Annual
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Report from the
Board of Directors
Scatec ASA - Annual Report 2023
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Highlights 2023
●
Proportionate revenues of NOK 12,714 million
(5,133) and EBITDA of NOK 3,845 million (2,550) ¹⁾
●
All time high D&C revenues of NOK 8.2 billion and
gross margin of 12% from 40% capacity increase
●
Announced self-funded growth plan targeting
annual equity investments of NOK 500 – 750 million
●
Divested Upington, Mozambique, Argentina, and
Rwanda in line with strategy
●
Raised USD 202 million of funding + USD 65 million
in guarantees for Release
●
Secured further growth for 2024 with NOK 350
million equity investment and NOK 2.5 billion D&C
revenues
●
Awarded 103 MW/412 GWh battery project in
South Africa and 60 MW expansion in Botswana
Proportionate revenues and EBITDA by year
Key figures
NOK million
FY 2023
FY 2022
Proportionate Financials
²⁾
Total revenues and other income
12,714
5,133
4,113
3,697
373
312
8,177
1,069
50
56
EBITDA
3,845
2,550
3,216
2,835
118
74
672
-221
-162
-138
Operating profit (EBIT)
2,152
460
1,631
918
112
68
607
-358
-198
-167
Net interest- bearing debt ²⁾
20,786
18,215
Power production (GWh)
3,615
3,898
Scatec share of distribution from operation companies
914
1,231
Consolidated Financials
Revenues and other income
4,721
3,751
EBITDA ²⁾
3,567
2,555
Operating profit (EBIT)
2,625
723
Profit/(loss)
1,122
-1,228
Net interest- bearing debt ²⁾
23,284
19,578
Basic earnings per share (NOK)
3.95
-8.40
Power production (GWh) ³⁾
8,540
9,381
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 2022 has been adjusted due to change in accounting policy as disclosed
in Note 31
32
Introduction
Scatec is a leading renewable energy provider, accelerating access to reliable and affordable clean energy in emerging markets. The
Company develops, builds, owns and operates renewable energy and has 4.2 GW in operation and under construction across four
continents at year end 2023. Additionally, Scatec started construction of 0.3 GW in the first quarter 2024. Scatec is committed to grow
its renewable energy capacity, delivered by passionate employees and partners who are driven by a common vision of ‘Improving our
Future’.
2023 Summary
Business strategy and growth
●
Aligned growth rate with internal funding capacity,
targeting NOK 500-750 million of annual equity
investments in renewable energy
●
Started commercial operation of Kenhardt, with 540
MW solar + 225 MW/ 1,140 MWh battery storage
●
Divested 258 MW solar in South Africa, 40 MW solar in
Mozambique and 117 MW solar in Argentina
●
Reached financial close and started initial construction
work for 273 MW Grootfontein in South Africa, and 60
MW first phase in Botswana
●
Awarded tariff for the 103 MW/ 412 MWh battery
projects in South Africa and expanded the Botswana
solar project to 120 MW
Operational
●
Total proportionate power production of 3,615 GWh
generating an EBITDA of NOK 3.2 billion including gain
on asset sales
●
The Philippines affected by el Niño and regulatory
changes in the ancillary services market
●
Started selling power in the merchant market from the
Progressovka power plant in Ukraine
●
Implemented NOK 150 million cost reduction
programme
●
Refinanced USD 193 million bridge to bond with new
NOK 1,000 million bond and USD 100 million term loan
Organisation and people
●
Hans Jakob Hegge started as new CFO on 1 March
2023
●
Permanent workforce reduced to 680 (778) employees
resulting from the cost reduction programme
●
49 different nationalities, a truly global company
●
29% female employees in management positions at the
end of 2023
●
2023
Statement on Equality and Non-discrimination
available on the
corporate website
Climate
●
Annual GHG emissions avoided from our power plants
reached 4.0 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 –
target to minimise direct emissions by 2030 and net
zero across the value chain by 2040
●
Net Zero roadmap published detailing the seven key
initiatives required to reach our climate targets
EU Taxonomy
1)
•
The majority of revenues, opex and capex are derived
from EU Taxonomy eligible activities
•
Scatec’s revenue is 94%, capex 97% and ppex 97%
aligned to the Taxonomy
•
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 9.2 million working hours with no fatalities or
serious injuries during 2023
•
The lost time incident frequency rate (LTIF) was 0.9 per
million working hours resulting from eight incidents
•
Certified to ISO 9001, 45001 and 14001 by DNV
Human rights/supply chain
●
Addressed forced labour concerns in China including
collaboration with key suppliers on traceability
●
Transparency Act statement published detailing
Scatec’s work with human rights
●
EcoVadis supplier management programme
implemented to screen suppliers of key procurement
categories
●
92 grievances received, 86% were resolved and the
remaining open grievances are being investigated
Anti-corruption and Compliance
●
Scatec provides mandatory anti-corruption and code of
conduct training to all employees. 100% of all
employees in-scope have completed the training
1) For details, please refer to our EU Taxonomy Report 20223 available under ESG resources on the Company’s website
Scatec ASA - Annual Report 2023
33
Group – Proportionate Financials
Please refer to Note 3 for details of the segment financials.
Power Production
Power Production revenues increased to NOK
4,113
million (3,697)
in 2023, reflecting sale of electricity from our solar, hydro and
wind power plants in Europe, Africa, South-east Asia, and Latin
America. Kenhardt reaching commercial operation in Q4
contributed positively to the increase. The revenues also include a
gain of NOK 348 million from the sale of project assets in South
Africa and Mozambique, insurance proceeds of NOK 39 million in
Ukraine, and foreign currency effects. Lower revenues in the
Philippines due to weaker hydrology and lower contribution from
ancillary services contributed negatively.
Operating expenses were NOK 896 million (834) for the year,
negatively impacted by foreign currency effects and an accrual of
NOK 40 million for a claim from the National Irrigation
Administration in the Philippines related to water fee charges for
previous periods for the lease of the Magat Dam.
Underlying EBITDA increase was NOK 93 million for the year,
adjusted for divestments and new generation capacity added. Full
year power Production EBITDA increased to NOK
3,216
million
(
2,835
) explained by the factors above.
EBIT increased to NOK 1,631 million (916), impacted by an
impairment of NOK 350 million related to the divested power
plant in Argentina, compared to NOK 770 million in 2022
triggered by the Russian invasion of Ukraine.
Power production had 3,549 MW installed capacity at year-end
and delivered 3,615 GWh on a proportionate basis, compared to
3,898 GWh last year. The reduction is explained by the
divestments of Upington in South Africa, Guañizuil in Argentina
and Mocuba in Mozambique, as well as, lower production in the
Philippines due to the effects of el Niño. This was partly offset by
additional power production from Kenhardt in South Africa and
increased production in Ukraine. The underlying reduction in
power production was 147 GWh, mainly driven by the Philippines.
The plant availability in 2023 was close to 100%, with no Lost Time
Incidents.
For further details on financial results on a country-by-country
basis please refer to Scatec’s Q1 to Q4 2023 historical financial
information’ published on Scatec’s web page.
Development & Construction (D&C)
Development & Construction delivered strong results after
reaching all-time high revenues of NOK 8,177 million (1,069). 2023
was characterised by high construction activities in South Africa,
Brazil and Pakistan, and a solid gross margin of 12 percent.
Construction of Kenhardt, the largest project in Scatec’s history,
was finalised and the plants started commercial operation in the
fourth quarter. The plants delivered solid operational
performance with no Lost Time Incidents.
Total operating expenses were NOK 322 million (327) in 2023.
This includes NOK 248 (237) million for early-stage project
development and NOK 74 (90) million in construction activity.
Development and construction EBITDA for the year was NOK
672
million, a solid increase from a negative EBITDA of NOK -221
million year-on-year
Services
Services revenues increased to NOK 373 million (312) and
operating expenses to NOK 260 million (238), mainly driven by
higher performance bonus in South Africa related to Operations
and Maintenance Services,
positive net foreign currency effects
,
higher Asset Management revenues and mobilization fees
provided by the projects under development and construction.
Corporate
Corporate revenues were NOK 50 million (56) in 2023, while
operating expenses were NOK 213 million (194). The change in
operating expenses was mainly driven by the non-recurring costs
related to the cost efficiency programme incurred in the second
quarter.
Consolidated financial statements
Consolidated income statement
NOK million
2023
2022
Revenues
3,399
3,002
Net gain/(loss) from sale of project assets
1,276
-
Net income/(loss) from JV and associated
companies
46
749
EBITDA
3,567
2,555
Operating profit (EBIT)
2,625
723
Profit before income tax
1,008
-1,095
Profit/(loss) for the period
1,122
-1,228
Profit/(loss) to Scatec
628
-1,334
Profit/(loss) to non-controlling interests
494
106
Revenues
Revenues reached NOK 4,721 million (3,751) in 2023. NOK 3,399
million was generated from power sales and the gain from sale of
project assets of NOK 1,276 million mainly relates to the
divestment of Upington, South Africa, and 32% of the shares in
Release.
34
Operating Profit
EBITDA increased to NOK 3,567 million compared to 2,555
million last year. The EBITDA was positively impacted by the
divestments while lower net income from the Philippines and
impairment of the power plant in Argentina of NOK 350 million
impacted negatively.
Depreciation, amortisation and impairment amounted to NOK
942 million in 2023, compared to NOK 1,832 million in 2022. The
decrease is mainly explained by impairments related to Ukraine in
2022. Refer to Note 13 Impairment for further details.
Operating profit (EBIT) ended at NOK 2,625 million in 2023, up
from NOK 723 million in 2022 explained by the factors as above.
Net financial items
NOK million
2023
2022
Interest and other financial income
415
115
Interest and other financial expenses
-1,977
-1,666
Net foreign exchange gains/(losses)
-56
-268
Net financial expenses
-1,617
-1,818
Interest and other financial income of NOK 415 million (115)
includes interest income on cash balances and gain on the USD/
ZAR currency hedging contracts for Kenhardt of NOK 246 million.
Interest and other financial expenses of NOK 1,977 million (1,666)
consist of interest expenses of NOK 1,724 million (1,424), and
other financial expenses of NOK 253 million (243). In addition, the
amount in 2022 includes a loss of NOK 89 million on the
USD/ZAR currency hedging contracts related to Kenhardt. The
increase in interest expense for the year is mainly driven by higher
interest expenses on the corporate debt which is partly offset by
lower interest expenses on non-recourse project level debt due to
disposal of the Upington solar plants in the second quarter 2023.
The net foreign exchange losses were NOK 56 million (268) for
the year are primarily unrealised losses from translation of
monetary assets and liabilities denominated in foreign currencies.
Profit before tax and net profit
The Group has recognized a tax benefit of NOK 114 million in
2023, compared to a tax expense of NOK 132 million last year.
The decrease in tax expense is driven by a tax benefit attributable
to Kenhardt (NOK 457 million) which qualified for the Enhanced
renewable energy tax incentive after reaching their Commercial
Operating dates in November and December 2023. For further
details, refer to Note 7 Tax.
Net profit for the year was NOK 1,122 million compared to a loss
of NOK 1,228 million last year. 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 NCI primarily own shares in the power plants while
Scatec also carries the cost of project development, construction,
operation & maintenance and corporate functions. Net income
from JVs and associated companies represent Scatec’s share of
the investment in the JVs and are fully allocated to Scatec.
further details, refer to Note 29 Non-controlling interests.
Other comprehensive income, which comprises items that may
subsequently be reclassified to profit or loss, amounted to
negative NOK 30 million (986) in 2023. This relates to after-tax
net movement of cash flow hedges of negative NOK 223 million
(514) and positive foreign currency translation differences of NOK
194 million (472).
Total comprehensive income was NOK 1,092 million (-242) for
2023 of which NOK 704 million (-648) was attributable to Scatec,
while NOK 389 (406) million is attributable to non-controlling
interests.
Consolidated statement of cash flow
Cash flow
NOK million
2023
2022
Net cash flow from operating activities
2,184
1,637
Net cash flow from investing activities
-6,575
-2,287
Net cash flow from financing activities
3,294
221
Net increase/(decrease) in cash and cash
equivalents
-1,097
-428
Net cash flow from consolidated operating activities amounted to
NOK 2,184 million (1,637) in 2023, compared to EBITDA of NOK
3,567 million (2,555).
Net cash flow from consolidated investing activities was negative
NOK 6,575 million (2,287) mainly driven by investments in
property, plant and equipment. Proceeds from sale of project
assets had a positive impact of NOK 390 million in the year.
Net cash flow from financing activities was positive NOK 3,294
million (221). The Group drew down on debt related to projects in
South Africa and Pakistan and received project funding from non-
controlling interests. Further, the cash flow was impacted by
drawdown on the Revolving Credit Facility of USD 70 million,
payment of interests and repayment of non-recourse financing in
project companies.
Cash and cash equivalents were NOK 3,101 million (4,132) at year-
end 2023 of which NOK 977 million was free cash at group level.
The total cash in power plant companies in operation and under
Scatec ASA - Annual Report 2023
35
construction was NOK 1,922 million (2,166), while other restricted
cash was NOK 203 million (223).
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.
Cash flow to equity for all segments reached NOK 1,600 million
compared to NOK 1,050 million last year.
NOK million
2023
2022
Power production
1,663
1,487
Services
96
58
Development & Construction
555
-149
Corporate
-716
-347
Sum
1,600
1,050
The cash flow to equity for Power Production increased to NOK
1,663 million in 2023 compared to NOK 1,487 million last year.
2023 was positively impacted by divestments of the Mocuba and
Upington plants while 2022 included proceeds of NOK 363
million from refinancing.
The increase in cash flow to equity in Services is mainly explained
by higher EBITDA in the segment. The cash flow to equity in the
D&C segment reached NOK 555 million (-149) driven by high
EBITDA in the projects under construction in South Africa, Brazil
and Pakistan.
The cash flow to equity in the Corporate segment decreased
compared to last year, mainly explained by increased interest
expenses and higher debt repayments on corporate funding for
the year.
Consolidated statement of financial position
Assets
NOK million
2023
2022
Property, plant and equipment and intangible
assets
22,752
18,068
Investments in JV and associated companies
12,368
10,674
Other non-current assets
1,790
1,476
Total non-current assets
36,911
30,218
Other current assets
1,646
2,380
Cash and cash equivalents
3,101
4,132
Assets held for sale
138
-
Total current assets
4,884
6,512
Total assets
41,795
36,730
Total assets amounted to NOK 41,795 million at year-end 2023,
up from NOK 36,730 million at the end of 2022. Non-current
assets totaled NOK 36,911 million (30,218). The increase is
primarily driven by construction activities in Pakistan and the new
Kenhardt plant. The increase is partly offset by the NOK 1.8 billion
disposal of Upington in the second quarter and depreciation of
NOK 853 million for the year. See Note 10 Property, plant and
equipment and Note 14 Investments in joint venture and
associated companies.
The balance of investments in JVs and associated companies
increased due to investments related to the Mendubim project in
Brazil and Release being classified as a joint venture. The effects
were partly offset by distributions of dividends. See Note 14
Investments in joint venture and associated companies
reconciliation.
Current assets amounted to NOK 4,884 million (6,512). Other
current assets decreased at year-end with reversal of project
accruals as the construction of Kenhardt was completed in the
fourth quarter of 2023. See the consolidated statement of cash
flows for further details and Note 15 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
2023
2022
Equity
10,570
8,803
Non-current non-recourse project
financing
15,026
13,297
Non-current corporate financing
7,947
7,987
Other non-current liabilities
2,617
2,604
Total non-current liabilities
25,590
23,888
Current non-recourse project financing
1,931
1,963
Current corporate financing
1,132
-
Trade payables and other current liabilities
2,443
2,076
Liabilities of disposal group held for sale
129
-
Total current liabilities
5,635
4,039
Total liabilities
31,225
27,927
Total equity and liabilities
41,795
36,730
Book equity ratio
25%
24%
Total equity increased to NOK 10,570 million (8,803). The change
in equity is driven by the total comprehensive income for the
period and capital increase from non-controlling interest. For
further details see consolidated statement of changes in equity.
Corporate financing consists of unsecured green bonds, secured
green term loans and financing secured in relation to the
acquisition of SN Power in 2021. Changes in 2023 is primarily due
to refinancing of Bridge-to-Bond facility, drawdown of the
Revolving Credit Facility and foreign currency translation. See
Note 23 Corporate Financing for further details.
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Total non-recourse financing reached NOK 17 billion at year-end
after drawdown of NOK 5.4 billion in project debt in South Africa
and NOK 630 million in Pakistan in the year. This was partially
offset by the sale of Upington including NOK 2.2 billion in non-
recourse financing and repayments. See Note 23 Corporate
Financing and 24 Non-recourse Financing 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 6,271 million and
operating loss (EBIT) of NOK 169 million in 2023, compared to
revenues of NOK 751 million and operating loss (EBIT) of NOK
665 million in 2022. The increase in revenues is driven by high
construction activity in South Africa, Pakistan and Brazil. 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 was NOK 6,043 million
(1,267). The increase is driven by higher construction activity.
Total interest and other financial income were NOK 392 million
(1,570) related to interest income on shareholder loans and
dividends received. The high dividend in 2022 was driven by
proceeds from refinancing. External interest expense was NOK
638 million (346). In 2022 the financial expenses included an
impairment of investments and receivables in Ukraine of NOK 948
million. Profit after tax was NOK -399 million, compared to a
profit after tax of NOK -480 million in 2022.
Total equity for the parent company Scatec ASA was NOK 10,296
million at 31 December 2023, up from NOK 10,265 million in
2022. Total assets was NOK 21,070 million at 31 December 2023,
compared to 20,591 last year.
Overview of project portfolio
Project stage
2023
(MW)
2022
(MW)
In operation
3,549
3,375
Under construction
690
1,267
Project backlog
876
953
Project pipeline
11,091
15,712
Total
16,206
21,307
Total annual production from the 4,728 MW in operation, under
construction and in backlog, excluding green hydrogen and BESS,
is expected to reach about 12,600 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 percent likelihood
of reaching financial close. When financial close has been
obtained and notice to proceed has been issued, 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.
Key events during 2023 were commercial operation start for
Kenhardt in South Africa, financial close for the 273 MW
Grootfontein solar project, extension of the Mmadinare Solar
Complex in Botswana to 120 MW and financial close for the first
60 MW, award of the 103 MW/412 GWh Mogobe battery energy
storage project in South Africa, and discontinued development of
240 MW of the 360 MW Tunisia portfolio.
For more information about the projects under construction and
in backlog, refer to our website: scatec.com/investor.
