4 million USD Total comprehensive income for the year, net of tax

Transcription

1 Annual Report 2014

2 Key figures Presence 4 countries Agua Imara is present in Zambia, Mozambique, Costa Rica and Panama Income million USD Total comprehensive income for the year, net of tax Compentence 103 employees The total number of employees in Agua Imara Content Key Figures 2 This is Agua Imara 3 Our Projects 4 Our Owners 5 Board of Directors 6 Board of Directors Report 8 Annual Accounts for 11 Annual Accounts for Agua Imara AS 31 Auditor s report 42

3 Our Mission is to be a leading renewable energy company in Africa and Central America, with main focus on hydropower, contributing to economic growth and sustainable development. Notes to the Accounts, This is Agua Imara Agua Imara was established in 2009 as a subsidiary of the SN Power Group, and is an international renewable energy company that invests in emerging markets. We aim to be a profitable long-term industrial investor, and develop, own and commercially operate sustainable renewable energy projects, with focus on hydropower, throughout Sub-Saharan Africa and Central America. As part of the SN Power Group, Agua Imara has a strong industrial foundation and capitalizes on more than 100 years of Norwegian and international hydropower experience. Agua Imara s owners, including Statkraft, represent the largest renewable energy output in Europe, with about 56 TWh in total annual electricity production. The SN Power Group s business model involves gaining footholds in emerging markets with substantial hydropower potential and energy needs, and building a leading position. Agua Imara s core markets of Sub-Saharan Africa and Central America show solid economic growth and rising power demand, and have substantial renewable energy potential. Our growth is envisioned through construction of new hydropower projects and acquisition of existing assets. Since Agua Imara s establishment, solid partnerships and hydropower projects either in operation or under construction have been obtained in Panama and Zambia, and local presence is established in Panama, Zambia, Mozambique and Singapore. In all business activities, we seek controlling influence and aspire to establish strategic cooperation with international, regional and local partners with comple mentary skills and compatible values. Equally important is that Agua Imara s investments contribute to sustainable development. All projects entered into should have minimal adverse impact on society and the environment and yield positive benefits for both local communities and society at large through the added generation of renewable energy. Solid partnerships and hydropower projects either in operation or under construction have been obtained in Panama and Zambia, and regional presence is established in Panama, Zambia, Mozambique and Singapore. Agua Imara aims to employ local people where possible, giving them the skills and experience to help both their personal development, and that of their communities. Each new project brings employment opportunities, especially during the intensive power plant construction phase. Currently, hundreds of workers are involved during the construction of the Bajo Frio facility in Panama, and the SN Power Group has grown across four continents. 3

4 Our projects ZAMBIA In 2011, Agua Imara signed an acquisition agreement for a 51% shareholding in Lunsemfwa Hydropower Company Ltd (LHPC). LHPC currently owns two hydropower plants, Mulungushi and Lunsemfwa with a combined generation capacity of 57MW. Mulungushi The Mulungushi power station comprises a regulation reservoir, a canal and penstock to a surface powerhouse. The power station has been developed in stages with the first 2MW unit installed in The station is today in need of an upgrade. Location: Near Kabwe in the Central Province Installed capacity: 32MW Avarage output: GWh Agua Imara ownership: 51% Other owners: Wanda Gorge Investments (WGI) Commercial operation: 1925 Lunsemfwa The Lunsemfwa power station comprises a reservoir, a canal and penstock to a surface powerhouse. The power station was constructed in 1945 with two 6MW units. The power plant was operated as a run-of-river scheme until 1958 when the Mita Hills dam was built. A third 6MW unit was installed in With a fourth unit installed in 2012, Lunsemfwa hydropower project today has the capacity of 25MW. Location: Near Kabwe in the Central Province Installed capacity: 25MW Avarage output: 149 GWh Agua Imara ownership: 51% Other owners: Wanda Gorge Investments (WGI) Commercial operation: 1945 Mozambique The SN Power Group opened an office in Maputo together with Norfund in The company has signed a Framework Agreement with the Government in Mozambique to develop the 50 MW Alto Malema Hydropower project in the northern parts of the country together with its two local partners, Electricidade de Mocambique and Tora Holding. A prefeasibility study on the project is on-going. Location: In the Zambezia province, close to Gurue. Costa Rica Agua Imara has no current active projects in the country, but business development activities are on-going. Panama The SN Power Group has been present in Panama since 2010, and is currently in the process of opening an office in Panama City. Agua Imara AS owns 50.1% of Fountain Intertrade Corporation. The local partner in the country is Credicorp Group/Harari family. The SN Power Group has to projects in the country Bajo frio and Burica. Bajo Frio will start producing during 2015 while Burica is still in the planning phase. Agua Imara and Credicorp are evaluating further investments in Panama. Bajo Frio Bajo Frio is a run-of-river hydropower scheme and is located in the lower part of the Chiriquí Viejo River and the Chiriqui province in western Panama. Bajo Frio is scheduled to start producing in Location: Chiriqui province in western Panama Installed capacity: 58 MW Agua Imara ownership: 50.1% Other owners: Credicorp group 49.9% Commercial operation: Muchinga LHPC fully owns the Muchinga Power Company which has a license to develop a new hydropower plant with a potential capacity of MW. A new Muchinga hydropower plant will harness the hydropower potential of the Lunsemfwa and Mkushi rivers and will be located downstream of the existing Lunsemfwa plant. Burica Burica is located directly downstream of the Bajo Frio project in the Chiriqui Viejo Basin. The construction of the project is still in the planning phase. Location: Chiriqui province in western Panama Installed capacity: 63 MW Owner: Burica Hydropower SA Other owners: Harari family (who also owns Credicorp Group) Agua Imara Ownership: 50.1%

5 Our owners SN Power AS was established in 2002 by the two stateowned entities Statkraft and Norfund. SN Power AS focuses exclusively on developments in South East Asia, Africa and Central America. The business in Africa and Central America is performed through the subsidiary Agua Imara AS. 5 BKK (Bergenshalvøens Municipal Power Company) has close to 100 years of experience in manufacturing, wholesale and transmission of electric power in Norway. It owns and operates more than 31 hydropower plants with an average annual production of 6.7 TWh.

6 Board of Directors Kjell Roland Chair of the Board Kjell Roland previously worked as partner and CEO in ECON Management AS and ECON Analysis over two decades. He co-founded ECON in As consultant, he has worked on macro economics, energy and environmental issues for private companies, governments and international organizations such as the World Bank and the Asian Development Bank. He has edited and published more than 300 articles and reports as well as seven books, mainly in the field of energy and environmental economics and climate policy. Roland holds a Master of Science degree from the department of Economics at the University of Oslo, a lower degree in Philosophy from University of Tromsø and has been a visiting scholar at the Department of Economics and Department Operations Research at Stanford University. Øistein Andresen Deputy Chair of the Board Øistein Andresen holds the position as Executive Vice President International Hydropower in Statkraft. From 2002 to 2010 he held the position as CEO of SN Power. His previous experience included ABB, Statkraft Engineering, Akershus Energy and Norwegian Ski Federation (Norwegian: Norges Skiforbund). He holds a Master of Science from the Norwegian Institute of Technology in Trondheim (NTNU) in electrical engineering. Lisa Huun Thomsen Board member Lisa Huun Thomsen has more than 20 year experience in the Renewable Energy sector, especially within areas of project finance, risk management, taxation and business development in emerging markets. Currently she holds the position as Senior Investment Manager in Renewable Energy in Norfund, and has previously worked in various positions in Statkraft from 1994 to 2002 and most recently in SN Power as Vice President Finance from 2002 to Huun Thomsen holds a Master of Science from the Norwegian School of Economics (NHH). 6

7 Board of Directors Kjersti Rønningen Board Member Kjersti Rønningen has been employed at Statkraft since 2008, first as Senior Vice President Corporate Audit and since August 2013 as SVP Finance & Control Rønningen also has 10 years of experience from the Corporate Audit function in the Norwegian Industrial conglomerate, Orkla covering governance, risk and business management in industrial and financial entities. Kjersti has also held positions covering financial reporting and performance management in the publishing sector and from Norwegian Chuch Aid s operations in Africa, Asia and Latin America. Rønningen holds a Bachelor degree with Honours in Business Management and International Finance from Herriot Watt University in Edinburgh, Scotland. Wenche Teigland Board member Wenche Teigland has been Executive Vice President of BKK Energy since 2007, and is the CEO of BKK Produksjon, which includes market, operations and maintenance, project development and execution, asset management. Her previous experience includes Gasnor, ABB Offshore Systems, Aker Engineering and Solbos AS. She has held several board positions, and is the current Chairman of the Board in Vestavind Offshore. Teigland holds an MSc in Mechanical Engineering from South Dakota School of Mines and Technology and a BSc from Bergen University. Ketil Konglevoll Board member Ketil Konglevoll has experience from Lönne Skandinavia AS, Rolls-Royce Marine AS, Enginor AS, Maritime Hydraulics AS and Scana Skarpenord AS before he joined BKK in He has held several Board positions in the Norwegian energy sector and also in Himal Power Ltd in Nepal. He has more than 20 years of experience as Mechanical Engineer. Konglevoll holds an MSc in Mechanical Engineering from University of Surrey and a BSc from Bergen University. 7

