92.8 During the fiscal year, the equivalent of 36.8 wind turbines with a combined capacity of 92.8 MW were handed over to customers.

Transcription

1 ANNUAL REPORT 2016/2017

2 THE PAST YEAR SIGNIFICANT EVENTS DURING THE FISCAL YEAR RECORD VOLUME IN NORWAY In November 2016, Eolus was granted a final permit for the Norwegian Øyfjellet project. This is Eolus largest permitted project to date, with capacity of up to 330 MW and estimated generation of approximately 1.4 TWh per year. Wind measurements and efforts to optimize the project are currently taking place to maximize generation and economic value. GERMAN KGAL SELECTED EOLUS In December 2016, Eolus signed an agreement with the German asset- and investment manager, KGAL, regarding divestment of the Gunillaberg and Lunna wind farms. The transaction totaled 15.4 MW, divided between seven Vestas V MW wind turbines. This is KGAL s first transaction in Sweden. Both wind farms were handed over in August Eolus will provide asset management services for both of the farms During the fiscal year, the equivalent of 36.8 wind turbines with a combined capacity of 92.8 MW were handed over to customers During the fiscal year, Eolus deployed 25 wind turbines with a combined capacity of 72.2 MW. EFFICIENT DEVELOPMENT OF THE JENÅSEN WIND FARM In May 2017, Eolus signed an agreement with Munich Re regarding divestment of the Jenåsen wind farm which is under construction in the Municipality of Sundsvall. This is Eolus s largest transaction to date, with a combined capacity of 79 MW. In October 2016, Eolus signed an agreement with E.ON Elnät regarding grid connection for the wind farm, and an agreement with Vestas for the delivery of 23 V MW wind turbines with a total height of 190 meters. The ongoing investments to connect Jenåsen to the grid will also present opportunities to connect other wind farms in the area. Eolus owns several projects in the area. All electricity generated by the Jenåsen wind farm is covered by a ten-year Power Purchase Agreement with Google and the farm is scheduled for completion in summer MISSED OPPORTUNITY FOR OFFSHORE WIND POWER In December 2016, the Swedish Government decided not to grant a permit based on the Environmental Code for the Blekinge Offshore wind power project, in which Eolus owns a 56% share. The application comprised a project with up to 2,500 MW capacity. The Government s negative decision, with reference to the Swedish Armed Forces activities, represents a missed opportunity to add green electricity generation in Electricity Price Area 4, in which electricity consumption exceeds generation. It also means that many new jobs will not be created. Eolus objective to find a balance between national defense interests and the community benefits of renewable electricity generation and jobs remains firm. Blekinge Offshore will, therefore, continue to monitor potential business opportunities, as well as market and community developments. WIND WALL NEW ACQUISITION IN THE US In December 2016, Eolus acquired a 60% interest in Wind Wall Development LLC through its Eolus North America Inc subsidiary. Wind Wall Development is planning to establish about 40 MW of wind power in Tehachapi, California, in the US. In connection with the acquisition, Eolus placed an order for the delivery of sufficient wind power components to receive a full value Production Tax Credit (PTC) for renewable energy in the US. 2 ANNUAL REPORT EOLUS VIND AB 2016/2017

3 THE PAST YEAR CONTENTS IGLASJÖN AND LÅNGMARKEN HANDED OVER TO CUSTOMERS During the fiscal year, the Iglasjön and Långmarken wind farms were completed and handed over to customers. When Iglasjön, comprising eight Vestas V MW wind turbines with a combined capacity of 26.4 MW, was handed over to Munich Re, Eolus passed the 500 mark for established turbines. Långmarken, comprising eight Vestas V MW wind turbines, was handed over to Mirova/the European Investment Bank, Kalmar County Council and the City of Malmö. EOLUS S CUMULATIVE INSTALLED CAPACITY MW / / / / / /2017 Installed capacity during the fiscal year + Total installed capacity FIVE-YEAR SUMMARY SEK M 2016/ / / / /2013 Net sales 1, , ,204.9 Operating profit/loss Profit/loss before tax Net profit/loss for the year Earnings/loss per share, before and after dilution, SEK No. of constructed and operational turbines Constructed and operational turbines, MW Electricity generation, GWh Significant events during the fiscal year...2 Five-year summary...3 Message from the CEO...4 Eolus in brief...6 Market...8 Customer groups...11 Project development segment...12 Project development segment customer case...19 Asset management segment...20 Electricity generation segment...21 Repowering...23 Employees and society...24 Financial summary...27 Key figures for the Group...27 Share and ownership structure...28 Management...30 Directors Report...32 Corporate Governance Report...37 Consolidated statement of income Consolidated statement of other comprehensive income...41 Consolidated statement of financial position...42 Consolidated statement of changes in equity...44 Consolidated cash-flow statement...45 Parent Company income statement Parent Company statement of other comprehensive income...47 Parent Company balance sheet...48 Parent Company statement of changes in equity...50 Parent Company cash-flow statement...51 Notes...52 Signatures...80 Auditor s Report...81 Board of Directors...84 Glossary...86 Annual General Meeting, financial calendar, definitions of alternative performance measures...87 ANNUAL REPORT EOLUS VIND AB 2016/2017 3

4 MESSAGE FROM THE CEO EOLUS IS FIRMLY POSITIONED FOR A FUTURE DOMINATED BY RENEWABLES The cost per megawatt-hour has continued to fall, and wind power is now a seriously competitive source of energy with the absolute lowest cost for new establishments. CEO Per Witalison opening the Gunillaberg wind farm in October ANNUAL REPORT EOLUS VIND AB 2016/2017

5 MESSAGE FROM THE CEO Due to a strong finish, we can summarize a fiscal year in which we achieved most of the goals we set ourselves at the beginning of the year. The year s transactions mean that we successfully delivered wind farms to international investors such as Munich Re, Mirova, the European Investment Bank and KGAL, as well as public players and private investors in Sweden. In addition to newly established turbines, we divested 21 MW net of our own facilities during the year. In two years, divestments have reduced our own holding from 58 to 18 MW. The wind farms were largely divested at their carrying amounts. The carrying amount of remaining facilities is just over SEK 100 M, corresponding to their estimated market value. The locations of several remaining facilities have the potential for being replaced by new modern turbines within a few years. The divestments have reduced the amount of tiedup capital and released major resources for investment in future projects. Establishment of the Jenåsen wind farm is in progress. The farm comprises 23 turbines with a combined capacity of 79 MW. Construction is progressing according to schedule. Roads and foundations are now in place and gridconnection construction is ongoing. The new national grid substation in Nysäter is under construction. The farm is scheduled for handover to Munich Re in summer In addition to Jenåsen, the dual turbine Vilseberga project of 4 MW is also under construction. The project is expected to be ready for handover to our customers during the second quarter of our 2017/2018 fiscal year. Our technical and financial management services for customer facilities are growing. At the end of the accounting period, Eolus managed a total of 351 MW. At least 83 MW will be added in the coming fiscal year, due to the customer contracts signed for projects under construction. In the past fiscal year, we established 25 turbines with a combined capacity of 73 MW. However, the 25 turbines that we expect to establish during the 2017/2018 fiscal year will have a combined capacity of 84 MW. On average, the turbines will be 16% larger than in the preceding year. Despite the same number of turbines year-on-year, the transaction volume will increase because the turbines are larger. Technology is advancing fast and over the past six months, several manufacturers have launched models with a capacity of over 4 MW and rotor diameters of about 150 meters. The cost per megawatt-hour has continued to fall, and wind power is now a seriously competitive source of energy with the absolute lowest cost for new establishments. Since electricity prices have begun to rise and the playing field for electricity certificates is now in place, development may move fast. In autumn, several large Nordic wind power transactions were announced. The Electricity Certificate System will introduce higher quota obligations for 2018 and The certificate surplus is expected to continue falling over the next few years. Volumes from the coming new, large-scale facilities will not be available until 2020 and onwards. In a market where buyers subject to quotas have a legal obligation to purchase a certain, generally known, volume every year, I believe that the price of certificates will rise in the short to medium term. In the long-term, the price will be determined by the level required by new facilities on top of the wholesale electricity price in order to become profitable. There is a clear trend that larger turbines and larger farms are generating the highest profits for investors. Eolus s resources, in terms of capital and time, will therefore be increasingly focused on a number of large high-priority projects. This will lead to major fluctuations in our sales, earnings and cash flows. When assessing Eolus s performance, monitoring the development of our high-priority projects will become increasingly important. We have therefore begun to report the current status of these projects in our interim reports and on our website. For a summary and description of the projects, refer to pages Over the next few years, the estimated transaction volume of these eight projects is about SEK 9 billion. In addition to these projects, Eolus s project portfolio also contains a number of high- quality, smaller projects with high realization potential. The divestment process for the next two projects in our Sundsvall cluster Kråktorpet and Nylandsbergen has moved forward and we are aiming to finalize transactions with both customers and suppliers over the next few months. Both projects are expected to be established and deployed during the 2019 calendar year. With net cash of SEK 168 M, an equity/assets ratio of 73% and an order backlog of more than SEK 1 billion, Eolus is firmly positioned for a future increasingly dominated by renewable electricity generation in all of our high-priority markets. PER WITALISSON Chief Executive Officer ANNUAL REPORT EOLUS VIND AB 2016/2017 5

6 EOLUS IN BRIEF MAJOR CUSTOMERS. HIGH DEMANDS. NO PROBLEM FOR EOLUS EOLUS IS A LEADING NORDIC WIND POWER DEVELOPER. Eolus aims to create value at all levels of project development, establishment and operation of facilities for renewable energy and energy storage, and to offer attractive and competitive investment objects to both local and international investors in the Nordic region, Baltic countries and the US. Since the company s inception in 1990, Eolus has been involved in the construction of 516 of the approximately 3,400 wind turbines across Sweden. Eolus divests most of its projects to customers as turnkey facilities. Eolus also offers a sophisticated concept for wind power asset management services. BUSINESS CONCEPT Eolus aims to create value at all levels of project development, establishment and operation of facilities for renewable energy and energy storage, and to offer attractive and competitive investment objects to both local and international investors in the Nordic region, Baltic countries and the US. EXTENSIVE EXPERIENCE Since the company s inception in 1990, Eolus s mission has been to develop and construct wind power facilities that are divested to investors as turnkey solutions. Eolus therefore has extensive experience and expertise in the construction of wind power facilities and a broad network of landowners, authorities, investors, sub-contractors and wind turbine manufacturers. A diverse and strong customer base is one of the main reasons for the company s success and strong market position. Eolus has established a combined capacity of 845 MW, which is about 13% of the wind power constructed in Sweden. BUSINESS MODEL Eolus s mission is to develop and construct wind power facilities in favorable wind locations. Projects are mainly realized through the divestment of turnkey facilities. The business model also allows parts of the project portfolio to be realized through the sale of project rights for permitted projects and projects under development. In connection with the 2017 Annual General Meeting, the Articles of Association were amended to also include activities related to other forms of renewable energy, and to energy storage. The company currently conducts operations in the Nordic region, Baltic countries and the US. Eolus generates electricity from proprietary wind power facilities and the holdings of these facilities are always for sale. In addition, Eolus offers a full range of asset management services to investors, enabling carefree ownership of wind power facilities constructed by either Eolus or other operators. The company has three operating segments: project development, asset management and electricity generation. Project development is by far the dominating segment. Eolus s strengths are the localization, planning, construction and divestment of turnkey wind power facilities in a range of sizes, as well as asset management. In combination, the three operating segments constitute a complete and competitive market offering. As more players have seen the opportunities offered by developing and investing in renewable electricity generation, Eolus has met their demand. THE EOLUS GROUP The Group comprises the Parent Company, Eolus Vind AB (publ) and such wholly owned subsidiaries as Ekovind AB, Svenska Vindbolaget AB, Eolus Elnät AB, Eolus Wind Power Management AB, SIA Eolus, Eolus Vind Norge A/S, Eolus North America Inc, Eolus Oy and the sub-subsidiary OÜ Baltic Wind Energy. In addition to the above companies, the Group also includes partly owned Blekinge Offshore AB and several other companies that have been formed to manage the development of specific wind power projects. Eolus owns 56% of the shares in Blekinge Offshore. The remaining shares are owned by Vingkraft and Vindin. In December 2016, the Swedish Government decided not to grant a permit for the project, under the stipulations of the Environmental Code. Although the activities of Blekinge Offshore have been reduced, the company will continue to monitor future business opportunities for the project. At August 31, 2017, Eolus s Swedish project portfolio contained sites for 934 onshore wind turbines with a potential capacity of approximately 2,950 MW. Most projects in the foreign portfolio are in the pre-study or project development phase, except for Eolus s largest permitted project to date, Øyfjellet, in Norway. In terms of volume, the US project portfolio is the largest foreign portfolio. For more information about the foreign business operations, refer to page 18. OBJECTIVES Vision Eolus s vision is to be the most profitable renewable energy developer and an attractive business partner in the transition to a sustainable society. Financial objective Eolus aims to achieve an annual return of at least 10% of equity after tax. Operational objectives that our stakeholders (customers, employees, suppliers and shareholders) perceive us as an attractive and market-leading wind power developer in the markets in which we operate. to establish a profitable foreign business operation. 6 ANNUAL REPORT EOLUS VIND AB 2016/2017

7 EOLUS IN BRIEF STRATEGY Eolus s core business is to construct wind power facilities in favorable wind locations and transfer them to customers as turnkey solutions. The strategy for the company s project development is to focus on projects that are most likely to be realized, and to develop them with highest possible quality at the lowest possible cost. This increases opportunities for offering end-investors facilities that provide the lowest-possible cost per megawatt-hour over the life of the facility. A careful selection process is therefore vital, combined with an early commercial focus. This ensures that projects with the greatest potential receive sufficient priority. A linchpin of project development is to only implement projects on sites where the company would actually be interested in owning turbines. When developing wind power facilities, there is uncertainty regarding how accurately the generation estimates will reflect the actual generation. This uncertainty can be reduced by conducting analyses based on wind measurements, normally over a period of at least one year, and by the expertise and experience of our employees. Eolus therefore conducts wind measurements for all major projects. Eolus normally secures user rights through leasehold agreements, rather than owning the land where turbines are constructed. Eolus s strategy is to offer landowners a commercial lease that is normally paid as an annual lease equivalent to a certain percentage of the value of the electricity generated by the facility. In some projects, neighboring landowners are also offered lease revenue. We take responsibility for the transition to a sustainable society. We act responsibly in our contact with authorities, local residents, customers and shareholders. Our income statement is positive and our balance sheet shows financial strength. With our wind power facilities, we also aim to offer our customers a profitable investment and favorable terms for the landowners affected. RESPONSIBILITY RESULTS CORE VALUES We strive for dialog and engagement with stakeholders affected by our wind power projects and offer opportunities for investment in renewable energy. COMMITMENT TRUST By acting in a consistent manner in regard to responsibility, participation and results, we will inspire the trust of shareholders, customers, banks, authorities, land owners and the public. ANNUAL REPORT EOLUS VIND AB 2016/2017 7

8 MARKET THE REVOLUTION IS HERE RENEWABLES ARE CHEAP A revolution is taking place in the global energy market. The cost of renewable power generation has fallen sharply, and this trend will probably continue. Development is thereby moving toward an increasing share of renewable generation capacity, with differences in various parts of the world. According to Bloomberg New Energy Finance s New Energy Outlook 2017, global power demand will grow 58% between now and 2040, while energy efficiency improvements will decouple power demand and GDP. The same report predicts that 72% of the new power generation capacity between now and 2040 will come from renewable sources, with wind as the highest source, followed by solar. Wind and solar combined will account for 34% of electricity generation worldwide. In 2016, wind power already accounted for most of the new power generation in Europe, according to statistics from Wind- Europe. SUBSTANTIAL PRICE REDUCTIONS The cost of establishing both wind and solar will continue to fall sharply, according to Bloomberg, and lead to a significant decline in coal power investments. The cost of establishing solar power is expected to drop by 66% between now and 2040, while the cost of onshore wind power is expected to drop by 47% during the same period. According to Bloomberg, offshore wind will fall fastest, at a rate of 71% by In the 2016 version of the World Energy Outlook, the International Energy Agency (IEA) predicts that these cost reductions will mean that most renewable electricity generation will not require subsidies by that time. Eolus is convinced that these events will take place even faster. NEW OPPORTUNITIES, NEW TECHNOLOGIES This trend is challenging existing business models and presenting new business opportunities for anyone who wishes to embrace change, rather than sticking to past truths and old business models. Modern wind power technology is relatively new compared with hydro or nuclear power. The technological advancements of recent years include longer rotor blades, higher towers and higher generating capacity, resulting in more efficient turbines that can harness more energy. Rapid technological advancements combined with more efficient construction methods, for example, have reduced the investment cost per megawatt-hour by approximately 75% since the advent of wind power in the 1980s. TROIKA DOMINATES According to statistics from the Global Wind Energy Council (GWEC), global installed wind power capacity in 2016 totaled 54,642 MW. Cumulative installed capacity reached 486,790 MW. This is the second-highest annual development figure after the recordbreaking year of In 2016, China, the US and Germany remained the countries with the highest share of cumulative installed capacity. China accounted for 42.8% of installed capacity, the US for 15.0% and Germany for 10.0%. These three countries have accumulated the most installed wind power capacity worldwide. Close to 62% of all wind power in the world has been established in these three countries. This rapid development has meant that wind power now represents an increasing and growing share of the total global energy mix. STRONG GLOBAL DRIVING FORCES Following the Paris Agreement and subsequent ratification of the long-term goal to hold the average rise of global temperature to well below 2 C, a strong global willingness to transition not only the energy sector but also other sectors of society became apparent. This force is far stronger than the objectives and actions of national governments. This is particularly evident in the US where, despite the Administration s decision to withdraw from the Paris Agreement, individual states, cities and businesses are standing firmly by the Agreement and the need for action. One state that has adopted the objectives of the Paris Agreement is California, where Eolus is conducting project development operations. LOW-PRICE ONSHORE GENERATION Onshore wind power is one of the cheapest methods for adding new generation capacity, according to the Swedish Energy Agency s report, Generation costs for wind power, published in September The cost of establishing new wind power is now lower than the cost of establishing new nuclear power, which is shown by a comparison with the strike price for electricity (corresponding to nearly PROPORTION OF INSTALLED CAPACITY IN 2016, GLOBALLY Total 54,642 MW Others, 12.3% Canada, 1.3% UK, 1.3% Netherlands, 1.6% Turkey, 2.5% France, 2.9% Brazil, 3.7% India, 6.6% Germany, 10.0% Source: GWEC US, 15.0% China, 42.8% PROPORTION OF INSTALLED CAPACITY IN 2016, PER EU COUNTRY Total 12,490 MW Italy, 2.3% Ireland, 2.3% Sweden, 3.9% Finland, 4.6% Poland, 5.5% UK, 5.9% Others, 11.5% Netherlands, 7.1% France, 12.5% Germany, 43.6% Source: Wind Europe, Wind in power 2016 European statistics TOTAL GLOBAL CUMULATIVE INSTALLED WIND POWER CAPACITY, MW 500, , , , , , , , , , , , , ,000 50, Source: GWEC 8 ANNUAL REPORT EOLUS VIND AB 2016/2017

9 MARKET TRENDS IN THE SWEDISH WIND POWER MARKET: Fewer but larger establishments Foreign investors account for a major share of the development Sharp decline in establishment costs Major need for professional asset management for facilities, including long-term service agreements NET GENERATION OF ELECTRICITY IN SWEDEN, TWh Hydropower Nuclear power Wind power Cogeneration Cogeneration in industry Condensation power Total net generation Source: Swedish Energy Agency SEK 1/kWh) that the UK Government has promised the owners of the Hinkley Point C nuclear power plant over 35 years. In Sweden, the establishment of onshore wind power currently lies far below that level. This also applies to many others markets. DECLINING OFFSHORE COSTS Offshore wind power holds major potential in both the Nordic region and globally, and plays a key role in the shift toward more renewable electricity generation. The cost of establishing offshore wind power has previously been high, but is now falling rapidly. In 2017, offshore wind power projects were auctioned in Germany, in which the winning bidder would not require a subsidy. In November 2017, following winning bids in offshore wind auctions, Vattenfall ordered MW turbines for three Danish projects. Eolus is following this development carefully and will continue to monitor future opportunities for the Blekinge Offshore project with a capacity of up to 2,500 MW. POWER PURCHASE AGREEMENTS INCREASINGLY COMMON AND IMPORTANT A growing trend in the Swedish and European electricity markets is Power Purchase Agreements (PPA). This is a contract between an electricity generator and an electricity purchaser to buy electricity directly from specific facilities, usually from wind power or photovoltaic facilities. Contractual terms can vary from five years and upwards, with fixed predetermined prices for all electricity generated by the facility. Long-term agreements with predetermined prices create security for electricity buyers who can estimate their costs during the contractual term. The agreements create security for both the owner of the facility and the builder by defining the revenue terms. This type of agreement is already common in the US and will become more frequent in Europe as wind power establishments become fewer but larger. Particularly for investors who do not have electricity generation as their core business. Power Purchase Agreements will play a key role in obtaining continued financing for the development of renewable electricity generation facilities. In the Nordic market, such companies as Google and Norsk Hydro have actively sought Wind Power Purchase Agreements. Norsk Hydro, for example, signed a 19-year PPA for 650 MW from Markbygden Ett in autumn Eolus has signed two PPAs with Google for 59 plus 79 MW, for which the latter pertains to Jenåsen which is currently under construction and scheduled for completion during summer Through PPAs signed all over the world, Google is now the world s largest corporate buyer of renewable electricity. NORWEGIAN AND US MARKETS ATTRACTIVE Eolus is active in several markets outside of Sweden. Norway and the US currently offer the most attractive foreign markets. In addition to high-priority projects in the Swedish market, Eolus has now identified high- priority projects in these markets in the project portfolio. EUROPE S LOWEST GENERATION COSTS The Swedish electricity market is currently characterized by historically low prices for electricity. This creates challenges for all types of power generation. Decisions to decommission Swedish nuclear reactors before the end of their service life are one example, as well as the financial complications for wind power owners who invested when the cost base was considerably higher than it is today. Wind power facilities established today can withstand considerably lower electricity prices than those established six-seven years ago. According to the Swedish Energy Agency s report Generation costs for wind power, Sweden has the lowest wind power generation costs in Europe. The rapid cost reduction for wind power construction in Sweden has attracted interest from countries with higher construction costs that want to understand how costs can be lowered. Swedish wind power has developed rapidly, and led to a sharp increase in the share of wind-power electricity in the Swedish electricity system. In 2006, Swedish wind power generated 1 TWh compared with about 15.5 TWh in According to Swedish Wind Energy, a forecasted generation of over 17 TWh will break new records in In 2016, wind power accounted for more than 10% of Sweden s total electricity generation and for some years now, has been the third-largest method of electricity generation in the country after hydropower and nuclear power. At the end of 2016, there was about 6,500 MW of installed wind power capacity in Sweden, according to statistics from the Swedish Energy Agency. At the end of 2016, Sweden s wind power development was ranked eleventh in the world. In Europe, Sweden is ranked sixth after Germany, Spain, the UK, France and Italy. ELECTRICITY CERTIFICATES: HOW THE SYSTEM WORKS The Swedish support system for renewable electricity generation is the Electricity Certificate System. This is a technology-neutral support scheme for generation from wind power, some hydropower, some biofuels, solar energy, geothermal energy, tide and wave energy and peat in combined heat and power plants (CHPs). Electricity generators in the Electricity Certificate System are awarded certificates in relation to their facility s generation over 15 years, where one megawatt-hour of electricity generated carries the right to one certificate. The Electricity Certificate System is not linked to the national budget and is financed by a surcharge on electricity prices for private consumers and for commercial and service companies. Other countries have opted for a fixed price per megawatt-hour generated, linked to the respective country s national budget. Demand for electricity certificates is regulated by a quota obligation, which determines the number of electricity certificates that an electricity consumer needs to purchase in relation to their annual electricity consumption. By changing the quota obligation, the Swedish Riksdag can control the price of electricity certificates. There is no quota obligation or electricity certificate cost for electricity-intensive industry in Sweden. This enables industry to benefit from ANNUAL REPORT EOLUS VIND AB 2016/2017 9

10 MARKET low electricity prices due to the ongoing expansion of renewable energy. The Electricity Certificate System was introduced in 2003 and Norway became affiliated in Within the framework of the energy agreement reached by five parliamentary parties, Sweden has decided to extend its Electricity Certificate System by adding 18 TWh of new electricity certificates until In Norway, facilities established after 2021 will not be included in the System. Since wind power is one of the cheapest methods for adding new electricity generation, it can be assumed that most investments will be made in wind power. NEWLY DESIGNED SYSTEM In April 2017, the Swedish and Norwegian governments reached an agreement on how the Swedish extension of the Electricity Certificate System should be designed in relation to the existing joint Swedish-Norwegian certificate system. The agreement has created clarity in relation to future conditions in the certificate market. The Electricity Certificate System will have higher quota obligations in 2018 and 2019, while the declining surplus of certificates is expected to continue in coming years. New volumes from the large additional facilities will not be available until 2020 and onwards. In the short term, this should raise the price of electricity certificates. In the long term, the price will be determined by the level required by new facilities on top of the wholesale electricity price in order to become profitable. For more information about electricity certificates, visit: or RENEWABLE FUTURE The political and partisan energy agreement reached by five parties in summer 2016 set a target of 100% renewable electricity generation by This means that the development of renewable electricity generation must continue. In recent years, more electricity has been generated than consumed in the Swedish market, enabling Sweden to become a net exporter of electricity. Norway and Sweden together have major potential to become Europe s green battery, with large-scale carbon- free electricity generation to replace the dirty fossil-fuel energy used by other countries. Continuing opportunities to export electricity are positive for Sweden and Norway, which is why it is important to continue the development of transmission capacity, not only within the country but also to other countries in addition to the transmission opportunities that already exist and are under construction to Germany and the UK, for example. It is positive, therefore, that the Swedish energy agreement takes a position on the development of transmission capacity in order to enable exports. The future potential to store electricity will present major opportunities for Sweden and Norway to increase their share of intermittent electricity sources, such as wind and solar power. Despite historically low prices for electricity and electricity certificates, the development of recent years is testament to the potential of the Swedish wind power market. Particularly for a company with Eolus s extensive experience which, in addition to project development and turnkey facilities, can also offer investors a comprehensive asset management concept. Despite varying conditions from country to country, there is major potential in other markets where Eolus operates. Development has accelerated in the US and Norway in order to realize projects within the framework of each respective country s support system, while a support system with price guarantees has intensified development in Finland. Eolus s market position allows both existing and new shareholders to feel secure in their investments, not least because of our professional approach to asset management. This applies particularly to investors whose core business is not electricity generation. All companies, both large and small, can benefit from Eolus s services and outsource all, or parts of, their technical asset management. EFFICIENCY MAXIMIZES PROFITS Eolus s objective is to continue pushing down the cost per megawatt-hour. Our aim is to reach a position where no extra support is needed to make the establishment of new facilities profitable for investors in the markets where Eolus is currently active and may enter into in the future. Increased efficiency across the value chain of a wind power project s life cycle are a necessity for meeting investors yield requirements. By significantly reducing the costs of wind power establishment, the realization of projects with profitability for endinvestors can also continue in periods of low overall price levels for electricity and electricity certificates in Sweden and Norway. This also applies to other countries with other types of support systems. INCREASED CONSUMPTION PREDICTED Despite energy-efficiency improvements, electricity consumption in the Nordic region is expected to increase by 21 TWh by 2030, according to Bixia s long-term forecast (published in November 2017). The increase is attributable to a growing population, more electric vehicles and the establishment of more data centers. Compared with its long-term forecast from November 2016, Bixia has revised upward its projected growth in electricity consumption. Bixia predicts falling Swedish electricity prices until 2019 followed by rising prices until 2030, with the greatest increase in The price forecast for 2023 is EUR 32 per MWh. Bixia predicts an average electricity price of EUR 37 per MWh in 2030, compared with EUR 27 per MWh in NEW BUSINESS OPPORTUNITIES FOR EOLUS In connection with the Annual General Meeting in January 2017, Eolus amended its Articles of Association to also include activities related to other forms of renewable energy, and to energy storage. This is a natural change in order to be part of a trend where solar power, for example, is becoming an increasingly larger and more important share of the global energy mix. By 2040, most of the new power generation will come from wind and solar, according to Bloomberg New Energy Finance s New Energy Outlook The rapidly falling costs of renewable generation from wind and solar present exciting combination solutions, as well as market offers with two independent sources of energy. The rising share of intermittent energy sources in the energy mix creates a growing need to identify smart solutions for energy storage. New market conditions present opportunities for a range of storage solutions. In general, both large-scale industrial batteries and small-scale flexible battery solutions are expected to offer major opportunities for storage. Just like wind and solar, battery costs are falling fast and helping to change market conditions. 10 ANNUAL REPORT EOLUS VIND AB 2016/2017

