Annual
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Report from the
Board of Directors
Scatec ASA - Annual Report 2021
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2018
2019
2020
2021
Revenues
EBITDA
Highlights 2021
●
Proportionate revenues of NOK 4,615 million
(2,844) and EBITDA of NOK 2,686 million (1,306)
●
Proportionate Power production of 3,823 GWh, up
2.5x from last year
●
Acquisition of SN Power completed with the hydro
assets contributing to strong growth
●
New solar plants started commercial operation in
Ukraine and Argentina
●
2025 growth target announced – 15 GW capacity
and investments of NOK 100 billion
●
Building pipeline and pursing several new Power to
X opportunities in Egypt and the Middle East
●
The Board proposes dividends of NOK 2.54 per
share, totaling NOK 401 million to be paid out in
2022
Proportionate revenues and EBITDA by year
Key figures
NOK million
FY 2021
FY 2020
Proportionate Financials
Total revenues and other income
4,615
2,844
4,176
1,708
260
231
137
873
42
33
EBITDA
2,686
1,306
2,949
1,404
75
82
-223
-28
-114
-153
Operating profit (EBIT)
1,606
690
1,977
838
70
79
-301
-54
-140
-173
Profit/loss
285
-435
Net interest- bearing debt
15,175
1,851
Power production (GWh)
3,823
1,602
Scatec proportionate share of cash flow to equity
1)
1,284
324
Consolidated Financials
Revenues and other income
3,803
2,754
EBITDA
2,903
2,069
Operating profit (EBIT)
2,012
1,292
Profit/(loss)
456
-368
Net interest- bearing debt
14,949
5,223
Basic earnings per Share (NOK)
2.45
-3.51
Power Production (GWh)
9,729
2,911
1) See Alternative Performance Measures appendix for definition
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Introduction
Scatec is a leading renewable energy solution provider, accelerating access to reliable and affordable clean energy in high growth
markets. As a long-term player, we develop, build, own and operate renewable energy plants, with 3.5 GW of installed capacity across
four continents today. We are targeting 15 GW of renewable capacity to be in operation or under construction by the end of 2025,
delivered by our 600 passionate employees who are driven by a common vision of ‘Improving our Future’.
2021 Summary
Business growth
●
Acquisition of SN Power completed with the hydro
assets contributing to strong growth
●
2025 target announced – 15 GW capacity and
investments of NOK 100 billion
●
Project pipeline increased by more than 50% to 14.8
GW across all renewable technologies
●
Some project delays due to prolonged governmental
approval processes and cost inflation
Operational
●
Stable operations and production in line with
expectations across the asset portfolio
●
Power production up 2.5x from last year
●
Commercial operation of new solar power plants in
Argentina and Ukraine
Organisation and people
●
Expanded the full-time workforce with 187 employees,
to a total of 622 employees at the end of 2021
●
51 different nationalities, a truly global company
●
27% female employees in management positions at the
end 2021, compared to target of 32%.
●
Launched 50/50 Female Leadership Programme
●
2021 Statement on Equality and Non-discrimination is
available on our corporate website
●
Developed a new People and Organisation Strategy
Climate
●
Annual GHG emissions avoided from our power plants
reached 4.8 million tones
●
On the ‘A’ List for tackling climate change by the
Carbon Disclosure Project (CDP)
●
Set climate ambitions in line with the 1.5 degree target;
zero scope 1 and 2 emissions by 2030 and net zero
across the supply chain by 2040
EU Taxonomy and reporting
•
All revenues, opex and investments are derived from
EU Taxonomy eligible activities – and we expect full
compliance at year end 2022
•
Ranked number one in ESG reporting out of the 100
largest companies on the Oslo Stock Exchange
HSSE
•
Delivered more than 2.5 million working hours with no
fatalities or serious injuries during 2021
•
The lost time incident frequency rate (LTIF) was 1.9 per
million working hours resulting from five incidents
•
Certified to ISO 9001, 45001 and 14001 by DNV
Human rights/supply chain
●
Further strengthened our human rights due diligence
process and training
●
Addressed forced labor concerns in China; alternative
sourcing, audits, peer collaboration and updates of
governing documents
●
New suppliers screened on environmental and social
criteria - environmental and social assessments
conducted for all new projects
●
28 grievances received, 79% were resolved as per the
publication of the report
Anti-corruption
●
Scatec provides mandatory anti-corruption and code of
conduct training to all employees. 89% of all
employees have completed the training
Scatec ASA - Annual Report 2021
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Group – Proportionate Financials
2021 proportionate revenues were NOK 4,615 million, up from
NOK 2,844 million in 2020. The increase reflects the acquisition of
SN Power in January 2021 and new solar plants in Ukraine and
Argentina which started operation during the year.
With a larger portfolio of power plants in operation, both
revenues and EBITDA increased in Power Production, while
decreasing in the Development & Construction segment. This
change in segment mix resulted in a higher EBITDA margin for
the Group compared with the previous year.
The increase in operating expenses and depreciation compared
with 2020 is mainly driven by the new power plants in operation,
strengthened project development and corporate functions.