8 Board of Director s Report and Agua Imara AS The Company Agua Imara was incorporated in January The Company s business is to develop, rehabilitate and acquire renewable energy on commercial terms in Africa and Central America with a focus on hydropower. The Company is located in Oslo, with its subsidiary Agua Imara ACA Pte Ltd located in Singapore, which has branch offices in Costa Rica and Mozambique. the Chiriquí Viejo Basin. Burica will be constructed as a third power house in the Bajo Frio cascade. Due to the synergies with Bajo Frio, the construction of the Burica intake will be completed in The land acquisition was successfully completed last year and the international tender process was initiated at the end of The lessons learnt regarding contractual management and HSE from Bajo Frio are emphasized in this project. Agua Imara ACA s only operating subsidiary is Lunsemfwa Hydro Power Company (LHPC) in Zambia, of which its ownership share is 51%. LHPC is headquartered in Kabwe, in the central part of Zambia, and owns and operates two hydropower plants, with dams, canals and power lines to Kabwe, with a combined capacity of 55 MW. LHPC is the only private power generating company connected to the Southern African Power Pool (SAPP). LHPC also owns Muchinga Power Company (MPC) in Zambia. MPC has a license to develop a hydropower plant with a potential capacity of MW, downstream of the existing LHPC power plants. Agua Imara ACA has one subsidiary and one joint venture in Panama, Fountain Intertrade Corporation (FIC) and Hidro Burica SA (Burica). Agua Imara ACA holds a 50.1% ownership share in both companies. FIC has offices in Panama City and Chiriquí, and is developing the 58 MW Bajo Frio run of river hydropower project, in the Chiriquí Viejo Basin near the border to Costa Rica. Bajo Frio is scheduled to commence operations in the second quarter of The project experienced contractual problems with involved contractors in 2014, which were successfully resolved. Furthermore, during the implementation of the project the HSE performance of the contractors has been an ongoing challenge. The project experienced its first fatality in November Burica is a 63 MW run of river hydropower plant under construction immediately downstream of Bajo Frio in Agua Imara s long term goal in Mozambique is to cooperate with the partners Electricidade de Moçambique (EdM) and Tora Holding to develop the Alto Malema Hydro power project north-east of Gurue in the Zambezi province. Alto Malema will have a capacity of MW. Agua Imara is part of the SN Power Group and has a service agreement with SN Power AS for delivery of technical, financial and administrative services. Statkraft Norfund Power Invest s (SNPI) assets and organization was split between Statkraft and a new SN Power in On June 27th 2014 BKK announced an increase in its shareholding in Agua Imara by taking over Trønder Energi s stake in the company leaving Agua Imara with only two shareholders SNP (64.9% and BKK 35.1%). The financial statements During 2014 continued to develop the two construction projects in Panama as well as the MPC project in Zambia. Zambia experienced a severe drought in 2014 which had a serious impact on the available water for power generation in parts of the country. As a consequence the financial performance of Agua Imara s subsidiary in Zambia, LHPC, shows a negative development in 2014 compared to previous years. LHPC has pursued the development of the Muchinga 8

9 greenfield project and the technical feasibility studies have been completed. The equity as a percentage of total debt and equity was 98.3% as of 31 December The sales for the Group amounted to USD 11.7 million, versus USD 16.6 million in The reduction is due to the aforementioned drought in Zambia. Net financial items amounted to USD +0.2 million in 2014 versus USD +0.1 million in The net result decreased from USD -5.5 million in 2013 to USD million in The s cash and cash equivalents were at USD 32.8 million as of 31 December Net cash flow from operational activities was USD -2.6 million (USD -2.2 million), while net cash flow from investment activities was USD million (USD million). Cash flow from financing activities amounted to USD 59.0 million (USD 93.3 million), which was mainly derived from draw down on non-recourse loan in FIC of USD 51.7 million. The Group had long term interest bearing debt from FIC s balance sheet of USD million and from LHPC balance sheet with USD 3.0 million. The amount in FIC s books is related to a non-recourse project finance loan, except from USD 10.4 million in shareholder loan from the owner of the non-controlling interest. Total assets for the Group amounted to USD million at the end of the year The equity as a percentage of total debt and equity went from 53.8% as of 31 December 2013 to 45.7% as of 31 December Allocation of this year s net loss and continued operations Agua Imara s Board of Directors has suggested that no dividend is distributed for 2014 and that this year s net loss is allocated as follows: Net loss 2014 Transferred from other equity USD 6.6 million USD 6.6 million It is the Board s opinion that the Annual Accounts give a true and fair view of s financial results in 2014 and the Group s financial situation as of 31 December According to the Norwegian Accounting Act, the Board confirms that the Annual Accounts have been prepared based on the Group as a going concern. Work Environment, Equal Rights and Discrimination The work environment is considered good. Total sick leave the last year was 326 (311) days for the Group and 40 (73) days for the Mother Company, which amounts to 1.2% (1.2%) and 1.4 % (2.4%) of the total number of working days. The health and safety of Agua Imara employees and the employees of contractors and consultants is a key priority for Agua Imara. Our goal is to meet high international Health, Safety and Environmental (HSE) standards in all of our activities. 9 Agua Imara AS The Mother Company, Agua Imara AS, had an operating loss of USD 6.0 million, compared to USD -5.2 million in Net financial items amounted to USD -0.6 million (USD +0.3 million), and net loss was USD -6.6 million in 2014 (USD -4.9 million). The Bajo Frio construction project experienced its first fatality in November 2014, when a load dropped from a crane, killing one person and seriously injuring one person. A thorough investigation has been carried out and corrective measures have been implemented at the project site was Agua Imara s sixth operating year. The Company s operational expenses declined to USD -5.7 million, compared to USD -6.9 million in The reduction relates to salary and personnel costs as a consequence of reduced headcount and reorganization of the management. Agua Imara s cash and cash equivalents were at USD 18.7 million as per 31 December Net cash flow from operational activities was USD 13.7 million (USD -4.8 million), while investment in Agua Imara was USD 15.8 million (USD 0 million). There was no new paid in equity in 2014 compared to USD 29.5 million in The Company has no long or short term interest bearing debt. Total Assets at the end of 2014 were USD million. During 2014 the Total Recordable Injury (TRI)-rate in operations and maintenance was 3.9. The corresponding figure for projects under construction was 21. Of the Group s total number of 106 (105) employees, 22 (23) are women. For the Mother Company the equivalent figures are 6 (6) out of a total of 10 (12) employees which are women. Agua Imara s Board of Directors consists of 3 men and 3 women. The does not discriminate on the basis of gender, religion or ethnic background. No specific measures have been implemented to encourage equal rights or diversity internally. This is due to the nature of the Group s businesses, which are diverse in ethnicity, age, gender and cultural background.

10 External Environment During 2014 there was no record of violations of Agua Imara s environmental standards for emissions or other environmental risks. Agua Imara is committed to comply with international environmental and social standards set by the International Finance Corporation (IFC) and the UN Global Compact. The standards are integrated into the Company s Group CSR and Environmental Policy and Procedures and into the Company s project management tool. Market Outlook In 2014, oil and coal prices dropped significantly during the year. This was due to robust supply and a weaker global demand for primary fuels in Asia and Latin America. The coming year Agua Imara expects a further decrease in oil prices, but some appreciation of coal prices compared to the low levels prevailing at the end of Emissions Reduction (CER) prices are expected to remain at a low level the coming years. Electricity demand growth remains robust in the markets where Agua Imara is operating, and power prices in Central America are still much higher than in the Nordic and Continental power markets, while prices in Southern Africa are still below cost reflective levels. Risk Management The Group follows established guidelines for risk management. In some countries where Agua Imara operates, exposure to political and economic risks is considered higher than normal because of past or current unstable political conditions. In order to reduce and minimize this risk, all markets are closely monitored. Country risk is included in all financial models. The also follows an established set of Health, Safety and Environmental (HSE) standards, specifications and procedures to ensure an acceptable minimum safety standard throughout our business. These standards are actively monitored and reported by our regional organizations and our representatives in Boards, and through HSE audits. Financial risk The Group manages financial risks by using different hedging instruments. Currency forward contracts are mainly used to hedge future cash flow in foreign currency while interest rate swaps are used to convert parts of loans from variable to fixed rates. The Group uses project finance with no or limited and capped recourse towards mother or sister companies. Market and Hydrological risk The Group will manage market risk and hydrological risk by building a portfolio in different energy markets with different spread of regulatory, hydrological and investment-cyclical market risk in Africa and Central America, as well as by using power purchase agreements with different profiles and indexations. Priorities for 2015 and onward With a renewed long term commitment from its owners, as well as very strong growth in all its core markets the company should be very well positioned for the future. The focus in 2015 will be on business opportunities. Agua Imara will have operating assets in Zambia and Panama and the Burica project under construction in Panama. The main objective for 2015 will be to optimize operations for existing assets and build a new portfolio of greenfield and acquisitions projects in existing and potentially new markets. Agua Imara will continue to evaluate the opportunities we have started to look into in Mozambique, as well as looking into other African and Central American markets. 10 Oslo, 24 February 2015 Kjell Roland Øistein Andresen Kjersti Rønningen Chair Deputy Chair Director Lisa Huun Thomsen Wenche Teigland Tore Jensen Director Director Director Torger Nils Lien Chief Executive Officer

11 Annual Accounts 2014 for

12 * Figures in USD 1,000 Income statement OPERATING REVENUES AND EXPENSES NOTE Sales revenues 7 11,724 16,593 Salary and personnel costs 8-7,299-8,398 Depreciation and impairment 11,12-6,848-2,956 Other operating costs 9-8,120-8,691 Income from investments in associated companies and joint ventures EARNINGS BEFORE FINANCIAL ITEMS AND TAX -10,679-3,464 FINANCIAL INCOME AND EXPENSES Financial income 10 1, Financial expenses 10-1, Net financial items Profit/loss before tax -10,514-3,353 This year's tax expense 19-1,553-2,106 NET PROFIT/LOSS FOR THE YEAR -12,067-5,459 Attributable to: Equity holders of the parent -10,827-6,298 Non-controlling interests -1, NET PROFIT/LOSS FOR THE YEAR -12,067-5, CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME Items that may be reclassified subsequently to profit or loss Net gain/losses on hedging instruments 14-7,368 9,842 Total items that may be reclassified subsequently to profit or loss -7,368 9,842 Items that will not be reclassified to profit or loss Pensions Total items that will not be reclassified to profit or loss Other comprehensive income for the year, net of tax -7,087 9,484 TOTAL COMPREHENSIVE INCOME FOR THE YEAR, NET OF TAX -19,154 4,025 Attributable to: Equity holders of the parent -14,231-1,722 Non-controlling interests -4,923 5,747 TOTAL COMPREHENSIVE INCOME FOR THE YEAR, NET OF TAX -19,154 4,025

