Quarterly Report • Jul 17, 2020
Quarterly Report
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2020
Scatec Solar is a leading integrated independent solar power producer, delivering affordable, rapidly deployable and sustainable clean energy worldwide. A long- term player, Scatec Solar develops, builds, owns and operates solar power plants and has an installation track record of more than 1.6 GW. The Company has a total of 1.9 GW in operation and under construction on four continents.
With an established global presence and a significant project pipeline, the company is targeting a capacity of 4.5 GW in operation and under construction by end of 2021. Scatec Solar is headquartered in Oslo, Norway and listed on the Oslo Stock Exchange under the ticker symbol 'SSO'.
The Development & Construction segment derives its revenues from the sale of development rights and construction services delivered to power plant companies where Scatec Solar has economic interests.
The plants produce electricity for sale under long term power purchase agreements (PPAs), with state owned utilities or corporate off-takers, or under government-based feed-in tariff schemes. The average remaining PPA duration for power plants in operation is 20 years.
The Services segment comprises Operations & Maintenance (O&M) and Asset Management services provided to solar power plants where Scatec Solar has economic interests. O&M revenues are generated on the basis of 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.
Corporate consists of activities of corporate services, management and group finance.
2) Scatec Solar's share of the total estimated economic return from its subsidiaries. For projects under development the economic interest may be subject to change.
Proportionate revenues and EBITDA NOK million
| NOK million | Q2 2020 | Q1 2020 | Q2 2019 | YTD 2020 | YTD 2019 |
|---|---|---|---|---|---|
| Proportionate Financials 1) | |||||
| Revenues and other income | 925 | 866 | 1,648 | 1,791 | 3,177 |
| Power Production | 458 | 391 | 258 | 849 | 455 |
| Services | 73 | 52 | 42 | 125 | 71 |
| Development & Construction | 383 | 414 | 1,339 | 797 | 2,636 |
| Corporate | 11 | 8 | 9 | 19 | 15 |
| EBITDA 1) | 417 | 346 | 388 | 763 | 703 |
| Power Production | 374 | 331 | 216 | 705 | 380 |
| Services | 34 | 16 | 19 | 50 | 26 |
| Development & Construction | 22 | 15 | 165 | 37 | 324 |
| Corporate | -13 | -16 | -11 | -29 | -25 |
| Operating profit (EBIT) | 262 | 206 | 298 | 468 | 531 |
| Profit/(loss) | -15 | 240 | 142 | 225 | 265 |
| Net interest- bearing debt 1) | 6,254 | 8,139 | 6,005 | 6,254 | 6,005 |
| Power Production (GWh) | 406 | 349 | 198 | 755 | 331 |
| SSO proportionate share of cash flow to equity 1) | 158 | 107 | 205 | 265 | 376 |
| Consolidated Financials | |||||
| Revenues and other income | 725 | 625 | 376 | 1,350 | 702 |
| EBITDA 1) | 580 | 503 | 290 | 1,083 | 531 |
| Operating profit (EBIT) | 377 | 328 | 188 | 705 | 333 |
| Profit/(loss) | -81 | 299 | 21 | 217 | 33 |
| Net interest- bearing debt | 9,868 | 12,038 | 9,367 | 9,868 | 9,367 |
| Earnings per Share | -0.76 | 1.87 | -0.22 | 1.06 | -0.51 |
| Power Production (GWh) 2) | 738 | 623 | 346 | 1,361 | 600 |
1) See Alternative Performance Measures appendix for definition.
2) Production volume on a 100% basis of all consolidated entities, including from JV companies.
| NOK million | Q2 2020 |
Q1 2020 |
Q2 2019 |
YTD 2020 |
YTD 2019 |
|---|---|---|---|---|---|
| Revenues and other income | 925 | 866 | 1,648 | 1,791 | 3,177 |
| Gross Profit | 596 | 497 | 500 | 1,093 | 917 |
| Operating expenses | -180 | -151 | -111 | -331 | -213 |
| EBITDA | 417 | 346 | 388 | 763 | 703 |
| EBITDA margin | 45% | 40% | 24% | 43% | 22% |
| D&A and impairment | -155 | -140 | -90 | -295 | -172 |
| EBIT | 262 | 206 | 298 | 468 | 531 |
| Cash flow to equity 1) | 158 | 107 | 205 | 265 | 376 |
Proportionate revenues and EBITDA NOK million
1) See Alternative Performance Measures appendix for definition.
Power Production – Proportionate financials
| NOK million | Q2 2020 |
Q1 2020 |
Q2 2019 |
YTD 2020 |
YTD 2019 |
|---|---|---|---|---|---|
| Revenues and other income | 458 | 391 | 258 | 849 | 455 |
| Operating expenses | -84 | -60 | -42 | -144 | -75 |
| EBITDA 1) | 374 | 331 | 216 | 705 | 380 |
| EBITDA margin 1) | 82% | 85% | 84% | 83% | 84% |
| D&A and impairment | -144 | -125 | -83 | -269 | -150 |
| EBIT | 230 | 206 | 133 | 436 | 230 |
| Cash flow to equity 1) | 135 | 105 | 78 | 240 | 136 |
1) See Alternative Performance Measures appendix for definition.
In the second quarter, proportionate revenues decreased compared to the same quarter last year due to lower construction activity only partly offset by higher power production revenues.
The EBITDA increased by 7% compared to the same period last year and by 21% compared to the previous quarter, primarily driven by new solar power plants starting commercial operation.
With a larger portfolio of power plants in operation, both revenues and EBITDA increased in the Power Production segment, while decreasing in the Development & Construction segment due to lower construction activity. This continued change in segment mix resulted in a higher EBITDA margin for the Group compared to previous periods.
Operating expenses and depreciation increased, mainly due to new solar power plants starting operation.
At the end of second quarter, power plants with a total capacity of 1,505 MW were in operation. The total capacity increased by 140 MW from the end of previous quarter reflecting completion of the 258 MW solar power plant in Upington, South Africa and the 54 MW Boguslav plant in Ukraine.
Production reached 406 GWh in the second quarter compared to 349 GWh in the previous quarter and 198 GWh in the same quarter last year, mainly explained by added capacity.
Operating expenses and depreciations increased due to the added capacity. The reduced EBITDA margin compared to the quarter is primarily reflecting seasonal production variations in South Africa and Malaysia.
See additional information on page 14 for a specification of financial performance for each individual power plant company.
Revenues and profitability in first half 2020 are explained by the developments referred to above.
| NOK million | Q2 2020 |
Q1 2020 |
Q2 2019 |
YTD 2020 |
YTD 2019 |
|---|---|---|---|---|---|
| Revenues and other income | 73 | 52 | 42 | 125 | 71 |
| Operating expenses | -39 | -36 | -24 | -75 | -46 |
| EBITDA | 34 | 16 | 19 | 50 | 26 |
| EBITDA margin 1) | 47% | 31% | 44% | 40% | 36% |
| D&A and impairment | -1 | -1 | -1 | -2 | -2 |
| EBIT | 33 | 15 | 18 | 49 | 24 |
| Cash flow to equity 1) | 27 | 13 | 15 | 40 | 20 |
Revenues from Services increased by 73% from the same period last year due to new plants starting operations in Ukraine, Egypt and South Africa. The revenues in second quarter also includes a NOK 14 million catch up of service revenues, following a clarification of certain contracts in the portfolio which allows for earlier revenue recognition than previously anticipated.
Operating expenses increased compared to the previous quarter and the second quarter last year, primarily due to the new plants in operation. The operating expenses mainly constitute fixed expenses, covering personnel and recurring maintenance cost reflecting fixed maintenance schedules.
Revenues and profitability in first half 2020 are explained by the developments referred to above.
NOK million Q2 2020 Q1 2020 Q2 YTD 2020 2019 Revenues and other income 383 414 1,339 797 2,636 Gross Profit 53 46 190 99 376 Gross Margin 1) 14% 11% 14% 12% 14% Operating expenses -32 -31 -25 -63 -52 EBITDA 22 15 165 37 324 D&A and impairment -4 -10 -5 -14 -18 EBIT 17 5 160 22 306 Cash flow to equity 1) 19 13 130 32 258
Development & Construction (D&C) – Proportionate financials
1) See Alternative Performance Measures appendix for definition. 2) Figures in brackets refer to same quarter previous years.
D&C revenues in second quarter were generated by the projects in Malaysia, South Africa, Ukraine and Argentina. Accumulated progress across ongoing construction projects at the end of the second quarter was 96%.
Construction was completed for an additional 54 MW in Ukraine and 86 MW in South Africa. Further, the second solar hybrid project for a United Nations (UN) organisation in South Sudan was completed. Limited construction activities remain for the ongoing projects in Malaysia, Argentina and Ukraine.
The 14% gross margin for the quarter reflects the current mix of projects under construction and under development.
Operating expenses comprised of approximately NOK 23 million (17) for early stage development of new projects and NOK 9 million (8) related to the construction business.
Compared to same quarter last year the EBITDA is reduced primarily due to lower construction activity.
Revenues and profitability in first half 2020 are explained by the developments referred to above.
| NOK million | Q2 2020 |
Q1 2020 |
Q2 2019 |
YTD 2020 |
YTD 2019 |
|---|---|---|---|---|---|
| Revenues and other income | 11 | 8 | 9 | 19 | 15 |
| Operating expenses | -24 | -24 | -20 | -48 | -40 |
| EBITDA | -13 | -16 | -11 | -29 | -25 |
| D&A and impairment | -5 | -5 | -2 | -10 | -3 |
| EBIT | -18 | -21 | -13 | -39 | -29 |
| Cash flow to equity 1) | -23 | -24 | -18 | -47 | -38 |
Corporate – Proportionate financials
1) See Alternative Performance Measures appendix for definition.
Revenues in the corporate segment refers to management fees charged to the other operating segments for corporate services rendered across the Group.
Operating expenses increased by NOK 4 million compared with the same quarter last year, reflecting the strengthening of corporate functions to support the Company's growth.
The estimated production for third quarter and full year 2020 is based on production from the 1,505 MW in operation at the end of second quarter 2020.
| GWh | Q2 2020 | Q3 2020E | 2020E |
|---|---|---|---|
| Proportionate | 406 | 420 - 435 | 1,580 – 1,630 |
| 100% basis | 738 | 770 - 800 | 2,900 – 3,000 |
Revenues in the Services segment are expected to reach approximately NOK 240 million in 2020 with an EBITDA margin of around 35%.
D&C revenues and margins are dependent on progress on development and construction projects.
At the end of second quarter, the portfolio under construction represents awarded Development & Construction contracts with a value of about NOK 1.1 billion. The remaining, not booked, contract value at the end of second quarter 2020 was about NOK 45 million.
The portfolio under construction was 96% completed at the end of second quarter, hence revenues from D&C are expected to be lower in second half of 2020. The revenues are estimated to increase significantly from first quarter 2021 when projects currently in backlog move into construction.