Scatec’s proportionate share of cash flow to equity was NOK
1,284 million in 2021, up from NOK 324 million in 2020. This is
mainly explained by the factors above in addition to NOK 397
million from refinancing of assets in the Philippines.
Power Production
Power Production revenues increased to NOK 4,176 million (1,708)
in 2021, while EBITDA increased by 48% to NOK 2,949 million
(1,404). Installed capacity was 3,355 MW at year-end and full year
production on proportionate basis reached 3,823 GWh, up from
1,602 GWh in 2020. The increase in production volumes and
revenues is mainly driven by the acquisition of SN Power.
For the existing power plants, the change in production volume
from last year is small and driven by regular operational
variability. The reported revenues for 2021 are reflecting sale of
electricity from solar power plants in Brazil, Czech Republic,
Egypt, Honduras, Jordan, Malaysia, Mozambique, Rwanda, South
Africa, Argentina and Ukraine, from hydro power plants in
Philippines, Uganda and Laos and wind power in Vietnam.
Operating expenses and depreciation increased from last year in
line with more plants in operation.
Scatec’s proportionate share of cash flow to equity from Power
Production was NOK 1,640 million, up from NOK 427 million in
2020. The increase in cash flow to equity is less than the increase
in EBITDA due to increased debt service.
Services
Revenues in the Service segment reached NOK 260 million (231).
The revenue growth is explained by the growing portfolio of
producing assets.
Operating expenses of NOK 186 million (149) in the segment
mainly constitute fixed expenses such as personnel and recurring
maintenance cost reflecting fixed maintenance schedules.
EBITDA reached NOK 75 million (82), corresponding to an
EBITDA margin of 29% (36%). The decrease in EBITDA margin
compared with last year is mainly due to growth of centralised
service costs required to support the growing portfolio.
Scatec’s proportionate share of cash flow to equity from Services
was NOK 60 million in 2021, down from NOK 65 million in 2020.
Development & Construction (D&C)
Revenues in Development & Construction was NOK 137 million
(873) and EBITDA NOK -223 million (-28) in 2021. The decrease is
explained by low construction activity during the year.
The increase in operating expenses reflects increased spending
on opportunity projects across several markets and renewable
technologies.
Project development spending, including amounts capitalised
reached NOK 318 million (245) in the year.
Scatec ’s proportionate share of cash flow to equity from D&C
was NOK -164 million, a decrease from NOK -15 million in 2020.
Corporate
Corporate activities mainly relate to corporate and management
services. The segment reported an operating loss of NOK 114
million (153) in 2021.
Revenues in the corporate segment refers to management fees
charged to the operating segments for corporate services
rendered across the Group. Corporate incurred NOK 156 million
(186) in operating expenses. In 2020 corporate included non-
recurring transaction cost related to the SN Power acquisition.
The change in operating expenses from 2020 to 2021 also reflects
the strengthening of corporate functions to support the
Company’s growth.
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Consolidated financial statements
Consolidated income statement
NOK million
2021
2020
Total revenues and other income
3,803
2,754
EBITDA
2,903
2,069
Operating profit (EBIT)
2,012
1,292
Profit before income tax
759
-238
Profit/(loss) for the period
456
-368
Profit/(loss) to Scatec
388
-478
Profit/(loss) to non-controlling interests
68
110
Revenues
Scatec reported net revenues of NOK 3,803 million (2,754) in
2021. The increase in revenues is explained by the commercial
operation of new solar parks at Kamianka, Chigrin and
Progressovka in Ukraine, and the acquisition of the Dam Nai wind
power plant in Vietnam.
Net income from associated companies increased from NOK -16
million in 2020 to NOK 765 million in 2021. The increase is
explained by net income from joint venture investments and
associated companies that were part of the SN Power acquisition
(operating power plants in the Philippines, Laos and Uganda) and
commercial of the new solar park Cordillera in Argentina.
Operating Profit
The Group has in 2021 strengthen the organisation and the
corporate functions following the significant growth of the
Company. Also, the Group has increased its spending on
opportunity projects, which explains the growth in operating
expenses to NOK 900 million compared to NOK million 685 last
year.
Earnings before interest, taxes, depreciation and amortisation
(EBITDA) reached NOK 2,903 million in 2021, an increase from
EBITDA of NOK 2,069 million in 2020.
Depreciation, amortisation and impairment amounted to NOK
892 million in 2021, compared to NOK 777 million in 2020. The
increase is mainly explained by depreciation of the new solar
plants which started operation in 2021.
Operating profit (EBIT) ended at NOK 2,012 million in 2021, up
from NOK 1,292 million in 2020.
Net financial items
NOK million
2021
2020
Financial income
47
57
Financial expenses
-1,368
-1,189
Foreign exchange gains/(losses)
69
-398
Net financial expenses
-1,253
-1,530
Net financial expenses amounted to NOK 1,253 million in 2021,
compared to NOK 1,530 million in 2020. Financial expenses
primarily consist of interest expenses on non-recourse financing
and corporate funding. The increase in interest expense is mainly
driven by the acquisition of SN Power.