Under construction
Sukkur, Pakistan 150 MW solar
At year end 2023, the construction of the Sukkur project in
Pakistan approached final stages and started commercial
operation on 31 January 2024.
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, financed by approximately 70%
non-recourse project finance debt and 30% equity from the
sponsors.
Scatec ASA - Annual Report 2023
37
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
The construction activities related to the Mendubim solar power
plant were near completion at year end 2023 and started
commercial operation 8 March 2024.
The 20-year PPA signed with Alunorte, with start-up 1 January
2025, 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 and is financed by a mix of non-recourse project debt and
equity from partners.
All three partners; Scatec, Equinor and Hydro Rein, have an equal
economic interest of 33.3%
1)
provide EPC services. Scatec will further provide O&M as well as
AM services to the power plants together with Equinor.
Release
Release has 8.7 MW of solar under construction in Mexico.
Backlog
Construction start of the backlog projects relies on final
governmental approval processes, completion of project finance
processes and component price development.
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, and in June 2023 the projects reached
financial close.
At the end of the fourth quarter, Scatec started enabling works
for the three projects, and construction activities will be ramped
up for all disciplines in the first quarter of 2024.
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, 120 MW solar
Since the fourth quarter 2022, Scatec has engaged with the
Tunisian authorities to negotiate the PPA tariff in order to
improve the economics of the three solar projects awarded in
2019, totalling 360 MW. Based on a review of the project portfolio
and in close dialogue with the Tunisian government, Scatec
decided to discontinue development of 240 MW in the fourth
quarter of 2023. The remaining 120 MW hold 20-year PPAs with
Société Tunisienne de l’Electricité et du Gaz (STEG) and will
continue to be developed based on more favourable project
economics.
Scatec currently owns 100% of the projects and will provide EPC,
O&M and AM services to the project company. Scatec is aiming
to reduce its ownership in the project by inviting equity partners.
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.
Fertiglobe will use the green hydrogen as feedstock for
production of green ammonia. Execution of the project will
depend on securing offtake for the green ammonia and the
timing of this depends on the development of market
mechanisms and demand for green ammonia.
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.
Mmadinare Solar Complex, Botswana, 120 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. During the third
quarter 2023 Scatec was awarded an additional 25-year PPA with
Botswana Power Corporation for another 60 MW. In December
2023, Scatec reached financial close for the first 60 MW and have
started preliminary site activities. Construction is expected to
ramp up in the first quarter 2024. The remaining 60 MW will be
developed in a second phase with financial close and
1)
In conjunction with the start of commercial operations, Alunorte has exercised its call option for an economic interest of 10% in Mendubim. Following the exercise of
the option, Scatec, Equinor and Hydro Rein hold an equal economic interest of 30%.
38
construction start also expected in 2024. The solar projects are
the first of its kind in the country.
Scatec currently owns 100% of the projects, and will provide EPC
services, as well as Asset Management and O&M services. Scatec
is aiming to reduce its ownership in the projects by inviting equity
partners.
Mogobe, South Africa, 103 MW BESS
In November 2023, Scatec was awarded preferred bidder status
for a battery energy storage project totalling 103 MW/ 412 MWh
by the Department of Mineral Resources and Energy in South
Africa under the Battery Energy Storage Independent Power
Producer Procurement Programme (BESIPPPP).
The power will be dispatched under a 15-year PPA. Scatec will
own 51%
of the equity in the project with Perpetua Holding
owning 46.5% and a Community Trust holding 2.5%. Scatec will
be the engineering, procurement, and construction (EPC)
provider and provide operations & maintenance (O&M), as well
as asset management (AM) services to the project.
According to
the Department of Mineral Resources and Energy, commercial
close is expected by June 2024
.
Pipeline
Location
2023
(MW)
2022
(MW)
Asia
834
4,800
Latin America/Europe
2,161
3,315
Middle East and North Africa
2,270
2,560
Sub-Saharan Africa
5,826
5,037
Total pipeline
11,091
15,712
In addition to the projects in backlog Scatec holds a solid pipeline
of projects totalling 11.1 GW across technologies, down from 15.7
GW at the end of last year. This is due to high grading of the
pipeline with focus on project locations, shorter timelines,
maturity and value creation. Less attractive projects, mainly within
offshore wind and hydro, have been taken out and new attractive
solar projects in core regions have been added. Consequently,
the share of solar in the pipeline has increased to 59%, and the
share of projects in our focus markets to above 90%.
Solution
2023
(MW)
2022
(MW)
Solar
6,571
5,005
Wind
2,280
6,223
Hydro
700
2,684
Green Hydrogen
1)
1,240
1,500
Release
300
300
Total
11,091
15,712
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.
For Scatec’s policy for research and development expenses,
please refer to Note 10 Property, plant and equipment for further
information.
Other matters
Russian war in Ukraine
After Russia’s attack on Ukraine the war has been going on for
two years. Scatec currently operates five solar power plants with a
total capacity of 336 MW, located in the central and southern
parts of the country. After a remarkable effort by our employees,
approximately 95% of the power plants owned and operated by
Scatec are intact and available. Revenues from power production
in Ukraine have only been recognised in accordance with actual
paid amounts since March 2022. In 2023, proportionate revenues
and EBITDA in Ukraine amounted to NOK 371 million and NOK
289 million respectively. The payment level reached 66%.
In June 2023, Scatec started selling power from the Progressovka
power plant in the merchant market, reaching a payment level of
100 percent, with revenues being settled in full every ten days.
The decision to sell into the spot market was made based on
changes in the local law which enabled Scatec to pause the PPA,
while retaining the option to re-enter the PPA at a later stage.
The Russian invasion triggered an impairment assessment in 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. Per 31 December 2023 the impairment tests have
been updated with new information on cash flow assumptions
and discount rates, however no further impairments have been
recognised. Refer to Note 13 Impairment for details on the
impairment of the plants.
As of 31 December 2023, the non-recourse financing in Ukraine
of NOK 865 million, continues to be classified as current in the
consolidated financials as the power plant companies are in
breach with certain covenants. A total of NOK 165 million of the
debt has been repaid in 2023. Scatec has continuous and
constructive dialogue with the lenders and the parties have
agreed on a non-formalised standstill.
1)
Renewable capacity for use in production of green hydrogen and green ammonia
Scatec ASA - Annual Report 2023
39
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 2020. In
2023, ENEE has continued to settle outstanding receivables and
paid a total of approximately NOK 180 million, leaving the
balance at NOK 87 million as of year-end.
In 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.
The negotiations of the PPAs were ongoing in 2023 and on
January 31, 2024, amendments to the PPA were signed. Refer to
note 32 Subsequent events for further information.
Covenants
Except for Ukraine, Scatec was in compliance with financial
covenants for both the recourse and non-recourse debt on 31
December 2023. Refer to Note 23 Corporate financing and Note
24 Non-recourse financing for more details.
Organisation
Scatec has an international and diverse workforce which at the
end of 2023 was represented by 49 nationalities and 680
employees across four continents. In May 2023, the Company
announced a cost reduction programme, with a target to reduce
operating expenses by NOK 150 million from the first quarter
2024 compared to the first quarter 2023. The programme was
completed according to plan. As a result, the full-time workforce
was reduced in 2023. In addition, Scatec had 171 short-term
employees and 42 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
https://scatec.com/sustainability/esg-resources/
. For further
information on work environment, including HSSE, statistics refer
to the Company’s 2023 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 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 2023 and key mitigation activities.
Project development risk
Scatec’s growth relies on successful project development which is
impacted by several 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 to the date of the investment decision the
Company is exposed to the risk of component price fluctuations
40
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.
Ethics and integrity risk
Scatec strives to meet the highest ethical standards and to
conduct business activities in a sustainable and transparent
manner.
The Scatec Code of Conduct sets out clear expectations and
requirements to promote ethics and integrity, including on
protection of the environment, human rights, safety and security,
and the Company’s zero tolerance for any form of corruption.
Employees are trained to manage risks they may face and are
encouraged to ask for guidance when they are unsure. All
employees have a duty to speak-up if they suspect misconduct.
Further, Scatec expects all business partners and suppliers to
conduct their activities in a way that is consistent with the Code of
Conduct. Third parties are screened and assessed against
potential integrity risks, and contractually required to mitigate
such risks.
A 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.
As a global company, operating in diverse markets, Scatec has
implemented a robust Anti-Corruption Compliance Programme
designed to meet the risks of challenging business environments,
including the requirements and tools noted above.
Integrity is imperative to achieve sustainable business. Scatec’s
reputation, built on integrity, earns the trust of its stakeholders
and the communities in which the Company operates. In 2023,
Scatec focused on targeted training for exposed positions, and in
2024 focus will be on strengthening the risk assessments process
to ensure that integrity risks continue to be identified and
adequately mitigated.
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
where 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 2023 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 2023.
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 20 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
Scatec ASA - Annual Report 2023
41
electricity from most of its power plants in operation at year end
2023. 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. In Ukraine, for the
Progressovka plants, changes in the local law in 2023 enabled
Scatec to pause the PPA and sell electricity in the spot market
while retaining the option to re-enter the PPA at a later stage.
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
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
2023 for corporate climate risk assessments and more
information.
For further environmental and social responsibilities
refer to the 2023 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.
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
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
Renewable energy is key to serve a growing population, create
42
economic development in emerging markets and drive the
energy transition.
According to Bloomberg New Energy Finance (BNEF), global
investments in the energy transition technologies hit a record of
USD 1.8 trillion in 2023, 17 per cent up year-on-year. At COP28,
130 countries pledged to triple renewable energy capacity by
2030, and for the first time it was committed to transition away
from fossil fuels.
To stay on track to reach net zero emissions by 2050, BNEF
confirms that a tripling is what the world needs. This requires a
significant acceleration, including investments in renewable
energy and power grids, increased battery storage capacity and
scaling up the technology mix for complementary generation.
The competitiveness of renewables continued to strengthen and
it is the most cost-efficient power source in most of the world.
Fundamentals for renewables remain strong, both solar PV prices
and battery storage systems reached all-time low in 2023. Prices
are expected to remain low in 2024, as supply of both solar
modules and battery input metals is estimated to exceed
demand.
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 November 2023 Scatec gave a strategy update and announced
that the growth rate for the strategy period to 2027 will be
funded by internal capacity, targeting NOK 500-750 million of
annual equity investments within renewable energy.
Scatec will further consider additional repayments of the
corporate debt on top of existing amortisations of approximately
NOK 280 million annually.
The revised business plan will be funded by:
•
a strong and growing cash flow from operating assets
•
enhanced capital recycling activities
•
alternative ownership structures with reduced equity
•
stakes
•
changed dividend policy to no dividend
Scatec continues to utilise the integrated business model and stay
committed to delivering attractive returns of 1.2 times cost of
equity, D&C gross margins of 8-10% and O&M margins of 25-
30%.
For the full year 2024 Scatec is estimated to generate
proportionate power production EBITDA of NOK 3,400-3,700
million based on an estimated power production of 4,200-4,600
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 2023, 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 2023, the
number of shareholders were 14,846. Refer to Note 27 - Share
capital, shareholder information and dividend for further
information. During 2023 Scatec’s share price increased by 3.2
per cent.
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 www.scatec.com/investor .
Dividend policy
In the third quarter 2023, the Board of Directors changed the
dividend policy to no dividend, due to the macro-economic and
capital market situation. The dividend policy will be assessed
annually by the board based on Scatec’s capital situation.
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
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 IFRS® Accounting Standards as adopted by the
EU
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.
Scatec ASA - Annual Report 2023
43
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 consolidated financial statements.
Subsequent events
No adjusting events have occurred after the balance sheet date.
Non-adjusting events
Long term incentive programme
In line with the terms adopted by the Annual General Meeting of
Scatec ASA in 2023, the Board of Directors continue the share-
based incentive programme for leading employees of the
company, following the same principles as previous years. On
January 3, 2024, a total of 1,515,885 share options were granted
to leading employees. Each share option gives the right to
subscribe for and be allotted one share in Scatec ASA. The strike
price of the options is set to NOK 79.47 per share based on the
volume weighted average share price over the ten last trading
days preceding the grant date of 3 January 2024. The options will
lapse if not exercised by 1 January 2028. The option grant is
divided into three tranches whereby 1/3 vests each year over
three years, with the first tranche vesting 1 January 2025. The
current grant is the second of three contemplated annual grants
of share options in accordance with Scatec’s share-based
incentive programme.
Refinancing of USD 150 million green term loan
On January 25, 2024, Scatec ASA agreed refinancing terms with
DNB, Nordea and Swedbank for its USD 150 million green term
loan, with USD 135 million outstanding at the end of the fourth
quarter 2023. The new green term loan will be amortised through
semi-annual repayments of USD 7.5 million with final maturity in
the fourth quarter 2027.
Placement of NOK 1,750 million senior unsecured green bonds
and buy-back of bonds
On January 31, 2024, Scatec ASA announced the issuance of a
NOK 1,750 million 4-year senior unsecured bond with a coupon
of 3 months NIBOR + 4.25% p.a. with quarterly interest payments.
DNB Markets, Nordea and SpareBank 1 Markets acted as Joint
Lead Managers in connection with the placement of the new
bond issue. An application was made for the bonds to be listed
on Oslo Stock Exchange.
On February 1, 2024, Scatec ASA announced buy-back of EUR
136 million of outstanding bonds with ticker “SCATC03 ESG” (ISIN
NO0010931181) which will be cancelled subsequently. Following
the transaction, the total nominal outstanding amount is EUR 114
million. The remaining proceeds from the NOK 1,750 million bond
issue after the buy-back will be applied towards eligible activities
as set out in the Green Financing Framework, including additional
repayment of corporate debt.
PPA amendments in Honduras
Reference is made to previous communication around changes
to the PPA in Honduras. In May 2022, a new Energy law came
into force as introduced by the new Government of Honduras.
Per January 31, 2024, a PPA amendment agreement was signed
between Scatec’s operating entities in Honduras and the off taker
ENEE. The key changes to the PPA include a lower tariff,
extension of the PPA with five more years and a compensation
amount to be paid by the off taker to Scatec’s operating entities.
In total, the amendments to the PPA in combination with the
compensation amount are not expected to have a material
adverse effect of the financials of the projects.
Devaluation of the Egyptian pound
On March 6, 2024, the central bank in Egypt announced a full
free floating of the local currency, Egyptian Pound (EGP), and the
local currency devaluated against USD. Scatec’s Benban plants in
Egypt are operating under a 25-year Power Purchase Agreement
with the Egyptian Electricity Transmission Company, S.A.E, which
started operations in 2019. The tariff in the Power Purchase
Agreement is denominated in USD but paid in EGP. 30% of the
production volume is invoiced in EGP at a fixed rate to USD of
8.88, while 70% of the revenues are invoiced at the official
EGP/USD spot rate for the relevant period. Due to devaluations of
the EGP since the operations commenced, the fixed-rate part of
the revenues constituted approximately NOK 30 million in 2023
representing 10% of Scatec’s total proportionate power
production revenues in Egypt. This part of the revenues is
exposed to further devaluation of the EGP. The non-recourse
debt is dominated in USD and not impacted by the devaluation,
while Scatec’s cash balances in EGP is negatively impacted by a
devaluation. The change of the central bank’s strategy in Egypt is
expected to ease the convertibility of EGP to USD. Please refer to
Note 15 Cash and cash equivalent for information on cash
balances in Egypt at year-end 2023.
