SEC Filing | Array Technologies, Inc.

Date: April 6, 2022

ARRAY TECHNOLOGIES, INC.

/s/ Tyson Hottinger

Tyson Hottinger

Chief Legal Officer

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8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(D)

OF THE SECURITIES EXCHANGE ACT OF 1934

Date of report (date of earliest event reported): April 6, 2022

Array Technologies, Inc.

(Exact name of registrant as specified in its charter)


Delaware	001-39613	83-2747826
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)


3901 Midway Place NE Albuquerque, New Mexico		87109
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (505) 881-7567

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligations of the registrant under any of the following provisions:

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.001 per share	ARRY	Nasdaq Global Market

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2). Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Explanatory Note

On January 11, 2022, Array Technologies, Inc. (the “Company”) filed a Current Report on Form 8-K (the “Prior Report”) with the U.S. Securities and Exchange Commission (the “SEC”) announcing the consummation of its previously announced acquisition (the “STI Acquisition”) of Soluciones Técnicas Integrales Norland, S.L., a Spanish private limited liability company, and its subsidiaries (collectively, “STI”).

This Current Report on Form 8-K is being filed to provide certain additional unaudited pro forma financial information relating to the STI Acquisition and certain historical financial information of STI.

Item 8.01.

Other Events.

The unaudited pro forma condensed combined balance sheet of the Company for the year ended December 31, 2021 and the unaudited pro forma condensed combined statement of operations of the Company for the year ended December 31, 2021 is filed herewith as Exhibit 99.1 to this Current Report on Form 8-K and incorporated herein by reference.

The historical consolidated financial statements of STI which include the consolidated balance sheet of as of December 31, 2021 and the consolidated income statement, the statement of changes in consolidated net equity and statement of consolidated cash flows for the year ended December 31, 2021, and the notes related thereto, is filed herewith as Exhibit 99.2 to this Current Report on Form 8-K and is incorporated herein by reference.

Item 9.01.

Financial Statements and Exhibits.

(d) Exhibits.


Exhibit Number		Description

23.1		Consent of KPMG Auditores, S.L., independent auditors.

99.1		Unaudited pro forma condensed combined financial information of the Company, which includes the unaudited pro forma condensed combined balance sheet as of December 31, 2021 and the unaudited pro forma condensed combined statement of operations for the year ended December 31, 2021.

99.2		Audited consolidated financial statements of Soluciones Técnicas Integrales Norland, S.L. and its subsidiaries as of and for the year ended December 31, 2021.

104		The cover page from this Current Report on Form 8-K, formatted in Inline XBRL

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned hereunto duly authorized.

EX-23.1

Exhibit 23.1

Consent of Independent Auditors

We consent to the incorporation by reference in the registration statements (No. 333-249552) on Form S-8 and (No. 333-261045) on Form S-3 of Array Technologies, Inc. of our report dated March 21, 2022 with respect to the consolidated financial statements of Soluciones Técnicas Integrales Norland, S.L. and its subsidiaries, which report appears in the Form 8-K of Array Technologies, Inc. dated April 5, 2022.

The audit report contains a qualification due to no comparative financial information being presented as required by the Spanish General Chart of Accounts approved by Royal Decree 1514/2007, the Standards for the Preparation of Consolidated Annual Accounts approved by Royal Decree 1159/2010 and subsequent amendments.

/s/ KPMG Auditores, S.L.

Pamplona, Spain

April 5, 2022

EX-99.1

Exhibit 99.1

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

On November 10, 2021, Array Technologies, Inc., a Delaware corporation (the “Company,” “we,” “us” or “our”) entered into a purchase agreement (“Purchase Agreement”) to acquire 100% of the share capital of Soluciones Técnicas Integrales Norland, S.L., a Spanish private limited liability company, and its subsidiaries (collectively, “STI”) (the “STI Acquisition”). On January 11, 2022 (the “Closing Date”), the Company paid closing consideration to STI consisting of €361 million (approximately $410.5 million) in cash (the “Cash Consideration”) and 13,894,800 shares of the Company’s common stock (the “Equity Consideration”) in accordance with the Purchase Agreement.

In connection with the STI Acquisition, the Company completed the following Financing, as defined below:

•

On December 3, 2021 and December 9, 2021, the Company completed a private offering of $375 million and $50 million over allotment, respectively, in aggregate principal amount of 1.00% Convertible Senior Notes due 2028 (the “Notes”) resulting in proceeds of $364.7 million and $48.6 million, respectively, after deducting the original issue discount of 2.75%. The Company’s historical consolidated balance sheet as of December 31, 2021 already reflects the issuance of the Notes. The unaudited pro forma condensed combined statement of operations has been prepared to reflect the issuance of the Notes as if it had been completed on January 1, 2021.

•

On January 7, 2022, the Company issued and sold 50,000 shares of Series A Perpetual Preferred Stock (“Preferred Shares”) and 1,125,000 shares of Common Stock for an aggregate purchase price of $49,376,125. The unaudited pro forma condensed combined statement of operations has been prepared to reflect the issuance of the Preferred Shares as if it had been completed on January 1, 2021. The unaudited pro forma condensed combined balance sheet has been prepared to reflect the issuance of the Preferred Shares as if it had been completed on December 31, 2021.

The following unaudited pro forma condensed combined financial information reflects adjustments to the historical financial results of the Company in connection with the Transactions, as defined below. The following sets forth the unaudited pro forma condensed combined financial information after giving effect to the STI Acquisition and issuance of the Notes and Preferred Shares (“Financing”) (together the “Transactions”) as if they had occurred on or as of the dates for the periods indicated. The unaudited pro forma condensed combined financial information has been derived from the historical financial statements of each of Array, which are incorporated by reference in this Form 8-K, and of STI, which are filed with this Form 8-K. The unaudited pro forma condensed combined financial information has been prepared using the acquisition method of accounting and applying the assumptions and adjustments described in the accompanying notes to the unaudited pro forma condensed combined financial information. The unaudited pro forma condensed combined financial information has been prepared to illustrate how the Transactions may have impacted the Company’s financial statements as follows:

•

unaudited pro forma condensed combined financial information as of December 31, 2021 to illustrate the effect that the STI Acquisition and the issuance of Preferred Shares might have had on the Company if it had been completed on December 31, 2021, for purposes of presenting an unaudited pro forma condensed combined balance sheet as of December 31, 2021; and

•

unaudited pro forma condensed combined financial information for the year ended December 31, 2021 to illustrate the effect that the Transactions might have had on the Company if they had been completed on January 1, 2021 for purposes of presenting an unaudited pro forma condensed combined statement of operations for the year ended December 31, 2021.

The unaudited pro forma condensed combined financial information has been derived from the audited consolidated financial statements of the Company as of and for the year ended December 31, 2021 prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”), which are incorporated by reference into this Form 8-K. The unaudited pro forma condensed combined financial information has also been derived from the audited consolidated financial statements of STI as of and for the year ended December 31, 2021 prepared in accordance with Spanish GAAP and reconciled to U.S. GAAP, which are filed with this Form 8-K.

The unaudited pro forma condensed combined financial information is prepared, unless otherwise specified, on a basis that is consistent with the accounting policies used in the preparation of the Company’s audited consolidated financial statements, which have been prepared in accordance with U.S. GAAP. The unaudited pro forma condensed combined financial information relating to STI reflected in the unaudited pro forma condensed combined financial information has been derived from the consolidated financial statements prepared in accordance with Spanish GAAP and reconciled to U.S. GAAP in the reconciliation footnote and the accounting policies as applied by the Company. Therefore, the unaudited pro forma condensed combined financial information relating to STI includes any material differences identified between U.S. GAAP and Spanish GAAP.

The unaudited pro forma condensed combined financial information is presented in thousands of U.S. dollars. Accordingly, STI consolidated financial data has been converted from Euros to U.S. dollars at the rates provided by the United States Federal Reserve for the relevant periods as disclosed below:


Period	Euro to U.S. dollars
Rate as of December 31, 2021		1.1373
Average rate for the year ended December 31, 2021		1.1830

The STI Acquisition will be accounted for under the acquisition method of accounting in accordance with Accounting Standard Codification 805, Business Combinations (“ASC 805”). Under the acquisition method of accounting, the total estimated purchase price, calculated as described in Note (4) to the unaudited pro forma condensed combined financial information, is allocated to the net tangible and intangible assets of STI acquired in connection with the STI Acquisition, based on their estimated fair values. Management has made a preliminary allocation of the estimated purchase price to the net tangible and intangible assets acquired and liabilities assumed based on various preliminary estimates. These preliminary estimates and assumptions are subject to change during the measurement period (up to the time it takes to gather the necessary information and no longer than one year from the acquisition date). The final determination of the values of assets and liabilities and integration costs may result in actual values, assets, liabilities and expenses that are different from those set forth in the unaudited pro forma condensed combined financial information.

The unaudited pro forma condensed combined financial information does not include all information required for financial statements under U.S. GAAP, and should be read in conjunction with both the audited financial statements of the Company for the year ended December 31, 2021, which are incorporated by reference into this Form 8-K, and the audited financial statements of STI for the year ended December 31, 2021, which are filed with this Form 8-K.

The unaudited pro forma condensed combined financial information was prepared in accordance with Article 11 of Regulation S-X as amended by the final rule, Release No. 33-10786 “Amendments to Financial Disclosures about Acquired and Disposed Businesses,” using the assumptions set forth in the notes to the unaudited pro forma condensed combined financial information. The unaudited pro forma condensed combined financial information has been adjusted to include Transaction Accounting Adjustments, which reflect the application of the accounting required by U.S. GAAP, linking the effects of the Transactions listed above to the Company’s historical consolidated financial statements.

The unaudited pro forma condensed combined financial information is presented for informational purposes only and are not necessarily indicative of the financial position or results of operations that would have occurred had the events been consummated as of the dates indicated, nor are they indicative of any future results. The information presented in the unaudited pro forma condensed combined financial information does not give effect to the potential impact of current financial conditions, or any anticipated revenue enhancements, cost savings or operating synergies that may result from the STI Acquisition.

All unaudited pro forma adjustments and their underlying assumptions are described more fully in the notes to the unaudited pro forma condensed combined financial information.

ARRAY TECHNOLOGIES, INC.

UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET

AS OF DECEMBER 31, 2021

(IN THOUSANDS)


	Array Note (1)			Adjusted STI Note (2a)		Alignment Adjustments Note (3)				STI Acquisition Adjustments Note (4)					Financing Transactions Adjustments Note (5)					Pro Forma Combined
Assets
Current Assets
Cash and cash equivalents	$	367,670		$	36,305	$	—			$	(410,543	)			$	48,751		(5a	)	$	42,183
Accounts receivable, net		236,009			—		116,727		(3a)		—					—					352,736
Inventories, net		205,653			—		48,612		(3b)		—					—					254,265
Income tax receivables		9,052			—		101		(3a)		—					—					9,153
Prepaid expenses and other		33,649			—		14,728		(3a,c,e)		—					—					48,377
STI Short-term accruals		—			325		(325	)	(3c)		—					—					—
STI Short-term financial investments		—			122		(122	)	(3c)		—					—					—
STI Commercial debtors and other accounts receivable		—			130,099		(130,099	)	(3a)		—					—					—
STI Inventory		—			48,612		(48,612	)	(3b)		—					—					—

Total Current Assets/ STI Current Assets		852,033			215,463		1,010				(410,543	)				48,751					706,714

Property, plant and equipment, net		10,692			—		3,282		(3d)		1,141		(4	)		—					15,115
Goodwill		69,727			—		—				132,956		(4	)		—					202,683
Other intangible assets, net		174,753			—		378		(3e)		409,427		(4	)		—					584,558
Deferred tax assets		9,345			—		—				—					—					9,345
Other assets		26,429			—		34		(3f)		—					—					26,463
STI Deferred tax assets		—			194		(194	)	(3k)		—					—					—
STI Long-term financial investments		—			34		(34	)	(3f)		—					—					—
STI Property, plant and equipment					3,282		(3,282	)	(3d)		—					—					—
STI Intangible assets		—			1,388		(1,388	)	(3e)		—					—					—

Total Assets	$	1,142,979		$	220,361	$	(194	)		$	132,981				$	48,751				$	1,544,878

Liabilities and Stockholders’ Deficit
Current Liabilities
Accounts payable	$	91,392		$	—	$	74,200		(3g)	$	—				$	—				$	165,592
Accounts payable – related party		610			—		—				—					—					610
Accrued expenses and other		38,494			—		248		(3h)		—					(331	)	(5c	)		38,411
Accrued warranty reserve		3,192			—		—				—					—					3,192
Income tax payable		60			—		6,111		(3g)		—					—					6,171
Deferred revenue		99,575			—		20,154		(3g)		—					—					119,729
Current portion of contingent consideration		1,773			—		—				—					—					1,773
Current portion of term loan		4,300			—		35,021		(3i)		—					—					39,321
Other current liabilities		5,909			—		549		(3i,j)		—					—					6,458
STI Short-term accruals		—			248		(248	)	(3h)		—					—					—
STI Commercial creditors and other accounts payable		—			100,465		(100,465	)	(3g)		—					—					—
STI Short-term debt		—			35,435		(35,435	)	(3i)		—					—					—
STI Short-term provisions					135		(135	)	(3j)		—					—					—

Total Current Liabilities/ STI Current Liabilities		245,305			136,283		—				—					(331	)				381,257

Long-term Liabilities/ STI Non-Current Liabilities
Deferred tax liability		—			—		—				—					—					—
Contingent consideration, net of current portion		12,804			—		—				—					—					12,804
Other long-term liabilities		5,557			—		4,548		(3l)		—					—					10,105
Long term debt, net of current portion, debt discounts and issuance costs		711,056			—		12,093		(3m)		—					(142	)	(5c	)		723,007
STI Long-term debt		—			12,093		(12,093	)	(3m)		—					—					—
STI Long-term provisions		—			4,523		(4,523	)	(3l)		—					—					—
STI Subsidies, gifts, and legacies		—			25		(25	)	(3l)		—					—					—
STI Deferred tax liabilities		—			313		(313	)	(3k)		—					—					—

Total Long-Term Liabilities/ STI Non-Current Liabilities		729,417			16,954		(313	)			—					(142	)				745,916

Total Liabilities		974,722			153,237		(313	)			—					(473	)				1,127,173

Commitments and Contingencies
Series A Redeemable Perpetual Preferred Stock		237,462			—		—				—					39,687		(5a	)		277,149
Stockholders’ equity/(deficit)
Preferred stock		—			—		—				—					—					—
Common stock		135			—		—				14		(4	)		1		(5a	)		150
Additional paid in capital		202,562			—		—				200,210		(4	)		9,063		(5a	)		411,835
Accumulated deficit		(271,902	)		—		67,243		(3n,k)		(67,243	)	(4a	)		473		(5a	)		(271,429	)
STI Net equity		—			67,124		(67,124	)	(3n)

Total member’s equity/stockholders’ deficit / STI Net Equity		(69,205	)		67,124		119				132,981					9,537					140,556

Total liabilities, Redeemable perpetual preferred stock and Members Equity/Stockholders’ Deficit / STI Total net equity and liabilities	$	1,142,979		$	220,361	$	(194	)		$	132,981				$	48,751				$	1,544,878

See accompanying notes to unaudited pro forma condensed combined financial information.