The decrease in foreign exchange losses in 2021 from negative
NOK 398 million to positive NOK 69 million is primarily driven by
change of functional currency in Scatec ASA from NOK to USD
from 1 January 2021.
Profit before tax and net profit
The effective tax rate was -40% (55%) for the full year 2021. The
difference between the actual tax expense of the year and a
calculated tax expense based on the Norwegian tax rate of 22% is
explained by a number of factors, including withholding taxes
paid on dividends received from subsidiaries, revised assessment
of deferred tax assets and currency effects. The tax cost is also
influenced by taxable profits and -losses in tax jurisdictions with
different tax rates which offset each other in the group but leaves
a net tax expense to be recognised. The underlying tax rates in
the companies in operation are in the range of 0% to 33%. In
some markets, Scatec also receives special tax incentives intended
to promote investments in renewable energy. For further details,
refer to Note 7 Tax.
Non-controlling interests (NCI) represent financial investors in
power plants. The allocation of profits between NCI and Scatec is
impacted by the fact that NCI only represent shareholdings in the
power plants that are fully consolidated and not includes net
income from JVs and associates
Other comprehensive income comprises items that may
subsequently be reclassified to profit or loss, amounted to NOK
317 million (-394) in 2021. This relates to after-tax net movement
of cash flow hedges of negative NOK 386 million (-380) and
foreign currency translation differences of NOK 40 million (-112).
Total comprehensive income was thus NOK 773 million (-762) for
2021 of which NOK 595 million (-698) was attributable to Scatec,
Scatec ASA - Annual Report 2021
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while NOK 178 (-65) million is attributable to non-controlling
interests.
Consolidated statement of cash flow
Cash flow
NOK million
FY 2021
FY 2020
Net cash flow from operating activities
2,072
1,671
Net cash flow from investing activities
-8,081
-1,704
Net cash flow from financing activities
2,413
4,984
Net increase/(decrease) in cash and cash
equivalents
-3,597
4,951
Net cash flow from consolidated operating activities amounted to
NOK 2,072 million (1,671) in 2021, compared to EBITDA of NOK
2,686 million (1,306). The difference is primarily explained by
increased net income from JVs and associated companies and
changes in other assets and liabilities.
Net cash flow from consolidated investing activities was negative
NOK -8,081 million (-1,704) driven by net investments in, and
distributions from JVs, and investments in property, plant and
equipment.
Net cash flow from financing activities amounted to NOK 2,413
million (4,984), driven primarily by net proceeds from corporate
financing of NOK 4,699 million related to the acquisition of SN
Powe
r,
repayments and proceeds from non-recourse project
financing amounted to NOK -707 million (-543) and NOK 1,180
million (894).
In total, the Group’s cash balance was reduced by NOK 3,597
million (4,951). Of the total cash balance of NOK 4,171 million
(7,788), NOK 1,711 million (1,741) was restricted cash in power
plant companies, NOK 91 million (87) represented other restricted
cash while NOK 2,335 million (5,949) represented free cash at the
Group level.
Proportionate share of cash flow to equity
Scatec’s “proportionate share of cash flow to equity”, is an
alternative performance measure that seeks to estimate the
Group’s ability to generate funds for equity investments in new
power plant projects and/or for shareholder dividends over time.
Scatec’s proportionate share of cash flow to equity totaled NOK
1,284 million (324) in 2021.
NOK million
2021
2020
Power production
1,640
427
Services
60
65
Development & Construction
-164
-15
Corporate
-252
-153
Sum
1,284
324
Consolidated statement of financial position
Assets
NOK million
2021
2020
Property, plant and equipment and intangible
assets
16,682
16,112
Investments in JV and associated companies
9,745
612
Other non-current assets
983
865
Total non-current assets
27,385
17,590
Other current assets
1,474
1,286
Cash and cash equivalents
4,171
7,788
Total current assets
5,645
9,074
Total assets
33,030
26,663
Total assets amounted to NOK 33,030 million at year-end 2021,
up from NOK 26,663 million at the end of 2020.
Non-current assets totaled NOK 27,385 million (17,590), the
increase is mainly driven by the acquisition of SN Power and
increased investments in JVs and associated companies. See Note
13 for an overview of investments in joint ventures and associated
companies and split per country.
Current assets amounted to NOK 5,645 million (9,074). Other
current assets increased compared to 2020, mainly driven by the
acquisition of SN Power, working capital changes and increase in
outstanding receivables in Honduras.
The cash balance has decreased by NOK 3,617 million since 31
December 2020, primarily following the acquisition of SN Power.
In addition to the cash balance as of year-end at NOK 4,171
million, the Group had NOK 1,632 million in available undrawn
credit facilities. See Note 15 for a detailed breakdown of cash
balances as well as an overview of movement of cash at the
Recourse Group level.
Other current assets and liabilities mainly relate to working capital
items such as trade receivables, prepayments and accruals.
