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Report
from the
Board of Directors
Scatec ASA - Annual Report 2022
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2019
2020
2021
2022
Revenues
EBITDA
Highlights 2022
●
Proportionate revenues of NOK 5,957 million
(4,329) and EBITDA of NOK 2,550 million (2,686) ¹⁾
●
Stable operational performance across the
portfolio, while financials were impacted by the
Russian invasion of Ukraine
●
Started construction of new power plants totalling
1.2 GW in South Africa, Brazil, and Pakistan,
representing 25% of Scatec’s NOK 10 billion 2027
equity investment target
●
Announced sharpened strategy and revised growth
targets
●
Received ‘A’ score in ESG reporting by Position Green,
and
recognised with ‘A’ score by CDP
●
The Board proposes dividends of NOK 1.94 per
share and adjusted dividend policy for 2023 and
onwards
Proportionate revenues and EBITDA by year
Key figures
NOK million
FY 2022
FY 2021
Proportionate Financials
²⁾
Total revenues and other income
5,957
4,329
4,521
3,890
312
260
1,069
137
56
42
EBITDA
2,550
2,686
2,835
2,949
74
75
-221
-223
-138
-114
Operating profit (EBIT)
460
1,606
917
1,977
68
70
-358
-301
-167
-140
Profit/loss
-1,213
285
Net interest- bearing debt ²⁾
18,215
15,175
Power production (GWh) ³⁾
3,898
3,823
Scatec share of distribution from operation companies
1,231
1,603
Consolidated Financials
Revenues and other income
3,751
3,803
EBITDA ²⁾
2,555
2,903
Operating profit (EBIT)
723
2,012
Profit/(loss)
-1,228
456
Net interest- bearing debt ²⁾
19,578
14,949
Basic earnings per share (NOK)
-8.40
2.45
Power Production (GWh)
9,381
9,729
1) Amounts from same period last year in brackets
2) See Alternative Performance Measures appendix for definition
3) Production volume on a 100% basis from all entities, including JV companies
4) Revenue from power production for 2021 has been adjusted due to change in accounting policy as disclosed in Note 29
40
Introduction
Scatec is a leading renewable energy solutions provider, accelerating access to reliable and affordable clean energy in emerging
markets. As a long-term player, we develop, build, own and operate renewable energy plants, with 4.6 GW in operation and under
construction across four continents today. We are committed to grow our renewable energy capacity, delivered by our close to 800
passionate employees and partners who are driven by a common vision of ‘Improving our Future’.
2022 Summary
Business strategy and growth
●
Sharpened strategy centred around growing
renewables in our focus markets, advancing green
hydrogen and optimising our portfolio
●
Started construction of new power plants in South
Africa, Brazil and Pakistan, totalling 1.2 GW, and
finalised 10 percent of the construction work during
2022
●
The green hydrogen project in Egypt with an
electrolyser capacity of 100 MW was further progressed
and moved into backlog
●
Project pipeline and backlog of 16.7 GW was further
matured during the year, with 85% held in our focus
markets
Operational
●
Stable operations and production in line with guidance
across the asset portfolio
●
Total proportionate power production of 3,898 GWh
generating an EBITDA of NOK 2,835 million
●
Financial performance in Ukraine impacted by the
Russian invasion
Organisation and people
●
Terje Pilskog started as new CEO on 1 May 2022
●
Executive Management Team expanded to strengthen
regional set-up
●
Expanded the full-time workforce with 156 employees
to 778 employees during 2022
●
50 different nationalities, a truly global company
●
29% female employees in management positions at the
end 2022, compared to the 2022 target of 32%.
●
DEIB programme launched to enhance attributes that
are already embedded in our culture
●
2022
Statement on Equality and Non-discrimination
available on the
Climate
●
Annual GHG emissions avoided from our power plants
reached 4.7 million tonnes (100%)
●
On the ‘A’ List for tackling climate change by the
Carbon Disclosure Project (CDP)
●
Climate targets approved by SBTi in January 2023 –
minimise direct emissions by 2030 and net zero across
the value chain by 2040
EU Taxonomy
1)
•
All revenues, opex and investments are derived from
EU Taxonomy eligible activities
•
Scatec’s revenue is 100%, Capex 91% and Opex 86%
aligned to the Taxonomy
•
Detailed site-specific climate risk assessments
completed for all solar, wind and hydropower projects
•
Quarterly reporting on key ESG indicators externally
•
Received ‘A’ score in ESG reporting by Position Green
•
Limited assurance on all GRI indicators according to
ISAE 3000
HSSE
•
Delivered more than 4.5 million working hours with no
fatalities or serious injuries during 2022
•
The lost time incident frequency rate (LTIF) was 0.7 per
million working hours resulting from three incidents
•
Certified to ISO 9001, 45001 and 14001 by DNV
Human rights/supply chain
●
Addressed forced labour concerns in China –
collaboration with key suppliers on traceability
●
Well prepared to report according to Transparency act
as per 2023 requirements
2)
●
EcoVadis supplier management programme
implemented to screen suppliers of key procurement
categories
●
151 grievances received, 87% were resolved and the
remaining in the process of being resolved
Anti-corruption and Compliance
●
Scatec provides mandatory anti-corruption and code of
conduct training to all employees. 100% of all
employees have completed the training
1) For details, please refer to our EU Taxonomy Report 2022 available under ESG resources on the Company’s website
2) For the third party gap analysis summary and Scatec's action taken towards best practice and compliance to the Transparency Act, refer to the Company’s ESG
Performance Report 2022
Scatec ASA - Annual Report 2022
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Group – Proportionate Financials
Please refer to Note 3 for details of the segment financials.
Power Production
Power Production revenues increased to NOK
4,521
million
(3,890) in 2022. The reported revenues for 2022 are reflecting
sale of electricity from solar power plants in Brazil, Czech
Republic, Egypt, Honduras, Jordan, Malaysia, Mozambique,
Rwanda, South Africa, Argentina and Ukraine, from hydro power
plants in Philippines, Uganda and Laos and wind power in
Vietnam. The increased revenues compared to 2021 is mainly
explained by the Philippines, driven by significantly higher power
sales at higher power prices, new power plants in operation and
foreign currency effects, partly offset by lower revenues in
Ukraine due to the ongoing war, and lower water inflow and
production in Laos.
In the Philippines, power is purchased in the power market in
periods when contract sales volumes exceed production volumes,
which generally occur during the dry season in the first half of the
year, and sold in the market when production volumes exceed
contract sales volumes, which generally occur during the wet
season in the second half of the year. Production is further
optimised to catch the highest possible spot prices which creates
variances between actual production volumes and contract sales
volumes in any given period. As such, some power will also be
bought in the market in periods when production volumes
exceed contract sales volumes and sold in the market when
production volumes fall short of contract sales volumes. The
purchase of power is captured in costs of sales. High power
production and high power prices in the Philippines in 2022 lead
to cost of sales of NOK 852 million (270) and gross profit of NOK
3,669 million (3,620).
Operating expenses increased from last year due to more plants
in operation and a credit loss provision of NOK 87 million on
accounts receivable in Ukraine.
Power Production EBITDA decreased to NOK
2,835
million (
2,949
)
in 2022 explained by the factors above.
Additionally, the decreased EBIT compared to 2021 is mainly
explained by an impairment charge of NOK 770 million in the first
quarter 2022 triggered by the Russian invasion of Ukraine.
Installed capacity was 3,375 MW at year-end and full year
production on proportionate basis reached 3,898 GWh, up from
3,823 GWh in 2021. The increase in production volumes is mainly
driven by the Philippines, Argentina and Ukraine partly offset by a
decrease in Laos and minor variations across the other power
plants.
Scatec’s proportionate share of cash flow to equity from Power
Production was NOK 1,487 million, down from NOK 1,640 million
in 2021. The decreased cash flow to equity compared to last year
is mainly explained by the decrease in EBITDA. Cash flow to
equity in 2022 includes NOK 363 million from debt refinancing of
assets in South Africa and Vietnam. In 2021, NOK 397 million from
debt refinancing of assets in the Philippines was included.
For further details on financial results on a country-by-country
basis please refer to Scatec’s Q1 to Q4 2022 historical financial
information’ published on Scatec’s web page.
Development & Construction (D&C)
Revenues in Development & Construction ended at NOK 1,069
million (137) and gross profit at NOK 106 million (16) in 2022. The
increase in revenues is explained
by the projects under
construction in South Africa, Brazil, and Pakistan.
Operating expenses increased from last year due to higher
spending on new project opportunities and higher construction
activity. In 2022, operating expenses comprised of approximately
NOK 237 million (179) for early-stage project development and
NOK 90 million (60) related to construction activities.
EBITDA for the year amounted to NOK
-221 million (-223)
explained by the factors above.
Scatec’s proportionate share of cash flow to equity from D&C was
negative NOK 149 million, compared to negative NOK 164 million
in 2021.
Services
Revenues in the Services segment reached NOK 312 million (260).
The revenue growth is explained by the growing portfolio of
producing assets.
Operating expenses of NOK 237 million (186) in the segment
mainly constitute fixed expenses such as personnel and recurring
maintenance cost reflecting fixed maintenance schedules. The
increase in operating expenses is explained by the growing
portfolio of producing assets.
EBITDA reached NOK 74 million (75), corresponding to an
EBITDA margin of 24% (29%). The decrease in EBITDA margin
compared with last year is explained by slightly higher operating
expenses and a general reduction of margins on new contracts in
the portfolio.
42
Scatec’s proportionate share of cash flow to equity from Services
was NOK 58 million in 2022, slightly decreased from NOK 60
million in 2021.
Corporate
Corporate consists of activities such as corporate services,
management, and group finance
. The segment reported an
EBITDA of NOK -138 million (-114) in 2022.
Revenues in the corporate segment refers to management fees
charged to other operating segments for corporate services
rendered across the Group. Corporate incurred NOK 193 million
(156) in operating expenses. The increase in operating expenses
reflects continued strengthening of corporate function with a
growing asset portfolio and project pipeline, and higher
construction activities.
Consolidated financial statements
Consolidated income statement
NOK million
2022
2021
Revenues
3,002
3,038
Net income/(loss) from JV and associated
companies
749
765
Total revenues and other income
3,751
3,803
EBITDA
2,555
2,903
Operating profit (EBIT)
723
2,012
Profit before income tax
-1,095
759
Profit/(loss) for the period
-1,228
456
Profit/(loss) to Scatec
-1,334
388
Profit/(loss) to non-controlling interests
106
68
Revenues
Revenues from power sales was NOK 3,751 million (3,803) in
2022, broadly in line with last year.
Operating Profit
Earnings before interest, taxes, depreciation and amortisation
(EBITDA) reached NOK 2,555 million in 2022, a decrease from
NOK 2,903 million in 2021. The EBITDA was negatively impacted
by a credit loss provision of NOK 98 million on accounts
receivable in Ukraine, recognised in the first quarter 2022, and
higher operating expenses related to construction activities and
strengthening of corporate function with a growing asset
portfolio and project pipeline.
Depreciation, amortisation and impairment amounted to NOK
1,832 million in 2022, compared to NOK 892 million in 2021. The
increase is mainly explained by impairments during 2022. In 2022,
the Group recognised an impairment expense of NOK 948 million
(76), of which 132 million related to discontinued development of
projects in Mali, Bangladesh, India and Lesotho and NOK 816
million related to the solar power plants in Ukraine. Refer to Note
12 Impairment for further details.
Operating profit (EBIT) ended at NOK 723 million in 2022, down
from NOK 2,012 million in 2021 explained by the factors as above.
Net financial items
NOK million
2022
2021
Interest and other financial income
115
47
Interest and other financial expenses
-1,666
-1,368
Net foreign exchange gains/(losses)
-268
69
Net financial expenses
-1,818
-1,253
The net financial expenses for the year are impacted by significant
currency movements
and increased interest rates compared with
last year.
Interest and other financial income of NOK 115 million (47) mainly
relates to income on cash balances.
Interest and other financial expenses of NOK 1,666 million (1,368)
consist of interest expenses of NOK 1,424 million (NOK 1,303
million), an unrealised non-cash loss of NOK 89 million (-) on an
USD/ZAR currency hedging contract related to RMIPPP, and other
financial expenses of NOK 154 million (NOK 67 million). Scatec
manages interest rate risk with a hedge ratio of approximately 80%
for the non-recourse project level debt and approximately 20% for
the corporate debt. The increase in interest expenses compared
with last year is primarily explained by increased debt after
refinancing in Egypt and South Africa and increased interest rates
on unhedged debt at the corporate level. The increase in other
financial expenses is mainly explained by non-recurring fees
recognised for the refinancing of the power plants in Egypt, South
Africa and Vietnam.
The increase in foreign exchange losses in 2022 from positive
NOK 69 million to negative NOK 268 million primarily driven by
significant movements of USD and EUR against local currencies in
countries where the group has USD and EUR as functional
currencies. The losses for the year are mainly unrealised losses,
primarily incurred in Egypt and Ukraine on translation of
monetary assets and liabilities denominated in local currencies.
Profit before tax and net profit
The tax expense amounted to NOK 132 million in 2022, down
from NOK 303 million in 2021. The difference between tax
expense and calculated tax expense based on the Norwegian tax
rate of 22% is impacted by different tax rates in the jurisdictions in
which the companies operate, withholding taxes paid on
Scatec ASA - Annual Report 2022
43
dividends, currency effects and effects from non-recognised tax
losses. Further, the profit/loss from JVs and associates are
reported net after tax which also impacts the effective tax rate.
The difference between effective tax expense for the year 2022
and a calculated tax expense based on the Norwegian tax rate of
22% is also impacted by non-recognised deferred tax asset
related to the impairment of the assets in Ukraine. For further
details, refer to Note 7 Tax.
Non-controlling interests (NCI) represent equity-investors in
power plants co-owned by Scatec.
The allocation of profits
between NCI and Scatec is impacted by the fact that non-
controlling interests (NCI) only represent shareholdings in the
power plants that are fully consolidated, while Scatec also carries
the cost of project development, construction, operation &
maintenance and corporate functions. Profits allocated to NCI do
not include net income from JVs and associated companies.
Other comprehensive income, which comprises items that may
subsequently be reclassified to profit or loss, amounted to NOK
986 million (317) in 2022. This relates to after-tax net movement
of cash flow hedges of positive NOK 514 million (278) and foreign
currency translation differences of NOK 472 million (40). During
the year, NOK depreciated against the key currencies USD, MYR
and BRL compared to the average rates of last year. On a net
basis, the movement in average rates positively affected the
translation of consolidated revenues to NOK by approximately
NOK - 304 million, while the net impact on translation of net
profit was approximately NOK - 84 million.
Total comprehensive income was thus negative NOK 242 million
(773) for 2022 of which negative NOK 648 million (595) was
attributable to Scatec, while NOK 406 (178) million is attributable
to non-controlling interests.
Consolidated statement of cash flow
Cash flow
NOK million
2022
2021
Net cash flow from operating activities
756
2,072
Net cash flow from investing activities
-1,406
-8,081
Net cash flow from financing activities
221
2,413
Net increase/(decrease) in cash and cash
equivalents
-428
-3,597
Net cash flow from consolidated operating activities amounted to
NOK 756 million (2,072) in 2022, compared to EBITDA of NOK
2,550 million (2,686). The difference is primarily explained by
change in net income from JVs and associated companies and
changes in other assets and liabilities.
Net cash flow from consolidated investing activities was negative
NOK 1,406 million (8,081) driven by investments in property, plant
and equipment related to power plants under construction in
South Africa, Pakistan and Release projects and investments in
associates and JV, mainly related to Mendubim. This was partly
offset by distributions from JVs. The 2021 figures include a
consideration of NOK 7,848 million paid for SN Power.
Net cash flow from financing activities amounted to NOK 221
million (2,413). The main financing activities in 2022 is issuance of
new debt in South Africa, refinancing of the existing non-recourse
debt in South Africa, payment of interests and repayment of non-
recourse financing in project companies as well as payment of
dividend to equity holders of the parent company and NCI.
In total, the Group’s cash balance was reduced by NOK 428
million (-3,597). Of the total cash balance of NOK 4,132 million
(4,171), NOK 2,057 million (1,711) was restricted cash in power
plant companies, NOK 223 million (91) represented other
restricted cash while NOK 1,743 million (2,335) represented free
cash at the Group level.
Proportionate share of cash flow to equity
Scatec’s “proportionate share of cash flow to equity”, is an
alternative performance measure that seeks to estimate the
Group’s ability to generate funds for equity investments in new
power plant projects and/or for shareholder dividends over time.
NOK million
2022
2021
Power production
1,487
1,640
Services
58
60
Development & Construction
-149
-164
Corporate
-347
-252
Sum
1,050
1,284
The cash flow to equity for Power Production for 2022 decreased
compared to last year, mainly explained by the decrease in
EBITDA and lower refinancing proceeds. Cash flow to equity in
2022 includes NOK 363 million from debt refinancing of assets in
South Africa and Vietnam. The full year 2021 included NOK 397
million from debt refinancing of assets in the Philippines.
The cash flow to equity in Services was approximately at the same
level compared to last year. The cash flow to equity in the D&C
segment for 2022 was impacted by construction activity in
addition to increased development and construction costs.
The cash flow to equity for the Corporate segment for 2022
primarily relates to operating expenses and interest expenses on
corporate funding. The increase for the Corporate segment in
44
2022 is primarily explained by the increased interest rates on
unhedged debt.
Consolidated statement of financial position
Assets
NOK million
2022
2021
Property, plant and equipment and intangible
assets
18,068
16,682
Investments in JV and associated companies
10,674
9,745
Other non-current assets
1,476
957
Total non-current assets
30,218
27,385
Other current assets
2,380
1,474
Cash and cash equivalents
4,132
4,171
Total current assets
6,512
5,645
Total assets
36,730
33,030
Total assets amounted to NOK 36,730 million at year-end 2022,
up from NOK 33,030 million at the end of 2021.
Non-current assets totaled NOK 30,218 million (27,385), the
increase in non-current assets is primarily driven by construction
activities in South Africa, Release and Pakistan, in addition to
currency translations from weakening of NOK against USD, EUR
and MYR. The increase is partly offset by NOK 742 million
impairment of the Ukrainian solar plants, impairment of
development projects of NOK 132 million and yearly depreciation
of NOK 864 million. See Note 9 Property, plant and equipment
and Note 12 Impairment for more information.
The balance of investments in JVs and associated companies have
increased due to appreciation of the functional currencies in the
JVs, and investments in JVs mainly related to Mendubim. Net
income from JVs and associated companies was NOK 749 million
in 2022 and NOK 669 million was received as dividend. See Note
13
Investments in joint venture and associated companies
reconciliation.
Current assets amounted to NOK 6,512 million (5,645). The
increase in current assets is primarily driven by working capital
changes related to the construction of the RMIPPP project in
South Africa. The cash balance is stable compared to 31
December 2021. Operating activities contribute positively with
NOK 756 million in cash inflow for the financial year 2022. Cash
outflows are mainly related to construction of plants and payment
of non-recourse financing, dividends to NCI and payment of
dividend to equity holders of the parent company. See the
consolidated statement of cash flows for further details and Note
14 Cash, cash equivalents for a detailed breakdown of cash
balances as well as an overview of movement of cash at the
Recourse Group level.
Equity and liabilities
NOK million
2022
2021
Equity
8,803
9,919
Non-current non-recourse project
financing
13,297
10,708
Non-current corporate financing
7,987
7,264
Other non-current liabilities
2,604
2,224
Total non-current liabilities
23,888
20,197
Current non-recourse project financing
1,963
1,147
Current corporate financing
-
-
Trade payables and other current liabilities
2,076
1,766
Total current liabilities
4,039
2,913
Total liabilities
27,927
23,110
Total equity and liabilities
36,730
33,030
Book equity ratio
24%
30%
Total equity decreased by NOK 1,117 million compared to 31
December 2021, driven by negative total comprehensive income
for the period and dividend distributions to the equity holders of
the parent company and NCI. Further details are given in the
consolidated statement of changes in equity.
Corporate financing consists of a listed green bond as well as
financing secured in relation to the acquisition of SN Power in
2021. Changes in balance in 2022 is due to foreign currency
translation. See Note 21 Corporate Financing for further details.
Total non-recourse financing increased as of 31 December 2022
mainly as a result of issuance of NOK 3 080 million in project debt
to the RMIPPP project in South Africa. Down payments of NOK
1,175 million have decreased the balance in 2022. The non-
current portion of the Ukrainian debt was reclassified to current
during the first quarter 2022 due to breach of covenants. See
Note 21 for further details.
Parent Company
Scatec ASA prepares its financial statements according to
Norwegian Generally Accepted Accounting Principles (NGAAP).
Scatec ASA is a holding company comprising parts of corporate
services, management and group finance. In addition, Scatec ASA
provides certain services related to project development and
construction for its subsidiaries.
Scatec ASA reported revenues of NOK 751 million and operating
loss (EBIT) of NOK 665 million in 2022, compared to revenues of
NOK 166 million and operating loss (EBIT) of NOK 343 million in
2021.
Scatec ASA - Annual Report 2022
45
Revenues increased from 2021 to 2022 due to higher construction
activity. All revenues are Group internal and based on
agreements established between Scatec ASA and its subsidiaries,
joint ventures and associated companies.
Cost of sales and operating expenses (excluding depreciation,
amortisation and impairment) increased to NOK 1,266 million
from NOK 456 million in 2021, reflecting higher construction
activity. The number of employees increased from 116 to 146
following the Company’s growth.
The Company recognised a write down of NOK 948 million
booked to interest and other financial expenses in 2022.
The
write-down is related to both impairment of shares (NOK 341
million) and impairment of receivables to group companies in
Ukraine (NOK 607 million).
363 million (250). Dividends from subsidiaries was NOK 1,384
million in 2022 up from NOK 277 million in 2021. Profit after tax
was NOK -480 million, compared to a profit after tax of NOK -74
million in 2021.
Total equity for the parent company Scatec ASA stood at NOK
10,265 million at 31 December 2022, up from NOK 9,761 million in
2021. Total assets amounted to NOK 20,591 million at 31
December 2022, up from NOK 20,048 million a year earlier.
Overview of project portfolio
Project stage
2022
(MW)
2021
(MW)
In operation
3,375
3,355
Under construction
1,267
195
Project backlog
953
1,818
Project pipeline
15,712
14,775
Total
21,307
20,144
Total annual production from the 5,315 MW of solar, wind and
hydro in operation, under construction and in backlog, is
expected to reach about 14,100 GWh (on 100% basis).
Projects under construction and backlog
Project backlog is defined as projects with a secure off-take
agreement and assessed to have more than 90% likelihood of
reaching financial close. When financial close is obtained the
project moves into construction generally with Scatec as the turn-
key Engineering, Procurement & Construction (EPC) provider.
Prior to financial close, environmental and social baseline studies
or impact assessments (ESIAs) are conducted to identify potential
environmental and social risks and impacts of the Company’s
activities. During construction Scatec is compensated for early-
stage development expenditures and construction services
through a Development & Construction (D&C) margin. The D&C
margin is used as a funding source for Scatec’s equity investment
in the project company.
Total initial capex for the projects under construction amounts to
approximately NOK 15.3 billion on a 100% basis. The capex will be
financed by non-recourse project debt and equity from the
sponsors with an expected average leverage of approximately
65%. Scatec is holding an average of 50% of the equity in the
projects under construction equivalent to an initial equity
investment of NOK 2.5 billion, of which NOK 1.7 billion were
remaining at the end of 2022. The remaining portion is well
covered by expected D&C margins, cash flow from operations
and free cash.
All figures in NOK have been updated based on currency rates
per the end of 2022.
For more information about the projects under construction and
in backlog, refer to our website:
Under construction
Sukkur, Pakistan 150 MW solar
Construction of the 150 MW Sukkur project in Pakistan has
progressed during 2022. Key activities included groundworks,
piling, orders for main equipment, and tracker installations
ramped up towards the end of the year. Most of the material and
equipment have arrived on site, such as modules, trackers,
inverters and cables. At the end of 2022 there were about 700
contractors and Scatec employees involved in construction work
on site, and 250,000 safe manhours completed without lost time
incidents.
Power from the solar power plant will be sold to Pakistan
Authorities under a 25-year PPA. Capex for the project is
approximately USD 110 million to be financed by approximately
70% non-recourse project finance debt and equity from the
sponsors.
Scatec owns 75% of the project and provide EPC services as well
as Operation & Maintenance (O&M) and Asset Management
(AM) services to the power plants.
Mendubim, Brazil 531 MW solar
Construction activities have progressed well during 2022 for the
531 MW Mendubim solar project, in partnership with Equinor and
Hydro Rein. Key construction activities included drainage,
foundations, levelling and road works, and clearance work for a
transmission line. All purchase orders for main equipment have
been placed. More than 500 contractors and Scatec employees
are involved in the construction work on site.
46
The 20-year PPA signed with Alunorte, will cover
approximately
60% of the power produced with the remaining volume to be
sold in the Brazilian power market. The estimated total capital
expenditure for the project is USD 430 million to be financed by a
mix of non-recourse project debt and equity from partners.
All three partners have an equal economic interest of 33.3% in
the power plant and will jointly provide EPC services. Scatec will
further provide O&M as well as AM services to the power plants
together with Equinor.
Kenhardt, South Africa, 540 MW solar with 225 MW/1,140
MWh battery storage
In July 2022 Scatec started construction of the RMIPPP project
after reaching financial close. Construction activities in 2022,
included piling, orders for main equipment, work on modules
substructure foundations, grid connections and access roads.
More than 500 Scatec employees and contractors are working on
site. All site labour is sourced from the local community, and the
project has established a dedicated community communication
hub in Kenhardt
.
Once operational the project will provide 150 MW of dispatchable
power to the Kenhardt region under a 20-year Power Purchase
Agreement with Eskom, the South African state-owned power
utility.
The project has a total capex of about ZAR 16.4 billion (USD 962
million) to be financed by equity from the owners and non-
recourse project debt. Equity will be paid in after final drawdown
of the project debt. Lenders includes The Standard Bank Group as
arranger and British International Investment.
Scatec will own 51% of the equity, and H1 Holdings, Scatec’s local
Black Economic Empowerment partner, will hold the remaining
49%. Scatec will be the EPC provider and provide O&M and AM
services to the power plants together with H1.
Release
Release has a project portfolio of 26.5 MW under construction, of
which the main project consists of 18 MW remaining under a 36
MW solar and 20 MWh battery project in Cameroon, with a
contract with ENEO the main utility of Cameroon.
Philippines, 20 MW BESS
Construction of the 20 MW battery energy storage system (BESS)
at the Magat hydropower plant is progressing well. The facility is
Scatec’s first BESS project connected to a hydropower plant, and
has been developed by SN Aboitiz Power, a joint venture
between Scatec and AboitizPower.
Hitachi Energy is providing engineering, procurement, and
construction services for the project.
The Bank of the Philippine
Islands and China Banking Corporation have provided debt
financing. The facility will be capable of dispatching energy to the
grid at times of peak demand and is expected to be used
primarily for ancillary services.
Backlog
Construction start of the backlog projects relies on final
governmental approval processes, completion of project finance
processes and component price development.
During the fourth quarter 2022 a 60 MW solar project in
Botswana has been added to the backlog.
Grootfontein, South Africa, 273 MW solar
In October 2021, Scatec was awarded preferred bidder status on
three solar projects totalling 273 MW by the Department of
Mineral Resources and Energy in South Africa under the
Renewable Energy Independent Power Producers Procurement
Programme (REIPPPP). In December 2022, the power purchase
and implementation agreements for the projects were signed.
The power will be sold under 20-year PPAs. Scatec will own 51%
of the equity in the projects with H1 Holdings, our local Black
Economic Empowerment partner owning 46.5% and a
Community Trust holding 2.5%. Scatec will be the EPC provider
and provide O&M as well as AM services to the power plants.
Tunisia portfolio, 360 MW solar
In December 2019, Scatec was awarded three solar projects in
Tunisia totalling 360 MW. The three projects will hold 20-year
PPAs with Société Tunisienne de l’Electricité et du Gaz (STEG).
During the fourth quarter, Scatec engaged with the Tunisian
authorities to negotiate the PPA tariff in order to improve the
economics of the projects. These discussions are ongoing.
Scatec will have an ownership share of 51% of the project and
provide EPC, O&M and AM services to the project company.
Egypt, 100 MW green hydrogen facility
Scatec has partnered with, Fertiglobe, The Sovereign Fund of
Egypt and Orascom Construction to develop, build, own and
operate a 100 MW green hydrogen production facility in Ain
Sokhna in Egypt. When the project is fully developed the facility
will be powered by 260 MW of solar and wind capacity.
