AI assistant
Scatec ASA — Investor Presentation 2021
Mar 23, 2021
3737_iss_2021-03-23_f15a80e2-87d5-495c-b2ae-6f2f8d415d04.pdf
Investor Presentation
Open in viewerOpens in your device viewer
Capital Markets Update
23 March 2021
Building a global leader in renewables
Raymond Carlsen, CEO
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 ASA or any company within the Scatec Group. This presentation contains statements regarding the future in connection with the Scatec 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 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.
The following presentation contains unaudited pro forma financial information which has been prepared solely for illustrative purposes to show how the acquisition of SN Power might have affected the financials of the group if the acquisition had occurred at an earlier date. All pro forma financials in this presentation are unaudited.
Alternative performance measures (APM) used in this presentation are described and presented in the fourth quarter report of the group for 2020.
Building a global leader in renewables
- Realising 15 GW by end of 2025
- Proven business model
- Team with a growth track record
- Solid cash flow to fund growth
- ESG at the center
The world can be powered by renewables in 2050
60%
increase in global electricity demand
75%
demand covered by renewables
Fossil from 64% to 20% market share
Solar, wind, hydro & storage share of energy mix from 36% to 73%
USD 500 billion Annual renewables
investments
Source: Bloomberg New Energy Outlook 2020
Scatec has grown significantly since the IPO in 2014 - invested NOK 34 billion³
- 6 1) 2020 EBITDA and cash flow pro forma including SN Power
- 2) Cash flow to Equity form Power Production
- 3) In total, including SN Power
Key achievements since our 2019 Capital Markets Update
8
Strong shareholder value creation
Share price development since IPO (NOK) Market cap growth since IPO (BNOK)
Source: Factset as of March 19, 2021
Note: Rebased to 100; Dividends reinvested on paydate; Core peers includes Northland Power, Neoen and Voltalia;
Other renewable IPPs includes Falck Renewables, ERG, Albioma and Boralex.
A broad and growing asset portfolio
We continue to lead and are broadening our growth strategy
Build a global leader across solar, hydro, wind and storage
Focus on new and existing high growth markets and a broader offering
Continue to adapt our business model to a changing market
4.5 GW by end 2021 and 15 GW by end 2025
GW – In operation and under construction – 100% basis
2021
Delivery of large solar projects in India, Brazil, Tunisia, South Africa & Pakistan
2025
Continued growth in pipeline and conversion of projects across key regions and technologies
2.6 GW in 2021 to be delivered from five large projects
A proven business model across renewables - Scatec role in wind and hydro expected to be similar to solar
| Develop | Build | Own | Operate | |
|---|---|---|---|---|
| Scatec's role | Lead developer | Engineering, procurement and construction management |
Scatec target equity of 50-60% |
Scatec to provide O&M and Asset Mng. services |
| Solar | ||||
| Wind | ||||
| Hydro | ||||
| Hybrid systems |
Scatec role may vary across solar, hydro and wind projects. D&C revenues on average expected to represent 55%-65% % of capex
An agile organisation with a track record of delivering growth
- Experienced global team developed and built >6 GW across technologies
- M&A capabilities
- Strong result-driven and value-based culture
- Matrix organisation with focus on enterprise leadership
A leading position in ESG
- Experience from navigating complex markets
- Identifies ESG project risks early with dedicated teams on the ground
- A net positive carbon footprint and set targets for reductions in direct emissions
- Comprehensive ESG reporting and close monitoring of regulations (e.g. EU Taxonomy)
Rating: A- (excellent) Status: Prime Prime threshold: C+
Carbon Disclosure Project
Staying selective when investing - Operating cash flow funding growth
- Power Production: Return on Equity: 12-16%
- Development & Construction gross margin: 10-12%*
- 15 GW representing NOK 100 billion of capex
- Scatec equity investments of NOK 15-20 billion
- Liquidity available & operating cash flow until 2025: NOK 14-16 billion**
A NOK 100 billion business plan towards 2025 - Building on our key strengths
(*) In operation or under construction..