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Equity and liabilities
NOK million
2021
2020
Equity
9,919
9,467
Non-current non-recourse project
financing
10,708
11,350
Non-current corporate financing
7,264
-
Other non-current liabilities
2,224
2,351
Total non-current liabilities
20,197
13,701
Current non-recourse project financing
1,147
913
Current corporate financing
-
748
Trade payables and other current liabilities
1,766
1,834
Total current liabilities
2,913
3,495
Total liabilities
23,110
17,196
Total equity and liabilities
33,030
26,663
Book equity ratio
30%
36%
Total equity increased by NOK 452 million compared with 31
December 2020, driven by the profit and other comprehensive
income in the period. The decreased book equity ratio is
explained by the increase in total equity and liabilities following
the acquisition of SN Power.
Total non-current liabilities amounted to NOK 20,197 million
(13,701) at the end of 2021, of which non-recourse project
financing accounted for NOK 10,708 million (11,350). The NOK
6,516 million increase in corporate financing compared with 31
December 2020 mainly relates to financing of the acquisition of
SN Power which, at closing date of the acquisition, comprised of
a USD 400 million bridge to bond facility, a USD 150 million Green
Term Loan and a USD 200 million Vendor Financing. In the first
quarter 2021, Scatec successfully completed a EUR 250 million
senior unsecured green bond issue with maturity in August 2025,
which was listed on the Oslo Stock Exchange on 23 June 2021.
Proceeds from the bond issue were used for repayment of USD
207 million of the bridge to bond facility, redemption of the NOK
750 million senior unsecured green bond issued in 2017, and
other eligible activities as set out in Scatec’s Green Financing
Framework. See Note 23 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 166 million and operating
loss (EBIT) of NOK -343 million in 2021, compared to revenues of
NOK 622 million and operating loss (EBIT) of NOK -63 million in
2020.
Revenues decreased from 2020 to 2021 due to lower construction
activity. All revenues are Group internal and based on
agreements established between Scatec ASA and its subsidiaries,
joint ventures and associated companies.
Operating expenses decreased to NOK 455 million, from NOK
675 million in 2020, reflecting the reduced construction activity.
The number of employees increased from 94 to 116 following the
Company’s growth.
Profit after tax reached NOK -74 million, compared to a profit
after tax of NOK 518 million in 2020.
Total equity for the parent company Scatec ASA stood at NOK
9,761 million at 31 December 2021, down from NOK 9,915 million
in 2020. Total assets amounted to NOK 20,048 million at 31
December 2021, up from NOK 11,658 million a year earlier. The
increase mainly relates to investments in subsidiaries following the
acquisition of SN Power.
Organisation
Scatec has an international and diverse workforce which at the
end of 2021 was represented by 51 nationalities and 622
employees in 26 countries. The organisation was strengthened
across key functions and regions by expanding the team by 187
highly skilled full-time employees during the year. In addition to
the full-time workforce, Scatec had 105 short-term employees
and 56 consultants supporting its functions. The organisation
remains flexible, and the young and dynamic 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 anti-discrimination on
https://scatec.com/sustainability/esg-resources/ and in the
Company’s 2021 ESG Performance report.
Risk factors and risk management
In Scatec, risk management is an integrated part of our operating
system. We have over the years systemised our approach to risk
management through policies and procedures, which are
followed up by our 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.
Scatec ASA - Annual Report 2021
39
With integrated operations within emerging economies and
across renewable technologies, we are exposed to a variety of
risks. Our ability to manage these risks is fundamental for our
success and has over time developed into a key competitive
advantage for Scatec. We capitalise on our experience from
complex environments and risk management systems to de-risk
an opportunity and move it forward.
As part of our 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 our 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.
Below we have summarised the key inherent risks that Scatec is
exposed to as per year end 2021 and key mitigation activities.
Project development risk
Scatec’s growth relies on successful project development which is
impacted by a number of factors including availability of attractive
sites, grid capacity and securing interconnection, power prices,
component prices, interest rate level, government approval
process, permits and access to competitive financing. Scatec
manages this risk through a well-proven approach to screening
of new projects as well as holding a large and broad project
pipeline.
Component price risk
From the date when Scatec enters into long-term contract for the
sale of electricity and the date of the investment decision the
Company is exposed to the risk component price fluctuations and
supply chain disruptions.
Scatec manages such risk by seeking to work with a broad set of
suppliers and contractors and ensure that both capex and EPC
budgets for new projects hold sufficient contingencies to absorb
the most likely price fluctuations in the relevant timeframe.
Compliance and integrity risk
Scatec is opposed all forms of corruption and strives to meet the
highest ethical standards across our business activities. As a
global company, we have implemented an Anti-Corruption
Compliance Programme designed to meet the risks of diverse
and challenging business environments.
The Scatec Code of Conduct sets out our commitment to prevent
corruption and places clear requirements on our employees. We
train our employees on how to manage the corruption risks they
may face, we encourage them to ask for guidance if they are
unsure, and we remind them of their duty to speak-up if they
suspect misconduct. In 2021 we made a Code of Conduct
eLearning available for all employees and, in 2022, we will focus
on tightening internal controls around high-risk partners and
activities.