13 * Figures in USD 1,000 Balance sheet ASSETS NOTE Intangible assets 12 10,863 15,711 Property, plant and equipment , ,991 Investment in associated companies and joint ventures 6 10,006 9,140 Non-current financial instruments (Derivatives) Financial assets Total non-current assets 381, ,612 Receivables 15 1,977 4,663 Bank deposits, cash and cash equivalents (Incl. restricted funds) 16 32,829 68,335 Total current assets 34,806 72,998 TOTAL ASSETS 416, ,610 EQUITY AND LIABILITIES Paid-in capital , ,786 Other equity -34,568-20,337 Non-controlling interests 71,292 65,840 Total Equity 190, ,289 Pension commitments Deferred tax 19 40,313 41,193 Non-current financial instruments (Derivatives) 14 6,716 - Interest-bearing long term debt , ,730 Total long-term liabilities 211, ,795 Current portion long term debt 21 6,795 3,077 Tax payable 19 1, Other current liabilities 22 6,616 7,228 Total current liabilities 14,951 10,526 TOTAL EQUITY AND LIABILITIES 416, , Oslo, 24 February 2015 Kjell Roland Øistein Andresen Kjersti Rønningen Chair Deputy Chair Director Lisa Huun Thomsen Wenche Teigland Tore Jensen Director Director Director Torger Nils Lien Chief Executive Officer

14 * Figures in USD 1,000 Consolidated Statement of Changes in Equity at 31 December Paid-in capital Share capital Attributable to majority owner Share premium Retained earnings Other equity Translation reserve Hedging reserve Non-controlling interests Total equity At 1 January , ,755-13, ,601 60, ,767 Transactions with shareholders Issue of share capital 2,724 26,773 29,497 Transactions with shareholders 2,724 26,773 29,497 Other comprehensive income for the year, net of tax Net gain/losses on hedging instruments 4,934 4,908 9,842 Pensions Other comprehensive income for the year, net of tax ,934 4,908 9,484 Recognized through Profit and Loss Profit for the year -6, ,459 Recognized through Profit and Loss -6, ,459 Total comprehensive income for the year, net of tax -6,656 4,934 5,747 4,025 At 31 December , ,528-20, , , Transactions with shareholders Issue of share capital 10,375 10,375 Transactions with shareholders 10,375 10,375 Other comprehensive income for the year, net of tax Net gain/losses on hedging instruments -3,685-3,683-7,369 Pensions Other comprehensive income for the year, net of tax 281-3,685-3,683-7,087 Recognized through Profit and Loss Profit for the year -10,827-1,240-12,067 Recognized through Profit and Loss -10,827-1,240-12,067 Total comprehensive income for the year, net of tax -10,546-3,685-4,923-19,154 At 31 December , ,528-31, ,352 71, ,510

15 * Figures in USD 1,000 Cash Flow Statement CASH FLOW FROM OPERATIONAL ACTIVITIES NOTE Profit/loss before tax -10,514-3,353 Tax paid ,296 Ordinary depreciation 11 6,848 2,956 Difference between this year's pension expense and pension premium Income from investments in associated companies and joint ventures Change in other long-term receivables Change in receivables and other current liabilities 1, Net cash flow from operational activities -2,568-2,163 CASH FLOW FROM INVESTMENT ACTIVITIES Investment in tangible and intangible fixed assets 11,12-90,948-66,166 Payment from sale of fixed assets Investment in associated companies and joint ventures 6-1,002-5,138 Net cash flow from investment activities -91,935-70,906 CASH FLOW FROM FINANCING ACTIVITIES New long-term debt 21 51,699 66,920 Paid installments long-term debt 21-3,077-3,111 New paid-in equity from non-controlling interests EQ 10,375 - New paid-in equity 17-29,497 Net cash flow from financing activities 58,997 93, Net change in cash and cash equivalents -35,506 20,237 Cash and cash equivalents at 1 January 68,335 48,098 Cash and cash equivalents at 31 December 32,829 68,335

16 Notes to the Accounts, Notes NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES Agua Imara AS, including subsidiaries (), is an international renewable energy company with projects and operations in Africa and Central America. The company invests on commercial terms and is committed to social and environmental sustainability throughout the business. The company s headquarter is in Oslo. in the consolidated financial statements. These principles have been applied consistently to all reporting, unless otherwise stated. Basic principles The consolidated financial statements for the Group have been prepared in accordance with the International Financial Reporting Standards (IFRS) as adopted by the EU. The consolidated financial statements of the for the year 2014 were authorized for issue in accordance with a resolution of the Board of Directors on 24 February The following text describes the most important accounting principles used STANDARD/ INTERPRETATION TITLE DATE OF ISSUE The following new and revised or amended Standards and Interpretations have also been adopted in these financial statements. Their adoption has not had any significant impact on the amounts reported in these financial statements, but may affect the accounting for future transactions or arrangements. Amendments to IAS 32 Offsetting Financial Assets and Financial Liabilities December January 2014 Amendments to IAS 36 Recoverable amount disclosures for Non-Financial Assets May January 2014 Amendments to IAS 39 Novations of Derivatives and Continuation for Hedge Accounting June January 2014 IFRIC 21 Levies May January 2014 APPLICABLE TO ACCOUNTING PERIODS COMMENCING ON OR AFTER 16 At the time of presentation of the financial statements, the following standards and interpretations are issued by IASB but not entered into force for the financial year Management assumes that these standards and interpretations will be applied in the Group financial statements from the financial STANDARD /INTERPRETATION TITLE DATE OF ISSUE year 2015 or later, and have not assessed the potential effect of these new standards. Standards and Interpretations that are clearly not relevant for the Group s financial statements have not been included in the below schedule. IFRS 9 Financial Instruments November January 2018 IFRS 15 Revenue from Contracts with Customers May January 2017 Amendments to IAS 19 Accounting for Contributions that are linked to Service November July 2014 Amendments to IAS 16 and IAS 38 Acceptable methods of depreciation and amortisation May January 2016 Amendments to IAS 27 Allow the use of the Equity Method in Separate Financial Statements August January 2016 Improvements to IFRSs (Various Standards and Interpretations) Improvements to IFRSs Cycle December July 2014 Improvements to IFRSs (Various Standards and Interpretations) Improvements to IFRSs Cycle December July 2014 APPLICABLE TO ACCOUNTING PERIODS COMMENCING ON OR AFTER The consolidated financial statements have been prepared on a historical cost basis. The functional currency of the parent company is US dollars (USD), and the Group financial statements are presented in USD. All values are rounded to the nearest USD thousand unless otherwise stated.

17 Notes to the Accounts, Notes Corresponding figures All figures in the income statement, the balance sheet, the consolidated statement of changes in equity, the cash flow statement and the notes to the financial statements are presented with the previous year s corresponding figures. The corresponding figures are based on the same principles as figures for the current period. Subsidiaries are consolidated from the date on which control is transferred to the Group. Correspondingly, they are deconsolidated from the date control ceases. The results of subsidiaries acquired or disposed of during the year are included in the consolidated income statement from the date of acquisition or up to the date of disposal. Significant accounting judgments, estimates and assumptions The preparation of the Group s financial statements requires management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities, at the reporting date. Estimates and underlying assumptions are reviewed on an ongoing basis. Changes in estimates will be recognized in the period they occur only if applicable in that period. If changes also concern future periods, the effect is distributed over both current and future periods. However, uncertainty about these assumptions and estimates could result in outcomes requiring a material adjustment to the carrying amount of the asset or liability affected in the future. The areas in the financial statements of Agua Imara that are most affected by significant accounting judgments, estimates and assumptions are: Useful life of tangible and intangible fixed assets Depreciation is based on management estimates of the useful lives of the assets and their residual values. Estimates may change due to changes in scrap value, technological development, environmental and other conditions. Management reviews the future useful lives of each component and the residual value annually, taking into account the above mentioned factors. Purchase price allocation related to new investments in subsidiaries, associated companies, and joint ventures When entering into new investments in subsidiaries, associated companies or joint ventures, the Group will measure the cost of the business combination according to IFRS 3. Management must use judgment in defining and allocating fair values of assets, liabilities and direct costs attributable to the combination. Capital management The primary objective of the Group s capital management is to optimize the use of equity to maximize shareholder value. The Group manages its capital structure and makes adjustments to it, in light of changes in economic conditions. To maintain or adjust the capital structure, the Group may adjust debt exposure, dividend payments to shareholders, return capital to shareholders or issue new shares. The Group s policy is to use project financing in all investments and in the long run to keep the gearing ratio in operating companies above 50%. The gearing ratio is defined as interest bearing debt divided by Total equity and liabilities: Total interest bearing debt 170, ,087 Total equity and liabilities 416, ,610 Gearing ratio 40.9% 32.9% Consolidation The consolidated financial statements comprise the financial statements of the parent company Agua Imara AS and its controlling interests in other companies as of 31 December Elimination of transactions Intra-group balances, unrealized profit, income and expenses resulting from intra-group transactions are eliminated in full. Subsidiaries Subsidiaries are all entities where the Group has a controlling interest. Normally, the Group controls an investee when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. The purchase method of accounting is used to account for the acquisition of subsidiaries. The purchase method implies that the cost of acquisition is allocated to the acquired assets and liabilities according to fair value on the acquisition date. Costs exceeding fair value of identified assets and liabilities are recorded as goodwill, and judgments are made annually whether the carrying amount can be justified based on future earnings. Non-controlling interest is the share of profit and equity that is not held by the majority owners. This is reported separately in the income statement and the statement of comprehensive income and on a separate line under equity in the consolidated financial statements. Functional currency is assessed for each subsidiary based on company specific indicators. The accounts of these subsidiaries are converted to the Group s presentation currency (USD) by calculating all balance sheet items at the closing rate at the year end, whilst all income statement items are converted at the average rate for the year. Any conversion differences affecting balance sheet items are recorded directly against equity. Investments in associated companies and joint ventures Shares in companies where the Group exercises a significant, but not controlling influence, and shares in companies with joint control are treated in accordance with the equity method. Significant influence normally means that the Group owns between 20% and 50% of the voting capital. The Group s share of the companies net result adjusted for amortization of excess value is shown on a separate line in the consolidated income statement. The investments are shown in the consolidated balance sheet as non-current assets, recognized at the value which equals the historical cost price including directly assigned transaction costs adjusted for the accumulated share of results adjusted for depreciation and amortization of excess values during the period of ownership, dividend received and possible exchange rate adjustment. Any conversion differences are recorded directly against equity. The consolidated financial statement includes the Group s share of profit or loss from the date on which significant influence is attained and until such influence ceases. Revenue recognition Revenue comprises the fair value for the sale of goods and services, net of value-added tax, rebates and discounts. Intra-group sales are eliminated in the group accounts. Revenue is recorded as and when earned. (a) Power sales Revenues from power sales and transmission are recognized as income when delivered. (b) Sales of services Sales of services are recognized in the accounting period in which the services are rendered. (c) Dividend income Dividend income is recognized when the right to receive payment is established, normally when approved by the General Meeting. (d) Income from associated companies The Group s share of the net result in associated companies and joint ventures is recorded in the Group s accounts in accordance with the equity method described in IAS 28. Borrowing costs Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to 17