Corporate costs are expected to remain at current levels as the corporate functions have been strengthened over the recent quarters.
Scatec Solar has throughout second quarter continued to follow and implement the respective national authorities' advice and recommendations regarding COVID-19. The Company has taken precautionary measures at all sites and locations to limit the spread of the virus, keep people safe, and ensure continued stable operations of the power plants. Strict travel restrictions are imposed for all employees globally, and office employees have mainly been working remotely without any impact on regular business processes.
In all countries where Scatec Solar has operating assets, power supply is defined as critical infrastructure and power production and general maintenance continue as normal. The Company has to date experienced limited impact of COVID-19 on operating assets or on delivery of power to customers. All solar plants require few operators and are remotely monitored and supported 24/7 by the Company's global Control & Monitoring Centre in Cape Town, South Africa. Scatec Solar has robust contingency plans in place to mitigate any potential operational issues.
The Company is selling all production from the portfolio of power plants to state owned utilities, normally supported by government guarantees, under long term fixed price contracts with USD, MYR and ZAR being the predominant currencies. The long term contracted cash flows amounts to more than NOK 56 billion over the next 20 years.
Scatec Solar has experienced some further delays of payments in Honduras, mainly due to the COVID-19 outbreak. Including some amount in Ukraine, the proportionate share of overdue payments increased by NOK 50 million during the second quarter to NOK 111 million. Based on discussions with the customers, Scatec Solar expects the full amounts to be paid in the future, hence no allowance is recognised in the second quarter financials. The delayed amounts are also secured by sovereign guarantees and the collection risk is therefore considered to be low. Please refer to note 16 in the Annual Report 2019 for further information on aging of trade receivables.
Scatec Solar's portfolio of 399 MW under construction is being completed during second half of 2020. Travel constraints and local restrictions are still affecting commissioning and testing of some of the new solar plants. No further material costs are expected to be associated with the delays.
The COVID-19 situation continues to impact some of the markets where Scatec Solar develops new projects, as some countries are still in lock-down or have restrictions on movement. A number of project development activities requires physical presence and the Company is expecting some temporary delays in maturing projects currently in backlog and pipeline.
The COVID-19 pandemic triggered a global economic slowdown, impacting all industries. With power supply defined as critical infrastructure solar has not been amongst the hardest hit sectors. Construction has continued in several countries even under lock down. Even though market analysts have cut global solar demand forecasts for 2020, the electricity demand is expected to continue growing in emerging markets. As some of the near-term growth has been pushed back in time, Scatec Solar might be impacted by delays in renewable energy investments in the short term. In the medium- and longer term, the renewable energy market is expected to see continued growth with solar market volumes expected to grow by 23-34% from 2019 to 2022 according to Bloomberg New Energy Finance (BNEF).
Earlier this year, Scatec Solar further strengthened its financial position by securing a new credit facility of USD 75 million and refinancing the existing USD 90 million revolving credit facility. In May, the Company raised NOK 1,968 million in gross proceeds through a private placement to fund further investments in renewable power plants.
In accordance with the overall development within the renewable energy sector it is conceivable that Scatec Solar will engage in other renewable energy technologies than solar energy, hence the Articles of Association have been amended to accommodate for a broader scope of future renewable business. As addressed at the first quarter presentation 2020, the Company is assessing certain M&A opportunities in the current environment.
Scatec Solar's long-term targets remain firm with the Company targeting a portfolio of projects under construction and in operation of 4.5 GW by end 2021. The solid track record and market position is supported by a robust financial platform and enables pursual of attractive project opportunities for further growth in emerging markets.
| NOK million | Q2 2020 |
Q1 2020 |
Q2 2019 |
YTD 2020 |
YTD 2019 |
|---|---|---|---|---|---|
| Revenues | 725 | 625 | 376 | 1,350 | 702 |
| EBITDA | 580 | 503 | 290 | 1,083 | 531 |
| Operating profit (EBIT) | 377 | 328 | 188 | 705 | 333 |
| Net financial items | -454 | 82 | -162 | -372 | -281 |
| Profit before income tax | -77 | 410 | 27 | 333 | 52 |
| Profit/(loss) for the period | -81 | 299 | 21 | 217 | 33 |
| Profit/(loss) to Scatec Solar | -98 | 235 | -25 | 137 | -58 |
| Profit/(loss) to non-controlling interests |
17 | 64 | 45 | 80 | 91 |
Revenues from power sales were up 93% compared to the same quarter last year. The increase in revenues is mainly explained by the grid connection of new plants in Malaysia, Egypt, Ukraine and Mozambique. For the remaining power plants, the change in production volume from last year is driven by regular operational and seasonal variations.
Net income from the joint venture investments in Brazil and Argentina is NOK 3 million (-7) 1) driven by production in Brazil and construction in Argentina.
Following the enlarged portfolio of power producing assets, the profitability (EBITDA) has increased in both relative and absolute terms compared to the second quarter last year. The growth in operating expenses compared to second quarter last year is mainly explained by the increased asset base in operation.
Consolidated operating expenses amounted to NOK 145 million (86) in the second quarter. This consists of approximately NOK 96 million (45) for operation of existing power plants, NOK 22 million (17) for early stage development of new projects, NOK 9 million (8) related to construction and NOK 18 million (13) of corporate expenses (excluding eliminated intersegment charges).
| NOK million | Q2 2020 |
Q1 2020 |
Q2 2019 |
YTD 2020 |
YTD 2019 |
|---|---|---|---|---|---|
| Financial income | 16 | 12 | 19 | 28 | 35 |
| Financial expenses | -301 | -250 | -177 | -552 | -317 |
| Foreign exchange gains/(loss) | -169 | 320 | -4 | 151 | 1 |
| Net financial items | -454 | 82 | -162 | -372 | -281 |
Financial expenses in the second quarter mainly consist of interest expenses, which comprise of interest on non-recourse financing of NOK 260 million (127), and corporate funding of NOK 19 million (16). See note 4 and 5 for further information on financing.
The currency gains and losses of the group are primarily driven by changes in the NOK value of Scatec Solar ASA's shareholder loans to project companies which are provided in the respective projects' currencies. The quarter's net foreign currency loss increased from NOK 4 million in the second quarter of 2019 to NOK 169 million in the second quarter of 2020, compared with a net gain of NOK 320 million in the first quarter of 2020. The gains primarily constitute unrealized gains on long term inter-company shareholders loans from Scatec Solar ASA to project companies and are driven by the strengthening of the NOK against the USD with approximately 7% compared with previous quarter.
The effective tax rate was negative 5% in the second quarter and 35% for the first half of 2020. The effective tax rate fluctuates from quarter to quarter based on construction progress, currency effects and level of profit in in JVs and associates which are reported net after tax. The underlying tax rates in the companies in operation are in the range of 0% to 33%. In some markets, Scatec Solar receives special tax incentives intended to promote investments in renewable energy. For further details, refer to note 6.
Non-controlling interests (NCI) represent financial investors in solar power plants. The allocation of profits between NCI and Scatec Solar is impacted by the fact that NCI only have shareholdings in solar power plants, while Scatec Solar also carries the cost of project development, construction, operation & maintenance and corporate functions. The allocation of profits is also impacted by unrealised currency gains and losses on shareholder loans from Scatec Solar ASA to project companies which are profits fully allocated to Scatec Solar. In the second quarter of 2020 the profits to Scatec Solar was particularly affected by the weakening of the USD against the NOK.
During the second quarter, the NOK depreciated against USD, EUR and MYR but appreciated against ZAR and BRL, compared to the average rates for the first quarter. On a net basis this negatively affected consolidated revenues by approximately NOK 3 million compared to the previous quarter, while the net impact on net profit in the quarter was negative with approximately NOK 1 million.
Following the movements in currencies in the second quarter, the Group has recognised a foreign currency translation loss of NOK 176 million (-179) in other comprehensive income related to the conversion of the subsidiaries' statements of financial position from the respective functional currencies to the Group's reporting currency.
Scatec Solar has not hedged the currency exposure on the expected cash distributions from the power plant companies.
| NOK million | 30 JUNE 2020 |
30 JUNE 2019 |
|---|---|---|
| Property, plant and equipment | 17,008 11,293 | |
| Other non-current assets | 1,624 | 1,517 |
| Total non-current assets | 18,632 12,811 | |
| Other current assets | 1,601 | 2,306 |
| Cash and cash equivalents | 4,069 | 2,375 |
| Total current assets | 5,670 | 4,681 |
| Total assets | 24,302 17,492 |
The 45% net increase of non-current assets is mainly driven by the new plants in South Africa, Mozambique, Egypt, Ukraine and Malaysia. This is partly offset by depreciation of the operating power plants.
Other current assets increased by 31% compared to second quarter 2019, mainly driven by working capital changes related to construction projects. The cash balance has increased with NOK 1,694 million since second quarter 2019, primarily following the private placement completed during the second quarter 2020 and third quarter 2019. In addition, the Group had NOK 1,646 million in available undrawn credit facilities at the end of the second quarter. See note 5 for a detailed breakdown of cash balances as well as an overview of movement of cash at the Recourse Group level.
In the consolidated statement of financial position, the solar power plant assets are valued at the Group's cost, reflecting elimination of gross margins generated through the project development and construction phase. At the same time, the ring-fenced non-recourse debt held in power plant assets is consolidated at full value. These accounting principles reduce the consolidated book equity ratio.
| NOK million | 30 JUNE 2020 |
30 JUNE 2019 |
|---|---|---|
| Equity | 5,699 | 2,123 |
| Non-current non-recourse project financing | 11,875 10,609 | |
| Other non-current liabilities | 3,505 | 2,350 |
| Total non-current liabilities | 15,380 12,959 | |
| Current non-recourse project financing | 1,315 | 389 |
| Other current liabilities | 1,908 | 2,021 |
| Total current liabilities | 3,223 | 2,410 |
| Total liabilities | 18,603 15,369 | |
| Total equity and liabilities | 24,302 17,492 | |
| Book equity ratio | 23.5 % | 12.1% |
Total equity increased by NOK 3,576 million since second quarter 2019, mainly driven by the private placement during the second quarter 2020 and the third quarter 2019. The book equity ratio almost doubled from the same quarter last year. The increase is driven by the private placement, partly offset by increased total balance sheet value. The current and non-current non-recourse project finance debt increased by NOK 2,193 million from the second quarter 2019 following the completion of new solar plants.
The equity to capitalisation ratio for the Recourse Group 1) (excluding the non-recourse financed project entities) as defined in the corporate bond agreement was 91% at the end of the second quarter. See note 5 for more information on the corporate bond agreement.
Net cash flow from consolidated operating activities amounted to NOK 200 million (-278) in the second quarter of 2020, compared to the EBITDA of NOK 580 million. The difference is primarily explained by changes in working capital, mainly related to power plants under construction.