A robust financial platform
Mikkel Tørud, CFO
A robust financial platform
- Solid operating cash flow
- Excellent access to funding
- Prudent risk management
- Focus on capital discipline
Strong growth in power production
Proportionate production, revenues and EBITDA
21 Compound annual growth rates
2020 EBITDA almost doubled with new hydro assets
2020 pro forma proportionate financials
NOK million
| Revenues | Solar | Hydro | Total |
|---|---|---|---|
| Power Production | 1,708 | 1,648 | 3,356 |
| Development & Construction (D&C) | 873 | - | 873 |
| Services | 232 | 11 | 243 |
| Corporate | 33 | 7 | 40 |
| Total | 2,844 | 1,667 | 4,512 |
| EBITDA | |||
| Power Production | 1,404 | 1,302 | 2,706 |
| Development & Construction | -28 | -84 | -112 |
| Services | 82 | 6 | 88 |
| Corporate | -153 | -50 | -203 |
| Total | 1,306 | 1,173 | 2,478 |
Pro forma 2020 explained
- Hydro production revenues impacted by low hydrology and Covid-19
- Growth in solar production and reduced construction activities
- D&C opex of NOK 221 million 85% on development of project pipeline
- Corporate includes NOK 102 million of SN Power transaction cost
- Solar & Hydro financials to be reported combined going forward
- Country P&L break down of Power Production to be provided
A well diversified and high quality asset portfolio
2020 EBITDA distribution:
Dividends will grow with increased cash flow
- The Group's objective is to pay shareholders consistent and growing cash dividends
- From 2021, Scatec will adjust its dividend policy to pay out a minimum of 25 % of the cash distributions received from the power plants
- Cash distributions is typically received by Scatec 6-12 months after cash being generated in the power plants
Group funding: A solid financial position
Year End 2020: Pro forma proportionate net debt post closing of SN Power acquisition
| NOK billion | Project level | Group level | Total |
|---|---|---|---|
| Cash | 1.7 | 2.9 | 4.6 |
| Debt | 12.1 | 7.2 | 19.2 |
| Net debt | 10.4 | 4.3 | 14.7 |
Green financing
- Scatec Green Finance Framework
- Dark Green shading from CICERO
- EUR 250 mill Green bond issued in Q1'21
- Undrawn USD 180 million Green RCF
Available liquidity* NOK 4.4 billion
2020 Cash flow to equity / Group level net debt:
20%
Group debt all in interest rate
2.5%
(*) Post SNP transaction – Group level cash + USD 180 million Revolving Credit Facility (RCF).
Strong partnership with projectequity and debt providers
Raised project level financing of NOK 20 billion
- Experienced project equity partners often DFIs
- Non-recourse project level debt of 60-80%
- Quality projects with good ESG profile in high demand
Opportunistic re-financing
- Highly dependent on project structure and market
- Hydro assets in the Philippines refinanced and released NOK 408 million to Scatec in Q1 2021
- Refinancing continues to be explored across portfolio
Careful structuring of projects to manage risks
Project structuring
Project level debt currency matching cash flows
Long debt tenors: 12.2 years avg. remaining
Fixed interest rate: 6.5% average interest rate 86% hedging ratio
MIGA insurance in South Africa, Egypt, Uganda
Staying selective when investing
- Focus on capital discipline
- Power Production: Return on Equity: 12-16%
- 30 year cash flows
- Average across technologies, regions & currencies
- Development & Construction gross margin: 10-12%
- D&C revenues expected to average 50-70% of project capex dependent on Scatec's role in the project
Target of 15 GW by end 2025 representing NOK 100 billion of capex
Scatec - 2021 Guidance
| Q1 2021 Power Production |
FY2021 Power production volume* |
FY2021 Services | FY2021 Corporate |
|---|---|---|---|
| Proportionate volume: 800-825 GWh |
Proportionate: 3,500 - 3,700 GWh |
Revenues NOK 280 million |
EBITDA NOK -110 million |
| Proportionate EBITDA: NOK 660-680 million |
Up from 3,045 GWh in 2020 |
EBITDA margin: 30-35% |
(*) Production from plants in operations.
A robust financial platform supporting growth
2020 Proportionate P&L segment details
2020 pro forma proportionate financials
| Development & | |||||||
|---|---|---|---|---|---|---|---|
| NOK MILLION | Power Production | Construction | Services | Corporate | Total | ||
| Revenues and other income | 3,356 | 873 | 243.4 | 40 | 4,512 | ||
| Cost of sales | -100 | -764 | - | - | -864 | ||
| Gross profit | 3,256 | 109 | 243 | 40 | 3,649 | ||
| Personnel | -96 | -117 | -78 | -97 | -388 | ||
| Other operating expenses | -453 | -104 | -77 | -146 | -780 | ||
| EBITDA | 2,706 | -112 | 88 | -203 | 2,478 | ||
| D&A | -812 | -26 | -3 | -20 | -861 | ||
| EBIT | 1,894 | -138 | 84 | -223 | 1,618 | ||
| Cash flow to equity | 1,067 | -78 | 69 | -190 | 867 | ||
| Cash flow to Equity % of EBITDA | 39 % | 70 % | 79 % | 94 % | 35 % |
