Scatec ASA

Earnings Release • Jul 22, 2016

Second quarter 2016

1

Raymond Carlsen, CEO Mikkel Tørud, CFO Oslo, July 22, 2016

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Disclaimer

The following presentation is being made only to, and is only directed at, persons to whom such presentation may lawfully be communicated ('relevant persons'). Any person who is not a relevant person should not rely, act or make assessment on the basis of this presentation or anything included therein.

The following presentation may include information related to investments made and key commercial terms thereof, including future returns. Such information cannot be relied upon as a guide to the future performance of such investments. The release, publication or distribution of this presentation in certain jurisdictions may be restricted by law, and therefore persons in such jurisdictions into which this presentation is released, published or distributed should inform themselves about, and observe, such restrictions. This presentation does not constitute an offering of securities or otherwise constitute an invitation or inducement to any person to underwrite, subscribe for or otherwise acquire securities in Scatec Solar ASA or any company within the Scatec Solar Group. This presentation contains statements regarding the future in connection with the Scatec Solar Group's growth initiatives, profit figures, outlook, strategies and objectives as well as forward looking statements and any such information or forward-looking statements regarding the future and/or the Scatec Solar Group's expectations are subject to inherent risks and uncertainties, and many factors can lead to actual profits and developments deviating substantially from what has been expressed or implied in such statements.

Operational review

Copyright: Scatec Solar ASA www.scatecsolar.com • post@scatecsolar.com

Q2'16 Highlights

Power production doubled from last year

• 21 MW in Jordan reached COD in June & July, another 22 MW to reach COD in August
• Investments of NOK 333 million in plants under construction and further development of project backlog and pipeline
• Egyptian authorities and International Finance Institutions have not yet agreed on the terms of the PV programme – construction start moved to 2017
• Targets 500-550 MW in operation and under construction by year end 2016
• The target for end of 2018 is 1,400-1,600 MW in operation and under construction

Key figures (NOKm)	Q2 16	Q1 16	Q2 15
Revenues	213	228	205
EBITDA	153	165	146
Net profit	6	-23	21
Cash flow to SSO equity	31	22	71
Power production (GWh)	183	182	90

Financial highlights

Cash flow to Scatec Solar's equity

• Increased cash generation across Power Production, O&M and Development & Construction

Project development

A solid project funnel – supporting growth targets

Status on project backlog Project development

Project	Capacity	Target construction start	SSO ownership	Status
Los Prados, Honduras	53 MW	Q4 2016	70%	Project finance progressing – final grid permit delayed - expected construction start moved out.
Segou, Mali	33 MW	Q4 2016	50%	Project finance process with IFC and AfDB extended – timeline adjusted.
Piaui, Brazil	78 MW	End 2016	70%	Project finance process and preparations for construction start moves forward as planned.
Upington, South Africa	258 MW	Q1 2017	42%*	Project finance and EPC preparations ongoing – financial close expected in 2H 2016.
Total	422 MW

Added 100 MW to project pipeline since Q1'16 reporting

Project	Capacity	Target construction start	Status
Egypt	341 MW	2017	Egyptian authorities and International Finance Institutions have not yet agreed on the terms of the PV programme – moved to 2017.
East & West Africa	205 MW	2016/2017	Secured 100 MW project in Nigeria. PPA for 40 MW in Mozambique approved and 48 MW in Kenya with government for approval.
Pakistan	150 MW	2017	All required development steps completed. Awaiting hearing and award of new 'Feed in Tariff' valid for 2H 2016.
Americas	30 MW	2017	30 MW in Mexico awaiting grid capacity feedback.
South Africa	430 MW	2018	SSO bid the projects in November 2015. Award of preferred bidders expected in 2H 2016.

Total 1,156 MW

Financial review

Copyright: Scatec Solar ASA www.scatecsolar.com • post@scatecsolar.com

Consolidated financials

Quarter on quarter:

• Revenue decline reflecting seasonally lower production in South Africa partially offset by higher production in the US, Czech Republic and Jordan
• Net profit is affected by non-cash currency gain on intercompany loans and reduced loss on Utah plant

An increasingly diversified asset portfolio

• The production volume is doubled from same quarter last year
• Quarter on quarter: Seasonally lower production in South Africa offset by higher production in the US
• The 10 MW Oryx plant in Jordan reached COD in June

Power production (GWh)

Shift in production mix impacts financials

• Quarter on quarter revenues and EBITDA decline as the share of production from South Africa declines and production sold from Utah increases

Operation & Maintenance

Growth in revenues and EBITDA

• The quarter on quarter increase in revenues and EBITDA is due to higher performance bonus for the South African plants reflecting higher performance ratio