ARRAY TECHNOLOGIES, INC.

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS

FOR THE YEAR ENDED DECEMBER 31, 2021

(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)


	Array Historical Note (1)			Adjusted STI Historical Note (2b)			Alignment Adjustments Note (3)					STI Acquisition Adjustments Note (4)					Financing Transactions Adjustments Note (5)					Pro Forma Combined
Revenue	$	853,318		$	—		$	265,539		(3o	)	$	—				$	—				$	1,118,857
Cost of Revenue		770,459			—			191,327		(3p	)		—					—					961,786
STI Net turnover		—			265,539			(265,539	)	(3o	)		—					—					—

Gross profit		82,859						(191,327	)				—					—					157,071

Operating Expenses
STI Changes in inventories of finished goods and work in progress		—			(34,430	)		34,430		(3p	)		—					—					—
STI Supplies		—			225,757			(225,757	)	(3p	)		—					—					—
General and administrative		80,974			—			27,128		(3q	)		—					—					108,102
Contingent consideration		2,696			—			—					—					—					2,696
Depreciation and amortization		23,930			—			619		(3r	)		167,453		(4b,c	)							192,002
STI Other operating income		—			(69	)		69		(3q	)		—					—					—
STI Staff expenses		—			14,769			(14,769	)	(3q	)		—					—					—
STI Other operating expenses		—			12,620			(12,620	)	(3q	)		—					—					—
STI Amortisation and depreciation		—			619			(619	)	(3r	)		—					—					—
STI Non-financial and other capital grants		—			(39	)		39		(3q	)		—					—					—
STI Impairment and result on disposal of fixed assets		—			4			(4	)	(3q	)		—					—					—
STI Other results		—			(157	)		157		(3q	)		—					—					—

Total Operating Expenses		107,600			219,074			(191,327	)				167,453					—					302,800

Income (loss) from Operations / STI Operating income		(24,741	)		46,465			—					(167,453	)				—					(145,729	)
Other Expense
Other expense, net		(905	)		—			(1,272	)	(3s	)		—					—					(2,177	)
Interest expense		(35,475	)		—			—					—					(5,624	)	(5c	)		(41,099	)
STI Financial income		—			814			(814	)	(3s	)		—					—					—
STI Financial expenses		—			(2,302	)		2,302		(3s	)		—					—					—
STI Variation in fair value of financial instruments		—			(321	)		321		(3s	)		—					—					—
STI Exchange differences		—			537			(537	)	(3s	)		—					—					—

Total Other Expense / STI Financial results		(36,380	)		(1,272	)		—					—					(5,624	)				(43,276	)

Income (Loss) Before Income Tax Expense (Benefit) / STI Results before tax		(61,121	)		45,193			—					(167,453	)				(5,624	)				(189,005	)

Income Tax Expense (Benefit)		(10,718	)		—			11,134		(3t	)		(50,567	)	(4d	)		(1,321	)	(5d	)		(51,472	)
STI Income tax		—			11,134			(11,134	)	(3t	)		—					—					—

Net Income (loss)/ STI Results for the Year		(50,403	)		34,059			—					(116,886	)				(4,303	)				(137,533	)

Preferred dividends and accretion		(15,715	)		—			—					—					(4,784	)	(5b	)		(20,499	)

Net Income (loss) to common shareholders	$	(66,118	)	$	34,059		$	—				$	(116,886	)			$	(9,087	)			$	(158,032	)

Earnings (loss) per share
Basic	$	(0.51	)																			$	(1.09	)

Diluted	$	(0.51	)																			$	(1.09	)

Weighted average number of shares
Basic		129,984																					145,004

Diluted		129,984																					145,004

See accompanying notes to unaudited pro forma condensed combined financial information.

ARRAY TECHNOLOGIES, INC.

NOTES TO THE UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

(In thousands)

Basis of Pro Forma Presentation

The Array historical financial information has been derived from the Company’s historical financial statements which are incorporated by reference in this Form 8-K. The STI historical financial information has been derived from the STI’s historical financial statements which are filed in this Form 8-K. Certain of STI’s historical amounts have been reclassified to conform to Array’s financial statement presentation, as discussed further in Note 3. The unaudited pro forma condensed combined financial information should be read in conjunction with each company’s historical financial statements and the notes thereto. The unaudited pro forma condensed combined balance sheet gives effect to the STI Acquisition and the issuance of the Preferred Shares as if they had been completed on December 31, 2021. The issuance of the Notes is included in the Array historical consolidated balance sheet as of December 31, 2021. The unaudited pro forma condensed combined statement of operations gives effect to the Transactions as if they had been completed on January 1, 2021. In the opinion of Array’s management, all material adjustments have been made that are necessary to present fairly the unaudited pro forma condensed combined financial information in accordance with Article 11. Array has elected not to present Management’s Adjustments and is presenting only Transaction Accounting Adjustments in the unaudited pro forma condensed combined financial information. The adjustments presented in the unaudited pro forma condensed combined financial information has been identified and presented to provide relevant information necessary to assist in understanding the post-combination company.

The unaudited pro forma condensed combined financial information do not purport to be indicative of the financial position or results of operations of the combined company that would have occurred if the Transactions had occurred on the dates indicated, nor are they indicative of Array’s future financial position or results of operations. In addition, future results may differ significantly from those reflected in the unaudited pro forma condensed combined financial information.

Note (1): Company Historical Financial Statements

The historical financial information of the Company for the year ended December 31, 2021 has been derived from the consolidated financial statements of Company as of and for the year ended December 31, 2021, which is prepared in accordance with U.S. GAAP, and which are incorporated by reference into this Form 8-K.

Note (2): Adjusted STI Historical Financial Statements

(a)	STI historical information as of December 31, 2021

The historical financial information of STI as of December 31, 2021 has been derived from STI’s audited consolidated financial statements as of and for the year ended December 31, 2021, which are prepared in accordance with Spanish GAAP and reconciled to U.S. GAAP as presented in the footnotes to the audited consolidated financial statements which are filed with this Form 8-K.

The following table reconciles the historical financial information of STI in U.S. GAAP as of December 31, 2021 prepared in euros and converted to U.S. dollars.


(in thousands)	Historical Adjusted STI U.S. GAAP (EUR)		Historical Adjusted STI U.S. GAAP (USD)
Assets
Current assets:
Cash and cash equivalents	€	31,922	$	36,305
Short-term accruals		286		325
Short-term financial investments		107		122
Commercial debtors and other accounts receivable		114,393		130,099
Inventory		42,743		48,612

Current assets		189,451		215,463

Deferred tax assets		171		194
Long-term financial investments		30		34
Property, plant and equipment		2,886		3,282
Intangible assets		1,220		1,388

Non-current assets		4,307		4,898

Total assets	€	193,758	$	220,361

Net Equity and Liabilities
Current liabilities
Short-term accruals	€	218	$	248
Commercial creditors and other accounts payable		88,336		100,465
Short-term debt		31,157		35,435
Short-term provisions		119		135

Current liabilities		119,830		136,283

Non-current liabilities
Long-term debt		10,633		12,093
Long-term provisions		3,977		4,523
Subsidies, gifts, and legacies		22		25
Deferred tax liabilities		275		313

Non-current liabilities		14,907		16,954

Total liabilities		134,737		153,237

Net equity		59,021		67,124

Total net equity and liabilities	€	193,758	$	220,361

(b)	STI historical information for the year ended December 31, 2021

The historical financial information of STI for the year ended December 31, 2021 has been derived from STI’s audited consolidated financial statements as of and for the year ended December 31, 2021, which are prepared in accordance with Spanish GAAP and reconciled to U.S. GAAP as presented in the footnotes to the audited consolidated financial statements which are filed with this Form 8-K.

The following table presents a reconciliation of the historical financial information of STI for the year ended December 31, 2021 prepared in euros and converted to U.S. dollars.


(in thousands)	Historical STI (EUR)			Spanish GAAP to U.S. GAAP and Reconciliation (EUR)		Historical Adjusted STI (EUR)			Historical Adjusted STI (USD)
Net turnover	€	224,462		€	—	€	224,462		$	265,539
Changes in inventories of finished goods and work in progress		29,104			—		29,104			34,430
Supplies		(190,834	)		—		(190,834	)		(225,757	)
Other operating income		58			—		58			69
Staff expenses		(12,484	)		—		(12,484	)		(14,769	)
Other operating expenses		(10,668	)				(10,668	)		(12,620	)
Amortisation and depreciation		(541	)		18		(523	)		(619	)
Non-financial and other capital grants		33			—		33			39
Impairment and result on disposal of fixed assets		(3	)		—		(3	)		(4	)
Other results		133			—		133			157

Operating Income		39,260			18		39,278			46,465

Financial income		688			—		688			814
Financial expenses		(1,946	)		—		(1,946	)		(2,302	)
Variation in fair value of financial instruments		(271	)		—		(271	)		(321	)
Exchange differences		454			—		454			537

Financial Results		(1,075	)		—		(1,075	)		(1,272	)

Results before tax		38,185			18		38,203			45,193
Income tax		9,412			—		9,412			11,134

Results for the Year	€	28,773		€	18	€	28,791		$	34,059

The STI historical amounts included in the unaudited pro forma condensed combined balance sheet and statements of operations have been formatted to reflect the number convention used by Array.

Note (3): Alignment adjustments

Alignment adjustments represent the adjustments required to conform STI historical financial statements to the Company’s historical financial statements with respect to accounting policies and Company’s presentation.

Accounting Policies

During the preparation of the unaudited pro forma condensed combined financial information, the Company performed a preliminary analysis to identify differences in accounting policies and methodologies between the Company and STI. As a result of that review, management did not become aware of any material differences between the accounting policies of the two companies, other than certain reclassifications necessary to conform STI to Array’s financial statement presentation.

The Company made the following reclassification adjustments to the unaudited pro forma condensed combined balance sheet as of December 31, 2021:

(a)

STI’s Commercial debtors and other accounts receivable balance was reclassified to Accounts receivable, net, Prepaid expenses and other and Income tax receivables to conform with Array’s balance sheet presentation. This reclassification has no impact on Total Assets.

(b)

STI’s Inventory was reclassified to Inventories, net to conform with Array’s balance sheet presentation. This reclassification has no impact on Total Assets.

(c)

STI’s Short-term accruals and Short-term financial investments balances were reclassified to Prepaid expenses and other to conform with Array’s balance sheet presentation. This reclassification has no impact on Total Assets.

(d)

STI’s Property, plant and equipment balance was reclassified to Property, plant and equipment, net to conform with Array’s balance sheet presentation. This reclassification has no impact on Total Assets.

(e)

STI’s Intangible assets balance was reclassified to Other intangible assets, net and Prepaid expenses and other to conform with Array’s balance sheet presentation. This reclassification has no impact on Total Assets.

(f)

STI’s Long-term financial investments balances was reclassified to Other assets to conform with Array’s balance sheet presentation. This reclassification has no impact on Total Assets.

(g)

STI’s Commercial creditors and other accounts payable balance was reclassified to Accounts payable, Income tax payable and Deferred revenue to conform with Array’s balance sheet presentation. This reclassification has no impact on Total Liabilities.

(h)

STI’s Short-term accruals balance was reclassified to Accrued expenses and other to conform with Array’s balance sheet presentation. This reclassification has no impact on Total Liabilities.

(i)

STI’s Short-term debt balance was reclassified to Current portion of term loan and Other current liabilities to conform with Array’s balance sheet presentation. This reclassification has no impact on Total Liabilities.

(j)

STI’s Short-term provisions balance was reclassified to Current portion of term loan and Other current liabilities to conform with Array’s balance sheet presentation. This reclassification has no impact on Total Liabilities.

(k)

STI’s Deferred tax liabilities and Deferred tax assets balances were removed as book and tax basis were reset to fair value. The offsetting entry was made to Accumulated Deficit to conform with Array’s balance sheet presentation.

(l)

STI’s Long-term provisions and Subsidies, gifts, and legacies balances were reclassified to Other long-term liabilities to conform with Array’s balance sheet presentation. This reclassification has no impact on Total Liabilities.

(m)

STI’s Long-term debt balance was reclassified to Long term debt, net of current portion, debt discounts and issuance costs to conform with Array’s balance sheet presentation. This reclassification has no impact on Total Liabilities.

(n)

STI’s Net equity was reclassified to Accumulated deficit to conform with Array’s balance sheet presentation. This reclassification has no impact on Total Liabilities and Member’s Equity/Stockholders’ Deficit.

The Company made the following reclassification adjustments to the unaudited pro forma condensed combined statements of operations for the year ended December 31, 2021:

(o)

STI’s Net turnover was reclassified to Revenue to conform with Array’s statement of operations presentation. This reclassification has no impact on Net Income.

(p)

STI’s Supplies and Changes in inventories of finished goods and work in progress was reclassified to Cost of Revenues to conform with Array’s statement of operations presentation. This reclassification has no impact on Net Income.

(q)

STI’s Other operating income, Staff expenses, Other operating expenses, Non-financial and other capital grants, Impairment and result on disposal of fixed assets and Other results were reclassified to General and administrative to conform with Array’s statement of operations presentation. This reclassification has no impact on Net Income.

(r)

STI’s Amortisation and depreciation was reclassified to Depreciation and amortization to conform with Array’s statement of operations presentation. This reclassification has no impact on Net Income.

(s)

STI’s Financial income, Financial expenses, Variation in fair value of financial instruments and Exchange differences were reclassified to Other expense, net to conform with Array’s statement of operations presentation. This reclassification has no impact on Net Income.

(t)

STI’s Income tax was reclassified to Income tax expense to conform with Array’s statement of operations presentation. This reclassification has no impact on Net Income.

Note: The unaudited pro forma condensed combined statement of operations has been presented by function consistent with Array’s historical presentation. STI’s historical Income Statement is presented by nature. For the purposes of preparing the unaudited pro forma condensed combined statement of operations, this difference in presentation was not considered material for the purpose of this Form 8-K and has not been included in the alignment adjustments. The Company’s management will continue to conduct reviews of STI’s accounting policies and methodologies and may identify differences that, when adjusted or reclassified, could have a material impact on the unaudited pro forma condensed combined financial information.