11 CUSTOMER GROUPS WIND POWER ATTRACTIVE TO MANY INVESTORS Since its inception in 1990, Eolus has built trust and credibility with customers, landowners, shareholders, creditors and employees. Creating and maintaining a high level of trust is a prerequisite for attracting both capital and the expertise required for continued growth and new business. With a flexible business model and strong balance sheet, Eolus has adapted to market fluctuations and the prevailing market conditions to effectively meet investor demands. The customer base is broad and varied, ranging from global investors in the form of insurance companies, infrastructure funds and energy companies, to small businesses and private individuals. Due to the trend of fewer but larger wind farms, a higher proportion of future revenue will be generated by major investors. INSTITUTIONAL INVESTORS Institutional investors have different horizons for different types of investments. Ownership of public infrastructure, such as wind power, is driven by long-term investments with relatively stable returns and cash flows. This, in turn, generates security in companies commitments to their customers in reinsurance and pension investment segments. Anyone who invests in renewable electricity generation is also supporting the transition to fossil-free electricity generation, which reduces CO 2 emissions and, in the long term, reduces risk in other green investments and insurance commitments. Major global players have invested heavily in Swedish wind power in recent years, including Munich Re, Allianz, Aquila, Black Rock, Mirova, KGAL and HG Capital. MAJOR CONSUMERS Major consumers are companies and organizations that consume large amounts of electricity but do not have energy generation as their core business. This customer group is growing partly because electricity generated by wind power provides secure, low and stable electricity costs over time, but also because of a sustainability perspective. More and more companies want to be recognized for their role in the transition to a fossil-free future. Investments can take the form of direct investments, or long-term Power Purchase Agreements, which are common in the US. Google has signed Power Purchase Agreements in Sweden, for example, including two with Eolus to supply Google s data center in Finland with renewable electricity. ENERGY COMPANIES Onshore wind power is one of the most costefficient methods for adding new generation capacity and is therefore attractive. By investing in wind power, energy companies are able to show clearly how they are offering their customers green electricity from their own facilities. Over the years, Eolus has divested both turnkey facilities and operational turbines to both Swedish and international energy companies. PUBLIC-SECTOR INVESTORS Public-sector investors are mainly municipalities, county councils/regions and municipal companies. Ownership of electricity generation facilities creates predictability and control over electricity consumption costs in their own operations. Wind-power investments contribute to sustainable development and therefore meet the environmental and energy targets that many public players set for their operations. WIND TURBINE COOPERATIVES Smaller operators can also invest in wind power by buying shares in wind turbines, where the facilities are then managed by a joint service company. Diversified ownership of wind power capacity is important for creating acceptance and an understanding of the role that wind power plays in the transition to a more sustainable energy system. The cooperative model has also proven highly successful for Eolus over the years. Eolus has been selling shares in wind turbines to customers for more than 25 years, thus enabling thousands of private individuals and companies to become wind power shareholders. Although larger players are gradually accounting for a higher share of total sales, Eolus will continue to offer ownership in suitable projects to smaller investors. CLEAR CUSTOMER BENEFITS With more than 25 years of experience and involvement in the construction of 516 wind turbines as of August 31, 2017, Eolus has built up expertise across the entire value chain and a financial position that makes the company a strong and stable partner. Eolus s project portfolio in Sweden and other markets in which the company operates presents major opportunities to offer facilities adapted to the specific needs of individual investors at the lowest possible cost per megawatt-hour. Eolus s complete asset management concept offers professional management that maximizes revenue for both large and small investors. As one of the largest players in the industry, Eolus can push investment and operating expenses down, which benefits investors in all customer groups. ANNUAL REPORT EOLUS VIND AB 2016/

12 PROJECT DEVELOPMENT OPERATING SEGMENT AN EXPERIENCED AND STRONG PLAYER SEES THE WHOLE PICTURE The company s project development has a multi-dimensional basis. The process aims to meet investors demands for sustainable investments in a simple and profitable manner. It should be characterized by a clear social presence and be environmentally friendly, with the lowest-possible carbon footprint throughout the entire life cycle. PROJECT DEVELOPMENT PHASES The project phases are: pre-study, project development, construction and divestment of the facilities. After final commissioning, the construction phase is completed by either handover to the customer, or by transfer to Eolus s own electricity generation operations if a customer contract has not been signed. The divestment phase is obviously varied, depending on the size and frequency of the transactions. If a contract has not been signed when the facility becomes operational, operating revenues and expenses are recognized in the Electricity Generation operating segment until the facility is divested. Eolus has an extensive project portfolio, with projects in various phases. This provides good opportunities for meeting a range of investor requirements and demands. REVENUE AND EXPENSES Revenue in this operating segment comprise proceeds from the divestment of facilities, shares in project companies or project rights. Due to the construction rate of the facilities, and the dates of their divestment, sales and earnings vary between quarters and fiscal years. Over the past three fiscal years, project development operations have accounted for 92 96% of Eolus s overall revenue. Wind power facilities are divested by transferring entire operational wind farms, individual wind turbines or shares in wind turbines. Eolus also offers construction-ready project rights. The most costly item when establishing a wind power facility is the actual wind turbine. Eolus mainly purchases turbines in EUR, which entails an element of risk. This is managed with currency futures to hedge the cash flow in foreign currency, or by divestment to customers in EUR. Overall, the actual wind turbine accounts for 65 75% of the costs for a turnkey facility. Others costs are attributable to project development, foundations, road construction and grid connection. The project development operations are mainly financed with construction loans, advance payments from customers or equity. At present, Eolus conducts project development operations in Sweden, Norway, Finland, the US and the Baltic countries. COMMUNICATION AND INTERACTION Eolus s work affects and influences a lot of people. Not only those living near a wind farm, but also people in general and other stakeholders such as government agencies and future green electricity customers. We are therefore committed to open dialogue about the effects, both positive and those perceived as negative. We also provide continuous information about the ongoing process, and answer any questions that may arise in connection with both the construction and the subsequent operation. Interaction with the local community is therefore a crucial part of a project. THE IMPACT OF LARGER FARMS Due to changing market conditions in terms of technological advancements, electricity prices and investors, Eolus will establish fewer but larger facilities, with larger wind turbines. This, in turn, will lead to a greater focus on those projects considered most likely to meet investors demands. With fewer but larger constructed wind farms, quarterly fluctuations will be greater in relation to the number of wind turbines constructed, and to sales and earnings. From the company s inception in 1990 until the balance-sheet date on August 31, 2017, Eolus has been involved in the construction of 516 wind turbines with a combined capacity of approximately 845 MW. During the 2016/2017 fiscal year, 25 (14) wind turbines, with a combined capacity of 72.2 (37.7) MW, were constructed and completed. At the end of the fiscal year, 25 wind turbines were under construction, compared with 16 on the corresponding date of the preceding year. PROJECT DEVELOPMENT KEY FIGURES SEK M Full-year Sep 1, Aug 31, 2017 Full-year Sep 1, Aug 31, 2016 Net sales 1, Other operating income Operating profit/loss CONSTRUCTED DURING THE 2016/2017 FISCAL YEAR Name Municipality Capacity in MW 1 Iglasjön Kungsbacka Långmarken Kristinehamn Gunillaberg Jönköping Lunna Askersund Täppeshusen Höganäs 4.0 Total ÅRSREDOVISNING EOLUS VIND AB 2016/2017

13 PROJECT DEVELOPMENT OPERATING SEGMENT EOLUS S SWEDISH PROJECT PORTFOLIO No. of turbines Group Aug 31, 2017 Total capacity, MW Group Aug 31, 2016 No. of turbines Total capacity, MW Pre-study ,028 Project development 368 1, ,353 Projects with relevant permits Under construction Total 934 2,944 1,042 3,270 EOLUS S OTHER PROJECT PORTFOLIOS Group Aug 31, 2017 Group Aug 31, 2016 No. of Total No. of Total Country turbines capacity, MW turbines capacity,mw Norway Latvia Estonia Finland US Offshore ,500 Inauguration of the Gunillaberg wind farm. ANNUAL REPORT EOLUS VIND AB 2016/

14 PROJECT DEVELOPMENT OPERATING SEGMENT HIGH-PRIORITY PROJECTS WITH TRANSACTION VOLUME OF SEK 9 BILLION As establishments become fewer but larger, there is a growing need for a clear focus on those projects that best match the market s demands for new generation facilities. Eolus s strategic focus will therefore concentrate on the development, establishment and divestment of a number of high-priority projects in coming years, i.e. those with the best conditions to be realized at the lowest cost per megawatt-hour. To highlight information about the status of these high-priority projects, they will be given a separate heading in Eolus s interim reports. The same information will be presented on Eolus s website. The website will be updated quarterly following the publication of quarterly reports, or due to other significant project events announced via press release. The following are currently our high-priority projects for the coming years. However, the summary does not rule out the establishment of other projects from Eolus s high-quality project portfolio that meet investors demands and requirements. The estimated transaction volume of these specific high-priority projects is about SEK 9 billion. HIGH-PRIORITY PROJECTS Project Location No. of turbines Capacity, MW Estimated generation, GWh Planned deployment Jenåsen Sundsvall, Sweden, SE Comments Ten-year Power Purchase Agreement with Google. The farm is sold to Munich Re, which is expected to take possession of the facility in summer Turbine supply agreement signed with Vestas. Roads and foundations are under construction. Eolus is financing the establishment with bank construction loans. Nylandsbergen Sundsvall, Sweden, SE Fully permitted. Turbine procurement is ongoing. Divestment process is ongoing. Kråktorpet Sundsvall, Sweden, SE Fully permitted. Turbine procurement is ongoing. Divestment process is ongoing. Wind Wall Tehachapi, California, US Repowering project. Full-value production tax credit granted for the project. Stigafjellet Bjerkreim, Norway, NO Fully concessioned. Grid capacity reserved. Divestment process initiated. Sötterfällan Jönköping, Sweden, SE Fully permitted. Bäckhammar Kristinehamn/Degerfors, Sweden, SE Fully permitted. Turbine procurement process initiated. Øyfjellet Vefsn, Norway, NO ,200 1, Fully concessioned. Grid capacity reserved. 14 ANNUAL REPORT EOLUS VIND AB 2016/2017

15 PROJECT DEVELOPMENT OPERATING SEGMENT THE SUNDSVALL CLUSTER The realization of Eolus s projects in the Municipality of Sundsvall (Electricity Price Area 2 in Sweden) is based on the Power Purchase Agreement (PPA) signed with Google in December 2015 in relation to the Jenåsen wind farm. Under this PPA, which is the second between Google and Eolus, Google will purchase all electricity generated by the Jenåsen wind farm, comprising 23 wind turbines and an installed capacity of approximately 79 MW, over a period of ten years. During the 2016/2017 fiscal year, Eolus signed an agreement to sell the wind farm to Munich Re, which will take possession of the facility when it is completed in summer Eolus will manage the facility on behalf of the customer. Under the grid connection agreement for Jenåsen between Eolus and E.ON Elnät, additional transmission capacity will also be installed through the construction of a new national grid substation in Nysäter. This will enable the development of other wind power projects in the area, by Eolus as well as other operators. For Eolus, this will enable construction of the high-priority and fully permitted projects Kråktorpet ( MW) and Nylandsbergen (65 76 MW). Estimated annual generation for Kråktorpet is GWh, and GWh for Nylandsbergen. The projects are located in forest areas with relatively few local residents, at a height of meters above sea level with good wind resources. A wind turbine procurement process is ongoing for both Kråktorpet and Nylandsbergen, alongside of the divestment process. Construction of Jenåsen. ANNUAL REPORT EOLUS VIND AB 2016/

16 PROJECT DEVELOPMENT OPERATING SEGMENT THE NORWEGIAN ØYFJELLET AND STIGAFJELLET PROJECTS Eolus has conducted operations in Norway since In Norway, like Sweden, Eolus is able to develop projects independently, acquire ongoing projects, acquire permitted projects and divest project rights at any time throughout the value chain. Projects in the Norwegian market are often characterized by challenging terrain and complex infrastructure, but also high average wind speeds, which leads to high generation in established facilities. Eolus has two high-priority projects in Norway, one of which Øyfjellet is Eolus s largest permitted project to date in all markets. Øyfjellet, which was granted a final permit by the Norwegian Ministry of Petroleum and Energy (OED) in November 2016, comprises wind turbines with a total maximum capacity of 330 MW. Eolus s aim is that the project will be realized within the framework of the Swedish-Norwegian Electricity Certificate System. The project is currently being optimized in terms of farm layout and economic value. Wind speeds are being measured at four sites in the project area and grid capacity has been reserved. The fully permitted project, Stigafjellet, in the Municipality of Bjerkreim comprises 30 MW and has grid capacity reserved. The divestment process has commenced. Installation of anemometers, Øyfjellet. 16 ANNUAL REPORT EOLUS VIND AB 2016/2017

17 PROJECT DEVELOPMENT OPERATING SEGMENT WIND WALL In December 2016, Eolus acquired 60% of the Wind Wall project in Tehachapi, California, in the US. This is a repowering project, in which old turbines are being replaced by new modern turbines. The farm comprises some 400 old wind turbines with an installed capacity of approximately 36 MW. Together with its US partners, Eolus intends to realize a project of MW by constructing new wind turbines. By replacing the old wind turbines on site, electricity generation will increase to about GWh annually, or three times the existing volume. By ordering the required amount of wind power components, Eolus has been granted a full-value production tax credit (PTC) for the project. Wind Wall, California, US. SÖTTERFÄLLAN Sötterfällan, in the Municipality of Jönköping (Electricity Price Area 3 in Sweden), is fully permitted and comprises MW with estimated annual generation of GWh. During the 2016/2017 fiscal year, Eolus established the Gunillaberg wind farm not far from Sötterfällan. Sötterfällan. The photo has been modified. BÄCKHAMMAR The Bäckhammar project is located in Electricity Price Area 3 in Sweden, across the Municipalities of Kristinehamn and Degerfors. The project is fully permitted and comprises MW. Estimated annual generation is GWh. Eolus s establishment of the Långmarken wind farm in the Municipality of Kristinehamn in 2016/2017 has given the company good knowledge of the area. A wind turbine procurement process has commenced. Bäckhammar. The photo has been modified. ANNUAL REPORT EOLUS VIND AB 2016/

18 PROJECT DEVELOPMENT OPERATING SEGMENT EOLUS IN OTHER MARKETS WITH OTHER CONDITIONS In addition to Sweden, Eolus is also developing projects in Norway, the US, Estonia, Latvia and Finland. These markets are diverse in terms of their current level of wind power development and facilities under construction. The countries also have varying conditions in terms of their geography, infrastructure, grid capacity and support systems for re newable electricity generation. In addition to Sweden, the most attractive markets for Eolus are currently Norway and the US, where Eolus has also identified high-priority projects. NORWAY Norway joined the Electricity Certificate System, a support system for renewable energy, on January 1, Eolus subsequently established operations in Norway in In Norway, as in other markets, Eolus can acquire ongoing projects and develop new projects independently. The Norwegian project portfolio comprises a potential capacity of about 400 MW, of which the largest project is Øyfjellet, outside Mosjøen in the Municipality of Vefsn. Øyfjellet comprises a maximum capacity of 330 MW and was granted a final permit by the Norwegian Ministry of Petroleum and Energy (OED) in November The project is included in Eolus s high-priority projects and is the company s largest onshore project to date to receive a permit. The aim is that the project will be realized within the framework of the Swedish-Norwegian Electricity Certificate System. Stigafjellet, comprising 30 MW in the Municipality of Bjerkreim, is also one of Eolus s high-priority projects for the coming years. According to statistics from the Norwegian Wind Energy Association (NORWEA), Norway s installed wind power capacity at the end of 2016 was 873 MW. In October 2017, there was about 1,050 MW of installed capacity and another 1,440 MW under construction, so wind power is currently under rapid development in the country. This rapid development is also characterized by the aspiration to receive electricity certificates. Facilities in Norway must be ready for operation by 2021 to be included in the Electricity Certificate System. Another driving force is the opportunity to export renewable electricity to the UK, for example, where transmission capacity already exists and is also being planned. Projects in the Norwegian market are often characterized by challenging terrain and complex infrastructure, but also high average wind speeds. THE US The US is the second-largest wind power market in the world after China in terms of both total cumulative installed capacity and the current rate of development. According to statistics from the Global Wind Energy Council (GWEC), total installed capacity in the US was 82,184 MW at the end of 2016 following the addition of 8,203 MW during the year. Eolus entered into the US market during the 2015/2016 fiscal year. In December 2016, Eolus acquired a majority holding in the Wind Wall repowering project of up to 40 MW in California. In conjunction with the acquisition, a full-value production tax credit (PTC) was also granted for the project. The production tax credit (PTC) is a federal incentive that provides financial support over a period of ten years, but with a gradual step down in the value of the credit depending on when construction has commenced. The tax credit applies for facilities whose construction commences before the end of Facilities commenced in 2015 and 2016 qualify for the full value of the credit. The value of the credit steps down in 2017, 2018 and Wind Wall is one of Eolus s high-priority projects for the coming years. Along the Western Nevada-California border where electricity prices are high, Eolus has two projects under development: Crescent Peak with a potential capacity of MW, and Comstock comprising MW. The plan is to develop and then divest the construction-ready projects, with or without a PPA. In addition to the federal PTC, a number of states have ambitious targets for renewable energy development that they are maintaining despite the federal government s now positive views on fossil-based power generation. This indicates the major potential of the US market, which really should be seen as several markets because of the geography and the wide range of permitting, grid connection and electricity trading regulations. The state of Texas has incomparably most wind power with an installed capacity of 21,450 MW at September 30, 2017, according to statistics from the American Wind Energy Association (AWEA). California has the fourth-highest installed capacity, with 5,561 MW at the same date. The state of Nevada has very little wind power to date, but a renewable energy target of 25% by 2025, representing major potential. FINLAND AND THE BALTIC COUNTRIES In 2016, 570 MW of wind power was installed in Finland, according to statistics from Wind- Europe. This is a sharp increase, adding up to a total installed capacity of 1,540 MW. Development has taken place within the old support system with generous feed-in tariffs capping at 2,000 MW, following a reduction from the former level of 2,500 MW. In the feed-in tariff scheme, the Finnish government reimburses the generators for the difference between a politically determined target price and the average spot price over the past three months for a period of 12 years. Since the scheme filled the limit in advance, a transition is now taking place to an auction-based technology-neutral support system for renewable generation with the aim of auctioning 2 TWh in the period. The first auction is expected to take place in Eolus s project development operations and the company s future strategy in Finland will be determined by the final design of the upcoming auctions. The rate of development in the Estonian wind power market is slow. According to statistics from WindEurope, no more than 8 MW of wind power has been constructed over the past two years, with a total installed capacity of 310 MW. One of the reasons for the low rate of development is severe restrictions on the construction of large wind turbines, due to claims by the Estonian Armed Forces that the turbines impact their defense radars. Eolus owns land on the island of Saaremaa. Project development takes place on this land as well as other privately owned properties, and Eolus owns two facilities on the island with a combined capacity of 1.6 MW. The Latvian market is currently cautious due to the uncertainty surrounding a future support system. However, Latvia has excellent wind conditions in both the western and central regions of the country, entailing major potential. At present, Eolus is one of the few active project developers in the country and had an estimated installed capacity of about 420 MW in its project portfolio at the end of the fiscal year. At the end of 2016, the country s total installed wind power capacity was 63 MW, according to statistics from WindEurope. 18 ANNUAL REPORT EOLUS VIND AB 2016/2017

19 PROJECT DEVELOPMENT SEGMENT CUSTOMER CASE LÅNGMARKEN PART OF FRENCH COMPANY MIROVA S INVESTMENT One of Eolus s customers during the fiscal year was the French asset management company Mirova, which made a joint investment with the European Investment Bank (EIB) in six wind turbines at the Långmarken wind farm, with an installed capacity of approximately 20 MW. Mirova is a subsidiary of Natixis Investment Managers and manages assets totaling EUR 8.2 billion. The company has helped to finance 1,400 MW of renewable energy generated from wind, solar, hydropower and biomass, mainly in France and Sweden. The company made its first investments in French wind power as early as Wind has been our primary focus since the launch of our first fund Fideme back in 2002 which was a public-private initiative to support small French wind developers to build new clean energy projects. The wind industry has now matured and it is an increasingly competitive source of renewable energy supporting the European energy transition, says Raphael Lance, Head of Renewable Energy Funds at Mirova. Mirova has continued to invest in wind power projects and in 2016, was named Energy Investor of the Year, Europe by Infrastructure Investor, partly because of the company s investment in Långmarken. We are convinced that giving access to wind projects to our investor base is consistent with their search for infrastructure risk adjusted returns while reducing their portfolio carbon exposure, says Raphael Lance. Raphael Lance, Head of Renewable Energy Funds at Mirova, at the inauguration of Långmarken. The Nordic region is a key market for Mirova, and the company has entered into four joint transactions in Sweden since 2012, ranging from MW, including the joint investment with the EIB in Långmarken. Due to attractive site features, Långmarken is one of the most competitive onshore wind projects of such a size that can be built in Europe, with costs in line with grid parity observed in most European countries. The reasonable size of the project and the equity contribution of the EIB, under the European Fund for Strategic Investments, have enabled to better mitigate electricity market swings due to the full equity structure, a feature that was reinforced by robust offtake agreements with Statkraft, says Raphael Lance. Långmarken was Mirova s first transaction with Eolus, and the flexibility shown by Eolus in terms of meeting investor requirements played a key role, according to Raphael Lance. We need to highlight how Eolus has adapted their preferred transaction structure to better fit our investment guidelines and improve the alignment of interests which was key for us. This has been instrumental for the deal to happen and we appreciate the Eolus team s expertise, pragmatism and the mutual trust we have built. In addition, the proven track record of Eolus in building and operating wind project in Sweden has given us a lot of comfort on their ability to meet our goals. Raphael Lance also highlights how the Nordic market s low compensation rates in recent years have fueled innovation and future opportunities. Low electricity prices combined with low green certificate value require all market participants to find innovative solutions to continuously reduce production costs and still structure transactions where all parties can find mutual benefits. We believe such innovative solutions can be exported outside the Nordics as a competitive edge for Swedish developers and investors to grow in the increasing number of countries around the World that are reducing public subsidies to low-carbon initiatives. ABOUT MIROVA. Mirova, an affiliate of Natixis Investment Managers, offers a global responsible investing approach with a single offer revolving around 5 pillars: equities, bonds, infrastructure, Impact investing, voting and engagement. Through a conviction-driven investment approach, Mirova s goal is to combine value creation over the long term with sustainable development. Mirova s talents have been pioneers in many areas of sustainable finance. Our ambition is to keep innovating to propose the best tailored and most impactful solutions to our clients. ANNUAL REPORT EOLUS VIND AB 2016/

20 ASSET MANAGEMENT OPERATING SEGMENT STRONG GROWTH FOR MANAGED WIND POWER During the fiscal year, Eolus increased the volume of its managed operational wind power assets from 293 MW to 351 MW, an increase of almost 20%. At the end of the fiscal year, asset management agreements had also been signed for the Jenåsen (79 MW) and Vilseberga (4.0 MW) wind farms, which are expected to become operational during the 2017/2018 fiscal year. When these farms are operational, the estimated generation of Eolus s managed wind power assets will amount to 1.3 TWh per year, equivalent to 1% of Sweden s electricity consumption. Eolus offers wind power owners a complete package of asset management services to maximize the revenues generated by their facilities. The goal of our technical and financial services is to ensure that the owner receives professional management of all aspects related to the operation of a facility, including surveillance, control, monitoring, administration and contact with the owner s contractual service company/turbine manu facturer. In our role as operator, Eolus works closely with turbine manufacturers including Vestas, Siemens/ Gamesa and Enercon. In collaboration with them, we ensure that the facility s availability is high and that downtime is minimized. The operating segment provides recurring, stable and long-term revenue streams. ASSET MANAGEMENT KEY FIGURES EXPERTISE CENTER Eolus s driving force is that we want our customers to see the company as a partner that will do anything to maximize generation and minimize operating expenses over the life of their facility. Eolus also takes care of all other practical and administrative aspects. Over the years, Eolus has built up extensive expertise in wind farm operation. The company has refined, packaged and offers this experience and knowledge to customers. This has also meant that Eolus s asset management department has evolved into a center for expertise, and can offer knowledge on a consultative basis, both externally to turbine customers and manufacturers, and internally within the organization during the project development and construction phases. MAJOR FUTURE POTENTIAL Eolus sees a growing market demand, both from international investors and other players in this segment. Investors whose core operations are neither wind power nor energy generation represent the strongest and clearest growth potential. Parties without any business operations in the relevant geographic market also hold potential. Not only does wind power hold a firm position in a total energy mix, it is also one of the fastest-growing sources of energy. This has also led a more professional approach to, and view of, asset management for wind power facilities, regardless of their size. 141 During the fiscal year, Eolus signed new asset management agreements for 141 MW, of which 58 had been deployed by the end of the fiscal year. ELECTRICITY PRICE AREA 2 Sundsvall TOTAL SOLUTION Eolus s Asset Management department can 10.0 provide technical operation and all administration of a facility, such as responsibility for electrical operations, occupational health ELECTRICITY and safety, and insurance. The company PRICE AREA also serves as the point of contact for the Stockholm facility s relevant suppliers, regulators and in surance companies. Eolus s operating engineers check and monitor the facility via the company s operations center, follow up planned 16.0 and unplanned service, make regular visits to the site, conduct annual 26.9 inspections of the facility and ensure compliance with regulatory conditions 26.4 and requirements. ELECTRICITY 44.9 PRICE Customers can purchase a total solution AREA 4 or purchase some of the services offered Estonia Malmö 0.2 by Eolus and this offer is not limited to the Swedish market MW managed capacity MW managed capacity, signed but not yet deployed ELECTRICITY PRICE AREA 1 Luleå SEK M Full-year Sep 1, Full-year Sep 1, Net sales Other operating income Operating profit/loss At the end of the fiscal year, Eolus had asset management assignments on both its own behalf and that of customers of 351 MW, plus signed agreements for an additional 83 MW. Investors that have chosen Eolus s asset management concept include ewz, Munich Re, Chorus, Tolvmanstegen Drift AB, Mirova/European Investment Bank and a range of public-sector investors. 20 ANNUAL REPORT EOLUS VIND AB 2016/2017

21 ELECTRICITY GENERATION OPERATING SEGMENT SHARP DECLINE IN OWN WIND POWER HOLDING The Electricity Generation Operating Segment comprises generation and sales of renewable electricity from facilities owned by Eolus. Our holding of operational wind turbines is recognized as either wind turbine inventories or noncurrent assets. Sales of electricity generation, with the associated electricity certificates and guarantee of origin certificates, are conducted on either an ongoing basis at the prevailing spot price, or by hedging, which can vary in terms of time. Guarantee of origin certificates are assigned in relation to generation and sold in the market like electricity certificates. Eolus s objective is to gradually reduce its own wind turbine holding in order to free up capital for investments in project development and divestment of turnkey facilities to investors. As a result, the effects of this operating segment on Eolus s earnings will gradually decline. However, in order to develop and renew the wind power portfolio and to meet customers needs the holding may sometimes be increased, which means that revenue streams may vary over time. During the fiscal year, Eolus divested 20.6 MW wind power from its own holding in addition to the newly established facilities divested to customers. This reduced the MW of the holding by 75% over two years. The divestments meant that the carrying amount of Eolus s own facilities was only about SEK 100 M at the end of the fiscal year. This reduced Eolus s direct exposure to price fluctuations in the electricity market and freed up resources for project development and the divestment of new facilities. In the operational phase, costs for a wind power owner usually comprise leasing fees to the landowner, service and maintenance, insurance, property tax and administration costs. Operating expenses, excluding capital costs, normally range from SEK per MWh. The cost of capital is additional and varies, depending on the loan-to-value ratio, interest rates and the owner s capital contribution. Operating expenses are lower for new facilities than for older ones, and normally range from SEK per MWh. Over the past three fiscal years, electricity generation s share of the Group s overall revenue has fallen and during the past fiscal year, accounted for 2%. At the end of the fiscal year, Eolus owned operational wind power facilities with a total installed capacity of 17.8 (38.3) MW, and estimated annual generation of 40.2 (89.1) GWh. Non-current assets com prised 17.0 MW and 37.4 GWh, re spectively. The remaining portions of 0.8 MW and 2.8 GWh, respectively, comprise wind turbine inventories. Average revenue for the electricity generated during the fiscal year was SEK 423 (375) per MWh. The Fröreda wind farm. ELECTRICITY GENERATION KEY FIGURES Full-year Sep 1, 2016 Full-year Sep 1, 2015 SEK M Aug Aug 31, 2016 Net sales Other operating income Operating profit,before impairment losses Operating profit/loss, after impairment losses Electricity generation, MWh 58, , Eolus reduced its own wind power holding by 20.6 MW during the fiscal year. ANNUAL REPORT EOLUS VIND AB 2016/