Completing construction of the Jordan projects

• Construction of the Oryx and GLAE plant in Jordan was completed and COD achieved in June and July
• The EJRE plant in Jordan is currently being commissioned

Cash generation to Scatec Solar's equity

Cash flow to equity from D&C* (NOKm)

Q2'16 - NOK million	Power Production	O&M	D&C	Corporate	Total	Elim.	Consolidated
Revenues	213.9	15.8	303.5	2.0	535.2	-321.9	213.4
EBITDA	176.3	8.8	11.8	-14.9	182.0	-29.4	152.6
Net interest & loan repayments	-120.8	-	0.3	-8.8	-129.3
Total cash flow to equity*:	49.4	6.7	10.2	-17.7	48.6
SSO share of CF to equity*:	31.9	6.7	10.2	-17.7	31.0

Copyright: Scatec Solar ASA www.scatecsolar.com • post@scatecsolar.com (*) Cash flow to equity is defined as EBITDA less normalised (i.e. average over each calendar year) loan and net interest repayments, less normalised income tax payments. The definition implies changes in net working capital and investing activities are excluded from the figure. Consolidated financial position

outside project companies

recourse project financing

• Equity of NOK 1,371 million

billion of which NOK 4.9 billion non-

Investing for further growth

5 772 666 1 287 6 043 1 682 1 000 2 000 3 000 4 000 5 000 6 000 7 000 8 000 Assets Equity & Liabilities Non-current liabilities Current liabilities Equity Non-current assets Current assets 5 843 5 821 715 654 1 425 1 159 5 844 6 382 2 140 1 251 0 1 000 2 000 3 000 4 000 5 000 6 000 7 000 8 000 Assets Equity & Liabilities Assets Equity & Liabilities Non-current liabilities Current liabilities Equity Non-current assets Current assets • Cash position of NOK 908 million of which NOK 126 million free cash available • Invested NOK 333 million in new plants and in maturing backlog and pipeline • Total interest bearing liabilities* of NOK 5.4 SSO financial position – outside project • Interest bearing liabilities of NOK 494 Financial position (NOKm) As of 31.12.2015 As of 30.06.2016 7,984 7,984 7,633 7,633

• Equity to capitalisation ratio of 73%

million (bond)

companies**:

www.scatecsolar.com • post@scatecsolar.com 16 *) Total interest bearing liabilities does not include shareholder loans to project companies (**) As per definitions in senior unsecured bond agreement

Outlook

Copyright: Scatec Solar ASA www.scatecsolar.com • post@scatecsolar.com

Outlook

• Targets 500-550 MW in operation and under construction by year end 2016
• The target for end of 2018 is 1,400-1,600 MW in operation and under construction
• Development and Construction gross margin averaging 15%
• Hurdle rate for power plant investments: Average equity IRR of 15% nominal after tax
• Expected 2016 cash flow to SSO equity of NOK 160-180 million (PP and O&M)
• Q3'16 production forecast of 205,000 MWh

The 10 MW Oryx solar power plant in Jordan

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Consolidated profit & loss

(NOK million)	Q2 16	Q1 16	Q2 15	YTD 16	YTD 15
Total revenues	213.4	227.9	204.8	441.2	412.1
Gross profit	213.4	227.9	187.3	441.2	412.1
EBITDA	152.6	165.2	146.2	317.7	324.0
Depreciation, amortization and impairment	-59.6	-58.6	-38.1	-118.2	-77.0
Operating profit	93.0	106.6	108.1	199.5	246.9
Interest, other financial income	15.8	12.1	15.8	27.9	28.7
Interest, other financial expenses	-119.3	-118.7	-95.3	-238.0	-196.4
Foreign exchange gain/(loss)	16.5	-34.5	1.0	-18.0	23.2
Net financial expenses	-87.0	-141.1	-78.5	-228.1	-144.6
Profit before income tax	6.0	-34.6	29.6	-28.6	102.4
Income tax (expense)/benefit	-0.5	11.6	-8.3	11.2	-34.0
Profit/(loss) for the period	5.5	-22.9	21.3	-17.5	68.3
Profit/(loss) attributable to:
Equity holders of the parent	4.6	-46.2	18.6	-41.6	38.1
Non-controlling interests	0.9	23.2	2.7	24.1	30.3
Basic and diluted EPS (NOK)	0.05	-0.49	0.20	-0.44	0.41