Note (4): STI Acquisition Adjustments

Preliminary Acquisition Price Allocation

Represents adjustments based on preliminary estimates of fair value and the adjustment to goodwill, property, plant and equipment, and intangible assets derived from the difference in the estimated total consideration and the estimated fair value of assets acquired and liabilities assumed. Upon completion of the fair value assessment after the STI Acquisition, it is anticipated that the ultimate purchase price allocation will differ from the preliminary assessment outlined below. Any changes to the initial estimates of the fair value of the acquired assets and assumed liabilities will be recorded as adjustments to those assets and liabilities, and residual amounts will be allocated to goodwill. The estimated consideration is based on the cash paid and common stock issued.

The calculated value assigned to the property, plant, and equipment, and intangible assets has been estimated by management utilizing third-party preliminary valuation studies utilizing valuation techniques including the income, cost and market approaches. Property, plant, and equipment was valued using a cost approach based on the fixed asset registers provided by STI. Reproduction cost new is defined as the current cost of reproducing a new replica of a property with the same or closely similar materials. Reproduction cost new was estimated as a starting point using the historical costs and acquisition dates in the fixed asset registers and then deductions for physical deterioration, functional obsolescence, and economic obsolescence were made to estimate calculated value. Further, we also held multiple discussions with the STI’s accounting and operations personnel to understand the age, condition, utility, maintenance, and other factors that would impact the calculated value of the assets. Working capital amounts are assumed to have fair values equal to historical book values. The final purchase price allocation will be based on a subsequent appraisal which may result in materially different allocations for assets than those presented in this unaudited pro forma condensed combined balance sheet. Any change in the amount of the final purchase price allocated to amortizable, finite-lived intangible assets as well as property, plant and equipment could materially affect the amount of amortization and depreciation expense. The preliminary purchase price and purchase price allocation are presented as follows:


($ in thousands)
Purchase Price
Cash consideration⁽ⁱ⁾	$	410,543
Stock consideration⁽ⁱⁱ⁾		200,224

Total purchase price		610,767
Allocated To
Cash and cash equivalents		36,305
Accounts receivable		116,727
Inventories		48,612
Income tax receivables		101
Prepaid expenses and other		14,728
Property, plant and equipment		4,423
Other intangible assets		409,805
Other assets		34
Accounts payable		(74,200	)
Deferred revenue		(20,154	)
Short-term debt		(35,021	)
Accrued expenses and other		(248	)
Other current liabilities		(549	)
Income tax payable		(6,111	)
Other long-term liabilities		(4,548	)
Long-term debt		(12,093	)

Preliminary fair value of net assets acquired		477,811

Preliminary allocation to goodwill	$	132,956

(i)	The cash considered includes $0.9 million of management transaction bonus and transaction costs.

(ii)	The stock consideration is based on the Company’s Stock price of $14.41, which is the closing stock price at closing of the STI Purchase Agreement on January 11, 2022.

(a)

Represents adjustments to adjust the stockholders’ equity of STI to zero upon closing of the STI Acquisition.

(b)

Represents adjustments to reflect the depreciation expense related to the net increase in fair value of the acquired property, plant and equipment.


(in thousands)	Year ended December 31, 2021
Historical depreciation expense	$	(466	)
Pro forma depreciation expense		524

Pro forma adjustment	$	58

(c)

As part of the valuation analysis, the Company identified backlog, customer relationships and tradename as intangible assets. The final fair value determinations for identifiable intangible assets may differ from this preliminary determination, and such differences could be material. The remaining useful life of the acquired intangible assets was estimated based on a preliminary estimate of the period over which substantially all of the cumulative discounted cash flows are expected to be realized. The pro forma adjustment to recognize additional expense related to the increased carrying value of the intangible assets has been computed with the assumption that these will be amortized over the estimated useful lives on a straight-line basis.

The following table summarizes the estimated fair values and useful lives of STI’s identifiable intangible assets (using the exchange rate as of December 31, 2021, of €1:1.1373):


(in thousands, except useful lives)	Estimated Fair Value (in EUR)		Estimated Fair Value (in USD)		Estimated Weighted Average Useful Life in Years
Backlog	€	120,000	$	136,476		1
Customer Relationships		215,000		244,520		10
Tradename		25,000		28,433		Indefinite

Total	€	360,000	$	409,429

The following table represents total intangible amortization expense in conjunction with the STI Acquisition:


($ in thousands)
Year ended December 31, 2021	$	167,395

(d)

Reflects the income tax effect of acquisition pro forma adjustments by applying the statutory rate to each adjustment based on the applicable jurisdiction.

Note (5): Financing Transactions Adjustments

(a)

The table below represents the incurrence of notes offered herby to fund the STI Acquisition. A detailed estimate of the sources and uses of cash associated with the transaction are as follows:


($ in thousands)
Sources:
Series A Redeemable Perpetual Preferred Stock⁽ⁱ⁾	$	48,751
Existing Array cash⁽ⁱⁱ⁾		367,670
Existing STI cash		36,305

Total Sources	$	452,726

Uses:
Cash Consideration	$	410,543
Cash to balance sheet		42,183

Total Uses	$	452,726

(i)

Proceeds from the Series A Redeemable Perpetual Preferred Stock. The Company issued 50,000 of Preferred Shares and 1,125,000 shares of the Company’s common stock for an aggregate purchase price of $49.4 million. The fair value of the Preferred Shares and common stock amounted to $55.2 million, net of fees. The fair value of the common stock was derived from the Company’s closing stock price of $14.12 as of January 7, 2022. The breakdown of the $55.2 million fair value, net of fees is comprised of $39.7 million to Series A Redeemable Perpetual Preferred Stock, $1.1 thousand to common stock and $15.5 million to additional paid-in capital.

(ii)	Existing Array cash includes proceeds of from the issuance of the Notes in December 3, 2021 and December 7, 2021.

(b)

The table below represents the total preferred dividends and accretion on the Preferred Shares calculated at the dividend rate of 5.75%:


($ in thousands)
Year ended December 31, 2021⁽ⁱ⁾	$	5,732

(i)	The Company has presented the Preferred Shares in temporary equity and is accreting the discount on the increasing rate dividends using the effective interest method. Such accretion totaled $2.9 million for the year ended December 31, 2021.

(c)

The table below represents the total interest expense and amortization of the discount and fees on the Convertible Senior Notes:


(in thousands)	Year ended December 31, 2021
Historical interest expense and amortization of discount and fees	$	(472	)
Pro forma interest expense and amortization of discount and fees		6,096

Pro forma adjustment	$	(5,624	)

(d)

Reflects the income tax effect of the financing pro forma adjustments by applying the statutory rate to each adjustment based on the applicable jurisdiction.

Note (6): Earnings Per Share

The following table sets forth the calculation of pro forma basic and diluted earnings per share:


(in thousands, except per share amounts)	Year Ended December 31, 2021
Basic earnings available to common shareholders	$	(158,032	)
Historical Array weighted average number of common shares outstanding (Basic)		129,984
Stock issued for Stock Consideration		13,895
Common stock issued for Series A Preferred Shares		1,125

Weighted average number of common shares outstanding (Basic)		145,004

Basic earnings per share	$	(1.09	)

Historical Array weighted average number of common shares outstanding (Diluted)		129,984
Stock issued for Stock consideration		13,895
Common stock issued for Series A Preferred Shares		1,125
Stock to be issued upon conversion of 2028 Notes⁽¹⁾

Weighted average number of common shares outstanding (Diluted)		145,004

Diluted earnings per share	$	(1.09	)

(1)

In connection with the issuance of the 2028 Notes, the Company entered into capped calls, which are not included for purposes of calculating the number of diluted shares outstanding, as their effect would have been anti-dilutive. The capped calls reduce the potential dilution to the Company’s common stock (or, in the event a conversion of the 2028 Notes is settled in cash, to reduce its cash payment obligation) in the event that at the time of conversion of the Notes the Company’s common stock price exceeds the conversion price of the Notes.

EX-99.2

Exhibit 99.2

KPMG Auditores, S.L.
Edificio Iruña Park

Arcadio M. Larraona, 1

31008 Pamplona

Independent Auditors’ Report

To the Shareholders and to the Directors of Soluciones Técnicas Integrales Norland, S.L. (Sociedad Unipersonal)

Qualified Opinion

We have audited the consolidated financial statements of Soluciones Técnicas Integrales Norland, S.L.U., and its subsidiaries (the Company) which comprise the consolidated balance sheet as of 31 December 2021, and the consolidated income statement, statement of changes in consolidated net equity and statement of consolidated cash flows for the year then ended, and the related notes to the consolidated financial statements.

In our opinion, except for the omission of the comparative financial information as described in the Basis for Qualified Opinion section of our report, the accompanying consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and the results of its operations and its cash flows for the year then ended in accordance with the Spanish General Chart of Accounts approved by Royal Decree 1514/2007, the Standards for the Preparation of Consolidated Annual Accounts approved by Royal Decree 1159/2010 and subsequent amendments.

Basis for Qualified Opinion

As more fully disclosed in Note 2.4 and 2.1 to the consolidated financial statements, the Spanish General Chart of Accounts approved by Royal Decree 1514/2007 requires that consolidated financial statements be presented with comparative financial information. These consolidated financial statements as of and for the year ended 31 December 2021 have been prepared solely for the inclusion in the U.S. Securities and Exchange Commission filings of Array Technologies Inc. Accordingly, no comparative financial information is presented.

We conducted our audit in accordance with auditing standards generally accepted in the United States of America (US GAAS). Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are required to be independent of the Company and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified audit opinion.

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Emphasis of Matter

We draw attention to the explanatory note 23 in which the Directors state that the accounting principles and criteria used in the preparation of the accompanying consolidated financial statements, differ in certain material respects from generally accepted accounting principles in the United States of America. Information with regard to the nature and effect of these differences on consolidated results for the year and the consolidated balance sheet as of 31 December 2021 is presented in note 23 to the accompanying consolidated financial statements. Our opinion is not modified in respect of this matter.

Responsibilities of the Directors for the Consolidated Financial Statements

The Directors are responsible for the preparation and fair presentation of the consolidated financial statements in accordance with the Spanish General Chart of Accounts approved by Royal Decree 1514/2007, the Standards for the Preparation of Consolidated Annual Accounts approved by Royal Decree 1159/2010 and subsequent amendments, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, the Directors are required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern for one year after the date that the consolidated financial statements are available to be issued.

Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with US GAAS will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the consolidated financial statements.

In performing an audit in accordance with US GAAS, we:

•

Exercise professional judgment and maintain professional skepticism throughout the audit.

•

Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.


		2

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•

Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control. Accordingly, no such opinion is expressed.

•

Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the consolidated financial statements.

•

Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern for a reasonable period of time.

We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control related matters that we identified during the audit.

KPMG Auditores, S.L.

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Pamplona, Spain

21 March 2022


		3

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SOLUCIONES TÉCNICAS INTEGRALES NORLAND, S.L. AND SUBSIDIARIES

Consolidated Financial Statements

for the year ended 31 December 2021

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SOLUCIONES TÉCNICAS INTEGRALES NORLAND, S.L. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET FOR THE

YEAR ENDED 31 DECEMBER 2021


ASSETS	Notes		31/12/2021
A) NON-CURRENT ASSETS				3.567.245
I. Intangible assets		4		480.891
1. Consolidated Goodwill				148.646
2. Other Intangible assets				332.245
II. Property, plant and equipment		5		2.885.475
1. Land and Constructions				769.594
2. Technical installations and other property, plant and equipment				2.060.350
3. Under construction and advances				55.531
V. Long-term financial investments		7.1		29.479
VI. Deferred tax assets		14.3		171.400
B) CURRENT ASSETS				189.450.837
II. Inventory		12		54.411.945
III. Commercial debtors and other accounts receivable				102.724.181
1. Trade receivables for sales and services		7.1		95.062.741
3. Current tax assets		14.2		88.770
4. Other receivables		7.1 - 14.2		7.572.670
V. Short-term financial investments		7.1		107.305
VI. Prepayments for current assets				286.034
VII. Cash and cash equivalents		7.1		31.921.372

TOTAL ASSETS				193.018.082


NET EQUITY AND LIABILITIES	Notes	31/12/2021
A) NET EQUITY			59.191.908
A-1) Equity			52.808.803
I. Capital	10.1		275.000
1. Registered capital			275.000
III. Reserves	10.2		28.937.535
VI. Result attributed to parent company			23.596.268
1. Consolidated profit and loss			28.772.636
2. (Profit and loss non-controlling interests)			-5.176.368
VII. Interim dividend			0
A-2) Adjustments for change in value	11		-2.119.973
I. Conversion difference			-2.119.973
A-3) Grants, donations and bequests received	20		22.401
A-4) Non-controlling interests	10.5		8.480.677
B) NON-CURRENT LIABILITIES			14.361.176
I. Long-term provisions	16		3.977.282
II. Long-term debt	8.1		10.108.995
2. Debts with financial institutions			10.000.000
4. Other financial liabilities			108.995
IV. Deferred tax liabilities	14.3		274.899
C) CURRENT LIABILITIES			119.464.998
II. Short-term provisions			118.449
III. Short-term debt	8.1		30.792.418
2. Debts with financial institutions			30.792.418
4. Other financial liabilities			0
V. Commercial creditors and other accounts payable			88.335.862
1. Suppliers	8.1		60.968.236
3. Current tax liabilities	14.2		5.372.728
4. Other payables	8.1 - 14.2		21.994.898
VI. Short-term accruals			218.269

TOTAL NET EQUITY AND LIABILITIES			193.018.082


The accompanying notes form an integral part of the consolidated balance sheet for the year ended 31 December 2021.

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SOLUCIONES TÉCNICAS INTEGRALES NORLAND, S.L. AND SUBSIDIARIES

CONSOLIDATED INCOME STATEMENT FOR THE

YEAR ENDED 31 DECEMBER 2021


CONSOLIDATED INCOME STATEMENT	Notes	31/12/2021
A) CONTINUING OPERATIONS
1. Net turnover	15		224.461.953
a) Sales			210.025.613
b) Services rendered			14.436.340
2. Changes in inventories of finished goods and work in progress	15		29.104.396
4. Supplies	15		-190.834.077
b) Consumption of raw materials and other consumables			-172.440.855
c) Work carried out by other companies			-18.393.222
5. Other operating income			57.726
b) Operating grants taken to income	20		57.726
6. Staff expenses			-12.484.287
a) Wages, salaries and related items			-9.748.076
b) Social charges	15		-2.736.211
7. Other operating expenses			-10.668.390
a) Losses, impairment and changes in trade provisions			-623.452
b) Other current management expenses			-10.044.938
8. Amortisation and depreciation			-540.838
9. Non-financial and other capital grants	20		32.912
11. Impairment and result on disposal of fixed assets			-2.883
b) Result for disposal and others			-2.883
14. Other results			132.889

A.1) OPERATING INCOME			39.259.401

15. Financial income			688.765
b) Marketable securities and other financial instruments			688.765
16. Financial expenses			-1.946.342
17. Variation in fair value of financial instruments			-271.192
18. Exchange differences	13		454.080
b) Other exchange differences			454.080

A.2) FINANCIAL RESULTS			-1.074.689

A.3) RESULT BEFORE TAX			38.184.712

23. Income tax	14.1		-9.412.076

A.4) RESULT FOR THE YEAR FROM CONTINUING OPERATIONS			28.772.636

B) DISCONTINUED OPERATIONS
A.5) RESULT FOR THE YEAR			28.772.636

Result attributed to parent company			23.596.268
Result attributed to non-controlling interests			5.176.368

The accompanying notes form an integral part of the consolidated income statement for the year ended 31 December 2021.