22 VERKSAMHET Assembly of Täppeshusen. 22 ANNUAL REPORT EOLUS VIND AB 2016/2017

23 REPOWERING REPOWERING NEW OR UP- GRADED FOR HIGHER CAPACITY When older wind turbines reach the end of their service life or are no longer economically viable, they present opportunities for repowering. Repowering is when old wind turbines are replaced or upgraded with more advanced technology. Replacing old turbines with new technology offers many benefits. These include generation data from the site that can be used to estimate the generation of new wind turbines on the site. In some cases, infrastructure such as roads and grids can be used or may only need to be improved rather than building from scratch. A site that has previously been used for electricity generation may lead to greater acceptance for new establishments. The greatest benefit by far, however, is the new and advanced technology. Modern turbine models harvest significantly more energy from the wind than older turbines. Considerably more energy can be harnessed on the same site chosen because of its obvious suitability with newer, more efficient and larger turbines. The Californian project in the US, in which Eolus owns a 60% interest, is one example of the major difference. In the Wind Wall project in Tehachapi, about 400 wind turbine with an approximate installed capacity of 36 MW are being replaced by new wind turbines. The installed capacity will be roughly the same, but the amount of electricity generated will be three times higher. In Sweden, the repowering project in Näsudden on southern Gotland is the largest and best-known to date. Some 58 wind turbines with an installed capacity of kw have been dismantled and replaced by 27 wind turbines with a capacity of 2 3 MW, which will increase generation from 50 GWh to 200 GWh per year. If a decision is made to not install new turbines or upgrade the existing turbines on a site, the site is restored to its previous condition when the wind turbines that have reached the end of their useful life are dismantled. This means that the land can once again be used for purposes other than generating electricity from wind power. Wind Wall, California, US TÄPPESHUSEN During the fiscal year, completion of the Täppeshusen wind farm in the Municipality of Höganäs marked the end of Eolus s first repowering project. Two Vestas V kw turbines and one Vestas V kw turbine were replaced by the construction of two Vestas V MW turbines. The combined generation of the three turbines was 2.6 GWh, compared with estimated generation of 14.8 GWh per year for the two newly established turbines. The Vestas V39 turbines were dismantled and sold to Ireland where they were reassembled. The entire nacelle in the V47 turbine was used to replace the nacelle in another older turbine model in Sweden. ANNUAL REPORT EOLUS VIND AB 2016/

24 EMPLOYEES AND SOCIETY RESPONSIBILITY FOR THE ENVIRONMENT, PEOPLE AND SOCIETY Eolus considers the company and its operations an important part of the infrastructure development that is benefitting society. Generating electricity from wind power contributes to a sustainable society. The transition to a sustainable society is one of today s most important issues. The company s operations touch all parts of the sustainability concept: ecological, economic and social sustainability. Eolus therefore has a corporate social responsibility in addition to generating a profit for our shareholders, offering cost-efficient solutions to our customers and providing meaningful, stimulating work for our employees. This responsible approach is not contradictory. On the contrary it is a competitive advantage and a prerequisite for our future success. A POSITIVE WORKPLACE Eolus is a knowledge-intensive company with a small-scale organization. This means that the experience, knowledge, creativity and commitment of our employees is important for the company, and for the development of Eolus s market offering. To achieve this, Eolus is committed to promoting a corporate culture in which every employee can find their own work/life balance. Our corporate culture also helps us to recruit and retain the best employees, and ensures that we are and are perceived as an attractive employer. The organization has a functional structure in order to leverage the unique expertise of each employee. The project development department, for example, is divided into smaller groups based on specialized functional areas such as land acquisition, project development, wind evaluation and grid. During the year, the average number of employees in the Group was 33 (33). The number of female employees was 10 (10), corresponding to 30% (30). OCCUPATIONAL HEALTH AND SAFETY Eolus has high ambitions for reducing the risk of occupational injuries and illness. The aim is to reduce illness rates, ensure a faster return to work and to continuously improve procedures for promoting a positive health and safety culture. Eolus has no collective bargaining agreements. Instead, the company has negotiated a pension and health insurance plan, and a wellness program with a financial contribution from the employer. Eolus has a number of construction project managers who are responsible for the construction of facilities. The on-site physical work is performed by sub-contractors under the supervision of Eolus s construction project managers. The contractors are not permitted to commence work unless there is an occupational health and safety officer on site. All workplace accidents must be reported to the relevant authorities, as well as internally. The same occupational health and safety regulations apply to Eolus s construction project managers, and to the technicians who manage the wind power facilities owned by Eolus as well as its customers. Work performed inside wind turbines is subject to special regulations to ensure a safe and healthy working environment. CRITICAL SOCIAL RESPONSIBILITY Wind power is a natural part of Sweden s energy supply and will play an increasing role in the transition to a sustainable energy system, with a political target of 100% renewable electricity generation by Wind is an infinite resource and an energy source that is completely free. A wind turbine is environmentally friendly and produces very small quantities of greenhouse gases during operation. It can generate electricity for years. When a turbine reaches the end of its useful life, it can easily be dismantled and recycled, and the land can be restored and used for new purposes, or for renewed electricity generation by constructing new wind turbines. LEADING PLAYER IN THE ENERGY TRANSITION Eolus has been a leading Nordic player in the transition to renewable energy since The company has driven the development of higher efficiency, and has extensive knowledge of where and how wind farms should be built for optimal generation and with consideration for other community interests. Value creation is inherent to our long experience including the ability to account for people, the landscape, the environment and society throughout the value chain. PROPER AND TRANSPARENT CONDUCT Eolus aims to be a respected company that creates value for its stakeholders. The company s employees are expected to act properly, fairly and honestly. The same demands apply to consultants, suppliers and other business partners. Impartiality shall prevail in all business relationships. Eolus aims for a high degree of transparency when communicating with shareholders and society in general. In addition to its own market research, Eolus monitors trends in the industry and other countries through its membership in Swedish Wind Energy, the Swedish Windpower Association and NORWEA, CALWEA, the Estonian Wind Power Association and the Latvian Wind Association. Our vision is to be the most profitable wind power developer and an attractive business partner in the transition to a sustainable society. 24 ANNUAL REPORT EOLUS VIND AB 2016/2017

25 Inauguration of Täppeshusen. ANNUAL REPORT EOLUS VIND AB 2016/

26 EKONOMISKT SAMMANDRAG OCH KONCERNENS NYCKELTAL The Iglasjön wind farm. 26 ANNUAL REPORT EOLUS VIND AB 2016/2017

27 FINANCIAL SUMMARY AND THE GROUP S KEY FIGURES FINANCIAL SUMMARY Amounts in KSEK 2016/ / / / /2013 Income statement Net sales 1,065, ,446 1,502, ,839 1,204,945 Operating profit/loss 40,233-15,949 90,040 41, ,720 Profit before tax 34,224-29,057 75,243 13, ,316 Net profit/loss for the year 24,504-23,918 79,994 9, ,564 Balance sheet Non-current assets 147, , , , ,588 Current assets 752, , ,568 1,503,439 1,100,223 Assets 900,764 1,269,616 1,259,355 1,929,814 1,562,811 Equity attributable to Eolus s shareholders 657, , , , ,813 Equity, non-controlling interests 1, ,971 Non-current liabilities 74, , , , ,101 Current liabilities 166, , , , ,868 Equity, provisions and liabilities 900,764 1,269,616 1,259,355 1,929,814 1,562,811 Cash-flow statement Cash flow from operating activities 90, , , , ,094 Cash flow from investing activities -9,718-10,395 44,167 10, ,102 Cash flow from financing activities -101, , , , ,289 Cash flow for the year -19,784-19, , , ,907 Cash and cash equivalents at beginning of year 221, ,522 86, ,612 42,703 Exchange-rate differences in cash and cash equivalents Cash and cash equivalents at year-end 201, , ,522 86, ,612 KEY FIGURES FOR THE GROUP*** 2016/ / / / /2013 No. of turbines taken into operation Turbines taken into operation, MW Electricity generation, GWh Average number of employees, full-time positions Operating margin, % 3.8 neg Profit margin, % 3.2 neg Return on capital employed, % 5.8 neg Return on equity after tax, % 3.7 neg Equity/assets ratio, % Earnings per share, SEK Equity per share, SEK Dividend per share, SEK 1.50* ** No. of shares at year-end, 000s 24,907 24,907 24,907 24,907 24,907 Average number of shares during the year, 000s 24,907 24,907 24,907 24,907 24,907 * Proposed dividends ** Extra dividend of SEK 10 paid in July 3, *** Refer to page 87 for a definition of key figures. ANNUAL REPORT EOLUS VIND AB 2016/

28 SHARE AND OWNERSHIP STRUCTURE EOLUS SHARE AND OWNERSHIP STRUCTURE Eolus Vind has classes of shares designated Class A and Class B. The company s Class B share has been traded on Nasdaq Stockholm Small Cap since February 2, 2015, under the ticker EOLU B. Prior to that, the company s Class B share was traded on Nasdaq OMX First North since May 28, 2009, and on Nasdaq First North Premier since May 5, SHARE PRICE PERFORMANCE During the fiscal year, the share price fluctuated between a low of SEK on September 1, 2 and 12, 2016 and a yearly high of SEK on January 3 and 5, 2017, respectively. The closing price at the end of the fiscal year, on August 31, 2017, was SEK Eolus s share price increased approximately 8.5% during the fiscal year, compared with the Nasdaq Stockholm Small Cap s index, which rose about 6.9% during the same period. A total of 9,186,097 Class B shares were traded. The turnover rate decreased about 6.3% compared with the preceding 12-month period. OWNERSHIP STRUCTURE At August 31, 2017, the number of shareholders in the company was 6,365, up 1,378 during the fiscal year. The ten largest shareholders accounted for 33.1% (33.8) of the capital, and 50.9% (50.4) of the voting rights. The largest shareholders mainly comprise Domneåns Kraftaktiebolag and Hans-Göran KEY FIGURES PER SHARE 2016/ / 2016 Earnings per share before dilution, SEK Earnings per share after dilution, SEK Ordinary dividend, SEK Direct yield, % Share price at year-end, SEK Market capitalization,sek M No. of shares outstanding, 000s 24,907 24,907 Average number of shares during the year, 000s 24,907 24,907 1 Based on the Board of Director s dividend proposal 2 Dividend divided by the closing price for each fiscal year Stennert. At the end of the 2016/2017 fiscal year, Eolus Vind AB did not hold any treasury shares. SHARE CAPITAL At August 31, 2017, the nominal amount of share capital in Eolus Vind AB was SEK 24,907,000. The total number of shares was 24,907,000 (24,907,000), divided between 1,285,625 Class A shares carrying one (1) voting right per share, and 23,621,375 Class B shares, carrying one-tenth (1/10) of a voting right per share. All shares outstanding are fully paid and entitle the holder to an equal share of the company s assets and earnings. Each share has a quotient value of SEK Shareholders are entitled to dividends at amounts determined by the Annual General Meeting. There are no restrictions on the transfer of shares or the voting rights of each shareholder at General Shareholder Meetings due to provisions in the Articles of Association. Eolus has implemented 11 new share issues since the company was founded in The purpose of all new share issues has been to facilitate faster expansion than the company s earnings growth has enabled. The share capital trend for the period is presented in the table on page 29. DIVIDENDS Eolus s long-term dividend policy entails that dividends over a long period of time will be determined by earnings and correspond to 20-50% of the company s profit after tax. DIVIDEND PER SHARE, AND DIRECT YIELD Dividend, SEK Direct yield, % SEK % / / 2014 ** 2014/ / / 2017 * The dividend from 2016/2017 refers to the Board s proposal ahead of the Annual General Meeting ** During the 2014/2015 fiscal year, and extraordinary dividend of SEK 10 was paid in the form of a share split with a redemption procedure. Direct yield including extraordinary dividend was 46.9%. * However, dividends will be adapted to the company s investment requirements and financial position. Eolus may incur net debt over time in order to continue developing the company. For a company such as Eolus, in which the development and sales of wind turbines are an essential part of the business, maintaining a strong financial position is imperative. The Board of Directors will therefore consider the company s long-term financing requirements at all times. In view of Eolus s strong financial position, the Board of Directors proposes to the Annual General Meeting that a dividend corresponding to SEK 1.50 (1.50) per share be paid to shareholders. This corresponds to a transfer of SEK 37.4 M (37.4), corresponding to a direct yield of 6.9%. FINANCIAL INFORMATION Eolus s Investor Relations (IR) communication is characterized by open, relevant and accurate information to shareholders, investors and analysts with the objective of raising knowledge of the Group s operations and share. Eolus communicates information in the form of interim reports, annual reports and relevant press releases, and provides detailed information about the company in the IR section of the company s website, Shareholders and other stakeholders may subscribe to press releases, the customer magazine New Winds and financial statements via the company s website. Presentations and interviews with the CEO of Eolus are also available on the website. SHARE PRICE PERFORMANCE SEK Eolus B Nasdaq Stockholm Small Cap 28 ANNUAL REPORT EOLUS VIND AB 2016/2017

29 SHARE AND OWNERSHIP STRUCTURE SHAREHOLDERS AT AUGUST 31, 2017 Shareholder No. of Class A shares No. of Class B shares Total no. of shares % of capital Domneåns Kraftaktiebolag 357,900 2,012,869 2,370, % 15.3% Hans-Göran Stennert, directly and through endowment insurance 380, , , % 11.8% Åke Johansson 194, , , % 6.9% Hans Johansson and Borgunda bygghandel, through companies 169,520 58, , % 4.8% Försäkringsaktiebolaget Avanza Pension 0 1,579,451 1,579, % 4.3% Johan Markensten 0 808, , % 2.2% Ingvar Svantesson 43, , , % 1.7% Nordnet Pensionsförsäkring AB , , % 1.5% Swedbank Försäkring 0 447, , % 1.2% Adlerbertska forskningsstiftelsen 0 350, , % 1.0% Other shareholders 139,135 16,525,317 16,664, % 49.1% Total 1,285,625 23,621,375 24,907, % 100.0% % of votes Intervals No. of shares % of capital No. of shareholders % of shareholders , % 4, % , % % 1,001-5,000 2,594, % 1, % 5,001-10,000 1,777, % % 10,001-15, , % % 15,001-20, , % % 20,001-17,680, % % Total 24,907, % 6, % SHARE CAPITAL TREND Year Event Total share capital, SEK Change in share capital, SEK No. of Class A shares No. of Class B shares Change in Class A shares Change in Class B shares Quotient value, SEK 1990 Company foundation 1,200,000 1,200,000 5,000 7,000 5,000 7, New share issue 3,000,000 1,800,000 5,000 25,000-18, New share issue 5,000,000 2,000,000 5,000 45,000-27, New share issue 6,000,000 1,000,000 6,000 54,000 1,000 9, New share issue 8,000,000 2,000,000 6,000 74,000-20, New share issue 10,000,000 2,000,000 7,500 92,500 1,500 18, New share issue 12,000,000 2,000,000 9, ,000 1,500 18, Non-cash issue 14,100,200 2,100,200 9, ,002-21, New share issue 16,114,400 2,014,200 10, ,859 1,285 18, New share issue 18,114,400 2,000,000 10, ,859-20, Split 100:1 18,114,400-1,028,500 17,085,900 1,018,215 16,915, New share issue 22,643,000 4,528,600 1,285,625 21,357, ,125 4,271, Non-cash issue 24,907,000 2,264,000 1,285,625 23,621,375-2,264, Split 2:1 24,907,000-2,571,250 47,242,750 1,285,625 23,621, Stock dividend 49,814,000 24,907, Redemption 24,907,000-24,907,000 1,285,625 23,621,375-1,285,625-23,621, Source: Euroclear and Eolus 24,907,000 1,285,625 23,621, ANNUAL REPORT EOLUS VIND AB 2016/

30 GROUP MANAGEMENT EOLUS GROUP MANAGEMENT Eolus had four senior executives during the 2016/2017 fiscal year: Per Witalisson, Marcus Landelin, Catharina Persson and Karl Olsson. Information regarding when they assumed their positions, their dates of birth, experience, shareholdings in Eolus at December 1, 2017 and their ongoing assignments is presented below. Assignments within the Group and assignments as deputy Board members are not specified. Company shareholdings cover holdings of own shares, both direct and indirect, as well as those of related parties. PER WITALISSON CEO Born: 1971 Employed since 2006 and CEO since August Master of Business Administration. Previously an auditor at Ernst & Young between 1996 and 2006, where he was an authorized public accountant between 2003 and Other assignments: Chairman of the Board of Rockneby Vind AB and Långmarken Wind AB. Board member of Isgrannatorp Drift AB and Triventus AB. Shareholding in Eolus: 12,700 Class A shares and 50,157 Class B shares MARCUS LANDELIN Deputy CEO and Chief Operating Officer Born: 1978 Employed since Bachelor of Laws degree and Master of Business Administration. Most r ecently worked at E.ON, where he was the Head of Origination and Project Development for onshore wind power in Northern Europe as well as working with offshore wind power. He has worked on export and trade issues at the Swedish Trade Council in Eastern Europe and ran his own trading and construction business. Other assignments: None Shareholding in Eolus: None CATHARINA PERSSON CFO Born: 1975 Employed since Master of Business Administration and previously CFO at ACAP Invest AB (publ). Other assignments: Board member of SD Förvaltning i Malmö AB Shareholding in Eolus: 2,068 Class B shares KARL OLSSON General Counsel Born: 1963 Employed since Bachelor of Laws degree. Previously employed as a lawyer at Setterwalls and Linklaters legal firms, and General Counsel in Vattenfall AB s Group staff unit. He has also been an employee and member of the management team at Awapatent AB and, prior to joining Eolus, conducted his own business Terrier Law AB. Other assignments: Board member and CEO of Terrier Law AB. Board member of Skogskovall AB and Rockneby Vind AB. Agent for service of process for Snickaregatan Holding AB. Shareholding in Eolus: 4,685 Class B shares 30 ANNUAL REPORT EOLUS VIND AB 2016/2017

31 ANNUAL REPORT EOLUS VIND AB 2016/

32 DIRECTORS REPORT DIRECTORS REPORT The Board of Directors and CEO of Eolus Vind AB (publ), Corp. Reg. No , hereby submit the Annual Report and consolidated financial statements for the September 1, 2016-August 31, 2017 fiscal year. All amounts are in thousands of Swedish kronor (KSEK), unless specified otherwise. Figures in parentheses pertain to the preceding fiscal year. INFORMATION ABOUT BUSINESS OPERATIONS Eolus aims to create value at all levels of project development, establishment and operation of facilities for renewable energy and energy storage, and to offer attractive and competitive investment objects to both local and international investors in the Nordic region, Baltic countries and the US. Eolus s main operations are to realize projects primarily through sales of turnkey operational facilities to a broad customer base of investors. The business model also includes parts of the project portfolio to be realized through sales of project rights, meaning permitted projects and projects under development. Eolus also uses its own wind power facilities to generate electricity. New wind turbines may be constructed, and existing turbines divested to customers that want to invest in facilities that are already operational, in order to continuously develop and renew the wind power portfolio for electricity generation. Eolus offers a full range of asset management services to wind power owners for carefree ownership. The Group consists of the Parent Company, Eolus Vind AB (publ), the subsidiaries Ekovind AB, Svenska Vindbolaget AB, Blekinge Offshore AB, Eolus Elnät AB, Eolus Wind Power Management AB, SIA Eolus, Eolus Vind Norge AS, Eolus Oy, Eolus North America Inc and the sub-subsidiary OÜ Baltic Wind Energy. In addition to the companies above, several other companies formed to manage the development of specific wind power projects are also included. Project development Since its inception in 1990, Eolus has evolved into a leading wind power developer throughout Sweden and the Nordic region. By the end of the fiscal year, Eolus had participated in the construction of 516 wind turbines with a combined capacity of 845 MW. Projects are mainly realized by constructing wind turbines that are divested as turnkey facilities to investors. If a customer contract has not been signed by the time the facility becomes operational, operating income and expenses are recognized in the Electricity Generation operating segment until the facility is divested. Projects can also be realized by selling project rights. Profit recognition after construction takes place after final commissioning. Sales and earnings may vary considerably between individual quarters and fiscal years, depending on the rate of wind farm construction, and when the farms are divested. The project development operations are mainly financed by equity, construction loans and advance payments from customers. At present, Eolus conducts project development operations in Sweden, Norway, Finland, the Baltic countries and the US. Sales from the development and divestment of turnkey wind power facilities amounted to SEK 1,027.4 M (637.2). During the fiscal year, 25 (14) wind turbines with a combined capacity of 72.2 MW (37.7) were installed and completed, of which all except 0.4 wind turbines were handed over to customers. Other operating income of SEK 2.5 M (1.3) mainly comprised exchange-rate gains attributable to exchanged currency futures, and capital gains on other non-current assets. Eolus s classification of revenues and expenses related to onward invoicing in connection with operating and divested turbines was changed as of September 1, Comparative periods were not reclassified, which affects comparability. During the fiscal year, SEK 0.3 M was forward invoiced and recognized as other operating income. For further information, refer to Note 1 Accounting Policies. Electricity generation The Group uses its own wind power facilities to generate electricity, which are recognized as either inventories or a non-current asset. Revenue is derived from sales of electricity, and from sales of the electricity certificates allocated to renewable electricity producers. New wind turbines may be constructed and existing turbines divested in order to continuously develop and renew the electricity generation asset portfolio. Sales from the Group s electricity generation amounted to SEK 24.8 M (46.3). This decline was attributable to lower electricity generation due to the strategy to reduce the number of owned turbines but was offset by higher wind speeds and higher average revenue. At the end of the fiscal year, the Group owned a combined installed capacity of 17.8 MW with estimated generation of 40.2 GWh per year. Of these figures, 17.0 MW, corresponding to 37.4 GWh, comprised non-current assets. The remaining 0.8 MW, corresponding to 2.7 GWh, comprised inventories. Average revenue for the electricity generated during the fiscal year was SEK 423 (375) per MWh. Eolus s classification of revenues and expenses related to onward invoicing in connection with divested turbines was changed as of September 1, Comparative periods were not reclassified, which affects comparability. During the fiscal year, SEK 4.2 M was invoiced onwards and recognized as other operating income. For further information, refer to Note 1 Accounting Policies. Asset management Over the years, Eolus has developed extensive expertise in virtually all areas related to the construction and operation of wind turbines. For many years, Eolus has drawn upon its own staff to provide technical and management consultancy services for wind power stakeholders. Eolus can therefore offer full asset management services to wind power owners to provide carefree ownership that maximizes revenue and minimizes production loss. Eolus sees increasing demand for these services both from major institutional investors that own large wind farms, and from local operators with smaller facilities. These operations provide Eolus with stable, recurring and long-term revenue streams. Sales from wind power asset management services amounted to SEK 14.3 M (10.9), of which external customers accounted for SEK 13.9 M (10.5). At the end of the fiscal year, Eolus s customer contracts relating to asset management assignments for its own holdings and on behalf of customers totaled 351 (293) MW, of which external customers accounted for 336 (262). In addition to these assignments, agreements were signed for the Jenåsen (79 MW) and Vilseberga (4 MW) wind farms, which will be completed during the 2017/2018 fiscal year. Eolus s classification of revenues and expenses related to onward invoicing in connection with asset management assignments was changed as of September 1, Comparative periods were not reclassified, which affects comparability. During the fiscal year, SEK 9.5 M was invoiced onwards and recognized as other operating income. For further information, refer to Note 1 Accounting Policies. 32 ANNUAL REPORT EOLUS VIND AB 2016/2017

33 DIRECTORS REPORT EARNINGS AND FINANCIAL POSITION 2016/2017 IFRS 2015/2016 IFRS 2014/2015 IFRS 2013/2014 IFRS 2012/2013 IFRS Overview Group Net sales 1,065, ,446 1,502, ,839 1,204,945 Operating profit/loss 40,233-15,949 90,040 41, ,720 Profit before tax 34,224-29,057 75,243 13, ,316 Return on capital employed, % 6 neg Return on equity after tax, % 4 neg Total assets 900,764 1,269,616 1,259,355 1,929,814 1,562,811 Equity/assets ratio, % Average number of employees /2017 RFR2 2015/2016 RFR2 2014/2015 RFR2 2013/2014 RFR2 2012/2013 RFR2 Overview Parent Company Net sales 910, ,873 1,348, ,809 1,079,202 Profit before tax 82,560 26, ,261 41,450 28,913 Total assets 890,371 1,176,727 1,088,855 1,602,132 1,210,398 Equity/assets ratio, % Average number of employees DEFINITIONS OF KEY FINANCIAL FIGURES Return on equity after tax Equity/assets ratio Return on capital employed Capital employed Net profit for the year expressed as a percentage of average equity Equity expressed as a percentage of total assets Profit before tax items plus interest expense expressed as a percentage of average capital employed Total assets minus non-interest-bearing liabilities. THE GROUP S NET SALES AND EARNINGS Net sales amounted to SEK 1,065.7 M (693.4), up SEK M compared with the preceding year. Operating profit totaled SEK 40.2 M (loss: 15.9), up SEK 56.1 M. The sales growth is attributable to the handover of 24.6 operational turbines and 12.2 turbines from inventories. The improved operating profit was mainly due to a higher number of commissioned and handed-over turbines year-on-year, despite the negative currency effects. During the year, 25 wind turbines with a capacity of 72.2 MW were constructed, of which 24.6 had been handed over to customers by the balance-sheet date. In the preceding year, 14 wind turbines with a capacity of 37.7 MW were constructed, of which 13.5 were handed over to customers. Changes in the fair value of currency derivatives had a negative impact of SEK 4.6 M on operating profit, compared with a negative amount of SEK 1.5 M in the preceding year. Loss from financial items amounted to SEK 6.0 M, compared with a loss of SEK 13.1 M in the preceding year. Changes in the fair value of interest-rate derivatives had a positive impact of SEK 8.3 M on financial items, compared with a negative impact of SEK 3.4 M in the preceding year. Overall, changes in the fair value of financial currency and interest-rate derivatives had a positive impact of SEK 3.7 M before tax, compared with a negative amount of SEK 4.9 M in the preceding year. The effective tax rate varies considerably between periods, depending on the structure of wind turbine divestments. FINANCIAL POSITION Total assets are significantly affected by the size of ongoing wind power projects, the phase they are in, and the use of credit facilities. For projects to be divested as turnkey facilities to customers, the company aims to secure customer financing in pace with the project s completion. The Group s equity/assets ratio was 73.2% at end of the fiscal year, compared with 52.9% at the end of the preceding fiscal year. CASH FLOW AND CASH AND CASH EQUIVALENTS Cash flow from operating activities amounted to SEK 91.0 M, compared with SEK M in the preceding year. Cash flow from operating activities remained positive, but is lower year-on-year. The difference is due to the number of ongoing establishments and their current phase. Cash flow from financing activities was a negative SEK 9.7 M, compared with a negative SEK 10.4 M in the preceding year. Cash flow from financing activities was a negative SEK M, compared with a negative SEK M in the preceding year. The change was mainly attributable to lower loan repayments in connection with electricity generation operations. At the end of the fiscal year, cash and cash equivalents amounted to SEK M (221.5), down SEK 20 M. In addition to cash and cash equivalents, there was an unutilized overdraft facility of SEK 75 M and two unutilized framework and construction loans totaling SEK 855 M. The construction loan of SEK 600 M pertains to the Jenåsen wind farm establishment, and the remaining framework loan is attributable to other construction activity. On the same date of the preceding year, Eolus had an overdraft facility, a framework loan and construction loan, also unutilized. At the end of the fiscal year, net cash amounted to SEK M (139.8), up SEK 27.8 M. ANNUAL REPORT EOLUS VIND AB 2016/

