Fourth quarter 2021 High development activity and robust cash flow
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Alternative performance measures (APM) used in this presentation are described and presented in the fourth quarter 2021 report for the group.
Agenda
- Project update and market outlook Raymond Carlsen, CEO
- Financial review
Mikkel Tørud, CFO
• Summary
Raymond Carlsen, CEO
Q4'21 High development activity and robust cash flow
- Proportionate revenues of NOK 1,250 million (497) and EBITDA1) of NOK 683 million (223)
- Stable plant performance power production of 1,047 GWh up 2.5x from same quarter last year
- 803 MW in Brazil and South Africa added to project backlog while 900 MW in India is put on hold
- Release by Scatec started delivery of 45 MW re-deployable solar to Cameroon, Chad and South Africa
- Building pipeline and pursuing several new Power to X opportunities
- The Board proposes dividends of NOK 2.54 per share, totaling NOK 401 million to be paid out in 2022
Power production (GWh)
4
1) EBITDA and other alternative performance measures (APMs) are defined and reconciled as a part of the APM section of the fourth quarter 2021 report on pages 41-44.
2021 Summary Strong productionand pipeline growth
- Successful integration of SN Power
- Grid connection of 320 MW of new solar plants
- Solid pipeline increase and broadening of portfolio
- Projects delayed due to prolonged approval processes and cost inflation
- Achieved top ESG ratings
Rating: A Top score, Carbon Disclosure & Project
Rating: Low risk #1 of 450 – Utilities #1 of 48 – Renewables
Rating: A+ #1 in ESG reporting of 100 largest companies on OSE
Developing a large pipeline across technologies in core markets, building on our market presence and business model
Project backlog update: 803 MW in Brazil and South Africa added to backlog
Brazil, 530 MW solar
- Strengthening our position in Brazil
- Commercial terms agreed for 20-year PPAs
- Remaining agreements and project finance being finalised
South Africa, 273 MW solar
- Continue to build scale in our home market
- 20-year PPA with the highest solar tariff amongst the winning bids
- Large portfolio of ready-to-bid projects for upcoming renewable programs
India, 900 MW solar
- Import duty of 40 % on solar modules to be imposed limited domestic capacity
- Project moved from backlog to pipeline
- Continue to develop our pipeline of solar, hydro and wind in India
Construction start for all projects in backlog expected in 2022
Project backlog update: Preparing for construction start for 540 MW in South Africa
South Africa, 540 MW solar & 225 MW battery system
- Government approval processes being finalised
- Concluding project finance and preparing for construction start
Tunisia, 360 MW solar
- Government approval processes progressing
- Finalising project finance
Pakistan, 150 MW solar
- Demarcation process further delayed
- Environmental and social programs progressing
Construction start for all projects in backlog expected in 2022
Project update: Release by Scatec starts delivery in Cameroon & Chad
Cameroon 36 MW solar & 20 MW battery system
- Started commissioning for ENEO
- Partnering with IFC for origination and funding
- Installation expected to be finished by mid 2022
Chad, 7.7 MW solar
- Initial step into Chad with sale of solar capacity to ZIZ Energie
- Support 300,000 households with much needed clean energy
- Installation expected to be finished during 2022
Release continues to build project pipeline
Cameroon construction site
Building on our position in Egypt to secure attractive renewable opportunities
- Developing 100 MW green hydrogen project in partnership with Fertiglobe, Orascom and Sovereign Fund of Egypt
- Signed MoU with Suez Canal Economic Zone to explore green ammonia opportunity
- Partnership with Orascom and Metito for early-stage development of large-scale seawater desalination powered by green energy
- Scatec's proven integrated business model a key success factor for project development and execution in Egypt
10 Scatec met with President of Egypt in Q4 2021 Photo credit: Egyptian Presidency
Scatec's integrated business model
- Develop, build, own & operate
- An agile and proven approach
- Focus on markets with excellent conditions for renewables
- Value creation from multiple sources
- Risk management integrated in Scatec operating system
Scatec's business model and strategic approach
Update on Ukraine
- The geopolitical situation in Ukraine is challenging
- Scatec is closely monitoring the situation
- Preparing for several scenarios with a dedicated team
- Primary focus on safeguarding our personnel
Financial review
Mikkel Tørud, CFO
2021: Strong growth in Revenues & EBITDA
14 CF to equity in Q1'21 includes NOK 397 million from refinancing of the assets in the Philippines. From 2021 the figures include assets from the acquisition of SN Power.
Power Production Robust cash flow generation
15 CF to equity in Q1'21 includes NOK 397 million from refinancing of the assets in the Philippines.
Comments
- EBITDA decreased by NOK 60 million from Q3, mainly explained
- Seasonal lower production in Ukraine and Czech Republic, partly offset by;
- Seasonal higher production in South Africa and the Philippines.
- Production in the Philippines in line with the 5-year seasonal average
16
Development & Construction High project development activity
-15 -164 -28 -223 137 2020 2021
Comments
- High project development activity across key markets and all renewable technologies
- Limited on site construction activity, but engineering, procurement and planning activities progresses for project backlog
- Impairment of NOK 20 million of project development expenses
A solid financial position
- Group free cash of NOK 2,335 million
- Available undrawn credit facilities NOK 1,632 million
- Group* book equity of NOK 11,244 million
(NOK
million) |
Consolidated |
Project
level |
Group
level* |
Total
prop. |
| Cash |
4,171 |
1,720 |
2,335 |
4,055 |
| Debt |
-19,120 |
-12,056 |
-7,265 |
-19,321 |
| Net debt |
-14,949 |
-10,336 |
-4,930 |
-15,266 |
(*) Defined as 'recourse group' in the corporate bond and loan agreements, where
Consolidated financial position (NOK million)
18
Q4'21 movement of the Group's free cash
Movement of cash in 'recourse group' as defined in the corporate bond and loan agreements.