The partners have signed a term sheet with Fertiglobe for a 20-
year offtake agreement for 100% of the volumes produced. The
Scatec ASA - Annual Report 2022
47
green hydrogen will be used as feedstock for production of green
ammonia.
The estimated total capital expenditure for the project is USD 430
million to be financed by 75% non-recourse project debt and
equity from partners.
Scatec will be the lead equity investor in the project with an
ownership share of 52% and provide EPC services in collaboration
with Orascom Construction. Scatec will further provide O&M and
AM services for the project alongside key technology providers
and project partners.
Botswana, 60 MW solar
In August 2022, Scatec signed a binding 25-year PPA with
Botswana Power Corporation, a state-owned utility in Botswana,
for a 60 MW solar power plant at Selebi-Phikwe. The solar project
is the first of its kind in the country.
The estimated total capital expenditure for the project is BWP 640
million (USD 49 million) to be financed by 70% non-recourse
project debt and equity from partners.
Scatec currently owns 100% of the project, and will provide EPC
services, as well as Asset Management and O&M services.
Pipeline
Location
2022
(MW)
2021
(MW)
Latin America
1,276
2,147
Africa and the Middle East
7,597
5,389
Europe & Central/South Asia
2,975
1,690
Southeast Asia
3,864
5,549
Total pipeline
15,712
14,775
In addition to the projects in backlog Scatec holds a solid pipeline
of projects totalling 15,712 MW across technologies.
Approximately 85% of the projects in the pipeline are located
within our focus markets.
Solution
2022
(MW)
2021
(MW)
Solar
5,005
6,311
Wind
6,223
5,150
Hydro
2,684
2,514
Green Hydrogen
1)
1,500
500
Release
300
300
Total
15,712
14,775
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 where project finance
is available. The project sites and concessions have been secured
and negotiations related to power sales and other project
implementation agreements are in various stages of completion.
Other matters
Russian war in Ukraine
On 24 February, Russia attacked Ukraine, and started a war that
has now been going on for almost a year.
We witness a country
under siege and countless lives lost in defense of their homes.
This situation has given rise to a major humanitarian and
geopolitical crisis.
Scatec currently operates five solar power plants with a total
capacity of 336 MW, located in the central and southern parts of
the country. The situation is very challenging and highly
uncertain, and Scatec's top priority is the safety of our Ukrainian
employees. All of Scatec’s employees are accounted for.
Approximately 95% of the power plants owned and operated by
Scatec are intact and available, however power demand is down,
and production is being curtailed by the grid operator on an ad
hoc basis. On 28 March 2022 the Ministry of Energy of Ukraine
issued an Order to reduce the amounts paid to the renewable
power producers to 15% of the agreed tariff to cover for
operating expenses for the duration of the martial law. On 29
June 2022 the Ministry of Energy issued a new order which
increased the payment level from a minimum of 15% to a
minimum of 18% after 2 July 2022. The unpaid amounts are
postponed to a later period. Due to the uncertainty related to
future settlement, Scatec has from 24 February 2022 only
recognised revenues in accordance with actual paid amounts and
expect to do so until the new regulation is lifted. The payments
levels have increased during the year and reached 66% in the
fourth quarter 2022. From 24 February 2022 until end of 2022,
the average payment level from the off-taker has been 42%.
1)
Renewable capacity for use in production of green hydrogen and green ammonia
48
The Russian invasion triggered an impairment assessment in the
first quarter 2022 and Scatec recognised an impairment charge of
NOK 770 million in the proportionate financials (NOK 816 million
in the consolidated financials) related to tangible and intangible
assets in Ukraine. On 31 December 2022 the impairment tests
have been updated with new information on cash flow
assumptions and discount rates, however no further impairments
have been recognised. After the impairment recognised in the
first quarter 2022, total fixed assets and intangible assets in
Ukraine amounts to NOK 2,107 million in the consolidated
financials as of 31 December 2022. Refer to Note 12 Impairment
for details on the impairment of the plants.
Scatec recognised an expected credit loss provision in the first
quarter 2022 with respect to trade and other receivables which
amounted to NOK 87 million in the proportionate financials (NOK
98 million in the consolidated financials). In the period second to
fourth quarter 2022 no further loss provisions have been made.
The provision is included in other operating expenses in the 2022
figures. Total outstanding receivables in Ukraine has during 2022
decreased from NOK 390 million to NOK 167 million (excluding
the credit loss provision) in the consolidated financials, due to
payments of accounts receivables from the period before the war
and changes in other receivables. Refer to Note 3 Operating
Segments for more details.
Scatec’s power plant companies in Ukraine are not in compliance
with covenants in the loan agreements for the non-recourse
project debt at year-end. The situation is unchanged from the
first quarter 2022, when NOK 603 million of the non-recourse
financing was reclassified from non-current to current. As of 31
December 2022, all
on-recourse financing in Ukraine, amounting
to NOK 964 million, continues to be classified as current in the
consolidated financials. Scatec has continuous and constructive
dialogue with the lenders and the parties have agreed on a non-
formalised “stand still”.
Additionally in Ukraine, please refer to the first quarter report and
the annual report 2021 for information related to the construction
loan provided by PowerChina Guizhou Engineering Co
(“PowerChina”) to Scatec for the Progressovska power plant in
Ukraine. Scatec and PowerChina has signed a revised payment
plan for the construction loan where part of the loan was paid in
August 2022 and of the remaining EUR 44 million, EUR 22 million
will be paid at the end of 2023 and EUR 22 million by mid-2025.
Scatec ASA has provided a corporate and bank guarantee to
PowerChina in support of this obligation. In the third quarter
2022 the construction loan was reclassified from trade payables
to other non-current interest-bearing liabilities. In the fourth
quarter, EUR 22 million related to the instalment due in 2023 has
been reclassified from non-current to current interest-bearing
liabilities. Refer to Note 17 Other Non-current and current
liabilities and Note 24 Guarantees and commitments for further
details.
Potential PPA changes and overdue receivables in Honduras
Scatec has over time experienced delayed payments from the
state owned off-taker in Honduras (ENEE) and overdue
receivables have accumulated to a varying degree since second
quarter 2020. During 2022, the off taker has paid
on average two
thirds of total recognised revenues
additional NOK 214 million of outstanding receivables were paid.
As a result, a large part of the accumulated overdue receivables
in Honduras in the consolidated financials was settled and
decreased from NOK 232 million at the end of the third quarter
2022 and NOK 172 million at the end of fourth quarter 2021 to
NOK 66 million at the end of the fourth quarter 2022.
In May 2022, a new Energy law came into force as introduced by
the new Government of Honduras. In accordance with the new
law, the state owned off-taker has proposed certain changes to
the existing PPAs for all renewable power plants in the country,
including Scatec’s solar plants Agua Fria and Los Prados.
Negotiations have continued and matured during the fourth
quarter with proposed changes to the PPA and settlement of
outstanding receivables. A new agreement can include changes
to tariff level and PPA tenor. As described above, part of
outstanding receivables is settled, and remaining amount is
subject to the ongoing negotiations. The outcome of the
negotiations is not concluded, and an unfavorable result may
have negative impact on payment of outstanding receivables by
ENEE and the future financial performance of the assets.
Covenants
Except for Ukraine, Scatec was in compliance with financial
covenants for both the recourse and non-recourse debt on 31
December 2022. Refer to Note 21 Corporate financing and Note
22 Non-recourse financing for more details.
COVID-19
Scatec has not experienced any material effects related to
COVID-19 on its operations of power plants in 2022. The COVID-
19 situation has however influenced the markets where Scatec
develops projects and has been causing delays in government
approvals for some of the development projects.
Organisation
Scatec has an international and diverse workforce which at the
end of 2022 was represented by 50 nationalities and 778
employees in 29 countries. The organisation was strengthened
across key functions and regions by expanding the team by 156
Scatec ASA - Annual Report 2022
49
highly skilled full-time employees during the year. In addition to
the full-time workforce, Scatec had 146 short-term employees
and 61 consultants supporting its functions. The organisation
remains flexible, and the workforce continues to deliver strong
results and growth.
The Company’s reporting on diversity and equal opportunity is
available in the Statement of equality and non-discrimination on
For further
information on work environment, including HSSE, statistics refer
to the Company’s 2022 ESG Performance report.
Risk factors and risk management
In Scatec, risk management is an integrated part of our operating
system. The company has over the last years systemised the
approach to risk management through policies and procedures,
which are followed up by the management team and relevant
functions including Solutions, Finance, Internal Audit, Legal,
Sustainability, HSSE, Compliance and O&M. The main risk
management policies are reviewed and approved by the Board of
Directors on a regular basis.
With integrated operations within emerging economies and
across renewable technologies, we are exposed to a variety of
risks. Scatec’s ability to manage these risks is fundamental for the
Company’s success and has over time developed into a key
competitive advantage for Scatec. Scatec capitalise on the
experience from complex environments and risk management
systems to de-risk an opportunity and move it forward.
As part of the risk management system, all risks related to a
project are identified and addressed in management- and
project- reviews and reported upon on a regular basis. These
reports represent an important part of Scatec’s decision gate
reviews. An annual and quarterly risk review are performed by the
Executive Management Team, and the output of the reviews are
reported to the Board of Directors.
Insurance
Scatec uses comprehensive global insurance programmes as risk
mitigating tools which covers a broad range of potential risks
such as general third-party liability, professional indemnity,
directors’ and officers’ liability, cyber security, and in certain
countries political violence insurance.
Scatec’s operational assets are insured through the programmes
against physical damage, including natural catastrophes and
weather-related events, through a property damage & business
interruption insurance. A similar insurance programme is also
designed for projects under construction which cover physical
damage, loss of income and transportation risks.
Below we have summarised the key inherent risks that Scatec is
exposed to as per year end 2022 and key mitigation activities.
Project development risk
Scatec’s growth relies on successful project development which is
impacted by a number of factors including availability of attractive
sites, grid capacity and securing interconnection, power prices,
component prices, interest rate level, government approval
process, permits and access to competitive financing. Scatec
manages this risk through a well-proven approach to screening
of new projects as well as holding a large and broad project
pipeline.
Component price risk
From the date when Scatec enters into long-term contract for the
sale of electricity and to the date of the investment decision the
Company is exposed to the risk of component price fluctuations
and supply chain disruptions.
Scatec manages such risk by seeking to work with a broad set of
suppliers and contractors and ensure that both capex and EPC
budgets for new projects hold sufficient contingencies to absorb
the most likely price fluctuations in the relevant timeframe. The
resilience to price fluctuations do however vary between projects.
During 2022 Scatec decided not to move forward with several
projects in backlog as a result of increasing component prices.
Additionally, Scatec has entered into negotiations with the
Tunisian authorities to increase the PPA tariff for the Tunisian
projects. At the same time Scatec started construction of new
projects in South Africa, Brazil, Pakistan and the Philippines which,
despite cost increases, meet return and margin within guidance.
Compliance and integrity risk
Scatec is opposed all forms of corruption and strives to meet the
highest ethical standards across its business activities. As a global
company, it has implemented an Anti-Corruption Compliance
Programme designed to meet the risks of diverse and challenging
business environments.
The Scatec Code of Conduct sets out the commitment to prevent
corruption and places clear requirements on its employees. The
Company trains employees on how to manage the corruption
risks they may face, and encourages them to ask for guidance if
they are unsure, and reminds them of their duty to speak-up if
they suspect misconduct. In 2022, Scatec focused on tightening
internal controls around high-risk partners and activities, and in
50
2023 the focus will be on targeted training for exposed positions
within the Company.
Scatec expects all business partners and suppliers to conduct their
activities in a way that is consistent with the Code of Conduct and
embeds this contractually in its Supplier Conduct Principles. The
Company screens all potential suppliers and systematically
assesses higher-risk business partners to avoid unsuitable third
parties. The assessment goes beyond corruption to include
environment, labour, human rights and sanction risks. Scatec
mitigates potential risks through transparent and fair tender
processes, robust contracting, pre-production audits and
monitoring during production.
Scatec’s whistleblower channel is available to all employees,
suppliers, partners, customers and external stakeholders through
internal channels and the corporate website. The channel is
operated by a neutral third-party to protect the anonymity of
reporters, should they so wish, and is available in multiple
languages. All reports are taken seriously and investigated
according to an established investigation procedure.
Scatec’s finance partners, including Norfund and the World Bank
International Finance Corporation, are widely acknowledged for
having high ethical standards and rigorous due diligence
requirements and, together with partners, Scatec ensures that its
projects and operations are conducted with integrity.
Political risk
Scatec sells electricity to state-owned utilities typically supported
by sovereign guarantees. The Company’s financial performance
therefore relies on government adherence to contractual
obligations and various laws and regulations.
Consequently, Scatec is subject to political risk in the countries it
operates. Scatec mitigates political risk through a comprehensive
contractual framework for each individual project and asset. Risk
is also mitigated through partnerships with multilateral
development banks as project finance lenders and/or through
establishing project risk insurance cover from the World Bank and
others. A large and broad asset portfolio also gives diversification
effects and reduces the overall political risk related to the asset
portfolio.
Cyber risk
Cyber risk is an increasing concern in society today. The main
cyber risks in 2022 were ransomware/cryptolocker, phishing,
supply chain attacks and zero-day vulnerabilities.
To mitigate these risks Scatec is protecting and monitoring all
endpoints with a well-known EDR (Endpoint Detection and
Response) solution, and another dedicated tool to reveal crypto
locker activity at an early stage. All user accounts are protected
with multi-factor authentication and users yearly need to
complete IT security awareness training.
Scatec’s offices and managed power plants are all connected to
the global enterprise network where all network traffic is passing
through next-generation firewalls that are monitored by our
service providers Security Operations Center (SOC) at all times. All
computers, servers and network devices are updated regularly by
following the best-practice schedules by the vendors. Any urgent
security vulnerabilities are patched immediately. The network is
protected against distributed denial-of-service (DDoS) attacks and
all the central server infrastructure is backed up to three different
physical locations. The security set-up is audited by third party
experts on a regular basis. Scatec has not had any major cyber
incidents in 2022.
Financial risk
Through its business activities, Scatec is exposed to financial risk,
mainly currency risk, credit risk, liquidity risk and interest rate risk.
Financial risk management is based on the objective of reducing
negative cash flow effects and to a less extent negative
accounting effects of these risks.
For a more detailed description and management of financial risk,
refer to Note 18 Financial risk management.
Power market price risk
The Company has exposure to power market price risk. Scatec
has entered into long-term fixed price contracts for the sale of
electricity from most of its power plants in operation at year end
2022. In the Philippines, Scatec has exposure to the long-term
power market price with about 70-80% of the electricity from
power plants sold under 1 - 3 year contracts to hedge the short
to mid-term market price exposure.
Health, Safety and Security risk
Through the construction of large-scale renewable energy plants
with between 500-5,000 workers on the project site, and when
providing operations and maintenance services during the
operational phase, the Company is exposed to health and safety
risk. Scatec is continuously working to achieve the goal of zero
harm to personnel, materials and the environment. Scatec takes
responsibility, sets requirements and monitors HSSE performance
in the development, construction and operations phases of the
projects. Further, the health and safety standards are defined and
communicated to employees and contractors.
Contractor management is identified as a key risk area for the
Company, and Scatec continuously works to monitor that all
Scatec ASA - Annual Report 2022
51
subcontractors operate in accordance with its corporate policy
and principles.
For countries with a high-risk rating, Scatec follows special
security measures for all travel in line with the recommendations
of the Company’s third-party risk advisor. Scatec works
systematically to strengthen its approach to security management
and emergency preparedness.
Climate risk
Scatec’s business model and strategy is based on the need to
transition from fossil fuels to reduce greenhouse gas (GHG)
emissions, a key climate opportunity. However, climate risk, both
physical risk and transition risk, could also have a range of
potential impacts on Scatec’s business. The most serious climate-
related risks involve the physical impact of extreme weather
events, including droughts and floods. Extreme weather can
cause physical damage to the plants and directly affect power
generations. The risk is mitigated through adequate engineering
in the design phase, regular inspections and emergency plans.
Transitional risks such as increased regulation, new technologies
and changes to markets also affect Scatec. As climate ambitions
increase, there is likely to be increased competition that can affect
among others component prices and power prices. Refer to our
Task Force on Climate related Financial Disclosure (TCFD) report
2022 for corporate climate risk assessments and more
information.
For further environmental and social responsibilities
refer to the 2022 ESG Performance report.
Other risks
Other inherent risk with low likelihood and/or lower potential
business impact is briefly described here.
Risk of war and civil unrest
– Scatec is generally not making
investments in regions with high risk of war and civil unrest. This
risk is assessed before starting development of new project
opportunities. The risk has unfortunately materialised in Ukraine
where Russia started a military invasion in February 2022. Refer to
‘Other matters’ for update on Ukraine.
Human rights –
human rights in renewable energy projects and the supply chain.
The main risk relating to the Company’s supply chain is related to
labour and working conditions in exposed regions such as
Xinjiang, China. The Company conducts human rights due
diligence in projects and the supply chain as per the
Transparency Act requirements and has a corporate human rights
policy aligned with the United Nations Guiding Principles on
Business and Human Rights.
Pandemic risk - Scatec
with its external risk advisors, regularly
assess risks related to global health issues such as pandemics. The
impact of COVID-19 on Scatec’s operations has been limited as
we operate critical infrastructure. The COVID-19 situation has
however influenced the markets where Scatec develops projects
and has caused delays in government approvals for some of the
development projects.
Corporate governance
The Board of Directors has made a strong commitment to ensure
trust in the Company and to enhance shareholder value through
effective decision-making and open communication between the
management, the Board of Directors, the shareholders and other
stakeholders. The Company’s framework for corporate
governance is intended to decrease business risk, maximise value
and utilise the Company’s recourses in an efficient, sustainable
manner, to the benefit of shareholders, employees and society at
large. The Company’s corporate governance framework is subject
to annual reviews and discussions by the Board of Directors. The
Company comply with the Norwegian Code of Practice for
Corporate Governance and the Board of Directors’ Corporate
Governance report is available on the corporate website under
the Investor section.
Scatec ASA has purchased and maintains a Directors and Officers
Liability Insurance on behalf of the members of the Board of
Directors and CEO. The insurance additionally covers any
employee acting in a managerial capacity and includes
subsidiaries owned with more than 50%. The insurance policy is
issued by a reputable, specialised insurer with appropriate rating.
Market outlook
According to Bloomberg New Energy Finance (BNEF), global
investments in the low-carbon energy transition reached USD 1.1
trillion in 2022, 31 per cent up from last year. Despite the record
high investment, it is below what is needed for the net zero
target. BNEF’s Net Zero Scenario calls for USD 194 trillion of
investments in the energy transition to 2050.
The demand for renewables is growing rapidly, spurred on by
increasingly urgent climate warnings, along with escalating
economical and geopolitical factors. The relative competitiveness
of renewables has strengthened over time, and it is now the most
cost-efficient power source in much of the world.
BNEF expects global solar new build to accelerate and see new
installations of around 316 GW in 2023, up from an estimated 268
GW in 2022. For wind, new installations are expected to reach 110
GW, up from 98 GW in 2022. The global energy storage market is
expected to continue to grow, estimated installations in 2023
increase to 28 GW from 16 GW in 2022.
52
Hydropower will continue to play an important role in the energy
transition. International Renewable Energy Agency IRENA
estimates in the 2022 Outlook, capacity to increase to 1,500 GW
by 2030.
Green hydrogen and green ammonia are set to play a major role
in decarbonisation of hard-to-abate sectors globally in the
coming years, driven by volatile gas prices, cheap renewables,
ambitious net zero targets and an increasing number of national
hydrogen strategies being adopted. Global demand for green
hydrogen and green ammonia is expected to reach more than
500 million tonnes and 200 million tonnes, respectively, by 2050.
Long term, BNEF expects all renewables to see massive growth
and to dominate the power sector in 2050. In its Net Zero
Scenario, BNEF highlights six key actions to be on track to reach
net zero by 2050:
●
Accelerate deployment of mature climate solutions
●
Support the development of new climate solutions
●
Manage the transitions or phase-out of carbon-intensive
activities
●
Create appropriate climate transition governance structures
●
Support the transition in emerging markets and developing
countries
●
Scale up the supply of critical materials
Forward-looking statements reflect current views about future
events and are, by their nature, subject to significant risks and
uncertainties because they relate to events and depend on
circumstances that will occur in the future. Although Scatec
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.
Scatec growth targets and outlook
In September 2022 Scatec announced a sharpened strategy and
updated growth targets. Scatec will continue to develop, build,
own and operate renewable energy in emerging markets and
secure long-term, profitable, and sustainable growth in the
strategy period towards 2027. The strategy outlines three primary
focus areas; i) grow renewables, ii) advance green hydrogen and
iii) optimise portfolio, including financial ambitions and targets.
i.
Scatec will continue to grow its renewables business,
including solar, wind and hydro, by building scale in selected
focus markets to improve predictability and value creation.
ii.
Scatec will build on its core strengths to take a leadership
role in green hydrogen by developing prime locations in
emerging markets, securing long-term offtake, and funding,
and applying the integrated business model.
iii.
Scatec will optimise its portfolio, by simplifying and
consolidating, capturing additional value in power markets,
and scaling and launching Release as an independent
platform.
Scatec targets to invest NOK 10 billion of equity in new power
plants with a required return of 1.2 times the cost of equity. The
company has a solid financial platform for growth, including a
diversified asset portfolio, prudent financial risk management,
continued focus on cost discipline, and solid cash flow.
For the full year 2023 Scatec is estimated to generate
proportionate power production EBITDA of NOK 2,700 – 3,000
million based on an estimated power production of 3,500 – 3,900
GWh.
Share capital and the Scatec share
Scatec ASA is listed on the Oslo Stock Exchange under the ticker
“SCATC”. The share capital of Scatec was NOK 3,972,932 divided
on 158,917,275 shares at year end 2022, each with a nominal
value of NOK 0.025. All shares are of the same class and with
equal voting and dividend rights. Per 31 December 2022, the
number of shareholders were 16,463. Refer to Note 25 - Share
capital, shareholder information and dividend for further
information. During 2022 Scatec’s share price declined by 50
percent.
Scatec aims at informing all interested parties about important
events and the Company’s developments through annual reports
and quarterly financial presentations, stock exchange notices and
other Company updates. Further information can be found in the
investor section of Scatec’s website at
Dividend policy
In line with the current dividend policy, the Board of Directors
have resolved to propose to the 2023 Annual General Meeting of
Scatec that a dividend of NOK 1,94 per share should be paid for
2022. The Board of Directors have further proposed to change
the payment ratio from 25% to 15% of free cash distributed from
producing power plants, to support Scatec’s growth ambitions
while retaining the Group’s objective to pay shareholder
dividends.
Financial review
Presentation of Accounts
Pursuant to Section 3-3 of the Norwegian Accounting Act, the
Board of Directors confirm that the Financial Statements have
Scatec ASA - Annual Report 2022
53
been prepared under the assumption that the Scatec Group
and Scatec ASA is a going concern and that this assumption
was appropriate at the date of approval of the Financial
Statements. The Group reports its Consolidated Financial
Statements in accordance with International Financial
Reporting Standards (IFRS) with Norwegian Kroner (NOK) as
reporting currency. The notations Scatec, Scatec Group, the
Company and the Group are used interchangeably
throughout the document. Figures in parentheses are for the
corresponding period of the previous year.
Segment and proportionate financials
Scatec reports on four operating business segments: Power
Production (PP), Services, Development & Construction (D&C)
and Corporate.
To improve earnings visibility and reporting transparency on
underlying value creation across Scatec’s business activities, the
Company is reporting on proportionate financials in addition to
consolidated financials. With proportionate financials Scatec
reports its share of revenues, expenses, profits and cash flows
from its subsidiaries based on Scatec’s economic interest in the
subsidiaries. Proportionate reporting is in line with how the
Management Team assesses the performance of the segments.
Please refer to Note 3 Operating Segments for further
descriptions of the proportionate financials as well as
reconciliation to the IFRS financial statement.
54
Subsequent events
No adjusting events have occurred after the balance sheet date.
Non-adjusting events
Refinancing of Bridge-to-Bond USD 193 million
On 2 February 2023, Scatec refinanced USD 100 million of the
USD 193 million Bridge to Bond facility with a new USD 100 million
term loan with maturity in the fourth quarter 2027 provided by
DNB, Nordea and Swedbank. The new term loan is amortised
through semi-annual repayments of USD 5 million starting from
2024. The existing USD 180 million Revolving Credit Facility,
provided by the same banks and BNP Paribas, is further extended
by 1.5 years with maturity in the third quarter of 2025.
On 10 February 2023, Scatec placed NOK 1,000 million in new
unsecured green bonds to refinance the remaining USD 93
million of the Bridge to Bond facility established when Scatec
acquired SN Power in 2021. The new bonds have maturity in
February 2027 and carries a coupon rate of 3-month NIBOR plus
6.60%.
Sale of Upington in South Africa
On 2 February 2023, Scatec signed an agreement with a
subsidiary of STANLIB Infrastructure Fund II, managed by
STANLIB Asset Management Proprietary Limited (“Stanlib”), to sell
its 42% equity share in the 258 MW Upington solar power plant
for a gross consideration of ZAR 979 million (NOK 569 million).
The transaction is in line with Scatec’s strategy to optimise the
portfolio as presented at the Capital Markets Update in
September 2022 and will release capital for new investments in
renewable energy.
The solar plant in Upington reached COD in 2020 and were
awarded in the fourth bidding round under the Renewable
Energy Independent Power Producer Programme. The plant
generates approximately one third of the proportionate power
production EBITDA in South Africa for Scatec. Scatec will continue
to provide Operations & Maintenance and Asset Management
services to the Upington power plant. South Africa remains a
focus market for Scatec, and the Company continues to build
scale by investing into new projects, including the Kenhardt and
Grootfontein projects.
The transaction is expected to generate a net accounting gain of
approximately NOK 760 million on a consolidated basis and NOK
310 million on a proportionate basis. The difference is primarily
explained by the D&C margin related to the projects which has
been eliminated in the consolidated statement of financial
positions. The final accounting effects will be determined on
closing of the transaction. Norfund is also selling its 18% equity
share to Stanlib as part of the same transaction. The transaction is
subject to the customary consents and is expected to close in the
first half of 2023. Please refer to note 30 Subsequent events for
further details.
