Investor presentation

Transcription

1 Investor presentation February 2018 Our values Predictable Driving results Changemakers Working together

2 Disclaimer The following presentation is being made only to, and is only directed at, persons to whom such presentation may lawfully be communicated ( relevant persons ). Any person who is not a relevant person should not rely, act or make assessment on the basis of this presentation or anything included therein. The following presentation may include information related to investments made and key commercial terms thereof, including future returns. Such information cannot be relied upon as a guide to the future performance of such investments. The release, publication or distribution of this presentation in certain jurisdictions may be restricted by law, and therefore persons in such jurisdictions into which this presentation is released, published or distributed should inform themselves about, and observe, such restrictions. This presentation does not constitute an offering of securities or otherwise constitute an invitation or inducement to any person to underwrite, subscribe for or otherwise acquire securities in Scatec Solar ASA or any company within the Scatec Solar Group. This presentation contains statements regarding the future in connection with the Scatec Solar Group s growth initiatives, profit figures, outlook, strategies and objectives as well as forward looking statements and any such information or forward-looking statements regarding the future and/or the Scatec Solar Group s expectations are subject to inherent risks and uncertainties, and many factors can lead to actual profits and developments deviating substantially from what has been expressed or implied in such statements. 2

3 Introduction

4 Generating and capturing PV value in emerging markets 1 2 Fully integrated business model tailored for emerging markets Strong global demand for PV accelerates growth in opportunities NYTT BILDE 3 Excellent track record in capturing value from complex PV projects 4 Solid asset base and a significant self funding capacity 5 Strong project pipeline supporting further growth in attractive markets 4

5 Our focus: Large scale PV and 20+ year cash flows # POWER PLANTS 12 IN OPERATION 322 MW UNDER CONSTRUCTION 394 MW BACKLOG 789 MW 5

6 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): 15 years of experience 60+ projects in 10 countries

7 A growing and diversified asset portfolio In operation 1 Czech Republic South Africa ASYV, Rwanda Agua Fria, Honduras Jordan Total MW 190 MW 9 MW 60 MW 43 MW 322 MW Under construction Malaysia Honduras (phase I) Brazil Total MW 35 MW 162 MW 394 MW Projects in backlog Egypt South Africa Malaysia, Redsol Mozambique Mali Total MW 258 MW 40 MW 40 MW 33 MW 789 MW Grand total 1,505 MW 7

8 Guidance and growth targets Return and margin targets: Average equity return of 15% after tax on investments in new solar power plants Project development and construction (D&C) gross margins averaging 15% Growth target (MWs) 2,800 Financial targets: 2018 O&M revenues of NOK million and EBITDA margins of 40-45% 789 1,300-1, cash flow to SSO equity from 322 MW in operation: NOK million Annual cash flow to SSO equity from 1.5 GW in operation: NOK million In operation Under construction Backlog Target end 18: In operation and under construction Pipeline Opportunities 8

9 The integrated business model

10 Integrated Independent Power Producer Scatec Solar develops, builds, owns & operates solar plants for 20 years Phases Origination Development Structuring Delivery Opportunity Pipeline Backlog Construction Power Production O&M Operation Key activities Analysis & Intelligence Business opportunity Partnerships Commercial viability Site control PPA and support agreements Business case Regulatory approvals/permits Equity, debt structuring Engineering Procurement Construction Management Operation & Maintenance Asset management 10

11 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 losses Active asset management to enhance value of portfolio Development margin Construction margin O&M margin NPV power production Optimize performance Cost of capital Residual value Total value 11

12 Our business model and typical project structure Simplified illustration of company structure and main contracts in place Scatec Solar Equity coinvestors 100% 39%-100% Shareholders agreement Land owners Land lease agreements Scatec Solar O&M / EPC World Bank/others EPC contract O&M contract Asset Management contract Political risk insurance (when relevant) Single Purpose Vehicle PPA agreement State owned utility Loan agreements Sovereign guarantee Concession agreement Project financing State government 12

13 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 USDm 90 (75%) Projects are financed by non-recourse debt, allowing Scatec Solar to operate with high financial leverage at the project level while maintaining limited risk exposure at the parent level 15 (12.5%) Annual self funded growth capacity of adding MW based on average ownership of 50-60% 15 (12.5%) 15 (12.5%) Total capex Debt Financing Partner s equity share D&C margin SSO equity Example based on a 75 MW project Copyright: Scatec Solar ASA post@scatecsolar.com 13

14 A truly sustainable business model Solar plants embedded in local communities in emerging economies for 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 risks Environmental and Social Impact Assessments are undertaken at the start of the project phase Community relations, social and environmental impacts are managed as an integrated part of the business Specialist advisors engaged to manage CSR and Economic Development programs 14