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SOLUCIONES TÉCNICAS INTEGRALES NORLAND, S.L. AND SUBSIDIARIES

STATEMENT OF CHANGES IN CONSOLIDATED NET EQUITY FOR THE

YEAR ENDED 31 DECEMBER 2021

A) STATEMENT OF RECOGNIZED CONSOLIDATED INCOME AND EXPENSES FOR THE

YEAR ENDED 31 DECEMBER 2021


	Notes		31/12/2021
A) Consolidated result for the year				28.772.636

Income and expenses directly attributable to net equity
I. by valuation of financial instruments				0
II. By cash flow hedges				0
III. Grants, donations and bequests received				23.751
IV. By actuarial profit and loss and other adjustments				0
V. Conversion difference		14.1		390.963
VI. Tax effect				-6.650

B) Total income and expenses allocated directly to consolidated net equity				408.064

Transfers to the consolidated income statement
VII. by valuation of financial instruments				0
VIII. By cash flow hedges				0
IX. Grants, donations and bequests received		20		-32.912
X. Conversion difference				0
XI. Tax effect		20		9.215

C) Total of transfers to the consolidated income statement				-23.697

TOTAL OF CONSOLIDATED RECOGNIZED INCOME AND EXPENSES (A + B + C)				29.157.003

Total income and expenses attributed to the parent company				23.980.635
Total income and expenses attributed to external partners				5.176.368

The accompanying notes form an integral part of the statement recognized consolidated income and expenses for the year ended 31 December 2021.

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SOLUCIONES TÉCNICAS INTEGRALES NORLAND, S.L. AND SUBSIDIARIES

STATEMENT OF CHANGES IN CONSOLIDATED NET EQUITY FOR THE

YEAR ENDED 31 DECEMBER 2021

STATEMENT OF CHANGES IN CONSOLIDATED NET EQUITY FOR THE

YEAR ENDED 31 DECEMBER 2021

Capital

Reserves and
results from
previous years

Other partner
contributions

result
attributed to
parent
company

Interim dividend

Adjustments for
change in value

Grants,
donations
and
bequests
received

Non-controlling
interests

TOTAL

Registered

Note 10.1

Note 10.2

Notes 11 and 13

Note 20

Note 10.5

C) BALANCE AT THE END OF YEAR 2020

275.000

11.971.732

1.616.495

25.029.340

-8.000.000

-3.836.335

28.997

2.949.675

30.034.904

I. Adjustments for changes in criteria from 2020

II. Adjustments for errors in 2020

D) ADJUSTED BALANCE AT THE START OF YEAR 2021

275.000

11.971.732

1.616.495

25.029.340

-8.000.000

-3.836.335

28.997

2.949.675

30.034.904

I. Total recognized consolidated income and expenses

23.596.268

390.963

-6.596

5.176.368

29.157.003

II. Transactions with partners or owners

15.349.308

-25.029.340

8.000.000

1.325.399

354.634

3. (-) Dividend distribution

7. Other transactions with partners or owners

15.349.308

-25.029.340

8.000.000

1.325.399

354.634

III. Other variations in net equity

E) BALANCE AT THE END OF YEAR 2021

275.000

27.321.040

1.616.495

23.596.268

-2.119.973

22.401

8.480.677

59.191.908

The accompanying notes form an integral part of the statement of changes in consolidated net equity for the year ended 31 December 2021.

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SOLUCIONES TÉCNICAS INTEGRALES NORLAND, S.L. AND SUBSIDIARIES

STATEMENT OF CONSOLIDATED CASH FLOWS FOR THE

YEAR ENDED 31 DECEMBER 2021


		Notes	31/12/2021
A) CASH FLOWS FROM OPERATING ACTIVITIES
1. result before tax				38.184.712

2. Adjustments to result				2.869.858

( + )	a) Amortisation and depriciation			540.838
( + / - )	c) Change in provisions			981.702
( - )	d) Grants recognised in the income statement			-32.912
( + / - )	e) Profit / loss on the disposal of fixed assets			2.883
( - )	g) Financial income			-688.765
( + )	h) Financial expenses			1.946.342
( + / - )	i) Exchange differences			390.962
( + / - )	j) Variation in fair value of financial instruments			-271.192

3. Changes in current capital				-67.816.291

( + / - )	a) Inventory			-39.399.862
( + / - )	b) Trade receivables for sales and services			-81.378.102
( + / - )	c) Other current assets			-41.629
( + / - )	d) Creditors and other accounts payable			54.637.184
( + / - )	e) Other current liabilities			-1.633.882
( + / - )	f) Other non-current assets and liabilities			0

4. Other cash flows from operating activities				-10.141.735

( - )	a) Interest payments			-1.946.342
( + )	c) Interest collection			688.765
( + / - )	d) Income tax collection/payment			-8.884.158

5. Cash flows from operating activities				-36.903.456

B) CASH FLOWS FROM INVESTMENT ACTIVITIES
6. Investment payments				-1.406.793

( - )	d) Intangible assets			-146.094
( - )	e) Property, plant and equipment			-1.260.699
( - )	g) Other financial assets			0

7. Payments received for divestitures				430.399

( + )	d) Intangible assets			132.428
( + )	e) Property, plant and equipment			99.995
( + )	g) Other financial assets			197.976

8. Cash flows from investment activities				-976.394

C) CASH FLOWS FROM FINANCING ACTIVITIES
10. Collection and payment for financial liability instruments				27.256.999

	a) Issue			35.147.862

( + )	2. Debts with financial institutions			35.124.111
( + )	3. Other debt			0
( + )	4. Grants, donations and bequests received			23.751

	b) Return and amortization of			-7.890.863

( - )	2. Debts with financial institutions			-7.760.065
( - )	3. Other debt			-130.798

11. Payments for dividends and remuneration of other equity instruments.				0

( - )	a) Dividends			0

12. Cash flows from financing activities				27.256.999

D) EFFECT OF VARIATIONS IN THE EXCHANGE RATE				0

E) NET INCREASE/REDUCTION IN CASH AND CASH EQUIVALENTS				-10.622.851

Cash or equivalent at the beginning of the year				42.544.223
Cash or equivalent at the end of the year				31.921.372

The accompanying notes form an integral part of the statement of consolidated cash flows for the year ended 31 December 2021.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR

THE YEAR ENDED 31 DECEMBER 2021

1.	GROUP COMPANIES

1.1.

PARENT COMPANY

SOLUCIONES TÉCNICAS INTEGRALES NORLAND, S.L. (hereinafter STI Norland S.L. or the Parent Company) was incorporated as a Limited Company on 2 April 1996 and has not changed its name since. Its current head office is at Avenida de Sancho el Fuerte, 26, Oficina 1, Pamplona (Spain).

The Parent Company’s corporate purpose, according to its incorporation documents, include:

•

Industrial, commercial, managerial and technical office consultancy work;

•

Construction (including contracting), rehabilitation, promotion, management, purchase and sale of buildings;

•

Production of renewable energy (solar and photovoltaic) and the implementation, assembly, repairs and maintenance of electrical installation in general (both low and medium voltage)

The Parent Company’s current activity consists in manufacturing and selling solar trackers and providing services related to installation of the solar trackers.

The Parent Company’s year runs from 1 January to 31 December.

The Parent Company’s functional currency is the euro.

For all foreign companies in the STI Norland Group whose functional currency is not the euro, their functional currency is the local currency of the foreign jurisdiction.

The financial information presented in these consolidated financial statements are expressed in euros.

1.2.

SUBSIDIARIES

Soluciones Técnicas Integrales Norland, S.L. together with its subsidiaries forms the STI Norland Group (the Group).

It is understood that a company forms part of the Group when both are connected by a control relationship, direct or indirect, similar to that set out in article 42 of the Spanish Commercial Code, or when companies are controlled by any means by one or several legal entities that act jointly or are under sole management using statutory agreements or clauses.

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The Subsidiaries included in the scope of consolidation are the following:


Entity	2021 - % participation	Head office	Location	Functional currency
STI SOLAR, SpA.	100%	Padre Mariano, 82 – office 1102	Providencial, Santiago (Chile)	Chilean peso (CLP)

STINORLAND ISRAEL, LTD.	100%	78 Rothschild Bv., 6578605	Tel-Aviv (Israel)	Israeli Shekel (ILS)

STINORLAND USA, INC.	100%	2804 Gateway Oaks Dr #100, Sacramento	California (USA)	American dollar (USD)

STINORLAND SOUTH AFRICA PTY LTD	100%	48 Main Road, Walmer, 6065	Port Elizabeth - Gqeberha (South Africa)	South African rand (ZAR)

STINORLAND BRASIL, LTDA.	80%	Quadra 1112 Sul, Alameda 11 Lote 02 a 06, Plano Diretor Sul, CEP 77024-182	Palmas, Estado do Tocantins (Brazil)	Brazilian real (BRL)

STINORLAND MEXICO, S.A. DE C.V.	99%	Calle Darwin 74, Interior 301, Col. Anzures, 11590	Miguel Hidalgo, Ciudad de México (Mexico)	Mexican peso (MXN)

STINORLAND INDIA PRIVATE LIMITED	100%	39 NGEF Lane, 2nd Floor, Suite No. 985, Indiranagar,	Bangalore, Karnataka (India)	Indian rupee (INR)

KTRSOLAR TECH, S.L.	80%	Plaza Mayor, 17 - 1º A 31621	Sarriguren, Navarre (Spain)	Euro (EUR)

STINORLAND AUSTRALIA PTY LTD	100%	14 Hastings St. McKinnon 3204	Victoria (Australia)	Australian dollar (AUD)

None of the Group companies are listed on a stock exchange or in any other market.

During the 2021 year the only dividend distribution approved was the following:

Entity

Date of approval

Amount of dividend

approved

Amount in euros

STINORLAND ISRAEL, LTD.

01/07/2021

170,000 euros

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The operating activities of the Group companies is the design, engineering, assembly and supply of structures and solar trackers for developing renewable energy, particularly photovoltaic energy.

No subsidiaries have been excluded from the scope of consolidation.

In 2021 the Group has incorporated a new company, STY NORLAND AUSTRALIA PTY LTD, a 100% subsidiary to manage the Group operations in Australia.

2.	BASIS OF PRESENTATION OF THE CONSOLIDATED FINANCIAL STATEMENTS

2.1.

FAIR PRESENTATION

On 10 November 2021 Array Technologies, Inc, a US company, entered into a purchase agreement with the shareholders of the Parent Company pursuant to which, Array agreed to acquire all of the outstanding equity interests of the Parent Company. The closing of this agreement is dated 11 January 2022. The Board of Directors is preparing these consolidated financial statements as of and for the year ending 31 December 2021 to be used during the acquisition process and to be filed as part of the 8 K filing of Array Technologies, Inc. These Consolidated Financial Statements are prepared in accordance with accounting rules in Spain and include a separate note with a reconciliation to generally accepted accounting principles in the United States of America (US GAAP). These Consolidated Financial Statements comprise the Consolidated Balance Sheet, Consolidated Income Statement, Statement of Changes in Consolidated Net Equity, Statement of Consolidated Cash Flows and Notes (the Consolidated Financial Statements).

As mention above, these Consolidated Financial Statements have not been prepared to comply with statutory legal requirements.

The accompanying Consolidated Financial Statements have been prepared on the basis of the accounting records of the Parent Company and its subsidiaries. The Consolidated Financial Statements for the year ended 31 December 2021 have been prepared in accordance with the Spanish General Chart of Accounts approved by Royal Decree 1514/2007, the Standards for the Preparation of Consolidated Annual Accounts approved by Royal Decree 1159/2010, and its subsequent amendments, to give a true and fair view of the consolidated equity and consolidated financial position at 31 December 2021 and consolidated results of operations, changes in consolidated equity, and consolidated cash flows for the year then ended.

There are no exceptional reasons why the legal provisions for accounting matters have not been applied in order to present an accurate picture.

The end of the year for the financial statements in all the consolidated companies is 31 December 2021, and coincides with that of the Parent Company, except for the subsidiary STINORLAND INDIA PRIVATE LIMITED, whose year ends on 31 March 2022, as established in local legislation. However, the financial information used to prepare the Consolidated Financial Statements corresponds to 31 December 2021.

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2.2.

ACCOUNTING PRINCIPLES

The accounting principles and criteria applied in preparing these Consolidated Financial Statements are those summarized in Note 3 of this report. The mandatory accounting principles that have a significant effect on these Consolidated Financial Statements have been applied. Non-mandatory accounting principles have not been applied.

2.3.

CRITICAL ISSUES REGARDING THE MEASUREMENT AND ESTIMATION OF UNCERTAINTIES

The information contained in these Consolidated Financial Statements is the responsibility of the Parent Company’s Board of Directors. In preparing these Consolidated Financial Statements, the Board has made judgements and estimates that affect the application of the Group’s accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Specifically, estimates have been used relating to:

•

The useful life of intangible assets and property, plant and equipment (Notes 4 and 5)

•

Provisions for responsibilities (Note 16)

Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to estimates are recognised prospectively.

2.4.

COMPARATIVE INFORMATION

The consolidated balance sheet, consolidated income statement, statement of changes in consolidated net equity, statement of consolidated cash flows and the notes thereto for 2021 do not include comparative figures for 2020.

These Consolidated Financial Statements have been prepared solely for the purpose of meeting the requirements of US Securities and Exchange Commission (“SEC”) Rule 3-05 of Regulation S-X, following the acquisition by Array Technologies (see note 2.1). These Consolidated Financial Statements have been prepared in accordance with the Spanish General Chart of Accounts approved by Royal Decree 1514/2007, which have been applied consistently except that no comparative information has been presented in these Consolidated Financial Statements, as no comparatives are required under SEC Rule 3-05 of Regulation S-X. Nonetheless, this is a departure from accounting rules in Spain, as comparative figures are required to be presented.

2.5.

AGGREGATION OF ITEMS

These Consolidated Financial Statements are presented consistently with the Spanish chart of accounts and do not contain any items that have been aggregated into one caption.

2.6.

ITEMS DISCLOSED UNDER SEVERAL LINE ITEMS

There are no elements of a similar nature included in different items on the balance sheet.

2.7.