Note: The pro forma figures include financials for SN Power as if the acquisition by Scatec occurred before January 1st 2020
2020 Proportionate - Power Production P&L details
2020 pro forma proportionate financials
| Power Production | ||||||
|---|---|---|---|---|---|---|
| NOK million | Philippines | Laos | Uganda | Solar assets | Other | Total |
| Power Production - GWh |
576 | 473 | 394 | 1,602 | n.a. | 3,045 |
| Revenues and other income | 1,053 | 242 | 337 | 1,703 | 21 | 3,356 |
| Cost of sales | -89 | -11 | 0 | - | - | -100 |
| Gross profit | 964 | 231 | 337 | 1,703 | 22 | 3,256 |
| Personnel | -27 | -7 | -3 | -2 | -57 | -96 |
| Other operating expenses | -115 | -16 | -15 | -253 | -54 | -453 |
| EBITDA | 822 | 208 | 319 | 1,449 | -90 | 2,706 |
| D&A | -126 | -58 | -60 | -564 | -3 | -812 |
| EBIT | 696 | 149 | 258 | 885 | -93 | 1,894 |
| Cash flow to equity | 400 | 59 | 216 | 460 | -68 | 1,067 |
| Cash flow to EQ % of EBITDA | 49% | 28% | 68% | 32% | n.a. | 39% |
| Net debt end 2020 | 2,151 | 306 | 786 | 7,141 | 10,383 |
Note: The pro forma figures include financials for SN Power as if the acquisition by Scatec occurred before January 1st 2020
2019 Proportionate - Power Production P&L details
2019 pro forma proportionate financials
| Power Production | ||||||
|---|---|---|---|---|---|---|
| NOK million | Philippines | Laos | Uganda | Solar assets | Other | Total |
| Power Production - GWh |
671 | 454 | 414 | 926 | n.a. | 2,465 |
| Revenues and other income | 1,191 | 217 | 315 | 1,162 | 21 | 2,906 |
| Cost of sales | -258 | -14 | - | - | - | -272 |
| Gross profit | 933 | 203 | 315 | 1,162 | 21 | 2,634 |
| Personnel | -28 | -7 | -2 | - | -48 | -86 |
| Other operating expenses | -90 | -18 | -16 | -164 | -26 | -314 |
| EBITDA | 815 | 178 | 297 | 999 | -60 | 2,229 |
| D&A | -116 | -55 | -50 | -376 | -36 | -633 |
| EBIT | 699 | 123 | 247 | 624 | -97 | 1,596 |
| Cash flow to Equity | 422 | 58 | 166 | 380 | -47 | 979 |
| Cash flow to Equity % of EBITDA | 52% | 33% | 56% | 38% | n.a. | 44% |
Note: The pro forma figures include financials for SN Power as if the acquisition by Scatec occurred before January 1st 2019
Fairly stable EBITDA generation through the year
2020 pro forma Power Production quarterly results
| Power Production (NOK million) | Q1 | Q2 | Q3 | Q4 | Total | |
|---|---|---|---|---|---|---|
| Solar | ||||||
| Revenues | 391 | 458 | 457 | 402 | 1,708 | |
| EBITDA | 331 | 374 | 379 | 320 | 1,404 | |
| Hydro | ||||||
| Revenues | 329 | 389 | 419 | 512 | 1,648 | |
| EBITDA | 242 | 307 | 340 | 413 | 1,302 | |
| Total | ||||||
| Revenues | 720 | 847 | 876 | 914 | 3,356 | |
| EBITDA | 573 | 681 | 719 | 733 | 2,706 | |
| % of yearly total |
21% | 25% | 27% | 27% | 100% |
Note: Solar & Hydro will be reported jointly in the Power Production segment going forward
2020 Cash flow to Equity details
2020 pro forma proportionate financials
| NOK million | Power Production |
Development & Construction |
Services | Corporate | Total |
|---|---|---|---|---|---|
| Revenues | 3,356 | 873 | 243 | 40 | 4,513 |
| EBITDA | 2,706 | -112 | 88 | -203 | 2,478 |
| Debt repayments | -731 | 0 | 0 | 0 | -731 |
| Interest expenses | -783 | 1 | 1 | -56 | -837 |
| Tax | -126 | 33 | -19 | 69 | -43 |
| Cash flow to equity | 1,067 | -78 | 69 | -190 | 867 |
- Power production includes debt service of project finance debt
- Corporate includes debt service of group level debt
- Quarterly reports will include P&L, balance sheet items and Cash flow to Equity for assets/countries: - The Philippines, South Africa, Laos, Uganda, Egypt, Malaysia, Brazil, Czech Republic, Jordan, other
Our capital structure - details
Pro forma capital structure – Per 31.12.2020 – with SN Power closing adjustment
Scatec
| NOK million | Consolidated | Proportionate Project Level | Group level* | Total Proportionate |
|---|---|---|---|---|
| Cash | 7,788 | 1,065 | 5,949 | 7,014 |
| Interest bearing liabilities | -13,011 | -8,205 | -748 | -8,953 |
| Net debt | -5,223 | -7,141 | 5,201 | -1,939 |
SN Power
| NOK million | Consolidated | Proportionate Project Level | Group level* | Total Proportionate |
|---|---|---|---|---|
| Cash | 491 | 614 | 491 | 1,105 |
| Interest bearing liabilities | - | -3,856 | - | -3,856 |
| Net debt | 491 | -3,242 | 491 | -2,751 |
SN Power Acquisition closing
| NOK million | Consolidated | Proportionate Project Level | Group level* | Total Proportionate |
|---|---|---|---|---|
| Acquisition financing debt | -6,415 | - | -6,415 | -6,415 |
| Cash settlement | -3,558 | - | -3,558 | -3,558 |
Combined
| NOK million | Consolidated | Proportionate Project Level | Group level* | Total Proportionate |
|---|---|---|---|---|
| Cash | 4,721 | 1,679 | 2,882 | 4,561 |
| Interest bearing liabilities | -19,426 | -12,061 | -7,163 | -19,224 |
| Net debt | -14,704 | -10,382 | -4,281 | -14,663 |