44
Oslo, 19 March 2024
The Board of Directors Scatec ASA
Scatec ASA - Annual Report 2023
45
Consolidated financial
statements Group
46
Consolidated statement of profit or loss
47
Consolidated statement of comprehensive income
48
Consolidated statement of financial position
49
Consolidated statement of changes in equity
51
Consolidated statement of cash flow
52
Notes to the Consolidated financial statements
53
General information
Note 1
Corporate information
53
Note 2
Basis for preparation, basis for consolidation and key sources of
estimation uncertainty
53
Statement of profit or loss (and comprehensive income)
Note 3
Operating segments
55
Note 4
Employee benefits
60
Note 5
Other operating expenses
62
Note 6
Financial income and expenses
62
Note 7
Tax
63
Note 8
Earnings per share
65
Note 9
Sale of project assets and disposal group held for sale
65
Statement of financial position
Note 10
Property, plant and equipment
68
Note 11
Goodwill and intangible assets
69
Note 12
Leases
70
Note 13
Impairment testing
72
Note 14
Investments in joint venture and associated companies
73
Note 15
Cash and cash equivalents
76
Note 16
Trade receivables
78
Note 17
Other non-current and current asset
79
Note 18
Other non-current and current liabilities
79
Note 19
Legal disputes and contingencies
80
Financial risk and capital management
Note 20
Financial risk management and risk sensitivities
80
Note 21
Financial instruments
83
Note 22
Derivative financial instruments
85
Note 23
Corporate financing
87
Note 24
Non-recourse financing
89
Note 25
Project equity financing provided by co-investors
91
Note 26
Guarantees and commitments
92
Other information
Note 27
Share capital, shareholder information and dividend
94
Note 28
Consolidated subsidiaries
95
Note 29
Non-controlling interests
96
Note 30
Transactions with related parties
98
Note 31
Changes in accounting policies
99
Note 32
Subsequent events
101
Scatec ASA - Annual Report 2023
47
Consolidated statement of profit and loss
1 JANUARY - 31 DECEMBER
NOK million
Note
2023
2022
Revenues
3
Net gain/(loss) from sale of project assets and divestments
9, 14
Net income/(loss) from JV and associated companies
3, 14
Total revenues and other income
Personnel expenses
4
-570
-528
Other operating expenses
5
-584
-668
Depreciation, amortisation and impairment
10, 11, 12, 13
-942
-1,832
Operating profit (EBIT)
Interest and other financial income
6
Interest and other financial expenses
6
-1,977
-1,666
Net foreign exchange gain/(loss)
20, 6
-56
-268
Net financial expenses
-1,617
-1,818
Profit/(loss) before income tax
-1,095
Income tax (expense)/benefit
7
-132
Profit/(loss) for the period
-1,228
Profit/(loss) attributable to:
Equity holders of the parent
-1,334
Non-controlling interest
29
Basic earnings per share (NOK)
8
-8.40
Diluted earnings per share (NOK)
8
-8.40
48
Consolidated statement of comprehensive income
1 JANUARY - 31 DECEMBER
NOK million
Notes
2023
2022
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
22
-292
Income tax effect from net movement of cash flow hedges
7
-150
Foreign currency translation differences
Net other comprehensive income to be reclassified
-30
Total comprehensive income for the year, net of tax
-242
Attributable to:
Equity holders of the parent
-648
Non-controlling interest
29
Scatec ASA - Annual Report 2023
49
Consolidated statement of financial position
NOK million
Note
31 December 2023
31 December 2022
Assets
Non-current assets
Deferred tax assets
7
Property, plant and equipment
10
Goodwill and intangible assets
11
Investments in JVs and associated companies
14
Other non-current financial assets
21, 22
Other non-current assets
17, 30
Total non-current assets
Current assets
Trade and other receivables
16
Other current financial assets
21, 22
Other current assets
17, 30
Cash and cash equivalents
15
Assets classified as held for sale
9
Total current assets
Total assets
50
Consolidated statement of financial position
NOK million
Note
31 December 2023
31 December 2022
Equity and liabilities
Equity
Paid in capital
Share capital
27
Share premium
Total paid in capital
Other equity
Retained earnings
-1,911
-2,231
Other reserves
Total other equity
-1,164
-1,560
Non-controlling interests
29
Total equity
Non-current liabilities
Deferred tax liabilities
7
Corporate financing
23
Non-recourse project financing
24
Other financial liabilities
21, 22
Other interest-bearing liabilities
23
Other non-current liabilities
18, 30
Total non-current liabilities
Current liabilities
Corporate financing
23
Non-recourse project financing
24
Income tax payable
7
Trade and other payables
Other financial liabilities
21, 22
Other interest-bearing liabilities
23
Other current liabilities
18, 30
Liabilities directly associated with assets classified as held for sale
9
Total current liabilities
Total liabilities
Total equity and liabilities
Oslo, 19 March 2024
The Board of Directors Scatec ASA
Scatec ASA - Annual Report 2023
51
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 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
27
Share purchase program
Dividend distribution
27
-404
-404
-526
-929
Capital increase from NCI
29
At 31 December 2022
-2,231
At 1 January 2023
-2,231
Profit for the period
Other comprehensive income
-166
-105
-30
Total comprehensive income
-166
Share-based payment
4
Dividend distribution
27
-308
-308
-121
-429
Capital increase from NCI
29
At 31 December 2023
-1,911
52
Consolidated statement of cash flow
NOK million
Notes
2023
2022
1)
Cash flow from operating activities
Profit before taxes
-1,095
Taxes paid
7
-261
-170
Depreciation and impairment
10, 11, 12
Proceeds from sale of fixed assets
10
Net income JV and associated companies
14
-46
-749
Gain from sale of project assets
9
-1,276
Interest and other financial income
6
-415
-115
Interest and other financial expenses
6
Foreign exchange (gain)/loss
6
(Increase)/decrease in current assets and current liabilities
1)
-45
Net cash flow from operating activities
Cash flows from investing activities
Interest received
6
Investments in property, plant and equipment
-7,145
-2,867
Proceeds from sale of project assets, net of cash disposed
2)
9
Distributions from JV and associated companies
14
Investments in JV and associated companies
14
-447
-204
Net cash flow used in investing activities
-6,575
-2,287
Cash flow from financing activities
Proceeds from non-controlling interests
25
Distributions to non-controlling interests
25
-35
-8
Interest paid
21
-1,962
-1,108
Proceeds from non-recourse project financing
24, 21
Repayment of non-recourse project financing
24, 21
-1,818
-1,175
Payments of principal portion on lease liabilities
12
-21
-26
Interest paid on lease liabilities
12
-27
-20
Net of proceeds and repayments from corporate financing
23, 21
Dividends paid to equity holders of the parent company and non-controlling interests
27
-429
-929
Net cash flow from financing activities
Net increase/(decrease) in cash and cash equivalents
-1,097
-428
Effect of exchange rate changes on cash and cash equivalents
Cash transferred to assets held for sale
-12
-
Cash and cash equivalents at beginning of the period
Cash and cash equivalents at end of the period
15
1) Cash-flows related to prepayments and incurred expenses for construction of new power plants are from 2023 presented as investing activities in line item "Investments in
property, plants and equipment". Comparable numbers are correspondingly updated. The comparative amounts for 2022 prior to restatement were NOK -1,986 million for
“Investments in property, plant and equipment” and NOK -926 million for “Increase/decrease in current assets and current liabilities".
2) Proceeds from sale of project assets, net of cash disposed, is cash received from sale of project assets less consolidated cash position in disposed projects at the time of
disposal.
Scatec ASA - Annual Report 2023
53
Notes to the Consolidated financial statements Group
Note 1 Corporate information
Information on the Group’s structure is provided in Note 28 –
Consolidated subsidiaries.
The Company is listed on the Oslo Stock Exchange under the
ticker symbol ‘SCATC’. For further details on shareholder
matters, refer to Note 27 – Share capital, shareholder
information and dividend.
The consolidated financial statements for the full year 2023
were authorised for issue in accordance with a resolution by
the Board of Directors on 19 March 2024.
i
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
IFRS® Accounting
Standards as adopted by the EU
(IFRS). In compliance with the
Norwegian Accounting Act, additional disclosure requirements
are included in the notes to the financial statements of Scatec
ASA.
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 other than NOK are
translated at the rate of exchange prevailing at the end of
reporting period and their income statements are translated at
average monthly exchange rates.
Basis of consolidation
The consolidated financial statements comprise the financial
statements of the Parent and its subsidiaries as of 31
December 2023. 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.
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
54
estimates are based on historical experience, current trends
and other relevant factors available when the consolidated
financial statements are prepared. Existing circumstances and
assumptions about future developments, however, may
change due to market changes 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 that have a significant risk of causing a material
adjustment to the carrying amounts of assets and liabilities
within the next financial year are largely incorporated into the
individual notes.
The Group’s management believes the following critical
accounting item 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 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.
Scatec ASA - Annual Report 2023
55
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 mainly
based on long-term Power Purchase Agreements or Feed-in-
tariffs. In the Philippines electricity is sold on bilateral contracts,
in the spot market and as ancillary services.
In Ukraine, for the
Progressovka plants, changes in the local law in 2023 enabled
Scatec to pause the PPA and sell electricity in the spot market
while retaining the option to re-enter the PPA at a later stage.
In addition, the segment includes revenues from the Release
concept.
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.
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. For items considered to be not distinct, 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.
For items considered to be distinct,
Scatec recognises direct material costs as incurred costs at
change of title, dependent on the incoterms in the EPC supply
of goods contract.
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 and Brazil, 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
56
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
in each power plant company.
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 based on Scatec
economic interest. In the table below elimination of equity
consolidated entities column shows the elimination of
proportionate financials lines to arrive at Scatec’s share of
net income/(loss).
●
Internal gains from transactions between segments 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 than the
proportionate financials and corresponding lower
depreciation charges. 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.
Bridge proportionate – to consolidated financials 2023
2023
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
3,760
32
4
-
3,796
1,199
-1,601
4
3,399
Net gain/(loss) from sale of project assets
348
-
-
-
348
-
-
928
1,276
Internal revenues
6
341
8,172
50
8,569
1,956
-557
-9,969
-
Net income/(loss) from JVs and associates
1)
-
-
-
-
-
-
46
-
46
Total revenues and other income
4,113
373
8,177
50
12,714
3,155
-2,115
-9,036
4,721
Cost of sales
2)
-
5
-7,182
-
-7,179
-1,888
502
8,565
-
Gross profit
4,113
378
994
50
5,535
1,268
-1,613
-469
4,721
Personnel expenses
-141
-138
-216
-139
-633
-12
94
-20
-570
Other operating expenses
-755
-122
-107
-74
-1,058
-224
314
383
-584
EBITDA
3,216
118
672
-162
3,845
1,032
-1,204
-106
3,567
Depreciation and impairment
-1,585
-6
-65
-36
-1,692
-323
939
135
-942
Operating profit (EBIT)
1,631
112
607
-198
2,152
709
-265
29
2,625
1) Refer to Note 14 Investments in joint venture and associated companies for details on Net income from JV and associates
2) Refer to Note 31 for details of the change in presentation of revenue and cost of sales for the Philippines
The Group has continued to recognise revenue from power
production in Ukraine to the extent Scatec believes it is
probable to collect the consideration, which is equal to actual
paid amounts. The recognised amount in 2023 was NOK 371
million in the proportionate financials (NOK 440 million in the
consolidated financials), which is in line with the paid amounts.
The Group has recognised net gain from sale of project assets
in total amount of NOK 348 million in the proportionate
financials (NOK 1,276 million in the consolidated financials)
attributable to the strategic sales of the Upington solar plants
in South Africa and Mocuba solar plant in Mozambique, and
to the divestment of 32% shareholding in Release, contributing
with an accounting gain of NOK 485 million in the
Scatec ASA - Annual Report 2023
57
consolidated financials. In 2023
the Group recognised an
impairment charge of NOK 350 million in the Power
Production segment in the proportionate financials (NOK 350
million in the consolidated financials included in the net
income/(loss) from JVs and associated companies) related to
the power plant in Argentina. The Group has also recognised
an impairment charge of
NOK 65 million in the proportionate
financials (NOK 48 million
in the consolidated financials) in the
D&C segment related to discontinued development projects.
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
2)
3,689
18
5
7
3,718
1,120
-1,837
-
3,002
Internal revenues
8
294
1,064
49
1,415
188
-138
-1,465
-
Net income/(loss) from JVs and associates
1)
-
-
-
-
-
-
749
-
749
Total revenues and other income
3,697
312
1,069
56
5,133
1,309
-1,226
-1,465
3,751
Cost of sales
2)
-28
1
-962
1
-989
-145
90
1,044
-
Gross profit
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
Depreciation and impairment
-1,918
-6
-137
-29
-2,090
-414
510
162
-1,832
Operating profit (EBIT)
916
68
-358
-167
460
519
-306
49
723
In 2022 the Group 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.
The Group 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.
Scatec also 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
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
NOK million
2023
2022
South Africa
1,073
1,106
Egypt
657
644
Malaysia
364
346
Ukraine
440
175
Honduras
232
200
Jordan
171
158
Czech Republic
150
128
Mozambique
97
93
Vietnam
95
83
Cameroon
1)
58
15
Rwanda
26
23
Netherlands
10
29
Other
26
1
Total
3,399
3,002
1) Revenues in Release Cameroon in 2023 are included for the period January – October, before 32% shareholding in Release was divested. Refer to Note 9 for details.
58
Property, plant and equipment per country
NOK million
2023
2022
South Africa
9,554
4,155
Egypt
3,453
3,411
Malaysia
2,570
2,728
Ukraine
1,993
1,922
Honduras
1,293
1,302
Pakistan
961
375
Jordan
866
905
Norway
475
428
Vietnam
422
454
Czech Republic
314
336
Netherlands
70
160
Other
64
8
Mozambique
-
558
Cameroon
-
427
Rwanda
-
141
Total
22,035
17,310
Major customers
In South Africa, revenues (3 plants which commenced
operations in 2013 and 2014 and 3 Upington plants which
commenced operations in 2020 and disposed in 2023) 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. Kenhardt plants started commercial
operation in December 2023 under a 20-year PPA which was
awarded under the Risk Mitigation Independent Power
Producer procurement programme (RMIPPPP). 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
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 Agreements 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.
Progressovka power plant in the spot market, The decision was
made based on changes in the local law which enabled Scatec
to pause the PPA, while retaining the option to re-enter the
PPA at a later stage.
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.As a result of the new Energy
law which came into force in 2022 as introduced by the new
Government of Honduras, the negotiations of the PPAs were
ongoing during the year.
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
Scatec ASA - Annual Report 2023
59
Agreement with Electricidade de Moçambique (EDM). The
financial commitments of EDM under the PPA are guaranteed
by The Mozambican government under the concession
agreement approved under law 88/2016 of 5 December 2016
for 30 years. In December 2023 Scatec sold its equity share in
the Mocuba plant. The consolidation of the project company
ceased.
The Dam Nai wind farm in Vietnam was acquired by Scatec 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. In December 2023 Scatec signed an agreement to
sell its equity share in the ASYV plant. The associated assets
and liabilities are presented as held for sale as per 31
December 2023.
60
Note 4 Employee benefits
Salaries and other personnel costs
NOK million
2023
2022
Salaries
518
463
Share-based payment
29
39
Payroll tax
58
43
Pension costs
41
38
Other personnel costs
35
31
Capitalised to PP&E (project assets)
-111
-87
Total
570
528
The Group’s pension schemes are classified as defined contribution plans.
Salaries and personnel expenses for the management
NOK million
2023
2022
Salary and bonus
41
45
Pension
2
2
Total
43
47
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
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.
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 December 31,
2023, there are options not fully vested from the grants
awarded in 2021 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.
The fair value of the options is expensed over the vesting
period. In 2023 NOK 29 million (39) have been expensed.
Date granted
Amount
Strike price
Lapse date
04/01/2021
138,567
314.91
01/01/2025
24/02/2021
7,617
314.91
01/01/2025
06/05/2021
116,176
244.28
01/01/2025
04/01/2022
635,730
150.79
01/01/2026
28/03/2022
10,000
134.53
01/01/2026
27/04/2022
14,353
124.34
01/01/2026
16/05/2022
16,711
96.16
01/01/2026
03/01/2023
1,201,148
80.25
01/01/2027
02/03/2023
67,516
80.25
01/01/2027
Sum
2,207,818
For the options granted in 2023 the assumptions used in
calculating the fair value of the options are as follows: 2.99
years (2.98 years) for expected lifetime, 52.45% (49.02%) for
the expected volatility and 0 (0) for expected dividend. The
calculations are based on average values.
During 2023 the employees exercised no options, compared
to 51 thousand at the weighted average strike and share price
of NOK 89.26 and NOK 130.30 in 2022.
See table below for total number of outstanding options under
the long-term incentive programme and number of
outstanding vested options.
Scatec ASA - Annual Report 2023
61
Summary of movements in options
Opening balance
Granted
Cancelled
Terminated
Closing balance
Closing balance
vested options
Numbers of instruments
1,767,265
1,573,057
-120,578
-801,560
2,411,222
603,842
Weighted average strike price
158.19
80.25
67.45
141.09
123.08
172.99
Number of employees in the financial year in the consolidated entities
2023
2022
South Africa
281
282
Norway
144
146
Egypt
98
74
Ukraine
46
57
Malaysia
29
35
Netherlands
31
28
Honduras
20
20
India
26
11
Vietnam
4
9
France
5
9
Mozambique
8
11
Pakistan
28
24
Other
31
26
Total
751
732
62
Note 5 Other operating expenses
NOK million
2023
2022
Facilities
210
210
Professional fees
166
175
IT and office costs
78
74
Travel costs
32
32
Social development contributions
21
18
O&M external fees
25
23
Other costs
52
38
Expected credit loss
-
98
Total other operating expenses
584
668
The impairment of expected credit loss in 2022 is related to
receivables in Ukraine.
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 2023 recognised
government grants of NOK 12 million (27) in cost reductions
and NOK 10 million (29) grants as deductions of the
development and construction asset’s carrying amount.
Remuneration to the auditors (PwC and other independent auditors)
NOK million
2023
2022
Audit services
15
9
Other attestation services
2
1
Tax services
1
1
Other services
-
1
Total remuneration
18
11
VAT is not included in the numbers above.
Note 6 Financial income and expenses
NOK million
2023
2022
Interest income
162
92
Change in fair value of forward exchange contracts
246
-
Other financial income
8
23
Interest and other financial income
415
115
Interest expenses
1,727
1,424
Change in fair value of forward exchange contracts
29
89
Other financial expenses
221
154
Interest and other financial expenses
1,977
1,666
Net foreign exchange gain/(loss)
-56
-268
Net fiancial expenses
1,617
1,818
See Note 20 Financial risk management for interest rate sensitivity. See Note 24 Non-recourse financing for details on project financing
and Note 23 for details on corporate financing.
Scatec ASA - Annual Report 2023
63
Note 7 Tax
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.
Management uses judgment in assessing the substance of
each tax credit scheme. The Group accounts for investment tax
credits in current tax in the year when the conditions required
to receive the credits are met and they are claimed on the tax
return. Investment tax credits that are unused recognised as
deferred tax assets to the extent that it is probable that future
taxable profit will be available against which unused tax credits
can be utilised.
The Group has not identified any significant exposure to Pillar
Two income taxes that require disclosure in the consolidated
financial statements.
Effective tax rate
NOK million
2023
2022
Tax payable
-230
-197
Change in deferred tax
384
108
Withholding tax
-42
-45
Adjustments of tax concerning previous years
2
1
Income tax expense
114
-132
Reconciliation of Norwegian nominal tax rate to effective tax rate
Profit before income tax
1,008
-1,095
Nominal tax rate (22%)
-222
241
Tax effect of:
Permanent differences on divestments
270
-
Permanent differences on tax incentive in South Africa
457
-
Other permanent differences
66
-28
Tax rate different from Norwegian rate
-29
-39
Current tax on dividend received and withholding tax
-42
-45
Valuation allowance loss carried forward
-322
-248
Share of net income from associated companies
10
165
Non-recognised tax effects from impairment in Ukraine
-
-175
Use and capitalisation of previously unrecognised losses carried forward
-1
14
Other items
10
-27
Currency translation
-84
11
Calculated tax expense
114
-132
Effective tax rate
-11%
NA
The Group recognised an income tax benefit of NOK 114
million (-132) in 2023. The tax benefit is largely attributable to
the Kenhardt plants (NOK 457 million) which qualified for the
Enhanced renewable energy tax incentive after reaching
Commercial Operating dates in the fourth quarter. This tax
incentive granted a 25% additional tax deduction of the plants
cost when the assets were put into use in 2023. The incentive
will be settled as reduced tax payments in the coming years.
64
The net gain from the divestment of 32% of the shares in
Release (NOK 485 million) and the gain on the sale of
Upington solar plants in South Africa (NOK 744 million) are
permanent differences and do not give rise to any tax
expense. The items are presented as permanent differences on
divestments in the table above.
The remaining 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 and
effects from unrecognised tax losses. Further, the profit/loss
from JVs and associates are reported net after tax which also
impacts the effective tax rate.
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.