Net cash flow from consolidated investing activities was NOK -564 million (-1,189), driven by further investment in new power plants as well as development of project pipeline and backlog.
Net cash flow from financing activities was NOK 1,399 million (1,037), driven primarily by increased share capital through a private placement, partly offset by loan- and interest payments.
Refer to note 5 for a detailed cash overview.
Scatec Solar's "proportionate share of cash flow to equity" 1), is an alternative performance measure that seeks to estimate the Group's ability to generate funds for equity investments in new solar power plant projects and/or for shareholder dividends over time.
| NOK million | Q2 2020 |
Q1 2020 |
Q2 2019 |
YTD 2020 |
YTD 2019 |
|---|---|---|---|---|---|
| Power Production | 135 | 105 | 78 | 240 | 136 |
| Services | 27 | 13 | 15 | 40 | 20 |
| Development & Construction | 19 | 13 | 130 | 32 | 258 |
| Corporate | -23 | -24 | -18 | -47 | -38 |
| Total | 158 | 107 | 205 | 265 | 376 |
The increased cash flow to equity in the Power Production segment compared to previous quarter is primarily explained by new power plants reached commercial operation, partly offset by higher debt repayments in line with the agreed repayment schedule on the non-recourse financing loans.
The cash flow to equity in Services is influenced by commencement of new contracts, seasonal variations and a NOK 14 million catch up of service revenues, following a clarification of certain contracts in the portfolio which allows for earlier revenue recognition than previously anticipated.
The cash flow to equity in the D&C segment is driven by the portfolio of construction projects currently being executed. The cash flow to equity for the Corporate segment primarily relates to operating expenses and payments of interest.
In the second quarter of 2020, the power plant companies has distributed a total of NOK 216 million to Scatec Solar ASA.
Scatec Solar has extensive policies and procedures in place as part of its operating system to actively manage risks related to the various parts of the Company's operations. Key policies are reviewed and approved by the Board of Directors annually. The regular follow up of these policies is carried out by Scatec Solar's Management Team, Finance, Legal and other relevant functions. For further information refer to the 2019 Annual Report (the Board of Directors' report and note 5).
Forward-looking statements reflect current views about future events and are, by their nature, subject to significant risk and uncertainties because they relate to events and depend on circumstances that will occur in the future. Although Scatec Solar believes that these assumptions were reasonable when made, the Group cannot assure that the future results, level of activity or performances will meet these expectations.
| Project stage | Q2 2020 Capacity 1) (MW) |
Q1 2020 Capacity 1) (MW) |
|---|---|---|
| In operation | 1,505 | 1,505 |
| Under construction | 399 | 399 |
| Project backlog 2) | 520 | 520 |
| Project pipeline 2) | 5,620 | 5,320 |
Project backlog is defined as projects with a secure off-take agreement and assessed to have more than 90% likelihood of reaching financial close and subsequent realisation.
The table below shows the projects under construction and in backlog with details on capital expenditure and annual production. For extensive information about the projects under construction and in backlog, refer to our website www.scatecsolar.com/asset-portfolio-overview/.
| Location | Capacity (MW) | Currency | CAPEX (100%, million) |
Annual production (100%, GWH) |
Debt leverage | SSO economic interest |
|---|---|---|---|---|---|---|
| In operation | 1,505 | NOK 3) | 20,233 | 3,093 | 72% | 58% |
| Under construction | ||||||
| Ukraine portfolio | 235 | EUR | 212 | 285 | 66% | 95% |
| Guanizuil, Argentina | 117 | USD | 103 | 310 | 60% | 50% |
| Redsol, Malaysia | 47 | MYR | 200 | 67 | 75% | 100% |
| Total under construction | 399 | NOK 3) | 3,752 | 662 | 82% | |
| Backlog | ||||||
| Tunisia | 360 | USD | 240 | 903 | 70% | 65% |
| Ukraine | 65 | EUR | 74 | 65 | 70% | 65% |
| Bangladesh | 62 | USD | 68 | 86 | 70% | 65% |
| Mali | 33 | EUR | 50 | 60 | 75% | 64% |
| Total backlog | 520 | NOK 3) | 4,351 | 1,141 | 65% | |
| Total | 2,424 | NOK 3) | 28,336 | 4,896 | 63% |
Total annual revenues from the 2,424 MW in operation, under construction and in backlog is expected to reach about NOK 4,300 million (on 100% basis) based on 20-25-year Power Purchase Agreements (PPAs). Scatec Solar will build, own and operate all power plants in the project backlog and pipeline.
Scatec Solar's project portfolio under construction is close to completion. Due to the COVID-19 outbreak, travel constraints and local regulations are mainly impacting commissioning and testing of the new solar plants. The final effects on completion
dates are still uncertain, however the Company currently estimates that all power plants will reach commercial operation dates (COD) in the second half of 2020.
| Project | Capacity (MW) | Status |
|---|---|---|
| Progressovka, Ukraine | 148 | PV plant completed – COD expected 2H 2020 |
| Guanizuil, Argentina | 117 | PV plant completed – COD expected 2H 2020 |
| Chigirin, Ukraine | 55 | PV plant completed – COD expected 2H 2020 |
| Redsol, Malaysia | 47 | PV plant completed – COD expected 2H 2020 |
| Kamianka, Ukraine | 32 | PV plant completed - COD expected 2H 2020 |
| Total | 399 |
There has been no movements in the project backlog during the second quarter, leaving the backlog at 520 MW.
The COVID-19 situation is in general impacting the markets in which Scatec Solar develops projects. Many countries are still in lock-down, or continued restrictions on movement, and international travel is still very limited. This will to a varying degree impact project development as certain activities requires physical presence. The progress that can be made for projects in backlog and pipeline is therefore impacted and delays in maturing some of these projects are expected.
In December 2019, Scatec Solar was awarded three solar power plant projects in Tunisia totalling 360 MW. The three projects will hold 20 years of PPAs with Société Tunisienne de l'Electricité et du Gaz (STEG).
Scatec Solar will be the lead equity investor in the projects. The company will also be the Engineering, Procurement and Construction (EPC) provider and provide Operation & Maintenance as well as Asset Management services to the power plants.
In Ukraine, the government is evaluating the current feed-in tariff scheme and working on the transition to a tender scheme for renewable energy.
The 65 MW Kherson project is situated at a very good site, is fully developed and ready to be built from a permitting perspective. The project is well positioned to participate in upcoming tenders.
The Nilphamari project was moved into backlog in 2019. The power plant will hold a 20 years PPA with the Bangladesh Power Development Board (BPDB). Total project costs are estimated to USD 78 million, expected to be funded with 75% debt and 25% equity. Lenders have been selected and are mandated.
Scatec Solar will finance, construct, own and operate the project. The project is being developed with a local development partner and with FMO, the Dutch development bank.
In July 2015, Scatec Solar and development partners, International Finance Corporation (IFC) and Power Africa 1, signed a 25-year PPA with Energie du Mali (EDM) for the Segou project. IFC and African Development Bank (AfDB) will provide the non-recourse project finance for the project.
During 2019, the project signed an amendment to the Concession Agreement with the Ministry of Finance and the Ministry of Energy and the amendment to the PPA with EDM. The main remaining step is to finalise agreements with lenders. Scatec Solar will build, own and operate the solar power plant with a 64% shareholding. IFC Infraventures and Africa Power will hold the remaining part of the equity.
| Location | Q2 2020 Capacity (MW) |
Q1 2020 Capacity (MW) |
|---|---|---|
| Latin America | 1,000 | 998 |
| Africa | 2,615 | 2,357 |
| Europe & Central Asia | 430 | 430 |
| South East Asia | 1,575 | 1,535 |
| Total pipeline | 5,620 | 5,320 |
In addition to projects in backlog Scatec Solar holds a solid pipeline of projects totalling 5,620 MW. The pipeline has developed favourably over the last year through systematic project development efforts in a number of markets across four key regions where both governments and corporate off-takers are seeking to source solar energy.
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 have typically been secured and Scatec Solar is in a position to participate in bilateral negotiations for a long-term power sales agreement with an off-taker, feed-intariff schemes, or tender processes.
Scatec Solar's development efforts in Latin America is now mainly focused on Brazil, where Scatec Solar is partnering with Equinor. Selected opportunities are also being pursued in other markets.
Brazil is a well-established market for renewable energy with about 2.7 GW of utility scale solar capacity installed. Scatec Solar has secured rights to a number of projects in Brazil and is seeking to secure power purchase agreements through upcoming tenders and negotiations with corporate off-takers.
Scatec Solar holds sites representing more than 1.0 GW ready to be bid in upcoming tender rounds in South Africa. The new integrated Resource Plan has been launched and based on this a new tender ("round 5") under the REIPPP Programme is expected to be launched during first half of 2021. Further, the Department of Mineral Resource and Energy has launched a Request for Information for a Risk Mitigation Power Procurement Programme in response to the current critical energy supply situation in the country.
The Department has indicated that they might procure 2-3 GW of power under this risk mitigation process and the tender is expected to be launched during second half of 2020.
In addition, Scatec Solar is developing a broad pipeline of projects across a number of markets, including Egypt, Nigeria, Cameroon, Kenya, Angola and several other countries on the continent. Some of the projects are based on bi-lateral negotiations with governments and state-owned utilities, while Scatec Solar is also selectively participating in tenders.
Through its Release concept, Scatec Solar has also increased its efforts in securing agreements with private companies and Non-Governmental Organisations, like the UN. These are typically smaller projects in the range of 5 to 20 MW and Scatec Solar is currently actively working on a portfolio of about 300 MW of this type of projects on the African continent.
Ukraine, Poland and Pakistan are key markets currently being pursued by Scatec Solar in Europe and Central Asia.
Ukraine is committed to integrate with the EU energy system with ongoing electricity market reforms. Scatec Solar is working on a portfolio of projects in Ukraine to participate in the expected auction system that likely will be implemented during 2020.
In Pakistan, the 150 MW project portfolio in Sindh were during first quarter 2020 awarded a "costs plus tariff" of 36.7 USD/MWh by the National Energy Power Regulatory Authority (NEPRA). This is a reduction in the tariff level from last award and Scatec Solar and the local partner, Nizam Energy, are now investigating on how to realize this project.
Malaysia, Bangladesh, Indonesia and Vietnam are prioritised markets for Scatec Solar in South East Asia. In Malaysia it is expected that the new government will maintain the same level of ambition for the renewable energy sector as before.
In Bangladesh, Scatec Solar is working on a project development portfolio of about 150 MW. These projects are partly based on bi-lateral negotiations and partly related to tender processes issued by the authorities.