Oslo, 21 March 2023
The Board of Directors Scatec ASA
Scatec ASA - Annual Report 2022
55
Consolidated financial
statements Group
56
Consolidated statement of profit or loss
57
Consolidated statement of comprehensive income
58
Consolidated statement of financial position
59
Consolidated statement of changes in equity
61
Consolidated statement of cash flow
63
Notes to the Consolidated financial statements
63
General information
Note 1
Corporate information
63
Note 2
Basis for preparation, basis for consolidation and key sources of
estimation uncertainty
63
Statement of profit or loss (and comprehensive income)
Note 3
Operating segments
64
Note 4
Employee benefits
69
Note 5
Other operating expenses
71
Note 6
Financial income and expenses
72
Note 7
Tax
72
Note 8
Earnings per share
75
Statement of financial position
Note 9
Property, plant and equipment
76
Note 10
Goodwill and intangible assets
77
Note 11
Leases
78
Note 12
Impairment testing
80
Note 13
Investments in joint venture and associated companies
82
Note 14
Cash and cash equivalents
86
Note 15
Trade receivables
87
Note 16
Other non-current and current asset
88
Note 17
Other non-current and current liabilities
88
Financial risk and capital management
Note 18
Financial risk management and risk sensitivities
89
Note 19
Financial instruments
92
Note 20
Derivative financial instruments
94
Note 21
Corporate financing
96
Note 22
Non-recourse financing
98
Note 23
Project equity financing provided by co-investors
100
Note 24
Guarantees and commitments
102
Other information
Note 25
Share capital, shareholder information and dividend
103
Note 26
Consolidated subsidiaries
104
Note 27
Non-controlling interests
105
Note 28
Transactions with related parties
107
Note 29
Changes in accounting policies
108
Note 30
Subsequent events
109
Scatec ASA - Annual Report 2022
57
Consolidated statement of profit and loss
1 JANUARY - 31 DECEMBER
NOK million
Note
2022
2021
Revenues
3
Net income/(loss) from JV and associated companies
3, 13
Total revenues and other income
Personnel expenses
4
-528
-397
Other operating expenses
5
-668
-503
Depreciation, amortisation and impairment
9, 10, 11
-1,832
-892
Operating profit (EBIT)
Interest and other financial income
6
Interest and other financial expenses
6
-1,666
-1,368
Net foreign exchange gain/(loss)
18, 6
-268
Net financial expenses
-1,818
-1,253
Profit/(loss) before income tax
-1,095
Income tax (expense)/benefit
7
-132
-303
Profit/(loss) for the period
-1,228
Profit/(loss) attributable to:
Equity holders of the parent
-1,334
Non-controlling interest
27
Basic earnings per share (NOK)
8
-8.40
Diluted earnings per share (NOK)
8
-8.40
58
Consolidated statement of comprehensive income
1 JANUARY - 31 DECEMBER
NOK million
Notes
2022
2021
Profit/(loss) for the period
-1,228
Other comprehensive income:
Items that may subsequently be reclassified to profit or loss
Net movement of cash flow hedges
20
Income tax effect from net movement of cash flow hedges
7
-150
-108
Foreign currency translation differences
Net other comprehensive income to be reclassified
Total comprehensive income for the year, net of tax
-242
Attributable to:
Equity holders of the parent
-648
Non-controlling interest
27
Scatec ASA - Annual Report 2022
59
Consolidated statement of financial position
NOK million
Note
31 December 2022
31 December 2021
Assets
Non-current assets
Deferred tax assets
7
Property, plant and equipment
9
Goodwill and intangible assets
10
Investments in JVs and associated companies
13
Other non-current assets
16, 28
Total non-current assets
Current assets
Trade and other receivables
15
Other current assets
16, 28
Cash and cash equivalents
14
Total current assets
Total assets
60
Consolidated statement of financial position
NOK million
Note
31 December 2022
31 December 2021
Equity and liabilities
Equity
Paid in capital
Share capital
25
Share premium
Total paid in capital
Other equity
Retained earnings
-2,231
-493
Other reserves
-16
Total other equity
-1,560
-508
Non-controlling interests
27
Total equity
Non-current liabilities
Deferred tax liabilities
7
Corporate financing
21
Non-recourse project financing
22
Other financial liabilities
19, 20
Other interest-bearing liabilities
17
Other non-current liabilities
17, 28
Total non-current liabilities
Current liabilities
Non-recourse project financing
22
Income tax payable
7
Trade and other payables
Other financial liabilities
19, 20
Other interest-bearing liabilities
17
Other current liabilities
17, 28
Total current liabilities
Total liabilities
Total equity and liabilities
Oslo, 21 March 2023
The Board of Directors Scatec ASA
Scatec ASA - Annual Report 2022
61
Consolidated statement of changes in equity
Other reserves
NOK million
Note
Share
capital
Share
premium
Retained
earnings
Foreign
currency
translation
Hedging
reserves
Total
Non-
controlling
interests
Total
equity
At 1 January 2021
-708
-261
Profit for the period
Other comprehensive income
Total comprehensive income
Share-based payment
4
Share capital increase
25
Share purchase program
-1
-1
-1
Dividend distribution
25
-173
-173
-217
-390
Capital increase from NCI
27
At 31 December 2021
-493
-111
At 1 January 2022
-493
-111
Profit for the period
-1,334
-1,334
-1,228
Other comprehensive income
Total comprehensive income
-1,334
-648
-242
Share-based payment
4
Share capital increase
25
Dividend distribution
25
-404
-404
-526
-929
Capital increase from NCI
27
At 31 December 2022
-2,231
62
Consolidated statement of cash flow
NOK million
Notes
2022
2021
Cash flow from operating activities
Profit before taxes
-1,095
Taxes paid
7
-170
-234
Depreciation and impairment
9, 10, 11
Net gain/loss from sale of fixed assets
9
Net income from JV and associated companies
13
-749
-765
Interest and other financial income
6
-115
-47
Interest and other financial expenses
6
Unrealised foreign exchange (gain)/loss
6
-69
Increase/(decrease) in current assets and current liabilities
-926
Net cash flow from operating activities
Cash flows from investing activities
Interest received
6
Consideration paid for SN Power, net of cash acquired
21
-7,848
Investments in property, plant and equipment
9
-1,986
-967
Distributions from JV and associated companies
13
Investments in JV and associated companies
13
-204
-131
Net cash flow used in investing activities
-1,406
-8,081
Cash flow from financing activities
Proceeds from non-controlling interests
23
Distributions to non-controlling interests
23
-8
-12
Interest paid
19
-1,108
-1,180
Proceeds from non-recourse project financing
22, 19
Repayment of non-recourse project financing
22, 19
-1,175
-750
Payments of principal portion on lease liabilities
11
-26
-25
Interest paid on lease liabilities
11
-20
-15
Net proceeds from corporate financing
21, 19
Share capital increase
25
Dividends paid to equity holders of the parent company and non-controlling interests
25
-929
-390
Net cash flow from financing activities
Net increase/(decrease) in cash and cash equivalents
-428
-3,597
Effect of exchange rate changes on cash and cash equivalents
-20
Cash and cash equivalents at beginning of the period
Cash and cash equivalents at end of the period
14
Scatec ASA - Annual Report 2022
63
Notes to the Consolidated financial statements Group
Note 1 Corporate information
. The
address of its registered office is
Information on the Group’s structure is provided in Note 26 –
Consolidated subsidiaries.
. For further details on shareholder
matters, refer to Note 25 – Share capital, shareholder
information and dividend.
The consolidated financial statements for the full year 2022
were authorised for issue in accordance with a resolution by
the Board of Directors on 21 March 2023.
The Company is pursuing an integrated business model across the complete lifecycle
of renewable power plants including project development, financing, construction, ownership,
and operation and maintenance.
Note 2 Basis for preparation, basis of consolidation and key sources of estimation
uncertainty
Basis for preparation
The Scatec Group’s consolidated financial statements have
been prepared in accordance with International Financial
Reporting Standards (IFRSs) and interpretations issued by the
International Accounting Standards Board (IASB) and as
adopted by the European Union (EU). In compliance with the
Norwegian Accounting Act, additional disclosure requirements
are included in the notes to the financial statements of Scatec
ASA.
The consolidated financial statements have been prepared on
a historical cost basis, except for financial instruments
measured at fair value.
The statement of cash flows is prepared under the indirect
method.
The segment financials are reported on a proportionate basis
in line with how the management team assesses the segments
performance. For further description of the proportionate
financials as well as a reconciliation between proportionate
financials and the consolidated financials please refer to Note
3 - Operating segments and the section on Alternative
Performance Measures (APM).
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
consolidated financial statements are presented in Norwegian
kroner (NOK) and on consolidation, the assets and liabilities of
foreign entities with functional currencies are translated into
NOK at the rate of exchange prevailing at the end of reporting
period and their income statements are translated at average
monthly exchange rates.
All values are rounded to the nearest million (NOK 1,000,000)
except when otherwise indicated. Because of these rounding
adjustments, the figures in some columns may not add up to
the total of that column.
Basis of consolidation
The consolidated financial statements comprise the financial
statements of the Parent and its subsidiaries as of 31
December 2022. When the Group has less than a majority of
the voting or similar rights of an investee, the Group considers
all relevant facts and circumstances in assessing whether it has
power over an investee. Control is achieved when the Group
has power over the investee, is exposed, or has rights, to
variable returns from its involvement with the investee and has
the ability to affect those returns through its power over the
investee.
i
64
When necessary, adjustments are made to the financial
statements of subsidiaries to bring their accounting policies in
line with the Group’s accounting policies.
All intra-group assets and liabilities, equity, income, expenses
and cash flows relating to transactions between members of
the Group are eliminated in full on consolidation.
Estimation uncertainty
In preparation of the Group’s consolidated financial
statements, management has made assumptions and
estimates about future events and applied judgements that
affect the reported values of assets, liabilities, revenues,
expenses and related disclosures. Uncertainty about these
assumptions and estimates could result in outcomes that
require a material adjustment to the carrying amount of assets
or liabilities affected in future periods. The assumptions and
estimates are based on historical experience, current trends
and other relevant factors available when the consolidated
financial statements are prepared. The key assumptions
concerning the future and other key sources of estimation
uncertainty at the reporting date, that have a significant risk of
causing a material adjustment to the carrying amounts of
assets and liabilities within the next financial year, are
described below and in individual notes. Existing circumstances
and assumptions about future developments, however, may
change due to market changes or circumstances arising
beyond the control of the Group. Such changes are reflected
in the financial statements when the changes in assumptions
occur.
Information about estimation uncertainty, judgements and
assumptions in the annual report are largely incorporated into
the individual notes.
The Company’s management believes the following critical
accounting items represent the more significant judgements
and estimates not naturally belonging in the individual notes,
but used in the preparation of the consolidated financial
statements:
Consolidation of power plant companies
Scatec’s value chain comprises all downstream activities such
as project development, financing, construction, operations as
well as having an asset management role through ownership
of the power plants. Normally Scatec enter partnerships for the
shareholding of the power plant companies. To be able to fully
utilise the business model, Scatec normally seeks to obtain
operational and financial 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’s role as the developer of the project, EPC provider
(construction), operation and maintenance service provider
and asset management service provider.
Scatec would normally seek to undertake the following distinct
roles in its projects:
1.
As the largest shareholder providing equity financing to
the project
2.
As (joint) developer, including obtaining project rights,
land permits, off taker agreements and other local
approvals
3.
As EPC contractor, responsible for the construction of the
project
4.
As provider of operation & maintenance services to the
projects, responsible for the day to day operations of the
plant
5.
As provider of management services to the power plant
companies
Even though none of the projects Scatec is involved with are
identically structured, the five roles/activities described above
constitute the main and relevant activities which affect the
variable return. When assessing whether Scatec controls a
power plant company, all facts and circumstances, including
the above agreements are analysed. For the power plant
companies consolidated in the financial statement, Scatec has
concluded that it through its involvement controls the entities.
Scatec has considered that it has the current ability to direct
the relevant activities of the entities and has the ability to affect
the variable returns through its power over the companies.
The assessment of whether Scatec controls the investee is
performed upon first time consolidation and is renewed
annually or more often, if and when facts that could impact
the conclusion change.
Please see individual notes and sections “Estimation
uncertainty” for further details around other estimations,
judgements and assumptions.
Note 3 Operating segments
Operating segments align with internal management reporting
to the Group’s chief operating decision makers, defined as the
Executive Management team. The operating segments are
determined based on differences in the nature of their
operations, products and services. Scatec manages its
operations in four segments: Power Production (PP), Services,
Development & Construction (D&C) and Corporate.
Power Production
The Power Production segment manages the Group’s power
producing assets and derives its revenue from the production
and sale of solar, winds and hydro generated electricity based
on long-term Power Purchase Agreements or Feed-in-tariffs.
In addition, the segment includes revenues from the Release
concept, and energy trading activities. The electricity is
primarily sold on long-term Power Purchase Agreements or
feed-in-tariffs except for in the Philippines where the electricity
Scatec ASA - Annual Report 2022
65
is sold on bilateral contracts, in the spot market and as
ancillary services.
Revenue is recognised upon delivery of electricity produced to
the local operator of the electricity grid. The performance
obligation is to deliver a series of distinct goods (power) and
the performance obligation is satisfied over time which entails
that revenue should be recognised for each unit delivered at
the transaction price. Revenue is recognised upon transfer of
electricity produced to the local operator of the electricity grid,
based on periodic meter readings. The Group applies a
practical expedient under IFRS 15 whereby the revenue from
power for most of the contracts is recognised at the amount of
which the entity has a right to invoice. The right to invoice
power arises when power is produced and delivered on to the
electricity grid. The right to invoice the consideration will
normally correspond directly with the value delivered to the
customer.
Delivery is deemed complete when all the risks and rewards
associated with ownership have been transferred to the buyer
as contractually agreed, compensation has been contractually
established and collection of the resulting receivable is
probable. For all sales contracts the Group had per the end of
year, indexation of tariffs is recognised when they come into
force.
Finance and operation of the plants is mainly 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, and any other project equity
investors in accordance with the shareholding and the terms of
the finance documents.
Services
The Services segment comprises Operations & Maintenance
(O&M) and Asset Management services provided to power
production plants where Scatec has economic interest. The
services are delivered to ensure optimised operations of power
producing assets through a complete and comprehensive
range of services for technical and operational management.
O&M revenues are generated based on 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.
Revenues are based on service agreements with a periodic
base fee as well as a potential performance bonus. These
revenues are recognised as the service is provided. The
potential performance revenues from the profit-sharing
agreements are considered as variable consideration under
IFRS 15 and are recognised when it is highly probable that the
recognition will not be reversed in future periods.
Development & Construction
The Development & Construction segment derives its revenue
from the sale of development rights and construction services
to project entities set up to operate the Group’s power
production plants. These transactions are primarily made with
entities that are under the control of the Group and hence
eliminated when consolidated.
Construction services include operations where Scatec is
responsible for the total scope of a turnkey installation of a
power plant through a contract covering Engineering,
Procurement and Construction. Revenues from construction
services are based on fixed price contracts and are accounted
for using the percentage of completion method. The
percentage of completion of a contract is determined by
actual cost incurred over total estimated costs to complete.
Scatec periodically revise contract profit estimates and
immediately recognises any losses on contracts. Incurred costs
include all direct materials, costs for modules, labor,
subcontractor costs, and other direct costs related to contract
performance. Scatec recognises direct material costs as
incurred costs when the main direct materials have been
installed. Scatec considers direct materials to be installed when
they are permanently attached or fitted to the power
production systems as required by engineering designs.
Some construction contracts include product warranties. The
expected warranty amounts are recognised as an expense at
the time of sale and are adjusted for subsequent changes in
estimates or actual outcomes. The group has currently
ongoing construction projects in Pakistan, Brazil and South
Africa, as well as projects related to Release in Cameroon and
South Africa.
Corporate
Corporate consists of the activities of corporate and
management services.
No segments have been aggregated to form these reporting
segments. Revenues from transactions between the D&C,
Services and PP segments, where Scatec 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.
Use of proportionate financials
The segment financials are reported on proportionate basis.
With proportionate financials Scatec reports its share of
revenues, expenses, profits and cash flows from its subsidiaries
without eliminations based on Scatec’s economic interest in
the subsidiaries. The Group introduced Proportionate
Financials as the Group is of the opinion that this method
improves earnings visibility and to improve transparency on
underlying value creation across Scatec’s business activity.
Revenues from transactions between group companies, where
Scatec is deemed to hold a controlling interest, are presented
as internal revenues in the segment reporting. These
transactions are based on international contract standards and
terms negotiated at arm’s length with lenders and co-investors
66
in each power plant company. No operating segments have
been aggregated to form these reporting segments.
The consolidated revenues and profits are mainly generated in
the Power Production segment. Activities in the Services and
Development & Construction segment mainly reflect deliveries
to other companies controlled by Scatec, or which revenues
and profits are eliminated in the consolidated financial
statements. The key differences between the proportionate
and the consolidated (IFRS) financials are that:
●
In the consolidated financials fully consolidated companies
are presented on a 100% basis. In the proportionate
financials the fully consolidated companies are presented
based on Scatec’s ownership percentage/economic interest.
The residual ownerships interests in the table below
represent the share of the proportionate financials in fully
consolidated subsidiaries where Scatec do not have 100%
economic interest.
●
In the consolidated financials joint venture and associate
companies are equity consolidated and are presented with
Scatec’s share of the net profit on a single line in the
statement of profit or loss. In the proportionate financials
the joint venture and associate companies are presented in
the same way as other subsidiaries on a gross basis in each
account in the statement of profit or loss. In the table below
is the column elimination of equity consolidated entities the
elimination of proportionate financials from equity
consolidated entities adjusted for Scatec’s share of net
income/(loss).
●
Internal gains are eliminated in the consolidated financials
but are retained in the proportionate financials. These
internal gains primarily relate to gross profit on D&C goods
and services delivered to project companies. Hence, the
consolidated financials have lower book value of solar plants
and corresponding lower depreciation charges because
internal gain is eliminated. Internal gain eliminations also
include profit on Operations and Maintenance - and Asset
Management services delivered to project companies.
●
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 on proportionate basis.
Scatec ASA - Annual Report 2022
67
Bridge proportionate – to consolidated financials 2022
2022
Proportionate financials
NOK million
Power
Production
Services
Development
&
Construction
Corporate
Total
Residual
ownership
for fully
consolidated
entities
Elimination
of equity
consolidated
entities
Other
eliminations
Consolidated
financials
External revenues
4,513
18
5
7
4,542
1,120
-2,661
-
3,002
Internal revenues
8
294
1,064
49
1,415
188
-138
-1,465
-
Net income from JV and associates
1)
-
-
-
-
-
-
749
-
749
Total revenues and other income
4,521
312
1,069
56
5,957
1,309
-2,050
-1,465
3,751
Cost of sales
-852
1
-962
1
-1,813
-145
914
1,044
-
Gross profit
2)
3,669
312
106
57
4,144
1,163
-1,136
-421
3,751
Personnel expenses
-125
-120
-215
-113
-574
-9
68
-12
-528
Other operating expenses
-709
-118
-112
-81
-1,020
-221
253
320
-668
EBITDA
2,835
74
-221
-138
2,550
933
-815
-113
2,555
D&A and impairment
-1,918
-6
-137
-29
-2,090
-414
510
162
-1,832
Operating profit (EBIT)
917
68
-358
-167
460
519
-306
49
723
1) Refer to Note 13 Investments in joint venture and associated companies for details on Net income from JV and associates
2) Equivalent to Net revenues
In 2022 the Group has recognised an impairment charge of
NOK 770 million in the Power Production segment in the
proportionate financials related to the solar power plants and
intangible assets in Ukraine. In the consolidated financials the
impairment charge amounts to NOK 816 million as disclosed in
the Note 12 Impairment testing.
The Group has also recognised an impairment charge (in both
consolidated and proportionate financials in the D&C
segment) of NOK 132 million related to discontinued
development projects in Lesotho, Bangladesh, Mali and India.
From March the Group has recognised revenue from power
production in Ukraine to the extent that Scatec believe it is
probable to collect consideration. The recognised amount is
NOK 129 million in proportionate financials (NOK 146 million in
the consolidated financials) in the period from March to
December, which is in line with the paid amounts for the
period. Total revenue from power production in Ukraine in the
proportionate financials for 2022 is NOK 153 million (NOK 175
million in the consolidated financials).
Scatec has further recognised an expected credit loss provision
in 2022 with respect to trade and other receivables related to
Ukraine which amount to NOK 87 million in the proportionate
financials (NOK 98 million in the consolidated financials), which
is included in other operating expenses.
Bridge proportionate – to consolidated financials 2021
2021
Proportionate financials
NOK million
Power
Production
Services
Development
&
Construction
Corporate
Total
Residual
ownership
for fully
consolidated
entities
Elimination
of equity
consolidated
entities
Other
eliminations
Consolidated
financials
External revenues
3)
3,889
5
3
6
3,903
1,162
-2,025
-1
3,038
Internal revenues
1
256
134
36
426
34
-22
-438
-
Net income from JV and associates
1)
-
-
-
-
-
-
765
-
765
Total revenues and other income
3,890
260
137
42
4,329
1,196
-1,282
-439
3,803
Cost of sales
3)
-270
1
-120
-
-389
-10
274
126
-
Gross profit
2)
3,620
261
16
42
3,939
1,186
-1,009
-313
3,803
Personnel expenses
-99
-97
-162
-92
-449
-7
49
10
-397
Other operating expenses
-572
-90
-78
-65
-804
-208
208
302
-503
EBITDA
2,949
75
-223
-114
2,686
970
-752
-1
2,903
D&A and impairment
-972
-5
-78
-26
-1,081
-330
369
151
-892
Operating profit (EBIT)
1,977
70
-301
-140
1,606
640
-383
149
2,012
3) Refer to Note 29 for details of the change in presentation of revenue and cost of sales for the electricity sold on bilateral contracts in the Philippines
68
Geographical break down of consolidated revenues and PPE
In presenting information based on geographical areas, revenues from external customers are attributed to the country of the legal
entity recording the sales. The allocation of property, plant and equipment is based on the geographical location of the assets. Projects
that have not yet reached construction are allocated to the parent company being the main developer. The tables and information
below include consolidated subsidiaries.
Consolidated revenues per country
External revenue
NOK million
2022
2021
South Africa
1,106
1,135
Egypt
644
596
Malaysia
346
348
Ukraine
175
303
Honduras
200
197
Jordan
158
143
Czech Republic
128
122
Mozambique
93
83
Vietnam
83
70
Rwanda
23
20
Netherlands
29
5
Other
16
16
Total
3,002
3,038
Property, plant and equipment per country
Property, plant and equipment
NOK million
2022
2021
South Africa
4,155
3,245
Egypt
3,411
3,074
Malaysia
2,728
2,683
Ukraine
1,922
2,616
Honduras
1,302
1,359
Jordan
905
820
Mozambique
558
456
Vietnam
454
444
Norway
428
348
Cameroon
427
98
Pakistan
375
108
Czech Republic
336
330
Netherlands
160
158
Rwanda
141
136
Other
8
12
Total
17,310
15,885
Major customers
In South Africa, revenues (3 plants which commenced
operations in 2013 and 2014 and 3 plants which commenced
operations in 2020) are earned under 20-year Power Purchase
Agreements (PPA) with Eskom Holdings (South African
incumbent utility), which was awarded under the Renewable
Independent Power Producer Procurement Programme
(REIPPPP) administrated by the Department of Energy. Eskom’s
financial commitments under the PPA are guaranteed by the
South African National Treasury under the Implementation
Agreement.
The Benban plant in Egypt commenced operation in 2019. The
electricity is sold under a 25-year Power Purchase Agreement
with Egyptian Electricity Transmission Company, S.A.E. The
financial commitments of Egyptian Electricity Transmission
Company, S.A.E under the PPA are guaranteed by the
sovereign guarantee from The Ministry of Finance under the
Egyptian Law.
The Gurun plant in Malaysia commenced operation in 2018,
the Merchang and Jasin plant commenced operation in 2019,
and RedSol commenced operations in 2020. The electricity is
Scatec ASA - Annual Report 2022
69
sold under 21-year Power Purchase Agreements with the
country’s largest electricity utility, Tenaga Nasional Berhad
(TNB). The PPA is not guaranteed by the Government as TNB
is a reputable AAA rated listed company in Malaysia.
The Rengy plant in Ukraine commenced operation in 2019,
Boguslav and Kamianka commenced operations in 2020 and
Chigrin and Progressovka commenced operations in 2021. The
electricity is sold under Power Purchase Agreement’s all
ending 31 December 2029 with the state-owned company
Guaranteed Buyer. The financial commitments of Guaranteed
Buyer under the PPA are guaranteed by the State under the
law on Alternative Energy Sources and the
Law on Electric
Energy Market.
The Agua Fria power plants in Honduras commenced
operations in 2015, whereas the Los Prados plants in Honduras
commenced operation in 2018. The electricity from the plants
is sold under a 20-year Power Purchase Agreement with the
utility Empresa Nacional de Energia Electricia (ENEE). The
financial commitments of ENEE under the PPA are guaranteed
by the sovereign guarantee executed by the Honduran
attorney general and the secretary of finance, approved by the
National Congress of Honduras.
The Oryx, GLAE and EJRE power plants in Jordan commenced
operations in 2016. The electricity is sold under a 20-year
Power Purchase Agreement with National Electric Power
Company (NEPCO). NEPCO’s financial commitments under the
PPA are guaranteed by the Government of Jordan
represented by its Ministry of Finance under the Government
Guarantee Agreement.
The Czech power plants commenced operations in 2009 (1
plant) and 2010 (3 plants) and have entered into power
purchase agreements with utilities CEZ Distribuce and EON
Distribuce, based on the terms of the Czech Energy Act and
Czech Renewable Energy Act. This legislation requires the
utilities to purchase the power produced from renewable
energy sources for a period of 20 years at the Feed-in-Tariff
(FiT) prescribed by law and applicable regulation, adjusted
annually.
The Mocuba plant in Mozambique commenced operation in
2019. The electricity is sold under a 25-year Power Purchase
Agreement with Electricidade de Moçambique (EDM). The
financial commitments of EDM under the PPA are guaranteed
by The Mozabican government under the concession
agreement approved under law 88/2016 of 5 December 2016
for 30 years.
The Dam Nai wind farm in Vietnam was acquired by SN Power
on 27 January 2021 and has a capacity of 39.4 MW. The wind
farm was constructed in two phases and Phase I started
operations in October 2017 (7.9 MW) and Phase II in
December 2018 (31.5 MW). The electricity is sold under a 20-
year Power Purchase Agreement with Vietnam Electricity; a
state-owned company established by the government in
Vietnam.
The ASYV power plant in Rwanda commenced operations in
2014. The power is sold under a 25-year Power Purchase
Agreement with the state-owned utility EWSA, with an annual
price adjustment of 100% of Rwandan CPI. EWSA’s financial
commitments under the PPA are guaranteed by the
Government of Rwanda represented by its Ministry of Finance
and Economic Planning under the Government Guarantee
Agreement.
Note 4 Employee benefits
Wages, salaries, bonuses, pension and social security
contributions, paid annual leave and sick leave are accrued in
the period in which the associated services are rendered by
employees of the Company.
The cost of equity-settled transactions is recognised in
personnel expenses, together with a corresponding increase in
equity over the vesting period. To calculate the fair value of
the options that meets the definition of an equity-settled
share-based payment transaction (IFRS 2 app. A), the
BlackScholes-Merton option-pricing model is applied on each
tranche. Share price (spot), exercise price, expected option
lifetime, expected volatility, expected dividend and risk-free
interest rate are the input parameters in the model.
Salaries and other personnel costs
NOK million
2022
2021
Salaries
463
363
Share-based payment
39
27
Payroll tax
43
31
Pension costs
38
24
Other personnel costs
31
21
Capitalised to PP&E (project assets)
-87
-68
Total
528
397
70
Salaries and personnel expenses for the management
NOK million
2022
2021
Salary and bonus
45
35
Pension
2
1
Total
47
36
For further details on employee benefits and management remuneration, refer to Note 4 Personnel expenses, number of employees
and auditor’s fee in the separate financial statements for the Parent Company
.
Reference is also given to the separate remuneration
report issued by the parent company
.
No severance package agreements have been established with management.
Long term incentive programmes
In line with the terms adopted by the Annual General Meeting
of Scatec ASA on 4 May 2016, and prolonged in the following
years, the Board of Directors have established an option
programme for leading employees of the company. Options
are vested in tranches over a three-year period, with the first
tranche vesting one year from award
.
As of 31 December
2022, there are options not fully vested from the grants
awarded in 2020 and onwards. Each share option gives the
right to subscribe for and be allotted one share in Scatec ASA.
The strike prices are equivalent to the volume weighted
average price of the shares the ten preceding trading days of
the grant.
Date granted
Amount
Strike price
02/01/2019
494,510
72.03
02/01/2020
595,140
114.83
04/01/2021
251,242
314.91
24/02/2021
32,999
314.91
06/05/2021
219,566
244.28
04/01/2022
1,049,596
150.79
28/03/2022
10,000
134.53
The options awarded in 2019 are fully vested.
A total of 26 employees were awarded options in 2019 of
which 3 has subsequently left the Company. A total of 39
employees were awarded options in 2020 of which 5 have
subsequently left the company. A total of 82 employees were
awarded options in 2021 of which 10 have subsequently left
the company. A total of 98 employees were awarded options
in 2022 of which 13 have subsequently left the company.
For the options granted in 2022 the assumptions used in
calculating the fair value of the options are as follows: 2.98
years (2.84 years) for expected lifetime, 49.02% (44.87%) for
the expected volatility and 0 (0) for expected dividend. The
calculations are based on average values.
During 2022 the employees exercised 51 thousand options
(515 thousand) at the weighted average strike and share price
of NOK 89.26 and NOK 130.30 (NOK 80.10 and NOK 279.18)
respectively. Total number of outstanding options under the
long-term incentive programme is 1,767 thousand (978
thousand) as of 31 December 2022, whereas 430 thousand are
vested at the weighted average strike price of NOK 158.19. The
fair value of the options is expensed over the vesting period,
and in 2022 NOK 39 million (27) have been expensed.
Summary of movements in options
Opening balance
Granted
Exercised
Forfeited
Closing balance
Closing balance
vested options
Numbers of instruments
997,258
1,090,607
-50,818
-269,782
1,767,265
429,604
Weighted average strike price
186.84
147.07
89.26
183.04
165.68
158.19
Pensions schemes
The Group has established pension schemes that are classified as defined contribution plans. Contributions to defined contribution
schemes are recognised in the consolidated statement of profit and loss in the period in which the contribution amounts are earned by
the employees.
Scatec ASA - Annual Report 2022
71
Number of FTE’s employed during the financial year in the consolidated entities
2022
2021
South Africa
219
179
Norway
146
116
Egypt
72
48
Ukraine
45
37
Malaysia
33
34
Netherlands
28
17
Honduras
20
18
India
11
5
Vietnam
9
8
France
9
4
Mozambique
7
7
Pakistan
6
4
Other
26
25
Total
631
502
Note 5 Other operating expenses
NOK million
2022
2021
Facilities
210
182
Professional fees
175
138
Other office costs
74
56
Travel costs
32
14
Social development contributions
18
54
O&M external fees
23
20
Impairment of expected credit loss
98
-
Other costs
38
39
Total other operating expenses
668
503
The impairment of expected credit loss is related to receivables
in Ukraine, refer to note 15 Trade receivables for further
details.