Scatec expects all business partners and suppliers to conduct their
activities in a way that is consistent with our Code of Conduct and
we embed this contractually in our Supplier Conduct
Principles. We screen all potential suppliers and systematically
assess higher-risk business partners to avoid unsuitable third
parties. Our assessment goes beyond corruption to include
environment, labour, human rights and sanction risks. We
mitigate these risks through our supplier development
programme, transparent and fair tender processes, robust
contracting, pre-production audits and monitoring during
production.
Our whistle-blower channel is available to all employees,
suppliers, partners and customers through internal channels and
our 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.
Our finance partners, including Norfund and the World Bank
International Finance Corporation, are widely acknowledged for
having high ethical standards and rigorous due diligence
requirements and, together, we ensure that our projects and
operations are conducted with integrity.
Political risk
Scatec sells electricity to state-owned utilities typically supported
by sovereign guarantees. The Company’s financial performance
therefor relies on government adherence to contractual
obligations and various laws and regulations.
Consequently, Scatec is subject to political risk in the countries it
operates. Scatec mitigates political risk through a comprehensive
contractual framework for each individual project and asset. Risk
is also mitigated through partnerships with multilateral
development banks as project finance lenders and/or through
establishing project risk insurance cover from the World Bank and
others. A large and broad asset portfolio also gives diversification
effects and reduces the overall political risk related to the asset
portfolio.
Cyber risk
Cyber risk is an increasing concern in today’s society. Scatec’s IT
partner’s Security Operations Center (ISOC) monitors all data
40
traffic passing through the firewalls 24/7 in addition to
surveillance of the general threat level across Scatec’s global
networks. The security set-up is audited by third party experts on
a regular basis.
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 19 – Financial risk management.
Power market price risk
The Company has moderate exposure to power market price risk.
Scatec has entered into long-term fixed price contracts for the
sale of electricity from most of its power plants in operation at
year end 2021. In the Philippines, Scatec has long term power
market price exposure as about 70-80% of the electricity from
power plants are sold under 1 - 3 year contracts to hedge the
short to mid-term market price exposure.
Health, Safety and Security risk
Through the construction of large-scale renewable energy plants
with between 500-5000 workers on the project site, 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.
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 of 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.
Climate change impact -
potential impacts on Scatec’s business. The most serious climate-
related risks involve the physical impact of extreme weather
events, including droughts and floods. Scatec conducts corporate
climate risk assessments Refer to our Task Force on Climate
related Financial Disclosure (TCFD) report 2021 for more
information.
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 and has a corporate
human rights policy aligned with the United Nations Guiding
Principles on Business and Human Rights.
Pandemic risk - Scatec
with its external risk advisors, regularly
assess risks related to global health issues such as pandemics. The
impact of COVID-19 on Scatec’s operations has been limited as
we operate critical infrastructure. The COVID-19 situation has
however influenced the markets where Scatec develops projects
and has caused delays in government approvals for some of the
development projects.
Corporate governance
The Board of Directors has made a strong commitment to ensure
trust in the Company and to enhance shareholder value through
effective decision-making and open communication between the
management, the Board of Directors, the shareholders and other
stakeholders. The Company’s framework for corporate
governance is intended to decrease business risk, maximise value
and utilise the Company’s recourses in an efficient, sustainable
manner, to the benefit of shareholders, employees and society at
large. The Company’s corporate governance framework is subject
to annual reviews and discussions by the Board of Directors. The
Company comply with the Norwegian Code of Practice for
Corporate Governance and the Board of Directors’ Corporate
Governance report is available on the corporate website under
the Investor section.
Scatec ASA has purchased and maintains a Directors and Officers
Liability Insurance on behalf of the members of the Board of
Directors and CEO. The insurance additionally covers any
employee acting in a managerial capacity and includes
Scatec ASA - Annual Report 2021
41
subsidiaries owned with more than 50%. The insurance policy is
issued by a reputable, specialised insurer with appropriate rating.
Market outlook
Global new installation of renewable energy capacity reached 315
GW in 2021 according to Bloomberg New Energy Finance (BNEF).
Although global cost inflation is impacting the renewables
industry the cost impact on other energy sources is even
stronger. Consequently, the relative competitiveness of the fuel
independent electricity form solar, wind and hydropower has
strengthened over the last few quarters.
Bloomberg New Energy Finance (BNEF) expects global solar new
build to accelerate and see new installations of around 228 GW in
2022, up from an estimated 183 GW in 2021. For wind, new
installations reached an estimated 93 GW in 2021 and is expected
to grow by 9% each year up to 2030, cumulative capacity
surpassing 1,000 GW already in 2023. The global energy storage
market grows at unprecedented rates, with an estimated 11 GW of
new capacity installed in 2021 and 345 GW to be added up to
2030.
Global hydropower new build reached an estimated 28 GW in
2021, according to the International Energy Agency (IEA). In a
recent report, IEA highlights that around half of the economically
viable potential of hydropower globally is yet untapped. The
potential is particularly high in emerging and developing
economies. To reach IEA’s net-zero emission by 2050, significant
investments are required to build an estimated additional 477 GW
of hydropower capacity globally by 2030.
