#1Credit Investor Presentation European Energy A/S - Gyngemose Parkvej 50 - 2860 Søborg - Denmark - Company Reg. no. 18351331 Nøjsomheds Odde Wind Farm, Lolland, Denmark EUROPEAN ENERGY#2Important information == EUROPEAN ENERGY IMPORTANT INFORMATION This investor presentation (this "Presentation") has been produced by European Energy A/S (the "Issuer") and its subsidiaries (together the "Group") solely for use in connection with the contemplated offering of bonds (the "Bonds") by the Issuer expected to be issued in June 2019 and may not be reproduced or redistributed in whole or in part to any other person. The bookrunners of the Bonds are DNB Bank ASA ("DNB") and Nordea Bank Abp ("Nordea"), together the ("Joint Bookrunners"). This Presentation is for information purposes only and does not in itself constitute an offer to sell or a solicitation of an offer to buy any of the Bonds. 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The information contained in this Presentation has not been independently verified and neither the Joint Bookrunners, the Issuer nor any other member of the Group assume any responsibility for, nor do the Joint Bookrunners, the Issuer or any other member of the Group make any warranty (expressly or implied) or representation as to, the accuracy, completeness or verification of the information contained in this Presentation. This Presentation is dated 27 May 2019. Neither the delivery of this Presentation nor any further discussions of the Group or the Joint Bookrunners with any of the recipients shall, under any circumstances, create any implication that there has been no change in the affairs of the Group since such date. The Group does not undertake any obligation to review or confirm, or to release publicly or otherwise to investors or any other person, any revisions to the information contained in this Presentation to reflect events that occur or circumstances that arise after the date of this Presentation. An investment in the Bonds involves a high level of risk and several factors could cause the actual results or performance of the Group or the Bonds to be different from what may be expressed or implied by statements contained in this Presentation. By attending a meeting where this Presentation is presented, or by reading this Presentation, you acknowledge that you will be solely responsible for and rely on your own assessment of the market and the market position of the Group and that you will conduct your own analysis and be solely responsible for forming your own view of the potential future performance of the Group, its business and the Bonds and other securities. The content of this Presentation is not to be construed as legal, credit, business, investment or tax advice. Each recipient should consult with its own legal, credit, business, investment and tax advisers to receive legal, credit, business, investment and tax advice. Each potential investor in the Bonds must determine the suitability of that investment in light of its own circumstances. In particular, each potential investor should: 1) have sufficient knowledge and experience to make a meaningful evaluation of the Bonds, the merits and risks of investing in the Bonds and the information contained or incorporated by reference in this Presentation, the Security documentation or any applicable supplement; 2) have access to, and knowledge of, appropriate analytical tools to evaluate, in the context of its particular financial situation, an investment in the Bonds and the impact other securities will have on its overall investment portfolio; 3) have sufficient financial resources and liquidity to bear all of the risks of an investment in the Bonds; 4) understand thoroughly the final terms and conditions for the Bonds; and 5) be able to evaluate (either alone or with the help of a financial adviser) possible scenarios for economic, interest rate and other factors that may affect its investment and its ability to bear the relevant risks. 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The distribution of this Presentation and any purchase of or application/subscription for Bonds or other securities of the Group may be restricted by law in certain jurisdictions, and persons into whose possession this Presentation comes should inform themselves about, and observe, any such restriction. Any failure to comply with such restrictions may constitute a violation of the applicable securities laws of any such jurisdiction. None of the Group or the Joint Bookrunners or any of its Representatives shall have any liability (in negligence or otherwise) for any loss howsoever arising from any use of this Presentation or its contents or otherwise arising in connection with the Presentation. Neither the Group nor the Joint Bookrunners have authorised any offer to the public of securities, or has undertaken or plans to undertake any action to make an offer of securities to the public requiring the publication of an offering prospectus, in any member state of the European Economic Area which has implemented the EU Prospectus Directive 2003/71/EC, as amended (the "Prospectus Directive") and this Presentation is not a prospectus for purposes of the Prospectus Directive. In the event that this Presentation is distributed in the United Kingdom, it shall be directed only at persons who are either (a) "investment professionals" for the purposes of Article 19(5) of the UK Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "Order"), (b) high net worth companies, unincorporated associations and other persons to whom it may lawfully be communicated in accordance with Article 49(2)(a) to (d) of the Order, or (c) persons to whom an invitation or inducement to engage in investment activity (within the meaning of Section 21 of the Financial Services and Markets Act 2000) in connection with the issue or sale of any Bonds may otherwise lawfully be communicated or caused to be communicated (all such persons together being referred to as "Relevant Persons"). Any investment or investment activity to which this Presentation relates will be available only to Relevant Persons and will be engaged in only with Relevant Persons. This Presentation is not a prospectus for the purposes of Section 85(1) of the UK Financial Services and Markets Act 2000, as amended ("FSMA"). Accordingly, this Presentation has not been approved as a prospectus by the UK Financial Services Authority ("FSA") under Section 87A of FSMA and has not been filed with the FSA pursuant to the UK Prospectus Rules nor has it been approved by a person authorised under FSMA. This Presentation does not constitute or form part of an offer or solicitation to purchase or subscribe for securities in the United States. The Bonds have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the "Securities Act"), or with any securities regulatory authority of any state or other jurisdiction in the United States. Accordingly, the Bonds may not be offered, sold (directly or indirectly), delivered or otherwise transferred within or into the United States or to, or for the account or benefit of, U.S. Persons, absent registration or under an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act. The Bonds are being offered and sold by the Joint Bookrunners only to non-US persons located outside the United States in reliance upon Regulation S under the Securities Act ("Regulation S"). The Joint Bookrunners and/or its Representatives may hold shares, options or other securities of the Group and may, as principal or agent, buy or sell such securities. The Joint Bookrunners may have other financial interests in transactions involving these securities or the Group. This Presentation is subject to Danish law (disregarding any conflict-of-laws rules which might refer the dispute to the laws of another jurisdiction), and any dispute arising in respect of this Presentation is subject to the exclusive jurisdiction of Danish courts with the City Court of Copenhagen as the court of first instance. MIFID II product governance / Retail investors, professional investors and eligible counterparties target market - Solely for the purposes of each manufacturer's product approval process, the target market assessment in respect of the Bonds has led to the conclusion that: (i) the target market for the Bonds is eligible counterparties, professional clients and retail clients, each as defined in Directive 2014/65/EU (as amended, "MiFID II"); and (ii) all channels for distribution of the Bonds to eligible counterparties and professional clients are appropriate and (iii) the following channels for distribution of the Bonds to retail clients are appropriate - investment advice, portfolio management, and non-advised sales or execution with appropriateness test, subject to the distributor's (as defined below) suitability and appropriateness obligations under MiFID II, as applicable. Any person subsequently offering, selling or recommending the Bonds (a "distributor") should take into consideration the manufacturers' target market assessment; however, a distributor subject to MiFID II is responsible for undertaking its own target market assessment in respect of the Bonds (by either adopting or refining the manufacturers' target market assessment) and determining appropriate distribution channels, subject to the distributor's suitability and appropriateness obligations under MiFID II, as applicable. The target market assessment indicates that Bonds are incompatible with the needs, characteristic and objectives of clients which are fully risk averse or are seeking on-demand full repayment of the amounts invested. Forward Looking Statements: Certain information contained in this presentation, including any information on the Group's plans or future financial or operating performance and other statements that express the Group's management's expectations or estimates of future performance, constitute forward-looking statements (when used in this document, the words "anticipate", "believe", "estimate" and "expect" and similar expressions, as they relate to the Group or its management, are intended to identify forward-looking statements). Such statements are based on a number of estimates and assumptions that, while considered reasonable by management at the time, are subject to significant business, economic and competitive uncertainties. The Group cautions that such statements involve known and unknown risks, uncertainties and other factors that may cause the actual financial results, performance or achievements of the Group to be materially different from the Group's estimated future results, performance or achievements expressed or implied by those forward-looking statements. Audit Review of Financial Information: Certain financial information contained in this Presentation has not been reviewed by the Group's auditor or any other auditor or financial expert. Hence, such financial information might not have been produced in accordance with applicable or recommended accounting principles and may furthermore contain errors and/or miscalculations. The Group is the source of the financial information, and none of the Group or the Joint Bookrunners or any of its Representatives shall have any liability (in negligence or otherwise) for any inaccuracy of the financial information set forth in this Presentation. ANY POTENTIAL INVESTOR INVESTING IN THE BONDS IS BOUND BY THE FINAL TERMS AND CONDITIONS OF THE BONDS WHICH THE INVESTOR ACKNOWLEDGES HAVING ACCEPTED BY SUBSCRIBING FOR SUCH BONDS. 1#3Indicative key terms of the new bond issue Indicative key terms for the contemplated new issue == EUROPEAN ENERGY Issuer: Rating: Size: Framework amount: Maturity: Format: Coupon: Call Schedule: European Energy A/S Unrated Minimum EUR 100m Up to EUR 200m (Some of the framework amount can be allocated to Market Loans where the security is shared on a pari passu basis, subject to an intercreditor agreement) [September 2023] Senior secured Green Bonds with pledge over shares of the Issuer 3mE +[] bps (Euribor floored at zero) Before 24 months, fair value early redemption call with no discounting • Callable thereafter at 50%, 37.5%, 25%, 12.5%, 10% of coupon, after 24,30,36,42,48 months Equity clawback upon IPO of 30% at 102.000% or prevailing call price • Min. equity EUR 80m Maintenance covenants: Incurrence covenants (Financial indebtedness and Dividends following an IPO): Selected Other Undertakings: Docs: Denomination: Listing: Use of Proceeds: Green Structuring Adviser: Joint Bookrunners: Target market: Min. total assets > EUR 230m Min. liquidity corresponding to 3 quarters interest payments Issuer Incurrence Test: Minimum equity ratio of 25% Subsidiary Incurrence Test: Group Interest Coverage Ratio > 2.5:1 Full dividend restriction (50% of previous years Net Income/Profit following an IPO) Mergers and demergers Disposals of assets Negative pledge Financial reporting and cross acceleration Standalone, Danish law EUR 100k + 100k Nasdaq Copenhagen within 180 days In accordance with the Green Bond Framework Nordea DNB, Nordea MiFID II professionals/ECPs/Retail/No PRIIPS KID - Manufacturer target market (MiFID II product governance) is eligible counterparties, professional clients and retail (all distribution channels). No PRIIPs key information document (KID) has been prepared as not deemed within scope | 2#4Transaction summary and overview of European Energy European Energy in brief • European Energy constructs wind and solar farms as well as large scale green energy storage. We are building solutions to climate change European Energy was founded in 2004 and has grown to a show an EBITDA of EUR 34m in 2018 with ~100 full-time employees based in Copenhagen and activities across 11 countries Simplified structure of European Energy Mikael Dystrup Pedersen == EUROPEAN ENERGY Jens-Peter Zink Knud Erik Andersen European Energy Employees Solar Power Onshore Wind Active in Europe, Brazil, Australia and India Active in Europe and Brazil ~14% Offshore wind EE Gigastorage Active in Denmark Active in Denmark Development portfolio Sources and uses for an issuance of EUR 120m Sources Uses Bond issue 120 Refinancing existing bond Call premium 85 w 3 General Corporate Purposes in accordance with the Green Bond Framework¹ 32 Total 120 Total 120 1) No dividend distribution -10% == -76% EUROPEAN ENERGY Illustrative overview of OpCos Construction portfolio Bond issue Operational portfolio <1% European Energy A/S establishes a special purpose vehicle (SPV) for every project. The projects are subsidiaries of European Energy A/S and can be divided into three groups, consolidated in financial