Government grants are recognised when it is reasonably
certain that the company will meet the conditions stipulated
for the grants and that the grants will be received. Grants are
recognised either as cost reduction or as a deduction of the
asset’s carrying amount. Scatec has in 2022 recognised
government grants of NOK 27 million (4) in cost reductions
and NOK 29 million (58) as deductions of the development
and construction asset’s carrying amount.
Remuneration to the auditors (PwC and other independent auditors)
NOK million
2022
2021
Audit services
9
9
Other attestation services
1
-
Tax services
1
3
Other services
1
1
Total remuneration
11
13
VAT is not included in the numbers above. The Scatec Group changed group auditor from EY to PwC as of 2022.
72
Note 6 Financial income and expenses
NOK million
2022
2021
Interest income
92
43
Other financial income
23
4
Interest and other financial income
115
47
Interest expenses
1,424
1,303
Change in fair value of forward exchange contracts
89
-2
Other financial expenses
154
67
Interest and other financial expenses
1,666
1,368
Net foreign exchange gain/(loss)
-268
69
Net fiancial expenses
1,818
1,253
The increase in other financial expenses is mainly explained by non-recurring fees recognised for the refinancing of the power plants in
Egypt, South Africa and Vietnam.
See Note 18 Financial risk management for interest rate sensitivity. See Note 22 Non-recourse
financing for details on project financing and Note 21 for details on corporate financing.
Note 7 Tax
Accounting principle
Income tax expense comprises current tax and change in net
deferred tax. The amount of net deferred tax provided is
based on the expected manner of realisation or settlement of
the carrying amount of assets and liabilities, using tax rates
enacted or substantially enacted at the consolidated statement
of financial position date. Deferred tax assets and liabilities are
offset if a legally enforceable right exists to set off current tax
assets against current income tax liabilities and the deferred
taxes relate to the same taxable entity and the same taxation
authority.
Estimation uncertainty
Deferred tax assets are recognised for unused tax losses to the
extent that it is probable that taxable profit will be available
against which the losses can be utilised. Significant
management judgement is required to determine the amount
of deferred tax assets that can be recognised based upon the
likely timing and the level of future taxable profits.
When assessing the probability of utilising these losses several
factors are considered, including if the entity in question has a
history of losses, if there is an expiration date on the entity’s
ability to carry the losses forward and/or if the losses may be
used to offset taxable income elsewhere in the Group. The
majority of the Group’s tax losses are related to favorable tax
rules for depreciation of power plants and its reversal is merely
a timing effect. Refer to paragraph below under specification
of tax losses carried forward for further description.
Uncertain tax positions and potential tax exposures are
analysed individually and, the best estimate of the probable
amount for liabilities to be paid (unpaid potential tax exposure
amounts, including penalties) and assets to be received
(disputed tax positions for which payment has already been
made), are recognised within current tax or net deferred tax as
appropriate.
Scatec ASA - Annual Report 2022
73
Effective tax rate
NOK million
2022
2021
Tax payable
-197
-84
Change in deferred tax
108
-232
Withholding tax
-45
-49
Adjustments of tax concerning previous years
1
63
Income tax expense
-132
-303
Reconciliation of Norwegian nominal tax rate to effective tax rate
Profit before income tax
-1,095
759
Nominal tax rate (22%)
241
-167
Tax effect of:
Permanent differences
-28
-25
Tax rate different from Norwegian rate
-39
-5
Current tax on dividend received and withholding tax
-45
-49
Valuation allowance loss carried forward
-248
-177
Adjustments of tax concerning previous years
-
-
Share of net income from associated companies
165
168
Non-recognised tax effects from impairment in Ukraine
-175
-
Use and capitalisation of previously unrecognised losses carried forward
14
9
Other items
-27
-11
Currency translation
11
-46
Calculated tax expense
-132
-303
Effective tax rate
NA
40%
The Group recognised an income tax expense of NOK -132
million (-303) in 2022. The difference between the Group’s
actual tax expense and a calculated tax expense based on the
Norwegian tax rate of 22% is mainly due to different tax rates
in the jurisdictions in which the companies operates,
withholding taxes paid on dividends, currency effects, effects
from non-recognised tax losses and revised assessment of
deferred tax assets. Further, the profit/loss from JVs and
associates are reported net after tax which also impacts the
effective tax rate. The effective tax rate is also impacted by
non-recognised deferred tax asset related to the impairment
of the assets in Ukraine.
The underlying tax rates in the companies in operation are in
the range of 0% to 33%. In some markets, Scatec 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
increases 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.
Significant components of deferred tax assets
NOK million
2022
2021
Tax losses carried forward
1,997
1,724
Valuation allowance of deferred tax assets
-458
-530
Financial instruments
48
87
Property, plant and equipment and intangible
assets
60
100
Construction projects
124
-
Lease liabilities
61
51
Other items
40
14
Offsetting of tax balances
1)
-1,012
-699
Total deferred tax assets
860
748
74
Significant components of deferred tax liabilities
NOK million
2022
2021
Property, plant and equipment and intangible
assets
1,658
1,282
Construction projects
-
1
Financial instruments
88
4
Other items
6
1
Offsetting of tax balances
1)
-1,012
-699
Total deferred tax liabilities
743
589
1)
Deferred tax assets and liabilities are offset to the extent that the deferred taxes related to the same fiscal authority and there is a legally enforceable right to offset
current tax assets against current tax liabilities
Specification of tax loss carried forward
NOK million
2022
2021
Country
Loss carried
forward
Deferred
tax asset
Loss carried
forward
Deferred
tax asset
Norway
2,890
251
2,054
260
South Africa
2,690
753
2,444
675
Ukraine
2,048
369
899
162
Egypt
1,371
143
1,050
78
Jordan
453
23
480
18
Netherlands
214
-
339
-
Malaysia
168
-
231
-
Other
11
-
18
-
Total
9,845
1,540
7,514
1,195
The Group has NOK 9,845 million (7,514) of tax losses carried
forward. The balances are offset against taxable temporary
differences within the same fiscal authority.
In Norway a net deferred tax asset balance of NOK 226 million
is recognised which is primarily related to tax losses carried
forward (NOK 251 million) and partly offset by other temporary
differences.
In South Africa a net deferred tax asset of NOK 73 million is
recognised. The difference between net position and deferred
tax asset related to tax losses carried forward (NOK 753
million) is mainly due to offsetting temporary differences on
property, plant and equipment.
Net deferred tax asset balance in Ukraine is NOK 58 million
and is related to tax losses carry forward (NOK 369 million)
offset by the increased deferred tax liability on property, plant
and equipment.
Net deferred tax liability in Egypt of NOK 309 million is
primarily related to temporary differences on property, plant
and equipment as well as on the financial instruments.
The losses carried forward in countries with power plant assets
are mainly related to accelerated depreciation rates for power
plant assets compared to the accounting depreciations which
are determined by the useful life of the assets. The increase in
losses carried forward for the Group in 2022 mainly derives
from losses in Ukraine entities and in Scatec ASA. We
assessed the probability of utilising the tax losses in all
countries where tax losses were recognised to ensure that tax
losses are recorded to the extent that the Group expects there
will be sufficient future taxable profits available to utilise the
losses. At year-end 2022 the Group has recorded a valuation
allowance of NOK -458 million (-530) related to tax losses
carried forward which are not expected to be used to offset
future taxable income. The valuation allowance is recognised
in Norway (NOK 203 million), Egypt (NOK 166 million),
Malaysia (NOK 40 million) and in other countries.
The tax losses in Egypt and Jordan can be carried forward for
5 years while losses in Netherlands can be carried forward
indefinitely. The Group had at the end of 2022 capitalised
approximately NOK 6 million (6) in deferred tax asset related
to deferred interest expenses, which can be carried forward for
10 years until 2027 in Norway. All other tax losses in the group
can be carried forward indefinitely.
Scatec ASA - Annual Report 2022
75
Movement in net deferred tax asset
NOK million
2022
2021
Net deferred tax asset at 1 January
159
517
Recognised in the consolidated statement of profit or loss
108
-232
Deferred tax other comprehensive income
-150
-108
Deferred tax on excess values from acquisition of SN Power
-
-19
Translation differences
-
2
Net deferred tax asset at 31 December
117
159
Note 8 Earnings per share
NOK million
2022
2021
Profit/(loss) attributable to the equity holders of the company and for the purpose of diluted shares
-1,334
388
Weighted average number of shares outstanding for the purpose of calculating basic earnings per share
158.9
158.8
Earnings per share for income attributable to the equity holders of the company - basic (NOK)
-8.40
2.45
Effect of potential dilutive shares:
Weighted average number of shares outstanding for the purpose of calculating diluted earnings per share
158.9
159.7
Earnings per share for income attributable to the equity holders of the company - diluted (NOK)
-8.40
2.43
Diluted earnings per share is affected by the option programme for equity-settled share-based payment transactions, refer to Note 4
Employee benefits. There is no diluted effect on earnings per share in case of loss.
76
Note 9 Property, plant and equipment
Accounting principle
Power plants in operation
The initial cost of an asset comprises its purchase price or
construction cost, any costs directly attributable to bringing the
asset into operation, the initial estimate of an asset retirement
obligation and, for qualifying assets, borrowing costs incurred in
the construction period. All other borrowing cosats are
recognised in the profit or loss in the period in which they incur.
Maintenance expenses are recognised in the statement of profit
or loss as incurred. Replacement of damaged components is
accounted for as an impairment with capitalisation of the
replacement cost as a new item of PPE.
Depreciation of a power plant commences when the plant is
ready for management’s intended use, normally at the date of
grid connection and commissioning.
Asset retirement obligations
Asset retirement costs is recognised when the Group has an
obligation to dismantle and remove a power plant and to restore
the site on which it is located. Expenditures related to asset
retirement obligations are expected to be paid in the period
between 2030 and 2046.
Power plants under development
Expenses relating to research activities (project opportunities) are
recognised in the statement of profit or loss as they incur.
Expenses relating to development activities (project pipeline and
backlog) are capitalised to the extent that the project is technically
and commercially viable and the Group has sufficient resources to
complete the development work.
Expenses that are capitalised include the costs of materials, direct
wage costs and other directly attributable expenses.
Other fixed assets
Other fixed assets mainly include office lease, fixtures and
equipment. For accounting principles related to right to use lease
assets, details are provided in Note 11 Leases.
Estimation uncertainty
Estimated useful life of power plants
The estimated useful lives of power plants are reviewed on an
annual basis and changes in useful lives are accounted for
prospectively.
In most of these markets the sale of electricity depends on having
a PPA, hence, the length of the PPA is deemed to be the critical
factor for determine useful life. The power plants currently in
operation have 15 to 25 years off-take agreements. Whether or
not these agreements will be extended is not currently known.
Technical useful life for the power plants is deemed to be at least
30 years, a factor also considered when assessing depreciation
period. The assessment is made on a plant by plant basis, and
most of the Group’s power plants are depreciated over the length
of the PPA. Existing Ukrainian regulation allow to choose to sell
electricity under a PPA agreement or directly in the electricity
spot market, thus the solar plants in Ukraine are not dependent
on an PPA agreement and will be able to sell produced electricity
in the existing electricity spot market in the country during and/or
after expiry of the current PPA contracts. There are no limitations
on the terms and validity of the market energy sales agreements.
Consequently, the Group has revised the estimated useful life of
its five solar plants in Ukraine from 25 to 30 years per 31
December 2022. This change in estimate will be applied
prospectively from 1 January 2023 and will not result in any
restatement to the current or prior year consolidated financial
statements.
Capitalisation of development costs
Expenses relating to development activities (project pipeline and
backlog) are capitalised to the extent that the project is technically
and commercially viable and the Group has sufficient resources to
complete the development work. The assessment of project
viability is based on completion of key development activities and
includes management judgment.
The carrying value of development projects that have not yet
reached the construction phase was NOK 232 million (364) at 31
December 2022.
Asset retirement obligations
Scatec’s future asset retirement obligation depends on several
factors such as the possible existence of a power market for the
plants after the end of the PPA, future recycling arrangements
and/or their second-hand value, future value of steel and copper
as well as future development of interest and currency exchange
rates. The calculation of the asset retirement obligation includes
significant judgment and is done on a plant-by-plant basis, taking
into consideration relevant project specifics.
Impairments
Power plants and projects under development/ construction are
tested for impairment to the extent that indicators of impairment
exist, please refer to Note
12 Impairment testing
for details.
During 2022, the Group impaired NOK 742 million related to
solar power plants in Ukraine and NOK 132 million (76) related to
discontinued development projects.
Scatec ASA - Annual Report 2022
77
Property, plant and equipment
NOK million
Power plants
Power plants
under
development
and construction
Other fixed assets
Total
Accumulated cost at 1 January 2022
18,026
698
316
19,040
Additions
141
1,783
62
1,986
Transfers
233
-233
-
-
Disposals
-
-45
-
-45
Effect of movements in foreign exchange rates
1,427
48
36
1,511
Accumulated cost at 31 December 2022
19,828
2,250
414
22,492
Accumulated depreciation and impairment losses at 1 January 2022
2,918
116
118
3,152
Depreciation for the year
818
-
46
864
Impairment losses
742
113
19
872
Effect of movements in foreign exchange rates
264
22
4
291
Accumulated depreciation and impairment losses at 31 December 2022
4,743
251
186
5,179
Carrying amount at 31 December 2022
15,083
1,997
229
17,310
Estimated useful life (years)
20-25
N/A
3-5
Accumulated cost at 1 January 2021
15,938
2,142
290
18,370
Additions
620
435
10
1,065
Transfers
1)
1,572
-1,856
18
-266
Disposals
-
-2
-10
-12
Effect of movements in foreign exchange rates
-103
-21
8
-116
Accumulated cost at 31 December 2021
18,026
698
316
19,040
Accumulated depreciation and impairment losses at 1 January 2021
2,173
46
82
2,301
Depreciation for the year
766
-
37
803
Impairment losses
6
70
-
76
Accumulated depreciation and impairment losses disposals
-
-
-3
-3
Effect of movements in foreign exchange rates
-26
-1
3
-24
Accumulated depreciation and impairment losses at 31 December 2021
2,918
116
118
3,152
Carrying amount at 31 December 2021
15,106
580
198
15,885
Estimated useful life (years)
20-30
N/A
3-5
1) NOK 266 million of Transfer of assets relates to reclassification of concept assets for Release and right to transmit electricity from PPE to intangible assets in 2021. Of the NOK 266 million, approximately NOK 90 million are
additions in 2021. Refer to note 10.
Note 10 Goodwill and other intangible
assets
Overview
The Group’s goodwill is associated with the acquisitions of
Solar competence GmbH in 2007 and SN Power in 2021.
The Group had no other intangible assets with an indefinite
useful life than goodwill as of 31 December 2022 and 2021.
The Group’s Other intangible assets consist of renewable
operating license, right to transmit electricity, software and
internally developed asset related to the Release concept with
a finite useful life. The estimated useful life of intangible assets
with a finite lifetime are reviewed on an annual basis, and are
amortised over 3-25 years.
In 2022, the Group impaired NOK 74 million of other
intangible assets in Ukraine related to
the right to transmit
electricity for the power solar plants.
were recognised in 2021 related to intangible assets. Please
refer to Note 12 Impairment testing.
Estimation uncertainty
There is considerable estimate uncertainty associated to the
value of intangible assets. Please refer to Note 12 Impairment
testing for assessment of recoverable amount.
78
Carrying value of goodwill and other intangible assets
NOK million
Goodwill
Other
intangible assets
Total
Accumulated cost at 1 January 2022
321
492
813
Effect of movements in foreign exchange
35
33
68
Accumulated cost at 31 December 2022
357
525
889
Accumulated depreciation and impairment losses at 1 January 2022
-
16
16
Depreciation for the year
-
26
26
Impairment losses
-
74
74
Effect of movements in foreign exchange
-
8
8
Accumulated depreciation and impairment losses at 31 December 2022
-
124
124
Carrying amount at 31 December 2022
357
401
758
Accumulated cost at 1 January 2021
25
20
45
Additions
290
198
488
Transfer
1)
-
266
266
Effect of movements in foreign exchange
6
8
14
Accumulated cost at 31 December 2021
321
492
813
Accumulated depreciation and impairment losses at 1 January 2021
-
5
5
Depreciation for the year
-
11
11
Accumulated depreciation and impairment losses at 31 December 2021
-
16
16
Carrying amount at 31 December 2021
321
476
797
Estimated useful life
N/A
3-25
1) NOK 266 million relates to reclassification of assets related to the Release concept and right to transmit electricity from Property, plant and equipment to Intangible assets
Note 11 Lease
Accounting principle
The group primarily leases office and land where the power
production plants are located, accounted for in accordance
with IFRS 16. IFRS 16 requires a lessee to account for lease
contracts by recognising a liability representing the future
lease payments, and an asset representing the right to use the
underlying asset.
The Group applies the recognition exemptions and recognises
the lease payments as other operating expenses in the
statement of profit or loss for leases of low value and leases
with lease term less than 12 months.
The future lease payments includes fixed lease payments and
variable lease payments that depends on an index or a rate.
The Group does not include variable lease payments
dependent on future events in the lease
liability. Instead, the
Group recognises these costs in profit or loss in the period in
which the event that triggers those payments occurs. Land
leases where the lease payment is based on power production
have been excluded from the liability measure.
Estimation uncertainty
When calculating the lease liability and the right-of-use asset,
the discount factor is a significant estimate. In the absence of
an identifiable discount rate, implicit in the lease agreement,
the discount rate used is the Group’s incremental borrowing
rate. The incremental borrowing rate has been estimated by
each subsidiary on an individual basis. For power producing
entities, the interest rate on the non-recourse loans has been
central when estimating the incremental borrowing rate. For
other subsidiaries, non-secured debt has been used as a
benchmark for the discount rate.
Several of the Group’s lease agreements contain options to
extend the lease agreement beyond the contractual lease
term. As the extension period is 20-25 years ahead for land
leases it is uncertain whether the option will be exercised. The
Group has evaluated all these options, but it’s not deemed
Scatec ASA - Annual Report 2022
79
reasonably certain that the Group will exercise the options,
and hence, the period covered by these options has not been
included in the lease liability. The Group reevaluate the options
on a continuously basis.
Reconciliation of movement in right-of-use asset
NOK million
Land
Office & cars
Total
Right-of-use asset at 1 January 2022
138
90
228
Additions
67
21
88
Depreciation for the year
-10
-25
-36
Effect of movement in foreign exchange and other changes
8
14
21
Right-of-use asset at 31 December 2022
202
98
301
Reconciliation of movement in lease liabilities
NOK million
2022
2021
Lease liability at 1 January
246
262
Lease agreements entered into during the year
65
18
Lease payments made during the year
-46
-41
Interest expense on lease liabilities
18
15
Effect of movement in foreign exchange and other changes
30
-8
Lease liability at 31 December
313
246
Leases in the income statement
NOK million
2022
2021
Operating expenses
Short term- low value and variable lease payment expenses
-41
-39
Depreciation expenses
Depreciation of right-of-use assets (land lease)
-10
-8
Depreciation of right-of-use assets (office lease and other)
-25
-23
Total depreciation
-36
-31
Financial expenses
Interest expense on lease liability
-18
-15
Total lease expense in the income statement
-94
-85
Leases in the statement of financial position
NOK million
2022
2021
Assets
Right-of-use assets - land lease
202
138
Right-of-use assets - office lease and other
98
90
Total right-of-use assets
301
228
The land lease portion of the Right-of-use asset is presented under “power plants” and “Power plants under development and
construction“ in note 9, while the office lease portion of the Right-of-use asset is presented under the line “Other fixed assets”.
Liabilities
Non-current liabilities
Lease liabilities (see Note 17 Other non-current and current liabilities)
270
206
Current liabilities
Lease liabilities (see Note 17 Other non-current and current liabilities)
43
39
Lease liabilities included in the balance sheet
313
246
80
Leases in the statement of cash flows
NOK million
2022
2021
Cash flow from operating activities
Short-term and variable lease payments
41
39
Cash flow from financing activities
Payments of principal portion on lease liabilities
26
26
Interest paid on lease liabilities
20
15
Maturity analysis – Undiscounted contractual cash flows
NOK million
2022
2021
One year
38
38
One to two years
42
31
Two to three years
37
28
Three to four years
36
28
Four to five years
34
27
More than five years
315
206
Total undiscounted lease liabilities
501
358
Lease liabilities included in the balance sheet
313
246
Note 12 Impairment testing
Accounting policy
The Group assesses property, plant and equipment for
impairment whenever events or changes in circumstances
indicate that the carrying value of an asset may not be
recoverable. Goodwill and intangible assets with an indefinite
useful life are tested for impairment annually or more
frequently if there are circumstances indicating that the
carrying amount may be impaired. The recoverable amount is
the higher of the assets fair value less costs to sell and its value
in use.
An impairment loss is recognised when an asset or cash
generating units carrying value exceeds the recoverable
amount.
Per 31 December 2022 and 2021, the Group had no intangible
assets with indefinite useful life other than goodwill.
Estimation uncertainty
Factors which trigger impairment testing include, but is not
limited to, political changes, macroeconomic fluctuations,
changes to the Group’s strategy, project delays,
underperforming, changes to tariffs and similar. Value in use
calculation is based on a discounted cash flow model. The
future cash flows include a number of estimates and
assumptions, including future market conditions, discount rates
and estimated useful life and others. Climate risks such as
more extreme weather and changes to the market for
renewable energy may impact the future cash flows. The
estimates are based on the Group’s budgets and long-term
outlooks approved by management. The recoverable amount
is sensitive to changes in discount rate, expected production
rates, demand and price forecasts for power assets with
variable income.
The Group monitors changes in government legislation related
to climate matters on a continuous basis. Legal changes may
impact key assumptions in the value in use calculations in
future periods.
Impairment test – plants in operation
Tests for impairment have been performed for CGUs with
mandatory annual tests and the CGUs where impairment
indicators have been identified. The recoverable amount for
these units have been determined estimating the value in use
of the assets and comparing against the carrying value of the
CGUs.
Impairment indicators were identified during 2022 for Scatec’s
five solar plants in Ukraine triggered by Russia’s invasion on 24
February 2022. The situation in Ukraine at the end of
December 2022 is still very challenging and highly uncertain,
and Scatec's top priority is the safety of our Ukrainian
employees. The outcome of the situation and the impact of
Scatec’s assets are highly uncertain.
Per 31 December 2022, approximately 95 percent of the power
plants are intact and available, but power demand is down,
and production is being curtailed by the grid operator on an
ad hoc basis. For the months after the invasion the Ukrainian
off-taker has approximately paid 42% of the revenues
Scatec ASA - Annual Report 2022
81
generated on the defined Feed-in-Tariff for Scatec’s assets.
The payments levels have increased during the year and the
payment level in November and December were 83% and
69% respectively.
In the fourth quarter 2022, the impairment tests from the first
quarter 2022 were updated with new information on cash flow
assumptions and WACC. Three scenarios have been assessed
and weighted to arrive at the value in use for the solar power
plants. The main assumptions used in the impairment test
were:
Future cash flows:
The solar power plants in Ukraine operate
under 10-years Feed-in-Tariffs (tariff) which all end in 2029. For
the cash flow periods after 2029, the estimates are based on
available power market data and Scatec’s long-term power
market outlook.
In a best-case scenario, we assume a continued reduction in
government payment for the power produced with a 65%
payment level in 2023 before the situation stabilises and return
to normal level from the beginning of 2024. The revenues not
paid for 2022 and 2023 are assumed to be deferred and paid
in 2024 and 2025. In a mid-case scenario, it is assumed cash
flow to be reduced also in 2024-2026 with a 65% payment
level before we return to normal level of cash flows from the
beginning of 2027. In a worst-case scenario, no future
revenues are assumed. The three scenarios have been equally
weighted to reflect the high uncertainty on the impact of
Scatec’s assets in Ukraine.
Discount rate:
estimate uncertainty, which has been reflected in the future
cash flow assumptions and estimates and not in the discount
rate.
The after-tax discount rate applied in on the cash flows was
8.7%. This corresponds to the average pre-tax discount rate of
9.4%.
The result of the analysis above equals an impairment
assessment including pre-war cash flows discounted at a
WACC approximately at 18.4%.
Sensitivity:
in discount rate. Sensitivity analysis shows that an increase in
the discount rate of 1% would results in an increased
impairment charge of NOK 170 million, assuming all other
factors remain unchanged. The sensitivity analysis is for
indicative purposes only.
Impairment:
recognised in the first quarter, whereof NOK 742 million
related to solar power plants and NOK 74 million related to
intangible assets. Intangible assets in Ukraine relate to right to
transmit electricity for the solar power plants. The recoverable
amount for the solar power plants and intangible assets in
Ukraine were NOK 2,107 million as per 31 December 2022.
NOK million
Power plants
in Ukraine
Other
Intangible
assets in
Ukraine
Total
Carrying value at
31 December 2022
2,681
242
2,923
Impairment charge
-742
-74
-816
Recoverable amount at
31 December 2022
1,939
168
2,107
Scatec has secured Political Violence Insurance (PVI) in Ukraine
which covers physical damage of the power plants up to a
predetermined amount. The insurance covers the replacement
value for rebuilding the power plants as well as for business
interruptions for 12 months for Rengy and Progressovka. As
communicated in the first quarter 2022 report, the Political
Violence Insurance for Boguslav, Kamianka and Chigirin
expired on 31 May 2022. Given the uncertainty in Ukraine,
(international) insurance markets are no longer able to provide
this cover going forward, hence Scatec has not been able to
renew the Political Violence Insurance for these assets. This
means that if Scatec suffered war related damages at these
sites, this would no longer be covered by (PV) insurance.
For information related to revenues and receivables refer to
Note 3 Operating segments, Note 22 Non-recourse financing
for financing commitments, covenants and guarantees and
Note 14 for cash in this report.
Impairment test – development projects
In 2022 Scatec impaired NOK 132 million related to
discontinued development projects in Lesotho, Mali,
Bangladesh and India.
Annual mandatory impairment test - goodwill
The goodwill of the Group mainly relates to the acquisition of
SN Power AS in 2021 (NOK 331 million). The goodwill relates to
the portfolio of identified project development opportunities
and assembled workforce. Consequently, the goodwill is
allocated to and tested for impairment on the global
Development & Construction operating segment. The goodwill
has been tested for impairment with the following key
assumptions and estimates:
Discount rate:
The discount rates are based on the Weighted
Average Cost of Capital (WACC) methodology. The discount
rate used in the impairment calculations represent the current
market assessment of the risks specific to a group of CGUs,
82
taking into consideration any individual risks of the underlying
assets that have not been incorporated in the cash flow
estimates. Discount rates used in the value in use calculation is
based on a discount rate after tax
.
The pre-tax discount rate applied in 2022 is 7.4%.
Future cash flows:
The recoverable amount has been
determined based on the value in use calculations. The
estimated cash flows correspond to the business plan a five-
year period, which is based on the Group’s project backlog
and pipeline. The business plan is approved by the Board of
Directors. Cash revenues have been calculated based on
estimated project volumes and an average margin related to
project execution. Cash expenses have been calculated based
on budgeted operating expenses attributable to project
execution activities. To the best of management’s judgement,
capital expenditure and changes in working capital are
insignificant in relation to this calculation and are therefore
excluded. The discounted free cash flows exceed the carrying
amount and the asset is not impaired.
Sensitivity:
The Group is of the view that no reasonably likely
change in the key assumptions listed above would cause the
carrying value to materially exceed the recoverable amount for
any of the CGUs. An increase in WACC by 2 percentage point
would not lead to impairment loss.
The Group has not recognised any impairments related to
goodwill in 2022 or 2021 as the recoverable amounts exceed
the carrying amount.
Note 13 Investments in joint venture and associated companies
Accounting principle
A joint venture or associate is an entity over which the Group
has joint control or significant influence. The Group’s
investments in its associates and joint ventures are accounted
for using the equity method. Under the equity method, the
investment is initially recognised at cost and subsequently
adjusted for further investments, distributions, and the Group’s
share of the net income from the associate or joint venture.
Estimation uncertainty
The considerations made in determining significant influence
or joint control are similar to those necessary to determine
control over subsidiaries. Refer to Note
2 Key sources of estimation uncertainty for significant
judgements related to the assessment of whether Scatec
controls an entity. There is also considerable estimate
uncertainty associated with the estimation of the excess values
included in the net investment in joint venture and associated
companies. The excess values mainly relate to water rights,
and the estimated useful life of the water rights are reviewed
on an annual basis and amortised over the remaining
concession period.