18 Notes to the Accounts, Notes the cost of those assets, until such time as the assets are substantially ready for their intended use or sale. instruments in cases where an instrument can qualify for recognition under more than one category. Government grants Grants from the government are recognized gross in the income statement and in the balance sheet. Government grants related to costs are deferred and recognized in the income statement over the period necessary to match them with the costs that they are intended to compensate. Government grants related to projects recognized in the balance sheet are presented as deferred income and recognized as income along with depreciation of the corresponding asset. Foreign currency The consolidated financial statements are presented in USD, which is also the parent Company s functional currency. Each entity in the Group determines its own functional currency based on local operations, and items included in the financial statement of each entity are measured using that functional currency. Balance sheet items in other currencies than the functional currency are assessed at the exchange rate at the date of the balance sheet. Exchange rate effects are recognized as financial items. Gains and losses on hedges in net investments in foreign operations, including a hedge of a monetary item that is accounted for as part of the net investment, are recognized directly in equity as long as the hedge is deemed effective. On disposal of a foreign operation, the cumulative value of any such gains or losses recognized directly in equity is transferred to the profit and loss along with accumulated exchange differences on the net investment. Financial instruments Generally Financial instruments are initially allocated to one of the categories of financial instruments as described in IAS 39. The different categories relevant to the and the management that follow the instruments recognized in the respective categories are described below. Valuation principles for different categories of financial instruments 1) Instruments at fair value through profit or loss Derivatives and financial instruments held for sale have to be measured at fair value in the balance sheet with corresponding change in fair value through profit and loss statement. For derivatives that are hedging instruments in a hedge accounting relationship, the change in value of the effective part of the hedge, following from a change in the value of the hedged risk, is not taken to profit or loss. In a fair value hedge such effects are carried against the value of the hedging object. For hedging of cash flow and hedging of net investments in foreign operations such effects are taken directly to equity. Derivatives consist of both independent derivatives and embedded derivatives that are separated from the host contract and recognized at fair value as if the derivative was an independent contract. 2) Loans and receivables Loans and receivables are initially recognized at fair value including transaction costs. In subsequent periods, loans and receivables are measured at amortized cost using the effective interest method, so that the effective interest rate becomes equal over the term of the instrument. 3) Financial liabilities Financial liabilities are initially recognized at fair value including transaction costs. In subsequent periods, financial liabilities are measured at amortized cost using the effective interest method so that the effective interest rate becomes equal over the term of the instrument. Principles for designation of financial instruments to different categories of instruments Below is a description of the guidelines applied by the for designation of financial instruments to different categories of financial Instruments at fair value through profit or loss Derivatives must always be assessed under the category fair value through profit or loss. Financial contracts regarding purchase or sale of energy and CO 2 -quotas always have to be considered as derivative financial instruments. Physical contracts regarding purchase and sale of energy and CO 2 -quotas entered into as authorized by trading, or settled financially are considered as if they where financial instruments and have to be measured at fair value. Physical contracts regarding purchase and sale of energy and CO 2 -quotas entered into according to authorization related to own requirements or provision for own production, are normally not covered by IAS 39 as long as the contracts do not contain written options in terms of volume flexibility. Financial instruments included in hedge accounting Identification of financial instruments designated as a hedge instrument or a hedge object in a hedge account is based on the intention of the acquisition of the financial instrument. If financial instruments are acquired with the intention to obtain an economic hedge effect, a closer consideration of the possibilities to document a hedge account will be made. Presentation of derivatives in profit and loss and in the balance sheet Derivatives not related to hedging are presented on separate lines in the balance sheet under assets and liabilities, respectively. Derivatives with positive and negative fair value, respectively, are presented gross in the balance sheet as long as no legal rights to set off different contracts exist, and such rights to offset actually will be applied in the current cash settlement following the contracts. In the latter case, the particular contract will be presented net in the balance sheet. In the income statement, changes in fair value of derivatives not classified as hedge accounting are classified as financial items. Value changes in energy derivatives are presented under revenue, while value changes in financial derivatives are presented under financial items. Income tax Tax payable for the current and prior periods is measured at the amount expected to be paid to the tax authorities in each country. The tax rates and laws used to compute the amount are those that are enacted or substantially enacted by the balance sheet date. Deferred tax and deferred tax assets Deferred income tax is calculated based on temporary differences between the tax base of assets and liabilities, and their carrying amounts for financial reporting purposes. Deferred income tax assets are recognized for all deductible temporary differences, carry-forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry-forward of unused tax assets and unused tax losses can be utilized. The carrying amount of deferred income tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilized. Unrecognized deferred income tax assets are reassessed at each balance sheet date and are recognized to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered. Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantially enacted at the date of the balance sheet. Deferred tax assets and deferred tax liabilities are offset within the same legal tax subject and jurisdiction. Current/non-current An asset/liability is classified as current when it is expected to be realized or settled, is intended for sale or consumption within the Group s normal operating cycle, is held primarily for the purpose of being traded, or is expected to be realized or settled within twelve months after the date of balance sheet. The presentation of financial instruments in current and non-current items respectively, is made according to general guidelines for such classification. For long-term debt, the first year installment is classified as a short-term item. 18

19 Notes to the Accounts, Notes Intangible assets Road and land rights Expenses for intangible assets, comprising road and land rights, are recognized at historic cost to the extent that the criteria for capitalization are satisfied. Development costs Development costs are capitalized only if future economic benefits from the development of an intangible asset are probable, according to IAS 38. Development costs will often be capitalized when a construction project is more likely to happen than not. This may occur before the formal investment decision has been made. Tangible assets Tangible assets are carried at cost, including expenses completing the asset for use, less accumulated depreciation and any accumulated impairments. Borrowing costs for significant investments are capitalized. Expenses accrued after the asset has been taken into use, such as maintenance costs, are taken to profit or loss, while other expenses expected to generate economic benefits are recognized in the balance sheet. Water rights are not depreciated if no right of reversion exists and the value is deemed to be perpetual. Time limited rights are depreciated over the license period. Water rights acquired in a separate transaction are measured initially at cost. Water rights acquired in a business combination is measured at fair value based on the estimated excess earnings of the acquired power plant. The excess earnings are the difference between the after-tax operating cash flow and the required cost of invested capital on all other assets used in order to generate those cash flows. These contributory assets include property, plant and equipment, other identifiable intangible assets and net working capital for the power plant. The allowance made for the cost of such capital is based on the value of such assets and a required rate of return reflecting the risks of the particular assets. Depreciation is made on a straight line basis over the useful life of the asset. Useful life is assessed on an individual basis and there might be variations within the group based on given local conditions or license period. The normal useful lives for different groups of assets are presented in the table below: Land Water rights Plants and machinery Fixtures and fittings, vehicles, other equipment Eternal License period Rock-fill dams, concrete dams 75 Tunnel systems 75 Rock rooms/chambers 75 Mechanical machine installations 40 Remaining technical machine parts 15 Generator 40 Transformer 40 Switchgear (high-voltage) 35 Control gear 15 Electro technical auxiliary gear 15 System control centre 15 Telecommunication circuit 10 Administration building 50 Power plant - Building structure 75 Other buildings related to operation 50 Buildings: Technical installations 30 Buildings: Tele- and automatics Office- and computer equipment 3 Furniture and fixtures 5 Means of transport 10 Each part of a fixed asset that is significant to the total cost of the item will be depreciated separately. Residual value is taken into account when calculating the annual depreciation. Land is not subject to depreciation. Periodic maintenance is capitalized with depreciation over the time period until the next maintenance is expected to be carried out. Estimated useful life, depreciation method and remaining value are reviewed annually. When assets are sold or disposed of, the capitalized value is derecognized and any loss or gain is taken to profit or loss. If new components are capitalized, the components that were replaced are removed and any remaining recognized value is recorded as a loss. Impairment of assets and intangible assets Tangible and intangible assets are assessed for impairment when events occur or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. Intangible assets with indefinite useful life and goodwill are tested at each reporting period. When impairment is considered, the assets are grouped at the lowest level for which there are separate identifiable cash generating units. Impairment is calculated as the difference between the assets carrying amount and the recoverable amount. The recoverable amount is the greater of the assets fair value less costs of disposal and the value in use for the company. In assessing value in use, the estimated future cash flow is discounted to the present value using a discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. When it is assumed that the recoverable amount of the asset is lower than its carrying amount, the asset is written down to recoverable amount. The impairment loss is recognized in the income statement in the expense categories consistent with the type of the impaired asset. Previously recognized impairment loss is reversed only if there have been changes in the estimates used to determine the recoverable amount. The reversed amount cannot exceed the carrying amount that would have been determined if no impairment loss had been recognized for the asset in prior years. Such reversal is recognized in profit or loss. Trade and other receivables Trade receivables are recognized initially at fair value and subsequently measured at amortized cost using the effective interest method, less provision for impairment. A provision for impairment of trade receivables is established when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of the receivables. The amount of the provision is the difference between the asset s carrying amount and the present value of estimated future cash flows, discounted at the effective interest rate. The amount of the provision is recognized in the income statement. Cash and cash equivalents Cash and cash equivalents include bank deposits, other short-term liquid investments and bank overdrafts. Cash and cash equivalents are recognized at current values. Restricted deposits are included in cash and cash equivalents. Equity Proposed dividend is classified as equity. Dividends are reclassified to short term liabilities when approved by the General Assembly. Provisions, contingent assets and liabilities Provisions are recognized when the Group has a present obligation (legal or self-imposed) as a result of a past event, it is probable that the obligation has to be settled and that a reliable estimate of the obligation can be made. Provisions are recognized with best estimate of the expenses required to settle the existing obligation at the balance sheet date. If significant, the time value of money is taken into account when calculating the size of the provision. Contingent assets and liabilities are not recorded in the financial statements. 19

