Investor presentation

Transcription

1 Investor presentation May 2016 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 to Scatec Solar ASA

4 Scatec Solar - an independent solar power producer An independent solar power producer SSO develops, builds, owns and operates large scale solar plants Present in South Africa, Czech Republic, Rwanda, USA, Honduras and Jordan + global business development Experienced and fast-growing Project track record of close to 600 MW 383 MW in operation and 43 MW under construction Focus on growth in emerging solar markets Project backlog and pipeline of ~1.6 GW Additional project opportunities of ~2.3 GW Integrated across the downstream value chain Generating margins through all project stages Assets with strong and predictable long-term cash flows 4

5 SSO: An Integrated Independent Power Producer Scatec Solar Develops, Builds, Owns & Operates Solar Plants for 20 Years Scatec Solar Equipment manufacturing Project development Financing Construction Operations Ownership (IPP) Own development Local partners Equity and debt structuring Engineering Procurement Project management Performance Management Maintenance and repair Long-term ownership Asset management

6 Scatec Solar asset portfolio 848 MW Operational assets 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 7 8 Agua Fria, Honduras Utah Red Hills, USA MW 104 MW Total 383 MW Assets under construction Jordan 8 43 MW Projects in backlog* Los Prados, Honduras 9 53 MW Upington, RSA MW Segou, Mali MW 10 Serato & Sorbral, Brazil MW Total 422 MW (*) Projects with secured tariff and/or off take agreements 6

7 The 10 MW Oryx solar power plant in Jordan

8 Project development A solid project funnel supporting growth 2,426 MW - 74 MW Regions Americas, Africa, MENA Pipeline Assessed as having more than 50% likelihood of being realized 1,056 MW >50% -118 MW >90% Regions Americas, East and West Africa, South Africa, Egypt, Pakistan Backlog Assessed as having more than 90% likelihood of being realized 422 MW + 78 MW Financial close/ Construction start Regions South Africa, Mali, Honduras, Brazil IN OPERATION / UNDER CONSTRUCTION 426 MW 6

9 Project development A comprehensive project structuring phase Enter pipeline Enter backlog 6-18 months 3-9 months Financial close 9-12 months Grid connection Power Purchase agreements and support agreements Key terms: tariff level, currency, tenor, deemed energy Grid code and other technical requirements Government guarantees / concession agreements Project structuring Tax review, legal structure establishment Environmental and Social Impact Assessments Project insurance & Political risk insurance Project finance Negotiate term-sheet Technical and legal due diligence Environment and CSR due diligence Business case verification Yield studies Capex and opex verification Project finance terms Construction preparations EPC company set up, tax & licenses EPC contract negotiations Sourcing, resource mobilization Construction Project management Cost control Quality assurance 9

10 Project development 78 MW added to backlog since Q4 15 reporting Project Capacity Target construction start SSO ownership Status Los Prados, Honduras 53 MW Q % Project finance progressing well awaiting final grid permit - some construction activities started. Segou, Mali 33 MW Q % Project finance process with IFC. Construction preparations continue. Piaui, Brazil 78 MW Q % Project finance process started. Upington, South Africa 258 MW Q %* Project finance and EPC preparations ongoing construction start as originally planned. Total 422 MW (*) Local Trust to own 40% - Trust to be funded by SSO and Norfund 10

11 Project development High project development activity across the pipeline Project Capacity Target construction start Status Egypt 341 MW 2016 Programme moving forward. Project finance due diligence and EPC preparations ongoing. Shared infrastructure under construction. East & West Africa 105 MW 2016 PPAs for 40 MW in Mozambique and 48 MW in Kenya with governments for approval. Pakistan 150 MW 2017 Well positioned to secure the 2016 tariff. Government grid studies now completed. Project finance available. Americas 30 MW MW in Mexico awaiting grid capacity feedback. South Africa 430 MW 2018 SSO bid the projects in November Award of preferred bidder status is delayed and expected after financial close of Round 4 projects. Total 1,056 MW 11

12 Access to financing: Norfund, IFC and other partnerships Norfund partnership: Project development and investment partnerships in various regions Norfund and KLP is equity co-investors in South Africa, Rwanda and Honduras IFC partnership: Project development and investment partner in selected countries in West Africa Project finance partners IFC, GIEK, EksportKreditt, FMO, EBRD, Proparco, Cifi multilateral development banks and institutions providing long term non-recourse project finance Standard Bank and partners providing project finance to plants in South Africa Key benefits: Access to lower cost of capital Expanded network for project origination Risk mitigation representing the Norwegian government, the World Bank and key local financial and government partners 12

13 Our business model and typical legal structure Simplified illustration of company structure and main contracts in place 100% Scatec Solar 39%-100% Shareholders agreement Equity coinvestors Land lease agreements Land owners 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 13

14 Financials

15 Consolidated financials Continued strong growth Consolidated financials, NOK million Revenues EBITDA Net profit

16 Consolidated financials Revenues (NOK million) EBITDA and Net profit (NOK million) Last twelve months rolling (NOK million) EBITDA 146 Net profit Q1 15 Q2 15 Q3 15 Q4 15 Q Q1 15 Q1 16 Q1 15 Q2 15 Q3 15 Q4 15 Q1 16 Quarter on quarter revenue decline reflecting seasonality in South African production and weaker ZAR, partially offset by revenues from the Utah plant Net profit affected by loss on the Utah plant and non-cash currency loss on intercompany loans 16

17 Power Production The 104 MW Utah plant in full production Power production (GWh) Quarter on quarter development: The new 104 MW Utah plant produced 43 GWh the main driver of the quarter on quarter growth Production across the existing plants declined 8% as normal for the season % Q1 15 Q2 15 Q3 15 Q4 15 Q1 16 Czech, 20 MW Linde, 40 MW Utah, 104 MW Kalkbult, 75 MW ASYV, 9 MW Dreunberg, 75 MW Agua Fria, 60 MW 17

