Scatec ASA

Scatec Annual Report 2023 5967007LIEEXZXIARK36 2023-01-01 2023-12-31 5967007LIEEXZXIARK36 2023-12-31 5967007LIEEXZXIARK36 2022-12-31 5967007LIEEXZXIARK36 2022-01-01 2022-12-31 5967007LIEEXZXIARK36 2021-12-31 5967007LIEEXZXIARK36 2021-12-31 ifrs-full:IssuedCapitalMember 5967007LIEEXZXIARK36 2022-01-01 2022-12-31 ifrs-full:IssuedCapitalMember 5967007LIEEXZXIARK36 2022-12-31 ifrs-full:IssuedCapitalMember 5967007LIEEXZXIARK36 2021-12-31 ifrs-full:SharePremiumMember 5967007LIEEXZXIARK36 2022-01-01 2022-12-31 ifrs-full:SharePremiumMember 5967007LIEEXZXIARK36 2022-12-31 ifrs-full:SharePremiumMember 5967007LIEEXZXIARK36 2021-12-31 ifrs-full:RetainedEarningsMember 5967007LIEEXZXIARK36 2022-01-01 2022-12-31 ifrs-full:RetainedEarningsMember 5967007LIEEXZXIARK36 2022-12-31 ifrs-full:RetainedEarningsMember 5967007LIEEXZXIARK36 2021-12-31 ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember 5967007LIEEXZXIARK36 2022-01-01 2022-12-31 ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember 5967007LIEEXZXIARK36 2022-12-31 ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember 5967007LIEEXZXIARK36 2021-12-31 ifrs-full:ReserveOfGainsAndLossesOnHedgingInstrumentsThatHedgeInvestmentsInEquityInstrumentsMember 5967007LIEEXZXIARK36 2022-01-01 2022-12-31 ifrs-full:ReserveOfGainsAndLossesOnHedgingInstrumentsThatHedgeInvestmentsInEquityInstrumentsMember 5967007LIEEXZXIARK36 2022-12-31 ifrs-full:ReserveOfGainsAndLossesOnHedgingInstrumentsThatHedgeInvestmentsInEquityInstrumentsMember 5967007LIEEXZXIARK36 2021-12-31 ifrs-full:EquityAttributableToOwnersOfParentMember 5967007LIEEXZXIARK36 2022-01-01 2022-12-31 ifrs-full:EquityAttributableToOwnersOfParentMember 5967007LIEEXZXIARK36 2022-12-31 ifrs-full:EquityAttributableToOwnersOfParentMember 5967007LIEEXZXIARK36 2021-12-31 ifrs-full:NoncontrollingInterestsMember 5967007LIEEXZXIARK36 2022-01-01 2022-12-31 ifrs-full:NoncontrollingInterestsMember 5967007LIEEXZXIARK36 2022-12-31 ifrs-full:NoncontrollingInterestsMember 5967007LIEEXZXIARK36 2023-01-01 2023-12-31 ifrs-full:IssuedCapitalMember 5967007LIEEXZXIARK36 2023-12-31 ifrs-full:IssuedCapitalMember 5967007LIEEXZXIARK36 2023-01-01 2023-12-31 ifrs-full:SharePremiumMember 5967007LIEEXZXIARK36 2023-12-31 ifrs-full:SharePremiumMember 5967007LIEEXZXIARK36 2023-01-01 2023-12-31 ifrs-full:RetainedEarningsMember 5967007LIEEXZXIARK36 2023-12-31 ifrs-full:RetainedEarningsMember 5967007LIEEXZXIARK36 2023-01-01 2023-12-31 ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember 5967007LIEEXZXIARK36 2023-12-31 ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember 5967007LIEEXZXIARK36 2023-01-01 2023-12-31 ifrs-full:ReserveOfGainsAndLossesOnHedgingInstrumentsThatHedgeInvestmentsInEquityInstrumentsMember 5967007LIEEXZXIARK36 2023-12-31 ifrs-full:ReserveOfGainsAndLossesOnHedgingInstrumentsThatHedgeInvestmentsInEquityInstrumentsMember 5967007LIEEXZXIARK36 2023-01-01 2023-12-31 ifrs-full:EquityAttributableToOwnersOfParentMember 5967007LIEEXZXIARK36 2023-12-31 ifrs-full:EquityAttributableToOwnersOfParentMember 5967007LIEEXZXIARK36 2023-01-01 2023-12-31 ifrs-full:NoncontrollingInterestsMember 5967007LIEEXZXIARK36 2023-12-31 ifrs-full:NoncontrollingInterestsMember iso4217:NOK iso4217:NOK xbrli:shares Annual R eport 2023 2 Scatec ASA - Annual Report 2023 3 4 Scatec ASA - Annual Report 2023 5 6 Scatec ASA - Annual Report 2023 7 8 Scatec ASA - Annual Report 2023 9 10 Scatec ASA - Annual Report 2023 11 12 Scatec ASA - Annual Report 2023 13 14 Scatec ASA - Annual Report 2023 15 16 Scatec ASA - Annual Report 2023 17 18 Scatec ASA - Annual Report 2023 19 20 Scatec ASA - Annual Report 2023 21 22 Scatec ASA - Annual Report 2023 23 24 Scatec ASA - Annual Report 2023 25 26 Scatec ASA - Annual Report 2023 27 28 Scatec ASA - Annual Report 2023 29 30 Report from the Board of Directors Scatec ASA - Annual Report 2023 31 Highlights 2023 ● Proportionate revenues of NOK 12,714 million (5,133) and EBITDA of NOK 3,845 million (2,550) ¹⁾ ● All time high D&C revenues of NOK 8.2 billion and gross margin of 12% from 40% capacity increase ● Announced self-funded growth plan targeting annual equity investments of NOK 500 – 750 million ● Divested Upington, Mozambique, Argentina, and Rwanda in line with strategy ● Raised USD 202 million of funding + USD 65 million in guarantees for Release ● Secured further growth for 2024 with NOK 350 million equity investment and NOK 2.5 billion D&C revenues ● Awarded 103 MW/412 GWh battery project in South Africa and 60 MW expansion in Botswana Proportionate revenues and EBITDA by year Key figures NOK million FY 2023 FY 2022 Proportionate Financials ²⁾ Total revenues and other income 12,714 5,133 Power Production⁴⁾ 4,113 3,697 Services 373 312 Development & Construction 8,177 1,069 Corporate 50 56 EBITDA 3,845 2,550 Power Production 3,216 2,835 Services 118 74 Development & Construction 672 -221 Corporate -162 -138 Operating profit (EBIT) 2,152 460 Power Production 1,631 918 Services 112 68 Development & Construction 607 -358 Corporate -198 -167 Net interest- bearing debt ²⁾ 20,786 18,215 Power production (GWh) 3,615 3,898 Scatec share of distribution from operation companies 914 1,231 Consolidated Financials Revenues and other income 4,721 3,751 EBITDA ²⁾ 3,567 2,555 Operating profit (EBIT) 2,625 723 Profit/(loss) 1,122 -1,228 Net interest- bearing debt ²⁾ 23,284 19,578 Basic earnings per share (NOK) 3.95 -8.40 Power production (GWh) ³⁾ 8,540 9,381 1) Amounts from same period last year in brackets 2) See Alternative Performance Measures appendix for definition 3) Production volume on a 100% basis from all entities, including JV companies 4) Revenue from power production for 2022 has been adjusted due to change in accounting policy as disclosed in Note 31 32 Introduction Scatec is a leading renewable energy provider, accelerating access to reliable and affordable clean energy in emerging markets. The Company develops, builds, owns and operates renewable energy and has 4.2 GW in operation and under construction across four continents at year end 2023. Additionally, Scatec started construction of 0.3 GW in the first quarter 2024. Scatec is committed to grow its renewable energy capacity, delivered by passionate employees and partners who are driven by a common vision of ‘Improving our Future’. 2023 Summary Business strategy and growth ● Aligned growth rate with internal funding capacity, targeting NOK 500-750 million of annual equity investments in renewable energy ● Started commercial operation of Kenhardt, with 540 MW solar + 225 MW/ 1,140 MWh battery storage ● Divested 258 MW solar in South Africa, 40 MW solar in Mozambique and 117 MW solar in Argentina ● Reached financial close and started initial construction work for 273 MW Grootfontein in South Africa, and 60 MW first phase in Botswana ● Awarded tariff for the 103 MW/ 412 MWh battery projects in South Africa and expanded the Botswana solar project to 120 MW Operational ● Total proportionate power production of 3,615 GWh generating an EBITDA of NOK 3.2 billion including gain on asset sales ● The Philippines affected by el Niño and regulatory changes in the ancillary services market ● Started selling power in the merchant market from the Progressovka power plant in Ukraine ● Implemented NOK 150 million cost reduction programme ● Refinanced USD 193 million bridge to bond with new NOK 1,000 million bond and USD 100 million term loan Organisation and people ● Hans Jakob Hegge started as new CFO on 1 March 2023 ● Permanent workforce reduced to 680 (778) employees resulting from the cost reduction programme ● 49 different nationalities, a truly global company ● 29% female employees in management positions at the end of 2023 ● 2023 Statement on Equality and Non-discrimination is available on the corporate website Climate ● Annual GHG emissions avoided from our power plants reached 4.0 million tonnes (100%) ● On the ‘A’ List for tackling climate change by the Carbon Disclosure Project (CDP) ● Climate targets approved by SBTi in January 2023 – target to minimise direct emissions by 2030 and net zero across the value chain by 2040 ● Net Zero roadmap published detailing the seven key initiatives required to reach our climate targets EU Taxonomy 1) and reporting • The majority of revenues, opex and capex are derived from EU Taxonomy eligible activities • Scatec’s revenue is 94%, capex 97% and ppex 97% aligned to the Taxonomy • Quarterly reporting on key ESG indicators externally • Received ‘A+’ score in ESG reporting by Position Green • Limited assurance on all GRI indicators according to ISAE 3000 HSSE • Delivered 9.2 million working hours with no fatalities or serious injuries during 2023 • The lost time incident frequency rate (LTIF) was 0.9 per million working hours resulting from eight incidents • Certified to ISO 9001, 45001 and 14001 by DNV Human rights/supply chain ● Addressed forced labour concerns in China including collaboration with key suppliers on traceability ● Transparency Act statement published detailing Scatec’s work with human rights ● EcoVadis supplier management programme implemented to screen suppliers of key procurement categories ● 92 grievances received, 86% were resolved and the remaining open grievances are being investigated Anti-corruption and Compliance ● Scatec provides mandatory anti-corruption and code of conduct training to all employees. 100% of all employees in-scope have completed the training 1) For details, please refer to our EU Taxonomy Report 20223 available under ESG resources on the Company’s website Scatec ASA - Annual Report 2023 33 Group – Proportionate Financials Please refer to Note 3 for details of the segment financials. Power Production Power Production revenues increased to NOK 4,113 million (3,697) in 2023, reflecting sale of electricity from our solar, hydro and wind power plants in Europe, Africa, South-east Asia, and Latin America. Kenhardt reaching commercial operation in Q4 contributed positively to the increase. The revenues also include a gain of NOK 348 million from the sale of project assets in South Africa and Mozambique, insurance proceeds of NOK 39 million in Ukraine, and foreign currency effects. Lower revenues in the Philippines due to weaker hydrology and lower contribution from ancillary services contributed negatively. Operating expenses were NOK 896 million (834) for the year, negatively impacted by foreign currency effects and an accrual of NOK 40 million for a claim from the National Irrigation Administration in the Philippines related to water fee charges for previous periods for the lease of the Magat Dam. Underlying EBITDA increase was NOK 93 million for the year, adjusted for divestments and new generation capacity added. Full year power Production EBITDA increased to NOK 3,216 million ( 2,835 ) explained by the factors above. EBIT increased to NOK 1,631 million (916), impacted by an impairment of NOK 350 million related to the divested power plant in Argentina, compared to NOK 770 million in 2022 triggered by the Russian invasion of Ukraine. Power production had 3,549 MW installed capacity at year-end and delivered 3,615 GWh on a proportionate basis, compared to 3,898 GWh last year. The reduction is explained by the divestments of Upington in South Africa, Guañizuil in Argentina and Mocuba in Mozambique, as well as, lower production in the Philippines due to the effects of el Niño. This was partly offset by additional power production from Kenhardt in South Africa and increased production in Ukraine. The underlying reduction in power production was 147 GWh, mainly driven by the Philippines. The plant availability in 2023 was close to 100%, with no Lost Time Incidents. For further details on financial results on a country-by-country basis please refer to Scatec’s Q1 to Q4 2023 historical financial information’ published on Scatec’s web page. Development & Construction (D&C) Development & Construction delivered strong results after reaching all-time high revenues of NOK 8,177 million (1,069). 2023 was characterised by high construction activities in South Africa, Brazil and Pakistan, and a solid gross margin of 12 percent. Construction of Kenhardt, the largest project in Scatec’s history, was finalised and the plants started commercial operation in the fourth quarter. The plants delivered solid operational performance with no Lost Time Incidents. Total operating expenses were NOK 322 million (327) in 2023. This includes NOK 248 (237) million for early-stage project development and NOK 74 (90) million in construction activity. Development and construction EBITDA for the year was NOK 672 million, a solid increase from a negative EBITDA of NOK -221 million year-on-year explained by the factors above. Services Services revenues increased to NOK 373 million (312) and operating expenses to NOK 260 million (238), mainly driven by higher performance bonus in South Africa related to Operations and Maintenance Services, positive net foreign currency effects , higher Asset Management revenues and mobilization fees provided by the projects under development and construction. Corporate Corporate revenues were NOK 50 million (56) in 2023, while operating expenses were NOK 213 million (194). The change in operating expenses was mainly driven by the non-recurring costs related to the cost efficiency programme incurred in the second quarter. Consolidated financial statements Consolidated income statement NOK million 2023 2022 Revenues 3,399 3,002 Net gain/(loss) from sale of project assets 1,276 - Net income/(loss) from JV and associated companies 46 749 EBITDA 3,567 2,555 Operating profit (EBIT) 2,625 723 Profit before income tax 1,008 -1,095 Profit/(loss) for the period 1,122 -1,228 Profit/(loss) to Scatec 628 -1,334 Profit/(loss) to non-controlling interests 494 106 Revenues Revenues reached NOK 4,721 million (3,751) in 2023. NOK 3,399 million was generated from power sales and the gain from sale of project assets of NOK 1,276 million mainly relates to the divestment of Upington, South Africa, and 32% of the shares in Release. 34 Operating Profit EBITDA increased to NOK 3,567 million compared to 2,555 million last year. The EBITDA was positively impacted by the divestments while lower net income from the Philippines and impairment of the power plant in Argentina of NOK 350 million impacted negatively. Depreciation, amortisation and impairment amounted to NOK 942 million in 2023, compared to NOK 1,832 million in 2022. The decrease is mainly explained by impairments related to Ukraine in 2022. Refer to Note 13 Impairment for further details. Operating profit (EBIT) ended at NOK 2,625 million in 2023, up from NOK 723 million in 2022 explained by the factors as above. Net financial items NOK million 2023 2022 Interest and other financial income 415 115 Interest and other financial expenses -1,977 -1,666 Net foreign exchange gains/(losses) -56 -268 Net financial expenses -1,617 -1,818 Interest and other financial income of NOK 415 million (115) includes interest income on cash balances and gain on the USD/ ZAR currency hedging contracts for Kenhardt of NOK 246 million. Interest and other financial expenses of NOK 1,977 million (1,666) consist of interest expenses of NOK 1,724 million (1,424), and other financial expenses of NOK 253 million (243). In addition, the amount in 2022 includes a loss of NOK 89 million on the USD/ZAR currency hedging contracts related to Kenhardt. The increase in interest expense for the year is mainly driven by higher interest expenses on the corporate debt which is partly offset by lower interest expenses on non-recourse project level debt due to disposal of the Upington solar plants in the second quarter 2023. The net foreign exchange losses were NOK 56 million (268) for the year are primarily unrealised losses from translation of monetary assets and liabilities denominated in foreign currencies. Profit before tax and net profit The Group has recognized a tax benefit of NOK 114 million in 2023, compared to a tax expense of NOK 132 million last year. The decrease in tax expense is driven by a tax benefit attributable to Kenhardt (NOK 457 million) which qualified for the Enhanced renewable energy tax incentive after reaching their Commercial Operating dates in November and December 2023. For further details, refer to Note 7 Tax. Net profit for the year was NOK 1,122 million compared to a loss of NOK 1,228 million last year. Non-controlling interests (NCI) represent equity-investors in power plants co-owned by Scatec. The allocation of profits between NCI and Scatec is impacted by the fact that NCI primarily own shares in the power plants while Scatec also carries the cost of project development, construction, operation & maintenance and corporate functions. Net income from JVs and associated companies represent Scatec’s share of the investment in the JVs and are fully allocated to Scatec. For further details, refer to Note 29 Non-controlling interests. Other comprehensive income, which comprises items that may subsequently be reclassified to profit or loss, amounted to negative NOK 30 million (986) in 2023. This relates to after-tax net movement of cash flow hedges of negative NOK 223 million (514) and positive foreign currency translation differences of NOK 194 million (472). Total comprehensive income was NOK 1,092 million (-242) for 2023 of which NOK 704 million (-648) was attributable to Scatec, while NOK 389 (406) million is attributable to non-controlling interests. Consolidated statement of cash flow Cash flow NOK million 2023 2022 Net cash flow from operating activities 2,184 1,637 Net cash flow from investing activities -6,575 -2,287 Net cash flow from financing activities 3,294 221 Net increase/(decrease) in cash and cash equivalents -1,097 -428 Net cash flow from consolidated operating activities amounted to NOK 2,184 million (1,637) in 2023, compared to EBITDA of NOK 3,567 million (2,555). Net cash flow from consolidated investing activities was negative NOK 6,575 million (2,287) mainly driven by investments in property, plant and equipment. Proceeds from sale of project assets had a positive impact of NOK 390 million in the year. Net cash flow from financing activities was positive NOK 3,294 million (221). The Group drew down on debt related to projects in South Africa and Pakistan and received project funding from non- controlling interests. Further, the cash flow was impacted by drawdown on the Revolving Credit Facility of USD 70 million, payment of interests and repayment of non-recourse financing in project companies. Cash and cash equivalents were NOK 3,101 million (4,132) at year- end 2023 of which NOK 977 million was free cash at group level. The total cash in power plant companies in operation and under Scatec ASA - Annual Report 2023 35 construction was NOK 1,922 million (2,166), while other restricted cash was NOK 203 million (223). Proportionate share of cash flow to equity Scatec’s “proportionate share of cash flow to equity”, is an alternative performance measure that seeks to estimate the Group’s ability to generate funds for equity investments in new power plant projects and/or for shareholder dividends over time. Cash flow to equity for all segments reached NOK 1,600 million compared to NOK 1,050 million last year. NOK million 2023 2022 Power production 1,663 1,487 Services 96 58 Development & Construction 555 -149 Corporate -716 -347 Sum 1,600 1,050 The cash flow to equity for Power Production increased to NOK 1,663 million in 2023 compared to NOK 1,487 million last year. 2023 was positively impacted by divestments of the Mocuba and Upington plants while 2022 included proceeds of NOK 363 million from refinancing. The increase in cash flow to equity in Services is mainly explained by higher EBITDA in the segment. The cash flow to equity in the D&C segment reached NOK 555 million (-149) driven by high EBITDA in the projects under construction in South Africa, Brazil and Pakistan. The cash flow to equity in the Corporate segment decreased compared to last year, mainly explained by increased interest expenses and higher debt repayments on corporate funding for the year. Consolidated statement of financial position Assets NOK million 2023 2022 Property, plant and equipment and intangible assets 22,752 18,068 Investments in JV and associated companies 12,368 10,674 Other non-current assets 1,790 1,476 Total non-current assets 36,911 30,218 Other current assets 1,646 2,380 Cash and cash equivalents 3,101 4,132 Assets held for sale 138 - Total current assets 4,884 6,512 Total assets 41,795 36,730 Total assets amounted to NOK 41,795 million at year-end 2023, up from NOK 36,730 million at the end of 2022. Non-current assets totaled NOK 36,911 million (30,218). The increase is primarily driven by construction activities in Pakistan and the new Kenhardt plant. The increase is partly offset by the NOK 1.8 billion disposal of Upington in the second quarter and depreciation of NOK 853 million for the year. See Note 10 Property, plant and equipment and Note 14 Investments in joint venture and associated companies. The balance of investments in JVs and associated companies increased due to investments related to the Mendubim project in Brazil and Release being classified as a joint venture. The effects were partly offset by distributions of dividends. See Note 14 Investments in joint venture and associated companies for full reconciliation. Current assets amounted to NOK 4,884 million (6,512). Other current assets decreased at year-end with reversal of project accruals as the construction of Kenhardt was completed in the fourth quarter of 2023. See the consolidated statement of cash flows for further details and Note 15 Cash, cash equivalents for a detailed breakdown of cash balances as well as an overview of movement of cash at the Recourse Group level. Equity and liabilities NOK million 2023 2022 Equity 10,570 8,803 Non-current non-recourse project financing 15,026 13,297 Non-current corporate financing 7,947 7,987 Other non-current liabilities 2,617 2,604 Total non-current liabilities 25,590 23,888 Current non-recourse project financing 1,931 1,963 Current corporate financing 1,132 - Trade payables and other current liabilities 2,443 2,076 Liabilities of disposal group held for sale 129 - Total current liabilities 5,635 4,039 Total liabilities 31,225 27,927 Total equity and liabilities 41,795 36,730 Book equity ratio 25% 24% Total equity increased to NOK 10,570 million (8,803). The change in equity is driven by the total comprehensive income for the period and capital increase from non-controlling interest. For further details see consolidated statement of changes in equity. Corporate financing consists of unsecured green bonds, secured green term loans and financing secured in relation to the acquisition of SN Power in 2021. Changes in 2023 is primarily due to refinancing of Bridge-to-Bond facility, drawdown of the Revolving Credit Facility and foreign currency translation. See Note 23 Corporate Financing for further details. 36 Total non-recourse financing reached NOK 17 billion at year-end after drawdown of NOK 5.4 billion in project debt in South Africa and NOK 630 million in Pakistan in the year. This was partially offset by the sale of Upington including NOK 2.2 billion in non- recourse financing and repayments. See Note 23 Corporate Financing and 24 Non-recourse Financing for further details. Parent Company Scatec ASA prepares its financial statements according to Norwegian Generally Accepted Accounting Principles (NGAAP). Scatec ASA is a holding company comprising parts of corporate services, management and group finance. In addition, Scatec ASA provides certain services related to project development and construction for its subsidiaries. Scatec ASA reported revenues of NOK 6,271 million and operating loss (EBIT) of NOK 169 million in 2023, compared to revenues of NOK 751 million and operating loss (EBIT) of NOK 665 million in 2022. The increase in revenues is driven by high construction activity in South Africa, Pakistan and Brazil. All revenues are group internal and based on agreements established between Scatec ASA and its subsidiaries, joint ventures and associated companies. Cost of sales and operating expenses was NOK 6,043 million (1,267). The increase is driven by higher construction activity. Total interest and other financial income were NOK 392 million (1,570) related to interest income on shareholder loans and dividends received. The high dividend in 2022 was driven by proceeds from refinancing. External interest expense was NOK 638 million (346). In 2022 the financial expenses included an impairment of investments and receivables in Ukraine of NOK 948 million. Profit after tax was NOK -399 million, compared to a profit after tax of NOK -480 million in 2022. Total equity for the parent company Scatec ASA was NOK 10,296 million at 31 December 2023, up from NOK 10,265 million in 2022. Total assets was NOK 21,070 million at 31 December 2023, compared to 20,591 last year. Overview of project portfolio Project stage 2023 Capacity (MW) 2022 Capacity (MW) In operation 3,549 3,375 Under construction 690 1,267 Project backlog 876 953 Project pipeline 11,091 15,712 Total 16,206 21,307 Total annual production from the 4,728 MW in operation, under construction and in backlog, excluding green hydrogen and BESS, is expected to reach about 12,600 GWh (on 100% basis). Projects under construction and backlog Project backlog is defined as projects with a secure off-take agreement and assessed to have more than 90 percent likelihood of reaching financial close. When financial close has been obtained and notice to proceed has been issued, the project moves into construction generally with Scatec as the turn-key Engineering, Procurement & Construction (EPC) provider. Prior to financial close, environmental and social baseline studies or impact assessments (ESIAs) are conducted to identify potential environmental and social risks and impacts of the Company’s activities. During construction Scatec is compensated for early- stage development expenditures and construction services through a Development & Construction (D&C) margin. The D&C margin is used as a funding source for Scatec’s equity investment in the project company. Key events during 2023 were commercial operation start for Kenhardt in South Africa, financial close for the 273 MW Grootfontein solar project, extension of the Mmadinare Solar Complex in Botswana to 120 MW and financial close for the first 60 MW, award of the 103 MW/412 GWh Mogobe battery energy storage project in South Africa, and discontinued development of 240 MW of the 360 MW Tunisia portfolio. For more information about the projects under construction and in backlog, refer to our website: scatec.com/investor. Under construction Sukkur, Pakistan 150 MW solar At year end 2023, the construction of the Sukkur project in Pakistan approached final stages and started commercial operation on 31 January 2024. Power from the solar power plant will be sold to Pakistan Authorities under a 25-year PPA. Capex for the project is approximately USD 110 million, financed by approximately 70% non-recourse project finance debt and 30% equity from the sponsors. Scatec ASA - Annual Report 2023 37 Scatec owns 75% of the project and provide EPC services as well as Operation & Maintenance (O&M) and Asset Management (AM) services to the power plants. Mendubim, Brazil 531 MW solar The construction activities related to the Mendubim solar power plant were near completion at year end 2023 and started commercial operation 8 March 2024. The 20-year PPA signed with Alunorte, with start-up 1 January 2025, will cover approximately 60% of the power produced with the remaining volume to be sold in the Brazilian power market. The estimated total capital expenditure for the project is USD 430 million and is financed by a mix of non-recourse project debt and equity from partners. All three partners; Scatec, Equinor and Hydro Rein, have an equal economic interest of 33.3% 1) in the power plant and will jointly provide EPC services. Scatec will further provide O&M as well as AM services to the power plants together with Equinor. Release Release has 8.7 MW of solar under construction in Mexico. Backlog Construction start of the backlog projects relies on final governmental approval processes, completion of project finance processes and component price development. Grootfontein, South Africa, 273 MW solar In October 2021, Scatec was awarded preferred bidder status on three solar projects totalling 273 MW by the Department of Mineral Resources and Energy in South Africa under the Renewable Energy Independent Power Producers Procurement Programme (REIPPPP). In December 2022, the power purchase and implementation agreements for the projects were signed, and in June 2023 the projects reached financial close. At the end of the fourth quarter, Scatec started enabling works for the three projects, and construction activities will be ramped up for all disciplines in the first quarter of 2024. The power will be sold under 20-year PPAs. Scatec will own 51% of the equity in the projects with H1 Holdings, our local Black Economic Empowerment partner owning 46.5% and a Community Trust holding 2.5%. Scatec will be the EPC provider and provide O&M as well as AM services to the power plants. Tunisia portfolio, 120 MW solar Since the fourth quarter 2022, Scatec has engaged with the Tunisian authorities to negotiate the PPA tariff in order to improve the economics of the three solar projects awarded in 2019, totalling 360 MW. Based on a review of the project portfolio and in close dialogue with the Tunisian government, Scatec decided to discontinue development of 240 MW in the fourth quarter of 2023. The remaining 120 MW hold 20-year PPAs with Société Tunisienne de l’Electricité et du Gaz (STEG) and will continue to be developed based on more favourable project economics. Scatec currently owns 100% of the projects and will provide EPC, O&M and AM services to the project company. Scatec is aiming to reduce its ownership in the project by inviting equity partners. Egypt, 100 MW green hydrogen facility Scatec has partnered with Fertiglobe, The Sovereign Fund of Egypt and Orascom Construction to develop, build, own and operate a 100 MW green hydrogen production facility in Ain Sokhna in Egypt. When the project is fully developed the facility will be powered by 260 MW of solar and wind capacity. The partners have signed a term sheet with Fertiglobe for a 20- year offtake agreement for 100% of the volumes produced. Fertiglobe will use the green hydrogen as feedstock for production of green ammonia. Execution of the project will depend on securing offtake for the green ammonia and the timing of this depends on the development of market mechanisms and demand for green ammonia. Scatec will be the lead equity investor in the project with an ownership share of 52% and provide EPC services in collaboration with Orascom Construction. Scatec will further provide O&M and AM services for the project alongside key technology providers and project partners. Mmadinare Solar Complex, Botswana, 120 MW solar In August 2022, Scatec signed a binding 25-year PPA with Botswana Power Corporation, a state-owned utility in Botswana, for a 60 MW solar power plant at Selebi-Phikwe. During the third quarter 2023 Scatec was awarded an additional 25-year PPA with Botswana Power Corporation for another 60 MW. In December 2023, Scatec reached financial close for the first 60 MW and have started preliminary site activities. Construction is expected to ramp up in the first quarter 2024. The remaining 60 MW will be developed in a second phase with financial close and 1) In conjunction with the start of commercial operations, Alunorte has exercised its call option for an economic interest of 10% in Mendubim. Following the exercise of the option, Scatec, Equinor and Hydro Rein hold an equal economic interest of 30%. 