20 Notes to the Accounts, Notes Pensions Defined benefit plans A defined benefit plan is a pension plan that defines an amount of pension that an employee will receive upon retirement, normally set as a share of the employee s salary. The liability recognized in the balance sheet in respect of defined benefit pension plans is the present value of the defined benefit obligation at the balance sheet date less the fair value of plan assets, together with adjustments for unrecognized actuarial gains or losses and past service costs. The present value of the defined benefit obligation at the balance sheet date is determined by discounting the estimated future cash outflow using a risk free interest rate. The obligation is calculated annually by an independent actuary using the linear accrual method. Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are recognized in comprehensive income. Changes in the defined benefit obligations due to changes in pension plans are taken directly through income statement over the vesting period. Net pension assets for over-funded plans are recognized at fair value and classified as long term assets. Net pension obligations for under-funded plans and non-funded plans covered by operations are classified as long term provisions. Net pension costs for the period are included in salary and personnel costs and consist of the sum of pension earned in the period, interest costs on the estimated obligation and estimated return on the pension s fund. Defined contribution plans A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity without further obligations after the contribution has been made. Expenses related to defined contribution plans are classified as salary and personnel costs. Cash Flow Statement The cash flow statement is prepared using the indirect method. This means presenting, on the basis of profit before tax, cash flow from operating, investing and financing activities. Dividend paid to shareholders and non-controlling interest is presented under financing activities. NOTE 2 BUSINESS COMBINATIONS In 2014 and 2013 was not involved in business combinations. NOTE 3 MARKET RISK, CREDIT RISK AND LIQUIDITY RISK Agua Imara s strategic goals and ambitions as well as the geographical and cultural diversity in the countries it operates in, makes it important to continuously evaluate risk factors at all levels. Agua Imara s core business is in regions that are, or have been politically and financially unstable and the company has a risk management framework in place, including policy and risk appetite, structure, methodology, skills, knowledge, culture and tools / system support. This framework is applied to projects in all life cycles, both to new developments, projects under construction and acquisitions as well as for operating entities. Market risk Market risk is defined as risk that the fair value or future cash flow of a financial instrument will fluctuate because of changes in market prices. Agua Imara is mainly exposed to market risk on financial instruments related to currency, interest rate and energy prices. Currency risk Agua Imara s presentation currency is US dollars (USD), and the functional currency of each subsidiary is determined from an evaluation of the primary economic environment of each company. Currently the functional currency is USD in all subsidiaries. is exposed to currency risk from local currencies in subsidiaries since a portion of the operating costs typically will be denominated in local currency. makes use of currency swaps and forward contracts to hedge any significant cash flows in foreign currency. Guidelines for the management and monitoring of foreign exchange exposure is regulated by the Group Finance Policy owned by the Treasury Department, and the entity with foreign currency risk is responsible for compliance. The following table shows the sensitivity of financial instruments to a reasonable possible change in material currencies for the Group (consolidated companies), with all other variables held constant: Currency risk Currency Increase/ decrease in currency rate Effect on profit before tax (TUSD) 2013 NOK +10% +1,473 NOK -10% -1, NOK +10% +14 NOK -10% -14 Significant currency changes in associated companies will also have consequences on the income statement through application of the equity method for such investments. Interest rate risk is exposed to interest rate risk through external debt financing in subsidiaries, associated companies and joint ventures. In addition there is an indirect interest rate exposure through inputs in valuations. Interest rate exposure related to the subsidiaries, associated companies and joint venture s debt financing is secured through interest rate swaps for a significant portion of the loans. Agua Imara s ambition for the Group s interest risk is to minimize interest costs, reduce fluctuations, and limit changes in the value of the Group s net debt. The Group`s total debt exposed to floating interest rates, exclusive associates and joint ventures, amounts to USD 62 million. The following table shows the sensitivity of financial instruments to a reasonable possible change in interest rate for the Group (consolidated companies), with all other variables held constant: Interest rate risk exposure Increase/ decrease in interest rate Effect on profit before tax % % % % Credit risk Credit risk is defined as the risk of a party to a financial instrument inflicting a financial loss on by not fulfilling its obligation. The maximum credit risk exposure is: Other long term receivables Cash and cash equivalents 32,829 68,335 Short term receivables 1,977 4,663 Derivatives non-current assets Total 34,847 73,768 20

21 Notes to the Accounts, Notes Credit risk related to account receivables and other receivables in Agua Imara is limited by the fact that customers and counterparts are in different markets and in many cases are governmental institutions. On the other hand, customers are few and large and we operate in emerging markets where counterparty risk might be assessed to be higher. Handling of potential credit risk on receivables is primarily made through credit checks, establishment of bank guarantees and parent company guarantees in addition to ongoing monitoring of counterparts. To mitigate credit risk related to cash and cash equivalents, Agua Imara have a finance policy that regulates the maximum exposure per counterpart. Ageing of account receivables is presented below, provision for losses on receivables are made. Current receivables Less than 90 days More than 90 days Impaired Total receivables Accounts receivables Other receivables 1,395 1,395 Liquidity risk Liquidity risk is defined as the risk that will encounter difficulties in meeting obligations associated with financial liabilities. Agua Imara AS s financing is based on equity. Both construction projects and operational activities are financed on the basis of non-recourse project financing. Agua Imara AS is extending limited and capped guarantees primarily during project construction phase. The following table sets out the installment profile by maturity of the Group s financial commitments After 2024 Total Instalments related to fixed interest rate loans External loans in subsidiaries Instalments related to floating interest rate loans* External loans in subsidiaries Interest payments Calculated interest payments Total liabilities Credit risk exposure Restricted cash Bank deposits, cash and cash equivalents Receivables Financial assets Total assets Net * Original principal amounts without considering interest swaps NOTE 4 EVENTS AFTER THE BALANCE SHEET DATE No significant events have occured after the balance sheet date.

22 Notes to the Accounts, Notes NOTE 5 SUBSIDIARIES The following subsidiaries are included in the consolidated financial statements: Company Date of establ./ acquisition Business office Main operations Parent company Voting share Owner share Agua Imara AS 13 January 2009 Oslo, Norway Investment Agua Imara ACA Pte. Ltd. 25 September 2009 Singapore Power plant under construction Agua Imara AS % 100.0% Fountain Intertrade 4 October 2010 Panama City, Power production Agua Imara ACA Pte. Ltd % 50.1% Corporation Panama Lunsemfwa Hydro Power Company Ltd 1 April 2011 Kabwe, Zambia Green field project Agua Imara ACA Pte. Ltd % 51.0% Muchinga Power Company Ltd. 20 September 2012 Kabwe, Zambia Green field project Lunsemfwa Hydro Power Company Ltd % 100.0% NOTE 6 ASSOCIATED COMPANIES AND JOINT VENTURES The following associated companies and joint ventures are included in the consolidated financial statements: Company Date of establ./ acquisition Business office Main operations Parent company Voting share Hidro Burica SA 21 February 2012 Panama City, Panama The company is not listed. Power plant under construction Agua Imara ACA Pte. Ltd Owner share 50.0% 50.1% Book value associated companies and joint ventures Company Country Book value 2013 Additions/ disposals Share of profit/loss Dividends Foreign currency translation difference Gain/Loss on hedges Book value 2013 Hidro Burica SA Panama 9,140 1, ,006 Total 9,140 1, , In February 2012 Agua Imara together with Credicorp established the company Hidro Burica SA. Its purpose is to develop the 63 MW Burica hydropower plant, which is currently in a construction phase. Agua Imara will gain control of the company upon draw-down of project financing. Financial information from associated companies and joint ventures(100%) * Company Assets Liabilities Revenue Net profit Hidro Burica SA Panama 22,053 2, NOTE 7 SALES REVENUES By business area By geographical market Power sales 11,277 15,731 Norway Services Africa 11,872 15,725 Total 11,724 16,593 Total 11,724 16,593 NOTE 8 EMPLOYEE BENEFIT EXPENSES, MANAGEMENT REMUNERATION AND AUDIT FEE Salary and personnel costs Salary expenses -5,904-7,219 Social security costs Pension costs (note 18) Other personnel costs Total salary and personnel costs -7,299-8,398 The average number of man-years consolidated companies associated companies and joint ventures (100%) - - Total

23 Notes to the Accounts, Notes Expensed management remuneration 2014 NOK 2014 USD 2013 NOK 2013 USD Chief Executive Officer Salary 1, , Paid pension premium Other Total Chief Executive Officer 1, , Executive Management Team Salary 4, ,402 1,260 Paid pension premium Other Total Executive Management Team 5, ,079 1,375 Total remuneration CEO and Executive Management Team 7,028 1,116 10,493 1,786 From January 2014 Agua Imara and its parent company SN Power have had a shared CEO, and from June 2014 a shared full management team. The remuneration expenses for the shared management services are split equally between the two companies. The table above reflects the expenses that are allocated to Agua Imara. Until June 2014 the Agua Imara Management Team consisted of five people in addition to the CEO. From June 2014 the shared management team was reduced to three people in addition to the CEO. The CEO has a supplementary pension scheme with a right to a pension of 66% of the salary from 12 up to 20 times the Norwegian Public Pension Base Rate ( G ) from the age of 65 years. The plan requires 30 years vesting period and is funded by the company. The Management Team has no right to severance pay related to end of employment, with the exception of the CEO who is entitled to severance pay of up to 12 months. The CEO and the Management Team are covered by the same bonus plan as all employees in Agua Imara AS. The plan is limited up to 20% of salary, and the remuneration is based on yearly goal achievements. Audit fee Statutory audit Other assurance services 2 - Tax services - 21 Non-audit services 22 8 Total fees to auditors Deloitte is the auditor for. Total fees related to consolidated companies not audited by Deloitte amounts to USD 89 thousand, whereof USD 38 thousand for statutory audit and USD 51 thousand for tax services provided (USD 97 thousand in 2013). NOTE 9 OTHER OPERATING COSTS Leasing premises 1) External services -4,239-2,296 Travel expenses ,125 Insurance expenses Fees, licenses, etc Loss on disposal of assets, accounts receivable and contracts Repairs and maintenance ,577 Office expenses Other costs ,160 Total other operating costs -8,120-8,691 1) Leasing of premises, office equipment and company cars are expected to be at the same level for the years to come NOTE 10 FINANCIAL INCOME AND EXPENSES Financial income IAS 39 category Interest income bank Amortized cost Realized currency gain Fair value through profit and loss Unrealized currency gain Fair value through profit and loss 1, Other financial income Amortized cost 28 - Financial income 1,