15 Project backlog, pipeline & opportunities

16 Impressive cost reductions and growth in demand Total system cost (USD / Watt) * Annual installed volume - GW Other Installation Balance of plant Inverter Module Rest of world India China USA Japan Europe % * Utility Scale: System cost will vary from market to market depending on system size, market maturity, bankability etc. Copyright: Scatec Solar ASA post@scatecsolar.com Source: Bloomberg New Energy Finance, Q PV Market Outlook 16

17 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 capex to opex Development banks and private players provides funding Kick-starting the market with build up of solar know-how /employment Multilateral development banks typically with a long standing presence and experience in the county Important lender to governments for infrastructure projects Non-recourse project finance lending High standards on Environment, Social, Governance Project structures and contracts designed to mitigate risk (political financial, compliance etc) Creates business opportunities Reduces risks of Scatec Solar s investments significantly Copyright: Scatec Solar ASA post@scatecsolar.com 17

18 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 banks and DFIs Credible local partners 18

19 Project update: Malaysia & Brazil Malaysia, 197 MW 25 year PPA with TNB SSO 100%* Capex: USD 293 million Project finance: USD 234 million Status Civil works approaching completion on all three sites Mechanical installation started Grid connection planned sequentially during 1H 2018 Brazil, 162 MW 20 year PPA with CCEE SSO 44%, Statoil 44%, Apodi 12% Capex: USD 215 million Project finance: USD 140 million Status Civil works approaching completion Mechanical installation will commence soon Grid connection planned during 2H 2018 Copyright: Scatec Solar ASA 19

20 Project update: Egypt & Honduras Egypt, 400 MW 25 year PPA with EETC SSO 51%, Norfund 24%, Africa50 25% Capex: USD 445 million Project finance: USD 335 million Status Financial close in October 2017 Common infrastructure in completion Construction start during 1H 2018 Honduras, 35 MW, phase 1 20 year PPA with ENEE SSO 70%, Norfund 30% Capex: 80 MUSD Project finance: USD 50 million Status Project experienced civil unrest Construction work will continue in close corporation with Honduran authorities Some impact on cost and schedule Copyright: Scatec Solar ASA post@scatecsolar.com 20

21 Project update: South Africa, Mozambique & Mali South Africa, 258 MW 20 year PPA with ESKOM SSO 42%, Norfund 18%, BEEE Trust 40% Capex: USD 315 million Project finance: USD 260 million Status Preparing with IPP Office and lenders for financial close Mozambique, 40 MW 25 year PPA with EDM SSO 52.5%, Norfund 22.5%, EDM 25% Capex: USD 76 million Project finance: USD 62 million Status Working to close out remaining conditions precedent of the loan to reach financial close Mali, 33 MW 25 year PPA with Energie du Mali SSO 51%, IFC 30%, Africa Power 19% Capex: USD 56 million Project finance: USD 42 million Status Currently finalizing project loan and guarantee agreements Copyright: Scatec Solar ASA 21

22 Total capacity added MW Project Development Outlook in South Africa Political situation ANC selected pro-business Cyril Ramaphosa as new party leader in December 2017 Immediate effects of the leadership change Currency: ZAR strengthened to best level in 2.5 years Corruption: Prosecution of State Capture actors Eskom: New board and acting CEO Future solar potential Integrated Resource Plan (IRP) sets volume, technology mix and pace of new generation capacity 1st iteration was IRP included 8.4 GW of PV 2 nd draft IRP indicates annual addition of at least 1 GW of PV from 2022 onwards based on conservative demand and PV costs forecasts Development of Proposed Integrated Resource Plan, PV Wind Landfill Gas - Peaking (OCGT) Gas - Fast Response (Engines) Gas - Mid Merit (CCGT) 22

23 Project Development Scatec Solar s position in South Africa REIPPP Programme 258 MW in Upington Awarded preferred bidder status in 2015 Approved by Board of Eskom Awaiting formal sign-off by Ministry 430 MW in pipeline Validity of bid bonds extended to 31 March 2018 Project opportunity portfolio Additional 400 MW of projects High irradiation, good interconnection situation Future potential Tenders Private PPAs in the C&I space Wheeling to multi-site off-takers Site-based generation for self-consumption NAMIBIA CAPE TOWN UPINGTON SOUTH AFRICA BLOEMFONTEIN PORT ELIZABETH Projects in operation Round 4 projects Pipeline and opportunities 23