The tables below show the material joint ventures and
associated companies recognised in the Group and the
reconciliation of the carrying amount.
Scatec ASA - Annual Report 2022
83
Material joint ventures and associated companies
Company
Registered office
2022
2021
Kube Energy AS
Oslo, Norway
25.00%
25.00%
Scatec Solar Brazil BV
Amsterdam, Netherlands
50.00%
50.00%
Quixeré, Brazil
43.75%
43.75%
Quixeré, Brazil
43.75%
43.75%
Quixeré, Brazil
43.75%
43.75%
Quixeré, Brazil
43.75%
43.75%
Mendubim Holding B.V.
1)
Amsterdam, Netherlands
33.33%
51.00%
1)
Assu, Brazil
33.33%
50.00%
1)
Assu, Brazil
33.33%
-
Mendubim Solar EPC Ltda.
1)
Assu, Brazil
33.33%
-
Scatec Solar Solutions Brazil B.V.
Amsterdam, Netherlands
50.00%
50.00%
Recife, Brazil
50.00%
50.00%
Scatec Equinor Solutions Argentina S.A
Buenos Aires, Argentina
50.00%
50.00%
Cordilleras Solar VIII S.A
Buenos Aires, Argentina
50.00%
50.00%
Theun-Hinboun Power Company
Vientiane, Laos
20.00%
20.00%
SN Aboitiz Power – Magat Inc
Manila, Phillippines
50.00%
50.00%
Manila-Oslo Reneweable Enterprise
Manila, Phillippines
16.70%
16.70%
SN Aboitiz Power – Benguet Inc
Manila, Phillippines
50.00%
50.00%
SN Aboitiz Power – RES Inc
Manila, Phillippines
50.00%
50.00%
SN Aboitiz Power – Generation Inc
Manila, Phillippines
50.00%
50.00%
SN Power Uganda Ltd.
Kampala, Uganda
51.00%
51.00%
Bujagali Energy Ltd.
Jinja, Uganda
28.28%
28.28%
Compagnie Générale D`Hydroelectricité de Volobé SA
Antananarivo, Madagascar
12.75%
12.75%
Ruzizi Energy Ltd
Kigali, Rwanda
20.40%
20.40%
SN Power Africa Ltd
Nairobi, Kenya
51.00%
51.00%
SN Power Invest Netherlands B.V.
Amsterdam, Netherlands
51.00%
100.00%
SN Development B.V.
Amsterdam, Netherlands
51.00%
-
1) Mendubim project structure includes 13 SPVs, EPC and an operating company.
Carrying amount of investments in material joint venture and associated companies
Country
Carrying value 31
December 2021
Additions/
disposals
Net income from
joint venture and
associated
companies
Dividends
Net movement of
cash flow hedges
recognized in OCI
Foreign currency
translations
Carrying value 31
December 2022
Philippines
6,366
-46
472
-402
-
144
6,535
Laos
1,632
1
79
-86
-
195
1,822
Uganda
1,101
-1
155
-182
85
134
1,292
Other
2
⁾
646
251
42
-
-
87
1,026
Total
9,745
204
749
-669
85
560
10,674
2) Other includes Brazil, Argentina, Rwanda, Madagascar, Kenya, Norway and the Netherlands.
84
100% figures of summarised profit and loss for material joint venture and associated companies (standalone basis)
2022
NOK million
Philippines
Uganda
Laos
Other
Revenues
4,010
1,234
1,257
681
Operating expenses
-407
-93
-169
-156
Operating profit/(loss)
1,576
877
842
109
Net financial items
-224
45
-16
126
Profit before income tax
1,352
923
826
236
Income tax
-197
-6
-123
95
Profit/(loss) after tax
1,155
917
703
331
Scatec’s share of profit/(loss) after tax
579
259
141
179
Amortisaton of excess values (net of tax) - Scatec`s share
-105
-22
-61
-
Elimination of internal transacitions and internal profit
-2
-82
-1
-136
Net profit/(loss)
472
155
79
42
2021
NOK million
Philippines
Uganda
Laos
Other
Revenues
3,582
1,103
1,486
280
Operating expenses
-355
-70
-178
-91
Operating profit/(loss)
1,556
822
1,090
137
Net financial items
-302
-113
28
-130
Profit before income tax
1,254
709
1,118
7
Income tax
-145
-20
-168
18
Profit/(loss) after tax
1,109
689
950
25
Scatec’s share of profit/(loss) after tax
545
195
195
14
-
-
-
SN Power January figures not included in consolidated figures
-86
-47
-17
-
Amortisaton of excess values (net of tax) - Scatec`s share
-58
-44
-53
-
Elimination of internal transacitions and internal profit
50
34
9
30
Net profit/(loss)
451
138
133
44
The joint ventures in the Philippines are subject to tax reviews by the local tax authorities on a regular basis, and one entity received a
final assessment notice related to the year 2019 of NOK 178 million equivalent (at 31 December 2022) in March 2022. The matter is
disputed, and the amount is not included in net income from JV and associated companies for the year. Under the Share Purchase
Agreement with Norfund, Scatec has secured full indemnity against historical tax claims in the Philippines up until the SN Power
acquisition closing.
Scatec has in Argentina a non-recourse construction financing from Equinor of NOK 614 million (at 31 December 2022) that has been
extended after COD and is due in May 2023. The financing from Equinor is pledged in the shares of the project company. The sponsors
are currently working on different alternatives for the project and expect to find a solution before due date of the financing.
Scatec ASA - Annual Report 2022
85
100% figures of summarised financial positions for material joint venture and associated companies (standalone basis)
2022
NOK million
Philippines
Uganda
Laos
Other
Non-current assets
7,764
7,825
4,193
6,839
Current assets
837
269
188
516
Cash and cash equivalents
901
427
744
319
Total assets
9,501
8,521
5,125
7,674
Non-current liabilities
5,351
5,197
729
1,785
Current liabilities
893
362
792
1,209
Total liabilities
6,243
5,559
1,521
2,994
Total Equity
3,258
2,962
3,604
4,680
Scatec share of equity
1,614
841
722
2,133
Excess value at acquistion date of SN Power
3,319
127
239
-
Excess values from previous acquisitions
1,674
304
979
-
Amortisation of excess values
-182
-44
-146
-
Loan to joint venture as investment
69
-
1
410
Other / foreign currency translation
41
65
26
-14
Elimination of equity investments
-
-
-
-1,504
Net investment in joint venture
6,535
1,292
1,822
1,026
2021
NOK million
Philippines
Uganda
Laos
Other
Non-current assets
7,766
7,104
3,973
2,911
Current assets
497
235
265
125
Cash and cash equivalents
633
419
678
57
Total assets
8,895
7,758
4,915
3,093
Non-current liabilities
5,528
5,313
1,238
1,918
Current liabilities
829
64
707
445
Total liabilities
6,086
5,377
1,945
2,363
Total Equity
2,808
2,381
2,970
730
Scatec share of equity
1,392
674
594
346
Excess value at acquistion date of SN Power
3,319
127
239
-
Excess values from previous acquisitions
1,674
304
979
-
Amortisation of excess values
-65
-19
-64
-
Loan to joint venture as investment
137
2
-
-
Other / foreign currency translation
-91
14
-115
300
Net investment in joint venture
6,366
1,101
1,632
646
86
Note 14 Cash and cash equivalents
scatec
Accounting principle
Cash includes cash in hand and at bank. Cash equivalents are
short-term liquid investments that can be immediately
converted into a known amount of cash and have a maximum
term to maturity of three months. Restricted cash is cash
reserved for a specific purpose and therefore not available for
immediate and general use by the Group. Refer to Note 21
Financial instruments by category for the accounting principles
for financial instruments.
Cash and cash equivalents
NOK million
2022
2021
Cash in power plant companies in operation
2,057
1,711
Cash in power plant companies under development / construction
109
34
Other restricted cash
223
91
Free cash
1,743
2,335
Total cash and cash equivalents
4,132
4,171
Cash in power plant companies in operation includes free
cash, restricted cash in proceeds 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
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.
Reconciliation of movement in free cash at Group level (in recourse group as defined in bond & loan facilities)
NOK million
2022
2021
Distributions received by Scatec ASA from the power plant companies
1,231
1,603
Cash flow to equity D&C
1)
-149
-164
Cash flow to equity Services
1)
58
60
Cash flow to equity Corporate
1)
-347
-252
Working capital/other
16
-556
Cash flow from operations
809
691
Capitalised expenditures and Scatec’s share of equity investments in projects under development
-454
-307
Scatec's share of equity investments in projects under construction
-543
-564
Net cash considerations from purchase of SNP
-
-3,262
Cash flow from investments
-996
-4,132
Dividend distribution to Scatec ASA shareholders
-404
-173
Cash flow from financing
-404
-173
Change in cash and cash equivalents
-592
-3,615
Free cash at beginning of period
2,335
5,949
Free cash at end of period
1,743
2,335
Available undrawn credit facilities
1,827
1,632
Total free cash and undrawn credit facilities at the end of period
3,570
3,967
1) Proportionate share of cash flow to equity is defined in Alternative Performance Measures Appendix
Refer to Note 21 Corporate Financing for further information on credit facilities.
Scatec ASA - Annual Report 2022
87
Note 15 Trade receivables
Trade receivables are recognised for unconditional amounts due from the customer. Accrued income represents contract assets related
to energy production in the last month of the year, which is invoiced in January the following year. Trade receivables are measured at
the transaction price determined under IFRS 15.
The assessment of whether there is objective evidence that trade receivables is impaired is conducted based on the expected credit loss
(ECL) approach. Under the approach, lifeatime expected credit loss is recognised based on forward-looking information about possible
default events. Information on credit risk and foreign exchange risk regarding trade receivables used in the ECL assessment is provided
in Note 18 - Financial risk management.
Trade receivables
NOK million
2022
2021
Trade receivables
384
557
Accrued income and other receivables
210
183
Impariment for expected credit loss
(98)
-
Total trade and other receivables
497
740
Ageing of trade receivables at year-end was as follows:
NOK million
Total
Not due
Overdue
2022
384
278
105
2021
557
306
251
Expected credit loss is assessed on an individual instrument basis. There is no evidence of change in credit risk for the performing trade
receivables which cover all the outstanding amounts, except for the trade receivables in Ukraine and Honduras. The overdue receivables
are mainly related to sale of electricity from power plants in Ukraine and Honduras. In all other countries, there are no indications that
the off-takers will not be able to meet their payment obligations, and hence no expected credit loss impairment have been recognised.
Ukraine
On 28 March 2022 the Ministry of Energy of Ukraine issued an Order to reduce the amounts paid to the renewable power producers to
15% of the agreed tariff to cover for operating expenses for the duration of the martial law. On 29 June 2022 the Ministry of Energy
issued a new
order which increased the payment level from a minimum of 15% to a minimum of 18% after 2 July 2022. The unpaid
amounts are postponed to a later period. Due to the uncertainty related to future settlement, Scatec has from 24 February 2022 only
recognised revenues in accordance with actual paid amounts and expect to do so until the new regulation is lifted. The payments levels
have increased during the year and reached 66% in the fourth quarter 2022. From 24 February 2022 until end of 2022, the average
payment level from the off-taker has been 42%.
Due to the high uncertainty related to future settlement of trade receivables and other receivables related to the period prior to the
war, Scatec has made an expected loss impairment of NOK 98 million as of 31 December 2022.
The impairment is included in other
operating expenses in the 2022 figures. Total outstanding receivables in Ukraine has during 2022 decreased from NOK 390 million to
NOK 167 million in the consolidated financials, due to payments of trade receivables from the period before the war and changes in
other receivables.
Honduras
Scatec has also experienced increased delays in payments from the state-owned off-takers of power in Honduras. Overdue payments
have accumulated in Honduras to a varying degree since the second quarter of 2020. At the end of 2022, the total accumulated
overdue receivables amounted to NOK 66 million (NOK 153 million) after settlement of NOK 214 million in outstanding amounts in
December 2022.
In May 2022, a new Energy law came into force as introduced by the new Government of Honduras. In accordance with the new law,
the state owned off-taker has proposed certain changes to the existing PPAs and settlement of outstanding receivables. Part of the
outstanding receivables was settled in 2022, and the remaining amount is, based on the ongoing negotiations, expected to be settled
88
and risk related to remaining amount is therefore deemed limited
.
Payments are secured by sovereign guarantees and no expected
credit loss impairment has hence been recognised
Ageing of overdue trade receivables at year-end was as follows:
Overdue
NOK million
Less than 30 days
30 - 60 days
60 - 90 days
More than 90 days
Total
2022
14
10
11
71
105
2021
10
26
18
198
251
Note 16 Other non-current and current assets
Other non-current assets
NOK million
2022
2021
Loan to non-controlling interest
-
1
Other non-current investments
125
32
Non-current derivative financial assets (ref Note 20)
375
26
Other non-current receivables
116
151
Total other non-current assets
616
210
Other current assets
NOK million
2022
2021
Prepayments related to assets under development/construction
1336
22
Receivables from public authorities/prepaid taxes, VAT etc
235
393
Current derivative financial assets (ref Note 20)
21
0
Other receivables and prepaid expenses
292
320
Total other current assets
1883
734
Prepayments related to assets under development and construction
The prepayments relates to the ongoing construction projects in South Africa and Brazil. The balance comprises upfront payments of
project costs under the EPC-contracts.
Note 17 Other non-current and current liabilities
Other non-current liabilities comprise the following:
NOK million
2022
2021
Shareholder loan from co-investors (ref Note 23)
708
610
Non-current lease liability (ref Note 11)
270
206
Asset retirement obligations (ref Note 9)
475
270
Other long-term provisions and accruals
165
301
Total other non-current liabilities
1,618
1,387
Scatec ASA - Annual Report 2022
89
Other current liabilities comprise the following:
NOK million
2022
2021
Accrued expenses related to assets under development/construction
237
237
Public dues other than income taxes
76
44
Accrued interest expenses
112
65
Accrued payroll
75
57
Current lease liability (ref Note 11)
43
39
Deferred income
106
103
Other current liabilities and accruals
457
296
Total other current liabilities
1,106
841
Liabilities related to power production plants reflects both working capital requirements for development/construction contracts
and cost accruals on completed projects. Accrued interest expenses are related to corporate financing in the parent company.
Asset retirement obligations are provided for in the case where the Group has a legal obligation to dismantle and remove a
power plant and restore the site on which it is located at a future date. The estimate for the asset retirement cost is capitalized
as part of the carrying value of the power plant and depreciated over the useful life. The estimate is reassessed annually for each
power plant, based on updates in assumptions and key input data. The 2022 reassessment has resulted in an increase from NOK
270 million in 2021 to NOK 475 million in 2022, primarily driven by increases in estimated dismantling costs.
Other interest-bearing liabilities include current and non-current portions of the liability to PowerChina of NOK 462 million in
total (NOK 231 million in non-current and current other interest-bearing liabilities).
payment plan for the construction loan where part of the loan was paid in August 2022 and of the remaining EUR 44 million, EUR 22
million will be paid at the end of 2023 and EUR 22 million by mid-2025. Scatec ASA has provided a corporate and bank guarantee to
PowerChina in support of this obligation. In the third quarter 2022 the construction loan was reclassified from trade payables to other
non-current interest-bearing liabilities. In the fourth quarter, EUR 22 million related to the instalment due in 2023 has been reclassified
from non-current to current interest-bearing liabilities. Refer to Note 24 Guarantees and commitments for further details.
Note 18 Financial risk management
Through its business activities Scatec is exposed to the
following financial risks:
●
Market risk (including commodity price risk, currency risk
and interest rate risk)
●
Liquidity risk
●
Credit risk
Guidelines for risk management have been approved by the
Board of Directors and are carried out by Scatec’s group
finance department in cooperation with the individual
operational units. The Group’s overall risk management
program focuses on the unpredictability of financial markets
and seeks to minimise potential adverse effects on the Group’s
financial performance. The Group uses derivative financial
instruments to hedge certain risk exposures.
Market risk
Scatec is exposed to various market risks, including fluctuations
in commodity prices, foreign currency rates and interest rates
that can affect the revenues and costs of operating, investing
and financing activities.
Commodity price risk
Scatec’s sales of electricity constitute a material share of its
revenues. As a result, the Group’s business, financial position,
results of operation and cash flow are affected by changes in
electricity prices. The Group seeks to reduce the effect of price
fluctuation by entering into long term, fixed price contracts.
The power plants produce electricity primarily sold under long
term bilateral power purchase agreements (PPAs), with state
owned utilities or corporate off-takers, or under government-
based feed-in tariff schemes. The weighted average remaining
PPA duration for power plants in operation is 15 years. The
electricity produced from the power plants in the Philippines is
sold on bilateral contracts in the spot market under a
renewable operating license, and as ancillary services.
90
Some of the off-take agreements entered into do not contain
inflation-based price increase provisions or provisions that only
partially allows for inflation-based increases. Some of the
countries in which the Company operates, or into which the
Company may expand in the future, have in the past
experienced high inflation. The fixed price contracts are
classified as “own use” contracts (with reference to IFRS 9.2.4),
and hence not considered to be in scope of IFRS 9.
The price of electricity is influenced by government support
schemes, the development of the renewable power
production industry and development in prices on other
sources of electricity. Transitional climate risk related to new
technology and change in power markets is expected to affect
power prices. This includes development in cost and efficiency
of renewable energy technologies.
A decline in the costs of other sources of electricity and
primary energy sources, such as fossil fuel or nuclear power,
could reduce the wholesale price of electricity. A significant
amount of new electricity generation capacity becoming
available could also reduce the wholesale price of electricity.
Broader regulatory changes to the electricity market, such as
climate related regulations, changes to energy trading,
allocation of transmission cost and grid capacity
, could have
an impact on electricity prices. A decline in the market price of
electricity could materially adversely affect the financial
attractiveness of new projects.
Currency risk
Scatec operates internationally and is subject to currency
exposure when transactions and monetary balances are
denominated in currencies other than the functional currency.
For the Group’s power plant entities, currency risk is managed
based on functional currency and expected cash flows. This is
done through the setup of the SPVs with natural hedges
where non-recourse financing, revenue and other transactions
to a large extent is denominated in the same currency.
Construction revenues, cost of sales and gross profit may be
subject to significant currency fluctuations. However, multi-
currency construction contracts contribute to a natural hedge
of cost of sales. To the extent that the Group hedges foreign
currency exposure, it is based on cash flow considerations and
not with regards to foreign currency translation effects in the
financial statements.
The Group is also exposed to currency fluctuations with
regards to dividend payment from the operating companies
and dividend payment to the shareholders of the parent
company. The general policy of the Group is not to hedge
foreign currency exposure on long term cash flows from the
companies operating the power plants.
As the Group reports its consolidated results in NOK, any
change in exchange rates between NOK and functional
currencies for the reporting entities, which mainly are USD,
ZAR, EUR, MYR, BRL, CZK, PHP and VND, affects the
consolidated statements when the results of those reporting
entities are translated into NOK.
The sensitivity analysis shows the profit and loss effect of
reevaluation of monetary items due to changes in currencies
the Group is exposed to. The sensitivities have been calculated
based on what Scatec views to be reasonably possible changes
in the foreign exchange rates for the coming year and net
balances in different currencies as of 31 December 2022.
NOK million
Profit (loss)
before taxes
At 31 December 2022
EUR - Net gain/(loss) (5%)
-45
USD - Net gain/(loss) (5%)
3
BRL - Net gain/(loss) (5%)
-4
ZAR - Net gain/(loss) (5%)
-13
MYR - Net gain/(loss) (5%)
-6
EGP - Net gain/(loss) (5%)
-21
UAH - Net gain/(loss) (5%)
-21
NOK million
Profit (loss)
before taxes
At 31 December 2021
EUR - Net gain/(loss) (5%)
154
USD - Net gain/(loss) (5%)
24
BRL - Net gain/(loss) (5%)
-
ZAR - Net gain/(loss) (5%)
-2
MYR - Net gain/(loss) (5%)
-6
Interest rate risk
Scatec is exposed to interest rate risks through funding and
cash management activities. The interest rate risk management
objective is to keep the borrowing costs at a minimum and to
keep the volatility of future interest payments within
acceptable limits. The Group manages its interest rate risk by
either using long-term financing at fixed rates or using floating
to fixed interest rate swaps for either parts or full exposure of
external loans.
Based on the current Group interest bearing debt portfolio,
the interest rate hedge ratio (weighted average) is 62% for the
period 2022-2041. This includes corporate debt of NOK 8.0
billion of which approximately 19% is swapped to fixed rate.
Including the JVs, the interest rate hedge ratio (weighted
average) is 69%.
Scatec ASA - Annual Report 2022
91
The interest rate risk on the debt at the power plant level is
predominantly hedged by way of interest rate swaps subject to
hedge accounting, fixed rate loans or inflation rate adjusted
interest following the indexed PPAs. For more information on
the Group’s financial liabilities, refer to Note 21 – Corporate
Financing and Note 22 – Non-recourse financing.
The sensitivity analysis shows how profit and loss would have
been affected by changes in unhedged interest rates.
NOK million
At 31
December
2022
At 31
December
2021
At 31 December 2022
1%
1%
Net gain/(loss)
-65
-27
The impact on the profit and loss including the JVs with a
decrease or increase in interest rate of 1% would result in a
gain or loss of NOK 65 million.
Interest rate benchmark reform
Scatec is exposed to the effects of the interest rate benchmark
reform, in which Interbank offered rates (IBORs) will be phased
out and replaced by new reference rates. The Groups
subsidiaries and the parent company currently have several
contracts which reference IBOR rates. Scatec has identified and
implemented necessary changes to contracts that is required
to transition to new reference rates. The 3-month USD Libor
will cease on 30 June 2023 and is to be replace by Secured
Overnight Financing Rate (SOFR). There is no indication that 6-
month KLIBOR and 3-month JIBAR will cease in the near
future.
Liquidity risk
Liquidity risk is the risk that Scatec will not be able to meet
financial obligations when due. The Group manages liquidity
risk through a regular review of future commitments, cash
flows from operations and credit facilities. Due to the dynamic
nature of the underlying business, the Group maintains
flexibility in funding by maintaining availability under
committed credit facilities. In addition, the Group has available
funding through the USD 180 million Revolving Credit Facility
(RCF) and the USD 5 million Overdraft Facility. Scatec has per
31 December 2022 not drawn on the revolving credit facility or
the overdraft facility.
For information about the Group’s financial liabilities including
maturity, refer to Note 21 – Corporate Financing, Note 22 –
Non-recourse financing and Note 11 Leases.
In some of the countries where Scatec operates, governments
have imposed regulations on repatriation of funds out of the
country. This may halt or delay flow of funds between group
companies under certain circumstances. Scatec seek to
minimise such risk through assessments of the relevant
jurisdictions and regulations and adapt accordingly.
Scatec’s ability to seek liquidity and comply with financial
obligations is related to the capability to comply with extended
ESG targets and reporting requirements. Transitional climate
risk including new regulations and shifting in global financing
may affect Scatec’s liquidity.
A break-down of free and restricted cash is provided in Note
14 – Cash and cash equivalents.
Credit risk
Credit risk is the risk that Scatec’s customers or counterparties
will cause financial loss by failing to honour their obligations.
The Group is exposed to third party credit risk in several
instances, including off-take partners who have committed to
buy electricity produced by or on behalf of the Group,
suppliers and/or contractors who are engaged to construct or
operate assets held by the Group, property owners who are
leasing land to the Group, banks providing financing and
guarantees of the obligations of other parties, insurance
companies providing coverage against various risks applicable
to the Group’s assets, and other third parties who may have
obligations towards the Group. Except for the energy sold to
the whole sale market in the Philippines, most of the electric
power generated by the Group’s current portfolio of projects
in operation or under construction is, or will be, sold under
long-term off-take agreements with public utilities or other
partners, or under Feed-in Tariff (“FiT”) arrangements, Power
Purchase Agreements (PPAs) or similar support mechanisms
governed by law. If, for any reason, any of the counterparties
to these contracts are unable or unwilling to fulfil their
contractual obligations, refuse to accept delivery of power
delivered thereunder or if they otherwise terminate such
agreements prior to the expiration thereof, our assets,
liabilities, business, financial condition, results of operations
and cash flows could be materially and adversely affected. For
the Group’s current projects in operation, the majority of these
are supported by government guarantees or have obligations
regulated by law. However, there is still a risk of legislative or
other political action that may impair their contractual
performance.
The Group’s main credit risks arise from credit exposures with
accounts receivables and deposits with financial institutions.
All major deposits and investments with financial institutions
are kept with entities carrying a minimum international credit
rating from Moodys/ S&P of at least A-.
92
Theoretically, the Group’s maximum credit exposure for
financial assets is the aggregated statement of financial
position carrying amounts of financial loans and receivables
before expected credit loss provision, as well as cash and cash
equivalents, equaling NOK 6,709 million at 31 December 2022.
Refer to Note 15 – Trade receivables for information on the
expected credit loss provision related to trade receivables.
Note 19 Financial instruments
Accounting principle
Financial assets
The Group initially measures financial assets at amortised cost,
its fair value plus, in the case of a financial asset at fair value
through OCI, transaction costs. The classification of financial
assets depends on the financial asset’s contractual cash flow
characteristics and the Group’s business model for managing
them.
The Group’s financial assets at amortised cost mainly include
trade receivables and cash and cash equivalents. Financial
assets at amortised cost are subsequently measured using the
effective interest (EIR) method and are subject to impairment
assessment. See note 15 for accounting policy and ECL
approach on trade receivables.
Financial assets at fair value through profit or loss include
derivatives, including separated embedded derivatives, unless
they are designated as effective hedging instruments.
The Group’s financial assets at fair value through OCI include
effective cash flow hedges.
Financial liabilities
All financial liabilities are initially recognised at fair value, in the
case of loans, borrowings and payables, net of directly
attributable transaction costs. The Group’s financial liabilities
include trade and other payables, loans and borrowings
including bank overdrafts and derivative financial instruments.
After initial recognition, interest-bearing loans and borrowings
are subsequently measured at amortised cost using the EIR
method. Amortised cost is calculated by taking into account
any discount or premium on acquisition and fees or costs that
are an integral part of the EIR. The EIR amortisation is included
as finance costs in the statement of profit or loss.
The Group’s financial liabilities at fair value through OCI
include effective cash flow hedges.
A financial liability is derecognised when the obligation under
the liability is discharged, cancelled or expires. When an
existing financial liability is replaced by another from the same
lender on substantially different terms, or the terms of an
existing liability are substantially modified, the exchange or
modification is treated as de-recognition of the original liability
and recognition of a new liability. The difference in the
respective carrying amounts is recognised in the statement of
profit or loss.
Estimation uncertainty
Fair value measurement
All assets and liabilities for which fair value is measured or
disclosed in the financial statements are categorised within the
fair value hierarchy from IFRS 13 based on the lowest level
input that is significant to the fair value measurement as a
whole:
●
Level 1
markets for identical assets or
●
Level 2
input that is significant to the fair value measurement is
directly or indirectly observable
●
Level 3
input that is significant to the fair value measurement is
unobservable
For assets and liabilities that are recognised in the financial
statements on a recurring basis, the Group determines
whether transfers have occurred between levels in the
hierarchy by re-assessing categorisation (based on the lowest
level input that is significant to the fair value measurement as a
whole) at the end of each reporting period. During the
reporting period ending 31 December 2022, there have been
no transfers between the fair value levels.
The fair value of interest rate swaps is calculated as the present
value of the estimated future cash flows based on the
observable yield curves (level 2). The fair value of a foreign
exchange embedded derivative is calculated as the present
value of the difference between the forward rate and the spot
rate at the balance sheet date (level 2). This imply to take into
account input from external parties and compare the terms
agreed under each derivative contract to the market terms for
Scatec ASA - Annual Report 2022
93
a similar contract on the valuation date. Changes in the fair
value relate to daily changes in market prices of the derivative
contracts and the volume of contracts. Refer to Note 20
Derivative financial instruments for details.
Financial instrument by measurement category
NOK million
Measurement category
2022
2021
Assets
Derivatives
Interest rate swap
Fair value – hedging instruments through OCI
396
26
Debt instruments
Cash and cash equivalents
Amortised cost
4,132
4,171
Trade receivables
Amortised cost
286
557
Other debt instruments and receivables
Amortised cost
451
759
Total financial assets
5,264
5,513
Total current
4,774
5,303
Total non-current
490
210
Liabilities
Interest bearing loans and borrowings
Corporate financing
Amortised cost
7,987
7,264
Non-recourse financing loans
Amortised cost
15,260
11,855
Derivatives
Interest rate swap
Fair value – hedging instruments through OCI
28
339
Foreign exchange forward contracts
Fair value – hedging instruments through PL
92
-
Other financial liabilities
Shareholder loan from non-controlling interests
Amortised cost
708
610
Trade and other financial liabilities
Amortised cost
1,285
1,148
Total financial liabilities
25,360
21,217
Total current
3,008
2,114
Total non-current
22,351
19,103
There are no significant differences between total carrying value and fair value for financial instruments measured at amortised cost.