Significant components of deferred tax assets
NOK million
2023
2022
Tax losses carried forward
4,058
1,997
Valuation allowance of deferred tax assets
-623
-458
Financial instruments
58
33
Property, plant and equipment and intangible
assets
120
60
Construction projects
92
124
Lease liabilities
56
61
Other items
5
55
Offsetting of tax balances
1)
-2,540
-1,012
Total deferred tax assets
1,226
860
Significant components of deferred tax liabilities
NOK million
2023
2022
Property, plant and equipment, intangible assets,
including right-of-use assets
3,252
1,658
Financial instruments
74
88
Other items
63
6
Offsetting of tax balances
1)
-2,540
-1,012
Total deferred tax liabilities
849
743
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
2023
2022
Country
Loss carried
forward
Deferred
tax asset
Net deferred tax on
other differences
Loss carried
forward
Deferred
tax asset
Net deferred tax on
other differences
South Africa
10,322
2,788
-2,187
2,690
753
-680
Norway
2,910
75
-25
2,890
251
-25
Ukraine
2,156
389
-421
2,048
369
-311
Egypt
1,463
158
-499
1,371
143
-452
Jordan
379
17
-55
453
23
-57
Netherlands
303
8
-2
214
-
1
Malaysia
163
-
25
168
-
37
Other
11
-
105
11
-
64
Total
17,708
3,435
-3,058
9,845
1,540
-1,423
The Group has NOK 17,708 million (9,845) of tax losses carried
forward. The balances are offset against taxable temporary
differences within the same fiscal authority, mainly related to
property, plant and equipment.
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
Scatec ASA - Annual Report 2023
65
losses carried forward for the Group in 2023 mainly derives
from losses in Kenhardt plants in South Africa due to
accelerated depreciation as the plants were set in operation as
well as additional tax deduction as described above. 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 2023 the Group has recorded a valuation
allowance of NOK -623 million (-458) 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 400 million), Egypt (NOK 171 million), Malaysia
(NOK 39 million) and in other countries
.
The tax losses in Egypt and Jordan can be carried forward for
5 years while all other tax losses in the Group can be carried
forward indefinitely. All other tax losses in the Group can be
carried forward indefinitely.
Movement in net deferred tax asset
NOK million
2023
2022
Net deferred tax asset at 1 January
117
159
Recognised in the consolidated statement of profit or loss
384
108
Deferred tax other comprehensive income
69
-150
Deferred tax transferred to assets classified as held for sale
-193
-
Net deferred tax asset at 31 December
377
117
Note 8 Earnings per share
NOK million
2023
2022
Profit/(loss) attributable to the equity holders of the company and for the purpose of diluted shares
628
-1334
Weighted average number of shares outstanding for the purpose of calculating basic earnings per share
158.9
158.9
Earnings per share for income attributable to the equity holders of the company - basic (NOK)
3.95
-8.40
Effect of potential dilutive shares:
Weighted average number of shares outstanding for the purpose of calculating diluted earnings per share
158.9
158.9
Earnings per share for income attributable to the equity holders of the company - diluted (NOK)
3.95
-8.40
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.
Note 9 Sale of project assets and disposal group held for sale
Sale of project assets
Upington solar power plants 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 plants.
The closing of the transaction took place on 31 May 2023.
Total consideration, net after sales cost amounted to NOK 546
million. The transaction generated a net accounting gain of
NOK 744 million on a consolidated basis presented in net
gain/(loss) from sale of project assets.
With effect from the closing date, the consolidation of the
project companies ceased, decreasing the total assets with
NOK 2,165 million, decreasing total liabilities with NOK 2,277
million, and increasing equity with NOK 198 million (Scatec’s
share).
An accumulated foreign currency translation reserve
(gain) of NOK 5 million was recycled from other
comprehensive income to profit or loss as part of the
deconsolidation. The reserve was recorded net with other
foreign currency translation differences in other
comprehensive income with the opposite entry presented as a
foreign exchange income in the statement of profit or loss.
66
Guañizuil IIA solar power plant in Argentina
On 19 October 2023, Scatec ASA and Equinor ASA sold their
shares in the 117 MW Guañizuil IIA solar power plant in
Argentina, as well as their shares in the local operating services
company to Central Puerto. The solar power plant was
impaired in amount of NOK 350 million, and the sales
transaction did not generate any material accounting impact.
Mocuba solar power plant in Mozambique
On 18 July 2023, Scatec signed an agreement with Globeleq to
sell its 52.5% equity share in the 40 MW Mocuba solar power
plant in Mozambique for a gross consideration of NOK 86
million, in line with the Group’s strategy. The closing of the
transaction took place on 29 December 2023. The transaction
has generated a net accounting gain of NOK 47 million on a
consolidated basis presented in net gain/(loss) from sale of
project assets. The consolidation of the project company
ceased, decreasing the total assets with NOK 785 million,
decreasing total liabilities with NOK 588 million, and
decreasing equity with NOK 41 million (Scatec’s share). An
accumulated foreign currency translation reserve (gain) of
NOK 21 million was recycled from other comprehensive
income to profit or loss as part of the deconsolidation. The
reserve was recorded net with other foreign currency
translation differences in other comprehensive income with the
opposite entry presented as a foreign exchange income in the
statement of profit or loss.
Release
On 27 October 2023, Release closed NOK 1.1 billion
transaction with Climate Fund Managers (‘CFM”). CFM
contributed approx. NOK 560 million in equity for a 32%
shareholding in Release. Scatec retained the majority
shareholding of 68%. CFM will also provide shareholder loans
of approx. NOK 480 million, part of which will be on
concessional terms. As a result of the transaction and in line
with the shareholder agreement, Scatec lost control over
Release. All assets and liabilities were deconsolidated and
Scatec recognised an investment in joint venture at fair value
at the acquisition date. Scatec recognised NOK 307 million of
the notional goodwill which is allocated to the investment in
Release. Notional goodwill is recorded in functional currency
and as a result, changes in currency exchange rates affect the
value of notional goodwill in NOK. Notional goodwill is not
deductible for tax purposes.
The divestment of the 32% shareholding generated an
accounting gain of NOK 485 million in the consolidated
financial statements presented in net gain/(loss) from sale of
project assets. An accumulated foreign currency translation
reserve loss of NOK 10 million
was recycled from other
comprehensive income to profit or loss as part of the gain on
sale.
Refer to Note 14 for details about profit and loss and financial
position at stand alone basis for the acquired joint venture,
including the bridge from Scatec’s share of equity at stand
alone basis to the carrying value of net investments in joint
ventures at Group level.
Scatec ASA - Annual Report 2023
67
Disposal group held for sale
On 19 December 2023, Scatec signed an agreement with Fortis
Green Fund I Rwanda Holdings Ltd and Axian Energy Green
Ltd to sell its 54% equity share in the 8.5 MW solar power
plant in Rwanda for a gross consideration of NOK 14.2 million,
in line with the Group’s strategy. The associated assets and
liabilities of the subsidiary are presented as held for sale as per
31 December 2023. The transaction is subject to the customary
consents and is expected to be completed in 2024. Scatec is
also exiting from the operations & maintenance and asset
management agreements as part of the sale.
NOK million
Carrying value
31 December 2023
Assets classified as held for sale
Property, plant and equipment
118
Trade and other receivables
7
Other current assets
1
Cash and cash equivalents
12
Total assets of disposal group held for sale
138
Liabilities directly associated with assets classified as held for sale
Non-current non-recourse project financing
104
Current portion of non-recourse project financing
11
Other current and non-current liabilities
14
Total liabilities of disposal group held for sale
129
68
Note 10 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 costs are recognised
in the profit or loss in the period in which they incur.
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 are 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 2050.
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 12 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 a relevant factor for
determine useful life. The power plants currently in operation
have 9 to 25 years off-take agreements.
The technical useful life
of power plants is subject to several factors such as climatic
conditions and maintenance programme; however, it is expected
to be 30 years. Technical useful life of storage equipment, such as
the BESS (batter energy storage system) on the Kenhardt plant, is
highly dependent on usage and number of charging cycles, but is
expected to be 25 years.
The assessment is made on a plant-by-plant basis. Most of the
Group’s power plants are depreciated over the length of the PPA
or up to 30 years based on expected usage.
Scatec’s operational assets are insured through 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. Thus, potential
physical damages of plants will be rebuilt and are not expected to
impact useful life of the plants. Other climate related risks have
been considered and are currently not assessed to impact useful
life of the plants.
Capitalisation of development costs
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. 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 332 million (232) at 31
December 2023.
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 development of manhour
and equipment costs, 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
13 Impairment testing
for details.
During 2023, the Group impaired NOK 48 million (132) related to
discontinued development projects. In 2022 the Group impaired
NOK 742 million related to solar power plants in Ukraine.
Scatec ASA - Annual Report 2023
69
Property, plant and equipment
NOK million
Power plants
Power plants
under
development
and construction
Other fixed assets
Total
Accumulated cost at 1 January 2023
19,828
2,250
414
22,492
Additions
62
8,674
51
8,786
Transfers
9,564
-9,564
-
-
Disposals
-3,377
-309
-12
-3,696
Transfer of assets classified as held for sale
-214
-
-
-214
Effect of movements in foreign exchange rates
33
183
8
224
Accumulated cost at 31 December 2023
25,896
1,233
461
27,590
Accumulated depreciation and impairment losses at 1 January 2023
4,743
251
186
5,179
Depreciation for the year
804
-
48
853
Impairment losses
17
48
-
64
Accumulated depreciation transfer of assets classified as held for sale
-100
-
-
-100
Accumulated depreciation and impairment losses disposed assets
-511
-8
-12
-531
Effect of movements in foreign exchange rates
88
-2
1
87
Accumulated depreciation and impairment losses at 31 December 2023
5,040
290
224
5,554
Carrying amount at 31 December 2023
20,854
943
238
22,035
Estimated useful life (years)
20-30
N/A
3-5
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)
20-30
N/A
3-5
Note 11 Goodwill and other intangible assets
Overview
The Group’s goodwill is mainly associated with the acquisitions
of SN Power in 2021. The Group had no other intangible assets
with an indefinite useful life than goodwill as of 31 December
2023 and 2022.
The Group’s Other intangible assets consist of renewable
operating license, right to transmit electricity and software. The
estimated useful life of intangible assets with a finite lifetime
are reviewed on an annual basis, and are amortised over 3-25
years.
No impairment charges were recognised in 2023 related to
intangible assets. 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.
Note 13 Impairment testing.
Estimation uncertainty
There is considerable estimate uncertainty associated to the
value of intangible assets. Please refer to Note 13 Impairment
testing for assessment of recoverable amount.
70
Carrying value of goodwill and other intangible assets
NOK million
Goodwill
Other
intangible assets
Total
Accumulated cost at 1 January 2023
357
525
882
Additions
-
35
35
Cost of disposed assets
-
-99
-99
Effect of movements in foreign exchange
10
28
38
Accumulated cost at 31 December 2023
367
489
857
Accumulated depreciation and impairment losses at 1 January 2023
-
124
124
Depreciation for the year
-
24
24
Accumulated depreciation and impairment losses disposed assets
-
-19
-19
Effect of movements in foreign exchange
-
10
10
Accumulated depreciation and impairment losses at 31 December 2023
-
139
139
Carrying amount at 31 December 2023
367
349
717
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
882
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
Estimated useful life
N/A
3-25
Note 12 Lease
Accounting principle
The Group primarily leases office and land where the power
production plants are located, accounted for in accordance
with IFRS 16.
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
include fixed lease payments and variable lease payments that
depend on an index or a rate. The Group recognises variable
lease payments dependent on future events in profit or loss,
this includes land lease expense where the lease payment is
based on power production.
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 at the end of the PPA period
for land leases it is uncertain whether the option will be
exercised. The Group has evaluated all these options, but it’s
not deemed 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.
Scatec ASA - Annual Report 2023
71
Reconciliation of movement in right-of-use asset
NOK million
Land
Office & cars
Total
Right-of-use asset at 1 January 2023
202
98
301
Additions
19
42
62
Depreciation for the year
-13
-25
-38
Effect of movement in foreign exchange and other changes
-7
1
-6
Right-of-use asset at 31 December 2023
201
116
317
Reconciliation of movement in lease liabilities
NOK million
2023
2022
Lease liability at 1 January 2023
313
246
Lease agreements entered into during the year
66
65
Lease payments made during the year
-48
-46
Interest expense on lease liabilities
27
18
Effect of movement in foreign exchange and other changes
-18
30
Lease liability at 31 Desember 2023
340
313
Leases in the income statement
NOK million
2023
2022
Operating expenses
Short term- low value and variable lease payment expenses
-35
-41
Depreciation expenses
Depreciation of right-of-use assets (land lease)
-13
-10
Depreciation of right-of-use assets (office lease and other)
-25
-25
Total depreciation
-38
-36
Financial expenses
Interest expense on lease liability
-27
-18
Total lease expense in the income statement
-100
-94
Leases in the statement of financial position
NOK million
2023
2022
Assets
Right-of-use assets - land lease
201
202
Right-of-use assets - office lease and other
116
98
Total right-of-use assets
317
301
Liabilities
Non-current liabilities
Lease liabilities (see Note 18 Other non-current and current liabilities)
315
270
Current liabilities
Lease liabilities (see Note 18 Other non-current and current liabilities)
25
43
Lease liabilities included in the balance sheet
340
313
The land lease portion of the Right-of-use asset is presented under “power plants” and “Power plants under development and
construction“ in Note 10, while the office lease portion of the Right-of-use asset is presented under the line “Other fixed assets”.
72
Leases in the statement of cash flows
NOK million
2023
2022
Cash flow from operating activities
Short-term and variable lease payments
-35
-41
Cash flow from financing activities
Payments of principal portion on lease liabilities
-21
-26
Interest paid on lease liabilities
-27
-20
Maturity analysis – Undiscounted contractual cash flows
NOK million
2023
2022
One year
47
38
One to two years
62
42
Two to three years
40
37
Three to four years
37
36
Four to five years
35
34
More than five years
278
315
Total undiscounted lease liabilities
499
501
Lease liabilities included in the balance sheet
340
313
Note 13 Impairment testing
Estimation uncertainty
An impairment loss is recognised when an asset or cash
generating unit (CGU)’s carrying value exceeds the recoverable
amount.
Factors which trigger impairment testing include, but are not
limited to, political changes, macroeconomic fluctuations,
changes to the Group’s strategy, project delays,
underperforming, changes to tariffs and similar. When an asset
is constructed, certain assumptions are made for climate
related factors such as irradiation and temperature. Deviations
of such assumptions may lead to underperforming of assets,
which if significant, may be an indicator of impairment.
Furthermore, climate related changes are expected to have a
pervasive effect on the energy industry which may impact
regulations, remaining useful life and financial viability of our
assets in the markets we operate in, and are considered in our
impairment testing.
Recoverable amount calculations of value in use are based on
a discounted cash flow model. The future cash flows include a
number of estimates and assumptions, including future market
conditions and energy prices, discount rates, estimated useful
life and others. Climate risks such as more extreme weather
and natural disasters, and changes to environmental
regulations, may impact future cash flows through lower
production or/and physical damages of the assets. Such risks
are accounted for in the discount rates. 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 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 amounts for
these units have been determined estimating the value in use
of the assets and comparing against the carrying value of the
CGUs.
In 2022 impairment indicators were identified for Scatec’s five
solar plants in Ukraine triggered by Russia’s invasion. As a
result of impairment assessment performed, an impairment
loss of NOK 816 million was recognised. Per 31 December
2023, approximately 95% of the power plants owned and
operated by Scatec are intact and available in Ukraine.
Revenues from power production have however only been
recognised in accordance with actual paid amounts since
March 2022. The payment level was 66% in 2023.
In the fourth quarter 2023, the impairment tests were updated
with new information. Three scenarios have been assessed and
weighted to arrive at the value in use for the solar power
plants. No significant events have triggered additional
Scatec ASA - Annual Report 2023
73
impairment compared to recognised amount in 2022. For
details please refer to the 2022 Annual Report.
Impairment test – development projects
In 2023 Scatec impaired NOK 48
million related to
discontinued development projects in
Brazil, Oman and
Madagascar.
Annual mandatory impairment test - goodwill
The goodwill of the Group mainly relates to the acquisition of
SN Power AS in 2021 (NOK 341 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,
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 before tax
.
The pre-tax discount rate applied in 2023 is 8.9%.
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 2023 or 2022 as the recoverable amounts exceed
the carrying amount.
Note 14 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 Basis for preparation,
basis for consolidation and 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.
74
Material joint ventures and associated companies
Company
Registered office
2023
2022
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%
33.33%
1)
Assu, Brazil
33.33%
33.33%
1)
Assu, Brazil
33.33%
33.33%
Mendubim Solar EPC Ltda.
1)
Assu, Brazil
33.33%
33.33%
Scatec Solar Solutions Brazil B.V.
Amsterdam, Netherlands
50.00%
50.00%
Recife, Brazil
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%
Ruzizi Holding Power Company Ltd
Kigali, Rwanda
20.40%
20.40%
Ruzizi Energy Ltd
Kigali, Rwanda
20.40%
20.40%
SN Power Invest Netherlands B.V.
Amsterdam, Netherlands
51.00%
51.00%
SN Development B.V.
Amsterdam, Netherlands
51.00%
51.00%
SN Malawi B.V.
Amsterdam, Netherlands
51.00%
51.00%
Mpatamanga Hydro Power Ltd.
Blantyre, Malawi
25.50%
25.50%
Release Solar AS
2)
Oslo, Norway
68.00%
100.00%
Release Management BV
2)
Amsterdam, Netherlands
68.00%
100.00%
Scatec Equinor Solutions Argentina S.A
Buenos Aires, Argentina
-
50.00%
Cordilleras Solar VIII S.A
Buenos Aires, Argentina
-
50.00%
1) Mendubim project structure includes 13 SPVs, EPC and an operating company.
2) Release project structure includes 11 companies
On 19 October 2023 Scatec ASA and Equinor sold their shares in the 117 MW Guañizuil IIA solar power plant in Argentina, as well as
their shares in the local operating services company. The investments have been derecognised from the group accounts of Scatec.
On 27 October 2023 Release by Scatec (“Release”) closed the NOK 1.1 billion transaction with Climate Fund Managers (“CFM”). CFM
contributed NOK 560 million in equity for a 32% stake in Release. Scatec retain the majority shareholding of 68%. All assets and
liabilities were deconsolidated and Scatec’s investment in joint venture was recognised at fair value at the acquisition date.
Carrying amount of investments in material joint venture and associated companies
Country
Carrying value 31
December 2022
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 2023
Philippines
6,535
-
152
-207
-
291
6,770
Laos
1,822
-1
63
-58
-
56
1,882
Uganda
1,292
-
171
-192
-22
40
1,288
Brazil
625
408
1
-
-
60
1,093
Release (incl. Africa and LATAM)
-
1,207
10
-
-
-
1,217
Other
401
40
-350
-
-
26
118
Total
10,674
1,654
46
-457
-22
473
12,368
3) Other includes Argentina, Malawi, Rwanda, Norway and the Netherlands.