38 construction start also expected in 2024. The solar projects are the first of its kind in the country. Scatec currently owns 100% of the projects, and will provide EPC services, as well as Asset Management and O&M services. Scatec is aiming to reduce its ownership in the projects by inviting equity partners. Mogobe, South Africa, 103 MW BESS In November 2023, Scatec was awarded preferred bidder status for a battery energy storage project totalling 103 MW/ 412 MWh by the Department of Mineral Resources and Energy in South Africa under the Battery Energy Storage Independent Power Producer Procurement Programme (BESIPPPP). The power will be dispatched under a 15-year PPA. Scatec will own 51% of the equity in the project with Perpetua Holding owning 46.5% and a Community Trust holding 2.5%. Scatec will be the engineering, procurement, and construction (EPC) provider and provide operations & maintenance (O&M), as well as asset management (AM) services to the project. According to the Department of Mineral Resources and Energy, commercial close is expected by June 2024 . Pipeline Location 2023 Capacity (MW) 2022 Capacity (MW) Asia 834 4,800 Latin America/Europe 2,161 3,315 Middle East and North Africa 2,270 2,560 Sub-Saharan Africa 5,826 5,037 Total pipeline 11,091 15,712 In addition to the projects in backlog Scatec holds a solid pipeline of projects totalling 11.1 GW across technologies, down from 15.7 GW at the end of last year. This is due to high grading of the pipeline with focus on project locations, shorter timelines, maturity and value creation. Less attractive projects, mainly within offshore wind and hydro, have been taken out and new attractive solar projects in core regions have been added. Consequently, the share of solar in the pipeline has increased to 59%, and the share of projects in our focus markets to above 90%. Solution 2023 Capacity (MW) 2022 Capacity (MW) Solar 6,571 5,005 Wind 2,280 6,223 Hydro 700 2,684 Green Hydrogen 1) 1,240 1,500 Release 300 300 Total 11,091 15,712 The pipeline projects are in different stages of development and maturity, but they are all typically in markets with an established government framework for renewables and where project finance is available. The project sites and concessions have been secured and negotiations related to power sales and other project implementation agreements are in various stages of completion. For Scatec’s policy for research and development expenses, please refer to Note 10 Property, plant and equipment for further information. Other matters Russian war in Ukraine After Russia’s attack on Ukraine the war has been going on for two years. Scatec currently operates five solar power plants with a total capacity of 336 MW, located in the central and southern parts of the country. After a remarkable effort by our employees, approximately 95% of the power plants owned and operated by Scatec are intact and available. Revenues from power production in Ukraine have only been recognised in accordance with actual paid amounts since March 2022. In 2023, proportionate revenues and EBITDA in Ukraine amounted to NOK 371 million and NOK 289 million respectively. The payment level reached 66%. In June 2023, Scatec started selling power from the Progressovka power plant in the merchant market, reaching a payment level of 100 percent, with revenues being settled in full every ten days. The decision to sell into the spot market was made based on changes in the local law which enabled Scatec to pause the PPA, while retaining the option to re-enter the PPA at a later stage. The Russian invasion triggered an impairment assessment in 2022 and Scatec recognised an impairment charge of NOK 770 million in the proportionate financials (NOK 816 million in the consolidated financials) related to tangible and intangible assets in Ukraine. Per 31 December 2023 the impairment tests have been updated with new information on cash flow assumptions and discount rates, however no further impairments have been recognised. Refer to Note 13 Impairment for details on the impairment of the plants. As of 31 December 2023, the non-recourse financing in Ukraine of NOK 865 million, continues to be classified as current in the consolidated financials as the power plant companies are in breach with certain covenants. A total of NOK 165 million of the debt has been repaid in 2023. Scatec has continuous and constructive dialogue with the lenders and the parties have agreed on a non-formalised standstill. 1) Renewable capacity for use in production of green hydrogen and green ammonia Scatec ASA - Annual Report 2023 39 Potential PPA changes and overdue receivables in Honduras Scatec has over time experienced delayed payments from the state owned off-taker in Honduras (ENEE) and overdue receivables have accumulated to a varying degree since 2020. In 2023, ENEE has continued to settle outstanding receivables and paid a total of approximately NOK 180 million, leaving the balance at NOK 87 million as of year-end. In 2022, a new Energy law came into force as introduced by the new Government of Honduras. In accordance with the new law, the state owned off-taker has proposed certain changes to the existing PPAs for all renewable power plants in the country, including Scatec’s solar plants Agua Fria and Los Prados. The negotiations of the PPAs were ongoing in 2023 and on January 31, 2024, amendments to the PPA were signed. Refer to note 32 Subsequent events for further information. Covenants Except for Ukraine, Scatec was in compliance with financial covenants for both the recourse and non-recourse debt on 31 December 2023. Refer to Note 23 Corporate financing and Note 24 Non-recourse financing for more details. Organisation Scatec has an international and diverse workforce which at the end of 2023 was represented by 49 nationalities and 680 employees across four continents. In May 2023, the Company announced a cost reduction programme, with a target to reduce operating expenses by NOK 150 million from the first quarter 2024 compared to the first quarter 2023. The programme was completed according to plan. As a result, the full-time workforce was reduced in 2023. In addition, Scatec had 171 short-term employees and 42 consultants supporting its functions. The organisation remains flexible, and the workforce continues to deliver strong results and growth. The Company’s reporting on diversity and equal opportunity is available in the Statement of equality and non-discrimination on https://scatec.com/sustainability/esg-resources/ . For further information on work environment, including HSSE, statistics refer to the Company’s 2023 ESG Performance report. Risk factors and risk management In Scatec, risk management is an integrated part of our operating system. The Company has over the last years systemised the approach to risk management through policies and procedures, which are followed up by the management team and relevant functions including Solutions, Finance, Internal Audit, Legal, Sustainability, HSSE, Compliance and O&M. The main risk management policies are reviewed and approved by the Board of Directors on a regular basis. With integrated operations within emerging economies and across renewable technologies, we are exposed to a variety of risks. Scatec’s ability to manage these risks is fundamental for the Company’s success and has over time developed into a key competitive advantage for Scatec. Scatec capitalise on the experience from complex environments and risk management systems to de-risk an opportunity and move it forward. As part of the risk management system, all risks related to a project are identified and addressed in management- and project- reviews and reported upon on a regular basis. These reports represent an important part of Scatec’s decision gate reviews. An annual and quarterly risk review are performed by the Executive Management Team, and the output of the reviews are reported to the Board of Directors. Insurance Scatec uses comprehensive global insurance programmes as risk mitigating tools which covers a broad range of potential risks such as general third-party liability, professional indemnity, directors’ and officers’ liability, cyber security, and in certain countries political violence insurance. Scatec’s operational assets are insured against physical damage, including natural catastrophes and weather-related events, through a property damage & business interruption insurance. A similar insurance programme is also designed for projects under construction which cover physical damage, loss of income and transportation risks. Below we have summarised the key inherent risks that Scatec is exposed to as per year end 2023 and key mitigation activities. Project development risk Scatec’s growth relies on successful project development which is impacted by several factors including availability of attractive sites, grid capacity and securing interconnection, power prices, component prices, interest rate level, government approval process, permits and access to competitive financing. Scatec manages this risk through a well-proven approach to screening of new projects as well as holding a large and broad project pipeline. Component price risk From the date when Scatec enters into long-term contract for the sale of electricity to the date of the investment decision the Company is exposed to the risk of component price fluctuations 40 and supply chain disruptions. Scatec manages such risk by seeking to work with a broad set of suppliers and contractors and ensure that both capex and EPC budgets for new projects hold sufficient contingencies to absorb the most likely price fluctuations in the relevant timeframe. The resilience to price fluctuations do however vary between projects. Ethics and integrity risk Scatec strives to meet the highest ethical standards and to conduct business activities in a sustainable and transparent manner. The Scatec Code of Conduct sets out clear expectations and requirements to promote ethics and integrity, including on protection of the environment, human rights, safety and security, and the Company’s zero tolerance for any form of corruption. Employees are trained to manage risks they may face and are encouraged to ask for guidance when they are unsure. All employees have a duty to speak-up if they suspect misconduct. Further, Scatec expects all business partners and suppliers to conduct their activities in a way that is consistent with the Code of Conduct. Third parties are screened and assessed against potential integrity risks, and contractually required to mitigate such risks. A whistleblower channel is available to all employees, suppliers, partners, customers and external stakeholders through internal channels and the corporate website. The channel is operated by a neutral third-party to protect the anonymity of reporters, should they so wish, and is available in multiple languages. All reports are taken seriously and investigated according to an established investigation procedure. As a global company, operating in diverse markets, Scatec has implemented a robust Anti-Corruption Compliance Programme designed to meet the risks of challenging business environments, including the requirements and tools noted above. Integrity is imperative to achieve sustainable business. Scatec’s reputation, built on integrity, earns the trust of its stakeholders and the communities in which the Company operates. In 2023, Scatec focused on targeted training for exposed positions, and in 2024 focus will be on strengthening the risk assessments process to ensure that integrity risks continue to be identified and adequately mitigated. Political risk Scatec sells electricity to state-owned utilities typically supported by sovereign guarantees. The Company’s financial performance therefore relies on government adherence to contractual obligations and various laws and regulations. Consequently, Scatec is subject to political risk in the countries where it operates. Scatec mitigates political risk through a comprehensive contractual framework for each individual project and asset. Risk is also mitigated through partnerships with multilateral development banks as project finance lenders and/or through establishing project risk insurance cover from the World Bank and others. A large and broad asset portfolio also gives diversification effects and reduces the overall political risk related to the asset portfolio. Cyber risk Cyber risk is an increasing concern in society today. The main cyber risks in 2023 were ransomware/cryptolocker, phishing, supply chain attacks and zero-day vulnerabilities. To mitigate these risks Scatec is protecting and monitoring all endpoints with a well-known EDR (Endpoint Detection and Response) solution, and another dedicated tool to reveal crypto locker activity at an early stage. All user accounts are protected with multi-factor authentication and users yearly need to complete IT security awareness training. Scatec’s offices and managed power plants are all connected to the global enterprise network where all network traffic is passing through next-generation firewalls that are monitored by our service providers Security Operations Center (SOC) at all times. All computers, servers and network devices are updated regularly by following the best-practice schedules by the vendors. Any urgent security vulnerabilities are patched immediately. The network is protected against distributed denial-of-service (DDoS) attacks and all the central server infrastructure is backed up to three different physical locations. The security set-up is audited by third party experts on a regular basis. Scatec has not had any major cyber incidents in 2023. Financial risk Through its business activities, Scatec is exposed to financial risk, mainly currency risk, credit risk, liquidity risk and interest rate risk. Financial risk management is based on the objective of reducing negative cash flow effects and to a less extent negative accounting effects of these risks. For a more detailed description and management of financial risk, refer to Note 20 Financial risk management. Power market price risk The Company has exposure to power market price risk. Scatec has entered into long-term fixed price contracts for the sale of Scatec ASA - Annual Report 2023 41 electricity from most of its power plants in operation at year end 2023. In the Philippines, Scatec has exposure to the long-term power market price with about 70-80% of the electricity from power plants sold under 1 - 3 year contracts to hedge the short to mid-term market price exposure. In Ukraine, for the Progressovka plants, changes in the local law in 2023 enabled Scatec to pause the PPA and sell electricity in the spot market while retaining the option to re-enter the PPA at a later stage. Health, Safety and Security risk Through the construction of large-scale renewable energy plants with between 500-5,000 workers on the project site, and when providing operations and maintenance services during the operational phase, the Company is exposed to health and safety risk. Scatec is continuously working to achieve the goal of zero harm to personnel, materials and the environment. Scatec takes responsibility, sets requirements and monitors HSSE performance in the development, construction and operations phases of the projects. Further, the health and safety standards are defined and communicated to employees and contractors. Contractor management is identified as a key risk area for the Company, and Scatec continuously works to monitor that all subcontractors operate in accordance with its corporate policy and principles. For countries with a high-risk rating, Scatec follows special security measures for all travel in line with the recommendations of the Company’s third -party risk advisor. Scatec works systematically to strengthen its approach to security management and emergency preparedness. Climate risk Scatec’s business model and strategy is based on the need to transition from fossil fuels to reduce greenhouse gas (GHG) emissions, a key climate opportunity. However, climate risk, both physical risk and transition risk, could also have a range of potential impacts on Scatec’s business. The most serious climate- related risks involve the physical impact of extreme weather events, including droughts and floods. Extreme weather can cause physical damage to the plants and directly affect power generations. The risk is mitigated through adequate engineering in the design phase, regular inspections and emergency plans. Transitional risks such as increased regulation, new technologies and changes to markets also affect Scatec. As climate ambitions increase, there is likely to be increased competition that can affect among others component prices and power prices. Refer to our Task Force on Climate related Financial Disclosure (TCFD) report 2023 for corporate climate risk assessments and more information. For further environmental and social responsibilities refer to the 2023 ESG Performance report. Other risks Other inherent risk with low likelihood and/or lower potential business impact is briefly described here. Risk of war and civil unrest – Scatec is generally not making investments in regions with high risk of war and civil unrest. This risk is assessed before starting development of new project opportunities. The risk has unfortunately materialised in Ukraine where Russia started a military invasion in February 2022. Refer to ‘Other matters’ for update on Ukraine. Human rights – the risk relating to the breach of fundamental human rights in renewable energy projects and the supply chain. The main risk relating to the Company’s supply chain is related to labour and working conditions in exposed regions such as Xinjiang, China. The Company conducts human rights due diligence in projects and the supply chain as per the Transparency Act requirements and has a corporate human rights policy aligned with the United Nations Guiding Principles on Business and Human Rights. Pandemic risk - Scatec with its external risk advisors, regularly assess risks related to global health issues such as pandemics. Corporate governance The Board of Directors has made a strong commitment to ensure trust in the Company and to enhance shareholder value through effective decision-making and open communication between management, the Board of Directors, the shareholders and other stakeholders. The Company’s framework for corporate governance is intended to decrease business risk, maximise value and utilise the Company’s recourses in an efficient, sustainable manner, to the benefit of shareholders, employees and society at large. The Company’s corporate governance framework is subject to annual reviews and discussions by the Board of Directors. The Company comply with the Norwegian Code of Practice for Corporate Governance and the Board of Directors’ Corporate Governance report is available on the corporate website under the Investor section. Scatec ASA has purchased and maintains a Directors and Officers Liability Insurance on behalf of the members of the Board of Directors and CEO. The insurance additionally covers any employee acting in a managerial capacity and includes subsidiaries owned with more than 50%. The insurance policy is issued by a reputable, specialised insurer with appropriate rating. Market outlook Renewable energy is key to serve a growing population, create 42 economic development in emerging markets and drive the energy transition. According to Bloomberg New Energy Finance (BNEF), global investments in the energy transition technologies hit a record of USD 1.8 trillion in 2023, 17 per cent up year-on-year. At COP28, 130 countries pledged to triple renewable energy capacity by 2030, and for the first time it was committed to transition away from fossil fuels. To stay on track to reach net zero emissions by 2050, BNEF confirms that a tripling is what the world needs. This requires a significant acceleration, including investments in renewable energy and power grids, increased battery storage capacity and scaling up the technology mix for complementary generation. The competitiveness of renewables continued to strengthen and it is the most cost-efficient power source in most of the world. Fundamentals for renewables remain strong, both solar PV prices and battery storage systems reached all-time low in 2023. Prices are expected to remain low in 2024, as supply of both solar modules and battery input metals is estimated to exceed demand. Forward-looking statements reflect current views about future events and are, by their nature, subject to significant risks and uncertainties because they relate to events and depend on circumstances that will occur in the future. Although Scatec believes that these assumptions were reasonable when made, the Group cannot assure that the future results, level of activity or performances will meet these expectations. Scatec growth targets and outlook In November 2023 Scatec gave a strategy update and announced that the growth rate for the strategy period to 2027 will be funded by internal capacity, targeting NOK 500-750 million of annual equity investments within renewable energy. Scatec will further consider additional repayments of the corporate debt on top of existing amortisations of approximately NOK 280 million annually. The revised business plan will be funded by: • a strong and growing cash flow from operating assets • enhanced capital recycling activities • alternative ownership structures with reduced equity • stakes • changed dividend policy to no dividend Scatec continues to utilise the integrated business model and stay committed to delivering attractive returns of 1.2 times cost of equity, D&C gross margins of 8-10% and O&M margins of 25- 30%. For the full year 2024 Scatec is estimated to generate proportionate power production EBITDA of NOK 3,400-3,700 million based on an estimated power production of 4,200-4,600 GWh. Share capital and the Scatec share Scatec ASA is listed on the Oslo Stock Exchange under the ticker “SCATC”. The share capital of Scatec was NOK 3,972,932 divided on 158,917,275 shares at year end 2023, each with a nominal value of NOK 0.025. All shares are of the same class and with equal voting and dividend rights. Per 31 December 2023, the number of shareholders were 14,846. Refer to Note 27 - Share capital, shareholder information and dividend for further information. During 2023 Scatec’s share price increased by 3.2 per cent. Scatec aims at informing all interested parties about important events and the Company’s developments through annual reports and quarterly financial presentations, stock exchange notices and other Company updates. Further information can be found in the investor section of Scatec’s website at www.scatec.com/investor . Dividend policy In the third quarter 2023, the Board of Directors changed the dividend policy to no dividend, due to the macro-economic and capital market situation. The dividend policy will be assessed annually by the board based on Scatec’s capital situation. Financial review Presentation of Accounts Pursuant to Section 3-3 of the Norwegian Accounting Act, the Board of Directors confirm that the Financial Statements have been prepared under the assumption that the Scatec Group and Scatec ASA is a going concern and that this assumption was appropriate at the date of approval of the Financial Statements. The Group reports its Consolidated Financial Statements in accordance with IFRS® Accounting Standards as adopted by the EU with Norwegian Kroner (NOK) as reporting currency. The notations Scatec, Scatec Group, the Company and the Group are used interchangeably throughout the document. Figures in parentheses are for the corresponding period of the previous year. Segment and proportionate financials Scatec reports on four operating business segments: Power Production (PP), Services, Development & Construction (D&C) and Corporate. Scatec ASA - Annual Report 2023 43 To improve earnings visibility and reporting transparency on underlying value creation across Scatec’s business activities, the Company is reporting on proportionate financials in addition to consolidated financials. With proportionate financials Scatec reports its share of revenues, expenses, profits and cash flows from its subsidiaries based on Scatec’s economic interest in the subsidiaries. Proportionate reporting is in line with how the Management Team assesses the performance of the segments. Please refer to Note 3 Operating Segments for further descriptions of the proportionate financials as well as reconciliation to the consolidated financial statements. Subsequent events No adjusting events have occurred after the balance sheet date. Non-adjusting events Long term incentive programme In line with the terms adopted by the Annual General Meeting of Scatec ASA in 2023, the Board of Directors continue the share- based incentive programme for leading employees of the company, following the same principles as previous years. On January 3, 2024, a total of 1,515,885 share options were granted to leading employees. Each share option gives the right to subscribe for and be allotted one share in Scatec ASA. The strike price of the options is set to NOK 79.47 per share based on the volume weighted average share price over the ten last trading days preceding the grant date of 3 January 2024. The options will lapse if not exercised by 1 January 2028. The option grant is divided into three tranches whereby 1/3 vests each year over three years, with the first tranche vesting 1 January 2025. The current grant is the second of three contemplated annual grants of share options in accordance with Scatec’s share-based incentive programme. Refinancing of USD 150 million green term loan On January 25, 2024, Scatec ASA agreed refinancing terms with DNB, Nordea and Swedbank for its USD 150 million green term loan, with USD 135 million outstanding at the end of the fourth quarter 2023. The new green term loan will be amortised through semi-annual repayments of USD 7.5 million with final maturity in the fourth quarter 2027. Placement of NOK 1,750 million senior unsecured green bonds and buy-back of bonds On January 31, 2024, Scatec ASA announced the issuance of a NOK 1,750 million 4-year senior unsecured bond with a coupon of 3 months NIBOR + 4.25% p.a. with quarterly interest payments. DNB Markets, Nordea and SpareBank 1 Markets acted as Joint Lead Managers in connection with the placement of the new bond issue. An application was made for the bonds to be listed on Oslo Stock Exchange. On February 1, 2024, Scatec ASA announced buy-back of EUR 136 million of outstanding bonds with ticker “SCATC03 ESG” (ISIN NO0010931181) which will be cancelled subsequently. Following the transaction, the total nominal outstanding amount is EUR 114 million. The remaining proceeds from the NOK 1,750 million bond issue after the buy-back will be applied towards eligible activities as set out in the Green Financing Framework, including additional repayment of corporate debt. PPA amendments in Honduras Reference is made to previous communication around changes to the PPA in Honduras. In May 2022, a new Energy law came into force as introduced by the new Government of Honduras. Per January 31, 2024, a PPA amendment agreement was signed between Scatec’s operating entities in Honduras and the off taker ENEE. The key changes to the PPA include a lower tariff, extension of the PPA with five more years and a compensation amount to be paid by the off taker to Scatec’s operating entities. In total, the amendments to the PPA in combination with the compensation amount are not expected to have a material adverse effect of the financials of the projects. Devaluation of the Egyptian pound On March 6, 2024, the central bank in Egypt announced a full free floating of the local currency, Egyptian Pound (EGP), and the local currency devaluated against USD. Scatec’s Benban plants in Egypt are operating under a 25-year Power Purchase Agreement with the Egyptian Electricity Transmission Company, S.A.E, which started operations in 2019. The tariff in the Power Purchase Agreement is denominated in USD but paid in EGP. 30% of the production volume is invoiced in EGP at a fixed rate to USD of 8.88, while 70% of the revenues are invoiced at the official EGP/USD spot rate for the relevant period. Due to devaluations of the EGP since the operations commenced, the fixed-rate part of the revenues constituted approximately NOK 30 million in 2023 representing 10% of Scatec’s total proportionate power production revenues in Egypt. This part of the revenues is exposed to further devaluation of the EGP. The non-recourse debt is dominated in USD and not impacted by the devaluation, while Scatec’s cash balances in EGP is negatively impacted by a devaluation. The change of the central bank’s strategy in Egypt is expected to ease the convertibility of EGP to USD. Please refer to Note 15 Cash and cash equivalent for information on cash balances in Egypt at year-end 2023. 