The table below provides a reconciliation of the movement of liabilities arising from financing activities, disaggregated by cash and non-
cash movements. Please refer to Note 11 Leases for a reconciliation of lease liabilities.
Movement in liabilities recognised at amortised cost
2022
Non-cash changes
NOK million
2021
Cashflows
Foreign
exchange
movement
Fair value
changes
Accrued interest
expense/
Reclassifications
2022
Corporate financing
7,264
(298)
903
-
118
7,987
Non-recourse financing
11,855
1,483
1,049
-
872
15,260
Total liabilities arising from financing activities
19,120
1,185
1,952
-
990
23,247
2021
Non-cash changes
NOK million
2020
Cashflows
Foreign
exchange
movement
Fair value
changes
Accrued interest
expense/
Reclassifications
2021
Corporate financing
748
4,448
-
-
2,068
7,264
Non-recourse financing
12,263
(1,637)
(103)
-
1,332
11,855
Total liabilities arising from financing activities
13,011
2,811
(103)
-
3,400
19,120
94
Note 20 Derivative financial instruments
Hedge accounting
The Group uses derivative financial instruments, such as
interest rate swaps, to hedge its interest rate risks related to
financing of renewable power production plants. Such
derivative financial instruments are initially recognised at fair
value on the date of which a derivative contract is entered and
are subsequently re-measured at fair value. The effective
portion of cash flow hedges is recognised in OCI and later
reclassified to profit or loss when the underlaying hedge item
affects profit or loss.
The Group only applies hedge accounting for cash flow
hedges that meet the criteria in IFRS 9. At the inception of
each hedge relationship, the Group designates and
documents the hedge accounting relationship, the risk
management objective and strategy for undertaking the
hedge. The documentation includes identification of the
hedging instrument, the hedged item or transaction, the
nature of the risk being hedged and how the entity will assess
the hedging instrument’s effectiveness in offsetting the
exposure to changes in expected cash flows from the hedged
item. Such hedges are expected to be highly effective in
achieving offsetting changes in the expected cash flows and
are assessed on an ongoing basis to determine that they
actually have been highly effective throughout the financial
reporting periods for which they were designated. If a hedge
of a forecasted transaction subsequently results in the
recognition of a non-financial asset or liability, the gain or loss
on the hedge instrument that was recognised in other
comprehensive income is reclassified to the income statement
in the same period or periods during which the asset acquired
or liability assumed affects the statement of profit or loss. If the
forecast transaction is no longer expected to occur, amounts
previously recognised in other comprehensive income are
reclassified to the statement of profit or loss. If the hedging
instrument expires or is sold, terminated or exercised without
replacement or rollover, or if its designation as a hedge is
revoked, amounts previously recognised in other
comprehensive income remain in other comprehensive
income until the forecasted transaction occurs.
Derivative financial assets and liabilities
NOK million
2022
2021
Interest rate swap contracts financial assets measured at level 2 in the fair value hierarchy
Current portion
21
-
Non-current portion
375
26
Total derivative financial assets
396
26
NOK million
2022
2021
Interest rate swap contracts financial liabilities measured at level 2 in the fair value hierarchy
Current portion
16
90
Non-current portion
12
249
Total Interest rate swap contracts derivative financial liabilities
28
339
Foreign exchange contracts financial liabilities measured at level 2 in the fair value hierarchy
Current portion
92
-
Non-current portion
-
-
Total Foreign exchange contracts financial liabilities
92
-
Total derivative financial liabilities
120
339
The tables above show the market value of the derivatives for the year ending 2022 and 2021, carried as financial assets when the fair
value is positive and as financial liabilities when the fair value is negative. The derivative financial instruments are presented on a gross
basis in the consolidated statement of financial position, since the Group did not have the legal right to offset these cash flows.
Scatec ASA - Annual Report 2022
95
Interest rate swaps per country 2022
Country
Notional amount (NOK million)
Fixed rate(s)
Floating rate reference rate(s)
Maturity
Norway
1,457
0.40%
3-month USD LIBOR
2025
South Africa
2,197
8.40% - 8.70%
3-month JIBAR
2024-2028
Egypt
2,471
2.15%
USD-SOFR-COMPOUND
2041
Mozambique
364
3.30%
6-month USD LIBOR
2035
Malaysia
212
4.30%
6-month KLIBOR
2028
Interest rate swaps per country 2021
Country
Notional amount (NOK million)
Fixed rate(s)
Floating rate reference rate(s)
Maturity
Norway
1,323
0.40%
3-month USD LIBOR
2025
South Africa
2,082
8.40% - 8.70%
3-month JIBAR
2024-2028
Egypt
2,811
5.40% - 8.00%
6-month USD LIBOR
2035
Mozambique
346
3.30%
6-month USD LIBOR
2035
Malaysia
216
4.30%
6-month KLIBOR
2028
The Egyptian power plant companies refinanced non-recourse debt by the issuance of USD 334.5 million bond in Q2 2022, of which a
USD 250 million tranche is subject to floating interest rates. As part of the refinancing, the power plant companies entered new interest
rate swaps matching the interest rate terms on the USD 250 million floating rate tranche.
NOK
Reconciliation of hedging reserve - interest rate swap contracts
NOK million
2022
2021
Opening balance
-242
-522
Recycling during the year to profit or loss, gross
348
203
Recycling during the year to profit or loss, tax effect
-85
-61
Unrealised gain/(loss) during the year
353
193
Unrealised gain/(loss) during the year, tax effect OCI
-83
-56
Closing balance
291
-242
Of which equity holders of the parent company
199
-111
The interest rate swap contracts described in this note are exposed to the effects of the Interest Rate Benchmark Reform, as the fair
values of interest rate swaps today are based on the following reference rates; 6-month KLIBOR, 3-month USD Libor, 6-month USD
Libor and 3-month JIBAR, and a change from these reference rates to the new reference rates described in the Interest Rate Benchmark
Reform could affect the fair value of the financial instruments. The Group pays attention to the development of the IBOR transition, and
will work with the contractual counterparts on the transition to new reference rates.
Foreign exchange derivatives
F
oreign exchange derivatives consist of
USD/ZAR currency forward contracts related to the
power plants under construction in
Kenhardt, South Africa, to mitigate currency exposure on equipment purchases denominated in USD. The foreign exchange derivatives
are recognized in the statement of financial position at fair value, with the change in value recognized in the statement of profit and
loss as financial income/expense.
96
Note 21 Corporate financing
Currency
Denominated
currency value
(million)
Maturity
Interest terms
Carrying value 31
December 2022
(NOK million)
Carrying value 31
December 2021
(NOK million)
Green Bond (Ticker: SCATC03 NO0010931181)
EUR
250
Q3 2025
3M EURIBOR + 2,50%
2,625
2,475
Total unsecured bonds
2,625
2,475
Green Term Loan
USD
150
Q1 2025
1,481
1,323
Bridge to Bond
USD
193
Q1 2024
1,906
1,702
Total secured acquisition financing
3,387
3,025
Vendor Financing (Norfund)
USD
200
Q1 2028
1,975
1,764
Total unsecured acquisition financing
1,975
1,764
Revolving credit facility
USD
180
Q1 2024
-
-
Overdraft facility
USD
5
-
-
Total secured back-stop bank facilities
-
-
Total
7,987
7,264
As of non current
7,987
7,264
As of current
-
-
Scatec ASA - Annual Report 2022
97
Green bond
In the first quarter of 2021 Scatec issued a EUR 250 million
senior unsecured green bond with maturity in August 2025.
The bond carries a coupon of 3-months EURIBOR (with no
floor) + 2.50%, margin to be settled on a quarterly basis. The
bond was listed on the Oslo Stock Exchange 23 June 2021 with
ticker SCATC03 ESG. The proceeds from the bond issue were
used to
●
Redeem in whole the NOK 750 million senior unsecured
green bond issued in 2017, with ticker SSO02 ESG,
including any call premium and accrued interest.
●
To partially refinance the bridge to bond facility that was
committed in 2020 in relation to the acquisition of SN
Power.
●
Cover for other eligible activities as set out in Scatec’s
Green Financing Framework.
During the term of the bond, Scatec shall comply with the
following financial covenants at all times:
●
Minimum liquidity: free cash of minimum NOK 150
million
●
Maximum debt to capitalisation ratio: 50%
●
Minimum interest coverage ratio: 3.0x.
Refer to the loan agreement available on
www.scatec.com/investor-overview for further information and
definitions.
Outstanding acquisition finance
As of 31 December 2022, the following facilities and amounts
are outstanding of the initial USD 1,030 million financing
package related to the acquisition of SN Power in the first
quarter of 2021:
●
USD 150 million Green Term Loan provided by Nordea,
Swedbank and DNB with maturity in the first quarter of
2025.
●
USD 193 million outstanding of the USD 400 million
bridge to bond facility provided by Nordea, Swedbank
and DNB. The maturity date for the facility was extended
to January 2024 in the third quarter of 2022.
●
USD 200 million Vendor Financing provided by Norfund
with maturity in the first quarter of 2028.
Refer to note 30 Subsequent events for information about
refinancing of the bridge to bond facility.
Revolving credit facility
In the first quarter of 2021 Scatec increased the existing
revolving credit facility (RCF) from USD 90 million to USD 180
million, with Nordea Bank as agent and Nordea Bank, DNB,
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 facility is ESG (Environmental, Social and
Governance) linked and has a three-year tenor. The facility
margin is linked to the following ESG KPIs:
●
A targeted level for LTIFR (Lost time incident frequency
rate) for the Group
●
Anti-Corruption training for all employees
●
Environmental and social baseline studies and risk
assessment on all power plants by external experts
Scatec has not drawn on the revolving credit facility per 31
December 2022.
Overdraft facility
In the second quarter of 2018 Scatec entered into a USD 5
million overdraft facility with Nordea Bank. Scatec has not
drawn on the overdraft facility per 31 December 2022.
Per 31 December 2022, Scatec 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 10,598 million per year end
.
During 2022, interest
expense net of gains/(loss) on interest rate swaps amounting
to NOK 344 million ( 250 ) was expensed for the bond,
acquisition finance, overdraft- and revolving credit facility.
Guarantee facilities
The guarantee facility (GFA) has Nordea Bank as agent and
issuer, with Nordea Bank, Swedbank, DNB and BNP Paribas as
guarantee instrument lenders. The guarantee facility is mainly
used to provide advance payment-, performance and
warranty bonds under construction agreements, as well as
trade letter of credits. In addition to the GFA, Scatec has
guarantee facilities with Standard Bank South Africa, Lombard
insurance company in South Africa and MBank in Malaysia.
These facilities are mostly used to cover short term bid bonds.
Refer to note 24 Guarantees for further information
98
Note 22 Non-recourse financing
See Note 19 Financial instruments for accounting principle for
financial liabilities recognised to amortised cost.
The table below specifies non-recourse financing at 31
December 2022 and 2021. The rate of interest is a calculated
average per portfolio. All loans are fixed or swapped to fixed
rate interests, except for the loans in South Africa Upington
where the interest rates are inflation-linked to match the
profile of the PPA indexations.
NOK million
Interest rate
Maturity date
2022
2021
Loan facilities (ZAR) - South Africa portfolio Kalkbult. Linde,
Dreunberg
10.05%
12/31/2032
1,910
1,616
Loan facilities (ZAR) - South Africa portfolio Upington 1)
8.23%
3/31/2037
2,267
2,157
Loan facilities (ZAR) - South Africa portfolio Kenhardt
10.14%
10/31/2041
2,582
-
Loan facilities (CZK) – Czech portfolio
4.90%
5/11/2029
315
318
Loan facilities (USD) - Gigawatt Global Rwanda Ltd (ASYV)
8.23%
1/11/2030
116
108
Loan facilities (USD) – Jordan portfolio
6.39%
1/10/2032
685
644
Loan facilities (USD) – Produccion De Energia S.A (Aqua Fria)
7.21%
10/31/2026
387
346
Loan facilities (MYR) – Quantum Solar Park (Semenanjung) SDN.
6.02%
4/30/2035
1,784
1,796
Loan facilities (MYR) – Red Sol
4.22%
12/23/2028
264
267
Loan facilities (USD) - Aswan portfolio Egypt
5.21%
3/31/2041
3,138
2,847
Loan facilities (USD) - Central Solar de Mocuba, Mozambique
6.45%
1/31/2035
468
438
Loan facilities (EUR) - Ukraine
6.86%
12/31/2029
987
969
Loan facilities (VND) - Vietnam
6.00%
1/31/2035
356
347
Total non-recourse financial liabilites
15,260
11,854
Of which non-current non-recourse financial liabilities
13,297
10,708
Of which current non-recourse financial liabilities
1,963
1,147
1) Parts of the loans in South Africa Upington are structured as CPI-linked loans where the principal loan amount is uplifted based on the yearly observed CPI factor. Hence, the
effective interest including the CPI factor is higher than the nominal interest rate of the loan. For 2021 the CPI factor applied to the loans was 1.17%
.
Scatec mainly uses non-recourse financing for constructing
and/or acquiring assets, exclusively using as guarantee the
assets and cash flows of the special purpose vehicle 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
companies operating in the Czech Republic, the non-recourse
financing
agreements include a cross default clause within the Czech
group. Please refer to Note 24 Guarantees and commitments
for information on the use of parent company guarantees in
favor of power plant companies.
The project entities’ assets are pledged as security for the non-
recourse financing. The Group’s book value of the pledged
power plants is
NOK 15,676 million (14,508)
at 31 December
2022.
Scatec ASA - Annual Report 2022
99
Repayment structure
NOK million
Loan repayment
Interest payment
Total
2023
1066
1088
2,154
2024
951
1111
2,062
2025
1010
1031
2,041
2026
1085
966
2,051
2027
1017
892
1,909
2028
1173
821
1,994
2029
996
702
1,698
2030
1010
636
1,646
2031
1111
563
1,674
2032
849
489
1,338
2033
787
435
1,222
2034
908
377
1,285
2035
852
312
1,164
2036
738
256
994
2037
713
196
909
2038
503
148
651
2039
519
106
625
2040
405
64
468
2041
469
23
492
Total future loan repayment
16,161
10,217
26,378
Covenants
Scatec has financial covenants related to the non-recourse
financing in the different countries, for example different
Debt Service Coverage Ratios (DSCR) and Equity ratios. The
Agreements also contain further restrictions on, inter alia,
hedging policies, subsidiaries and new activities, amendments
to the key agreements and insurance policies, new consents,
pledges and guarantees, financial indebtedness and giving
financial support, capital expenditures and changes of
shareholder structure and auditors, as well as several
undertakings related to e.g., budgets, financial and operational
reporting and information.
Except for Ukraine, Scatec was in compliance with financial
covenants for the non-recourse debt on 31 December 2022.
Ukraine
Scatec’s power plant companies in Ukraine are not in
compliance with covenants in the loan agreements for the
non-recourse project debt at year-end. The situation is
unchanged from the first quarter 2022, when NOK 603 million
of the non-recourse financing was reclassified from non-
current to current. As of 31 December 2022, all
on-recourse
financing (including accrued interest) in Ukraine, amounting to
NOK 987 million, continues to be classified as current in the
consolidated financials. Scatec has continuous and constructive
dialogue with the lenders and the parties have agreed on a
non-formalised “stand still”
100
Note 23 Project financing provided by co-investors
In relation to the structuring and financing of the power plant companies in the Group, financial instruments are issued to both the
controlling and non-controlling interests. Such financing can be both paid-in equity and shareholder loans. Issued capital and
shareholder loans are considered equity instruments if repayment is on the discretion of the power plant company.
At 31 December 2022, the following financing have been granted by co-investors to consolidated power plant companies:
Shareholder loan recognized
NOK million
Country of
incorporation
Total
financing
Paid-in
equity
in equity
as financial
liability
Scatec Solar SA 166 (Pty) Ltd (Kalkbult)
South Africa
54
54
0
0
Simacel 155 (Pty) Ltd (Linde)
South Africa
21
21
0
0
Simacel 160 (Pty) Ltd (Dreunberg)
South Africa
41
41
0
0
Gigawatt Global Rwanda (ASYV)
Rwanda
20
5
15
0
Anwar Al Ardh for Solar Energy Generation PSC (EJRE)
Jordan
91
1
90
0
Ardh Al Amal for Solar Energy Generation PSC (GLAE)
Jordan
43
1
42
0
Producción de Energía Solar y Demás Renovables, S.A.
(Agua Fria)
Honduras
265
111
0
155
Los Prados
Honduras
207
207
0
0
Aswan Solar Power SAE (BB1)
Egypt
33
33
0
0
Zafarana Solar Power SAE (ZAF1)
Egypt
89
37
0
52
Red Sea Solar Power SAE (ZAF2)
Egypt
167
33
0
134
Upper Egypt Solar Power (BB2)
Egypt
100
36
0
64
Kom Ombo Renewable Energy SAE (BB3)
Egypt
97
43
0
54
Daraw Solar Power SAE (BB4)
Egypt
79
40
0
40
Egypt Green Hydrogen
Egypt
44
0
0
44
Kamianka / Chysta Energiya
Ukraine
59
1
0
58
Rengy Bioenergy
Ukraine
83
1
0
82
Central Solar de Mocuba, Mozambique
Mozambique
49
29
0
20
Dyason's Klip 1
South Africa
111
111
0
0
Dyason's Klip 2
South Africa
112
112
0
0
Sirius Solar PV Project One
South Africa
110
110
0
0
Helios Power (Private) Limited
Pakistan
14
14
0
1
Meridian Energy (Private) Limited
Pakistan
14
14
0
1
HNDS Energy (Private) Limited
Pakistan
14
14
0
1
Total project financing from co-investors
1,921
1,070
147
708
Scatec ASA - Annual Report 2022
101
At 31 December 2021, the following financing have been granted by co-investors to consolidated power plant companies:
Shareholder loan recognized
NOK million
Country of
incorporation
Total
financing
Paid-in
equity
in equity
as financial
liability
Scatec Solar SA 166 (Pty) Ltd (Kalkbult)
South Africa
52
52
0
0
Simacel 155 (Pty) Ltd (Linde)
South Africa
20
20
0
0
Simacel 160 (Pty) Ltd (Dreunberg)
South Africa
40
40
0
0
Gigawatt Global Rwanda (ASYV)
Rwanda
17
5
12
0
Anwar Al Ardh for Solar Energy Generation PSC (EJRE)
Jordan
81
1
80
0
Ardh Al Amal for Solar Energy Generation PSC (GLAE)
Jordan
38
1
37
0
Producción de Energía Solar y Demás Renovables, S.A.
(Agua Fria)
Honduras
226
99
0
127
Los Prados
Honduras
192
192
0
0
Aswan Solar Power SAE (BB1)
Egypt
29
29
0
0
Zafarana Solar Power SAE (ZAF1)
Egypt
119
33
0
86
Red Sea Solar Power SAE (ZAF2)
Egypt
98
29
0
68
Upper Egypt Solar Power (BB2)
Egypt
83
33
0
50
Kom Ombo Renewable Energy SAE (BB3)
Egypt
124
38
0
86
Daraw Solar Power SAE (BB4)
Egypt
65
35
0
29
Kamianka / Chysta Energiya
Ukraine
52
1
0
51
Rengy Bioenergy
Ukraine
85
1
0
84
Central Solar de Mocuba, Mozambique
Mozambique
43
26
0
17
Dyason's Klip 1
South Africa
107
107
0
0
Dyason's Klip 2
South Africa
108
108
0
0
Sirius Solar PV Project One
South Africa
106
106
0
0
Helios Power (Private) Limited
Pakistan
9
6
0
3
Meridian Energy (Private) Limited
Pakistan
9
6
0
3
HNDS Energy (Private) Limited
Pakistan
9
6
0
3
Total project financing from co-investors
1,711
973
130
610
For the year 2022,
interest expenses on financing from co-investors of NOK 45 million have been expensed (NOK 38 million for 2021),
of which NOK 2 million is recognised directly in equity (NOK 1 million for 2021).
The equity and loan financing provided by the co-investors is repaid according to a pre-determined waterfall structure, meaning that
the financing presented above will
be settled after external non-recourse financing, and only when distributable cash as defined by the
financing agreements is available. Normally this would occur twice a year.
For some of the project companies in the above table the co-investor funding has been provided indirectly through jointly owned
holding companies.
102
Note 24 Guarantees and commitments
Guarantee exposure
The amounts specified below are total exposure on guarantees issued by Scatec ASA at each balance sheet date based on when the
guarantees expire. The guarantees expire haphazardly during the year. The fair value of the guarantees is immaterial on a consolidated
basis; hence no liability is recognised.
NOK million
31.12.2022
31.12.2023
31.12.2024
31.12.2025
Bid Bonds
401
170
170
0
SPV Performance / Commitments
256
202
202
156
O&M Performance (3rd party)
16
-
-
-
Other Payment Guarantees
1,800
1,620
46
46
Total
2,474
1,992
418
202
Guarantees
For projects under development, Scatec is often required to
issue bid bonds to secure commitment during submission of
project bids. The bid bonds are mainly related to projects
under development in Tunisia, South Africa, India, Brazil and
Egypt.
Guarantees are issued to secure power plant company
performance for plants in operations. This includes SPV
performance and commitment guarantees to cover the
obligations under PPAs and Implementation Agreements.
These obligations are connected to project performance
where Scatec is in
control and hold the O&M and asset
management agreements. SPV performance gurantee mainly
relate to the project in Botswana and RMIPPP in South Africa.
In addition, Scatec provides payment guarantees. This includes
for equity injection in project companies where project lenders
disburse debt before equity is paid in and Debt Service
Reserve to replace cash reserves in the project companies. The
main outstanding payment guarantees are related to the
RMIPPP project in South Africa, as well as to Power China and
Sukkur. The payment guarantee of NOK 264 million to Power
China is related to the construction loan on the Progressovska
solar plant in Ukraine.
For four of the power plants in Ukraine, Scatec has provided
additional corporate guarantees of NOK 58 million related to
establishment of debt service reserve accounts and contingent
equity.
Guarantee facility
The guarantees issued by Scatec ASA and other recourse
group entities are issued under the guarantee facility with
Nordea Bank as agent, and Nordea Bank, BNP Paribas,
Swedbank and DNB as guarantee instrument lenders.
In addition to this facility, Scatec have guarantee facilities with
other financial institutions in countries where Scatec operates.
These facilities are mostly used to cover short term bid bonds.
The Norwegian Export Credit Guarantee Agency (Eksfin)
normally counter guarantee for the guarantees issued by the
banks. Eksfin can issue counter indemnity of 50% in favor of
the issuing banks. The financial covenants in the Guarantee
Facility Agreement are:
• Free cash of no less than NOK 150,000,000
• Debt to capitalization ratio 50%
• Minimum interest coverage ratio 3.0x
Per 31 December 2022, Scatec was in compliance with all
covenants in the Guarantee Facility Agreement.
Scatec ASA - Annual Report 2022
103
Note 25 Share capital, shareholder information and dividend
Share capital and shareholder information
At year-end 2022 the total number of shareholders in Scatec
was 16,463 (16,487). The total number of outstanding shares
was 158,917,275 (158,864,018) at par value NOK 0.025 per
share as of 31 December 2022.
In February 2022, Scatec increased the share capital by issuing
53,257 new shares as part of the share option programme. In
May 2022,, Scatec bought back 89,200 shares at an average
volume weighted price per share of NOK 93.78 related to the
employee share purchase programme.
Refer to Note 12 – Equity and shareholder information in the
Parent financial statement for an overview of the largest
shareholders of Scatec ASA and shares held by Management
and Board of Directors at 31 December 2022.
Refer to Note 4 – Employee benefits for information on share
options granted to the management.
Dividend
The Company recognises a liability to make cash or non-cash
distributions to equity holders of the parent when the
distribution is authorised, and the distribution is no longer at
the discretion of the Company. As per the corporate laws in
Norway, a distribution is authorised when it is approved by the
General Meeting.
The Group’s objective is to pay shareholders consistent and
growing cash dividends. On 2 February 2023, the Board of
Directors announced its intention to propose to the Annual
General Meeting to change the payment ratio from 25% to
15% of free cash distributed from producing power plants, this
to support Scatec’s growth ambitions while retaining
the Group’s objective to pay shareholder dividends.
On 2 February 2022, the Board of Directors announced its
intention to propose a dividend of NOK 2.54 per share to the
Annual General Meeting, totaling NOK 404 million. The
amount was paid out in May 2022.
104
Note 26 Consolidated subsidiaries
The consolidated financial statement of Scatec comprises more
than 200 legal companies that are controlled by Scatec
.
The
following table include material consolidated subsidiaries,
including material holding companies. Consolidated economic
interests correspond to the voting interests if not otherwise
stated. For subsidiaries of the ultimate Parent’s subsidiaries, the
economic interests stated is the mathematically indirect
consolidated economic interests. For information on
associated companies and joint venture companies, refer to
Note 13 Investments in JV and associated companies
Company
Registered office
Consolidated
economic
interests 2022
SN Power AS
Oslo, Norway
100.00%
Scatec Solar Netherlands BV
Amsterdam, Netherlands
100.00%
Release Management B.V.
Amsterdam, Netherlands
100.00%
Release Africa B.V.
Amsterdam, Netherlands
100.00%
Release South Africa Pty (Ltd)
Cape Town, South Africa
100.00%
Release Cameroon SARL
Douala, Cameroon
100.00%
Signo Solar PP01 s.r.o.
Prague, Czech
100.00%
Scatec Solar s.r.o.
Prague, Czech
100.00%
Signo Solar PP01 s.r.o.
Prague, Czech
100.00%
Signo Solar PP02 s.r.o.
Prague, Czech
100.00%
Signo Solar PP03 s.r.o.
Prague, Czech
100.00%
Signo Solar PP04 s.r.o.
Prague, Czech
100.00%
Signo Solar PV1 s.r.o.
Prague, Czech
100.00%
Scatec Solar Solutions Ukraine LLC
Kyiv, Ukraine
100.00%
Chysta Energhiaa 2011 LLC
Kyiv, Ukraine
60.00%
Boguslav Energy LLC
Bohuslav, Ukraine
100.00%
Greenteco SES LLC
Kyiv, Ukraine
100.00%
Rengy Bioenergy LLC
Kyiv, Ukraine
51.00%
PV Progressovka Gamma LLC
Berezanka, Ukraine
100.00%
PV Progressovka ALpha LLC
Berezanka, Ukraine
100.00%
PV Progressovka Beta LLC
Berezanka, Ukraine
100.00%
Scatec Solar Jordan (EPC)
Amman, Jordan
100.00%
Scatec Solar AS/ Jordan PSC
Amman, Jordan
100.00%
Anwar Al Ardh For Solar Energy Generation PSC
Amman, Jordan
50.10%
Ardh Al Amal For Solar Energy Generation PSC
Amman, Jordan
50.10%
Scatec Solar Africa (Pty) Ltd
Cape Town, South Africa
100.00%
Scatec Solar Management Services (Pty) Ltd
Sandton, South Africa
100.00%
Scatec Solar SA 163 (Pty) Ltd.
Sandton, South Africa
92.00%
Scatec Solar SA (pty) Ltd.
Sandton, South Africa
100.00%
Scatec Solar SA 165 (Pty) Ltd.
Sandton, South Africa
76.60%
Scatec Solar SA 166 (Pty) Ltd.
Sandton, South Africa
46.00%
Scatec Solar SA 164 (Pty) Ltd.
Sandton, South Africa
80.70%
Simacel 155 (Pty) Ltd.
Sandton, South Africa
44.40%
Simacel 160 (Pty) Ltd.
Sandton, South Africa
44.40%
Dyason's Klip 1 (Pty) Ltd
Cape Town, South Africa
45.50%
Dyason's Klip 2 (Pty) Ltd
Cape Town, South Africa
45.50%
Scatec Solar Construction R4
Cape Town, South Africa
51.00%
Scatec Solar Operations R4
Cape Town, South Africa
51.00%
Sirius Solar PV Project One (RF) (Pty) Ltd
Cape Town, South Africa
45.50%
Scatec Hybrid EPC (Pty) Ltd
Cape Town, South Africa
100.00%
Scatec Kenhardt 1 (Pty) Ltd
Cape Town, South Africa
100.00%
Scatec Kenhardt 2 (Pty) Ltd
Cape Town, South Africa
100.00%
Scatec Kenhardt 3 (Pty) Ltd
Cape Town, South Africa
100.00%
Continues on following page
Scatec ASA - Annual Report 2022
105
Company
Registered office
Consolidated
economic
interests 2022
Scatec Solar Honduras SA
Tegucigalpa, Honduras
100.00%
Energias Solares S.A.