Scatec Solar has signed up several new projects in Vietnam during 2020 and the pipeline stands at more than 1,000 MW. These are projects that fit well with the stated objectives of the authorities in terms of the future implementation of renewable energy in the country.
| NOK million | Czech Republic |
South Africa Round 1/2 1) |
Honduras | Jordan | Brazil | Malaysia | Egypt | Ukraine | Mozambique | South Africa Round IV 2) |
Other 3) | Total |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Revenues | 48 | 66 | 29 | 31 | 20 | 86 | 91 | 38 | 11 | 33 | 4 | 458 |
| OPEX | -3 | -12 | -4 | -11 | -4 | -12 | -12 | -3 | -3 | -8 | -12 | -84 |
| EBITDA | 45 | 55 | 25 | 20 | 16 | 74 | 79 | 35 | 8 | 25 | -8 | 374 |
| EBITDA margin | 94% | 82% | 85% | 66% | 82% | 87% | 86% | 91% | 69% | 77% | -216% | 82% |
| Net interest expenses 4) |
-5 | -25 | -4 | -8 | -1 | -28 | -30 | -7 | -3 | -18 | -1 | -129 |
| Normalised loan repayments 4) |
-8 | -17 | -6 | -8 | -2 | -29 | -9 | -9 | -3 | - | -1 | -93 |
| Normalised income tax payments 4) |
-6 | -4 | - | - | -1 | -1 | -6 | -3 | - | 2 | 2 | -17 |
| Cash flow to equity | 27 | 9 | 15 | 4 | 13 | 16 | 34 | 16 | 1 | 10 | -8 | 135 |
| SSO economic interest |
100% | 45% | 51% | 62% | 44% | 100% | 51% | 91% | 53% | 46% | ||
| Net production (GWh) |
9 | 35 | 20 | 19 | 33 | 71 | 129 | 22 | 8 | 57 | 2 | 406 |
1) Kalkult, Linde and Dreunberg projects
2) Upington projects
3) Includes Rwanda
4) See Alternative Performance Measures appendix for definition
| NOK million | Czech Republic |
South Africa Round 1/2 1) |
Honduras | Jordan | Brazil | Malaysia | Egypt | Ukraine | Mozambique | South Africa Round IV 2) |
Other 3) | Total |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Revenues | 43 | 70 | 26 | 28 | 23 | 46 | 19 | - | - | - | 2 | 258 |
| OPEX | -3 | -12 | -4 | -3 | -5 | -5 | -2 | - | - | - | -9 | -42 |
| EBITDA | 40 | 58 | 23 | 26 | 19 | 41 | 17 | - | - | - | -7 | 216 |
| EBITDA margin | 94% | 82% | 88% | 92% | 82% | 90% | 87% | - | - | - | -406% | 84% |
| Net interest expenses 4) |
-5 | -28 | -3 | -7 | -9 | -16 | -5 | - | - | - | -1 | -73 |
| Normalised loan repayments 4) |
-7 | -17 | -6 | -7 | -3 | -15 | - | - | - | - | - | -55 |
| Normalised income tax payments 4) |
-5 | -3 | - | -1 | - | -1 | -2 | - | - | - | - | -10 |
| Cash flow to equity | 24 | 9 | 14 | 12 | 8 | 9 | 10 | - | - | - | -8 | 78 |
| SSO economic interest |
100% | 45% | 51% | 62% | 44% | 100% | 51% | - | - | - | ||
| Net production (GWh) |
9 | 35 | 21 | 19 | 27 | 46 | 40 | - | - | - | 2 | 198 |
1) Kalkult, Linde and Dreunberg projects
2) Upington projects
3) Includes Rwanda
4) See Alternative Performance Measures appendix for definition
| NOK million | Czech Republic |
South Africa Round 1/2 1) |
Honduras | Jordan | Brazil | Malaysia | Egypt | Ukraine | Mozambique | South Africa Round IV 2) |
Other 3) | Total |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Revenues | 71 | 157 | 60 | 51 | 41 | 181 | 164 | 46 | 25 | 46 | 7 | 849 |
| OPEX | -5 | -22 | -8 | -13 | -9 | -21 | -23 | -5 | -5 | -12 | -21 | -144 |
| EBITDA | 66 | 134 | 52 | 38 | 32 | 161 | 141 | 41 | 20 | 34 | -14 | 705 |
| EBITDA margin | 92% | 86% | 86% | 74% | 79% | 89% | 86% | 89% | 79% | 75% | -215% | 83% |
| Net interest expenses 4) |
-10 | -52 | -7 | -15 | -10 | -56 | -62 | -10 | -7 | -22 | -2 | -253 |
| Normalised loan repayments 4) |
-17 | -35 | -13 | -16 | -4 | -57 | -17 | -13 | -6 | - | -1 | -181 |
| Normalised income tax payments 4) |
-7 | -13 | - | - | -1 | -4 | -9 | -3 | -1 | 2 | 4 | -31 |
| Cash flow to equity | 33 | 34 | 32 | 6 | 17 | 44 | 54 | 15 | 6 | 14 | -14 | 240 |
| SSO economic interest |
100% | 45% | 51% | 62% | 44% | 100% | 51% | 91% | 53% | 46% | ||
| Net production (GWh) |
13 | 81 | 43 | 32 | 63 | 152 | 238 | 28 | 18 | 84 | 3 | 755 |
1) Kalkult, Linde and Dreunberg projects
2) Upington projects
3) Includes Rwanda
4) See Alternative Performance Measures appendix for definition
| NOK million | Czech Republic |
South Africa Round 1/2 1) |
Honduras | Jordan | Brazil | Malaysia | Egypt | Ukraine | Mozambique | South Africa Round IV 2) |
Other 3) | Total |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Revenues | 63 | 162 | 53 | 46 | 40 | 68 | 19 | - | - | - | 4 | 455 |
| OPEX | -5 | -20 | -8 | -6 | -10 | -8 | -2 | - | - | - | -18 | -75 |
| EBITDA | 58 | 141 | 45 | 42 | 30 | 60 | 17 | - | - | - | -13 | 380 |
| EBITDA margin | 92% | 87% | 86% | 90% | 76% | 89% | 87% | - | - | - | -287% | 84% |
| Net interest expenses 4) |
-10 | -55 | -6 | -14 | -13 | -23 | -5 | - | - | - | -1 | -126 |
| Normalised loan repayments 4) |
-14 | -32 | -10 | -13 | -5 | -22 | - | - | - | - | -1 | -98 |
| Normalised income tax payments 4) |
-5 | -14 | - | -1 | - | -1 | -2 | - | - | - | 2 | -20 |
| Cash flow to equity | 29 | 41 | 29 | 14 | 13 | 13 | 10 | - | - | - | -13 | 136 |
| SSO economic interest |
100% | 45% | 51% | 62% | 44% | 100% | 51% | - | - | - | ||
| Net production (GWh) |
13 | 83 | 43 | 31 | 52 | 66 | 40 | - | - | - | 4 | 331 |
1) Kalkult, Linde and Dreunberg projects.
2) Upington projects.
3) Includes Rwanda.
4) See Alternative Performance Measures appendix for definition.
| NOK million | Czech Republic |
South Africa Round 1/2 1) |
Honduras | Jordan | Brazil | Malaysia | Egypt | Ukraine | Mozambique | South Africa Round IV 2) |
Other 3) | Total |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Revenues | 118 | 350 | 105 | 92 | 101 | 228 | 127 | 12 | 23 | - | 7 | 1,163 |
| OPEX | -10 | -40 | -17 | -11 | -25 | -27 | -21 | -2 | -6 | - | -29 | -188 |
| EBITDA | 108 | 309 | 89 | 81 | 76 | 201 | 106 | 10 | 17 | - | -22 | 975 |
| EBITDA margin | 92% | 88% | 84% | 88% | 75% | 88% | 83% | 82% | 75% | - | - | 84% |
| Net interest expenses 4) |
-19 | -112 | -14 | -29 | -20 | -80 | -43 | -7 | -8 | - | -2 | -333 |
| Normalised loan repayments 4) |
-28 | -65 | -21 | -26 | -14 | -67 | -4 | -3 | - | - | -1 | -229 |
| Normalised income tax payments 4) |
-10 | -35 | - | -1 | -2 | -6 | -6 | 1 | - | - | 8 | -51 |
| Cash flow to equity | 51 | 97 | 54 | 26 | 40 | 48 | 53 | 1 | 9 | - | -17 | 362 |
| SSO economic interest |
100% | 45% | 51% | 62% | 44% | 100% | 51% | 91% | 53% | - | ||
| Net production (GWh) |
23 | 177 | 83 | 62 | 118 | 205 | 225 | 8 | 18 | - | 7 | 926 |
1) Kalkult, Linde and Dreunberg projects
2) Upington projects
3) Includes Rwanda
4) See Alternative Performance Measures appendix for definition
| Solar plants in operation | Solar plants under construction | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| NOK million | Czech repub. |
South Africa Round 1/2 |
Rwa nda |
Hon duras |
Jordan Malaysia | Brazil | Egypt | Mozam bique |
Ukraine | South Africa Round IV |
Malaysia | Ukraine | Argentina | Total | |
| Project equity 1) | 159 | 11 | 21 | 781 | 228 | 478 | 219 | 304 | 97 | 288 | 261 | 97 | 920 | 224 | 4,088 |
| Total assets | 588 | 1,094 | 97 | 1,016 | 786 | 2,776 | 583 | 2,466 | 459 | 870 | 1,373 | 448 | 2,280 | 600 | 15,435 |
| PP&E | 446 | 933 | 87 | 835 | 605 | 2,670 | 508 | 2,015 | 337 | 736 | 1,230 | 399 | 2,011 | 543 | 13,356 |
| Cash | 56 | 105 | 3 | 42 | 133 | 464 | 29 | 303 | 82 | 15 | 64 | 4 | 44 | 4 | 1,349 |
| Gross interest bearing debt 2) |
355 | 847 | 68 | 192 | 485 | 2,083 | 320 | 1,660 | 277 | 539 | 1,007 | 264 | 435 | 327 | 8,859 |
| Net interest bearing debt 2) |
299 | 741 | 65 | 150 | 351 | 1,619 | 291 | 1,357 | 195 | 524 | 942 | 260 | 391 | 323 | 7,510 |
| Net working capital 2) |
-24 | -46 | -3 | 86 | -74 | -639 | -21 | -184 | - | -105 | -65 | -10 | -702 | -314 | -2,102 |
| SSO economic interest |
100% | 45% | 54% | 51% | 62% | 100% | 44% | 51% | 53% | 77% | 46% | 100% | 95% | 50% |
1) See Other definitions appendix for definition
2) See Alternative Performance Measures appendix for definition
| NOK million | Total proportionate Solar plants |
Residual ownership interest |
Less equity consolidated entities |
PP overhead, D&C, Services, Corporate, eliminations |
Consolidated |
|---|---|---|---|---|---|
| Project equity 1) | 4,088 | 2,079 | -947 | 479 | 5,699 |
| Total assets | 15,435 | 8,981 | -2,533 | 2,419 | 24,302 |
| PP&E-in solar projects | 13,356 | 7,528 | -2,248 | -1,848 | 16,788 |
| Cash | 1,349 | 792 | -74 | 2,002 | 4,069 |
| Gross interest bearing debt 2) | 8,859 | 5,717 | -1,385 | 747 | 13,937 |
| Net interest bearing debt 2) | 7,510 | 4,925 | -1,311 | -1,255 | 9,868 |
| Net-working capital 2) | -2,102 | -796 | 677 | 721 | -1,501 |
1) See Other definitions appendix for definition.
