Annual Report • Mar 18, 2022
Annual Report
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2021
| Strategic Report | 4 |
|---|---|
| Scatec in brief | 5 |
| 2021 performance | 6 |
| Letter from the CEO | 10 |
| Strategy | 12 |
| People and Organisation | 20 |
| Investment and funding approach | 22 |
| Risk and risk management | 23 |
| Company targets | 25 |
| Our asset portfolio | 26 |
| Executive Management & Board of Directors | 28 |
| Report from the Board of Directors | 32 |
| Consolidated financial statements Group | 43 |
| Parent company financial statements | 104 |
| Alternative performance measures & other definitions | 125 |
| Auditor's Report | 129 |
Improving our future
To deliver competitive and sustainable renewable energy globally, to protect our environment and to improve quality of life through innovative integration of reliable technology
Driving results Changemakers Predictable Working together
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 3.5 GW of installed capacity across four continents today. We are targeting 15 GW of renewable capacity to be in operation or under construction by the end of 2025, delivered by our 600 passionate employees who are driven by a common vision of 'Improving our Future'. Scatec is headquartered in Oslo, Norway and listed on the Oslo Stock Exchange under the ticker symbol 'SCATC'.
NOK MILLION
Note: MW in operation and pipeline figures are presented on a 100% basis, while the remaining figures are proportionate to Scatec
GHG emissions avoided
PER MILLION HOURS
For detailed information about our ESG results, see ESG Performance Report 2021.
Note: The 2021 GHG emissions avoided figure includes annual production for all projects on a 100% basis.
In 2021 Scatec developed from a pure solar player to a leading provider of renewable energy solutions with a multi-technology platform following the acquisition of SN Power and several strategic initiatives within Power-to-X.
2021
We expanded our full-time workforce with 187 highly skilled employees, increasing the total number to 622.
People Asset portfolio
Our asset portfolio increased by 320 MW of solar power, now totalling 3,355 MW.
GHG emissions
Our power plants contributed to 4.8 million tonnes GHG emissions avoided.
In June 2021 we proved that tailored made renewable energy solutions are cost competitive in direct competition with conventional energy.
In a technology agnostic tender in South Africa known as RMIPPP, we were one of the winning bidders with a 540 MW solar and 225 MW storage solution. The only solution entirely based on renewable energy.
Once operational we will dispatch 150 MW of capacity between 5:00 am to 9:30 pm under a 20-year PPA. Construction start for the project is expected in 2022.
Our Release concept provides pre-assembled and containerised solar PV and battery equipment under short- to medium term lease agreements.
In 2021 Release entered into a lease agreement with ENEO in Cameroon to deliver two hybrid solar and storage plants totalling 36 MW solar and 20 MW storage solution.
The project will supply reliable, clean and cost competitive energy to the Maroua and Guider in the Grand-North of Cameroon which is struggling with power shortages.
In 2021, Scatec embarked on its transformation from a pure solar power company into a leading renewable energy solutions provider with a broad technological footprint. We raised our capacity target to 15 GW by the end of 2025 and made solid operational progress during the year.
According to the Bloomberg New Energy Outlook, 85 per cent of the world's energy production will have to come from renewable energy if we are to reach the global net-zero objective by 2050. Huge investments in wind, solar and batteries are vital to reach this goal, and emerging economies will play a fundamental role in this transition.
Scatec is a renewable power producer. We deliver affordable and clean energy to emerging markets, where our energy production also covers important social needs. We are sustainable by nature, and sustainability is integrated all parts of our business.
We acquired SN Power to leverage our expertise and track record in emerging markets, as well as to capture growth in hydropower and hybrid solutions. This transaction was completed in January 2021 and transformed Scatec from a large-scale solar player into a more diversified renewable energy solutions provider. The process of merging SN Power's team with Scatec's has gone very well and we are now operating as a fully integrated unit.
By the end of 2021, we had 3.5 GW of solar, wind and hydro power plants installed across 15 countries, generating predictable cash flows under long-term contracts. In sum, Scatec is now more robust than it was just a year ago, with a much broader diversification across technologies and geographies.
Going forward, our focus is to scale up and further strengthen our market position in our core geographical markets that account for 70 per cent of our project backlog and pipeline, and which are critical to the green transition: South Africa, Brazil, India, the Philippines, Vietnam, and Egypt. The common denominators for these markets are a strong and growing demand for power to support economic development, a carbon-intensive power sector that is ripe for low-carbon alternatives, and a regulatory framework that seeks international capital for the renewables targets to be achieved.
On the basis of this, we set a target in 2021 for 15 GW of renewable capacity to be in operation or under construction by the end of 2025, equivalent to NOK 100 billion of gross capital expenditure. This is ambitious but realistic given our strong platform and the positive market outlook.
We took important steps towards our objective in 2021. We brought projects in Ukraine and Argentina into production, and thanks to our new hydropower assets, power production more than doubled compared to 2020.
We did however experience prolonged government approval processes and cost inflation which caused delays in progression of several of our backlog projects. This in combination with a wider negative market sentiment towards "green" stocks unfortunately impacted shareholder returns in 2021.
Despite last years challenges the outlook for Scatec remains strong. Our project pipeline increased by 50 per cent to almost 15 GW during the year, and new projects in South Africa and Brazil entered our project backlog, which stood at 1.9 GW by the end of 2021. A main priority for 2022 is to progress this project backlog into construction.
The market advance for Release was another highlight last year. Release commenced delivery of redeployable solar and battery solutions in Cameroon, Chad and South Africa in 2021. Although the outlook remains positive, conservative industries are having an impact on the market adoption rate. However, higher energy prices are beneficial for Release, and we also expect growing interest as soon as the first plants are operational and demonstrating their value.
We are also investing in technology that can make tomorrow's energy mix even more sustainable. Our "Power-to-X" strategy aims to enable and realise industrial projects that help to reduce carbon emission through provision of competitive renewable energy. We have already embarked on several exciting initiatives in Egypt under the "Power-to-X" umbrella, including desalination of seawater, and the production of hydrogen and ammonia powered by renewable energy. Such development projects underline Scatec's position as a frontrunner that helps to identify new and profitable renewable energy solutions.
At the time of writing this summary, Russian troops have invaded Ukraine. In light of these tragic events and the growing number of lost lives, a lot of our day-to-day matters suddenly seem trivial. At Scatec, we will always prioritise people ahead of our assets, and we are deeply concerned for the wellbeing of our Ukrainian employees and their families. We are now doing everything we can to assist our local team with the main priority of keeping our colleagues safe.
Finally, I would like to extend my thanks to our employees and business partners that are continuing to support Scatec. We welcomed more than 170 employees last year and our people have once again demonstrated their flexibility, continuously adapting to the changing nature of COVID-19 restrictions throughout 2021. Many of our partners and employees around the world have recently reached out to express concern for our colleagues in Ukraine. I greatly appreciate your support and I am grateful for being part of such a supportive team.
Raymond Carlsen, CEO
"Scatec is now more robust than it was just a year ago, with a much broader diversification across technologies and geographies."
The demand for renewables is expected to grow exponentially within emerging economies in the coming decades in order to meet new energy demand, replace existing power production based on conventional energy and decarbonise hard-to-abate industries.
The world is facing a stark challenge: the 1.5 degree goal of the Paris Agreement, which requires rapid transformation of all industries but especially energy production, which accounts for approximately 70 per cent of total global emissions. This global energy transition requires attractive incentives from governments, clear direction from global leaders, and widespread collaboration between multiple players.
To achieve the goal of net zero emissions by 2050, 85 per cent of the world's energy production will have to come from renewable energy, according to BloombergNEF, which will require total investments of USD 150 trillion in total.
In addition to the environmental perspective, demand for renewables is also driven by economical and geopolitical factors. The relative competitiveness of renewables has strengthened over time compared to conventional energy and is now the most cost-efficient source of energy in many locations and particularly in emerging economies. Authorities in many countries are also seeing the benefit of not relying on imported fossil fuels given
price volatility and geopolitical unrest. Emerging economies will be fundamental in this transition, in which accelerating demand for new renewable energy will be driven by high economic growth, rapidly increasing populations, and improving living standards, in combination with initiatives to reduce the use of fossil fuels.
Beyond renewable energy, there is a growing need to accelerate the decarbonisation of hard-to-abate industries through Power-to-X solutions such as the production of green hydrogen, ammonia, and other critical feedstocks powered by renewable energy. Industry analysts forecast that global demand for green hydrogen and green ammonia will reach 550 million tonnes and 200 million tonnes respectively by 2050.
Emerging economies with attractive renewable resources and strategic locations close to end markets are expected to take the lead in this development and become large producers and exporters of green hydrogen and green fuel in the years to come.
Renewables must be deployed with respect for nature and social inclusion and in close cooperation with society as a whole. The impact of renewable power plants on biodiversity and local communities needs to be understood and minimised, and economic development and job creation are essential in order for renewable deployment to gain support.
This is the context for Scatec's strategy.
We are 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.
Over the last 15 years, we have been at the forefront of solar development and investment in emerging economies. We have decoded the complexity and systemised our way of working in these countries to make them our home markets.
We have further developed our strategy in an effort to become a broader provider of renewable energy solutions, as demonstrated by our acquisition of SN Power in 2021, which secured us attractive hydropower assets and a large project pipeline in several markets.
We currently have solar, wind, and hydro power plants with 3.5 GW of capacity installed in 15 countries and generating predictable, diversified cash flows under long-term contracts. We seek to continue a high rate of responsible growth in our core markets. Our long-term perspective on all of our investments is based on profitability and potential impact on the environment, people, local communities, and other stakeholders.
On the basis of these foundations, we have set ourselves the ambitious target of 15 GW of renewable capacity either in operation or under construction by the end of 2025, equivalent to NOK 100 billion in gross capital expenditure.
We are motivated to generate value-creating sustainable growth by building on our heritage and spearheading the development of renewable energy solutions. We have grown rapidly but have remained agile and flexible so that we can move quickly when new opportunities arise.
We see a megatrend unfolding within Power-to-X and are now building a position in this market with our renewable expertise, business model, and market presence. We are currently developing green hydrogen, green fuels, and fresh water through sea water desalination in Egypt, and we have further early-stage Power-to-X opportunities under development that will have significant potential in the years to come.
Over time we have gained a key competitive advantage through our profound understanding of how to exploit the opportunities and manage the risks related to operations in complex environments. This includes their environmental and social, commercial and contractual, financial, technical, compliance, and health and safety aspects. Our core competence is to holistically assess and manage all of these aspects, bring new investment opportunities forward, and ensure that long-lasting renewable assets can be financed and built. Leveraging this key competitive advantage is a fundamental component of our strategy.
Another important success factor is our partnership model whereby we partner with policy-makers, communities, financial institutions, and suppliers, as well as with utilities and other end consumers, to support Scatec's growth, value creation, and risk mitigation through project origination, equity and debt financing, and project execution.
Our strong commitment to develop and operate all of our assets in line with IFC Performance Standards and the Equator Principles is embedded in the key pillars of our strategy. We develop an environmental and social impact assessment and action plan for each project, which is carefully monitored by us and our partners. We have been a member of the UN Global Compact since 2018, which reinforces our global commitment to responsible business conduct in four areas: labour conditions, human rights, the environment, and anti-corruption.
We are scaling up and strengthening our position in our core markets and adapting our offering to be able to provide new solutions to a more diverse customer base.
One of our key focus areas is building a strong market position in six core markets that are critical to the green transition: South Africa, Brazil, India, the Philippines, Vietnam, and Egypt. These markets exhibit a high demand for new power to support economic development, a carbon-intensive power sector that needs to undergo a transition in order to satisfy climate policies and targets, and a regulatory framework that supports the use of international private capital for the realisation of a renewablebased infrastructure. In these markets, greater levels of deregulation also enable corporates to source energy independently of state-owned utilities.
70 per cent of our project backlog and pipeline are held in these core markets, and our experienced teams and partners are
utilising a deep understanding of the energy market to secure attractive new sites at an early stage so as to expand our pipeline further. We are also pursuing opportunities outside our core markets which we deem attractive from a size and return perspective.
Although our customers have been predominantly governments and state-owned utilities, we are now adapting our offering in order to provide new solutions to a more diverse customer base. Examples of this include our collaboration with Fertiglobe in Egypt and Norsk Hydro in Brazil and our Release concept, which addresses the demand for more affordable, sustainable, and flexible solutions from corporate offtakers, including the mining industries in Africa and Latin America.
During 2021 we advanced our Power-to-X strategy through several new initiatives, which included green hydrogen and ammonia.
We partnered with Fertiglobe, Orascom and Sovereign Fund of Egypt to develop a 100 MW green hydrogen facility in Egypt. The hydrogen will be used as feedstock for green ammonia production and sold under a long-term contract to EBIC, a subsidiary of Fertiglobe.
We are developing a large-scale green ammonia production facility with SCZONE and the Ministry of Electricity and Renewable Energy in close proximity to the Suez Canal in Egypt.
We have further partnered with ACME to develop a large-scale green ammonia facility in Oman.
Over time we have developed a business model which allows us to capture the total value of a renewable project while retaining control over health and safety matters and managing the potential effects on people, communities, and the environment. Our business model involves the development, construction, ownership, and operation of renewable energy plants in emerging economies and the sale of power predominantly under long-term power purchase agreements (PPAs). Our approach is to offer the most cost-efficient solution for each project which could either be a single technology or a combination of several integrated renewables technologies.
In the initial phase of a project, we always start with environmental studies and social impact assessments to ensure that the projects meet our strict criteria. We secure attractive locations, grid connections, and licences and permits and initiate discussions with potential long-term partners. We negotiate commercially viable PPAs with potential off-takers and start plant design. All project details are summarised in a business case which is benchmarked against our investment criteria. It is our strong conviction that early-stage development is crucial for sustainable value creation.
In the next phase, we use our experience to structure and integrate all project documents in collaboration with banks and equity partners in order to raise equity and predominately non-recourse financing for the project. Another key task is optimising project cash flows in order to maximise returns. Once these have been agreed with our financing partners, a final investment decision is made, and the project reaches financial close. Further development work, as well as engineering and construction planning, is performed in parallel with readying the project for construction.
During construction, we typically assume the role of turn-key engineering, procurement, and construction (EPC) provider for the power plant dependent on project structure and technology. This ensures that we have full control over risk mitigating actions, costs, quality, and progression as well as maintaining a strong emphasis on health, safety, security, and environmental issues.
Once commissioned, the power plant commences commercial operation and we are often responsible for operations and for maintenance and asset management services, with the aim of maximising the performance and availability of the plant. These services are delivered under longterm service contracts with pre-agreed commercial terms.
As owner of the power plants, we receive annual dividends based on cash flows that are generated under the long-term PPAs or through the sale of power in the power market.
Our people are the backbone of Scatec. Our skilled, passionate, and ambitious employees are the foundation of our competitive advantage and growth strategy.
During 2021, we expanded our team internationally by 187 fulltime employees, increasing the total number of employees to 622. With their 51 different nationalities, our employees represent true diversity.
In order to meet our growth targets, we implemented a new People and Organisation strategy during 2021 that reflects our aims for growth in our core markets.
We are focusing on strengthening our organisation, developing our people, and reinforcing our culture. We will build on our heritage and create a robust organisation with solid leaders who are ready to take on the challenge of taking Scatec to the next level. The strategy also sets out key activities for achieving our goals in respect of diversity, equity, inclusion, and belonging (DEIB).
We will continue to recruit business development resources in our core markets to capitalise on new project opportunities early on. We are strengthening our employer brand to ensure long-term access to talent and offer unique career opportunities by promoting growth and development. When we recruit, we look for top candidates who have both a cultural and a business understanding of the markets where we operate. We do this to reduce risk and accelerate growth.
Our organisation has unique competencies in navigating complex markets. Our business model for developing, building, owning, and operating renewable energy plants has provided us with knowledge and experience of a kind that few others can offer, and we empower our teams to work across functions and borders alike.
Our leadership development framework facilitates horizontal career moves, which facilitates the development of broader skillsets, multi-functional competencies, and a stronger company culture.
2021 marked a year of change in Scatec and our diverse, global, and agile workforce will remain our key strength. We are implementing our people strategy which will contribute to fulfil our business plan.
27% female managers
51 nationalities
We have a strong commitment to generate shareholder value through profitable growth. To deliver on this commitment, we invest selectively and scrutinise all of our investment opportunities to ensure that the project portfolio meets our investment criteria.
We have a project equity IRR target of 12–16 per cent, which is based on cash flow from power production and excludes other sources of revenue identified in our integrated business model.
We define the individual cost of equity for each project based on a standardised methodology that takes into account the relevant cost of debt, currency, leverage, and country risk premium.
Our renewable energy power plants are normally established in dedicated project companies and are financed by equity from Scatec and co-investors, representing 20–30 per cent of the investment, and predominately by ring-fenced non-recourse project debt, representing the remaining 70–80 per cent of the total investment.
We seek to retain a majority ownership of the assets, with the remaining equity and debt provided by commercial and multilateral finance institutions that are attracted by the return rates and the environmental and social benefits of the renewable projects.
In our role as EPC provider we aim to achieve a gross Development & Construction margin of 10–12 per cent which can be used to fund a substantial part of our equity investment in the project. Revenues from this segment typically represent 50–75 per cent of project capex.
When combining the effects of several revenue sources, total project return is typically higher than the stand-alone project equity IRR. This illustrates the robustness of our integrated business model.
Illustration of funding structure
At Scatec, risk management is an integrated part of the operating system. Over the years we have systematised our approach to risk management through policies and procedures that are followed up by our management team and relevant functions, including Solutions, Finance, Internal Audit, Legal, Sustainability, HSSE, Compliance, and O&M. Our main risk management policies are reviewed and approved by the Board of Directors on a regular basis.
Our integrated operations in emerging economies and renewable technologies mean that we are exposed to a variety of risks. Our ability to manage these risks is fundamental to our success and over time has developed into a key competitive advantage for Scatec. We capitalise on our experience of complex environments and risk management systems in order to de-risk an opportunity and move it forward.
In accordance with our risk management system, all project risks are identified and addressed in management and project reviews and reported upon on a regular basis. These reports are an important part of our decision gate reviews. Annual and quarterly risk reviews are performed by the Executive Management Team, and the conclusions of the reviews are reported to the Board of Directors.
In the matrix below we have summarised the main inherent risks affecting Scatec as at year end 2021. Please see the Report from the Board of Directors for more details on risk mitigation.
15GW in operation and under construction
by end of 2025
12-16% project equity Internal Rate of
Return (IRR)
≤3.1 Total Recordable Injury Frequency (TRIF) 1) in 2022
NOK in gross investments by end of 2025
Construction (D&C) margin
≤2.1 Lost Time Incident Frequency (LTIF) 1) in 2022
3.0 billion NOK Power Production EBITDA in 2022
≤1.4 High potential incidents in 2022
1) Per million hours
NET ZERO By 2040
| 2030 | 2040 |
|---|---|
| Scope 1 & 2: Zeroemissions |
Scope 3: >97% reduction/ kWh |
>40% reduction/ kWh Scope 3:
Pipeline by technology Pipeline by region
Offtake structure
| Country | Technology | Capacity MW |
Economic interest |
Remaining PPA tenor |
|---|---|---|---|---|
| Philippines | 642 | 50% | NA 1) | |
| Laos | 525 | 20% | 10 | |
| South Africa | 448 | 45% | 16 | |
| Egypt | 380 | 51% | 22 | |
| Ukraine | 336 | 89% | 9 | |
| Uganda | 255 | 28% | 20 | |
| Malaysia | 244 | 100% | 18 | |
| Brazil | 162 | 44% | 16 | |
| Argentina | 117 | 50% | 20 | |
| Honduras | 95 | 51% | 14 | |
| Jordan | 43 | 62% | 14 | |
| Mozambique | 40 | 53% | 22 | |
| Vietnam | 39 | 100% | 16 | |
| Czech Republic | 20 | 100% | 8 | |
| Rwanda | 9 | 54% | 17 | |
| Total | 3,355 | 52% |
| Country | Technology | Capacity MW |
Economic interest |
PPA tenor |
|---|---|---|---|---|
| Pakistan | 150 | 75% | 25 | |
| Release | 45 | 100% | NA | |
| Total | 195 | 61% |
| Country | Technology | Capacity MW |
Economic interest |
PPA tenor |
|---|---|---|---|---|
| South Africa | 813 | 51% | 20 | |
| Brazil | 530 | 33% | 20 | |
| Tunisia | 360 | 55% | 20 | |
| Bangladesh | 62 | 65% | 20 | |
| Mali | 33 | 64% | 25 | |
| Lesotho | 20 | 48% | 25 | |
| Total | 1,818 | 47% |
Chief Executive Officer
Raymond Carlsen became CEO of Scatec in 2009. Carlsen was previously partner and responsible for developing Aker ASA's portfolio of energy related businesses. He was also responsible for Aker Solutions' Subsea division, a USD 2 billion revenue business with 5,000 employees and operations in more than 15 countries. He has more than 30 years of industrial experience from management positions. Carlsen holds a Master of Science degree from Florida Institute of Technology.
Number of shares in Scatec: 3,128,209 Number of share options: 111,032
Chief Financial Officer
Mikkel Tørud became CFO of Scatec in 2014. Tørud was previously SVP of Business Development and Investor Relations and member of Group Management in REC. Prior to REC he was commercial advisor in BP and management consultant in PA Consulting Group. He has extensive experience from finance, investor relations, corporate communications and business development. Tørud holds a Master of Science degree in Industrial Economics and Technology Management from the Norwegian University of Science and Technology.
Number of shares in Scatec: 226,636 Number of share options: 79,898
EVP Solutions
Pål Helsing became EVP of Solutions of Scatec in 2015. Helsing was previously President of Kongsberg Oil and Gas Technologies AS and a member of the Kongsberg Group Executive Management Team. Before that, he held several executive positions within Aker Solutions. Helsing holds a Bachelor of Science Civil from Glasgow University and a Business Economics degree from BI Norwegian Business School.
Number of shares in Scatec: 5,296 Number of share options: 68,225
EVP Sustainable Business & HSSE
Roar Haugland became EVP of Sustainable Business & HSSE of Scatec in 2010. He has more than 20 years of experience from leading positions in business development, sales and management from large multinational companies like HP and IBM. Haugland holds a Master of Science in Mechanical Engineering from the Norwegian University of Science and Technology.
Number of shares in Scatec: 187,058 Number of share options: 61,833
Note: The number of shares and share options are quoted per 17 March 2022.
Snorre Valdimarsson has served as EVP General Counsel since 2009. Prior to joining Scatec, Valdimarsson worked at the Norwegian law firm Selmer, focusing on M&A, debt and equity capital markets. He has more than a decade of experience in structuring, financing and realising renewable energy projects globally. Valdimarsson holds a Master in Law from the University of Bergen, Norway.
Number of shares in Scatec: 12,419 Number of share options: 66,084
Terje Pilskog became EVP for Project Development of Scatec in 2013. He was previously SVP of REC Systems and Business Development at Renewable Energy Corporation ASA. Prior to REC, he was Associate Partner at the management consulting company McKinsey & Co. Pilskog holds a Master of Science in Business Administration from BI Norwegian Business School.
Number of shares in Scatec: 511,296 Number of share options: 73,757
Toril Haaland became EVP of People & Organisation of Scatec in 2018. She has more than 20 years of leading HR experience from major international companies, latest General Electric Company (GE). Prior to GE she served eight years with Hewlett Packard. Haaland holds degrees in Leadership, Business and HR from BI Norwegian Business School.
Number of shares in Scatec: 3,996 Number of share options: 57,319
Torstein Berntsen became EVP of Power production of Scatec Solar in 2014. He was previously the CFO in Scatec Solar ASA and Scatec AS. Prior to this Berntsen was Senior Manager at Ernst and Young and he previously held the position as Audit Manager at Arthur Andersen. Berntsen holds a Master of Science in Business Administration and is a state authorised public accountant from the Norwegian School of Economics (NHH).
Number of shares in Scatec: 67,753 1) Number of share options: 67,753
Note: The number of shares and share options are quoted per 17 March 2022. 1) Together with related parties, Berntsen holds a total of 711,800 shares in Scatec ASA.
Mr. Andersen is the CEO of Scatec Innovation AS and has been Chairman of the Board of Scatec ASA since May 2014. He is the former Chief Operating Officer of the REC Group, where he held several executive management positions during his 12 years with the company. Prior to the REC Group, he held various management positions in Borregaard. Mr. Andersen holds a Master of Business and Economics from BI Norwegian Business School.
Board Member
Mr. Skogseth has more than 35 years of experience from the Oil, Gas and Renewable industries ranging from oil companies to supplier industries, both in Norway and internationally. He was President and CEO for Aibel from 2008 to 2017 and played a key role in establishing new presence and business for the company on several continents. Mr. Skogseth holds a Master of Science Mechancal Engineering from South Dakota School of Mines and Technology.
Board Member
Mrs. Marchand has worked as full time non-executive board member and advisor since 2018. She has extensive top management experience from positions in financial institutions like DNB ASA (VP in charge of corporate and retail banking), the Government Pension Fund (CEO), Eksportfinans ASA (CEO) as well as the law firm Haavind AS (CEO). She has also extensive board experience from the last 20 years in different quoted and non-quoted companies and was former vice chair on the Norwegian Stock Exchange. Mrs. Marchand holds a Bachelor's degree in Business from Copenhagen Business School.
Mrs. Moræus Hanssen has an extensive experience from the international oil & gas industry, including 6 years as CEO of GdF Suez E&P Norge as, ENGIE E&P International SA (Paris) and DEA AG (Hamburg). She has previously held executive positions in Norsk Hydro, Statoil (Equinor), Aker ASA and served as Deputy CEO and COO for the newly merged Wintershall DEA when she moved back to Norway end of 2019. Mrs. Moræus Hanssen holds a Master of Petroleum Engineering from Norwegian University of Science and Technology and Master of Petroleum Economics from IFP School (Paris).