statements as follows: - Subsidiaries directly or indirectly owned (100% ownership), consolidated line by line Joint ventures or associated companies (50% ownership or more), recognised as "equity-accounted investments" Companies in which the Group has no material ownership (less than 20% ownership), recognised as other investments - 3#5Experienced management team Presenting today Knud Erik Andersen With EE since 2004 Chief Executive Officer and founder Owners Jens-Peter Zink With EE since 2005 Executive Vice President and chairman == EUROPEAN ENERGY Mikael D. Pedersen With EE since 2004 Chief Technical Officer and founder Education Master of Science (M.Sc.) in Electrical Engineering from Technical University of Denmark Prior experience • Co-founder and CEO of Sentic A/S Co-founder and CEO of Inside Technology A/S which was sold to Kontron AG in 2003 Education Master of Science (M.Sc.) in Business Economics and Auditing from Copenhagen Business School Prior experience 10 years with KPMG holding different positions, including Manager, M&A Education • Master of Science (M.Sc.) in Electrical Engineering from Technical University of Denmark Prior experience • Sentic A/S (CTO Wind Turbine Controller) Co-founder of Inside Technology A/S which was sold to Kontron AG in 2003 Thomas Hvalsø Hansen With EE since 2012 Chief Operating Officer Education Education . Master of Science (M.Sc.) in Engineering from Technical University of Denmark • • Diploma in Finance from Copenhagen Business School Prior experience . Experience from the software and media industry Lars Bo Jørgensen With EE since 2016 Jonny Thorsted Jonasson With EE since 2012 Chief Financial Officer Thorvald Spanggaard With EE since 2017 Project Director Master of Science (M.Sc.) in Business Economics and Auditing from Copenhagen Business School Prior experience Extensive experience as Chief Financial Officer within the real-estate, retail and internet industries • General manager within real-estate and private equity industries Education • Master of Law from University of Copenhagen LL.M. from Harvard University ⚫ MBA from Copenhagen Business School Prior experience . General Counsel & Head of Claims at EKF (Denmark's Export Credit Agency) Attorney at law, Kromann Reumert Head of Transaction Services and Project Economy Education • Master of Science (M.Sc.) in Business Economics and Auditing from Copenhagen Business School ⚫ State-authorized public accountant Prior experience • Partner KPMG Simon Bjørnholt With EE since 2018 Legal Director Education • MBA, Fordham University • Bachelor's degree, HD International Business, Copenhagen Business School • MA, Law, King's College London & Aarhus University Prior experience • Head of Legal, Deloitte • Attorney at law, Bruun & Hjejle | 4#6Agenda 1. Introduction to European Energy 2. Business description 3. Market overview 4. European Energy financials 5. Q&A 6. Appendices 7. Risk Factors Project Kappel, Denmark ויו ויו EUROPEAN ENERGY#7• • == EUROPEAN ENERGY Company milestones Key findings • European Energy has demonstrated strong growth in capacity installed and cumulative investments from Investment value and installed capacity of power-generating assets since European Energy's foundation Wind acc. capacity installed (MW) Solar acc. capacity installed (MW) Cummulated investment (EURm) 2008 EE constructs its first solar power plant 2014 EURM 1,695 1,318 1,209 MW First issue of a listed bond with EUR 45m 1,027 936 MW 300 863 789 MW inception in 2004 to 2004 687 168 638 681 MW European Energy was today 531 168 founded by Knud Erik 527 MW 414 415 431 475 MW 153 Andersen and Mikael 373 • The strong growth 361 MW 27 D. Pedersen 270 23 909 224 242 MW 272 MW 272 MW 277 MW 768 has been profitable 19 622 65 11 11 16 23 11 453 500 528 throughout with all 342 176 211 231 261 261 261 projects ever 18 47 2004 2005 2006 2007 2008 2009 completed having 2010 2011 2012 2013 2014 2015 2016 2017 2018 positive results European Energy only holds assets in the operational portfolio with specific strategic value, such as repowering Operational assets held by European Energy has grown to 231 MW under management All constructed projects since inception have showed positive results J 2015 a 2016 2017 UK PV portfolio Nøjsomheds Odde 2018 Gross profit Grid Connection date $ EE has divested more than 100 projects and all with positive results ☑ 000 Since 2004 EE has installed 1,209 MW capacity (300 MW solar and 909 MW wind) | 6#8Significantly better positioned than in 2016 with stronger performance Financial and operational position as per time of previous bond issues and now 2016 Q1 2019 LTM Total equity EBITDA Profit before tax EUR 64m (no dividends paid) EUR 25m EUR 18m Operation portfolio 405 MW EE share: 156 MW (39%) 408 MW Construction portfolio EE share: 242 MW (59%) 2,045 MW Development portfolio EE share: 1,063 MW (52%) Geographical diversification Credit metrics 1) ICR EBITDA / Net interest expenses 56% in AA or AAA rated countries in construction portfolio Equity ratio: 29% NIBD/EBITDA: 4.0x ICR1: 4.6x ཏ ཏ ་ ་ ་ ར ། == EUROPEAN ENERGY EUROPE EUR 127m (no dividends paid) Increased by 2.0x EUR 53m EUR 44m Increased by 2.1x Increased by 2.5x 561 MW (End of 2018) EE share: 231 MW (41%) EE share increased by 1.5x 571 MW (End of 2018) EE share: 434 MW (76%) EE share increased by 1.8x 2,734 MW (End of 2018) EE share: 1,779 MW (65%) EE share increased by 1.7x 87% in AA or AAA rated countries in construction portfolio Equity ratio: 31% NIBD/EBITDA: 2.8x ICR1: 9.5x | 7#9European Energy by the numbers Key findings EBITDA == EUROPEAN ENERGY PROFIT BEFORE TAX European Energy has more than doubled its equity since 2015 45 45 40 40 Full year 34 34 • EBITDA has more than tripled since 2015 35 guidance 40-45 • Revenue from consolidated power sale has increased significantly from EUR 6m in 2015 to EUR 20m in 2018 . Strong earnings linked to growth in EBITDA EUR million 30 25 16 25 20 28 20 15 11 20 20 EUR million 10 2332250 26 26 26 26 Full year guidance 30-35 18 • Healthy construction pipeline underlining continued сл 5 10 5 9 future growth 0 2015 2016 17 15 10 18 6 21 21 5 7 0 2015 2016 2017 2018 Q1 20191 2017 2018 Q1 20191 140 120 100 EUR million 00 80 60 40 20 0 Sale of energy parks Sale of power, asset mgmt. etc. UNDER CONSTRUCTION OR READY TO BUILD EQUITY SALE OF ELECTRICITY 700 127 CAGR: 600 500 408 400 300 180 200 100 0 2015 2016 2017 2018 Q1 20191 اس اس اس 40 644 40 571 35 1372 501 30 25 507 10 5 0 2015 2016 2017 2018 Q1 20191 1) Q1 2019 numbers are not audited 2) Construction projects acquired or started after Q1 2019, in order to reflect current pipeline Consolidated sale EE-share in non-consolidated companies 16 10 6 Q1 20191 | 8#10三三 EUROPEAN ENERGY Robust Green Bond framework - 'pure play' green operations European Energy's green bond framework Eligible Assets and Projects include Development and construction of renewable energy projects (i.e. solar and wind) Energy storage projects to store renewable energy and surplus heating R&D projects related to solar and wind power (e.g. Risø Test Centre) To the extent feasible Eligible Assets and Projects will be allocated to new projects. In cases where proceeds are allocated to existing projects European Energy will endeavour to target a look-back period of maximum 3 years Eligible Assets and Projects may cover both capital expenditures and operational expenditures, such as through labour costs or spending on R&D Eligible Assets and Projects target specific climate related objectives of reducing greenhouse gas emissions through the production of renewable energy In 2018 European Energy saved the planet of 231,592 tCO2 emissions - equivalent to... 1,264 Railcars' worth of coal burned 536,184 Barrels of oil consumed or 9,467,412 Propane cylinders used for barbeques 29,530,826,764 Number of smart- phones charged Process selection European Energy's investment committee are responsible for ensuring that only projects aligned with the framework are allocated proceeds from Green Bonds Managment of proceeds A Green Bond Register will be created to ensure that proceeds are mapped to Eligible Projects and Assets. Projects may be added or removed and will be replaced. Reporting External review An annual allocation and impact report will be published. Where feasible impact will be reported in GHG avoidance. DNV-GL 327 GWH of green electricity produced in 2018 | 9#11European Energy key credit highlights ויו 1 Rising electricity sales with more operational projects resulting in stable EBITDA and high margins 2 More than 100 projects completed and EUR 1.7bn cumulative investments, all resulting in positive results. Average profit margin for European Energy's last 5 completed projects was approx. 25% 3 Fast project turnover from Ready-to-Build to grid connection and divestment == EUROPEAN ENERGY Business 4 Large construction portfolio, supported by continuously expanding development pipeline EUROPEAN ENERGY 5 Fast growing market for renewable energy with positive outlook, driven by several trends amongst others the need for increasing the share of renewable energy in the energy mix Market 6 Renewable energy sources comfortably below grid parity with fossil fuels and with potential to be even more cost-efficient. Only hydro is cheaper than solar and wind 7 Strong financials - positive results even if excluding revenue from divestments in Q1 2019 Financials 8 Solid financial profile with a strong equity story starting with EUR 4m equity in 2004 to EUR 108m in 2018 equivalent to a CAGR in equity from 2004 to 2018 at 27%. From 2015 to 2018 CAGR was 24%. | 10#12Agenda 1. Introduction to European Energy 2. Business description 3. Market overview 4. European Energy financials 5. Q&A 6. Appendices 7. Risk Factors Project Kappel, Denmark ויו ויו EUROPEAN ENERGY#13Overview of European Energy's business model == EUROPEAN ENERGY . • Development Potential wind & solar site assessment Project risk assessment Environmental studies Secure land & building permits • Approx. 35 people work within development (both external and internal Construction Select optimal technology and park layouts Oversee every construction phase from groundworks to grid connection Approx. 25 employees work within construction Divestment Sale and handover of wind and solar farms to long-term investors • Internal M&A division with 10 employees Internal legal with 8 employees • • Asset Management Protect returns for investors and partners by optimising production output Identifying repowering opportunities within the operational portfolio AM division of 12 employees Project Troia, Italy Project Zinkgruvan, Sweden 0000 Production and ⑮4 sale of electricity Independent production of electricity Sale of electricity to the grid • 4 Dedicated PPA Specialists Project Haukineva, Finland • Project financing For each project European Energy seeks the optimal capital partner. In 2018, European Energy raised or refinanced project loans of more than EUR 200m with 12 different counterparts Long-term non-recourse project financing, typically fixed interest 12-18 years in the SPVs DANMARKS GRØNNE INVESTERINGSFOND LBEBW Landesbank Baden-Württemberg REALKREDIT Danmark DKB Deutsche Kreditbank AG SPAREKASSEN KRONJYLLAND NASDAQ OMX | COPENHAGEN jyske SPAREKASSE KFW Ringkjøbing Landbobank MERKUR ANDELSKASSE NORD/LB Nordea | 12#14三三 EUROPEAN ENERGY Large pipeline with great geographic and technological diversity Distribution per technology Description Development pipeline • Includes all development projects from initial analysis until ready-to-build status • Project screening, selection and completion are based on in-house competencies resulting in: Bigger certainty of project realisation Shorter investment cycles Greater agility Gross amount, pre-dev.1 5,861 MW Gross amount, dev.2 2,734 MW 29% Wind 71% Solar PV . Construction portfolio Construction includes all wind turbines / solar panels as well as all other hardware, foundation, etc. European Energy has never started construction of a project that has not resulted in positive results Gross amount 571 MW 67% Wind 33% Solar PV • Operational assets European Energy is an independent power producer with sale of power generating 35% of gross profit in Q1 2019 Almost all operational projects has secured their revenue through a long-term PPA European Energy manages 838 MW on behalf of third parties Gross amount 561 MW 87% Wind 13% Solar PV Denmark Portfolio distribution per country EE share of portfolio, pre- EE share of portfolio, dev. dev. 4,950 MW 1,779 MW EE share of portfolio = 434 MW EE share of portfolio = 231 MW Brazil 10% Spain Brazil 3% 9% Bulgaria 74% Sweden 32% Italy 20% 3% 70% 26% 16% 14% Pre-dev. Dev. Solar Wind, onshore Wind, offshore 3% Poland 6% Germany 18% Finland 31% Denmark 40% Germany 24% Note: Figures as of year-end 2018. 1) Pre-development workstreams: Analysis of the site, securing land rights, analysis of needed permits. 2) Development workstreams: Permit applications submitted to relevant authorities, access to grid | 13#15EUROPEAN -ENERGY M Development - risk management in the investment process Project Risk Committee and the investment criteria Market conditions ■ Are the site-specific wind resources and/or irradiation sufficient to meet production thresholds? ■ Do the power prices suffice to provide a successful business case given the production levels, and/or do existing feed-in- tariff/subsidy regimes prevail in the market? ■ What is the condition of the infrastructure and where is the nearest connection point? ■Market opportunities to make bankable Power Purchase Agreements (PPAs) Risk profile How stable are the political and economic factors in the market? Project Risk Committee The scope of the committee is to identify and asses potential risks of new development projects. The committee is comprised of three members and a number of observers, all from the management team. √35 $ Local resources ■ Does European Energy have local knowledge and/or local partners in the relevant market? ■ Are top-tier suppliers active in the market? Exit & finance opportunities ■ Is it possible to find sources of external project financing in the market? ■ Does European Energy sense an appetite for renewable-energy assets in the market? Legal & permits ■ Assessment of the difficulty of acquiring building permits for the project ■ What is the environmental impact of construction on the project site? $ Investment decision ■ Can European Energy develop a wind or solar farm that provides attractive long-term returns given the risk level embedded in the asset for both financiers and equity investors? | 14#16Development - risk management and value creation through divestment 三ﾐ EUROPEAN ENERGY Illustrative overview of the business and relationship between project risk throughout the project cycle RTB3 COD4 Operation & Maintenance 100% Financial close Grid connection & Commissioning Early stage Early in the process project likelihood is low and European Energy carries all relevant investments, which is why investments are kept to a minimum and very limited amount ~ 70-85% Planning / permits Securing of land Site selection -2% FID1 Raise finance Finalise contracts & PPA Tender EPC² Operational contracts Project Value On the last 5 divestments, with an aggregated enterprise value of approx. EUR 250m, EE made a profit of approx. EUR 61.5m, which corresponds to a goodwill share of approx. 