Tegucigalpa, Honduras
70.00%
Fotovoltaica Los Prados S.A.
Tegucigalpa, Honduras
70.00%
Fotovoltaica Surena S.A.
Tegucigalpa, Honduras
70.00%
Generaciones Energeticas S.A.
Tegucigalpa, Honduras
70.00%
Produccion de Energia Solar Demas Renovables S.A
Tegucigalpa, Honduras
40.00%
Central Solar de Mocuba S.A.
Maputo, Mozambique
52.50%
Scatec Solar Mozambique Limitada
Maputo, Mozambique
100.00%
Scatec Solar Solutions Egypt LLC
Cairo, Egypt
100.00%
Aswan Solar Power SAE
Cairo, Egypt
51.00%
Daraw Solar Power SAE
Cairo, Egypt
51.00%
Kom Ombo Renewable Energy SAE
Cairo, Egypt
51.00%
Red Sea Solar Power SAE.
Cairo, Egypt
51.00%
Upper Egypt Solar Power
Cairo, Egypt
51.00%
Zafarana Power SAE
Cairo, Egypt
51.00%
Scatec Solar Solutions Malaysia Sdn Bhd
Kuala Lumpur, Malaysia
100.00%
Quantum Solar Park (Kedah) Sdn Bhd ¹⁾
Kuala Lumpur, Malaysia
100.00%
Quantum Solar Park (Melaka) Sdn Bhd ¹⁾
Kuala Lumpur, Malaysia
100.00%
Quantum Solar Park (Terengganu) Sdn Bhd ¹⁾
Kuala Lumpur, Malaysia
100.00%
Quantum Solar Park Semenanjung Sdn Bhd ¹⁾
Kuala Lumpur, Malaysia
100.00%
Red Sol
Kuala Lumpur, Malaysia
100.00%
Helios Power Ltd
Clifton Karachi, Pakistan
100.00%
HNDS Energy Ltd
Clifton Karachi, Pakistan
100.00%
Meridian Energy Ltd
Clifton Karachi, Pakistan
100.00%
Scatec Solar Pvt Ltd (Pakistan)
Clifton Karachi, Pakistan
100.00%
Scatec Solar Solutions Vietnam Co. Ltd.
Ho Chi Minh City, Vietnam
100.00%
Dam Nai Wind Power JSC
Ninh Thuan, Vietnam
100.00%
1) The consolidated economic interest in the Malaysian project companies represents Scatec’s share of the contributed equity and retained earnings in the project companies as of the reporting date. Scatec’s average economic
interest through the PPA tenor is estimated to be 95% based on the Group’s right to economic return obtained through shareholdings and other contractual arrangements. The average economic interest may be subject to change.
Note 27 Non-controlling interests
Non-controlling interests
Scatec’s value chain comprises all downstream activities such
as project development, financing, construction, operations as
well as having an asset management role trough ownership of
the solar power plants. Normally Scatec enter into partnerships
for the shareholding of the power plant company owning the
power plants while maintaining control, leading to material
non-controlling interest.
Consolidation of power plant companies are identified as a
significant judgement for the consolidated financial
statements, please refer to Note 2 for further information.
Note 26 Consolidated subsidiaries include all material entities
with an NCI share. The NCI share is the share of interest not
owned by Scatec.
Accumulated balances of non-controlling interest and the
allocation of profit and loss are presented below by sub-
group. The change in NCI balance from year to year is driven
by the NCIs share of profit or loss and other comprehensive
income, capital injections from- and dividends paid to NCIs, as
well as foreign exchange differences.
Accounting principle
Non-controlling interests are calculated on the respective
subsidiaries’ stand-alone reporting, before eliminations of
intercompany transactions. Furthermore, unrealised intercom-
pany profits relating to depreciable assets (power plants) are
viewed as being realised gradually over the remaining
economic life of the asset. Consequently, the specification of
non-controlling interest in the group financial statements will
differ from the non-controlling interests calculated based on
the respective subsidiaries’ stand-alone reporting.
106
When recognising a non-controlling interest through an
acquisition, the difference between the cost of the non-
controlling interest and the non-controlling interest’s share of
the assets and liabilities is reflected in the consolidated
statement of financial position at the date of acquisition as an
equity transaction.
Total balances of material non-controlling interest
NOK million
2022
2021
Egypt
99
-24
Honduras
323
318
Jordan
183
149
Mozambique
56
-5
Pakistan
30
11
Rwanda
5
7
South Africa
-48
178
Ukraine
-108
14
Total non-controlling interests
540
649
Profit/(loss) allocated to material non-controlling interest
NOK million
2022
2021
Egypt
-6
-41
Honduras
4
8
Jordan
13
10
Mozambique
12
-1
Pakistan
-4
-6
Rwanda
-2
-3
South Africa
188
82
Ukraine
-97
18
Total non-controlling interests
106
68
Financial information of subsidiaries that have material non-controlling interests is provided below:
Summarised statement of profit or loss for 2022 (before group eliminations)
NOK million
Revenues
Operating
expenses
Operating
profit
Net financial
expenses
Profit before
income tax
Profit/(loss) for
the period
Profit/loss
attributable to
non-controlling
interest
Dividends paid
to non-
controlling
interest 1)
#REF!
Egypt
637
(281)
356
(353)
3
(13)
(6)
-
Honduras
200
(132)
68
(52)
16
16
4
-
Jordan
121
(62)
59
(33)
27
25
13
-
Mozambique
91
(43)
48
(3)
46
26
12
-
Pakistan
-
(4)
(4)
(11)
(15)
(15)
(4)
-
Rwanda
23
(13)
10
(15)
(5)
(5)
(2)
-
South Africa
1,842
(1,154)
688
(84)
602
584
188
526
Ukraine
47
(176)
(129)
(89)
(217)
(221)
(97)
-
1) Excluding repayments of shareholders loans
Scatec ASA - Annual Report 2022
107
Summarised statement of profit or loss for 2021 (before group eliminations)
NOK million
Revenues
Operating
expenses
Operating
profit
Net financial
expenses
Profit before
income tax
Profit/(loss) for
the period
Profit/loss
attributable to
non-controlling
interest
Dividends paid
to non-
controlling
interest 1)
#REF!
Egypt
596
(250)
345
(215)
130
(85)
(42)
-
Honduras
196
(128)
68
(44)
24
24
8
-
Jordan
109
(56)
54
(32)
22
20
10
-
Mozambique
82
(40)
42
(41)
1
(2)
(1)
-
Pakistan
-
(34)
(34)
(1)
(34)
(25)
(6)
-
Rwanda
20
(12)
8
(14)
(5)
(5)
(3)
-
South Africa
1,245
(628)
617
(369)
248
217
83
209
Ukraine
119
(47)
73
(22)
50
38
18
-
1) Excluding repayments of shareholders loans
Summarised statement of financial position as at 31 December 2022
Attributable to
NOK million
Property,
plant and
equipment
Other non-
current asstes
Cash and
cash
equivalent
Other current
assets
Non-resource
financing
Other non-
current
liabilities
Current
liabilities
Total equity
Non-
controlling
interests
Equity
holders of
the parent
#REF!
Egypt
3,360
1,712
485
114
(3,138)
(2,078)
(160)
296
99
197
Honduras
1,287
9
268
103
(387)
(325)
(27)
929
323
605
Jordan
888
(0)
373
22
(685)
(78)
(93)
427
183
244
Mozambique
555
8
135
17
(468)
(80)
(68)
100
56
44
Pakistan
363
11
97
18
-
(161)
(209)
120
30
90
Rwanda
139
1
11
4
(116)
(55)
(3)
(20)
5
(25)
South Africa
4,048
1,143
762
3,257
(6,759)
(731)
(2,297)
(577)
(48)
(531)
Ukraine
414
387
17
(11)
(377)
(937)
242
(265)
(108)
(157)
Summarised statement of financial position as at 31 December 2021
Attributable to
NOK million
Property,
plant and
equipment
Other non-
current asstes
Cash and
cash
equivalent
Other current
assets
Non-resource
financing
Other non-
current
liabilities
Current
liabilities
Total equity
Non-
controlling
interests
Equity
holders of
the parent
#REF!
Egypt
3,035
1,226
316
94
(2,847)
(1,854)
(84)
(113)
(24)
(89)
Honduras
1,194
3
40
186
(346)
(271)
(15)
791
318
473
Jordan
792
-
298
21
(658)
(49)
(79)
325
149
176
Mozambique
478
4
99
11
(438)
(84)
(105)
(35)
(5)
(29)
Rwanda
137
-
5
4
(108)
(56)
(1)
(19)
7
(26)
South Africa
3,819
774
466
503
(3,773)
(807)
(325)
657
178
479
Ukraine
578
361
63
77
(404)
(639)
(22)
14
14
(0)
Note 28 Transactions with related parties
Related parties include affiliates, associates, joint ventures, and other companies where the Group have significant influence, as well as
the Executive Management and the Board of Directors. All related party transactions have been carried out as part of the normal course
of business and at arm’s length terms.
See Note 26 for information about consolidated subsidiaries. Intercompany balances and transactions between consolidated companies
are eliminated in the consolidated accounts.
108
See Note 13 Investments in JV and associated companies for overview of the companies included and further information about the
investments. Transactions with joint ventures and associates are primarily financing provided to the companies and dividends received
from the companies. Transactions also include sale of development rights, asset management and OM services from consolidated
entities to equity consolidated entities.
For remuneration to Management, see Note 4 Employee benefits and further details in Note 4 - Personnel expenses in the Parent
financial statement. The Note also includes remuneration to Board of Directors. The company has no significant agreements with
companies in which a board member has a material interest. Scatec has loans to Executive Management given in relation to the long-
term incentive programme amounting to NOK 0.2 million (0.2) as of 31 December 2022.
Note 29 Change in accounting policies
Presentation of external revenues and cost of sales in the proportionate segment financials
The hydropower companies in the Philippines are presented in
the condensed interim consolidated financial statements as
investments in JVs and associated companies which are
accounted for using the equity method. The companies were
acquired as part of the business combination of 100% of the
shares of SN Power AS, which effectively took place on 29
January 2021.
The Group has re-assessed its accounting policy for the
presentation of external revenues and cost of sales in the
proportionate financials. The power market settlement
mechanism for bilateral contracts in the Philippines applies net
settlement within the settlement period although all volumes
are reported gross.
On 1 January 2022, the Group elected to voluntarily change
the method of accounting for external revenues and cost of
sales related to electricity sold on bilateral contracts in the
proportionate financials.
The Group had previously accounted for such external
revenues and cost of sales on a gross basis in accordance with
the reported volumes. Going forward the Group will present
the figures net in accordance with the financial settlement
mechanism. The change has no impact on net revenues or
EBITDA.
The Group believes that the net presentation provides more
relevant information to the users of the proportionate
financials as it will reduce the fluctuation in external revenues
from the business in the Philippines and is more aligned to the
practices adopted by its peers.
The Group applied the change retrospectively to the
proportionate financials. The change is not applicable to the
consolidated financials as the investment in JVs are accounted
for using the equity method.
The voluntary change in accounting policies is applied retrospectively in 2021 as follows
Proportionate financials - NOK million
Reported
FY 2021
Adjustment
Adjusted
FY 2021
External revenues - Power Production
4,176
-287
3,890
Cost of sales - Power Production
-556
287
-269
EBITDA - Power Production
2,949
-
2,949
New standards and interpretations
The Group have elected early adoption of the amendments to IAS 1 and IFRS Practice Statement 2 compromising accounting policy
information. The material accounting principles in the Annual Report are largely incorporated into the individual notes.
The Group have not elected to early adopt Amendments to IAS 1
Presentation of Financial Statements
Requirements related to classification and disclosed of non-current and current liabilities with covenants is not expected to have
material effect on the Group in 2022.
There are no other new standards, not yet adopted, expected to have material effect for the Group in 2022.
Scatec ASA - Annual Report 2022
109
Note 30 Subsequent events
Accounting principle
Subsequent events are viewed as new information on the Groups financial position that becomes known after the reporting period. In
evaluating such, the Group distinguishes between
adjusting
and
non-adjusting
events after the reporting period. Adjusting events refer
to those that provide evidence of conditions that existed at the end of the reporting period, whereas non-adjusting events refer to
those that are indicative of conditions that arose after the reporting period. Events after the reporting period that do not affect the
Groups financial position at the end of the reporting period, but which will affect the Groups financial position in the future, are
disclosed if significant.
Adjusting subsequent events
No adjusting events have occurred after the balance sheet date.
Non-adjusting subsequent event
Refinancing of Bridge-to-Bond USD 193 million
On 2 February 2023, Scatec refinanced USD 100 million of the USD 193 million Bridge-to-Bond facility with a new USD 100 million term
loan with maturity in the fourth quarter 2027 provided by DNB, Nordea and Swedbank. The new term loan is amortised through
semiannual repayments of USD 5 million starting from 2024.
The existing USD 180 million Revolving Credit Facility, provided by the
same banks and BNP Paribas, is further extended by 1.5 years with maturity in the third quarter of 2025.
On 10 February 2023, Scatec placed NOK 1,000 million in new unsecured green bonds to refinance the remaining USD 93 million of the
Bridge-to-Bond facility established when Scatec acquired SN Power in 2021. The new bonds have maturity in February 2027 and carries
a coupon rate of 3-month NIBOR plus 6.60%.
Sale of Upington in South Africa
On 2 February 2023, Scatec signed an agreement with a subsidiary of STANLIB Infrastructure Fund II, managed by STANLIB Asset
Management Proprietary Limited (“Stanlib”), to sell its 42% equity share in the 258 MW Upington solar power plant for a gross
consideration of ZAR 979 million (NOK 569 million). The transaction is in line with Scatec’s strategy to optimise the portfolio as
presented at the Capital Markets Update in September 2022 and will release capital for new investments in renewable energy.
The solar plant in Upington reached COD in 2020 and were awarded in the fourth bidding round under the Renewable Energy
Independent Power Producer Programme. The plant generates approximately one third of the proportionate power production EBITDA
in South Africa for Scatec. Scatec will continue to provide Operations & Maintenance and Asset Management services to the Upington
power plant. South Africa remains a focus market for Scatec, and the Company continues to build scale by investing into new projects,
including the Kenhardt and Grootfontein projects.
The transaction is expected to generate a net accounting gain of approximately NOK 760 million on a consolidated basis and NOK 310
million on a proportionate basis. The difference is primarily explained by the D&C margin related to the projects which has been
eliminated in the consolidated statement of financial positions. The final accounting effects will be determined on closing of the
transaction. Norfund is also selling its 18% equity share to Stanlib as part of the same transaction. The transaction is subject to the
customary consents and is expected to close in the first half of 2023.
110
Parent company
financial statements
Scatec ASA - Annual Report 2022
111
Statement of income
112
Statement of financial position - assets
113
Statement of financial position – equity and liabilities
114
Statement of cash flow
115
Notes to the parent company financial statements
116
Note 1
General information
116
Note 2
Accounting principles
116
Note 3
Revenues
118
Note 4
Personnel expenses, number of employees and auditor’s fee
119
Note 5
Other operating expenses
121
Note 6
Provision for bad debt
121
Note 7
Financial income and expenses
122
Note 8
Tax
123
Note 9
Property, plant and equipment
124
Note 10
Investments in subsidiaries, joint ventures and
associated companies
124
Note 11
Inventory
125
Note 12
Cash and cash equivalents
125
Note 13
Equity and shareholder information
126
Note 14
Corporate financing
127
Note 15
Other current liabilities
128
Note 16
Guarantees, contractual obligations and contingent liabilities
128
Note 17
Transactions with related parties
129
Note 18
Subsequent events
130
112
Statement of income
1 JANUARY – 31 DECEMBER
NOK million
Note
2022
2021
Revenues
3
751
166
Total revenues
751
166
Costs of sales
-797
-104
Personnel expenses
4
-268
-209
Other operating expenses
5, 6, 17
-201
-143
Depreciation, amortisation and impairment
9, 11
-150
-53
Operating profit/(loss)
-665
-343
Interest and other financial income
7, 17
1,570
402
Interest and other financial expenses
6, 7, 17
-1,311
-262
Net foreign exchange gain/(loss)
-5
33
Profit/(loss) before tax
-411
-171
Income tax (expense)/benefit
8
-68
97
Profit/(loss) for the period
-480
-74
Allocation of profit/(loss) for the period
Dividend
13
308
404
Transfer to/(from) other equity
13
-788
-478
Total allocation of profit/(loss) for the period
-480
-74
Scatec ASA - Annual Report 2022
113
Statement of financial position
1 JANUARY – 31 DECEMBER
NOK million
Note
2022
2021
Non-current assets
Deferred tax assets
8
226
261
Property plant and equipment
9
73
60
Investments in subsidiaries, joint ventures and associated companies
10
15,000
14,666
Loan to group companies
17
2,327
2,633
Interest rate swap (cash flow hedge)
14
115
26
Other non-current receivables
63
57
Total non-current assets
17,804
17,702
Current assets
Inventory
11
1,390
311
Trade and other receivables
6
42
49
Trade and other receivables group companies
3, 17
498
301
Other current assets
46
64
Cash and cash equivalents
12
811
1,620
Total current assets
2,787
2,345
Total assets
20,591
20,048
114
Statement of financial position
AS OF 31 DECEMBER
NOK million
Note
2022
2021
Paid in capital
Share capital
13
5
4
Share premium
13
11,378
10,122
Total paid in capital
11,382
10,126
Other equity
Other equity
13
-1,203
-385
Reserve for valuation variances
85
20
Total other equity
-1,117
-365
Total equity
10,265
9,761
Non-current liabilities
Corporate financing
14
7,987
7,264
Liabilities to group companies
17
350
549
Other non-current liabilities
3
4
Total non-current liabilities
8,339
7,818
Current liabilities
Trade and other payables
431
16
Trade payables group companies
60
127
Public duties payable
18
19
Dividend
13
308
404
Other current liabilities
15
1,170
1,903
Total current liabilities
1,987
2,469
Total liabilities
10,326
10,287
Total equity and liabilities
20,591
20,048
Oslo, 21 March 2023
The Board of Directors Scatec ASA
Scatec ASA - Annual Report 2022
115
Statement of cash flow
1 JANUARY – 31 DECEMBER
NOK million
Notes
2022
2021
Cash flow from operating activities
Profit/(loss) before tax
-411
-171
Depreciation, amortisation and impairment
9
150
53
Interest and other financial income
7
-1,570
-402
Interest and other financial expenses
7
1,311
262
Foreign exchange gain/(loss)
5
-33
Increase)/decrease in inventories
11
-1,079
-125
(Increase)/decrease in trade and other receivables
-285
-22
Increase/(decrease) in trade and other payables
147
146
Taxes paid
8
-
-
(Increase)/decrease in current assets and current liabilities / other adjustments
1,067
261
Net cash flow from operating activities
-665
-31
Cash flows from investing activities
Investments in property, plant and equipment
9
16
-56
Net increase in loans to subsidiaries
17
-301
-100
Interest received
175
127
Investments in subsidiaries and associated companies
10
-675
-8,577
Dividends from and capital decrease in subsidiaries
7
1,384
277
Net cash flow used in investing activities
599
-8,329
Cash flow from financing activities
Proceeds from share capital increase
13
5
41
Dividends paid to equity holders
13
-404
-173
Interest paid
-344
-251
Proceeds from corporate financing
14
-
4,699
Net cash flow from financing activities
-743
4,316
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
1,620
5,664
Cash and cash equivalents at end of period
811
1,620
Net increase/(decrease) in cash and cash equivalents
-809
-4,044
116
Notes to the parent company
financial statements
Note 1 General information
Scatec ASA is incorporated and domiciled in Norway. The
address of its registered office is Askekroken 11, NO-0277
OSLO, Norway. Scatec was established on 2 February 2007.
Scatec ASA (“the Company”), its subsidiaries and investments
in associated companies and joint ventures (“the Group” or
“Scatec”) is a leading renewable power producer, delivering
affordable and clean energy worldwide. As a long-term player,
Scatec develops, builds, owns and operates solar, wind and
hydro power plants and storage solutions.
The Company is listed on the Oslo Stock Exchange.
The consolidated financial statements for the full year 2022
were authorized for issue in accordance with a resolution by
the Board of Directors on 21 March 2022.
Note 2 Accounting principles
Basis for preparation
The financial statements of Scatec ASA are prepared in
accordance with the Norwegian Accounting Act of 1998 and
Norwegian Generally Accepted Accounting Principles
(NGAAP). The financial statements have been prepared on a
historical cost basis.
Accounting estimates and judgements
In preparing the financial statements, management has made
assumptions and estimates about future events and applied
judgements that affect the reported values of assets, liabilities,
revenues, expenses, and related disclosures. Therefore, future
actual results may differ from current figures.
Foreign currency translation
The functional currency of the Company is US dollar (USD).
USD is the currency which primarily affects the financials
including corporate financing, income from dividends and
revenue from construction activities. The financial statements
are presented in NOK. The assets and liabilities are translated
into NOK at the rate of exchange prevailing at the end of
reporting period and their income statement is translated at
average exchange rates. The exchange differences arising on
translation are recognised in equity.
Revenues and cost of sales
Scatec ASA develops project rights that are the basis for
construction of power plants. Revenues from sale of project
rights are recognised upon the transfer of title. Projects in work
in progress are expensed as cost of sale upon the transfer of
title or when a project is abandoned and impaired.
Revenues from construction services are based on fixed price
contracts and are accounted for using the percentage of
completion method. The stage of completion of a contract is
determined by actual cost incurred over total estimated costs
to complete. Incurred costs include all direct materials, costs
for modules, labour, subcontractor costs, and other direct
costs related to contract performance. Scatec recognises direct
material costs as incurred costs when the direct materials have
been installed when they are permanently attached or fitted to
the power systems as required by engineering designs.
Scatec ASA periodically revise contract margin estimates and
immediately recognises any losses on onerous contracts. Some
construction contracts include product warranties. The
expected warranty amounts are expensed at the time of sale
and are adjusted for subsequent changes in assumptions or
actual outcomes.
Further, Scatec ASA derives revenues from the allocation of
headquarter costs to its subsidiaries. Revenues from the sale of
intercompany services are recognised when the services are
delivered.
Employee benefits
Wages, salaries, bonuses, pension and social security
contributions, paid annual leave and sick leave are accrued in
the period in which the associated services are rendered by
Scatec ASA - Annual Report 2022
117
employees of the Company. The Company has pension plans
for employees that are classified as defined contribution plans.
Contributions to defined contribution schemes are recognised
in the statement of profit or loss in the period in which the
contribution amounts are earned by the employees.
The Board of Directors has established an option program for
leading employees of the company. The cost of equity-settled
transactions is determined by the fair value at the date when
the grant is made using an appropriate valuation model. That
cost is recognised in personnel expenses, together with a
corresponding increase in equity over the vesting period.
For further information on accounting principle and share
options refer to Note 4 – Employee benefits in the
consolidated financials.
For further information refer Note 4 – Personnel expenses,
number of employees and auditor’s fee.
Interest income and expenses
Interest income and expenses are recognised in the income
statement as they accrue, based on the effective interest
method.
Income tax expense
Income tax expense comprises current tax and changes in
deferred tax. Current tax is the expected tax payable on the
taxable income for the year and any adjustment to tax payable
in respect of previous years. Deferred tax assets and liabilities
are recognised for the future tax consequences attributable to
differences between the carrying amounts of existing assets
and liabilities and their respective tax bases.
A deferred tax asset is recognised only to the extent that it is
probable that future taxable profits will be available against
which the asset can be utilised. In order for a deferred tax
asset to be recognised based on future taxable profits,
convincing evidence is required.
Balance sheet classification
Current assets and liabilities consist of receivables and
payables due within one year, as well as project rights. Other
balance sheet items are classified as non-current assets and
liabilities.
Property, plant and equipment
Property, plant and equipment are stated at cost, less
accumulated depreciation and accumulated impairment losses.
Property, plant and equipment are depreciated on a straight-
line basis over their expected useful life, from the date the
assets are taken into use.
Subsidiaries and investment in associated companies
Subsidiaries are entities controlled by Scatec ASA. Subsidiaries
and investment in associated companies are accounted for
using the cost method and are recognised at cost less
impairment. The cost is increased when funds are added
through capital increases. Dividends to be received are
recognised at the date the dividend is declared by the general
meeting of the subsidiary. To the extent that the dividend
relates to distribution of results from the period Scatec ASA
has owned the subsidiary, it is recognised as income.
Dividends which are repayment of invested capital are
recognised as a reduction of the investment in the subsidiary.
Inventories
Inventories are measured at the lower of cost and net
realisable value. Inventories consist primarily of project assets
in various stages of development. Capitalised development
costs include legal, consulting, permitting, and other similar
costs such as interconnection or transmission upgrade costs as
well as directly attributable payroll expenses, travel expenses
and other expenses related to developing the project rights.
Scatec reviews project assets for impairment whenever events
or changes in circumstances indicate that the carrying amount
may not be recoverable. The Company considers a project
commercially viable if it is anticipated to be realised with a
margin once it is either fully developed or fully constructed.
Scatec considers a partially developed project commercially
viable if the anticipated selling price is higher than the carrying
value of the related project assets. A number of factors are
assessed to determine if the project will be profitable, the most
notable is whether there are any changes in environmental,
ecological,
permitting, or regulatory conditions that impact the
project.
Cash and cash equivalents
Cash includes cash in hand and at bank. Cash equivalents are
short-term liquid investments that can be immediately
converted into a known amount of cash and have a maximum
term to maturity of three months. In the statement of cash
flows, the overdraft facility is presented gross as part of
changes in current liabilities.
Financial liabilities
Interest-bearing borrowings are initially recognised at cost.
After initial recognition, such financial liabilities are measured
at amortised costs using the effective interest method.
118
Transaction costs are taken into account when calculating
amortised cost. Trade payables are carried at cost.
Dividends
Distribution of dividends is resolved by a majority vote at the
Annual General Meeting of the shareholders of Scatec ASA,
based on a proposal from the Board of Directors.
Dividends are recognised as a liability at the reporting date of
the financial year that the proposal of dividend relates to.
Additional proposed dividends based on the previous fiscal
year approved financial statements (i.e. between 1 January and
the date that the current year financial statements will be
approved) are recognised as a liability at the balance sheet
date.
Events after the reporting period
New information on the Company’s financial position on the
end of the reporting period which becomes known after the
reporting period, is recorded in the annual accounts. Events
after the reporting period that do not affect the Company’s
financial position on the end of the reporting period, but
which will affect the Company’s financial position in the future,
are disclosed if significant.
Statement of cash flow
The cash flow statement is prepared using the indirect
method.
Note 3 Revenues
Revenue by business area
NOK million
2022
2021
Services
732
153
Other revenue
19
13
Sum
751
166
Services comprise EPC services, sale of project rights and management services – all rendered to Group companies and associates.
Revenue by geographical distribution
NOK million
2022
2021
Pakistan
153
67
Netherlands
63
25
South-Africa
459
22
Ukraine
3
15
Egypt
6
7
Brazil
31
6
Argentina
4
5
Malaysia
4
3
Honduras
1
2
Mozambique
1
1
France
1
-
India
1
-
Phillipines
1
-
Rwanda
4
-
Sum
732
153
Refer to Note 14 - Transactions with related parties for further information.
Scatec ASA - Annual Report 2022
119
Note 4 Personnel expenses, number of employees and auditor’s fee
Personnel expenses
NOK million
2022
2021
Salaries
216
171
Share-based payment
39
27
Payroll tax
31
19
Pension costs
18
14
Other benefits and personnel costs
3
6
Capitalised to inventory
-39
-28
Total personnel expenses
268
209
The average number of FTEs that has been employed in the company through 2022 was 146 (116).
Pension costs
The Company has a defined contribution plan in line with the requirement of the law. NOK 18 million (14) is expensed related to the
defined contribution plan in 2022.