2021 dividend proposal
Dividend Policy
- The Group's objective is to pay shareholders consistent and growing cash dividends
- Scatec pays dividends representing minimum of 25 % of free cash distributed from producing power plants
Proposed dividend for 2021
- Scatec received distributions from operating power plant companies of NOK 1,603 million in 2021
- The Board of Directors proposes a dividend of NOK 2.54 per share, totaling NOK 401 million to be paid out in 2022
Scatec's assets expected to be compliant with the EU Taxonomy EU Taxonomy update
Taxonomy compliance:
- Solar assets Taxonomy compliant
- Hydropower and wind assets assessed:
- Within threshold for Lifecycle greenhouse gas (GHG) emissions (100gCO2/kWh)
- Compliant with Do No Significant Harm (DNSH) principle
- Climate risk assessments to be performed in 2022
Recap: Value creation in Scatec's integrated business model
- The integrated business model yields multiple sources of value
- Project cost of equity defined based on e.g. leverage, currency and country risk premium
- Scatec guidance:
- Avg project Equity IRR of 12-16%
- D&C gross margins of 10-12%
- Cost inflation with some impact on Development & Construction margin for project backlog
Illustration of Equity IRR build up:
2022 guidance
| Power Production1 |
Q1'22 |
FY2022 |
|
Production -
GWh |
850 –
950 |
3,900 –
4,300 |
|
EBITDA -
NOK million |
|
2,700 –
3,000 |
|
In the Philippines production in Q1 2022 is expected to be 25% lower than 5-year average due to hydrology variations. In Q1 2021 production was 25% above the 5-year average
Services & Corporate
Services 2022 EBITDA is expected slightly above 2021. Corporate 2022 EBITDA is expected slightly below 2021
(1) Proportionate production volume based on production from plants in operations at the end of 2021. EBITDA based on currency rates as per year end 2021.
Summary
Raymond Carlsen, CEO
A renewable solution provider well positioned for further growth
- Robust cash flow from operating power plants
- Building on our position and track record to secure continued growth across core markets
- Pursuing new Power to X opportunities
- Applying our integrated business model with multiple sources of value creation
Our asset portfolio
| Plants in operation |
|
|
|
|
|
MW |
interest |
| Theun Hinboun, Laos |
|
525 |
20% |
| Magat, Philippines |
|
388 |
50% |
| Benban, Egypt |
|
380 |
51% |
| Upington, South Africa |
|
258 |
46% |
| Bujagali, Uganda |
|
255 |
28% |
| Quantum Solar Park, Malaysia |
|
197 |
100% |
| Apodi, Brazil |
|
162 |
44% |
| Progressovka, Ukraine |
|
148 |
100% |
| Binga, Philippines |
|
140 |
50% |
| Guanizuil IIA, Argentina |
|
117 |
50% |
| Ambuklao, Philippines |
|
105 |
50% |
| Kalkbult, South Africa |
|
75 |
45% |
| Dreunberg, South Africa |
|
75 |
45% |
| Agua Fria, Honduras |
|
60 |
40% |
| Chigirin, Ukraine |
|
55 |
100% |
| Boguslav, Ukraine |
|
54 |
100% |
| Rengy, Ukraine |
|
47 |
51% |
| Redsol, Malaysia |
|
47 |
100% |
| Jordan, Jordan |
|
43 |
62% |
| Linde, South Africa |
|
40 |
45% |
| Mocuba, Mozambique |
|
40 |
53% |
| Dam Nai, Vietnam |
|
39 |
100% |
| Los Prados, Honduras |
|
35 |
70% |
| Kamianka, Ukraine |
|
32 |
61% |
| Czech, Czech Republic |
|
20 |
100% |
| Maris Hydro, Philippines |
|
9 |
50% |
| Asyv, Rwanda |
|
9 |
54% |
| Total |
|
3,355 |
52% |
Capacity
MW |
Economic
interest |
Under construction |
Capacity
MW |
Economic
interest |
Project pipeline |
|
|
Sukkur, Pakistan |
150 |
75% |
|
|
|
Release
Total |
45
195 |
100%
61% |
|
|
|
|
|
|
|
|
|
Project backlog |
Capacity |
Economic |
|
|
|
|
MW |
interest |
|
|
|
|
|
|
|
|
|
South Africa |
813 |
51% |
|
|
|
Brazil |
530 |
33% |
|
|
|
Tunisia |
360 |
55% |
|
|
|
Bangladesh |
62 |
65% |
|
|
|
Mali |
33 |
64% |
|
|
|
Lesotho |
20 |
48% |
|
|
|
Total |
1,818 |
47% |
|
|
Capacity
MW |
Share in % |
| Solar |
6,644 |
45% |
| Wind |
4,910 |
33% |
| Hydro |
2,305 |
16% |
| Hybrid solutions |
616 |
4% |
| Release |
300 |
2% |
| Total |
14,775 |
100% |
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