44 Oslo, 19 March 2024 The Board of Directors Scatec ASA Scatec ASA - Annual Report 2023 45 Consolidated financial statements Group 46 Consolidated statement of profit or loss 47 Consolidated statement of comprehensive income 48 Consolidated statement of financial position 49 Consolidated statement of changes in equity 51 Consolidated statement of cash flow 52 Notes to the Consolidated financial statements 53 General information Note 1 Corporate information 53 Note 2 Basis for preparation, basis for consolidation and key sources of estimation uncertainty 53 Statement of profit or loss (and comprehensive income) Note 3 Operating segments 55 Note 4 Employee benefits 60 Note 5 Other operating expenses 62 Note 6 Financial income and expenses 62 Note 7 Tax 63 Note 8 Earnings per share 65 Note 9 Sale of project assets and disposal group held for sale 65 Statement of financial position Note 10 Property, plant and equipment 68 Note 11 Goodwill and intangible assets 69 Note 12 Leases 70 Note 13 Impairment testing 72 Note 14 Investments in joint venture and associated companies 73 Note 15 Cash and cash equivalents 76 Note 16 Trade receivables 78 Note 17 Other non-current and current asset 79 Note 18 Other non-current and current liabilities 79 Note 19 Legal disputes and contingencies 80 Financial risk and capital management Note 20 Financial risk management and risk sensitivities 80 Note 21 Financial instruments 83 Note 22 Derivative financial instruments 85 Note 23 Corporate financing 87 Note 24 Non-recourse financing 89 Note 25 Project equity financing provided by co-investors 91 Note 26 Guarantees and commitments 92 Other information Note 27 Share capital, shareholder information and dividend 94 Note 28 Consolidated subsidiaries 95 Note 29 Non-controlling interests 96 Note 30 Transactions with related parties 98 Note 31 Changes in accounting policies 99 Note 32 Subsequent events 101 Scatec ASA - Annual Report 2023 47 Consolidated statement of profit and loss 1 JANUARY - 31 DECEMBER NOK million Note 2023 2022 Revenues 3 3,399 3,002 Net gain/(loss) from sale of project assets and divestments 9, 14 1,276 - Net income/(loss) from JV and associated companies 3, 14 46 749 Total revenues and other income 4,721 3,751 Personnel expenses 4 -570 -528 Other operating expenses 5 -584 -668 Depreciation, amortisation and impairment 10, 11, 12, 13 -942 -1,832 Operating profit (EBIT) 2,625 723 Interest and other financial income 6 415 115 Interest and other financial expenses 6 -1,977 -1,666 Net foreign exchange gain/(loss) 20, 6 -56 -268 Net financial expenses -1,617 -1,818 Profit/(loss) before income tax 1,008 -1,095 Income tax (expense)/benefit 7 114 -132 Profit/(loss) for the period 1,122 -1,228 Profit/(loss) attributable to: Equity holders of the parent 628 -1,334 Non-controlling interest 29 494 106 Basic earnings per share (NOK) 8 3.95 -8.40 Diluted earnings per share (NOK) 8 3.95 -8.40 48 Consolidated statement of comprehensive income 1 JANUARY - 31 DECEMBER NOK million Notes 2023 2022 Profit/(loss) for the period 1,122 -1,228 Other comprehensive income: Items that may subsequently be reclassified to profit or loss Net movement of cash flow hedges 22 -292 664 Income tax effect from net movement of cash flow hedges 7 69 -150 Foreign currency translation differences 194 472 Net other comprehensive income to be reclassified -30 986 Total comprehensive income for the year, net of tax 1,092 -242 Attributable to: Equity holders of the parent 704 -648 Non-controlling interest 29 389 406 Scatec ASA - Annual Report 2023 49 Consolidated statement of financial position NOK million Note 31 December 2023 31 December 2022 Assets Non-current assets Deferred tax assets 7 1,226 860 Property, plant and equipment 10 22,035 17,310 Goodwill and intangible assets 11 717 758 Investments in JVs and associated companies 14 12,368 10,674 Other non-current financial assets 21, 22 299 375 Other non-current assets 17, 30 265 241 Total non-current assets 36,911 30,218 Current assets Trade and other receivables 16 478 497 Other current financial assets 21, 22 16 21 Other current assets 17, 30 1,150 1,862 Cash and cash equivalents 15 3,101 4,132 Assets classified as held for sale 9 138 - Total current assets 4,884 6,512 Total assets 41,795 36,730 50 Consolidated statement of financial position NOK million Note 31 December 2023 31 December 2022 Equity and liabilities Equity Paid in capital Share capital 27 4 4 Share premium 9,847 9,819 Total paid in capital 9,851 9,823 Other equity Retained earnings -1,911 -2,231 Other reserves 747 671 Total other equity -1,164 -1,560 Non-controlling interests 29 1,884 540 Total equity 10,570 8,803 Non-current liabilities Deferred tax liabilities 7 849 743 Corporate financing 23 7,947 7,987 Non-recourse project financing 24 15,026 13,297 Other financial liabilities 21, 22 179 12 Other interest-bearing liabilities 23 247 231 Other non-current liabilities 18, 30 1,343 1,618 Total non-current liabilities 25,590 23,888 Current liabilities Corporate financing 23 1,132 - Non-recourse project financing 24 1,931 1,963 Income tax payable 7 48 37 Trade and other payables 294 594 Other financial liabilities 21, 22 41 108 Other interest-bearing liabilities 23 - 231 Other current liabilities 18, 30 2,060 1,106 Liabilities directly associated with assets classified as held for sale 9 129 - Total current liabilities 5,635 4,039 Total liabilities 31,225 27,927 Total equity and liabilities 41,795 36,730 Oslo, 19 March 2024 The Board of Directors Scatec ASA Scatec ASA - Annual Report 2023 51 Consolidated statement of changes in equity Other reserves NOK million Note Share capital Share premium Retained earnings Foreign currency translation Hedging reserves Total Non- controlling interests Total equity At 1 January 2022 4 9,775 -493 95 -111 9,271 649 9,919 Profit for the period - - -1,334 - - -1,334 106 -1,228 Other comprehensive income - - - 377 309 686 300 986 Total comprehensive income - - -1,334 377 309 -648 406 -242 Share-based payment 4 - 39 - - - 39 - 39 Share capital increase 27 - 5 - - - 5 - 5 Share purchase program - - - - - - - - Dividend distribution 27 - - -404 - - -404 -526 -929 Capital increase from NCI 29 - - - - - - 11 11 At 31 December 2022 4 9,819 -2,231 472 199 8,263 540 8,803 At 1 January 2023 4 9,819 -2,231 472 199 8,263 540 8,803 Profit for the period - - 628 - - 628 494 1,122 Other comprehensive income - - - 241 -166 75 -105 -30 Total comprehensive income - - 628 241 -166 704 389 1,092 Share-based payment 4 - 28 - - - 28 - 28 Dividend distribution 27 - - -308 - - -308 -121 -429 Capital increase from NCI 29 - - - - - - 1,076 1,076 At 31 December 2023 4 9,847 -1,911 713 34 8,686 1,884 10,570 52 Consolidated statement of cash flow NOK million Notes 2023 2022 1) Cash flow from operating activities Profit before taxes 1,008 -1,095 Taxes paid 7 -261 -170 Depreciation and impairment 10, 11, 12 942 1,832 Proceeds from sale of fixed assets 10 68 45 Net income JV and associated companies 14 -46 -749 Gain from sale of project assets 9 -1,276 - Interest and other financial income 6 -415 -115 Interest and other financial expenses 6 1,977 1,666 Foreign exchange (gain)/loss 6 56 268 (Increase)/decrease in current assets and current liabilities 1) 132 -45 Net cash flow from operating activities 2,184 1,637 Cash flows from investing activities Interest received 6 170 115 Investments in property, plant and equipment 1) -7,145 -2,867 Proceeds from sale of project assets, net of cash disposed 2) 9 390 - Distributions from JV and associated companies 14 457 669 Investments in JV and associated companies 14 -447 -204 Net cash flow used in investing activities -6,575 -2,287 Cash flow from financing activities Proceeds from non-controlling interests 25 944 18 Distributions to non-controlling interests 25 -35 -8 Interest paid 21 -1,962 -1,108 Proceeds from non-recourse project financing 24, 21 6,038 3,468 Repayment of non-recourse project financing 24, 21 -1,818 -1,175 Payments of principal portion on lease liabilities 12 -21 -26 Interest paid on lease liabilities 12 -27 -20 Net of proceeds and repayments from corporate financing 23, 21 603 - Dividends paid to equity holders of the parent company and non-controlling interests 27 -429 -929 Net cash flow from financing activities 3,294 221 Net increase/(decrease) in cash and cash equivalents -1,097 -428 Effect of exchange rate changes on cash and cash equivalents 78 389 Cash transferred to assets held for sale -12 - Cash and cash equivalents at beginning of the period 4,132 4,171 Cash and cash equivalents at end of the period 15 3,101 4,132 1) Cash-flows related to prepayments and incurred expenses for construction of new power plants are from 2023 presented as investing activities in line item "Investments in property, plants and equipment". Comparable numbers are correspondingly updated. The comparative amounts for 2022 prior to restatement were NOK -1,986 million for “Investments in property, plant and equipment” and NOK -926 million for “Increase/decrease in current assets and current liabilities". 2) Proceeds from sale of project assets, net of cash disposed, is cash received from sale of project assets less consolidated cash position in disposed projects at the time of disposal. Scatec ASA - Annual Report 2023 53 Notes to the Consolidated financial statements Group Note 1 Corporate information Scatec ASA is incorporated and domiciled in Norway. The address of its registered office is Askekroken 11, NO-0277 Oslo, Norway. Scatec ASA was established on 2 February 2007. Scatec ASA (“the Company”), its subsidiaries and investments in associated companies and joint ventures (“the Group” or “Scatec”) is a leading renewable energy solution provider, accelerating access to reliable and affordable clean energy in high growth markets. As a long-term player, we develop, build, own and operate renewable energy plants, with 4.2 GW in operation and under construction across four continents today (refer to Note 3 – Operating segments). Information on the Group’s structure is provided in Note 28 – Consolidated subsidiaries. The Company is listed on the Oslo Stock Exchange under the ticker symbol ‘SCATC’. For further details on shareholder matters, refer to Note 27 – Share capital, shareholder information and dividend. The consolidated financial statements for the full year 2023 were authorised for issue in accordance with a resolution by the Board of Directors on 19 March 2024. i The Company is pursuing an integrated business model across the complete lifecycle of renewable power plants including project development, financing, construction, ownership, and operation and maintenance. Note 2 Basis for preparation, basis of consolidation and key sources of estimation uncertainty Basis for preparation The Scatec Group’s consolidated financial statements have been prepared in accordance with IFRS® Accounting Standards as adopted by the EU (IFRS). In compliance with the Norwegian Accounting Act, additional disclosure requirements are included in the notes to the financial statements of Scatec ASA. The statement of cash flows is prepared under the indirect method. The segment financials are reported on a proportionate basis in line with how the management team assesses the segments performance. For further description of the proportionate financials as well as a reconciliation between proportionate financials and the consolidated financials please refer to Note 3 - Operating segments and the section on Alternative Performance Measures (APM). The functional currency of the companies in the Group is determined based on the nature of the primary economic environment in which each company operates. The consolidated financial statements are presented in Norwegian kroner (NOK) and on consolidation, the assets and liabilities of foreign entities with functional currencies other than NOK are translated at the rate of exchange prevailing at the end of reporting period and their income statements are translated at average monthly exchange rates. Basis of consolidation The consolidated financial statements comprise the financial statements of the Parent and its subsidiaries as of 31 December 2023. When the Group has less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts and circumstances in assessing whether it has power over an investee. Control is achieved when the Group has power over the investee, is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Estimation uncertainty In preparation of the Group’s consolidated financial statements, management has made assumptions and estimates about future events and applied judgements that affect the reported values of assets, liabilities, revenues, expenses and related disclosures. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods. The assumptions and 54 estimates are based on historical experience, current trends and other relevant factors available when the consolidated financial statements are prepared. Existing circumstances and assumptions about future developments, however, may change due to market changes beyond the control of the Group. Such changes are reflected in the financial statements when the changes in assumptions occur. Information about estimation uncertainty, judgements and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are largely incorporated into the individual notes. The Group’s management believes the following critical accounting item represent the more significant judgements and estimates not naturally belonging in the individual notes, but used in the preparation of the consolidated financial statements: Consolidation of power plant companies Scatec’s value chain comprises all downstream activities such as project development, financing, construction, operations as well as having an asset management role through ownership of the power plants. Normally Scatec enter partnerships for the shareholding of the power plant companies. To be able to fully utilise the business model, Scatec normally seeks to obtain operational and financial control of the power plant companies. Operational control is obtained through governing bodies, shareholder agreements and other contractual arrangements. Other contractual arrangements may include Scatec’s role as the developer of the project, EPC provider (construction), operation and maintenance service provider and asset management service provider. Scatec would normally seek to undertake the following distinct roles in its projects: 1. As the largest shareholder providing equity financing to the project 2. As developer, including obtaining project rights, land permits, off taker agreements and other local approvals 3. As EPC contractor, responsible for the construction of the project 4. As provider of operation & maintenance services to the projects, responsible for the day to day operations of the plant 5. As provider of management services to the power plant companies Even though none of the projects Scatec is involved with are identically structured, the five roles/activities described above constitute the main and relevant activities which affect the variable return. When assessing whether Scatec controls a power plant company, all facts and circumstances, including the above agreements are analysed. For the power plant companies consolidated in the financial statement, Scatec has concluded that it through its involvement controls the entities. Scatec has considered that it has the current ability to direct the relevant activities of the entities and has the ability to affect the variable returns through its power over the companies. The assessment of whether Scatec controls the investee is performed upon first time consolidation and is renewed annually or more often, if and when facts that could impact the conclusion change. Please see individual notes and sections “Estimation uncertainty” for further details around other estimations, judgements and assumptions. Scatec ASA - Annual Report 2023 55 Note 3 Operating segments Operating segments align with internal management reporting to the Group’s chief operating decision makers, defined as the Executive Management team. The operating segments are determined based on differences in the nature of their operations, products and services. Scatec manages its operations in four segments: Power Production (PP), Services, Development & Construction (D&C) and Corporate. Power Production The Power Production segment manages the Group’s power producing assets and derives its revenue from the production and sale of solar, winds and hydro generated electricity mainly based on long-term Power Purchase Agreements or Feed-in- tariffs. In the Philippines electricity is sold on bilateral contracts, in the spot market and as ancillary services. In Ukraine, for the Progressovka plants, changes in the local law in 2023 enabled Scatec to pause the PPA and sell electricity in the spot market while retaining the option to re-enter the PPA at a later stage. In addition, the segment includes revenues from the Release concept. The performance obligation is to deliver a series of distinct goods (power) and the performance obligation is satisfied over time which entails that revenue should be recognised for each unit delivered at the transaction price. Revenue is recognised upon transfer of electricity produced to the local operator of the electricity grid, based on periodic meter readings. The Group applies a practical expedient under IFRS 15 whereby the revenue from power for most of the contracts is recognised at the amount of which the entity has a right to invoice. The right to invoice power arises when power is produced and delivered on to the electricity grid. The right to invoice the consideration will normally correspond directly with the value delivered to the customer. Delivery is deemed complete when all the risks and rewards associated with ownership have been transferred to the buyer as contractually agreed, compensation has been contractually established and collection of the resulting receivable is probable. For all sales contracts the Group had per the end of year, indexation of tariffs is recognised when they come into force. Services The Services segment comprises Operations & Maintenance (O&M) and Asset Management services provided to power production plants where Scatec has economic interest. The services are delivered to ensure optimised operations of power producing assets through a complete and comprehensive range of services for technical and operational management. O&M revenues are generated based on fixed service fees with additional profit-sharing arrangements. Asset Management services typically include financial reporting to sponsors and lenders, regulatory compliance, environmental and social management, as well as contract management on behalf of the power plant companies. Revenues are based on service agreements with a periodic base fee as well as a potential performance bonus. These revenues are recognised as the service is provided. The potential performance revenues from the profit-sharing agreements are considered as variable consideration under IFRS 15 and are recognised when it is highly probable that the recognition will not be reversed in future periods. Development & Construction The Development & Construction segment derives its revenue from the sale of development rights and construction services to project entities set up to operate the Group’s power production plants. These transactions are primarily made with entities that are under the control of the Group and hence eliminated when consolidated. Construction services include operations where Scatec is responsible for the total scope of a turnkey installation of a power plant through a contract covering Engineering, Procurement and Construction. Revenues from construction services are based on fixed price contracts and are accounted for using the percentage of completion method. The percentage of completion of a contract is determined by actual cost incurred over total estimated costs to complete. Scatec periodically revise contract profit estimates and immediately recognises any losses on contracts. Incurred costs include all direct materials, costs for modules, labor, subcontractor costs, and other direct costs related to contract performance. For items considered to be not distinct, Scatec recognises direct material costs as incurred costs when the main direct materials have been installed. Scatec considers direct materials to be installed when they are permanently attached or fitted to the power production systems as required by engineering designs. For items considered to be distinct, Scatec recognises direct material costs as incurred costs at change of title, dependent on the incoterms in the EPC supply of goods contract. Some construction contracts include product warranties. The expected warranty amounts are recognised as an expense at the time of sale and are adjusted for subsequent changes in estimates or actual outcomes. The Group has currently ongoing construction projects in Pakistan and Brazil, as well as projects related to Release in Cameroon and South Africa. Corporate Corporate consists of the activities of corporate and management services. No segments have been aggregated to form these reporting segments. Revenues from transactions between the D&C, Services and PP segments, where Scatec is deemed to hold a controlling interest, are presented as internal revenues in the segment reporting, and eliminated in the consolidated statement of profit or loss. Use of proportionate financials The segment financials are reported on proportionate basis. With proportionate financials Scatec reports its share of revenues, expenses, profits and cash flows from its subsidiaries 56 without eliminations based on Scatec’s economic interest in the subsidiaries. The Group introduced Proportionate Financials as the Group is of the opinion that this method improves earnings visibility and to improve transparency on underlying value creation across Scatec’s business activity. Revenues from transactions between group companies, where Scatec is deemed to hold a controlling interest, are presented as internal revenues in the segment reporting. These transactions are based on international contract standards and terms negotiated at arm’s length with lenders and co-investors in each power plant company. The consolidated revenues and profits are mainly generated in the Power Production segment. Activities in the Services and Development & Construction segment mainly reflect deliveries to other companies controlled by Scatec, or which revenues and profits are eliminated in the consolidated financial statements. The key differences between the proportionate and the consolidated (IFRS) financials are that: ● In the consolidated financials fully consolidated companies are presented on a 100% basis. In the proportionate financials the fully consolidated companies are presented based on Scatec’s ownership percentage/economic interest. The residual ownerships interests in the table below represent the share of the proportionate financials in fully consolidated subsidiaries where Scatec do not have 100% economic interest. ● In the consolidated financials joint venture and associate companies are equity consolidated and are presented with Scatec’s share of the net profit on a single line in the statement of profit or loss. In the proportionate financials the joint venture and associate companies are presented in the same way as other subsidiaries on a gross basis in each account in the statement of profit or loss based on Scatec economic interest. In the table below elimination of equity consolidated entities column shows the elimination of proportionate financials lines to arrive at Scatec’s share of net income/(loss). ● Internal gains from transactions between segments are eliminated in the consolidated financials but are retained in the proportionate financials. These internal gains primarily relate to gross profit on D&C goods and services delivered to project companies. Hence, the consolidated financials have lower book value of solar plants than the proportionate financials and corresponding lower depreciation charges. Internal gain eliminations also include profit on Operations and Maintenance - and Asset Management services delivered to project companies. ● The management team assesses the performance of the operating segments based on a measure of gross profit and operating profit; hence interest income/expense is not disclosed on proportionate basis. Bridge proportionate – to consolidated financials 2023 2023 Proportionate financials NOK million Power Production Services Development & Construction Corporate Total Residual ownership for fully consolidated entities Elimination of equity consolidated entities Other eliminations Consolidated financials External revenues 3,760 32 4 - 3,796 1,199 -1,601 4 3,399 Net gain/(loss) from sale of project assets 348 - - - 348 - - 928 1,276 Internal revenues 6 341 8,172 50 8,569 1,956 -557 -9,969 - Net income/(loss) from JVs and associates 1) - - - - - - 46 - 46 Total revenues and other income 4,113 373 8,177 50 12,714 3,155 -2,115 -9,036 4,721 Cost of sales 2) - 5 -7,182 - -7,179 -1,888 502 8,565 - Gross profit 4,113 378 994 50 5,535 1,268 -1,613 -469 4,721 Personnel expenses -141 -138 -216 -139 -633 -12 94 -20 -570 Other operating expenses -755 -122 -107 -74 -1,058 -224 314 383 -584 EBITDA 3,216 118 672 -162 3,845 1,032 -1,204 -106 3,567 Depreciation and impairment -1,585 -6 -65 -36 -1,692 -323 939 135 -942 Operating profit (EBIT) 1,631 112 607 -198 2,152 709 -265 29 2,625 1) Refer to Note 14 Investments in joint venture and associated companies for details on Net income from JV and associates 2) Refer to Note 31 for details of the change in presentation of revenue and cost of sales for the Philippines The Group has continued to recognise revenue from power production in Ukraine to the extent Scatec believes it is probable to collect the consideration, which is equal to actual paid amounts. The recognised amount in 2023 was NOK 371 million in the proportionate financials (NOK 440 million in the consolidated financials), which is in line with the paid amounts. The Group has recognised net gain from sale of project assets in total amount of NOK 348 million in the proportionate financials (NOK 1,276 million in the consolidated financials) attributable to the strategic sales of the Upington solar plants in South Africa and Mocuba solar plant in Mozambique, and to the divestment of 32% shareholding in Release, contributing with an accounting gain of NOK 485 million in the Scatec ASA - Annual Report 2023 57 consolidated financials. In 2023 the Group recognised an impairment charge of NOK 350 million in the Power Production segment in the proportionate financials (NOK 350 million in the consolidated financials included in the net income/(loss) from JVs and associated companies) related to the power plant in Argentina. The Group has also recognised an impairment charge of NOK 65 million in the proportionate financials (NOK 48 million in the consolidated financials) in the D&C segment related to discontinued development projects. Bridge proportionate – to consolidated financials 2022 2022 Proportionate financials NOK million Power Production Services Development & Construction Corporate Total Residual ownership for fully consolidated entities Elimination of equity consolidated entities Other eliminations Consolidated financials External revenues 2) 3,689 18 5 7 3,718 1,120 -1,837 - 3,002 Internal revenues 8 294 1,064 49 1,415 188 -138 -1,465 - Net income/(loss) from JVs and associates 1) - - - - - - 749 - 749 Total revenues and other income 3,697 312 1,069 56 5,133 1,309 -1,226 -1,465 3,751 Cost of sales 2) -28 1 -962 1 -989 -145 90 1,044 - Gross profit 3,669 312 106 57 4,144 1,163 -1,136 -421 3,751 Personnel expenses -125 -120 -215 -113 -574 -9 68 -12 -528 Other operating expenses -709 -118 -112 -81 -1,020 -221 253 320 -668 EBITDA 2,835 74 -221 -138 2,550 933 -815 -113 2,555 Depreciation and impairment -1,918 -6 -137 -29 -2,090 -414 510 162 -1,832 Operating profit (EBIT) 916 68 -358 -167 460 519 -306 49 723 In 2022 the Group recognised an impairment charge of NOK 770 million in the Power Production segment in the proportionate financials related to the solar power plants and intangible assets in Ukraine. In the consolidated financials the impairment charge amounts to NOK 816 million. The Group recognised an impairment charge (in both consolidated and proportionate financials in the D&C segment) of NOK 132 million related to discontinued development projects in Lesotho, Bangladesh, Mali and India. Scatec also recognised an expected credit loss provision in 2022 with respect to trade and other receivables related to Ukraine which amount to NOK 87 million in the proportionate financials (NOK 98 million in the consolidated financials), which is included in other operating expenses Geographical break down of consolidated revenues and PPE In presenting information based on geographical areas, revenues from external customers are attributed to the country of the legal entity recording the sales. The allocation of property, plant and equipment is based on the geographical location of the assets. Projects that have not yet reached construction are allocated to the parent company being the main developer. The tables and information below include consolidated subsidiaries. Consolidated revenues per country External revenue NOK million 2023 2022 South Africa 1,073 1,106 Egypt 657 644 Malaysia 364 346 Ukraine 440 175 Honduras 232 200 Jordan 171 158 Czech Republic 150 128 Mozambique 97 93 Vietnam 95 83 Cameroon 1) 58 15 Rwanda 26 23 Netherlands 10 29 Other 26 1 Total 3,399 3,002 1) Revenues in Release Cameroon in 2023 are included for the period January – October, before 32% shareholding in Release was divested. Refer to Note 9 for details. 58 Property, plant and equipment per country Property, plant and equipment NOK million 2023 2022 South Africa 9,554 4,155 Egypt 3,453 3,411 Malaysia 2,570 2,728 Ukraine 1,993 1,922 Honduras 1,293 1,302 Pakistan 961 375 Jordan 866 905 Norway 475 428 Vietnam 422 454 Czech Republic 314 336 Netherlands 70 160 Other 64 8 Mozambique - 558 Cameroon - 427 Rwanda - 141 Total 22,035 17,310 Major customers In South Africa, revenues (3 plants which commenced operations in 2013 and 2014 and 3 Upington plants which commenced operations in 2020 and disposed in 2023) are earned under 20-year Power Purchase Agreements (PPA) with Eskom Holdings (South African incumbent utility), which was awarded under the Renewable Independent Power Producer Procurement Programme (REIPPPP) administrated by the Department of Energy. Kenhardt plants started commercial operation in December 2023 under a 20-year PPA which was awarded under the Risk Mitigation Independent Power Producer procurement programme (RMIPPPP). Eskom’s financial commitments under the PPA are guaranteed by the South African National Treasury under the Implementation Agreement. The Benban plant in Egypt commenced operation in 2019. The electricity is sold under a 25-year Power Purchase Agreement with Egyptian Electricity Transmission Company, S.A.E. The financial commitments of Egyptian Electricity Transmission Company, S.A.E under the PPA are guaranteed by the sovereign guarantee from The Ministry of Finance under the Egyptian Law. The Gurun plant in Malaysia commenced operation in 2018, the Merchang and Jasin plant commenced operation in 2019, and RedSol commenced operations in 2020. The electricity is sold under 21-year Power Purchase Agreements with the country’s largest electricity utility, Tenaga Nasional Berhad (TNB). The PPA is not guaranteed by the Government as TNB is a reputable AAA rated listed company in Malaysia. The Rengy plant in Ukraine commenced operation in 2019, Boguslav and Kamianka commenced operations in 2020 and Chigrin and Progressovka commenced operations in 2021. The electricity is sold under Power Purchase Agreements all ending 31 December 2029 with the state-owned company Guaranteed Buyer. The financial commitments of Guaranteed Buyer under the PPA are guaranteed by the State under the law on Alternative Energy Sources and the Law on Electric Energy Market. In June 2023, Scatec started selling power from the Progressovka power plant in the spot market, The decision was made based on changes in the local law which enabled Scatec to pause the PPA, while retaining the option to re-enter the PPA at a later stage. The Agua Fria power plants in Honduras commenced operations in 2015, whereas the Los Prados plants in Honduras commenced operation in 2018. The electricity from the plants is sold under a 20-year Power Purchase Agreement with the utility Empresa Nacional de Energia Electricia (ENEE). The financial commitments of ENEE under the PPA are guaranteed by the sovereign guarantee executed by the Honduran attorney general and the secretary of finance, approved by the National Congress of Honduras.As a result of the new Energy law which came into force in 2022 as introduced by the new Government of Honduras, the negotiations of the PPAs were ongoing during the year. The Oryx, GLAE and EJRE power plants in Jordan commenced operations in 2016. The electricity is sold under a 20-year Power Purchase Agreement with National Electric Power Company (NEPCO). NEPCO’s financial commitments under the PPA are guaranteed by the Government of Jordan represented by its Ministry of Finance under the Government Guarantee Agreement. The Czech power plants commenced operations in 2009 (1 plant) and 2010 (3 plants) and have entered into power purchase agreements with utilities CEZ Distribuce and EON Distribuce, based on the terms of the Czech Energy Act and Czech Renewable Energy Act. This legislation requires the utilities to purchase the power produced from renewable energy sources for a period of 20 years at the Feed-in-Tariff (FiT) prescribed by law and applicable regulation, adjusted annually. The Mocuba plant in Mozambique commenced operation in 2019. The electricity is sold under a 25-year Power Purchase Scatec ASA - Annual Report 2023 59 Agreement with Electricidade de Moçambique (EDM). The financial commitments of EDM under the PPA are guaranteed by The Mozambican government under the concession agreement approved under law 88/2016 of 5 December 2016 for 30 years. In December 2023 Scatec sold its equity share in the Mocuba plant. The consolidation of the project company ceased. The Dam Nai wind farm in Vietnam was acquired by Scatec on 27 January 2021 and has a capacity of 39.4 MW. The wind farm was constructed in two phases and Phase I started operations in October 2017 (7.9 MW) and Phase II in December 2018 (31.5 MW). The electricity is sold under a 20- year Power Purchase Agreement with Vietnam Electricity; a state-owned company established by the government in Vietnam. The ASYV power plant in Rwanda commenced operations in 2014. The power is sold under a 25-year Power Purchase Agreement with the state-owned utility EWSA, with an annual price adjustment of 100% of Rwandan CPI. EWSA’s financial commitments under the PPA are guaranteed by the Government of Rwanda represented by its Ministry of Finance and Economic Planning under the Government Guarantee Agreement. In December 2023 Scatec signed an agreement to sell its equity share in the ASYV plant. The associated assets and liabilities are presented as held for sale as per 31 December 2023. 