Scatec ASA - Annual Report 2023
75
100% figures of summarised profit and loss for material joint venture and associated companies (standalone basis)
2023
NOK million
Philippines
Uganda
Laos
Brazil
Release
Other
Revenues
2,033
1,349
1,261
1,104
460
147
Operating expenses
-521
-88
-195
-138
-37
-58
Operating profit/(loss)
605
861
398
108
23
-689
Net financial items
-214
-308
-33
-120
22
171
Profit before income tax
391
553
365
-12
44
-519
Income tax
-87
-34
-52
-8
-20
76
Profit/(loss) after tax
304
520
313
-19
25
-443
Scatec’s share of profit/(loss) after tax
152
147
63
-11
17
-220
Elimination of January - October figures for Release
-
-
-
-
10
-
Elimination of internal transacitions and internal profit
-
24
-
12
-17
-129
Net profit/(loss)
152
171
63
1
10
-350
2022
NOK million
Philippines
Uganda
Laos
Brazil
Release
Other
Revenues
2,616
1,234
1,257
518
-
163
Operating expenses
-407
-93
-169
-93
-
-63
Operating profit/(loss)
1,343
799
481
116
-
-7
Net financial items
-224
45
-16
-94
-
220
Profit before income tax
1,120
845
465
22
-
214
Income tax
-174
-6
-68
-14
-
109
Profit/(loss) after tax
946
839
396
8
-
323
Scatec’s share of profit/(loss) after tax
473
237
79
4
-
175
Elimination of internal transacitions and internal profit
-2
-82
-1
16
-
-153
Net profit/(loss)
472
155
79
20
-
22
76
100% figures of summarised financial positions for material joint venture and associated companies (standalone basis)
2023
NOK million
Philippines
Uganda
Laos
Brazil
Release
Other
Non-current assets
19,241
9,277
10,198
11,200
2,222
2,754
Current assets
625
277
201
741
1,330
44
Cash and cash equivalents
915
447
696
513
533
178
Total assets
20,781
10,000
11,094
12,454
4,086
2,977
Non-current liabilities
6,543
5,155
852
6,072
210
388
Current liabilities
823
299
833
1,219
1,316
30
Total liabilities
7,365
5,453
1,685
7,292
1,525
418
Total Equity
13,416
4,547
9,409
5,163
2,561
2,559
Scatec share of equity
6,708
1,286
1,882
1,798
1,741
1,313
Loan to joint venture as investment
73
-
-
258
66
61
Other / foreign currency translation
-10
2
-
14
-31
-
Elimination of equity investments
-
-
-
-976
-560
-1,255
Net investment in joint venture
6,770
1,288
1,882
1,093
1,217
118
2022
NOK million
Philippines
Uganda
Laos
Brazil
Release
Other
Non-current assets
18,780
9,430
10,504
2,947
-
3,892
Current assets
837
269
188
438
-
78
Cash and cash equivalents
901
427
744
218
-
101
Total assets
20,517
10,126
11,435
3,602
-
4,072
Non-current liabilities
6,673
5,197
1,538
1,251
-
534
Current liabilities
893
362
792
465
-
744
Total liabilities
7,566
5,559
2,330
1,716
-
1,278
Total Equity
12,951
4,567
9,105
1,886
-
2,794
Scatec share of equity
6,475
1,292
1,821
703
-
1,430
Loan to joint venture as investment
69
-
1
157
-
253
Other / foreign currency translation
-10
-
-
5
-
-19
Elimination of equity investments
-
-
-
-240
-
-1,263
Net investment in joint venture
6,535
1,292
1,822
625
-
401
Note 15 Cash and cash equivalents
sca
NOK million
31 December 2023
31 December 2022
Cash in power plant companies in operation
1,747
2,057
Cash in power plant companies under development / construction
175
109
Other restricted cash
203
223
Free cash
977
1,743
Total cash and cash equivalents
3,101
4,132
Cash in power plant companies in operation includes 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 distributions as determined by
shareholder and non-recourse financing agreements. Cash in
assets held for sale of NOK 12 million is not included.
Cash in power plant companies under development and
construction comprises shareholder financing and draw down
on non-recourse financing debt 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
Scatec ASA - Annual Report 2023
77
financing of power plant companies not yet distributed to the
power plant companies.
As of 31 December 2023, NOK 117 million of the total cash is
related to companies in Ukraine (of this NOK 88 million is cash
in power plant companies). In Egypt, NOK 60 million is held in
Egyptian pounds (of this NOK 40 million is cash in power plant
companies). Refer to note 32 Subsequent events for further
information.
Distribution in 2022 included refinancing proceeds from South
Africa and Vietnam compared to no proceeds from
refinancing in 2023. Capitalised expenditures and Scatec’s
share of equity investments in projects under development
includes spending related to Botswana and the Grootfontein
projects in South Africa, where constructions are planned to
start in the first quarter of 2024. Scatec’s share of equity
investment in project under construction includes investment
in Kenhardt proiects in South Africa, which were in operation
at the end of 2023.
Movement in free cash at Group level (in recourse group as defined in bond & loan facilities)
NOK million
31 December 2023
31 December 2022
Distributions received by Scatec ASA from the power plant companies
914
1,231
Cash flow to equity D&C
1)
555
-149
Cash flow to equity Services
1)
96
58
Cash flow to equity Corporate
1)
-716
-347
Working capital/other
2)
-427
16
Cash flow from operations
422
809
Capitalised expenditures and Scatec’s share of equity investments in projects under development
-503
-454
Scatec's share of equity investments in projects under construction
-1,723
-543
Proceeds from disposals of project assets
632
-
Cash flow from investments
-1,594
-996
Dividend distribution to Scatec ASA shareholders
-308
-404
Drawdown of credit facilities in Scatec ASA
713
-
Cash flow from financing
405
-404
Change in cash and cash equivalents
-766
-592
Free cash at beginning of period
1,743
2,335
Free cash at end of period
977
1,743
Available undrawn credit facilities
1,171
1,827
Total free cash and undrawn credit facilities at the end of period
2,148
3,570
1)
Proportionate share of cash flow to equity is defined in Alternative Performance Measures Appendix.
2)
Working capital/other in 2023 is mainly explained by payments for construction activities related to the Kenhardt project in South Africa and repayment of construction loan for
Ukraine to PowerChina
78
Note 16 Trade receivables
Trade receivables are recognised for amounts owed 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.
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, lifetime 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 20 - Financial risk management.
Trade receivables
NOK million
2023
2022
Trade receivables
328
384
Accrued income and other receivables
247
210
Impairment for expected credit loss
-98
-98
Total trade and other receivables
478
497
Ageing of trade receivables at year-end was as follows:
NOK million
Total
Not due
Overdue
2023
328
244
86
2022
384
278
105
Expected credit loss is assessed on an individual instrument basis. The overdue receivables for the Group are mainly related to sale of
electricity from power plants in Ukraine and Honduras, see further details below. For other jurisdictions in the Group, there are no
evidence of change in credit risk for the performing trade receivables and no expected credit provision has been made.
Ukraine
On 28 March 2022 the Ministry of Energy of Ukraine issued an Order to reduce the amounts paid to the renewable power producers
and the unpaid amounts are postponed to a later period. Due to the uncertainty related to future settlement, Scatec has from February
2022 only recognised revenues in accordance with actual paid amounts. In 2022 Scatec made an expected credit loss impairment of
NOK 98 million reflecting the high uncertainty related to future settlement of trade and other receivables related to the period prior to
the wa
r.
There have been no significant changes to the situation in 2023 nor increase in outstanding trade receivables, hence no
changes to the provision were made.
Honduras
Scatec has experienced delays in payments from the state-owned off-takers of power in Honduras. Overdue payments have
accumulated in Honduras to a varying degree since 2020.
In 2023, ENEE has continued to settle outstanding receivables and paid a
total of approximately NOK 180 million, leaving the balance at NOK 87 million as of year-end.
In 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 at the end of 2022, and throughout 2023. Remaining outstanding amounts are expected to be
settled and payments are secured by sovereign guarantees, hence no expected credit loss impairment has 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
2023
23
11
35
16
86
2022
14
10
11
71
105
Scatec ASA - Annual Report 2023
79
Note 17 Other non-current and current assets
Other non-current assets
NOK million
2023
2022
Other non-current investments
154
125
Other non-current receivables
112
116
Total other non-current assets
265
241
Other current assets
NOK million
2023
2022
Prepayments related to assets under development/construction
635
1336
Receivables from public authorities/prepaid taxes, VAT etc
252
235
Other receivables and prepaid expenses
263
292
Total other current assets
1,150
1,862
Prepayments related to assets under development and construction
The prepayments relate to upfront payment of project costs on the construction projects in South Africa and Pakistan.
Note 18 Other non-current and current liabilities
Other non-current liabilities comprise the following:
NOK million
2023
2022
Shareholder loan from co-investors (ref Note 25)
428
708
Non-current lease liability (ref Note 12)
315
270
Asset retirement obligations (ref Note 10)
490
475
Other long-term liabilites and accruals
110
165
Total other non-current liabilities
1,343
1,618
Other current liabilities comprise the following:
NOK million
2023
2022
Accrued expenses related to assets under development/construction
1,400
237
Public dues other than income taxes
89
76
Accrued interest expenses
-
112
Accrued payroll
74
75
Current lease liability (ref Note 12)
25
43
Deferred income
14
106
Other current liabilities and accruals
459
457
Total other current liabilities
2,060
1,106
Accrued expenses related to assets under development/construction
Accrued expenses relate to accrual of project costs on the construction projects in South Africa and Pakistan.
Asset retirement obligations are provided for in 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 capitalised 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.
80
Movement in asset retirement obligations
NOK million
2023
2022
Asset retirement obligation at 1 January
475
270
Additional provision during the year
35
189
Provisions reversed during the year
-52
-
Unwinding of discount
25
18
Effect of movement in foreign exchange and other changes
6
-1
Asset retirement obligation at 31 December
490
475
Note 19 Legal disputes and contingencies
Estimation uncertainty
The Group is operating in various jurisdictions and is subject to
legal disputes and regulatory reviews. Management applies
assumptions and judgement considering all information
available when assessing if unfavourable outcomes are
probable and when estimating amounts required to settle any
obligation. Legal claims are assessed on an individual basis
and provisions are recognised if the specific claims give rise to
present, probable obligations and the costs can be reliably
measured. The most significant claims are summarised below.
Significant disputes and uncertain tax positions
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 183 million equivalent (at 31 December 2023) in March
2022. The matter is disputed, and the amount is not included
in net income from JV and associated companies for the year.
The joint venture in Uganda is subject to a tax investigation by
a local tax authority and received tax claims in total amount of
NOK 308 million equivalent (at 31 December 2023) on Scatec’s
proportionate share during the third quarter 2023. The matter
is disputed, and the amount is not included in net income
from JVs and associated companies for the year. If the claims
materialise, the joint venture will claim this through the tariff
according to the Power Purchase Agreement. Should this be
challenged the JV has certain indemnities under the Power
Purchase Agreement with the off-taker. Further, Scatec has
certain tax indemnities under the SN Power share purchase
agreement with Norfund.
Note 20 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.
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 sale 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 in the spot market and on bilateral contracts under a
renewable operating license, as well as ancillary services. In
June 2023, Scatec started selling power from the Progressovka
power plant in the spot market. The decision to sell into the
Scatec ASA - Annual Report 2023
81
spot market was made based on changes in the local law
which enabled Scatec to pause the PPA (while still being able
to re-enter the PPA).
Some of the off-take agreements entered into do not contain
inflation-based price increase provisions or provisions that only
partially allow 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.
A decline in the market price of electricity could materially
adversely affect the financial attractiveness of new projects.
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 including broader regulatory changes,
development in cost and efficiency of renewable energy
technologies and changes in power markets are expected to
affect power prices. Changes to energy trading,
allocation of
transmission cost and grid capacity
, could also have an impact
on electricity prices.
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.
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 operating 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 are 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 distributions 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 distributions from the
companies operating the power plants.
The sensitivity analysis shows the profit and loss effect of
reevaluation of monetary items due to changes in currencies
the Group is exposed to. See consolidated statement of other
comprehensive income for foreign currency translation
affecting equity. 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 December 31, 2023. The tables
show profit and loss effect of 5 % increase in the currency rate
against NOK.
NOK million
Profit (loss)
before taxes
At 31 December 2023
EUR - Net gain/(loss) (5%)
-63
USD - Net gain/(loss) (5%)
-3
ZAR - Net gain/(loss) (5%)
-25
MYR - Net gain/(loss) (5%)
-6
EGP - Net gain/(loss) (5%)
-7
UAH - Net gain/(loss) (5%)
-24
PKR - Net gain/(loss) (5%)
-20
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
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
approximately 63 % for the non-recourse project level debt.
For corporate debt, the hedge ratio has been slightly reduced
from approximately 20% to 17% in 2023 due to amortisation
on the hedged part of the debt.
82
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 or fixed rate loans. For more information on
the Group’s financial liabilities, refer to Note 23 Corporate
Financing and Note 24 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
2023
At 31
December
2022
At 31 December 2023
1%
1%
Net gain/(loss)
-61
-65
The impact on the profit and loss with a decrease or increase
in interest rate of 1% would result in a gain or loss of NOK 61
million.
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. As per
December 31, 2023, USD 70 million was drawn on the RCF.
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 seeks 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
15 Cash and cash equivalents.
Maturity of principal payment and interest on financial liabilities held by the Group
NOK million
Within 1 year
1-2 years
2-5 years
More than 5 years
Corporate financing
1,564
4,600
5,612
-
Non-recourse financing
2,596
2,455
7,091
20,717
Shareholder loan from non-controlling interests
30
12
168
370
Trade and other interest-bearing liabilities
294
247
-
-
Lease liabilities
47
62
112
278
Total
4,531
7,376
12,983
21,365
For information about the Group’s financial liabilities including
maturity, refer to Note 23 Corporate Financing, Note 24 Non-
recourse financing, Note 26 Guarantees and Note 12 Leases
Credit risk
Credit risk is the risk that Scatec’s customers or counterparties
will cause financial loss by failing to meet 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.
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. The majority of these
projects is 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 energy produced in the Philippines is sold to the whole
sale market. Energy produced by the Progressovka plant in
Ukraine is delivering to the spot market, but retaining the
option to re-enter the PPA. For any reason, if any of the
counterparties to these contracts are unable or unwilling to
fulfil their contractual obligations, refuse to accept delivery of
Scatec ASA - Annual Report 2023
83
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.
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-.
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 5,020 million at 31 December 2023.
Refer to Note 16 Trade receivables for information on the
expected credit loss provision related to trade receivables.
Note 21 Financial instruments
Accounting principle
Financial assets
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 16 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. 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.
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
.
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 derivatives are calculated as the present value of the
difference between the fixed forward rate and the spot rate at
the balance sheet date (level 2). During the reporting period
ending 31 December 2023, there have been no transfers
between the fair value levels. Refer to Note 22 Derivative
financial instruments for details.
84
Financial instrument by measurement category
NOK million
Measurement category
2023
2022
Assets
Derivatives
Interest rate swap
Fair value – hedging instruments through OCI
315
396
Debt instruments
Cash and cash equivalents
Amortised cost
3,101
4,132
Trade receivables
Amortised cost
230
286
Other debt instruments and receivables
Amortised cost
560
451
Total financial assets
4,206
5,264
Total current
3,728
4,774
Total non-current
478
490
Liabilities
Interest bearing loans and borrowings
Corporate financing
Amortised cost
9,079
7,987
Non-recourse financing loans
Amortised cost
16,957
15,260
Derivatives
Interest rate swap
Fair value – hedging instruments through OCI
179
28
Foreign exchange forward contracts
Fair value – hedging instruments through PL
-
92
Foreign exchange forward contracts
Fair value – hedging instruments through OCI
41
-
Other financial liabilities
Shareholder loan from non-controlling interests
Amortised cost
428
708
Trade and other financial liabilities
Amortised cost
541
1,285
Total financial liabilities
27,224
25,360
Total current
3,645
3,009
Total non-current
23,579
22,351
There are no significant differences between total carrying value and fair value for financial instruments measured at amortised cost.
NOK million
2023
2022
2023
2022
Corporate financing
Non-recourse financing
Liability at 1 January 2023
7,987
7,264
15,260
11,855
Proceeds
713
-
6,038
3,468
Repayment
(110)
-
(1,818)
(1,175)
Change in accrued interest
165
(180)
88
62
Disposal and reclassified to held for sale
-
-
(2,692)
-
Reclassed to equity
-
-
-
-
Foreign exchange movements
324
903
80
1,049
Liability at 31 Desember 2023
9,079
7,987
16,957
15,260
Refer Note 12 Lease for movement in lease liabilities.
Scatec ASA - Annual Report 2023
85
Note 22 Derivative financial instruments
Derivatives
The Group uses derivative financial instruments to hedge
certain risk exposures. Derivative financial instruments entered
into include:
●
receive fixed, pay variable interest rate swaps to
hedge the interest rate risks related to non-recourse
financing of renewable power production plants and
for parts of the corporate debt
●
cross-currency interest rate swap to hedge
corporate debt denominated in NOK where the
principal amount in NOK is swapped to USD and
reference rate is swapped from NIBOR to SOFR to
hedge the risk of fluctuations in the USD/NOK
exchange rate and the underlying interest rates
●
foreign exchange derivative contracts to hedge the
risk related to financing and CAPEX denominated in
local currencies for projects under construction
Hedge accounting
Interest rate swaps and cross-currency interest rate swap
Derivative financial instruments are initially recognised at fair
value on the date of which a derivative contract is entered into
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 underlying hedged item
affects profit or loss.
The Group only applies hedge accounting for cash flow
hedges that meet the criteria in IFRS 9. This include the interest
rate swaps and the cross-currency interest rate swaps. 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.
Foreign exchange derivatives
Foreign exchange derivatives consist of USD/ZAR currency
forward contracts related to the power plants under
construction in 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.
Hedge accounting is applied for hedges entered into during
the year, and the effective portion of cash flow hedges is then
recognised in OCI and later reclassified to profit or loss when
the underlying hedged item affects profit or loss.
Derivative financial assets and liabilities
The tables show the market value of the derivatives for the year ending 2023 and 2022, 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.