24 Notes to the Accounts, Notes Financial expenses IAS 39 category Interest expenses loans Amortized cost Realized currency loss Fair value through profit and loss Unrealized currency loss Fair value through profit and loss -1, Other financial expenses Amortized cost 35 - Financial expenses -1, Net financial items NOTE 11 PROPERTY, PLANT AND EQUIPMENT Land Water rights Plants and machinery Fixtures and fittings, vehicles, other equipment Book value 1 January ,704 96, ,324 1, ,998 Additions 62-53, ,960 Reclassification Capitalized borrowing costs - - 6,539-6,539 Disposals at book value Depreciation for the year , ,577 Impairment for the year Exchange differences for the year Book value 31 December ,766 96, ,026 1, ,991 Total Acquisition cost 31 December ,766 96, ,449 2, ,813 Accumulated depreciation ,423-1,407-9,830 Accumulated exchange differences Book value 31 December ,766 96, ,026 1, , Book value 1 January ,766 96, ,026 1, ,991 Additions , ,725 Capitalized borrowing costs - - 6,173-6,173 Disposals at book value Depreciation for the year , ,950 Exchange differences for the year Book value 31 December ,883 96, , ,913 Acquisition cost 31 December ,883 96, ,933 2, ,566 Accumulated depreciation ,883-1,767-11,650 Accumulated exchange differences Book value 31 December ,883 96, , ,913

25 Notes to the Accounts, Notes NOTE 12 INTANGIBLE ASSETS Goodwill Project development Total Book value 1 January ,987 4,904 10,891 Additions - 5,667 5,667 Reclassification Disposals at book value Impairment for the year - -1,316-1,316 Book value 31 December ,864 8,847 15,711 Acquisition cost 31 December ,864 10,163 17,027 Accumulated amortization - -1,316-1,316 Book value 31 December ,864 8,847 15,711 Book value 1 January ,864 8,847 15,711 Additions Impairment for the year - -4,898-4,898 Book value 31 December ,864 3,999 10,863 Acquisition cost 31 December ,864 10,213 17,077 Accumulated amortization - -6,214-6,214 Book value 31 December ,864 3,999 10,863 Project development Project development costs are capitalized only if future economic benefits from the development of an intangible asset is probable. Development costs will be capitalized as part of the construction cost of the plant and depreciation will start when the asset is put into operation. Project Development costs related to the Mulungushi Power Project in Lunsemfwa Hydro Power Company in Zambia has been written down with USD 1 million in Project Development costs related to the Muchinga Power Project in Muchinga Power Company in Zambia has been written down with USD 5 million in NOTE 13 CONTRACTUAL COMMITMENT In October 2011, Agua Imara approved construction of the hydro power plant Bajo Frio in Panama. The power plant will have an installed capacity of 58 MW and an expected average annual production of 260 GWh. The investment frame was increased by USD 37 million to USD 271 million (100%) during the year. The remaining commitment for SN Power is USD 12 million (hereof USD 3 million in contingency) as of December The sponsors have granted parent company guarantees for the remaining investment frame which will bring the project to completion. The 63 MW Burica power plant downstream of Bajo Frio is, as of December 2014, in a construction phase. Early work contracts amounting to USD 5.5 million have been carried out throughout the year. As of December 2014, the remaining commitment related to these contracts constitutes USD 1.9 million. NOTE 14 FAIR VALUE OF FINANCIAL INSTRUMENTS Fair value of financial instruments The estimated fair value of financial instruments has been determined using the relevant market information and valuation methods. There are no identified financial instruments where the carrying amount differs significantly from fair value. The carrying amount of cash and cash equivalents is the best estimate of fair value. The fair value of loans is calculated by discounting expected future cash flows at prevailing interest rates and are not significantly different from book value. Financial assets valued at amortized cost Book Value Fair Value Financial assets Account receivable 1,051 1,051 Prepayments to suppliers Other current receivables Bank deposits, cash and cash equivalents 32,829 32,829 Total financial assets at amortized costs 34,847 34,847

26 Notes to the Accounts, Notes Financial liabilities valued at amortized cost Book Value Fair Value Interest-bearing long term debt (note 21) 155, ,502 Current portion long term debt (note 21) 14,927 14,927 Other current liabilities 5,263 5,264 Accounts payable 1,353 1,353 Tax (note 19) 1,540 1,540 Total financial assets at amortized costs 178, ,586 Derivatives Derivatives non current assets Interest rate derivatives Currency rate derivatives - 65 Total derivatives non-current assets Derivatives non current liabilities Interest rate derivatives 6,137 - Currency rate derivatives Total derivatives non-current liabilities 6,716 - Net Interest rate derivatives -6, Net currency rate derivatives Total net derivatives -6, Fair value of derivatives The estimated fair value of financial instruments has been determined using relevant market information and valuation methods. The fair value of interest rate swaps and currency swaps is determined by discounting expected future cash flows to present values using observed market interest rates and exchange rates, while the valuation of forward exchange contracts is based on the observed exchange rates, of which forward exchange rates are derived. Estimated present values are tested for reasonableness against calculations made by the counterparties in the contracts (market-to-market). Market interest rate curve is assumed for discounting derivatives. Market interest rate curve calculated based on the published swap rates from major financial institutions and credit spreads are added to the market yield curve in cases where credit risk is relevant. Fair value measurements can be classified by using a fair value hierarchy that reflects the significance of the inputs used in the preparation of the measurements. The fair value hierarchy has the following levels: Level 1: Non-adjusted quoted prices in active markets for identical assets or liabilities. Level 2: Other than the quoted prices included in Level 1 that are observable for the asset or liability either directly as prices, or indirectly derived from prices. Level 3: Data for the asset or liability is not based on observable market data. Fair value hierarchy and fair value changes in financial derivatives is presented below, while for the remaining financial instruments are discussed in the text above. Further analysis of market risk is discussed in note 3. Interest derivatives Level 2 Currency derivatives Level 2 Derivatives 1 January Derivatives 31 December , ,716 Change in fair value for derivatives -6, ,369 Total Changes in fair value recognized in other equity -6, ,369 Change in fair value for derivatives -6, ,369 Changes in fair value recognized in other equity -6, ,369 Recognized in other equity -6, ,369 Hedge accounting Agua Imara has entered into interest rate swaps and currency swaps in Fountain Intertrade Corporation. All contracts qualify for hedge accounting of future cash flows, and changes in fair value are recorded against equity until the payment is settled. Other hedging instruments that do not meet hedge accounting requirements are recorded at fair value in the profit and loss statement. Per 31 December a total of USD 7.4 million of the groups hedging instruments qualify for hedge accounting.

27 Notes to the Accounts, Notes NOTE 15 RECEIVABLES Accounts receivables 1,051 3,523 Provisions for loss on receivables Prepayments to suppliers Other current receivables Settlement account VAT Prepaid rent 7 6 Total receivables 1,977 4,663 NOTE 16 BANK DEPOSITS, CASH AND CASH EQUIVALENTS Bank deposits, cash and cash equivalents 32,714 68,216 Bank deposits - tax restricted Total cash and cash equivalents 31 December 32,829 68,335 NOTE 17 SHARE CAPITAL, SHAREHOLDER INFORMATION AND DIVIDEND Share capital Share premium reserve Paid-in capital Paid-in equity 1 January , , ,786 Paid-in equity 31 December , , ,786 Shareholders in Agua Imara AS 31 December 2014 Number of A- shares Number of B- shares Nominal value Share capital Owner share SN Power AS 5,196, ,604 NOK 10 61,434, % 61.00% BKK Produksjon AS 3,322,579 - NOK 10 33,225, % 39.00% Total 8,519, ,604 94,660, % 100% Voting Share 27 No dividends will be paid out in NOTE 18 PENSIONS AND OTHER LONG-TERM EMPLOYEE BENEFITS Agua Imara AS has pension schemes that cover a total of 12 staff members, and comply with Norwegian regulations on mandatory pension. The pension plans confer the right to defined future benefits, that mainly depend on the vesting period, the level of pay at retirement and the size of state pension benefits. These obligations are covered through a group pension scheme with Nordea Liv. In addition, the Chief Executive Officer has a supplementary plan. This plan confers a right to a pension of 66% of the salary up to 20G (see note 8) from the age of 65 years. The plan requires 30 years vesting period and is funded by the company. Assumptions The following assumptions were used in calculating the current year s pension costs and liabilities: Discount rate 2.30% 4.10% Expected rate of return 2.30% 4.10% Regulation of salary 2.75% 3.75% Regulation of pension 0.00% 0.90% Regulation of base rate 2.50% 3.50% Turnover 3.50% 3.50% Pensions costs Funded Unfunded Net present value of the current year's pension earnings Interest rate and administrative costs Gross pension costs Return on pension plan assets Administration costs Accrued social security cost Net pension costs