60 Note 4 Employee benefits Salaries and other personnel costs NOK million 2023 2022 Salaries 518 463 Share-based payment 29 39 Payroll tax 58 43 Pension costs 41 38 Other personnel costs 35 31 Capitalised to PP&E (project assets) -111 -87 Total 570 528 The Group’s pension schemes are classified as defined contribution plans. Salaries and personnel expenses for the management NOK million 2023 2022 Salary and bonus 41 45 Pension 2 2 Total 43 47 For further details on employee benefits and management remuneration, refer to Note 4 Personnel expenses, number of employees and auditor’s fee in the separate financial statements for the Parent Company . Reference is also given to the separate remuneration report issued by the parent company . No severance package agreements have been established with management. Long term incentive programmes The cost of equity-settled transactions is recognised in personnel expenses, together with a corresponding increase in equity over the vesting period. To calculate the fair value of the options that meets the definition of an equity-settled share-based payment transaction (IFRS 2 app. A), the BlackScholes-Merton option-pricing model is applied on each tranche. Share price (spot), exercise price, expected option lifetime, expected volatility, expected dividend and risk-free interest rate are the input parameters in the model. In line with the terms adopted by the Annual General Meeting of Scatec ASA on 4 May 2016, and prolonged in the following years, the Board of Directors have established an option programme for leading employees of the company. Options are vested in tranches over a three-year period, with the first tranche vesting one year from award . As of December 31, 2023, there are options not fully vested from the grants awarded in 2021 and onwards. Each share option gives the right to subscribe for and be allotted one share in Scatec ASA. The strike prices are equivalent to the volume weighted average price of the shares the ten preceding trading days of the grant. The fair value of the options is expensed over the vesting period. In 2023 NOK 29 million (39) have been expensed. Date granted Amount Strike price Lapse date 04/01/2021 138,567 314.91 01/01/2025 24/02/2021 7,617 314.91 01/01/2025 06/05/2021 116,176 244.28 01/01/2025 04/01/2022 635,730 150.79 01/01/2026 28/03/2022 10,000 134.53 01/01/2026 27/04/2022 14,353 124.34 01/01/2026 16/05/2022 16,711 96.16 01/01/2026 03/01/2023 1,201,148 80.25 01/01/2027 02/03/2023 67,516 80.25 01/01/2027 Sum 2,207,818 For the options granted in 2023 the assumptions used in calculating the fair value of the options are as follows: 2.99 years (2.98 years) for expected lifetime, 52.45% (49.02%) for the expected volatility and 0 (0) for expected dividend. The calculations are based on average values. During 2023 the employees exercised no options, compared to 51 thousand at the weighted average strike and share price of NOK 89.26 and NOK 130.30 in 2022. See table below for total number of outstanding options under the long-term incentive programme and number of outstanding vested options. Scatec ASA - Annual Report 2023 61 Summary of movements in options Opening balance Granted Cancelled Terminated Closing balance Closing balance vested options Numbers of instruments 1,767,265 1,573,057 -120,578 -801,560 2,411,222 603,842 Weighted average strike price 158.19 80.25 67.45 141.09 123.08 172.99 Number of employees in the financial year in the consolidated entities 2023 2022 South Africa 281 282 Norway 144 146 Egypt 98 74 Ukraine 46 57 Malaysia 29 35 Netherlands 31 28 Honduras 20 20 India 26 11 Vietnam 4 9 France 5 9 Mozambique 8 11 Pakistan 28 24 Other 31 26 Total 751 732 62 Note 5 Other operating expenses NOK million 2023 2022 Facilities 210 210 Professional fees 166 175 IT and office costs 78 74 Travel costs 32 32 Social development contributions 21 18 O&M external fees 25 23 Other costs 52 38 Expected credit loss - 98 Total other operating expenses 584 668 The impairment of expected credit loss in 2022 is related to receivables in Ukraine. Government grants are recognised when it is reasonably certain that the company will meet the conditions stipulated for the grants and that the grants will be received. Grants are recognised either as cost reduction or as a deduction of the asset’s carrying amount. Scatec has in 2023 recognised government grants of NOK 12 million (27) in cost reductions and NOK 10 million (29) grants as deductions of the development and construction asset’s carrying amount. Remuneration to the auditors (PwC and other independent auditors) NOK million 2023 2022 Audit services 15 9 Other attestation services 2 1 Tax services 1 1 Other services - 1 Total remuneration 18 11 VAT is not included in the numbers above. Note 6 Financial income and expenses NOK million 2023 2022 Interest income 162 92 Change in fair value of forward exchange contracts 246 - Other financial income 8 23 Interest and other financial income 415 115 Interest expenses 1,727 1,424 Change in fair value of forward exchange contracts 29 89 Other financial expenses 221 154 Interest and other financial expenses 1,977 1,666 Net foreign exchange gain/(loss) -56 -268 Net fiancial expenses 1,617 1,818 See Note 20 Financial risk management for interest rate sensitivity. See Note 24 Non-recourse financing for details on project financing and Note 23 for details on corporate financing. Scatec ASA - Annual Report 2023 63 Note 7 Tax Estimation uncertainty Deferred tax assets are recognised for unused tax losses to the extent that it is probable that taxable profit will be available against which the losses can be utilised. Significant management judgement is required to determine the amount of deferred tax assets that can be recognised based upon the likely timing and the level of future taxable profits. When assessing the probability of utilising these losses several factors are considered, including if the entity in question has a history of losses, if there is an expiration date on the entity’s ability to carry the losses forward and/or if the losses may be used to offset taxable income elsewhere in the Group. The majority of the Group’s tax losses are related to favorable tax rules for depreciation of power plants and its reversal is merely a timing effect. Refer to paragraph below under specification of tax losses carried forward for further description. Uncertain tax positions and potential tax exposures are analysed individually and, the best estimate of the probable amount for liabilities to be paid (unpaid potential tax exposure amounts, including penalties) and assets to be received (disputed tax positions for which payment has already been made), are recognised within current tax or net deferred tax as appropriate. Management uses judgment in assessing the substance of each tax credit scheme. The Group accounts for investment tax credits in current tax in the year when the conditions required to receive the credits are met and they are claimed on the tax return. Investment tax credits that are unused recognised as deferred tax assets to the extent that it is probable that future taxable profit will be available against which unused tax credits can be utilised. The Group has not identified any significant exposure to Pillar Two income taxes that require disclosure in the consolidated financial statements. Effective tax rate NOK million 2023 2022 Tax payable -230 -197 Change in deferred tax 384 108 Withholding tax -42 -45 Adjustments of tax concerning previous years 2 1 Income tax expense 114 -132 Reconciliation of Norwegian nominal tax rate to effective tax rate Profit before income tax 1,008 -1,095 Nominal tax rate (22%) -222 241 Tax effect of: Permanent differences on divestments 270 - Permanent differences on tax incentive in South Africa 457 - Other permanent differences 66 -28 Tax rate different from Norwegian rate -29 -39 Current tax on dividend received and withholding tax -42 -45 Valuation allowance loss carried forward -322 -248 Share of net income from associated companies 10 165 Non-recognised tax effects from impairment in Ukraine - -175 Use and capitalisation of previously unrecognised losses carried forward -1 14 Other items 10 -27 Currency translation -84 11 Calculated tax expense 114 -132 Effective tax rate -11% NA The Group recognised an income tax benefit of NOK 114 million (-132) in 2023. The tax benefit is largely attributable to the Kenhardt plants (NOK 457 million) which qualified for the Enhanced renewable energy tax incentive after reaching Commercial Operating dates in the fourth quarter. This tax incentive granted a 25% additional tax deduction of the plants cost when the assets were put into use in 2023. The incentive will be settled as reduced tax payments in the coming years. 64 The net gain from the divestment of 32% of the shares in Release (NOK 485 million) and the gain on the sale of Upington solar plants in South Africa (NOK 744 million) are permanent differences and do not give rise to any tax expense. The items are presented as permanent differences on divestments in the table above. The remaining difference between the Group’s actual tax expense and a calculated tax expense based on the Norwegian tax rate of 22% is mainly due to different tax rates in the jurisdictions in which the companies operates, withholding taxes paid on dividends, currency effects and effects from unrecognised tax losses. Further, the profit/loss from JVs and associates are reported net after tax which also impacts the effective tax rate. The underlying tax rates in the companies in operation are in the range of 0% to 33%. In some markets, Scatec receives special tax incentives intended to promote investments in renewable energy. Significant components of deferred tax assets NOK million 2023 2022 Tax losses carried forward 4,058 1,997 Valuation allowance of deferred tax assets -623 -458 Financial instruments 58 33 Property, plant and equipment and intangible assets 120 60 Construction projects 92 124 Lease liabilities 56 61 Other items 5 55 Offsetting of tax balances 1) -2,540 -1,012 Total deferred tax assets 1,226 860 Significant components of deferred tax liabilities NOK million 2023 2022 Property, plant and equipment, intangible assets, including right-of-use assets 3,252 1,658 Financial instruments 74 88 Other items 63 6 Offsetting of tax balances 1) -2,540 -1,012 Total deferred tax liabilities 849 743 1) Deferred tax assets and liabilities are offset to the extent that the deferred taxes related to the same fiscal authority and there is a legally enforceable right to offset current tax assets against current tax liabilities Specification of tax loss carried forward NOK million 2023 2022 Country Loss carried forward Deferred tax asset Net deferred tax on other differences Loss carried forward Deferred tax asset Net deferred tax on other differences South Africa 10,322 2,788 -2,187 2,690 753 -680 Norway 2,910 75 -25 2,890 251 -25 Ukraine 2,156 389 -421 2,048 369 -311 Egypt 1,463 158 -499 1,371 143 -452 Jordan 379 17 -55 453 23 -57 Netherlands 303 8 -2 214 - 1 Malaysia 163 - 25 168 - 37 Other 11 - 105 11 - 64 Total 17,708 3,435 -3,058 9,845 1,540 -1,423 The Group has NOK 17,708 million (9,845) of tax losses carried forward. The balances are offset against taxable temporary differences within the same fiscal authority, mainly related to property, plant and equipment. The losses carried forward in countries with power plant assets are mainly related to accelerated depreciation rates for power plant assets compared to the accounting depreciations which are determined by the useful life of the assets. The increase in Scatec ASA - Annual Report 2023 65 losses carried forward for the Group in 2023 mainly derives from losses in Kenhardt plants in South Africa due to accelerated depreciation as the plants were set in operation as well as additional tax deduction as described above. We assessed the probability of utilising the tax losses in all countries where tax losses were recognised to ensure that tax losses are recorded to the extent that the Group expects there will be sufficient future taxable profits available to utilise the losses. At year-end 2023 the Group has recorded a valuation allowance of NOK -623 million (-458) related to tax losses carried forward which are not expected to be used to offset future taxable income. The valuation allowance is recognised in Norway (NOK 400 million), Egypt (NOK 171 million), Malaysia (NOK 39 million) and in other countries . The tax losses in Egypt and Jordan can be carried forward for 5 years while all other tax losses in the Group can be carried forward indefinitely. All other tax losses in the Group can be carried forward indefinitely. Movement in net deferred tax asset NOK million 2023 2022 Net deferred tax asset at 1 January 117 159 Recognised in the consolidated statement of profit or loss 384 108 Deferred tax other comprehensive income 69 -150 Deferred tax transferred to assets classified as held for sale -193 - Net deferred tax asset at 31 December 377 117 Note 8 Earnings per share NOK million 2023 2022 Profit/(loss) attributable to the equity holders of the company and for the purpose of diluted shares 628 -1334 Weighted average number of shares outstanding for the purpose of calculating basic earnings per share 158.9 158.9 Earnings per share for income attributable to the equity holders of the company - basic (NOK) 3.95 -8.40 Effect of potential dilutive shares: Weighted average number of shares outstanding for the purpose of calculating diluted earnings per share 158.9 158.9 Earnings per share for income attributable to the equity holders of the company - diluted (NOK) 3.95 -8.40 Diluted earnings per share is affected by the option programme for equity-settled share-based payment transactions, refer to Note 4 Employee benefits. There is no diluted effect on earnings per share in case of loss. Note 9 Sale of project assets and disposal group held for sale Sale of project assets Upington solar power plants in South Africa On 2 February 2023, Scatec signed an agreement with a subsidiary of STANLIB Infrastructure Fund II, managed by STANLIB Asset Management Proprietary Limited (“Stanlib”), to sell its 42% equity share in the 258 MW Upington solar plants. The closing of the transaction took place on 31 May 2023. Total consideration, net after sales cost amounted to NOK 546 million. The transaction generated a net accounting gain of NOK 744 million on a consolidated basis presented in net gain/(loss) from sale of project assets. With effect from the closing date, the consolidation of the project companies ceased, decreasing the total assets with NOK 2,165 million, decreasing total liabilities with NOK 2,277 million, and increasing equity with NOK 198 million (Scatec’s share). An accumulated foreign currency translation reserve (gain) of NOK 5 million was recycled from other comprehensive income to profit or loss as part of the deconsolidation. The reserve was recorded net with other foreign currency translation differences in other comprehensive income with the opposite entry presented as a foreign exchange income in the statement of profit or loss. 66 Guañizuil IIA solar power plant in Argentina On 19 October 2023, Scatec ASA and Equinor ASA sold their shares in the 117 MW Guañizuil IIA solar power plant in Argentina, as well as their shares in the local operating services company to Central Puerto. The solar power plant was impaired in amount of NOK 350 million, and the sales transaction did not generate any material accounting impact. Mocuba solar power plant in Mozambique On 18 July 2023, Scatec signed an agreement with Globeleq to sell its 52.5% equity share in the 40 MW Mocuba solar power plant in Mozambique for a gross consideration of NOK 86 million, in line with the Group’s strategy. The closing of the transaction took place on 29 December 2023. The transaction has generated a net accounting gain of NOK 47 million on a consolidated basis presented in net gain/(loss) from sale of project assets. The consolidation of the project company ceased, decreasing the total assets with NOK 785 million, decreasing total liabilities with NOK 588 million, and decreasing equity with NOK 41 million (Scatec’s share). An accumulated foreign currency translation reserve (gain) of NOK 21 million was recycled from other comprehensive income to profit or loss as part of the deconsolidation. The reserve was recorded net with other foreign currency translation differences in other comprehensive income with the opposite entry presented as a foreign exchange income in the statement of profit or loss. Release On 27 October 2023, Release closed NOK 1.1 billion transaction with Climate Fund Managers (‘CFM”). CFM contributed approx. NOK 560 million in equity for a 32% shareholding in Release. Scatec retained the majority shareholding of 68%. CFM will also provide shareholder loans of approx. NOK 480 million, part of which will be on concessional terms. As a result of the transaction and in line with the shareholder agreement, Scatec lost control over Release. All assets and liabilities were deconsolidated and Scatec recognised an investment in joint venture at fair value at the acquisition date. Scatec recognised NOK 307 million of the notional goodwill which is allocated to the investment in Release. Notional goodwill is recorded in functional currency and as a result, changes in currency exchange rates affect the value of notional goodwill in NOK. Notional goodwill is not deductible for tax purposes. The divestment of the 32% shareholding generated an accounting gain of NOK 485 million in the consolidated financial statements presented in net gain/(loss) from sale of project assets. An accumulated foreign currency translation reserve loss of NOK 10 million was recycled from other comprehensive income to profit or loss as part of the gain on sale. Refer to Note 14 for details about profit and loss and financial position at stand alone basis for the acquired joint venture, including the bridge from Scatec’s share of equity at stand alone basis to the carrying value of net investments in joint ventures at Group level. Scatec ASA - Annual Report 2023 67 Disposal group held for sale On 19 December 2023, Scatec signed an agreement with Fortis Green Fund I Rwanda Holdings Ltd and Axian Energy Green Ltd to sell its 54% equity share in the 8.5 MW solar power plant in Rwanda for a gross consideration of NOK 14.2 million, in line with the Group’s strategy. The associated assets and liabilities of the subsidiary are presented as held for sale as per 31 December 2023. The transaction is subject to the customary consents and is expected to be completed in 2024. Scatec is also exiting from the operations & maintenance and asset management agreements as part of the sale. NOK million Carrying value 31 December 2023 Assets classified as held for sale Property, plant and equipment 118 Trade and other receivables 7 Other current assets 1 Cash and cash equivalents 12 Total assets of disposal group held for sale 138 Liabilities directly associated with assets classified as held for sale Non-current non-recourse project financing 104 Current portion of non-recourse project financing 11 Other current and non-current liabilities 14 Total liabilities of disposal group held for sale 129 68 Note 10 Property, plant and equipment Accounting principle Power plants in operation The initial cost of an asset comprises its purchase price or construction cost, any costs directly attributable to bringing the asset into operation, the initial estimate of an asset retirement obligation and, for qualifying assets, borrowing costs incurred in the construction period. All other borrowing costs are recognised in the profit or loss in the period in which they incur. Depreciation of a power plant commences when the plant is ready for management’s intended use, normally at the date of grid connection and commissioning. Asset retirement obligations Asset retirement costs are recognised when the Group has an obligation to dismantle and remove a power plant and to restore the site on which it is located. Expenditures related to asset retirement obligations are expected to be paid in the period between 2030 and 2050. Other fixed assets Other fixed assets mainly include office lease, fixtures and equipment. For accounting principles related to right to use lease assets, details are provided in Note 12 Leases. Estimation uncertainty Estimated useful life of power plants The estimated useful lives of power plants are reviewed on an annual basis and changes in useful lives are accounted for prospectively. In most of these markets the sale of electricity depends on having a PPA, hence, the length of the PPA is a relevant factor for determine useful life. The power plants currently in operation have 9 to 25 years off-take agreements. The technical useful life of power plants is subject to several factors such as climatic conditions and maintenance programme; however, it is expected to be 30 years. Technical useful life of storage equipment, such as the BESS (batter energy storage system) on the Kenhardt plant, is highly dependent on usage and number of charging cycles, but is expected to be 25 years. The assessment is made on a plant-by-plant basis. Most of the Group’s power plants are depreciated over the length of the PPA or up to 30 years based on expected usage. Scatec’s operational assets are insured through programmes against physical damage, including natural catastrophes and weather-related events, through a property damage & business interruption insurance. A similar insurance programme is also designed for projects under construction which cover physical damage, loss of income and transportation risks. Thus, potential physical damages of plants will be rebuilt and are not expected to impact useful life of the plants. Other climate related risks have been considered and are currently not assessed to impact useful life of the plants. Capitalisation of development costs Expenses relating to research activities (project opportunities) are recognised in the statement of profit or loss as they incur. Expenses relating to development activities (project pipeline and backlog) are capitalised to the extent that the project is technically and commercially viable and the Group has sufficient resources to complete the development work. The assessment of project viability is based on completion of key development activities and includes management judgment. The carrying value of development projects that have not yet reached the construction phase was NOK 332 million (232) at 31 December 2023. Asset retirement obligations Scatec’s future asset retirement obligation depends on several factors such as the possible existence of a power market for the plants after the end of the PPA, future development of manhour and equipment costs, interest and currency exchange rates. The calculation of the asset retirement obligation includes significant judgment and is done on a plant-by-plant basis, taking into consideration relevant project specifics. Impairments Power plants and projects under development/construction are tested for impairment to the extent that indicators of impairment exist, please refer to Note 13 Impairment testing for details. During 2023, the Group impaired NOK 48 million (132) related to discontinued development projects. In 2022 the Group impaired NOK 742 million related to solar power plants in Ukraine. Scatec ASA - Annual Report 2023 69 Property, plant and equipment NOK million Power plants Power plants under development and construction Other fixed assets Total Accumulated cost at 1 January 2023 19,828 2,250 414 22,492 Additions 62 8,674 51 8,786 Transfers 9,564 -9,564 - - Disposals -3,377 -309 -12 -3,696 Transfer of assets classified as held for sale -214 - - -214 Effect of movements in foreign exchange rates 33 183 8 224 Accumulated cost at 31 December 2023 25,896 1,233 461 27,590 Accumulated depreciation and impairment losses at 1 January 2023 4,743 251 186 5,179 Depreciation for the year 804 - 48 853 Impairment losses 17 48 - 64 Accumulated depreciation transfer of assets classified as held for sale -100 - - -100 Accumulated depreciation and impairment losses disposed assets -511 -8 -12 -531 Effect of movements in foreign exchange rates 88 -2 1 87 Accumulated depreciation and impairment losses at 31 December 2023 5,040 290 224 5,554 Carrying amount at 31 December 2023 20,854 943 238 22,035 Estimated useful life (years) 20-30 N/A 3-5 Accumulated cost at 1 January 2022 18,026 698 316 19,040 Additions 141 1,783 62 1,986 Transfers 233 -233 - - Disposals - -45 - -45 Effect of movements in foreign exchange rates 1,427 48 36 1,511 Accumulated cost at 31 December 2022 19,828 2,250 414 22,492 Accumulated depreciation and impairment losses at 1 January 2022 2,918 116 118 3,152 Depreciation for the year 818 - 46 864 Impairment losses 742 113 19 872 Effect of movements in foreign exchange rates 264 22 4 291 Accumulated depreciation and impairment losses at 31 December 2022 4,743 251 186 5,179 Carrying amount at 31 December 2022 15,083 1,997 229 17,310 Estimated useful life (years) 20-30 N/A 3-5 Note 11 Goodwill and other intangible assets Overview The Group’s goodwill is mainly associated with the acquisitions of SN Power in 2021. The Group had no other intangible assets with an indefinite useful life than goodwill as of 31 December 2023 and 2022. The Group’s Other intangible assets consist of renewable operating license, right to transmit electricity and software. The estimated useful life of intangible assets with a finite lifetime are reviewed on an annual basis, and are amortised over 3-25 years. No impairment charges were recognised in 2023 related to intangible assets. In 2022, the Group impaired NOK 74 million of other intangible assets in Ukraine related to the right to transmit electricity for the power solar plants. Please refer to Note 13 Impairment testing. Estimation uncertainty There is considerable estimate uncertainty associated to the value of intangible assets. Please refer to Note 13 Impairment testing for assessment of recoverable amount. 70 Carrying value of goodwill and other intangible assets NOK million Goodwill Other intangible assets Total Accumulated cost at 1 January 2023 357 525 882 Additions - 35 35 Cost of disposed assets - -99 -99 Effect of movements in foreign exchange 10 28 38 Accumulated cost at 31 December 2023 367 489 857 Accumulated depreciation and impairment losses at 1 January 2023 - 124 124 Depreciation for the year - 24 24 Accumulated depreciation and impairment losses disposed assets - -19 -19 Effect of movements in foreign exchange - 10 10 Accumulated depreciation and impairment losses at 31 December 2023 - 139 139 Carrying amount at 31 December 2023 367 349 717 Accumulated cost at 1 January 2022 321 492 813 Effect of movements in foreign exchange 35 33 68 Accumulated cost at 31 December 2022 357 525 882 Accumulated depreciation and impairment losses at 1 January 2022 - 16 16 Depreciation for the year - 26 26 Impairment losses - 74 74 Effect of movements in foreign exchange - 8 8 Accumulated depreciation and impairment losses at 31 December 2022 - 124 124 Carrying amount at 31 December 2022 357 401 758 Estimated useful life N/A 3-25 Note 12 Lease Accounting principle The Group primarily leases office and land where the power production plants are located, accounted for in accordance with IFRS 16. The Group applies the recognition exemptions and recognises the lease payments as other operating expenses in the statement of profit or loss for leases of low value and leases with lease term less than 12 months. The future lease payments include fixed lease payments and variable lease payments that depend on an index or a rate. The Group recognises variable lease payments dependent on future events in profit or loss, this includes land lease expense where the lease payment is based on power production. Estimation uncertainty When calculating the lease liability and the right-of-use asset, the discount factor is a significant estimate. In the absence of an identifiable discount rate, implicit in the lease agreement, the discount rate used is the Group’s incremental borrowing rate. The incremental borrowing rate has been estimated by each subsidiary on an individual basis. For power producing entities, the interest rate on the non-recourse loans has been central when estimating the incremental borrowing rate. For other subsidiaries, non-secured debt has been used as a benchmark for the discount rate. Several of the Group’s lease agreements contain options to extend the lease agreement beyond the contractual lease term. As the extension period is at the end of the PPA period for land leases it is uncertain whether the option will be exercised. The Group has evaluated all these options, but it’s not deemed reasonably certain that the Group will exercise the options, and hence, the period covered by these options has not been included in the lease liability. The Group reevaluate the options on a continuously basis. Scatec ASA - Annual Report 2023 71 Reconciliation of movement in right-of-use asset NOK million Land Office & cars Total Right-of-use asset at 1 January 2023 202 98 301 Additions 19 42 62 Depreciation for the year -13 -25 -38 Effect of movement in foreign exchange and other changes -7 1 -6 Right-of-use asset at 31 December 2023 201 116 317 Reconciliation of movement in lease liabilities NOK million 2023 2022 Lease liability at 1 January 2023 313 246 Lease agreements entered into during the year 66 65 Lease payments made during the year -48 -46 Interest expense on lease liabilities 27 18 Effect of movement in foreign exchange and other changes -18 30 Lease liability at 31 Desember 2023 340 313 Leases in the income statement NOK million 2023 2022 Operating expenses Short term- low value and variable lease payment expenses -35 -41 Depreciation expenses Depreciation of right-of-use assets (land lease) -13 -10 Depreciation of right-of-use assets (office lease and other) -25 -25 Total depreciation -38 -36 Financial expenses Interest expense on lease liability -27 -18 Total lease expense in the income statement -100 -94 Leases in the statement of financial position NOK million 2023 2022 Assets Right-of-use assets - land lease 201 202 Right-of-use assets - office lease and other 116 98 Total right-of-use assets 317 301 Liabilities Non-current liabilities Lease liabilities (see Note 18 Other non-current and current liabilities) 315 270 Current liabilities Lease liabilities (see Note 18 Other non-current and current liabilities) 25 43 Lease liabilities included in the balance sheet 340 313 The land lease portion of the Right-of-use asset is presented under “power plants” and “Power plants under development and construction“ in Note 10, while the office lease portion of the Right-of-use asset is presented under the line “Other fixed assets”. 