Investor presentation May 2017 Our values Predictable Driving results Changemakers Working together
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
Introduction
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
Our focus: Large scale PV and 20+ year cash flows # POWER PLANTS 12 IN OPERATION 322 MW FY 2016 PRODUCTION 791 GWh BACKLOG 1,131 MW 5
A solid track record of developing and building PV 322 MW in operation: Czech Kalkbult Dreunberg Linde ASYV Agua Fria Jordan 20 MW 75 MW 75 MW 40 MW 9 MW 60 MW 43 MW Czech Republic South Africa South Africa South Africa Rwanda Honduras Jordan Installation track record (MW): 15 years of experience 60+ projects in 10 countries 386 559 602 28 41 49 58 105 182 268 2001-2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 6
A growing and diversified asset portfolio In operation Czech Republic 1 20 MW Kalkbult, RSA 2 75 MW Linde, RSA 3 40 MW Dreunberg, RSA 4 75 MW 1 ASYV, Rwanda 5 9 MW Agua Fria, Honduras 6 60 MW 14 7 Jordan Total 7 43 MW 322 MW 8 6 10 13 Projects in backlog* 12 5 11 Honduras South Africa 8 9 53 MW 258 MW Mali 10 33 MW Mozambique 11 40 MW Brazil 12 150 MW Malaysia 13 197 MW Egypt 14 400 MW 9 Total 1,131 MW 2 3 4 Pipeline & opportunities 3.0 GW (*) Projects with secured tariff and/or off take agreements 7
The integrated business model
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 9
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 10
Norwegian and international partners key for our success Norfund partnership: Project development and investment partnership Norfund (with KLP) are equity co-investors in South Africa, Rwanda and Honduras IFC partnership: Project development and investment partner in West Africa, South Asia GIEK partnership Project finance Guarantees and bonds Project finance partners Multilateral development banks and commercial institutions Climate finance partners Key benefits: Access to lower cost of capital Expanded network for project origination Risk mitigation 11
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
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 300-400 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 www.scatecsolar.com post@scatecsolar.com 13
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 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
Markets and project backlog & pipeline
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 3.24-70% 83.5 68.6 1.80 1.49 45.0 1.13 0.98 30.7 18.3 2010 2012 2014 2016 2018 2010 2012 2014 2016 2018 * Utility Scale. System cost will vary from market to market depending on system size, market maturity, bankability etc. Copyright: Scatec Solar ASA www.scatecsolar.com post@scatecsolar.com Source: Bloomberg New Energy Finance, Q4 2016 PV Market Outlook 16
Large-scale solar - a major part of the market PV installation per year, GW 95 94,8 90 85 83,0 80 75 70 65 60 55 50 45 54,6 66,1 68,8 74,1 Utility (>5MW) Industrial (1MW - 5MW) Commercial (20kW - 1MW) Residential (<20kW) 40 35 30 25 20 15 10 5 0 2015 2016E 2017E 2018E 2019E 2020E Source: GTM, Solar Summit, May 2016 17
Project development 400 MW added to the project backlog 1,965 MW Regions Americas, Africa, MENA Pipeline Assessed as having more than 50% likelihood of being realized 745 MW >50% >90% Regions South Africa, Pakistan, Nigeria, Kenya and Burkina Faso Backlog Assessed as having more than 90% likelihood of being realized 1,131 MW Financial close/ Construction start Regions South Africa, Mali, Mozambique, Honduras, Brazil, Malaysia, Egypt IN OPERATION* 322 MW Copyright: Scatec Solar ASA www.scatecsolar.com post@scatecsolar.com (*) Scatec Solar has entered into an agreement for sale of 100% of the sponsor equity in the 104 MW Utah Red Hills project 18
Project backlog Signed 25 year PPAs for 400 MW in Egypt Background and status Feed-in-Tariff programme for 2 GW of PV established in 2015 25 year PPA signed with EETC in April 2017 Six projects co-located in Aswan area, Upper Egypt Economic reforms basis for further growth in Egypt a solar market with a solid long term potential Partners Scatec Solar ASA* KLP Norfund and local partners Project finance to be provided by EBRD, Green Climate Fund and Islamic Development Bank Key facts Capacity: 400 MW Capex: USD 450 million Production: 870 GWh/year Copyright: Scatec Solar ASA www.scatecsolar.com post@scatecsolar.com *SSO investment of 50-70 MUSD 19
Project backlog Good progress on projects across backlog UPINGTON, 258 MW 20 year PPA with Eskom Capex: ZAR 4,600 million Production: 645 GWh/year MALAYSIA, 197 MW 21 year PPA with Tenaga Nasional Berhad Capex: MYR 1,240 million Production: 285 GWh/year BRAZIL, 150 MW 20 year PPA with ANEEL Capex: BRL 720 million Production: 305 GWh/year HONDURAS, 53 MW 20 year PPA with ENEE Capex: USD 100 million Production: 110 GWh/year MOZAMBIQUE, 40 MW 25 year PPA with EDM Capex: USD 80 million Production: 77 GWh/year MALI, 33 MW 25 year PPA with Energie du Mali Capex: EUR 52 million Production: 60 GWh/year Copyright: Scatec Solar ASA www.scatecsolar.com post@scatecsolar.com 20