Board Member
Mr. Kildahl is a Senior Advisor in Energy Infrastructure Partners. He has extensive leadership experience from the energy sector, including more than 5 years as EVP in E.ON SE and 11 years in Statkraft AS, whereof 6 years as CEO of Statkraft Energi AS. Mr. Kildahl holds a MSc in Economics, is a Chartered Financial Analyst and holds an MBA from the Norwegian School of Economics, and concluded the Advanced Management Program at Harvard Business School.
| Proportionate Financials | ||
|---|---|---|
| Total revenues and other income | 4,615 | 2,844 |
| Power Production | 4,176 | 1,708 |
| Services | 260 | 231 |
| Development & Construction | 137 | 873 |
| Corporate | 42 | 33 |
| EBITDA | 2,686 | 1,306 |
| Power Production | 2,949 | 1,404 |
| Services | 75 | 82 |
| Development & Construction | -223 | -28 |
| Corporate | -114 | -153 |
| Operating profit (EBIT) | 1,606 | 690 |
| Power Production | 1,977 | 838 |
| Services | 70 | 79 |
| Development & Construction | -301 | -54 |
| Corporate | -140 | -173 |
| Profit/loss | 285 | -435 |
| Net interest- bearing debt | 15,175 | 1,851 |
| Power production (GWh) | 3,823 | 1,602 |
| Scatec proportionate share of cash flow to equity1) | 1,284 | 324 |
| Consolidated Financials | ||
| Revenues and other income | 3,803 | 2,754 |
| EBITDA | 2,903 | 2,069 |
| Operating profit (EBIT) | 2,012 | 1,292 |
| Profit/(loss) | 456 | -368 |
| Net interest- bearing debt | 14,949 | 5,223 |
Basic earnings per Share (NOK) 2.45 -3.51
NOK million FY 2021 FY 2020
Power Production (GWh) 9,729 2,911
1) See Alternative Performance Measures appendix for definition
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 3.5 GW of installed capacity across four continents today. We are targeting 15 GW of renewable capacity to be in operation or under construction by the end of 2025, delivered by our 600 passionate employees who are driven by a common vision of 'Improving our Future'.
Scatec provides mandatory anti-corruption and code of conduct training to all employees. 89% of all employees have completed the training
2021 proportionate revenues were NOK 4,615 million, up from NOK 2,844 million in 2020. The increase reflects the acquisition of SN Power in January 2021 and new solar plants in Ukraine and Argentina which started operation during the year.
With a larger portfolio of power plants in operation, both revenues and EBITDA increased in Power Production, while decreasing in the Development & Construction segment. This change in segment mix resulted in a higher EBITDA margin for the Group compared with the previous year.
The increase in operating expenses and depreciation compared with 2020 is mainly driven by the new power plants in operation, strengthened project development and corporate functions.
Scatec's proportionate share of cash flow to equity was NOK 1,284 million in 2021, up from NOK 324 million in 2020. This is mainly explained by the factors above in addition to NOK 397 million from refinancing of assets in the Philippines.
Power Production revenues increased to NOK 4,176 million (1,708) in 2021, while EBITDA increased by 48% to NOK 2,949 million (1,404). Installed capacity was 3,355 MW at year-end and full year production on proportionate basis reached 3,823 GWh, up from 1,602 GWh in 2020. The increase in production volumes and revenues is mainly driven by the acquisition of SN Power.
For the existing power plants, the change in production volume from last year is small and driven by regular operational variability. The reported revenues for 2021 are reflecting sale of electricity from solar power plants in Brazil, Czech Republic, Egypt, Honduras, Jordan, Malaysia, Mozambique, Rwanda, South Africa, Argentina and Ukraine, from hydro power plants in Philippines, Uganda and Laos and wind power in Vietnam. Operating expenses and depreciation increased from last year in line with more plants in operation.
Scatec's proportionate share of cash flow to equity from Power Production was NOK 1,640 million, up from NOK 427 million in 2020. The increase in cash flow to equity is less than the increase in EBITDA due to increased debt service.
Revenues in the Service segment reached NOK 260 million (231). The revenue growth is explained by the growing portfolio of producing assets.
Operating expenses of NOK 186 million (149) in the segment mainly constitute fixed expenses such as personnel and recurring maintenance cost reflecting fixed maintenance schedules.
EBITDA reached NOK 75 million (82), corresponding to an EBITDA margin of 29% (36%). The decrease in EBITDA margin compared with last year is mainly due to growth of centralised service costs required to support the growing portfolio.
Scatec's proportionate share of cash flow to equity from Services was NOK 60 million in 2021, down from NOK 65 million in 2020.
Revenues in Development & Construction was NOK 137 million (873) and EBITDA NOK -223 million (-28) in 2021. The decrease is explained by low construction activity during the year.
The increase in operating expenses reflects increased spending on opportunity projects across several markets and renewable technologies.
Project development spending, including amounts capitalised reached NOK 318 million (245) in the year.
Scatec 's proportionate share of cash flow to equity from D&C was NOK -164 million, a decrease from NOK -15 million in 2020.
Corporate activities mainly relate to corporate and management services. The segment reported an operating loss of NOK 114 million (153) in 2021.
Revenues in the corporate segment refers to management fees charged to the operating segments for corporate services rendered across the Group. Corporate incurred NOK 156 million (186) in operating expenses. In 2020 corporate included nonrecurring transaction cost related to the SN Power acquisition. The change in operating expenses from 2020 to 2021 also reflects the strengthening of corporate functions to support the Company's growth.
| NOK million | 2021 | 2020 |
|---|---|---|
| Total revenues and other income | 3,803 | 2,754 |
| EBITDA | 2,903 | 2,069 |
| Operating profit (EBIT) | 2,012 | 1,292 |
| Profit before income tax | 759 | -238 |
| Profit/(loss) for the period | 456 | -368 |
| Profit/(loss) to Scatec | 388 | -478 |
| Profit/(loss) to non-controlling interests | 68 | 110 |
Scatec reported net revenues of NOK 3,803 million (2,754) in 2021. The increase in revenues is explained by the commercial operation of new solar parks at Kamianka, Chigrin and Progressovka in Ukraine, and the acquisition of the Dam Nai wind power plant in Vietnam.
Net income from associated companies increased from NOK -16 million in 2020 to NOK 765 million in 2021. The increase is explained by net income from joint venture investments and associated companies that were part of the SN Power acquisition (operating power plants in the Philippines, Laos and Uganda) and commercial of the new solar park Cordillera in Argentina.
The Group has in 2021 strengthen the organisation and the corporate functions following the significant growth of the Company. Also, the Group has increased its spending on opportunity projects, which explains the growth in operating expenses to NOK 900 million compared to NOK million 685 last year.
Earnings before interest, taxes, depreciation and amortisation (EBITDA) reached NOK 2,903 million in 2021, an increase from EBITDA of NOK 2,069 million in 2020.
Depreciation, amortisation and impairment amounted to NOK 892 million in 2021, compared to NOK 777 million in 2020. The increase is mainly explained by depreciation of the new solar plants which started operation in 2021.
Operating profit (EBIT) ended at NOK 2,012 million in 2021, up from NOK 1,292 million in 2020.
| NOK million | 2021 | 2020 |
|---|---|---|
| Financial income | 47 | 57 |
| Financial expenses | -1,368 | -1,189 |
| Foreign exchange gains/(losses) | 69 | -398 |
| Net financial expenses | -1,253 | -1,530 |
Net financial expenses amounted to NOK 1,253 million in 2021, compared to NOK 1,530 million in 2020. Financial expenses primarily consist of interest expenses on non-recourse financing and corporate funding. The increase in interest expense is mainly driven by the acquisition of SN Power.
The decrease in foreign exchange losses in 2021 from negative NOK 398 million to positive NOK 69 million is primarily driven by change of functional currency in Scatec ASA from NOK to USD from 1 January 2021.
The effective tax rate was -40% (55%) for the full year 2021. The difference between the actual tax expense of the year and a calculated tax expense based on the Norwegian tax rate of 22% is explained by a number of factors, including withholding taxes paid on dividends received from subsidiaries, revised assessment of deferred tax assets and currency effects. The tax cost is also influenced by taxable profits and -losses in tax jurisdictions with different tax rates which offset each other in the group but leaves a net tax expense to be recognised. The underlying tax rates in the companies in operation are in the range of 0% to 33%. In some markets, Scatec also receives special tax incentives intended to promote investments in renewable energy. For further details, refer to Note 7 Tax.
Non-controlling interests (NCI) represent financial investors in power plants. The allocation of profits between NCI and Scatec is impacted by the fact that NCI only represent shareholdings in the power plants that are fully consolidated and not includes net income from JVs and associates
Other comprehensive income comprises items that may subsequently be reclassified to profit or loss, amounted to NOK 317 million (-394) in 2021. This relates to after-tax net movement of cash flow hedges of negative NOK 386 million (-380) and foreign currency translation differences of NOK 40 million (-112).
Total comprehensive income was thus NOK 773 million (-762) for 2021 of which NOK 595 million (-698) was attributable to Scatec,
while NOK 178 (-65) million is attributable to non-controlling interests.
| NOK million | FY 2021 | FY 2020 |
|---|---|---|
| Net cash flow from operating activities | 2,072 | 1,671 |
| Net cash flow from investing activities | -8,081 | -1,704 |
| Net cash flow from financing activities | 2,413 | 4,984 |
| Net increase/(decrease) in cash and cash equivalents |
-3,597 | 4,951 |
Net cash flow from consolidated operating activities amounted to NOK 2,072 million (1,671) in 2021, compared to EBITDA of NOK 2,686 million (1,306). The difference is primarily explained by increased net income from JVs and associated companies and changes in other assets and liabilities.
Net cash flow from consolidated investing activities was negative NOK -8,081 million (-1,704) driven by net investments in, and distributions from JVs, and investments in property, plant and equipment.
Net cash flow from financing activities amounted to NOK 2,413 million (4,984), driven primarily by net proceeds from corporate financing of NOK 4,699 million related to the acquisition of SN Power, repayments and proceeds from non-recourse project financing amounted to NOK -707 million (-543) and NOK 1,180 million (894).
In total, the Group's cash balance was reduced by NOK 3,597 million (4,951). Of the total cash balance of NOK 4,171 million (7,788), NOK 1,711 million (1,741) was restricted cash in power plant companies, NOK 91 million (87) represented other restricted cash while NOK 2,335 million (5,949) represented free cash at the Group level.
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. Scatec's proportionate share of cash flow to equity totaled NOK 1,284 million (324) in 2021.
| 2021 | 2020 |
|---|---|
| 1,640 | 427 |
| 60 | 65 |
| -164 | -15 |
| -252 | -153 |
| 1,284 | 324 |
| NOK million | 2021 | 2020 |
|---|---|---|
| Property, plant and equipment and intangible assets |
16,682 | 16,112 |
| Investments in JV and associated companies | 9,745 | 612 |
| Other non-current assets | 983 | 865 |
| Total non-current assets | 27,385 | 17,590 |
| Other current assets | 1,474 | 1,286 |
| Cash and cash equivalents | 4,171 | 7,788 |
| Total current assets | 5,645 | 9,074 |
| Total assets | 33,030 | 26,663 |
Total assets amounted to NOK 33,030 million at year-end 2021, up from NOK 26,663 million at the end of 2020.
Non-current assets totaled NOK 27,385 million (17,590), the increase is mainly driven by the acquisition of SN Power and increased investments in JVs and associated companies. See Note 13 for an overview of investments in joint ventures and associated companies and split per country.
Current assets amounted to NOK 5,645 million (9,074). Other current assets increased compared to 2020, mainly driven by the acquisition of SN Power, working capital changes and increase in outstanding receivables in Honduras.
The cash balance has decreased by NOK 3,617 million since 31 December 2020, primarily following the acquisition of SN Power. In addition to the cash balance as of year-end at NOK 4,171 million, the Group had NOK 1,632 million in available undrawn credit facilities. See Note 15 for a detailed breakdown of cash balances as well as an overview of movement of cash at the Recourse Group level.
Other current assets and liabilities mainly relate to working capital items such as trade receivables, prepayments and accruals.
| NOK million | 2021 | 2020 |
|---|---|---|
| Equity | 9,919 | 9,467 |
| Non-current non-recourse project financing |
10,708 | 11,350 |
| Non-current corporate financing | 7,264 | - |
| Other non-current liabilities | 2,224 | 2,351 |
| Total non-current liabilities | 20,197 | 13,701 |
| Current non-recourse project financing | 1,147 | 913 |
| Current corporate financing | - | 748 |
| Trade payables and other current liabilities | 1,766 | 1,834 |
| Total current liabilities | 2,913 | 3,495 |
| Total liabilities | 23,110 | 17,196 |
| Total equity and liabilities | 33,030 | 26,663 |
| Book equity ratio | 30% | 36% |
Total equity increased by NOK 452 million compared with 31 December 2020, driven by the profit and other comprehensive income in the period. The decreased book equity ratio is explained by the increase in total equity and liabilities following the acquisition of SN Power.
Total non-current liabilities amounted to NOK 20,197 million (13,701) at the end of 2021, of which non-recourse project financing accounted for NOK 10,708 million (11,350). The NOK 6,516 million increase in corporate financing compared with 31 December 2020 mainly relates to financing of the acquisition of SN Power which, at closing date of the acquisition, comprised of a USD 400 million bridge to bond facility, a USD 150 million Green Term Loan and a USD 200 million Vendor Financing. In the first quarter 2021, Scatec successfully completed a EUR 250 million senior unsecured green bond issue with maturity in August 2025, which was listed on the Oslo Stock Exchange on 23 June 2021. Proceeds from the bond issue were used for repayment of USD 207 million of the bridge to bond facility, redemption of the NOK 750 million senior unsecured green bond issued in 2017, and other eligible activities as set out in Scatec's Green Financing Framework. See Note 23 for further details.
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 166 million and operating loss (EBIT) of NOK -343 million in 2021, compared to revenues of NOK 622 million and operating loss (EBIT) of NOK -63 million in 2020.
Revenues decreased from 2020 to 2021 due to lower construction activity. All revenues are Group internal and based on agreements established between Scatec ASA and its subsidiaries, joint ventures and associated companies.
Operating expenses decreased to NOK 455 million, from NOK 675 million in 2020, reflecting the reduced construction activity. The number of employees increased from 94 to 116 following the Company's growth.
Profit after tax reached NOK -74 million, compared to a profit after tax of NOK 518 million in 2020.
Total equity for the parent company Scatec ASA stood at NOK 9,761 million at 31 December 2021, down from NOK 9,915 million in 2020. Total assets amounted to NOK 20,048 million at 31 December 2021, up from NOK 11,658 million a year earlier. The increase mainly relates to investments in subsidiaries following the acquisition of SN Power.
Scatec has an international and diverse workforce which at the end of 2021 was represented by 51 nationalities and 622 employees in 26 countries. The organisation was strengthened across key functions and regions by expanding the team by 187 highly skilled full-time employees during the year. In addition to the full-time workforce, Scatec had 105 short-term employees and 56 consultants supporting its functions. The organisation remains flexible, and the young and dynamic 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 anti-discrimination on https://scatec.com/sustainability/esg-resources/ and in the Company's 2021 ESG Performance report.
In Scatec, risk management is an integrated part of our operating system. We have over the years systemised our approach to risk management through policies and procedures, which are followed up by our 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. Our ability to manage these risks is fundamental for our success and has over time developed into a key competitive advantage for Scatec. We capitalise on our experience from complex environments and risk management systems to de-risk an opportunity and move it forward.
As part of our 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 our 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.
Below we have summarised the key inherent risks that Scatec is exposed to as per year end 2021 and key mitigation activities.
Scatec's growth relies on successful project development which is impacted by a number of 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.
From the date when Scatec enters into long-term contract for the sale of electricity and the date of the investment decision the Company is exposed to the risk component price fluctuations 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.
Scatec is opposed all forms of corruption and strives to meet the highest ethical standards across our business activities. As a global company, we have implemented an Anti-Corruption Compliance Programme designed to meet the risks of diverse and challenging business environments.
The Scatec Code of Conduct sets out our commitment to prevent corruption and places clear requirements on our employees. We train our employees on how to manage the corruption risks they may face, we encourage them to ask for guidance if they are
unsure, and we remind them of their duty to speak-up if they suspect misconduct. In 2021 we made a Code of Conduct eLearning available for all employees and, in 2022, we will focus on tightening internal controls around high-risk partners and activities.
Scatec expects all business partners and suppliers to conduct their activities in a way that is consistent with our Code of Conduct and we embed this contractually in our Supplier Conduct Principles. We screen all potential suppliers and systematically assess higher-risk business partners to avoid unsuitable third parties. Our assessment goes beyond corruption to include environment, labour, human rights and sanction risks. We mitigate these risks through our supplier development programme, transparent and fair tender processes, robust contracting, pre-production audits and monitoring during production.
Our whistle-blower channel is available to all employees, suppliers, partners and customers through internal channels and our 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.
Our finance partners, including Norfund and the World Bank International Finance Corporation, are widely acknowledged for having high ethical standards and rigorous due diligence requirements and, together, we ensure that our projects and operations are conducted with integrity.
Scatec sells electricity to state-owned utilities typically supported by sovereign guarantees. The Company's financial performance therefor relies on government adherence to contractual obligations and various laws and regulations.
Consequently, Scatec is subject to political risk in the countries 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 is an increasing concern in today's society. Scatec's IT partner's Security Operations Center (ISOC) monitors all data
traffic passing through the firewalls 24/7 in addition to surveillance of the general threat level across Scatec's global networks. The security set-up is audited by third party experts on a regular basis.
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 19 – Financial risk management.
The Company has moderate exposure to power market price risk. Scatec has entered into long-term fixed price contracts for the sale of electricity from most of its power plants in operation at year end 2021. In the Philippines, Scatec has long term power market price exposure as about 70-80% of the electricity from power plants are sold under 1 - 3 year contracts to hedge the short to mid-term market price exposure.
Through the construction of large-scale renewable energy plants with between 500-5000 workers on the project site, 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.
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 of 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.
Climate change impact - climate change could have a range of potential impacts on Scatec's business. The most serious climaterelated risks involve the physical impact of extreme weather events, including droughts and floods. Scatec conducts corporate climate risk assessments Refer to our Task Force on Climate related Financial Disclosure (TCFD) report 2021 for more information.
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 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. The impact of COVID-19 on Scatec's operations has been limited as we operate critical infrastructure. The COVID-19 situation has however influenced the markets where Scatec develops projects and has caused delays in government approvals for some of the development projects.
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 the 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.
Global new installation of renewable energy capacity reached 315 GW in 2021 according to Bloomberg New Energy Finance (BNEF).
Although global cost inflation is impacting the renewables industry the cost impact on other energy sources is even stronger. Consequently, the relative competitiveness of the fuel independent electricity form solar, wind and hydropower has strengthened over the last few quarters.
Bloomberg New Energy Finance (BNEF) expects global solar new build to accelerate and see new installations of around 228 GW in 2022, up from an estimated 183 GW in 2021. For wind, new installations reached an estimated 93 GW in 2021 and is expected to grow by 9% each year up to 2030, cumulative capacity surpassing 1,000 GW already in 2023. The global energy storage market grows at unprecedented rates, with an estimated 11 GW of new capacity installed in 2021 and 345 GW to be added up to 2030.
Global hydropower new build reached an estimated 28 GW in 2021, according to the International Energy Agency (IEA). In a recent report, IEA highlights that around half of the economically viable potential of hydropower globally is yet untapped. The potential is particularly high in emerging and developing economies. To reach IEA's net-zero emission by 2050, significant investments are required to build an estimated additional 477 GW of hydropower capacity globally by 2030.
Long term, BNEF expects all renewables to see massive growth and to supply 85% of energy in 2050 in a green scenario1 . In its latest New Energy Outlook 2021 report, BNEF highlights that the following milestones would need to be achieved every year on average through 2030 to be on track to reach net zero by 2050:
To achieve the goal of net zero emissions by 2050, 85 per cent of the world's energy production will have to come from renewable energy, according to Bloomberg NEF, which will require total investments of USD 150 trillion in total.
Green hydrogen and green ammonia are set to play a major role in decarbonisation of hard-to-abate sectors globally in the coming years, driven by volatile gas prices, cheap renewables, ambitious net zero targets and an increasing number of national
hydrogen strategies being adopted. IRENA's 1.5°C scenario envisages that clean hydrogen could meet up to 12% of final energy consumption by 2050.
In March 2021, Scatec announced a new target to reach 15 GW by the end of 2025 and a NOK 100 billion investment plan to fund the growth target. The business plan is supported by Scatec's track record of strong growth and the solid project pipeline across solar, wind, hydro and storage in high-growth markets globally.
The 15 GW target implies 12 GW of new capacity, with NOK 15-20 billion of a total NOK 100 billion in investments to be funded by Scatec equity. Solid long term cash flows from operating power plants and margins from development and construction of new facilities are expected to fund a large part of Scatec's equity investments.
Scatec ASA is listed on the Oslo Stock Exchange under the ticker "SCATC". The share capital of Scatec was NOK 3,958,392 divided on 158,864,018 shares at year end 2021, 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 2021, the number of shareholders were 16,487. Refer to Note 27 - Share capital, shareholder information and dividend for further information.
In 2021, the Scatec share price was negatively affected by a weak sector development as well as delayed construction start for several of Scatec's backlog projects.
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.
The Group's objective is to pay shareholders consistent and growing cash dividends. Scatec's dividend policy is to, over time, pay its shareholders dividends representing minimum 25% of the cash distributions received from the power plants each year. In line with the dividend policy, the Board of Directors have resolved to propose to the 2022 Annual General Meeting of Scatec that a dividend of NOK 2.54 per share should be paid for 2021.
Green Scenario is a clean-electricity and green-hydrogen net-zero pathway. Here, hydrogen produced from water using electrolyzers powered by wind and solar is applied in sectors such as industry and heavy transport, as well as in power generation to complement electrification.
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 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 International Financial Reporting Standards (IFRS) 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.
Scatec reports on four operating business segments: Power Production (PP), Services, Development & Construction (D&C) and Corporate.
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 IFRS financial statement.
No adjusting events have occurred after the balance sheet date.
On 24 February 2022, Russia invaded Ukraine where Scatec currently operate five solar power plants, located in the central and southern parts of the country. The situation is extremely challenging, and Scatec's top priority is the safety of our Ukrainian employees. The outcome is still highly uncertain, but the event may significantly impact Scatec's financial performance in Ukraine, including restructuring of the loan for Chigirin. Based on the current circumstances we anticipate to be in breach of loan covenants as of end of Q1 2022 and we have a continuous and constructive dialogue with the lenders on this matter.