CHANGES TO ACCOUNTING POLICIES

Royal Decree 1/2021 was published on 30 January 2021 amending the Spanish General Chart of Accounts. Consequently, the recognition and measurement standards 14 Revenue from sales and services and 9 Financial instruments have been amended in 2021.

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2.8.

RELATIVE IMPORTANCE

When determining the information to be disclosed in these Consolidated Financial Statements, on the different items of the Consolidated Financial Statements or other matters, the Group, in accordance with the Conceptual Accounting Framework, has taken into account relative importance in relation to the 2021 Consolidated Financial Statements.

3.	RECOGNITION AND MEASUREMENT STANDARDS

The principal standards of recording and measurement applied in preparing the attached Consolidated Financial Statements, in accordance with the General Accounting Plan, were the following:

3.1.

CONSOLIDATION METHOD

The attached Consolidated Financial Statements have been prepared in accordance with the global integration method for all the Subsidiaries over which the Parent Company has effective control: STI SOLAR, SpA., STINORLAND ISRAEL, LTD., STINORLAND SOUTH AFRICA (PTY), LTD., STINORLAND USA, INC., STINORLAND BRASIL, LTDA., STINORLAND MÉXICO, S.A. DE C.V., STINORLAND INDIA PRIVATE LIMITED, KTRSOLAR TECH, S.L. and STINORLAND AUSTRALIA PTY LTD.

For companies consolidated by the global integration method (full consolidation), 100% of the items on the balance sheet and income statement are incorporated, recognizing, if applicable, the value of the participation of non-controlling interest in net equity and in the consolidated income statement in the corresponding proportion.

In the investment-net equity elimination in the consolidation process, the offsetting of the book values representing the Parent Company’s equity instruments with the proportional part of the net equity items of the above-mentioned subsidiaries, has been carried out on the basis of values obtained from applying the acquisition method. If the date of first consolidation is later than the acquisition date, the figures resulting from applying the global integration method have been referred to the acquisition date.

3.2.

TRANSACTIONS BETWEEN CONSOLIDATED COMPANIES

Results of internal transactions in the scope of consolidation have been eliminated, provided that their amount is relevant, being deferred until they are carried out with third parties outside the Group. If there are works carried out by the Group for its own fixed assets, the intra-group results are eliminated, arising at the rate of amortization of the affected items or when sold to third parties.

Intra-group balances and transactions, and any unrealised income and expenses (except for foreign currency transaction gains or losses) arising from intra-group transactions, are eliminated

3.3.

HOMOGENISATION

Consolidation of the companies that make up the scope of consolidation has been carried out using their individual financial statements that are prepared in accordance with Royal Decree 1514/2007 for the Parent Company headquartered in Spain, and their own local legislation for foreign companies. All the necessary standardization operations have been carried out in the Group’s companies to unify the measurement criteria and structure of the consolidated annual reports with those used by the Parent Company in its financial statements.

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3.4.

CONVERSION OF FINANCIAL RESULTS IN CURRENCY OTHER THAN THE EURO

Financial results in a currency other than the euro of foreign companies have been converted to euros using the exchange rate at balance sheet date. In this way the goods, rights and obligations have been converted at the exchange rate current at the close date, equity at historic exchange rate and items on the income statement at the average exchange rate for the year. The differences in conversion arising from the application of this method will be shown, where applicable, in the caption “Adjustments for change in value” in the section on equity on the consolidated balance sheet, the part that corresponds to non-controlling interest being deducted. During the year 2021 the conversion differences amounted to -2,119,973 euros.

3.5.

INTANGIBLE ASSETS

As a general rule, intangible assets are initially measured at cost, whether this be acquisition price or production cost. The cost of intangible assets acquired through combinations of business is its fair value on the date of acquisition.

After initial recognition, intangible assets are measured at cost, minus accumulated depreciation and, if applicable, the accumulated amount of recorded impairment corrections.

Intangible assets are assets of a defined useful life and are amortized systematically in accordance with their estimated useful life and residual value. The methods and periods of amortization applied are revised at the end of each year and adjusted prospectively, if need be.

At least annually, indicators of impairment are evaluated, in which case the recoverable amounts are estimated, to the extent that the carrying value exceeds the recoverable amounts, an impairment is recorded for the difference.

For accounting, the Group recognizes any loss that may have occurred in the recorded value of these assets due to impairment, using the heading “Impairment and result on disposal of fixed assets”. The criteria for recognizing losses due to impairment is similar to the one described in section 3.6. Property, plant and Equipment.

3.5.1. IT APPLICATIONS

These are valued at acquisition price or production cost. The useful life of these items is estimated at 4 years, being amortized on a straight-line basis during this period.

3.5.2. CONCESSIONS

The costs incurred to obtain the concession of two parking places for the Group are amortized on a straight-line basis in the 75-year concession period. If the circumstances of non-compliance with conditions meant the rights derived from this concession are lost, the recorded value for it would be adjusted in its entirety to cancel its net book value.

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3.6.

PROPERTY, PLANT AND EQUIPMENT

These are valued at acquisition price or production cost that includes, besides the amount billed after deducting any discount or rebate in the price, all the additional and directly related expenses arising up to its commissioning, such as costs of earthworks and demolition, transport, insurance, installation, assembly and the like.

In the cost of property, plant and equipment that needs a period of more than one year before it is ready for use, exploitation or sale, the Group includes the financial expenses related to specific or generic financing, directly attributable to acquisition, construction or production. In 2021 no financial expenses have been capitalized in property, plant and equipment.

The initial estimate of the actual value of the obligations assumed derived from decommissioning or retirement and other associated obligations is also included in the value of property, plant and equipment. Other obligations associated with the asset include the costs of restoration when these give rise to recording of provisions.

The Group does not have any commitments for decommissioning, retirement or restoration of its fixed assets. Therefore, under assets, no values have been booked for hedging such obligations in the future.

The Parent Company’s Board of Directors considers that the accounting value of the assets does not exceed their recoverable value.

An impairment loss in the value of an item of property, plant and equipment arises when its net book value exceeds its recoverable amount, this being understood as the higher amount between its fair value minus costs to sell and its value in use.

Expenditure during the year due to repairs and maintenance carried out by the Group will be charged to the corresponding expenditure accounts. Expansion or improvement costs that give rise to an increase in production capacity or extension of the useful life of goods are incorporated into the asset as the higher value of that asset.

The property, plant and equipment accounts in progress are debited by the amount of those expenses, with a credit to the income item that includes the works carried out by the Group for itself.

Amortization of property, plant and equipment commences from the moment the assets are available for commissioning, on a straight-line basis during their estimated useful life, with an estimated residual value of zero. The periods of estimated useful life translate into the following annual depreciation ratios:


Construction	4-5	%
Other installations	15	%
Machinery	15	%
Tools	25	%
Transport items	20	%
Furniture	15	%
Information processing equipment	25	%

3.7.

LEASES

Whether to classify a lease as operating or financial depends on the circumstances of each of the contracting parties, since they can be classified differently as lessor or lessee.

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The Group classifies as a financing lease, any lease provided that its conditions infer that the risks and benefits inherent in the ownership of the asset that is the object of the contract have been substantially transferred to the lessee. The assumptions for transferring risks and benefits established in the PGC (General Accounting Plan) are assumed by the companies.

Other leases are classified as operating leases. In these ownerships of the leased good and, substantially all the risks and benefits that are devolved to the good, remains with the lessor.

When the Group acts as lessor, the leasing expenses are charged on a straight-line basis to the income statement according to the agreements and life of the contract.

3.8.

FINANCIAL INSTRUMENTS

3.8.1. RECOGNITION AND CLASSIFICATION OF FINANCIAL INSTRUMENTS

Since 1 January 2021 the Group has applied the new recognition and measurement standard 9 Financial instruments in accordance with Royal Decree 1/2021 amending the Spanish General Chart of Accounts.

No significant differences in the valuation of financial instruments existing in the Group at 1 January 2021 have been identified as a result of applying the new recognition and measurement standard

9. Consequently, the Group has applied the new recognition and measurement standard retroactively. This note on valuation only includes the Group’s policies in relation to the new standard.

The Company classifies financial instruments on initial recognition as a financial asset, a financial liability or an equity instrument in accordance with the economic substance of the contractual arrangement and the definitions of a financial asset, a financial liability and an equity instrument.

The Company recognises a financial instrument when it becomes party to the contract or legal transaction, in accordance with the terms set out therein, either as the issuer or holder or acquirer thereof.

For measurement purposes, the Company classifies financial instruments into the following categories: financial assets and financial liabilities at fair value through profit or loss, showing separately those designated as such upon initial recognition from those that are held for trading and those mandatorily measured at fair value through profit or loss; financial assets and financial liabilities measured at amortised cost; financial assets measured at fair value through equity, showing separately equity instruments designated as such from other financial assets; and financial assets measured at cost. The Company classifies financial assets at amortised cost and at fair value through equity, except for equity instruments designated as such, according to the business model and the contractual cash flow characteristics. The Company classifies financial liabilities as measured at amortised cost, except those designated as at fair value through profit or loss and those held for trading.

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The Company classifies a financial asset or liability as held for trading when:

•

It is originated, acquired or issued or assumed principally for the purpose of selling or repurchasing it in the near term;

•

On initial recognition it is part of a portfolio of identified financial instruments that are managed together and for which there is evidence of recent actions in pursuit of short-term profit-taking;

•

It is a derivative financial instrument, provided that it is not a financial guarantee contract or it has not been designated as a hedging instrument or

•

It is an obligation that the Company has in a short position to deliver financial assets that it has been loaned.

The Company classifies a financial asset at amortised cost, even if it is admitted to trading, if it is held within a business model whose objective is to hold the investment in order to collect contractual cash flows and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding (SPPI).

The Company classifies a financial asset at fair value through equity if it is held within a business model whose objective involves collecting contractual cash flows and selling financial assets, and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest (SPPI).

The business model is determined by key personnel of the Company and at a level that reflects how groups of financial assets are managed together to achieve a particular business objective. The Company’s business model represents the manner in which it manages its financial assets to generate cash flows.

The Company classifies other financial liabilities as financial liabilities at amortised cost, except for financial guarantee contracts, commitments to provide a loan at a below-market interest rate or financial liabilities that arise when a transfer of a financial asset does not qualify for derecognition or when the continuing involvement approach applies.

3.8.2. OFFSET PRINCIPLES

A financial asset and a financial liability are offset only when the Company currently has the legally enforceable right to offset the recognised amounts and intends either to settle on a net basis or to realise the asset and settle the liability simultaneously.

3.8.3. FINANCIAL ASSETS AND FINANCIAL LIABILITIES AT FAIR VALUE THROUGH PROFIT OR LOSS

The Company recognises financial assets and financial liabilities at fair value through profit or loss initially at fair value. Transaction costs directly attributable to the acquisition or issue are recognised as an expense when incurred.

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3.8.4. FINANCIAL ASSETS AND FINANCIAL LIABILITIES AT AMORTISED COST

Financial assets and financial liabilities at amortised cost are initially recognised at fair value, plus or minus transaction costs, and are subsequently measured at amortised cost using the effective interest method. The effective interest rate is the discount rate that equates the carrying amount of a financial instrument to the estimated cash flows expected over the life of the instrument based on the contractual terms and for the financial assets, excluding future losses due to credit risk.

3.8.5. INTEREST AND DIVIDENDS

The Company recognises interest and dividends accrued on financial assets after acquisition as income in the income statement.

3.8.6. IMPAIRMENT OF FINANCIAL ASSETS

A financial asset or a group of financial assets is impaired and impairment losses are incurred if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset and the event or events have an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated

•

Impairment of financial assets carried at amortised cost

The amount of the impairment loss of financial assets carried at amortised cost is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset’s original effective interest rate. For floating-rate financial assets, the effective interest rate corresponding to the measurement date under the contractual conditions is used. Nevertheless, the Company uses their market value, provided this is sufficiently reliable to be considered representative of the recoverable amount

3.8.7. DERECOGNITION OF FINANCIAL ASSETS AND LIABILITIES

Financial assets are derecognized when the rights to receive related cash flows have expired o have been transferred and the Group has substantially transferred the risks and benefits derived from their ownership.

Financial liabilities are derecognized when the obligations that generated them have ended.

3.8.8. REVERSE FACTORING

The Group has contracted reverse factoring facilities with various financial institutions to manage payments to suppliers. Trade payables settled under the management of financial institutions are recognised under trade and other payables in the consolidated balance sheet until they are settled, repaid or have expired.

Payables to financial entities as a result of the transfer of trade liabilities are recognised as trade payables advanced by banks under trade and other payables in the consolidated balance sheet.

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When the Group requests a deferral of the initial payment term of trade payables, these debts are derecognised within the original maturity period and a financial liability is recognised under loans and borrowings in the consolidated balance sheet.

The Group presents the net amount of collections and payments relating to reverse factoring in the statement of cash flows, as these collections and payments have a high turnover, as established in the applicable standards

3.9.

INVENTORY

Goods included in Inventory are measured at their production cost, which is determined by adding the costs directly attributable to the product to the purchase price of raw materials and other consumables. To this is also added the part that reasonably corresponds to the indirectly attributable costs of the products, to the extent that such costs correspond to the period of manufacturing, processing or construction, which may have been incurred in placing them for sale and are based on the level of utilization of the normal working capacity of the means of production.

Indirect taxes on inventory are only incorporated into the acquisition price or production cost when they are not directly recoverable from the tax authorities.

Advances to suppliers on account for future inventory supplies are measured at cost.

The measurement of obsolete, defective or slow-moving products is reduced to their potential realization value.

3.10.

TRANSACTIONS IN FOREIGN CURRENCY

Transactions carried out in foreign currency are recorded at the exchange rates current at the time of the transaction. During the year, the differences between the booked exchange rate and the one that is current at the time of receiving or paying are recorded as financial results in the income statement. The Parent Company has not changed the functional currency during the year, which is the euro.

Likewise, on 31 December of each year the conversion of balances receivable or payable originating in a foreign currency is made with the closing exchange rate. The resulting differences in measurement are recorded as financial results in the income statement.

3.11.

INCOME TAX

The current tax expense is determined by adding the current tax expense and the deferred tax. The current tax expense is determined by applying the current tax rate to the financial profit for the year and reducing the result thus obtained by the amount of allowances and general deductions applied during the year.

Deferred tax assets and liabilities come from temporary differences defined as the amounts expected to be payable or recoverable in the future and that derive from the difference between the book value of assets and liabilities and their tax base. Those amounts are recorded by applying the tax rate at which they are expected to be recovered or settled to the temporary difference.

Deferred tax assets also arise as a result of negative tax bases pending compensation and from the credits for tax deductions generated and not applied.

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The corresponding deferred tax liability is recognized for all the temporary tax differences, unless the temporary difference is derived from the initial recognition of goodwill or initial recognition (except in a business combination) of other assets and liabilities in a transaction that, at the time it is carried out, affects neither the tax nor accounting result.