2) See Alternative Performance Measures appendix for definition.
Interim consolidated statement of profit or loss
| NOK million | NOTES | Q2 2020 | Q2 2019 | YTD 2020 | YTD 2019 | FY 2019 |
|---|---|---|---|---|---|---|
| Revenues | 2 | 722 | 382 | 1,352 | 713 | 1,810 |
| Net income/(loss) from JVs and associated companies | 2 | 3 | -7 | -2 | -11 | -28 |
| Total revenues and other income | 725 | 376 | 1,350 | 702 | 1,783 | |
| Personnel expenses | 2 | -59 | -35 | -113 | -71 | -163 |
| Other operating expenses | 2 | -86 | -51 | -155 | -100 | -234 |
| Depreciation, amortisation and impairment | 2,3 | -203 | -101 | -378 | -198 | -512 |
| Operating profit (EBIT) | 377 | 188 | 705 | 333 | 874 | |
| Interest and other financial income | 4 | 16 | 19 | 28 | 35 | 66 |
| Interest and other financial expenses | 4 | -301 | -177 | -552 | -317 | -744 |
| Net foreign exchange gain/(losses) | 4 | -169 | -4 | 151 | 1 | -13 |
| Net financial expenses | -454 | -162 | -372 | -281 | -690 | |
| Profit/(loss) before income tax | -77 | 27 | 333 | 52 | 184 | |
| Income tax (expense)/benefit | 6 | -4 | -6 | -115 | -19 | -29 |
| Profit/(loss) for the period | -81 | 21 | 217 | 33 | 155 | |
| Profit/(loss) attributable to: | ||||||
| Equity holders of the parent | -98 | -25 | 137 | -58 | -39 | |
| Non-controlling interests | 17 | 45 | 80 | 91 | 194 | |
| Basic earnings per share (NOK) 1) | -0.76 | -0.22 | 1.06 | -0.51 | -0.31 | |
| Diluted earnings per share (NOK) 1) | -0.75 | -0.22 | 1.05 | -0.51 | -0.31 |
1) Based on average 129.1 million shares outstanding for the purpose of earnings per share and average 130.9 million shares outstanding for the purpose of diluted earnings per share.
| NOK million | NOTES | Q2 2020 | Q2 2019 | YTD 2020 | YTD 2019 | FY 2019 |
|---|---|---|---|---|---|---|
| Profit/(loss) for the period | -81 | 21 | 217 | 33 | 155 | |
| Other comprehensive income: | ||||||
| Items that may subsequently be reclassified to profit or loss | ||||||
| Net movement of cash flow hedges | -176 | -179 | -480 | -202 | -233 | |
| Income tax effect | 6 | 48 | 48 | 121 | 54 | 58 |
| Foreign currency translation differences | -163 | -11 | 138 | -36 | 12 | |
| Net other comprehensive income to be reclassified to profit or loss in subsequent periods |
-291 | -142 | -220 | -184 | -162 | |
| Total comprehensive income for the period net of tax | -373 | -121 | -3 | -152 | -7 | |
| Attributable to: | ||||||
| Equity holders of the parent | -269 | -102 | 74 | -159 | -117 | |
| Non-controlling interests | -103 | -19 | -76 | 7 | 109 |
| NOK million | Notes | As of 30 June 2020 | As of 31 December 2019 |
|---|---|---|---|
| Assets | |||
| Non-current assets | |||
| Deferred tax assets | 6 | 780 | 781 |
| Property, plant and equipment – in solar projects | 3 | 16,788 | 15,180 |
| Property, plant and equipment – other | 3 | 220 | 221 |
| Goodwill | 25 | 24 | |
| Investments in JVs and associated companies | 674 | 728 | |
| Other non-current assets | 144 | 149 | |
| Total non-current assets | 18,632 | 17,083 | |
| Current assets | |||
| Trade and other receivables | 764 | 461 | |
| Other current assets | 837 | 1,211 | |
| Cash and cash equivalents | 5 | 4,069 | 2,824 |
| Total current assets | 5,670 | 4,495 | |
| Total assets | 24,302 | 21,578 |
| Notes | As of 30 June 2020 | As of 31 December 2019 |
|---|---|---|
| 3 | ||
| 3,108 | ||
| 3,111 | ||
| -134 | ||
| -2 | ||
| -136 | ||
| 663 | ||
| 3,640 | ||
| 6 | 349 | 437 |
| 4 | 11,875 | 12,228 |
| 745 | ||
| 320 | ||
| 1,460 | ||
| 15,380 | 15,190 | |
| 888 | ||
| 92 | ||
| 837 | ||
| 31 | ||
| 902 | ||
| 2,750 | ||
| 17,939 | ||
| 21,578 | ||
| 5 4 6 4 4 |
3 5,075 5,079 37 -64 -27 647 5,699 747 710 1,699 867 7 1,315 121 912 3,223 18,603 24,302 |
The Board of Directors of Scatec Solar 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 2019 | 3 | 1,795 | 8 | 123 | -44 | 1,884 | 591 | 2,475 |
| Profit for the period | - | - | -58 | - | - | -58 | 91 | 33 |
| Other comprehensive income | - | - | - | -29 | -72 | -101 | -83 | -184 |
| Total comprehensive income | - | - | -58 | -29 | -72 | -159 | 7 | -152 |
| Share-based payment | - | 3 | - | - | - | 3 | - | 3 |
| Share capital increase | - | 11 | - | - | - | 11 | - | 11 |
| Share purchase program | - | -1 | - | - | - | -1 | - | -1 |
| Dividend distribution | - | - | -108 | - | - | -107 | -98 | -205 |
| Purchase of NCIs shares in group companies | - | - | -5 | - | - | -5 | -3 | -9 |
| At 30 June 2019 | 3 | 1,808 | -163 | 93 | -115 | 1,626 | 497 | 2,123 |
| At 1 July 2019 | 3 | 1,808 | -163 | 93 | -115 | 1,626 | 497 | 2,123 |
| Profit for the period | - | - | 19 | - | - | 19 | 101 | 122 |
| Other comprehensive income | - | - | 3 | 35 | -15 | 24 | -1 | 22 |
| Total comprehensive income | - | - | 22 | 35 | -15 | 42 | 100 | 145 |
| Share-based payment | - | 3 | - | - | - | 3 | - | 3 |
| Share capital increase 1) | - | 1,319 | - | - | - | 1,319 | - | 1,319 |
| Transaction cost, net after tax | - | -23 | - | - | - | -23 | - | -23 |
| Dividend distribution | - | - | -1 | - | - | -1 | -81 | -82 |
| Purchase of NCIs shares in group companies | - | - | 7 | - | - | 7 | - | 8 |
| Capital increase from NCI | - | - | - | - | - | - | 147 | 147 |
| At 31 December 2019 | 3 | 3,108 | -134 | 128 | -130 | 2,975 | 663 | 3,640 |
| At 1 January 2020 | 3 | 3,108 | -134 | 128 | -130 | 2,975 | 663 | 3,640 |
| Profit for the period | - | - | 137 | - | - | 137 | 80 | 217 |
| Other comprehensive income | - | - | -1 | 122 | -184 | -63 | -157 | -220 |
| Total comprehensive income | - | - | 136 | 122 | -184 | 74 | -76 | -3 |
| Share-based payment | - | 7 | - | - | - | 7 | - | 7 |
| Share capital increase 2) | - | 1,994 | - | - | - | 1,994 | - | 1,994 |
| Transaction cost, net after tax | - | -32 | - | - | - | -32 | - | -32 |
| Share purchase program | - | -1 | - | - | - | -1 | - | -1 |
| Dividend distribution | - | - | - | - | - | - | -110 | -110 |
| Sale of shares in group companies to NCIs | - | - | 35 | - | - | 35 | - | 35 |
| Capital increase from NCI | - | - | - | - | - | - | 169 | 169 |
| At 30 June 2020 | 3 | 5,075 | 37 | 250 | -314 | 5,052 | 647 | 5,699 |
1) During third quarter 2019 the Group increased the share capital with NOK 1,297 million net of transaction cost of NOK 23 million after tax.
2) During first half year 2020 the group increased the share capital with NOK 1,994 million, whereof NOK 1,934 million net of transaction cost of NOK 32 million after tax was raised through a private placement, and NOK 26 million was share option program.
| NOK million | NOTES | Q2 2020 | Q2 2019 | YTD 2020 | YTD 2019 | FY 2019 |
|---|---|---|---|---|---|---|
| Cash flow from operating activities | ||||||
| Profit before taxes | -77 | 27 | 333 | 52 | 184 | |
| Taxes paid | 6 | -105 | -31 | -168 | -40 | -61 |
| Depreciation and impairment | 3 | 203 | 101 | 378 | 198 | 512 |
| Proceeds from disposal of fixed assets | 3 | - | - | - | 6 | 6 |
| Net income associated companies/sale of project assets | -3 | 7 | 2 | 11 | 28 | |
| Interest and other financial income | 4 | -16 | -19 | -28 | -35 | -66 |
| Interest and other financial expenses | 4 | 301 | 177 | 552 | 317 | 744 |
| Unrealised foreign exchange (gain)/loss | 4 | 169 | 4 | -151 | -1 | 13 |
| Increase/(decrease) in other assets and liabilities | -274 | -543 | 12 | -627 | 501 | |
| Net cash flow from operating activities | 200 | -278 | 929 | -119 | 1,860 | |
| Cash flow from investing activities | ||||||
| Interest received | 4 | 16 | 25 | 28 | 42 | 76 |
| Net investments in property, plant and equipment | 3 | -648 | -1,229 | -1,378 | -2,453 | -6,502 |
| Net investment in associated companies | 68 | 16 | 64 | 45 | -14 | |
| Net cash flow from investing activities | -564 | -1,189 | -1,287 | -2,366 | -6,439 | |
| Cash flow from financing activities | ||||||
| Net proceeds from NCI shareholder financing 1) | 85 | - | 190 | 50 | 307 | |
| Interest paid | -335 | -268 | -443 | -360 | -740 | |
| Net proceeds and repayment from non-recourse project and other external financing |
-278 | 1,419 | 21 | 2,073 | 3,646 | |
| Share capital increase | 1,927 | - | 1,954 | 10 | 1,307 | |
| Dividends paid to equity holders of the parent company and | ||||||
| non-controlling interests | - | -114 | -110 | -205 | -288 | |
| Net cash flow from financing activities | 1,399 | 1,037 | 1,612 | 1,568 | 4,232 | |
| Net increase/(decrease) in cash and cash equivalents | 1,035 | -430 | 1,254 | -917 | -348 | |
| Effect of exchange rate changes on cash and cash equivalents 2) | -24 | -1 | -8 | -11 | -131 | |
| Cash and cash equivalents at beginning of the period | 3,058 | 2,806 | 2,824 | 3,303 | 3,303 | |
| Cash and cash equivalents at end of the period | 4,069 | 2,375 | 4,069 | 2,375 | 2,824 |
1) Proceeds from non-controlling interest's shareholder financing include both equity contributions and shareholder loans.