Oslo, 17 March 2022 The Board of Directors Scatec ASA
| Consolidated statement of profit or loss | 45 |
|---|---|
| Consolidated statement of comprehensive income | 46 |
| Consolidated statement of financial position | 47 |
| Consolidated statement of changes in equity | 49 |
| Consolidated statement of cash flow | 50 |
Notes to the Consolidated financial statements 51
| General information | ||
|---|---|---|
| Note 1 | Corporate information | 51 |
| Note 2 | Key sources of estimation uncertainty, judgements and assumptions | 51 |
| Statement of profit or loss (and comprehensive income) | ||
| Note 3 | Operating segments | 52 |
| Note 4 | Employee benefits | 56 |
| Note 5 | Other operating expenses | 58 |
| Note 6 | Financial income and expenses | 59 |
| Note 7 | Tax | 59 |
| Note 8 | Earnings per share | 62 |
| Statement of financial position | ||
| Note 9 | Property, plant and equipment | 62 |
| Note 10 | Goodwill and intangible assets | 64 |
| Note 11 | Leases | 66 |
| Note 12 | Impairment testing | 68 |
| Note 13 | Investments in joint venture and associated companies | 70 |
| Note 14 | Business combinations | 74 |
| Note 15 | Cash and cash equivalents | 75 |
| Note 16 | Trade receivables | 76 |
| Note 17 | Other non-current and current asset | 77 |
| Note 18 | Other non-current and current liabilities | 78 |
| Financial risk and capital management | ||
| Note 19 | Financial risk management and risk sensitivities | 79 |
| Note 20 | Financial instruments | 81 |
| Note 21 | Financial instruments by category | 83 |
| Note 22 | Derivative financial instruments | 84 |
| Note 23 | Corporate financing | 86 |
| Note 24 | Non-recourse financing | 88 |
Note 25 Project equity financing provided by co-investors 91 Note 26 Guarantees and commitments 92
| 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 | 100 |
| Note 31 | Summary of significant accounting policies | 101 |
| Note 32 | Subsequent events | 102 |
1 JANUARY - 31 DECEMBER
| NOK million | Note | 2021 | 2020 |
|---|---|---|---|
| Revenues | 3 | 3,038 | 2,771 |
| Net income/(loss) from JV and associated companies | 3, 13 | 765 | -16 |
| Total revenues and other income | 3,803 | 2,754 | |
| Personnel expenses | 4 | -397 | -262 |
| Other operating expenses | 5 | -503 | -423 |
| Depreciation, amortisation and impairment | 9, 10, 11 | -892 | -777 |
| Operating profit (EBIT) | 2,012 | 1,292 | |
| Interest and other financial income | 6 | 47 | 57 |
| Interest and other financial expenses | 6 | -1,368 | -1,189 |
| Net foreign exchange gain/(loss) | 19, 6 | 69 | -398 |
| Net financial expenses | -1,253 | -1,530 | |
| Profit/(loss) before income tax | 759 | -238 | |
| Income tax (expense)/benefit | 7 | -303 | -130 |
| Profit/(loss) for the period | 456 | -368 | |
| Profit/(loss) attributable to: | |||
| Equity holders of the parent | 388 | -478 | |
| Non-controlling interest | 29 | 68 | 110 |
| Basic earnings per share (NOK) | 8 | 2.45 | -3.51 |
| Diluted earnings per share (NOK) | 8 | 2.43 | -3.51 |
1 JANUARY - 31 DECEMBER
| NOK million | Notes | 2021 | 2020 |
|---|---|---|---|
| Profit/(loss) for the period | 456 | -368 | |
| Other comprehensive income: | |||
| Items that may subsequently be reclassified to profit or loss | |||
| Net movement of cash flow hedges | 22 | 386 | -376 |
| Income tax effect from net movement of cash flow hedges | 7 | -108 | 98 |
| Foreign currency translation differences | 40 | -116 | |
| Net other comprehensive income to be reclassified | 317 | -394 | |
| Total comprehensive income for the year, net of tax | 773 | -762 | |
| Attributable to: | |||
| Equity holders of the parent | 595 | -698 | |
| Non-controlling interest | 29 | 178 | -65 |
| NOK million | Note | As of 31 December 2021 |
As of 31 December 2020 |
|---|---|---|---|
| Assets | |||
| Non-current assets | |||
| Deferred tax assets | 7 | 748 | 722 |
| Property, plant and equipment | 9 | 15,885 | 16,071 |
| Goodwill and intangible assets | 10 | 797 | 40 |
| Investments in JVs and associated companies | 13 | 9,745 | 612 |
| Other non-current assets | 17, 30 | 210 | 144 |
| Total non-current assets | 27,385 | 17,590 | |
| Current assets | |||
| Trade and other receivables | 16 | 740 | 623 |
| Other current assets | 17, 30 | 734 | 663 |
| Cash and cash equivalents | 15 | 4,171 | 7,788 |
| Total current assets | 5,645 | 9,074 | |
| Total assets | 33,030 | 26,663 |
| NOK million | Note | As of 31 December 2021 |
As of 31 December 2020 |
|---|---|---|---|
| Equity and liabilities | |||
| Equity | |||
| Paid in capital | |||
| Share capital | 27 | 4 | 4 |
| Share premium | 9,775 | 9,720 | |
| Total paid in capital | 9,779 | 9,724 | |
| Other equity | |||
| Retained earnings | -493 | -708 | |
| Other reserves | -16 | -221 | |
| Total other equity | -508 | -929 | |
| Non-controlling interests | 29 | 649 | 673 |
| Total equity | 9,919 | 9,467 | |
| Non-current liabilities | |||
| Deferred tax liabilities | 7 | 589 | 205 |
| Corporate financing | 23 | 7,264 | - |
| Non-recourse project financing | 24 | 10,708 | 11,350 |
| Other financial liabilities | 20, 21, 22 | 249 | 572 |
| Other non-current liabilities | 18, 30 | 1,387 | 1,575 |
| Total non-current liabilities | 20,197 | 13,701 | |
| Current liabilities | |||
| Corporate financing | 23 | - | 748 |
| Non-recourse project financing | 24 | 1,147 | 913 |
| Income tax payable | 7 | 24 | 90 |
| Trade and other payables | 812 | 760 | |
| Other financial liabilities | 20, 21, 22 | 90 | 131 |
| Other current liabilities | 18, 30 | 841 | 852 |
| Total current liabilities | 2,913 | 3,495 | |
| Total liabilities | 23,110 | 17,196 | |
| Total equity and liabilities | 33,030 | 26,663 |
Oslo, 17 March 2022
The Board of Directors Scatec ASA
| Other reserves | ||||||||
|---|---|---|---|---|---|---|---|---|
| NOK million | Share capital |
Share premium |
Retained earnings |
Foreign currency translation |
Hedging reserves |
Total | Non controlling interests |
Total equity |
| At 1 January 2020 | 3 | 3,108 | -134 | 128 | -130 | 2,975 | 663 | 3,640 |
| Profit for the period | - | - | -478 | - | - | -478 | 110 | -368 |
| Other comprehensive income | - | - | - | -89 | -131 | -219 | -174 | -394 |
| Total comprehensive income | - | - | -478 | -89 | -131 | -698 | -65 | -762 |
| Share-based payment | - | 14 | - | - | - | 14 | - | 14 |
| Share capital increase | 1 | 6,743 | - | - | - | 6,744 | - | 6,744 |
| Transaction cost, net after tax | - | -144 | - | - | - | -144 | - | -144 |
| Share purchase program | - | -1 | - | - | - | -1 | - | -1 |
| Dividend distribution | - | - | -131 | - | - | -131 | -148 | -279 |
| Purchase of NCIs shares in group companies | - | - | 35 | - | - | 35 | - | 35 |
| Capital increase from NCI | - | - | - | - | - | - | 221 | 221 |
| At 31 December 2020 | 4 | 9,720 | -708 | 40 | -261 | 8,794 | 673 | 9,467 |
| At 1 January 2021 | 4 | 9,720 | -708 | 40 | -261 | 8,794 | 673 | 9,467 |
| Profit for the period | - | - | 388 | - | - | 388 | 68 | 456 |
| Other comprehensive income | - | - | 1 | 55 | 150 | 206 | 110 | 317 |
| Total comprehensive income | - | - | 390 | 55 | 150 | 595 | 178 | 773 |
| Share-based payment | - | 12 | - | - | - | 12 | - | 12 |
| Share capital increase | - | 42 | - | - | - | 42 | - | 42 |
| Share purchase program | - | -1 | - | - | - | -1 | - | -1 |
| Dividend distribution | - | - | -173 | - | - | -173 | -217 | -390 |
| Capital increase from NCI | - | - | - | - | - | - | 14 | 14 |
| At 31 December 2021 | 4 | 9,775 | -493 | 95 | -111 | 9,271 | 649 | 9,919 |
| NOK million | Notes | 2021 | 2020 |
|---|---|---|---|
| Cash flow from operating activities | |||
| Profit before taxes | 759 | -238 | |
| Taxes paid | 7 | -234 | -214 |
| Depreciation and impairment | 9, 10, 11 | 892 | 777 |
| Net gain/loss from sale of fixed assets | 9 | 9 | 26 |
| Net income from JV and associated companies | 13 | -765 | 16 |
| Interest and other financial income | 6 | -47 | -57 |
| Interest and other financial expenses | 6 | 1,368 | 1,189 |
| Unrealised foreign exchange (gain)/loss | 6 | -69 | 398 |
| (Increase)/decrease in current assets and current liabilities | 158 | -226 | |
| Net cash flow from operating activities | 2,072 | 1,671 | |
| Cash flows from investing activities | |||
| Interest received | 6 | 47 | 57 |
| Consideration paid for SN Power, net of cash acquired | 23, 14 | -7,848 | - |
| Investments in property, plant and equipment | 9 | -967 | -1,774 |
| Distributions from JV and associated companies | 13 | 819 | 51 |
| Investments in JV and associated companies | 13 | -131 | -39 |
| Net cash flow used in investing activities | -8,081 | -1,704 | |
| Cash flow from financing activities | |||
| Net proceeds from non-controlling interests shareholder financing | 25 | -12 | 159 |
| Interest paid | -1,180 | -894 | |
| Proceeds from non-recourse project financing | 24 | 43 | 135 |
| Repayment of non-recourse project financing | 24 | -750 | -678 |
| Payments of principal portion on lease liabilities | 11 | -25 | -18 |
| Interest paid on lease liabilities | 11 | -15 | -18 |
| Net proceeds from corporate financing | 23 | 4,699 | - |
| Share capital increase 1) | 27 | 42 | 6,576 |
| Dividends paid to equity holders of the parent company and non-controlling interests | 27 | -390 | -280 |
| Net cash flow from financing activities | 2,413 | 4,984 | |
| Net increase/(decrease) in cash and cash equivalents | -3,597 | 4,951 | |
| Effect of exchange rate changes on cash and cash equivalents | -20 | 13 | |
| Cash and cash equivalents at beginning of the period | 7,788 | 2,824 | |
| Cash and cash equivalents at end of the period | 15 | 4,171 | 7,788 |
1) The amounts of share capital increase are presented net of transaction cost of NOK 0 million (128) in 2021
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 3.5 GW of installed capacity 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 2021 were authorised for issue in accordance with a resolution by the Board of Directors on 17 March 2022.
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.
Information about estimation uncertainty, judgements and assumptions in the annual report are largely incorporated into the individual notes. Information presented in this note are more general descriptions and information that does not naturally belong in the individual notes.
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 estimates are based on historical experience, current trends and other relevant factors available when the consolidated financial statements are prepared. The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below and in individual notes. The Group based its assumptions and estimates on parameters available when the consolidated financial statements were prepared. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising beyond the control of the Group. Such changes are
reflected in the financial statements when the changes in assumptions occur.
The Company's management believes the following critical accounting items represent the more significant judgements and estimates used in the preparation of the consolidated financial statements:
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:
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.
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.
From January 2021, the group has incorporated the hydro and wind producing assets in the Power Production segment, other activities related to the development, construction and operations of the wind and hydro plants are incorporated in the different segments according to its nature, as defined below.
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 based on long-term Power Purchase Agreements or Feed-inTariffs. In addition, the segment includes revenues from the Release concept, and energy trading activities. The electricity is primarily sold on long-term Power Purchase Agreements or feed-in-tariffs except for in the Philippines where the electricity is sold on bilateral contracts, in the spot market and as ancillary services.
Revenue is recognised upon delivery of electricity produced to the local operator of the electricity grid. 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 and the right to invoice the consideration will normally correspond directly with the value 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.
Finance and operation 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, and that 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.
The Services segment comprises Operations & Maintenance (O&M) and Asset Management services provided to solar and hydro power plants where Scatec has economic interest. The services are delivered to ensure optimised operations of solar and hydro 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.
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 solar, wind and hydro power 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. 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 solar power systems as required by engineering designs.
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 related to Release in Cameroon, Chad and South Africa.
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.
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 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. No operating segments have been aggregated to form these reporting segments.
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:
The acquisition of SN Power from January 2021 is structured so that the economic risk of the acquired companies is transferred to Scatec from 1 January 2021. Consequently, SN Power is included in the proportionate segment financials from 1 January 2021. In the Group consolidated IFRS financials the date of inclusion is 29 January 2021, which is the date of completion when Scatec obtained control over the project companies as defined by IFRS. The proportionate amount of total revenues, EBITDA, EBIT and net profit included for the SN Power entities for January 2021 are NOK 184 million, NOK 119
million, NOK 92 million and NOK 45 million respectively. Of this a net profit of NOK 57 million from equity consolidated
| 2021 | 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 1) | 4,176 | 5 | 3 | 6 | 4,189 | 1,162 | -2,312 | -1 | 3,038 |
| Internal revenues | - | 256 | 134 | 36 | 426 | 34 | -22 | -438 | - |
| Net income from JV and associates 2) | - | - | - | - | - | - | 765 | - | 765 |
| Total revenues and other income | 4,176 | 260 | 137 | 42 | 4,615 | 1,196 | -1,569 | -439 | 3,803 |
| Cost of sales | -557 | 1 | -120 | - | -676 | -10 | 560 | 126 | - |
| Gross profit 3) | 3,620 | 261 | 16 | 42 | 3,939 | 1,186 | -1,009 | -313 | 3,803 |
| Personnel expenses | -99 | -97 | -162 | -92 | -449 | -7 | 49 | 10 | -397 |
| Other operating expenses | -572 | -90 | -78 | -65 | -804 | -208 | 208 | 302 | -503 |
| EBITDA | 2,949 | 75 | -223 | -114 | 2,686 | 970 | -752 | -1 | 2,903 |
| D&A and impairment 4) | -972 | -5 | -78 | -26 | -1,081 | -330 | 369 | 151 | -892 |
| Operating profit (EBIT) | 1,977 | 70 | -301 | -140 | 1,606 | 640 | -383 | 149 | 2,012 |
1) In addition to ancillary services and spot market sales, the reported revenues and cost of sales from the Philippines reflect the power market settlement mechanism for bilateral contracts – implying that both the sale and a buy transaction related to the gross contract business is included and not eliminated
2) Refer to Note 13 Investments in joint venture and associated companies for details on Net income from JV and associates
3) Equivalent to Net revenues
4) Included in the Power Production segment is amortisation of excess values related to the acquisition of SN Power (ref Note 13) and included in Development & Construction
segment is the impairment of discontinued development of projects (ref Note 12)
| 2020 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 | 1,708 | 1 | 12 | 5 | 1,727 | 1,131 | -77 | -10 | 2,771 | ||
| Internal revenues | - | 231 | 861 | 28 | 1,118 | 310 | -25 | -1,403 | - | ||
| Net income from JV and associates | - | - | - | - | - | - | -16 | - | -16 | ||
| Total revenues and other income | 1,708 | 232 | 873 | 33 | 2,844 | 1,442 | -119 | -1,414 | 2,754 | ||
| Cost of sales | - | - | -764 | - | -764 | -271 | 17 | 1,017 | - | ||
| Gross profit | 1,708 | 232 | 109 | 33 | 2,080 | 1,171 | -102 | -396 | 2,754 | ||
| Personnel expenses | -28 | -75 | -85 | -72 | -259 | -3 | 6 | -7 | -262 | ||
| Other operating expenses | -276 | -75 | -52 | -113 | -517 | -189 | 26 | 256 | -423 | ||
| EBITDA | 1,404 | 82 | -28 | -153 | 1,306 | 979 | -69 | -147 | 2,069 | ||
| D&A and impairment | -566 | -3 | -26 | -20 | -615 | -321 | 29 | 131 | -777 | ||
| Operating profit (EBIT) | 838 | 79 | -54 | -173 | 690 | 658 | -40 | -16 | 1,292 |
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.
| External revenue | ||
|---|---|---|
| NOK million | 2021 | 2020 |
| South Africa | 1,135 | 1,040 |
| Egypt | 596 | 629 |
| Malaysia | 348 | 335 |
| Ukraine | 303 | 150 |
| Honduras | 197 | 214 |
| Jordan | 143 | 156 |
| Czech Republic | 122 | 128 |
| Mozambique | 83 | 88 |
| Vietnam | 70 | - |
| Rwanda | 20 | 22 |
| Other | 21 | 10 |
| Total | 3,038 | 2,771 |
| Property, plant and equipment | ||||
|---|---|---|---|---|
| NOK million | 2021 | 2020 | ||
| South Africa | 3,245 | 3,563 | ||
| Egypt | 3,074 | 3,086 | ||
| Malaysia | 2,683 | 2,777 | ||
| Ukraine | 2,616 | 3,013 | ||
| Honduras | 1,359 | 1,404 | ||
| Jordan | 820 | 829 | ||
| Mozambique | 456 | 468 | ||
| Vietnam | 444 | - | ||
| Norway | 348 | 271 | ||
| Czech Republic | 330 | 357 | ||
| Netherlands | 256 | 151 | ||
| Rwanda | 136 | 139 | ||
| Pakistan | 108 | - | ||
| Other | 12 | 12 | ||
| Total | 15,885 | 16,070 |
In South Africa, revenues (3 plants which commenced operations in 2013 and 2014 and 3 plants which commenced operations in 2020) 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. 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 Agreement's all ending 31 December 2029 with the stateowned 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.
The Agua Fria power plants in Honduras commenced operations 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.
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 Agreement with Electricidade de Moçambique (EDM). The financial commitments of EDM under the PPA are guaranteed by The Mozabican government under the concession agreement approved under law 88/2016 of 5 December 2016 for 30 years.
The Dam Nai wind farm in Vietnam was acquired by SN Power 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.
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 cost of equity-settled transactions is determined by the fair value at the date when the grant is made using an appropriate option-pricing model. That cost is recognised in personnel expenses, together with a corresponding increase in equity over the vesting period. The cumulative expense recognised for equity-settled transactions at each reporting date until the vesting date reflects the extent to which the vesting period has expired and the company's best estimate of the number of equity instruments that will ultimately vest. Service and non-market performance conditions are not considered when determining the grant date fair value of awards, but the likelihood of the conditions being met is assessed as part of the company's best estimate of the number of equity instruments that will ultimately vest. Market performance conditions are reflected within the grant date fair value. Any other conditions attached to an award, but without an associated service requirement, is considered to be nonvesting conditions. Non-vesting conditions are reflected in the fair value of an award and lead to an immediate expensing of an award unless there are also service and/or performance conditions. The dilutive effect of outstanding options is reflected as additional share dilution in the computation of diluted earnings per share.
A liability is recognised for the fair value of cash-settled transactions over the period until the vesting date. The fair value is measured initially and at each reporting date up to and including the settlement date, with changes in fair value recognised in personnel expenses.
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 optionpricing 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. Expected volatility is calculated on the historical volatility based on the company's own share prices.
| NOK million | 2021 | 2020 |
|---|---|---|
| Salaries | 363 | 256 |
| Share-based payment | 27 | 14 |
| Payroll tax | 31 | 52 |
| Pension costs | 24 | 17 |
| Other personnel costs | 21 | 11 |
| Capitalised to PP&E (project assets) | -68 | -88 |
| Total | 397 | 262 |
| NOK million | 2021 | 2020 |
|---|---|---|
| Salary and bonus | 35 | 26 |
| Pension | 1 | 1 |
| Total | 36 | 27 |
For further details refer to Note 4 Personnel expenses, number of employees and auditor's fee in the separate financial statements for the Parent Company. No severance package agreements have been established with management.
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 31 December 2021, there are options not fully vested from the grants awarded in 2019 and onwards. The strike prices are equivalent to the volume weighted average price of the shares the ten preceding trading days of the grant.
| 1/2/2019 | 1/2/2020 | 1/4/2021 | 2/24/2021 | 5/6/2021 | |
|---|---|---|---|---|---|
| Amount | 494,510 | 595,140 | 251,242 | 32,999 | 219,566 |
| Strike price | 72.03 | 114.83 | 314.91 | 314.91 | 244.28 |
A total of 26 employees were awarded options in 2019 of which 3 has subsequently left the Company. A total of 39 employees were awarded options in 2020 of which 5 have subsequently left the company. A total of 82 employees were awarded options in 2021 of which 10 have subsequently left the company.
For the options granted in 2021 the assumptions used in calculating the fair value of the options are as follows: 2.84 years (2.5 years) for expected lifetime, 44.87% (33.7%) for the expected volatility and 0 (0) for expected dividend.
During 2021 the employees exercised 515 thousand options (540 thousand) at the weighted average strike and share price of NOK 80.10 and NOK 279.18 (NOK 47.02 and NOK 123.40) respectively. Total number of outstanding options under the long-term incentive programme is 978 thousand (1,071 thousand) as of 31 December 2021. The fair value of the options are expensed over the vesting period, and in 2021 NOK 27 million (14) have been expensed.
The Group has established pension schemes that are classified as defined contribution plans. Contributions to defined contribution schemes are recognised in the consolidated statement of profit and loss in the period in which the contribution amounts are earned by the employees.
| 2021 | 2020 | |
|---|---|---|
| South Africa | 179 | 159 |
| Norway | 116 | 94 |
| Egypt | 48 | 41 |
| Malaysia | 34 | 31 |
| Ukraine | 37 | 27 |
| Honduras | 18 | 15 |
| Netherlands | 17 | 8 |
| Vietnam | 8 | 6 |
| Mozambique | 7 | 7 |
| Thailand | 5 | - |
| India | 5 | - |
| Other | 28 | 12 |
| Total | 502 | 400 |
| NOK million | 2021 | 2020 |
|---|---|---|
| Facilities | 182 | 142 |
| Professional fees | 138 | 147 |
| Other office costs | 56 | 45 |
| Travel costs | 14 | 11 |
| Social development contributions | 54 | 33 |
| O&M external fees | 20 | 7 |
| Other costs | 39 | 39 |
| Total other operating expenses | 503 | 423 |
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 2021 recognised
government grants of NOK 4 million (3) in cost reductions and NOK 58 million (5) as deductions of the development and construction asset's carrying amount. NOK 40 million of the amount deducted from development and construction asset's relates to the Sukkur project in Pakistan under development.
| NOK million | 2021 | 2020 |
|---|---|---|
| Audit services | 9 | 7 |
| Other attestation services | - | 1 |
| Tax services | 3 | 7 |
| Other services | 1 | 7 |
| Total remuneration | 13 | 22 |
VAT is not included in the numbers above. Non-audit fee for 2020 mainly relates to due diligence services in connection with the acquisition of SN Power.
| NOK million | 2021 | 2020 |
|---|---|---|
| Interest income | 43 | 48 |
| Other financial income | 4 | 8 |
| Interest and other financial income | 47 | 57 |
| Interest expenses | 1,303 | 1,131 |
| Change in fair value of forward exchange contracts | -2 | 7 |
| Other financial expenses | 67 | 51 |
| Interest and other financial expenses | 1,368 | 1,189 |
| Net foreign exchange gain/(loss) | 69 | -398 |
| Net fiancial expenses | 1,253 | 1,530 |
See Note 19 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.
Income tax expense comprises current tax and change in net deferred tax.
Current income 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 in the financial statements and their respective tax bases. The amount of net deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantially enacted at the consolidated statement of financial position date. Deferred tax assets and liabilities are offset if a legally enforceable right exists to set off current tax assets against current income tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.
Current and change in net deferred tax are recognised as expense or income in the consolidated statement of profit or loss, except where they relate to items recognised in other comprehensive income or directly to equity, in which case the tax is also recognised as other comprehensive income or directly to equity.
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. 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.
When assessing the probability of utilising these losses several factors are considered, including all available positive and negative evidence. These factors include, 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 solar power plants and its reversal is merely a timing effect. At year-end 2021 the Group has recorded a valuation allowance of NOK 530 million (108) related to tax losses carried forward which are not expected to be used to offset future taxable income.
| NOK million | 2021 | 2020 |
|---|---|---|
| Tax payable | -84 | -142 |
| Change in deferred tax | -232 | 25 |
| Withholding tax | -49 | -13 |
| Adjustments of tax concerning previous years | 63 | - |
| Income tax expense | -303 | -130 |
| Reconciliation of Norwegian nominal tax rate to effective tax rate | ||
| Profit before income tax | 759 | -238 |
| Nominal tax rate (22%) | -167 | 52 |
| Tax effect of: | ||
| Permanent differences | -25 | -138 |
| Tax rate different from Norwegian rate | -5 | -14 |
| Current tax on dividend received and withholding tax | -49 | -13 |
| Valuation allowance loss carried forward | -177 | -9 |
| Adjustments of tax concerning previous years | - | 5 |
| Share of net income from associated companies | 168 | -4 |
| Use and capitalisation of previously unrecognised losses carried forward | 9 | - |
| Other items | -11 | -3 |
| Currency translation | -46 | -7 |
| Calculated tax expense | -303 | -130 |
| Effective tax rate | 40% | -55% |
The Group recognised an income tax expense of NOK 303 million (130) in 2021, equivalent to an effective tax rate of 40%. The 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, revised assessment of deferred tax asset and change in taxable depreciation profile for one of the operating power plants. 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. The effective tax rate has been and will be impacted by the volume of construction activities as the tax rate in the construction companies normally is higher than in the power plant companies. This means that the full tax expense on the internal profit will not be eliminated and hence increases the effective tax rate during construction. The opposite effect will occur when the eliminated internal profit is reversed through lower depreciation at the tax rate of the power plant company.
| NOK million | 2021 | 2020 |
|---|---|---|
| Tax losses carried forward | 1,724 | 1,013 |
| Valuation allowance of deferred tax assets | -530 | -108 |
| Financial instruments | 87 | 191 |
| Property, plant and equipment and intangible | 100 | 268 |
| assets Construction projects |
- | 89 |
| Lease liabilities | 51 | 30 |
| Other items | 14 | 19 |
| Offsetting of tax balances 1) | -699 | -780 |
| Total deferred tax assets | 748 | 722 |
| NOK million | 2021 | 2020 |
|---|---|---|
| Property, plant and equipment and intangible | 1,282 | 950 |
| assets Construction projects |
1 | 31 |
| Financial instruments | 4 | 2 |
| Other items | 1 | 3 |
| Offsetting of tax balances 1) | -699 | -780 |
| Total deferred tax liabilities | 589 | 206 |
1) Deferred tax assets and liabilities are offset to the extent that the deferred taxes relate to the same fiscal authority and there is a legally enforceable right to offset current tax assets against current tax liabilities.
| NOK million | 2021 | 2020 | ||
|---|---|---|---|---|
| Country | Loss carried forward |
Deferred tax asset |
Loss carried forward |
Deferred tax asset |
| South Africa | 2,444 | 675 | 2,083 | 579 |
| Norway | 2,054 | 260 | 700 | 150 |
| Egypt | 1,050 | 78 | 2 | - |
| Ukraine | 899 | 162 | 704 | 160 |
| Jordan | 480 | 18 | 464 | 15 |
| Netherlands | 339 | - | - | - |
| Malaysia | 231 | - | 140 | - |
| Other | 18 | - | 34 | - |
| Total | 7,514 | 1,195 | 4,127 | 905 |
The Group has NOK 7,514 million (4,127) of tax losses carried forward. 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 is determined by the useful life of the assets. The increase in losses carried forward for the Group in 2021 mainly derives from losses in recourse group companies and revised taxable depreciation profile for one of the operating power plants.
The tax losses in Egypt and Jordan can be carried forward for 5 years while losses in Netherlands can be carried forward for 6 years. The Group had at the end of 2021 capitalised approximately NOK 6 million (6) in deferred tax asset related to deferred interest expenses, which can be carried forward for 10 years until 2027 in Norway. All other tax losses in the group can be carried forward indefinitely.
The Group has recognized tax assets on unused tax losses to the extent that the Group expects there will be sufficient future taxable profits available to utilise the losses.
| NOK million | 2021 | 2020 |
|---|---|---|
| Net deferred tax asset at 1 January | 517 | 343 |
| Recognised in the consolidated statement of profit or loss | -232 | 25 |
| Deferred tax other comprehensive income | -108 | 98 |
| Deferred tax on excess values from acquisition of SN Power | -19 | 0 |
| Recognised in the consolidated statement of changes in equity | 0 | 41 |
| Translation differences | 2 | 9 |
| Net deferred tax asset at 31 December | 159 | 517 |
Earnings per share is calculated as profit/(loss) attributable to the equity holders of the parent company divided by the average number of shares outstanding.