On the other hand, deferred tax assets, identified with deductible temporary differences, are only recognized in the event that it is probable that the Group will have sufficient future financial earnings against which they can be made effective and do not come from initial recognition (except in a business combination) of other assets and liabilities in a transaction that affects neither the financial nor the accounting result. The remaining deferred tax assets (tax loss carryforwards and deductions pending compensation) are only recognized in the event that it is probable that the Group will have sufficient future financial earnings against which they can be made effective.

At each accounting close, recorded deferred taxes are reviewed (both assets and liabilities) with the aim of checking that they are still recoverable, making appropriate adjustments to them, in accordance with the results of the analyses carried out.

The deferred tax expense or income corresponds to the recognition and cancellation of deferred tax liabilities and assets, as well as, where appropriate, by recognizing and allocating to the income statement, the income directly attributable to net equity that may result from accounting for those deductions and other financial benefits that have the economic nature of grants.

3.12.

INCOME AND EXPENSES

Income and expenses are allocated in accordance with the accrual criterion, regardless of the time when the monetary or financial flow derived from them occurs.

Since 1 January 2021 the Group has applied the new recognition and measurement standard 14 Revenue from sales and services in accordance with Royal Decree 1/2021 amending the Spanish General Chart of Accounts.

The effect of applying the new recognition and measurement standard 14 to 2020 revenues and its related trade receivables is not significant.

(i) Sale of goods

The Company manufactures and sells parts and components that are installable in solar panel tracking systems in energy parks. The installable parts and components are designed and manufactured exclusively for the customers; the level of customisation is not significant and they have alternative uses for the Company. Consequently, the revenue is recognised when control of these parts and components is transferred and not over time.

The Company sells the parts on F.O.B or delivery to the customer’s warehouse terms, therefore the revenue is recognised when the customer receives the products at the agreed point. The Company records these sales at the nominal amount, without considering the financial effect thereof, because this effect is not significant.

The Company grants customers a standard product warranty that is recognised in accordance with the indications of the accounting policy for provisions.

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(ii) Rendering of services

The Company performs the service of installing the parts and components that it sells to some of its customers. Installation is not complex or specialised and a high level of integration is not required, therefore the goods and installation are considered separate obligations.

Revenues from this service are recognised over time because the Company’s performance creates an asset controlled by the customers and it has no alternative use for the Company, which has an enforceable right to payment for performance completed up to the reporting date.

Each month the Company invoices the actual stage of completion of the project, measured in units installed in each period, so that at the end of each period the revenue is recognised for the service effectually carried at any time.

3.13.

PROVISIONS AND CONTINGENCIES

The Consolidated Financial Statements include all provisions with respect to which it is estimated that the probability that the obligation will have to be met is greater than the converse situation. Contingent liabilities are not recognized in the consolidated Balance sheet, but information on them is given in the notes, to the extent that they are not considered remote.

Where appropriate, provisions are valued at the actual value of the best possible estimate of the amount necessary to cancel or transfer the obligation, taking into account the information available about the event and its consequences, and recording adjustments that arise from updating of those provisions as a financial expense as it accrues.

3.14.

ENVIRONMENTAL INFORMATION

The costs incurred, where appropriate, from systems, equipment and installations whose purpose is to minimize the environmental impact whilst carrying out the activity, and/or the protection and improvement of the environment are recorded as investments in property, plant and equipment.

The remaining expenses related to the environment, other than the above, are expensed as incurred. The calculation of potential environmental provisions that may arise, is made according to the best estimate of the provision at the time they are known, and under the assumption that insurance policies will not cover any damage caused.

3.15.

CRITERIA USED FOR RECORDING AND VALUING EMPLOYEE EXPENSES

Employee expenses include all salaries and mandatory or voluntary social obligations accrued at all times, recognizing obligations for extra payments, holidays or variable salaries and their associated expenses.

Except for justifiable cause, companies are obliged to compensate their employees when their services cease.

In the absence of any foreseeable need for irregular termination of employment and given that those employees who retire or voluntarily end their services, do not receive severance payments, severance payments, when they arise, are booked to expenses at the time the decision is taken to terminate the employment.

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3.16.

GRANTS, DONATIONS AND BEQUESTS RECEIVED

Non-refundable capital grants are valued at the amount granted, initially being recognized as income directly attributable to net equity and attributable to the results during the period in the proportion of depreciation experienced by the assets financed by those grants, unless it is a question of non-depreciable assets, in which case they will be attributed to the income for the year in which they are sold or derecognized from the inventory.

While they have the features of repayable grants, they are booked as debts that can be converted into grants.

When grants are granted to finance specific expenses, they are booked as income in the year in which the expenses they are financing occur.

3.17.

CRITERIA USED IN TRANSACTIONS BETWEEN RELATED PARTIES

If they exist, transactions between companies in the same Group, regardless of the degree of connection, are accounted for in line with the general rules. The items that are the subject of the transactions carried out will be booked at their fair value initially. Subsequent measurement is made in accordance with the specific rules that may apply.

3.18.

CLASSIFICATION BETWEEN CURRENT AND NON-CURRENT BALANCES

In the attached consolidated balance sheet, balances with a maturity of less than one year from the date of the balance sheet are classed as current, those with a maturity of more than a year are considered non-current.

4.	INTANGIBLE ASSETS

The detail of the items under this heading and transactions throughout the 2021 year is the following:

2021 YEAR


	Initial balance		Additions		Disposals		Transfers		Final Balance
COST
IT applications		368,388		79,792		-15,926		102,300		534,554
Other Intangible assets		530,273		0		-503,829		0		26,444
Consolidated Goodwill		185,807		0		0		0		185,807

TOTAL COST		1,084,468		79,792		-519,755		102,300		746,805

AMORTIZATIONS
IT applications		-181,632		-84,936		15,926		0		-250,642
Other Intangible assets		-92,770		-353		88,882		0		-4,241
Consolidated Goodwill		-18,581		-18,580		0		0		-37,161

TOTAL AMORTIZATIONS		-292,983		-103,869		104,808		0		-292,044

Advances paid to suppliers		62,128		66,302		0		-102,300		26,130

NET TOTAL		853,613		42,225		-414,947		0		480,891

The cost of intangible assets totally amortized is 96,713 euros at the end of the 2021 year.

The Group has not made any impairment adjustments to intangible assets.

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4.1.

CONSOLIDATED GOODWILL

The balance included under this heading corresponds to net goodwill arising from the acquisition of KTRSolar Tech S.L. carried out on 31 January 2020.

Transactions under this heading of the consolidated balance sheet in the 2021 year, were as follows:

2021 YEAR

Initial
balance

Additions

Amortization

Final
Balance

KTR Solar Tech, S.L.

167,226

-18,581

148,645

TOTAL

167,226

-18,581

148,645

5.	PROPERTY, PLANT AND EQUIPMENT

Transactions made under this heading of the consolidated balance sheet in the years 2021, as well as the most significant information that affects this heading, were the following:

2021 YEAR


	Initial balance		Additions		Disposals		Transfers		Final Balance
COST
Land and Constructions		1,590,448		0		-252,768		0		1,337,680
Technical Installations and Machinery		950,216		754,348		-58,742		19,734		1,665,556
Other Installations, Tools and Furniture		1,982,031		258,990		-25,268		0		2,215,753
Other assets		845,841		186,917		-134,907		0		897,851

TOTAL COST		5,368,536		1,200,255		-471,685		19,734		6,116,840

DEPRECIATION
Constructions		-607,812		-57,502		97,228		0		-568,086
Technical Installations and Machinery		-255,403		-157,591		971		0		-412,023
Other Installations, Tools and Furniture		-1,799,325		-52,795		25,268		0		-1,826,852
Other assets		-466,999		-125,868		112,932		0		-479,935

TOTAL DEPRECIATION		-3,129,539		-393,756		236,399		0		-3,286,896

under construction and advances		14,821		60,444		0		-19,734		55,531

NET TOTAL		2,253,818		866,943		-235,286		0		2,885,475

The principal additions for 2021 correspond to the elements acquired to cover the needs associated with the Group’s growth.

There has been no circumstance that has meant a significant impact affecting the current year or future years and that may affect cost estimates for decommissioning, retirement or restoration, useful life and depreciation methods.

The grants received for financing various investment projects relating to property, plant and equipment, are explained in Note 20.

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The cost of property, plant and equipment completely depreciated in the 2021 year is detailed as follows:


Item	2021
Machinery		59,408
Tools		42,396
Other installations		1,595,246
Furniture		62,330
Information processing equipment		87,828
Transport items		179,793

TOTALS		2,027,001

Group policy is to take out insurance policies to cover potential risks that the different elements of property, plant and equipment are subject to. The Parent’s Company Board of Directors reviews on an annual basis, or when an event makes it necessary, the coverage and risks covered. Amounts that must be reasonably covered for the following year are also agreed.

The Group has not made any impairment adjustments to property, plant and equipment.

The details of property, plant and equipment items located abroad at 31 December is as follows:


	Balance at 31/12/2021
COST
Technical Installations and Machinery		1,022,481
Other Installations, Tools and Furniture		387,004
Other assets		365,717

TOTAL COST		1,775,202

DEPRECIATION
Technical Installations and Machinery		-149,445
Other Installations, Tools and Furniture		-49,045
Other assets		-92,126

TOTAL AMORTIZATIONS		-290,616

NET TOTAL		1,484,586

6.	LEASES AND OTHER OPERATIONS OF A SIMILAR NATURE

6.1.

OPERATING LEASES

The Group has been granted the use of various assets under operating leases, the most significant information is the following:


	2021 year
Lease payments recognized as expenses for the period		385,012

The minimum payments amount for operating leases mainly relates to the leasing of both offices and industrial premises where the Group companies carry out their daily activity and the leasing of furniture, equipment and vehicles to cover the needs of different projects. The Group also makes payments to lease apartments in other countries such as Mexico, India, South Africa and China, due to the different projects carried out by the Group in those countries.

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Details of the minimum payments for leasing, broken down by time period are as follows:


	2021
Up to a year		452,380
Between one and five years		731,017
More than five years		0

TOTAL		1,183,397

7.	FINANCIAL ASSETS

7.1.

CATEGORIES OF FINANCIAL ASSETS

Information of long-term financial investments as shown in the consolidated balance sheet is not itemized as it is not material, as it relates mainly to security deposits and amounts to 29,479 euros for 2021.

Information of short-term financial assets on the consolidated balance sheet, classified by category, is shown below:

YEAR 2021


	CLASSES
CATEGORY	Security deposits		Term deposits		Short-term credits, derivatives and others		TOTAL
Financial assets at amortised cost		107,305		0		95,071,074		95,178,379
- Other financial assets		107,305		0		95,071,074		95,178,379
Cash and cash equivalents		0		25,192,953		6,728,419		31,921,372

TOTAL		107,305		25,192,953		101,799,493		127,099,751

The breakdown of the section “Other financial assets” is as follows:


Item	2021
Trade receivables for sales and services		95,062,741
Other debtors		8,333

TOTAL		95,071,074

7.2.

RECLASSIFICATIONS

There were no reclassifications among the different categories of financial assets.

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7.3.

CLASSIFICATION BY MATURITIES

Classification by maturity of the Group’s financial assets of the amounts that mature in each of the years following the end of the year until their final maturity are shown in the following table:

2021 YEAR


Maturity in years
	2022		2023		2024		2025		2026 and beyond		TOTAL
Financial investments
Others		107,305		808		0		0		28,671		136,784
Commercial debtors and other accounts receivable
Net Trade receivables for sales and services		95,062,741		0		0		0		0		95,062,741
Other debtors		8,333		0		0		0		0		8,333
Cash and cash equivalents
Treasury		31,921,372		0		0		0		0		31,921,372

TOTAL		127,099,751		808		0		0		28,671		127,129,230

7.4.

ASSETS ASSIGNED AND ACCEPTED AS COLLATERAL

In 2021 the Group does not have, nor has had financial assets delivered as collateral.

In 2021 the Group does not have third-party assets as collateral although it does have bank guarantees in its favour from suppliers in the amount of 1.289.539,59 euros that expire in the years 2022, 2023, 2024 and 2025.

7.5.

IMPAIRMENT OF VALUE ARISING FROM CREDIT RISK

The following is the analysis of transactions of corrective accounts by asset class, representing impairment losses caused by credit risk in the years 2021:


Asset class	Credits, derivatives and others (1)
	Short-term
Impairment loss at the end of the 2020 year		687
(+) Measurement adjustment for impairment		0
(-) Impairment reversal		-687
(-) Disposals and reductions		0
Impairment loss at the end of the 2021 year		0

(1)

Includes impairment adjustments arising from credit risk in “Commercial debtors and other receivables”

During the 2021 year the Group has considered the impairment registered in 2019 as definitive. Consequently, impairment has been applied to the corresponding account balance.

7.6.

NON-PAYMENT OR NON-COMPLIANCE WITH CONTRACTUAL CONDITIONS

During the year there was no contractual non-compliance which would have granted the lender the right to claim early repayment of its loans.

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8.	FINANCIAL LIABILITIES

8.1.

CATEGORIES OF FINANCIAL LIABILITIES

Long-term financial liabilities on the consolidated balance sheet, classified by category, are shown below:

YEAR 2021

CLASSES

Debts with
financial
institutions

Long-term
derivatives
and others

TOTAL

Financial liabilities at amortised cost

10,000,000

108,995

10,108,995

TOTAL

10,000,000

108,995

10,108,995

Under the heading “Debts with financial institutions” it is included the long term loans obtained during 2021 (see 8.3).

Included under the heading “Long-term derivatives and others” and amounting 108,995 euros is an advance payment received by the Parent Company during the 2019 year relating to a loan granted by the Centre for Industrial Technology Development, the payment of which was earmarked for the year 2020, but which has been delayed until 2022, once the applicable documentation had been provided. Total loan granted amounts to euros 332 thousand. This loan includes a non-repayable allowance (euros 33 thousand), and its maturity extends to 2027.

Information on the short-term financial liabilities on the consolidated balance sheet, classified by category, is shown below:

YEAR 2021

CLASSES

Debts with
financial
institutions

Short-term
derivatives
and others

TOTAL

Debts and payables

30,792,418

82,103,763

112,896,181

TOTAL

30,792,418

82,103,763

112,896,181

The breakdown of the “Short-term derivatives and others” section is as follows:


Item	2021
Suppliers		60,968,236
Creditors		2,330,209
Staff		1,083,913
Customer advances		17,721,405

TOTAL		82,103,763

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8.2.