2) See note 5 Cash, cash equivalents and corporate funding
Scatec Solar ASA is incorporated and domiciled in Norway. The address of its registered office is Askekroken 11, NO-0277 Oslo, Norway. Scatec Solar ASA was established on 2 February 2007.
Scatec Solar ASA ("the Company"), its subsidiaries and investments in associated companies ("the Group" or "Scatec Solar") is a leading independent solar power producer. The Company is pursuing an integrated business model across the complete life cycle of utility-scale solar photovoltaic (PV) power plants including project development, financing, construction, ownership and operation and maintenance.
The condensed interim consolidated financial statements were authorised by the Board of Directors for issue on 16 July 2020.
These condensed interim consolidated financial statements are prepared in accordance with recognition, measurement and presentation principles consistent with International Financing Reporting Standards as adopted by the European Union ("IFRS") for interim reporting under International Accounting Standard ("IAS") 34 Interim Financial Reporting. These condensed interim consolidated financial statements are unaudited.
These condensed interim consolidated financial statements are condensed and do not include all of the information and notes required by IFRS for a complete set of consolidated financial statements. These condensed interim consolidated financial statements should be read in conjunction with the annual consolidated financial statements.
The accounting policies adopted in the preparation of the condensed interim consolidated financial statements are consistent with those followed in the preparation of the Group's annual consolidated financial statements for 2019.
The functional currency of the companies in the Group is determined based on the nature of the primary economic environment in which each company operates. The functional currency of the parent company Scatec Solar ASA and the
presentation currency of the Group is Norwegian kroner (NOK). All amounts are presented in NOK million unless otherwise stated.
As a result of rounding adjustments, the figures in some columns may not add up to the total of that column.
The preparation of condensed interim consolidated financial statements in conformity with IFRS requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses.
In the process of applying the Group's accounting policies, management make judgements of which the following have the most significant effect on the amounts recognised in the condensed interim financial statements:
Scatec Solar's value chain comprises all downstream activities such as project development, financing, construction and operations, as well as having an asset management role through ownership of the solar power plants. Normally Scatec Solar enters into partnerships for the shareholding of the power plant companies owning the power plants. To be able to utilise the business model fully, Scatec Solar seeks to obtain operational 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 Solar's role as the developer of the project, EPC provider (construction), operation and maintenance service provider and asset management service provider.
When assessing whether Scatec Solar controls a power plant company as defined by IFRS 10 Consolidated Financial Statements, the Group's roles and activities are analysed in line with the requirements and definitions in IFRS 10.
During second quarter 2020 no new power plant companies have been included in the consolidated financial statements.
Refer to note 3 of the 2019 annual report for further information on judgements, including control assessments made in previous years.
The estimates and underlying assumptions are reviewed on an ongoing basis, considering the current and expected future market conditions. Changes in accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods.
Interim period results are not necessarily indicative of results of operations or cash flows for an annual period. The Group's operating results are impacted by external factors, such as weather conditions. The power production at the PV solar parks is directly impacted by seasonal changes in solar irradiance which is normally at its highest during the summer months. This effect is to a certain degree offset in the consolidated revenues due to the fact that the Group operates PV solar parks on both the northern and southern hemisphere.
Operating segments align with internal management reporting to the Group's chief operating decision maker, defined as the Group management team. The operating segments are determined based on differences in the nature of their operations, products and services.
Scatec Solar manages its operations in three segments; Power Production (PP), Services and Development & Construction (D&C).
From January 2020 the group has reorganized its segment structure so that the Group's Operations and Maintenance services and Asset Management services are reported combined in the new segment Services. Earlier these operations were reported in the segments Operations & Maintenance and Power Production respectively. The comparative figures for 2019 in the tables below are restated with the new segment structure.
Financing and operation of solar power plants is ring-fenced in power plant companies with a non-recourse project finance structure - where Scatec Solar contributes with the required equity, either alone or together with co-investors.
The management team assesses the performance of the operating segments based on a measure of gross profit and operating profit; hence interest income/expense is not disclosed per segment.
The Power Production segment manages the Group's power producing assets and derives its revenue from the production and sale of solar generated electricity based on long-term Power Purchase Agreements or feed-in-tariffs. Finance and
operation of the plants is 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 Solar, 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 power plants where Scatec Solar has economic interest. O&M revenues are generated on the basis of 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.
The Development and Construction segment derives its revenue from the sale of development rights and construction services to power plant companies set up to operate the Group's solar power plants. These transactions are primarily made with companies that are under the control of the Group and hence are being consolidated. Revenues from transfer of development rights are recognised upon the transfer of title.
Revenues from construction services are based on fixed price contracts and are accounted for using the percentage of completion method.
Corporate consists of the activities of corporate services, management and group finance.
No segments have been aggregated to form these reporting segments. Revenues from transactions between the D&C, Services and PP segments, where Scatec Solar 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. 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.
The segment financials are reported on proportionate basis. With proportionate financials Scatec Solar reports its share of revenues, expenses, profits and cash flows from its subsidiaries without eliminations based on Scatec Solar's economic interest in the subsidiaries. The Group introduced SSO Proportionate Financials as the Group is of the opinion that this method improves earnings visibility. Proportionate financials are further described in the APM section of this report. A reconciliation between the segments proportionate financials and the groups consolidated financials is included in the tables below.
| Proportionate financials | ||||||||
|---|---|---|---|---|---|---|---|---|
| NOK million | Power Production |
Services | Development & construction |
Corporate | Total | Residual ownership interests 1) |
Eliminations 2) | Consolidated financials |
| External revenues | 458 | - | 6 | 2 | 467 | 262 | -6 | 722 |
| Internal revenues | - | 73 | 377 | 9 | 458 | 4 | -462 | - |
| Net income from JV and associated companies |
- | - | - | - | - | - | 3 | 3 |
| Total revenues and other income | 458 | 73 | 383 | 11 | 925 | 266 | -465 | 725 |
| Cost of sales | - | - | -329 | - | -330 | - | 329 | - |
| Gross profit | 458 | 73 | 53 | 11 | 596 | 265 | -136 | 725 |
| Personnel expenses | -5 | -21 | -20 | -14 | -61 | 1 | 1 | -59 |
| Other operating expenses | -78 | -18 | -13 | -10 | -119 | -51 | 83 | -86 |
| EBITDA | 374 | 34 | 22 | -13 | 417 | 216 | -53 | 580 |
| Depreciation and impairment | -144 | -1 | -4 | -5 | -155 | -96 | 48 | -203 |
| Operating profit | 230 | 33 | 17 | -18 | 262 | 120 | -5 | 377 |
1) Residual ownerships interests share of the proportionate financials in subsidiaries where SSO do not have 100% economic interest.
2) Eliminations made in the preparation of the groups IFRS consolidated financials.
| Proportionate financials | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| NOK million | Power Production |
Services | Development & construction |
Corporate | Total | Residual ownership interests 1) |
Eliminations 2) | Consolidated financials |
|
| External revenues | 258 | - | 2 | - | 260 | 161 | -38 | 382 | |
| Internal revenues | - | 42 | 1,337 | 9 | 1,388 | 69 | -1,457 | - | |
| Net income/(loss) from JV and associates | - | - | - | - | - | - | -7 | -7 | |
| Total revenues and other income | 258 | 42 | 1,339 | 9 | 1,648 | 230 | -1,502 | 376 | |
| Cost of sales | - | - | -1,149 | - | -1,149 | -50 | 1,198 | - | |
| Gross profit | 258 | 42 | 190 | 9 | 500 | 180 | -305 | 376 | |
| Personnel expenses | -5 | -10 | -13 | -10 | -38 | - | 3 | -35 | |
| Other operating expenses | -37 | -14 | -12 | -10 | -73 | -26 | 48 | -51 | |
| EBITDA | 216 | 19 | 165 | -11 | 388 | 154 | -253 | 290 | |
| Depreciation and impairment | -83 | -1 | -5 | -2 | -90 | -76 | 64 | -101 | |
| Operating profit (EBIT) | 133 | 18 | 160 | -13 | 298 | 79 | -190 | 188 |
1) Residual ownerships interests share of the proportionate financials in subsidiaries where SSO do not have 100% economic interest.
2) Eliminations made in the preparation of the groups IFRS consolidated financials.
| Proportionate financials | ||||||||
|---|---|---|---|---|---|---|---|---|
| NOK million | Power Production |
Services | Development & construction |
Corporate | Total | Residual ownership interests 1) |
Eliminations 2) | Consolidated financials |
| External revenues | 849 | - | 6 | 2 | 858 | 527 | -32 | 1,352 |
| Internal revenues | - | 125 | 791 | 17 | 933 | 60 | -993 | - |
| Net income/(loss) from JV and associates | - | - | - | - | - | - | -2 | -2 |
| Total revenues and other income | 849 | 125 | 797 | 19 | 1,791 | 587 | -1,027 | 1,350 |
| Cost of sales | - | - | -698 | - | -698 | -45 | 743 | - |
| Gross profit | 849 | 125 | 99 | 19 | 1,093 | 541 | -284 | 1,350 |
| Personnel expenses | -11 | -38 | -39 | -28 | -117 | 1 | 3 | -113 |
| Other operating expenses | -133 | -37 | -24 | -20 | -214 | -90 | 149 | -155 |
| EBITDA | 705 | 50 | 37 | -29 | 763 | 453 | -133 | 1,083 |
| Depreciation and impairment | -269 | -2 | -14 | -10 | -295 | -190 | 107 | -378 |
| Operating profit (EBIT) | 436 | 49 | 22 | -39 | 468 | 263 | -26 | 705 |
1) Residual ownerships interests share of the proportionate financials in subsidiaries where SSO do not have 100% economic interest. 2) Eliminations made in the preparation of the groups IFRS consolidated financials.
| Proportionate financials | ||||||||
|---|---|---|---|---|---|---|---|---|
| NOK million | Power Production |
Services | Development & construction |
Corporate | Total | Residual ownership interests 1) |
Eliminations 2) | Consolidated financials |
| External revenues | 455 | - | 2 | - | 457 | 333 | -76 | 713 |
| Internal revenues | - | 71 | 2,634 | 15 | 2,720 | 75 | -2,794 | - |
| Net income/(loss) from JV and associates | - | - | - | - | - | - | -11 | -11 |
| Total revenues and other income | 455 | 71 | 2,636 | 15 | 3,177 | 408 | -2,881 | 702 |
| Cost of sales | - | - | -2,261 | - | -2,260 | -57 | 2,317 | - |
| Gross profit | 455 | 71 | 376 | 15 | 917 | 350 | -566 | 702 |
| Personnel expenses | -10 | -19 | -27 | -21 | -77 | 5 | 1 | -71 |
| Other operating expenses | -65 | -27 | -25 | -19 | -136 | -26 | 62 | -100 |
| EBITDA | 380 | 26 | 324 | -25 | 703 | 329 | -502 | 531 |
| Depreciation and impairment | -150 | -2 | -18 | -3 | -172 | -155 | 128 | -198 |
| Operating profit (EBIT) | 230 | 24 | 306 | -29 | 531 | 176 | -375 | 333 |
1) Residual ownerships interests share of the proportionate financials in subsidiaries where SSO do not have 100% economic interest.
