Scatec ASA — Investor Presentation 2020

Oct 16, 2020

Acquisition of SN Power Building a global leader in renewable energy

16 October 2020

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 forwardlooking 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.

Today's presenters

Raymond Carlsen Chief Executive Officer

Terje Pilskog EVP Project Development & Project Finance

Mikkel Tørud Chief Financial Officer

Scatec Solar acquires SN Power - a leading hydropower developer and IPP

The acquisition of SN Power AS

• Scatec Solar has signed an agreement to acquire 100% of the shares in SN Power from Norfund for a total consideration of USD 1,166 million (NOK 10,948 million)
• Includes SN Power's hydropower assets in the Philippines, Laos and Uganda¹ with a gross capacity of 1.4 GW (production of 6.1 TWh) and a pipeline of gross 2.5 GW
• Hydro asset and pipeline in Sub-Saharan Africa to be structured as a joint venture with Norfund (51% Scatec Solar / 49% Norfund) – Scatec Solar being the operator

• The acquisition is fully funded through cash on hand, vendor finance, term loan and acquisition finance from DNB, Nordea, Swedbank and BNP Paribas
• The transaction is expected to close in the first half of 2021
• The transaction is conditional upon customary regulatory approvals and local competition approval

Strategic rationale

2

3

• 1 Building a global leader in renewable energy
  • Adding significant cash flow from operating plants
    • Solid hydro assets in attractive power markets
• 4 Accelerating growth with new pipeline & market access
• 5 Cultural fit and strong focus on ESG

The energy transition is accelerating and Scatec Solar broadens its growth strategy 1

Massive demand growth in renewables

More complex power markets

Further technology integration

Scatec Solar's broadened growth strategy:

• Build an IPP across solar, hydro, wind and storage
• New, high growth markets and broader offering
• Maintain the integrated business model
• Increase focus on early phase project development

The SN Power acquisition is an important step in this direction

Strengthening Scatec Solar's position as a leading renewable developer 1

(1) Based on short term guidance; (2) SSO + SN Power power assets with P50 weather conditions & hydrology; (3) For listed mid cap peers.

Adding scale and significant cash flow from operating plants 2

Combined financials

Financial year 2019 – Proportionate, MNOK Revenues 6,341 1,766 EBITDA 1,571 1,149 EBITDA margin 25% 65% Cash flow to equity 8,107 2,720 34% 1,336 795 541 +

Power Production EBITDA per geography

Value creation

• The equity returns from SN Power's asset base is expected to be significantly higher than Scatec Solar's cost of equity
• Equity returns on hydro pipeline projects are expected to be above returns on solar pipeline
• Increased portfolio diversification - assets with long term cash flows in new markets and new technologies

The hydropower assets are generating stable long-term cash flows

SN Power proportionate financials - MNOK Comments

• Low operational gearing and high cash conversion
• A mix of contract types are stabilizing cash generation
• Well maintained assets with limited capex expected in the medium term
• SN Power annual corporate / asset ownership expenses (pre synergies) of about NOK 90 million + project development expenses of about NOK 50 million

1H 2020 performance

• Some reduced water in-flow compared to 2019
• Covid-19 impacting power demand and prices in the Philippines
• EBITDA down about 10% from 1H 2019 to 1H 2020
• Seasonal variations; 55-60% of full year EBITDA generated in 2H

2

Securing solid hydro assets in attractive power markets 3

Scatec Solar: Plants in operation & under construction in 11 countries SN Power: Plants in operation in 3 countries

Philippines

• About 2 GW new PV & Wind expected by 2025
• Established wholesale market with large volumes
• Market dominated by local/regional players

Laos

• Targeting 30% non-hydro renewables by 2025
• Single-buyer structure with Electricité du Laos (EDL)
• Increasing 2x transmission capacity to neighbours (e.g. Thailand and Vietnam) over the next few years

• Generates >90% of its power from renewable sources, including large hydro and biomass
• Feed in Tariff first auction program for renewables in East Africa