NOK million
2023
2022
Interest rate swap contracts financial assets measured at level 2 in the fair value hierarchy
Current portion
16
21
Non-current portion
299
375
Total derivative financial assets
315
396
NOK million
2023
2022
Interest rate swap contracts financial liabilities measured at level 2 in the fair value hierarchy
Current portion
7
16
Non-current portion
172
12
Total Interest rate swap contracts derivative financial liabilities
179
28
Foreign exchange contracts financial liabilities measured at level 2 in the fair value hierarchy
Current portion
34
92
Non-current portion
7
0
Total Foreign exchange contracts financial liabilities
41
92
Total derivative financial liabilities
219
120
86
Interest rate swaps per country 2023
Country
Notional amount (NOK million)
Fixed rate(s)
Floating rate reference rate(s)
Maturity
Norway
1,374
0.40%
3-month USD LIBOR
2025
South Africa
3,308
8.40% - 9.78%
3-month JIBAR, 1-month JIBAR
2031-2041
Egypt
2,369
2.15%
USD-SOFR-COMPOUND
2041
Malaysia
191
2.95%
6-month KLIBOR
2028
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
2.95%
6-month KLIBOR
2028
The
cross-currency swap is entered into for the NOK 1 billion
senior unsecured Green Bond which is swapped to USD 97.5 million and
the interest reference rate is swapped from NIBOR to SOFR
to hedge the risk of fluctuations in the USD/NOK. The swap matures in
2027.
Reconciliation of hedging reserve - interest rate swap contracts
NOK million
2023
2022
Opening balance
291
-242
Recycling during the year to profit or loss, gross
-125
348
Recycling during the year to profit or loss, tax effect
28
-85
Unrealised gain/(loss) during the year
-125
353
Unrealised gain/(loss) during the year, tax effect OCI
37
-83
Hedge reserves in disposed enities and currency effects
-8
-
Closing balance
98
291
Of which equity holders of the parent company
34
199
Scatec ASA - Annual Report 2023
87
Note 23 Financing
Corporate financing
The table below gives an overview of the corporate financing
carried out by the Group. The loan balances include the non-
current and current portion.
The book equity of the recourse group, as defined in the facility
agreements, was NOK 10 393 million on 31 December 2023.
Scatec was in compliance with financial covenants for recourse
debt at year end.
The listed EUR Green Bond has a coupon rate of 3M EURIBOR +
2.5 % margin. The USD 150 million Green Term Loan is amortised
through semi-annual repayments of USD 7.5 million.
Refinancing of Bridge to Bond facility
In the first quarter of 2023, Scatec fully refinanced the USD 193
million Bridge-to-Bond facility related to the acquisition of SN
Power. On 2 February 2023, Scatec refinanced USD 100 million of
the USD 193 million Bridge-to-Bond facility with a new USD 100
million Green 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.
On 10 February 2023 Scatec ASA issued NOK 1 billion of new
senior unsecured green bonds to refinance the remaining USD 93
million of the Bridge-to-Bond facility. Interests will be paid on a
quarterly basis, with no repayments of principal before maturity.
The new bonds have maturity in February 2027 with a coupon
rate of 3m NIBOR + 660 bps. With the new bond, Scatec ASA has
entered into a cross-currency interest rate swap contract in which
the principal of NOK 1 billion was swapped to USD 97.5 million,
and interest payments based on NIBOR rates are swapped to
SOFR-based rates.
Refer to Note 32 Subsequent Events for information about
refinancing and issuance of new bond after year end.
Currency
Denominated
currency value
(million)
Maturity
Carrying value 31
December 2023
(NOK million)
Carrying value 31
December 2022
(NOK million)
Green Bond EUR (Ticker: SCATC03 NO0010931181)
EUR
250
Q3 2025
2,793
2,625
Green Bond NOK (Ticker: ISIN NO0012837030)
NOK
1,000
Q1 2027
989
-
Total unsecured bonds
3,782
2,625
USD 150 million Green Term Loan
USD
135
Q1 2025
1,374
1,481
USD 100 million Green Term Loan
USD
100
Q4 2027
1,008
-
Bridge to Bond
USD
193
-
-
1,906
Total secured financing
2,383
3,387
Vendor Financing (Norfund)
USD
200
Q1 2028
2,038
1,975
Total unsecured financing
2,038
1,975
Revolving credit facility
USD
180
Q3 2025
713
-
Overdraft facility
USD
5
-
-
Total secured back-stop bank facilities
713
-
Total Principal amount
8,915
7,987
Accrued interest
164
112
Total Corporate financing
1)
9,079
8,099
As of non-current
7,947
8,099
As of current
1,132
-
1) Accrued interest has been reclassified from Other current liabilities to Corporate financing in the statement of financial position in 2023.
88
Outstanding acquisition finance
As of 31 December 2023, 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. Refer to note 32 Subsequent Events for information
about refinancing of the Green Term Loan.
●
USD 200 million Vendor Financing provided by Norfund with
maturity in the first quarter of 2028.
Revolving credit facility
The existing USD 180 million Revolving Credit Facility (RCF),
provided by Nordea Bank, DNB, Swedbank and BNP Paribas, was
in the first quarter further extended by 1.5 years with maturity in
the third quarter of 2025.
The facility can be drawn in USD, NOK,
EUR or an optional currency agreed with the banks.
Any
drawdown on the RCF is required to be repaid after 12 months.
Scatec made a drawdown on the facility in the fourth quarter and
USD 70 million was outstanding at year-end 2023, increasing free
cash to NOK 977 million.
The margin on the RCF is linked to the following ESG
(Environmental, Social and Governance) 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
Overdraft facility
Scatec has not drawn on the overdraft facility with Nordea per 31
December 2023. Per 31 December 2023, Scatec was in
compliance with all financial covenants for the above facilities.
Guarantee facilities
The Guarantee Facility Agreement (GFA) has Nordea Bank as
agent and issuer, with Nordea Bank, Swedbank, DNB and BNP
Paribas as guarantee instrument lenders. The GFA 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, First Randbank in South Africa, four European
insurance companies providing sureties and MBank in Malaysia.
These facilities are mostly used to cover short term bid bonds.
Refer to 26 Guarantees and commitments for further information.
Other interest-bearing liabilities
PowerChina Guizhou Engineering Co (“PowerChina”) have
provided a construction loan to Scatec for the Progressovska
power plant in Ukraine. Scatec has provided a corporate and
bank guarantee to PowerChina in support of this obligation. In
2022, Scatec and PowerChina signed a revised payment plan for
the construction loan where part of the loan was paid in August
2022 and December 2023. The last tranche of EUR 22 million,
equivalent to NOK 247 million at year-end 2023, will be paid by
mid-2025.
Scatec has no other recourse construction financing
arrangements for other projects. Refer to Note
26
Guarantees
and commitments for further details.
Scatec ASA - Annual Report 2023
89
Note 24 Non-recourse financing
See Note 21 Financial instruments for accounting principle for
financial liabilities recognised to amortised cost.
The table below specifies non-recourse financing as of 31
December 2023 and 2022. The rate of interest is a calculated
average per portfolio. Most of the loans are fixed or swapped
to fixed rate interests. For more information on interest rate
risk, see Note 20 Financial Risk Management.
NOK million
Interest rate
Maturity date
2023
2022
Loan facilities (ZAR) - South Africa portfolio Kalkbult, Linde and Dreunberg
10.84%
2031-2032
1,711
1,910
Loan facilities (ZAR) - South Africa portfolio Kenhardt
11.88%
2041
6,969
2,582
Loan facilities (ZAR) - South Africa portfolio Grootfontein
10.42%
2045
237
-
Loan facilities (CZK) – Czech portfolio
4.90%
2029
284
315
Loan facilities (USD) – Jordan portfolio
6.55%
2032
639
685
Loan facilities (USD) – Produccion De Energia S.A (Aqua Fria)
7.21%
2026
302
387
Loan facilities (MYR) – Quantum Solar Park (Semenanjung) SDN. BHD.
6.00%
2035
1,656
1,784
Loan facilities (MYR) – Red Sol
4.42%
2028
236
264
Loan facilities (USD) - Aswan portfolio Egypt
5.21%
2041
3,074
3,138
Loan facilities (EUR) - Ukraine
7.78%
2027-2029
868
987
Loan facilities (VND) - Vietnam
9.00%
2035
345
356
Loan facilities (VND) - Pakistan
14.72%
2037
637
-
Loan facilities (USD) - Gigawatt Global Rwanda Ltd (ASYV)
1)
8.25%
2031
-
116
Loan facilities (ZAR) - South Africa portfolio Upington
-
-
-
2,267
Loan facilitites (USD) - Central Solar de Mocuba, Mozambique
-
-
-
468
Total non-recourse financial liabilites
16,957
15,260
Of which non-current non-recourse financial liabilities
15,026
13,297
Of which current non-recourse financial liabilities
1,931
1,963
1) Rwanda is presented as held for sale and the total group loan balance does not include outstanding non-recoursing finance balance in Rwanda at the end of 2023
The financing 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
.
Compared to corporate financing, non-recourse financing has
certain key advantages, including a clearly defined and limited
risk profile
. 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.
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 26 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 20,710 million (15,676)
as of 31 December
2023.
90
Repayment structure
NOK million
Loan repayment
Interest payment
Total
2024
1,080
1,516
2,596
2025
925
1,530
2,455
2026
959
1,473
2,432
2027
884
1,394
2,279
2028
1,052
1,327
2,380
2029
798
1,140
1,938
2030
818
1,040
1,858
2031
943
982
1,926
2032
780
917
1,697
2033
782
856
1,637
2034
996
781
1,777
2035
1,019
689
1,708
2036
945
596
1,540
2037
1,056
494
1,550
2038
1,016
394
1,411
2039
1,061
296
1,357
2040
849
196
1,045
2041
1,017
97
1,114
2042
31
25
56
2043
36
8
44
2044
31
4
36
2045
22
1
23
Total future loan repayment
17,102
15,758
32,859
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 restrictions on, inter alia, hedging
policies, new activities and consents, amendments to the key
agreements and insurance policies, pledges and guarantees,
financial indebtedness and giving financial support, capital
expenditures, changes of shareholder structure and auditors,
as well as several undertakings related to budgets, financial
and operational reporting.
Except for Ukraine, Scatec was in compliance with financial
covenants for the non-recourse debt on 31 December 2023.
Ukraine
The current non-recourse debt as of 31 December 2023
includes NOK 865 million in non-recourse debt in Ukraine. All
of Scatec’s power plant companies in Ukraine with non-
recourse financing are in breach with several covenants in the
loan agreements as of 2023. Scatec has continuous and
constructive dialogue with the lenders and the parties have
agreed on a non-formalised “stand still”.
Egypt
Scatec has a non-recourse Green Project Bond in Egypt with
an outstanding balance of USD 302 million per 31 December
2023. Due to the recent economic development, Egypt is
facing a shortage in foreign currencies including USD. By the
end of 2023, the subsidiaries in Egypt exchanged material
deposits in local currency to USD (USD 42 million) at the
official exchange rate and refilled the Debt Service Reserve
Accounts with the required amounts for the non-recourse
Green Project Bond. The project companies hold sufficient
USD to serve the next installment of the bond due in March
2024 of approximately USD 18 million. The uncertain macro
situation and difficulties of exchanging EGP to USD is expected
to persist and is closely monitored by the group. Refer to Note
32 Subsequent events for further information.
Scatec ASA - Annual Report 2023
91
Note 25 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.
The equity and loan financing provided by the co-investors is
repaid according to a pre-determined waterfall structure,
meaning that the financing presented below will
be settled
after external non-recourse financing, and only when distrib-
utable cash as defined by the financing agreements is
available. Normally this would occur twice a year.
For some of the project companies in the table the co-investor
funding has been provided indirectly through jointly owned
holding companies.
At 31 December 2023, 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
21
21
0
0
Simacel 160 (Pty) Ltd (Dreunberg)
South Africa
40
40
0
0
Scatec Kenhardt 1 (RF) (Pty.) Ltd.
South Africa
333
333
0
0
Scatec Kenhardt 2 (RF) (Pty.) Ltd.
South Africa
331
331
0
0
Scatec Kenhardt 3 (RF) (Pty.) Ltd.
South Africa
256
256
0
0
Gigawatt Global Rwanda (ASYV)
Rwanda
18
5
12
0
Anwar Al Ardh for Solar Energy Generation PSC (EJRE)
Jordan
94
1
93
0
Ardh Al Amal for Solar Energy Generation PSC (GLAE)
Jordan
44
1
43
0
Producción de Energía Solar y Demás Renovables, S.A.
(Agua Fria)
Honduras
287
114
0
172
Los Prados
Honduras
160
160
0
0
Aswan Solar Power SAE (BB1)
Egypt
34
34
0
0
Zafarana Solar Power SAE (ZAF1)
Egypt
97
93
0
4
Red Sea Solar Power SAE (ZAF2)
Egypt
186
176
0
10
Upper Egypt Solar Power (BB2)
Egypt
110
105
0
5
Kom Ombo Renewable Energy SAE (BB3)
Egypt
105
101
0
4
Daraw Solar Power SAE (BB4)
Egypt
86
83
0
3
Egypt Green Hydrogen S.A.E.
Egypt
94
0
0
94
Kamianka / Chysta Energiya
Ukraine
68
1
0
67
Rengy Bioenergy
Ukraine
69
1
0
68
Helios Power (Private) Limited
Pakistan
15
14
0
0
Meridian Energy (Private) Limited
Pakistan
15
14
0
0
HNDS Energy (Private) Limited
Pakistan
15
14
0
0
Total project financing from co-investors
2,526
1,950
148
428
92
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
For the year 2023,
interest expenses on financing from co-investors of NOK 45 million have been expensed (NOK 45 million for 2022),
of which NOK 2 million is recognised directly in equity (NOK 2 million for 2022).
Note 26 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 randomly during the year. Most guarantees are issued on behalf of consolidated entities,
except as specified in the table below. The fair value of the guarantees is immaterial on a consolidated basis; hence no liability is
recognised.
NOK million
31.12.2023
31.12.2024
31.12.2025
31.12.2026
Bid Bonds
66
44
44
44
Advanced Payment Guarantees
31
-
-
-
Performance Guarantees (EPC)
289
249
-
-
Warranty Guarantees (EPC)
621
359
359
-
SPV Performance / Commitments
625
537
228
149
O&M Performance (3rd Party)
19
-
-
-
Other Payment Guarantees
2,083
274
9
9
Total
3,734
1,462
640
201
Whereof issued on behalf of non-consolidated entities
108
36
-
-
Scatec ASA - Annual Report 2023
93
Guarantees
For projects under development, Scatec is often required to
issue Bid Bonds to secure commitment during submission of
project bids.
Performance Guarantees cover contractual obligations under
the construction phase and typically represents 10%-15% of
the contract value. Warranty Gurantees represent typically
2.5%-5% of the contract value and are issued to cover
potential shortfall of operational performance for the first two
years of operation.
SPV Performance and Commitment Guarantees are issued to
cover some obligations under PPAs and Implementation
Agreements. These obligations are connected to project
performance where Scatec is in control and hold the O&M
and the asset management agreements. In addition, this
includes the payment guarantee to PowerChina for the
construction loan on the Progressovska solar plant in Ukraine.
In addition, Scatec provides Other Payment Guarantees. This
includes security for equity injection in project companies
during construction where project lenders disburse debt
before equity is paid in and Debt Service Reserve to replace
cash reserves in the project companies.
Guarantee Facilities
The guarantees issued by Scatec ASA are issued under the
Guarantee Facility Agreement (GFA) with Nordea Bank as
agent, and Nordea Bank, BNP Paribas, Swedbank and DNB as
guarantee instrument lenders.
Export Finance Norway (Eksfin) normally cover the guarantees
issued under the GFA. Eksfin can issue counter indemnity of
50% in favor of the issuing banks. The financial covenants in
the GFA 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 2023, Scatec was in compliance with all
covenants in the GFA. In addition, Scatec ASA has guarantee
facilities with State Bank of South Africa (SBSA), First Randbank
(RMB) in South Africa and Botswana and five insurance
companies.
94
Note 27 Share capital, shareholder information and dividend
Share capital and shareholder information
At year-end 2023 the total number of shareholders in Scatec
was 14,846 (16,463). The total number of outstanding shares
was 158,917,275 (158,917,275) at par value NOK 0.025 per
share as of 31 December 2023.
No leading employees have exercised any share options
during the year and no employee share purchase program
was carried out, leading to no increase in share capital during
the year.
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 2023.
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.
In the fourth quarter of 2022, Scatec announced that the
Board of Directors (BoD) had decided to change the dividend
policy from 25% to 15% of cash distributions received from
operating power plants. It was further stated that the dividend
policy would be assessed annually by the BoD based on
Scatec’s capital situation. Given the current macro-economic
and capital market situation the BoD approved in the fourth
quarter 2023 to change the dividend policy to no dividend.
The dividend policy will be assessed annually by the board
based on Scatec’s capital situation.
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, totaling NOK 308 million. The
amount was paid out in May 2023.
Scatec ASA - Annual Report 2023
95
Note 28 Consolidated subsidiaries
The consolidated financial statement of Scatec comprises more
than 200 legal companies that are controlled by Scatec ASA.
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 14 Investments in JV and associated companies.
Company
Registered office
Consolidated
economic
interests 2023
SN Power AS
Oslo, Norway
100.00%
Scatec Solar Netherlands BV
Amsterdam, Netherlands
100.00%
Scatec Solar s.r.o.
Prague, Czech
100.00%
Signo Solar PV1 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 PP04 s.r.o.
Prague, Czech
100.00%
FVE Sulkov 3, 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 Alpha LLC
Berezanka, Ukraine
100.00%
PV Progressovka Beta LLC
Berezanka, Ukraine
100.00%
PV Progressovka Gamma 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%
Scatec Hybrid EPC (Pty) Ltd
Cape Town, South Africa
75.00%
Scatec Kenhardt 1 (Pty) Ltd
Cape Town, South Africa
51.00%
Scatec Kenhardt 2 (Pty) Ltd
Cape Town, South Africa
51.00%
Scatec Kenhardt 3 (Pty) Ltd
Cape Town, South Africa
51.00%
Scatec R5 Construction (Pty.) Ltd.
Cape Town, South Africa
75.00%
Scatec R5 Operations (Pty.) Ltd.