72 Leases in the statement of cash flows NOK million 2023 2022 Cash flow from operating activities Short-term and variable lease payments -35 -41 Cash flow from financing activities Payments of principal portion on lease liabilities -21 -26 Interest paid on lease liabilities -27 -20 Maturity analysis – Undiscounted contractual cash flows NOK million 2023 2022 One year 47 38 One to two years 62 42 Two to three years 40 37 Three to four years 37 36 Four to five years 35 34 More than five years 278 315 Total undiscounted lease liabilities 499 501 Lease liabilities included in the balance sheet 340 313 Note 13 Impairment testing Estimation uncertainty An impairment loss is recognised when an asset or cash generating unit (CGU)’s carrying value exceeds the recoverable amount. Factors which trigger impairment testing include, but are not limited to, political changes, macroeconomic fluctuations, changes to the Group’s strategy, project delays, underperforming, changes to tariffs and similar. When an asset is constructed, certain assumptions are made for climate related factors such as irradiation and temperature. Deviations of such assumptions may lead to underperforming of assets, which if significant, may be an indicator of impairment. Furthermore, climate related changes are expected to have a pervasive effect on the energy industry which may impact regulations, remaining useful life and financial viability of our assets in the markets we operate in, and are considered in our impairment testing. Recoverable amount calculations of value in use are based on a discounted cash flow model. The future cash flows include a number of estimates and assumptions, including future market conditions and energy prices, discount rates, estimated useful life and others. Climate risks such as more extreme weather and natural disasters, and changes to environmental regulations, may impact future cash flows through lower production or/and physical damages of the assets. Such risks are accounted for in the discount rates. The estimates are based on the Group’s budgets and long-term outlooks approved by management. The recoverable amount is sensitive to changes in discount rate, expected production rates, demand and price forecasts for power assets with variable income. The Group monitors changes in government legislation on a continuous basis. Legal changes may impact key assumptions in the value in use calculations in future periods. Impairment test – plants in operation Tests for impairment have been performed for CGUs with mandatory annual tests and the CGUs where impairment indicators have been identified. The recoverable amounts for these units have been determined estimating the value in use of the assets and comparing against the carrying value of the CGUs. In 2022 impairment indicators were identified for Scatec’s five solar plants in Ukraine triggered by Russia’s invasion. As a result of impairment assessment performed, an impairment loss of NOK 816 million was recognised. Per 31 December 2023, approximately 95% of the power plants owned and operated by Scatec are intact and available in Ukraine. Revenues from power production have however only been recognised in accordance with actual paid amounts since March 2022. The payment level was 66% in 2023. In the fourth quarter 2023, the impairment tests were updated with new information. Three scenarios have been assessed and weighted to arrive at the value in use for the solar power plants. No significant events have triggered additional Scatec ASA - Annual Report 2023 73 impairment compared to recognised amount in 2022. For details please refer to the 2022 Annual Report. Impairment test – development projects In 2023 Scatec impaired NOK 48 million related to discontinued development projects in Brazil, Oman and Madagascar. Annual mandatory impairment test - goodwill The goodwill of the Group mainly relates to the acquisition of SN Power AS in 2021 (NOK 341 million). The goodwill relates to the portfolio of identified project development opportunities and assembled workforce. Consequently, the goodwill is allocated to and tested for impairment on the global Development & Construction operating segment. The goodwill has been tested for impairment with the following key assumptions and estimates: Discount rate: The discount rates are based on the Weighted Average Cost of Capital (WACC) methodology. The discount rate used in the impairment calculations represent the current market assessment of the risks specific to a group of CGUs, taking into consideration any individual risks of the underlying assets that have not been incorporated in the cash flow estimates. Discount rates used in the value in use calculation is based on a discount rate before tax . The pre-tax discount rate applied in 2023 is 8.9%. Future cash flows: The recoverable amount has been determined based on the value in use calculations. The estimated cash flows correspond to the business plan a five- year period, which is based on the Group’s project backlog and pipeline. The business plan is approved by the Board of Directors. Cash revenues have been calculated based on estimated project volumes and an average margin related to project execution. Cash expenses have been calculated based on budgeted operating expenses attributable to project execution activities. To the best of management’s judgement, capital expenditure and changes in working capital are insignificant in relation to this calculation and are therefore excluded. The discounted free cash flows exceed the carrying amount and the asset is not impaired. Sensitivity: The Group is of the view that no reasonably likely change in the key assumptions listed above would cause the carrying value to materially exceed the recoverable amount for any of the CGUs. An increase in WACC by 2 percentage point would not lead to impairment loss. The Group has not recognised any impairments related to goodwill in 2023 or 2022 as the recoverable amounts exceed the carrying amount. Note 14 Investments in joint venture and associated companies Accounting principle A joint venture or associate is an entity over which the Group has joint control or significant influence. The Group’s investments in its associates and joint ventures are accounted for using the equity method. Under the equity method, the investment is initially recognised at cost and subsequently adjusted for further investments, distributions, and the Group’s share of the net income from the associate or joint venture. Estimation uncertainty The considerations made in determining significant influence or joint control are similar to those necessary to determine control over subsidiaries. Refer to Note 2 Basis for preparation, basis for consolidation and key sources of estimation uncertainty for significant judgements related to the assessment of whether Scatec controls an entity. There is also considerable estimate uncertainty associated with the estimation of the excess values included in the net investment in joint venture and associated companies. The excess values mainly relate to water rights, and the estimated useful life of the water rights are reviewed on an annual basis and amortised over the remaining concession period. The tables below show the material joint ventures and associated companies recognised in the Group and the reconciliation of the carrying amount. 74 Material joint ventures and associated companies Company Registered office 2023 2022 Kube Energy AS Oslo, Norway 25.00% 25.00% Scatec Solar Brazil BV Amsterdam, Netherlands 50.00% 50.00% Apodi I Energia SPE S.A Quixeré, Brazil 43.75% 43.75% Apodi II Energia SPE S.A Quixeré, Brazil 43.75% 43.75% Apodi III Energia SPE S.A Quixeré, Brazil 43.75% 43.75% Apodi IV Energia SPE S.A Quixeré, Brazil 43.75% 43.75% Mendubim Holding B.V. 1) Amsterdam, Netherlands 33.33% 33.33% Mendubim Geração de Energia Ltda. 1) Assu, Brazil 33.33% 33.33% Mendubim (I-XIII) Energia Ltda. 1) Assu, Brazil 33.33% 33.33% Mendubim Solar EPC Ltda. 1) Assu, Brazil 33.33% 33.33% Scatec Solar Solutions Brazil B.V. Amsterdam, Netherlands 50.00% 50.00% Scatec Solar Brasil Servicos De Engenharia LTDA Recife, Brazil 50.00% 50.00% Theun-Hinboun Power Company Vientiane, Laos 20.00% 20.00% SN Aboitiz Power – Magat Inc Manila, Phillippines 50.00% 50.00% Manila-Oslo Reneweable Enterprise Manila, Phillippines 16.70% 16.70% SN Aboitiz Power – Benguet Inc Manila, Phillippines 50.00% 50.00% SN Aboitiz Power – RES Inc Manila, Phillippines 50.00% 50.00% SN Aboitiz Power – Generation Inc Manila, Phillippines 50.00% 50.00% SN Power Uganda Ltd. Kampala, Uganda 51.00% 51.00% Bujagali Energy Ltd. Jinja, Uganda 28.28% 28.28% Ruzizi Holding Power Company Ltd Kigali, Rwanda 20.40% 20.40% Ruzizi Energy Ltd Kigali, Rwanda 20.40% 20.40% SN Power Invest Netherlands B.V. Amsterdam, Netherlands 51.00% 51.00% SN Development B.V. Amsterdam, Netherlands 51.00% 51.00% SN Malawi B.V. Amsterdam, Netherlands 51.00% 51.00% Mpatamanga Hydro Power Ltd. Blantyre, Malawi 25.50% 25.50% Release Solar AS 2) Oslo, Norway 68.00% 100.00% Release Management BV 2) Amsterdam, Netherlands 68.00% 100.00% Scatec Equinor Solutions Argentina S.A Buenos Aires, Argentina - 50.00% Cordilleras Solar VIII S.A Buenos Aires, Argentina - 50.00% 1) Mendubim project structure includes 13 SPVs, EPC and an operating company. 2) Release project structure includes 11 companies On 19 October 2023 Scatec ASA and Equinor sold their shares in the 117 MW Guañizuil IIA solar power plant in Argentina, as well as their shares in the local operating services company. The investments have been derecognised from the group accounts of Scatec. On 27 October 2023 Release by Scatec (“Release”) closed the NOK 1.1 billion transaction with Climate Fund Managers (“CFM”). CFM contributed NOK 560 million in equity for a 32% stake in Release. Scatec retain the majority shareholding of 68%. All assets and liabilities were deconsolidated and Scatec’s investment in joint venture was recognised at fair value at the acquisition date. Carrying amount of investments in material joint venture and associated companies Country Carrying value 31 December 2022 Additions/ disposals Net income from joint venture and associated companies Dividends Net movement of cash flow hedges recognized in OCI Foreign currency translations Carrying value 31 December 2023 Philippines 6,535 - 152 -207 - 291 6,770 Laos 1,822 -1 63 -58 - 56 1,882 Uganda 1,292 - 171 -192 -22 40 1,288 Brazil 625 408 1 - - 60 1,093 Release (incl. Africa and LATAM) - 1,207 10 - - - 1,217 Other 3) 401 40 -350 - - 26 118 Total 10,674 1,654 46 -457 -22 473 12,368 3) Other includes Argentina, Malawi, Rwanda, Norway and the Netherlands. Scatec ASA - Annual Report 2023 75 100% figures of summarised profit and loss for material joint venture and associated companies (standalone basis) 2023 NOK million Philippines Uganda Laos Brazil Release Other Revenues 2,033 1,349 1,261 1,104 460 147 Operating expenses -521 -88 -195 -138 -37 -58 Operating profit/(loss) 605 861 398 108 23 -689 Net financial items -214 -308 -33 -120 22 171 Profit before income tax 391 553 365 -12 44 -519 Income tax -87 -34 -52 -8 -20 76 Profit/(loss) after tax 304 520 313 -19 25 -443 Scatec’s share of profit/(loss) after tax 152 147 63 -11 17 -220 Elimination of January - October figures for Release - - - - 10 - Elimination of internal transacitions and internal profit - 24 - 12 -17 -129 Net profit/(loss) 152 171 63 1 10 -350 2022 NOK million Philippines Uganda Laos Brazil Release Other Revenues 2,616 1,234 1,257 518 - 163 Operating expenses -407 -93 -169 -93 - -63 Operating profit/(loss) 1,343 799 481 116 - -7 Net financial items -224 45 -16 -94 - 220 Profit before income tax 1,120 845 465 22 - 214 Income tax -174 -6 -68 -14 - 109 Profit/(loss) after tax 946 839 396 8 - 323 Scatec’s share of profit/(loss) after tax 473 237 79 4 - 175 Elimination of internal transacitions and internal profit -2 -82 -1 16 - -153 Net profit/(loss) 472 155 79 20 - 22 76 100% figures of summarised financial positions for material joint venture and associated companies (standalone basis) 2023 NOK million Philippines Uganda Laos Brazil Release Other Non-current assets 19,241 9,277 10,198 11,200 2,222 2,754 Current assets 625 277 201 741 1,330 44 Cash and cash equivalents 915 447 696 513 533 178 Total assets 20,781 10,000 11,094 12,454 4,086 2,977 Non-current liabilities 6,543 5,155 852 6,072 210 388 Current liabilities 823 299 833 1,219 1,316 30 Total liabilities 7,365 5,453 1,685 7,292 1,525 418 Total Equity 13,416 4,547 9,409 5,163 2,561 2,559 Scatec share of equity 6,708 1,286 1,882 1,798 1,741 1,313 Loan to joint venture as investment 73 - - 258 66 61 Other / foreign currency translation -10 2 - 14 -31 - Elimination of equity investments - - - -976 -560 -1,255 Net investment in joint venture 6,770 1,288 1,882 1,093 1,217 118 2022 NOK million Philippines Uganda Laos Brazil Release Other Non-current assets 18,780 9,430 10,504 2,947 - 3,892 Current assets 837 269 188 438 - 78 Cash and cash equivalents 901 427 744 218 - 101 Total assets 20,517 10,126 11,435 3,602 - 4,072 Non-current liabilities 6,673 5,197 1,538 1,251 - 534 Current liabilities 893 362 792 465 - 744 Total liabilities 7,566 5,559 2,330 1,716 - 1,278 Total Equity 12,951 4,567 9,105 1,886 - 2,794 Scatec share of equity 6,475 1,292 1,821 703 - 1,430 Loan to joint venture as investment 69 - 1 157 - 253 Other / foreign currency translation -10 - - 5 - -19 Elimination of equity investments - - - -240 - -1,263 Net investment in joint venture 6,535 1,292 1,822 625 - 401 Note 15 Cash and cash equivalents sca NOK million 31 December 2023 31 December 2022 Cash in power plant companies in operation 1,747 2,057 Cash in power plant companies under development / construction 175 109 Other restricted cash 203 223 Free cash 977 1,743 Total cash and cash equivalents 3,101 4,132 Cash in power plant companies in operation includes restricted cash in proceed accounts, debt service reserve accounts, disbursements accounts, maintenance and insurance reserve accounts and similar. These cash and cash equivalents are only available to the Group through distributions as determined by shareholder and non-recourse financing agreements. Cash in assets held for sale of NOK 12 million is not included. Cash in power plant companies under development and construction comprises shareholder financing and draw down on non-recourse financing debt to settle outstanding external EPC invoices. Other restricted cash comprises restricted deposits for withholding tax, guarantees, VAT and rent, NCI’s share of free cash as well as collateralised shareholder Scatec ASA - Annual Report 2023 77 financing of power plant companies not yet distributed to the power plant companies. As of 31 December 2023, NOK 117 million of the total cash is related to companies in Ukraine (of this NOK 88 million is cash in power plant companies). In Egypt, NOK 60 million is held in Egyptian pounds (of this NOK 40 million is cash in power plant companies). Refer to note 32 Subsequent events for further information. Distribution in 2022 included refinancing proceeds from South Africa and Vietnam compared to no proceeds from refinancing in 2023. Capitalised expenditures and Scatec’s share of equity investments in projects under development includes spending related to Botswana and the Grootfontein projects in South Africa, where constructions are planned to start in the first quarter of 2024. Scatec’s share of equity investment in project under construction includes investment in Kenhardt proiects in South Africa, which were in operation at the end of 2023. Movement in free cash at Group level (in recourse group as defined in bond & loan facilities) NOK million 31 December 2023 31 December 2022 Distributions received by Scatec ASA from the power plant companies 914 1,231 Cash flow to equity D&C 1) 555 -149 Cash flow to equity Services 1) 96 58 Cash flow to equity Corporate 1) -716 -347 Working capital/other 2) -427 16 Cash flow from operations 422 809 Capitalised expenditures and Scatec’s share of equity investments in projects under development -503 -454 Scatec's share of equity investments in projects under construction -1,723 -543 Proceeds from disposals of project assets 632 - Cash flow from investments -1,594 -996 Dividend distribution to Scatec ASA shareholders -308 -404 Drawdown of credit facilities in Scatec ASA 713 - Cash flow from financing 405 -404 Change in cash and cash equivalents -766 -592 Free cash at beginning of period 1,743 2,335 Free cash at end of period 977 1,743 Available undrawn credit facilities 1,171 1,827 Total free cash and undrawn credit facilities at the end of period 2,148 3,570 1) Proportionate share of cash flow to equity is defined in Alternative Performance Measures Appendix. 2) Working capital/other in 2023 is mainly explained by payments for construction activities related to the Kenhardt project in South Africa and repayment of construction loan for Ukraine to PowerChina 78 Note 16 Trade receivables Trade receivables are recognised for amounts owed from the customer. Accrued income represents contract assets related to energy production in the last month of the year, which is invoiced in January the following year. The assessment of whether there is objective evidence that trade receivables is impaired is conducted based on the expected credit loss (ECL) approach. Under the approach, lifetime expected credit loss is recognised based on forward-looking information about possible default events. Information on credit risk and foreign exchange risk regarding trade receivables used in the ECL assessment is provided in Note 20 - Financial risk management. Trade receivables NOK million 2023 2022 Trade receivables 328 384 Accrued income and other receivables 247 210 Impairment for expected credit loss -98 -98 Total trade and other receivables 478 497 Ageing of trade receivables at year-end was as follows: NOK million Total Not due Overdue 2023 328 244 86 2022 384 278 105 Expected credit loss is assessed on an individual instrument basis. The overdue receivables for the Group are mainly related to sale of electricity from power plants in Ukraine and Honduras, see further details below. For other jurisdictions in the Group, there are no evidence of change in credit risk for the performing trade receivables and no expected credit provision has been made. Ukraine On 28 March 2022 the Ministry of Energy of Ukraine issued an Order to reduce the amounts paid to the renewable power producers and the unpaid amounts are postponed to a later period. Due to the uncertainty related to future settlement, Scatec has from February 2022 only recognised revenues in accordance with actual paid amounts. In 2022 Scatec made an expected credit loss impairment of NOK 98 million reflecting the high uncertainty related to future settlement of trade and other receivables related to the period prior to the wa r. There have been no significant changes to the situation in 2023 nor increase in outstanding trade receivables, hence no changes to the provision were made. Honduras Scatec has experienced delays in payments from the state-owned off-takers of power in Honduras. Overdue payments have accumulated in Honduras to a varying degree since 2020. In 2023, ENEE has continued to settle outstanding receivables and paid a total of approximately NOK 180 million, leaving the balance at NOK 87 million as of year-end. In 2022, a new Energy law came into force as introduced by the new Government of Honduras. In accordance with the new law, the state owned off-taker has proposed certain changes to the existing PPAs and settlement of outstanding receivables. Part of the outstanding receivables was settled at the end of 2022, and throughout 2023. Remaining outstanding amounts are expected to be settled and payments are secured by sovereign guarantees, hence no expected credit loss impairment has been recognised. Ageing of overdue trade receivables at year-end was as follows: Overdue NOK million Less than 30 days 30 - 60 days 60 - 90 days More than 90 days Total 2023 23 11 35 16 86 2022 14 10 11 71 105 Scatec ASA - Annual Report 2023 79 Note 17 Other non-current and current assets Other non-current assets NOK million 2023 2022 Other non-current investments 154 125 Other non-current receivables 112 116 Total other non-current assets 265 241 Other current assets NOK million 2023 2022 Prepayments related to assets under development/construction 635 1336 Receivables from public authorities/prepaid taxes, VAT etc 252 235 Other receivables and prepaid expenses 263 292 Total other current assets 1,150 1,862 Prepayments related to assets under development and construction The prepayments relate to upfront payment of project costs on the construction projects in South Africa and Pakistan. Note 18 Other non-current and current liabilities Other non-current liabilities comprise the following: NOK million 2023 2022 Shareholder loan from co-investors (ref Note 25) 428 708 Non-current lease liability (ref Note 12) 315 270 Asset retirement obligations (ref Note 10) 490 475 Other long-term liabilites and accruals 110 165 Total other non-current liabilities 1,343 1,618 Other current liabilities comprise the following: NOK million 2023 2022 Accrued expenses related to assets under development/construction 1,400 237 Public dues other than income taxes 89 76 Accrued interest expenses - 112 Accrued payroll 74 75 Current lease liability (ref Note 12) 25 43 Deferred income 14 106 Other current liabilities and accruals 459 457 Total other current liabilities 2,060 1,106 Accrued expenses related to assets under development/construction Accrued expenses relate to accrual of project costs on the construction projects in South Africa and Pakistan. Asset retirement obligations are provided for in case where the Group has a legal obligation to dismantle and remove a power plant and restore the site on which it is located at a future date. The estimate for the asset retirement cost is capitalised as part of the carrying value of the power plant and depreciated over the useful life. The estimate is reassessed annually for each power plant, based on updates in assumptions and key input data. 80 Movement in asset retirement obligations NOK million 2023 2022 Asset retirement obligation at 1 January 475 270 Additional provision during the year 35 189 Provisions reversed during the year -52 - Unwinding of discount 25 18 Effect of movement in foreign exchange and other changes 6 -1 Asset retirement obligation at 31 December 490 475 Note 19 Legal disputes and contingencies Estimation uncertainty The Group is operating in various jurisdictions and is subject to legal disputes and regulatory reviews. Management applies assumptions and judgement considering all information available when assessing if unfavourable outcomes are probable and when estimating amounts required to settle any obligation. Legal claims are assessed on an individual basis and provisions are recognised if the specific claims give rise to present, probable obligations and the costs can be reliably measured. The most significant claims are summarised below. Significant disputes and uncertain tax positions The joint ventures in the Philippines are subject to tax reviews by the local tax authorities on a regular basis, and one entity received a final assessment notice related to the year 2019 of NOK 183 million equivalent (at 31 December 2023) in March 2022. The matter is disputed, and the amount is not included in net income from JV and associated companies for the year. The joint venture in Uganda is subject to a tax investigation by a local tax authority and received tax claims in total amount of NOK 308 million equivalent (at 31 December 2023) on Scatec’s proportionate share during the third quarter 2023. The matter is disputed, and the amount is not included in net income from JVs and associated companies for the year. If the claims materialise, the joint venture will claim this through the tariff according to the Power Purchase Agreement. Should this be challenged the JV has certain indemnities under the Power Purchase Agreement with the off-taker. Further, Scatec has certain tax indemnities under the SN Power share purchase agreement with Norfund. Note 20 Financial risk management Through its business activities Scatec is exposed to the following financial risks: ● Market risk (including commodity price risk, currency risk and interest rate risk) ● Liquidity risk ● Credit risk Guidelines for risk management have been approved by the Board of Directors and are carried out by Scatec’s group finance department in cooperation with the individual operational units. Market risk Scatec is exposed to various market risks, including fluctuations in commodity prices, foreign currency rates and interest rates that can affect the revenues and costs of operating, investing and financing activities. Commodity price risk Scatec’s sale of electricity constitute a material share of its revenues. As a result, the Group’s business, financial position, results of operation and cash flow are affected by changes in electricity prices. The Group seeks to reduce the effect of price fluctuation by entering into long term, fixed price contracts. The power plants produce electricity primarily sold under long term bilateral power purchase agreements (PPAs), with state owned utilities or corporate off-takers, or under government- based feed-in tariff schemes. The weighted average remaining PPA duration for power plants in operation is 15 years. The electricity produced from the power plants in the Philippines is sold in the spot market and on bilateral contracts under a renewable operating license, as well as ancillary services. In June 2023, Scatec started selling power from the Progressovka power plant in the spot market. The decision to sell into the Scatec ASA - Annual Report 2023 81 spot market was made based on changes in the local law which enabled Scatec to pause the PPA (while still being able to re-enter the PPA). Some of the off-take agreements entered into do not contain inflation-based price increase provisions or provisions that only partially allow for inflation-based increases. Some of the countries in which the Company operates, or into which the Company may expand in the future, have in the past experienced high inflation. The fixed price contracts are classified as “own use” contracts (with reference to IFRS 9.2.4), and hence not considered to be in scope of IFRS 9. A decline in the market price of electricity could materially adversely affect the financial attractiveness of new projects. The price of electricity is influenced by government support schemes, the development of the renewable power production industry and development in prices on other sources of electricity. Transitional climate risk including broader regulatory changes, development in cost and efficiency of renewable energy technologies and changes in power markets are expected to affect power prices. Changes to energy trading, allocation of transmission cost and grid capacity , could also have an impact on electricity prices. A decline in the costs of other sources of electricity and primary energy sources, such as fossil fuel or nuclear power, could reduce the wholesale price of electricity. A significant amount of new electricity generation capacity becoming available could also reduce the wholesale price of electricity. Currency risk Scatec operates internationally and is subject to currency exposure when transactions and monetary balances are denominated in currencies other than the functional currency. For the Group’s operating entities, currency risk is managed based on functional currency and expected cash flows. This is done through the setup of the SPVs with natural hedges where non-recourse financing, revenue and other transactions to a large extent are denominated in the same currency. Construction revenues, cost of sales and gross profit may be subject to significant currency fluctuations. However, multi- currency construction contracts contribute to a natural hedge of cost of sales. To the extent that the Group hedges foreign currency exposure, it is based on cash flow considerations and not with regards to foreign currency translation effects in the financial statements. The Group is also exposed to currency fluctuations with regards to dividend distributions from the operating companies and dividend payment to the shareholders of the parent company. The general policy of the Group is not to hedge foreign currency exposure on distributions from the companies operating the power plants. The sensitivity analysis shows the profit and loss effect of reevaluation of monetary items due to changes in currencies the Group is exposed to. See consolidated statement of other comprehensive income for foreign currency translation affecting equity. The sensitivities have been calculated based on what Scatec views to be reasonably possible changes in the foreign exchange rates for the coming year and net balances in different currencies as of December 31, 2023. The tables show profit and loss effect of 5 % increase in the currency rate against NOK. NOK million Profit (loss) before taxes At 31 December 2023 EUR - Net gain/(loss) (5%) -63 USD - Net gain/(loss) (5%) -3 ZAR - Net gain/(loss) (5%) -25 MYR - Net gain/(loss) (5%) -6 EGP - Net gain/(loss) (5%) -7 UAH - Net gain/(loss) (5%) -24 PKR - Net gain/(loss) (5%) -20 NOK million Profit (loss) before taxes At 31 December 2022 EUR - Net gain/(loss) (5%) -45 USD - Net gain/(loss) (5%) 3 BRL - Net gain/(loss) (5%) -4 ZAR - Net gain/(loss) (5%) -13 MYR - Net gain/(loss) (5%) -6 EGP - Net gain/(loss) (5%) -21 UAH - Net gain/(loss) (5%) -21 Interest rate risk Scatec is exposed to interest rate risks through funding and cash management activities. The interest rate risk management objective is to keep the borrowing costs at a minimum and to keep the volatility of future interest payments within acceptable limits. The Group manages its interest rate risk by either using long-term financing at fixed rates or using floating to fixed interest rate swaps for either parts or full exposure of external loans. Based on the current Group interest bearing debt portfolio, the interest rate hedge ratio (weighted average) is approximately 63 % for the non-recourse project level debt. For corporate debt, the hedge ratio has been slightly reduced from approximately 20% to 17% in 2023 due to amortisation on the hedged part of the debt. 82 The interest rate risk on the debt at the power plant level is predominantly hedged by way of interest rate swaps subject to hedge accounting or fixed rate loans. For more information on the Group’s financial liabilities, refer to Note 23 Corporate Financing and Note 24 Non-recourse financing. The sensitivity analysis shows how profit and loss would have been affected by changes in unhedged interest rates. NOK million At 31 December 2023 At 31 December 2022 At 31 December 2023 1% 1% Net gain/(loss) -61 -65 The impact on the profit and loss with a decrease or increase in interest rate of 1% would result in a gain or loss of NOK 61 million. Liquidity risk Liquidity risk is the risk that Scatec will not be able to meet financial obligations when due. The Group manages liquidity risk through a regular review of future commitments, cash flows from operations and credit facilities. Due to the dynamic nature of the underlying business, the Group maintains flexibility in funding by maintaining availability under committed credit facilities. In addition, the Group has available funding through the USD 180 million Revolving Credit Facility (RCF) and the USD 5 million Overdraft Facility. As per December 31, 2023, USD 70 million was drawn on the RCF. In some of the countries where Scatec operates, governments have imposed regulations on repatriation of funds out of the country. This may halt or delay flow of funds between group companies under certain circumstances. Scatec seeks to minimise such risk through assessments of the relevant jurisdictions and regulations and adapt accordingly. Scatec’s ability to seek liquidity and comply with financial obligations is related to the capability to comply with extended ESG targets and reporting requirements. Transitional climate risk including new regulations and shifting in global financing may affect Scatec’s liquidity. A break-down of free and restricted cash is provided in Note 15 Cash and cash equivalents. Maturity of principal payment and interest on financial liabilities held by the Group NOK million Within 1 year 1-2 years 2-5 years More than 5 years Corporate financing 1,564 4,600 5,612 - Non-recourse financing 2,596 2,455 7,091 20,717 Shareholder loan from non-controlling interests 30 12 168 370 Trade and other interest-bearing liabilities 294 247 - - Lease liabilities 47 62 112 278 Total 4,531 7,376 12,983 21,365 For information about the Group’s financial liabilities including maturity, refer to Note 23 Corporate Financing, Note 24 Non- recourse financing, Note 26 Guarantees and Note 12 Leases Credit risk Credit risk is the risk that Scatec’s customers or counterparties will cause financial loss by failing to meet their obligations. The Group is exposed to third party credit risk in several instances, including off-take partners who have committed to buy electricity produced by or on behalf of the Group, suppliers and/or contractors who are engaged to construct or operate assets held by the Group, property owners who are leasing land to the Group, banks providing financing and guarantees of the obligations of other parties, insurance companies providing coverage against various risks applicable to the Group’s assets, and other third parties who may have obligations towards the Group. Most of the electric power generated by the Group’s current portfolio of projects in operation or under construction is, or will be, sold under long-term off-take agreements with public utilities or other partners, or under Feed-in Tariff (“FiT”) arrangements, Power Purchase Agreements (PPAs) or similar support mechanisms governed by law. The majority of these projects is supported by government guarantees or have obligations regulated by law. However, there is still a risk of legislative or other political action that may impair their contractual performance. The energy produced in the Philippines is sold to the whole sale market. Energy produced by the Progressovka plant in Ukraine is delivering to the spot market, but retaining the option to re-enter the PPA. For any reason, if any of the counterparties to these contracts are unable or unwilling to fulfil their contractual obligations, refuse to accept delivery of Scatec ASA - Annual Report 2023 83 power delivered thereunder or if they otherwise terminate such agreements prior to the expiration thereof, our assets, liabilities, business, financial condition, results of operations and cash flows could be materially and adversely affected. The Group’s main credit risks arise from credit exposures with accounts receivables and deposits with financial institutions. All major deposits and investments with financial institutions are kept with entities carrying a minimum international credit rating from Moodys/ S&P of at least A-. Theoretically, the Group’s maximum credit exposure for financial assets is the aggregated statement of financial position carrying amounts of financial loans and receivables before expected credit loss provision, as well as cash and cash equivalents, equaling NOK 5,020 million at 31 December 2023. Refer to Note 16 Trade receivables for information on the expected credit loss provision related to trade receivables. Note 21 Financial instruments Accounting principle Financial assets The classification of financial assets depends on the financial asset’s contractual cash flow characteristics and the Group’s business model for managing them. The Group’s financial assets at amortised cost mainly include trade receivables and cash and cash equivalents. Financial assets at amortised cost are subsequently measured using the effective interest (EIR) method and are subject to impairment assessment. See note 16 for accounting policy and ECL approach on trade receivables. Financial assets at fair value through profit or loss include derivatives, including separated embedded derivatives, unless they are designated as effective hedging instruments. The Group’s financial assets at fair value through OCI include effective cash flow hedges. Financial liabilities All financial liabilities are initially recognised at fair value, in the case of loans, borrowings and payables, net of directly attributable transaction costs. The Group’s financial liabilities include trade and other payables, loans and borrowings including bank overdrafts and derivative financial instruments. After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the EIR method. The EIR amortisation is included as finance costs in the statement of profit or loss. The Group’s financial liabilities at fair value through OCI include effective cash flow hedges. A financial liability is derecognised when the obligation under the liability is discharged, cancelled or expires. Estimation uncertainty Fair value measurement All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy from IFRS 13 based on the lowest level input that is significant to the fair value measurement . The fair value of interest rate swaps is calculated as the present value of the estimated future cash flows based on the observable yield curves (level 2). The fair value of a foreign exchange derivatives are calculated as the present value of the difference between the fixed forward rate and the spot rate at the balance sheet date (level 2). During the reporting period ending 31 December 2023, there have been no transfers between the fair value levels. Refer to Note 22 Derivative financial instruments for details. 