The Philippines – a sophisticated power market in a robust economy

SN Power assets Benguet & Magat

Key facts Stakeholders and agreements

Power sales

• 30 % spot sales in the wholesale market
• 40 % sales of ancillary services
• 30% bilateral contracts with 2-3 years tenor

Financing

• Project finance: 57% leverage provided by a consortium of local banks

Equity partner

• Aboitiz Power²

Horizon

• Assets owned to perpetuity

Binga 140 MW hydro power plant

(1) On 50% basis. NOK/USD 8.80. (2) See appendix for more information

Laos – delivering hydropower to Thailand

SN Power assets

Theun Hinboun Power Company

Key facts Stakeholders and agreements

Power sales

• Off-taker EGAT (Thailand) and EDL (Laos)
• 20 year take-or-pay fixed price contract for ca 90% of generation with EGAT

Financing

• Project finance: 50% leverage provided by a consortium of Development Banks

Equity Partners

178 • Electricité du Laos EDL (Utility in Laos) and GMS Power Public Company (Thailand)²

Horizon

• PPA renegotiated or transfer assets to state in 2039

THPC 525 MW hydro power plant

3

Uganda - largest independent hydro investment in Africa

SN Power assets Bujagali

Key facts Stakeholders and agreements

Power sales

• Off taker: Ugandan Electricity Transmission Co
• Tariff entirely based on capacity payments

Financing

• Project finance: 75% leverage provided by a consortium of Development Banks (incl IFC)

Equity Partners

• Equity partners: Aga Kahn Fund for Economic Development and others²
• MIGA insurance from the World Bank
• Producing asset in new SSO & Norfund JV

Horizon

• 25-year concession expiring in 2042

Bujagali 255 MW hydro power plant

Increasing pipeline to further accelerate growth

Selected mature pipeline projects

Country	Philippines	Philippines	Rwanda, DRC, Burundi	Madagascar
Capacity1	140 MW	40 MW	147 MW	120 MW
Technology	Hydro	Battery	Hydro	Hydro

Pipeline & backlog:¹

Accelerating growth

• Leveraging both companies track record in project development, financing and construction
• Access to 2.5 GW of pipeline across hydro, floating solar, wind and storage - brings significant growth optionality
• Four mature pipeline projects totaling 447 MW
• Presence in new markets for Scatec Solar

A new joint venture for Sub-Saharan Africa;

• Joint venture for Hydro power production and project development in the region
• Includes the Bujagali hydro asset and the hydro project pipeline from SN Power
• Scatec Solar will be the JV operator

4

51% 49%

Hydro power production and project development in Sub-Saharan Africa

Complementary technologies and strong competence synergies

Complementary technologies Competence synergies

4

• Optimal use of intermittent PV and regulated hydro generation to create base load & hybrid solutions
• Hydro reservoirs potential for floating PV plants
• SN Power's pipeline in addition includes battery storage and wind projects

• The same development process, legal framework project financing and off-takers across technologies
• Combining Scatec Solar's project development competence with SN Power's hydro experience
• Transferring leading power trading competence from hydro to other renewable technologies

Strong ESG focus: Solid track record and shared mindset

Scatec Solar and SN Power with same ESG approach

Strict ESG standards: Operating in line with the IFC Performance Standards and signatories to the UN Global Compact

Trusted partnerships: Partners with strong ethical standards including IFC, Norfund, UN, KLP and several larger development banks

Strong ESG track record and performance: ESG as an integrated part of both businesses with solid hands on experience across emerging markets

Financing and capital structure

Financing of the transaction

A new Revolving Credit Facility of 180 MUSD to be established – replacing the existing 90 MUSD facility – not required/drawn for the acquisition

Financing of the transaction	Financing - MUSD:
200 MUSD subordinated 7-year vendor finance provided by Norfund	Vendor finance	200
150 MUSD 4- year term loan provided by Nordea, DNB and Swedbank	Term loan 150
700 MUSD acquisition finance is available until 12 months after	Acquisition finance	700
transaction close and is expected to be refinanced through debt and equity	Cash on hand	116
Scatec Solar is committed to the policy of moderate group level debt in relation to long-term cash flow generated by operating power plants	Purchase price	1,166