34 DIRECTORS REPORT WIND TURBINE INVENTORIES, WIND TURBINES UNDER CONSTRUCTION AND PROJECTS UNDER DEVELOPMENT At the end of the fiscal year, wind turbine inventories, wind turbines under construction and projects under development amounted to SEK M (462.3), representing a decline of SEK M during the fiscal year. At the end of the fiscal year, there were 25 wind turbines under construction, compared with 16 on the corresponding date of the preceding year. Wind turbines recognized as non-current assets or inventories, respectively, are attributable to the Electricity Generation operating segment and generate electricity that the company sells. New wind turbines may be established and existing turbines divested in order to continuously develop and renew the electricity generation asset portfolio. During the fiscal year, 12 wind turbines were reclassified from non-current assets to inventories prior to divestment. LIABILITIES At the end of the fiscal year, net cash amounted to SEK M, compared with SEK M on the corresponding date of the preceding year. Liabilities have declined due to the strategy to reduce the number of owned turbines. SIGNIFICANT EVENTS DURING THE FISCAL YEAR In November 2016, Eolus was granted a final permit for the Norwegian Øyfjellet project. This is Eolus largest permitted project to date, with capacity of up to 330 MW and estimated generation of about 1.4 TWh per year. Alongside of the divestment process, the project is also being optimized in order to maximize generation and economic value. In December 2016, Eolus signed an agreement with the German asset and investment manager, KGAL, regarding divestment of the Gunillaberg and Lunna wind farms. The total transaction amounted to 15.4 MW, divided between seven Vestas V MW wind turbines. Both wind farms were handed over in August Eolus will provide asset management services for both of the farms. In December 2016, Eolus acquired a 60% interest in Wind Wall Development LLC through its Eolus North America Inc subsidiary. Wind Wall Development is planning to establish about 40 MW of wind power in Tehachapi, California, in the US. In connection with the acquisition, Eolus ordered sufficient wind power components from Vestas to be granted a full-value Production Tax Credit (PTC) for renewable energy in the US. In December 2016, the Swedish Government decided not to grant a permit based on the Environmental Code for the Blekinge Offshore wind power project, in which Eolus owns a 56% interest. The application comprised a project with up to 2,500 MW capacity. The Swedish Government s negative decision with reference to national defense interests represents a missed opportunity to add green electricity generation in Electricity Price Area 4, in which electricity consumption exceeds generation. It also means that new jobs will not be created. Eolus objective was to find a balance between national defense interests and the community benefits of renewable electricity generation and jobs. In May 2017, Eolus signed an agreement with Munich Re regarding divestment of the Jenåsen wind farm, which is under construction in the Municipality of Sundsvall. This is Eolus s largest transaction to date, with a combined capacity of about 79 MW. In October 2016, Eolus signed an agreement with E.ON Elnät regarding grid connection for the wind farm, and an agreement with Vestas for the delivery of 23 V MW wind turbines with a total height of 190 meters. The ongoing investments to connect Jenåsen to the grid will also present opportunities to connect other wind farms in the area. All electricity generated by the Jenåsen wind farm is covered by a ten-year Power Purchase Agreement with Google and the farm is scheduled for completion in summer During the fiscal year, the Iglasjön and Långmarken wind farms were completed and handed over to customers. When Iglasjön, comprising eight Vestas V MW wind turbines with a combined capacity of 26.4 MW, was handed over to Munich Re, Eolus passed the 500 mark for established turbines. Långmarken, comprising eight Vestas V MW wind turbines, was handed over to Mirova/the European Investment Bank, Kalmar County Council and the City of Malmö. During the fiscal year, Eolus deployed 25 wind turbines with a combined capacity of 72.2 MW, of which 24.6 wind turbines were handed over to customers. During the same period, 36.8 wind turbines with a combined capacity of 92.8 MW were handed over to customers. During the fiscal year, Eolus procured a total of 23 Vestas V126 turbines with a combined capacity of 79.4 MW. ENVIRONMENTAL IMPACT Through its wind power holdings, the Parent Company and the Ekovind subsidiary conduct activities that are licensable or subject to notification requirements under the Swedish Environmental Code. The company and the Group hold the relevant environmental permits. When notification requirements apply, an application under the Environmental Code is a prerequisite for granting a building permit. Wind power is a clean and renewable source of energy with very little environmental impact throughout the life of a turbine. During operation, the negative environmental effects are mainly noise and shadow casting. EMPLOYEES During the year, the average number of employees in the Group was 33 (33). The number of female employees was 10 (10), corresponding to 30% (30). For information regarding distribution of the number of employees and salaries paid, other remuneration, social security expenses pertaining to the Board and the CEO, as well as remuneration of senior executives, refer to Notes 5 and 6. SIGNIFICANT RISKS AND UNCERTAINTIES Significant risks A number of risk factors considered significant for the future development of Eolus are outlined below. The following risks are not ranked in order of priority and do not claim to be comprehensive. Dependence on regulations, legislation and policy measures The establishment of wind power facilities is covered by a series of regulations. The law was amended on August 1, 2009 and building permits or detailed development plans are no longer required for facilities that are granted environmental permits according to certain conditions under the Swedish Environmental Code. For environmental permits to be granted, the relevant municipality must actively recommend that the permit be granted. In practice, municipalities thus hold a right of veto. Both building permits and environmental permits may be appealed, which can lead to delays or make projects impossible to implement. Under the Planning and Building Act, municipalities in Sweden exercise a planning monopoly. The implementation of projects is therefore dependent on the willingness of each individual municipality to contribute to a sustainable energy supply. Political will can swing rapidly due to changing public opinion, the distribution of seats in building and planning committees, and so forth. Without accounting for the socio-economic environmental costs, it is currently cheaper to generate electricity from, for example, oil or coal. Wind power is therefore dependent on subsidies that make it profitable to generate electricity in an environmentally sustainable manner. Sweden and Norway have technology-neutral electricity certificate systems, which favor the development of renewable electricity generation. In 2008, the EU adopted the Renewable Energy Directive, through which Sweden has agreed that at least 49% of its energy consumption will be derived from renewable energy sources by Through its energy and climate agreement, the former Swedish Government raised ambitions by an additional percentage point. In October 2014, EU member states decided that the share of renewable energy should amount to at least 27% of the energy mix by On January 1, 2012 a joint Swedish-Norwegian market for electricity certificates was launched with the objective to increase the amount of electricity generated from renewable sources by 28.4 TWh between 2012 and In October 2015, the Riksdag decided to introduce technical adjustments to the quota curve in order to correct previous erroneous assumptions, and to raise 34 ANNUAL REPORT EOLUS VIND AB 2016/2017

35 DIRECTORS REPORT ambitions for the Swedish Electricity Certificate System by 2 TWh, under an agreement with Norway, from 26.4 TWh to 28.4 TWh. In June 2016, an energy agreement was presented between the two governing parties, the Moderate Party, the Centre Party and the Swedish Christian Democrats. The aim of the agreement is for Sweden to have 100% renewable electricity generation by 2040, zero net emissions of greenhouse gases to the atmosphere five years later in 2045 and, ultimately, negative emissions. Under the framework of the agreement, Sweden has decided to extend the Electricity Certificate System and expand it by 18 TWh during the period. To achieve the new goals for the Electricity Certificate System, investments of about SEK billion will need to be made in renewable electricity generation during the ten-year period from 2021 to Wind power is expected to account for most of this volume since it is the most cost-efficient way to add new generation capacity. Although conditions for the wind power industry have become clearer in recent years, there is no guarantee that future Swedish parliaments will not make other decisions, entailing weaker terms for wind power in Sweden, which could affect Eolus s operations and financial position. The division of Sweden into four electricity price areas means that the price of electricity generated varies, depending on the supply and demand situation in the relevant area. Dependence on agreements Eolus has not concluded any operational or financial agreements with terms considered uncommon for the industry. When establishing wind power facilities, the company s activities include signing agreements with manufacturers for the supply of wind turbines. Advance payments to wind turbine manufacturers can add up to considerable amounts. Since the size of the company s wind power projects has increased in recent years, while the number of manufacturers in the market is limited and delivery times are relatively long, the inability of a particular manufacturer to fulfill agreements could have a significantly adverse effect on the company s financial position. Dependence on strategic partners Eolus installs wind power facilities from world-class manufacturers using the highest possible technical and overall economic efficiency. The wind power industry is undergoing rapid growth and the number of manufacturers that want to establish a market presence has increased in recent years. This competition among manufacturers has led to better terms and reduced dependence on individual suppliers. Although new manufacturers are becoming established in the markets where Eolus operates, it may take time for them to establish construction and service organizations. Dependence on key individuals and employees Eolus is a knowledge-based company with a small organization, where dependence on the knowledge, experience and creativity of individual employees is high. The loss of key individuals could have significantly adverse effects on the company in the short term. Earning capacity The capital cost per MWh generated in a wind turbine varies greatly, depending on the wind conditions at the actual location. Establishing wind power facilities on appropriate sites and accurate generation assessments are thus crucial to the company s earning capacity. The wind conditions at each individual facility can vary from year to year. Generation can vary up to +/- 15%, compared with a normal wind year. The market price of electricity varies over time. The price trend for electricity certificates is dependent on how rapidly renewable electricity generation is developed in proportion to the quota obligation that applies for consumers when purchasing electricity certificates. Through a partnership with Axpo Sverige AB, a leading player on the Nord Pool Spot power market, Eolus acquires risk management support for sales of electricity. The partnership aims to secure future generation revenues, achieve long-term profitability, minimize the risk that market volatility will have a negative impact on Eolus s earnings, generate positive results from price hedging and address the need for load balancing in a cost-efficient manner. In its finance and risk policy, Eolus hedges a predetermined portion of the generation volume, which reduces the volume and profile risk. The main costs for wind turbine management are interest expense, depreciation, leases, service and maintenance costs and insurance expenses. Rising market interest rates have a negative impact on earnings. Investment decisions are usually based on an economic life of years. If the actual life falls short of the estimated life, this would have a negative impact on profitability. With such a long time horizon, there is an additional risk that the future costs of service and maintenance may differ from the cost basis of the investment decision. Competition Since development of the wind power industry has accelerated sharply in recent years, the number of market players has risen. Under current conditions, this has increased the supply of projects and turnkey facilities to the market. In the project development phase, Eolus competes with smaller players, major utilities companies and international wind power developers. In regard to sales of electricity, wind power-based electricity competes with all other types of electricity generation since all electricity is sold on a single market. The Electricity Certificate System is technology-neutral, which favors the generation of renewable electricity using the most cost-efficient technology. In terms of its offering of asset management services, Eolus competes with both major wind power developers offering complete managements services and owners who choose to carry out these services themselves. FINANCIAL RISKS Capital requirements and financing ability Eolus has a large, high-quality project portfolio. The planning of project development operations includes monitoring building permits and other permits to ensure they do not expire before the wind turbines are constructed. Should the wind power market show a negative trend, making it more difficult to divest facilities at acceptable prices and mean that Eolus would thereby need to finance more turbines than planned, capital requirements could increase. In July 2016, Eolus secured financing for the next two fiscal years through the signing of three credit agreements with Handelsbanken. All agreements have a 29-month term. The agreements comprise an overdraft facility of SEK 75 M, a framework credit agreement of SEK 255 M for project financing and a construction loan of SEK 600 M. The construction loan was signed in order to finance the establishment of the Jenåsen wind farm, for which Eolus signed a Power Purchase Agreement with Google. At the balance-sheet date, all of the credit facilities were unutilized. The Board has adopted a finance and risk policy containing guidelines for the equity/assets ratio, maturity structure of loans and the management of liquidity preparedness to reduce refinancing risk. Exchange-rate changes A major portion of Eolus s wind turbine payments are made in EUR. Exchange-rate fluctuations against the SEK can thus affect the profitability of wind turbine construction. This is offset by either currency futures or sales in EUR. The Board has stated in the finance and risk policy that at least 75%, and a maximum of 125%, of the estimated net flow over a 12-month period is to be hedged. On the balance-sheet date, the company s outstanding currency derivatives amounted to EUR 13.0 M (13.0). These had a negative market value of SEK 0.5 M (pos: 4.1). Interest-rate risk The electricity generation operations are partly financed by bank loans. Changes in market interest rates may therefore affect future earnings and profitability. The Board has stated in the finance and risk policy that the average fixed-interest term in the electricity generation operations is not to be less than 2.5 years. At the end of the 2016/2017 fiscal year, more than 100% of the Group s liabilities attributable to electricity generation operations to credit institutions were covered by interest-rate hedging instruments. The Board of Directors approved this deviation from the policy. On the balance-sheet date, these instruments had a negative market value of SEK 14.6 M (neg: 38.8). ANNUAL REPORT EOLUS VIND AB 2016/

36 DIRECTORS REPORT SIGNIFICANT EVENTS AFTER THE END OF THE FISCAL YEAR No significant events took place after the end of the fiscal year. OUTLOOK The energy market is undergoing a rapid and intense change process. Low price levels for electricity impact the entire energy sector and no method of generation remains unaffected by this market trend. Although the pricing scenario is largely driven by global prices for fossil-based energy generation, investments in renewable generation methods account for a majority of the new investments at the global level. From a Swedish perspective, wind power has undergone tremendous growth from 1 TWh of generated electricity in 2006 to about 15.5 TWh in Electricity generation in 2017 will be higher due to continued development and better wind resources than in Wind power is now well-established as the country s third-largest electricity generation method after hydropower and nuclear power. The Swedish Energy Agreement from summer 2016 is based on the objective of transitioning to 100%-renewable electricity generation in Sweden. The agreement contains a new development target of 18 TWh for the Electricity Certificate System between 2021 and With the current cost base for the establishment of new renewable electricity generation, a large proportion of these investments will be made in wind power. In recent years, more electricity has been generated than consumed in the Swedish market, enabling Sweden to become a net exporter of electricity. Sweden has an excellent opportunity to become a driving force for sustainability in Europe thanks to its extensive carbon-free electricity generation, which could replace the dirty fossil-based power used in other countries. A continued ability to export electricity is positive for Sweden, which is why it is so important to continue expanding the transmission capacity not only within Sweden but also to other countries. The fact that the energy agreement addresses the need to expand the transmission capacity in order to enable exports is thus positive. The future potential to store electricity will present major opportunities for Sweden to increase their share of intermittent electricity sources, such as wind and solar power. Eolus is now active in a number of markets beside Sweden. At present, the most attractive markets for Eolus s operations in addition to Sweden are the Norwegian and US markets. In addition to high-priority projects in the Swedish market, Eolus has now identified high-priority projects in these markets in the project portfolio for the coming years. It is not yet known whether the US Administration s positive views on fossil-based electricity generation will have any effect on the development of renewable generation in the US. However, the growth potential is still considered high due to robust targets for wind power development at both federal and state level, and longterm federal tax policy that is driving wind power. Onshore wind power is one of the cheapest methods for adding new generation capacity. The cost associated with establishing new wind power is already lower than the cost of establishing new nuclear power, and Eolus aims to continue pushing down the price per MWh generated. Efficiency enhancements throughout the value chain of a wind power project s lifespan are crucial in order to meet investors yield requirements. By significantly reducing the costs of wind power establishment, the realization of projects with profitability for end-investors can also continue in times with low overall price levels for electricity and electricity certificates. Eolus s extensive experience in the construction of wind power facilities, combined with a full range of asset management services, will safeguard the company s continued ability to offer attractive investment objects to various types of investors, but primarily to customer groups that invest in major generation facilities. Eolus s strategic focus will concentrate on the development, establishment and divestment of a number of high-priority projects in coming years, i.e. those with the best conditions to be realized at the lowest cost per megawatt-hour. With fewer but larger established wind farms, quarterly fluctuations will be greater in relation to wind turbines constructed, tied-up capital and sales and earnings. To highlight information about the status of these high-priority projects, they will be given a separate heading in Eolus s interim reports from now on. The same information will be presented on Eolus s website. The website will be updated quarterly following the publication of interim reports, or due to other significant project events announced via press release. SHAREHOLDERS On August 31, 2017, Eolus had 6,365 shareholders according to the register maintained by Euroclear Sweden AB. Shareholders with a direct and indirect shareholding who represent more than 10% of the votes are Domneåns Kraftaktiebolag and Hans-Göran Stennert. The largest shareholders of Eolus shares are presented on page 29. The number of shares held by individuals with an insider position are presented on Eolus s website: SHARES On August 31, 2017, the share capital in Eolus Vind AB amounted to SEK 24,907,000, distributed between 1,285,625 Class A shares and 23,621,375 Class B shares. Class A shares carry one voting right, while Class B shares correspond to one-tenth (1/10) of a voting right. All shares carry equal rights to the company s assets, profit and dividends. CORPORATE GOVERNANCE For information about the company s governance during the year, refer to the Corporate Governance Report on pages DIVIDEND POLICY The Board has adopted a dividend policy entailing that dividends issued by Eolus in the long term will be determined by the company s earnings and correspond to 20-50% of the company s profit. However, dividends will be adapted to the company s investment requirements and financial position. For the 2015/2016 fiscal year, the Annual General Meeting on January 28, 2017 resolved to pay dividends corresponding to SEK 1.50 (1.50) per share. Payment of the dividend took place on February 3, PROPOSED DISTRIBUTION OF PROFIT The Board of Directors proposes a dividend of SEK 1.50 (1.50) per share for the 2016/2017 fiscal year in line with the company s dividend policy. The proposed record date for the dividends is Tuesday, January 30, Payment of the dividend is expected to take place on Friday, February 2, The Board of Directors deems that the proposal is consistent with the prudence rule in Chapter 17, Section 3 of the Swedish Companies Act, as follows: The following profits are at the disposal of the Annual General Meeting (amounts in SEK): Share premium reserve 168,662,573 Retained earnings 193,423,282 Net profit for the year 137,710,058 Total 499,795,913 The Board of Directors proposes that the profits be appropriated as follows: dividend to the shareholders 37,360,500 to be carried forward 462,435,413 Total 499,795,913 Statement: The proposed dividend is considered justifiable in view of the earnings trend after the end of the fiscal year. The proposed distribution of profit is also considered justifiable in view of the requirements concerning equity, consolidation requirements, liquidity and financial position in general for both the Parent Company and the Group. 36 ANNUAL REPORT EOLUS VIND AB 2016/2017

37 CORPORATE GOVERNANCE REPORT CORPORATE GOVERNANCE REPORT CORPORATE GOVERNANCE REPORT FOR EOLUS VIND AB (PUBL) Eolus Vind AB is a Swedish public limited liability company that has been listed on Nasdaq Stockholm since February 2, Eolus is governed through General Meetings, the Board of Directors, the CEO and Group management in accordance with the Swedish Companies Act, the Articles of Association and the rules of procedure for the Board of Directors and CEO. Representatives from the Eolus Group s management are also members of its subsidiaries boards. With Nasdaq Stockholm, Eolus has committed to apply the Swedish Corporate Governance Code (the Code ), which is to be applied by all Swedish limited liability companies whose shares are traded on a regulated market in Sweden. ARTICLES OF ASSOCIATION The current Articles of Association were adopted at the Annual General Meeting on January 28, It states that the Board s registered office is to be in Hässleholm, Sweden, that the Board s members be elected every year by the Annual General Meeting for a period up to the next Annual General Meeting, and that one Class A share entitles the holder to one vote while one Class B share entitles one-tenth of a vote. The complete Articles of Association are available on Eolus s website, GENERAL MEETINGS The shareholders exercise their decision-making rights regarding central issues at the General Meeting. The Meeting resolves on adoption of the income statement and balance sheet, appropriation of the company s profit or loss, discharge of liability for Board members and CEO, election of the Board of Directors and auditors, and remuneration of the Board of Directors and auditors. Notice convening the Annual General Meeting for Eolus must be issued not earlier than six weeks and not later than four weeks prior to the Meeting. The notice is to be advertised in Post- och Inrikes Tidningar and on Eolus s website. The fact that notification has been issued is announced in Swedish daily Dagens Industri. Shareholders who wish to participate in the Annual General Meeting are to notify the company by no later than the date stipulated in the notice Annual General Meeting Eolus s 2017 Annual General Meeting was held in Hässelholm, Sweden, on Saturday, January 28. Some 92 shareholders, representing 33% of the votes, attended the meeting, personally or through proxy. General Counsel Karl Olsson was elected Chairman of the Meeting. In attendance at the Annual General Meeting were the Board members, CEO, Deputy CEO, CFO and the company s auditor. The minutes of the Meeting are available in Swedish on Eolus s website, All resolutions were made in accordance with the proposals from the Nomination Committee and the Board of Directors. A few of the resolutions made by the Meeting include: Dividend of SEK 1.50 per share for the 2015/2016 fiscal year. The Board of Directors is to comprise six members, but no deputy members. Re-election of Board members Hans-Göran Stennert, Fredrik Daveby, Sigrun Hjelmquist and Hans Johansson. Hans Linnarsson and Bodil Rosvall Jönsson were elected as new members of the Board. Re-election of Hans-Göran Stennert as Board Chairman. Re-election of PricewaterhouseCoopers AB as the company s auditors with Eva Carlsvi as Auditor in Charge. Fees to the Board Chairman, Board members and auditor. Rules for the appointment and work of the Nomination Committee. Amendment of the Articles of Association to allow the company to conduct operations including renewable energy and facilities for energy storage. Annual General Meeting 2018 The next Annual General Meeting for Eolus s shareholders will be held at Hässleholms Kulturhus on Saturday, January 27, 2018 at 3:00 p.m. More details about the Annual General Meeting, registration, etc. are available on page 87. NOMINATION COMMITTEE The Nomination Committee nominates the people who are proposed for election to Eolus s Board of Directors at the Annual General Meeting. It also presents proposals for auditors fees, Board fees to the Chairman and other Board members, and remuneration for committee work. All the proposals are presented at the Annual General Meeting, in the notice and on the website ahead of the Annual General Meeting. The Nomination Committee comprises the Board Chairman and representatives for Eolus s three largest shareholders in terms of the number of votes on May 31. Hans-Göran Stennert, Board Chairman, presented the composition of the Nomination Committee on July 11, The Nomination Committee comprises the following members: Name Represents Holding on May 31, 2017 Hans-Göran Stennert In his capacity as Chairman of the Board Ingvar Svantesson Domneåns Kraftaktiebolag 15.3% Hans Gydell (Chairman) Hans-Göran Stennert 11.8% Hans Johansson Åke Johansson 6.4% The Nomination Committee held its first meeting on September 7, The Nomination Committee has held two minuted meetings ahead of the 2018 Annual General Meeting. The work of the Nomination Committee begins with the members reviewing the evaluation of the Board carried out during the year. The Nomination Committee agreed unanimously that the current composition is satisfactory. Two new members were elected at the previous Annual General Meeting, and the Board s teamwork can therefore benefit from continuity among members during the forthcoming term of office. The number of Board members is considered appropriate and the expertise possessed by the Board is both complementary and relevant. The composition of the Board is also considered satisfactory in terms of equality. THE BOARD OF DIRECTORS AND ITS WORK Eolus s Board of Directors decides on the company s business orientation, strategy, business plan, resources and capital structure, organization, acquisitions, major investments and divestments, annual reports and interim reports, as well as other comprehensive matters of a strategic nature. The Board also appoints the CEO who is in charge of the day-to-day management in accordance with the Board s instructions. Board members Board members are elected every year by the Annual General Meeting for the period up until the next Annual General Meeting. According to the Articles of Association, the Board is to comprise no fewer than four and no more than ten regular members and no more than six deputy members. The Board comprised six members as of the Annual General Meeting on January 28, For a presentation of the Board Chairman and Board members, see pages Eolus s CEO is not a member of the Board but participates, as does the Deputy CEO, CFO and General Counsel, as a rule at the Board meetings as rapporteurs. The work of the Board At the first regular Board meeting following the Annual General Meeting, Eolus s Board adopts written instructions that describe the Board s rules of procedure. The adopted rules of procedure stipulate the division of duties among the Board s members and how often the Board will convene. Furthermore, the rules of procedure regulate the Board s duties, quorum, instructions for the CEO, the division of responsibilities between the Board and the CEO, ANNUAL REPORT EOLUS VIND AB 2016/

38 CORPORATE GOVERNANCE REPORT and more. The Board has also internally established a Remuneration Committee comprising three members of the Board and an Audit Committee comprising the entire Board. The Board convenes according to a one-year plan proposed in advance and more meetings are arranged as needed. The Board had ten minuted Board meetings during the 2016/2017 fiscal year. Items on the agenda for 2016/2017 included: Annual accounts including the auditors report, the proposed distribution of profit and the year-end report. Annual report and preparations ahead of the Annual General Meeting. Follow-up with the auditor in charge regarding the year s audit. Interim reports. Rules of procedure for the Board and CEO. Annual review of policies. Budget. Strategic issues and risks. Ongoing forecasts. Outline plans (prioritized projects for the next three years). Liquidity planing with respect to future prioritized projects. Economic climate and conditions. In addition to the Board meetings, the Board Chairman and the CEO have an ongoing dialog regarding the management of the company. The CEO, Per Witalisson, is in charge of implementation of the business plan, the dayto-day management of the company s affairs and the daily operations of the company. Before Board meetings, the Board receives written information in the form of a CEO report that contains a follow-up of the company s sales, operational results, liquidity forecasts, interest rate and currency hedging, details concerning order backlog, the number of wind turbines under construction as well as comments concerning the various market trends. Prior to the Board meetings, the Board will also have access to the balance statements and cash-flow statements. The Board Chairman presents to the Board the results of the annual evaluation of the Board s work. The evaluation includes the composition of the Board, the individual Board members and the Board s work and procedures. The Code contains rules concerning the Board members independence and stipulates that the majority of the Board members are to be independent in relation to the company and company management. At least two of the Board members who are independent in relation to the company and company management must also be independent in relation to all shareholders who control ten percent or more of the shares or the votes in Eolus Vind AB. No more than one person from company management may be a member of the Board. BOARD ATTENDANCE IN 2016/2017 Function Independent 1 Board meeting Remuneration Committee Hans-Göran Stennert Chairman 2) 10 of 10 2 of 2 Fredrik Daveby Board member X 10 of 10 2 of 2 Sigrun Hjelmquist Board member X 10 of 10 2 of 2 Jan Bengtsson* Board member X 4 of 10 Hans Johansson Board member X 10 of 10 Hans Linnarson** Board member X 5 of 10 Bodil Rosvall Jönsson** Board member X 6 of 10 * Resigned from the Board at the Annual General Meeting on January 28, ** Was elected to the Board at the Annual General Meeting on January 28, ) According to the definition in the Swedish Corporate Governance Code. 2) Not independent (in relation to Eolus s major shareholders). REMUNERATION COMMITTEE The Remuneration Committee comprises Hans-Göran Stennert, Sigrun Hjelmquist and Fredrik Daveby. Hans-Göran Stennert is the Committee s Chairman. The duties of the Remuneration Committee include: to prepare and on behalf of the Board make decisions on matters regarding remuneration policy, remuneration and other terms of employment for senior management including submitting proposals to the Annual General Meeting on behalf of the Board on the guidelines for remuneration of senior executives that the Annual General Meeting is to resolve on, monitor and evaluate any ongoing and during-the-year adopted programs for variable remuneration to company management, monitor and evaluate the application of the guidelines for remuneration of senior executives decided by the Annual General Meeting as well as relevant remuneration structures and levels in the company, ensure that the company s auditor submits a written statement to the Board no later than three weeks before the Annual General Meeting regarding whether the guidelines for remuneration of senior executives valid since the previous Annual General Meeting have been followed, and carry out the other duties that are assigned the Remuneration Committee in the Swedish Corporate Governance Code and other applicable rules and regulations for the company. The Remuneration Committee held two minuted meetings during 2016/2017 at which all members were in attendance. AUDIT COMMITTEE The company has decided that the Board in its entirety will carry out the committee s duties. The duties that the Board will carry out in this function include: monitoring the company s financial statements, monitoring the effectiveness of the company s internal control and risk management in relation to financial reporting and provide recommendations and proposals to ensure the reliability of financial reporting, annually evaluating the need for an internal audit function that is the responsibility of the Board, remaining informed about the audit of the annual report and consolidated accounts, and assessing how the audit contributed to the reliability of financial reporting. regularly meeting the company s auditor for updates concerning the scope and methodology of the audit and to discuss the approach to the company s risks, determine guidelines for non-auditing services that the company may request from the company s auditor, review and monitor the auditor s impartiality and independence, assist the Nomination Committee in preparing proposals for the General Meeting s decisions regarding auditors and fees for the audit assignment, execute the other duties of the Audit Committee required by law, the Swedish Corporate Governance Code, and other relevant rules and regulations for the company. CHIEF EXECUTIVE OFFICER (CEO) The CEO of Eolus is Per Witalisson (born 1971), Master of Business Administration. The Board has adopted instructions for the work and role of the CEO. The CEO is responsible for the day-to-day management of the Group s business in accordance with the Board s guidelines. For a presentation of the CEO, refer to page 30. For remuneration of the CEO, refer to Note 6. GROUP MANAGEMENT Per Witalisson leads the work of Group management and makes decisions in consultation with other members of management. Group management consists of four people, in addition to the CEO, Deputy CEO, CFO and General Counsel. During the 2016/2017 fiscal year, management convened on 17 occasions in Hässleholm or Malmö in Sweden. The year s meetings were dominated by continuous reconciliation of the rolling business plan, strategy issues and action plans. Standing items on the agenda are minutes from the previous meeting, reports from the operational team, finances, project development, establishment, sales and marketing, operation, foreign operations, personnel, occupational health and safety and legal issues. 38 ANNUAL REPORT EOLUS VIND AB 2016/2017

