Scatec Asa · OSL:SCATC
Scatec Asa — Scatec Solar — Investor Presentation (February 2018)
35 slides from Scatec Asa's investor presentation, February 2018
Slide 1: Investor presentation
Investor presentation February 2018 Our values • Predictable • Driving results • Changemakers • Working together
Slide 2: Disclaimer
Disclaimer The following presentation is being made only to, and is only directed at, persons to whom such presentation may lawfully be communicated (’relevant persons’). Any person who is not a relevant person should not rely, act or make assessment on the basis of this presentation or anything inc
Slide 3: Introduction
o Scatec Solar Improving our future™ Introduction
Slide 4: Generating and capturing PV value in emerging markets
Generating and capturing PV value in emerging markets Fully integrated business model 1 tailored for emerging markets NYTT BILDE Strong global demand for PV 2 accelerates growth in opportunities Excellent track record in capturing 3 value from complex PV projects Solid asset base and a significant 4
Slide 5: Our focus: Large scale PV and 20+ year cash flows
Our focus: Large scale PV and 20+ year cash flows # POWER UNDER IN OPERATION BACKLOG PLANTS CONSTRUCTION 12 322 MW 394 MW 789 MW 5
Slide 6: A solid PV track record on a growth trajectory
A solid PV track record on a growth trajectory 716 MW in operation and under construction: Czech South Africa ASYV Agua Fria Jordan Malaysia Apodi 20 MW 190 MW 9 MW 60 MW 43 MW 197 MW 162 MW Czech Republic South Africa Rwanda Honduras Jordan Malaysia Brazil Installation track record (MW): 996 • 15 y
Slide 7: A growing and diversified asset portfolio
A growing and diversified asset portfolio In operation Czech Republic 1 20 MW South Africa 2 3 4 190 MW ASYV, Rwanda 5 9 MW Agua Fria, Honduras 6 60 MW 1 Jordan 7 43 MW Total 322 MW 7 11 Under construction 9 6 15 8 Malaysia 8 197 MW 13 Honduras (phase I) 9 35 MW 5 Brazil 10 162 MW 10 14 Total 394 MW
Slide 8: Guidance and growth targets
Guidance and growth targets Growth target (MWs) Return and margin targets: • Average equity return of 15% after tax on investments in new solar power plants • Project development and construction (D&C) 2,800 gross margins averaging 15% Financial targets: 1,300-1,500 745 • 2018 O&M revenues of NOK 70
Slide 9: The integrated business model
The integrated business model
Slide 10: Integrated Independent Power Producer
Integrated Independent Power Producer Scatec Solar develops, builds, owns & operates solar plants for 20 years Power Production Origination Development Structuring Delivery Phases O&M • Opportunity • Pipeline • Backlog • Construction • Operation • Analysis & • Site control • Equity, debt • Procureme
Slide 11: The integrated model captures the full project value
The integrated model captures the full project value Project development & construction: • Provides access to attractive project pipeline • Generates D&C margins that can be reinvested as equity in projects Long term asset ownership: • Generates steady long term cash flows • Eliminates ‘friction los
Slide 12: Our business model and typical project structure
Our business model and typical project structure Simplified illustration of company structure and main contracts in place Equity co- Scatec Solar investors 100% 39%-100% Land owners Shareholders agreement Land lease agreements Scatec Solar Single Purpose Project financing O&M / EPC • EPC contract Ve
Slide 13: A business model enabling “self funded” growth
A business model enabling “self funded” growth 120 (100%) • The D&C gross margin provides a large part of the Scatec Solar’s equity contribution in the project 90 • Projects are financed by non-recourse debt, allowing (75%) Scatec Solar to operate with high financial leverage at the project level wh
Slide 14: A truly sustainable business model
A truly sustainable business model • Solar plants embedded in local communities in emerging economies for 20-25 years • Economic activity is of vital importance to both countries and communities • Local suppliers, local employees and good relations with local communities impact performance, cost and
Slide 15: Project backlog, pipeline & opportunities
Project backlog, pipeline & opportunities
Slide 16: Impressive cost reductions and growth in demand
Impressive cost reductions and growth in demand Total system cost (USD / Watt) * Annual installed volume - GW Other Balance of plant Module Rest of world China Japan Installation Inverter India USA Europe -74% 3.24 107 94 92 75 1.80 56 1.49 45 1.14 0.92 0.85 2010 2012 2014 2016 2018 2020 2014 2015 2
Slide 17: Partnering with Governments and Development banks
Partnering with Governments and Development banks • As cost of solar continues to decline - governments are looking to solar to cover their power needs and grow the economy • Governments in emerging economies finds private/public partnerships very attractive implementation model (IPPs) • Converts ca
Slide 18: SSO develops 3.5 GW of opportunities globally
Project Development SSO develops 3.5 GW of opportunities globally Legend • Backlog (789 MW) • Pipeline (745 MW) • Opportunities (~2,800 MW) Market Characteristics • Solid solar irradiation • Strong clean energy demand • Renewable programmes supporting growth • Active support from project finance ban