Long term, BNEF expects all renewables to see massive growth
and to supply 85% of energy in 2050 in a green scenario
1
. In its
latest New Energy Outlook 2021 report, BNEF highlights that the
following milestones would need to be achieved every year on
average through 2030 to be on track to reach net zero by 2050:
●
New wind power of 505 GW
●
Solar PV of 455 GW
●
Batteries of 245 GW
To achieve the goal of net zero emissions by 2050, 85 per cent of
the world’s energy production will have to come from renewable
energy, according to Bloomberg NEF, which will require total
investments of USD 150 trillion in total.
Green hydrogen and green ammonia are set to play a major role
in decarbonisation of hard-to-abate sectors globally in the
coming years, driven by volatile gas prices, cheap renewables,
ambitious net zero targets and an increasing number of national
hydrogen strategies being adopted. IRENA’s 1.5°C scenario
envisages that clean hydrogen could meet up to 12% of final
energy consumption by 2050.
Scatec mid-term growth target
In March 2021, Scatec announced a new target to reach 15 GW by
the end of 2025 and a NOK 100 billion investment plan to fund
the growth target. The business plan is supported by Scatec’s
track record of strong growth and the solid project pipeline
across solar, wind, hydro and storage in high-growth markets
globally.
The 15 GW target implies 12 GW of new capacity, with NOK 15-20
billion of a total NOK 100 billion in investments to be funded by
Scatec equity. Solid long term cash flows from operating power
plants and margins from development and construction of new
facilities are expected to fund a large part of Scatec’s equity
investments.
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 3,958,392 divided
on 158,864,018 shares at year end 2021, 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 2021, the
number of shareholders were 16,487. Refer to Note 27 - Share
capital, shareholder information and dividend for further
information.
In 2021, the Scatec share price was negatively affected by a weak
sector development as well as delayed construction start for
several of Scatec’s backlog projects.
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
The Group’s objective is to pay shareholders consistent and
growing cash dividends. Scatec’s dividend policy is to, over time,
pay its shareholders dividends representing minimum 25% of the
cash distributions received from the power plants each year. In
line with the dividend policy, the Board of Directors have resolved
to propose to the 2022 Annual General Meeting of Scatec that a
dividend of NOK 2.54 per share should be paid for 2021.
1
applied in sectors such as industry and heavy transport, as well as in power generation to complement electrification.
42
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 is
a going concern and that this assumption was appropriate at
the date of approval of the Financial Statements. The Group
reports its Consolidated Financial Statements in accordance
with International Financial Reporting Standards (IFRS) with
Norwegian Kroner (NOK) as reporting currency. The notations
Scatec, Scatec Group, the Company and the Group are used
interchangeably throughout the document. Figures in
parentheses are for the corresponding period of the previous
year.
Segment and proportionate financials
Scatec reports on four operating business segments: Power
Production (PP), Services, Development & Construction (D&C)
and Corporate.
To improve earnings visibility and reporting transparency on
underlying value creation across Scatec’s business activities, the
Company is reporting on proportionate financials in addition to
consolidated financials. With proportionate financials Scatec
reports its share of revenues, expenses, profits and cash flows
from its subsidiaries based on Scatec’s economic interest in the
subsidiaries. Proportionate reporting is in line with how the
Management Team assesses the performance of the segments.
Please refer to Note 3 Operating Segments for further
descriptions of the proportionate financials as well as
reconciliation to the IFRS financial statement.
Subsequent events
No adjusting events have occurred after the balance sheet date.
Non-adjusting event
On 24 February 2022, Russia invaded Ukraine where Scatec
currently operate five solar power plants, located in the central
and southern parts of the country. The situation is extremely
challenging, and Scatec's top priority is the safety of our Ukrainian
employees. The outcome is still highly uncertain, but the event
may significantly impact Scatec’s financial performance in Ukraine,
including restructuring of the loan for Chigirin.
Based on the
current circumstances we anticipate to be in breach of loan
covenants as of end of Q1 2022 and we have a continuous and
constructive dialogue with the lenders on this matter.