2) Eliminations made in the preparation of the groups IFRS consolidated financials.
| Proportionate financials | ||||||||
|---|---|---|---|---|---|---|---|---|
| NOK million | Power Production |
Services | Development & construction |
Corporate | Total | Residual ownership interests 1) |
Eliminations 2) | Consolidated financials |
| External revenues | 1,163 | 1 | 2 | - | 1,165 | 776 | -130 | 1,810 |
| Internal revenues | - | 167 | 4,978 | 31 | 5,176 | 301 | -5,477 | - |
| Net income/(loss) from JV and associates | - | - | - | - | - | - | -28 | -28 |
| Total revenues and other income | 1,163 | 168 | 4,980 | 31 | 6,341 | 1,077 | -5,635 | 1,783 |
| Cost of sales | - | - | -4,274 | - | -4,274 | -228 | 4,503 | - |
| Gross profit | 1,163 | 168 | 706 | 31 | 2,067 | 848 | -1,133 | 1,783 |
| Personnel expenses | -21 | -45 | -59 | -48 | -173 | 8 | 2 | -163 |
| Other operating expenses | -167 | -59 | -57 | -40 | -323 | -126 | 215 | -234 |
| EBITDA | 975 | 65 | 589 | -57 | 1,571 | 730 | -915 | 1,386 |
| Depreciation and impairment | -412 | -4 | -39 | -6 | -460 | -278 | 226 | -512 |
| Operating profit (EBIT) | 563 | 61 | 550 | -65 | 1,111 | 452 | -689 | 874 |
1) Residual ownerships interests share of the proportionate financials in subsidiaries where SSO do not have 100% economic interest. 2) Eliminations made in the preparation of the groups IFRS consolidated financials.
The Group operates solar power plants in Europe, South East Asia, Middle East, Africa and South America. The power plant companies in Argentina and Brazil are equity consolidated and hence not included in the below table.
In first quarter 2020 two of three solar power plants in Upington, South Africa, reached commercial operation, while the third reached commercial operation in the second quarter, completing the 258 MW solar power
complex. In addition, the 54 MW Boguslav project in Ukraine were grid connected in second quarter, hence the second project in Ukraine have been completed.
There has been recorded an impairment charge of NOK 6 million in 2020. Total impairments amounted to NOK 33 million in 2019.
| NOK million | Solar power plants |
Solar power plants under construction |
Solar power plants under development |
Intangible assets, equipment and other assets |
Total |
|---|---|---|---|---|---|
| Carrying value at 31 December 2019 | 11,584 | 3,415 | 181 | 221 | 15,401 |
| Additions | 1 | 1,279 | 81 | 17 | 1,378 |
| Disposals | - | - | - | - | - |
| Transfer between asset classes | 3,104 | -3,104 | - | - | - |
| Depreciation | -352 | - | - | -20 | -372 |
| Impairment losses | - | - | -6 | - | -6 |
| Effect of foreign exchange currency translation adjustments | 495 | 108 | 2 | 3 | 607 |
| Carrying value at 30 June 2020 | 14,833 | 1,698 | 257 | 220 | 17,008 |
| Estimated useful life (years) | 20-25 | N/A | N/A | 3-10 |
Scatec Solar uses non-recourse financing for constructing and/or acquiring assets, exclusively using as guarantee the assets and cash flows of the power plants 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 solar power companies operating in the Czech Republic and the three solar power companies in Malaysia, the non-recourse financing agreements include a cross default clause within the Czech and Malaysian group respectively.
The power plant companies' assets are pledged as security for the non-recourse financing. The repayment plan for the debt is a sculpted annuity; hence the sum of loan and interest repayments are not stable from year to year. Repayments are normally made twice a year. The maturity date for the loan's ranges from 2028 to 2038. NOK 806 million of the Group's total non-recourse debt is due within 12 months and is presented as current in the statement of financial position, together with accrued interest. In addition, the Rengy project in Ukraine failed to meet one loan covenant measured at June 30th, due to missing payments of revenues following
a delayed funding of the offtaker. Consequently NOK 299 million of non-current non-recourse debt has been presented as current in the balance-sheet.
During the second quarter 2020 the Group has drawn NOK 21 million on the non-recourse financing related to the construction projects in Ukraine, NOK 22 million related to the construction project in Egypt and NOK 6 million related to the construction project in Malaysia.
During the second quarter of 2020 the group had a loss of NOK 1 million on USD and EUR Foreign Exchange Contracts which were set up in order to eliminate currency exchange risk in the construction period for the Upington projects in South Africa. All these contracts have been closed during the second quarter in parallel with the completion of the projects.
Derivative financial instruments (including interest rate swaps and forward exchange contracts) are valued at fair value on Level 2 of the fair value hierarchy, in which the fair value is calculated by comparing the terms agreed under each derivative contract to the market terms for a similar contract on the valuation date. Note 7 in the annual report for 2019 provides details for each class of financial assets and financial liabilities, and how these assets and liabilities are grouped.
| NOK million | Q2 2020 | Q2 2019 | YTD 2020 | YTD 2019 | FY 2019 |
|---|---|---|---|---|---|
| Interest income | 13 | 17 | 24 | 32 | 66 |
| Other financial income | 2 | 2 | 4 | 3 | - |
| Financial income | 16 | 19 | 28 | 35 | 66 |
| Interest expenses | -291 | -149 | -528 | -274 | -704 |
| Forward exchange contracts | -1 | -22 | -7 | -32 | -33 |
| Other financial expenses | -9 | -5 | -16 | -11 | -6 |
| Financial expenses | -301 | -177 | -552 | -317 | -744 |
| Foreign exchange gains/(losses) | -169 | -4 | 151 | 1 | -13 |
| Net financial expenses | -454 | -162 | -372 | -281 | -690 |
| NOK million | 30 June 2020 | 31 December 2019 |
|---|---|---|
| Cash in power plant companies in operation | 2,019 | 1,567 |
| Cash in power plant companies under development/construction | 52 | 420 |
| Other restricted cash | 65 | 78 |
| Free cash | 1,933 | 758 |
| Total cash and cash equivalents | 4,069 | 2,824 |
There are no significant changes in the presentation of these categories in the period.
Cash in power plant companies in operation includes 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 distributions as determined by shareholder and non-recourse financing agreements.
Cash in power plant companies under development and 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. Net cash effect from Working Capital/Other is mainly related to ongoing construction projects.
| NOK million | Q2 2020 | Q2 2019 | YTD 2020 | YTD 2019 | FY 2019 |
|---|---|---|---|---|---|
| Free cash at beginning of period | 717 | 785 | 758 | 1,039 | 1,039 |
| Proportionate share of cash flow to equity 1) Services | 27 | 15 | 40 | 20 | 53 |
| Proportionate share of cash flow to equity 1) D&C | 19 | 130 | 32 | 258 | 471 |
| Proportionate share of cash flow to equity 1) CORP | -23 | -18 | -47 | -38 | -91 |
| Project development capex in recourse group | -53 | -10 | -108 | -22 | -135 |
| Equity contributions to power plant companies 2) | -216 | -264 | -569 | -378 | -869 |
| Distributions from power plant companies | 20 | 29 | 163 | 102 | 241 |
| Share capital increase, net after transaction cost and tax | 1,927 | - | 1,927 | - | 1,300 |
| Dividend distribution | - | -108 | - | -108 | -108 |
| Working capital / Other | -1 69 | 1 | -262 | -313 | -1,143 |
| Drawn on credit facilities | -315 | - | - | - | - |
| Free cash at end of the period | 1,933 | 560 | 1,933 | 560 | 758 |
| Available undrawn credit facilities | 1,646 | 811 | 1,646 | 811 | 836 |
| Total free cash and undrawn credit facilities at the end of the period | 3,579 | 1,371 | 3,579 | 1,371 | 1,594 |
1) Proportionate share of cash flow to equity is defined in Alternative Performance Measures Appendix.
2) Equity contributions to power plant companies consist of equity injections and shareholder loans.
In the first quarter of 2020, Scatec Solar refinanced the guarantee facility and intercreditor agreement that was established in 2017. The guarantee facility has Nordea Bank as agent and issuer, Nordea Bank, Swedbank and BNP Paribas as guarantee instrument lenders. The guarantee facility is mainly used to provide advanced payment-, performance- and warranty bonds under construction agreements, as well as trade letter of credits. The intercreditor agreement is entered into by Scatec Solar, the issuing banks under the guarantee facility and GIEK. GIEK can issue counter indemnity in favour of the issuing banks on behalf of the relevant instrument lenders.
In first quarter 2020 Scatec Solar refinanced the USD 90 million revolving credit facility (RCF) with Nordea Bank as agent and Nordea Bank, 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 new facility is ESG linked and has a three years tenor. The facility is linked to the following ESG (Environmental, Social and Governance) KPIs:
Revolving credit facility interest is the interbank offer rate for the drawn period plus a margin of 2.40%. The margin is adjusted annually according to a matrix related to fulfilment of the ESG KPIs. Scatec Solar has not drawn on the revolving credit facility per 30 June 2020.
In first quarter 2020, Scatec Solar entered into a USD 75 million credit facility with Nordea Bank, Swedbank and BNP Paribas. The facility has a tenor of up to 18 months. Scatec Solar has not drawn on this facility per 30 June 2020.
In second quarter 2018 Scatec Solar entered into a USD 5 million overdraft facility with Nordea Bank. The overdraft interest is the 7-day interbank offer rate plus a margin of 2.5%. Scatec Solar has not drawn on the overdraft facility per 30 June 2020.