Diluted earnings per share is affected by the option programme for equity-settled share-based payment transaction, refer to Note 4 Employee benefits.
| NOK million | 2021 | 2020 |
|---|---|---|
| Profit/(loss) attributable to the equity holders of the company and for the purpose of diluted shares | 388 | -478 |
| Weighted average number of shares outstanding for the purpose of basic earnings per share | 158.8 | 135.9 |
| Earnings per share for income attributable to the equity holders of the company - basic (NOK) | 2.45 | -3.51 |
| Effect of potential dilutive shares: | ||
| Weighted average number of shares outstanding for the purpose of diluted earnings per share | 159.7 | 135.9 |
| Earnings per share for income attributable to the equity holders of the company - diluted (NOK) | 2.43 | -3.51 |
Power plants in operation is stated at cost, less accumulated depreciation and impairment losses. 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 a decommissioning obligation, if any, and, for qualifying assets, borrowing costs incurred in the construction period. Capitalisation of borrowing costs commences when the activities to prepare the asset for its intended use are undertaken and continue to be capitalised until the date in which development of the relevant asset is complete. All other borrowing costs are recognised in the profit or loss in the period in which they incur.
Maintenance expenses are recognised in the statement of profit or loss as incurred. Replacement of damaged components is accounted for as an impairment with capitalization of the replacement cost as a new item of PPE.
Each component of an item of power plants in operation with a cost that is significant in relation to the total cost of the item is depreciated separately on a straightline basis over the estimated useful life of the component. 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. The residual value of the plant is taken into consideration when calculating the annual depreciation.
An item of power plants in operation is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on de-recognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the item) is included in profit or loss in the period the item is derecognised.
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
Expenses that are capitalised include the costs of materials, direct wage costs and other directly attributable expenses.
Provision for 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. The asset retirement cost is capitalised as part of the carrying value of the power plant and depreciated over the useful life of the plants. Expenditures related to asset retirement obligations are expected to be paid in the period between 2030 and 2046.
Other fixed assets mainly include right of use assets. For accounting principles related to right to use lease assets, details are provided in Note 11 Leases.
The estimated useful lives of power plants are reviewed on an annual basis and changes in useful lives are accounted for prospectively.
When determining the useful life of a plant, the following factors are considered:
d) legal or similar limits on the use of the plants, such as the expiry dates of related leases.
The power plants currently in operation have 15 to 25 years offtake agreements. Whether or not these agreements will be extended is not currently known. The technical useful life for the power plants is deemed to be at least 25 years. In most of these markets the sale of electricity depends on having a PPA, hence, the length of the PPA is deemed to be the critical factor for determine useful life. Most of the Group's power plants are depreciated over the length of the PPA. The assessment is made on a plant by plant basis.
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 recycling arrangements and/or their second-hand value, future value of steel and copper as well as future development of 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.
Power plants and projects under development/ construction are tested for impairment to the extent that indicators of impairment exist, please refer to Note12 Impairment testingfor details.
| Power plants | ||||
|---|---|---|---|---|
| under development | ||||
| NOK million | Power plants | and construction | Other fixed assets | Total |
| Accumulated cost at 1 January 2021 | 15,938 | 2,142 | 290 | 18,370 |
| Additions | 620 | 435 | 10 | 1,065 |
| Transfers 1) | 1,572 | -1,856 | 18 | -266 |
| Cost of disposed assets | - | -2 | -10 | -12 |
| Effect of movements in foreign exchange | -103 | -21 | 8 | -116 |
| Accumulated cost at 31 December 2021 | 18,026 | 698 | 316 | 19,040 |
| Accumulated depreciation and impairment losses at 1 January 2021 | 2,173 | 46 | 82 | 2,301 |
| Depreciation for the year | 766 | - | 37 | 803 |
| Impairment losses | 6 | 70 | - | 76 |
| Accumulated depreciation and impairment losses disposed assets | - | - | -3 | -3 |
| Effect of movements in foreign exchange | -26 | 1 | 3 | -24 |
| Accumulated depreciation and impairment losses at 31 December 2021 | 2,918 | 116 | 118 | 3,152 |
| Carrying amount at 31 December 2021 | 15,106 | 580 | 198 | 15,885 |
| Estimated useful life (years) | 20-25 | N/A | 3-5 | |
| Accumulated cost at 1 January 2020 | 13,118 | 3,631 | 260 | 17,009 |
| Additions | 149 | 1,581 | 35 | 1,765 |
| Transfers | 2,936 | -2,936 | 0 | - |
| Cost of disposed assets | -25 | - | -1 | -26 |
| Effect of movements in foreign exchange | -240 | -132 | -4 | -376 |
| Accumulated cost at 31 December 2020 | 15,938 | 2,142 | 290 | 18,370 |
| Accumulated depreciation and impairment at 1 January 2020 | 1,534 | 35 | 45 | 1,614 |
| Depreciation for the year | 727 | - | 39 | 766 |
| Impairment losses | - | 11 | - | 11 |
| Accumulated depreciation and impairment losses disposed assets | -3 | - | -1 | -4 |
| Effect of movements in foreign exchange | -85 | - | -2 | -87 |
| Accumulated depreciation and impairment losses at 31 December 2020 | 2,173 | 46 | 82 | 2,301 |
| Carrying amount at 31 December 2020 | 13,765 | 2,096 | 210 | 16,071 |
| Estimated useful life (years) | 20-25 | N/A | 3-5 |
1) NOK 266 million of Transfer of assets relates to reclassification of concept assets for Release and right to transmit electricity from PPE to intangible assets in 2021. Of the NOK 266 million, approximately NOK 90 millions are additions in 2021. Refer to note 10.
The Group's power plants accounted for using the equity method are not included in the table above. The carrying value of development projects that have not yet reached the construction phase was NOK 364 million (275) at 31 December 2021. The power plant entities' assets, are pledged as security for the non-recourse financing. During 2021, the Group impaired NOK 76 million (11) mainly related to discontinued development projects.
Intangible assets acquired separately are measured on initial recognition at cost while the cost of intangible assets acquired in a business combination is their fair value at the date of acquisition. Following initial recognition, intangible assets are carried at cost less any accumulated amortisation and accumulated impairment losses.
Goodwill and other intangible assets with an indefinite useful life are not amortised on a regular basis but are tested for impairment annually or more frequently if there are circumstances indicating that the carrying amount may be impaired. The Group's goodwill derives from business acquisitions. The Group had no other intangible assets with an indefinite useful life than goodwill as of 31 December 2021 and 2020.
Intangible assets with a finite lifetime are amortised over the useful life of the assets and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The Group's Other intangible assets consist of renewable operating license, right to transmit electricity, software and internally developed asset related to the Release concept.
There is considerable estimate uncertainty associated to the value of intangible assets. 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 recognized in 2021 related to intangible assets, please refer to Note 12 Impairment testing.
In 2020, intangible assets with a finite lifetime were presented as part of Property, plant and equipment.
| NOK million | Other | Total | |
|---|---|---|---|
| Goodwill | intangible assets | ||
| Accumulated cost at 1 January 2021 | 25 | 20 | 45 |
| Additions | 290 | 198 | 488 |
| Transfer 1) | - | 266 | 266 |
| Effect of movements in foreign exchange | 6 | 8 | 14 |
| Accumulated cost at 31 December 2021 | 321 | 492 | 813 |
| Accumulated depreciation and impairment losses at 1 January 1 2021 | - | 5 | 5 |
| Depreciation for the year | - | 11 | 11 |
| Accumulated depreciation and impairment losses at 31 December 2021 | - | 16 | 16 |
| Carrying amount at 31 December 2021 | 321 | 476 | 797 |
| Accumulated cost at 1 January 2020 | 24 | 10 | 34 |
| Additions and reclassifications | - | 10 | 10 |
| Effect of movements in foreign exchange | 1 | - | 1 |
| Accumulated cost at 31 December 2020 | 25 | 20 | 45 |
| Accumulated depreciation and impairment losses at 1 January 2020 | - | 4 | 4 |
| Depreciation for the year | - | 1 | 2 |
| Accumulated depreciation and impairment losses at 31 December 2020 | - | 5 | 5 |
| Carrying amount at 31 December 2020 | 25 | 15 | 40 |
| Estimated useful life | N/A | 3-25 |
1) NOK 266 million relates to reclassification of assets related to the Release concept and right to transmit electricity from Property, plant and equipment to Intangible assets.
The goodwill is associated with the acquisitions of Solar competence GmbH in 2007 and SN Power in 2021. The additions of other intangible assets mainly relate to renewable operating license for Dam Nai (acquired as part of the SN
Power acquisition) and reclassification from PPE. Please refer to Note 14 Business Combinations for more details of the SN Power acquisition.
IFRS 16 requires a lessee to account for lease contracts by recognizing a liability representing the future lease payments, and an asset representing the right to use the underlying asset. The group primarily leases office and land, accounted for in accordance with IFRS 16.
At the inception of a contract, the Group assesses whether the contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period in exchange for consideration.
At the lease commencement date, the Group recognises a lease liability and corresponding right-of-use asset for all lease agreements in which it is the lessee.
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 lease liability is initially measured as the present value of future lease payments made during the lease term. The lease term represents the non-cancellable period of the lease, and periods covered by an option to extend the lease when the Group is reasonably certain to exercise the option.
The future lease payments includes fixed lease payments and variable lease payments that depends on an index or a rate. The Group does not include variable lease payments arising from future events in the lease liability. Instead, the Group recognises these costs in profit or loss in the period in which the event that triggers those payments occurs. Land leases where the lease payment is based on power production have been excluded from the liability measure.
The right-of-use asset is initially measured at cost and include the amount of the initial measurement of the lease liability and lease pre-payments made at or before the commencement date.
The right-of-use asset is subsequently measured at cost less accumulated depreciation and any impairment losses in accordance with the accounting principles set out in Note 9 Property, plant and equipment.
The Groups Power Purchase Agreements in Jordan and Malaysia have a pricing mechanism which require power produced above a certain volume to be made available to the buyers at a discount. Hence, the pricing is not "contractually fixed per unit" and these two contracts were accounted for as operational leases as set forth by IFRIC 4. IFRIC 4 was superseded by IFRS 16 as of 1 January 2019 and the Group has based on the guidance in IFRS 16 concluded that these contracts do not contain leases. The change does however not have an impact on the presentation of revenue as operating lease revenues are presented together with revenues from sale of electricity in the statement of profit and loss.
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 subsidiaries with plants, 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.
In addition, several of the Group's lease agreements contain options to extend the lease agreement beyond the contractual lease term. As the the extension period is 20-25 years ahead 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.
| NOK million | Land | Office & cars | Total |
|---|---|---|---|
| Right-of-use asset at 1 January 2021 | 157 | 107 | 264 |
| Additions | - | 11 | 11 |
| Depreciation for the year | -8 | -23 | -31 |
| Effect of movement in foreign exchange and other changes | -11 | -3 | -14 |
| Right-of-use asset at 31 December 2021 | 138 | 90 | 228 |
| NOK million | 2021 | 2020 |
|---|---|---|
| Lease liability at 1 January | 262 | 245 |
| Lease agreements entered into during the year | 18 | 37 |
| Lease payments made during the year | -41 | -36 |
| Interest expense on lease liabilities | 15 | 18 |
| Effect of movement in foreign exchange and other changes | -8 | -2 |
| Lease liability at 31 Desember | 246 | 262 |
| NOK million | 2021 | 2020 |
|---|---|---|
| Operating expenses | ||
| Short term- low value and variable lease payment expenses | -39 | -36 |
| Depreciation expenses | ||
| Depreciation of right-of-use assets (land lease) | -8 | -10 |
| Depreciation of right-of-use assets (office lease and other) | -23 | -23 |
| Total depreciation | -31 | -33 |
| Financial expenses | ||
| Interest expense on lease liability | -15 | -18 |
| Total lease expense in the income statement | -85 | -87 |
| NOK million | 2021 | 2020 |
|---|---|---|
| Assets | ||
| Right-of-use assets - land lease | 138 | 157 |
| Right-of-use assets - office lease and other | 90 | 107 |
| Total right-of-use assets | 228 | 264 |
| Liabilities | ||
| Non-current liabilities | ||
| Lease liabilities (see Note 18 Other non-current and current liabilities) | 206 | 227 |
| Current liabilities | ||
| Lease liabilities (see Note 18 Other non-current and current liabilities) | 39 | 35 |
| Lease liabilities included in the balance sheet | 246 | 262 |
| NOK million | 2021 | 2020 |
|---|---|---|
| Cash flow from operating activities | ||
| Short-term and variable lease payments | 39 | 36 |
| Cash flow from financing activities | ||
| Payments of principal portion on lease liabilities | 26 | 16 |
| Interest paid on lease liabilities | 15 | 18 |
| NOK million | 2021 | 2020 |
|---|---|---|
| One year | 38 | 35 |
| One to two years | 31 | 33 |
| Two to three years | 28 | 28 |
| Three to four years | 28 | 27 |
| Four to five years | 27 | 27 |
| More than five years | 206 | 230 |
| Total undiscounted lease liabilities | 358 | 381 |
| Lease liabilities included in the balance sheet | 246 | 262 |
The Group assesses property, plant and equipment for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. Goodwill and intangible assets with an indefinite useful life are tested for impairment annually or more frequently if there are circumstances indicating that the carrying amount may be impaired. The recoverable amount is the higher of the assets fair value less costs to sell and its value in use.
Assets are grouped to the lowest level that provides separately identifiable and independent cash flows, cash-generating units (CGUs). An impairment loss is recognised when an asset or cash generating units carrying value exceeds the recoverable amount. Impairment losses is recognised to the profit and loss.
Impairment losses are reversed to the extent that conditions for impairment are no longer present. Impairments for goodwill are not reversed.
The right-of-use asset is subsequently measured at cost less accumulated depreciation and any impairment losses in accordance with the accounting principles set out in Note 9 Property, plant and equipment.
Factors which trigger impairment testing include, but is not limited to, political changes, macroeconomic fluctuations, changes to the Group's strategy, project delays, underperforming, changes to tariffs and similar. Value in use calculation is based on a discounted cash flow model. The future cash flows include a number of estimates and assumptions, including future market conditions, discount rates and estimated useful life etc. 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 related to climate matters. Legal changes may impact key assumptions in the value in use calculations in future periods.
Tests for impairment have been performed for CGUs with mandatory annual tests and the CGUs where impairment indicators have been identified. The recoverable amount for these units have been determined estimating the value in use of the assets and comparing against the carrying value of the CGUs. Impairment of property, plant and equipment in 2021
amounts to NOK 76 million and is mainly related to discontinued development projects.
The goodwill of the Group mainly relates to the acquisition of SN Power AS in 2021, which has been allocated to the acquired entities (a group of CGUs) including the hydropower assets in the Philippines, Laos and Uganda, and the wind farm Dam Nai in Vietnam. All CGUs to which the goodwill has been allocated are accounted for as equity investments, except for Dam Nai in Vietnam. The goodwill relates to the portfolio of identified project development opportunities and assembled workforce.
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 each CGU, 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 after tax.
The after-tax discount rate applied in 2021 for the CGUs are in the range from; 8% to 12%.
Future cash flows: The cash flows for the electricity sold in Vietnam, Laos and Uganda are based long term, fixed, PPA contracts during the concession periods which end in 2038, 2039 and 2042 respectively. No terminal value is assumed for the power plants.
The electricity produced from the power plants in the Philippines is sold on bilateral contracts, in the spot market and as ancillary services, hence a combination of assumptions is used for the cash flow estimates of these power plants. The cash flow estimates are based on available market data and Scatec's long-term market outlook. In all material respect, the cash flow from the power plants are generated during the renewable operating license with options to extend until 2066.
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.
The Group has not recognised any impairments related to goodwill in 2021 or 2020 as the recoverable amounts exceed the carrying amount.
An associate is an entity over which the Group has significant influence. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those policies. A joint venture (JV) is a type of joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the joint venture. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require the unanimous consent of the parties sharing control. The considerations made in determining significant influence or joint control are similar to those necessary to determine control over subsidiaries. Refer to Note 2 Key sources of estimation uncertainty, judgements and assumptions for significant judgements related to the assessment whether Scatec controls an entity.
The Group's investments in its associates and joint ventures are accounted for using the equity method. Under the equity method, the investment in an associate or a joint venture is initially recognised at cost. The carrying value of the investments includes share capital and loans, and are subsequently adjusted for further investments and the Group's share of the net income of the associate or joint venture. The carrying amount of the investment is adjusted to recognise changes in the Group's share of net assets of the associate or joint venture since the acquisition date.
When the Group's share of a loss exceeds the Group's investment in an associate or joint venture, the amount carried in the Group's statement of financial position is reduced to zero and further losses are not recognised unless the Group has an obligation to cover any such loss.
Any change in OCI of those investees is presented as part of the Group's OCI. In addition, when there has been a change recognised directly in the equity of the associate or joint venture, the Group recognises its share of any changes, when applicable, in the statement of changes in equity. Unrealised gains and losses resulting from transactions between the Group and the associate or joint venture are eliminated to the extent of the interest in the associate or joint venture.
The Group determines whether it is necessary to recognise an impairment loss on its investment in its associate or joint venture. At each reporting date, the Group determines whether there is objective evidence that the investment in the associate or joint venture should be impaired. If there is such evidence, the Group calculates the amount of impairment as the difference between the recoverable amount of the associate or joint venture and its carrying value, and then recognises the loss as "Net income/(loss) from JV and associates" in the statement of profit or loss.
There is considerable estimate uncertainty associated to the value of 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. For the full year 2021, net income from the newly acquired joint ventures in Laos, Philippines and Uganda includes the share of profit for the period from 29 January to 31 December 2021.
| Company | Registered office | 2021 | 2020 |
|---|---|---|---|
| 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. | Amsterdam, Netherlands | 51.00% | - |
| Mendubim Geração de Energia Ltda. | Assu, Brazil | 50.00% | - |
| Scatec Solar Solutions Brazil BV | Amsterdam, Netherlands | 50.00% | 50.00% |
| Scatec Solar Brasil Servicos De Engenharia LTDA | Recife, Brazil | 50.00% | 50.00% |
| Scatec Equinor Solutions Argentina S.A | Buenos Aires, Argentina | 50.00% | 50.00% |
| Cordilleras Solar VIII S.A | Buenos Aires, Argentina | 50.00% | 50.00% |
| Theun-Hinboun Power Company | Vientiane, Laos | 20.00% | - |
| SN Aboitiz Power – Magat Inc | Manila, Phillippines | 50.00% | - |
| Manila-Oslo Reneweable Enterprise | Manila, Phillippines | 16.70% | - |
| SN Aboitiz Power – Benguet Inc | Manila, Phillippines | 50.00% | - |
| SN Aboitiz Power – RES Inc | Manila, Phillippines | 50.00% | - |
| SN Aboitiz Power – Generation Inc | Manila, Phillippines | 50.00% | - |
| SN Power Uganda Ltd. ¹⁾ | Kampala, Uganda | 51.00% | - |
| Bujagali Energy Ltd. ¹⁾ | Jinja, Uganda | 28.28% | - |
| Campganie Générale D`Hydroelectrciite de Volobe SA ¹⁾ | Antananarivo, Madagascar | 12.75% | - |
| Ruzizi Holding Power Company Ltd ¹⁾ | Kigali, Rwanda | 20.40% | - |
| Ruzizi Energy Ltd ¹⁾ | Kigali, Rwanda | 20.40% | - |
| SN Power Africa Ltd ¹⁾ | Nairobi, Kenya | 51.00% | - |
1) The ownership reflects that Norfund retains a 49% stake in these investments, as communicated in the acquisition announcement (16 October 2020).
| Country | Carrying value 31 December 2020 |
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 2021 |
|---|---|---|---|---|---|---|---|
| Philippines | - | 6,663 | 451 | -547 | - | -202 | 6,366 |
| Uganda | - | 1,068 | 138 | -160 | 26 | 29 | 1,101 |
| Laos | - | 1,568 | 133 | -112 | - | 43 | 1,632 |
| Other ¹⁾ | 612 | -7 | 44 | - | - | -3 | 646 |
| Total | 612 | 9,293 | 765 | -819 | 26 | -133 | 9,745 |
1) Other includes Brazil, Argentina, Rwanda, Madagascar and Kenya.
| 2021 | ||||
|---|---|---|---|---|
| NOK million | Philippines | Uganda | Laos | Other |
| Revenues | 3,582 | 1,103 | 1,486 | 280 |
| Operating expenses | -355 | -70 | -178 | -91 |
| Operating profit/(loss) | 1,556 | 822 | 1,090 | 137 |
| Net financial items | -302 | -113 | 28 | -130 |
| Profit before income tax | 1,254 | 709 | 1,118 | 7 |
| Income tax | -145 | -20 | -168 | 18 |
| Profit/(loss) after tax | 1,109 | 689 | 950 | 25 |
| Scatec's share of profit/(loss) after tax | 545 | 195 | 195 | 14 |
| SN Power January figures not included in consolidated figures ¹⁾ | -86 | -47 | -17 | - |
| Amortisaton of excess values (net of tax) - Scatec`s share ¹⁾ | -58 | -44 | -53 | - |
| Elimination of internal transacitions and internal profit | 50 | 34 | 9 | 30 |
| Net profit/loss | 451 | 138 | 133 | 44 |
1) Refer to Note 3 Operating Segment and Note 14 Business Combinations for further details on the acquisition of SN Power.
| 2020 | ||||
|---|---|---|---|---|
| NOK million | Philippines | Uganda | Laos | Other |
| Revenues | - | - | - | 214 |
| Operating expenses | - | - | - | -197 |
| Operating profit/(loss) | - | - | - | 17 |
| Net financial items | - | - | - | -90 |
| Profit before income tax | - | - | - | -73 |
| Income tax | - | - | - | -26 |
| Profit/(loss) after tax | - | - | - | -99 |
| Scatec's share of profit/(loss) after tax | - | - | - | -49 |
| - | ||||
| Elimination of internal transacitions and internal profit | - | - | - | 32 |
| Net profit/loss | - | - | - | -16 |
| 2021 | ||||
|---|---|---|---|---|
| NOK million | Philippines | Uganda | Laos | Other |
| Non-current assets | 7,766 | 7,104 | 3,973 | 2,911 |
| Current assets | 497 | 235 | 265 | 125 |
| Cash and cash equivalents | 633 | 419 | 678 | 57 |
| Total assets | 8,895 | 7,758 | 4,915 | 3,093 |
| Non-current liabilities | 5,258 | 5,313 | 1,238 | 1,918 |
| Current liabilities | 829 | 64 | 707 | 445 |
| Total liabilities | 6,086 | 5,377 | 1,945 | 2,363 |
| Total Equity | 2,808 | 2,381 | 2,970 | 730 |
| Scatec share of equity | 1,392 | 674 | 594 | 346 |
| Excess value at acquistion date of SN Power ¹⁾ | 3,319 | 127 | 239 | - |
| Excess values from previous acquisitions | 1,674 | 304 | 979 | - |
| Amortisation of excess values | -65 | -19 | -64 | - |
| Loan to joint venture as investment | 137 | 2 | - | - |
| Other / foregin currency translation | -91 | 14 | -115 | 309 |
| Net investment in joint venture | 6,366 | 1,101 | 1,632 | -9 |
1) Refer to Note 14 Business Combinations for further details on the excess values related to the acquisition of SN Power.
| 2020 | ||||
|---|---|---|---|---|
| NOK million | Philippines | Uganda | Laos | Other |
| Non-current assets | - | - | - | 2,221 |
| Current assets | - | - | - | 105 |
| Cash and cash equivalents | - | - | - | 80 |
| Total assets | - | - | - | 2,405 |
| Non-current liabilities | - | - | - | 1,183 |
| Current liabilities | - | - | - | 731 |
| Total liabilities | - | - | - | 1,914 |
| Total Equity | - | - | - | 491 |
| Scatec share of equity | 230 | |||
| - | ||||
| Fair value adjustments | - | - | - | 125 |
| Loan to joint venture as investment | - | - | - | 317 |
| Other / foregin currency translation | - | - | - | -62 |
| Net investment in joint venture | - | - | - | 612 |
Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured to fair value of the consideration transferred at the acquisition date, including any amount of non-controlling interests in the acquiree. The acquisition date is the date when control is transferred to the Group.
When the Group acquires a business, a purchase price allocation is carried out, and assets and liabilities are valued to fair value at the time of the acquisition. The Group assesses the assets and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic circumstances and pertinent conditions. Acquisition related costs are booked to operating expenses.
The residual value in the acquisition is goodwill, which is initially measured at cost. After initial recognition, goodwill is measured at cost less any accumulated impairment losses.
The purchase price allocation is by nature judgmental as it includes allocation of the purchase price to underlying assets and liabilities. The consideration paid is allocated to the acquired assets and liabilities based on their estimated fair values. The purchase price allocation requires management to apply significant judgements about valuation method, estimates and assumptions. There is an inherent uncertainty related to management's estimates of significant assumptions such as discount rate, cash flow estimates and useful life which impact the split of the allocated fair values of the assets.
On 29 January 2021, Scatec ASA acquired 100% of the shares of SN Power AS, a leading hydropower developer and Independent Power Producer (IPP), from Norfund for a total consideration of USD 1,211 million (NOK 10,405 million), which was finally agreed in the fourth quarter of 2021. The transaction included SN Power's portfolio of hydropower assets in the
Philippines, Laos and Uganda with a total gross capacity of 1.4 GW (net 0.5 GW) and gross median production of 6.1 TWh (net 1.8 TWh) and the wind farm Dam Nai in Vietnam. Dam Nai was acquired by SN Power on 27 January 2021 and has a capacity of 39.4 MW.