Slide 19: Project update: Malaysia & Brazil
Project update: Malaysia & Brazil Malaysia, 197 MW Status • 25 year PPA with TNB • Civil works approaching completion on all three sites • SSO 100%* • Mechanical installation started • Capex: USD 293 million • Grid connection planned sequentially • Project finance: USD 234 million during 1H 2018 Bra
Slide 20: Project update: Egypt & Honduras
Project update: Egypt & Honduras Egypt, 400 MW Status • 25 year PPA with EETC • Financial close in October 2017 • SSO 51%, Norfund 24%, Africa50 25% • Common infrastructure in completion • Capex: USD 445 million • Construction start during 1H 2018 • Project finance: USD 335 million Honduras, 35 MW,
Slide 21: Project update: South Africa, Mozambique & Mali
Project update: South Africa, Mozambique & Mali South Africa, 258 MW Status • 20 year PPA with ESKOM • Preparing with IPP Office and • SSO 42%, Norfund 18%, BEEE Trust 40% lenders for financial close • Capex: USD 315 million • Project finance: USD 260 million Mozambique, 40 MW Status • 25 year PPA w
Slide 22: Outlook in South Africa
Project Development Outlook in South Africa Political situation Development of Proposed Integrated Resource Plan, 2020 - 2035 • ANC selected pro-business Cyril Ramaphosa as new party leader in December 2017 6000 • Immediate effects of the leadership change – Currency: ZAR strengthened to best level
Slide 23: Scatec Solar’s position in South Africa
Project Development Scatec Solar’s position in South Africa REIPPP Programme NAMIBIA • 258 MW in Upington SOUTH – Awarded preferred bidder status in 2015 AFRICA – Approved by Board of Eskom – Awaiting formal sign-off by Ministry • 430 MW in pipeline – Validity of bid bonds extended to 31 March 2018
Slide 24: Building position in South East Asia
Project Development Building position in South East Asia Regional strategy 40 MW RedSol project Malaysia • 35.49 MYR/MWh PPA price KEDA • RSS 3 to be launched H • Capex of ~ 50 mUSD • Projects from previous auctions • SSO to fund 100% equity TERENGGA • Bi-lateral and private PPAs in region NU • ~75%
Slide 25: Financials
o Scatec Solar Improving our future™ Financials
Slide 26: Q4’17 - Consolidated & proportionate financials
Q4’17 - Consolidated & proportionate financials Consolidated financials (NOK million) SSO proportionate financials (NOK million) Revenues EBITDA EBIT Revenues EBITDA EBIT 922 655 595 534 500 363 461 438 294 281 276 279 210 222 217 207 160 151 148 153 143 165 87 100 106 83 66 47 58 -11 Q4 16 Q1 17 Q2
Slide 27: Solid financial results across segments
Proportionate financials Solid financial results across segments Fourth quarter 2017 Power Power Operation & Development & Production Production Maintenance Construction Corporate Total (NOK million) 100% basis SSO share* SSO share* SSO share* SSO share* Revenues and other income 285 125 15 294 4 43
Slide 28: Scatec Solar’s share of cash flow to equity
Scatec Solar’s share of cash flow to equity SSO proportionate share of cash flow to equity* Last twelve months (NOKm) Development & Construction Operation & Maintenance Corporate Power production 167 76 183 130 148 143 44 29 41 42 30 -63 -65 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 2015 2016 2017 Total 23 7 20
Slide 29: A solid financial position
A solid financial position Financial position (NOKm) • Cash position of NOK 2,863 million of which NOK 688 million at the group level As of 31.12.2016 As of 31.12.2017 • Group* book equity strengthened to NOK 2,072 7,075 7,075 10,240 10,240 million – equity ratio of 74% 10 000 • Successful refinance
Slide 30: 2017 - movement of free cash at group level
2017 - movement of free cash at group level NOK million Brazil, Malaysia and Egypt Net WC construction projects 688 65 167 291 22 151 Development of 304 477 project backlog 227 and pipeline 73 373 229 End 2016 Distributions Cash flow to Cash flow to Cash flow Project Dvidend Project Net Net Working
Slide 31: Further strengthening of growth capacity
Further strengthening of growth capacity Fully funding for investments in projects under construction and in backlog (1,183 MW) and further project development over the next 1-2 years Uses – NOK million Sources – NOK million Funding of projects under construction and in backlog (1,183 MW): 800-900 1
Slide 32: Outlook
o Scatec Solar Improving our future™ Outlook
Slide 33: Guidance and growth targets
Guidance and growth targets Growth target (MWs) Return and margin targets: • Average equity return of 15% after tax on investments in new solar power plants • Project development and construction (D&C) 2,800 gross margins averaging 15% Financial targets: 1,300-1,500 745 • 2018 O&M revenues of NOK 70
Slide 34: Focus on project delivery and pipeline development
Focus on project delivery and pipeline development • Emerging markets continue to present themselves with attractive opportunities • Further expansion of our portfolio will benefit from our strong partnerships • Very high construction activity in 2018 and 2019 • Capital Markets Day to be held May 30
Slide 35: Thank you
Thank you Our values • Predictable • Driving results • Changemakers • Working together