25%. Project Cost General European Energy business case 15-30% average gross margin on projects Buyer business case (as assumed by European Energy) Leveraged IRR = 4.0- 8.5% (market dependent) Non-leveraged IRR = 2.5-5.0% (market dependent) Project Risk Operation Development phase Construction phase Project Structuring Actual construction Varies 9-24 months 40 years Varies 12-36 months ≥ 30 years 1) FID: Final investment decision, 2) EPC: Engineering, procurement and construction agreements, 3) RTB: Ready-to-build, 4) COD: Commercial operation date Financing External financing is always secured before entering the actual construction, as to share the risk External financing typically constitute around 70-100% of the invested capital | 15#17EUROPEAN ENERGY Construction portfolio - well diversified between technologies Wind portfolio totalling 381 MW Gross (MW) Net (MW) EE share (%) Comments 381 290 76% Solar PV portfolio totalling 190 MW Gross (MW) Net (MW) EE share (%) Comments Total 190 143 78% Total Brazil Ready-to-Build Ouro Branco | Ouro Branco II Quatro Ventos 22 332 30 12.2 41% 30 12.2 41% 20-year FIT secured 20-year FiT secured Brazil Under construction 9.0 41% 20-year FIT secured Coremas III Finland Ready-to-Build Ahvenneva Honkakangas Koiramäki Mustalamminimäki 22880 10 50% 10 50% 30 30 100% 30 30 100% Potential construction in 2020 Potential construction in 2020 Denmark Ready-to-Build Evetofte Næssundvej Germany Ready-to-Build Oberbarnim 4 Vier Berge 27 Viertkamp 14 47 100% 14 50% FIT secured 50% FiT secured Under construction Jetsch 2 1 50% FIT secured Poland Ready-to-Build Bialogard Grzmiaca 6 100% 6 100% FIT secured 10 99 37 31 11 35% 20-year FIT secured Rødbyfjord Thisted Flyveplads 8888 65 44 53 48 88 8 100% 33 100% 67% 90% 20-year price premium secured 20-year price premium secured 20-year price premium secured Sweden Ready-to-Build Fimmerstad 23 Grevekulla 27 Kingebol 27 Under construction Västenby Zinkgruvan 31 ~~~ 27 NNN 23 100% 27 100% 100% Potential construction in 2020 Potential construction in 2020 Potential construction in 2020 10 53 130 10 100% 53 100% Went into operation Q1 2019 Project Coremas, Brazil | 16#18Case study - Project: Danish Solar PV (70 MW) == EUROPEAN ENERGY Solar PV farms in Denmark with a total nameplate capacity of 70 MW. The project was sold in 2018 to re:cap, an asset manager for renewable energy investments based in Switzerland Location: Bodelslyngsvejen, Denmark Location: Stubbekøbing, Denmark Location: Øster Toreby, Denmark | 17#19Case study - Project: Zinkgruvan, Sweden (53.2 MW) 三ﾐ EUROPEAN ENERGY Wind project with a capacity of 53.2 MW, has just been constructed and will be fully grid connected in September 2019 | 18#20Case study - Project: Coremas, Brazil (93 MW) == EUROPEAN ENERGY The Coremas project is a cluster of 3 sites with a total capacity of 93 MW. Two thirds of the project is currently operational and the remaining part will be constructed during 2019 | 19#21Case study - Project: Risø Test Centre, Denmark EUROPEAN -ENERGY The test centre in Risø will give European Energy and Technical University of Denmark (DTU) insights on the potential of the next generation of technical equipment harvesting energy from the sun. European Energy has financed the construction of the test centre at DTU's Risø Campus and is also funding several research projects at the new test centre. - | 20#22Efficient project life cycle from origination to divestment Overview of all grid connected projects in 2018 Comments . European Energy delivers extremely fast execution from ready-to-build to grid connection and divestment 2018 was a busy year at European Energy: The activities spanned five countries: Denmark, Sweden, Germany, Italy and Brazil == Track record of efficient project execution - from origination through to divestment DK PV 70MW Coremas I & II 62MW Bosco le Paine 39MW Lüdersdorf II 3.5MW Lohkamp 12MW Constructed and grid-connected wind and solar farms with an investment value of EUR 377 million in total Nøjsomheds Odde 32.4MW Holmen II 21.6MW Svindbæk EUROPEAN ENERGY 1Y, 2Q 2Y 1Y, 1Q 1Y, 1Q 1Y, 1Q 1Y, 2Q 20 2Q Time from Ready-to-Build to Grid Connection Status of all grid-connected projects in 2018 32MW 2Q Q4 2016 Q1 2017 Q2 2017 Q3 2017 Ready-to-build Q4 2017 Q1 2018 Grid connection Q2 2018 Q3 2018 Q4 2018 Q1 2019 Divested Project Origination DK PV, DK Project rights acquired and project developed Q2 - Q3 2016 Coremas I & II, BR Bosco le Paine, IT Project rights acquired Q4 2016 Project rights acquired Q3 2017 Lüdersdorf II, DE1 Concentration from Wriezener Höhe Q4 2016 Lohkamp, DE Project rights acquired Nøjsomheds Odde, DK Holmen II, DK Q3 2017 Project rights acquired Q2 2016 Project rights acquired Q3 2017 Svindbæk, DK Project rights acquired Q3 2017 Ready-to-build Q4 2016 Q4 2016 Q3 2017 Q2 2017 Q4 2016 Q2 2017 Q3 2017 Q3 2017 In construction Q1 2018 Q4 2016 Q3 2017 Q1 2018 Q3 2017 Q2 2017 Q3 2017 Q3 2017 Grid connected Q2 2018 Q4 2018 Q4 2018 Q2 2018 Q1 2018 Q1 2018 Q1 2018 Q1 2018 Divested Q4 2018 Not yet divested Q1 2019 Not yet divested Q1 2018 Q4 2018 Q1 2019 Not yet divested 1) Repowering Proven ability to deliver strikingly fast project execution minimizes European Energy A/S's financial commitments to projects | 21#23== EUROPEAN ENERGY Production and sale of electricity Continuous increase in sale of electricity 25 20 20 18 Consolidated sale CAGR: 49% 17 20 20 20 20 20 Key findings • Even without divestments in 2018 and Q1 2019, European Energy made a positive result EURM 15 10 9 6 5 0 2015 2016 10 2017 2018 10 6 Q1 20191 • . Revenue from sale of electricity has been growing steadily with a CAGR of 49% between 2015-2018 • Interest Coverage Ratio¹ without divestments still show significant comfort of 3.4x in 2018 compared to 6.5x including divestments Significant profits are realised upon divestment of completed projects Consolidated sale EE-share in non-consolidated companies Profit/loss statement excluding income from divestments - even without divestment EE made a positive result 2018 EURM Reported 2018 Revenue 96 Sale of projects 73 Without sale of projects 23 Reported Q1 2019 Q1 2019 Sale of projects Without sale of projects 125 115 10 Profit after tax from equity-accounted investments 6 6 1 1 Other income 1 1 Direct costs -61 -55 -5 -100 -98 -2 Gross profit 43 18 25 26 17 9 Staff costs -5 -1 -4 -1 0 -1 Other external costs -4 -1 -3 -1 0 -1 EBITDA 34 16 18 24 17 7 Depreciation & impairment -2 -2 -1 -1 Operating profit (EBIT) 31 15 23 6 Finance income 4 4 1 Finance expenses -9 -9 -3 1 -3 Profit/loss before tax 26 10 21 1) ICR EBITDA / Net interest expenses - | 22#24Asset Management & PPAS Assets managed on behalf of third parties Basics of PPAs Assets managed (MW) Current Business 2015 2016 2017 2018 - on behalf of third parties Solar 282 102 126 236 Wind 97 451 513 602 Total 379 553 639 838 == EUROPEAN ENERGY Value to shareholders Getting to market Corporates Supporting ongoing project needs while also creating room for development Build information channels and knowledge to ensure flexibility in execution Projects Getting new customers and additional value generation through direct access to consumers Comments on Asset Management • • Revenue from wind and solar farms depends not only on the technology installed, weather conditions and electricity prices, but also on the ability to ensure reliable operation of the farms Consequently, European Energy has a dedicated Asset Management team tasked with minimising downtime at operating plants and dealing with incidents when they occur, including solar and wind farms managed on behalf of third parties Asset management is integral to the core business of European Energy, whose customers are often institutional investors who prioritise choosing a business partner with the ability to construct a plant, optimise production output, and minimise operating costs on their behalf The Asset Management fee is only a small part of European Energy's total revenue, but represents added value to the investors since the caretaking of assets for institutional investors brings European Energy: Purchasing power Considerable knowledge - Market insight Often triggers new business in the form of repowering opportunities in existing energy parks Utility PPAs a po Energi Danmark VINDENERGI DANMARK dc Danske Commodities e.on PPA sources Goverment auctions Government auctions won 3 Corporate PPAs NISSAN NEASN 2 ENERGY 4 MWSC | 23#25Agenda 1. Introduction to European Energy 2. Business description 3. Market overview 4. European Energy financials 5. Q&A 6. Appendices 7. Risk Factors Project Kappel, Denmark ויו ויו EUROPEAN ENERGY#26== EUROPEAN ENERGY Growing global renewable-energy market Comments • • • . • From 2004 (when the Issuer was founded) until end of 2018, the global installed capacity of wind and solar PV farms has grown from 42 GW in early 2004 to approx. 1,100 GW This growth has been stimulated by significant technological breakthroughs, favourable political frameworks and dedicated developers, financiers and subcontractors Although renewable energy is still somewhat dependent on subsidies, new renewable-energy technology is becoming more competitive with fossil fuel sources. The levelised cost of energy, LCOE, has been pushed down due to the larger and more efficient wind turbines and scalability of production of solar PV panels and other solar PV components Onshore wind power is currently one of the most economically competitive alternatives to traditional fossil fuel sources. The technological advances, e.g. in terms of rotor diameter, standard generator capacity, and height of turbines, made during recent years, have contributed to the lowering of LCOE In most countries, the solar PV market remains policy-driven but the predictability and stability of power production from solar assets, increased competition between technology suppliers, improvement in underlying technology and economies of scale associated with panel productions, also support cost effective financing Despite seeing strong growth over the past 10 years, renewable energy makes up less than 5% of global energy demand. As such, the potential for future growth in the renewable-energy market continues to be very large 2017 Distribution of global energy mix 2% Strong global growth Capacity (GW) Capacity (GW) 500 600 Onshore Wind 540 CAGR: 496 16% 453 405 400 341 293 300 262 216 178 200 148 100 0 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 600 Solar PV 480 500 400 CAGR: 40% 386 292 300 221 200 173 136 100 71 100 23 40 0 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 98% ■Renewables excl. hydro Other Source: IEA (2019) World Energy Outlook 2018, https://www.iea.org/weo/. All rights reserved. Capacity (GW) 10 255 15 25 Offshore Wind 20 CAGR: 31% 12 8 7 5 3 4 2 0 2009 2010 2011 2013 2014 2015 19 14 14 23 23 2016 2017 2018 2012 Source: International Renewable Energy Agency - Renewable Capacity Statistics 2019 | 25#27Market benefitting from strongly declining costs Wind energy • The overall LCOE¹ for wind is estimated to have dropped by more than 2/3s over the past 10 years due to cheaper construction and turbine costs, and higher capacity factors Onshore wind's LCOE has fallen 68% since 2009 and is cheapest in India and China, running between EUR 41-100, which means that well-sited wind farms in these countries are among the cheapest in the world - an incredibly important factor seeing as these countries' surging demand for power is currently being met by coal Solar energy • • • == EUROPEAN ENERGY If wind's LCOE drop has been steady, solar energy's has been meteoric - after being more than 2.5x that of wind, the LCOE of solar PV has now almost caught up with wind Feed-in tariffs and plummeting photovoltaic module prices make solar competitive with most forms of power generation On 3 September 2018, the European Union (EU) removed the Minimum Import Prices on solar panels from China. These measures were initially put into place to protect the European module manufacturers Removing the trade measures, however, meant that the construction cost of a solar plant in the EU dropped by 12-15% overnight, and now grid parity can be achieved in large parts of Southern Europe LCOE (USD/MWh) 140 160 80 60 ༄ ༔ སཽ ༔ ྂ ¥ I 120 Wind 9-year percentage decrease: -69% Wind 9-year CAGR: -12% 100 -68% 40 20 400 350 300 250 200 150 100 50 LCOE (USD/MWh) Solar 9-year percentage decrease: -87% Solar 9-year CAGR: -21% -87% 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 A B A B Cost of components: Can still decrease further. However, not at the same rate as it has in the past Efficiency: Significant potential for increased efficiency as turbines increase in size and technology is enhanced Cost of components: Significant potential to decrease cost as competition among suppliers increases Efficiency: Significant potential for increased efficiency as panels increase in size and technology is enhanced Note: 1) LCOE: levelised cost of energy Source: Lazard and management estimates | 26#28Necessity of renewable transformation benefits operating environment == 1 Power consumption expected to increase ... Total primary energy demand global under IEA's New Policies Scenario 20 000 Historical Mtoe 17 500 15.000 12 500 2 EUROPEAN ENERGY ... but to ensure that global warming will not exceed 1.5°C, drastic reductions in CO2 emissions have to be made over the coming years Global total net CO2 emissions - pathways to 1.5°C Billion tonnes of CO₂/yr 50 40 30 Other renewables 20 Hydro Nuclear 10 000 7500 5000 2500 0 2000 2010 2020 2030 2040 Bioenergy 10 Natural gas Coal Oil Source: IEA (2019) World Energy Outlook 2018, https://www.iea.org/weo/. All rights reserved. -10 -20 0 In pathways limiting global warming to 1.5°C with no or limited overshoot as well as in pathways with a higher overshoot, CO2 emissions are reduced to net zero globally around 2050. Four illustrative model pathways P1 P2 720 P3 P4 1 2010 2020 2030 2040 2050 2060 2070 2080 2090 2100 Source: IPCC, 2018: Summary for Policymakers. In: Global Warming of 1.5°C. An IPCC Special Report on the impacts of global warming of 1.5°C above pre-industrial levels and related global greenhouse gas emission pathways, in the context of strengthening the global response to the threat of climate change, sustainable development, and efforts to eradicate poverty [Masson-Delmotte, V., P. Zhai, H.