The acquisition forms an important part of Scatec's broadened growth strategy, with an ambition to become a global largescale player in solar, hydro, wind and storage solutions, and an integrator of high-value infrastructure solutions. Scatec and SN Power have a unique and complementary portfolio of assets, geographical footprint and capabilities, and will together hold a large project pipeline across solar, hydro, wind and storage.
The acquisition was financed by debt and available cash. See Note 23 for overview of the financing of the acquisition.
The table below gives details of net assets acquired and goodwill identified in the acquisition. Excess values of NOK 3,684 million are identified for investments in JVs and associated companies. The excess values relate to water rights and infrastructure assets in the hydropower companies in the Philippines (NOK 3,319 million), Laos (NOK 239 million) and Uganda (NOK 127 million). The hydropower assets in the Philippines are operating under a renewable operating license with options to extend until 2066, and the excess values are amortized over the remaining operating license period. The hydropower assets in Laos and Uganda are operating under concession agreements which end in 2039 and 2042 respectively, and the excess values for Laos and Uganda are amortized over the remaining concession period.
Scatec have recognised USD 34 million (NOK 289 million) in goodwill, mainly related to the portfolio of identified project development opportunities and assembled workforce. Goodwill is recorded in functional currency and as a result, changes in currency exchange rates affect the value of goodwill in NOK. The goodwill is not deductible for tax purposes.
| NOK million | Book value | Excess value | Fair value |
|---|---|---|---|
| Consideration | |||
| Total consideration | 10,405 | ||
| Amounts of assets and liabilites recognized | |||
| Property, plant and equipment | 431 | 431 | |
| Other intangible assets | 152 | 152 | |
| Investments in JV and associated companies | 5,434 | 3,684 | 9,118 |
| Other non-current assets | 71 | 71 | |
| Trade and other receivables | 101 | 101 | |
| Cash and cash equivalents | 826 | 826 | |
| Total assets | 7,014 | 3,684 | 10,698 |
| Deferred tax liabilities | 19 | 19 | |
| Non-recourse project financing | 318 | 318 | |
| Other non-current liabilities | 21 | 29 | 51 |
| Non-recourse financing | 57 | 57 | |
| Trade and other payables | 7 | 7 | |
| Other current liabilities | 60 | 71 | 131 |
| Total liabilites | 481 | 101 | 582 |
| Total identifable net assets at fair value | 6,533 | 3,584 | 10,116 |
| Goodwill | 289 | 289 | |
| Total net assets | 6,533 | 3,872 | 10,405 |
Refer to Note 13 for details about profit and loss and financial position at stand alone basis for the acquired joint ventures, 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.
The proportionate financials include all transactions in the acquired companies since the commencement of the reporting period. Refer to Note 3 for revenue and net income stated as the acquisition took place at the commencement of the reporting period.
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. Restricted cash is cash
reserved for a specific purpose and therefore not available for immediate and general use by the Group.
Refer to Note 21 Financial instruments by category for the accounting principles for financial instruments.
| NOK million | 2021 | 2020 |
|---|---|---|
| Cash in power plant companies in operation | 1,711 | 1,741 |
| Cash in power plant companies under development / construction | 34 | 11 |
| Other restricted cash | 91 | 87 |
| Free cash | 2,335 | 5,949 |
| Total cash and cash equivalents | 4,171 | 7,788 |
Cash in power plant companies in operation includes free cash, restricted cash in proceeds 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.
construction comprise shareholder financing and draw down on loan facilities 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 financing of power plant companies not yet distributed to the power plant companies.
| NOK million | 2021 | 2020 |
|---|---|---|
| Free cash at beginning of the period | 5,949 | 758 |
| Free cash in acquired SN Power entities at 1 January 2021 | 491 | - |
| Proportionate share of cash flow to equity O&M 1) | 60 | 65 |
| Proportionate share of cash flow to equity D&C 1) | -164 | -15 |
| Proportionate share of cash flow to equity CORP 1) | -252 | -153 |
| Project development capex | -307 | -156 |
| Equity contributions to power plant companies | -564 | -756 |
| Distributions from power plant companies | 1,603 | 346 |
| Share capital increase, net after transaction cost and tax | - | 6,576 |
| Dividend distribution | -173 | -131 |
| Net cash considerations from acquisition of SN Power | -3,753 | - |
| Working capital / Other | -556 | -584 |
| Free cash at end of the period | 2,335 | 5,949 |
| Available under credit facilities | 1,632 | 813 |
| Total free cash and indrawn credit facilities at the end of the period | 3,967 | 6,762 |
1) Proportionate share of cash flow to equity is defined in Alternative Performance Measures Appendix
Refer to Note 23 Corporate Financing for further information on credit facilities.
Trade receivables are recognized for unconditional amounts due from the customer. For details on accounting principles and estimation uncertainty for financial instruments, see Note 20 – Financial instruments: measurement.
| NOK million | 2021 | 2020 |
|---|---|---|
| Accounts receivables | 557 | 435 |
| Accrued income and other receivables | 183 | 189 |
| Total trade receivables | 740 | 623 |
Information on credit risk and foreign exchange risk regarding accounts receivables is further provided in Note 19 - Financial risk management. Accrued income represents contract assets related to energy production in the last month of the year, which is invoiced in January the following year.
| NOK million | Total | Not due | Overdue |
|---|---|---|---|
| 2021 | 557 | 306 | 251 |
| 2020 | 435 | 254 | 181 |
The overdue receivables are mainly related to sale of electricity from power plants in Ukraine and Honduras.
Scatec has in previous periods experienced increased delays in payments from the state-owned off-taker of power in Ukraine and increased overdue payments. In the fourth quarter of 2021, the off-taker secured new financing and paid a significant amount of the debt and the overdue receivables decreased with NOK 102 million. The remaining overdue amount as of 31 December 2021 is NOK 63 million and no bad debt allowance has hence been recognised in 2021. Refer to Note 32 Subsequent events for an update of the situation in Ukraine.
Scatec has also experienced increased delays in payments from the state-owned off-takers of power in Honduras. Overdue payments have accumulated in Honduras to a varying degree since the second quarter of 2020. At the end of 2021, the total accumulated overdue receivables on a 100%-basis from Honduras amounted to NOK 153 million. Payments are secured by sovereign guarantees and Scatec's experience is that delayed payments in Honduras are being paid in full. Scatec therefore expects the outstanding amounts to be paid in full and no bad debt allowance has hence been recognized.
The provision for bad debt is based on an individual assessment of each receivable. In all other countries, there are no indications that the off-takers will not be able to meet their payment obligations, and hence no provision for bad debt allowance has been recognized.
| Overdue | ||||||
|---|---|---|---|---|---|---|
| NOK million | Less than 30 days | 30 - 60 days | 60 - 90 days | More than 90 days | ||
| 2021 | 10 | 26 | 18 | 197 | ||
| 2020 | 20 | 34 | 19 | 108 |
| NOK million | 2021 | 2020 |
|---|---|---|
| Loan to non-controlling interest | 1 | 45 |
| Other non-current investments | 32 | 2 |
| Other non-current receivables | 177 | 97 |
| Total other non-current assets | 210 | 144 |
| NOK million | 2021 | 2020 |
|---|---|---|
| Prepayments related to assets under development/construction | 22 | 18 |
| Receivables from public authorities/prepaid taxes, VAT etc | 393 | 457 |
| Other receivables and prepaid expenses | 320 | 187 |
| Total other current assets | 734 | 663 |
Provisions are recognised when the Group has a present obligation (legal or constructive) because of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. If the effect of the time value of money is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability. Where discounting is used, the increase in the provision
due to the passage of time is recognised as finance expenses in the consolidated statement of profit or loss. Contingent liabilities arising from past events and for which it is not probable that an outflow of resources will be required to settle the obligation, if any, are not recognised but disclosed with indication of uncertainties relating to amounts and timing involved. Disclosures are not given if the possibility of an outflow in settlement is remote.
For accounting principles regarding asset retirement obligations, see Note 9 Property, plant and equipment. For accounting principles regarding leases, see Note 11 Leases.
| NOK million | 2021 | 2020 |
|---|---|---|
| Shareholder loan from co-investors (ref Note 25) | 610 | 717 |
| Non-current lease liability (ref Note 11) | 206 | 227 |
| Asset retirement obligations (ref Note 9) | 270 | 266 |
| Other long-term provisions and accruals | 301 | 365 |
| Total other non-current liabilities | 1,387 | 1,575 |
| NOK million | 2021 | 2020 |
|---|---|---|
| Accrued expenses related to solar power plants | 237 | 295 |
| Public dues other than income taxes | 44 | 114 |
| Accrued interest expenses | 65 | 6 |
| Accrued payroll | 57 | 39 |
| Current lease liability (ref Note 11) | 39 | 35 |
| Other accrued expenses | 399 | 363 |
| Total other current liabilities | 841 | 852 |
Liabilities related to solar power plants reflects both working capital requirements for development/construction contracts and cost accruals on completed projects.
Through its business activities Scatec is exposed to the following financial risks:
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. The Group's overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Group's financial performance. The Group uses derivative financial instruments to hedge certain risk exposures.
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 activites.
Scatec's sales 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 the electricity prices. The Group seeks to reduce the effect of price fluctuation by entering into longterm, fixed price contracts. The power plants produce electricity for sale primarily under long term 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 18 years. Some of the off-take agreements that have been entered into do not contain inflation-based price increase provisions or provisions that only partially allows 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. The electricity produced from the power plants in the Philippines is sold on bilateral contracts and in the spot market under a renewable operating license, and as ancillary services.
Price of electricity is influenced by government support schemes, the future development of the renewable power plant industry in general, and the Group in particular, will to a significant degree depend on the development in electricity market prices over time. Electricity prices depend on a number of factors including, but not limited to, availability and costs of primary energy sources (including oil, coal, natural gas and uranium), and the development in cost, efficiency and equipment investment need for other electricity producing technologies, including other renewable energy sources.
A decline in the costs of other sources of electricity, 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. Broader regulatory changes to the electricity market, such as regulatory environmental changes, changes to integration of transmission allocation and changes to energy trading and transmission, could have an impact on electricity prices. A decline in the market price of electricity could materially adversely affect the financial attractiveness of new projects.
Scatec operates internationally and is subject to currency risks arising from foreign currency transactions and exposures. As the Group has reported its consolidated results in NOK, any change in exchange rates between NOK and functional currencies for the reporting entities, which mainly are USD, ZAR, EUR, MYR, BRL, CZK, PHP and VND, affects the consolidated statements when the results of those reporting entities are translated into NOK.
The sensitivity analysis shows how profit and loss, or equity would have been affected by changes in currencies the Group is exposed to. The sensitivities have been calculated based on what Scatec views to be reasonably possible changes in the foreign exchange rates for the coming year.
| NOK million | Profit (loss) before taxes |
|---|---|
| At 31 December 2021 | |
| EUR - Net gain/(loss) (-5%) | -154 |
| USD - Net gain/(loss) (-5%) | -24 |
| BRL - Net gain/(loss) (-5%) | - |
| ZAR - Net gain/(loss) (-5%) | 2 |
| MYR - Net gain/(loss) (-5%) | 6 |
| EUR - Net gain/(loss) (+5%) | 154 |
| USD - Net gain/(loss) (+5%) | 24 |
| BRL - Net gain/(loss) (+5%) | - |
| ZAR - Net gain/(loss) (+5%) | -2 |
| MYR - Net gain/(loss) (+5%) | -6 |
| NOK million | Profit (loss) before taxes |
|---|---|
| At 31 December 2020 | |
| EUR - Net gain/(loss) (-5%) | 73 |
| USD - Net gain/(loss) (-5%) | 250 |
| BRL - Net gain/(loss) (-5%) | 3 |
| ZAR - Net gain/(loss) (-5%) | 2 |
| MYR - Net gain/(loss) (-5%) | 6 |
| EUR - Net gain/(loss) (+5%) | -73 |
| USD - Net gain/(loss) (+5%) | -250 |
| BRL - Net gain/(loss) (+5%) | -3 |
| ZAR - Net gain/(loss) (+5%) | -2 |
| MYR - Net gain/(loss) (+5%) | -6 |
The general policy of the Group is to not hedge foreign currency exposure on long term cash flows from the companies operating the power plants. For the Group's power plant entities, currency risk is managed based on functional currency and expected cash flows. This is done through the setup of the SPVs with ring-fenced financing and significant non-controlling interests. The Company's segment revenues, cost of sales and gross profit may be subject to significant currency fluctuations (inter alia with respect to construction contracts). However, multi-currency construction contracts contribute to a natural hedge of cost of sales. To the extent 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.
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 64% for the period 2022-2035. This includes corporate debt of NOK 7.3 billion of which approximately 24% is swapped to fixed rate. Including the JVs, the interest rate hedge ratio (weighted average) is 70%.
The interest rate risk on the debt at the power plant level is predominantly hedged by way of interest rate swaps, fixed rate loans or inflation rate adjusted interest following the indexed PPAs. For more information on the Group's financial liabilities, refer to Note 23 – Corporate Financing and Note 24 – Nonrecourse financing.
The sensitivity analysis shows how profit and loss, or equity would have been affected by changes in interest rates.
| NOK million | ||
|---|---|---|
| At 31 December 2021 | 1% | -1% |
| Net gain/(loss) | -27 | 27 |
| At 31 December 2020 | 1% | -1% |
| Net gain/(loss) | 44 | -44 |
The impact on the profit and loss, or equity, including the JVs with a decrease or increase in interest rate of 1% would result in a gain of NOK 23 million and loss of NOK 23 million respectively.
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. Scatec has per 31 December 2021 not drawn on the revolving credit facility or the overdraft facility.
For information about the Group's financial liabilities, refer to Note 23 – Corporate Financing and Note 24 – Non-recourse financing.
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 has not experienced any significant delays to date and are seeking to minimise such risk through assessments of the relevant jurisdictions and regulations and adapt accordingly.
A break-down of free and restricted cash is provided in Note 15 – Cash and cash equivalents.
Credit risk is the risk that Scatec's customers or counterparties will cause financial loss by failing to honour 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. Except for the energy sold to the whole sale market in the Philippines, all 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. If, for any reason, any of the counterparties to these contracts are unable or unwilling to fulfil their contractual obligations, refuse to accept delivery of 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. For the Group's current projects in operation, the majority of these are 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 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 provisions for bad debt, as well as cash and cash equivalents, equaling NOK 5,797 million at 31 December 2021.
Refer to Note 16 – Trade receivables for information on the provision for bad debt related to trade receivables.
Financial assets are, at initial recognition, measured using amortised cost, fair value through other comprehensive income (OCI) or fair value through profit or loss.
The classification of financial assets at initial recognition depends on the financial asset's contractual cash flow characteristics and the Group's business model for managing them. The Group initially measures a financial asset at its fair value plus, in the case of a financial asset at fair value through OCI, transaction costs. Trade receivables that do not contain a significant financing component or for which the Group has applied the practical expedient are measured at the transaction price determined under IFRS 15.
For purposes of subsequent measurement, financial assets are classified in four categories:
Financial assets at fair value through profit or loss At 31 December 2021, the Group has financial assets at amortised cost and at fair value through profit or loss and to fair value through OCI.
These categories are described below:
The Group measures financial assets at amortised cost if both of the following conditions are met:
interest on the principal amount outstanding on specified dates
Financial assets at amortised cost are subsequently measured using the effective interest (EIR) method and are subject to impairment assessment. Gains and losses are recognised in profit or loss when the asset is derecognised, modified or impaired. The Group's financial assets at amortised cost includes trade receivables and cash and cash equivalents
Financial assets at fair value through profit or loss are carried in the statement of financial position at fair value with net changes in fair value recognised in the statement of profit or loss. This include financial assets designated upon initial recognition at fair value or financial assets mandatorily required to be measured at fair value. Derivatives, including separated embedded derivatives, are classified as fair value through profit or loss unless they are designated as effective hedging instruments.
The Group assesses, at each reporting date, whether there is objective evidence that a financial asset or a group of financial assets is impaired. This assessment is conducted through an expected credit loss (ECL) approach, under which forwardlooking information is taken into account. Under the ECLapproach an allowance for expected credit losses should be recognised for all contract assets not held at fair value through profit or loss.
A financial asset is primarily derecognised and removed from the Group's consolidated statement of financial position when the rights to receive cash flows from the asset have expired, the Group has transferred substantially all the risks and rewards of the asset, or has transferred control of the asset.
All financial liabilities are recognised initially at fair value through profit or loss and, 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.
For purposes of subsequent measurement, financial liabilities are classified in two categories:
Financial liabilities at fair value through profit or loss include financial liabilities held for trading, such as trade and other payables.
After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the EIR method. Gains and losses are recognised in profit or loss when the liabilities are derecognised as well as through the EIR amortisation process. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included as finance costs in the statement of profit or loss. Refer to Note 21 Financial instruments by category for details.
A financial liability is derecognised when the obligation under the liability is discharged, cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, the exchange or modification is treated as de-recognition of the original liability and recognition of a new liability. The difference in the respective carrying amounts is recognised in the statement of profit or loss.
Financial assets and financial liabilities are offset, and the net amount is reported in the consolidated statement of financial position if there is a current enforceable legal right to offset the recognised amounts, there is an intention to settle on a net basis and to realise the assets and settle the liabilities simultaneously.
Entities within the Group have issued certain instruments as part of the project financing structures to minority shareholders (shareholder loans). These shareholder loans are considered equity instruments only if both of the definitions in IFRS are met. See Note 25 Project equity financing provided by co-investors for further information.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. 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 as a whole:
For assets and liabilities that are recognised in the financial statements on a recurring basis, the Group determines whether transfers have occurred between levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.
During the reporting period ending 31 December 2021, there have been no transfers between the fair value levels.
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). This imply to take into account input from external parties and compare the terms agreed under each derivative contract to the market terms for a similar contract on the valuation date. Changes in the fair value relate to daily changes in market prices of the derivative contracts and the volume of contracts.
As of 31 December 2021 the group had financial assets and financial liabilities related to the interest rate swaps classified as derivate financial instruments on level 2. Refer to Note 22 Derivative financial instruments for details.
For details on accounting principles and estimation uncertainty for financial instruments, see Note 20 Financial instruments – Measurement.
| NOK million | Measurement category | 2021 | 2020 |
|---|---|---|---|
| Assets | |||
| Derivatives | |||
| Interest rate swap | Fair value – hedging instruments through OCI | 26 | - |
| Debt instruments | |||
| Cash and cash equivalents | Amortised cost | 4,171 | 7,788 |
| Accounts receivable | Amortised cost | 557 | 435 |
| Other debt instruments and receivables | Amortised cost | 759 | 789 |
| Total financial assets | 5,513 | 9,012 | |
| Total current | 5,303 | 8,868 | |
| Total non-current | 210 | 144 | |
| Liabilities | |||
| Interest bearing loans and borrowings | |||
| Corporate financing | Amortised cost | 7,264 | 748 |
| Non-recourse financing loans | Amortised cost | 11,855 | 12,263 |
| Derivatives | |||
| Interest rate swap | Fair value – hedging instruments through OCI | 339 | 703 |
| Other financial liabilities | |||
| Trade and other financial liabilities | Amortised cost | 1,422 | 1,478 |
| Total financial liabilities | 20,880 | 15,191 | |
| Total current | 2,049 | 2,553 | |
| Total non-current | 18,831 | 12,638 |
Financial instruments and their carrying amounts are recognised in the consolidated statement of financial position at 31 December, with categories as defined by IFRS 9, as presented above. There are no significant differences between total carrying value and fair value for financial instruments measured at amortised cost.
The table below provides a reconciliation of the movement of liabilities arising from financing activities, disaggregated by cash and noncash movements. Please refer to Note 11 Leases for a reconciliation of lease liabilities.
| 2021 | Non-cash changes | |||||
|---|---|---|---|---|---|---|
| NOK million | 2020 | Cashflows | Foreign exchange movement |
Fair value changes |
Other/ Reclassifi cations |
2021 |
| Non-recourse financing | 12,263 | (708) | (103) | - | 403 | 11,855 |
| Corporate financing | 748 | 4,699 | - | - | 1,817 | 7,264 |
| Derivatives (net) | 703 | (203) | - | (168) | 7 | 339 |
| Shareholder loan from non-controlling interests | 717 | (122) | 15 | - | (1) | 610 |
| Trade and accounts payables | 760 | 52 | - | - | - | 812 |
| Total liabilities arising from financing activities | 15,191 | 3,719 | (87) | (168) | 2,226 | 20,880 |
| 2020 | Non-cash changes | |||||
|---|---|---|---|---|---|---|
| NOK million | 2019 | Cashflows | Foreign exchange movement |
Fair value changes |
Other/ Reclassifi cations |
2020 |
| Non-recourse financing | 13,064 | (543) | (374) | - | 116 | 12,263 |
| Corporate financing | 745 | - | - | - | 3 | 748 |
| Derivatives (net) | 351 | (121) | - | 469 | 4 | 703 |
| Shareholder loan from non-controlling interests | 761 | (14) | (30) | - | 1 | 717 |
| Trade and accounts payables | 887 | (127) | - | - | - | 760 |
| Total liabilities arising from finaning activities | 15,808 | (806) | (404) | 469 | 124 | 15,191 |
The Group uses derivative financial instruments, such as interest rate swaps, to hedge its interest rate risks related to financing of renewable power plants. Such derivative financial instruments are initially recognised at fair value on the date of which a derivative contract is entered and are subsequently remeasured at fair value. The effective portion of cash flow hedges is recognised in OCI and later reclassified to profit or loss when the underlaying hedge item affects profit or loss.
The Group only applies hedge accounting for cash flow hedges that meet the criteria in IFRS 9. At the inception of each hedge relationship, the Group designates and documents the hedge accounting relationship, the risk management objective and strategy for undertaking the hedge. The documentation includes identification of the hedging instrument, the hedged item or transaction, the nature of the risk being hedged and how the entity will assess the hedging instrument's effectiveness in offsetting the exposure to changes in expected cash flows from the hedged
item. Such hedges are expected to be highly effective in
| NOK million | 2021 | 2020 |
|---|---|---|
| Interest rate swap contracts financial assets measured at level 2 in the fair value hierarchy | ||
| Non-current portion | 26 | - |
| Total derivative financial assets | 26 | - |
| Interest rate swap contracts financial liabilities measured at level 2 in the fair value hierarchy | ||
| Current portion | 90 | 131 |
| Non-current portion | 249 | 572 |
| Total derivative financial liabilities | 339 | 703 |
The tables above show the market value of the derivatives for the year ending 2021 and 2020, 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.
The notional principal amount of the outstanding interest rate swap contracts at 31 December 2021 was NOK 1,323 million (0). The fixed interest swap rate is 0.4%, and the floating rate is based on 3-month USD Libor. The maturity profile of the interest rate swap is set up to match the USD 150 million Green Term Loan and maturity is in 2025. Please refer to Note 23 for further information on corporate funding.
The notional principal amount of the outstanding interest rate swap contracts at 31 December 2021 was NOK 2,082 million (2,350). The fixed interest rates vary from 8.4% to 8.7%, and the floating rates is based on to 3-month JIBAR. The maturity
profile of the interest rate swaps is set up in order to match the non-recourse financing, and maturity is in 2028.
The notional principal amount of the outstanding interest rate swap contracts at 31 December 2021 was NOK 2,811 million (2,792). The fixed interest swap rate varies from 5.4% to 8.0%, and the main floating rates based on 6-month USD Libor. The maturity profile of the interest rate swaps is set up in order to match the non-recourse financing, and maturity is in 2035.
The notional principal amount of the outstanding interest rate swap contracts at 31 December 2021 was NOK 346 million (357). The fixed interest swap rate is 3.3%, and the floating rate is based on 6-month USD Libor. The maturity profile of the interest rate swaps is set up in order to match the nonrecourse financing, and maturity is in 2035.
The notional principal amount of the outstanding interest rate swap contracts at 31 December 2021 was NOK 216 million (238). The fixed interest swap rate is 4.3%, and the floating rate is based on 6-month KLIBOR. The maturity profile of the interest rate swaps is set up in order to match the nonrecourse financing, and maturity is in 2028.
| NOK million | 2021 | 2020 |
|---|---|---|
| Opening balance | -522 | -268 |
| Recycling during the year to profit or loss, gross | 203 | 121 |
| Recycling during the year to profit or loss, tax effect | -61 | -33 |
| Unrealised gain/(loss) during the year | 193 | -469 |
| Unrealised gain/(loss) during the year, tax effect OCI | -56 | 128 |
| Closing balance | -242 | -522 |
| Of which equity holders of the parent company | -111 | -261 |
The interest rate swap contracts described in this note are exposed to the IBOR transition, as the fair values of the interest rate swaps today are based on the following reference rates; 6-month KLIBOR, 6-month USD Libor and 3-month JIBAR, and a change from these reference rates to the new reference rates described in the IBOR reform could affect the fair value of the financial instruments. The notional amounts for interest rate swap contracts based on 3-month USD Libor, 6-month
USD Libor, 6-month KLIBOR 3-month JIBAR are NOK 1,323, NOK 3,157 million, NOK 216 million and NOK 2,082 million respectively. The Group pays attention to the development of the IBOR transition, and will consider to initiate any actions deemed appropriate. Based on a preliminary assessment, the Group does not expect that the IBOR transition will cause a material change in the fair value of the Group's interest rate swaps.
| Currency | Denominated currency value (million) |
Maturity | Interest terms | Carrying value 2021 (NOK million) |
Carrying value 2020 (NOK million) |
|
|---|---|---|---|---|---|---|
| Bond: (Ticker: SS002 NO0010809684) | NOK | 750 | Q3 2021 | 3M NIBOR + 4.75% | - | 748 |
| Green Bond (Ticker: SCATC03 NO0010931181) | EUR | 250 | Q3 2025 | 3M EURIBOR + 2,50% | 2,475 | - |
| Total unsecured bonds | 2,475 | 748 | ||||
| Green Term Loan | USD | 150 | Q1 2025 | 1,323 | - | |
| Bridge to Bond | USD | 193 | Q1 2023 | 1,702 | - | |
| Total secured acquisition financing | 3,025 | - | ||||
| Vendor Financing (Norfund) | USD | 200 | Q1 2028 | 1,764 | - | |
| Total unsecured acquisition financing | 1,764 | - | ||||
| Revolving credit facility | USD | 180 | Q1 2024 | - | - | |
| Overdraft facility | USD | 5 | - | - | ||
| Total secured back-stop bank facilities | - | - | ||||
| Total | 7,264 | 748 | ||||
| As of non current | 7,264 | - | ||||
| As of current | - | 748 |
In the first quarter of 2021 Scatec issued a EUR 250 million senior unsecured green bond with maturity in August 2025. The bond carries a coupon of 3-months EURIBOR (with no floor) + 2.50%, to be settled on a quarterly basis. The bond was listed on the Oslo Stock Exchange 23 June 2021 with ticker SCATC03 ESG. The proceeds from the bond issue were used to
During the term of the bond, Scatec shall comply with the following financial covenants at all times:
Refer to the loan agreement available on www.scatec.com/investor-overview for further information and definitions.