39 CORPORATE GOVERNANCE REPORT AUDIT At the Annual General Meeting on January 28, 2017, Pricewaterhouse- Coopers AB (PwC) was re-elected with Eva Carlsvi as Auditor in Charge. The auditors review the annual accounts and the annual report as well as the company s ongoing operations and procedures in order to express an opinion on the accounts and the administration of the Board of Directors and the CEO. The annual accounts and the annual report are audited in October and November. An examination is then made of whether the Annual General Meeting s guidelines for the remuneration of senior executives have been followed. An interim review is performed in May, and Eolus s second-quarter report is reviewed in April. In addition to Eolus, Eva Carlsvi is also Auditor in Charge for Duni (publ), BE Group AB (publ), E.ON Nordic Aktiebolag and KappAhl AB (publ). Eva Carlsvi is an authorized public accountant and member of FAR. In 2016/2017, fees paid to PwC for non-audit assignments totaled SEK 0.6 M (0.5). REMUNERATION Remuneration of the Board Fees and other remuneration of the Board, including the Chairman of Eolus s Board, are determined by the Annual General Meeting. The Annual General Meeting on January 28, 2017 resolved on total annual fees of SEK 1,100,000, of which SEK 350,000 would be paid to the Chairman and SEK 150,000 to each of the other Board members. For more information about remuneration of the Board, refer to Note 6. Remuneration of senior executives Remuneration of the CEO and other members of Group Management (currently the Deputy CEO, CFO and General Counsel) is paid in accordance with the guidelines for the remuneration of senior executives. The guidelines were adopted by the Annual General Meeting on January 28, 2017, for the period until the next Annual General Meeting. According to the guidelines, senior executives shall be offered market-based and competitive remuneration. The level of remuneration for individual senior executives shall be based on such factors as position, expertise, experience and performance. Remuneration includes fixed salary and pension benefits, and may also include variable salary and other non-monetary benefits. The company shall able to offer all senior executives maximum variable remuneration of one monthly salary per year. Variable salary shall be based on the achievement of one or more quantitative and/or qualitative targets. The targets shall be formulated with the objective of promoting the company s long-term value creation. Furthermore, the company shall also be able to offer senior executives a share ownership program under which the company, three years after payment of variable remuneration, will reimburse the cost of acquiring half as many shares as the executive acquired for their variable remuneration and continues to hold. For more information about remuneration of senior executives, refer to Note 6. Remuneration of auditors Fees for the audit assignment are paid against invoice and amounted to SEK 0.5 M for the 2016/2017 fiscal year. For the 2016/2017 fiscal year, fees paid to PwC for non-audit assignments totaled SEK 0.5 M. For more information about the remuneration of auditors, refer to Note 7. THE BOARD S DESCRIPTION OF INTERNAL CONTROL OVER FINANCIAL REPORTING FOR THE 2016/2017 FISCAL YEAR The Board s responsibility for internal control is governed by the Swedish Companies Act and Swedish Corporate Governance Code. This includes monitoring Eolus s financial reporting and the effectiveness of the company s internal control and risk assessment. Internal control over financial reporting aims to provide reasonable assurance of the reliability of the external financial reporting in the form of annual reports and interim reports published by Eolus every year, and that financial reporting is prepared in accordance with the law, applicable accounting standards and other requirements for listed companies. Internal control is also aimed at ensuring high-quality financial reporting to company management and the Board so that decisions can be made on correct grounds. To describe internal control over financial reporting, Eolus proceeds from the five components of internal control defined in the COSO Internal Control-Integrated Framework Control Environment, Risk Assessment, Control Activities, Information and Communication, and Monitoring Activities. The description below therefore relates to Eolus s internal control system in relation to the 1992 edition of the COSO Framework. Control environment The Board s rules of procedure and the Board s instructions for the duties of the CEO and the Board s Committees clearly define the division of responsibility and powers in order to ensure effective management of risks in the business operations. In its role as Audit Committee, the Board of Eolus reviews the instructions and procedures used in the financial reporting process as well as accounting policies and any amendments of these. The CEO reports to the Board of Directors, according to established procedures, on the operations and financial performance prior to every Board meeting. Internal control instruments for financial reporting mainly comprise the finance and risk policy, information policy and the Group s accounting manual, which defines the accounting and reporting rules. Risk assessment and control structure Significant risks for the operations are analyzed by the Board of Directors as part of financial reporting. The risk areas are documented on the basis of probability and their probable impact. Based on this, control processes are designed to ensure high-quality financial reporting. The organizational structure, and the division of responsibility and rules of authorization, are clearly described and communicated through instructions. The operations are organized into segments that are monitored. Information and communication An accounting manual with guidelines and instructions for financial reporting has been produced. The accounting manual is continuously updated and issued to the relevant employees at Eolus. Prior to all quarterly financial statements and the annual accounts, specific written instructions are also provided to ensure accurate information in the external reporting. External communication is governed by Eolus s information policy and communication plan, which address responsibilities, procedures and rules. The policy is continuously evaluated to ensure that information to the stock market maintains high quality and is in accordance with the stock exchange s rules. Financial information such as quarterly reports, annual reports and significant events are published through press releases, and on Eolus s website. Meetings with financial analysts are arranged regularly in conjunction with the publication of quarterly reports. Monitoring Group management continuously analyzes the financial performance of the Group s segments. At all levels of the organization, continuous monitoring is generally performed through comparisons against budget, forecasts and plans, as well as evaluation of key figures. Prior to Board meetings, the Board receives financial reporting on Eolus s performance. In addition to formal reporting, there are informal information channels to the CEO and the Board for significant information from employees. The Board continuously evaluates the information provided by the CEO. This involves ensuring that measures are taken in regard to any shortcomings and proposed measures that have arisen during the internal control and external audit. The Board and the auditor engage in regular dialog. All members of the Board and the auditor receive a copy of interim reports before they are published. The Board and the auditor meet at least once per year, without the presence of management. Opinions on internal audits To date, the Board has not found any reason to establish an internal audit function, as the above functions are considered to fulfil this role. However, the Board annually evaluates the need for such a function. ANNUAL REPORT EOLUS VIND AB 2016/

40 CONSOLIDATED STATEMENT OF INCOME CONSOLIDATED STATEMENT OF INCOME KSEK Note 2016/ /2016 Net sales 3 1,065, ,446 Other operating income 8 17,379 2,215 Total operating income 1,083, ,661 Change in inventories of wind turbines, wind turbines under construction and projects under development -183,858 73,558 Cost of goods and project development -739, ,186 Other external expenses ,382-43,615 Employee benefits expenses ,650-28,175 Depreciation and impairment of property, plant and equipment 12-23,423-26,719 Profit/loss from participations in associated companies 17-2,570-1,309 Other operating expenses 8-8,904-4,165 Total operating expenses -1,042, ,610 Operating profit/loss 40,233-15,949 Interest income 9 2, Interest expense 9-7,464-11,239 Other financial items ,206 Loss from financial items -6,009-13,108 Profit/loss before tax 34,224-29,057 Tax 11-9,720 5,139 Net profit/loss for the year 24,504-23,918 Attributable to Parent Company shareholders 25,317-22,925 Attributable to non-controlling interests Total 24,504-23,918 Earnings per share, before and after dilution ANNUAL REPORT EOLUS VIND AB 2016/2017

41 CONSOLIDATED STATEMENT OF OTHER COMPREHENSIVE INCOME CONSOLIDATED STATEMENT OF OTHER COMPREHENSIVE INCOME KSEK Note 2016/ /2016 Net profit/loss for the year 24,504-23,918 Other comprehensive income Other comprehensive income not to be reclassified to profit or loss in subsequent periods - - Other comprehensive income to be reclassified to profit or loss in subsequent periods - - Exchange differences on translation of foreign operations Total other comprehensive income Comprehensive income for the year 24,677-23,921 Attributable to Parent Company shareholders 25,729-22,928 Attributable to non-controlling interests -1, Total 24,677-23,921 ANNUAL REPORT EOLUS VIND AB 2016/

42 CONSOLIDATED STATEMENT OF FINANCIAL POSITION CONSOLIDATED STATEMENT OF FINANCIAL POSITION KSEK Note Aug 31, 2017 Aug 31, 2016 ASSETS Non-current assets Property, plant and equipment , ,323 Participation in associated companies 17 3,763 8,076 Deferred tax assets 11 2, Other financial assets 24 30,517 24,356 Total non-current assets 147, ,795 Current assets Inventories of wind turbines, wind turbines under construction and projects under development , ,301 Advance payments to suppliers 128, ,597 Accounts receivable 19, 24 25,686 28,793 Derivative instruments 24-4,130 Current tax assets - 19,095 Other current receivables 19, 24 44,493 29,131 Prepaid expenses and accrued income 20, 24 7,840 8,225 Cash and cash equivalents , ,549 Total current assets 752, ,821 TOTAL ASSETS 900,764 1,269, ANNUAL REPORT EOLUS VIND AB 2016/2017

43 CONSOLIDATED STATEMENT OF FINANCIAL POSITION KSEK Note Aug 31, 2017 Aug 31, 2016 EQUITY AND LIABILITIES Equity Share capital 21 24,907 24,907 Additional paid-in capital 190, ,843 Reserves Retained earnings 441, ,315 Equity attributable to Eolus s shareholders 657, ,026 Non-controlling interests 1, Total equity 659, ,166 Non-current liabilities Non-current interest-bearing liabilities to credit institutions 22, 24 12,740 50,216 Non-current provisions 23 3,789 7,599 Deferred tax liabilities 11 57,291 77,765 Other non-current liabilities Total non-current liabilities 74, ,434 Current liabilities Current interest-bearing liabilities to credit institutions 22, 24 21,169 31,558 Accounts payable 24 28, ,998 Derivative instruments 24 15,097 38,753 Current tax liabilities 15, Accrued expenses and deferred income 20, 24 32,483 15,678 Advance payments from customers 51, ,831 Other current liabilities 24 2,714 28,122 Total current liabilities 166, ,017 TOTAL EQUITY AND LIABILITIES 900,764 1,269,616 ANNUAL REPORT EOLUS VIND AB 2016/

44 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY CONSOLIDATED STATEMENT OF CHANGES IN EQUITY KSEK Note 21 Share capital Additional paid-in capital Reserves Retained earnings Total, Eolus s shareholders Noncontrolling interests Total equity At September 1, , , , , ,166 Net profit/loss for the year 25,317 25, ,504 Other comprehensive income Total comprehensive income ,317 25,729-1,053 24,677 Transactions with shareholders Acquisition of shares from non-controlling interests Non-controlling interests arising on acquisition of subsidiaries - 2,641 2,641 Change in shares of equity in associated companies -1,610-1, ,610 Dividends -37,361-37,361-37,361 At August 31, , , , ,791 1, ,510 KSEK Note 21 Share capital Additional paid-in capital Reserves Retained earnings Total, Eolus s shareholders Noncontrolling interests Total equity At September 1, , , , , ,364 Net profit/loss for the year -22,925-22, ,918 Other comprehensive income Total comprehensive income -3-22,925-22, ,921 Transactions with shareholders Capital contribution from non-controlling interests 1,082 1,082 Dividends -37,361-37,361-37,361 At August 31, , , , , , ANNUAL REPORT EOLUS VIND AB 2016/2017

45 CONSOLIDATED CASH-FLOW STATEMENT CONSOLIDATED CASH-FLOW STATEMENT KSEK Note 2016/ /2016 Operating activities Operating profit/loss 40,233-15,949 Non-cash items 25 23,715 28,337 63,948 12,388 Interest received 730 1,081 Interest paid -8,632-11,650 Income tax paid -1,175-6,814 Net cash flow from operating activities before changes in working capital 54,871-4,996 Adjustments of working capital Decrease/increase in inventories of wind turbines, wind turbines under construction, projects under development and advance payments to suppliers 335,260-56,690 Increase/decrease in operating receivables -22,429 10,423 Decrease/increase in operating liabilities -276, ,453 Cash flow from operating activities 90, ,190 Cash flow from investing activities Acquisition of participations in subsidiaries/asset acquisitions -4, Acquisition of property, plant and equipment 12-6,698-2,503 Sale of property, plant and equipment ,836 Acquisition of financial assets ,152 Sale of financial assets Cash flow from investing activities -9,718-10,395 Cash flow from financing activities Repayment of loans 22-47, ,141 Redemption derivative instruments -15,810 - Capital contribution Dividends -37,361-37,360 Cash flow from financing activities -101, ,754 Cash flow for the year -19,784-19,959 Cash and cash equivalents at beginning of year 221, ,522 Exchange-rate differences in cash and cash equivalents Cash and cash equivalents at year-end 201, ,549 ANNUAL REPORT EOLUS VIND AB 2016/

46 PARENT COMPANY INCOME STATEMENT PARENT COMPANY INCOME STATEMENT KSEK Note 2016/ /2016 Net sales 4 910, ,873 Change in inventories of wind turbines, wind turbines under construction and projects under development -155,556 90,291 Other operating income 8 16,974 1,170 Total operating income 771, ,334 Cost of goods and project development -624, ,480 Other external expenses ,439-21,980 Personnel costs 5, 6-30,112-27,671 Depreciation and impairment of property, plant and equipment 12-4,673-5,174 Other operating expenses 8-10,294-2,840 Total operating expenses -702, ,145 Operating profit/loss 68,865 3,189 Profit from participations in Group companies 15 21,109 23,311 Interest income Interest expense 9-1,586-1,530 Other financial items 9-6,298 1,319 Loss from financial items 13,695 23,474 Profit after financial items 82,560 26,663 Appropriations 10 89,547 26,392 Profit before tax 172,107 53,055 Tax on profit for the year 11-34,396-6,649 Net profit for the year 137,711 46, ANNUAL REPORT EOLUS VIND AB 2016/2017

47 PARENT COMPANY STATEMENT OF OTHER COMPREHENSIVE INCOME PARENT COMPANY STATEMENT OF OTHER COMPREHENSIVE INCOME KSEK Note 2016/ /2016 Net profit for the year 137,711 46,406 Other comprehensive income Other comprehensive income not to be reclassified to profit or loss in subsequent periods - - Other comprehensive income to be reclassified to profit or loss in subsequent periods - - Total other comprehensive income - - Comprehensive income for the year 137,711 46,406 ANNUAL REPORT EOLUS VIND AB 2016/

48 PARENT COMPANY BALANCE SHEET PARENT COMPANY BALANCE SHEET KSEK Note Aug 31, 2017 Aug 31, 2016 ASSETS Property, plant and equipment Land and buildings Wind turbines 12 35,477 66,702 Equipment 12 3,027 2,540 Constructions in progress 12 4, ,524 69,463 Financial assets Participations in Group companies , ,831 Participations in associated companies 17 3,725 8,700 Other securities held as non-current assets 14 1,242 1,567 Deferred tax assets Other non-current receivables 5, , ,029 Total non-current assets 191, ,492 Inventories, etc. Inventories of wind turbines 9,325 11,995 Wind turbines under construction and projects under development 173, ,595 Advance payments to suppliers 125, , , ,341 Current receivables Accounts receivable 23,760 27,480 Receivables from Group companies 161,712 95,590 Current tax assets - 25,353 Other current receivables 18,723 6,190 Prepaid expenses and accrued income 20 4,530 2, , ,425 Cash and cash equivalents 181, ,469 Total current assets 698, ,235 TOTAL ASSETS 890,371 1,176, ANNUAL REPORT EOLUS VIND AB 2016/2017

49 PARENT COMPANY BALANCE SHEET KSEK Note Aug 31, 2017 Aug 31, 2016 EQUITY AND LIABILITIES Restricted equity 21 Share capital 24,907 24,907 Statutory reserve 22,259 22,259 47,166 47,166 Non-restricted equity Share premium reserve 168, ,663 Retained earnings 193, ,378 Net profit for the year 137,711 46, , ,447 Total equity 546, ,613 Untaxed reserves , ,958 Provisions 23 1,449 2,353 Current liabilities Advance payments from customers 51, ,831 Accounts payable 26, ,490 Liabilities to Group companies 64, ,218 Current tax liabilities 23,693 - Other liabilities 2,454 28,512 Accrued expenses and deferred income 20 31,192 12,752 Total current liabilities 199, ,803 TOTAL EQUITY AND LIABILITIES 890,371 1,176,727 ANNUAL REPORT EOLUS VIND AB 2016/

50 PARENT COMPANY STATEMENT OF CHANGES IN EQUITY PARENT COMPANY STATEMENT OF CHANGES IN EQUITY KSEK Note 21 Share capital Additional paid-in capital Reserves Retained earnings Total equity At September 1, ,907 22, , , ,613 Net profit for the year 137, ,711 Total comprehensive income 137, ,711 Transactions with shareholders Dividends -37,361-37,361 At August 31, ,907 22, , , ,963 KSEK Note 21 Share capital Statutory reserve Share premium reserve Retained earnings Total equity At September 1, ,907 22, , , ,566 Net profit for the year 46,406 46,406 Total comprehensive income 46,406 46,406 Transactions with shareholders Exchange differences on translation of foreign operations Dividends -37,361-37,361 At August 31, ,907 22, , , , ANNUAL REPORT EOLUS VIND AB 2016/2017

51 PARENT COMPANY CASH-FLOW STATEMENT PARENT COMPANY CASH-FLOW STATEMENT KSEK Note 2016/ /2016 Operating activities Operating profit/loss 68,865 3,189 Non-cash items 25 9,860 6,085 78,725 9,274 Interest received Interest paid -3,292-1,601 Income tax paid 14,736-6,303 Net cash flow from operating activities before changes in working capital 90,654 1,810 Adjustments of working capital Decrease/increase in inventories of wind turbines, wind turbines under construction, projects under development and advance payments to suppliers 230, ,677 Increase in operating receivables -81,668-18,201 Decrease/increase in operating liabilities -276, ,000 Cash flow from operating activities -36,611 68,932 Cash flow from investing activities Shareholders contributions Acquisition of participations in subsidiaries Divestment of participations in subsidiaries Acquisition of property, plant and equipment 12-6,034-2,073 Sale of property, plant and equipment 12 26,162 13,620 Acquisition of financial assets Cash flow from investing activities 20,633 11,149 Cash flow from financing activities Repayment of loans ,850 Group contributions received/paid 23,255-50,916 Dividends -37,362-37,362 Cash flow from financing activities -14,106-99,128 Cash flow for the year -30,084-19,047 Cash and cash equivalents at beginning of year 211, ,516 Cash and cash equivalents at year-end 181, ,469 ANNUAL REPORT EOLUS VIND AB 2016/

52 NOTES NOTES NOTE 1 GENERAL INFORMATION AND SIGNIFICANT ACCOUNTING POLICIES The Parent Company, Eolus Vind AB, Corporate Registration Number , is a limited liability company registered and headquartered in Sweden. The Group s main operations comprise the development and construction of wind turbines for divestment or proprietary management. The address of the head office is Tredje Avenyen 3, Hässleholm, Sweden, under the postal address Box 95, SE Hässleholm, Sweden. The company is listed on Nasdaq Stockholm. The Board of Directors approved these consolidated financial statements and the financial statements for the Parent Company on December 4, 2017 and they will be presented for adoption at the Annual General Meeting on January 27, The most important accounting policies applied to the preparation of these consolidated financial statements are stated below. These policies were applied consistently for all years presented, unless otherwise stated. REGULATIONS APPLIED TO THE CONSOLIDATED FINANCIAL STATEMENTS The consolidated financial statements were prepared in accordance with International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB) as adopted by the EU. Furthermore, the Swedish Annual Accounts Act and recommendation RFR 1 Supplementary Accounting Rules for Groups were applied. BASIS FOR THE PREPARATION OF THE CONSOLIDATED FINANCIAL STATEMENTS The consolidated financial statements are based on historical cost, unless otherwise stated. The Group s presentation currency is SEK, which is the Parent Company s functional currency. All figures are presented in thousands of SEK (KSEK), unless otherwise stated. INTRODUCTION OF NEW ACCOUNTING POLICIES The Group has decided to comment only on standards and interpretations that are deemed to be, or may in the future be, relevant to the Group and its operations. The standards, interpretations and amendments that are to be applied on or after the 2017/2018 fiscal year are currently being evaluated. Other than that which is stated below, the initial assessment is that they will not have any significant impact on the consolidated financial statements. IFRS 9 FINANCIAL INSTRUMENTS: RECOGNITION AND MEASUREMENT IFRS 9 is mandatory for fiscal years beginning on or after January 1, The standard includes a reduction in the number of measurement categories for financial assets and entails that the two main classifications for recognition are amortized cost and fair value through profit or loss. An evaluation of the potential impact of implementing the standard is ongoing. IFRS 15 REVENUE FROM CONTRACTS WITH CUSTOMERS IFRS 15 is the new standard on revenue recognition. IFRS 15 replaces IAS 18 Revenue and IAS 11 Construction Contracts. IFRS 15 is based on the principle that revenue is recognized when control of the sold good or service is passed to the customer a principle that replaces the previous principle that revenue is recognized when the risks and rewards are transferred to the buyer. A company can choose between full retrospective or prospective application with additional disclosures. The standard is to be applied to fiscal years beginning on or after January 1, The Group will apply IFRS 15 from September 1, The Group has not yet evaluated the effects of implementing the standard. The Group will perform a detailed evaluation during the coming fiscal year. IFRS 16 LEASES IFRS 16 was issued on January 13, 2016 and replaced IAS 17 Leases. IFRS 16 introduces a right-of-use model entailing that the lessee is to recognize essentially all leases in the balance sheet, meaning that leases no longer need to be classified as either operating or finance leases. The exceptions are leases with a term of 12 months or less and leases of low value. Depreciation of the asset and interest expense on the liability are to be recognized in profit or loss. An evaluation of the potential impact of implementing the standard is ongoing. CONSOLIDATION BASIS The consolidated financial statements encompass the Parent Company and its subsidiaries. The financial statements for the Parent Company and subsidiaries included in the consolidated financial statements pertain to the same period and have been prepared in accordance with the same accounting policies as for the Group. Subsidiaries Subsidiaries are defined as all companies over which the Group exercises a controlling influence. The Group controls a company when the Group is exposed to, or has rights to, variable returns from its holding in the company and has the ability to impact those returns through exercising its influence over the company. Subsidiaries are included in the consolidated financial statements from the acquisition date, meaning the date on which the Group gains a controlling influence, and are included in the consolidated financial statements until the date on which the controlling influence ceases. Business combinations are recognized in accordance with the acquisition method. The purchase consideration comprises the fair value of acquired assets, liabilities and issued shares. The purchase consideration also includes the fair value of all assets and liabilities that are part of any contracted, contingent purchase considerations. Acquisition-related costs are expensed when they arise and are recognized as other expenses. Identifiable assets acquired and liabilities assumed are initially measured at fair value on the acquisition date. For each acquisition, the Group determines whether all non-controlling interests in the acquired company are measured at fair value or at the proportionate share of net assets of the acquired company. The amount by which the purchase consideration, any non-controlling interests and the fair value of previous shareholdings exceeds the fair value of the Group s share of identifiable assets acquired is recognized as goodwill. If the amount is less than the fair value of the acquired subsidiary s assets, the difference is recognized directly in the statement of comprehensive income. In accordance with common practice in the industry, wind power projects are often conducted in separate companies. This means that acquisitions and divestments of projects and completed wind turbines are conducted as share transactions. These transactions are classified as asset acquisitions since the main aim is to acquire wind power facilities and there are either no other operations or administration, or these are of minor importance. The assets that are acquired in this manner are measured at fair value in the consolidated financial statements, and no goodwill arises. Associated companies Associated companies are all companies over which the Group exercises a significant but not a controlling influence, which generally applies to shareholdings comprising between 20% and 50% of the votes. Holdings in associated companies are recognized in accordance with the equity method and are initially measured at cost and, thereafter, the carrying amount is increased or decreased to recognize the Group s share of the associated company s profit or loss after the acquisition date. The Group s carrying amounts for holdings in associated companies include goodwill identified on acquisition. 52 ANNUAL REPORT EOLUS VIND AB 2016/2017

53 NOTES Non-controlling interests Non-controlling interests are the portion of the earnings and net assets of a non-wholly owned subsidiary that accrue to other owners than Parent Company shareholders. Their share of earnings is included in net profit for the year in the consolidated income statement and the share of net assets is included in equity in the consolidated statement of financial position. Translation of accounts of foreign subsidiaries Items in the subsidiaries balance sheets are presented in their respective functional currencies, which is normally the same as the local currency in that specific country. The Group s financial statements are presented in SEK, which is the Parent Company s functional currency. The income statements and balance sheets of the foreign subsidiaries are translated to SEK. The balance sheets are translated at the closing day rate. The income statements are translated at the average exchange rate for the period. Exchange-rate differences arising on translation do not impact net profit for the year and instead are recognized in other comprehensive income in the consolidated financial statements. The following exchange rates were used in the translations: RECEIVABLES AND LIABILITIES IN FOREIGN CURRENCIES Receivables and liabilities in foreign currency are translated at the closing day rate, and unrealized exchange-rate gains and losses are included in profit or loss. EUR NOK USD Closing day rate, Aug 31, Average exchange rate for the period 2016/ Closing day rate, Aug 31, Average exchange rate for the period 2015/ RELATED-PARTY TRANSACTIONS Transactions with related parties take place are subject to market-based conditions. Related parties refer to the companies over which the Group exercises a controlling or significant influence in terms of operational and financial decision-making. The sphere of related parties also includes the companies and natural persons who have the opportunity to exercise a controlling or significant influence over the Group s financial and operational decisions. SEGMENT REPORTING Operating segments are recognized in a manner that corresponds to the internal reporting to the chief operating decision maker (CODM). The CODM is the function that is responsible for allocating resources and assessing the performance of the operating segments. For the Group, this function has been identified as the CEO. Eolus s operating segments are described in Note 3 and comprise: Project development involving pre-study, project development, establishment and sale of wind power facilities. This also includes technical and management consultancy services for wind power stakeholders. Electricity generation encompassing the operation of wholly or partly owned wind turbines, the sale of electric power and the divestment of electricity certificates allocated to producers of renewable electricity. Asset Management which pertains to full asset management services for external and internal wind power facilities. CASH-FLOW STATEMENT The cash-flow statement was prepared in accordance with the indirect method. The recognized cash flow only includes transactions entailing incoming and outgoing payments. Cash and cash equivalents are included in cash and bank balances, and current investments with insignificant value fluctuations and original due dates of less than three months. REVENUE Revenue is recognized to the extent that it is probable that the financial benefits will accrue to the Group and if revenue can be reliably measured. Revenue is measured at the fair value of what has been received or will be received, excluding value-added tax. Sales proceeds are recognized when the following criteria have been fulfilled: Sale of wind power facilities Revenue is recognized when the material risks and benefits associated with ownership of the facilities have been transferred to the purchaser and when the amount of revenue can be reliably measured. The projects comprise three phases: pre-study, project development and establishment. Following final commissioning, the establishment phase is concluded through the divestment of the wind power facility to the customer or by transferring it to our proprietary electricity generation operations where it is classified under inventories. Revenue from divestments is recognized in net sales. Since there are relatively few projects in the establishment phase at any one time, sales and earnings may vary considerably from quarter to quarter. The project development operations are mainly financed through equity, construction loans or advance payments from customers. Sale of electricity Revenue attributable to the sale of produced electricity is recognized in the period in which delivery is made. Revenue from the sale of electricity certificates on account with the Swedish Energy Agency is recognized in the period in which the sale took place. Electricity certificates are recognized in the balance sheet as intangible current assets when they are registered in the Swedish Energy Agency s account and recognized as accrued income when the certificates have been earned but not yet registered. Sale of administrative and technical management services Revenue from administrative and technical management services is recognized in the period in which the services were essentially carried out. Interest Interest income is recognized as financial income through application of the effective-interest method. Dividends Dividends are recognized in profit or loss when the shareholders rights to receive payment have been determined. PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment are recognized at cost less accumulated depreciation and any impairment. Expenses for improving the performance of the assets beyond the original level increase the carrying amount of the assets. Expenses for repairs and maintenance are recognized as costs in profit or loss. Property, plant and equipment are depreciated systematically over the estimated useful lives of the assets. The useful life is tested at the end of every accounting period and is adjusted as necessary. Any residual value of the asset is taken into account when determining the depreciable amount of the asset. The straight-line depreciation method is applied to all types of assets. The following depreciation periods are applied: Buildings and land improvements Wind turbines, foundations and electrical installations Equipment Number of years 20 years 20 years 5 years IMPAIRMENT OF NON-FINANCIAL ASSETS If there is an indication that an asset subject to depreciation has declined in value, the recoverable amount of the asset is calculated. The asset is impaired to its recoverable amount if the calculated recoverable amount is less than the carrying amount. The recoverable amount is the highest of the net realizable value and value in use in the operations. The recoverable amount is assessed by cash-generating unit, which is the same as the defined operating segments. ANNUAL REPORT EOLUS VIND AB 2016/

