Cloudberry Clean Energy Annual report 2020

Cloudberry Annual report 2020 Financial statements 80 Note 4 Operating segments Cloudberry is a listed Nordic renewable industrial company with strong local roots. Cloudberry man- ages its operations in three segments Develop, Production and Corporate. The business model is bifocal where Develop completes in-house devel- opments of wind and hydropower assets in Norway and Sweden to the projects are ready-to-build. Production owns and operates selected producing assets with low overhead cost. Capacity for con- struction, operations and maintenance is normally sourced externally. Combining the two gives a devel- opment portfolio to ensure long-term and strategic portfolios of exclusive land-areas and projects, while the ownership in the power plants to ensure long- term cash flows. Corporate ensure management tasks for the Group like financing, marketing, report- ing and other corporate activities. Cloudberry Production (“Production”) The production segment manages the Group’s power producing assets and derives its revenue from the production and sale of hydro and wind gener- ated electricity. By year end Production had a producing portfolio of 27 MW in operation from Finnesetbekken, Røyrmyra and Forte Energy Norway AS (“Forte”). The purchase of 34% of Forte was finalized in Q4 2020 and con- tributed with a production of 9 GWh to Cloudberry during 2020. The figures represent Productions proportionate share of the Forte portfolio. Hydro power production from Finnesetbekken totalled 4 GWh in 2020. It was a year with high- er-than-normal precipitation and the warmest year ever recorded in Norway. Both these elements were drivers for the very strong production in 2020. Operation of the hydro plant has been stable. Wind power production from Røyrmyra totalled 8 GWh. This was slightly under predicted normal level and was due to that one of the turbines in Røyrmyra Vindpark was out of production following a break- down in the front main bearing during 1st half of the year and due to Covid-19, the repair took longer than normal. Production in 2nd half of 2020 was stable and ended up slightly better than normal. In total, Cloudberry’s production ended at 21 GWh for the year. Annual production will increase considera- bly in 2021, following acquisitions made during 2020, as well as the completion of power plants which are currently under construction. Cloudberry Develop (“Develop”) Develop was established in 2008 and holds a significant development portfolio with renewable assets in Sweden and Norway both on- and offshore. Develop has since inception fully developed and sold ten projects pre-construction to larger infrastructure investors and European insurance companies. Going forward Cloudberry has the flexibility to either sell or keep the projects in-house to secure long-term cash flows for the Cloudberry Group. Larger project might be farmed down in order to diversify risk. Develop is responsible for development of hydro and wind power assets from early stage until the projects receive construction permits. Some of the assets developed are then transferred to Production while others are wholly or partly sold. Construction is normally outsourced to local partners. In 2020 Develop continued the work on project Hån and Duvhällen. These projects are expected to be ready to construct in 2021 to 2022. In September Develop acquired Scanvind2 AS (now Cloudberry Offshore Wind AS) owning the shallow water offshore wind project Stenkalles in lake Vänern in Sweden. In January 2021, a SPA containing several closing conditions, was entered into with Downing LLP giving them 80% of the shares in Cloudberry Offshore Wind AS upon closing that is expected to take place during second half of 2021. The remaining 20% of this project will, if this transaction is com- pleted, be part of the Cloudberry Production portfo- lio. In addition to these projects, multiple projects in the backlog and pipeline had further movement and progress during 2020. Cloudberry Clean Energy (“Corporate”) Corporate consists of the activities of corporate services, management, and group finance. The past year the activities has been focused on ramping up of the Cloudberry Group include listing on Oslo Børs, Merkur Market (now Euronext Growth) and