Cape Town, South Africa
51.00%
Grootfontein PV1 (RF) (Pty) Ltd
Cape Town, South Africa
51.00%
Grootfontein PV2 (RF) (Pty) Ltd
Cape Town, South Africa
51.00%
Grootfontein PV3 (RF) (Pty) Ltd
Cape Town, South Africa
51.00%
Continues on following page
96
Company
Registered office
Consolidated
economic
interests 2023
Scatec Solar Honduras SA
Tegucigalpa, Honduras
100.00%
Energias Solares 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 y Demas Renovables S.A DE C.V
(Agua Fria)
Tegucigalpa, Honduras
40.00%
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%
Egypt Green Hydrogen S.A.E.
Cairo, Egypt
46.20%
EGH for Renewable Energy S.A.E.
Cairo, Egypt
56.30%
Scatec Solar Solutions Malaysia Sdn Bhd
Kuala Lumpur, Malaysia
100.00%
Quantum Solar Park (Kedah) Sdn Bhd
Kuala Lumpur, Malaysia
100.00%
Quantum Solar Park (Melaka) Sdn Bhd
1)
Kuala Lumpur, Malaysia
100.00%
Quantum Solar Park (Terengganu) Sdn Bhd
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
75.00%
HNDS Energy Ltd
Clifton Karachi, Pakistan
75.00%
Meridian Energy Ltd
Clifton Karachi, Pakistan
75.00%
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%
Scatec Operations Botswana (Pty) Ltd
Gaborone, Botswana
100.00%
Selebi Phikwe Solar Proprietary Limited
Gaborone, Botswana
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 29 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 enters 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 is identified as a
significant judgement for the consolidated financial
statements, please refer to Note 2 for further information.
Note 28 Consolidated subsidiaries include all material entities
with a 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
Scatec ASA - Annual Report 2023
97
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.
Total balances of material non-controlling interest
NOK million
2023
2022
Egypt
394
99
Honduras
327
323
Jordan
191
183
Mozambique
0
56
Pakistan
28
30
Rwanda
6
5
South Africa
997
-48
Ukraine
-60
-108
Total non-controlling interests
1,884
540
Profit/(loss) allocated to material non-controlling interest
NOK million
2023
2022
Egypt
-7
-6
Honduras
12
4
Jordan
15
13
Mozambique
9
12
Pakistan
-9
-4
Rwanda
-1
-2
South Africa
449
188
Ukraine
28
-97
Total non-controlling interests
494
106
Financial information of subsidiaries that have material non-controlling interests is provided below:
Summarised statement of profit or loss for 2023 (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
646
(296)
350
(337)
13
(14)
(7)
-
Honduras
232
(104)
127
(88)
39
39
12
-
Jordan
130
(68)
62
(31)
31
30
15
-
Mozambique
99
(48)
51
(31)
20
18
9
-
Pakistan
1
(6)
(5)
(31)
(36)
(47)
(9)
-
Rwanda
26
(15)
11
(12)
(1)
(1)
(1)
-
South Africa
9,569
(7,968)
1,601
33
1,634
2,109
449
121
Ukraine
153
(37)
116
(39)
77
57
28
-
1) Excluding repayments of shareholders loans
98
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
Summarised statement of financial position as at 31 December 2023
Attributable to
NOK million
Property,
plant and
equipment
Other non-
current asstes
Cash and
cash
equivalent
Other current
assets
Non-recourse
financing
Other non-
current
liabilities
Current
liabilities
Total equity
Non-
controlling
interests
Equity
holders of
the parent
#REF!
Egypt
3,380
1,057
521
108
(3,074)
(1,008)
(181)
803
394
410
Honduras
1,217
10
179
130
(302)
(357)
(40)
837
327
510
Jordan
841
1
419
23
(639)
(82)
(97)
467
191
276
Mozambique
-
-
-
-
-
-
-
-
-
-
Pakistan
941
-
133
38
(637)
(231)
(166)
79
28
50
Rwanda
-
-
(3)
138
-
(31)
(129)
(25)
6
(32)
South Africa
9,593
1,094
652
1,260
(8,917)
(717)
(1,658)
1,308
997
309
Ukraine
431
368
5
(1)
(348)
(662)
(21)
(228)
(60)
(167)
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-recourse
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
-
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)
Note 30 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 28 for information about consolidated subsidiaries. Intercompany balances and transactions between consolidated companies
are eliminated in the consolidated accounts. No significant impairment is booked for expected credit loss on intercompany receivables
within the group.
Scatec ASA - Annual Report 2023
99
See Note 14 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.
See Note 16
Guarantees, contractual obligations and contingent liabilities in the Parent financial statement for overview of guarantees
provided by Scatec ASA to group companies.
For remuneration to Management including information about the share purchase program, 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.
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 2023.
Note 31 Change in accounting policies
Change in accounting policy for external revenues and cost of sales in Power Production segment
The Group has re-assessed its accounting policy for the presentation of external revenues and cost of sales in the proportionate
financials. The change is motivated by changes in management internal reporting of revenue from the hydropower companies in the
Philippines. The power market settlement mechanism in the Philippines is net for all power sales and purchases within the reporting
period, although all volumes are reported gross. The Group previously accounted for such external revenues and cost of sales on a
gross basis in accordance with reported volumes. Going forward the Group will present the figures net in accordance with the financial
settlement mechanism. The change has no impact on gross profit or EBITDA. The Group believes that net presentation provides more
relevant information to the users of the proportionate financials as it reduces the fluctuations in external revenues reported in the
Philippines and is more aligned to the practices adopted by peers. The Group has applied the change retrospectively to the
proportionate financials. The change is not applicable to the consolidated financials as the investments in the Philippine JVs are
accounted for using the equity method. On 1 January 2023, the Group elected to voluntarily change the method of accounting for
external revenues and cost of sales in the proportionate financials. Comparative figures for proportionate revenues in 2022 have been
restated as follows:
Proportionate financials - NOK million
Reported FY 2022
Adjustment
Adjusted FY 2022
External revenues - Power Production
4,513
-824
3,689
Cost of sales - Power Production
-852
824
-28
EBITDA
2,835
-
2,835
New standards and interpretations
The Group has early adopted amendments to IAS 1 and IFRS Practice Statement 2 in 2022 compromising accounting policy information.
The material accounting principles in the Annual report are largely incorporated into the individual notes.
The Group has not elected to early adopt amendments to IAS 1
Presentation of Financial Statements
Amendments to requirements related to classification of non-current and current liabilities with covenants is not expected to affect the
classification of any liabilities in the Group’s financial statements in 2023. The amendments require an entity to provide disclosures
related to liabilities with covenants, including information about the covenants, and risk of non-compliance. The amendments will
require additional note disclosures related to the corporate debt and non-recourse project debt. Scatec will comply with the new
regulations from 2024.
The Group has not elected to early adopt amendments to IAS 7
Statement of cash flow
Financial instruments: Disclosures
effective from 1 January 2024. The amendments clarify the characteristics of supplier finance arrangement and include amendments to
required note disclosures on the impact on the entity of such arrangements. The amendments may be relevant for credit facilities held
during the construction phases.
100
The Group has not elected to early adopt Amendments to IAS 21
The effects of changes in foreign exchange rates
January 2025. The amendments specify how an entity should assess whether a currency is exchangeable and how it should determine a
spot exchange rate when exchangeability is lacking. The amendments may be relevant for certain jurisdictions where Scatec operates
and holds balances in local currencies.
Scatec ASA - Annual Report 2023
101
Note 32 Subsequent events
Adjusting subsequent events
No adjusting events have occurred after the balance sheet date.
Non-adjusting subsequent event
In line with the terms adopted by the Annual General Meeting of Scatec ASA in 2023, the Board of Directors continue the share-based
incentive programme for leading employees of the company, following the same principles as previous years. On January 3, 2024, a
total of 1,515,885 share options were granted to leading employees. Each share option gives the right to subscribe for and be allotted
one share in Scatec ASA. The strike price of the options is set to NOK 79.47 per share based on the volume weighted average share
price over the ten last trading days preceding the grant date of 3 January 2024. The options will lapse if not exercised by 1 January
2028. The option grant is divided into three tranches whereby 1/3 vests each year over three years, with the first tranche vesting 1
January 2025. The current grant is the second of three contemplated annual grants of share options in accordance with Scatec’s share-
based incentive programme.
On January 25, 2024, Scatec ASA agreed refinancing terms with DNB, Nordea and Swedbank for its USD 150 million green term loan,
with USD 135 million outstanding at the end of the fourth quarter 2023. The new green term loan will be amortised through semi-
annual repayments of USD 7.5 million with final maturity in the fourth quarter 2027.
On January 31, 2024, Scatec ASA announced the issuance of a NOK 1,750 million 4-year senior unsecured bond with a coupon of 3
months NIBOR + 4.25% p.a. with quarterly interest payments. DNB Markets, Nordea and SpareBank 1 Markets acted as Joint Lead
Managers in connection with the placement of the new bond issue. An application was made for the bonds to be listed on Oslo Stock
Exchange. On February 1, 2024, Scatec ASA announced buy-back of EUR 136 million of outstanding bonds with ticker “SCATC03 ESG”
(ISIN NO0010931181) which will be cancelled subsequently. Following the transaction, the total nominal outstanding amount is EUR 114
million. The remaining proceeds from the NOK 1,750 million bond issue after the buy-back will be applied towards eligible activities as
set out in the Green Financing Framework, including additional repayment of corporate debt.
Reference is made to previous communication around changes to the PPA in Honduras. In May 2022, a new Energy law came into
force as introduced by the new Government of Honduras. Per January 31, 2024, a PPA amendment agreement was signed between
Scatec’s operating entities in Honduras and the offtaker ENEE. The key changes to the PPA include a lower tariff, extension of the PPA
with five more years and a compensation amount to be paid by the off taker to Scatec’s operating entities. In total, the amendments to
the PPA in combination with the compensation amount are not expected to have a material adverse effect of the financials of the
projects.
On March 6, 2024, the central bank in Egypt announced a full free floating of the local currency, Egyptian Pound (EGP), and the local
currency devaluated against USD. Scatec’s Benban plants in Egypt are operating under a 25-year Power Purchase Agreement with the
Egyptian Electricity Transmission Company, S.A.E, which started operations in 2019. The tariff in the Power Purchase Agreement is
denominated in USD but paid in EGP. 30% of the production volume is invoiced in EGP at a fixed rate to USD of 8.88, while 70% of the
revenues are invoiced at the official EGP/USD spot rate for the relevant period. Due to devaluations of the EGP since the operations
commenced, the fixed-rate part of the revenues constituted approximately NOK 30 million in 2023 representing 10% of Scatec’s total
proportionate power production revenues in Egypt. This part of the revenues is exposed to further devaluation of the EGP. The non-
recourse debt is dominated in USD and not impacted by the devaluation, while Scatec’s cash balances in EGP is negatively impacted by
a devaluation. The change of the central bank’s strategy in Egypt is expected to ease the convertibility of EGP to USD. Please refer to
Note 15 Cash and cash equivalent for information on cash balances in Egypt at year-end 2023.
102
Parent company
financial statements
Scatec ASA - Annual Report 2023
103
Statement of income
104
Statement of financial position - assets
105
Statement of financial position – equity and liabilities
106
Statement of cash flow
107
Notes to the parent company financial statements
108
Note 1
General information
108
Note 2
Accounting principles
108
Note 3
Revenues
110
Note 4
Personnel expenses, number of employees and auditor’s fee
111
Note 5
Other operating expenses
113
Note 6
Provision for bad debt
113
Note 7
Financial income and expenses
114
Note 8
Tax
115
Note 9
Property, plant and equipment
116
Note 10
Investments in subsidiaries, joint ventures and
associated companies
117
Note 11
Inventory
118
Note 12
Cash and cash equivalents
118
Note 13
Equity and shareholder information
118
Note 14
Corporate financing
120
Note 15
Other current liabilities
120
Note 16
Guarantees, contractual obligations and contingent liabilities
120
Note 17
Transactions with related parties
121
Note 18
Subsequent events
122
104
Statement of income
1 JANUARY – 31 DECEMBER
NOK million
Note
2023
2022
Revenues
3
6,271
751
Total revenues
6,271
751
Costs of sales
-5,570
-797
Personnel expenses
4
-284
-268
Other operating expenses
5, 6, 17
-189
-201
Depreciation, amortisation and impairment
9, 11
-59
-150
Operating profit/(loss)
169
-665
Interest and other financial income
7, 17
392
1,570
Interest and other financial expenses
7, 17
-707
-1,311
Net foreign exchange gain/(loss)
-33
-5
Profit/(loss) before tax
-179
-411
Income tax (expense)/benefit
8
-220
-68
Profit/(loss) for the period
-399
-480
Allocation of profit/(loss) for the period
Dividend
13
-
308
Transfer to/(from) other equity
13
-399
-788
Total allocation of profit/(loss) for the period
-399
-480
Scatec ASA - Annual Report 2023
105
Statement of financial position
1 JANUARY – 31 DECEMBER
NOK million
Note
2023
2022
Non-current assets
Deferred tax assets
8
35
226
Property plant and equipment
9
86
73
Investments in subsidiaries, joint ventures and associated companies
10
16,025
15,000
Loan to group companies
17
2,783
2,327
Interest rate swap (cash flow hedge)
14
64
115
Other non-current receivables
53
63
Total non-current assets
19,047
17,804
Current assets
Inventory
11
996
1,390
Trade and other receivables
6
68
42
Trade and other receivables group companies
3, 17
755
498
Other current assets
30
46
Cash and cash equivalents
12
173
811
Total current assets
2,022
2,787
Total assets
21,070
20,591
106
Statement of financial position
AS OF 31 DECEMBER
NOK million
Note
2023
2022
Paid in capital
Share capital
13
5
5
Share premium
13
11,761
11,378
Total paid in capital
11,765
11,382
Other equity
Other equity
13
-1,520
-1,203
Reserve for valuation variances
51
85
Total other equity
-1,469
-1,117
Total equity
10,296
10,265
Non-current liabilities
Corporate financing
14
7,947
7,987
Liabilities to group companies
17
17
350
Other non-current liabilities
2
3
Total non-current liabilities
7,966
8,339
Current liabilities
Trade and other payables
226
431
Trade payables group companies
444
60
Public duties payable
24
18
Dividend
13
-
308
Other current liabilities
15
1,146
1,170
Other current financial liabilities
12
713
-
Current corporate financing
14
255
-
Total current liabilities
2,808
1,987
Total liabilities
10,774
10,326
Total equity and liabilities
21,070
20,591
Oslo, 19 March 2024
The Board of Directors Scatec ASA
Scatec ASA - Annual Report 2023
107
Statement of cash flow
1 JANUARY – 31 DECEMBER
NOK million
Notes
2023
2022
Cash flow from operating activities
Profit/(loss) before tax
-179
-411
Depreciation, amortisation and impairment
9
59
150
Interest and other financial income
7
-392
-1,570
Interest and other financial expenses
7
707
1,311
Foreign exchange gain/(loss)
33
5
Increase)/decrease in inventories
11
394
-1,079
(Increase)/decrease in trade and other receivables
-223
-285
Increase/(decrease) in trade and other payables
149
147
Taxes paid
8
-
-
(Increase)/decrease in current assets and current liabilities / other adjustments
103
1,067
Net cash flow from operating activities
651
-665
Cash flows from investing activities
Investments in property, plant and equipment
9
33
16
Net increase in loans to subsidiaries
17
-456
-301
Interest received
252
175
Investments in subsidiaries and associated companies
10
-1,025
-675
Dividends from and capital decrease in subsidiaries
7
140
1,384
Net cash flow used in investing activities
-1,056
599
Cash flow from financing activities
Proceeds from share capital increase
13
-
5
Dividends paid to equity holders
13
-308
-404
Interest paid
-638
-344
Proceeds from corporate financing
14
713
-
Net cash flow from financing activities
-233
-743
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
811
1,620
Cash and cash equivalents at end of period
173
811
Net increase/(decrease) in cash and cash equivalents
-638
-809
108
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 2023
were authorized for issue in accordance with a resolution by
the Board of Directors on 19 March 2024.
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 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
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
Scatec ASA - Annual Report 2023
109
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.
Transaction costs are taken into account when calculating
amortised cost. Trade payables are carried at cost.
110
Dividends
On 2 November 2023, the Board of Directors announced its
decision to change the dividend policy to no dividend.
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
2023
2022
Services
6,252
732
Other revenue
19
19
Sum
6,271
751
Services comprise EPC services, sale of project rights and management services – all rendered to Group companies and associates.
Revenue by geographical distribution
NOK million
2023
2022
Pakistan
462
153
Netherlands
49
63
South-Africa
5,658
459
Ukraine
3
3
Egypt
36
6
Brazil
37
31
Argentina
2
4
Malaysia
3
4
Honduras
1
1
Mozambique
-
1
France
1
1
India
-
1
Philippines
-
1
Rwanda
-
4
Sum
6,252
732
Refer to Note 17 - Transactions with related parties for further information.
Scatec ASA - Annual Report 2023
111
Note 4 Personnel expenses, number of employees and auditor’s fee
Personnel expenses
NOK million
2023
2022
Salaries
225
216
Share-based payment
28
39
Payroll tax
43
31
Pension costs
18
18
Other benefits and personnel costs
7
3
Capitalised to inventory
-38
-39
Total personnel expenses
284
268
The average number of FTEs that has been employed in the company through 2023 was 144 (146).
Pension costs
The Company has a defined contribution plan in line with the requirement of the law. NOK 18 million (18) is expensed related to the
defined contribution plan in 2023.
Paid salaries and personnel expenses for the management of Scatec ASA
2023
Bonus
Number
of options
awarded
Exercise
of share
options
Out-
standing
share
options
Loans
out-
standing
NOK thousand
Title
Salary
1)
Other
benefits
Pension
cost
Terje Pilskog
Chief Executive Officer
3,992
1,444
57
-
129
158
b)
179
-
Hans Jakob Hegge
3)
Chief Financial Officer
2,895
1,313
68
-
68
1513
a)
146
-
Siobhan Minnaar
2)
EVP General Counsel
2,009
750
13
-
29
16
173
-
Roar Haugland
EVP People, Sustainability & Digital
2,262
802
31
-
83
143
b)
180
-
Pål Helsing
EVP Solutions
2,601
922
36
-
94
152
b)
177
-
Ann-Mari Lillejord
EVP Latam/Europe
2,179
788
29
-
43
16
173
-
Pål Strøm
EVP Operations & Maintenance
2,102
750
29
-
55
16
176
-
Kate Bragg
EVP People, Strategy & Digital
2,294
8)
29
-
-
16
172
-
Snorre
Valdimarsson
5)
EVP General Counsel
480
-
-
-
-
1
48
-
Mikkel Tørud
6)
EVP Chief Financial Officer / EVP MENA
Green H2
2,145
-
41
-
-
175
b)
149
-
Torstein Berntsen
7)
Interim EVP MENA/Green H2
497
-
36
-
93
138
38
-
1) Including holiday allowance accrued in 2023
2) Joined EMT 01.02.2023
3) Joined Scatec and EMT 01.03.2023
4) Includes benefits such as insurances, mobile, broadband, or other allowances
5) Left Scatec 31.01.2023
6) CFO between 01.01.2023 – 31.03.2023. EVP MENA/Green H2 between 01.03.2023 – 31.08.2023
7) Interim EVP MENA/Green H2 between 01.01.2023 – 28.02.2023
8) Left Scatec before bonus pay-out March 2024
112
2022
NOK thousand
Title
Salary
1)
Bonus
2)
Number
of options
awarded
Exercise
of share
options
Out-
standing
share
options
Other
benefits
3)
Pension
cost
Loans
out-
standing
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
168
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
175
23
Torstein Berntsen
6)
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 Korsberg
9)
EVP Hydropower Project Development
628
-
-
-
-
-
-
-
1) Including paid out holiday allowance and car allowance.