18 The Utah Plant: A 20 year PPA with fixed power price from 2017 The 104 MW Utah Red Hills plant is entering into the 20-year fixed PPA price from selling power in merchant market in 2016 Merchant price Q1 16: 16 USD/MWh PPA price from 2017: 59 USD/MWh Eligible for Renewable Energy Credits (REC s) and Production Tax Credits (PTC s) representing additional revenue streams Low revenues and cash flow neutral through 2016 The 104 MW Utah Red Hills solar power plant in the US Power price Utah Red Hills plant Merchant 20 year Power Purchase Agreement price + REC s

19 Power Production Utah and seasonality impact financials Revenues & EBITDA (NOKm) Last twelve months rolling (NOKm) Revenues EBITDA Q Q Q Q Q Q Q EBITDA 90% 86% 85% 90% 85% 89% 87% Quarter on quarter revenue reduction from existing plants of NOK 35 million 8% lower production as expected for the season and 9% weaker ZAR against NOK The new Utah Red Hills plant generated revenues of only NOK 8 million in the merchant market 19

20 Operation & Maintenance The O&M business grows as asset base expands Revenues & EBITDA (NOKm) Last twelve months rolling (NOKm) Revenues EBITDA Q Q Q Q Q Q Q EBITDA 55% 63% 65% 36% 44% 53% 53% The O&M contract for the 60 MW Agua Fria plant in Honduras effective from January 2016 Revenues and EBITDA affected by a lower performance bonus accrual 20

21 Development & Construction Construction of 43 MW in Jordan progressing Revenues & EBITDA (NOKm) Last twelve months rolling (NOKm) Revenues EBITDA Q Q Q Q Q Q Q Gross Margin 16% 12% 13% 22% 12% 31% 14% EBITDA 7% 9% 3% 13% 3% 21% 8% The Oryx plant is now mechanically complete and expected to earn revenues from May Construction progresses well on the 33 MW EJRE/GLAE plant Non-recurring opex of about NOK 4 million related to close down in the US 21

22 Cash flow in Scatec Solar O&M contract #1 O&M contract #2 Power Production: O&M contract #3 Single Purpose Vehicle #1 Single Purpose Vehicle #2 Single Purpose Vehicle #3 Dividends Equity O&M margins Total cash available Development & Construction margins Working capital Construction project #1 Construction project #2 Construction project #3 Surplus liquidity / Scatec Solar dividends Page 22

23 Financial highlights Cash flow to Scatec Solar s equity SSO proportionate share of cash flow to equity* Last twelve months rolling (NOKm) Development & Construction Corporate Operation & Maintenance Power production Q1 15 Q2 15 Q3 15 Q4 15 Q Q1 15 Q1 16 Power Production cash flow reduced mainly due to seasonally lower production in South Africa - Utah cash neutral Moderate D&C cash flow with Jordan construction progress only contributor Corporate cost includes interest expenses on NOK 500 million senior 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. 23

24 Financial position Investing for further growth Cash position of NOK 1,217 million of which NOK 277 million free cash available outside project companies Invested NOK 422 million in new plants and in maturing backlog and pipeline Total interest bearing liabilities* of NOK 5.4 billion of which NOK 4.9 billion non-recourse project financing Financial position (NOKm) As of As of ,984 7,984 7,726 7, 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. 24

25 Outlook

26 Strong market growth The global market for PV is expected to grow from 57 GW to 68 GW in 2016* Emerging economies take advantage of lower electricity prices coming from installation of renewables Financing and contract periods are becoming standardized Lower oil and gas prices have limited impact on the appetite for renewables Market transformation opens up for new business offerings Scatec Solar is strengthening its position as a leading emerging market player The 60 MW Agua Fria solar power plant in Honduras (*) Source: Bloomberg New Energy Finance, Q PV market outlook 26

27 Outlook Targeting 1,400 1,600 MW in operation and under construction by year end % gross margin from Development and Construction Target average equity IRR of 15% nominal after tax on power plant investments Target 2016 cash flow to SSO equity of NOK million (PP and O&M) MW in production and under construction In operation In operation & under construction Q2 16 production target of 185,000 MWh YE2015 YE2016e YE2018e 27

28 Thank you Our values Predictable Driving results Changemakers Working together

29 Diversified portfolio of long term projects Overview of plants in operation and under construction Project name Capacity (MW) SSO ownership COD Off-take arrangement Expected annual production (MWh) Expected annual revenues (100%) (NOKm) Expected annual EBITDA (100%) (NOKm) Plants in operation and under construction: Czech plants % 2010/ year, FiT 20, Kalkbult, South Africa % Q year, PPA 150, Linde, South Africa % Q year, PPA 93, Dreunberg, South Africa % Q year, PPA 178, ASYV, Rwanda % Q year, PPA 15, Agua Fria, Honduras* % 2H year, PPA 110, Red Hills, USA** % Q year, PPA 210, Oryx, Jordan % Q year, PPA 25, EJRE/GLAE, Jordan % Q year, PPA 78, Total SSO projects ,200 1,218 1,088 Please note that off-take arrangements are subject to certain terms and conditions Revenue and EBITDA estimates are based on contractual power prices and estimated production volumes. Please note that the expected annual revenues reflect the estimated 1 st year after COD for the respective solar PV plants Please see the appendix for further information about the assumptions for FX rates applied (*) Revenues and EBITDA includes additional incentive tariff of 4 USD cent/kwh for early completion, awaiting confirmation by Utility (**) Merchant power price in Revenues based on PPA from