CLASSIFICATION BY MATURITIES

Classification by maturity of the Group’s financial liabilities of the amounts that mature in each of the years following the end of the year until their final maturity are shown in the following table:

2021 YEAR


Maturity in years
Debts	2022		2023		2024		2025		2026 and beyond		TOTAL
Debts with financial institutions		30,792,418		5,000,000		5,000,000		0		0		40,792,418
Other financial liabilities		0		9,506		19,012		19,012		61,465		108,995
Commercial creditors and other accounts receivable
Suppliers		60,968,236		0		0		0		0		60,968,236
Creditors		2,330,209		0		0		0		0		2,330,209
Staff		1,083,913		0		0		0		0		1,083,913
Customer advances		17,721,405		0		0		0		0		17,721,405

TOTAL		112,896,181		5,009,506		5,019,012		19,012		61,465		123,005,176

8.3.

OTHER INFORMATION

Other significant facts that affect financial liabilities are the following:

•

Insurance: the Group has contracted, and paid for the premiums at maturity, current civil liability insurance that reasonably covers the risks inherent in its activity, as well as at least a significant part of the net book value or, where appropriate, inventory and non-current assets.

•

At the date of preparing these Consolidated Financial Statements no significant disputes that could affect them are known. The credit policy and lines of credit limits are as follows:


Financial entities 2021	Limit granted		Arranged		Available
Total of lines of credit and guarantees		98,839,745		58,942,886		39,896,859
Total lines of confirming		23,900,000		6,986,551		16,913,449
Total multiproduct lines		35,539,008		22,792,329		12,746,679

TOTAL RISK LINES		158,278,753		88,721,766		69,556,987

During the 2021 year the Parent Company received seven loans from financial institutions for a total amount of 15,000,000 euros and 6,500,000 USD (5,732,428 euros). All these loans in euros were agreed with a maturity of three years with annual amortization. The ones in USD were agreed with a maturity of one year, so they all expire during the 2022 year.

During the year there has been a repayment of the principal of loans granted in previous years for the amount of 13,831,992 euros.

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9.	INFORMATION ON THE NATURE AND LEVEL OF RISK FROM FINANCIAL INSTRUMENTS

9.1.

QUALITATIVE INFORMATION

a	MARKET RISK

During 2021 the Group has been operating in the international environment (EU, Chile, Israel, South Africa, Brazil, Mexico, the United States, Japan, Senegal and Egypt) and as such is exposed to exchange rate risk for currency transactions. To minimize this risk, the Group enters into exchange rate insurance contracts to hedge exchange rates when it is considered that these will perform unfavourably.

b	CREDIT RISK

The Group has significant concentrations of credit risk, however, it has policies and procedures to ensure that the products are sold to customers with a satisfactory credit history. In addition it manages the limits on individualized outstanding amounts for each debtor, on the basis of prior knowledge of each one and/or financial reports from third parties, supported by an integrated information management system. The Group also enters into credit insurance contracts to cover risks that may arise.

c	LIQUIDITY RISK

The Group carries out prudent liquidity risk management, based on maintaining adequate cash, and especially on the availability of financing through a sufficient amount of dedicated credit facilities and sufficient capacity to settle market positions. The Group’s objective is to maintain flexibility in financing through the availability of lines of credit if they are needed.

9.2.

QUANTITATIVE INFORMATION

Given the characteristics and specifications of the Group’s product and sector, the future quantification of credit risk will depend on potential failed customer transactions and the percentage that may not be insured. The Group expects that in the conditions described the credit risk is less than 1% of ordinary sales to customers who are not group companies or associates.

Commercial credit risk is not associated with any other financial instrument that shares the same characteristics.

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10.

EQUITY

10.1.

SHARE CAPITAL

At the end of the 2021 year, the Parent Company’s share capital is made up of 2,750 company shares of 100 euros each in nominal value, fully subscribed and paid up.

All the shares that make up the share capital have the same rights, there being no statutory restrictions to their transferability, nor are they admitted to trading.

The Group’s shareholders at 31 December 2021, were as follows:


	Number of shares		% participation
Amixa Capital, S.L.		1,609		58.51	%
Aurica Trackers, S.L.		1,141		41.49	%

10.2.

RESERVES

Reserves at the end of the 2021 year are as follows:


Name	2021
Legal reserve		55,000
Voluntary reserves		12,864,789
Amortized capital reserves		225,000
Reserves in consolidated companies		14,176,251
Other Partner Contributions		1,616,496

TOTAL RESERVES		28,937,536

10.2.1. LEGAL RESERVE

The Legal Reserve, which amounted to the 55,000 euros at the end of 2021 has been allocated in compliance with article 274 of the Consolidated Text of the Commercial Companies Law which establishes that, in any event, a figure equal to 10% of the annual profits should be allocated for this until it reaches at least 20% of the share capital. This reserve, while it does not exceed the indicated limit, may only be allocated to compensate for losses in the event that there are no other reserves available for this purpose.

At the end of the 2021 year the Legal Reserve is fully allocated.

10.2.2. VOLUNTARY RESERVES

Voluntary reserves are freely available and may be distributed if the value of net equity is not or does not become less than the share capital as a result of the distribution. If there are losses from previous years that made the Group’s net equity lower than its share capital, these losses must be offset prior to its distribution.

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The Voluntary Reserve is freely available and as of 31 December 2021 amounts to 12,864,789, euros.

10.2.3. AMORTIZED CAPITAL RESERVES

In January 2018, the General Shareholders’ Meeting of the Parent Company agreed to allocate an unavailable reserve of 225,000 euros in compliance with the provisions of article 332 of the Capital Companies Act for the cases of acquisition of treasury shares.

10.2.4. RESERVES IN CONSOLIDATED COMPANIES

This relates to the variation in Reserves of Consolidated Companies fully consolidated from the date of their incorporation into the Group, in accordance with the distribution shown below:


Entity	2021
STI SOLAR, SpA.		241,909
STINORLAND ISRAEL, LTD.		-40,702
STINORLAND USA, INC.		575,364
STINORLAND SOUTH AFRICA (PTY), LTD.		315,541
STINORLAND BRASIL, LTDA.		11,871,185
STINORLAND MEXICO, S.A. DE C.V.		537,941
STINORLAND INDIA PVT LTD		-66,091
KTRSOLAR TECH, S.L.		741,104

TOTAL RESERVES IN CONSOLIDATED COMPANIES		14,176,251

10.3.

INTERIM DIVIDEND

In its meeting of 23 December 2020, the Parent Company’s Board of Directors approved the payment of an interim dividend for a total amount of 8,000,000 euros charged to the profit for the year 2020.

This amount to be distributed did not exceed the results obtained since the last year by the Parent Company, deducting the estimate for Corporation Tax to be paid on those results, in accordance with the provisions of article 277 of the Consolidated Text of the Capital Companies Law.

The forecast accounting statement prepared in accordance with the legal requirements that reveals the existence of sufficient liquidity for the distribution of the above-mentioned dividend is shown below:


	Thousands of euros
Forecast of distributable profits for 2020:
Projected results net of tax up to 31/12/2020		18,500
Estimate of distributable profits for 2020:		18,500
Interim dividend distributed:		(8,000	)
Treasury forecast for the period between 23/12/2020 and 23/12/2021:
Treasury balances at 23 December 2020		21,886
Projected receivables		82,500
Projected payments, including the dividend on account		(87,500	)
Projected treasury balances at 23 December 2021		16,886

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10.4.

DISTRIBUTION OF THE RESULT OF THE PARENT COMPANY

The Company’s Board of Directors will propose the approval of distribution of the 2021 results to the General Shareholders’ Meeting in the following way:


2021 YEAR
Basis of distribution	Amount
Income statement balance		4,088,400

Total


Distribution	Amount
To Voluntary Reserves		4,088,400

Total

10.5.

NON-CONTROLLING INTEREST

A detailed of the non-controlling interest and its movement is as follows:


Company	December 2020		Results		Additions		Dividends		Conversion Differences		December 2021
Brasil		2,626,506		4,857,793		0		0		354,771		7,839,070
México		4,881		-185		0		0		-137		4,559
KTRSolar Tech		318,288		318,760		0		0		0		637,048

		2.949.675		5,176,368		0		0		354,634		8,480,677

11.

ADJUSTMENTS FOR CHANGE IN VALUE

The breakdown under the heading “Adjustment for change in value” of net equity at the close of the 2021 year is -2,119,973 euros and is derived from the Parent Company’s part of the subsidiaries’ adaptation of their financial statements to euros, the functional currency of the Parent Company.

12.

INVENTORY AND ADVANCES TO SUPPLIERS

At 31 December 2021 inventory is made up of the following:


Description	2021
Work in progress		42,743,086
Advances to suppliers		11,668,859

TOTAL		54,411,945

The Group has taken out insurance policies that reasonably guarantee that the net book value of the inventory can be recovered.

Measurement adjustments to value impairment have not been recorded during either the 2021 year.

During the 2021 year the Group has not operated with emission allowances.

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13.

FOREIGN CURRENCY

The overall amount in euros of the assets and liabilities denominated in foreign currency, including a breakdown of the most significant assets and liabilities classified by currency, is set out in the tables below:


	2021
Assets and liabilities denominated in foreign currency	In euros
Assets and liabilities denominated in foreign currency	USD		BRL		MXN		ZAR		Other currencies
A) NON-CURRENT ASSETS		0		28,431		0		0		0
5. Long-term financial investments		0		28,431		0		0		0
B) CURRENT ASSETS		13,681,340		74,591,592		1,155,090		7,625,686		95,212
3. Commercial debtors and other accounts receivable		11,278,309		49,182,646		1,114,678		7,557,206		15,099
5. Short-term financial investments		0		1,664		0		2,820		3,109
7. Cash and cash equivalents		2,403,031		25,407,282		40,412		65,660		77,004
C) CURRENT LIABILITIES		8,322,746		39,320,927		0		3,278,097		14,244
5. Commercial creditors and other accounts payable		8,322,746		39,320,927		0		3,278,097		14,244

Due to them having little relevance, the following are included in “Other currencies”: ILS (Israeli shekel), CLP (Chilean peso), CNY (Chinese yuan), INR (Indian rupee), AUD (Australian dollar) and JPY (Japanese yen).

The amounts corresponding to the most significant sales, purchases and services received and provided in foreign currency are the following:


	2021 year
Transactions in foreign currency (in euros)			Classification by currency
Transactions in foreign currency (in euros)	Total		USD		BRL		Other currencies
Sales and other income		180,346,417		38,582,294		133,243,461		8,520,662
Purchases and other expenses		142,402,261		34,026,139		103,679,801		4,696,321

The amount of the differences in exchange recognized in the result by classes of financial instruments is shown in the following table:


	2021 year
Item	Settled		Pending
CURRENT ASSETS
3. Trade Receivables for sales and services		897,581		284,423
5. Other financial assets		17,456		0
7. Cash and cash equivalents		-451,880		144,021
CURRENT LIABILITIES
3. Short-term debt		8,013		-35,089
5. Commercial creditors and other accounts payable		-422,567		12,122
TOTAL		48,603		405,477

		454,080

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The amount of the differences in conversion into net equity of the Parent Company recognized in the result is shown in the following table:


	2021
BALANCE AT THE BEGINNING OF THE YEAR		-3,836,335

Variation due to applying the exchange rate		390,963
Variation due to intra-group dividends distributed in 2020		1,325,399

BALANCE AT THE END OF THE YEAR		-2,119,973

14.

TAX SITUATION

14.1.

INCOME TAX

The Group companies do not benefit from the consolidated tax regime.

Reconciliation of the result with the taxable base of Corporation Tax in the 2021 year is the following:


	2021
	Income statement		Income and expenses attributable to net equity
Balance of annual income and expenses		28,772,636		384,367
Income Tax		9,412,076		-2,565
Permanent differences
of individual companies		177,689
of consolidation adjustments		161,500		-390,963
Temporary differences
of individual companies
• Increases		1,676,405		-23,751
• Reductions		-981,494		32.912
of consolidation adjustments
• Increases				0
• Reductions		-59,595		0
Taxable base (tax result)		39,159,217		0

The breakdown of expense/(income) by income tax is the following:

YEAR 2021

2 Variation of deferred tax

1 Current
tax

a) of assets

b) of
liabilities

3 TOTAL
(1+2)

Temporary
Differences

Tax
credit for
industrial
profit (-)

Other
credits

Temporary
Differences

Tax on profit and loss, of which:

9,219,363

-64,423

257,136

9,412,076

- To continuing operations

9,219,363

-64,423

257,136

9,412,076

- To discontinued operations

Tax on net equity, of which:

-2,565

For grants, donations and bequests received

-2,565

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The relationship between the tax expense and accounting profit for the year is as follows:


	2021
Results before tax		38,184,712
Tax at applicable rates		12,562,760
Permanent differences		114,380
Tax Benefits		-4,307,870
DTA not recognized		845,000
Other		197,742

Total Tax expense		9,412,012

The expense of Corporation Tax in the consolidated income statement is broken down into:


	2021
Current tax expense		9,219,363
Deferred tax expense		192,713

Total		9,412,076

The deferred tax expense has been generated by the temporary differences caused by the difference in accounting-tax criteria. In 2021, it mainly comes from the South African subsidiary.

The balances of deferred tax assets and liabilities are detailed in Note 14.3.

The Group submits Corporation Tax statements in the different jurisdictions where it operates. Here, Brazil is the most significant jurisdiction outside Spain. During the 2021 year, in its Brazilian subsidiary, the Group submitted a corporation tax expense of 7,209,997 euros and has an account payable for current tax at 31 December 2021 of 4,144,274 euros.

14.2.

BALANCES WITH TAX AUTHORITIES

The detail of the balances with tax authorities on the consolidated balance sheet at 31 December 2021 and 2020, in euros, is as follows:


	2021
Item	Debtor		Creditor
VAT		6,111,174		20,380
Withholding tax		0		144,915
Other items		339,092		359,303
Social Security Organizations		363		334,659
Corporate tax		1,113,708		5,372,841

TOTAL		7,564,337		6,232,098

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14.3.

DEFERRED TAX ASSETS AND LIABILITIES

Deferred tax assets and liabilities at the end of the 2021 year are as follows:


	2021 year
Item	Debtor		Creditor
Temporary difference – Tax effect of intra-group inventories at year end		0		0
Temporary difference – R&D+i projects financed		100,004		0
Temporary difference – Accelerated amortization/depreciation		0		10,856
Temporary difference – Grants		0		0
Temporary difference – CDTI (Centre for Industrial Technology Development) loan		0		2,061
Temporary difference – Prepayments		0		68,282
Temporary difference – Income received in advance		71,396		0
Temporary difference – Work in progress		0		136,886
Temporary difference – Debtors retention		0		56,814

TOTAL		171,400		274,899

In the 2021 year the Group recorded deferred tax assets related to deductions for R&D+i projects financed pending application, as well as the effect of the sale of merchandise between Group companies.