84 Financial instrument by measurement category NOK million Measurement category 2023 2022 Assets Derivatives Interest rate swap Fair value – hedging instruments through OCI 315 396 Debt instruments Cash and cash equivalents Amortised cost 3,101 4,132 Trade receivables Amortised cost 230 286 Other debt instruments and receivables Amortised cost 560 451 Total financial assets 4,206 5,264 Total current 3,728 4,774 Total non-current 478 490 Liabilities Interest bearing loans and borrowings Corporate financing Amortised cost 9,079 7,987 Non-recourse financing loans Amortised cost 16,957 15,260 Derivatives Interest rate swap Fair value – hedging instruments through OCI 179 28 Foreign exchange forward contracts Fair value – hedging instruments through PL - 92 Foreign exchange forward contracts Fair value – hedging instruments through OCI 41 - Other financial liabilities Shareholder loan from non-controlling interests Amortised cost 428 708 Trade and other financial liabilities Amortised cost 541 1,285 Total financial liabilities 27,224 25,360 Total current 3,645 3,009 Total non-current 23,579 22,351 There are no significant differences between total carrying value and fair value for financial instruments measured at amortised cost. NOK million 2023 2022 2023 2022 Corporate financing Non-recourse financing Liability at 1 January 2023 7,987 7,264 15,260 11,855 Proceeds 713 - 6,038 3,468 Repayment (110) - (1,818) (1,175) Change in accrued interest 165 (180) 88 62 Disposal and reclassified to held for sale - - (2,692) - Reclassed to equity - - - - Foreign exchange movements 324 903 80 1,049 Liability at 31 Desember 2023 9,079 7,987 16,957 15,260 Refer Note 12 Lease for movement in lease liabilities. Scatec ASA - Annual Report 2023 85 Note 22 Derivative financial instruments Derivatives The Group uses derivative financial instruments to hedge certain risk exposures. Derivative financial instruments entered into include: ● receive fixed, pay variable interest rate swaps to hedge the interest rate risks related to non-recourse financing of renewable power production plants and for parts of the corporate debt ● cross-currency interest rate swap to hedge corporate debt denominated in NOK where the principal amount in NOK is swapped to USD and reference rate is swapped from NIBOR to SOFR to hedge the risk of fluctuations in the USD/NOK exchange rate and the underlying interest rates ● foreign exchange derivative contracts to hedge the risk related to financing and CAPEX denominated in local currencies for projects under construction Hedge accounting Interest rate swaps and cross-currency interest rate swap Derivative financial instruments are initially recognised at fair value on the date of which a derivative contract is entered into and are subsequently re-measured at fair value. The effective portion of cash flow hedges is recognised in OCI and later reclassified to profit or loss when the underlying hedged item affects profit or loss. The Group only applies hedge accounting for cash flow hedges that meet the criteria in IFRS 9. This include the interest rate swaps and the cross-currency interest rate swaps. Such hedges are expected to be highly effective in achieving offsetting changes in the expected cash flows and are assessed on an ongoing basis to determine that they actually have been highly effective throughout the financial reporting periods for which they were designated. Foreign exchange derivatives Foreign exchange derivatives consist of USD/ZAR currency forward contracts related to the power plants under construction in South Africa, to mitigate currency exposure on equipment purchases denominated in USD. The foreign exchange derivatives are recognized in the statement of financial position at fair value, with the change in value recognized in the statement of profit and loss as financial income/expense. Hedge accounting is applied for hedges entered into during the year, and the effective portion of cash flow hedges is then recognised in OCI and later reclassified to profit or loss when the underlying hedged item affects profit or loss. Derivative financial assets and liabilities The tables show the market value of the derivatives for the year ending 2023 and 2022, carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative. The derivative financial instruments are presented on a gross basis in the consolidated statement of financial position, since the Group did not have the legal right to offset these cash flows. NOK million 2023 2022 Interest rate swap contracts financial assets measured at level 2 in the fair value hierarchy Current portion 16 21 Non-current portion 299 375 Total derivative financial assets 315 396 NOK million 2023 2022 Interest rate swap contracts financial liabilities measured at level 2 in the fair value hierarchy Current portion 7 16 Non-current portion 172 12 Total Interest rate swap contracts derivative financial liabilities 179 28 Foreign exchange contracts financial liabilities measured at level 2 in the fair value hierarchy Current portion 34 92 Non-current portion 7 0 Total Foreign exchange contracts financial liabilities 41 92 Total derivative financial liabilities 219 120 86 Interest rate swaps per country 2023 Country Notional amount (NOK million) Fixed rate(s) Floating rate reference rate(s) Maturity Norway 1,374 0.40% 3-month USD LIBOR 2025 South Africa 3,308 8.40% - 9.78% 3-month JIBAR, 1-month JIBAR 2031-2041 Egypt 2,369 2.15% USD-SOFR-COMPOUND 2041 Malaysia 191 2.95% 6-month KLIBOR 2028 Interest rate swaps per country 2022 Country Notional amount (NOK million) Fixed rate(s) Floating rate reference rate(s) Maturity Norway 1,457 0.40% 3-month USD LIBOR 2025 South Africa 2,197 8.40% - 8.70% 3-month JIBAR 2024-2028 Egypt 2,471 2.15% USD-SOFR-COMPOUND 2041 Mozambique 364 3.30% 6-month USD LIBOR 2035 Malaysia 212 2.95% 6-month KLIBOR 2028 The cross-currency swap is entered into for the NOK 1 billion senior unsecured Green Bond which is swapped to USD 97.5 million and the interest reference rate is swapped from NIBOR to SOFR to hedge the risk of fluctuations in the USD/NOK. The swap matures in 2027. Reconciliation of hedging reserve - interest rate swap contracts NOK million 2023 2022 Opening balance 291 -242 Recycling during the year to profit or loss, gross -125 348 Recycling during the year to profit or loss, tax effect 28 -85 Unrealised gain/(loss) during the year -125 353 Unrealised gain/(loss) during the year, tax effect OCI 37 -83 Hedge reserves in disposed enities and currency effects -8 - Closing balance 98 291 Of which equity holders of the parent company 34 199 Scatec ASA - Annual Report 2023 87 Note 23 Financing Corporate financing The table below gives an overview of the corporate financing carried out by the Group. The loan balances include the non- current and current portion. The book equity of the recourse group, as defined in the facility agreements, was NOK 10 393 million on 31 December 2023. Scatec was in compliance with financial covenants for recourse debt at year end. The listed EUR Green Bond has a coupon rate of 3M EURIBOR + 2.5 % margin. The USD 150 million Green Term Loan is amortised through semi-annual repayments of USD 7.5 million. Refinancing of Bridge to Bond facility In the first quarter of 2023, Scatec fully refinanced the USD 193 million Bridge-to-Bond facility related to the acquisition of SN Power. On 2 February 2023, Scatec refinanced USD 100 million of the USD 193 million Bridge-to-Bond facility with a new USD 100 million Green Term Loan with maturity in the fourth quarter 2027 provided by DNB, Nordea and Swedbank. The new Term loan is amortised through semi-annual repayments of USD 5 million starting from 2024. On 10 February 2023 Scatec ASA issued NOK 1 billion of new senior unsecured green bonds to refinance the remaining USD 93 million of the Bridge-to-Bond facility. Interests will be paid on a quarterly basis, with no repayments of principal before maturity. The new bonds have maturity in February 2027 with a coupon rate of 3m NIBOR + 660 bps. With the new bond, Scatec ASA has entered into a cross-currency interest rate swap contract in which the principal of NOK 1 billion was swapped to USD 97.5 million, and interest payments based on NIBOR rates are swapped to SOFR-based rates. Refer to Note 32 Subsequent Events for information about refinancing and issuance of new bond after year end. Currency Denominated currency value (million) Maturity Carrying value 31 December 2023 (NOK million) Carrying value 31 December 2022 (NOK million) Green Bond EUR (Ticker: SCATC03 NO0010931181) EUR 250 Q3 2025 2,793 2,625 Green Bond NOK (Ticker: ISIN NO0012837030) NOK 1,000 Q1 2027 989 - Total unsecured bonds 3,782 2,625 USD 150 million Green Term Loan USD 135 Q1 2025 1,374 1,481 USD 100 million Green Term Loan USD 100 Q4 2027 1,008 - Bridge to Bond USD 193 - - 1,906 Total secured financing 2,383 3,387 Vendor Financing (Norfund) USD 200 Q1 2028 2,038 1,975 Total unsecured financing 2,038 1,975 Revolving credit facility USD 180 Q3 2025 713 - Overdraft facility USD 5 - - Total secured back-stop bank facilities 713 - Total Principal amount 8,915 7,987 Accrued interest 164 112 Total Corporate financing 1) 9,079 8,099 As of non-current 7,947 8,099 As of current 1,132 - 1) Accrued interest has been reclassified from Other current liabilities to Corporate financing in the statement of financial position in 2023. 88 Outstanding acquisition finance As of 31 December 2023, the following facilities and amounts are outstanding of the initial USD 1,030 million financing package related to the acquisition of SN Power in the first quarter of 2021: ● USD 150 million Green Term Loan provided by Nordea, Swedbank and DNB with maturity in the first quarter of 2025. Refer to note 32 Subsequent Events for information about refinancing of the Green Term Loan. ● USD 200 million Vendor Financing provided by Norfund with maturity in the first quarter of 2028. Revolving credit facility The existing USD 180 million Revolving Credit Facility (RCF), provided by Nordea Bank, DNB, Swedbank and BNP Paribas, was in the first quarter further extended by 1.5 years with maturity in the third quarter of 2025. The facility can be drawn in USD, NOK, EUR or an optional currency agreed with the banks. Any drawdown on the RCF is required to be repaid after 12 months. Scatec made a drawdown on the facility in the fourth quarter and USD 70 million was outstanding at year-end 2023, increasing free cash to NOK 977 million. The margin on the RCF is linked to the following ESG (Environmental, Social and Governance) KPIs: ● A targeted level for LTIFR (Lost time incident frequency rate) for the Group ● Anti-Corruption training for all employees ● Environmental and social baseline studies and risk assessment on all power plants by external experts Overdraft facility Scatec has not drawn on the overdraft facility with Nordea per 31 December 2023. Per 31 December 2023, Scatec was in compliance with all financial covenants for the above facilities. Guarantee facilities The Guarantee Facility Agreement (GFA) has Nordea Bank as agent and issuer, with Nordea Bank, Swedbank, DNB and BNP Paribas as guarantee instrument lenders. The GFA is mainly used to provide advance payment-, performance and warranty bonds under construction agreements, as well as trade letter of credits. In addition to the GFA, Scatec has guarantee facilities with Standard Bank South Africa, Lombard insurance company in South Africa, First Randbank in South Africa, four European insurance companies providing sureties and MBank in Malaysia. These facilities are mostly used to cover short term bid bonds. Refer to 26 Guarantees and commitments for further information. Other interest-bearing liabilities PowerChina Guizhou Engineering Co (“PowerChina”) have provided a construction loan to Scatec for the Progressovska power plant in Ukraine. Scatec has provided a corporate and bank guarantee to PowerChina in support of this obligation. In 2022, Scatec and PowerChina signed a revised payment plan for the construction loan where part of the loan was paid in August 2022 and December 2023. The last tranche of EUR 22 million, equivalent to NOK 247 million at year-end 2023, will be paid by mid-2025. Scatec has no other recourse construction financing arrangements for other projects. Refer to Note 26 Guarantees and commitments for further details. Scatec ASA - Annual Report 2023 89 Note 24 Non-recourse financing See Note 21 Financial instruments for accounting principle for financial liabilities recognised to amortised cost. The table below specifies non-recourse financing as of 31 December 2023 and 2022. The rate of interest is a calculated average per portfolio. Most of the loans are fixed or swapped to fixed rate interests. For more information on interest rate risk, see Note 20 Financial Risk Management. NOK million Interest rate Maturity date 2023 2022 Loan facilities (ZAR) - South Africa portfolio Kalkbult, Linde and Dreunberg 10.84% 2031-2032 1,711 1,910 Loan facilities (ZAR) - South Africa portfolio Kenhardt 11.88% 2041 6,969 2,582 Loan facilities (ZAR) - South Africa portfolio Grootfontein 10.42% 2045 237 - Loan facilities (CZK) – Czech portfolio 4.90% 2029 284 315 Loan facilities (USD) – Jordan portfolio 6.55% 2032 639 685 Loan facilities (USD) – Produccion De Energia S.A (Aqua Fria) 7.21% 2026 302 387 Loan facilities (MYR) – Quantum Solar Park (Semenanjung) SDN. BHD. 6.00% 2035 1,656 1,784 Loan facilities (MYR) – Red Sol 4.42% 2028 236 264 Loan facilities (USD) - Aswan portfolio Egypt 5.21% 2041 3,074 3,138 Loan facilities (EUR) - Ukraine 7.78% 2027-2029 868 987 Loan facilities (VND) - Vietnam 9.00% 2035 345 356 Loan facilities (VND) - Pakistan 14.72% 2037 637 - Loan facilities (USD) - Gigawatt Global Rwanda Ltd (ASYV) 1) 8.25% 2031 - 116 Loan facilities (ZAR) - South Africa portfolio Upington - - - 2,267 Loan facilitites (USD) - Central Solar de Mocuba, Mozambique - - - 468 Total non-recourse financial liabilites 16,957 15,260 Of which non-current non-recourse financial liabilities 15,026 13,297 Of which current non-recourse financial liabilities 1,931 1,963 1) Rwanda is presented as held for sale and the total group loan balance does not include outstanding non-recoursing finance balance in Rwanda at the end of 2023 The financing of the plants is mainly ring-fenced in power plant companies with a non-recourse finance structure. This implies that the project debt is only secured and serviced by project assets and the cash flows generated by the project . Compared to corporate financing, non-recourse financing has certain key advantages, including a clearly defined and limited risk profile . There is no obligation for project equity investors to contribute additional funding in the event of a default. Free cash flows after debt service are distributed from these power plant companies to Scatec, and any other project equity investors in accordance with the shareholding and the terms of the finance documents. For four of the five companies operating in the Czech Republic, the non-recourse financing agreements include a cross-default clause within the Czech group. Please refer to Note 26 Guarantees and commitments for information on the use of parent company guarantees in favor of power plant companies. The project entities’ assets are pledged as security for the non- recourse financing. The Group’s book value of the pledged power plants is NOK 20,710 million (15,676) as of 31 December 2023. 90 Repayment structure NOK million Loan repayment Interest payment Total 2024 1,080 1,516 2,596 2025 925 1,530 2,455 2026 959 1,473 2,432 2027 884 1,394 2,279 2028 1,052 1,327 2,380 2029 798 1,140 1,938 2030 818 1,040 1,858 2031 943 982 1,926 2032 780 917 1,697 2033 782 856 1,637 2034 996 781 1,777 2035 1,019 689 1,708 2036 945 596 1,540 2037 1,056 494 1,550 2038 1,016 394 1,411 2039 1,061 296 1,357 2040 849 196 1,045 2041 1,017 97 1,114 2042 31 25 56 2043 36 8 44 2044 31 4 36 2045 22 1 23 Total future loan repayment 17,102 15,758 32,859 Covenants Scatec has financial covenants related to the non-recourse financing in the different countries, for example different Debt Service Coverage Ratios (DSCR) and Equity Ratios. The agreements also contain restrictions on, inter alia, hedging policies, new activities and consents, amendments to the key agreements and insurance policies, pledges and guarantees, financial indebtedness and giving financial support, capital expenditures, changes of shareholder structure and auditors, as well as several undertakings related to budgets, financial and operational reporting. Except for Ukraine, Scatec was in compliance with financial covenants for the non-recourse debt on 31 December 2023. Ukraine The current non-recourse debt as of 31 December 2023 includes NOK 865 million in non-recourse debt in Ukraine. All of Scatec’s power plant companies in Ukraine with non- recourse financing are in breach with several covenants in the loan agreements as of 2023. Scatec has continuous and constructive dialogue with the lenders and the parties have agreed on a non-formalised “stand still”. Egypt Scatec has a non-recourse Green Project Bond in Egypt with an outstanding balance of USD 302 million per 31 December 2023. Due to the recent economic development, Egypt is facing a shortage in foreign currencies including USD. By the end of 2023, the subsidiaries in Egypt exchanged material deposits in local currency to USD (USD 42 million) at the official exchange rate and refilled the Debt Service Reserve Accounts with the required amounts for the non-recourse Green Project Bond. The project companies hold sufficient USD to serve the next installment of the bond due in March 2024 of approximately USD 18 million. The uncertain macro situation and difficulties of exchanging EGP to USD is expected to persist and is closely monitored by the group. Refer to Note 32 Subsequent events for further information. Scatec ASA - Annual Report 2023 91 Note 25 Project financing provided by co-investors In relation to the structuring and financing of the power plant companies in the Group, financial instruments are issued to both the controlling and non-controlling interests. Such financing can be both paid-in equity and shareholder loans. Issued capital and shareholder loans are considered equity instruments if repayment is on the discretion of the power plant company. The equity and loan financing provided by the co-investors is repaid according to a pre-determined waterfall structure, meaning that the financing presented below will be settled after external non-recourse financing, and only when distrib- utable cash as defined by the financing agreements is available. Normally this would occur twice a year. For some of the project companies in the table the co-investor funding has been provided indirectly through jointly owned holding companies. At 31 December 2023, the following financing have been granted by co-investors to consolidated power plant companies: Shareholder loan recognized NOK million Country of incorporation Total financing Paid-in equity in equity as financial liability Scatec Solar SA 166 (Pty) Ltd (Kalkbult) South Africa 52 52 0 0 Simacel 155 (Pty) Ltd (Linde) South Africa 21 21 0 0 Simacel 160 (Pty) Ltd (Dreunberg) South Africa 40 40 0 0 Scatec Kenhardt 1 (RF) (Pty.) Ltd. South Africa 333 333 0 0 Scatec Kenhardt 2 (RF) (Pty.) Ltd. South Africa 331 331 0 0 Scatec Kenhardt 3 (RF) (Pty.) Ltd. South Africa 256 256 0 0 Gigawatt Global Rwanda (ASYV) Rwanda 18 5 12 0 Anwar Al Ardh for Solar Energy Generation PSC (EJRE) Jordan 94 1 93 0 Ardh Al Amal for Solar Energy Generation PSC (GLAE) Jordan 44 1 43 0 Producción de Energía Solar y Demás Renovables, S.A. (Agua Fria) Honduras 287 114 0 172 Los Prados Honduras 160 160 0 0 Aswan Solar Power SAE (BB1) Egypt 34 34 0 0 Zafarana Solar Power SAE (ZAF1) Egypt 97 93 0 4 Red Sea Solar Power SAE (ZAF2) Egypt 186 176 0 10 Upper Egypt Solar Power (BB2) Egypt 110 105 0 5 Kom Ombo Renewable Energy SAE (BB3) Egypt 105 101 0 4 Daraw Solar Power SAE (BB4) Egypt 86 83 0 3 Egypt Green Hydrogen S.A.E. Egypt 94 0 0 94 Kamianka / Chysta Energiya Ukraine 68 1 0 67 Rengy Bioenergy Ukraine 69 1 0 68 Helios Power (Private) Limited Pakistan 15 14 0 0 Meridian Energy (Private) Limited Pakistan 15 14 0 0 HNDS Energy (Private) Limited Pakistan 15 14 0 0 Total project financing from co-investors 2,526 1,950 148 428 92 At 31 December 2022, the following financing have been granted by co-investors to consolidated power plant companies: Shareholder loan recognized NOK million Country of incorporation Total financing Paid-in equity in equity as financial liability Scatec Solar SA 166 (Pty) Ltd (Kalkbult) South Africa 54 54 0 0 Simacel 155 (Pty) Ltd (Linde) South Africa 21 21 0 0 Simacel 160 (Pty) Ltd (Dreunberg) South Africa 41 41 0 0 Gigawatt Global Rwanda (ASYV) Rwanda 20 5 15 0 Anwar Al Ardh for Solar Energy Generation PSC (EJRE) Jordan 91 1 90 0 Ardh Al Amal for Solar Energy Generation PSC (GLAE) Jordan 43 1 42 0 Producción de Energía Solar y Demás Renovables, S.A. (Agua Fria) Honduras 265 111 0 155 Los Prados Honduras 207 207 0 0 Aswan Solar Power SAE (BB1) Egypt 33 33 0 0 Zafarana Solar Power SAE (ZAF1) Egypt 89 37 0 52 Red Sea Solar Power SAE (ZAF2) Egypt 167 33 0 134 Upper Egypt Solar Power (BB2) Egypt 100 36 0 64 Kom Ombo Renewable Energy SAE (BB3) Egypt 97 43 0 54 Daraw Solar Power SAE (BB4) Egypt 79 40 0 40 Egypt Green Hydrogen Egypt 44 0 0 44 Kamianka / Chysta Energiya Ukraine 59 1 0 58 Rengy Bioenergy Ukraine 83 1 0 82 Central Solar de Mocuba, Mozambique Mozambique 49 29 0 20 Dyason's Klip 1 South Africa 111 111 0 0 Dyason's Klip 2 South Africa 112 112 0 0 Sirius Solar PV Project One South Africa 110 110 0 0 Helios Power (Private) Limited Pakistan 14 14 0 1 Meridian Energy (Private) Limited Pakistan 14 14 0 1 HNDS Energy (Private) Limited Pakistan 14 14 0 1 Total project financing from co-investors 1,921 1,070 147 708 For the year 2023, interest expenses on financing from co-investors of NOK 45 million have been expensed (NOK 45 million for 2022), of which NOK 2 million is recognised directly in equity (NOK 2 million for 2022). Note 26 Guarantees and commitments Guarantee exposure The amounts specified below are total exposure on guarantees issued by Scatec ASA at each balance sheet date based on when the guarantees expire. The guarantees expire randomly during the year. Most guarantees are issued on behalf of consolidated entities, except as specified in the table below. The fair value of the guarantees is immaterial on a consolidated basis; hence no liability is recognised. NOK million 31.12.2023 31.12.2024 31.12.2025 31.12.2026 Bid Bonds 66 44 44 44 Advanced Payment Guarantees 31 - - - Performance Guarantees (EPC) 289 249 - - Warranty Guarantees (EPC) 621 359 359 - SPV Performance / Commitments 625 537 228 149 O&M Performance (3rd Party) 19 - - - Other Payment Guarantees 2,083 274 9 9 Total 3,734 1,462 640 201 Whereof issued on behalf of non-consolidated entities 108 36 - - Scatec ASA - Annual Report 2023 93 Guarantees For projects under development, Scatec is often required to issue Bid Bonds to secure commitment during submission of project bids. Performance Guarantees cover contractual obligations under the construction phase and typically represents 10%-15% of the contract value. Warranty Gurantees represent typically 2.5%-5% of the contract value and are issued to cover potential shortfall of operational performance for the first two years of operation. SPV Performance and Commitment Guarantees are issued to cover some obligations under PPAs and Implementation Agreements. These obligations are connected to project performance where Scatec is in control and hold the O&M and the asset management agreements. In addition, this includes the payment guarantee to PowerChina for the construction loan on the Progressovska solar plant in Ukraine. In addition, Scatec provides Other Payment Guarantees. This includes security for equity injection in project companies during construction where project lenders disburse debt before equity is paid in and Debt Service Reserve to replace cash reserves in the project companies. Guarantee Facilities The guarantees issued by Scatec ASA are issued under the Guarantee Facility Agreement (GFA) with Nordea Bank as agent, and Nordea Bank, BNP Paribas, Swedbank and DNB as guarantee instrument lenders. Export Finance Norway (Eksfin) normally cover the guarantees issued under the GFA. Eksfin can issue counter indemnity of 50% in favor of the issuing banks. The financial covenants in the GFA are: • Free cash of no less than NOK 150,000,000 • Debt to capitalization ratio 50% • Minimum interest coverage ratio 3.0x Per 31 December 2023, Scatec was in compliance with all covenants in the GFA. In addition, Scatec ASA has guarantee facilities with State Bank of South Africa (SBSA), First Randbank (RMB) in South Africa and Botswana and five insurance companies. 