28 Notes to the Accounts, Notes Pension liabilities Funded Unfunded Pension liabilities 1, ,316 1,656 Pension plan assets Calculated pension liabilities Social security cost Net pension liabilities Movement in actuarial gains/losses recognized directly in equity Accumulated amount recognized directly in equity before tax 1 January Translation effects Recognized in the period Accumulated amount recognized directly in equity NOTE 19 TAX Tax expense Taxes payable -1,670-1,018 Change in deferred tax liability 117-1,088 Tax expense -1,553-2,106 Tax expense is related to foreign subsidiaries. Tax expense Profit before tax -10,514-3,353 Expected tax expense at a nominal rate of 27% 2, Effect on taxes of: Differences in foreign tax rates -1, Income from associated companies and joint ventures Tax loss carried forward -3,151-2,501 This year's tax expense -1,553-2,106 Recognized in profit and loss Business Combinations Specification of the tax effects of temporary differences 1 January 2014 Recognized in equity Other 31 December 2014 Property, plant and equipment -41, ,313 Total net deferred tax liability/(asset) -41, ,313 Deferred tax -41,193-40,313 Total deferred tax in balance sheet -41,193-40,313 Temporary differences or unused tax losses for which no deferred tax asset/liability is recognized in the balance sheet Property, plant and equipment 4 11 Pension liabilities Tax losses carried forward/compensation 10,122 21,049 Temporary differences or unused tax losses for which no deferred tax asset/liability is recognized in the balance sheet 10,047 21,427 Deferred tax benefit not recognized in the balance sheet is related to losses carried forward in Agua Imara AS and Agua Imara ACA Pte. Ltd. Deferred tax benefit is recorded on the basis of an expectation of a future taxable profit. The nature of Agua Imara AS and Agua Imara ACA Pte. Ltd. operations imply that future profits will not primarily be taxable. Accordingly the benefits of deferred tax cannot be justified in the foreseeable future and have not been recognized in the companies s balance sheets. NOTE 20 LONG TERM PROVISIONS AND CONTINGENT LIABILITIES No long term provisions or contingent liabilities are recognized as of the balance sheet date.

29 NOTE 21 INTEREST BEARING LONG-TERM DEBT Notes to the Accounts, Notes Average interest rate Regular loans in subsidiaries 3.72% 170, ,807 Total debt 170, ,807 First years installment long term debt -6,795-3,077 Interest-bearing long term debt 163, ,730 Pledged as security and restricted funds The uses non-recourse debt in the project companies to fund investments and capital expenditures for construction and acquisition of power plants. This debt is secured by the shares in the project company, the physical assets, the contracts, and the cash flows of the relatedproject company. The risk is limited to the respective project company and is without recourse to the parent companies. The terms and conditions of the non-recourse debt within the, include certain financial and non-financial covenants. These covenants are limited to the activities in the project companies and vary among the companies. The covenants may include, but are not limited to maintenance of certain reserves, minimum levels of working capital, limitations on incurring additional debt andshare retention. Book value of pledged assets/shares in the group amounts to USD 255 million and the underlying commitment amounts to USD 160 million. Book value Mortgages and pledges of object 2014 Obligation 2014 Bajo Frio fixed assets pledged as security for loan 231, ,000 Lunsemfwa fixed assets pledged as security for loan 23,266 5,010 Total mortgages and pledges 254, ,010 Agua Imara AS has in addition a share retention obligation to keep the current ownership of the shares in Agua Imara ACA Pte Ltd and its shares in Fountain Intertrade Corporation until the loan as been repaid. NOTE 22 OTHER CURRENT LIABILITIES Payables to employees and shareholders Public taxes payable Accounts payable 1,353 1,534 Accrued salary and vacation expense 1,654 1,729 Accrued costs and deferred revenue Accrued interest 1,905 1,569 Other current liabilities 1,111 2,049 Total other current liabilities 6,616 7, NOTE 23 RELATED PARTY TRANSACTIONS All subsidiaries, associated companies and joint ventures listed in Note 5 and Note 6 are related parties of Agua Imara. Balances and transactions between consolidated companies are eliminated in the consolidated accounts and are not shown in the note. Agua Imara s Management Team and Board of Directors are also related parties of Agua Imara. Agua Imara is indirectly owned by the Norwegian government. There are no identified significant transactions and balances with the Norwegian government or companies controlled by the Norwegian government other than the ones listed in this note 23 and note 9. All transactions with related parties have been carried out as part of the ordinary operations and at arm s length prices. There are no identified significant transactions and balances with related parties other than the ones listed in this note 23 and note 9. The income statement includes the following amounts resulting from transactions with related parties. Transaction type Related party Sales revenue Hidro Burica SA Sales revenue Total Other operating costs Statkraft IH Invest AS ,051 Other operating costs BKK Produksjon AS Other operating costs SN Power AS Other operating costs SN Power Invest Asia Pte. Ltd Other operating costs Total -1,206-1,193 The balance sheet includes the following amounts resulting from transactions with related parties.

30 Notes to the Accounts, Notes Transaction type Related party Accounts receivable SN Power Invest Asia Pte. Ltd Accounts receivable Total Other short term liabilities Statkraft Norfund Power Invest AS Other short term liabilities Total

31 Annual Accounts 2014 for Agua Imara AS

32 * Figures in USD 1,000 Agua Imara AS Income statement OPERATING REVENUES AND EXPENSES NOTE Sales revenues ,703 Salary and personnel costs 3-2,332-3,513 Ordinary depreciation Other operating costs 4-3,312-3,368 OPERATING PROFIT/LOSS -5,966-5,195 FINANCIAL INCOME AND EXPENSES Financial income Financial expenses 5-1, Net financial items Profit/loss before tax -6,554-4,894 Tax expense NET PROFIT/LOSS FOR THE YEAR -6,554-4,894 Transferred to uncovered loss 6,554 4,894 STATEMENT OF COMPREHENSIVE INCOME 32 Items that will not be reclassified to profit or loss Pensions Total items that will not be reclassified to profit or loss Other comprehensive income for the year, net of tax TOTAL COMPREHENSIVE INCOME FOR THE YEAR; NET OF TAX -6,273-5,253

33 * Figures in USD 1,000 Agua Imara AS Balance sheet at 31 December ASSETS NOTE Tangible assets Investment in subsidiaries 9 105,352 89,607 Total non-current assets 105,387 89,620 Receivables Intra-group receivables 12 7,557 1,010 Bank deposits, cash and cash equivalents (Including restricted funds) 10 18,717 48,173 Total current assets 26,862 49,947 TOTAL ASSETS 132, ,567 EQUITY AND LIABILITIES Paid-in capital , ,785 Other equity -23,727-17,454 Total Equity 130, ,331 Pension commitments Total long-term liabilities Accounts payable Intra-group payables Other current liabilities ,423 Total current liabilities 1,728 2, TOTAL EQUITY AND LIABILITIES 132, ,567 Oslo, 24 February 2015 Kjell Roland Øistein Andresen Kjersti Rønningen Chair Deputy Chair Director Lisa Huun Thomsen Wenche Teigland Tore Jensen Director Director Director Torger Nils Lien Chief Executive Officer

34 * Figures in USD 1,000 Agua Imara AS Statement of Changes in Equity at 31 December Share capital Share premium Other equity Total equity At 1 January , ,755-12, ,087 Transactions with shareholders Issue of share capital 2,724 26,773 29,497 Transactions with shareholders 2,724 26,773 29,497 Other comprehensive income for the year, net of tax Pensions Other comprehensive income for the year, net of tax Recognized through Profit and Loss Profit for the year -4,894-4,894 Recognized through Profit and Loss -4,894-4,894 At 31 December , ,526-17, ,331 Other comprehensive income for the year, net of tax Pensions Other comprehensive income for the year, net of tax Recognized through Profit and Loss Profit for the year -6,554-6,554 Recognized through Profit and Loss -6,554-6, At 31 December , ,526-23, ,058

35 * Figures in USD 1,000 Agua Imara AS Cash Flow Statement CASH FLOW FROM OPERATIONAL ACTIVITIES Profit/loss before tax -6,554-4,894 Depreciations Difference between this year's pension expense and pension premium Change in accounts receivables Change in short term payables Change in intra-group accounts -6,242 - Change in other current assets and liabilities Net cash flow from operational activities -13,675-4,849 CASH FLOW FROM INVESTMENT ACTIVITIES Investment in tangible and intangible fixed assets Investments in subsidiaries -15,745 - Net cash flow from investment activities -15,781 - CASH FLOW FROM FINANCING ACTIVITIES New paid-in equity - 29,497 Net cash flow from financing activities - 29,497 Net change in cash and cash equivalents -29,456 24,648 Cash and cash equivalents at 1 January 48,173 23,525 CASH AND CASH EQUIVALENTS AT 31 DECEMBER 18,717 48,173 35

