Dato for ledelsens godkendelse af årsrapporten:2024-07-10
Ledelsespåtegning:Statement by the Executive Board
Beskrivelse af usikkerhed ved indregning eller måling:Uncertainty with regard to recognition and measurementWhen preparing the consolidated financial statements of the Group, Management makes anumber of accounting estimates and assumptions on which the recognition and measurementof the Group’s assets and liabilities are based. The following provides information about assumptions and estimation uncertainties with asignificant risk of resulting in a material adjustment in the year ending 31 December 2023RevenueWhen divesting power plants the transaction price may comprise both a fixed and a variableelement. The variable consideration may take various forms, most commonly the variabilitymay relate to an agreed IRR for the sold project or an earn-out or production guarantee linkedto future production. Additionally, the variable consideration may relate to various milestonesfor construction progress, completion, project economy or similar. The milestones may tosome extent depend on external conditions, like weather, local authorities, etc. , which createsan inherit uncertainty in the estimates. To the extent possible we use external or historical datato support our estimates, or other factors considered relevant. The uncertainty about measurement relates essentially to this variable consideration andallocation of revenue between different performance obligations. This measurement requiresManagement judgement applying assumptions and estimates. Business combinationIn applying the acquisition method of accounting, estimates are an integral part of assessingfair values of identifiable assets acquired and liabilities assumed, as observable market pricesare typically not available. The purchase price of property, plant and equipment includes estimates on future capacity ofgenerating cash flow by the wind and solar farms. Valuation techniques where estimates are applied typically relate to determining the presentvalue of future uncertain cash flows or assessing other events in which the outcome is uncertainat the date of acquisition. More significant estimates are typically applied in accounting for property, plant andequipment, customer relationships, trade receivables, deferred tax, debt and contingentliabilities. As a result of the uncertainties inherent in fair value estimation, measurement periodadjustments may be applied. InventoriesInventories, comprising projects under development, under construction and completedprojects are initially measured at cost. An impairment test is performed on the carrying amount. The impairment test is based on assumptions regarding strategy, market conditions, discountrates and budgets etc. , after the project has been completed and production commenced. Ifmarket-related assumptions etc. are changed, projects may have to be written down. Management examines and assesses the underlying assumptions when determining whetherthe carrying amount should be written down. ProvisionsManagement continually assesses provisions, including contingencies and the likely outcomeof pending and potential legal proceedings. The outcome of such proceedings depends onfuture events, which are, by nature, uncertain. When considering provisions involving significant estimates, opinions and estimates byexternal legal experts and existing case law are applied in assessing the probable outcome ofmaterial legal proceedings, etc. Determination of fair valueWhen measuring the fair value of our portfolio of power purchase agreements we are aimingfor the use of quoted prices (level 2 in the fair value hierarchy). However, this is not alwayspossible since we have entered PPA’s on power markets where the future forward prices arenot available throughout the entire contract lifetime. If the forward prices are not available forthe entire contract period on the specific power market then the contract is measured accordingto a non-observable input (level 3 in the fair value hierarchy). The non-observable inputs usedwhen measuring the fair value are comprised of quotes to the market for similar contracts,estimates on future price curves adjusted for inflation and other market expectations. Further,management expectations and assumptions regarding future developments in the powermarket. Tax governanceUncertainties exist with respect to the interpretation of tax regulations in the different countriesin which the Group operates, to changes in tax law and to the amount and timing of futuretaxable income. Differences arising between the actual results and the assumptions made, orfuture changes to such assumptions, could potentially cause adjustments to tax income andexpense already accounted for. Management reviews deferred tax assets quarterly, which arerecognised only to the extent considered sustainable in the future, taking the timing and thelevel of future taxable profits into account, together with the Group’s future tax planningstrategies.
Statement by Management on the annual report
Identifikation af den godkendte årsrapport:The Executive Board has today discussed and approved the annual report of KEA Holding IIIApS for the financial year 1 January – 31 December 2023.
Management's review
Beskrivelse af virksomhedens væsentligste aktiviteter:The Company’s Main ActivitiesThe main focus of the KEA Holding III Group is developing and constructing wind turbinesand solar parks. Another focus of the Group is purchasing existing renewable energy parksand the financing of these for either disposal or operation. The most significant part of the activities in the Group are related to the subsidiary EuropeanEnergy A/S. Business modelSince 2004, European Energy has acquired considerable know-how in all stages of the windand solar power value chain. This expertise ranges from identifying new sites and securingfinancing to managing the actual construction process and ensuring the reliable operation ofassets. European Energy has three main business areas• development, construction and divestment• sale of electricity from operational assets• asset managementReference is made to the Annual Report of European Energy A/S for a comprehensivedescription of the business model etc. of the European Energy A/S Group.
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