter the renewable energy market. See announcement dated 9 March 2020 “Magnora ASA Strategic Update: The Future is Electric!”. After this announcement, Magnora has developed a strategic market position within wind power project development through Magnora and through its ownership in Vindr. Both companies are currently engaged in multiple wind development projects and expect to see considerable growth going forward. Wind development will continue to be a core focus area for Magnora directly and through Vindr.

Anchored in the 2019 strategic development process, the next stage of Magnora’s corporate development has been to develop a strong and viable strategic position within the solar market, to the benefit of Magnora’s shareholders. Magnora has decided to enter solar market through the enabling-technology side of the solar module market. Magnora has considered many ways of entering this market. The conclusion was that the best entry is through a strategic acquisition of a company with world-class know-how, strong technological position, and with high and long-term growth opportunities. Evolar, with its unique enabling bolt-on technology offering for the solar module manufacturing market, represents the ideal opportunity for Magnora and its shareholders.

Attractive technology

Today, silicon-based solar cells are dominating the market. However, silicon-based solar cell technology is highly commoditised, with suppliers competing primarily on price, and has stagnated with regards to solar panel efficiency. Silicon-based solar cells have since they were invented in the 1950s seen strong growth and development. However, over the last decade the efficiency of silicon-based solar cells has struggled to go any significantly higher than 20 percent efficiency (= how much of the solar energy that is converted to electricity).

Evolar’s PV power booster solution to improve the efficiency of solar panels is to add a perovskite-based thin-film solar cell layer on the inside of the cover glass on each solar panel, to create a tandem solar cell. Such a solution is expected to increase the efficiency of the solar module by 5 percentage points, which would raise the efficiency of the solar modules from around 20 to around 25 percent. Such an increase would have a huge impact on the solar energy market as it dramatically improves the economics of the solar module market, both for the end-users of solar cells and for the manufactures of the solar modules. This efficiency increase will leapfrog the performance of solar modules and make solar energy significantly more competitive relative to other energy sources. The solution will also allow solar panel producers to significantly increase the price of each solar panel and become more profitable than they are today.

The perovskite mineral was discovered 150 years ago but is a man-made material in solar cells. As a result of perovskite’s physical properties, it does an outstanding job of converting sunlight into electricity. Perovskites have gone through an amazing trajectory over the last decade and have turned out to be the only realistic way to significantly increase the performance of conventional solar cells of today.

“By adding the thin perovskite-based solar cell structure to a solar panel, you convert it from a commodity product to a premium product. Just as important is that it is easy to integrate the perovskite thin film process into current production set-ups, which means that the capex investment will be paid back in a very short time for solar panel manufacturers,” says Mats Ljunggren, CEO of Evolar,

The Evolar team

Evolar is based in Uppsala, Sweden, where it has sprung out of the world leading thin film solar cell research cluster at Uppsala University. The company’s management are scientists with individually 20-40 years’ experience from thin film solar cell development.

In 2003, prior to establishing Evolar, the team established Solibro AB, which successfully commercialised solar cells based on a material called CIGS – Copper Indium Gallium de-Selenide – where modules are composed with layers of very thin film applied on glass. In 2006, Solibro was sold to German solar group Q-Cells, at a valuation of EUR 84 million. At the time, Solibro was partly owned by Statkraft’s, Eidsvia’s and Hafslund’s venture divisions.

“Hence, we are very familiar with the work of professor Lars Stolt and the rest of the Evolar team after watching the group closely over many years and we are impressed by their ability to industrialize cutting edge technology. Evolar has some of the world’s leading experts within thin film solar cell technologies, with several existing performance world records,” says Erik Sneve, Magnora’s CEO. “Furthermore, the Perovskite opportunity represents a strategic inflection point for the solar industry, regular businesses and consumers with efficiency rates possibly leaping at a time when EU and other governments are requiring more green energy,” says Erik Sneve.

High growth market

In recent time, the Evolar team has worked on identifying how perovskite can be applied to boost the energy performance of all silicon-based solar cell modules.

“By an increased efficiency of 25 percent of the solar modules, the cost of the generated electricity will be significantly lowered. This will increase the solar module market further, speed up the transition to clean energy and reduced CO2 emission,” says Dr. Olle Lundberg, CTO of Evolar and former co-founder of Solibro.

Today, it is estimated that approximately 270 million silicon-based solar cells are produced globally each year. The market for solar cells is expected to grow from today’s 115 GW to 200 GW in 2025 and above 1,000 GW in 2045. [Source: International Technology Roadmap for Photovoltaic, 2020]

Next steps

Evolar owns unique and ready-to-use industrial size R&D prototype line equipment, which were acquired at a very attractive cost (with replacement value of NOK 150-200 million), that allows the team to quickly scale and test solar cells and modules (industrial size). Time-to-market is shortened by 24-36 months by having access to the long-lead time prototype equipment line from day one. The equipment is well suited to further develop the perovskite technology at the highest speed. The equipment is already installed and fully operational in Evolar’s manufacturing facilities. The team and equipment have already demonstrated this capability in their previous work on CIGS, where they achieved world record performance both on lab as well as product scale. Evolar plans to cooperate with several leading players to test and scale up the technology to rapidly capitalise on the USD multi-billion solar cell market. Evolar intends to run an asset light business model, where it will design and engineer production lines for its partners and customers. The company also aims to generate recurring revenues from design, engineering, software and royalties.

The transaction

Under the terms of the agreement, Magnora will participate in a share issue giving the Company a 28.44 percent shareholding in Evolar for an undisclosed cash consideration, with options to acquire up to 63.5 percent of the shares in Evolar under a detailed milestone plan.

Magnora’s investment is fully financed and backed by current cash. Further investment in Evolar through exercise of share purchase options are planned to be financed by the company’s cash.

The shareholders of Evolar will consider listing the company’s shares on a regulated market, which could involve Magnora’s shareholders becoming direct shareholders in Evolar.

“There is currently no commercial perovskite product on the market. Evolar aims to capitalise on an early-mover advantage to reach commercialisation. At the appropriate time, it will make sense to consider a listing and an initial public offering to fast-track the growth of the business,” says Torstein Sanness, Magnora’s Executive Chairman.

Schjødt and LIGL IP Consult has advised Magnora on legal and patent matters related to this transaction.

Magnora delivered solid financial results in the third quarter driven both by increased operating revenue and gains from investments, giving a net profit in line with Q2 2020, and a slight increase in cash and cash equivalents.

For further information, please contact:

Erik Sneve, CEO of Magnora ASA, e-mail: es at magnoraasa.com

Torstein Sanness, Executive Chairman Magnora ASA, e-mail: sanness at sf-nett.no

About Magnora ASA

Magnora ASA (OSE: MGN) is a renewable energy investment company looking for profitable green investment opportunities. The company is listed on the main list on Oslo Stock Exchange under the ticker MGN.

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