-O. Pörtner, D. Roberts, J. Skea, P.R. Shukla, A. Pirani, W. Moufouma-Okia, C. Péan, R. Pidcock, S. Connors, J.B.R. Matthews, Y. Chen, X. Zhou, M.I. Gomis, E. Lonnoy, T. Maycock, M. Tignor, and T. Waterfield (eds.)]. World Meteorological Organization, Geneva, Switzerland, 32 pp 3 A large transformation in the energy-mix is absolutely crucial to reach the C02 reductions needed when considering growing global energy demand 27#29Agenda 1. Introduction to European Energy 2. Business description 3. Market overview 4. European Energy financials 5. Q&A 6. Appendices 7. Risk Factors Project Kappel, Denmark ויו ויו EUROPEAN ENERGY#30== EUROPEAN ENERGY European Energy providing stable earnings growth Stable high growth in EBITDA with strong margins 2015-Q1 2019 17.7% 18.3% 14.6% 10.8 FY 2015 34.9% 34.2 33.6 24.9 23.6 FY 2016 FY 2017 FY 2018 EBITDA (EURm) EBITDA margin (%) Q1 2019 Considerations . • • EBITDA is stable with a continuously positive development from 2015 - Q12019 EBITDA remains stable under volatile revenues due to the inclusion of profit after tax from equity-accounted investments and the high margin on the increased electricity sales from operational projects not yet divested Profit before tax (EBT) follows the development in EBITDA with European Energy delivering the best-ever results in 2018 The strong EBITDA has continuously resulted in strong EBT results 13.8% 12.7% 8.6% 27.0% 25.8 25.9 17.9 20.7 EBT (EURM) EBT margin (%) 6.4 FY 2015 FY 2016 FY 2017 FY 2018 Q1 2019 | 29#31== EUROPEAN ENERGY Positive cash flow development in 2018 and Q1 2019 Cash flow from operations excl. changes in net working capital, EURm Cash flow from operations before changes in NWC Change in net working capital FY 2015 -21 21 18 FY 2016 -11 18 FY 2017 -33 21 20 -172 FY 2018 Q1 2019 46 Positive development in overall cash flow - change in cash flow year-on-year, EURM Change in cash and cash equivalents Cash and cash equivalents end of period 48 59 59 68 Considerations • • • The cash flow from operations excl. the changes in Net Working Capital (NWC) show a steady increase similar to profit before tax for the Group The negative cash flow from NWC 2015- 2018 is primarily due to the increase in inventories which in turn is a result of higher an increased construction activity and portfolio. In Q1 2019 change in NWC was positive due to the two big divestments of projects in Denmark and Italy freeing up NWC The general increase in NWC is financed through the positive cash flow from operations and from debt financing Overall the change in cash and cash equivalents have seen a positive development 2015 to Q1 2019 resulting in a strong liquidity position for European Energy 16 -1 15 33 10 10 -3 FY 2015 FY 2016 FY 2017 FY 2018 Q1 2019 | 30#32Balance sheet overview Assets, EURM 447 407 59 40 68 288 61 30 Cash 61 48 223 219 16 15 42 38 37 202 Receivables Investm. and loans in companies 45 153 48 43 Inventory 102 76 72 Assets held for sale 49 86 46 51 50 47 PPE FY 2015 FY 2016 FY 2017 FY 2018 Q1 2019 Equity and liabilities, EURm 223 53 447 407 91 Current liabilities 107 288 81 248 173 124 116 114 50 10 91 108 127 57 FY 2015 64 FY 2016 FY 2017 FY 2018 Q1 2019 Contingent liabilities, EURm 113 79 24 51 3 28 76 86 48 15-7 3 6 FY 2015 FY 2016 FY 2017 FY 2018 Non-current liabilities Total equity == EUROPEAN -- ENERGY Considerations • . • • • • • Non-current assets represent the operating assets Energy, and the either of European investments in companies with operating assets or development assets Current assets are increasing mainly due to the increase in inventories, which is a consequence of the increased pipeline and portfolio Inventories mainly consist of parks in the construction portfolio Completed projects planned for divestment are also held in inventories, meaning part of the assets in inventory will generate revenue The increased balance is financed partly from the increased equity, partly from increased debt facilities The project financing is typically long-term, which is why non-current liabilities are increasing Bond proceeds from earlier bond issues have accelerated the fast growth of European Energy Guarantees related to financing agreements Guarantees, warranties and other liabilities related to SPAS Guarantees, warranties and other liabilities related to vendor contracts | 31#33== EUROPEAN ENERGY Overview of debt structure as per end of 2018 Total financing, EURm 476 Debt from ass. companies, EURM The EURm 14 is related to the following underlying debt: Consolidated debt overview, EURM 99 Debt from ass. companies 78 The recourse loan of EURm 8 relates to the Nøjsomheds Odde project, which has been released in March 2019. The remaining part relates to project Krupen. 299 84 163 299 Consolidated debt 99 Total financing Debt from ass. companies (not EE share) Debt from ass. companies (EE share) Consolidated debt NIBD/EBITDA 9.9x 64 201 84 I 180 97 64 14 116 14 36 34 Non-recourse debt Recourse debt Total Non-recourse Bond loan Construction financing NIBD/EBITDA NIBD (recourse only debt)/EBITDA 7.1x Solvency ratio, % Recourse The EURm 116 is related to the following underlying debt: - EURM 49 relates to Holmen, which is fully divested and unwinded in Q1 2019 EURM 42 relates to project Zinkgruvan, which will either be converted into a non-recourse project financing and/or fully divested in 2019. The project is fully constructed and will be fully grid connected later in 2019 EURm 25 relates to project Måde where 50% of the project is in operation and the other 50% will soon be constructed. Financing of fixed assets, dev. projects & other debt 32% 29% 25% 31% 2015 NIBD, EURM 4.0x 3.0x 24% 2.8x 4.3x 1.5x 2016 2017 2018 Q1 2019 2015 107 101 102 2015 2016 1) ICR EBITDA / Net interest expenses 239 148 2016 Interest Coverage Ratio¹ 2017 2018 Q1 2019 9.5x 6.5x 5.1x 4.6x 3.7x 2017 2018 Q1 2019 2015 2016 2017 2018 Q1 2019 | 32#34Agenda 1. Introduction to European Energy 2. Business description 3. Market overview 4. European Energy financials 5. Q&A 6. Appendices 7. Risk Factors Project Kappel, Denmark ויו ויו EUROPEAN ENERGY#35Agenda 1. Introduction to European Energy 2. Business description 3. Market overview 4. European Energy financials 5. Q&A 6. Appendices 7. Risk Factors Project Kappel, Denmark ויו ויו EUROPEAN ENERGY#36European Energy's income statement EUR'000 == EUROPEAN ENERGY FY 2015 FY 2016 FY 2017 FY 2018 Q1 20191 Revenue 73,559 140,788 186,716 96,182 125,201 Profit after tax from equity-accounted investments 1,713 -1,043 5,432 5,795 982 Other income 269 1,400 1,182 Direct costs -57,533 -107,289 -148,550 -60,589 -100,103 Gross profit 18,008 32,456 44,998 42,570 26,080 Staff costs Other external costs EBITDA -5,178 -4,949 -6,970 -5,030 -1,398 -2,071 -2,578 -3,854 -3,933 -1,057 10,759 24,929 34,174 33,607 23,625 14.6% 17.7% 18.3% 34.9% 18.9% Depreciation & impairment -1,495 -1,610 -1,723 -2,490 -847 Operating profit (EBIT) 9,264 23,319 32,451 31,117 22,778 Finance income 3,676 3,562 3,103 3,907 761 Finance expenses -6,580 -8,976 -9,765 -9,100 -2,857 Profit/loss before tax 6,360 17,905 25,789 25,924 20,682 8.6% 12.7% 13.8% 27.0% Tax -2,879 -2,260 -4,600 -3,403 -2,558 Profit/loss for the period 3,481 15,645 21,189 22,521 18,124 Attributable to: Shareholders of the Company 3,664 15,103 17,575 21,328 13,380 Non-controlling interests (NCI) -183 542 3,614 1,193 4,744 Profit/loss for the period 3,481 15,645 21,189 22,521 18,124 1) Q1 2019 numbers are not audited | 35#37European Energy's balance sheet == EUROPEAN ENERGY EUR'000 FY 2015 FY 2016 FY 2017 FY 2018 Q1 20191 EUR'000 FY 2015 FY 2016 FY 2017 FY 2018 Q1 20191 ASSETS EQUITY AND LIABILITIES Non-current assets Equity Share capital 1,340 1,340 40,311 40,316 40,316 Property, plant and equipment 45,509 51,320 50,340 85,947 45,502 Retained earnings and reserves 41,113 56,334 35,002 55,772 69,641 Lease assets 1,010 Equity attributable to owners of Joint Venture investments 8,805 6,943 9,977 11,938 13,345 42,453 57,674 75,313 96,088 109,957 the Company Associated companies investments 10,195 11,265 12,507 I 8,643 8,324 Non-controlling interests 14,354 6,326 15,687 I 11,597 Other investments 3,622 3,629 4,960 6,764 6,733 Total Equity 56,807 64,000 91,000 107,685 16,591 126,548 Liabilities Loans to related parties 25,581 21,098 17,951 33,179 32,990 Bond loan 52,040 44,700 58,924 83,670 83,809 Trade receivables and contract 9,047 5,547 5,153 4,131 3,870 assets Project financing 55,780 55,500 53,310 157,666 81,937 Other receivables 7,634 8,141 8,656 3,101 2,545 Other debt 4,275 1,402 597 898 931 Lease liabilities 1,716 Deferred tax 5,608 3,931 2,826 1,584 457 Provisions 556 798 3,066 3,072 Prepayments 9,937 3,923 Deferred tax 1,681 2,618 2,201 2,986 2,011 Total non-current assets 116,001 111,874 112,370 165,224 118,699 Total non-current liabilities 113,776 104,776 115,830 248,286 173,476 Bond loan 7,600 7,600 Current assets Project financing 15,007 15,726 38,363 56,111 50,522 Inventories 75,679 72,201 101,797 202,193 152,684 Lease liabilities 457 Trade receivables and contract assets 6,394 11,550 9,534 9,317 13,242 Trade payables 17,957 11,512 16,062 9,987 8,109 Payables to related parties 408 835 4,848 481 974 Other receivables 7,372 5,938 15,430 10,734 3,340 Corporation tax 1,866 920 760 1,194 1,830 Prepayments for goods and services 1,810 1,896 453 Free cash and cash equivalents 12,901 10,243 42,087 1,027 50,718 2,275 Provisions 3,040 1,975 1,264 1,985 1,986 65,472 Contract liabilities 2,575 5,960 1,634 Restricted cash and cash Other payables 11,750 11,191 12,037 15,392 13,365 3,029 4,833 6,093 7,868 2,629 equivalents Assets held for sale Liabilities held for sale 28,370 48,930 Total current liabilities 52,603 49,759 80,934 91,110 107,247 Total current assets TOTAL ASSETS 107,185 106,661 223,186 218,535 175,394 281,857 287,764 I 447,081 288,572 Total liabilities 166,379 154,535 196,764 339,396 280,723 407,271 TOTAL EQUITY AND LIABILITIES 223,186 218,535 287,764 | 447,081 407,271 1) Q1 2019 numbers are not audited | 36#38European Energy's cash flow statement == EUROPEAN ENERGY EUR'000 Profit/loss before tax Adjustments for: Financial income Financial Expenses Depreciations Profit from equity-accounted companies Change in networking capital FY 2015 6,360 FY 2016 17,905 FY 2017 25,789 FY 2018 25,924 Q1 20191 20,682 -3,676 -3,562 -3,103 -3,907 -761 6,580 8,976 9,765 9,100 2,857 1,495 1,610 1,723 2,490 847 -1,713 1,043 -5,432 -5,795 -982 -20,534 -10,854 -32,582 -172,106 45,960 Other non-cash items -269 -1,400 -1,263 -347 Cash generated from operation before financial items and tax -11,757 15,118 -5,240 -145,557 68,256 Taxes paid -2,203 -1,469 -3,297 -751 -4 Interest paid and realised currency losses -6,577 -8,483 -8,817 -8,263 -2,671 Interest received and realised currency gains 3,441 2,140 2,878 Cash flow from operating activities -17,096 7,306 -14,476 3,610 -150,961 670 66,251 Purchase of Property, plant and equipment -98 -6,848 -815 -12,576 -8 Proceeds from disposal of equity-accounted investments 1,196 1,999 69 3,161 Purchase/disposal of other investments - 252 31 Investment/loans in equity-accounted investments -6,601 4,659 4,303 8,508 -899 Dividends 88 52 31 165 Cash flow from investing activities -5,415 -138 3,588 -490 -876 Proceeds from issue of bonds Repayment of bonds Proceeds from borrowings Repayment of borrowings Changes in payables to associates Transactions with NCI Cash flow from financing activities Change in cash and cash equivalents 58,785 25,107 -45,000 -7,600 33,956 40,437 125,974 191,594 12,273 -25,748 -39,998 -105,527 -49,729 -68,876 351 427 4,013 -4,367 493 11,445 -8,888 5,747 6,852 250 20,004 -8,022 43,992 161,857 -55,860 -2,507 -854 33,104 10,406 9,515 Cash and cash equivalents at beginning of period 18,437 15,930 15,076 48,180 58,586 Cash and cash equivalents end of period 15,930 15,076 48,180 58,586 68,101 Of which restricted cash and cash equivalents -3,029 -4,833 -6,093 -7,868 -2,629 Non-restricted cash and cash equivalents end of period 12,901 10,243 42,087 I 50,718 65,472 1) Q1 2019 numbers are not audited | 37#39Agenda 1. Introduction to European Energy 2. Business description 3. Market overview 4. European Energy financials 5. Q&A 6. Appendices 7. Risk Factors Project Kappel, Denmark ויו ויו EUROPEAN ENERGY#40Risk Factors == EUROPEAN ENERGY Investing in the Bonds involves certain risks. Prospective investors should carefully consider the risks described below, as well as the other information contained in this Prospectus, before making an investment decision. Any of the risks described below could have a material adverse impact on our business, prospects, result of operations, cash flows and/or financial condition and could therefore have a negative effect on the trading price of the Bonds and the Issuer's ability to pay all or part of the interest, principal and other amounts on the Bonds. Investment in the Bonds involves a high degree of risk and holders of the Bonds (the "Bondholders") may lose all or part of their original investment. The Issuer believes that the factors described below represent the principal risks inherent in the Issuer's business and in investing in the Bonds and which could have a negative effect on the Issuer's ability to satisfy its payment obligations under the Bonds. The Issuer does not represent that the risks described below are the only risks facing the Issuer and the Issuer's Group. Additional risk factors not presently known, or that are currently deemed immaterial, may also render the Issuer unable to pay interest, principal or other amounts on or in connection with the Bonds. In addition, our past performance and historical trends should not be used to anticipate results or trends in future periods. The risk factors described below are not listed in any order of priority with regard to their significance or probability. Risks related to the Issuer Operational Risks The Group's business depends on the successful development of new renewable energy projects, which may be impaired due to changes of the market conditions or in the regulatory framework The Group's result and business depend amongst other factors on the successful development of