Similarly, in the same years the Group recorded a deferred tax liability corresponding to the temporary differences originating from the difference in accounting-tax criteria in recording amortizations, work in progress, prepayments, debtors retentions, grants pending to be allocated to income (Note 20) and the loan received from the CDTI.

14.4.

OTHER INFORMATION

According to current legal provisions, settling tax bills cannot be considered final until they have been inspected by the tax authorities or the 4-year statute of limitations has passed. At year end, Group companies keep all years within the statute of limitations period of the last four years open for inspection (or, if applicable, all years since their incorporation). The Parent Company’s Board of Directors considers that any additional tax liability that could arise as a consequence of an inspection would not have a significant effect on the Consolidated Financial Statements.

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15.

INCOME AND EXPENSES

The breakdown of the consolidated income statement attached is as follows:


Breakdown of the income statement	2021 year
1 Net turnover		224,461,953
2 Changes in inventories of finished goods and work in progress		29,104,396
3 Supplies		-190,834,077
a) Purchases, net of refunds and any discount of which:		-172,440,855
- national		-30,785,674
- intra-community (within European Union) acquisitions		-1,408,253
- imports		-140,246,928
b) Work carried out by other companies		-18,393,222
4 Other operating income		57,726
5 Staff expenses:		-12,484,287
a) Wages, salaries and related items		-9,748,076
b) Social charges		-2,736,211
6. Other operating costs:		-10,668,390
a) External services		-9,638,070
b) Taxes		-406,868
c) Other operating costs:		-623,452
7 Other results		132,889

16.

PROVISIONS AND CONTINGENCIES

The Long-term Provisions heading has had the following transactions:

YEAR 2021

Initial balance

Addition

Reversal

Final Balance

Provisions for guarantees

3,095,193

3,977,282

-3,095,193

3,977,282

Total Long-term provisions

3,095,193

3,977,282

-3,095,193

3,977,282

Long-term provisions relate fully to the provision of guarantees calculated on the basis of sales with outstanding guarantees according to the historical data on observed repairs.

During the 2021 year the Group has recorded expenses related to guarantees granted to customers directly in the income statement according to their nature for a total amount of 71,625 euros. The Group keeps a record to manage expenses generated by guarantees provided.

At the date of preparing these financial statements no significant disputes that could affect them are known.

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17.

ENVIRONMENTAL INFORMATION

Given the Group’s business activity, it has no responsibilities, expenses, assets nor provisions and contingencies of an environmental nature that could be significant in relation to equity, financial situation and earnings thereof. For this reason, this consolidated report does not include breakdowns relating to information on environmental matters.

The Parent Company’s Board of Directors states that in the Group’s accounting for these Consolidated Financial Statements there is no item that should be included in the document other than the environmental information pursuant to the indication of the third part of the General Accounting Plan (Royal Decree 1514/2007 of 16 November).

18.

SUBSEQUENT EVENTS

On 10 November 2021 Array Technologies, Inc, a US public company, entered into a purchase agreement with the shareholders of the Parent Company pursuant to which, Array agreed to acquire all of the outstanding equity interests of the Parent Company. The acquisition was subject to the receipt of required regulatory approvals. At 11 January 2022 all regulatory approvals have been granted and Array Technologies acquired 100% of the shares of the Group. On the same date and prior to this acquisition, Soluciones Técnicas Integrales Norland, S.L. acquired non controlling interest of STI Norland Brazil, LTDA (20,01%) and KTRSolar (20%).

There has been no other relevant event after the close of the year that may significantly affect the information contained in these financial statements and that are not reflected therein.

19.

TRANSACTIONS WITH RELATED PARTIES

19.1.

INFORMATION RELATING TO THE BOARD OF DIRECTORS AND SENIOR MANAGEMENT

Members of the Parent Company’s Board of Directors earned remuneration relating to carrying out their functions of 149 thousand euros in 2021.

In 2021, members of the Board of Directors of the Parent Company and senior management of the Group earned 738, 611 and 629 thousand euros respectively, as salaries. These are set out in the section “Wages and Salaries” in the Consolidated Income Statement.

There are no advance payments or credits granted to members of the Board of Directors and nor are there any obligations for pensions or life insurance matters.

During the 2021 the Parent Company paid premiums for civil liability insurance of directors and executives for damage caused in the exercise of functions for net amounts of 3.5 thousand euros in 2021.

In compliance with article 229 of Royal Legislative Decree 1/2010 of 2 July, which proves the Consolidated Text of the Capital Companies Law, at 31 December 2021, no members of the Board of Directors of the Parent Company or any persons related to it have declared any direct or indirect conflict of interest that they may have had with the Group’s interest.

Members of the Board of Directors have not, in that year, carried out on their own, or others’ behalf, any similar or complementary activity as that which constitutes the corporate purpose of the Group.

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This statement does not include, nor considers participations or activities that they may exercise in “companies associated” with this one, as it is considered that these do not affect the provisions of those articles as they are known by all partners and by the Board of Directors of the Parent Company.

19.2.

PARENT COMPANY TRANSACTIONS AND BALANCES WITH OTHER RELATED PARTIES

The credit balance of Amixa Capital, S.L. is 36,300 euros at 31 December 2021.

The volume of operations for Amixa Capital S.L.’s provision of services was 92,420 euros during 2021.

The volume of operations with the entity Enerta, S.L., related to the General Manager of Brazilian affiliate, has provided services to the Group amounting 87,963 euros during 2021.

20.

GRANTS, DONATIONS AND BEQUESTS

The following table shows a breakdown of the amounts and features of grants, gifts and legacies received that appear on the consolidated balance sheet, as well as those apportioned on the consolidated income statement:


Grants, donations and bequests	2021
That appear on the net equity in the consolidated balance sheet (net of tax)		22,401
Allocated on the consolidated income statement ⁽¹⁾		90,638

⁽¹⁾	Including the operating grants incorporated in the result for the year

The analysis of transactions under this heading in the 2021 and 2020 years is as follows:


Grants, donations and bequests on the balance sheet	2021
BALANCE AT THE START OF THE YEAR		28,997

(+) Grants received during the year		23,751
(+) Tax effect on grants received during the year		-6,650
(-) Grants transferred to income during the year		-32,912
(-) Tax effect on Grants transferred to income during the year		9,215

BALANCE AT THE END OF THE YEAR		22,401

In the 2021 year the Australian subsidiary received a non-repayable grant to cover part of the expenses related to commercial events. Moreover, the Parent Company transferred the part corresponding to capital grants received in 2012 discounted for tax at 28% to earnings for the year.

In the 2012 year the Parent Company received two non-repayable grants: one from the Ministry of the Economy and Finance, for 160,866 euros, the result of applying the 18% percentage to the approved investment of 893,698 euros. Additionally, it received 151,930 euros from the Department of Employment, Companies and Innovation of Extremadura, the result of applying 17% to the approved investment of 893,698 euros.

The Parent Company is complying with the legal requirements demanded to obtain and maintain these grants.

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21.

OTHER INFORMATION

21.1.

STAFF

The average number of employees during the year and the number of employees at the end of the year of the Group companies is as follows:


Average number of employees during the course of the year by categories and gender	2021
	F		M
Senior management		1		17
Technicians and administrators		40		100
Commercial, sales people and similar		6		9
Unskilled workers		13		225

Total average employment		60		351


Breakdown of employees in the Group at the end of the year, by category and gender	2021
	F		M
Senior management		1		16
Technicians and administrators		48		122
Commercial, sales people and similar		4		10
Unskilled workers		24		323

Total staff at the end of the year		77		471

At 31 December 2021 the Group employs three people with a disability above 33%.

21.2.

AUDITING FEES

The fees for provision of services by the company KPMG Auditores, S.L., for auditing the Group’s annual accounts for the year ended 31 December 2021, regardless of when they were invoiced, amounted to 60 thousand euros for auditing services.

In addition, other entities affiliated to KPMG International invoiced the Group during the year ended

31 December 2021 fees for auditing services related to the audit of the 2021 annual accounts in the amount of 5 thousand euros, and other tax services for an amount of 6 thousand euros.

During 2021 KPMG Auditores, S.L. has provided services to the Group related to audit services and audit related services amounting to 264 thousand euros corresponding to audits and reviews of financial statements ended in 2020 and 2021 and other works related to the acquisition process mentioned in note 2. Other entities affiliated to KPMG International invoiced the Group 28 thousand euros for the same concepts.

22.

INFORMATION BY SEGMENT

All the Group companies are involved in the same sector of activity which means that all assets and liabilities refer to that sector, as do the amounts in the consolidated income statement.

The breakdown of Group turnover by activity is shown in the following table:

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Market	2021
Internal:		20	%
External:
-EU.		0	%
-Rest		80	%
Total		100	%

23.

RECONCILIATION FROM SPANISH GENERAL CHART OF ACCOUNTS (“SPANISH GAAP”) TO U.S. GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (“U.S. GAAP”)

Accounting Principles

The Consolidated Financial Statements of STI Norland S.L. have been prepared in accordance with Spanish GAAP which differs from U.S. GAAP in certain respects. The following is a summary of the adjustments to results for the year 2021.

Adjustments to the Results for the year included in the Consolidated Income Statement for the year ending 31 December 2021:


	Notes			Euros
Result for the year in conformity with Spanish GAAP					28,772,636
Adjustments on account of:
Historical goodwill amortization		(a	)		18,581
Total impact of all adjustments, net of tax					18,581
Results for the year in conformity with U.S. GAAP					28,791,217

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Adjustments to the Balance sheet as of 31 December 2021 reconciliation:

Euros

Financial Statement Line

Spanish GAAP
Balance

Adjustment

Notes

US GAAP

A) NON-CURRENT ASSETS

3,567,245

739,483

4,306,728

I. Intangible Assets

480,891

739,483

1,220,374

1. Consolidated Goodwill

148,645

-148,645

)

2. Other Intangible assets

332,246

888,128

)

1,220,374

II. Property. plant and equipment

2,885,475

V. Long-term financial investments

29,479

VI. Deferred tax assets

171,400

B) CURRENT ASSETS

189,450,837

II. Inventory

54,411,945

-11,668,859

)

42,743,086

III. Commercial debtors and other accounts receivable

102,724,181

11,668,859

)

114,393,040

V. Short-term financial investments

107,305

VI. Short-term accruals

286,034

VII. Cash and cash equivalents

31,921,372

TOTAL ASSETS

193,018,082

739,483

193,757,565

NET EQUITY AND LIABILITIES

A) NET EQUITY

59,191,908

-171,046

59,020,862

A-1) Equity

52,808,803

-148,645

52,660,157

I. Capital

275,000

III. Reserves

28,937,535

-167,226

28,770,309

VI. Annual result attributed to parent company

23,596,268

18,581

23,614,849

1. Consolidated profit and loss

28,772,636

18,581

)

28,791,217

2. (Profit and loss external partners)

-5,176,368

VII. (Interim dividend)

A-2) Adjustments for change in value

-2,119,973

1. Conversion difference

A-3) Subsidies. gifts and legacies

22,401

-22,401

)

A-4) External partners

8,480,677

B) NON-CURRENT LIABILITIES

14,361,176

546,135

14,907,311

I. Long-term provisions

3,977,282

II. Long-term debt

10,108,995

523,734

10,632,729

2. Debts with credit institutions

10,000,000

4. Other financial liabilities

108,995

523,734

)

632,729

III. Subsidies. gifts. and legacies

22,401

)

22,401

IV. Deferred tax liabilities

274,899

C) CURRENT LIABILITIES

119,464,998

364,394

119,829,392

I. Short-term provisions

118,449

III. Short-term debt

30,792,418

364,394

31,156,812

2. Debts with credit institutions

30,792,418

4. Other financial liabilities

364,394

)

364,394

V. Commercial creditors and other accounts payable

88,335,862

VI. Short-term accruals

218,269

TOTAL NET EQUITY AND LIABILITIES

193.018.082

739.483

193.757.565

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Adjustments to the Cash Flows for the year included in the Consolidated Cash flow statement for the year ending 31 December 2021:

There are no reconciling items in the statement of consolidated cash flows.

a. Historical goodwill and related amortization

Under ASC 805 Business Combinations, when accounting for a transfer of assets or exchange of shares between entities under common control, the receiving entity recognizes the assets and liabilities transferred at the historical cost of the parent with no step-up in basis or recognition of goodwill. Under Spanish GAAP as applied by STI, such transfers are recorded at fair value with any difference in the net assets acquired recognized as goodwill. In accordance with ASC 805 Business Combinations, the historical goodwill recognized by STI has been reversed.

Under Spanish GAAP, goodwill is subject to amortization on a straight-line basis over 10 years. In accordance with US GAAP, goodwill is not amortized; therefore, the goodwill amortization recognized by STI has been reversed.

b. Leases

In accordance with ASC 842 Leases, which has been adopted as if effective on 1 January 2020 the value of the lease liability and right of use asset related to STI’s operating leases, have been presented on the balance sheet. The current and non-current lease liability recognised as at 31 December 2021 was Euros 364,394 and Euros 523,734 respectively. The right of use asset recognised as at 31 December 2021 was Euros 888,128. Under Spanish GAAP, operating leases are accounted as expenses as incurred and the right of use asset and right of use liability are not shown in the consolidated balance sheet.

c. Grants

Under Spanish GAAP, subsidies are initially recognized in equity, net of tax. The subsidies are recycled to the income statement when the expenses which are being subsidized are recognized. In accordance with US GAAP, the equity balance has been reclassified as a liability on the consolidated balance sheet.

d. Alignment of Presentation - Spanish GAAP to U.S. GAAP

Under Spanish GAAP prepayment to suppliers are recognized in Inventories in the Consolidated Balance Sheet. In accordance with U.S. GAAP, the prepayments to suppliers were reclassified to Commercial debtors and other accounts receivable. The adjustment has no net impact on profit for the period or current assets.

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SIGNATURES CERTIFICATE

The Parent Company’s Board of Directors has prepared, at its meeting on 17 March 2022, the Consolidated Financial Statements (made up of the Consolidated Balance Sheet, the Consolidated Income Statement, Statement of Changes in Consolidated Net Equity, Statement of Consolidated Cash Flows and Notes) of the STI Norland Group, whose Parent Company is SOLUCIONES TÉCNICAS INTEGRALES NORLAND, S.L., for the Group year between 1 January 2021 and 31 December 2021 and has drafted (including this certificate) a total of 41 sheets consecutively numbered from 1 to 41, inclusive, signed, as evidence of agreement, by the president of the Board of Directors, Mr. James MacMillan Fusaro by virtue of the authorization granted for this purpose in that meeting and by Mr. Javier Marti-Fluxa, Secretary non-Board member.

/s/ Mr. James MacMillan Fusaro

Mr. James MacMillan Fusaro

President

/s/ Mr. Javier Martí-Fluxá Elías de Tejada

Mr. Javier Martí-Fluxá Elías de Tejada

Secretary non-Board member