Paid salaries and personnel expenses for the management of Scatec ASA
2022
Annual
bonus
accrued
2)
Number
of options
awarded
Exercise
of share
options
Out-
standing
share
options
Loans
out-
standing
NOK thousand
Title
Salary
1)
Other
benefits
Pension
cost
Raymond Carlsen
4)
Chief Executive Officer
2,418
-
43
-
-
4,678
a)
80
-
Terje Pilskog
5)
Chief Executive Officer
3,460
1,163
39
-
84
15
170
23
Mikkel Tørud
Chief Financial Officer
2,939
936
30
-
80
15
169
23
Snorre
Valdimarsson
EVP General Counsel
2,483
-
26
-
66
15
169
23
Roar Haugland
EVP Sustainable Business & HSSE
2,244
720
23
-
62
15
172
23
Torstein Berntsen
EVP MENA/Green H2
2,575
840
27
-
68
15
174
23
Pål Helsing
EVP Solutions
2,568
828
27
-
68
15
169
23
Toril Haaland
EVP People & Organisation
2,104
684
22
-
57
2,086
b)
170
23
Ann Mari Lillejord
7)
EVP Latam/Europe
1,266
443
14
-
14
10
112
23
Kate Bragg
7)
EVP People, Strategy & Digital
1,560
522
10
-
10
15
162
23
Pål Strøm
8)
EVP Operations & Maintenance
1,781
597
12
-4
26
15
166
-
Jarl Arve Korberg
9)
EVP Project Development Hydropower
628
-
-
-
-
1
18
-
2021
NOK thousand
Title
Salary
1)
Annual
bonus
accrued
2)
Number
of options
awarded
Exercise
of share
options
Out-
standing
share
options
Other
benefits
3)
Pension
cost
Loans
out-
standing
Raymond Carlsen
Chief Executive Officer
3,995
1,345
18
-59
68
15
157
22
Mikkel Tørud
Chief Financial Officer
2,718
949
13
-43
50
15
165
22
Snorre
Valdimarsson
EVP General Counsel
2,292
799
11
-34
40
15
162
22
Terje Pilskog
EVP Project Development & Project
Finance
2,594
901
12
-38
45
15
162
22
Roar Haugland
EVP Sustainable Business & HSSE
2,105
732
10
-34
38
15
164
22
Torstein Berntsen
EVP Power Production & Asset
Management
2,383
827
11
-36
41
15
172
22
Pål Helsing
EVP Solutions
2,396
829
11
-21
41
15
160
22
Toril Haaland
EVP People & Organisation
1,978
689
9
-18
35
15
161
22
Jarl Arve Kosberg
EVP Hydropower Project Development
1,943
647
13
-
13
13
143
22
1) Including paid out holiday allowance and car allowance.
120
2) Changed to accrued bonus. 2021 report showed actual paid out bonus.
3) Other benefits include benefits such as insurance and free phone.
4) Until 30.04.22,
5) CEO from 01.05.22. EVP Project Development before CEO
6) Interim EVP Mena/Green H2 from 21.11.22
7) Joined EMT 01.05.2022
8) Joined EMT 21.11.2022
9) Left EMT 31.01.2022
Remuneration for the Board of Directors
1)
2022
2021
NOK thousand
Board
remuner-
ation
Audit
committee
Remuner-
ation
committee
Nominatio
n
committee
Board
remuner-
ation
Audit
committee
Remuner-
ation
committee
Nomination
committee
John Andersen jr.
557
90
75
-
530
65
50
-
Jan Skogseth
357
-
55
-
340
-
35
-
Gisele Marchand
357
150
-
-
340
90
-
-
Maria Moræus
Hanssen
357
-
55
-
340
-
35
-
Jørgen Kildahl
357
90
-
-
340
65
-
-
Mette Krogsrud
357
-
55
-
-
-
-
-
Espen Gundersen
357
90
-
-
-
-
-
-
Kristine Ryssdal
-
-
-
60
-
-
-
57
Svein Høgseth
-
-
-
40
-
-
-
39
Mats Holm
-
-
-
40
-
-
-
39
Annie Bersagel
-
-
-
40
-
-
-
39
1) Annual fees paid for 2021 and accrued for 2022 respectively.
For more information about remuneration to management, refer to Note 4 Employee benefits in the consolidated financial statement of
the Group and the Remuneration Report for 2022.
Audit
NOK million
2022
2021
Audit fees
2
3
Other attestation services
-
-
Tax services
2
2
Other services
-
-
Total
4
5
PwC replaced Ernst & Young as the Company`s auditor in 2022. The audit fee for 2022 is related to both former auditor Ernst & Young
and current auditor PwC.
VAT is not included in the numbers above.
Scatec ASA - Annual Report 2022
121
Note 5 Other operating expenses
NOK million
2022
2021
Facilities
27
23
Professional fees
100
51
IT and communications
43
36
Travel costs
11
4
O&M costs
-
1
Other costs
20
28
Total other operating expenses
201
143
Note 6 Provision for bad debt
The Company has during 2022 recognised NOK 6.8 million in realised bad debt losses on receivables related to discontinued
development projects.
Per 31 December 2022 the Company recognised an impairment loss of NOK 607 million for receivables to group companies in Ukraine
as a result of increased collection risk associated with Russia’s invasion in Ukraine. The situation
in Ukraine at the end of December 2022
is still very challenging and highly uncertain. The outcome of the situation and the impact of Scatec’s assets are highly uncertain.
to Note 12 in the consolidated financial statement of the Group for details related to the impairment testing.
No further provision for bad debt has been made as the collection risk of the outstanding receivables is considered low.
122
Note 7 Financial income and expenses
Interest and other financial income
NOK million
2022
2021
Interest income from group companies
156
114
Other interest income
19
13
Gain/(loss) on sale of financial investments
7
-2
Dividend from group companies
1,384
277
Gain from financial investment
3
-
Total interest and other financial income
1,570
402
Interest and other financial expenses
NOK million
2022
2021
Interest expenses from group companies
-
-1
Other interest expenses
-346
-250
Impairment of financial assets
-949
-
Other financial expenses
-17
-11
Total interest and other financial expenses
-1,311
-262
The write down of financial assets in 2022 is related to Scatec Solar Netherlands BV investments in Ukraine. The write-down is related to
both impairment of shares (NOK 341 million) and impairment of receivables to group companies in Ukraine (NOK 607 million). Refer to
Note 12 in the consolidated financial statement of the Group for details related to the impairment testing.
During 2022, interest amounting to NOK 346 million (250) was expensed for corporate financing, refer to Note 21 Corporate Financing
in the consolidated financial statement of the Group for further details. The increase in interest expenses is
primarily explained by
increase in interest rates.
Scatec ASA - Annual Report 2022
123
Note 8 Tax
NOK million
2022
2021
Income tax expense:
Current taxes
-
-
Withholding tax on received dividends
21
10
Change in deferred tax
34
-104
Taxes related to previous years
13
-3
Total tax expense/(income)
68
-97
Tax basis:
Profit before taxes
-411
-171
Permanent differences
1)
-434
-297
Changes in temporary differences
-2
-16
Increase of tax losses carried forward
846
484
Tax base
-
-
Current taxes according to statutory tax rate (22%)
-
-
1) Net permanent differences are related to non-taxable dividends partly offset by non-deductible impairment loss on investments and receivables in Ukraine and share based
payment expenses.
Reconciliation of nominal statutory tax rate to effective tax rate
NOK million
2022
2021
Expected income tax expense according to statutory tax rate (22%)
-90
-38
Non-taxable expense/ (income)
-85
-65
Allowance for losses carried forward
219
25
Withholding tax on received dividends
21
10
Taxes related to previous years
13
-3
Foreign exchange variations between functional and tax currency
-10
-26
Income tax expense/(income)
68
-97
Effective tax rate (%)
16.55%
56.71%
Temporary differences as of 31 December
NOK million
2022
2021
Change
Tax loss carried forward
-2,146
-1,301
846
Allowance for deferred tax assets
1,106
114
-992
Work in progress
-
6
6
Shared based payments and amortised Interests on corporate financing
4
-4
-8
Total temporary differences
-1,037
-1,185
-148
Recognised tax liability/(asset)
-226
-261
-34
The change in deferred tax asset is recognised in tax expense, except for changes which are related to transaction cost from capital
increases which are booked directly to equity.
Significant management judgement is required to determine the amount of deferred tax assets that can be recognised based upon the
likely timing and the level of future taxable profits. Reference is made to Note 7 in the Consolidated financial statements for the
assessment of estimation uncertainty. We assessed the probability of utilising the tax losses to ensure that deferred taxare recognised to
the extent that Scatec ASA expects there will be sufficient future taxable profits available to utilise the losses. The tax losses in Norway
can be carried forward indefinitely.
124
Note 9 Property, plant and equipment
Office equipment
NOK million
2022
2021
Accumulated cost at 1 January
87
75
Additions
16
11
Foreign currency translation
10
2
Accumulated cost at 31 December
114
87
Accumulated depreciation at 1 January
28
19
Depreciations for the year
10
7
Foreign currency translation
4
2
Accumulated depreciation at 31 December
42
28
Carrying amount at 31 December
73
60
Estimated useful life (years)
3-10
3-10
Note 10 Investments in subsidiaries, joint ventures and associated companies
The table below include material subsidiaries of Scatec ASA. Ownership interest corresponds to voting interest if not otherwise stated.
NOK million
Company
Registered office
Ownership
interest
Carryring
value 2022
Carryring
value 2021
SN Power AS
Norway
100.00%
1,050
2,595
Scatec Solar Netherlands BV
Netherlands
100.00%
12,268
10,933
Release Management BV
Netherlands
100.00%
623
409
Scatec Solar SA (pty) Ltd.
Sandton, South-Africa
100.00%
3
-
Scatec Solar SA 163 (Pty) Ltd.
South-Africa
100.00%
18
1
Scatec Solar SA 164 (Pty) Ltd.
Sandton, South-Africa
80.70%
82
5
Scatec Solar SA 165 (Pty) Ltd.
Sandton, South-Africa
76.60%
110
7
Gigawatt Global Rwanda Ltd
Rwanda
54.00%
8
7
Scatec Solar Mozambique Limitada
Mozambique
0.50%
9
9
Scatec Solar SAS
Paris, France
100.00%
82
-
Scatec Solar Jordan
Amman, Jordan
100.00%
39
44
Anwar Al Ardh For Solar Energy Generation
PSC
Amman, Jordan
50.10%
95
86
Ardh Al Amal For Solar Energy Generation PSC
Amman, Jordan
50.10%
42
38
Aswan Solar Power SAE (BB1)
Egypt
-
-
2
Scatec Solar Honduras S.A.
Honduras
100.00%
3
3
Produccion de Energia Solar Demas
Renovables S.A
Honduras
40.00%
69
62
Fotovoltaica Los Prados
Honduras
70.00%
82
74
Fotovoltaica Surena
Honduras
70.00%
159
150
Generaciones Energeticas S.A
Honduras
70.00%
152
144
Energias Solares S.A
Honduras
70.00%
94
88
Foto Sol S.A
Honduras
70.00%
6
6
Scatec Solar PV1 S.R.O
Prague, Czech
100.00%
2
-
Scatec Solar S.R.O
Prague, Czech
100.00%
1
-
15,000
14,666
Scatec ASA - Annual Report 2022
125
Per 31 December 2022, carrying value of the investment in Scatec Solar Netherlands B.V. has been impaired by NOK 341 million related
to the Company`s investments in Ukraine. For details of the assessment and significant assumptions reference is made to Note 12
Impairment testing in the Consolidated financial statements.
A list of all material companies in the Scatec Group is listed in Note 26 Consolidated subsidiaries of the Consolidated financial
statements.
NOK million
Associates and joint ventures
Office
Ownership
Carrying value 2022
Carrying value 2021
Kube Energy AS
Oslo, Norway
25%
2
2
Total
2
2
Note 11 Inventory
The carrying value of projects under development are presented as inventories and are stated at the lower of cost and net realisable
value. The project assets are related to solar, hydro and wind power plants under development and construction. The increase from last
year is mainly explained by construction in South Africa and Pakistan.
Project geography
NOK million
2022
2021
Asia
303
149
Europe
12
38
West Africa
8
34
South Africa
990
49
North Africa
56
24
South America
18
16
East Africa
2
-
Carrying value of inventory at 31 December 2021
1,390
311
Impairment charges in 2022 were NOK 140 million (45) for development projects in Ukraine, Mali, Bangladesh and India.
Note 12 Cash and cash equivalents
NOK million
2022
2021
Restricted cash
58
37
Free cash
753
1,584
Total cash and cash equivalents
811
1,620
Scatec ASA has not drawn on the revolving credit facility per 31 December 2022.
For more information about external financing and facilities, refer to Note 21 Corporate Financing in the consolidated financial
statement of the Group.
126
Note 13 Equity and shareholder information
Nok million
Issued capital
Share premium
Other equity
Total equity
Equity as of 31 December 2021
4
10,122
-365
9,761
Profit/(loss) for the period
-
-
-480
-480
Share-based payment
-
39
-
39
Capital increase from exercised employee share
options, net of transaction cost after tax
1)
-
5
-
5
Accrued dividend
-
-
-308
-308
Reserve for valuation variances
-
-
70
70
Foreign currency translation
1
1,212
-35
1,177
Equity as of 31 December 2022
5
11,378
-1,118
10,265
1) On 9 February 2022 as part of the Group’s incentive program, NOK 5 million was raised in a share capital net of transaction cost after tax, through an exercise of employee
share options consisting of 30 379 new shares at a price of NOK 69,99 per share, 22 878 new shares at a price of NOK 112,79 per share. At 31 December 2022, the share capital
amounted to NOK 3,972 million. All shares rank in parity with one another and carry one vote per share.
On 2 February 2023, the Board of Directors announced its intention to propose a dividend of NOK 1,94 per share to the Annual General
Meeting.
On 29 April 2022, the Annual General Meeting of Scatec ASA resolved to pay a dividend of NOK 2,54 per share, totaling NOK 404
million. The dividend was paid to the shareholders on 10 May 2022. This equal to amount accrued for in 2021.
The table below show the largest shareholders of Scatec ASA at 31 December 2022.
Shareholder
Number of shares
Ownership
EQUINOR ASA
20,776,200
13.07%
SCATEC INNOVATION AS
19,482,339
12.26%
FOLKETRYGDFONDET
13,521,678
8.51%
State Street Bank and Trust Comp
3,618,391
2.28%
CLEARSTREAM BANKING S.A.
3,399,872
2.14%
The Bank of New York Mellon
3,267,711
2.06%
VERDIPAPIRFONDET DNB MILJØINVEST
3,099,748
1.95%
J.P. Morgan SE
2,875,587
1.81%
RAIFFEISEN BANK INTERNATIONAL AG
2,622,845
1.65%
Euroclear Bank S.A./N.V.
2,546,789
1.60%
Pictet & Cie (Europe) S.A.
2,525,354
1.59%
State Street Bank and Trust Comp
2,414,283
1.52%
JPMorgan Chase Bank
2,384,753
1.50%
State Street Bank and Trust Comp
2,310,681
1.45%
The Bank of New York Mellon SA/NV
2,197,886
1.38%
Citibank Europe plc
2,158,187
1.36%
ARGENTOS AS
2,000,000
1.26%
VERDIPAPIRFONDET STOREBRAND NORGE
1,517,574
0.95%
VPF DNB AM NORSKE AKSJER
1,514,033
0.95%
VERDIPAPIRFONDET DNB NORGE
1,508,210
0.95%
Total 20 largest shareholders
95,742,121
60.25%
Total other shareholders
63,175,154
39.75%
Total shares outstanding
158,917,275
100%
Scatec ASA - Annual Report 2022
127
The tables below show shares held by Management and Board of Directors at 31 December 2022.
Board of Directors
Number of shares
Ownership
John Andersen, Jr.
1)
-
0.00%
Jan Skogseth
23,000
0.01%
Gisele Marchand
3,586
0.00%
Maria Moræus Hanssen
2)
5,510
0.00%
Jørgen Kildahl
3,000
0.00%
Mette Krogsrud
1,000
0.00%
Espen Gundersen
10,000
0.01%
Total at 31 December 2022
46,096
0.03%
1) Related parties control 19,482,339 shares through Scatec Inovation AS.
2) Held through the controlled company MMH Nysteen Invest AS.
Management
Number of shares
Ownership
Raymond Carlsen
1)
2,000,593
1.26%
Terje Pilskog
2)
542,204
0.34%
Mikkel Tørud
227,544
0.14%
Roar Haugland
3)
79,566
0.05%
Torstein Berntsen
4)
711,813
0.45%
Snorre Valdimarsson
12,025
0.01%
Pål Helsing
6,204
0.00%
Toril Haaland
4,904
0.00%
Jarl Kosberg
419
0.00%
Ann-Mari Lillejord
10,129
0.01%
Kate Bragg
920
0.00%
Pål Strøm
1,844
0.00%
Total at 31 December 2022
3,598,165
2.26%
1) End date 31.04.2022. Held through the controlled company Argentos AS, whereof 593 shares held by Raymond Carlsen directly
2) Held through the controlled company Océmar AS, whereof 2,204 shares held by Terje Pilskog directly
3) Held through the controlled company Buzz Aldrin AS, whereof 2,204 shares held by Roar Haugland directly
4) Held through the controlled company Belito AS, whereof 19,204 shares held by Torstein Berntsen directly. In addition, 895 shares are held by held by Torstein Berntsen’s
spouse. These are not included in the total presented in the table above.
Refer to Note 4 – Personnel expenses, number of employees and auditor’s fee for information on share options granted to the
management.
Note 14 Corporate financing
For information about Corporate financing refer to Note 21 Corporate financing in the consolidated financial statement of the Group.
For information about interest rate swap refer to Note 20 Derivative financial instruments in the consolidated financial statement of the
Group.
128
Note 15 Other current liabilities
Nok million
2022
2021
Deferred income EPC projects
997
128
Liabilities to co-developers
-
19
Accrued interest expenses
118
52
Vacation allowances, bonus accruals etc.
49
41
Other
7
43
Liability to Norfund
1)
-
1,620
Total current liabilities
1,170
1,903
1) Norfund’s 49% ownership stake in SN Power’s Sub-Saharan Africa hydro assets which will be exchanged for shares in the Sub-Saharan Africa JV without cash impact after
completion of agreed restructuring activities.
Note 16 Guarantees, contractual obligations and contingent liabilities
Scatec ASA issue certain guarantees on behalf of the Group. The amounts specified below are total exposure on guarantees issued by
Scatec ASA at each balance sheet date based on when the guarantees expire. The guarantees expire haphazardly during the year.
NOK million
31.12.2022
31.12.2023
31.12.2024
31.12.2025
Advance Payment guarantees
81
-
-
-
Performance guarantees
1,629
-
-
-
Warranty Guarantees
352
176
-
-
Bid Bonds
401
170
170
0
SPV Performance / Commitments
256
202
202
156
O&M Performance (3rd party)
16
-
-
-
Other Payment Guarantees (including 25 MEUR to Power China)
1,838
1,658
46
46
Total
4,574
2,205
418
202
The guarantees are mainly related to EPC performance, EPC payments, plant performance, bid bonds related to bid performance and
payment guarantees. Guarantees issued as security for performance on EPC contracts entered between project companies and
construction companies include:
●
Advance Payment Guarantees in exchange for advance payment under the EPC contract (typically represents 15%- 20% of the
contract value),
●
Performance Guarantees to cover contract obligations (typically represents 10%-15% of the contract value)
●
Warranty Bonds (typically 5%-10% of the contract value) to cover operational performance for the first two years of operation.
The performance guarantees issued by Scatec ASA mainly relate to the RMIPPP project in South Africa that expire in Q4 2023.
See note 24 Guarantee and commitments in the consolidated financial statement of the Group for more information on the other
guarantees issued to third parties.
Contractual obligations
Scatec ASA has contractual obligations primarily through office lease.
NOK million
2023
2024
2025
>2025
Leases (office rental)
14
14
14
60
Total contractual oblications
14
14
14
60
Scatec ASA - Annual Report 2022
129
Further, as an EPC contractor Scatec ASA may enter into purchase commitments with suppliers of equipment and sub-EPC services
related to the plants under construction.
Contingent liabilities
Scatec ASA have no material contingent liabilities.
Note 17 Transactions with related parties
Related parties
Subsidiaries, joint ventures and associates
Key management personnel
Board of Directors
Transactions
Management, development and EPC services and financing
Loan and payroll
Board remuneration
Transactions with related parties
All related party transactions have been carried out as part of the normal course of business and at arm’s length. The most significant
transactions in 2022 and 2021 are:
Subsidiaries – EPC services
In 2022 Scatec ASA sold EPC services amounting to NOK 572 million. The company has been EPC contractor for the construction of
power plants in South-Africa and Pakistan. During 2022 total revenue on these contracts amounted to NOK 543 million.
Scatec ASA sold EPC services amounting to NOK 76 million in total during 2021. Scatec ASA has been EPC contractor for the
construction of power plants in Ukraine, Egypt, Malaysia and Pakistan. During 2021 total revenue on these contracts amounted to NOK
73 million.
Subsidiaries – development services
During 2022 the company sold development project rights amounting to NOK 26 million, of which NOK 16 million relates to the transfer
of rights for the Pakistan projects.
Subsidiaries - management service income
Scatec ASA has during 2022 charged NOK 48 million (31) for corporate services provided to its subsidiaries and associates.
Subsidiaries and associates – financing
In the course of the ordinary business, inter-company financing is provided from Scatec ASA to its subsidiaries. Long-term financing is
interest bearing and priced at arm’s length. Refer to Note 6 for specification of interest income/expenses from/to subsidiaries and Note
9 Investments in subsidiaries, joint ventures and associated companies.
Refer to Note 4 – Personnel expenses, number of employees and auditor’s fee for information regarding transactions with key
management personnel and board members.
130
Note 18 Subsequent events
Adjusting subsequent events
No adjusting events have occurred after the balance sheet date.
Non-adjusting subsequent event
Refinancing of Bridge-to-Bond USD 193 million
On 2 February 2023, Scatec refinanced USD 100 million of the USD 193 million Bridge-to-Bond facility and on 10 February 2023, Scatec
placed NOK 1,000 million in new unsecured green bonds to refinance the remaining USD 93 million of the Bridge-to-Bond facility. Refer
to note 30 Subsequent events in the
consolidated financial statement of the Group
Sale of Upington in South Africa
On 2 February 2023, Scatec signed an agreement to sell its 42% equity share in the 258 MW Upington solar power plant for a gross
consideration of ZAR 979 million (NOK 569 million). Refer to note 30 Subsequent events in the
consolidated financial statement of the
Group.
Scatec ASA - Annual Report 2022
131
Responsibility statement
We confirm to the best of our knowledge, that the consolidated financial statements for 2022 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 is facing during the next accounting
period.
Oslo, 21 March 2023
The Board of Directors Scatec ASA
132
Alternative Performance Measures
Scatec 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.
Definition of alternative performance measures used by the
Group for enhanced financial information
Cash flow to equity:
creation in terms of the Group’s ability to generate funds for
equity investments in new power plant projects and/or for
shareholder dividends over time. Management believes that the
cash flow to equity measure provides 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, plus any proceeds from refinancing. 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, non-recurring fees and
accretion expenses on asset retirement obligations. Normalised
income tax payment is calculated as operating profit (EBIT) less
normalised net interest expense multiplied with the nominal tax
rate of the jurisdiction where the profit is taxed.
EBITDA:
amortisation and impairments.
EBITDA margin:
revenues and other income.
EBITDA and EBITDA margin are used for providing consistent
information of operating performance which is
comparable 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).
Gross profit is used to measure project profitability in
the D&C segment.
Net revenues:
include energy sales revenues net of significant
cost items directly linked to the energy sales volume (such as cost
of energy purchase) in the PP segment. Refer to note 3 Operating
segments for further details.
Gross interest-bearing debt:
total debt obligations and consists of non-current and
current external non-recourse financing and external
corporate financing and other interest-bearing liabilities,
irrespective of its maturity as well as
bank overdraft.
Net interest-bearing debt (NIBD):
interest-bearing debt, less cash and cash equivalents. NIBD
does not include shareholder loans.
Net working capital
other current assets, trade- and other payables, income tax
payable and other current liabilities.
Scatec ASA - Annual Report 2022
133
Proportionate Financials
The group’s 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 (with from
39% to 100% economic interest), for which revenues and profits
are eliminated in the Consolidated Financial Statements. With
proportionate financials Scatec reports its share of revenues,
expenses, profits and cash flows from all its subsidiaries without
eliminations based on Scatec’s economic interest in the
subsidiaries. The Group introduced 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;
•
Internal gains are eliminated in the consolidated financials
but are retained in the proportionate financials. These
internal gains primarily relate to gross profit on D&C
goods and services delivered to project companies which
are eliminated as a reduced group value of the power
plant compared to the stand-alone book value. Similarly,
the consolidated financials have lower power plant
depreciation charges than the proportionate financials
since the proportionate depreciations are based on
power plant values without elimination of internal gain.
Internal gain eliminations also include profit on Services
delivered to project companies.
•
The consolidated financials are presented on a 100%
basis, while the proportionate financials are presented
based on Scatec’s ownership percentage/economic
interest.
•
In the consolidated financials joint venture companies are
equity consolidated and are presented with Scatec’s share
of the net profit on a single line in the statement of profit
or loss. In the proportionate financials the joint venture
companies are presented in the same way as other
subsidiaries on a gross basis in each account in the
statement of profit or loss.
In 2022 Scatec reports a proportionate operating profit of NOK
460 million compared with an operating profit of NOK 723 million
in the consolidated financials. To arrive at the proportionate
operating profit from the consolidated operating profit the Group
has;
1.
added back
to the proportionate statement of profit or loss the
internal gain on transactions between group companies with a
negative amount of NOK 80 million. Where NOK 106 million
comprise Scatec’s share of gross profit on D&C contracts, NOK
-146 million comprise increased depreciation charges from
internal gains and NOK -41 million comprise other items.
2.
removed the non-controlling interests share of the operating
profit of NOK 519 million to only leave the portion
corresponding to Scatec’s ownership share,
3.
replaced the consolidated net profit from joint venture
companies of NOK 749 million with Scatec’s share of the
Operating profit from the joint venture companies with NOK
1,086 million.
See Note 3 for further information on the reporting of
proportionate financial figures, including reconciliation of the
proportionate financials against the consolidated financials.
134
Consolidated Financials
NOK million
2022
2021
EBITDA
Operating profit (EBIT)
723
2,012
Depreciation, amortisation and impairment
1,832
892
EBITDA
2,555
2,903
Total revenues and other income
3,751
3,803
EBITDA margin
68%
76%
Gross profit
Total revenues and other income
3,751
3,803
Cost of sales
-
-
Gross profit
3,751
3,803
Gross interest-bearing debt
Non-recourse project financing
13,297
10,708
Bonds
7,987
7,264
Non-recourse project financing - current
1,963
1,147
Other non-current interest-bearing liabilities
231
-
Other current interest-bearing liabilities
231
-
Gross interest-bearing debt
23,709
19,120
Net interest-bearing debt
Gross interest-bearing debt
23,709
19,120
Cash and cash equivalents
4,132
4,171
Net interest-bearing debt
19,578
14,949
Net working capital
Trade and other receivables
497
740
Other current assets
1,863
734
Trade and other payable
-594
-812
Income tax payable
-37
-24
Other current liabilities
-1,106
-841
Non-recourse project financing-current
-1,963
-1,147
Other current interest-bearing liabilitie
-231
-
Net working capital
-1,571
-1,351
Break-down of proportionate cash flow to equity
FY 2022
NOK million
Power Production
Services
Development &
Construction
Corporate
Total
EBITDA
2,835
74
-221
-138
2,550
Net interest expenses
-780
-1
-5
-316
-1,101
Normalised loan repayments
-815
-
-
-
-815
Proceeds from refinancing
363
-
-
-
363
Normalised income tax payment
-116
-15
78
106
53
Cash flow to equity
1,487
58
-149
-347
1,050
1
FY 2021
NOK million
Power Production
Services
Development &
Construction
Corporate
Total
EBITDA
2,949
75
-223
-114
2,686
Net interest expenses
-776
1
-8
-217
-1,000
Normalised loan repayments
-790
-
-
-
-790
Proceeds from refinancing
397
-
-
-
397
Normalised income tax payment
-140
-16
68
78
-9
Cash flow to equity
1,640
60
-164
-252
1,284
Scatec ASA - Annual Report 2022
135
Other definitions
Backlog
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.
Pipeline
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 and
concessions have been secured and negotiations related
power sales and other project implementation agreements are
in various stages of completion.
Lost time injury (LTI)
An occurrence that results in a fatality, permanent disability or
time lost from work of one day/shift or more.
Scatec’s economic interest
Scatec’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.
Cash in power plant companies in operation
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.
Cash in power plant companies under
development/construction
Comprise shareholder financing and draw down on term loan
facilities by power plant companies to settle outstanding
external EPC invoices.
Project equity
Project equity comprise of equity and shareholder loans in
power plant companies.
Recourse Group
Recourse Group means all entities in the Group, excluding
renewable energy companies (each a recourse group
company).
Definition of project milestones
Commercial Operation Date (COD):
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):
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 power plant will
normally be given directly thereafter. Projects in Scatec defined
as “backlog” are classified as “under construction” upon
achievement of financial close.
Start of Production (SOP):
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):
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.
136
Auditor’s Report
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138
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140
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