94 Note 27 Share capital, shareholder information and dividend Share capital and shareholder information At year-end 2023 the total number of shareholders in Scatec was 14,846 (16,463). The total number of outstanding shares was 158,917,275 (158,917,275) at par value NOK 0.025 per share as of 31 December 2023. No leading employees have exercised any share options during the year and no employee share purchase program was carried out, leading to no increase in share capital during the year. Refer to Note 12 – Equity and shareholder information in the Parent financial statement for an overview of the largest shareholders of Scatec ASA and shares held by Management and Board of Directors at 31 December 2023. Refer to Note 4 – Employee benefits for information on share options granted to the management. Dividend The Company recognises a liability to make cash or non-cash distributions to equity holders of the parent when the distribution is authorised, and the distribution is no longer at the discretion of the Company. As per the corporate laws in Norway, a distribution is authorised when it is approved by the General Meeting. In the fourth quarter of 2022, Scatec announced that the Board of Directors (BoD) had decided to change the dividend policy from 25% to 15% of cash distributions received from operating power plants. It was further stated that the dividend policy would be assessed annually by the BoD based on Scatec’s capital situation. Given the current macro-economic and capital market situation the BoD approved in the fourth quarter 2023 to change the dividend policy to no dividend. The dividend policy will be assessed annually by the board based on Scatec’s capital situation. On 2 February 2023, the Board of Directors announced its intention to propose a dividend of NOK 1.94 per share to the Annual General Meeting, totaling NOK 308 million. The amount was paid out in May 2023. Scatec ASA - Annual Report 2023 95 Note 28 Consolidated subsidiaries The consolidated financial statement of Scatec comprises more than 200 legal companies that are controlled by Scatec ASA. The following table include material consolidated subsidiaries, including material holding companies. Consolidated economic interests correspond to the voting interests if not otherwise stated. For subsidiaries of the ultimate Parent’s subsidiaries, the economic interests stated is the mathematically indirect consolidated economic interests. For information on associated companies and joint venture companies, refer to Note 14 Investments in JV and associated companies. Company Registered office Consolidated economic interests 2023 SN Power AS Oslo, Norway 100.00% Scatec Solar Netherlands BV Amsterdam, Netherlands 100.00% Scatec Solar s.r.o. Prague, Czech 100.00% Signo Solar PV1 s.r.o. Prague, Czech 100.00% Signo Solar PP01 s.r.o. Prague, Czech 100.00% Signo Solar PP02 s.r.o. Prague, Czech 100.00% Signo Solar PP04 s.r.o. Prague, Czech 100.00% FVE Sulkov 3, s.r.o. Prague, Czech 100.00% Scatec Solar Solutions Ukraine LLC Kyiv, Ukraine 100.00% Chysta Energhiaa 2011 LLC Kyiv, Ukraine 60.00% Boguslav Energy LLC Bohuslav, Ukraine 100.00% Greenteco SES LLC Kyiv, Ukraine 100.00% Rengy Bioenergy LLC Kyiv, Ukraine 51.00% PV Progressovka Alpha LLC Berezanka, Ukraine 100.00% PV Progressovka Beta LLC Berezanka, Ukraine 100.00% PV Progressovka Gamma LLC Berezanka, Ukraine 100.00% Scatec Solar Jordan (EPC) Amman, Jordan 100.00% Scatec Solar AS/ Jordan PSC Amman, Jordan 100.00% Anwar Al Ardh For Solar Energy Generation PSC Amman, Jordan 50.10% Ardh Al Amal For Solar Energy Generation PSC Amman, Jordan 50.10% Scatec Solar Africa (Pty) Ltd Cape Town, South Africa 100.00% Scatec Solar Management Services (Pty) Ltd Sandton, South Africa 100.00% Scatec Solar SA 163 (Pty) Ltd. Sandton, South Africa 92.00% Scatec Solar SA (pty) Ltd. Sandton, South Africa 100.00% Scatec Solar SA 165 (Pty) Ltd. Sandton, South Africa 76.60% Scatec Solar SA 166 (Pty) Ltd. Sandton, South Africa 46.00% Scatec Solar SA 164 (Pty) Ltd. Sandton, South Africa 80.70% Simacel 155 (Pty) Ltd. Sandton, South Africa 44.40% Simacel 160 (Pty) Ltd. Sandton, South Africa 44.40% Scatec Hybrid EPC (Pty) Ltd Cape Town, South Africa 75.00% Scatec Kenhardt 1 (Pty) Ltd Cape Town, South Africa 51.00% Scatec Kenhardt 2 (Pty) Ltd Cape Town, South Africa 51.00% Scatec Kenhardt 3 (Pty) Ltd Cape Town, South Africa 51.00% Scatec R5 Construction (Pty.) Ltd. Cape Town, South Africa 75.00% Scatec R5 Operations (Pty.) Ltd. Cape Town, South Africa 51.00% Grootfontein PV1 (RF) (Pty) Ltd Cape Town, South Africa 51.00% Grootfontein PV2 (RF) (Pty) Ltd Cape Town, South Africa 51.00% Grootfontein PV3 (RF) (Pty) Ltd Cape Town, South Africa 51.00% Continues on following page 96 Company Registered office Consolidated economic interests 2023 Scatec Solar Honduras SA Tegucigalpa, Honduras 100.00% Energias Solares S.A. Tegucigalpa, Honduras 70.00% Fotovoltaica Surena S.A. Tegucigalpa, Honduras 70.00% Generaciones Energeticas S.A. Tegucigalpa, Honduras 70.00% Produccion de Energia Solar y Demas Renovables S.A DE C.V (Agua Fria) Tegucigalpa, Honduras 40.00% Scatec Solar Solutions Egypt LLC Cairo, Egypt 100.00% Aswan Solar Power SAE Cairo, Egypt 51.00% Daraw Solar Power SAE Cairo, Egypt 51.00% Kom Ombo Renewable Energy SAE Cairo, Egypt 51.00% Red Sea Solar Power SAE. Cairo, Egypt 51.00% Upper Egypt Solar Power Cairo, Egypt 51.00% Zafarana Power SAE Cairo, Egypt 51.00% Egypt Green Hydrogen S.A.E. Cairo, Egypt 46.20% EGH for Renewable Energy S.A.E. Cairo, Egypt 56.30% Scatec Solar Solutions Malaysia Sdn Bhd Kuala Lumpur, Malaysia 100.00% Quantum Solar Park (Kedah) Sdn Bhd 1) Kuala Lumpur, Malaysia 100.00% Quantum Solar Park (Melaka) Sdn Bhd 1) Kuala Lumpur, Malaysia 100.00% Quantum Solar Park (Terengganu) Sdn Bhd 1) Kuala Lumpur, Malaysia 100.00% Quantum Solar Park Semenanjung Sdn Bhd 1) Kuala Lumpur, Malaysia 100.00% Red Sol Kuala Lumpur, Malaysia 100.00% Helios Power Ltd Clifton Karachi, Pakistan 75.00% HNDS Energy Ltd Clifton Karachi, Pakistan 75.00% Meridian Energy Ltd Clifton Karachi, Pakistan 75.00% Scatec Solar Pvt Ltd (Pakistan) Clifton Karachi, Pakistan 100.00% Scatec Solar Solutions Vietnam Co. Ltd. Ho Chi Minh City, Vietnam 100.00% Dam Nai Wind Power JSC Ninh Thuan, Vietnam 100.00% Scatec Operations Botswana (Pty) Ltd Gaborone, Botswana 100.00% Selebi Phikwe Solar Proprietary Limited Gaborone, Botswana 100.00% 1) The consolidated economic interest in the Malaysian project companies represents Scatec’s share of the contributed equity and retained earnings in the project companies as of the reporting date. Scatec’s average economic interest through the PPA tenor is estimated to be 95% based on the Group’s right to economic return obtained through shareholdings and other contractual arrangements. The average economic interest may be subject to change. Note 29 Non-controlling interests Non-controlling interests Scatec’s value chain comprises all downstream activities such as project development, financing, construction, operations as well as having an asset management role trough ownership of the solar power plants. Normally Scatec enters into partnerships for the shareholding of the power plant company owning the power plants while maintaining control, leading to material non-controlling interest. Consolidation of power plant companies is identified as a significant judgement for the consolidated financial statements, please refer to Note 2 for further information. Note 28 Consolidated subsidiaries include all material entities with a NCI share. The NCI share is the share of interest not owned by Scatec. Accumulated balances of non-controlling interest and the allocation of profit and loss are presented below by sub- group. The change in NCI balance from year to year is driven by the NCIs share of profit or loss and other comprehensive income, capital injections from and dividends paid to NCIs, as well as foreign exchange differences. Accounting principle Non-controlling interests are calculated on the respective subsidiaries’ stand-alone reporting, before eliminations of Scatec ASA - Annual Report 2023 97 intercompany transactions. Furthermore, unrealised intercom- pany profits relating to depreciable assets (power plants) are viewed as being realised gradually over the remaining economic life of the asset. Consequently, the specification of non-controlling interest in the Group financial statements will differ from the non-controlling interests calculated based on the respective subsidiaries’ stand-alone reporting. Total balances of material non-controlling interest NOK million 2023 2022 Egypt 394 99 Honduras 327 323 Jordan 191 183 Mozambique 0 56 Pakistan 28 30 Rwanda 6 5 South Africa 997 -48 Ukraine -60 -108 Total non-controlling interests 1,884 540 Profit/(loss) allocated to material non-controlling interest NOK million 2023 2022 Egypt -7 -6 Honduras 12 4 Jordan 15 13 Mozambique 9 12 Pakistan -9 -4 Rwanda -1 -2 South Africa 449 188 Ukraine 28 -97 Total non-controlling interests 494 106 Financial information of subsidiaries that have material non-controlling interests is provided below: Summarised statement of profit or loss for 2023 (before group eliminations) NOK million Revenues Operating expenses Operating profit Net financial expenses Profit before income tax Profit/(loss) for the period Profit/loss attributable to non-controlling interest Dividends paid to non- controlling interest 1) #REF! Egypt 646 (296) 350 (337) 13 (14) (7) - Honduras 232 (104) 127 (88) 39 39 12 - Jordan 130 (68) 62 (31) 31 30 15 - Mozambique 99 (48) 51 (31) 20 18 9 - Pakistan 1 (6) (5) (31) (36) (47) (9) - Rwanda 26 (15) 11 (12) (1) (1) (1) - South Africa 9,569 (7,968) 1,601 33 1,634 2,109 449 121 Ukraine 153 (37) 116 (39) 77 57 28 - 1) Excluding repayments of shareholders loans 98 Summarised statement of profit or loss for 2022 (before group eliminations) NOK million Revenues Operating expenses Operating profit Net financial expenses Profit before income tax Profit/(loss) for the period Profit/loss attributable to non-controlling interest Dividends paid to non- controlling interest 1) #REF! Egypt 637 (281) 356 (353) 3 (13) (6) - Honduras 200 (132) 68 (52) 16 16 4 - Jordan 121 (62) 59 (33) 27 25 13 - Mozambique 91 (43) 48 (3) 46 26 12 - Pakistan - (4) (4) (11) (15) (15) (4) - Rwanda 23 (13) 10 (15) (5) (5) (2) - South Africa 1,842 (1,154) 688 (84) 602 584 188 526 Ukraine 47 (176) (129) (89) (217) (221) (97) - 1) Excluding repayments of shareholders loans Summarised statement of financial position as at 31 December 2023 Attributable to NOK million Property, plant and equipment Other non- current asstes Cash and cash equivalent Other current assets Non-recourse financing Other non- current liabilities Current liabilities Total equity Non- controlling interests Equity holders of the parent #REF! Egypt 3,380 1,057 521 108 (3,074) (1,008) (181) 803 394 410 Honduras 1,217 10 179 130 (302) (357) (40) 837 327 510 Jordan 841 1 419 23 (639) (82) (97) 467 191 276 Mozambique - - - - - - - - - - Pakistan 941 - 133 38 (637) (231) (166) 79 28 50 Rwanda - - (3) 138 - (31) (129) (25) 6 (32) South Africa 9,593 1,094 652 1,260 (8,917) (717) (1,658) 1,308 997 309 Ukraine 431 368 5 (1) (348) (662) (21) (228) (60) (167) Summarised statement of financial position as at 31 December 2022 Attributable to NOK million Property, plant and equipment Other non- current asstes Cash and cash equivalent Other current assets Non-recourse financing Other non- current liabilities Current liabilities Total equity Non- controlling interests Equity holders of the parent #REF! Egypt 3,360 1,712 485 114 (3,138) (2,078) (160) 296 99 197 Honduras 1,287 9 268 103 (387) (325) (27) 929 323 605 Jordan 888 - 373 22 (685) (78) (93) 427 183 244 Mozambique 555 8 135 17 (468) (80) (68) 100 56 44 Pakistan 363 11 97 18 - (161) (209) 120 30 90 Rwanda 139 1 11 4 (116) (55) (3) (20) 5 (25) South Africa 4,048 1,143 762 3,257 (6,759) (731) (2,297) (577) (48) (531) Ukraine 414 387 17 (11) (377) (937) 242 (265) (108) (157) Note 30 Transactions with related parties Related parties include affiliates, associates, joint ventures, and other companies where the Group have significant influence, as well as the Executive Management and the Board of Directors. All related party transactions have been carried out as part of the normal course of business and at arm’s length terms. See Note 28 for information about consolidated subsidiaries. Intercompany balances and transactions between consolidated companies are eliminated in the consolidated accounts. No significant impairment is booked for expected credit loss on intercompany receivables within the group. Scatec ASA - Annual Report 2023 99 See Note 14 Investments in JV and associated companies for overview of the companies included and further information about the investments. Transactions with joint ventures and associates are primarily financing provided to the companies and dividends received from the companies. Transactions also include sale of development rights, asset management and OM services from consolidated entities to equity consolidated entities. See Note 16 Guarantees, contractual obligations and contingent liabilities in the Parent financial statement for overview of guarantees provided by Scatec ASA to group companies. For remuneration to Management including information about the share purchase program, see Note 4 Employee benefits and further details in Note 4 - Personnel expenses in the Parent financial statement. The Note also includes remuneration to Board of Directors. Scatec has loans to Executive Management given in relation to the long-term incentive programme amounting to NOK 0.2 million (0.2) as of 31 December 2023. Note 31 Change in accounting policies Change in accounting policy for external revenues and cost of sales in Power Production segment The Group has re-assessed its accounting policy for the presentation of external revenues and cost of sales in the proportionate financials. The change is motivated by changes in management internal reporting of revenue from the hydropower companies in the Philippines. The power market settlement mechanism in the Philippines is net for all power sales and purchases within the reporting period, although all volumes are reported gross. The Group previously accounted for such external revenues and cost of sales on a gross basis in accordance with reported volumes. Going forward the Group will present the figures net in accordance with the financial settlement mechanism. The change has no impact on gross profit or EBITDA. The Group believes that net presentation provides more relevant information to the users of the proportionate financials as it reduces the fluctuations in external revenues reported in the Philippines and is more aligned to the practices adopted by peers. The Group has applied the change retrospectively to the proportionate financials. The change is not applicable to the consolidated financials as the investments in the Philippine JVs are accounted for using the equity method. On 1 January 2023, the Group elected to voluntarily change the method of accounting for external revenues and cost of sales in the proportionate financials. Comparative figures for proportionate revenues in 2022 have been restated as follows: Proportionate financials - NOK million Reported FY 2022 Adjustment Adjusted FY 2022 External revenues - Power Production 4,513 -824 3,689 Cost of sales - Power Production -852 824 -28 EBITDA 2,835 - 2,835 New standards and interpretations The Group has early adopted amendments to IAS 1 and IFRS Practice Statement 2 in 2022 compromising accounting policy information. The material accounting principles in the Annual report are largely incorporated into the individual notes. The Group has not elected to early adopt amendments to IAS 1 Presentation of Financial Statements effective from 1 January 2024. Amendments to requirements related to classification of non-current and current liabilities with covenants is not expected to affect the classification of any liabilities in the Group’s financial statements in 2023. The amendments require an entity to provide disclosures related to liabilities with covenants, including information about the covenants, and risk of non-compliance. The amendments will require additional note disclosures related to the corporate debt and non-recourse project debt. Scatec will comply with the new regulations from 2024. The Group has not elected to early adopt amendments to IAS 7 Statement of cash flow and IFRS 7 Financial instruments: Disclosures effective from 1 January 2024. The amendments clarify the characteristics of supplier finance arrangement and include amendments to required note disclosures on the impact on the entity of such arrangements. The amendments may be relevant for credit facilities held during the construction phases. 100 The Group has not elected to early adopt Amendments to IAS 21 The effects of changes in foreign exchange rates effective from 1 January 2025. The amendments specify how an entity should assess whether a currency is exchangeable and how it should determine a spot exchange rate when exchangeability is lacking. The amendments may be relevant for certain jurisdictions where Scatec operates and holds balances in local currencies. Scatec ASA - Annual Report 2023 101 Note 32 Subsequent events Adjusting subsequent events No adjusting events have occurred after the balance sheet date. Non-adjusting subsequent event In line with the terms adopted by the Annual General Meeting of Scatec ASA in 2023, the Board of Directors continue the share-based incentive programme for leading employees of the company, following the same principles as previous years. On January 3, 2024, a total of 1,515,885 share options were granted to leading employees. Each share option gives the right to subscribe for and be allotted one share in Scatec ASA. The strike price of the options is set to NOK 79.47 per share based on the volume weighted average share price over the ten last trading days preceding the grant date of 3 January 2024. The options will lapse if not exercised by 1 January 2028. The option grant is divided into three tranches whereby 1/3 vests each year over three years, with the first tranche vesting 1 January 2025. The current grant is the second of three contemplated annual grants of share options in accordance with Scatec’s share- based incentive programme. On January 25, 2024, Scatec ASA agreed refinancing terms with DNB, Nordea and Swedbank for its USD 150 million green term loan, with USD 135 million outstanding at the end of the fourth quarter 2023. The new green term loan will be amortised through semi- annual repayments of USD 7.5 million with final maturity in the fourth quarter 2027. On January 31, 2024, Scatec ASA announced the issuance of a NOK 1,750 million 4-year senior unsecured bond with a coupon of 3 months NIBOR + 4.25% p.a. with quarterly interest payments. DNB Markets, Nordea and SpareBank 1 Markets acted as Joint Lead Managers in connection with the placement of the new bond issue. An application was made for the bonds to be listed on Oslo Stock Exchange. On February 1, 2024, Scatec ASA announced buy-back of EUR 136 million of outstanding bonds with ticker “SCATC03 ESG” (ISIN NO0010931181) which will be cancelled subsequently. Following the transaction, the total nominal outstanding amount is EUR 114 million. The remaining proceeds from the NOK 1,750 million bond issue after the buy-back will be applied towards eligible activities as set out in the Green Financing Framework, including additional repayment of corporate debt. Reference is made to previous communication around changes to the PPA in Honduras. In May 2022, a new Energy law came into force as introduced by the new Government of Honduras. Per January 31, 2024, a PPA amendment agreement was signed between Scatec’s operating entities in Honduras and the offtaker ENEE. The key changes to the PPA include a lower tariff, extension of the PPA with five more years and a compensation amount to be paid by the off taker to Scatec’s operating entities. In total, the amendments to the PPA in combination with the compensation amount are not expected to have a material adverse effect of the financials of the projects. On March 6, 2024, the central bank in Egypt announced a full free floating of the local currency, Egyptian Pound (EGP), and the local currency devaluated against USD. Scatec’s Benban plants in Egypt are operating under a 25-year Power Purchase Agreement with the Egyptian Electricity Transmission Company, S.A.E, which started operations in 2019. The tariff in the Power Purchase Agreement is denominated in USD but paid in EGP. 30% of the production volume is invoiced in EGP at a fixed rate to USD of 8.88, while 70% of the revenues are invoiced at the official EGP/USD spot rate for the relevant period. Due to devaluations of the EGP since the operations commenced, the fixed-rate part of the revenues constituted approximately NOK 30 million in 2023 representing 10% of Scatec’s total proportionate power production revenues in Egypt. This part of the revenues is exposed to further devaluation of the EGP. The non- recourse debt is dominated in USD and not impacted by the devaluation, while Scatec’s cash balances in EGP is negatively impacted by a devaluation. The change of the central bank’s strategy in Egypt is expected to ease the convertibility of EGP to USD. Please refer to Note 15 Cash and cash equivalent for information on cash balances in Egypt at year-end 2023. 102 Parent company financial statements Scatec ASA - Annual Report 2023 103 Statement of income 104 Statement of financial position - assets 105 Statement of financial position – equity and liabilities 106 Statement of cash flow 107 Notes to the parent company financial statements 108 Note 1 General information 108 Note 2 Accounting principles 108 Note 3 Revenues 110 Note 4 Personnel expenses, number of employees and auditor’s fee 111 Note 5 Other operating expenses 113 Note 6 Provision for bad debt 113 Note 7 Financial income and expenses 114 Note 8 Tax 115 Note 9 Property, plant and equipment 116 Note 10 Investments in subsidiaries, joint ventures and associated companies 117 Note 11 Inventory 118 Note 12 Cash and cash equivalents 118 Note 13 Equity and shareholder information 118 Note 14 Corporate financing 120 Note 15 Other current liabilities 120 Note 16 Guarantees, contractual obligations and contingent liabilities 120 Note 17 Transactions with related parties 121 Note 18 Subsequent events 122 104 Statement of income 1 JANUARY – 31 DECEMBER NOK million Note 2023 2022 Revenues 3 6,271 751 Total revenues 6,271 751 Costs of sales -5,570 -797 Personnel expenses 4 -284 -268 Other operating expenses 5, 6, 17 -189 -201 Depreciation, amortisation and impairment 9, 11 -59 -150 Operating profit/(loss) 169 -665 Interest and other financial income 7, 17 392 1,570 Interest and other financial expenses 7, 17 -707 -1,311 Net foreign exchange gain/(loss) -33 -5 Profit/(loss) before tax -179 -411 Income tax (expense)/benefit 8 -220 -68 Profit/(loss) for the period -399 -480 Allocation of profit/(loss) for the period Dividend 13 - 308 Transfer to/(from) other equity 13 -399 -788 Total allocation of profit/(loss) for the period -399 -480 Scatec ASA - Annual Report 2023 105 Statement of financial position 1 JANUARY – 31 DECEMBER NOK million Note 2023 2022 Non-current assets Deferred tax assets 8 35 226 Property plant and equipment 9 86 73 Investments in subsidiaries, joint ventures and associated companies 10 16,025 15,000 Loan to group companies 17 2,783 2,327 Interest rate swap (cash flow hedge) 14 64 115 Other non-current receivables 53 63 Total non-current assets 19,047 17,804 Current assets Inventory 11 996 1,390 Trade and other receivables 6 68 42 Trade and other receivables group companies 3, 17 755 498 Other current assets 30 46 Cash and cash equivalents 12 173 811 Total current assets 2,022 2,787 Total assets 21,070 20,591 106 Statement of financial position AS OF 31 DECEMBER NOK million Note 2023 2022 Paid in capital Share capital 13 5 5 Share premium 13 11,761 11,378 Total paid in capital 11,765 11,382 Other equity Other equity 13 -1,520 -1,203 Reserve for valuation variances 51 85 Total other equity -1,469 -1,117 Total equity 10,296 10,265 Non-current liabilities Corporate financing 14 7,947 7,987 Liabilities to group companies 17 17 350 Other non-current liabilities 2 3 Total non-current liabilities 7,966 8,339 Current liabilities Trade and other payables 226 431 Trade payables group companies 444 60 Public duties payable 24 18 Dividend 13 - 308 Other current liabilities 15 1,146 1,170 Other current financial liabilities 12 713 - Current corporate financing 14 255 - Total current liabilities 2,808 1,987 Total liabilities 10,774 10,326 Total equity and liabilities 21,070 20,591 Oslo, 19 March 2024 The Board of Directors Scatec ASA Scatec ASA - Annual Report 2023 107 Statement of cash flow 1 JANUARY – 31 DECEMBER NOK million Notes 2023 2022 Cash flow from operating activities Profit/(loss) before tax -179 -411 Depreciation, amortisation and impairment 9 59 150 Interest and other financial income 7 -392 -1,570 Interest and other financial expenses 7 707 1,311 Foreign exchange gain/(loss) 33 5 Increase)/decrease in inventories 11 394 -1,079 (Increase)/decrease in trade and other receivables -223 -285 Increase/(decrease) in trade and other payables 149 147 Taxes paid 8 - - (Increase)/decrease in current assets and current liabilities / other adjustments 103 1,067 Net cash flow from operating activities 651 -665 Cash flows from investing activities Investments in property, plant and equipment 9 33 16 Net increase in loans to subsidiaries 17 -456 -301 Interest received 252 175 Investments in subsidiaries and associated companies 10 -1,025 -675 Dividends from and capital decrease in subsidiaries 7 140 1,384 Net cash flow used in investing activities -1,056 599 Cash flow from financing activities Proceeds from share capital increase 13 - 5 Dividends paid to equity holders 13 -308 -404 Interest paid -638 -344 Proceeds from corporate financing 14 713 - Net cash flow from financing activities -233 -743 Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at beginning of period 811 1,620 Cash and cash equivalents at end of period 173 811 Net increase/(decrease) in cash and cash equivalents -638 -809 108 Notes to the parent company financial statements Note 1 General information Scatec ASA is incorporated and domiciled in Norway. The address of its registered office is Askekroken 11, NO-0277 OSLO, Norway. Scatec was established on 2 February 2007. Scatec ASA (“the Company”), its subsidiaries and investments in associated companies and joint ventures (“the Group” or “Scatec”) is a leading renewable power producer, delivering affordable and clean energy worldwide. As a long-term player, Scatec develops, builds, owns and operates solar, wind and hydro power plants and storage solutions. The Company is listed on the Oslo Stock Exchange. The consolidated financial statements for the full year 2023 were authorized for issue in accordance with a resolution by the Board of Directors on 19 March 2024. Note 2 Accounting principles Basis for preparation The financial statements of Scatec ASA are prepared in accordance with the Norwegian Accounting Act of 1998 and Norwegian Generally Accepted Accounting Principles (NGAAP). The financial statements have been prepared on a historical cost basis. Accounting estimates and judgements In preparing the financial statements, management has made assumptions and estimates about future events and applied judgements that affect the reported values of assets, liabilities, revenues, expenses, and related disclosures. Therefore, future actual results may differ from current figures. Foreign currency translation The functional currency of the Company is US dollar (USD). USD is the currency which primarily affects the financials including corporate financing, income from dividends and revenue from construction activities. The financial statements are presented in NOK. The assets and liabilities are translated into NOK at the rate of exchange prevailing at the end of reporting period and their income statement is translated at average exchange rates. The exchange differences arising on translation are recognised in equity. Revenues and cost of sales Scatec ASA develops project rights that are the basis for construction of power plants. Revenues from sale of project rights are recognised upon the transfer of title. Projects in work in progress are expensed as cost of sale upon the transfer of title or when a project is abandoned and impaired. Revenues from construction services are based on fixed price contracts and are accounted for using the percentage of completion method. The stage of completion of a contract is determined by actual cost incurred over total estimated costs to complete. Incurred costs include all direct materials, costs for modules, labour, subcontractor costs, and other direct costs related to contract performance. Scatec ASA periodically revise contract margin estimates and immediately recognises any losses on onerous contracts. Some construction contracts include product warranties. The expected warranty amounts are expensed at the time of sale and are adjusted for subsequent changes in assumptions or actual outcomes. Further, Scatec ASA derives revenues from the allocation of headquarter costs to its subsidiaries. Revenues from the sale of intercompany services are recognised when the services are delivered. Employee benefits Wages, salaries, bonuses, pension and social security contributions, paid annual leave and sick leave are accrued in the period in which the associated services are rendered by employees of the Company. The Company has pension plans for employees that are classified as defined contribution plans. Contributions to defined contribution schemes are recognised Scatec ASA - Annual Report 2023 109 in the statement of profit or loss in the period in which the contribution amounts are earned by the employees. The Board of Directors has established an option program for leading employees of the company. The cost of equity-settled transactions is determined by the fair value at the date when the grant is made using an appropriate valuation model. That cost is recognised in personnel expenses, together with a corresponding increase in equity over the vesting period. For further information on accounting principle and share options refer to Note 4 – Employee benefits in the consolidated financials. For further information refer Note 4 – Personnel expenses, number of employees and auditor’s fee. Interest income and expenses Interest income and expenses are recognised in the income statement as they accrue, based on the effective interest method. Income tax expense Income tax expense comprises current tax and changes in deferred tax. Current tax is the expected tax payable on the taxable income for the year and any adjustment to tax payable in respect of previous years. Deferred tax assets and liabilities are recognised for the future tax consequences attributable to differences between the carrying amounts of existing assets and liabilities and their respective tax bases. A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the asset can be utilised. In order for a deferred tax asset to be recognised based on future taxable profits, convincing evidence is required. Balance sheet classification Current assets and liabilities consist of receivables and payables due within one year, as well as project rights. Other balance sheet items are classified as non-current assets and liabilities. Property, plant and equipment Property, plant and equipment are stated at cost, less accumulated depreciation and accumulated impairment losses. Property, plant and equipment are depreciated on a straight- line basis over their expected useful life, from the date the assets are taken into use. Subsidiaries and investment in associated companies Subsidiaries are entities controlled by Scatec ASA. Subsidiaries and investment in associated companies are accounted for using the cost method and are recognised at cost less impairment. The cost is increased when funds are added through capital increases. Dividends to be received are recognised at the date the dividend is declared by the general meeting of the subsidiary. To the extent that the dividend relates to distribution of results from the period Scatec ASA has owned the subsidiary, it is recognised as income. Dividends which are repayment of invested capital are recognised as a reduction of the investment in the subsidiary. Inventories Inventories are measured at the lower of cost and net realisable value. Inventories consist primarily of project assets in various stages of development. Capitalised development costs include legal, consulting, permitting, and other similar costs such as interconnection or transmission upgrade costs as well as directly attributable payroll expenses, travel expenses and other expenses related to developing the project rights. Scatec reviews project assets for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. The Company considers a project commercially viable if it is anticipated to be realised with a margin once it is either fully developed or fully constructed. Scatec considers a partially developed project commercially viable if the anticipated selling price is higher than the carrying value of the related project assets. A number of factors are assessed to determine if the project will be profitable, the most notable is whether there are any changes in environmental, ecological, permitting, or regulatory conditions that impact the project. Cash and cash equivalents Cash includes cash in hand and at bank. Cash equivalents are short-term liquid investments that can be immediately converted into a known amount of cash and have a maximum term to maturity of three months. In the statement of cash flows, the overdraft facility is presented gross as part of changes in current liabilities. Financial liabilities Interest-bearing borrowings are initially recognised at cost. After initial recognition, such financial liabilities are measured at amortised costs using the effective interest method. Transaction costs are taken into account when calculating amortised cost. Trade payables are carried at cost. 110 Dividends On 2 November 2023, the Board of Directors announced its decision to change the dividend policy to no dividend. Events after the reporting period New information on the Company’s financial position on the end of the reporting period which becomes known after the reporting period, is recorded in the annual accounts. Events after the reporting period that do not affect the Company’s financial position on the end of the reporting period, but which will affect the Company’s financial position in the future, are disclosed if significant. Statement of cash flow The cash flow statement is prepared using the indirect method. Note 3 Revenues Revenue by business area NOK million 2023 2022 Services 6,252 732 Other revenue 19 19 Sum 6,271 751 Services comprise EPC services, sale of project rights and management services – all rendered to Group companies and associates. Revenue by geographical distribution NOK million 2023 2022 Pakistan 462 153 Netherlands 49 63 South-Africa 5,658 459 Ukraine 3 3 Egypt 36 6 Brazil 37 31 Argentina 2 4 Malaysia 3 4 Honduras 1 1 Mozambique - 1 France 1 1 India - 1 Philippines - 1 Rwanda - 4 Sum 6,252 732 Refer to Note 17 - Transactions with related parties for further information. Scatec ASA - Annual Report 2023 111 Note 4 Personnel expenses, number of employees and auditor’s fee Personnel expenses NOK million 2023 2022 Salaries 225 216 Share-based payment 28 39 Payroll tax 43 31 Pension costs 18 18 Other benefits and personnel costs 7 3 Capitalised to inventory -38 -39 Total personnel expenses 284 268 The average number of FTEs that has been employed in the company through 2023 was 144 (146). Pension costs The Company has a defined contribution plan in line with the requirement of the law. NOK 18 million (18) is expensed related to the defined contribution plan in 2023. Paid salaries and personnel expenses for the management of Scatec ASA 2023 Bonus Number of options awarded Exercise of share options Out- standing share options Loans out- standing NOK thousand Title Salary 1) Other benefits 4) Pension cost Terje Pilskog Chief Executive Officer 3,992 1,444 57 - 129 158 b) 179 - Hans Jakob Hegge 3) Chief Financial Officer 2,895 1,313 68 - 68 1513 a) 146 - Siobhan Minnaar 2) EVP General Counsel 2,009 750 13 - 29 16 173 - Roar Haugland EVP People, Sustainability & Digital 2,262 802 31 - 83 143 b) 180 - Pål Helsing EVP Solutions 2,601 922 36 - 94 152 b) 177 - Ann-Mari Lillejord EVP Latam/Europe 2,179 788 29 - 43 16 173 - Pål Strøm EVP Operations & Maintenance 2,102 750 29 - 55 16 176 - Kate Bragg EVP People, Strategy & Digital 2,294 8) 29 - - 16 172 - Snorre Valdimarsson 5) EVP General Counsel 480 - - - - 1 48 - Mikkel Tørud 6) EVP Chief Financial Officer / EVP MENA Green H2 2,145 - 41 - - 175 b) 149 - Torstein Berntsen 7) Interim EVP MENA/Green H2 497 - 36 - 93 138 38 - 1) Including holiday allowance accrued in 2023 2) Joined EMT 01.02.2023 3) Joined Scatec and EMT 01.03.2023 4) Includes benefits such as insurances, mobile, broadband, or other allowances a) Includes a sign-on bonus of 1,500,000 NOK b) Includes stock options converted to cash payment 5) Left Scatec 31.01.2023 6) CFO between 01.01.2023 – 31.03.2023. EVP MENA/Green H2 between 01.03.2023 – 31.08.2023 7) Interim EVP MENA/Green H2 between 01.01.2023 – 28.02.2023 8) Left Scatec before bonus pay-out March 2024 112 2022 NOK thousand Title Salary 1) Bonus 2) Number of options awarded Exercise of share options Out- standing share options Other benefits 3) Pension cost Loans out- standing Raymond Carlsen 4) Chief Executive Officer 2,418 - 43 - - 4,678 a) 80 - Terje Pilskog 5) Chief Executive Officer 3,460 1,163 39 - 84 15 170 23 Mikkel Tørud Chief Financial Officer 2,939 936 30 - 80 15 168 23 Snorre Valdimarsson EVP General Counsel 2,483 - 26 - 66 15 169 23 Roar Haugland EVP Sustainable Business & HSSE 2,244 720 23 - 62 15 175 23 Torstein Berntsen 6) EVP MENA/Green H2 2,575 840 27 - 68 15 174 23 Pål Helsing EVP Solutions 2,568 828 27 - 68 15 169 23 Toril Haaland EVP People & Organisation 2,104 684 22 - 57 2,086 b) 170 23 Ann-Mari Lillejord 7) EVP Latam/Europe 1,266 443 14 - 14 10 112 23 Kate Bragg 7) EVP People, Strategy & Digital 1,560 522 10 - 10 15 162 23 Pål Strøm 8) EVP Operations & Maintenance 1,781 597 12 -4 26 15 166 - Jarl Arve Korsberg 9) EVP Hydropower Project Development 628 - - - - - - - 1) Including paid out holiday allowance and car allowance. 