new wind and solar energy projects. A number of risks are associated with the development of such projects. The successful development of renewable energy projects depends to a large extent on the regulatory framework. This concerns both the applicable feed-in tariff schemes as well as the permissibility of the projects with regard to competing public interests (such as environmental protection, noise emission controls, aviation or military use of land and airspace). Given the comparably long development periods, renewable energy projects are particularly vulnerable to changes in this regulatory framework. Additionally, in most of the Group's key markets, there are a multitude of public and private stakeholders involved in the process of approving a given project who may delay or stall the successful development of new projects (such as municipalities, governmental authorities or local residents). The development of new projects may also be subject to complaints or law suits - e.g. regarding necessary approvals or permits - which may delay the construction of a project or even lead to its cancellation. Together with the vulnerability to changes in the regulatory framework, these factors increase the risk that the Group finds itself unable to finalize the development of new projects and to expand its business. The Group may also lose funds invested in the development of unsuccessful projects. Successful project development requires the availability of suitable sites for the projects, which satisfy a number of criteria (such as favourable wind or irradiation conditions, availability of grid connection possibilities and capacity or favourable regulatory prospects for renewable energy projects). In parallel with the expansion of renewable energy in some of the Group's key markets (such as Denmark and Germany), such sites are becoming more difficult to find and more expensive to acquire or to secure. This can adversely affect the Group's ability to successfully develop projects and expand its business. In order to explore business opportunities in different markets, the Group is currently developing renewable energy projects in many different countries. This include European countries, but also countries outside Europe. Consequently, the Group is continuously assessing the possibility of entering into new markets. When entering into new markets, the Group can to a lesser degree than when operating in core market countries rely on relevant in-house experience, and will have to rely on external advisors (legal, technical, etc.). By consequence, the information and knowhow necessary for the successful development of such projects may not be available within reasonable time frames or at reasonable costs. This can adversely affect the Group's ability to successfully develop projects and expand its business. Some renewable energy markets experience significant peaks of project development activities due to regulatory deadlines for attractive feed-in tariff schemes. These peaks stress the availability and costs of crucial resources for project development (such as grid connection and capacity, construction companies or technical advisors). The increase in costs for such resources may impair the profitable development of projects. At the same time, the external deadlines causing peaks in activities also lead to peaks in the Group's internal work load. There is a risk that the necessary human resources cannot be available in due time. This may prevent the successful and timely development of new projects. Further, there is a trend towards a decrease in subsidy levels due to successful implementation of competitive auction-processes. This could within a short- or mid-term period of time (at least within Europe) lead to regimes with none or significantly reduced subsidies for renewable energy projects. The consequence hereof could be that the profitability per MW of the Issuer's projects will be reduced, whereby the Issuer will have to rely on an increased volume of projects to ensure continuous profitability on the overall portfolio. The Group has developed a large-scale energy storage project (EE GigaStorage). Further development of this project will most likely imply further investments by the Group. Whether such development costs will be recouped by third-party investments, a third-party purchase of a license to use the technology etc., is uncertain, and could therefore lead to a risk of loss of development costs. | 39#41Risk Factors, continued == EUROPEAN ENERGY The Group's business also depends on the successful acquisition of new renewable energy projects, which may be difficult or costly The Group does not only develop green field projects but also acquires projects at different stages of their development. This entails a number of risks, which may render the acquisition of projects more difficult and less profitable. The availability of suitable projects at reasonable prices may vary subject to the general economic situation or due to an increase in demand for such projects in specific countries with attractive feed-in tariff schemes. The acquisition of projects developed by others bears the risk that the projects have hidden deficiencies, which are not revealed in a buyer's due diligence and/or might not be covered by warranties/indemnities (such as missing securities, unrealistic production prognoses or hidden liabilities). Also, the timing of the acquisition of a project may not allow for a due diligence process that covers all detailed aspects of the project. The Group's project acquisitions may thus prove less profitable than expected. The construction of renewable energy projects is subject to risks affecting the costs or timely completion of the construction works and, thereby, affecting the profitability of the projects for the Group The construction of renewable energy projects involves certain risks which may affect the cost of construction and, subsequently, the profitability of the projects. The construction works may be subject to cost-overruns and delays. Those can stem from a poor performance by the counterparties involved in the construction (such as the construction contractors, their sub-contractors or manufacturers of key components), including performance issues arising from financial difficulties encountered by such counterparties, or from the occurrence of unforeseen circumstances at the relevant project site, force majeure events or similar impeding the progress of the construction. Additionally, delayed projects may miss out on an attractive feed-in tariff due to their late completion. In all these cases, projects can become less profitable for the Issuer. The Issuer or other companies of the Group may provide guarantees under the construction phase relating - inter alia - to the development and construction of the project. Such guarantees may be part of a project management agreement by which the Issuer or other companies of the Group provide services with respect to the design, procurement and construction of a project. Such guarantees may be to the benefit of the special purpose companies that own the projects and/or to lenders providing financing to such special purpose companies. Thereby, the financial risks associated with the construction are transferred to a bigger part of the Group and the risks for the Group's overall result are increased. The Group develops and owns many of its projects with external partners, who may affect the Group's reputation and liquidity or impair the Group's ability to steer these projects according to its own best interest The Group develops and operates many of its projects in cooperation with other parties. These parties are for example companies or individuals who have originally developed a project and then kept a stake in it or financial investors who provide funding for the development of a project. These collaborations entail a number of risks for the Group. Entering into such collaborations could mean that the Group has to assume the risks related to the partner's behaviour and liquidity. If the partner's business behaviour is unlawful, unreliable or otherwise unprofessional, this may affect the Group's reputation as it is associated with this partner. A deterioration of the Group's reputation may adversely affect future business opportunities as the counter parties might pull out or offer worse conditions for future projects and collaborations. It may also impair the Group's access to financing and its relationship with private and public stakeholders necessary for the successful development of projects. In case of the partner's insolvency, or if the partner's business behaviour is unlawful, unreliable or otherwise unprofessional, the partner may need to be replaced and the relevant projects may be confronted with a new ownership structure and subsequent legal uncertainties. This may adversely affect the projects' access to financing or the Group's ability to divest the projects. Furthermore, the Group's ability to successfully develop or operate projects may be affected without the financial contributions by the partner. By consequence, the projects may fail and the Group lose its investments. In some cases, including where the Group does not hold a majority interest in a project, the development and operation of the project is not in the Group's full control and the Group may thus not be capable of effectively counteracting an undesirable development of the projects. This may impair the successful development or operation of the project and the Group may lose its investments in the project. Finally, the partnerships may adversely affect the disposability of the projects. If the partners and the Group have conflicting priorities and business interests, they may not be able to agree on the timing and pricing for a sale of their projects. As a consequence, the divestment of the projects may be less profitable for the Group. | 40#42Risk Factors, continued == EUROPEAN ENERGY The Group's business depends on the successful divestment of its projects, which may become less profitable due to market conditions or other factors affecting the proceeds of the divestments The Group's business concept includes the total or partial divestment of projects. There are a number of risks, which can impede the successful divestment of projects by the Group and thus adversely affect the Group's cash flow and ability to reinvest in new projects and to seize new business opportunities. The demand for renewable energy projects may decrease due to e.g. the general economic situation or to country-specific market developments, such as uncertainties with regards to the continuity of feed-in tariff schemes. The changes in the subsidy- regimes could impact the profitability of the projects negatively, and thereby lead to further decrease in the demand for renewable energy projects. Such decrease in demand can affect both the market value of and the availability of divestment opportunities for the Group's projects. Finding creditworthy and reliable buyers can prove to be time and cost intensive. As a consequence, the divestment of projects can become more difficult and less profitable for the Group. In the framework of the divestment of a project, the Group may accept to give certain guarantees regarding the project to the buyer that are not fully covered by the back-to-back arrangements with the suppliers. Such guarantees, which may include fulfilment of permits or meeting project specific criteria for receiving subsidies, can force the Group to allocate (human and financial) resources to the project after its divestment and potentially lead to direct payment obligations. Part of the revenues resulting from a divestment may be held back by the buyer or held in escrow until the fulfilment of certain conditions subsequent. This can force the Group to allocate resources to the project after its divestment and the Group may not be able to receive the entirety of the revenues, e.g. in a case where the Group is exposed to a credit risk on the buyer. Based on earn-out mechanisms in the sales contract, the revenues resulting from a divestment may be dependent on the productivity of the projects after their divestment and be lower than expected. The production generated by the Group's projects may be adversely affected by a number of external factors lowering the Group's revenues The operation and production of the Group's projects may be affected by a series of risk factors, which can reduce the Group's revenues stemming from the operation of these projects. The production of renewable power projects depends on favourable weather conditions (such as wind or solar conditions). The actual weather conditions on the projects' sites may fall short of the predicted average conditions and the production and revenue from the respective projects may thus be reduced. Extreme weather conditions may lead to interruptions of operations as the production may have to be shut down, by precaution or as a result of damages caused to the project facilities. The operation of the projects may also be interrupted by technical defects or other external events (such as cases of force majeure, administrative prohibitions etc.). The interruption of operation may persist for a longer period of time if maintenance services are unavailable or not delivered as contracted. These interruptions of operation can lead to a reduction of the production and thus of the revenue generated by the concerned projects. The projects may not be able to feed the entirety of their production into the electricity grid in the absence of sufficient or delayed grid capacity. The increase in renewable generation capacity in the markets where the Group operates may lead to increased grid curtailment and such curtailment may not be compensated leading to a loss of revenue. The remuneration for the electricity produced by the Group's projects is partly paid out in currencies which are subject to exchange rate fluctuations to the Group's main currencies. This may adversely affect the profitability of the projects for the Group's accounts. Even though the Group applies what is considered proven technology in the projects, the technologies used in the Group's projects may entail risks for the production and profitability of the projects. Technologies which are based on the present scientific knowledge and state-of-the-art engineering may reveal themselves as being unreliable or having unexpected deficiencies in the future and thereby impair the productivity of the projects. 