54 NOTES For wind power facilities recognized as non-current assets or inventories, impairment testing takes place at the end of every quarter by preparing calculations showing the remaining expected cash flows of each asset. The key parameters in preparing these calculations are the assumptions regarding future generation, remaining service lives, the market prices of electricity and electricity certificates, operating expenses and the discount rate. FINANCIAL ASSETS Classification The Group classifies its financial assets in the following categories. Available-for-sale financial assets. Financial assets measured at fair value through profit or loss. Loan receivables and accounts receivable measured at amortized cost in accordance with the effective interest method. Classification depends on the purpose for which the financial asset was acquired. The classification of financial assets is determined when they are first recognized. All purchases and sales of financial assets are recognized on the transaction date. Available-for-sale financial assets Available-for-sale financial assets are assets that are not derivatives and are either identified as available for sale or cannot be classified into any of the other categories. The Group s available-for-sale financial assets comprise securities. Financial assets measured at fair value through profit or loss Financial assets measured at fair value through profit or loss are financial assets held for trading. A financial asset is classified in this category if it was principally acquired for the purpose of being sold within the near future. Derivatives are always classified as held for trading. Assets in this category are classified as current assets if they are expected to be settled within 12 months, otherwise they are classified as non-current assets. The Group s assets in this category comprise currency futures and interest-rate derivatives. The Group does not apply hedge accounting. Gains and losses arising as a result of changes in fair value attributable to the category of financial assets measured at fair value through profit or loss are recognized in the periods in which they arise. Changes in the fair value of currency derivatives are recognized in profit or loss under other income/expenses. Loan receivables and accounts receivable Loan receivables and accounts receivable are non-derivative financial assets that have fixed or fixable payments that are not listed on an active market. Loan receivables and accounts receivable are initially measured at fair value and are subject to regular and systematic analysis to determine the amounts at which the receivables are expected to be received. If a loan receivable is deemed to be doubtful, a reserve is established comprising the difference between the carrying amount and the expected cash flow. Losses attributable to doubtful receivables are recognized in profit or loss under other operating expenses, refer to Note 8. Any interest income on loan receivables is included in financial income. The Group s accounts receivable, other current receivables, blocked bank balances and accrued interest income are included in this category. Recognition and measurement Purchases and sales of financial assets are recognized at the trade date, that is, the date on which the Group commits to purchase or sell the asset. Financial instruments are initially measured at fair value plus transaction costs, which applies to all financial assets not measured at fair value through profit or loss. Financial assets measured at fair value through profit or loss are initially measured at fair value, while attributable transaction costs are recognized in profit or loss. Financial assets are derecognized from the balance sheet when the right to receive cash flows from the instrument has expired or been transferred and the Group has assumed essentially all risks and benefits connected with the right of ownership. Financial assets measured at fair value through profit or loss are measured at fair value after the date of acquisition. Loan receivables and accounts receivable are initially recognized after the date of acquisition at amortized cost by applying the effective interest method. Dividend income from securities is recognized in profit or loss as a portion of financial income once the Group s right to receive payment has been established. Impairment principles for financial assets Loan receivables and accounts receivable At the end of each reporting period, the Group assesses whether there is objective evidence that a financial asset or group of financial assets requires impairment. A financial asset or group of financial assets requires impairment and is impaired only if there is objective evidence of an impairment requirement due to one or more events having occurred after the asset was first recognized (a loss event) and that this event (or these events) has an effect, that can be reliably estimated, on the estimated future cash flows for the financial asset or group of financial assets. For the loan receivables and accounts receivable categories, impairment is calculated as the difference between the carrying amount of the asset and the present value of estimated future cash flows (excluding future loan losses that have not occurred), discounted to the original effective interest of the financial asset. The asset s carrying amount is impaired and this impairment loss is recognized in the consolidated income statement. FINANCIAL LIABILITIES The Group s financial liabilities are divided into two categories: Financial liabilities measured at fair value through profit or loss. Financial liabilities measured at amortized cost. Financial liabilities measured at fair value through profit or loss comprise currency and interest-rate derivatives. Other financial liabilities are initially measured at fair value less any transaction costs that have arisen. In subsequent periods, these liabilities are measured at amortized cost in accordance with the effective interest method. Eolus s accounts payable, borrowing and other current liabilities and accrued expenses are included in this category. FAIR VALUE MEASUREMENT Fair value is the price that would be received at the measurement date on selling an asset or paid on transferring a liability in an orderly transaction between market participants at the measurement date. Financial instruments measured at fair value are classified either as fair value in profit or loss or available for sale. Measurement can be based on any of the following conditions: Quoted market prices (unadjusted) in active markets for identical assets or liabilities (level 1). Inputs other than quoted prices that are observable for the asset or liability, either directly (quoted prices) or indirectly (derived from quoted prices) (level 2). Unobservable market inputs for the asset or liability (level 3). The fair value of financial instruments traded in an active market is based on quoted market prices on the balance-sheet date. A market is considered to be active if quoted prices from a stock exchange, broker, industrial group, pricing service or supervisory authority are readily and regularly available and these prices represent actual and regularly occurring market transactions at arm s length. The fair value of financial instruments not traded in an active market (for example, OTC derivatives) is determined using valuation techniques. Market information is used for this as far as possible when it is available, whereas company-specific information is used as little as possible. If all significant inputs required for measurement are observable, then level 2 measurement is applied. The fair value of unquoted securities is based on cash flows discounted at an interest rate based on the market interest rate and a risk mark-up specific to these unquoted securities. The fair value of currency futures is determined by using the exchange rates for currency futures on the balance-sheet date where the resulting value is discounted to the present value, meaning level 2. Eolus currently recognizes all financial instruments at level ANNUAL REPORT EOLUS VIND AB 2016/2017

55 NOTES If one or more significant inputs are not based on observable market information, the instrument in question is classified as level 3. Eolus does not currently recognize any financial instruments belonging to this category. No reclassifications between the various categories took place during the period. INVENTORIES OF WIND TURBINES, WIND TURBINES UNDER CONSTRUCTION AND PROJECTS UNDER DEVELOPMENT Inventories of wind turbines are the wind turbines available for sale but that are operational and generate electricity since they have not been divested. At the end of every quarter, if a wind turbine has not been divested after 12 months, it is reclassified from inventories to non-current assets. If advanced discussions regarding a sale are in progress that are assessed as leading to a divestment, the turbine is not reclassified. Wind turbines classified as inventories have been measured at adjusted cost, meaning that the carrying amount of each wind turbine is adjusted each quarter to meet the decline in value that takes place. The procedure is described in more detail under the heading Impairment of non-financial assets. Wind turbines classified as non-current assets are reclassified to inventories of wind turbines at the end of the quarter if advanced discussions regarding a sale are in progress that are assessed as leading to a divestment in the next quarter. Wind turbines under construction are wind turbines that are in the process of being built. Projects under development are the project development activities being conducted. All projects that have incurred costs of at least KSEK 10 are included in the portfolio. The project portfolio is reviewed at the end of every quarter and impairment is recognized if, for example, the project has been rejected by the licensing authority. Wind turbines under construction and projects under development are measured at the lowest of costs incurred and fair value. PROVISIONS Provisions are recognized when the Group has a legal or informal commitment due to previous events and when it is probable that a payment will be required to settle the commitment and the amount can be reliably calculated. For cases in which the company expects an established provision to be compensated by an external party, for example, within the framework of an insurance contract, such expected compensation is recognized as a separate asset, but only when it is essentially certain that compensation will be received. If the time value is significant, the future payment is calculated at its present value. The calculations are made by applying a discount rate that reflects the short-term market expectations taking into account specific risks associated with the commitment. An increase in the commitment is recognized as an interest expense. Provisions for after-treatment costs According to the Swedish Environmental Code, the regulatory authority is entitled to require that guarantees be provided for security with respect to dismantling and after-treatment. The future costs are estimated for each facility with guidance from investigations carried out for the specific turbines. Provisions are established at the present value of the calculated future cost. Provisions are continuously adjusted upward using the discount rate and this upward adjustment is recognized as a borrowing cost (interest expense). The asset s carrying amount is adjusted if it is classified as a non-current asset. Provisions for restructuring costs A restructuring provision is recognized during the period in which the Group is legally or informally bound to the plan. Provisions may only be made for the expenses arising as a direct effect of the restructuring and that are an effect or the remaining contractual commitments with no lasting financial benefit or that comprise a fine due to the termination of the commitment. Provisions are tested at the end of every reporting period. CONTINGENT LIABILITIES Contingent liabilities comprise possible commitments originating from events that have occurred and whose occurrence is confirmed only by the occurrence or non-occurrence of one or several uncertain future events, which are not within Eolus s control. Contingent liabilities may also be a commitment originating from events that have occurred but that have not been recognized as a liability or a provision because it is not likely that the commitment will be settled or the amount of the commitment cannot be reliably calculated. EMPLOYEE BENEFITS Severance pay Severance pay is paid when employment is terminated before the normal age of retirement or when the employee accepts voluntary redundancy in exchange for such remuneration. Eolus recognizes severance pay when the Group has an existing legal or informal commitment when it is more probably that an outflow of resources will be required to settle the commitment than not, and when the amount can be reliably calculated. Pensions Eolus s pension obligations only encompass defined-contribution plans. A defined-contribution plan is a pension plan under which the Group pays fixed contributions to a separate legal entity. The Group does not have any legal or informal obligations to pay additional contributions if this legal entity does not have sufficient assets to pay all of the remuneration to the employees that is associated with the employees service in current and earlier periods. The Group s payments into defined-contribution pension plans are charged to net profit for the year in the year to which they are attributable. Leases Non-current assets utilized under leases are classified in accordance with the financial implication of the leasing agreement. The leasing of non-current assets, whereby the Group essentially assumes the risks and benefits associated with ownership, are classified as finance leases. Financial leases are recognized at the start of the lease period at the lower of the fair value of the leasing object and the present value of the minimum leasing fees. Other leasing agreements are classified as operating leases. Payments made over the lease period are expensed in profit or loss in a straight line over the lease period. Eolus only has leasing agreements classified as operating leases. INCOME TAX The tax expense for the period includes current and deferred tax. Tax is recognized in profit or loss, except when the tax pertains to items recognized in other comprehensive income or directly in equity. In such cases, the tax is also recognized in other comprehensive income and equity, respectively. All tax liabilities and tax assets are valued at nominal amounts in accordance with the tax rules and at the tax rates decided or announced and which, with all likelihood, will be adopted. Deferred tax is recognized on the balance-sheet date in accordance with the balance-sheet method for temporary differences between the tax and accounting values of the assets and liabilities. Deferred tax assets are recognized for all deductible temporary differences, including loss carryforwards, to the extent that it is probable that a taxable profit will be available against which the deductible temporary differences can be utilized. ASSESSMENTS, ESTIMATES AND ASSUMPTIONS Certain estimates and assumptions are made when the Board of Directors and CEO prepare the financial statements in accordance with applicable accounting policies that affect the carrying amounts of assets, liabilities, income and costs. The areas in which estimates and assumptions are of great significance to the Group and that could impact the income statement and balance sheet if they were to change are described below: Provisions for doubtful receivables Accounts receivable are initially measured at fair value and thereafter at the expected realizable value. An estimate of doubtful receivables is based on the conduct of an objective evaluation of all amounts outstanding at the end of the year. Losses attributable to doubtful receivables are recognized in profit or loss under other operating expenses. Refer to Note 8. ANNUAL REPORT EOLUS VIND AB 2016/

56 NOTES After-treatment costs The costs for dismantling and after-treatment are estimated for each facility with guidance from investigations carried out for specific turbines. The basis is a standard value per megawatt (MW) of installed capacity. The residual value is handled as a deductible item in the disposal analysis and is taken into account in these standard amounts. The time factor is taken into account through discounting. The price trend can be assumed to be equal to the long-term inflation target of 2%, while a certain level of technological progress should reduce the cost trend. These assumptions are continuously evaluated. Legal disputes Provisions for disputes are estimates of the future cash flows required to settle obligations. Disputes primarily refer to contractual obligations pertaining to agreements with customers and suppliers, but other types of disputes also arise in the course of normal business activities. ASSESSMENT OF USEFUL LIVES FOR PROPERTY, PLANT AND EQUIPMENT Based on experience gained and in light of improvements in technological performance, the Board has deemed that a depreciation period of 20 years reflects the expected useful life. These assumptions that form the basis of the assessment are continuously reevaluated and local differences are also taken into consideration. The useful lives for all components of the wind turbines, foundations and electrical installations are deemed to be the same, which is why there is no further division. ASSESSMENT OF IMPAIRMENT REQUIREMENTS FOR WIND POWER PROJECTS At the end of each quarter, the carrying amounts of the Group s project portfolio are analyzed to determine whether any indications exist that these carrying amounts have declined. Should such an indication exist, a comparison is made between the estimated final establishment cost and the project s acquisition value to an investor. Impairment is recognized if the estimated establishment cost is higher than the acquisition value of the project to an investor. Other factors, such as permits, could also impact the realizability of the project and thus its value. Any impairment is recognized directly in profit or loss. PARENT COMPANY S ACCOUNTING POLICIES The Parent Company prepares its annual reports in accordance with the Swedish Annual Accounts Act and the Swedish Financial Accounting Standards Board s recommendation RFR 2 Accounting for Legal Entities. RFR 2 entails that the Parent Company s annual report for the legal entity is to apply all IFRSs and statements approved by the EU as far as possible under the framework of the Annual Accounts Act and by taking into account the connection between accounting and taxation. The recommendation also states the exceptions and additions that may be made compared with reporting under IFRS. The Group s and the Parent Company s accounting policies have the following differences. Participations in subsidiaries are recognized in the Parent Company according to the cost method. Certain financial assets are measured at fair value in the consolidated financial statements. These are measured at the lower of cost and fair value in the Parent Company s accounts. The Parent Company applies the exception under RFR2 to disapply IAS 39. Instead, financial instruments are recognized and measured based on their cost pursuant to the Swedish Annual Accounts Act. The Parent Company has recognized Group contributions as appropriations since 2012/2013 in accordance with the alternative method stated in RFR 2 Accounting for Legal Entities. The amounts deposited in untaxed reserves comprise taxable temporary differences. Deferred tax liabilities attributable to the untaxed reserves are not recognized separately in the Parent Company due to the connection between accounting and taxation. The amounts are included in untaxed reserves instead. None of the amendments to RFR 2 Accounting for Legal Entities have impacted the Parent Company s financial statements. AMENDMENTS TO RFR 2 THAT HAVE NOT YET COME INTO FORCE None of the coming amendments to RFR 2 are expected to have a significant impact on the financial statements. NOTE 2 FINANCIAL RISK MANAGEMENT FINANCIAL RISK MANAGEMENT AT EOLUS Through its operations, Eolus is exposed to a variety of financial risks: market risk (interest-rate risk, currency risk and energy price risk), credit risk and liquidity and refinancing risk. The Group s overall risk management focuses on the unpredictably of the financial markets and seeks to minimize potentially adverse effects on the Group s earnings. These financial risks include the impact of changed interest expense for floating interest loans, the impact of exchange-rate fluctuations on wind turbine purchases, the risk of changes in electricity and electricity certificate prices, the risk of the company not having access to the necessary financing for future projects and the company having insufficient short-term liquidity to meet its existing payment commitments. Risk is managed by the finance function following a written finance and risk policy that is adopted every year by the Board of Directors if changes are made, otherwise its current form applies. Follow-ups of the Group s finance and risk policy are reported to the Board every quarter. MARKET RISK Eolus s primary operations comprise developing wind power facilities and divesting wind power facilities when they are turnkey facilities and have become operational. Most of the company s market risks are both direct and indirect since Eolus s customers also need to manage these risks and Eolus may thus be indirectly impacted by lower demand and/or lower sales prices. Interest-rate risk Eolus s customers usually borrow for their investments in wind power. Consequently, interest rates affect demand for wind power facilities. The Group s loans are attributable to financing wind power facilities under construction and financing the wind power portfolio that is owned and which generates electricity. Interest on these credit facilities is currently floating, refer to Note 22. Borrowing raised at fixed interest rates exposes the Group to interest-rate risk pertaining to fair value. Changes in market interest rates can have an impact on future earnings and profitability, partly regarding the wind power portfolio that is owned and conducts electricity generation, and also the wind power facilities under construction that are financed by bank loans. Under the adopted finance and risk policy, the average fixed-interest term linked to electricity generation is not to be less than 2.5 years and the nominal amount for interest-rate derivatives is not to exceed 100% of interestbearing liabilities to credit institutions. This can be achieved by a combination of fixed-interest loans, loans at variable interest rates and derivative instruments. The aim of interest-rate derivatives is to swap floating interest rates for fixed interest rates. At August 31, 2017, the Group had interest-rate derivatives outstanding that amounted to a nominal SEK 90 M (180), of which SEK 45 M falls due in 2020 and SEK 45 M in Including interest-rate derivatives, the loan portfolio had an average fixed-interest period of 3.4 years at the end of the accounting period. Interest-bearing liabilities amounted to SEK 33.9 M (81.8) at August 31, At the end of the accounting period, more than 100% (100) of the Group s liabilities to credit institutions, attributable to electricity generation operations, were covered by interest-rate hedging instruments. The deviation from the finance and risk policy was approved by the Board of Directors. Excluding interest-rate derivatives, the average interest rate was 1.85% (1.82). Including interest-rate derivatives, the average interest rate was 3.6% (3.6). A change in interest rates of +/- 1 percentage 56 ANNUAL REPORT EOLUS VIND AB 2016/2017

57 NOTES point would have an earnings impact of +/- SEK 0.3 M (0.8). A corresponding change would have an earnings impact of +/- SEK 11 M (11) attributable to the market value of interest-rate derivatives. Currency risk Eolus s currency risk exposure primarily arises by purchasing a large portion of wind turbines in EUR. Exchange-rate fluctuations can thus affect profitability in the construction of wind turbines. The Group s finance and risk policy stipulates guidelines for reducing the negative effects of changes in exchange rates. The policy entails that at least 75% and at most 125% of the forecast net flow (inward and outward payments in EUR) within 12 months is to be hedged using, for example, currency futures, currency swaps, loans in foreign currency or currency deposits. Calculated flows later than 12 months but within 24 months may be hedged at a maximum of 75%. Forecast flows later than 24 months are not hedged. At August 31, 2017, the Group had outstanding currency derivatives and currency swaps amounting to a nominal EUR 13.0 M (13.0). All currency futures fall due within 12 months. Signed currency futures, together with forecast inflows for the next 12 months, amount to about 200% of forecast outflows. The forecast net inflow includes the agreed purchase consideration for Jenåsen, and raised and repaid loans in EUR. The hedged portion exceeds the decided amount under the adopted finance and risk policy, and the Board has approved the deviation. Only the EUR/SEK rate was hedged during the year. A change in the EUR/SEK exchange rate of SEK 0.10 at the end of the fiscal year would result in an earnings impact of +/- SEK 2.8 M (3.3), given the translation of currency accounts and currency futures outstanding at August 31, Energy price risk The market price of electricity varies over time and the price trend of electricity certificates depends on the rate at which the generation of renewable electricity is expanded in relation to the quota obligation that consumers have to purchase electricity certificates. Eolus hedges a predetermined portion of the generation volume, which means that volume and profile risk is reduced. Hedging takes place with a number of the largest electricity traders to minimize counterparty risk. Electricity certificates are recognized in income in conjunction with generation of the corresponding electricity and are physically received from the Swedish Energy Agency in the month after being earned. The future transfer price of electricity and electricity certificates is the single most important parameter in customers investment calculations. Accordingly Eolus s operations are affected in both the short and long-term by trends in the forward market for electricity and electricity certificates. Eolus closely follows the market to understand how it works and its correlation to the price of other energy sources and business cycles, etc. As a result, fluctuations in the price of electricity affect the Group s potential customers. Existing agreements and contracts are not considered to be financial instruments but are regarded as physical deliveries of electricity. No market valuation takes place since it is deemed that fixed-price contracts do not comprise financial instruments. CREDIT RISK Credit risk, or counterparty risk, is defined as the risk of incurring a loss if the counterparty does not fulfill its commitments. Commercial credit risk encompasses customers solvency and is managed by closely monitoring payment behavior, following up customers financial statements and maintaining regular communication. The Group s total credit risk is divided each year between a small number of customers that account for a relatively large percentage of the Group s accounts receivable, refer to Note 19. All customers are highly transparent, including marketplaces for electricity trading. During periods of temporary excess liquidity, investments may only be made by deposits with banks that are under the supervision of a financial supervisory agency in a Nordic country or by deposits with or purchases of instruments issued by the Swedish National Debt Office. The fixed-term period for each individual investment of surplus liquidity may not be longer than three months. Investments with longer fixed-term periods require separate decisions. Investments The Group s cash flow generated from operating activities and from the divestment of turnkey operational facilities and wind turbines from inventories/ non-current assets is used for developing new projects and financing operating activities. Surplus liquidity is to be invested with counterparties that have high credit ratings and thus low credit risk. The Group s risks regarding interest income are relatively limited. The current interest rate of 0% on bank balances entails that there is no interest income from credit institutions for the 2016/2017 fiscal year. LIQUIDITY AND REFINANCING RISK The company s operations are financed by borrowings from credit institutions in addition to equity. Liquidity risk is defined as the risk of the Group being adversely affected by shortcomings in managing and controlling cash and cash equivalents and payment flows. Refinancing risk pertains to the risk of experiencing difficulties in securing financing for the operations at a given point in time. Eolus s project operations largely comprise constructing wind turbines for which customer contracts have already been signed, and to only a minor extent constructing turbines that are to be divested at a later date. The company works continuously on preparing 24-month cash-flow forecasts for the Group. The management closely monitors rolling forecasts for trends in net debt/cash flows and to ensure that the Group has sufficient liquidity available to meet operational needs. For wind turbines that are sold as operational to customers, the company endeavors to match payment plans, in terms of liquidity, from customers with the plans that the company has with the largest suppliers of each specific project. In July 2016, three credit agreements were signed with Handelsbanken. All agreements have a 29-month term. The loans comprise an overdraft facility of SEK 75 M, a framework credit agreement of SEK 255 M for project financing and a construction loan of SEK 600 M. The construction loan was signed in order to finance the establishment of the Jenåsen wind farm, for which Eolus signed a Power Purchase Agreement with Google. At the balance-sheet date, all of the loans were unutilized. Given that some wind power facilities are available for sale and that the mortgaged facilities that conduct electricity generation are covered by separate loans, the Board adopted in its finance and risk policy that new loans are to be raised with short tenors. However, the company has previous credit facilities of SEK 14.7 M (51.4) with long tenors, and that fall due later than five years. Loans are to be raised with different credit institutions to reduce refinancing risk. A shorter term structure requires a higher equity/assets ratio and liquidity preparedness. The Group s equity/assets ratio may not fall below 30%. A continuous dialog is maintained with credit institutions for renegotiating new facilities in good time prior to due dates. To achieve optimal and cost-efficient access to financing, such financing is to be matched to the tenors of ongoing wind power projects. Separate covenants are in place for liabilities to credit institutions. Covenants for current credit agreements pertain to the equity/assets ratio and interest coverage ratio. If these undertakings are not met, the bank can withdraw the credit facilities. In the 2016/2017 fiscal year, all of the covenants to credit institutions were met. Interest-bearing liabilities amounted to SEK 33.9 M (81.7), of which SEK 14.7 M (50.2) is non-current. The fixed-term period for loans amounted to about three years (six) at the end of the fiscal year, with average interest rate of 1.85% (1.82) excluding interest-rate derivatives. Refer to Note 16 for disclosures about remaining liquidity flows pertaining to financial liabilities. CAPITAL RISK The Group s targets for its capital structure are to safeguard the Group s ability to pursue its operations so that it can generate returns for shareholders and value for stakeholders, and to maintain an optimal capital structure to keep costs for capital down. To maintain or adjust its capital structure, the Group can change the dividends it pays to shareholders, repay capital to shareholders, issue new shares or sell assets to reduce its liabilities. ANNUAL REPORT EOLUS VIND AB 2016/

58 NOTES GROUP PARENT COMPANY Loan maturity structure Aug 31, 2017 Aug 31, 2016 Aug 31, 2017 Aug 31, months or less 11,369 11, months 7,840 13, years - 5, More than 5 years 14,700 51, Total 33,909 81, NOTE 3 OPERATING SEGMENTS Project development: involving pre-study, project development, construction and sale of wind power facilities. This also includes technical and management consultancy services for wind power stakeholders. Electricity generation: encompassing the operation of wholly or partly owned wind turbines, the sale of electric power and the divestment of electricity certificates allocated to producers of renewable electricity. Asset Management: pertains to full asset management services for owners of wind power facilities. 2016/2017 Project development Electricity generation Asset management Joint eliminations Total group Segment revenue Net sales, external customers 1,027,012 24,751 13,905-1,065,668 Inter-segment transactions Other revenue 2,928 4,472 9,979-17,379 Expenses -985,795-34,976-22, ,042,814 (of which depreciation and impairment) (-1,282) (-22,109) (-32) (-) (-23,423) Operating profit/loss 44,523-5,753 1,463-40,233 Interest income -3,691 Interest expense -2,318 Profit before tax 34,224 Tax -9,720 Net profit for the year 24,504 Segment s assets at August 31, , , , ,764 Assets include: Purchase of non-current assets 6, ,698 The carrying amounts of wind turbines during the period were impaired by KSEK 8,489 to adjust to the changed price levels in the market. The entire amount was charged to the electricity generation segment. The entire amount pertains to the impairment of non-current assets. 58 ANNUAL REPORT EOLUS VIND AB 2016/2017

59 NOTES 2015/2016 Project development Electricity generation Asset management Joint eliminations Group total Segment revenue Net sales, external customers 636,624 46,333 10, ,446 Inter-segment transactions ,062 - Other revenue 1, ,215 Expenses -655,927-47,058-9,688 1, ,610 (of which depreciation and impairment) (-1,989) (-24,730) (-) (-) (-26,719) Operating profit/loss -17, , ,949 Interest income 1,775 Interest expense -14,883 Profit before tax -29,057 Tax 5,139 Net profit for the year -23,918 Segment s assets at August 31, , , ,924 1,269,616 Assets include: Purchase of non-current assets 2, , % (100) of the Group s revenue is attributable to Sweden. Three customers account for 70% of revenue: 27%, 33% and 20%, respectively. In the preceding year, two customers accounted for 55% of revenue: 36% and 19%, respectively. Non-current assets Aug 31, 2017 Aug 31, 2016 Sweden 99, ,302 Estonia 15,886 17,096 Total 115, ,398 NOTE 4 REVENUE The Parent Company s sales primarily comprise turnkey wind power projects. The structure of the contracts varies and sales can be made of the following: wind power facilities that are constructed directly for the customer or facility/ parts of wind turbines that are already operational and in inventories, shares in project companies and projects with relevant permits. A separate follow-up assignment after projects with relevant permits or shares in project companies are sold can be constructing wind turbines for customers on the basis of a contractor agreement. The generation of electric power from completed turbines in inventories comprises a small portion of the Parent Company s revenue. All of the Parent Company s sales took place in Sweden. ANNUAL REPORT EOLUS VIND AB 2016/