2) Changed to accrued bonus. 3) Other benefits include benefits such as insurance and free phone. a) Including severance package (3 800) and vested stock Options converted to cash payment (839), b) Including severance package 4) Until 30.04.22, 5) CEO from 01.05.22. EVP Project Development before CEO 6) Interim EVP Mena/Green H2 from 21.11.22 7) Joined EMT 01.05.2022 8) Joined EMT 21.11.2022 9) Left EMT 31.01.2022 Remuneration for the Board of Directors 1) 2023 2022 NOK thousand Board remuner- ation Audit committee Remuner- ation committee Nomination committee Total remuner- ation 2023 Board remuner- ation Audit committee Remuner- ation committee Nomination committee Total remuner- ation 2022 John Andersen jr. 576 93 77 - 746 557 90 75 - 722 Gisele Marchand 369 155 - - 524 357 150 - - 507 Maria Moræus Hanssen 369 - 57 - 426 357 - 55 - 412 Jørgen Kildahl 369 93 - - 462 357 90 - - 447 Mette Krogsrud 369 - 57 - 426 357 - 55 - 412 Espen Gundersen 369 93 - - 462 357 90 - - 447 Morten Henriksen 250 - 38 - 288 - - - - - Jan Skogseth 119 - 18 - 137 357 - 55 - 412 Kristine Ryssdal - - - 62 62 - - - 60 60 Svein Høgseth - - - 13 13 - - - 40 40 Mats Holm - - - 41 41 - - - 40 40 Annie Bersagel - - - 41 41 - - - 40 40 Christian Rom - - - 28 28 - - - - - 1) Annual fees paid for 2022 and accrued for 2023 respectively. For more information about remuneration to management, refer to Note 4 Employee benefits in the consolidated financial statement of the Group and the Remuneration Report for 2023. Scatec ASA - Annual Report 2023 113 Audit NOK million 2023 2022 Audit fees 5 2 Other attestation services 2 - Tax services - 2 Other services - - Total 7 4 PwC replaced Ernst & Young as the Company`s auditor in 2022. The audit fee for 2022 is related to both former auditor Ernst & Young and current auditor PwC. VAT is not included in the numbers above. Note 5 Other operating expenses NOK million 2023 2022 Facilities 21 27 Professional fees 60 100 IT and communications 42 43 Travel costs 13 11 O&M costs 2 - Other costs 51 20 Total other operating expenses 189 201 Note 6 Provision for bad debt The Company has during 2023 recognized NOK 13.3 million in realized bad debt losses on receivables related to discontinued development projects. No further provision for bad debt has been made as the collection risk of the outstanding receivables is considered low. 114 Note 7 Financial income and expenses Interest and other financial income NOK million 2023 2022 Interest income from group companies 218 156 Other interest income 34 19 Gain/(loss) on sale of financial investments - 7 Dividend from group companies 140 1,384 Gain from financial investment - 3 Total interest and other financial income 392 1,570 Interest and other financial expenses NOK million 2023 2022 External interest expenses -638 -346 Impairment of financial assets - -949 Other financial expenses -69 -17 Total interest and other financial expenses -707 -1,311 The write down of financial assets in 2022 is related to Scatec Solar Netherlands BV investments in Ukraine. The write-down is related to both impairment of shares (NOK 341 million) and impairment of receivables to group companies in Ukraine (NOK 607 million). Refer to Note 13 in the consolidated financial statement of the Group for details related to the impairment testing. During 2023, interest amounting to NOK 638 million (346) was expensed for corporate financing, refer to Note 23 Financing in the consolidated financial statement of the Group for further details. The increase in interest expenses is primarily explained by increase in interest rates. Scatec ASA - Annual Report 2023 115 Note 8 Tax NOK million 2023 2022 Income tax expense: Withholding tax on received dividends 3 21 Change in deferred tax 204 34 Taxes related to previous years 12 13 Total tax expense/(income) 220 68 Tax basis: Profit before taxes -179 -411 Permanent differences 1) -158 -434 Changes in temporary differences 25 -2 Increase of tax losses carried forward 314 846 Tax base - - Current taxes according to statutory tax rate (22%) - - 1) Net permanent differences for 2022 are related to non-taxable dividends partly offset by non-deductible impairment loss on investments and receivables in Ukraine and share based payment expenses. Reconciliation of nominal statutory tax rate to effective tax rate NOK million 2023 2022 Expected income tax expense according to statutory tax rate (22%) -39 -90 Non-taxable expense/ (income) -36 -85 Allowance for losses carried forward 268 219 Withholding tax on received dividends 3 21 Taxes related to previous years 27 13 Foreign exchange variations between functional and tax currency -2 -10 Income tax expense/(income) 220 68 1 Effective tax rate (%) 122.94% 16.55% Temporary differences as of 31 December NOK million 2023 2022 Change Tax loss carried forward 1) -2,656 -2,342 314 Other temporary differences -21 4 25 Total temporary differences -2,677 -2,338 339 0 Tax loss carried forward not recognized 2,518 1,301 -1,217 Total temporary differences as basis for recognized tax liability/(asset) -159 -1,037 -878 Recognised tax liability/(asset) -35 -226 191 1) Temporary differences are related to tax loss carry forward and disallowed interest deductions carry forward. The change in deferred tax asset is recognised in tax expense, except for changes which are related to transaction cost from capital increases which are booked directly to equity. Significant management judgement is required to determine the amount of deferred tax assets that can be recognised based upon the likely timing and the level of future taxable profits. Reference is made to Note 7 in the Consolidated financial statements for the assessment of estimation uncertainty. We assessed the probability of utilising the tax losses to ensure that deferred taxare recognised to 116 the extent that Scatec ASA expects there will be sufficient future taxable profits available to utilise the losses. The tax losses in Norway can be carried forward indefinitely. Note 9 Property, plant and equipment Office equipment NOK million 2023 2022 Accumulated cost at 1 January 113 87 Additions 33 16 Foreign currency translation -7 10 Accumulated cost at 31 December 139 114 Accumulated depreciation at 1 January 42 28 Depreciations for the year 13 10 Foreign currency translation 1 4 Accumulated depreciation at 31 December 54 42 Carrying amount at 31 December 86 73 Estimated useful life (years) 3-10 3-10 Scatec ASA - Annual Report 2023 117 Note 10 Investments in subsidiaries, joint ventures and associated companies The table below include material subsidiaries of Scatec ASA. Ownership interest corresponds to voting interest if not otherwise stated. NOK million Company Registered office Ownership interest Carrying value 2023 Carrying value 2022 SN Power AS Norway 100.00% 1,083 1,050 Scatec Solar Netherlands BV Netherlands 100.00% 13,163 12,268 Release Management BV Netherlands - - 623 Scatec Solar SA (pty) Ltd. Sandton, South-Africa 100.00% 3 3 Scatec Solar SA 163 (Pty) Ltd. South-Africa 100.00% 19 18 Scatec Solar SA 164 (Pty) Ltd. Sandton, South-Africa 80.70% 85 82 Scatec Solar SA 165 (Pty) Ltd. Sandton, South-Africa 76.60% 114 110 Gigawatt Global Rwanda Ltd Rwanda 54.00% 8 8 Scatec Solar Mozambique Limitada Mozambique 0.50% 10 9 Scatec Solar SAS Paris, France 100.00% 89 82 Scatec Solar Jordan Amman, Jordan 100.00% 31 39 Anwar Al Ardh For Solar Energy Generation PSC Amman, Jordan 50.10% 98 95 Ardh Al Amal For Solar Energy Generation PSC Amman, Jordan 50.10% 43 42 Scatec Solar Honduras S.A. Honduras 100.00% 3 3 Produccion de Energia Solar Demas Renovables S.A Honduras 40.00% 71 69 Fotovoltaica Los Prados Honduras 70.00% 84 82 Fotovoltaica Surena Honduras 70.00% 133 159 Generaciones Energeticas S.A Honduras 70.00% 126 152 Energias Solares S.A Honduras 70.00% 79 94 Foto Sol S.A Honduras 70.00% 6 6 Scatec Solar PV1 S.R.O Prague, Czech 100.00% 2 2 Scatec Solar S.R.O Prague, Czech 100.00% 1 1 15,254 15,000 A list of all material companies in the Scatec Group is listed in Note 28 Consolidated subsidiaries of the Consolidated financial statements. NOK million Associates and joint ventures Office Ownership Carrying value 2023 Carrying value 2022 Kube Energy AS Oslo, Norway 0% - 2 Release Solar AS Oslo, Norway 68% 771 - Total 771 2 In 2023, Scatec ASA signed an agreement to raise capital from Climate Fund Managers (“CFM”) to further accelerate its growth ambitions in Release. CFM contributed approx. NOK 560 million in equity for a 32% shareholding in Release Solar AS. Scatec retained the majority shareholding of 68% but the investment is recognized as a joint venture. Release Solar AS is recognized at cost, where Scatec’s carrying value as of December 2023 corresponds to the investments made in the company prior to the entry of CFM. Total equity and net profit in the financial statements of Release Solar AS for 2022 was NOK 0. 118 Note 11 Inventory The carrying value of projects under development are presented as inventories and are stated at the lower of cost and net realisable value. The project assets are related to solar, hydro and wind power plants under development and construction. The decrease from last year is mainly explained by projects reaching construction completion in South Africa and Pakistan. Project geography NOK million 2023 2022 Asia 193 303 Europe 63 12 West Africa 4 8 South Africa 642 990 North Africa 66 56 South America 25 18 East Africa 3 2 Carrying value of inventory at 31 December 2023 996 1,390 Impairment charges in 2023 were NOK 37 million (140) for development projects in Oman and Brazil. Note 12 Cash and cash equivalents NOK million 2023 2022 Restricted cash 50 58 Free cash 122 753 Total cash and cash equivalents 173 811 Scatec ASA has drawn USD 70 million (0) on the revolving credit facility per 31 December 2023. For more information about external financing and facilities, refer to Note 23 Corporate Financing in the consolidated financial statement of the Group. Note 13 Equity and shareholder information Nok million Issued capital Share premium Other equity Total equity Equity as of 31 December 2022 5 11,378 -1,118 10,265 Profit/(loss) for the period - - -399 -399 Share-based payment - 28 - 28 Capital increase from exercised employee share options, net of transaction cost after tax - - - - Accrued dividend - - - - Change in hegding reserves - - -45 -45 Foreign currency translation - 355 93 448 Equity as of 31 December 2023 5 11,761 -1,469 10,296 On 2 November 2023, the Board of Directors announced its decision to change the dividend policy to no dividend. On 18 April 2023, the Annual General Meeting of Scatec ASA resolved to pay a dividend of NOK 1,94 per share, totaling NOK 308 million. The dividend was paid to the shareholders on 11 May 2023. This equal to amount accrued for in 2022. The table below show the largest shareholders of Scatec ASA at 31 December 2023. Scatec ASA - Annual Report 2023 119 Shareholder Number of shares Ownership EQUINOR ASA 25,776,200 16.22% SCATEC INNOVATION AS 14,132,339 8.89% FOLKETRYGDFONDET 12,642,754 7.96% J.P. Morgan SE 4,721,976 2.97% VERDIPAPIRFONDET DNB MILJØINVEST 3,870,567 2.44% Citibank Europe plc 3,800,435 2.39% CLEARSTREAM BANKING S.A. 3,375,973 2.12% RAIFFEISEN BANK INTERNATIONAL AG 2,947,061 1.85% Bank Pictet & Cie (Europe) AG 2,930,610 1.84% JPMorgan Chase Bank 2,483,309 1.56% State Street Bank and Trust Comp 2,400,774 1.51% Citibank 2,295,532 1.44% The Bank of New York Mellon 2,119,792 1.33% VERDIPAPIRFONDET DNB NORGE 2,013,957 1.27% VPF DNB AM NORSKE AKSJER 1,839,033 1.16% The Bank of New York Mellon SA/NV 1,710,350 1.08% State Street Bank and Trust Comp 1,697,587 1.07% VERDIPAPIRFONDET STOREBRAND NORGE 1,574,879 0.99% ARGENTOS AS 1,500,000 0.94% State Street Bank and Trust Comp 1,495,729 0.94% Total 20 largest shareholders 95,328,857 59.99% Total other shareholders 63,588,418 40.01% Total shares outstanding 158,917,275 100% The tables below show shares held by Management and Board of Directors at 31 December 2023. Board of Directors Number of shares Ownership John Andersen, Jr. 1) - 0.00% Gisele Marchand 3,586 0.00% Maria Moræus Hanssen 2) 11,040 0.01% Jørgen Kildahl 3,000 0.00% Mette Krogsrud 1,000 0.00% Espen Gundersen 10,000 0.01% Morten Henriksen 5,000 0.00% Total at 31 December 2023 33,626 0.02% 1) Related parties control 14,132,339 shares through Scatec Innovation AS. 2) Held through the controlled company MMH Nysteen Invest AS. Management Number of shares Ownership Terje Pilskog 1) 542,204 0.34% Hans Jakob Hegge 10,000 0.00% Mikkel Tørud 186,667 0.12% Roar Haugland 2) 79,566 0.05% Torstein Berntsen 3) 434,289 0.27% Pål Helsing 6,204 0.00% Ann-Mari Lillejord 10,129 0.01% Kate Bragg 920 0.00% Pål Strøm 1,844 0.00% Total at 31 December 2023 1,271,823 0.80% 1) Held through the controlled company Océmar AS 2) Held through the controlled company Buzz Aldrin AS, whereof 2204 shares held by Roar Haugland directly 3) Held through the controlled company Belito AS, whereof 908 shares held by Torstein Berntsen directly. In addition, 895 shares are held by Torstein Berntsen’s spouse. These are not included in the total presented in the table above. 120 Refer to Note 4 – Personnel expenses, number of employees and auditor’s fee for information on share options granted to the management. Note 14 Corporate financing For information about Corporate financing refer to Note 23 Financing in the consolidated financial statement of the Group. For information about interest rate swap refer to Note 22 Derivative financial instruments in the consolidated financial statement of the Group. Note 15 Other current liabilities Nok million 2023 2022 Deferred income EPC projects 901 997 Accrued interest expenses 164 118 Vacation allowances, bonus accruals etc. 47 49 Other 34 7 Total current liabilities 1,146 1,170 Note 16 Guarantees, contractual obligations and contingent liabilities Scatec ASA issue certain guarantees on behalf of the Group. The amounts specified below are total exposure on guarantees issued by Scatec ASA at each balance sheet date based on when the guarantees expire. The guarantees expire haphazardly during the year. NOK million 12/31/2023 12/31/2024 12/31/2025 12/31/2026 Advance Payment guarantees 31 - - - Performance guarantees 289 249 - - Warranty Guarantees 621 359 359 - Bid Bonds 66 44 44 44 SPV Performance / Commitments 625 537 228 149 O&M Performance (3rd party) 19 - - - Other Payment Guarantees 2,083 274 9 9 Total 3,734 1,463 640 202 See note 26 Guarantee and commitments in the consolidated financial statement of the Group for more information on the other guarantees issued to third parties. Contractual obligations Scatec ASA has contractual obligations primarily through office lease. NOK million 2024 2025 2026 >2026 Leases (office rental) 14 15 15 44 Total contractual obligations 14 15 15 44 Further, as an EPC contractor Scatec ASA may enter into purchase commitments with suppliers of equipment and sub-EPC services related to the plants under construction. Scatec ASA - Annual Report 2023 121 Contingent liabilities Scatec ASA have no material contingent liabilities. Note 17 Transactions with related parties Related parties Subsidiaries, joint ventures and associates Key management personnel Board of Directors Transactions Management, development and EPC services and financing Loan and payroll Board remuneration Transactions with related parties All related party transactions have been carried out as part of the normal course of business and at arm’s length. The most significant transactions in 2023 and 2022 are: Subsidiaries – EPC services In 2023 Scatec ASA sold EPC services to subsidiaries amounting to NOK 6 116 million (572 million). Subsidiaries – development services During 2023 the company sold development project services amounting to NOK 80 million. Corresponding amount in 2022 was 83 million. Subsidiaries - management service income Scatec ASA has during 2023 charged NOK 49 million (47 million) for corporate services provided to its subsidiaries and associates. Subsidiaries and associates – financing In the course of the ordinary business, inter-company financing is provided from Scatec ASA to its subsidiaries. Long-term financing is interest bearing and priced at arm’s length. Refer to Note 7 for specification of interest income/expenses from/to subsidiaries and Note 10 Investments in subsidiaries, joint ventures and associated companies. Refer to Note 4 – Personnel expenses, number of employees and auditor’s fee for information regarding transactions with key management personnel and board members. 122 Note 18 Subsequent events Adjusting subsequent events No adjusting events have occurred after the balance sheet date. Non-adjusting subsequent event In line with the terms adopted by the Annual General Meeting of Scatec ASA in 2023, the Board of Directors continue the share-based incentive programme for leading employees of the company, following the same principles as previous years. On 3 January 2024, a total of 1,515,886 share options were granted to leading employees. Refer to Note 32 in the consolidated financial statement of the Group for details related to the share-based incentive program. On 25 January 2024, Scatec ASA agreed refinancing terms for its USD 150 million green term loan, with USD 135 million outstanding as the end of the fourth quarter 2023 and on 31 January 2024, Scatec ASA successfully issued a NOK 1,750 million bond. In conjunction with the bond issue, on 1 February 2024 Scatec bought back EUR 136 million of outstanding bonds. Scatec ASA - Annual Report 2023 123 Responsibility statement We confirm to the best of our knowledge, that the consolidated financial statements for 2023 has been prepared in accordance with IFRS Accounting Standards as adopted by EU, and that the information gives a true and fair view of the Group’s assets, liabilities, financial position and result for the period. We also confirm that presented information provides a fair overview of important events that have occurred during the period and their impact on the financial statements, key risk and uncertainty factors that Scatec is facing during the next accounting period. Oslo, 19 March 2024 The Board of Directors Scatec ASA 124 Alternative Performance Measures Scatec discloses alternative performance measures (APMs) in addition to those normally required by IFRS. This is based on the Group’s experience that APMs are frequently used by analysts, investors and other parties for supplemental information. The purpose of APMs is to provide an enhanced insight into the operations, financing and future prospect of the Group. Management also uses these measures internally to drive performance in terms of long-term target setting. APMs are adjusted IFRS measures that are defined, calculated and used in a consistent and transparent manner over the years and across the Group where relevant. Financial APMs should not be considered as a substitute for measures of performance in accordance with IFRS. Disclosures of APMs are subject to established internal control procedures. Definition of alternative performance measures used by the Group for enhanced financial information Cash flow to equity: is a measure that seeks to estimate value creation in terms of the Group’s ability to generate funds for equity investments in new power plant projects and/or for shareholder dividends over time. Management believes that the cash flow to equity measure provides increased understanding of the Group’s ability to create funds from its investments. The measure is defined as EBITDA less net interest expense, normalised loan repayments and normalised income tax payments, plus any proceeds from refinancing. The definition excludes changes in net working capital, investing activities and fair value adjustment of first-time recognition of joint venture investments. Normalised loan repayments are calculated as the annual repayment divided by four quarters for each calendar year. However, loan repayments are normally made bi-annually. Loan repayments will vary from year to year as the payment plan is based on a sculpted annuity. Net interest expense is here defined as interest income less interest expenses, excluding shareholder loan interest expenses, non-recurring fees and accretion expenses on asset retirement obligations. Normalised income tax payment is calculated as operating profit (EBIT) less normalised net interest expense multiplied with the nominal tax rate of the jurisdiction where the profit is taxed. EBITDA: is defined as operating profit adjusted for depreciation, amortisation and impairments. EBITDA margin: is defined as EBITDA divided by total revenues and other income. EBITDA and EBITDA margin are used for providing consistent information of operating performance which is comparable to other companies and frequently used by other stakeholders. Gross profit: is defined as total sales revenue including net gain/loss from sale of project assets and net gain/ loss from associates minus the cost of goods sold (COGS). Gross profit is used to measure project profitability in the D&C segment. Net revenues: include energy sales revenues net of significant cost items directly linked to the energy sales volume (such as cost of energy purchase) in the PP segment. Refer to Note 3 Operating segments for further details. Gross interest-bearing debt: is defined as the Group’s total debt obligations and consists of non-current and current external non-recourse financing and external corporate financing and other interest-bearing liabilities, irrespective of its maturity as well as bank overdraft. Net interest-bearing debt (NIBD): is defined as gross interest-bearing debt, less cash and cash equivalents. NIBD does not include shareholder loans. Net working capital includes trade- and other receivables, other current assets, trade- and other payables, income tax payable and other current liabilities. Scatec ASA - Annual Report 2023 125 Proportionate Financials The Group’s segment financials are reported on a proportionate basis. The consolidated revenues and profits are mainly generated in the Power Production segment. Activities in Services and Development & Construction segment mainly reflect deliveries to other companies controlled by Scatec (with from 33% to 100% economic interest), for which revenues and profits are eliminated in the Consolidated Financial Statements. With proportionate financials Scatec reports its share of revenues, expenses, profits and cash flows from all its subsidiaries without eliminations based on Scatec’s economic interest in the subsidiaries. The Group introduced Proportionate Financials as the Group is of the opinion that this method improves earnings visibility. The key differences between the proportionate and the consolidated IFRS financials are that; • Internal gains are eliminated in the consolidated financials but are retained in the proportionate financials. These internal gains primarily relate to gross profit on D&C goods and services delivered to project companies which are eliminated as a reduced group value of the power plant compared to the stand-alone book value. Similarly, the consolidated financials have lower power plant depreciation charges than the proportionate financials since the proportionate depreciations are based on power plant values without elimination of internal gain. Internal gain eliminations also include profit on Services delivered to project companies. • The consolidated financials are presented on a 100% basis, while the proportionate financials are presented based on Scatec’s ownership percentage/economic interest. • In the consolidated financials joint venture companies are equity consolidated and are presented with Scatec’s share of the net profit on a single line in the statement of profit or loss. In the proportionate financials the joint venture companies are presented in the same way as other subsidiaries on a gross basis in each account in the statement of profit or loss. In 2023 Scatec reports a proportionate operating profit of NOK 2,152 million compared with an operating profit of NOK 2,625 million in the consolidated financials. To arrive at the proportionate operating profit from the consolidated operating profit the Group has; 1. removed from the consolidated statement of profit or loss the internal gain on transactions between group companies with a positive amount of NOK 97 million. 2. removed the non-controlling interests share of the operating profit of NOK 709 million to only leave the portion corresponding to Scatec’s ownership share, 3. replaced the consolidated net profit from joint venture companies of NOK 46 million with Scatec’s share of the Operating profit from the joint venture companies with NOK 379 million. See Note 3 for further information on the reporting of proportionate financial figures, including reconciliation of the proportionate financials against the consolidated financials. 126 Consolidated Financials NOK million 2023 2022 EBITDA Operating profit (EBIT) 2,625 723 Depreciation, amortisation and impairment 942 1,832 EBITDA 3,567 2,555 Total revenues and other income 4,721 3,751 EBITDA margin 76% 68% Gross interest-bearing debt Non-recourse project financing 15,026 13,297 Corporate financing 7,947 7,987 Non-recourse project financing - current 1,931 1,963 Corporate financing - current 1,132 - Other non-current interest-bearing liabilities 247 231 Other current interest-bearing liabilities - 231 Gross interest-bearing debt associated with disposal group held for sale 115 - Gross interest-bearing debt 26,398 23,709 Net interest-bearing debt Gross interest-bearing debt 26,398 23,709 Cash and cash equivalents 3,101 4,132 Cash and cash equivalents associated with disposal group held for sale 12 - Net interest-bearing debt 23,284 19,578 Net working capital Trade and other receivables 478 497 Other current receivables 1) 1,151 1,863 Trade and other payable -294 -594 Income tax payable -48 -37 Other current liabilities -2,060 -1,106 Non-recourse project financing-current -1,931 -1,963 Corporate financing - current -1,132 - Other current interest-bearing liabilitie - -231 Net working capital associated with disposal group held for sale -6 - Net working capital -3,842 -1,571 1) Excluding current portion of derivatives of NOK 15 million in 2023 and NOK 20 million in 2022 Break-down of proportionate cash flow to equity FY 2023 NOK million Power Production Services Development & Construction Corporate Total EBITDA 3,216 118 672 -162 3,845 Net interest expenses -712 4 22 -593 -1,279 Normalised loan repayments -998 - - -145 -1,144 Proceeds from refinancing -348 - - - -348 Normalised income tax payment -126 -25 -138 174 -116 Cash flow to equity 1,663 96 555 -716 1,600 1 FY 2022 NOK million Power Production Services Development & Construction Corporate Total EBITDA 2,835 74 -221 -138 2,550 Net interest expenses -780 -1 -5 -316 -1,102 Normalised loan repayments -815 - - - -815 Proceeds from refinancing 363 - - - 363 Normalised income tax payment -116 -15 78 106 53 Cash flow to equity 1,487 58 -149 -347 1,050 Scatec ASA - Annual Report 2023 127 Other definitions Backlog Project backlog is defined as projects with a secure off-take agreement assessed to have more than 90% probability of reaching financial close and subsequent realisation. Pipeline The pipeline projects are in different stages of development and maturity, but they are all typically in markets with an established government framework for renewables and for which project finance is available (from commercial banks or multilateral development banks). The project sites and concessions have been secured and negotiations related power sales and other project implementation agreements are in various stages of completion. Scatec’s economic interest Scatec’s share of the total estimated economic return from its subsidiaries. For projects in development and construction the economic interest is subject to change from the development of the financial model. Cash in power plant companies in operation Comprise restricted cash in proceed accounts, debt service reserve accounts, disbursements accounts, maintenance and insurance reserve accounts and similar. These cash and cash equivalents are only available to the Group through distribution as determined by shareholder and non-recourse financing agreements. Cash in power plant companies under development/construction Comprise shareholder financing and draw down on term loan facilities by power plant companies to settle outstanding external EPC invoices. Project equity Project equity comprise of equity and shareholder loans in power plant companies. Recourse Group Recourse Group means all entities in the Group, excluding renewable energy companies (each a recourse group company). Definition of project milestones Commercial Operation Date (COD): A scheduled date when certain formal key milestones have been reached, typically including grid compliance, approval of metering systems and technical approval of plant by independent engineers. Production volumes have reached normalised levels sold at the agreed off-taker agreement price. This milestone is regulated by the off-taker agreement with the power off-taker. In the quarterly report grid connection is used as a synonym to COD. Financial close (FC): The date on which all conditions precedent for drawdown of debt funding has been achieved and equity funding has been subscribed for, including execution of all project agreements. Notice to proceed for commencement of construction of the power plant will normally be given directly thereafter. Projects in Scatec defined as “backlog” are classified as “under construction” upon achievement of financial close. 128 Auditor’s Report Scatec ASA - Annual Report 2023 129 130 Scatec ASA - Annual Report 2023 131 132 Scatec ASA - Annual Report 2023 133

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