Oslo, 17 March 2022
The Board of Directors Scatec ASA
Scatec ASA - Annual Report 2021
43
Consolidated financial
statements Group
44
Consolidated statement of profit or loss
45
Consolidated statement of comprehensive income
46
Consolidated statement of financial position
47
Consolidated statement of changes in equity
49
Consolidated statement of cash flow
50
Notes to the Consolidated financial statements
51
General information
Note 1
Corporate information
51
Note 2
Key sources of estimation uncertainty, judgements and assumptions
51
Statement of profit or loss (and comprehensive income)
Note 3
Operating segments
52
Note 4
Employee benefits
56
Note 5
Other operating expenses
58
Note 6
Financial income and expenses
59
Note 7
Tax
59
Note 8
Earnings per share
62
Statement of financial position
Note 9
Property, plant and equipment
62
Note 10
Goodwill and intangible assets
64
Note 11
Leases
66
Note 12
Impairment testing
68
Note 13
Investments in joint venture and associated companies
70
Note 14
Business combinations
74
Note 15
Cash and cash equivalents
75
Note 16
Trade receivables
76
Note 17
Other non-current and current asset
77
Note 18
Other non-current and current liabilities
78
Financial risk and capital management
Note 19
Financial risk management and risk sensitivities
79
Note 20
Financial instruments
81
Note 21
Financial instruments by category
83
Note 22
Derivative financial instruments
84
Note 23
Corporate financing
86
Note 24
Non-recourse financing
88
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
100
Note 31
Summary of significant accounting policies
101
Note 32
Subsequent events
102
Scatec ASA - Annual Report 2021
45
Consolidated statement of profit and loss
1 JANUARY - 31 DECEMBER
NOK million
Note
2021
2020
Revenues
3
Net income/(loss) from JV and associated companies
3, 13
-16
Total revenues and other income
Personnel expenses
4
-397
-262
Other operating expenses
5
-503
-423
Depreciation, amortisation and impairment
9, 10, 11
-892
-777
Operating profit (EBIT)
Interest and other financial income
6
Interest and other financial expenses
6
-1,368
-1,189
Net foreign exchange gain/(loss)
19, 6
-398
Net financial expenses
-1,253
-1,530
Profit/(loss) before income tax
-238
Income tax (expense)/benefit
7
-303
-130
Profit/(loss) for the period
-368
Profit/(loss) attributable to:
Equity holders of the parent
-478
Non-controlling interest
29
Basic earnings per share (NOK)
8
-3.51
Diluted earnings per share (NOK)
8
-3.51
46
Consolidated statement of comprehensive income
1 JANUARY - 31 DECEMBER
NOK million
Notes
2021
2020
Profit/(loss) for the period
-368
Other comprehensive income:
Items that may subsequently be reclassified to profit or loss
Net movement of cash flow hedges
22
-376
Income tax effect from net movement of cash flow hedges
7
-108
Foreign currency translation differences
-116
Net other comprehensive income to be reclassified
-394
Total comprehensive income for the year, net of tax
-762
Attributable to:
Equity holders of the parent
-698
Non-controlling interest
29
-65
Scatec ASA - Annual Report 2021
47
Consolidated statement of financial position
NOK million
Note
As of
31 December 2021
As of
Assets
Non-current assets
Deferred tax assets
7
Property, plant and equipment
9
Goodwill and intangible assets
10
Investments in JVs and associated companies
13
Other non-current assets
17, 30
Total non-current assets
Current assets
Trade and other receivables
16
Other current assets
17, 30
Cash and cash equivalents
15
Total current assets
Total assets
48
Consolidated statement of financial position
NOK million
Note
As of
31 December 2021
As of
31 December 2020
Equity and liabilities
Equity
Paid in capital
Share capital
27
Share premium
Total paid in capital
Other equity
Retained earnings
-493
-708
Other reserves
-16
-221
Total other equity
-508
-929
Non-controlling interests
29
Total equity
Non-current liabilities
Deferred tax liabilities
7
Corporate financing
23
Non-recourse project financing
24
Other financial liabilities
20, 21, 22
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
20, 21, 22
Other current liabilities
18, 30
Total current liabilities
Total liabilities
Total equity and liabilities
Oslo, 17 March 2022
The Board of Directors Scatec ASA
Scatec ASA - Annual Report 2021
49
Consolidated statement of changes in equity
Other reserves
NOK million
Share
capital
Share
premium
Retained
earnings
Foreign
currency
translation
Hedging
reserves
Total
Non-
controlling
interests
Total
equity
At 1 January 2020
-134
-130
Profit for the period
-478
-478
-368
Other comprehensive income
-89
-131
-219
-174
-394
Total comprehensive income
-478
-89
-131
-698
-65
-762
Share-based payment
Share capital increase
Transaction cost, net after tax
-144
-144
-144
Share purchase program
-1
-1
-1
Dividend distribution
-131
-131
-148
-279
Purchase of NCIs shares in group companies
Capital increase from NCI
At 31 December 2020
-708
-261
At 1 January 2021
-708
-261
Profit for the period
Other comprehensive income
Total comprehensive income
Share-based payment
Share capital increase
Share purchase program
-1
-1
-1
Dividend distribution
-173
-173
-217
-390
Capital increase from NCI
At 31 December 2021
-493
-111
50
Consolidated statement of cash flow
NOK million
Notes
2021
2020
Cash flow from operating activities
Profit before taxes
-238
Taxes paid
7
-234
-214
Depreciation and impairment
9, 10, 11
Net gain/loss from sale of fixed assets
9
Net income from JV and associated companies
13
-765
Interest and other financial income
6
-47
-57
Interest and other financial expenses
6
Unrealised foreign exchange (gain)/loss
6
-69
(Increase)/decrease in current assets and current liabilities
-226
Net cash flow from operating activities
Cash flows from investing activities
Interest received
6
Consideration paid for SN Power, net of cash acquired
23, 14
-7,848
Investments in property, plant and equipment
9
-967
-1,774
Distributions from JV and associated companies
13
Investments in JV and associated companies
13
-131
-39
Net cash flow used in investing activities
-8,081
-1,704
Cash flow from financing activities
Net proceeds from non-controlling interests shareholder financing
25
-12
Interest paid
-1,180
-894
Proceeds from non-recourse project financing
24
Repayment of non-recourse project financing
24
-750
-678
Payments of principal portion on lease liabilities
11
-25
-18
Interest paid on lease liabilities
11
-15
-18
Net proceeds from corporate financing
23
Share capital increase
1)
27
Dividends paid to equity holders of the parent company and non-controlling interests
27
-390
-280
Net cash flow from financing activities
Net increase/(decrease) in cash and cash equivalents
-3,597
Effect of exchange rate changes on cash and cash equivalents
-20
Cash and cash equivalents at beginning of the period
Cash and cash equivalents at end of the period
15
1)
The amounts of share capital increase are presented net of transaction cost of NOK 0 million (128) in 2021
Scatec ASA - Annual Report 2021
51
Notes to the Consolidated financial statements Group
Note 1 Corporate information
. The
address of its registered office is
. Scatec
3 – Operating segments).