41#43Risk Factors, continued Commercial Risks == EUROPEAN ENERGY Decrease in the market price of electricity and/or certificates can have an adverse effect on the Group While part of the income generated by the Group's wind farms and solar photovoltaic ("Solar PV") plants is covered by fixed prices (due to guaranteed feed-in tariffs or long term power purchase agreements) or fixed price premiums, part of the income may fluctuate with the market price of electricity and/or certificates. This exposes the Group to a risk of decrease in the price of electricity and/or certificates which could occur due to inter alia - a reduction in the demand for electricity or new capacity being added to the market. This risk can be reduced to a certain extent by entering into long-term power and/or certificate purchase agreements or price hedging agreements but as this will not always be the case there will remain an exposure to decreases in the price of electricity and/or certificates. The Group does not operate with a general price hedging strategy. Furthermore, a decrease in the price of electricity and/or certificates may weaken the market for the Group's projects leading to less demand for projects and/or a decrease in the price that the projects can be sold to which will have an adverse effect on the Group. The rapid technological development of renewable energy production requires the Issuer to respond quickly and failure to do so may have an adverse impact on the Group's business The technology of renewable energy generation, including wind turbine generators and solar PV plants, advances at a very fast pace. This requires the Group to be constantly aware of the technological development and to respond quickly to any changes to the technology employed by the Group in its wind parks and solar PV plants. The rapid technological development could also lead to other technological solutions for generating renewable energy surpassing the solutions currently chosen by the Group with regard to efficiency and costs. Should this occur, it could have a negative impact on the Group's business. The Group is operating in a number of different jurisdictions which increases the risk that not all applicable law is being complied with at all times The Issuer is present in a number of different countries and is required to comply with multiple regulatory requirements pertaining to the operation of its business. This entails a risk that compliance with all requirements cannot be ensured at all times and should one or more violations occur, the Group may become liable to sanctions such as - but not limited to - fines and loss of financial support or revocation of permits requiring the operation of a wind farm or solar PV plant to be halted or suspended. Such sanctions or other consequences of non-compliance with applicable law may have a material adverse effect on the Group. The Group or its advisors may be wrong in their interpretation of applicable tax legislation and there may be different views on what is the correct transfer pricing methodology The Group applies tax legislation based on its - or in some cases, its tax advisors' - interpretation of the relevant regulations and seeks to ensure that local tax filings are made in compliance with all relevant regulations and that its transfer pricing methodology is accurate. The Group or its advisors may commit errors when interpreting the tax legislation, however, and any such errors could have an adverse effect on the Issuer's financial position. Furthermore, local tax authorities may have different interpretations of the correct transfer pricing methodology. In addition, the applicable tax legislation may change over time, potentially also with retroactive effect, to the detriment of the Group. Additionally, the Group may become involved in disputes regarding its tax positions with relevant local authorities and if decided against the Group, such disputes may affect Issuer's financial position negatively. Changes to legislation and regulatory regimes, including but not limited to - changes to support mechanisms for renewable energy, in the countries where the Group operates can impact negatively on the Group's business The market for renewable energy and renewable energy projects is highly sensitive to changes in legislation and to the regulatory regimes in general. Support mechanism are frequently changed because of inter alia - the changing market conditions for renewable energy and conflicting political views on what the level of support for renewable energy should be. Changes to support mechanisms may be phased in over the course of several years but may also be implemented very quickly. In all cases, the changes require the Group to re-evaluate all projects that may be affected and as a consequence, projects representing significant value in terms of costs already incurred or future profitability could be abandoned. Furthermore, changes to support mechanisms may be made with retroactive effect (such as reducing already guaranteed tariff levels for the future or imposing additional costs on the operation of renewable energy plants) and any such retroactive changes can impair the value of the Group's assets significantly and may have a materially adverse effect on the Issuer. Changes to other parts of the legislation than what relates to support mechanisms can also have an adverse effect on the Group. This can be the case if the changes - inter alia - makes it more difficult to develop, construct or operate renewable energy projects or on a general level increase the burden of conducting a business similar to the Group's. While the Issuer to some extent monitors the changes in legislation and regulatory regimes where the Issuer conducts its business, the large number of jurisdiction in which the Group operates makes it difficult or even impossible for the Issuer to be aware of all relevant legislative changes. Any delay in reacting to legislative changes may amplify the potential adverse effect of the changes. | 42#44Risk Factors, continued == EUROPEAN ENERGY In order to construct and operate the Group's wind parks and solar PV plants, contracts are concluded with a large number of third parties. Should a third party become financially distressed or default on its obligations it may result in a financial loss for the Group. Similarly, the Group is exposed to counterpart risks when part of the consideration which the Group is entitled to for a renewable energy project is deferred When constructing wind parks and solar PV plants, the Group concludes agreements concerning delivery of construction services, components and infrastructure etc. with third party suppliers. Although the largest part of the payment to the suppliers will often be aligned with the supplier's delivery of goods and/or services, the suppliers will often demand that an advance payment is made before delivery takes place. While some suppliers issue a guarantee that covers the risk of the advance payment, most suppliers do not and if the suppliers become financially distressed the advance payment may be lost. Additionally, there are no guarantees that the supplier does not default on its deliveries or is not delayed. If that occurs, it may impact negatively on the construction process which could result in the Group not being able to meet its contractual obligations to a buyer of the project in question. The Group is also exposed to counterpart risks during the operating phase of its assets, as the servicing and/or management of the assets are being carried out by third party suppliers. While any financial exposure is limited due to the fact that the suppliers of these services are usually not paid in advance, a defaulting supplier could result in an interruption to the operations of a plant until a replacement supplier has been found. Furthermore, in some instances a part of the consideration that the Group receives for a renewable energy project is deferred (such as earn-out payments tied to the production of the wind farm or solar PV project in question). Should the buyer of the project not be able to pay the deferred consideration when it becomes due, this would have a negative impact on the Issuer. Disagreement or deadlock with third parties whom the Group collaborates with can have a negative impact on the Group's renewable energy projects The Group has entered into a number of partnerships with third parties. The partnerships are related to all phases of the Group's renewable energy projects (from development to construction, divestment, and/or operation) and takes place both as incorporated and un-incorporated joint ventures/joint arrangements. In a number of partnerships, the Group does not have a controlling interest or only has a controlling interest with regard to some matters. This entails the risk of disagreement or deadlock on substantial matters, including the funding of the project that is the subject matter of the partnership. Disagreement or deadlock may have negative consequences for - inter alia - the development, construction or divestment of the project or could lead to the project not being able to achieve its full economical potential. Furthermore, partners may not always be able to honour their commitments which could also have an adverse impact on the Group. Disputes that the Group is or in the future will become involved in may have a negative effect on the Group should decisions go against it Disputes related to the Group's business, including the development, construction and divestment of wind farms and solar PV plants, may arise in the future. Such disputes may be resolved outside the courts or through court or arbitration proceedings. The outcome of such disputes could have a negative effect on the Issuer's ability to fulfil its obligations under the Bonds should a decision or settlement go against the Group. It may prove difficult to replace key personnel and the process of recruiting replacements could last for a prolonged period of time which could affect the Issuer negatively The Issuer is to a large extent dependent on its management, department heads and other key personnel due to the extensive knowledge and experience these persons possess. If one or more of these key persons decide to leave the Issuer, this may result in loss of know-how and may delay or prevent the implementation of the Group's projects and business strategy. New members of the staff are being recruited on a regular basis. However, the Group's ability to hire and retain qualified staff depends on a number of factors. Due to the office's location in Denmark and the fact that positions in the company often require specific knowledge of a foreign market and corresponding language skills, the process of recruiting specific competences can at times persist for a prolonged period of time. The markets on which the Group is engaged are highly competitive. This requires the Group to continuously react to its competitors, e.g. by increasing its efficiency and cutting costs The Group is engaged in competitive markets. With regard to the development and subsequent divestment of renewable energy projects, there is large number of competitors - ranging from small- and medium sized developers with a profile similar to that of the Issuer to large state-owned utilities. Also with regard to the sale of electricity and certificates at market prices, the Group is faced with intense competition from other power generators and operators of renewable energy plants. The competition increases the demand on the Issuer to constantly improve its development and operating activities and cut costs in order to remain competitive. Any failure to do so could lead to an advantage for the Group's competitors which would negatively impact the Group. Further, even though the Group has developed a significant project portfolio there is a risk that a number of projects forming part of the portfolio will not be executed due to non-issuance of relevant permits, changes in political views, decrease in subsidy levels, failure to agree with relevant project partners, delayed delivery of components etc. with the consequence that the expected divestment of projects will not take place, or expected revenue from the project will not be realized. Insurance taken out by the Group to cover its assets may not in all situations cover the losses incurred, e.g. in case of natural disasters and other unforeseen events While the Group maintains normal insurance both in the construction and operating phase of its assets, there may be situations where the insurance cover is insufficient or the loss incurred exceeds the maximum pay-out of the insurance policy. The resulting losses would affect the Group negatively. This could occur in a situation - but is not limited to - where natural disasters (such as storms, earthquakes, hail storms, floods etc.) or other unforeseen events (such as war, riots, armed conflict etc.) destroy the Group's operating assets, impair the production or affect an on-going construction negatively. Price hedging agreements that the Group enters into can expose the Group to losses should the agreed minimum level of production not be reached The Group may from time to time enter into hedging agreements in order to receive a guaranteed fixed price instead of a variable price for the sale of - inter alia - electricity and certificates. Such agreements may require a minimum level of production and should the production not meet the agreed minimum level - for example, due to unforeseen events or unexpected adverse weather conditions - it may be necessary to purchase electricity or certificates on the spot market in order to meet the obligations under the hedging agreement. If the spot prices at the time of purchase is higher than the price obtained by virtue of the hedging agreement this could lead to a loss which may have an adverse effect on the financial position of the Group. The Group does not operate with a general price hedging strategy. | 43#45Risk Factors, continued Financial Risks == EUROPEAN ENERGY An increase in interest rates may have an adverse effect on the Group A substantial proportion of the Group's renewable energy projects are financed with up to 80% debt, usually obtained as project financing. While some loans carry a fixed interest rate others have a floating rate interest. Consequently, an increase in the interest rates could adversely affect the profitability of the Group's projects and could also render projects in the development stage unviable due to the higher cost of financing. Furthermore, in some instances bridge financing is obtained in order to construct a project without a corresponding long-term financing