24 Project Development Building position in South East Asia Regional strategy 40 MW RedSol project Malaysia RSS 3 to be launched Projects from previous auctions Bi-lateral and private PPAs in region Vietnam 4+ GW annual new capacity needed KEDA H PERA K TERENGGA NU MYR/MWh PPA price Capex of ~ 50 musd SSO to fund 100% equity ~75% leverage Target financial close end 2018 FiT in place; PV competitive with coal Negotiating first 50 MW project MALAYSI A Bangladesh Urgent need for new capacity KUALA LUMPUR First 50 MW project awaiting approval Myanmar: 70 MW project proposal submitted MELAK A Current Scatec Solar projects 24

25 Financials

26 Q Consolidated & proportionate financials Consolidated financials (NOK million) SSO proportionate financials (NOK million) Revenues EBITDA EBIT Revenues EBITDA EBIT Q4 16 Q1 17 Q2 17 Q3 17 Q Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Copyright: Scatec Solar ASA post@scatecsolar.com 26

27 Proportionate financials Solid financial results across segments Fourth quarter 2017 (NOK million) Power Production 100% basis Power Production SSO share* Operation & Maintenance SSO share* Development & Construction SSO share* Corporate SSO share* Revenues and other income Gross margin EBITDA Operating profit (EBIT) EBIT (%) 61% 54% 27% 3% - 15% Total Full year 2017 (NOK million) Power Production 100% basis Power Production SSO share* Operation & Maintenance SSO share* Development & Construction SSO share* Corporate SSO share* Revenues and other income 1, , ,668 Gross margin 1, ,056 EBITDA Operating profit (EBIT) EBIT (%) 59% 56% 39% 34% - 38% Total Copyright: Scatec Solar ASA post@scatecsolar.com (*) SSO share adjusted based on Scatec Solar s ownership in the subsidiaries 27

28 Scatec Solar s share of cash flow to equity SSO proportionate share of cash flow to equity* Last twelve months (NOKm) Development & Construction Corporate Operation & Maintenance Power production Q4 16 Q1 17 Q2 17 Q3 17 Q Total Interest paid on corporate bond Copyright: Scatec Solar ASA post@scatecsolar.com (*) Cash flow to equity is defined as EBITDA less normalised (i.e. average over each calendar year) loan and net interest repayments, less normalised income tax payments. The definition implies changes in net working capital and investing activities are excluded from the figure. 28

29 A solid financial position Cash position of NOK 2,863 million of which NOK 688 million at the group level Group* book equity strengthened to NOK 2,072 million equity ratio of 74% Successful refinance of the 2018 Bond new NOK 750 million bond with 4 year tenor NOKm Consolidated SSO prop. Share Group level** Cash 2,863 1, Interest bearing liabilities* -7,221-3, Net debt -4,358-2, Financial position (NOKm) As of As of ,075 7,075 10,240 10, Assets Equity & Liabilities Assets Equity & Liabilities Non-current liabilities Current liabilities Equity Non-current assets Current assets Copyright: Scatec Solar ASA post@scatecsolar.com *) Total interest bearing liabilities does not include shareholder loans to project companies (**) As per definitions of Recourse Group, Recourse Equity and Equity to capitalisation ratio in senior bond agreement 29

30 movement of free cash at group level NOK million Brazil, Malaysia and Egypt Net WC construction projects Development of project backlog and pipeline End 2016 Distributions from operating power plants Cash flow to equity O&M Cash flow to equity D&C Cash flow to equity Corporate Project equity Dvidend distribution Project Development capex Net proceeds from equity issue Net proceeds from bond issue Working Capital/other End 2017 Copyright: Scatec Solar ASA post@scatecsolar.com 30

31 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): NOK m Capex 12,200 - Project debt 9, ,600-1, ,800-1,950 - Project equity 2, Partners equity (37%) 1,100 - SSO equity (63%) 1,800 SSO remaining equity 950 Remaining equity Corporate & Dividends Project Development Further growth Total Cash* CF from PP & OM D&C cash flow** Total Annual cash flow to equity from Power Production and O&M is expected to increase to NOK million with backlog grid connected Copyright: Scatec Solar ASA post@scatecsolar.com (*) After tax D&C cash flow adjusted for working capital changes related to construction 31

32 Outlook

33 Guidance and growth targets Return and margin targets: Average equity return of 15% after tax on investments in new solar power plants Project development and construction (D&C) gross margins averaging 15% Growth target (MWs) 2,800 Financial targets: 2018 O&M revenues of NOK million and EBITDA margins of 40-45% 789 1,300-1, cash flow to SSO equity from 322 MW in operation: NOK million Annual cash flow to SSO equity from 1.5 GW in operation: NOK million In operation Under construction Backlog Target end 18: In operation and under construction Pipeline Opportunities 33

34 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, 2018 Copyright: Scatec Solar ASA 34

35 Thank you Our values Predictable Driving results Changemakers Working together