2) Changed to accrued 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)
2023
2022
NOK thousand
Board
remuner-
ation
Audit
committee
Remuner-
ation
committee
Nomination
committee
Total
remuner-
ation 2023
Board
remuner-
ation
Audit
committee
Remuner-
ation
committee
Nomination
committee
Total
remuner-
ation 2022
John Andersen jr.
576
93
77
-
746
557
90
75
-
722
Gisele Marchand
369
155
-
-
524
357
150
-
-
507
Maria Moræus Hanssen
369
-
57
-
426
357
-
55
-
412
Jørgen Kildahl
369
93
-
-
462
357
90
-
-
447
Mette Krogsrud
369
-
57
-
426
357
-
55
-
412
Espen Gundersen
369
93
-
-
462
357
90
-
-
447
Morten Henriksen
250
-
38
-
288
-
-
-
-
-
Jan Skogseth
119
-
18
-
137
357
-
55
-
412
Kristine Ryssdal
-
-
-
62
62
-
-
-
60
60
Svein Høgseth
-
-
-
13
13
-
-
-
40
40
Mats Holm
-
-
-
41
41
-
-
-
40
40
Annie Bersagel
-
-
-
41
41
-
-
-
40
40
Christian Rom
-
-
-
28
28
-
-
-
-
-
1) Annual fees paid for 2022 and accrued for 2023 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 2023.
Scatec ASA - Annual Report 2023
113
Audit
NOK million
2023
2022
Audit fees
5
2
Other attestation services
2
-
Tax services
-
2
Other services
-
-
Total
7
4
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.
Note 5 Other operating expenses
NOK million
2023
2022
Facilities
21
27
Professional fees
60
100
IT and communications
42
43
Travel costs
13
11
O&M costs
2
-
Other costs
51
20
Total other operating expenses
189
201
Note 6 Provision for bad debt
The Company has during 2023 recognized NOK 13.3 million in realized bad debt losses on receivables related to discontinued
development projects.
No further provision for bad debt has been made as the collection risk of the outstanding receivables is considered low.
114
Note 7 Financial income and expenses
Interest and other financial income
NOK million
2023
2022
Interest income from group companies
218
156
Other interest income
34
19
Gain/(loss) on sale of financial investments
-
7
Dividend from group companies
140
1,384
Gain from financial investment
-
3
Total interest and other financial income
392
1,570
Interest and other financial expenses
NOK million
2023
2022
External interest expenses
-638
-346
Impairment of financial assets
-
-949
Other financial expenses
-69
-17
Total interest and other financial expenses
-707
-1,311
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 13 in the consolidated financial statement of the Group for details related to the impairment testing.
During 2023, interest amounting to NOK 638 million (346) was expensed for corporate financing, refer to Note 23 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 2023
115
Note 8 Tax
NOK million
2023
2022
Income tax expense:
Withholding tax on received dividends
3
21
Change in deferred tax
204
34
Taxes related to previous years
12
13
Total tax expense/(income)
220
68
Tax basis:
Profit before taxes
-179
-411
Permanent differences
1)
-158
-434
Changes in temporary differences
25
-2
Increase of tax losses carried forward
314
846
Tax base
-
-
Current taxes according to statutory tax rate (22%)
-
-
1) Net permanent differences for 2022 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
2023
2022
Expected income tax expense according to statutory tax rate (22%)
-39
-90
Non-taxable expense/ (income)
-36
-85
Allowance for losses carried forward
268
219
Withholding tax on received dividends
3
21
Taxes related to previous years
27
13
Foreign exchange variations between functional and tax currency
-2
-10
Income tax expense/(income)
220
68
1
Effective tax rate (%)
122.94%
16.55%
Temporary differences as of 31 December
NOK million
2023
2022
Change
Tax loss carried forward
1)
-2,656
-2,342
314
Other temporary differences
-21
4
25
Total temporary differences
-2,677
-2,338
339
0
Tax loss carried forward not recognized
2,518
1,301
-1,217
Total temporary differences as basis for recognized tax liability/(asset)
-159
-1,037
-878
Recognised tax liability/(asset)
-35
-226
191
1)
Temporary differences are related to tax loss carry forward and disallowed interest deductions carry forward.
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
116
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.
Note 9 Property, plant and equipment
Office equipment
NOK million
2023
2022
Accumulated cost at 1 January
113
87
Additions
33
16
Foreign currency translation
-7
10
Accumulated cost at 31 December
139
114
Accumulated depreciation at 1 January
42
28
Depreciations for the year
13
10
Foreign currency translation
1
4
Accumulated depreciation at 31 December
54
42
Carrying amount at 31 December
86
73
Estimated useful life (years)
3-10
3-10
Scatec ASA - Annual Report 2023
117
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
Carrying
value 2023
Carrying
value 2022
SN Power AS
Norway
100.00%
1,083
1,050
Scatec Solar Netherlands BV
Netherlands
100.00%
13,163
12,268
Release Management BV
Netherlands
-
-
623
Scatec Solar SA (pty) Ltd.
Sandton, South-Africa
100.00%
3
3
Scatec Solar SA 163 (Pty) Ltd.
South-Africa
100.00%
19
18
Scatec Solar SA 164 (Pty) Ltd.
Sandton, South-Africa
80.70%
85
82
Scatec Solar SA 165 (Pty) Ltd.
Sandton, South-Africa
76.60%
114
110
Gigawatt Global Rwanda Ltd
Rwanda
54.00%
8
8
Scatec Solar Mozambique Limitada
Mozambique
0.50%
10
9
Scatec Solar SAS
Paris, France
100.00%
89
82
Scatec Solar Jordan
Amman, Jordan
100.00%
31
39
Anwar Al Ardh For Solar Energy Generation
PSC
Amman, Jordan
50.10%
98
95
Ardh Al Amal For Solar Energy Generation PSC
Amman, Jordan
50.10%
43
42
Scatec Solar Honduras S.A.
Honduras
100.00%
3
3
Produccion de Energia Solar Demas
Renovables S.A
Honduras
40.00%
71
69
Fotovoltaica Los Prados
Honduras
70.00%
84
82
Fotovoltaica Surena
Honduras
70.00%
133
159
Generaciones Energeticas S.A
Honduras
70.00%
126
152
Energias Solares S.A
Honduras
70.00%
79
94
Foto Sol S.A
Honduras
70.00%
6
6
Scatec Solar PV1 S.R.O
Prague, Czech
100.00%
2
2
Scatec Solar S.R.O
Prague, Czech
100.00%
1
1
15,254
15,000
A list of all material companies in the Scatec Group is listed in Note 28 Consolidated subsidiaries of the Consolidated financial
statements.
NOK million
Associates and joint ventures
Office
Ownership
Carrying value 2023
Carrying value 2022
Kube Energy AS
Oslo, Norway
0%
-
2
Release Solar AS
Oslo, Norway
68%
771
-
Total
771
2
In 2023, Scatec ASA signed an agreement to raise capital from Climate Fund Managers (“CFM”) to further accelerate its growth
ambitions in Release. CFM contributed approx. NOK 560 million in equity for a 32% shareholding in Release Solar AS. Scatec retained
the majority shareholding of 68% but the investment is recognized as a joint venture. Release Solar AS is recognized at cost, where
Scatec’s carrying value as of December 2023 corresponds to the investments made in the company prior to the entry of CFM. Total
equity and net profit in the financial statements of Release Solar AS for 2022 was NOK 0.
118
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 decrease from
last year is mainly explained by projects reaching construction completion in South Africa and Pakistan.
Project geography
NOK million
2023
2022
Asia
193
303
Europe
63
12
West Africa
4
8
South Africa
642
990
North Africa
66
56
South America
25
18
East Africa
3
2
Carrying value of inventory at 31 December 2023
996
1,390
Impairment charges in 2023 were NOK 37 million (140) for development projects in Oman and Brazil.
Note 12 Cash and cash equivalents
NOK million
2023
2022
Restricted cash
50
58
Free cash
122
753
Total cash and cash equivalents
173
811
Scatec ASA has drawn USD 70 million (0) on the revolving credit facility per 31 December 2023.
For more information about external financing and facilities, refer to Note 23 Corporate Financing in the consolidated financial
statement of the Group.
Note 13 Equity and shareholder information
Nok million
Issued capital
Share premium
Other equity
Total equity
Equity as of 31 December 2022
5
11,378
-1,118
10,265
Profit/(loss) for the period
-
-
-399
-399
Share-based payment
-
28
-
28
Capital increase from exercised employee share
options, net of transaction cost after tax
-
-
-
-
Accrued dividend
-
-
-
-
Change in hegding reserves
-
-
-45
-45
Foreign currency translation
-
355
93
448
Equity as of 31 December 2023
5
11,761
-1,469
10,296
On 2 November 2023, the Board of Directors announced its decision to change the dividend policy to no dividend.
On 18 April 2023, the Annual General Meeting of Scatec ASA resolved to pay a dividend of NOK 1,94 per share, totaling NOK 308
million. The dividend was paid to the shareholders on 11 May 2023. This equal to amount accrued for in 2022.
The table below show the largest shareholders of Scatec ASA at 31 December 2023.
Scatec ASA - Annual Report 2023
119
Shareholder
Number of shares
Ownership
EQUINOR ASA
25,776,200
16.22%
SCATEC INNOVATION AS
14,132,339
8.89%
FOLKETRYGDFONDET
12,642,754
7.96%
J.P. Morgan SE
4,721,976
2.97%
VERDIPAPIRFONDET DNB MILJØINVEST
3,870,567
2.44%
Citibank Europe plc
3,800,435
2.39%
CLEARSTREAM BANKING S.A.
3,375,973
2.12%
RAIFFEISEN BANK INTERNATIONAL AG
2,947,061
1.85%
Bank Pictet & Cie (Europe) AG
2,930,610
1.84%
JPMorgan Chase Bank
2,483,309
1.56%
State Street Bank and Trust Comp
2,400,774
1.51%
Citibank
2,295,532
1.44%
The Bank of New York Mellon
2,119,792
1.33%
VERDIPAPIRFONDET DNB NORGE
2,013,957
1.27%
VPF DNB AM NORSKE AKSJER
1,839,033
1.16%
The Bank of New York Mellon SA/NV
1,710,350
1.08%
State Street Bank and Trust Comp
1,697,587
1.07%
VERDIPAPIRFONDET STOREBRAND NORGE
1,574,879
0.99%
ARGENTOS AS
1,500,000
0.94%
State Street Bank and Trust Comp
1,495,729
0.94%
Total 20 largest shareholders
95,328,857
59.99%
Total other shareholders
63,588,418
40.01%
Total shares outstanding
158,917,275
100%
The tables below show shares held by Management and Board of Directors at 31 December 2023.
Board of Directors
Number of shares
Ownership
John Andersen, Jr.
1)
-
0.00%
Gisele Marchand
3,586
0.00%
Maria Moræus Hanssen
2)
11,040
0.01%
Jørgen Kildahl
3,000
0.00%
Mette Krogsrud
1,000
0.00%
Espen Gundersen
10,000
0.01%
Morten Henriksen
5,000
0.00%
Total at 31 December 2023
33,626
0.02%
1) Related parties control 14,132,339 shares through Scatec Innovation AS.
2) Held through the controlled company MMH Nysteen Invest AS.
Management
Number of shares
Ownership
Terje Pilskog
1)
542,204
0.34%
Hans Jakob Hegge
10,000
0.00%
Mikkel Tørud
186,667
0.12%
Roar Haugland
2)
79,566
0.05%
Torstein Berntsen
3)
434,289
0.27%
Pål Helsing
6,204
0.00%
Ann-Mari Lillejord
10,129
0.01%
Kate Bragg
920
0.00%
Pål Strøm
1,844
0.00%
Total at 31 December 2023
1,271,823
0.80%
1) Held through the controlled company Océmar AS
2) Held through the controlled company Buzz Aldrin AS, whereof 2204 shares held by Roar Haugland directly
3) Held through the controlled company Belito AS, whereof 908 shares held by Torstein Berntsen directly. In addition, 895 shares are held by Torstein Berntsen’s spouse. These
are not included in the total presented in the table above.
120
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 23 Financing in the consolidated financial statement of the Group.
For information about interest rate swap refer to Note 22 Derivative financial instruments in the consolidated financial statement of the
Group.
Note 15 Other current liabilities
Nok million
2023
2022
Deferred income EPC projects
901
997
Accrued interest expenses
164
118
Vacation allowances, bonus accruals etc.
47
49
Other
34
7
Total current liabilities
1,146
1,170
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
12/31/2023
12/31/2024
12/31/2025
12/31/2026
Advance Payment guarantees
31
-
-
-
Performance guarantees
289
249
-
-
Warranty Guarantees
621
359
359
-
Bid Bonds
66
44
44
44
SPV Performance / Commitments
625
537
228
149
O&M Performance (3rd party)
19
-
-
-
Other Payment Guarantees
2,083
274
9
9
Total
3,734
1,463
640
202
See note 26 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
2024
2025
2026
>2026
Leases (office rental)
14
15
15
44
Total contractual obligations
14
15
15
44
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.
Scatec ASA - Annual Report 2023
121
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 2023 and 2022 are:
Subsidiaries – EPC services
In 2023 Scatec ASA sold EPC services to subsidiaries amounting to NOK 6 116 million (572 million).
Subsidiaries – development services
During 2023 the company sold development project services amounting to NOK 80 million. Corresponding amount in 2022 was 83
million.
Subsidiaries - management service income
Scatec ASA has during 2023 charged NOK 49 million (47 million) 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 7 for specification of interest income/expenses from/to subsidiaries and Note
10 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.
122
Note 18 Subsequent events
Adjusting subsequent events
No adjusting events have occurred after the balance sheet date.
Non-adjusting subsequent event
In line with the terms adopted by the Annual General Meeting of Scatec ASA in 2023, the Board of Directors continue the share-based
incentive programme for leading employees of the company, following the same principles as previous years. On 3 January 2024, a
total of 1,515,886 share options were granted to leading employees. Refer to Note 32 in the consolidated financial statement of the
Group for details related to the share-based incentive program.
On 25 January 2024, Scatec ASA agreed refinancing terms for its USD 150 million green term loan, with USD 135 million outstanding as
the end of the fourth quarter 2023 and on 31 January 2024, Scatec ASA successfully issued a NOK 1,750 million bond. In conjunction
with the bond issue, on 1 February 2024 Scatec bought back EUR 136 million of outstanding bonds.
Scatec ASA - Annual Report 2023
123
Responsibility statement
We confirm to the best of our knowledge, that the consolidated financial statements for 2023 has been prepared in accordance with
IFRS Accounting Standards 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, 19 March 2024
The Board of Directors Scatec ASA
124
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 2023
125
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
33% 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 2023 Scatec reports a proportionate operating profit of NOK
2,152 million compared with an operating profit of NOK 2,625
million in the consolidated financials. To arrive at the
proportionate operating profit from the consolidated operating
profit the Group has;
1.
removed from the consolidated statement
internal gain on transactions between group companies with a
positive amount of NOK 97 million.
2.
removed the non-controlling interests share of the operating
profit of NOK 709 million to only leave the portion
corresponding to Scatec’s ownership share,
3.
replaced the consolidated net profit from joint venture
companies of NOK 46 million with Scatec’s share of the
Operating profit from the joint venture companies with NOK
379 million.
See Note 3 for further information on the reporting of
proportionate financial figures, including reconciliation of the
proportionate financials against the consolidated financials.
126
Consolidated Financials
NOK million
2023
2022
EBITDA
Operating profit (EBIT)
2,625
723
Depreciation, amortisation and impairment
942
1,832
EBITDA
3,567
2,555
Total revenues and other income
4,721
3,751
EBITDA margin
76%
68%
Gross interest-bearing debt
Non-recourse project financing
15,026
13,297
Corporate financing
7,947
7,987
Non-recourse project financing - current
1,931
1,963
Corporate financing - current
1,132
-
Other non-current interest-bearing liabilities
247
231
Other current interest-bearing liabilities
-
231
Gross interest-bearing debt associated with disposal group held for sale
115
-
Gross interest-bearing debt
26,398
23,709
Net interest-bearing debt
Gross interest-bearing debt
26,398
23,709
Cash and cash equivalents
3,101
4,132
Cash and cash equivalents associated with disposal group held for sale
12
-
Net interest-bearing debt
23,284
19,578
Net working capital
Trade and other receivables
478
497
Other current receivables
1)
1,151
1,863
Trade and other payable
-294
-594
Income tax payable
-48
-37
Other current liabilities
-2,060
-1,106
Non-recourse project financing-current
-1,931
-1,963
Corporate financing - current
-1,132
-
Other current interest-bearing liabilitie
-
-231
Net working capital associated with disposal group held for sale
-6
-
Net working capital
-3,842
-1,571
1)
Excluding current portion of derivatives of NOK 15 million in 2023 and NOK 20 million in 2022
Break-down of proportionate cash flow to equity
FY 2023
NOK million
Power Production
Services
Development &
Construction
Corporate
Total
EBITDA
3,216
118
672
-162
3,845
Net interest expenses
-712
4
22
-593
-1,279
Normalised loan repayments
-998
-
-
-145
-1,144
Proceeds from refinancing
-348
-
-
-
-348
Normalised income tax payment
-126
-25
-138
174
-116
Cash flow to equity
1,663
96
555
-716
1,600
1
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
-1,102
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
Scatec ASA - Annual Report 2023
127
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.
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.
128
Auditor’s Report
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130
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