having been secured at the same time. This exposes the Group to an increase in the interest rate of the long-term financing prior to it being secured which could affect the Issuer negatively. This could also be the case where the duration of a long-term financing is limited so that a new long term financing must be secured when the first one expires. The Group is exposed to currency risks which may negatively affect the Issuer's financial position The Group conducts most of its business in EUR and the annual accounts are prepared in EUR. Changes in the exchange rate between EUR and other currencies to which the Group is exposed may therefore influence the Group's financial results, also negatively. This is particularly relevant where the currency in question is not subject to an exchange rate mechanism such as ERM II (which limits the exchange rate fluctuations between DKK, the currency in the Issuer's home country, and EUR). In some cases, both income and expenses are incurred in the local currency which provides a natural hedge to some extent but in other cases there are no such match. This could increase the losses due to currency risk if no separate hedging agreements are concluded. The Group does not have a general hedging strategy in place for currency risks. A reduction in the availability of financing will have an adverse impact on the Group as could any breaches of covenants in existing financing arrangements The Group finances a substantial proportion of its renewable energy projects with debt. Reduced availability of financing on acceptable terms could consequently lead to delays in the development and construction of renewable energy projects or prevent their realisation altogether. This would have an adverse effect on the Group's business. Furthermore, the Group has covenants related to some of its existing loans, requiring the borrowing entities to inter alia - maintain certain ratios (such as debt service coverage ratios). Should it not be possible to comply with such a covenant (e.g. due to unpredicted interruption of the production) this could e.g. entitle the lender to require that an extraordinary repayment is made or could constitute a default under the terms of the loans. This would affect the Issuer's financial position negatively. Additionally, where a construction financing has been obtained in order to construct a project without a corresponding long term financing having been secured at the same time, there is a risk that long-term financing cannot be obtained at the relevant time or at acceptable terms. This could also be the case where the duration of a long-term financing is limited so that a new long term financing must be secured when the first one expires. This could have an adverse impact on the Group. The Group is required to maintain an effective management of its liquidity since many of the Group's activities have substantial liquidity needs while the timing of the income generated by such activities can be unpredictable The Group is to a large extent dependent on an effective management of its liquidity. Many of the Group's activities are liquidity intensive (e.g. the acquisition or construction of projects) and also to some extent unpredictable with regard to the timing of the income they generate. For instance, the construction of a project may be delayed which can postpone the income generated by the power produced by the project or if the project is sold prior to construction being complete the payment of the purchase price. This requires the Issuer to maintain comprehensive monitoring of its current and future cash flow and failure to do so could have a negative effect on the Issuer's ability to satisfy its obligations under the Bonds. | 44#46Risk Factors, continued == EUROPEAN ENERGY Risks related to Investment in the Bonds Investors carry a credit risks Investors in the Bonds carry a credit risk relating to the Group. The investors' ability to receive payment under the Terms and Conditions is dependent on the Issuer's ability to meet its payment obligations, which in turn is largely dependent upon the performance of the Group's operations and its financial position. An increased credit risk may cause the market to charge the Bonds a higher risk premium, which would affect the Bonds' value negatively. Another aspect of the credit risk is that a deteriorating financial position of the Group may reduce the Group's possibility to receive debt financing at the time of the maturity of the Bonds. The Issuer is dependent on other companies within the Group A significant part of the Group's assets and revenues relate to the Issuer's subsidiaries. The Issuer is thus dependent upon receipt of sufficient income and cash flow related to the operations of the subsidiaries. The Issuer's subsidiaries will be legally separate and distinct from the Issuer and have no obligation to pay amounts due with respect to the Issuer's obligations and commitments, including the Bonds, or to make funds available for such payments. Consequently, the Issuer is dependent on the subsidiaries' availability of cash and their legal ability to make dividends which may from time to time be restricted by, the availability of funds, corporate restrictions, and law. Should the Issuer not receive sufficient income from its subsidiaries, the investor's ability to receive payment under the Terms and Conditions may be adversely affected. The Bonds are structurally subordinated to other debt of the Group In the event of liquidation, dissolution, bankruptcy or similar proceeding relating to a direct or indirect subsidiary of the Issuer, all creditors of such subsidiary would be entitled to payment in full out of the assets of such subsidiary before any entity within the Group, as a shareholder, would be entitled to any payments. Thus, the Bonds are structurally subordinated to the liabilities of the Issuer's direct and indirect subsidiaries. Any creditors of a direct or indirect subsidiary of the Group may be entitled to take action against such subsidiary and its assets, whether under applicable bankruptcy law, by contract or otherwise. In addition, the Issuer provides parent company guarantees for certain obligations of its subsidiaries, including financial and performance guarantees. Any defaults by, or the insolvency of, such subsidiaries could result in an obligation of the Issuer to make payments under parent guarantees in respect of such subsidiaries' obligations. Furthermore, defaults by one or more subsidiaries could result in the occurrence of cross defaults on certain borrowings of the Group. Security over assets granted to third parties The Group may, subject to limitations, incur additional financial indebtedness and provide additional security for such indebtedness. In the event of bankruptcy, reorganisation or winding-up of the Issuer, the Bondholders will be subordinated in right of payment out of the assets being subject to security. In addition, if any such third-party financier holding security provided by the Group would enforce such security due to a default by any Group company under the relevant finance documents, such enforcement could have a material adverse effect on the Group's assets, operations and ultimately the position of the Bondholders. Security granted to secure the Bonds may be insufficient and may be required to be shared with other holders of debt that the Issuer is permitted to incur The Issuer's obligations under the Bonds are secured by a share pledge of all shares in the Issuer ("Transaction Security"). Under the Terms and Conditions the Issuer is permitted to incur debt by way of Market Loans (defined as the issuance of debt securities which are subject to trade on Nasdaq Copenhagen or another regulated market or multilateral trading facility) in the maximum principal amount of up to EUR 200,000,000 provided that the Issuer Incurrence Test (as defined in the Terms and Conditions) is satisfied. Any such Market Loans are entitled to share in the Transaction Security on a pari-passu and pro-rata basis with the Bonds pursuant to the terms of an intercreditor agreement which the Agent is obliged to enter into without any further consent of the Bondholders. There can be no assurances that the Issuer will continue Market Loans are entitled to share in the Transaction Security on a pari-passu and pro-rata basis with the Bonds pursuant to the terms of an intercreditor agreement which the Agent is obliged to enter into without any to satisfy the Issuer Incurrence Test after a Market Loan is incurred. In addition, if the Issuer defaults on the Bonds, the Bondholders will be secured only to the extent of the value of the Transaction Security underlying the security interest (which, if the Issuer has issued new Market Loans, will be required to be shared with the holders thereof). There is a risk that the pledged assets will be insufficient for the Bondholders should the pledges be realized and this risk is increased if the Issuer issues additional debt which shares in the Transaction Security. The value of the Transaction Security may fluctuate over time and no appraisal is made by the Issuer or any other person with respect of the value of the Transaction Security. The amount received upon a sale or other disposal of the Transaction Security will depend on numerous factors including, but not limited to, the actual fair market value of the Transaction Security at such time, market and economic conditions, and the timing and the manner of the sale or disposal. There can also be no assurance that the Transaction Security will be saleable and, even if saleable, the timing of such sale or other disposal is uncertain | 45#47Risk Factors, continued Security granted to secure the Bonds may be unenforceable or enforcement of the security may be delayed == EUROPEAN ENERGY The enforceability of the Transaction Security may be subject to uncertainty. If the Issuer is unable to make repayment under the Bonds and a court would render a judgment that the Transaction Security granted in respect of the Bonds was unenforceable, the Bondholders may find it difficult or impossible to recover the amounts owed to them under the Bonds. Therefore, there is a risk that the Transaction Security will be void or ineffective. In addition, any enforcement may be delayed due to any inability to sell the security assets. The Issuer may not be able to refinance the Bonds The Group will eventually be required to refinance all of its outstanding debt, including the Bonds. The Group's ability to successfully refinance its debt is dependent on the conditions of the capital markets and its financial condition at such time. The Group's access to financing sources may not be available on favourable terms, or at all. The Group's inability to refinance its debt obligations on favourable terms, or at all, could have an adverse effect on the Group's business, financial condition and results of operations and on the Bondholders' recovery under the Bonds. The Issuer may become unable to serve its other debt which may trigger cross-default provisions relating hereto and may thereby adversely impact the value of the Bonds Events beyond the Issuer's control, including changes in the economy and the business conditions in which the Issuer and its subsidiaries operate, may affect the Issuer's ability to comply with, inter alia, the undertakings set out in the Terms and Conditions which could result in a breach and consequently an acceleration of the Bonds. The Issuer may become unable to pay interest, principal, or other amounts on or in connection with the Bonds, caused by the Issuer being unable to serve its other debt which may have cross-default provisions incorporated which may have an adverse impact on the value of the Bonds. An increased credit risk or decrease in the Issuer's creditworthiness may have a negative effect on the market price of the Bonds. The Issuer may not be able to finance a change of control put option required by the Terms and Conditions of the Bonds According to the Terms and Conditions, following the occurrence of a Change of Control Event, each Bondholder will have the right of redemption of all or part of its Bonds and the Issuer will have an obligation to redeem or repurchase such Bonds. If a Change of Control Event were to occur, the Issuer may not have sufficient funds available, or may not be able to obtain the funds needed, to redeem or pay the repurchase price for all of the Bonds put to it by the Bondholders. Failure to redeem or repurchase the Bonds would adversely affect the Issuer, e.g. by causing insolvency or an event of default under the Terms and Conditions, and thus adversely affect the Bondholders and not only those that choose to exercise the put option. Early redemption The Issuer has under certain circumstances reserved the possibility to redeem all outstanding Bonds. There is a risk that the market value of the Bonds is higher than the early redemption amount and that an investor may not be able to reinvest the redemption proceeds received after the exercise of such redemption at an effective interest rate as high as the interest rate on the Bonds being redeemed and may only be able to do so at a significantly lower rate. Further, the right for the Issuer to redeem the Bonds prior to the maturity date could affect the market value of the Bonds. | 46#48Risk Factors, continued == EUROPEAN ENERGY Risks related to green bonds The Issuer intends to apply the net proceeds of the Bonds to finance or re-finance (with a maximum lookback period of three years) certain eligible assets and projects (the "Green Projects") as further described in the Issuer's green bond framework (the "Green Bond Framework") in force as at the Issue Date. Any changes made to the Green Bond Framework after the Issue Date (including, but not limited to, changes made as a result of developments in market practices and standards for green bonds) will not influence the Bonds issued on the Issue Date, but may apply to any Subsequent Bond Issue. There is no legal definition of what constitutes a "green" project nor is there any clear market consensus in terms of what is specifically required for a project to be defined as "green" or equivalently labelled. Accordingly, there is a risk that the Green Projects described in the Green Bond Framework will not meet current or future investor expectations regarding such "green" or equivalently labelled performance objectives. Further, there is a risk that future developments in market practices and standards for "green" projects may deviate from the Green Projects described in the Green Bond