Consolidated cash flow statement

(NOK million)	Q2 16	Q1 16	Q2 15	YTD 2016	YTD 2015
Net cash flow from operations	311.7	9.4	102.7	321.1	559.3
Net cash flow from investments	-317.5	-409.5	-1,142.8	-726.9	-1,828.0
Net cash flow from financing	-309.8	26.7	750.7	-283.1	1,203.9
Net increase/(decrease) in cash and cash equivalents	-315.6	-373.3	-289.4	-688.9	-64.9
Effect of exchange rate changes on cash and cash equivalents	6.6	-48.5	-2.2	-41.9	18.3
Cash and cash equivalents at beginning of the period	1,217.2	1,639.0	1,294.1	1,639.0	1,049.1
Cash and cash equivalents at end of the period	908.2	1,217.2	1,002.5	908.2	1,002.5

Segment results – Q2'16

(NOK million)	Power Production	Operation & Maintenance	Development & Construction	Corporate	Eliminations	Total
External revenues	213.9	0.5	-	-	-	214.4
Internal revenues	-	15.4	304.5	2.0	-321.9	-
Net gain/(loss) from sale of project assets	-	-	1.4	-	-	1.4
Net income / (loss) from associates	-	-	-2.4	-	-	-2.4
Total revenues and other income	213.9	15.8	303.5	2.0	-321.9	213.4
Cost of sales	-	-	-275.1	-	275.1	-
Gross profit	213.9	15.8	28.4	2.0	-46.8	213.4
Operating expenses	-37.6	-7.0	-16.6	-16.9	17.4	-60.8
EBITDA	176.3	8.8	11.8	-14.9	-29.4	152.6
Depreciation, amortisation and impairment	-69.7	-0.6	-4.5	-0.2	15.3	-59.6
Operating profit (EBIT)	106.6	8.2	7.3	-15	-14.1	93.0

Segment results – First half 2016

	Power	Operation &	Development &
(NOK million)	Production	Maintenance	Construction	Corporate	Eliminations	Total
External revenues	441.2	1.4	-	-	-	442.6
Internal revenues	-	27.5	562.3	4.4	-594.2	-
Net gain/(loss) from sale of project assets	-	-	1.6	-	-	1.6
Net income / (loss) from associates	-	-	-3.0	-	-	-3.0
Total revenues and other income	441.2	28.9	560.9	4.4	-594.2	441.2
Cost of sales	-	-	-502.7	-	502.7	-
Gross profit	441.2	28.9	58.1	4.4	-91.5	441.2
Operating expenses	-71.3	-14.4	-38.9	-30.9	31.9	-123.5
EBITDA	370	14.5	19.2	-26.5	-59.6	317.7
Depreciation, amortisation and impairment	-140.8	-1.1	-6.9	-0.3	31	-118.2
Operating profit (EBIT)	229.2	13.4	12.3	-26.8	-28.6	199.5

(NOK million)	Czech Republic	Kalkbult	Linde	Dreunberg	ASYV	Agua Fria	Utah Red Hills	Oryx	Segment overhead	Total segment	SSO prop. share
SSO shareholding	100%	39%	39%	39%	43%	40%	100%	90%
Revenues	34.5	58.6	23.2	43.6	7.5	27.7	14.4	4.1	0.3	213.9	116.1
OPEX	-2.4	-7.3	-4.5	-8.5	-1.5	-4.1	-4.9	-0.2	-4.2	-37.6	-21.9
EBITDA	32.1	51.2	18.7	35.1	6.1	23.6	9.5	4.0	-3.9	176.3	94.1
Net interest expenses	-5.3	-24.9	-10.4	-24.7	-3.2	-9.9	-8.6	-1.0	0.8	-87.1	-42.7
Normalised loan repayments	-5.4	-4.7	-6.4	-10.6	-3.1	-3.7	-	-	-	-34.7	-16.6
Cash flow to equity*	18.0	18.3	1.7	1.0	-0.4	10.0	-	2.9	-2.1	49.4	31.9

* Cash flow to equity: is EBITDA less normalised (i.e. average quarterly) loan and interest repayments, less normalised income tax payments.

SSO's profit normally impacted by growth investments

• Scatec Solar is investing early phase project development and construction as well as corporate functions that impacts SSO's share of net profit
• These investments pays off through access to attractive projects and significant cash generation

Q2'16 (NOK million)	Consolidated	SSO prop. share	%
Total revenues	213.4	123.0	58 %
Cost of sales & opex	-60.8	-57.3	94 %
EBITDA	152.6	65.6	43 %
D&A & Impairments	-59.6	-25.1	42 %
EBIT	93.0	40.6	44 %
Net financials & tax	-87.4	-35.7	41 %
Net profit	5.5	4.9	89 %

Eliminated D&C margins affect book equity

• Margins created through Development & Construction of power plants are eliminated in consolidated financial statement
• Elimination booked against PP&E in consolidated financial statements

Leads to:

• A negative effect on consolidated equity short term as corresponding non-recourse finance is included at full value
• Improves consolidated net profit over time through reduced depreciation

Build up of PP&E as per 30.06.2016 NOKm