60 NOTES NOTE 5 SALARIES, REMUNERATION AND NUMBER OF EMPLOYEES All of the Group s employees in Sweden are employed in the Parent Company. The members of the Parent Company s management team also comprise Group Management. Salaries and other remuneration 2016/ /2016 Social security Salaries expenses (of which and other pension costs) remuneration Social security expenses (of which pension costs) Sweden, Parent Company 23,430 11,505 21,680 11,093 (3,338) (3,058) Estonia (-) (-) Latvia (-) (-) Group 23,680 11,592 22,063 11,215 (3,338) (3,058) Salaries and other remuneration (of which bonus) 2016/ /2016 Pension costs Salaries and other remuneration (of which bonus) Pension costs Board of Directors and CEO 3, , (13) (60) Other employees 20,622 2,959 19,240 2,717 (58) (654) Group 23,680 3,338 22,063 3,058 (71) (714) Gender distribution, Board of Directors and other senior executives Aug 31, 2017 Aug 31, 2016 Number at Of whom men Number at Of whom men balance-sheet balance-sheet date date Board of Directors CEO and other senior executives Group and Parent Company Average number of employees 2016/ /2016 Average number Of whom men Average number of employees of employees Of whom men Sweden, Parent Company Estonia Group Eolus has established a bonus and share ownership program for the company's employees. A bonus is paid if the company achieves earnings targets set by the Board of Directors. The bonus is paid in the form of a cash payment and/or shares. Under the share ownership program, an additional bonus may be paid in the form of bonus shares to individuals acquiring shares in the company, and retaining them for three years, for a portion or their entire bonus payment instead of a cash payment. The liabilities under this program amount to insignificant amounts on each balance-sheet date. There is no dilution for existing shareholders since no new shares are issued under the program. 60 ANNUAL REPORT EOLUS VIND AB 2016/2017

61 NOTES NOTE 6 REMUNERATION OF BOARD OF DIRECTORS, CEO AND OTHER SENIOR EXECUTIVES CONDITIONS FOR BOARD OF DIRECTORS The Annual General Meeting held on January 28, 2017 resolved that the Chairman of the Board would receive an annual fee of KSEK 350 and other Directors would each receive a fee of KSEK 150. No remuneration was paid to Directors other than the Board fees described below and the transactions reported in Notes 5 and 27. Proposals on remuneration of the Board of Directors are presented by the Nomination Committee. CONDITIONS FOR THE CEO Remuneration of the CEO is determined by the Board of Directors. CEO Per Witalisson received salary, pension benefits and car benefits during the fiscal year. The age of retirement is 65. The employment contract can be terminated with a mutual notice period of six months. CONDITIONS FOR SENIOR EXECUTIVES For the 2016/2017 fiscal year, the members of Group Management are considered to be senior executives. Remuneration of other senior executives is determined by the CEO in consultation with the Chairman of the Board. The level of remuneration is to be based on such factors as position, expertise, experience and performance. Remuneration comprises fixed salary and may also comprise pension, variable salary and other benefits. The variable salary is to be based on the achievement of quantitative and qualitative targets. The company s pension obligations are covered in all cases by continuous pension premiums. No Board fees are paid to employees of the Eolus Group. There are no agreements on severance pay. Basic salary/ Variable Pension Car Total Remuneration and other benefits 2016/2017 Board fee remuneration costs benefits Board of Directors: Chairman of the Board Hans-Göran Stennert Director Fredrik Daveby Director Sigrun Hjelmqvist Director Hans Johansson Director Hans Linnarson Director Bodil Rosvall Jönsson Senior executives: Per Witalisson, CEO 1, ,404 Marcus Landelin, Deputy CEO 1, ,879 Other senior executives (2 individuals) 2, ,663 Total 6, , ,046 Basic salary/ Variable Pension Car Total Remuneration and other benefits 2015/2016 Board fee remuneration costs benefits Board of Directors: Chairman of the Board Hans-Göran Stennert Director Fredrik Daveby Director Sigrun Hjelmqvist Director Jan Bengtsson Director Hans Johansson Senior executives: Per Witalisson, CEO 1, ,322 Marcus Landelin, Deputy CEO December 1, 2015 to August 31, , ,410 Hans-Christian Schulze, Deputy CEO September 1, 2015 to November 30, Other senior executives (2 individuals) 2, ,752 Total 6, , ,701 ANNUAL REPORT EOLUS VIND AB 2016/

62 NOTES NOTE 7 REMUNERATION OF AUDITORS PricewaterhouseCoopers GROUP PARENT COMPANY 2016/ / / /2016 Audit assignment Audit activities in addition to the audit assignment Tax consultancy Other services Total 1,094 1,105 1,094 1,105 EY Audit assignment Audit activities in addition to the audit assignment Other services Total KPMG Audit assignment Total Assertum Audit OÜ Audit assignment Total Revisorgruppen Tröndelag AS Audit assignment Total Total 1,161 1,501 1,124 1, ANNUAL REPORT EOLUS VIND AB 2016/2017

63 NOTES NOTE 8 OTHER OPERATING INCOME AND OTHER OPERATING EXPENSES GROUP PARENT COMPANY Other operating income 2016/ / / /2016 Exchange-rate gains attributable to project activities 2, , Capital gains attributable to sale of wind power facilities Capital gains attributable to other non-current assets Fair value of change in currency derivatives Invoiced expenses* 13,881-13,426 - Other Total 17,379 2,215 16,974 1,170 Other operating expenses 2016/ / / /2016 Exchange-rate losses attributable to project activities -3,891-2,043-3,891-2,029 Capital losses attributable to sale of wind power facilities , Capital losses attributable to other non-current assets , Fair value of change in currency derivatives -4,593-1, Other Total -8,904-4,165-10,294-2,840 * From September 1, 2016, Eolus changes the classification of revenue and expenses for onward-invoiced operations-related expenses. Comparative periods were not reclassified, which affects comparability. For further information, refer to accounting policies. Eolus hedges future forecast payment flows in accordance with an established finance and risk policy. The difference between the price paid and the forward rate on maturity results in exchange-rate gains and exchange-rate losses, which are recognized as other operating income and other operating expenses, respectively. NOTE 9 FINANCIAL INCOME AND EXPENSES GROUP PARENT COMPANY Interest income 2016/ / / /2016 Loans and receivables 2, Loans and receivables to Group companies Total financial income 2, Interest expense 2016/ / / /2016 Bank loans -7,464-11, Liabilities to Group companies ,219 Total financial expenses -7,464-11,239-1,586-1,530 Other financial items 2016/ / / /2016 Exchange-rate differences intra-group receivables and liabilities -10, , Exchange-rate differences in cash and cash equivalents 4,284 1,215 4,346 1,265 Exchange-rate differences, other Other financial expenses -3, , Fair value of change in interest-rate derivatives 8,308-3, Total financial expenses ,206-6,298 1,319 of which attributable to balance-sheet items measured at fair value 8,308-3, ANNUAL REPORT EOLUS VIND AB 2016/

64 NOTES NOTE 10 APPROPRIATIONS AND UNTAXED RESERVES PARENT COMPANY Appropriations 2016/ /2016 Change in tax allocation reserve -13,310 10,920 Depreciation in excess of plan 4,317-7,783 Group contributions received/paid 98,540 23,255 Total 89,547 26,392 Untaxed reserves Aug 31, 2017 Aug 31, 2016 Tax allocation reserve 107,645 94,335 Accumulated depreciation in excess of plan 35,306 39,623 Total 142, ,958 NOTE 11 INCOME TAX GROUP PARENT COMPANY 2016/ / / /2016 Current tax: Current tax on profit for the year -34,328-6,384-34,310-6,687 Current tax attributable to prior periods -1, Total current tax -35,794-6,623-34,310-6,687 Deferred tax: Origination and reversal of temporary differences 26,074 14, Tax loss carryforwards utilized during the year - -3, Total deferred tax 26,074 11, Tax -9,720 5,139-34,396-6,649 GROUP PARENT COMPANY Reconciliation of effective tax rate 2016/ / / /2016 Profit/loss before tax 34,224-29, ,107 53,055 Tax calculated at applicable tax rate in Sweden -7,529 6,393-37,864-11,672 Difference between Swedish and foreign tax rates Non-taxable income ,688 5,473 Non-deductible expenses , Interest surcharge for tax allocation reserve Adjustment of current tax attributable to prior periods -1, Tax losses not recognized Total tax expense/tax income -9,720 5,139-34,396-6,649 No tax pertains to components of other comprehensive income or has been recognized in equity. 64 ANNUAL REPORT EOLUS VIND AB 2016/2017

65 NOTES GROUP Specification of deferred tax assets and tax liabilities: Deferred tax assets 2016/ /2016 Deferred tax liabilities Deferred tax assets Deferred tax liabilities Property, plant and equipment and intangible assets Assets measured at fair value 5, ,591 1,858 Provisions Untaxed reserves - 42,707-66,654 Inventories of wind turbines, wind turbines under construction and projects under development , ,365 Recognized tax losses: Total 6,510 61,564 9,841 87,565 of which to be utilized/paid after more than 12 months ,121 1,209 85,707 of which to be utilized/paid within 12 months 5, ,632 1,858 PARENT COMPANY Specification of deferred tax assets: 2016/ /2016 Provisions Total Recognized in the statement of GROUP PARENT COMPANY financial position/balance sheet: 2016/ / / /2016 Deferred tax assets 2, Deferred tax liabilities -57,290-77, Deferred tax liabilities (assets), net -55,054-77, GROUP PARENT COMPANY Change in deferred taxes 2016/ / / /2016 At September 1-77,724-88, Tax income/expenses recognized in profit or loss 26,074 11, Reclassification from current tax Reclassification to current tax -3,403-1, Acquisition of subsidiaries At August 31-55,054-77, The Group s tax loss carryforwards at August 31, 2017 amounted to KSEK 166 (167), all attributable to Sweden. Deferred tax assets were recognized on tax deficits amounting to KSEK 0 (0). Deficits have no determined maturity date. ANNUAL REPORT EOLUS VIND AB 2016/

66 NOTES NOTE 12 PROPERTY, PLANT AND EQUIPMENT GROUP PARENT COMPANY 2016/2017 Land and buildings Wind turbines Equipment Constructions in progress and advance payments Total Land and buildings Wind turbines Equipment Constructions in progress and advance payments Total Opening accumulated cost 13, ,674 24, ,271 2,533 81,963 21, ,502 Investments 385 1,514 4,799 6,698-1,235 4,799 6,034 Sales and disposals , , ,374-1, ,804 Reclassifications , , Exchange-rate differences Closing accumulated cost 13, ,697 25,027 4, ,190 2,533 48,589 20,811 4,799 76,732 Opening accumulated depreciation ,393-21, , ,622-18, ,088 Depreciation for the year - -13,620-1, , , ,674 Sales and disposals - 1 1,378-1,379-3,571 1,378-4,949 Reclassifications - 62, , , ,715 Exchange-rate differences Closing accumulated depreciation - -87,631-21, , ,744-17, ,528 Opening accumulated impairment -2,312-73, ,178-2,312-9, ,951 Impairment for the year - -8, , Reclassifications - 61, ,871-4, ,271 Exchange-rate differences Closing accumulated impairment -2,312-20, ,796-2,312-5, ,680 Net carrying amount at year-end 11,357 91,583 3,705 4, , ,477 3,027 4,799 43,524 During the fiscal year, 0 (2) wind turbines previously recognized as inventories were reclassified as non-current assets. During the fiscal year, 12 (5) new wind turbines recognized as non-current assets were reclassified to inventories and subsequently sold. 66 ANNUAL REPORT EOLUS VIND AB 2016/2017

67 NOTES GROUP PARENT COMPANY 2015/2016 Land and buildings Wind turbines Equipment Constructions in progress and advance payments Total Land and buildings Wind turbines Equipment Constructions in progress and advance payments Total Opening accumulated cost 13, ,096 24,354 1, ,178 2, ,616 20, ,517 Investments ,176-2, ,073-2,073 Sales and disposals ,975-1, , ,475-1, ,910 Reclassifications - -51, ,186-52,714-6, ,822 Exchange-rate differences Closing accumulated cost 13, ,674 24, ,270 2,533 81,963 21, ,502 Opening accumulated depreciation ,823-20, , ,442-18, ,565 Depreciation for the year - -22,203-2, , ,770-1, ,174 Sales and disposals - 30,090 1,084-31,174-15,590 1,061-16,651 Reclassifications - 16, , Exchange-rate differences Closing accumulated depreciation ,393-21, , ,622-18, ,088 Opening accumulated impairment -2,312-80, ,163-2,312-9, ,951 Impairment for the year - -2, , Reclassifications - 9, , Exchange-rate differences Closing accumulated impairment -2,312-73, ,178-2,312-9, ,951 Net carrying amount at year-end 11, ,414 3, , ,702 2,540-69,463 INVESTMENTS AND SALES OF PROJECTS AND COMPLETED WIND TURBINES In accordance with industry practice, wind power projects are often conducted in separate companies. This means that certain acquisitions and divestments of projects and completed wind turbines are conducted as share transactions. A number of such transactions were carried out in the 2016/2017 and 2015/2016 fiscal years. All of these transactions are deemed to be sales or investments of assets and thus are not recognized as business combinations. Assets acquired through share transactions are measured at fair value on the acquisition date. NOTE 13 COMMITMENTS INVESTMENT COMMITMENTS No agreements regarding the acquisition of property, plant and equipment or intangible assets had been signed at the end of the accounting period. LEASING AGREEMENTS The Group has entered into leasing agreements regarding office premises, cars and office machines. The related costs for these are included in profit or loss. The leasing periods vary between three months and three years and most leasing agreements can be extended at the end of the lease period on market-based conditions. However, the agreements are usually discontinued. Paid and future lease payments pertaining to operating leasing agreements for premises and equipment amounted to the following for the fiscal year: PREMISES EQUIPMENT KSEK Group Parent Company Group Parent Company 2016/2017 1,891 1, /2018 1,641 1, /2019 1,399 1, / / Total 6,595 6,533 1,805 1,710 ANNUAL REPORT EOLUS VIND AB 2016/

68 NOTES NOTE 14 OTHER SECURITIES HELD AS FIXED ASSETS Holdings in other companies Number of participations Equity/votes (%) Aug 31, 2017 Aug 31, 2016 Långmarken Wind AB 50 10/10 Slättens Vind AB 22,575 2/2 1,242 1,567 Carrying amount 1,242 1,567 Information about equity refers to adjusted equity, which means including the equity portion of untaxed reserves. Net profit for the year according to the Annual Report has correspondingly been adjusted, where necessary, by the equity portion of change in untaxed reserves for the year. Holdings in other companies Corp. Reg. No. Registered office Profit/loss Equity Långmarken Wind AB Hässleholm Slättens Vind AB Vara 97 63,234 NOTE 15 PARTICIPATIONS IN GROUP COMPANIES 2016/ /2016 At September 1 187, ,246 Acquisitions Divestments Shareholders contributions, net -10,343-22,726 Impairment -54,353-1,377 Reversal of impairment 14,511 24,688 At August , ,831 Profit from participations in Group companies 2016/ /2016 Impairment -54,352-1,377 Reversal of impairment 14,511 24,688 Dividends 60,890 - Gain attributable to divestments 60-21,109 23,311 Subsidiaries and sub-subsidiaries are listed in the table below. Group companies Number of participations Equity/votes (%) Aug 31, 2017 Aug 31, 2016 Eolus Vind Amnehärad AB 1, / Amnehärad Vindkraft Aktiebolag Blekinge Offshore AB / Bosberget Vindkraft AB 1, / Ekovind AB 130, /100 65,002 65,002 Baltic Wind Energy Eolus Elnät AB 1, / Eolus Stensåsa Vindkraft AB / Eolus Oy 2, / Eolus Pörtom Vind Oy Eolus Vind Norge AS 23, /100 2,624 2,624 Stigafjell Vind AS Eolus North America Inc. 100/100 Comstock LLC Crescent Peak Renewables LLC Wind Wall Development LLC Wind Wall 1 LLC 68 ANNUAL REPORT EOLUS VIND AB 2016/2017

69 NOTES Group companies Number of participations Equity/votes (%) Aug 31, 2017 Aug 31, 2016 Eolus Vindpark Ett AB / Lörby 8 Drift AB / Eolus Vindpark Fem AB / Eolus Vindpark Sex AB Eolus Vindpark Sju AB / Vilseberga Vind AB Eolus Vindpark Nio AB / Eolus Vindpark Elva AB / Eolus Vindpark Tolv AB Eolus Vindpark Tretton AB / Eolus Vindpark Femton AB / Eolus Vindpark Sjutton AB / Eolus Vindpark Nitton AB / Eolus Vindpark Tjugo AB Eolus Vindpark 23 AB / Eolus Vindpark 24 AB Eolus Vindpark 25 AB / Eolus Vindpark 26 AB Eolus Vindpark 27 AB / Eolus Vindpark 28 AB Eolus Wind Power Management AB / Kattegatt Vindkraft AB 16, /100 1,724 1,724 Lunnekullen Vindkraft AB 1, / Linusvind AB 50, / Långmarken Vindkraft AB 1, / ,127 Lärkeskogen Vindkraft AB 1, / Näset Vindkraft AB 1, / SIA Eolus 2, / Andruves wind SIA Virzas wind SIA Gulbji wind SIA Melderi wind SIA Pienava wind SIA Unas wind SIA Dobele wind SIA Osi wind SIA Mekji wind SIA Valpene wind SIA Skogaryd Vindkraft AB 1, / Skuggetorp Vindkraft AB 1, / Svenska Vindbolaget AB 1, /100 63, ,861 Svenska Vindbolaget Vindpark ETT AB Svenska Vindbolaget Vindpark TVÅ AB Svenska Vindbolaget Vindpark FYRA AB Eolus Vindpark Tjugoett AB Eolus Vindpark Tjugotvå AB Uddevalla Vind AB 1, / Vingkraft Rönnerum AB 1, / ,100 Ölme Vindkraft AB 1, /100 3,058 3,058 Carrying amount 137, ,831 ANNUAL REPORT EOLUS VIND AB 2016/

70 NOTES Group companies Corp. Reg. No. Registered office Eolus Vind Amnehärad AB Hässleholm Amnehärad Vindkraft Aktiebolag Hässleholm Blekinge Offshore AB Karlshamn Bosberget Vindkraft AB Hässleholm Ekovind AB Vårgårda Baltic Wind Energy Saare County, Estonia Eolus Elnät AB Hässleholm Eolus Stensåsa Vindkraft AB Hässleholm Eolus Oy Vaasa, Finland Eolus Pörtom Vind Oy Vaasa, Finland Eolus Vind Norge AS Stjørdal, Norway Stigafjell Vind AS Stjørdal, Norway Eolus North America Inc Nevada, USA Comstock LLC Nevada, USA Crescent Peak Renewables LLC Delaware, USA Wind Wall Development LLC Nevada, USA Wind Wall 1 LLC Nevada, USA Eolus Vindpark Ett AB Hässleholm Lörby 8 Drift AB Hässleholm Eolus Vindpark Fem AB Hässleholm Eolus Vindpark Sex AB Hässleholm Eolus Vindpark Sju AB Hässleholm Vilseberga Vind AB Hässleholm Eolus Vindpark Nio AB Hässleholm Eolus Vindpark Elva AB Hässleholm Eolus Vindpark Tolv AB Hässleholm Eolus Vindpark Tretton AB Hässleholm Eolus Vindpark Femton AB Hässleholm Eolus Vindpark Sjutton AB Hässleholm Eolus Vindpark Nitton AB Hässleholm Eolus Vindpark Tjugo AB Hässleholm Eolus Vindpark 23 AB Hässleholm Eolus Vindpark 24 AB Hässleholm Eolus Vindpark 25 AB Hässleholm Eolus Vindpark 26 AB Hässleholm Group companies Corp. Reg. No. Registered office Eolus Vindpark 27 AB Hässleholm Eolus Vindpark 28 AB Hässleholm Eolus Wind Power Management AB Hässleholm Kattegatt Vindkraft AB Hässleholm Lunnekullen Vindkraft AB Hässleholm Linusvind AB Hässleholm Långmarken Vindkraft AB Hässleholm Lärkeskogen Vindkraft AB Hässleholm Näset Vindkraft AB Hässleholm SIA Eolus Riga, Latvia Andruves wind SIA Riga, Latvia Virzas wind SIA Riga, Latvia Gulbji wind SIA Riga, Latvia Melderi wind SIA Riga, Latvia Pienava wind SIA Riga, Latvia Unas wind SIA Riga, Latvia Dobele wind SIA Riga, Latvia Osi wind SIA Riga, Latvia Mekji wind SIA Riga, Latvia Valpene wind SIA Riga, Latvia Skogaryd Vindkraft AB Hässleholm Skuggetorp Vindkraft AB Hässleholm Svenska Vindbolaget AB Hässleholm Svenska Vindbolaget Vindpark ETT AB Svenska Vindbolaget Vindpark TVÅ AB Svenska Vindbolaget Vindpark FYRA AB Hässleholm Hässleholm Hässleholm Eolus Vindpark Tjugoett AB Hässleholm Eolus Vindpark Tjugotvå AB Hässleholm Uddevalla Vind AB Hässleholm Vingkraft Rönnerum AB Hässleholm Ölme Vindkraft AB Hässleholm 70 ANNUAL REPORT EOLUS VIND AB 2016/2017

71 NOTES NOTE 16 FINANCIAL RISK MANAGEMENT The table below presents the remaining contractual maturities of the financial liabilities. The amounts stated in the table are the contractual and undiscounted cash flows. All currency derivatives have positive market values. The negative total market value of currency derivatives was KSEK 463 (pos: 4,130) at the end of the accounting period. Contractual interest-rate derivatives had negative market values at the end of the accounting period. The total negative market value of interest-rate derivatives was KSEK 14,634 (neg: 38,753) at the end of the accounting period. Aug 31, 2017 <3 months 3 months-1 year 1-2 years 2-5 years >5 years Total Borrowing 11,202 10,357 2,196 6,175 5,011 34,941 Accounts payable 28, ,276 Derivatives 963 2,890 3,854 8,244 1,959 17,910 Other financial liabilities 2, ,540 Total 43,176 13,255 6,050 15,216 6,970 84,667 Aug 31, 2016 <3 months 3 months-1 year 1-2 years 2-5 years >5 years Total Borrowing 13,803 22,961 7,447 19,152 23,063 86,426 Accounts payable 109, ,998 Derivatives 1,977 5,931 7,907 23,722 5,007 44,544 Other financial liabilities 28, ,131 Total 154,047 28,900 15,354 43,728 28, ,099 NOTE 17 PARTICIPATIONS IN ASSOCIATED COMPANIES GROUP CARRYING AMOUNT Corp. Reg. No. Registered Capital/votes Aug 31, 2017 Aug 31, 2016 Participations in associated companies office (%) Gärdslösa Drift AB Borgholm 33/33 37 Isgrannatorp Drift AB Kristianstad 33/ Kråge Vind AB Kristianstad 20/ Triventus AB Falkenberg 40/40 3,725 7,900 Carrying amount 3,763 8,076 FINANCIAL INFORMATION REGARDING THE GROUP S ASSOCIATED COMPANIES (RELATES TO ENTIRE ASSOCIATED COMPANIES, NOT ONLY THE GROUP S PARTICIPATING INTEREST) Income statement 2016/ /2016 Operating income 13,422 21,736 Operating expenses -21,496-31,856 Operating loss -8,074-10,120 Net financial items 1,702 1,501 Tax Net loss for the period -6,372-9,078 Balance sheet Aug 31, 2017 Aug 31, 2016 Non-current assets 1,642 4,553 Current assets 28,519 48,863 Total assets 30,161 53,416 Equity 9,347 20,315 Provisions 16,499 17,000 Non-current liabilities 2,100 11,522 Current liabilities 2,215 4,579 Total equity and liabilities 30,161 53,416 ANNUAL REPORT EOLUS VIND AB 2016/

72 NOTES Profit/loss from participations in associated companies 2016/ /2016 Kråge Vind AB - -3 Triventus AB -2, Other -1,604 - Total loss from participations in associated companies -4, Change in participations in associated companies 2016/ /2016 At September 1 8,075 8,703 Share in profits -4, Divestments Other - - At August 31 3,761 8,075 PARENT COMPANY Participations in associated companies Corp. Reg. No. Registered office Capital/votes (%) CARRYING AMOUNT Aug 31, 2017 Aug 31, 2016 Kråge Vind AB Kristianstad 20/ Triventus AB Falkenberg 40/40 3,725 8,500 Carrying amount 3,725 8,700 Change in participations in associated companies 2016/ /2016 At September 1 8,700 8,720 Impairment -4,775 - Divestments At August 31 3,725 8,700 NOTE 18 INVENTORIES OF WIND TURBINES, WIND TURBINES UNDER CONSTRUCTION AND PROJECTS UNDER DEVELOPMENT GROUP PARENT COMPANY Aug 31, 2017 Aug 31, 2016 Aug 31, 2017 Aug 31, 2016 Inventories of wind turbines 9,325 11,995 9,325 11,995 Wind turbines under construction and projects under development 335, , , ,595 Total 344, , , , ANNUAL REPORT EOLUS VIND AB 2016/2017

73 NOTES NOTE 19 ACCOUNTS RECEIVABLE AND OTHER CURRENT RECEIVABLES GROUP PARENT COMPANY Aug 31, 2017 Aug 31, 2016 Aug 31, 2017 Aug 31, 2016 Accounts receivable 25,686 28,793 23,760 27,480 Other current receivables 44,493 29,131 18,723 6,190 Total 70,180 57,924 42,483 33,670 Other current receivables relate to: Aug 31, 2017 Aug 31, 2016 Aug 31, 2017 Aug 31, 2016 VAT receivables 2, , Receivables from related parties Blocked accounts 19,632 24,733-5,040 Other receivables 22,397 4,038 16,293 1,124 Total 44,493 29,131 18,723 6,190 The credit risk of accounts receivable that have not yet fallen due for payment or been impaired is considered low. Because customers represent various categories, such as municipalities, companies and private individuals, and due to the geographically dispersed nature of these, it is considered unlikely that all would experience financial difficulties at the same point in time. Eolus has historically low bad debt losses and performs a credit rating review of all new customers. Accounts receivables that have fallen due for payment but have not been impaired have undergone a thorough individual assessment and are not considered to carry a material risk of losses. GROUP PARENT COMPANY Credit exposure Aug 31, 2017 Aug 31, 2016 Aug 31, 2017 Aug 31, 2016 Accounts receivable, not yet fallen due or impaired 6,811 27,679 5,405 27,082 Accounts receivable, past due but not impaired 18,845 1,114 18, Accounts receivable, past due and impaired Reserve for doubtful receivables Total accounts receivables 25,686 28,793 23,760 27,480 At August 31, 2017, past due accounts receivable for which no reserve was considered necessary amounted to KSEK 18,815 (1,114). Age analysis of accounts receivable, past due but not impaired Aug 31, 2017 Aug 31, 2016 Aug 31, 2017 Aug 31, 2016 <30 days 3,302 1,114 3, days 2,754-2, days >180 days 12,581-12,495 - Total past due but not impaired accounts receivable 18,845 1,114 18, Age analysis of accounts receivable, past due and impaired Aug 31, 2017 Aug 31, 2016 Aug 31, 2017 Aug 31, 2016 >180 days Total past due and impaired accounts receivable Provisions for doubtful receivables correspond to 0% (0) of the total accounts receivable. Provision for doubtful receivables Aug 31, 2017 Aug 31, 2016 Aug 31, 2017 Aug 31, 2016 Provision at beginning of year Provision for doubtful receivables for the year Written-off receivables Amount at year-end Provisions for the reversals of reserves for doubtful receivables are included in the item other operating expenses in the income statement. GROUP PARENT COMPANY Recognized amount for accounts receivable per currency Aug 31, 2017 Aug 31, 2016 Aug 31, 2017 Aug 31, 2016 SEK 13,133 1,536 11, EUR 12,553 27,257 12,553 27,257 Total KSEK 25,686 28,793 23,760 27,480 The ten largest customers represent 83% (99) of the Group s total accounts receivable. A single customer accounts for 57% (94). ANNUAL REPORT EOLUS VIND AB 2016/

74 NOTES NOTE 20 ACCRUALS GROUP PARENT COMPANY Prepaid expenses and accrued income Aug 31, 2017 Aug 31, 2016 Aug 31, 2017 Aug 31, 2016 Prepaid rental charges Other prepaid expenses 3,237 2,912 2,303 1,201 Accrued income 4,455 5,189 2,079 1,487 Total 7,840 8,225 4,530 2,812 Accrued expenses and deferred income Aug 31, 2017 Aug 31, 2016 Aug 31, 2017 Aug 31, 2016 Accrued payroll expenses and personnel costs 6,341 7,628 6,294 7,571 Accrued expenses and deferred income pertaining to projects 23,624 4,397 23,624 4,397 Other accrued expenses 2,517 3,653 1, Total 32,483 15,678 31,192 12,752 NOTE 21 SHARE CAPITAL AND EARNINGS PER SHARE Disclosure on number of shares Aug 31, 2017 Aug 31, 2016 Number of issued and fully paid shares Class A shares (number of votes per share 1) quotient value SEK 1 1,285,625 1,285,625 Class B shares (number of votes per share 1/10) quotient value SEK 1 23,621,375 23,621,375 Number of issued and fully paid shares 24,907,000 24,907,000 The specification of changes in equity can be found in the consolidated statement of changes in equity. Reserves consist of exchange-rate differences arising in connection with the translation of the financial statements of foreign subsidiaries. The Parent Company has no potential common shares, which is why earnings per share are the same before and after dilution for the reported years. GROUP Earnings per share, before and after dilution 2016/ /2016 Earnings attributable to Parent Company shareholders 25,317-22,925 Weighted average number of outstanding common shares 24,907,000 24,907,000 Earnings per share, before and after dilution ANNUAL REPORT EOLUS VIND AB 2016/2017