Project pipeline Project pipeline status Project South Africa Pakistan Nigeria Kenya Burkina Faso Total Capacity 430 MW 150 MW 100 MW 48 MW 17 MW 745 MW Status SSO bid the projects in November 2015. Award of preferred bidder status expected after closing of the round 4 Upington projects All required development steps completed. Recived grid study approval and is now applying for the costs plus tariff Signed Joint Development Agreement with Norfund and Africa50 in November 2016. Initialed PPA with local utility Kenya Power and Lighting Company (KPLC) in December 2016. Concession agreement signed with Ministry of Energy. Awaiting final sign-off from Ministry of Finance before PPA can be signed. Copyright: Scatec Solar ASA www.scatecsolar.com post@scatecsolar.com 21
Financials
Consolidated & proportionate financials Consolidated financials (NOK million) SSO proportionate financials (NOK million) Revenues EBITDA EBIT Revenues EBITDA EBIT 363 437 375 281 294 276 228 222 213 210 222 165 160 153 154 107 93 83 40 100 56 209 111 63 153 83 143 87 47 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q1 16 Q2 16 Q3 16 Q4 16-11 Q1 17 23
Proportionate financials improve earnings visibility Financial results presented based on proportionate method without eliminations In line with segment reporting while adjusting for Scatec Solar s ownership in Power Production First quarter 2017 (NOK million) Power Production 100% basis Power Production SSO share* Operation & Maintenance Development & Construction Corporate Total revenues and other income 276.5 125.3 14.6-0.2 3.0 EBITDA 243.3 107.8 4.9-15.4-10.5 86.8 Operating profit (EBIT) 165.8 69.3 4.6-15.9-10.8 47.2 First quarter 2016 (NOK million) Power Production 100% basis Power Production SSO share* Operation & Maintenance Development & Construction Corporate * Total revenues and other income 227.3 102.5 13.1 257.4 2.4 EBITDA 193.7 81.5 5.7 7.5-11.6 83.1 Operating profit (EBIT) 122.6 41.0 5.2 5.1-11.8 39.5 Total 142. 7 Total 375. 3 (*) SSO share adjusted based on Scatec Solar s ownership in the subsidiaries 24
SSO 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 4 26 7 32 10 4 46 44 4 29 135 14 103 69 24 126 24 151-36 -31-63 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q1 15 Q1 16 Q1 17 Total 22 31 29 23 7 216 188 89 Interest paid on corporate bond (*) 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. 25
Financial position Solid financial position NOK 665 million free cash Financial position Total assets of NOK 7.5 billion New equity NOK 380 million raised in March 2017 NOKm Consolidated SSO prop. share Group level** Cash 1,562 1,137 665 Interest bearing liabilities* -5,195-2,752-496 Net debt/cash -3,633-1,615 169 Financial position (NOKm) As of 31.12.2016 As of 31.03.2017 7,075 7,075 7,492 7,492 8 000 7 000 1 313 1 863 1 522 1 484 6 000 509 671 5 000 4 000 3 000 5 591 5 253 5 629 5 300 2 000 1 000 0 Assets Equity & Liabilities Assets Equity & Liabilities Non-current liabilities Current liabilities Equity Non-current assets Current assets *) Total interest bearing liabilities does not include shareholder loans to project companies (**) As per definitions of Recourse Group in senior unsecured bond agreement 26
Outlook
Fully funded for investments in project backlog In operation Capacity MW 322 Annual Production GWh ~640 Annual Revenues MNOK ~1,100 Total Capex MNOK 5,639* Total Equity MNOK 1,382* Backlog 1,131 ~2,352 ~1,750 ~13,000 ~2,800 Total 1,453 ~2,992 ~2,850 ~18,639 ~4,182 Scatec Solar s share of equity investments NOK 1,700 2,000 million in project backlog SSO targets average equity IRR of 15% nominal after tax on these investments Free cash position of NOK 665 million Project backlog s D&C contract value representing NOK ~11,000 million Scatec Solar targets 15% gross margin from Development & Construction (*) Based on PP&E and Project Equity in project companies as of year-end 2016 28
Outlook Growth target by year end 2018: Growth target (MWs) 1,300-1,500 MW in operation & under construction 2017 SSO cash flow to equity from PP and O&M: NOK 170-190 million 745 1,300 1,500 Power production: 2017: ~ 640 GWh Q2 17: ~145 GWh 1,131 322 In operation Backlog Pipeline In operation and under construction by end 2018 29
Summary The global market for PV is expected to grow significantly in the years to come Recent fall in component prices makes solar power even more competitive Emerging economies will continue to take advantage of lower cost renewables Cost of batteries in rapid decline Lower oil and gas prices have limited impact on the appetite for renewables The 10 MW Oryx solar power plant in Jordan Copyright: Scatec Solar ASA www.scatecsolar.com post@scatecsolar.com 30
Thank you Our values Predictable Driving results Changemakers Working together