Outstanding acquisition finance related to the SN Power acquisition The following facilities and amounts are currently outstanding of the initial USD 1,030 million financing package related to the acquisition of SN Power in the first quarter of 2021:
In the first quarter of 2021 Scatec increased the existing revolving credit facility (RCF) from USD 90 million to USD 180 million, with Nordea Bank as agent and Nordea Bank, DNB, Swedbank and BNP Paribas as equal Lenders. The facility can be drawn in USD, NOK, EUR or an optional currency agreed with the banks. The facility is ESG (Environmental, Social and Governance) linked and has a three-year tenor. The facility margin is linked to the following ESG KPIs:
Scatec has not drawn on the revolving credit facility per 31 December 2021.
In the second quarter of 2018 Scatec entered into a USD 5 million overdraft facility with Nordea Bank. Scatec has not drawn on the overdraft facility per 31 December 2021.
Per 31 December 2021, Scatec was in compliance with all financial covenants for the above facilities. The book equity of the recourse group, as defined in the facility agreements, was NOK 11,244 million per year end. During 2021, interest amounting to NOK 250 million ( 98) was expensed for the bond, acquisition finance, overdraft- and revolving credit facility.
In the first quarter of 2021, Scatec refinanced the guarantee facility and intercreditor agreement that was established in
See Note 20 Financial instruments: Measurement and market risk sensitivities for accounting principle.
The table below specifies non-recourse financing at 31 December 2021 and 2020. The amounts in the table are nominal amounts and not amortised cost. The rate of interest is a calculated average. All loans are fixed or swapped to fixed rate interests, except for the loans in South Africa Upington where the interest rates are inflation-linked to match the profile of the PPA indexations.
| NOK million | Interest rate | Maturity date | 2021 | 2020 |
|---|---|---|---|---|
| Loan facilities (ZAR) - South Africa portfolio, Kalkbult, Linde and Dreunberg |
12.26% | 12/31/2029 | 1,616 | 1,887 |
| Loan facilities (CZK) - Czech portfolio | 5.02% | 5/11/2029 | 318 | 334 |
| Loan facilities (USD) - Gigawatt Global Rwanda Ltd (ASYV) | 8.21% | 1/11/2030 | 108 | 109 |
| Loan facilities (USD) - Jordan portfolio | 5.68% | 1/10/2032 | 644 | 672 |
| Loan facilities (USD) - Produccion De Energia S.A (Aqua Fria) | 6.59% | 12/31/2026 | 346 | 394 |
| Loan facilities (MYR) – Quantum Solar Park (Semenanjung) SDN. | 6.13% | 2/23/2035 | 1,796 | 1,906 |
| BHD. Loan facilities (USD) - Aswan portfolio Egypt |
6.75% | 10/31/2035 | 2,847 | 2,845 |
| Loan facilities (USD) - Central Solar de Mocuba, Mozambique | 6.41% | 1/31/2035 | 438 | 452 |
| Loan facilities (ZAR) - South Africa Upington 1) | 8.58% | 3/31/2037 | 2,157 | 2,283 |
| Loan facilities (MYR) – Red Sol | 3.86% | 12/31/2028 | 267 | 240 |
| Loan facilities (EUR) - Ukraine | 6.05% | 5/31/2029 | 969 | 1,142 |
| Loan facilities (VND) - Vietnam | 10.00% | 1/31/2035 | 347 | - |
| Total non-recourse financial liabilites | 11,855 | 12,263 | ||
| Of which non-current non-recourse financial liabilities | 10,708 | 11,350 | ||
| Of which current non-recourse financial liabilities | 1,147 | 913 |
1) Parts of the loans in South Africa Upington are structured as CPI-linked loans where the principal loan amount is uplifted based on the yearly observed CPI factor. Hence, the effective interest including the CPI factor is higher than the nominal interest rate of the loan. For 2021 the CPI factor applied to the loans was 1.17%.
Scatec mainly uses non-recourse financing for constructing and/or acquiring assets, exclusively using as guarantee the assets and cash flows of the special purpose vehicle carrying out the activities financed. Compared to corporate financing, non-recourse financing has certain key advantages, including a clearly defined and limited risk profile. In this respect, the banks recover the financing solely through the cash flows generated by the projects financed. 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 nonrecourse financing. The Group's book value of the pledged power plants is NOK 14,508 million (14,877) at 31 December 2021.
| NOK million | Loan repayment | Interest payment | Total |
|---|---|---|---|
| 2022 | 747 | 737 | 1,484 |
| 2023 | 865 | 698 | 1,563 |
| 2024 | 950 | 634 | 1,585 |
| 2025 | 978 | 574 | 1,553 |
| 2026 | 1033 | 511 | 1,544 |
| 2027 | 998 | 444 | 1,441 |
| 2028 | 1160 | 386 | 1,546 |
| 2029 | 931 | 305 | 1,236 |
| 2030 | 671 | 268 | 939 |
| 2031 | 666 | 214 | 880 |
| 2032 | 621 | 194 | 815 |
| 2033 | 608 | 142 | 750 |
| 2034 | 639 | 124 | 763 |
| 2035 | 642 | 65 | 707 |
| 2036 | 177 | 67 | 245 |
| 2037 | 122 | 45 | 167 |
| Total future loan repayment | 11,807 | 5,409 | 17,216 |
Due to the previously announced tariff reductions by the authorities in Ukraine, the project level debt for Scatec's solar power plants has been, or is in the process of being, restructured. For the Boguslav, Rengy and Kamianka projects, Scatec has completed the restructuring and is compliant with all covenants on 31 December 2021. For the Chigrin project, Scatec is not in compliance with all financial covenants on 31 December 2021. Project level debt amount of NOK 275 million for the Chigrin project has therefore been classified as current liabilities in the statement of financial position on 31 December 2021. Refer to note 32 Subsequent events for an update of the situation in Ukraine.
The Loan Facilities and the Common Terms Agreements (CTA) contain financial covenants including, but not limited to: Default Ratios: the Twelve Month Historic DSCR is equal to or exceeds 1.10:1, the Twelve Month Projected DSCR is equal to or exceeds 1.10:1, until the Final Maturity Date the projects maintain a Debt to Equity Ratio of not more than 70:30. Distribution Conditions: restricted until Financial Completion Date, thereafter the Historic and Projected DSCRs must exceed 1.20:1. The Agreements contain further restrictions on, inter alia, hedging policies, asset sales and entering into new activities, amendments to the key agreements, insurance 86 Annual Accounts Group policies, pledges and guarantees, additional financial indebtedness, project accounts, capital expenditures and changes of shareholder structure and auditors, as well as a number of undertakings related to e.g., budgets, financial, operational and environmental reporting and information.
The Loan Facility and the Common Terms Agreements contain financial covenants including, but not limited to: minimum compliance ratios: DSCR of 1.30 : 1, Loan Life Coverage Ratio (LLCR) of 1.30 : 1 and Project Life Coverage Ratio (PLCR) of 1.40 : 1; 50% distribution cash sweep if DSCR is between 1.30 : 1 and 1.20 : 1; lock-in and full cash sweep ratios: DSCR of 1.20 : 1, LLCR of 1.20 : 1 and PLCR of 1.35 : 1; and default ratios: DSCR of 1.10 : 1, LLCR of 1.15 : 1 and PLCDR of 1.30 : 1 as well as funding on debt service and maintenance reserve accounts. The Agreements contain further restrictions on, inter alia, hedging policies, subsidiaries and new activities, amendments to the key agreements and insurance policies, new consents, pledges and guarantees, financial indebtedness and giving financial support, capital expenditures and changes of shareholder structure and auditors, as well as a number of undertakings related to e.g. budgets, financial and operational reporting and information.
The Loan Facility and the Common Terms Agreements contain financial covenants including, but not limited to: minimum compliance ratios: senior DSCR of 1.30 : 1 (total meaning senior + subordinated DSCR of 1.15 : 1), senior LLCR of 1.30 : 1 (total LLCR of 1.20 : 1), and senior PLCR of 1.40 : 1 (total PLCR of 1.30 : 1); 50% distribution cash sweep if DSCR is between 1.30 : 1 and 1.20 : 1; lock-in and full cash sweep ratios: senior DSCR of 1.20 : 1 (total DSCR of 1.10 : 1), senior LLCR of 1.20 : 1 (total LLCR of 1.15 : 1) and senior PLCR of 1.35 : 1 (total PLCR of 1.25 : 1); and default ratios: senior DSCR of 1.10 : 1 (total DSCR of 1.05 : 1), senior LLCR of 1.15 : 1 (total of LLCR 1.10 : 1) and senior PLR of 1.30 : 1 (total PLCR of 1.20 : 1), as well as funding on debt service and maintenance reserve accounts. The restrictions
and undertakings contained in the Facility Agreements are similar to those listed for Scatec Solar SA 166 (Pty) Ltd.
The Loan Facility and the Common Terms Agreements contain financial covenants similar to those mentioned above for Simacel 155 (Pty) Ltd RF. The restrictions and undertakings contained in the Facility Agreements are similar to those listed for Scatec Solar SA 166 (Pty) Ltd.
The Loan Facility and the Common Terms Agreements contain financial covenants including, but not limited to: minimum compliance ratios: senior historic DSCR of 1.10 : 1, senior projected DSCR of 1.10 and senior LLCR of 1.15 : 1. The Agreements contain further restrictions on, inter alia, hedging policies, subsidiaries and new activities, amendments to the key agreements and insurance policies, new consents, pledges and guarantees, financial indebtedness and giving financial support, capital expenditures and changes of shareholder structure and auditors, as well as a number of undertakings related to e.g. budgets, financial and operational reporting and information.
The Facilities Agreement contains financial covenants including, but not limited to: lock-in and default Debt Service Coverage Ratio (DSCR) of 1.20: 1 and minimum (adjusted) Equity Ratio of 20%, as well as funding on debt service reserve account. The Agreement contains further restrictions on, inter alia, environmental compliance, changes of business and certain corporate acts, amendments to the key agreements and insurance policies, new consents, pledges and guarantees, financial indebtedness and giving financial support, capital expenditures and changes of shareholder structure and auditors, as well as a number of undertakings related to e.g. budgets, financial reporting and information.
The loan agreement includes financial covenants requiring that the borrower must ensure that on each Calculation Date from the Financial Completion Date: Historic Audited DSCR and Historic Unaudited DSCR must exceed 1.10 : 1; and Projected Minimum DSCR must exceed 1.10 : 1.
The loan agreement includes financial covenants requiring that the borrower must ensure that on each Calculation Date from the Commercial Operation Date: Historic Unaudited DSCR (HUDSCR) and Forecast Minimum DSCR (PMDSCR) must exceed 1.10 : 1.
The loan facilities agreement contains financial covenants included, but not limited to: maintain a Minimum Debt Service Coverage of 1.10; maintain a Financial Debt to Total Assets not more than 70%.
The loan agreement contains financial covenants included, but not limited to: maintain a Financial Service Coverage Ratio (FSCR) of minimum 1.25. FSCR with cash post distribution: min 1.5x. FSRA (Finance Service Reserve Account) of 6 months. The agreement contains further restriction on MRA to be funded in stages after COD, no changes to shareholders structure, no other financial indebtedness and no material amendments to project documents.
The Loan Facilities and the Common Terms Agreements contain financial covenants including, but not limited to: Default Ratios: the Six Month Historic DSCR is equal to or exceeds 1.15:1, the Twelve Month Historic DSCR is equal to or exceeds 1.15:1, the Twelve Month Projected DSCR is equal to or exceeds 1.15:1, until the Financial Completion Date the projects maintain a Debt to Equity Ratio of not more than 75:25. Distribution Conditions: Historic and Projected DSCRs exceed 1.20:1.The Agreements contain further restrictions on, inter alia, hedging policies, subsidiaries and new activities, amendments to the key agreements and insurance policies, new consents, pledges and guarantees, financial indebtedness and giving financial support, capital expenditures and changes of shareholder structure and auditors, as well as a number of undertakings related to e.g. budgets, financial and operational reporting and information.
The loan agreement contains financial covenants including, but not limited to: Default ratios: For any calculation period, the historic DSCR must exceed 1.10:1 or LLCR must exceed 1.20:1. Distribution conditions: The prospective and Historic DSCR exceed 1.20:1 and LLCR exceed 1.30:1. The Agreements contain further restrictions on, inter alia, hedging policies, subsidiaries and new activities, amendments to the key agreements and insurance policies, new consents, pledges and guarantees, financial indebtedness and giving financial support, capital expenditures and changes of shareholder structure and auditors, as well as a number of undertakings related to e.g. budgets, financial and operational reporting and information.
The Facility Agreement contains financial covenants including, but not limited to: Default Ratios: the Twelve Month Historic DSCR is equal to or exceeds 1.10:1, the Twelve Month Projected DSCR is equal to or exceeds 1.10:1, until the first Repayment Date the projects maintain a Debt to Equity Ratio of not more than 73:27. Distribution Conditions: Historic and Projected DSCRs exceed 1.15:1.
The Agreements contain further restrictions on, inter alia, hedging policies, subsidiaries and new activities, amendments to the key agreements and insurance policies, new consents, pledges and guarantees, financial indebtedness and giving financial support, capital expenditures and changes of
shareholder structure and auditors, as well as a number of undertakings related to e.g. budgets, financial and operational reporting and information.
The loan agreement contains financial covenants included, but not limited to: (a) maintaining a current asset over current liabilities ratio of minimum 1 and (b) an adjusted DSCR ratio of minimum 1. Additionally, the lender also require borrower to maintain a DSRA with funds equals to one quarterly principal payment plus three months of interest at any time during the loan tenure.
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. Repayment of shareholder loans are at the discretion of the power plant company, accordingly these shareholder loans are accounted for as equity.
| NOK million | Country of incorporation |
Total financing |
Paid-in equity |
Shareholder loan recognized in equity |
as financial liability |
|---|---|---|---|---|---|
| Scatec Solar SA 166 (Pty) Ltd (Kalkbult) | South Africa | 52 | 52 | - | - |
| Simacel 155 (Pty) Ltd (Linde) | South Africa | 20 | 20 | - | - |
| Simacel 160 (Pty) Ltd (Dreunberg) | South Africa | 40 | 40 | - | - |
| Gigawatt Global Rwanda (ASYV) | Rwanda | 17 | 5 | 12 | - |
| Anwar Al Ardh for Solar Energy Generation PSC (EJRE) | Jordan | 81 | 1 | 80 | - |
| Ardh Al Amal for Solar Energy Generation PSC (GLAE) | Jordan | 38 | 1 | 37 | - |
| Producción de Energía Solar y Demás Renovables, S.A. | |||||
| (Agua Fria) | Honduras | 226 | 99 | - | 127 |
| Los Prados, Honduras | Honduras | 192 | 192 | - | - |
| Aswan Solar Power SAE (BB1) | Egypt | 29 | 29 | - | - |
| Zafarana Solar Power SAE (ZAF1) | Egypt | 119 | 33 | - | 86 |
| Red Sea Solar Power SAE (ZAF2) | Egypt | 98 | 29 | - | 68 |
| Upper Egypt Solar Power (BB2) | Egypt | 83 | 33 | - | 50 |
| Kom Ombo Renewable Energy SAE (BB3) | Egypt | 124 | 38 | - | 86 |
| Daraw Solar Power SAE (BB4) | Egypt | 65 | 35 | - | 29 |
| Kamianka / Chysta Energiya | Ukraine | 52 | 1 | - | 51 |
| Rengy Bioenergy | Ukraine | 85 | 1 | - | 84 |
| Central Solar de Mocuba, Mozambique | Mozambique | 43 | 26 | - | 17 |
| Dyason's Klip 1 | South Africa | 107 | 107 | - | - |
| Dyason's Klip 2 | South Africa | 108 | 108 | - | - |
| Sirius Solar PV Project One | South Africa | 106 | 106 | - | - |
| Helios Power (Private) Limited | Pakistan | 9 | 6 | - | 3 |
| Meridian Energy (Private) Limited | Pakistan | 9 | 6 | - | 3 |
| HNDS Energy (Private) Limited | Pakistan | 9 | 6 | - | 3 |
| Total project financing from co-investors | 1,711 | 973 | 130 | 610 |
| NOK million | Country of incorporation |
Total financing |
Paid-in equity |
Shareholder loan recognized in equity |
as financial liability |
|---|---|---|---|---|---|
| Scatec Solar SA 166 (Pty) Ltd (Kalkbult) | South Africa | 54 | 54 | - | - |
| Simacel 155 (Pty) Ltd (Linde) | South Africa | 23 | 23 | - | - |
| Simacel 160 (Pty) Ltd (Dreunberg) | South Africa | 40 | 40 | - | - |
| Gigawatt Global Rwanda (ASYV) | Rwanda | 15 | 4 | 10 | - |
| Anwar Al Ardh for Solar Energy Generation PSC (EJRE) | Jordan | 79 | 1 | 78 | - |
| Ardh Al Amal for Solar Energy Generation PSC (GLAE) | Jordan | 37 | 1 | 36 | - |
| Producción de Energía Solar y Demás Renovables, S.A. | |||||
| (Agua Fria) | Honduras | 236 | 96 | - | 140 |
| Los Prados, Honduras | Honduras | 196 | 196 | - | - |
| Aswan Solar Power SAE (BB1) | Egypt | 6 | 6 | - | - |
| Zafarana Solar Power SAE (ZAF1) | Egypt | 94 | 5 | - | 89 |
| Red Sea Solar Power SAE (ZAF2) | Egypt | 94 | 5 | - | 89 |
| Upper Egypt Solar Power (BB2) | Egypt | 76 | 6 | - | 70 |
| Kom Ombo Renewable Energy SAE (BB3) | Egypt | 99 | 5 | - | 94 |
| Daraw Solar Power SAE (BB4) | Egypt | 97 | 8 | - | 88 |
| Kamianka / Chysta Energiya | Ukraine | 50 | 1 | - | 49 |
| Rengy Bioenergy | Ukraine | 83 | 1 | - | 82 |
| Central Solar de Mocuba, Mozambique | Mozambique | 42 | 26 | - | 16 |
| Dyason's Klip 1 | South Africa | 112 | 112 | - | - |
| Dyason's Klip 2 | South Africa | 114 | 114 | - | - |
| Sirius Solar PV Project One | South Africa | 111 | 111 | - | - |
| Total project financing from co-investors | 1,660 | 816 | 124 | 717 |
For the year 2021, interest expenses on financing from co-investors of NOK 38 million have been expensed (NOK 56 million for 2020), of which NOK 1 million is recognised directly in equity (NOK 1 million for 2020).
The equity and loan financing provided by the co-investors is repaid according to a pre-determined waterfall structure, meaning that the financing presented above will be settled after external non-recourse financing, and only when distributable cash as defined by the financing agreements is available. Normally this would occur twice a year.
For some of the project companies in the above table the co-investor funding has been provided indirectly through jointly owned holding companies.
Scatec is mainly issuing corporate guarantees as security for EPC and construction contract performance, but may also in exceptional circumstances issue corporate guarantees to support power plant company performance.
Scatec provides the following types of guarantees for EPC contract performance:
Advance payment, performance and warranty guarantees are mainly issued in relation to construction contracts entered with project companies where Scatec has a controlling interest. The total nominal exposure from such guarantees may become significant as the level of construction activities increases.
Scatec is often required to issue Bid Bonds to secure performance during submission of project bids.
For power plants in operation Scatec may offer Commitment Bonds to cover the obligations under PPAs and Implementation Agreements. These obligations are connected to project performance where Scatec is in control and hold the O&M and Asset management agreements.
In addition, Scatec provides Payment Guarantees for limited situations:
For the Progressovka solar plant in Ukraine, which reached commercial operation in 2021, Power China provided construction services and supplier financing. Scatec has provided a corporate guarantee to Power China (NOK 638 million) of which a bank guarantee of EUR 20 million is issued in support of this obligation.
For four of the power plants in Ukraine Scatec has provided additional corporate guarantees of NOK 132 million related to establishment of debt service reserve accounts and contingent equity.
The volumes of guarantees specified below are bank guarantees issued by Scatec ASA to project companies (subsidiaries) mainly in relation to Scatec provided EPC services.
The guarantees have the following duration (closing balance of total guarantee exposure):
| NOK million | 2022 | 2023 | 2024 | >2024 |
|---|---|---|---|---|
| Advance payment guarantees | 61 | - | - | - |
| Performance guarantees | 183 | 57 | - | - |
| Warranty guarantees | 278 | - | - | - |
| Bid Bonds | 170 | - | - | - |
| SPV Performance / commitments | 30 | 20 | 19 | 19 |
| Other payment guarantees (includes 20 MEUR to Power China) | 426 | 13 | 9 | 9 |
| Total | 1,148 | 90 | 28 | 28 |
The guarantees issued by Scatec ASA and other recourse group entities are issued by Nordea Bank under the guarantee facility with Nordea Bank as agent, and Nordea Bank, BNP Paribas, Swedbank and DNB as guarantee instrument lenders. DNB was included as instrument lender from closing of the SN Power acquisition in January 2021.
In addition to this facility, Scatec has guarantee facilities with Standard Bank of South Africa and Lombard, an insurance company in South Africa as well as a commercial bank in Malaysia.
The bid bonds, advance payment guarantees, performance guarantees, and warranty guarantees are for the most part
counter guaranteed by The Norwegian Export Credit Guarantee Agency (Eksfin).
The financial covenants in the Guarantee Facility Agreement are:
Per 31 December 2021, Scatec was in compliance with all covenants in the Guarantee Facility Agreement.
At year-end 2021 the total number of shareholders in Scatec was 16,487 (12,622). The total number of outstanding shares was 158,864,018 (158,335,667) at par value NOK 0.025 per share as of 31 December 2021.
In January 2021, Scatec increased the share capital by 528,351 new shares as part of the share option programme. In May 2021, Scatec bought back 43,907 shares at an average volume weighted price per share of NOK 204,4785 related to the employee share purchase programme.
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 2021.
Refer to Note 4 – Employee benefits for information on share options granted to the management.
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.
The Group's objective is to pay shareholders consistent and growing cash dividends. In line with the dividend policy, Scatec will pay out a minimum of 25 % of the cash distributions received from the power plants.
On 1 February 2021, the Board of Directors announced its intention to propose a dividend of NOK 1.09 per share to the Annual General Meeting, totalling NOK 173 million. The amount was paid out in April 2021. On 2 February 2022, the Board of Directors announced its intention to propose a dividend of NOK 2.54 per share to the Annual General Meeting, totalling NOK 402 million.
The consolidated financial statement of Scatec comprises more than 200 legal companies that are controlled by Scatec. 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 13 Investments in JV and associated companies.
| Consolidated | ||
|---|---|---|
| Company | Registered office | economic interests 2021 |
| SN Power AS | Oslo, Norway | 100.00% |
| Scatec Solar Netherlands BV | Amsterdam, Netherlands | 100.00% |
| Release Management B.V. | Amsterdam, Netherlands | 100.00% |
| Scatec Solar 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 PP03 s.r.o. | Prague, Czech | 100.00% |
| Signo Solar PP04 s.r.o. | Prague, Czech | 100.00% |
| Signo Solar PV1 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 Gamma LLC | Berezanka, Ukraine | 100.00% |
| PV Progressovka ALpha LLC | Berezanka, Ukraine | 100.00% |
| PV Progressovka Beta 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% |
| Dyason's Klip 1 (Pty) Ltd | Cape Town, South Africa | 45.50% |
| Dyason's Klip 2 (Pty) Ltd | Cape Town, South Africa | 45.50% |
| Scatec Solar Construction R4 | Cape Town, South Africa | 51.00% |
| Scatec Solar Operations R4 | Cape Town, South Africa | 51.00% |
| Sirius Solar PV Project One (RF) (Pty) Ltd | Cape Town, South Africa | 45.50% |
| Scatec Solar Honduras SA | Tegucigalpa, Honduras | 100.00% |
| Energias Solares S.A. | Tegucigalpa, Honduras | 70.00% |
| Fotovoltaica Los Prados S.A. | Tegucigalpa, Honduras | 70.00% |
| Fotovoltaica Surena S.A. | Tegucigalpa, Honduras | 70.00% |
Continues on following page
| Consolidated economic |
||
|---|---|---|
| Quantum Solar Park (Kedah) Sdn Bhd 1) | Registered office | interests 2021 |
| Generaciones Energeticas S.A. | Tegucigalpa, Honduras | 70.00% |
| Produccion de Energia Solar Demas Renovables S.A | Tegucigalpa, Honduras | 40.00% |
| Central Solar de Mocuba S.A. | Maputo, Mozambique | 52.50% |
| Scatec Solar Mozambique Limitada | Maputo, Mozambique | 100.00% |
| 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% |
| 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 | 100.00% |
| HNDS Energy Ltd | Clifton Karachi, Pakistan | 100.00% |
| Meridian Energy Ltd | Clifton Karachi, Pakistan | 100.00% |
| 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% |
| Release Cameroon SARL | Douala, Cameroon | 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. Refer to Note 31 for further description of the project's investment structure.