75 NOTES NOTE 22 BORROWING GROUP PARENT COMPANY Non-current borrowing from credit institutions Aug 31, 2017 Aug 31, 2016 Aug 31, 2017 Aug 31, 2016 Bank loans (fixed interest rate) - 4, Bank loans (variable interest rate) 12,740 46, Total non-current borrowing 12,740 50, Current borrowing Bank loans (variable interest rate) 21,169 31, Total current liabilities 21,169 31, Total borrowing 33,909 81, For information on pledged assets for loans raised, refer to Note 26. BANK LOANS The Group s and Parent Company s exposure, on the basis of loans, to interest-rate changes and contractual dates for renegotiations of interest rates are as follows: GROUP PARENT COMPANY Aug 31, 2017 Aug 31, 2016 Aug 31, 2017 Aug 31, months or less 33,909 77, months - 4, years More than 5 years Total 33,909 81, Borrowing per currency Aug 31, 2017 Aug 31, 2016 Aug 31, 2017 Aug 31, 2016 SEK 33,245 79, EUR 664 1, Total 33,909 81, BANK OVERDRAFT FACILITIES GROUP PARENT COMPANY Aug 31, 2017 Aug 31, 2016 Aug 31, 2017 Aug 31, 2016 Amount granted 75,000 75,000 75,000 75,000 Unutilized credit is included in current borrowing and amounts to Special undertakings, known as covenants, are in place for liabilities to credit institutions. If these undertaking are not fulfilled, the credit providers can withdraw the credit facilities. In the 2016/2017 fiscal year, all of the covenants were fulfilled. NON-CURRENT LIABILITIES Group s and Parent Company s non-current liabilities. Maturity dates as presented below: GROUP PARENT COMPANY Aug 31, 2017 Aug 31, 2016 Aug 31, 2017 Aug 31, years 7,840 28, More than 5 years 4,900 22, Total 12,740 50, ANNUAL REPORT EOLUS VIND AB 2016/

76 NOTES NOTE 23 PROVISIONS GROUP After-treatment costs for disposal of wind turbines At September 1, , ,599 Recognized in profit or loss additional provisions, interest reversed amounts pertaining to divested turbines -3, ,956 At August 31, , ,789 Lease fees Total After-treatment costs for disposal of wind turbines At September 1, , ,841 Recognized in profit or loss additional provisions, interest reversed amounts pertaining to divested turbines -1, ,898 At August 31, , ,599 Lease fees Total COMMITMENTS REGARDING AFTER-TREATMENT According to the Swedish Environmental Code, financial guarantees must be provided as security for dismantling and after-treating the locations of wind turbines. The costs for dismantling and after-treatment are estimated for each facility with guidance from investigations carried out for particular turbines. The basis is a normal value of SEK 250 per megawatt (MW) of installed capacity for steel hubs. About SEK 100 per MW is added if the turbine is constructed using concrete. The amounts apply to the cost scenario at September 1, The residual value is handled as a deductible item in the disposal analysis and is taken into account in these standard amounts. The time factor is taken into account through discounting. The price trend can be assumed to be equal to the long-term inflation target of 2%, while a certain level of technological progress should reduce the cost trend. Provisions are established at the present value of the calculated future cost. In accordance with IAS 37, point 60, provisions are continuously adjusted upward using the discount rate and this upward adjustment is recognized as a borrowing cost (interest expense). COMMITMENTS REGARDING FUTURE LEASING The provision pertains to the commitment to pay future leases for turbines that have been sold. PARENT COMPANY The Parent Company s provisions at August 31, 2017 comprise KSEK 1,081 (1,472) in after-treatment costs and KSEK 368 (881) in lease fees, or a total of KSEK 1,449 (2,353). NOTE 24 FINANCIAL INSTRUMENTS DISCLOSURE ON FAIR VALUE PER CATEGORY GROUP Aug 31, 2017 Carrying amount Fair value Level Assets in the balance sheet Available-for-sale financial assets Other financial assets 25,517 25,517 2 Loan receivables and accounts receivable Cash and cash equivalents 201, ,509 2 Accounts receivable 25,686 25,686 2 Other current receivables 1,157 1,157 2 Blocked bank balances 24,632 24,632 2 Accrued interest income ANNUAL REPORT EOLUS VIND AB 2016/2017

77 NOTES Aug 31, 2017 Carrying amount Fair value Level Liabilities in the balance sheet Liabilities measured at fair value through profit or loss Derivate liabilities Currency futures Currency swaps Interest-rate swaps 14,634 14,634 2 Liabilities measured at amortized cost Interest-bearing liabilities 33,909 33,909 2 Accounts payable 28,276 28,276 2 Other liabilities 2 Accrued interest expense Aug 31, 2016 Carrying amount Fair value Level Assets in the balance sheet Available-for-sale financial assets Other financial assets 24,355 24,355 2 Assets measured at fair value through profit or loss Currency derivatives 4,130 4,130 Loan receivables and accounts receivable Cash and cash equivalents 221, ,549 2 Accounts receivable 28,793 28,793 2 Other current receivables 4,398 4,398 2 Blocked bank balances 24,733 24,733 2 Accrued interest income Liabilities in the balance sheet Liabilities measured at fair value through profit or loss Derivate liabilities Interest-rate swaps 38,753 38,753 2 Liabilities measured at amortized cost Interest-bearing liabilities 81,774 81,774 2 Accounts payable 109, ,998 2 Other liabilities 28,122 28,122 2 Accrued interest expense DERIVATIVE INSTRUMENTS Eolus does not apply hedge accounting. Derivative instruments for managing currency and interest-rate risk are recognized as current assets or current liabilities and classified as held for trading. Changes in the value of currency derivatives are recognized in profit or loss as other operating income or other operating expenses. Changes in the value of interest-rate derivatives are recognized in net financial items. DESCRIPTION OF FAIR VALUE Interest-bearing liabilities The fair value of interest-bearing liabilities is calculated by discounting future cash flows of capital amounts and interest discounted to the current market interest rate. Derivatives Currency futures are measured at fair value by discounting the difference between the contracted forward rate and the forward rate and can be agreed on the balance-sheet date for the remaining contract period. The fair value of interest-rate swaps is based on a discounting of expected future cash flows according to the contracts terms and conditions and due dates, using the market interest rate as the baseline. Other financial assets and liabilities For accounts receivable, other receivables/liabilities, accrued income and expenses and accounts payable with a remaining term of less than six months, the carrying amount is considered to reflect the fair value. ANNUAL REPORT EOLUS VIND AB 2016/

78 NOTES NOTE 25 RECONCILIATION BETWEEN PROFIT BEFORE TAX AND NET CASH FLOW GROUP PARENT COMPANY Non-cash items 2016/ / / /2016 Depreciation and impairment of property, plant and equipment 23,423 26,719 2,118 5,174 Unrealized exchange-rate differences ,215 4,346 1,265 Capital gains from divestment of non-current assets , Changes in provisions -3,833-1, Measurement of derivatives at fair value 4,592 1, Other Total 23,715 28,337 9,860 6,085 NOTE 26 PLEDGED ASSETS AND CONTINGENT LIABILITIES GROUP PARENT COMPANY Pledged assets for liabilities 2016/ / / /2016 Chattel mortgages 603, , , ,000 Wind turbines and leases used as collateral 50, , Blocked bank balances 19,632 19, Shares in associated companies Total 673, , , ,000 CONTINGENT LIABILITIES The Group has contingent liabilities pertaining to legal claims that have arisen in the normal business operations. No significant liabilities, other than those for which provisions have been made (Note 23), are expected to arise on the basis of these. PARENT COMPANY Contingent liabilities 2016/ /2016 Contingent liabilities for the benefit of subsidiaries 69,885 69,885 Total 69,885 69, ANNUAL REPORT EOLUS VIND AB 2016/2017

79 NOTES NOTE 27 RELATED-PARTY TRANSACTIONS OWNER STRUCTURE AT AUGUST 31, 2017 Largest shareholders No. of Class A shares No. of Class B shares Share of equity (%) Share of votes (%) Domneåns Kraftaktiebolag 357,900 2,012, Hans-Göran Stennert, directly and through endowment insurance 380, , Åke Johansson 194, , Hans Johansson and Borgunda bygghandel, through companies 169,520 58, Försäkringsaktiebolaget Avanza Pension - 1,579, Johan Markensten - 808, Ingvar Svantesson 43, , Nordnet Pensionsförsäkring AB , Swedbank Försäkring - 447, Adlerbertska forskningsstiftelsen - 350, Other shareholders 139,135 16,525, Total 1,285,625 23,621, No Board members of other senior executives had any direct or indirect share transactions with the Group in 2016/2017 or 2015/2016, other than the remuneration stated in Note 6. PARENT COMPANY S TRANSACTIONS WITH OTHER GROUP COMPANIES 0.0% (0.0) of the Parent Company s sales pertain to intra-group invoicing. The Parent Company s operating expenses include intra-group purchases at only insignificant amounts. The same pricing policies apply to both purchases and sales between Group companies as to transactions with external parties. NOTE 28 SIGNIFICANT EVENTS AFTER THE END OF THE REPORTING PERIOD No significant events took place after the end of the fiscal year. ANNUAL REPORT EOLUS VIND AB 2016/

80 SIGNATURES The undersigned affirm that these consolidated financial statements and this Annual Report have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU and generally accepted accounting principles, and provide a true and fair view of the Group s and the Parent Company s financial position and earnings, and that the Directors Report provides a fair review of the Group s and Parent Company s operations, financial position and earnings and describes the material risks and uncertainty factors faced by the companies included in the Group. Hässleholm, December 4, 2017 Hans-Göran Stennert Chairman Hans Linnarson Board member Fredrik Daveby Board member Hans Johansson Board member Sigrun Hjelmquist Board member Bodil Rosvall Jönsson Board member Per Witalisson CEO Our auditor s report was submitted on December 4, PricewaterhouseCoopers AB Eva Carlsvi Authorized Public Accountant 80 ANNUAL REPORT EOLUS VIND AB 2016/2017

81 AUDITOR S REPORT AUDITOR S REPORT To the general meeting of the shareholders of Eolus Vind AB (publ), corporate identity number REPORT ON THE ANNUAL ACCOUNTS AND CONSOLIDATED ACCOUNTS Opinions We have audited the annual accounts and consolidated accounts of Eolus Vind AB (publ) for the year 1st September 2016 to 31 August 2017, excluding the corporate governance report on pages The annual accounts and consolidated accounts of the company are included on pages in this document. In our opinion, the annual accounts have been prepared in accordance with the Annual Accounts Act and present fairly, in all material respects, the financial position of the parent company as of 31 August 2017 and its financial performance and cash flow for the year then ended in accordance with the Annual Accounts Act. The consolidated accounts have been prepared in accordance with the Annual Accounts Act and present fairly, in all material respects, the financial position of the group as of 31 August 2017 and their financial performance and cash flow for the year then ended in accordance with International Financial Reporting Standards (IFRS), as adopted by the EU, and the Annual Accounts Act. Our opinion does not include the corporate governance report on pages The statutory administration report is consistent with the other parts of the annual accounts and consolidated accounts. We therefore recommend that the general meeting of shareholders adopts the income statement and balance sheet for the parent company and the group. Our opinions in this report on the annual accounts and consolidated accounts are consistent with the content of the supplementary report that has been submitted to the Parent Company s Audit Committee in accordance with Article 11 of the Auditors Ordinance (537/2014). Basis for Opinions We conducted our audit in accordance with International Standards on Auditing (ISA) and generally accepted auditing standards in Sweden. Our responsibilities under those standards are further described in the Auditor s Responsibilities section. We are independent of the parent company and the group in accordance with professional ethics for accountants in Sweden and have otherwise fulfilled our ethical responsibilities in accordance with these requirements. This means that, based on our best knowledge and belief, no prohibited services referred to in Article 5.1 of the Auditors Ordinance (537/2014) have been provided to the audited company or, as the case may be, its parent company or its controlled company within the EU. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinions. Our audit approach Audit focus and scope We designed our audit by determining materiality and assessing the risks of material misstatement in the consolidated financial statements. In particular, we considered where management made subjective judgements; for example, in respect of significant accounting estimates that involved making assumptions and considering future events that are inherently uncertain. As in all of our audits, we also addressed the risk of management override of internal controls, including among other matters consideration of whether there was evidence of bias that represented a risk of material misstatement due to fraud. We tailored the scope of our audit in order to perform sufficient work to enable us to provide an opinion on the consolidated financial statements as a whole, taking into account the structure of the Group, the accounting processes and controls, and the industry in which the group operates. Materiality The scope of our audit was influenced by our application of materiality. An audit is designed to obtain reasonable assurance whether the financial statements are free from material misstatement. Misstatements may arise due to fraud or error. They are considered material if individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial statements. Based on our professional judgement, we determined certain quantitative thresholds for materiality, including the overall materiality for the financial statements as a whole. These, together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent of our audit procedures and to evaluate the effect of misstatements, both individually and in aggregate on the financial statements as a whole. Key audit matters Key audit matters of the audit are those matters that, in our professional judgment, were of most significance in our audit of the annual accounts and consolidated accounts of the current period. These matters were addressed in the context of our audit of, and in forming our opinion thereon, the annual accounts and consolidated accounts as a whole, but we do not provide a separate opinion on these matters. KEY AUDIT MATTER Revenue recognition sale of wind farms Eolus Vind has a business plan and strategy which implies the construction and sale of wind farms, either directly or via companies. During the financial year, Eolus sold the projects Långmarken, Iglasjön, Gunillaberg, Lunna and Täppeshusen. Each separate transaction is individually produced and the contracts contain specific terms and conditions which, amongst other things, stipulate the payment model to apply and which also stipulate the respective parties commitments and requirements for completion of the contract within the determined time period. The business approach and associated contract comprises a complex area where various interpretations of the executed transaction and the associated contract terms can have a significant impact on the company s accounting and revenue recognition. HOW OUR AUDIT ADDRESSED THE KEY AUDIT MATTER Each separate contract for the sale of a wind farm, either directly or via a company, is individually produced and contains various regulations and clauses. In our audit we have: Audited the company s calculation of capital gains by reconciling the calculation against the sales contracts Audited the company s bookkeeping regarding sales at company level Audited the company s bookkeeping regarding sales at Group level Examined to determine if the classification of capital gains has been handled correctly in accordance with the company s accounting principles. In performing our audit, we have noted no significant deviations. ANNUAL REPORT EOLUS VIND AB 2016/

82 AUDITOR S REPORT KEY AUDIT MATTER HOW OUR AUDIT ADDRESSED THE KEY AUDIT MATTER Impairment testing of wind farms in operation Refer to Note 1 page 55 of the annual financial statements Assessments, estimates and assumptions, and Note 12 page 66 Tangible fixed assets. The reported value of the commissioned wind farms amounted, as at 31 August 2017, to MSEK 101. The market prices of electricity and electricity certificates have declined in recent years and remain at a relatively low level. These price declines are indications of changes in factors which can impact the valuation of the wind farms. Due to this, the company has performed write-downs amounting to MSEK 8. The company undertakes write-down tests on an on-going basis to ensure the correctness of the value of the assets. The company has not identified any further impairment requirements. Certain of the assumptions and assessments made by management in conjunction with the impairment testing regarding future cash flows and circumstances are complex and have a major impact on the calculation of the value in use. This applies, in particular, to the assessment of the future price levels of electricity and of electricity certificates and of the discount rate, where limited deviations result in a major impact on the calculation of the value in use. We have studied company management s impairment tests. These calculations contain the company s assessments regarding future cash flows and the choice of discount rates. The assumption on future price developments as regards electricity and electricity certificates has been based on price forecasts estimated by external expertise. In performing our audit we have obtained an understanding of the manner in which macro economic developments impact Eolus Vind, and how the Board of Directors and company management work to compile information to serve as the basis of their decision making. The impairment tests have been examined through our: Assessment of the correctness of the calculation models Checking of the calculation and assessment of the applied WACC Comparison of input data regarding planned production against external data and we have undertaken a reasonability assessment comparing such data with data regarding historical production. Comparison of input data regarding estimated operating costs and other data against the company s forecasts and we have undertaken a reasonability assessment comparing such data with historical information. Executed sensitivity analyses regarding, amongst other things, changes in price developments and the discount rate. In performing our audit, we have noted no significant deviations. Valuation of projects in progress Eolus Vind reports projects in progress in its balance sheet associated with the design of wind farms. The projects are realized when Eolus Vind sells the project as a construction-ready project or when the wind farm is already constructed and is either sold to a client or moved to the inventory. A project can also be realized through the sale of project rights. The reported value of projects in progress amounted at 31 August 2017 to MSEK 335. This balance sheet item is significant in its size and with the current electricity prices and prices of electricity certificates, the valuation of projects in progress is a focus area in our audit. Each project is valued individually and the company considers the realization potential of the project in the long and short term. The value of a project which is not seen to be realizable is written down immediately. This takes place, for example, when a project is rejected in the working permit process. We have studied company management s assessments and have challenged them as regarding these assessments. In performing our audit, we have obtained an understanding of the manner in which macro economic developments impact Eolus Vind and how the Board of Directors and company management work to compile information to serve as the basis of their decision making. Projects in progress have been audited on the basis of our: detailed testing to determine that the costs referring to the projects actually refer to relevant project costs studied the company s assessment of the realization of projects in the short and long term assessed the inherent parameters, such as the time plans and budgets, in the projects for which a contract has already been signed with a client discussed and assessed projects included in the business plan and budget with management and followed up the outcome against last year s business plan and budget performed random sample testing for the remaining projects included in the project portfolio and obtained comments from project managers regarding the status and assessed value of the projects. In performing our audit, we have noted no significant deviations. Other Information than the annual accounts and consolidated accounts This document also contains other information than the annual accounts and consolidated accounts and is found on pages 1-31 amd The Board of Directors and the Managing Director are responsible for this other information. Our opinion on the annual accounts and consolidated accounts does not cover this other information and we do not express any form of assurance conclusion regarding this other information. In connection with our audit of the annual accounts and consolidated accounts, our responsibility is to read the information identified above and consider whether the information is materially inconsistent with the annual accounts and consolidated accounts. In this procedure we also take into account our knowledge otherwise obtained in the audit and assess whether the information otherwise appears to be materially misstated. If we, based on the work performed concerning this information, conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Responsibilities of the Board of Directors and the Managing Director The Board of Directors and the Managing Director are responsible for the preparation of the annual accounts and consolidated accounts and that they give a fair presentation in accordance with the Annual Accounts Act and, concerning the consolidated accounts, in accordance with IFRS as adopted by the EU. The Board of Directors and the Managing Director are also responsible for such internal control as they 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. In preparing the annual accounts and consolidated accounts, The Board of Directors and the Managing Director are responsible for the assessment of 82 ANNUAL REPORT EOLUS VIND AB 2016/2017

83 AUDITOR S REPORT the company s and the group s ability to continue as a going concern. They disclose, as applicable, matters related to going concern and using the going concern basis of accounting. The going concern basis of accounting is however not applied if the Board of Directors and the Managing Director intends to liquidate the company, to cease operations, or has no realistic alternative but to do so. The Board s Audit Committee shall, without affecting the other tasks and responsibilities of the Board, monitor the company s financial reporting, among other things. Auditor s responsibility Our objectives are to obtain reasonable assurance about whether the annual accounts and consolidated accounts as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor s report that includes our opinions. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs and generally accepted auditing standards in Sweden will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these annual accounts and consolidated accounts. A further description of our responsibility for the audit of the annual accounts and consolidated accounts is available on the Swedish Inspectorate of Auditors website: This description is part of the auditor s report. REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS Opinions In addition to our audit of the annual accounts and consolidated accounts, we have also audited the administration of the Board of Directors and the Managing Director of Eolus Vind AB (publ) for the year 1 September 2016 to 31 August 2017 and the proposed appropriations of the company s profit or loss. We recommend to the general meeting of shareholders that the profit be appropriated in accordance with the proposal in the statutory administration report and that the members of the Board of Directors and the Managing Director be discharged from liability for the financial year. Basis for Opinions We conducted the audit in accordance with generally accepted auditing standards in Sweden. Our responsibilities under those standards are further described in the Auditor s Responsibilities section. We are independent of the parent company and the group in accordance with professional ethics for accountants in Sweden and have otherwise fulfilled our ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinions. Responsibilities of the Board of Directors and the Managing Director The Board of Directors is responsible for the proposal for appropriations of the company s profit or loss. At the proposal of a dividend, this includes an assessment of whether the dividend is justifiable considering the requirements which the company s and the group s type of operations, size and risks place on the size of the parent company s and the group s equity, consolidation requirements, liquidity and position in general. The Board of Directors is responsible for the company s organization and the administration of the company s affairs. This includes among other things continuous assessment of the company s and the group s financial situation and ensuring that the company s organization is designed so that the accounting, management of assets and the company s financial affairs otherwise are controlled in a reassuring manner. The Managing Director shall manage the ongoing administration according to the Board of Directors guidelines and instructions and among other matters take measures that are necessary to fulfil the company s accounting in accordance with law and handle the management of assets in a reassuring manner. Auditor s responsibility Our objective concerning the audit of the administration, and thereby our opinion about discharge from liability, is to obtain audit evidence to assess with a reasonable degree of assurance whether any member of the Board of Directors or the Managing Director in any material respect: has undertaken any action or been guilty of any omission which can give rise to liability to the company, or in any other way has acted in contravention of the Companies Act, the Annual Accounts Act or the Articles of Association. Our objective concerning the audit of the proposed appropriations of the company s profit or loss, and thereby our opinion about this, is to assess with reasonable degree of assurance whether the proposal is in accordance with the Companies Act. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with generally accepted auditing standards in Sweden will always detect actions or omissions that can give rise to liability to the company, or that the proposed appropriations of the company s profit or loss are not in accordance with the Companies Act. A further description of our responsibility for the audit of the administration is available on the Swedish Inspectorate of Auditors website: This description is part of the auditor s report. Audit of the corporate governance report The Board of Directors is responsible for the corporate governance report on pages and for ensuring that it is prepared in accordance with the Annual Accounts Act. Our review has been conducted in accordance with FAR s statement RevU 16 Auditor s examination of the corporate governance report. This means that our review of the corporate governance report has a different focus and a much more limited scope compared to the focus and scope of an audit in accordance with the International Standards on Auditing and generally accepted auditing standards in Sweden. We believe that this examination provides a sufficient basis for our opinion. A corporate governance report has been prepared. Disclosure in accordance with Chapter 6. 6 subparagraphs 2-6 of the Annual Accounts Act and Chapter 7. 31, second paragraph of the same Act are consistent with the annual accounts and consolidated accounts and are in accordance with the Annual Accounts Act. PricewaterhouseCoopers AB was appointed Eolus Vind AB (publ) s auditor at the Annual General Meeting on 28 January 2017, and has been the company s auditor since 24 January Hässleholm, 4 December 2017 PricewaterhouseCoopers AB Eva Carlsvi Authorised Public Accountant ANNUAL REPORT EOLUS VIND AB 2016/

84 BOARD OF DIRECTORS BOARD OF DIRECTORS HANS-GÖRAN STENNERT CHAIRMAN OF THE BOARD Born: 1954 Elected: 2008, Chairman since Education and background: Holds a Master of Business Administration degree and has extensive experience from positions and assignments in the IKEA Group, including Board member of the IKEA Group s holding company INGKA Holding BV in He served as Chairman of the Board for the last nine years of this period. Other assignments: Chairman of the Board of Entreprenörinvest Sverige AB. Board member of Cuptronic Technology AB and Winplantan AB. Shareholding in Eolus: 380,100 Class A shares, of which 378,000 Class A shares are held through endowment insurance, and 518,984 Class B shares, of which 516,984 Class B shares are held through endowment insurance. FREDRIK DAVEBY BOARD MEMBER Born: 1962 Elected: 2009 Education and background: Agriculturalist. President of Motormännens Riksförbund since President of Länsförsäkring Kronoberg Many Board assignments in the Länsförsäkringar Alliance, including Board member of Länsförsäkringar AB Head of Members at Södra Skogsägarna and previously held positions at the Swedish Government Offices and the Federation of Swedish Farmers. Other assignments: Chairman of the Board and President of Motormännens Testcenter AB. Chairman of the Board of Motormännens Försäkringsförmedling AB. President of Motormännens Riksförbund. Shareholding in Eolus: 10,000 Class B shares SIGRUN HJELMQUIST BOARD MEMBER Born: 1956 Elected: 2011 Education and background: Master of Science in Engineering and Licentiate of Engineering in Applied Physics degrees from the Royal Swedish Institute of Technology. Executive Partner, Facesso AB. Active in the Ericsson Group , most recently as President of Ericsson Components AB. Investment Manager at BrainHeart Capital Other assignments: Chairman of the Board of Facesso AB. Board member of Addnode group AB (publ), Clavister Holding AB, Edgeware AB, Ragn-Sellsföretagen AB and IGOT AB. Shareholding in Eolus: 1,000 Class B shares HANS JOHANSSON BOARD MEMBER Born: 1965 Elected: 2016 Education and background: Extensive experience in the Swedish building materials trade through duties at the purchasing firm Woody Bygghandel AB which has 50 member companies, and in operations at the family firm Borgunda Bygghandel where he is the CEO. Other assignments: CEO and Chairman of the Board of Borgunda Bygghandel AB and CEO or Board member of its subsidiaries Borgunda Exteras Ett AB, Borgunda Exteras Två AB, Borgunda Exteras Tre AB, Borgunda Exteras Fyra AB and Borgunda Exteras Fem AB. Chairman of the Boards of Borg unda Tributo AB and Borgunda Uterque AB. Member of the Boards of Woody Bygghandel AB and Borgunda Gård AB. Partner of Borgunda Fastighet Handelsbolag. Shareholding in Eolus: 169,520 Class A shares and 58,455 Class B shares. 84 ANNUAL REPORT EOLUS VIND AB 2016/2017

85 BOARD OF DIRECTORS HANS LINNARSON BOARD MEMBER Born: 1952 Elected: 2017 Education and background: Electronics engineer and B.A. Experience from a number of different assignments as CEO of Swedish international industrial companies for more than 30 years, such as Enertec Component AB, CTC AB, Asko Cylinda AB. Leading positions within the Electrolux Group and CEO of Husqvarna AB. Other assignments: Chairman of the Board of Nibe Industrier AB, Hörberg Petersson Tronic AB, Scandbio AB and Skeppshults Press och Svets Aktiebolag. Board member of Inission AB, LWW Group AB, Nordiska Plast AB, Plastinject Aktiebolag and Zinkteknik i Bredaryd Aktiebolag. Shareholding in Eolus: 2,500 Class B shares BODIL ROSVALL JÖNSSON BOARD MEMBER Born: 1970 Elected: 2017 Education and background: Master of Business Administration from the Faculty of Economics and Business Administration Lund. Senior Advisor at Hypergene and Navet and member of office Board at Handelsbanken Malmö-Triangeln. Former CEO of the Business Region Skåne and Enterprise Manager at Skåne County Council , CEO of Minc as well as positions within E.on Other assignments: CEO and Board member of BRJ Management AB. Shareholding in Eolus: 4,000 Class B shares OTHER DISCLOSURES REGARDING THE BOARD OF DIRECTORS AND SENIOR EXECUTIVES The assignments of Board members and senior executives described above pertain to assignments outside the Eolus Group and do not include assignments as deputy Board members. Reported shareholdings comprise both direct, indirect and related parties shareholdings in accordance with the shareholder register maintained by Euroclear on August 31, 2017 and thereafter with any changes known by Eolus. Members of the Board were elected at the Annual General Meeting on January 28, 2017 for the period until the 2018 Annual General Meeting. No separate agreements with major shareholders, customers, suppliers or other parties exist under which Board members or senior executives have been elected or appointed. No agreements exist with Eolus or any of its subsidiaries concerning benefits after the completion of each assignment. There are no close family ties between the company s Board members and senior executives. Nor do any conflicts of interest exist, whereby the private interests of Board members and senior executives could conflict with those of Eolus. All Board members and senior executives can be reached by contacting Eolus s head office. ANNUAL REPORT EOLUS VIND AB 2016/