36 Notes to the Accounts, Agua Imara AS Notes NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES Basic principles The financial statements have been presented in accordance with simplified application of international accounting standards according to the Norwegian Accounting Act 3-9. The financial statements consist of the income statement, balance sheet, statement of changes in equity, cash flow statement and notes to the financial statements. The financial statements give a true and fair view of the financial position, the financial performance and the cash flows for the year. Classification Assets and liabilities related to the normal operating cycle are classified as current assets and current liabilities. Receivables and liabilities not related to the normal operating cycle are classified as current if they are of a shortterm nature, normally due within one year. Shares and other investments not intended for continued use or ownership are classified as current assets. Other assets are classified as fixed assets and other liabilities as long term liabilities. Revenue recognition Sales of services are recorded as income when rendered. Other operating revenue is recognized to the extent that it is probable that the economic benefits will flow to the company and the revenue can be reliably measured. Foreign currency Foreign currency monetary items are translated at the closing rate at the date of the balance sheet. Foreign currency gains and losses are reported in the income statement under the line items financial income or financial expenses. The functional currency of Agua Imara AS is USD. Investments Investments in subsidiaries are accounted for using the cost method. The investments are initially measured at the acquisition price of the shares. When it is assumed that the fair value of investments is lower than its carrying amount, the asset is written down to the recoverable amount. Previously recognized impairment loss is reversed only if there have been changes in the estimates used to determine the recoverable amount. Dividends from subsidiaries are recognized when earned and not in the year when payment takes place. If an appropriation exceeds the proportion of retained profit after acquisition, the excess amount represents a repayment of invested capital, and the appropriation is deducted from the value of the investment in the balance sheet. Tangible fixed assets and intangible assets Tangible fixed assets and intangible assets are measured at cost less accumulated depreciation and write-downs. Tangible fixed assets and intangible assets with limited useful lives are depreciated over the expected useful life. Tangible fixed assets and intangible assets are written down if the carrying amount exceeds the recoverable amount. The recoverable amount is the higher of fair value less costs of disposal and the value in use. Write-downs are reversed if the basis for the write-down is no longer present. Research costs are expensed as incurred. Development costs related to project development are capitalised only if future economic benefits from the development of an intangible asset is probable. Development costs will often be capitalised when a construction project is more probable than not. This may occur before the formal investment decision has been made. Trade receivables Trade receivables are measured at realizable value. Provisions are made for bad debts. Income taxes The tax expense is calculated from the profit (loss) before tax and comprises the current taxes and the change in deferred taxes. Deferred tax assets and liabilities are calculated in accordance with the liability method without discounting and provided for all differences between the carrying amount in the balance sheet and the tax base of assets and liabilities, and for tax losses carried forward. Deferred tax assets are recognized on the balance sheet only when it is probable that the benefit can be utilized through future taxable profits. Pension cost Pension liabilities related to defined benefit plans are measured at the net present value of future pension benefits earned at the balance sheet date and calculated on the basis of assumptions for, among others, the discount rate, expected future wage growth and pension adjustments. Plan assets are measured at fair value. Net pension liabilities related to under-funded plans are recorded as provisions, while the net assets of over-funded plans are recorded in financial fixed assets. Net pension expense, which is gross pension expense less the expected return on plan assets adjusted for past service cost and the effects of changes in estimates, are included in salary and personnel costs. Changes in pension liabilities due to amendments in pension plans are included in net pension expense over the vesting period or immediately if the benefits are immediately vested. Changes in pension liabilities and plan assets, due to changes in and deviations from the calculation assumptions are recorded in equity. In the case of pension plans that are defined as contribution plans for accounting purposes the premiums are charged to pension expenses for the period. Cash flow statement The cash flow statement is prepared using the indirect method. Cash and cash equivalents include cash, bank deposits and other monetary instruments with a maturity of less than three months at the date of purchase. 36

37 Notes to the Accounts, Agua Imara AS Notes NOTE 2 SALES REVENUES By business area Contribution Norad *) Services 110 1,073 Total ,703 *) Agua Imara in 2013 entered into a 3-year agreement with Norad under their private sector development facility. The grant is provided as a risk sharing measure for our in early phase hydropower project developments in Zambia. The grant provided for 2013 and 2014 amounted to NOK million in total, of which NOK 10.1 million has been allocated to the subsidiary in Zambia, Lunsemfwa Hydro Power Company Ltd. (LHPC). Some of the grant provided in 2013 has been reallocated to LHPC in NOTE 3 EMPLOYEE BENEFIT EXPENSES, MANAGEMENT REMUNERATION AND AUDIT FEE Salary and personnel costs Salary expenses -1,398-2,650 Social security costs Pension costs (note 7) Other employee benefits Total salary and personnel costs -2,332-3,513 The average number of man-years Agua Imara AS The total number of employees at 31 December 2014 are 10 persons including 6 women. Remuneration to leading employees From January 2014 Agua Imara and its parent company SN Power have had a shared CEO, and from June 2014 a shared full management team. The remuneration expenses for the shared management services are split equally between the two companies. The table above reflects the expenses that are allocated to Agua Imara. 37 Until June 2014 the Agua Imara Management Team consisted of five people in addition to the CEO. From June 2014 the shared management team was reduced to three people in addition to the CEO. The CEO has a supplementary pension scheme with a right to a pension of 66% of the salary from 12 up to 20 times the Norwegian Public Pension Base Rate ( G ) from the age of 65 years. The plan requires 30 years vesting period and is funded by the company. The Management Team has no right to severance pay related to end of employment, with the exception of the CEO who is entitled to severance pay of up to 12 months. The CEO and the Management Team are covered by the same bonus plan as all employees in Agua Imara AS. The plan is limited up to 20% of salary, and the remuneration is based on yearly goal achievements. The Chief Executive Officer received a salary of NOK 1,106 thousand (USD 176 thousand), paid pension premium of NOK 119 thousand (USD 19 thousand) and other remuneration of NOK 47 thousand (USD 7 thousand). No remuneration has been paid by Agua Imara AS to any of its board members in No collateral or loan has been granted to employees, owners or board members. Auditor Statutory audit Other assurance services 2 - Tax services - 21 Non-audit services 22 8 Total fees to auditors 60 60

38 Notes to the Accounts, Agua Imara AS Notes NOTE 4 OTHER OPERATING COSTS Other operating costs Leasing premises 1) Other leasing costs 1) External services -1, Group services Travel expenses Insurance expenses Office expenses Other costs Total other operating costs -3,312-3,368 1) Leasing of premises, office equipment and company cars are expected to be at the same level for the years to come NOTE 5 FINANCIAL ITEMS Financial income Interest income bank Currency gain Financial income Financial expenses Currency loss -1, Other financial expenses Financial expenses -1, NOTE 6 FIXED ASSETS Tangible assets Inventory Total Acquisition cost 1 January Additions Acquisition cost 31 December Accumulated depreciation at 31 December Book value 31 December Ordinary depreciation for the year Estimated economic life Depreciation method 3-10 yrs linear NOTE 7 PENSIONS Agua Imara AS has pension schemes that cover a total of 12 staff members, and comply with Norwegian regulations on mandatory pension. The pension plan confers the right to defined future benefits, that mainly depend on the vesting period, the level of pay at retirement and the size of state pension benefits. These obligations are covered by a group pension scheme with Nordea Liv. In addition, the Chief Executive Officer has a supplementary plan. This plan confers a right to a pension of 66% of the salary from 12G up to 20G (see note 3) from the age of 65 years. The plan requires 30 years vesting period and its funded by the company. Assumptions The following assumptions were used in calculating the current year s pension costs and liabilities: Discount rate 2.30% 4.10% Expected rate of return 2.30% 4.10% Regulation of salary 2.75% 3.75% Regulation of pension 0.00% 0.90% Regulation of base rate 2.50% 3.50% Turnover 3.50% 3.50%

39 Notes to the Accounts, Agua Imara AS Notes Pension costs Funded Unfunded Net present value of the current year's pension earnings Interest rate and administrative costs Gross pension costs Return on pension plan assets Administration costs Accrued social security cost Net pension costs Pension liabilities Pension liabilities 1,274-1,274 1,625 Pension plan assets Calculated pension liabilities Social security cost Net pension liabilities Movement in actuarial gains/losses recognized directly in equity Accumulated amount recognized directly in equity before tax 1 January Translation effects This year estimate deviation against equity included social security expense Estimate deviation against equity NOTE 8 TAX Tax Expense Profit before tax -6,554-4,894 Expected tax expense at a nominal rate of 27% -1,770-1,370 Effect on taxes of: Permanent profit and loss differences between USD accounts and tax accounts in NOK translated to USD at average rate 2,059 2,142 Permanent differences -4-6 Changes in temporary differences Tax loss carried forward This year's tax expense - - Tax rate 0% 0% 39 Taxes payable - - Change in deferred tax asset - - Change in deferred tax liability - - This year's tax expense Fixed assets 1 11 Pensions Tax loss carried forward 10,122 14,041 Temporary differences 31 December 10,110 14,419 Tax rate 27% 27% Deferred tax asset 31 December - - Deferred tax asset is recognized based on an expectation about a future taxable profit. Based on Agua Imara AS operations, future income will primarily not be taxable. Accordingly, deferred tax asset can not be utilized and have not been recognized in the company s balance sheet.

40 Notes to the Accounts, Agua Imara AS Notes NOTE 9 INVESTMENTS IN SUBSIDIARIES The following subsidiaries are included in the consolidated financial statements: Company Date of establishment Business office Country of registration Main operations Parent company Voting share Ownership share Agua Imara ACA Holding Pte. Ltd Singapore Singapore Investments Agua Imara AS % % Shares in subsidiaries are recorded in accordance with the cost method in the balance sheet of Agua Imara AS. Paid in capital to Agua Imara ACA Pte. Ltd as of 31 December 2014 was USD 105,351,840, equivalent to NOK 631,181,825. NOTE 10 BANK DEPOSITS, CASH AND CASH EQUIVALENTS Specification of cash and cash equivalents: Cash and bank deposits 18,602 48,055 Restricted bank deposits - withholding tax employees Total cash and cash equivalents 18,717 48,173 NOTE 11 SHARE CAPITAL AND SHAREHOLDER INFORMATION Share Capital Share Premium Paid-in capital Equity 1 January , , ,785 Equity 31 December , , ,785 Nominal value per share is NOK 10. Total issued shares are 9,466,039, of this 946,604 B-shares without voting rights. All issued shares are equally entitled to dividend. 40 Shareholders 31 December 2014 Number of A-shares Number of B-shares Face value Share capital Owner share Voting share SN Power AS 5,196, ,604 NOK 10 61,434, % 61.00% BKK Produksjon AS 3,322,579 - NOK 10 33,225, % 39.00% Total 8,519, ,604 94,660, % 100% No dividend will be paid out for 2014.

41 Notes to the Accounts, Agua Imara AS Notes NOTE 12 TRANSACTIONS WITH RELATED PARTIES Sales revenues Statkraft IH Invest AS - 71 Fountain Intertrade Corporation Lunsemfwa Hydro Power Company Ltd Total 46 1,189 Other operating costs Statkraft IH Invest AS ,051 BKK Produksjon AS SN Power AS SN Power Invest Asia Pte. Ltd Total -1,206-1,193 Intercompany short term receivables Agua Imara ACA Pte. Ltd. 7,530 - Fountain Intertrade Corporation Lunsemfwa Hydro Power Company Ltd Total 7,557 1,010 Intercompany short term payables Statkraft IH Invest AS SN Power Invest Asia Pte. Ltd Lunsemfwa Hydro Power Company Ltd Total NOTE 13 RECEIVABLES Accounts receivable 1 - Other current receivables Total current receivables NOTE 14 OTHER CURRENT LIABILITIES Accrued vacation expenses Accrued costs Public dues Total current liabilities 580 1,423

42 Auditor s report 42