Non-controlling interests are calculated on the respective subsidiaries' stand-alone reporting, adjusted for intercompany transactions – i.e. unrealised profits and losses for the Group are not taken into account. Furthermore, unrealised intercompany 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.
When recognising a non-controlling interest through an acquisition, the difference between the cost of the non-controlling interest and the non-controlling interest's share of the assets and liabilities is reflected in the consolidated statement of financial position at the date of acquisition as an equity transaction.
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 enter 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 are identified as a significant judgement for the consolidated financial statements, please refer to Note 2 for further information.
In the table below the non-controlling interests are presented in groups for companies that share the same non-controlling interests.
| Country of incorporation | ||||
|---|---|---|---|---|
| Name | and operation | 2021 | 2020 | |
| Egypt | ||||
| Aswan Solar Power SAE | Egypt | In operation | 49% | 49% |
| Daraw Solar Power SAE (Philadelphia) | Egypt | In operation | 49% | 49% |
| Kom Ombo Renewable Energy SAE (KOM Ombo) | Egypt | In operation | 49% | 49% |
| Red Sear Solar Power SAE (Red Sea) | Egypt | In operation | 49% | 49% |
| Upper Egypt Solar Power SAE (Sun Infinite) | Egypt | In operation | 49% | 49% |
| Zafarana Solar Power SAE (Zafarana) | Egypt | In operation | 49% | 49% |
| Daraw BV | Netherlands | In operation | 49% | 49% |
| Egypt Solar BV | Netherlands | In operation | 49% | 49% |
| Kom Ombo BV | Netherlands | In operation | 49% | 49% |
| Zafarana B.V. | Netherlands | In operation | 49% | 49% |
| Zafarana B.V. | Netherlands | In operation | 49% | 49% |
| Red Sear Solar Power B.V. | Netherlands | In operation | 49% | 49% |
| Honduras Agua Fria | ||||
| Producción de Energia Solary Demás Renovables, S.A. | ||||
| (Agua Fria) | Honduras | In operation | 60% | 60% |
| Honduras Los Prados | ||||
| Fotovoltaica Surena S.A | Honduras | In operation | 30% | 30% |
| Generaciones Energeticas S.A | Honduras | In operation | 30% | 30% |
| Energias Solares S.A | Honduras | In operation | 30% | 30% |
| Fotovoltaica Los Prados S.A | Honduras | Under development | 30% | 30% |
| Foto Sol S.A | Honduras | Under development | 30% | 30% |
| Jordan | ||||
| Anwar Al Ardh for Solar Energy Generation PSC (EJRE) | Jordan | In operation | 50% | 50% |
| Ardh Al Amal for Solar Energy Generation PSC (GLAE) | Jordan | In operation | 50% | 50% |
| Mozambique | ||||
| Central Solar de Mocuba (Mocuba) | Mozambique | In operation | 48% | 48% |
| Pakistan | ||||
| Helios Power Ltd | Pakistan | Under construction | 25% | 0% |
| Meridian Energy Ltd | Pakistan | Under construction | 25% | 0% |
| HNDS Energy Ltd | Pakistan | Under construction | 25% | 0% |
| Rwanda | ||||
| Gigawatt Global Rwanda (ASYV) | Rwanda | In operation | 46% | 46% |
| South Africa Upington | ||||
| Scatec Solar South Africa BV | Netherland | In operation | 30% | 30% |
| Dyason's Klip 1 | South Africa | In operation | 55% | 55% |
| Dyason's Klip 2 | South Africa | In operation | 55% | 55% |
| Sirius Solar PV Project One (RF) (Pty) Ltd | South Africa | In operation | 55% | 55% |
| Scatec Solar Construction | South Africa | In operation | 49% | 49% |
| Scatec Solar Operations (Pty) Ltd | South Africa | In operation | 49% | 49% |
| South Africa Linde/Dreunberg | ||||
| Scatec Solar SA 164 (Pty) Ltd | South Africa | In operation | 19% | 19% |
| Simacel 155 (Pty) Ltd (Linde) | South Africa | In operation | 56% | 56% |
| Simacel 160 (Pty) Ltd (Dreunberg) | South Africa | In operation | 56% | 56% |
| Name | Country of incorporation and operation |
2021 | 2020 | |
|---|---|---|---|---|
| South Africa Kalkbult | ||||
| Scatec Solar SA 165 (Pty) Ltd | South Africa | In operation | 23% | 23% |
| Scatec Solar SA 166 (Pty) (Kalkbult) | South Africa | In operation | 54% | 54% |
| South Africa Other | ||||
| Scatec Solar SA 163 (Pty) Ltd | South Africa | In operation | 8% | 8% |
| Ukraine | ||||
| Scatec Solar Ukraine B.V. | Netherland | Under construction | 40% | 40% |
| Chysta Enerhiaa 2011 LLC | Ukraine | Under construction | 40% | 40% |
| Rengy Bioenergy LLC | Netherland | In operation | 49% | 49% |
| Rengy Bioenergy LLC | Ukraine | In operation | 49% | 49% |
Accumulated balances of non-controlling interest and the allocation of profit and loss are presented below, where they are presented 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.
| NOK million | 2021 | 2020 |
|---|---|---|
| Egypt | -24 | -71 |
| Honduras | 318 | 302 |
| Jordan | 149 | 135 |
| Mozambique | -5 | 7 |
| Pakistan | 11 | - |
| Rwanda | 7 | 9 |
| South Africa | 178 | 294 |
| Ukraine | 14 | -3 |
| Total non-controlling interests | 649 | 673 |
| NOK million | 2021 | 2020 |
|---|---|---|
| Egypt | -41 | -4 |
| Honduras | 8 | 14 |
| Jordan | 10 | 3 |
| Mozambique | -1 | 4 |
| Pakistan | -6 | - |
| Rwanda | -3 | -2 |
| South Africa | 82 | 104 |
| Ukraine | 18 | -9 |
| Total non-controlling interests | 68 | 110 |
Financial information of subsidiaries that have material non-controlling interests is provided below:
| 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 | 596 | (250) | 345 | (215) | 130 | (85) | (42) | - |
| Honduras | 196 | (128) | 68 | (44) | 24 | 24 | 8 | - |
| Jordan | 109 | (56) | 54 | (32) | 22 | 20 | 10 | - |
| Mozambique | 82 | (40) | 42 | (41) | 1 | (2) | (1) | - |
| Pakistan | - | (34) | (34) | (1) | (34) | (25) | (6) | - |
| Rwanda | 20 | (12) | 8 | (14) | (5) | (5) | (3) | - |
| South Africa | 1,245 | (628) | 617 | (369) | 248 | 217 | 83 | 209 |
| Ukraine | 119 | (47) | 73 | (22) | 50 | 38 | 18 | - |
1) Excluding repayments of shareholders loans
| 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 | 628 | (262) | 366 | (277) | 89 | (7) | (4) | - |
| Honduras | 214 | (120) | 94 | (54) | 40 | 40 | 14 | - |
| Jordan | 119 | (123) | 28 | (41) | (45) | (47) | 3 | - |
| Mozambique | 90 | (43) | 47 | (37) | 10 | 9 | 4 | - |
| Pakistan | - | - | - | - | - | - | - | - |
| Rwanda | 22 | (12) | 9 | (14) | (5) | (5) | (2) | - |
| South Africa | 1,719 | (988) | 763 | (405) | 325 | 232 | 104 | 148 |
| Ukraine | 87 | (46) | 41 | (54) | (13) | (11) | (10) | - |
1) Excluding repayments of shareholders loans
| Attributable to | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| NOK million | Property, plant and equipment |
Other non current asstes |
Cash and cash equivalent |
Other current assets |
Non-resource financing |
Other non current liabilities |
Current liabilities |
Total equity | Non controlling interests |
Equity holders of the parent |
| #REF! | ||||||||||
| Egypt | 3,035 | 1,226 | 316 | 94 | (2,847) | (1,854) | (84) | (113) | (24) | (89) |
| Honduras | 1,194 | 3 | 40 | 186 | (346) | (271) | (15) | 791 | 318 | 473 |
| Jordan | 792 | - | 298 | 21 | (658) | (49) | (79) | 325 | 149 | 176 |
| Mozambique | 478 | 4 | 99 | 11 | (438) | (84) | (105) | (35) | (5) | (29) |
| Pakistan | 111 | - | 33 | 3 | - | (32) | (69) | 46 | 11 | 34 |
| Rwanda | 137 | - | 5 | 4 | (108) | (56) | (1) | (19) | 7 | (26) |
| South Africa | 3,819 | 774 | 466 | 503 | (3,773) | (807) | (325) | 657 | 178 | 479 |
| Ukraine | 578 | 361 | 63 | 77 | (404) | (639) | (22) | 14 | 14 | (0) |
| Attributable to | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| NOK million | Property, plant and equipment |
Other non current asstes |
Cash and cash equivalent |
Other current assets |
Non-resource financing |
Other non current liabilities |
Current liabilities |
Total equity | Non controlling interests |
Equity holders of the parent |
| #REF! | ||||||||||
| Egypt | 3,280 | 2,036 | 451 | 53 | (2,845) | (3,134) | (135) | (185) | (92) | (94) |
| Honduras | 1,332 | 12 | 130 | 91 | (394) | (310) | (4) | 857 | 301 | 556 |
| Jordan | 865 | (194) | 246 | 1 | (685) | 64 | (44) | 253 | 135 | 118 |
| Mozambique | 535 | 25 | 93 | 33 | (452) | (196) | (28) | 10 | 7 | 4 |
| Rwanda | 146 | - | 5 | 3 | (109) | (53) | (0) | (8) | 9 | (17) |
| South Africa | 4,079 | 471 | 555 | 411 | (4,170) | (765) | (207) | 1,047 | 316 | 732 |
| Ukraine | 703 | 325 | 24 | 92 | (488) | (634) | (18) | 5 | (3) | 7 |
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.
See Note 13 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.
For remuneration to Management, 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. The company has no significant agreements with companies in which a board member has a material interest. Scatec has loans to Executive Management given in relation to the longterm incentive programme amounting to NOK 0.2 million (1.4) as of 31 December 2021.
The accounting principles in the Annual Report are largely incorporated into the individual notes. Principles and policies that are presented in this note are more general descriptions which do not naturally belong in the individual notes.
The Scatec Group's consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs) and interpretations issued by the International Accounting Standards Board (IASB) and as adopted by the European Union (EU). In compliance with the Norwegian Accounting Act, additional disclosure requirements are included in the notes to the financial statements of Scatec ASA.
The consolidated financial statements have been prepared on a historical cost basis, except for financial instruments measured at fair value.
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 consolidated financial statements are presented in Norwegian kroner (NOK) and all values are rounded to the nearest million (NOK 1,000,000) except when otherwise indicated. Because of these rounding adjustments, the figures in some columns may not add up to the total of that column.
The consolidated financial statements comprise the financial statements of the Parent and its subsidiaries as of 31 December 2021. 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.
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. The Group re-assesses whether it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control.
Profit or loss and each component of other comprehensive income (OCI) are attributed to the equity holders of the parent of the Group and to the non-controlling interests, even if this results in the non-controlling interests having a deficit balance. When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies in line with the Group's accounting policies.
All intra-group assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group are eliminated in full on consolidation.
See Note 29 - Non-controlling interests for information on the non-controlling interests share of profit/loss and equity prior to intercompany eliminations.
The statement of cash flows is prepared under the indirect method.
The Group's consolidated financial statements are presented in NOK. For each entity the Group determines the functional currency, and items included in the financial statements of each entity are measured using that functional currency.
Transactions in foreign currencies are initially recorded by the Group's entities at their respective functional currency spot rates at the date the transaction first qualifies for recognition.
Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency spot rates of exchange at the end of reporting period. Differences arising on settlement or translation of monetary items are recognised in profit or loss.
Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates at the dates of the initial transactions.
On consolidation, the assets and liabilities of foreign entities with functional currencies other than NOK are translated into NOK at the rate of exchange prevailing at the end of reporting period and their income statements are translated at average monthly exchange rates. The exchange differences arising on translation for consolidation are recognised in other comprehensive income.
The Group presents assets and liabilities in the statement of financial position based on current/non-current classification. An asset is current when it is:
All other assets are classified as non-current.
A liability is current when:
It is held primarily for trading
It is due to be settled within twelve months after the reporting period, or
The Group classifies all other liabilities as non-current.
Deferred tax assets and liabilities are classified as non-current assets and liabilities.
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.
There are no new standards, not yet adopted, expected to have material effect for the Group in 2021.
Subsequent events are viewed as new information on the company's financial position that becomes known after the reporting period. In evaluating such, the Group distinguishes between adjusting and non-adjusting events after the reporting period. Adjusting events refer to those that provide evidence of conditions that existed at the end of the reporting period, whereas non-adjusting events refer to those that are indicative of conditions that arose after the reporting period. Events after the reporting period that do not affect the company's financial position at the end of the reporting period, but which will affect the company's financial position in the future, are disclosed if significant.
No adjusting events have occurred after the balance sheet date.
On 24 February 2022, Russia invaded Ukraine where Scatec currently operate five solar power plants, located in the central and southern parts of the country. The situation is extremely challenging, and Scatec's top priority is the safety of our Ukrainian employees. The outcome is still highly uncertain, but the event may significantly impact Scatec's financial performance in Ukraine, including restructuring of the loan for Chigirin. Based on the current circumstances we anticipate to be in breach of loan covenants as of end of Q1 2022 and we have a continuous and constructive dialogue with the lenders on this matter.
Please refer to Note 3 Operating segments, Note 24 Nonrecourse financing and Note 26 Guarantees and commitments for further details on Scatec's financial performance and commitments in Ukraine.
The table below includes key financial information of Scatec's financial position and performance in Ukraine as per 31 December 2021 as well as an overview of insurance coverage. All entities within Ukraine, including both power plant companies and the operating company, are consolidated on a 100% basis in the consolidated statement of financial position. The type of undertaking presented below related to construction financing of Progressovka with recourse to Scatec ASA only exist in Ukraine and is not standard practice.
| NOK million | Progressovka(1) | Other Ukraine(2) | Total Ukraine |
|---|---|---|---|
| Production and capacity (100 %) | |||
| Installed capacity | 148 | 187 | 335 |
| Power production(GWh) | 79 | 125 | 204 |
| Economic interest | 100% | 83% | 89% |
| Consolidated statement of profit and loss 2021 | |||
| Revenues | 66 | 237 | 303 |
| EBITDA | 43 | 198 | 241 |
| Condensed consolidated statement of financial position per 31.12.2021 | |||
| Property, plant and equipment | 1,245 | 1,371 | 2,616 |
| Cash and cash equivalent | 34 | 103 | 138 |
| Other current - and non-current assets | 315 | 344 | 659 |
| Total assets | 1,594 | 1,819 | 3,413 |
| Equity incl. shareholder loans | 825 | 755 | 1,580 |
| Non-recourse project financing | - | 968 | 968 |
| Trade and other payables | 686 | 24 | 710 |
| Other current - and non-current liabilities | 83 | 71 | 155 |
| Total equity and liabilities | 1,594 | 1,819 | 3,413 |
| Proportionate statement of profit and loss 2021 | |||
| Revenues | 66 | 183 | 249 |
| EBITDA | 43 | 154 | 197 |
| Corporate guarantees with recourse to Scatec ASA - net | |||
| Corporate guarantee for construction financing(3) | 638 | - | 638 |
| Other guarantees(4) | - | 132 | 132 |
| Insurance coverage - net | |||
| Political Violence Insurance(5) | |||
| Property Damage | 891 | 955 | 1,846 |
| Business Interruption | 199 | 68 | 267 |
| Notes | Comments |
|---|---|
| (1) | Progressovka started producing power and generate revenues in July 2021. In 2021 Progressovka accounted for 26% of total revenues in Ukraine. |
| (2) | Chigirin started producing power and generate revenues in July 2021. In 2021 Chigirin accounted for 15% of total revenues in Ukraine. |
| (3) | The Progressovka power plant has been a collaboration with PowerChina Guizhou Engineering Co. Ltd who has provided construction financing and Engineering Procurement and Construction (EPC) services to the project. The construction financing from PowerChina is classified as trade and other payables in the statement of financial position. The amount is due in June 2022 and subject to uncertainty following an assessment by Scatec of the construction performance by PowerChina. The construction financing is covered by a corporate guarantee from Scatec ASA. Scatec has no other recourse construction financing arrangements for other projects. |
| (4) | Other guarantees consist of Debt Service Reserve Account (DSRA) and Stand-by equity. A Debt Service Reserve Account (DSRA) is a liquidity reserve covering debt service for a given period in case of breach of certain covenants in the loan agreement. The liquidity reserve related to the project financing of Kamianka and Boguslav are covered by bank guarantees issued on behalf of Scatec ASA. Stand-by equity is a contingent liability which can be called upon by the lenders in case of breach of certain covenants in the loan agreement. The reason for including stand-by equity clauses in Ukraine is the limited time between the maturity dates of the FiTs (10 years) and the maturity dates of the project financing (9 years). The stand-by equity amounts in the table above are linked to the project financing of Chigirin and Rengy and are financial obligations with recourse to Scatec ASA. |
| (5) | Scatec has secured Political Violence Insurance in Ukraine which covers physical damage of the power plants up to a predetermined amount (as stated in the table above). The insurance covers the replacement value for rebuilding the power plants as well as for business interruptions for 6-12 months. |
| Statement of income | 106 | |
|---|---|---|
| Statement of financial position - assets | 107 | |
| Statement of financial position – equity and liabilities | 108 | |
| Statement of cash flow | 109 | |
| Notes to the parent company financial statements | 110 | |
| Note 1 | General information | 110 |
| Note 2 | Accounting principles | 110 |
| Note 3 | Revenues | 112 |
| Note 4 | Personnel expenses, number of employees and auditor's fee | 113 |
| Note 5 | Other operating expenses | 114 |
| Note 6 | Financial income and expenses | 115 |
| Note 7 | Tax | 116 |
| Note 8 | Property, plant and equipment | 117 |
| Note 9 | Investments in subsidiaries, joint ventures and | 118 |
| associated companies | ||
| Note 10 | Inventory | 119 |
| Note 11 | Cash and cash equivalents | 119 |
| Note 12 | Equity and shareholder information | 120 |
| Note 13 | Guarantees, contractual obligations and contingent liabilities | 121 |
| Note 14 | Transactions with related parties | 122 |
| Note 15 | Provision for bad debt | 122 |
| Note 16 | Corporate financing | 123 |
| Note 17 | Other current liabilities | 123 |
| Note 18 | Subsequent events | 123 |
1 JANUARY – 31 DECEMBER
| NOK million | Note | 2021 | 2020 |
|---|---|---|---|
| Revenues | 3 | 166 | 622 |
| Total revenues | 166 | 622 | |
| Costs of sales | 2 | -104 | -437 |
| Personnel expenses | 4 | -209 | -156 |
| Other operating expenses | 5, 14, 15 | -143 | -82 |
| Depreciation, amortisation and impairment | 8, 10 | -53 | -10 |
| Operating profit/(loss) | -343 | -63 | |
| Interest and other financial income | 6, 14 | 402 | 977 |
| Interest and other financial expenses | 6, 14 | -262 | -107 |
| Net foreign exchange gain/(loss) | 33 | -345 | |
| Profit before tax | -171 | 462 | |
| Income tax (expense)/benefit | 7 | 97 | 56 |
| Profit/(loss) for the period | -74 | 518 | |
| Allocation of profit/(loss) for the period | |||
| Dividend | 12 | 404 | 173 |
| Transfer to/(from) other equity | 12 | -478 | 345 |
| Total allocation of profit/(loss) for the period | -74 | 518 |
1 JANUARY – 31 DECEMBER
| NOK million | Note | 2021 | 2020 |
|---|---|---|---|
| Non-current assets | |||
| Deferred tax assets | 7 | 261 | 157 |
| Property plant and equipment | 8 | 60 | 57 |
| Investments in subsidiaries | 9 | 14,666 | 2,620 |
| Loan to group companies | 14 | 2,633 | 2,533 |
| Interest rate swap (cash flow hedge) | 16 | 26 | - |
| Other non-current receivables | 57 | 63 | |
| Total non-current assets | 17,702 | 5,430 | |
| Current assets | |||
| Inventory | 10 | 311 | 186 |
| Trade and other receivables | 15 | 49 | 103 |
| Trade and other receivables group companies | 3, 15 | 301 | 245 |
| Other current assets | 64 | 30 | |
| Cash and cash equivalents | 11 | 1,620 | 5,664 |
| Total current assets | 2,345 | 6,228 | |
| Total assets | 20,048 | 11,658 |
AS OF 31 DECEMBER
| NOK million | Note | 2021 | 2020 |
|---|---|---|---|
| Paid in capital | |||
| Share capital | 12 | 4 | 4 |
| Share premium | 12 | 10,122 | 9,720 |
| Total paid in capital | 10,126 | 9,724 | |
| Other equity | |||
| Other equity | 12 | -385 | 191 |
| Reserve for valuation variances | 20 | - | |
| Total other equity | -365 | 191 | |
| Total equity | 9,761 | 9,915 | |
| Non-current liabilities | |||
| Corporate financing | 16 | 7,264 | - |
| Liabilities to group companies | 14 | 549 | 413 |
| Other non-current liabilities | 4 | 4 | |
| Total non-current liabilities | 7,818 | 417 | |
| Current liabilities | |||
| Trade and other payables | 16 | 5 | |
| Trade payables group companies | 127 | 109 | |
| Public duties payable | 19 | 41 | |
| Dividend | 12 | 404 | 173 |
| Other current liabilities | 17 | 1,903 | 252 |
| Other current financial liabilities | 16 | - | 748 |
| Total current liabilities | 2,469 | 1,327 | |
| Total liabilities | 10,287 | 1,744 | |
| Total equity and liabilities | 20,048 | 11,658 |
Oslo, 17 March 2022
The Board of Directors Scatec ASA
1 JANUARY – 31 DECEMBER
| NOK million | Notes | 2021 | 2020 |
|---|---|---|---|
| Cash flow from operating activities | |||
| Profit before taxes | -171 | 462 | |
| Depreciation, amortisation and impairment | 5 | 53 | 10 |
| Interest and other financial income | 7 | -402 | -519 |
| Interest and other financial expenses | 7 | 262 | 6 |
| Foreign exchange gain/(loss) | -33 | 310 | |
| Increase)/decrease in inventories | 10 | -125 | 88 |
| (Increase)/decrease in trade receivables | 15 | -22 | -36 |
| Increase/(decrease) in trade payables | 146 | -1,008 | |
| Taxes paid | 8 | - | -11 |
| (Increase)/decrease in current assets and current liabilities | 261 | 1,005 | |
| Net cash flow from operating activities | -31 | 307 | |
| Cash flows from investing activities | |||
| Investments in property, plant and equipment | 5 | -56 | -17 |
| Net increase in loans to subsidiaries | 14 | -100 | 139 |
| Interest received | 127 | -141 | |
| Investments in subsidiaries and associated companies | 9 | -8,577 | -636 |
| Dividends from and capital decrease in subsidiaries | 9 | 277 | -282 |
| Net cash flow used in investing activities | -8,329 | -938 | |
| Cash flow from financing activities | |||
| Proceeds from share capital increase | 12 | 41 | 6,576 |
| Dividends paid to equity holders | 12 | -173 | -131 |
| Interest paid | -251 | 101 | |
| Proceeds from corporate financing | 16 | 4,699 | -745 |
| Net cash flow from financing activities | 4,316 | 5,801 | |
| Net increase/(decrease) in cash and cash equivalents | |||
| Cash and cash equivalents at beginning of period | 5,664 | 494 | |
| Cash and cash equivalents at end of period | 1,620 | 5,664 | |
| Net increase/(decrease) in cash and cash equivalents | -4,044 | 5,170 |
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,
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.
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.
The functional currency of the Company is US dollar (USD). The functional currency was changed from NOK in 2021 due to USD being the currency which primarily affects the financials including corporate financing, the acquisition of SN Power and revenues from construction activities. Prior year figures are not restated. Transactions in foreign currency are translated at the rate applicable on the transaction date. Monetary items in a foreign currency are translated into USD using the exchange rate applicable on the balance sheet date. Non-monetary items that are measured at their historical cost expressed in a foreign currency are translated into USD using the exchange rate applicable on the transaction date. 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
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 2021 were authorized for issue in accordance with a resolution by the Board of Directors on 17 March 2022.
translated at average exchange rates. The exchange differences arising on translation are recognized in equity.
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. Capitalized project rights 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 recognises direct material costs as incurred costs when the direct materials have been installed. Scatec considers direct materials to be installed when they are permanently attached or fitted to the power systems as required by engineering designs.
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.
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 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 are recognised in the income statement as they accrue, based on the effective interest method.
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. The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantially enacted at the balance sheet date.
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.
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.
Intangible assets and property, plant and equipment are stated at cost, less accumulated depreciation and accumulated impairment losses.
Intangible assets and 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.
An item of intangible assets and property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on derecognition of the asset is recognised in the statement of income in the period the item is derecognised.
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 are measured at the lower of cost and net realisable value. Inventories consist primarily of project assets in various stages of development. Capitalized 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 that are directly attributable 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 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.
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.
Distribution of dividends is resolved by a majority vote at the Annual General Meeting of the shareholders of Scatec ASA, based on a proposal from the Board of Directors.
Dividends are recognised as a liability at the reporting date of the financial year that the proposal of dividend relates to. Additional proposed dividends based on the previous fiscal year approved financial statements (i.e. between 1 January and the date that the current year financial statements will be approved) are recognised as a liability at the balance sheet date.