Average margin on transaction financing facilities: 250 bps¹

Building a global leader in renewable energy

20

Appendix

2019 Pro forma proportionate P&L

	FY 2019
	Scatec Solar
	Power		Scatec Solar	Scatec Solar	Scatec Solar
NOK MILLION	Production	SN Power	Services	D&C	Corporate	Total
Revenues and other income	1,163	1,766	168	4,980	31	8,108
Cost of sales	0	-272	0	-4,274	0	-4,546
Gross profit	1,163	1,494	168	706	31	3,562
Personnel	-21	-110	-45	-59	-48	-283
Other operating expenses	-167	-235	-59	-57	-40	-558
EBITDA	975	1,149	64	590	-57	2,720
SSO share of CF to equity	362	541	53	471	-91	1,336

2019 Proportionate P&L SN Power

	FY 2019 SN Power
NOK MILLION	Philippines	Laos	Uganda	Corporate	Total
Power Production - GWh	671	454	414	-	1,539
Revenues and other income	1,191	217	315	42	1,766
Cost of sales	-258	-14	-	-	-272
Gross profit	933	203	315	42	1,493
Personnel	-28	-7	-2	-73	-110
Other operating expenses	-90	-18	-16	-111	-235
EBITDA	815	178	297	-144	1,149
D&A	-101	-45	-46	0	-191
EBIT	714	134	252	-144	958
SSO share of CF to equity	422	58	166	-105	541

Pro forma capital structure

Pro- forma capital structure – Per 30 June 2020

Scatec Solar

NOK million	Consolidated	SSO prop. share	Group level
Cash	4,069	3,351	1,933
Interest bearing liabilities1	(13,937)	(9,606)	(747)
Net debt	(9,868)	(6,255)	1,186
SN Power
NOK million	Consolidated	SN Power prop. share	Group level
Cash	613	978	241
Interest bearing liabilities	(1,133)	(4,534)	-
Net debt	(519)	(3,557)	241
Combined
NOK million	Consolidated	Combined prop. share	Group level
Cash	4,682	4,329	2,174
Interest bearing liabilities	(15,070)	(14,140)	(747)
Acquisition financing	(8,230)2	(8,230)2	(8,230)2
Net debt	(18,617)	(18,042)	(6,803)

¹ Defined as 'recourse group' in the corporate bond and loan agreements; ² Acquisition finance of USD 700 and term loan of USD 150m. USD/NOK exchange rate of 9.68

Equity partner Philippines

Equity partners Laos

Gen

Equity partners Uganda

Business overview	Presence in renewables	Ownership	History and recent developments in hydro
▪ International development agency that invests in economically sound enterprises in the developing world ▪ Operates as a network of affiliates with more than 90 separate project companies across 18 countries	▪ In addition to the investment in Bujagali, Aga Khan Fund for Economic Development has also invested in another hydro energy project through PamirEnergy	▪ Owned by the Aga Khan Development Network	▪ 2019: Signed agreement with SN Power and the governments of Rwanda, Burundi and DRC to develop the 147 MW Ruzizi hydropower plant
▪ The infrastructure and development arm of the Aga Khan Fund for Economic Development, an affiliate of the privately-owned Aga Khan Development Network	▪ Part of a PPP for the creation of Bujagali and owner of the West Nile Rural Electrification Company. Bujagali is the flagship of IPS' infrastructure investments in East Africa	▪ Majority owned by the Aga Khan Development Network
▪ CDC is the UK's development finance institution ▪ 28% of the current portfolio is invested in infrastructure, of which the majority is in Africa and South Asia	▪ Investments produced a total of 57,000 GWh of electricity in 2019	▪ Owned by the UK government	▪ Experience in investing with Norfund through the c.\$700mm acquisition of Globeleq, the largest independent power producer in Africa, in 2015
▪ Listed Kenyan financial services holding company, with subsidiaries across East Africa (Kenya, Uganda, Tanzania, Burundi, Mauritius) and Pakistan, mainly active within the insurance services sector		▪ The Aga Khan Fund for Economic Development holds a 38% interest
▪ The government of Uganda holds a passive stake in the Uganda assets