In fourth quarter 2017 Scatec Solar issued a NOK 750 million senior unsecured green bond with maturity in November 2021. The bond carries an interest of 3-month NIBOR + 4.75%, to be settled on a quarterly basis. The bond was listed on the Oslo Stock Exchange 6 April 2018 with ticker SSO02 G.
Per 30 June 2020, Scatec Solar 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 7 ,361 million per quarter end.
During second quarter of 2020, interest amounting to NOK 20 million (NOK 17 million in previous quarter) was expensed for the bond, overdraft- and revolving credit facility.
Refer to bond agreement available on www.scatecsolar.com/ investor/debt for further information and definitions.
The Group had an income tax expense of NOK 4 million for the second quarter and NOK 115 million for the first half of 2020, equivalent to an effective tax rate of negative 5% and 35%. The effective tax rate continues to be influenced by profits and losses in tax jurisdictions with different tax rates offsetting each other. The effective tax rate is also influenced by currency fluctuations on tax assets and liabilities in locations where different functional currency is applied in tax reporting compared with financial accounting.
The underlying tax rates in the companies in operation are in the range of 0% to 33%. In some markets, Scatec Solar 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 increase 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. Further, the profit/loss from JVs and associates, which are reported net after tax, has an impact on the effective tax rate depending on the relative size of the profit/loss relative to the consolidated profit. In addition to the above, the quarter's effective tax rate is also impacted by withholding tax expenses associated with distributions from power plant companies.
| NOK million | Q2 2020 | Q2 2019 | YTD 2020 | YTD 2019 | FY 2019 |
|---|---|---|---|---|---|
| Profit before income tax | -77 | 27 | 333 | 52 | 184 |
| Income tax (expense)/benefit | -4 | -6 | -115 | -19 | -29 |
| Equivalent to a tax rate of (%) | -5% | 23% | 35% | 45% | 16% |
| NOK million | Q2 2020 | Q2 2019 | YTD 2020 | YTD 2019 | FY 2019 |
|---|---|---|---|---|---|
| Net deferred tax asset at beginning of period | 395 | 210 | 343 | 181 | 181 |
| Recognised in the consolidated statement of profit or loss | -5 | 35 | -79 | 55 | 91 |
| Deferred tax on financial instruments recognised in OCI | 48 | 48 | 121 | 54 | 58 |
| Recognised in the consolidated statement of changes in equity | 9 | - | 9 | - | 6 |
| Translation differences | -16 | -5 | 36 | -3 | 7 |
| Net deferred tax asset at end of period | 432 | 288 | 432 | 288 | 343 |
Scatec Solar has related party transactions and balances with equity consolidated JVs in Brazil and Argentina, mainly loans which are included in the carrying value of the investments. The loan balance as per 30 June 2020 was NOK 189 million.
In addition, Scatec Solar has transactions and balances with key management. Note 26 in the annual report for 2019 provides details of transactions with related parties and the nature of these transactions.
All related party transactions have been carried out as part of the normal course of business and at arm`s length. For further information on project financing provided by co-investors, refer to note 28 in the 2019 annual report.
In connection with the Company's Share Option Programme and capital increases in 2019 and 2020, the Company entered into share lending agreements with Scatec AS, the Company's second largest shareholder.
During second quarter 2020 Scatec Solar successfully raised NOK 1,968 million through a private placement consisting of 12,000,000 new shares at a price of NOK 164 per share.
Total transaction cost for the capital increase is recognized in equity and amounted to NOK 32 million after tax.
In line with the dividend policy and pursuant to the authorisation granted by the Annual General Meeting 28 April 2020, The Board of Directors has resolved to approve a dividend of NOK 0.95 per share for 2019, totalling NOK 131 million.
The share will be trading excluding dividend rights (ex-date) from 22 July 2020.
Please refer to www.scatecsolar.com for the Group's dividend policy.
No events have occurred after the balance sheet date with significant impact on the interim financial statements for the second quarter 2020.
Scatec Solar 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 solar power plant projects and/or for shareholder dividends over time. Management believes that the cash flow to equity measure provide 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. 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 and accretion expenses on asset retirement obligations. Normalised income tax payment is calculated as operating profit (EBIT) less normalized 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 consisting information of operating performance which is relative 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). The measurement of gross profit is used to measure project profitability in the D&C segment. Refer to note 2 Operating Segments for 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 and discounted notes.
Net interest-bearing debt (NIBD): is defined as total interestbearing 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, other current liabilities and intercompany receivables and payables.
The groups 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 Solar (with from 39% to 100% economic interest), for which revenues and profits are eliminated in the Consolidated Financial Statements. With proportionate financials Scatec Solar reports its share of revenues, expenses, profits and cash flows from its subsidiaries without eliminations based on Scatec Solar's economic interest in the subsidiaries. The Group introduced SSO 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;
For second quarter 2020 Scatec Solar reports a proportionate operating profit of NOK 262 million compared with an operating profit of NOK 377 million in the consolidated financials. To arrive at the proportionate operating profit from the consolidated operating profit the Group has;
See Note 2 for further information on the reporting of proportionate financial figures, including reconciliation of the proportionate financials against the consolidated financials.
1) Where NOK 53 million comprise Scatec Solar's share of gross profit on D&C contracts, NOK -32 million comprise increased depreciation charges from internal gains and NOK -15 million comprise other items.
| NOK million | Q2 2020 | Q2 2019 | YTD 2020 | YTD 2019 | FY 2019 |
|---|---|---|---|---|---|
| EBITDA | |||||
| Operating profit (EBIT) | 377 | 188 | 705 | 333 | 874 |
| Depreciation, amortisation and impairment | 203 | 101 | 378 | 198 | 512 |
| EBITDA | 580 | 290 | 1,083 | 531 | 1,386 |
| Total revenues and other income | 725 | 376 | 1,350 | 702 | 1,783 |
| EBITDA margin | 80% | 77% | 80% | 76% | 78% |
| Gross profit | |||||
| Total revenues and other income | 725 | 376 | 1,350 | 702 | 1,783 |
| Cost of sales | - | - | - | - | - |
| Gross profit | 725 | 376 | 1,350 | 702 | 1,783 |
| Gross interest-bearing debt | |||||
| Non-recourse project financing | 11,875 | 10,609 | 11,875 | 10,609 | 12,228 |
| Bonds | 747 | 744 | 747 | 744 | 745 |
| Non-recourse project financing - current | 1,315 | 389 | 1,315 | 389 | 837 |
| Gross interest-bearing debt | 13,937 | 11,742 | 13,937 | 11,742 | 13,810 |
| Net interest-bearing debt | |||||
| Gross interest-bearing debt | 13,937 | 11,742 | 13,937 | 11,742 | 13,810 |
| Cash and cash equivalents | 4,069 | 2,375 | 4,069 | 2,375 | 2,824 |
| Net interest-bearing debt | 9,868 | 9,367 | 9,868 | 9,367 | 10,986 |
| Net working capital | |||||
| Trade and other receivables | 764 | 389 | 764 | 389 | 461 |
| Other current assets | 837 | 1,801 | 837 | 1,801 | 1,211 |
| Trade and other payables | -867 | -234 | -867 | -234 | -888 |
| Income tax payable | -7 | -66 | -7 | -66 | -92 |
| Other current liabilities | -912 | -1,698 | -912 | -1,698 | -902 |
| Non-recourse project financing-current | -1,315 | -389 | -1,315 | -389 | -837 |
| Net working capital | -1,501 | -197 | -1,501 | -197 | -1,047 |
| NOK million | Power Production |
Services | Development & Construction |
Corporate | Total |
|---|---|---|---|---|---|
| EBITDA | 374 | 34 | 22 | -13 | 417 |
| Net interest expenses | -129 | - | - | -17 | -147 |
| Normalised loan repayments | -93 | - | - | - | -93 |
| Normalised income tax payment | -17 | -7 | -3 | 8 | -19 |
| Cash flow to equity | 135 | 27 | 19 | -23 | 158 |
| NOK million | Power Production |
Services | Development & Construction |
Corporate | Total |
|---|---|---|---|---|---|
| EBITDA | 331 | 16 | 15 | -16 | 346 |
| Net interest expenses | -124 | - | - | -16 | -139 |
| Normalised loan repayments | -88 | - | - | - | -88 |
| Normalised income tax payment | -15 | -3 | -2 | 8 | -13 |
| Cash flow to equity | 105 | 13 | 13 | -24 | 107 |
| NOK million | Power Production |
Services | Development & Construction |
Corporate | Total |
|---|---|---|---|---|---|
| EBITDA | 216 | 19 | 165 | -11 | 388 |
| Net interest expenses | -73 | - | 1 | -13 | -85 |
| Normalised loan repayments | -55 | - | - | - | -55 |
| Normalised income tax payment | -10 | -4 | -35 | 6 | -44 |
| Cash flow to equity | 78 | 15 | 130 | -18 | 205 |
1) 2019 is restated in line with the new segment structure
| NOK million | Power Production |
Services | Development & Construction |
Corporate | Total |
|---|---|---|---|---|---|
| EBITDA | 705 | 50 | 37 | -29 | 763 |
| Net interest expenses | -253 | 1 | - | -34 | -286 |
| Normalised loan repayments | -181 | - | - | - | -181 |
| Normalised income tax payment | -31 | -11 | -5 | 16 | -31 |
| Cash flow to equity | 240 | 40 | 32 | -47 | 265 |
| NOK million | Power Production |
Services | Development & Construction |
Corporate | Total |
|---|---|---|---|---|---|
| EBITDA | 380 | 26 | 324 | -25 | 703 |
| Net interest expenses | -126 | - | 2 | -24 | -149 |
| Normalised loan repayments | -98 | - | - | - | -98 |
| Normalised income tax payment | -20 | -5 | -68 | 12 | -81 |
| Cash flow to equity | 136 | 20 | 258 | -38 | 376 |
1) 2019 is restated in line with the new segment structure
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.
Project pipeline is defined as projects that do not yet have a 90% probability of reaching financial close and subsequent realisation. However, the Group has verified feasibility and business cases for the projects.
Scatec Solar'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 solar power plant companies.
Recourse Group means all entities in the Group, excluding solar park 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 solar power plant will normally be given directly thereafter. Projects in Scatec Solar defined as "backlog" are classified as "under construction" upon achievement of financial close.
Start of Production (SOP): The first date on which the solar power plant generates revenues through sale of power under the off-take 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.
We confirm to the best of our knowledge, that the condensed interim financial statement for the period 1 January 2020 to 30 June 2020 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 Solar is facing during the next accounting period.
Oslo, 16 July 2020 The Board of Directors of Scatec Solar ASA
John Andersen jr. (Chairman) John Giverholt Maria Moræus Hanssen
Jan Skogseth Gisele Marchand Raymond Carlsen (CEO)
www.scatecsolar.com
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