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.
The cash flow statement is prepared using the indirect method.
| NOK million | 2021 | 2020 |
|---|---|---|
| Services | 153 | 616 |
| Other revenue | 13 | 6 |
| Sum | 166 | 622 |
Services comprise EPC services, sale of project rights and management services – all rendered to Group companies and associates.
| NOK million | 2021 | 2020 |
|---|---|---|
| Pakistan | 67 | - |
| Netherlands | 25 | 15 |
| South-Africa | 22 | 291 |
| Ukraine | 15 | 140 |
| Egypt | 7 | 5 |
| Brazil | 6 | 4 |
| Argentina | 5 | 22 |
| Malaysia | 3 | 118 |
| Honduras | 2 | 2 |
| Mozambique | 1 | 16 |
| Jordan | - | 3 |
| Sum | 153 | 616 |
Refer to Note 14 - Transactions with related parties for further information.
| NOK million | 2021 | 2020 |
|---|---|---|
| Salaries | 171 | 127 |
| Share-based payment | 27 | 14 |
| Payroll tax | 19 | 46 |
| Pension costs | 14 | 10 |
| Other benefits and personnel costs | 6 | 2 |
| Capitalised to inventory | -28 | -42 |
| Total personnel expenses | 209 | 156 |
The average number of FTEs that has been employed in the company through 2021 was 116 (94).
The Company has a defined contribution plan in line with the requirement of the law. NOK 14 million (10) is expensed related to the defined contribution plan in 2021.
| 2021 | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| 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 Chief Executive Officer | 3,995 | 2,763 | 18 | -59 | 68 | 15 | 157 | 22 | |
| Mikkel Tørud | Chief Financial Officer | 2,718 | 1,975 | 13 | -43 | 50 | 15 | 165 | 22 |
| Snorre Valdimarsson |
EVP General Counsel | 2,292 | 1,632 | 11 | -34 | 40 | 15 | 162 | 22 |
| Terje Pilskog | EVP Project Development & Project Finance |
2,594 | 1,797 | 12 | -38 | 45 | 15 | 162 | 22 |
| Roar Haugland | EVP Sustainable Business & HSSE | 2,105 | 1,173 | 10 | -34 | 38 | 15 | 164 | 22 |
| Torstein Berntsen | EVP Power Production & Asset Management | 2,383 | 1,246 | 11 | -36 | 41 | 15 | 172 | 22 |
| Pål Helsing | EVP Solutions | 2,396 | 1,262 | 11 | -21 | 41 | 15 | 160 | 22 |
| Toril Haaland | EVP People & Organisation | 1,978 | 1,071 | 9 | -18 | 35 | 15 | 161 | 22 |
| Jarl Arve Kosberg | EVP Hydropower Project Development | 1,943 | - | 13 | - | 13 | 13 | 143 | 22 |
| 2020 | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| 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 Chief Executive Officer | 3,557 | 1,418 | 48 | -82 | 109 | 45 | 156 | - | |
| Mikkel Tørud | Chief Financial Officer | 2,454 | 930 | 36 | -61 | 80 | 45 | 156 | 273 |
| Snorre Valdimarsson |
EVP General Counsel | 2,024 | 768 | 29 | -47 | 64 | 42 | 157 | 432 |
| Terje Pilskog | EVP Project Development & Project Finance |
2,225 | 845 | 32 | -53 | 71 | 45 | 158 | 316 |
| Roar Haugland | EVP Sustainable Business & HSSE | 1,924 | 722 | 28 | -47 | 62 | 43 | 161 | - |
| Torstein Berntsen | EVP Power Production & Asset Management | 2,026 | 768 | 29 | -51 | 66 | 43 | 164 | 370 |
| Pål Helsing | EVP Solutions | 2,069 | 776 | 30 | -11 | 51 | 43 | 157 | - |
| Toril Haaland | EVP People & Organisation | 1,707 | 660 | 25 | -9 | 43 | 42 | 157 | - |
| 1) Including paid out holiday allowance and car allowance. |
2) Bonus paid based on performance for the previous year.
3) Other benefits include benefits such as insurance and free phone.
| 2021 | 2020 | |||||||
|---|---|---|---|---|---|---|---|---|
| NOK thousand | Board remuner ation |
Audit committee |
Remuner ation committee |
Nomination committee |
Board remuner ation |
Audit committee |
Remuner ation committee |
Nomination committee |
| John Andersen jr. | 530 | 65 | 50 | - | 480 | 59 | 32 | - |
| John Giverholt | - | - | - | - | 300 | - | 32 | - |
| Jan Skogseth | 340 | - | 35 | - | 300 | - | 32 | - |
| Gisele Marchand | 340 | 90 | - | - | 300 | 59 | 32 | - |
| Maria Moræus | 340 | - | 35 | - | 300 | 59 | - | - |
| Hanssen Jørgen Kildahl |
340 | 65 | - | - | - | - | - | - |
| Alf Inge Gjerde | - | - | - | - | - | - | - | 54 |
| Kristine Ryssdal | - | - | - | 57 | - | - | - | 37 |
| Svein Høgseth | - | - | - | 39 | - | - | - | 37 |
| Mats Holm | - | - | - | 39 | - | - | - | - |
| Annie Bersagel | - | - | - | 39 | - | - | - | - |
1) Annual fees paid for 2020 and accrued for 2021 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 2021.
| NOK million | 2021 | 2020 |
|---|---|---|
| Audit fees | 3 | 2 |
| Other attestation services | 0 | 1 |
| Tax services | 2 | 7 |
| Other services | 0 | 7 |
| Total | 5 | 17 |
VAT is not included in the numbers above.
| NOK million | 2021 | 2020 |
|---|---|---|
| Facilities | 23 | 14 |
| Professional fees | 51 | 6 |
| IT and communications | 36 | 26 |
| Travel costs | 4 | 2 |
| O&M costs | 1 | - |
| Other costs | 28 | 34 |
| Total other operating expenses | 143 | 82 |
| NOK million | 2021 | 2020 |
|---|---|---|
| Interest income from group companies | 114 | 132 |
| Other interest income | 13 | 9 |
| Gain/(loss) on sale of financial investments | -2 | 35 |
| Dividend from group companies | 277 | 282 |
| Gain from financial investment | - | 519 |
| Total interest and other financial income | 402 | 977 |
The write down of financial investment in 2020 is due to the liquidation of Scatec Solar Solutions GmbH, Germany. When Scatec Solar Solutions GmbH was liquidated, the net positions Scatec ASA had towards the company was a debt of NOK Million 519 which is written down and recognised as a gain.
| NOK million | 2021 | 2020 |
|---|---|---|
| Interest expenses from group companies | -1 | -4 |
| Other interest expenses | -250 | -98 |
| Other financial expenses | -11 | -6 |
| Total interest and other financial expenses | -262 | -107 |
During 2021, interest amounting to NOK 250 million (98) was expensed for corporate financing, refer to Note 23 Corporate Financing in the consolidated financial statement of the Group. The increase in interest expenses is due to the financing package related to the acquisition of SN Power in the first quarter of 2021.
| NOK million | 2021 | 2020 |
|---|---|---|
| Income tax expense: | ||
| Current taxes | - | - |
| Withholding tax on received dividends | 10 | 11 |
| Change in deferred tax | -104 | -67 |
| Taxes related to previous years | -3 | - |
| Total tax expense/(income) | -97 | -56 |
| Tax basis: | ||
| Profit before taxes | -171 | 462 |
| Permanent differences 1) | -297 | -958 |
| Changes in temporary differences | -16 | 185 |
| Increase of tax losses carried forward | 484 | 311 |
| Tax base | - | - |
| Current taxes according to statutory tax rate (22%) | - | - |
1) Net non-deductible income and expenses for 2021 and 2020 are mainly related to non-taxable dividends partly offset by non-deductible share based payment expenses. The
items also include tax-deduction on transaction costs from capital increase recognised in equity.
| NOK million | 2021 | 2020 |
|---|---|---|
| Expected income tax expense according to statutory tax rate (22%) | -38 | 102 |
| Non-taxable income | -65 | -170 |
| Allowance for losses carried forward | 25 | - |
| Withholding tax on received dividends | 10 | 11 |
| Taxes related to previous years | -3 | 1 |
| Foreign exchange variations between functional and tax currency | -26 | - |
| Income tax expense/(income) | -97 | -56 |
| Effective tax rate (%) | 56.71% | 12.40% |
| NOK million | 2021 | 2020 | Change |
|---|---|---|---|
| Tax loss carried forward | -1,301 | -700 | 601 |
| Allowance for deferred tax assets | 114 | - | -114 |
| Receivables | - | - | - |
| Property, plant and equipment | - | 2 | 2 |
| Work in progress | 6 | 10 | 4 |
| Shared based payments and amortised Interests on corporate financing | -4 | -25 | -21 |
| Total temporary differences | -1,185 | -713 | 472 |
| Recognised tax liability/(asset) | -261 | -157 | 104 |
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.
Scatec ASA has recognised tax assets on unused tax losses to the extent that Scatec ASA expects there will be sufficient future taxable profits available to utilise the losses. NOK 29 million of the tax losses carried forward is related to non-deductible interest which will expire in 2024. The remaining tax loss can be carried forward indefinitely.
| NOK million | 2021 | 2020 |
|---|---|---|
| Accumulated cost at 1 January | 75 | 59 |
| Additions | 11 | 17 |
| Foreign currency translation | 2 | - |
| Disposed assets at cost | - | - |
| Accumulated cost at 31 December | 87 | 76 |
| Accumulated depreciation at 1 January | 19 | 10 |
| Depreciations for the year | 7 | 9 |
| Accumulated depreciation disposed assets | - | - |
| Foreign currency translation | 2 | - |
| Accumulated depreciation at 31 December | 28 | 19 |
| Carrying amount at 31 December | 60 | 57 |
| Estimated useful life (years) | 3-10 | 3-10 |
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 |
Carryring value 2021 |
Carryring value 2020 |
| SN Power AS | Norway | 100.00% | 2,595 | - |
| Scatec Solar Netherlands BV | Netherlands | 100.00% | 10,933 | 1,523 |
| Release Management BV | Netherlands | 100.00% | 409 | 170 |
| Scatec Solar SA (pty) Ltd. | Sandton, South-Africa | 100.00% | - | 3 |
| Scatec Solar SA 163 (Pty) Ltd. | South-Africa | 100.00% | 1 | 16 |
| Scatec Solar SA 164 (Pty) Ltd. | Sandton, South-Africa | 80.70% | 5 | 71 |
| Scatec Solar SA 165 (Pty) Ltd. | Sandton, South-Africa | 76.60% | 7 | 96 |
| Gigawatt Global Rwanda Ltd | Rwanda | 54.00% | 7 | 27 |
| Scatec Solar Mozambique Limitada | Mozambique | 53.00% | 9 | 8 |
| Scatec Solar Jordan | Amman, Jordan | 100.00% | 44 | 44 |
| Anwar Al Ardh For Solar Energy Generation PSC |
Amman, Jordan | 50.10% | 86 | 75 |
| Ardh Al Amal For Solar Energy Generation PSC | Amman, Jordan | 50.10% | 38 | 33 |
| Aswan Solar Power SAE (BB1) | Egypt | - | 2 | 2 |
| Scatec Solar Honduras S.A. | Honduras | 100.00% | 3 | 22 |
| Produccion de Energia Solar Demas Renovables S.A |
Honduras | 40.00% | 62 | 60 |
| Fotovoltaica Los Prados | Honduras | 70.00% | 74 | 67 |
| Fotovoltaica Surena | Honduras | 70.00% | 150 | 153 |
| Generaciones Energeticas S.A | Honduras | 70.00% | 144 | 148 |
| Energias Solares S.A | Honduras | 70.00% | 88 | 90 |
| Foto Sol S.A | Honduras | 70.00% | 6 | 3 |
| Scatec Solar PV1 S.R.O | Prague, Czech | 100.00% | - | 2 |
| Scatec Solar S.R.O | Prague, Czech | 100.00% | - | 6 |
| 14,666 | 2,619 |
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 2021 | Carrying value 2020 |
| Kube Energy AS | Oslo, Norway | 25% | 2 | 2 |
| Total | 2 | 2 |
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.
| NOK million | 2021 | 2020 |
|---|---|---|
| Asia | 149 | 39 |
| Europe | 38 | 92 |
| West Africa | 34 | 44 |
| South Africa | 49 | - |
| North Africa | 24 | 7 |
| South America | 16 | 4 |
| East Africa | - | - |
| Carrying value of inventory at 31 December 2021 | 311 | 186 |
Impairment charges in 2021 were NOK 45 million (2) for "Power plant under development" related to development projects in Brazil and Ukraine.
| NOK million | 2021 | 2020 |
|---|---|---|
| Restricted cash | 37 | 29 |
| Free cash | 1,584 | 5,635 |
| Total cash and cash equivalents | 1,620 | 5,664 |
Scatec ASA has not drawn on the revolving credit facility per 31 December 2021.
For more information about external financing and facilities, refer to Note 23 Corporate Financing in the consolidated financial statement of the Group.
| Nok million | Issued capital | Share premium | Other equity | Total equity |
|---|---|---|---|---|
| Equity as of 31 December 2020 | 4 | 9,720 | 191 | 9,915 |
| Profit/(loss) for the period | - | - | -75 | -75 |
| Share-based payment | - | 27 | - | 27 |
| Capital increase from exercised employee share | ||||
| options, net of transaction cost after tax 1) | - | 42 | - | 42 |
| Share purchase program | - | -1 | - | -1 |
| Accrued dividend | - | - | -404 | -404 |
| Reserve for valuation variances | - | - | 20 | 20 |
| Foreign currency translation | - | 334 | -97 | 237 |
| Equity as of 31 December 2021 | 4 | 10,122 | -365 | 9,761 |
1) On 4 February 2021, as part of the Group's incentive program, a share capital increase raised NOK 42 million net of transaction cost after tax, through an exercise of employee share options consisting of 164 907 new shares at a price of NOK 46.70 per share, 165 321 new shares at a price of NOK 71.08 per share and 198 123 new shares at a price of
NOK 113.88 per share. At 31 December 2021, the share capital amounted to NOK 3,971 million. All shares rank in parity with one another and carry one vote per share.
On 30 April 2021, the Annual General Meeting of Scatec ASA resolved to pay a dividend of NOK 1,09 per share, totalling NOK 173 million. The dividend was paid to the shareholders on 7 May 2021.
The table below show the largest shareholders of Scatec ASA at 31 December 2021.
| Shareholder | Number of shares | Ownership | |
|---|---|---|---|
| EQUINOR ASA | 20,776,200 | 13.08% | |
| SCATEC INNOVATION AS | 19,482,339 | 12.26% | |
| FOLKETRYGDFONDET | 15,233,197 | 9.59% | |
| State Street Bank and Trust Comp | 3,943,712 | 2.48% | |
| State Street Bank and Trust Comp | 3,696,234 | 2.33% | |
| The Bank of New York Mellon | 3,257,301 | 2.05% | |
| The Bank of New York Mellon SA/NV | 3,180,078 | 2.00% | |
| ARGENTOS AS | 3,068,116 | 1.93% | |
| CLEARSTREAM BANKING S.A. | 2,956,834 | 1.86% | |
| State Street Bank and Trust Comp | 2,335,929 | 1.47% | |
| RAIFFEISEN BANK INTERNATIONAL AG | 2,208,075 | 1.39% | |
| JPMorgan Chase Bank, N.A., London | 2,168,486 | 1.36% | |
| State Street Bank and Trust Comp | 2,108,050 | 1.33% | |
| Citibank, N.A. | 2,009,304 | 1.26% | |
| VERDIPAPIRFONDET DNB MILJØINVEST | 1,747,156 | 1.10% | |
| Citibank Europe plc | 1,427,050 | 0.90% | |
| CACEIS Bank | 1,359,077 | 0.86% | |
| VERDIPAPIRFONDET KLP AKSJENORGE IN | 1,205,458 | 0.76% | |
| VPF DNB AM NORSKE AKSJER | 1,175,227 | 0.74% | |
| VERDIPAPIRFONDET STOREBRAND NORGE | 1,134,841 | 0.71% | |
| Total 20 largest shareholders | 94,472,664 | 59.47% | |
| Total other shareholders | 64,391,354 | 40.53% | |
| Total shares outstanding | 158,864,018 | 100% |
On 2 February 2022, the Board of Directors announced its intention to propose a dividend of NOK 2,54 per share to the Annual General Meeting.
The tables below show shares held by Management and Board of Directors at 31 December 2021.
| Board of Directors | Number of shares | Ownership |
|---|---|---|
| John Andersen, Jr. 1) | - | 0.00% |
| Jan Skogseth | 23,000 | 0.01% |
| Gisele Marchand | 2,586 | 0.00% |
| Maria Moræus Hanssen 2) | 2,760 | 0.00% |
| Jørgen Kildahl | 2,000 | 0.00% |
| Kristine Ryssdal | 225 | 0.00% |
| Total at 31 December 2021 | 30,571 | 0.02% |
| 1) Related parties control 19,482,339 shares through Scatec Inovation AS. |
2) Held through the controlled company MMH Nysteen Invest AS.
| Management | Number of shares | Ownership |
|---|---|---|
| Raymond Carlsen 1) | 3,128,209 | 1.97% |
| Mikkel Tørud | 226,636 | 0.14% |
| Terje Pilskog 2) | 511,296 | 0.32% |
| Roar Haugland 3) | 187,058 | 0.12% |
| Torstein Berntsen 4) | 711,800 | 0.45% |
| Snorre Valdimarsson | 12,419 | 0.01% |
| Pål Helsing | 5,296 | 0.00% |
| Toril Haaland | 3,996 | 0.00% |
| Jarl Kosberg | 419 | 0.00% |
| Total at 31 December 2021 | 4,787,129 | 3.01% |
1) Held through the controlled company Argentos AS, whereof 59,674 shares held by Raymond Carlsen directly
2) Held through the controlled company Océmar AS, whereof 877 shares held by Terje Pilskog directly
3) Held through the controlled company Buzz Aldrin AS, whereof 877 shares held by Roar Haugland directly
4) Held through the controlled company Belito AS, whereof 17,877 shares held by Torstein Berntsen directly. In addition, 895 shares are held by held by Torstein Berntsen's
spouse. These are not included in the total presented in the table above.
Refer to Note 4 – Personnel expenses, number of employees and auditor's fee for information on share options granted to the management.
For information about guarantees, contractual obligations and contingent liabilities refer to Note 26 Guarantee and commitments in the consolidated financial statement of the Group
Scatec ASA has contractual obligations primarily through office lease. Further, the group commitments in contracts with suppliers of equipment and sub-EPC services related to the plants under construction in South Africa.
| Nok million | 2022 | 2023 | 2024 | >2024 |
|---|---|---|---|---|
| Leases (office rental) | 18 | 12 | 12 | 63 |
| Total purchase modules, inverters etc. | - | - | - | - |
| Total contractual obligations | 18 | 12 | 12 | 63 |
Subsidiaries and associates Key management personnel Board of Directors Joint ventures
Management, development and EPC services and financing Loan and payroll
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 2021 and 2020 are:
Scatec ASA sold EPC services amounting to NOK 76 million in total during 2021. Scatec ASA has been EPC contractor for the construction of power plants in Ukraine, Egypt, Malaysia and Pakistan. During 2021 total revenue on these contracts amounted to NOK 73 million.
In 2020 Scatec ASA sold EPC services amounting to NOK 576 million. The company has been EPC contractor for the construction of power plants in Ukraine, Malaysia and South-Africa. During 2020 total revenue on these contracts amounted to NOK 544 million.
During 2021 the company sold development project rights amounting to NOK 10 million. The sale of rights related to the financial close and transfer of rights for the Pakistan projects amounting to NOK 10 million.
Scatec ASA has during 2021 charged NOK 31 million (22) for corporate services provided to its subsidiaries.
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 6 for specification of interest income/expenses from/to subsidiaries and Note 9 Investments in subsidiaries, joint ventures and associated companies.
Related to the new company name Scatec ASA acquired certain administrative work from Scatec Innovation AS, NOK 605 thousand for 2021. Scatec ASA acquired certain consultancy services to maintain the global trademark Scatec ASA from Scatec Innovation AS, NOK 63 thousand for 2021. For the year ended 31 December 2021 the company incurred fair share of travel agency service cost of NOK 109 thousand (139). Travel agency service is presented as other operating expenses in the statement of income. In connection with the Scatec ASA equity issue in 2020 and 2021, Scatec ASA entered a share lending agreement with the joint book-runners and Scatec Innovation AS.
Refer to Note 4 – Personnel expenses, number of employees and auditor's fee for information regarding transactions with key management personnel.
No provision for bad debt has been made as the collection risk is considered low.
For information about Corporate financing refer to Note 23 Corporate 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.
| Nok million | 2021 | 2020 |
|---|---|---|
| Deferred income EPC projects | 128 | 103 |
| Liabilities to co-developers | 19 | 16 |
| Accrued interest expenses | 52 | 6 |
| Vacation allowances, bonus accruals etc. | 41 | 29 |
| Other | 43 | 98 |
| Liability to Norfund 1) | 1,620 | - |
| Total current liabilities | 1,903 | 252 |
1) Norfund's 49% ownership stake in SN Power's Sub-Saharan Africa hydro assets which will be exchanged for shares in the Sub-Saharan Africa JV without cash impact after
completion of agreed restructuring activities.
No adjusting events have occurred after the balance sheet date.
On 25 February 2022, Russia invaded Ukraine where Scatec Group currently operates five solar power plants, located in the central and southern parts of the country. Please refer to note 32 in the in the consolidated financial statement of the Group for further details. The indirect carrying value of the investment in Ukraine, through Scatec Solar Netherlands BV, per December 31, 2021, was NOK 1.6 billion, including shareholder loans. Scatec ASA has issued guarantees for the vendor financing for Power China, Stand-by equity and the DSRA as described in Note 32 in the consolidated financial statement of the Group.
We confirm to the best of our knowledge, that the consolidated financial statements for 2021 has been prepared in accordance with IFRS 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, 17 March 2022 The Board of Directors Scatec ASA
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.
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 3for 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, 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.
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 39% 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;
In 2021 Scatec reports a proportionate operating profit of NOK 1,606 million compared with an operating profit of NOK 2,012 million in the consolidated financials. To arrive at the proportionate operating profit from the consolidated operating profit the Group has;
•
See Note 3 for further information on the reporting of proportionate financial figures, including reconciliation of the proportionate financials against the consolidated financials.
A bridge from proportionate to consolidated key figures including APMs like gross interest-bearing debt, net interest-bearing debt and net-working capital is included in the Q4 report of 2021 on page 19.
Construction Corporate Total
| NOK million | 2021 | 2020 |
|---|---|---|
| EBITDA | ||
| Operating profit (EBIT) | 2,012 | 1,292 |
| Depreciation, amortisation and impairment | 892 | 777 |
| EBITDA | 2,903 | 2,069 |
| Total revenues and other income | 3,803 | 2,754 |
| EBITDA margin | 76% | 75% |
| Gross profit | ||
| Total revenues and other income | 3,803 | 2,754 |
| Cost of sales | - | - |
| Gross profit | 3,803 | 2,754 |
| Gross interest-bearing debt | ||
| Non-recourse project financing | 10,708 | 11,350 |
| Bonds | 7,264 | 748 |
| Non-recourse project financing - current | 1,147 | 913 |
| Gross interest-bearing debt | 19,120 | 13,011 |
| Net interest-bearing debt | ||
| Gross interest-bearing debt | 19,120 | 13,011 |
| Cash and cash equivalents | 4,171 | 7,788 |
| Net interest-bearing debt | 14,949 | 5,223 |
| Net working capital | ||
| Trade and other receivables | 740 | 623 |
| Other current assets | 734 | 662 |
| Trade and other payable | -812 | -760 |
| Income tax payable | -24 | -90 |
| Other current liabilities | -841 | -852 |
| Non-recourse project financing-current | -1,147 | -913 |
| Net working capital | -1,351 | -1,330 |
Normalised loan repayments -790 - - - -790 Proceeds from refinancing 1) 397 - - - 397 Normalised income tax payment -140 -16 68 78 -9 Cash flow to equity 1,640 60 -164 -252 1,284
1) Refer to Note 15
| NOK million | Power Production | Services | Development & Construction |
Corporate | Total |
|---|---|---|---|---|---|
| EBITDA | 1,404 | 82 | -28 | -153 | 1,306 |
| Net interest expenses | -542 | 1 | 1 | -58 | -598 |
| Normalised loan repayments | -382 | - | - | - | -382 |
| Normalised income tax payment | -53 | -18 | 12 | 58 | -2 |
| Cash flow to equity | 427 | 65 | -15 | -153 | 324 |
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.
Historically, about 50% of projects in pipeline have been realised. 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.
An occurrence that results in a fatality, permanent disability or time lost from work of one day/shift or more.
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.
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.
Comprise shareholder financing and draw down on term loan facilities by power plant companies to settle outstanding external EPC invoices.
Project equity comprise of equity and shareholder loans in power plant companies.
Recourse Group means all entities in the Group, excluding renewable energy companies (each a recourse group company).
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.
Start of Production (SOP): The first date on which the power plant generates revenues through sale of power under the offtake agreement. Production volumes and/or the price of the power may be lower than when commercial operation date (COD) is reached. This milestone is regulated by the off-take agreement with the power off-taker. This milestone may be reached prior to COD if the construction of a power plant is completed earlier than anticipated in the off-take agreement.
Take Over Date (TOD): The date on which the EPC contractor hands over the power plant to the power plant company. COD must have been reached, in addition to delivery of training and all technical documentation before TOD takes place. The responsibility for Operations & Maintenance (O&M) of the plant is handed over from the EPC contractor to the O&M contractor at the TOD. This milestone will normally occur shortly after the COD date.
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