Framework. The Issuer cannot provide any assurance that the intended application of the net proceeds of the Bonds in accordance with the Green Bond Framework will satisfy, whether in whole or in part, any present or future investor expectations or requirements as regards any investment criteria or guidelines with which such investor or its investments are required to comply, whether according to any present or future applicable law or regulations or by such investor's own by-laws or other governing rules or investment portfolio mandates. Any failure by the Issuer to comply with the Green Bond Framework does not constitute an Event of Default under the Terms and Conditions for the Bonds. Bondholders do not have any put option or other right of early redemption in case of any failure by the Issuer to comply with the Green Bond Framework. The Issuer has appointed DNV GL for an independent evaluation of the Green Bond Framework. The evaluation has resulted in a second party opinion dated 3 June 2019 (the "Second Party Opinion"). No assurance or representation is given by the Issuer as to the suitability or reliability for any purpose whatsoever of the Second Party Opinion or of any other opinion or certification of any third party (whether or not solicited by the Issuer) which may be made available in connection with the issue of the Bonds. For the avoidance of doubt, any such opinion or certification (i) is not, nor shall be deemed to be, incorporated in and/or form part of this Prospectus, (ii) is not, nor should be deemed to be, a recommendation by the Issuer or any other person to buy, sell or hold any Bonds and (iii) would only be current as of the date that it was initially issued. Prospective investors must determine for themselves the relevance of any such opinion or certification, the information contained therein and the provider of such opinion or certification for the purpose of any investment in the Bonds. Currently, the providers of such opinions and certifications are not subject to any specific regulatory or other regime or oversight and there is a risk that such providers may be deemed as not being reliable or objective, whether now or in the future. In the event that the Bonds are listed or admitted to trading on any dedicated "green" or other equivalently-labelled segment of any stock exchange or securities market (whether or not regulated), no representation or assurance is given by the Issuer or any other person that such listing or admission satisfies, whether in whole or in part, any present or future investor expectations or requirements as regards any investment criteria or guidelines with which such investor or its investments are required to comply. The criteria for any such listings or admission to trading may vary from one stock exchange or securities market to another. No representation or assurance is given or made by the Issuer or any other person that any such listing or admission to trading will be obtained in respect of the Bonds or, if obtained, that any such listing or admission to trading will be maintained during the life of the Bonds. Any failure by the Issuer to comply with the Green Bond Framework, and/or withdrawal of the Second Party Opinion or any other opinion or certification as described above, and/or any Bonds not being listed or admitted to trading (or ceasing to be listed or admitted to trading) on any dedicated "green" or other equivalently-labelled segment of any stock exchange or securities market as described above, may have a material adverse effect on the value of the Bonds and/or result in adverse consequences for individual investors, including (but not limited to) investors with portfolio mandates to invest in securities to be used for a particular purpose. The Issuer cannot assure that an active trading market will develop for the Bonds Although the Issuer will apply for listing of the Bonds on Nasdaq Copenhagen, the Issuer cannot assure that the Bonds will be or will remain listed on that stock exchange or that an active trading market will develop for the Bonds. The market price of the Bonds could be subject to significant fluctuations. The market price at which the Bonds may trade will depend on many factors, including, but not limited to, prevailing interest rates, general economic conditions, the Issuer's and the Group's actual or anticipated performance and financial results, actual or anticipated performance and financial results of competitors, adverse business developments, changes to the regulatory environment in which the Group operates, changes in financial estimates by securities analysts and the actual or expected sale of a large number of Bonds, and markets for similar securities in general. Historically, the markets for debt such as the Bonds have been subject to disruptions that have caused substantial volatility in their prices. The market, if any, for the Bonds may be subject to similar disruptions which may have a material adverse effect on the Bondholders. In recent years, the global financial markets have experienced significant price and volume fluctuations, which, if repeated in the future, could adversely affect the market price of the Bonds without regard to the Group's business, financial position, earnings and ability to make payments under the Bonds. There may not be a liquid trading market for the Bonds. The Bonds may have no established trading market, and one may never develop, though the Issuer will apply for listing of the Bonds on Nasdaq Copenhagen. If a market does develop, it may not be very liquid. Therefore, investors may not be able to sell their Bonds or sell the Bonds at prices that will provide them with a yield comparable to similar investments that have a developed secondary market. 47#49Risk Factors, continued == EUROPEAN ENERGY Investments in the Bonds may have unforeseen tax implications which may adversely impact the value of the investment Prospective investors should be aware that the investment in the Bonds may have unforeseen tax implications. Prospective investors should seek independent advice relating to tax risks prior to making a decision to invest in the Bonds. A change in the governing law of the Bonds may adversely affect Bondholders The conditions of the Bonds are based on Danish law. No assurance can be given as to the impact of any possible judicial decision or change to Danish law or administrative practice after the date of this prospectus. The value of an investment in the Bonds may be subject to exchange rate fluctuations The Issuer will pay principal and interest on the Bonds in EUR. This presents certain risks relating to currency conversions if an investor's financial activities are denominated principally in a currency or currency unit ("Investor's Currency") other than EUR. These include the risk that exchange rates may significantly change (including changes due to devaluation of the EUR or revaluation of the Investor's Currency) and the risk that authorities with jurisdiction over the Investor's Currency may impose or modify exchange controls. An appreciation in the value of the Investor's Currency relative to EUR would decrease (i) the Investor's Currency equivalent yield on the Bonds, (ii) the Investor's Currency equivalent value of the principal payable on the Bonds and (iii) the Investor's Currency equivalent market value of the Bonds. Government and monetary authorities may impose (as some have done in the past) exchange controls that could adversely affect an applicable exchange rate or the ability of the Issuer to make payments in respect of the Bonds. As a result, there is a risk that investors may receive less interest or principal than expected, or no interest or principal. The value of an investment in the Bonds may be subject to interest rate fluctuations The Bonds' value depends on several factors, one of the most significant over time being the level of market interest. Investment in the Bonds involves the risk that subsequent changes in market interest rates may adversely affect the value of the Bonds. Bondholders' Meetings The Terms and Conditions contain provisions for calling meetings of Bondholders to consider matters affecting their interests generally. These provisions permit defined majorities to bind all Bondholders, including Bondholders who did not attend the meeting, did not vote at the relevant meeting, or voted differently. A Bondholder may be adversely affected by such decisions. The rights of Bondholders depend on the Agent's actions and financial standing By subscribing for, or purchasing, or accepting the assignment of, any Bond, each Bondholder will accept the appointment of the Agent to act on its behalf and to perform administrative functions relating to the Bonds and the Bondholders are prevented from taking actions on their own against the Issuer. The Agent shall have, among other things, the right to represent the Bondholders in all court and administrative proceedings in respect of the Bonds and to enforce the Terms and Conditions or any Transaction Security on behalf of the Bondholders. Individual Bondholders do not have the right to take legal actions to declare any default by claiming any payment from or enforcing any Transaction Security granted by the Issuer and may therefore lack effective remedies unless and until a requisite majority of the Bondholders agree to take such action. However, there is a risk that an individual bondholder, in certain situations, could bring its own action against the Issuer (in breach of the Terms and Conditions) which could negatively impact an acceleration of the Bonds or other action against the Issuer. The rights, duties and obligations of the Agent as the representative of the Bondholders will be subject to the provisions of the Terms and Conditions for the Bonds and the agency agreement. The Agent will in some cases have the right to make decisions and take measures that bind all Bondholders. Consequently, the actions of the Agent in such matters could impact a Bondholder's rights under the Terms and Conditions in a manner that would be undesirable for some of the Bondholders. A failure by the Agent to perform its duties and obligations properly or at all may adversely affect the enforcement of the rights of the Bondholders. Under the Terms and Conditions for the Bonds, the funds collected by the Agent as the representative of the Bondholders must be held separately from the funds of the Agent and be treated as escrow funds to ensure that in the event of the Agent's bankruptcy, such funds can be separated for the benefit of the Bondholders. However, there is a risk that such segregation of funds will not be respected by a bankruptcy administrator in case of the Agent's bankruptcy. Also, in the event the Agent would fail to separate the funds in an appropriate manner, the funds could be included in the Agent's bankruptcy estate. The Agent may be replaced by a successor Bondholders' agent in accordance with the Terms and Conditions for the Bonds. | 48#50Risk Factors, continued == EUROPEAN ENERGY The Agent may modify, waive, and enforce Bondholders' rights which may adversely impact the value of the Bonds The Terms and Conditions contain provisions to the effect that a Bondholder is prohibited from taking actions of its own against the Issuer. Consequently, individual Bondholders do not have the right to take legal actions to declare any default by claiming any payment from the Issuer and may therefore lack effective remedies unless and until a requisite majority of the Bondholders agree to take such action. This does not, however, rule out the possibility that the Bondholders, in certain situations, could bring their own actions against the Issuer, which could negatively impact the chances of an effective enforcement of the Terms and Conditions. Additionally, under the Terms and Conditions the Agent has the right in some cases to amend the Terms and Conditions or waive any provisions in the Terms and Conditions provided that: such amendment or waiver is not detrimental to the interest of the Bondholders, or is made solely for the purpose of rectifying obvious errors and mistakes; such amendment or waiver is required by applicable law, a court ruling or a decision by a relevant authority; such amendment or waiver is necessary for the purpose of listing the Bonds on the Nasdaq Copenhagen (or any other Regulated Market, as applicable) provided such amendment or waiver does not materially adversely affect the rights of the Bondholders. A Bondholder may not take any steps whatsoever against the Issuer or the Issuer's Group to enforce or recover any amount due or owing to it pursuant to the Terms and Conditions, or to initiate, support or procure the winding-up, dissolution, liquidation, company reorganisation or bankruptcy (or its equivalent in any other jurisdiction) of the Issuer or the Issuer's Group in relation to any of the liabilities of the Issuer under the Terms and Conditions. The choice of law may render it difficult for Bondholders to exercise or enforce certain rights The Issuer is a public limited company under the laws of Denmark. It may be difficult for investors outside Denmark to serve process on or enforce judgments against the Issuer in connection with their rights as Bondholders. The Bonds are dematerialised securities Because the Bonds are dematerialised securities held in VP Securities A/S' system, investors will have to rely on the clearing system procedures for transfer, payment and communication with the Issuer. VP Securities A/S' general condition and quality of services pose a risk that may adversely impact the value of the Bonds. The Bonds will not be evidenced by any physical note or document of title other than statements of account made by VP Securities A/S. Legal title to the Bonds, as well as payment of interest and repayment of the principal, will be recorded and transfer effected only through electronic registration in the book-entry system and register maintained by VP Securities A/S. Conflicting interests between the Bondholders and the Lead Managers and their affiliates The Lead Managers and their affiliates have engaged in, and may in the future engage in, investment banking and/or commercial banking or other services for the Issuer and the Group in the ordinary course of business. Accordingly, conflicts of interest may exist or may arise as a result of the Lead Managers and their affiliates having previously engaged, or engaging in future, in transactions with other parties, having multiple roles or carrying out other transactions for third parties with conflicting interests. | 49