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 2021
were authorised for issue in accordance with a resolution by
the Board of Directors on 17 March 2022.
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 Key sources of estimation uncertainty, judgements and assumptions
Information about estimation uncertainty, judgements and
assumptions in the annual report are largely incorporated into the
individual notes. Information presented in this note are more
general descriptions and information that does not naturally
belong in the individual notes.
In preparation of the Group’s consolidated financial statements,
management has made assumptions and estimates about future
events and applied judgements that affect the reported values of
assets, liabilities, revenues, expenses and related disclosures.
Uncertainty about these assumptions and estimates could result
in outcomes that require a material adjustment to the carrying
amount of assets or liabilities affected in future periods. The
assumptions and estimates are based on historical experience,
current trends and other relevant factors available when the
consolidated financial statements are prepared. The key
assumptions concerning the future and other key sources of
estimation uncertainty at the reporting date, that have a
significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities within the next financial year, are
described below and in individual notes. The Group based its
assumptions and estimates on parameters available when the
consolidated financial statements were prepared. Existing
circumstances and assumptions about future developments,
however, may change due to market changes or circumstances
arising beyond the control of the Group. Such changes are
reflected in the financial statements when the changes in
assumptions occur.
The Company’s management believes the following critical
accounting items represent the more significant judgements and
estimates 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:
i
52
1.
As the largest shareholder providing equity financing to the
project
2.
As (joint) developer, including obtaining project rights, land
permits, off taker agreements and other local approvals
3.
As EPC contractor, responsible for the construction of the
project
4.
As provider of operation & maintenance services to the
projects, responsible for the day to day operations of the
plant
5.
As provider of management services to the power plant
companies
Even though none of the projects Scatec is involved with are
identically structured, the five roles/activities described above
constitute the main and relevant activities which affect the
variable return. When assessing whether Scatec controls a power
plant company, all facts and circumstances, including the above
agreements are analysed. For the power plant companies
consolidated in the financial statement, Scatec has concluded that
it through its involvement controls the entities. Scatec has
considered that it has the current ability to direct the relevant
activities of the entities and has the ability to affect the variable
returns through its power over the companies. The assessment of
whether Scatec controls the investee is performed upon first time
consolidation and is renewed annually or more often, if and when
facts that could impact the conclusion change.
Please see individual notes and sections “Estimation uncertainty”
for further details around other estimations, judgements and
assumptions.
Note 3 Operating segments
Operating segments align with internal management reporting
to the Group’s chief operating decision makers, defined as the
Executive Management team. The operating segments are
determined based on differences in the nature of their
operations, products and services. Scatec manages its
operations in four segments: Power Production (PP), Services,
Development & Construction (D&C) and Corporate.
From January 2021, the group has incorporated the hydro and
wind producing assets in the Power Production segment, other
activities related to the development, construction and
operations of the wind and hydro plants are incorporated in
the different segments according to its nature, as defined
below.
Power Production
The Power Production segment manages the Group’s power
producing assets and derives its revenue from the production
and sale of solar, winds and hydro generated electricity based
on long-term Power Purchase Agreements or Feed-inTariffs . In
addition, the segment includes revenues from the Release
concept, and energy trading activities. The electricity is
primarily sold on long-term Power Purchase Agreements or
feed-in-tariffs except for in the Philippines where the electricity
is sold on bilateral contracts, in the spot market and as
ancillary services.
Revenue is recognised upon delivery of electricity produced to
the local operator of the electricity grid. The performance
obligation is to deliver a series of distinct goods (power) and
the performance obligation is satisfied over time which entails
that revenue should be recognised for each unit delivered at
the transaction price. Revenue is recognised upon transfer of
electricity produced to the local operator of the electricity grid,
based on periodic meter readings. The Group applies a
practical expedient under IFRS 15 whereby the revenue from
power for most of the contracts is recognised at the amount of
which the entity has a right to invoice. The right to invoice
power arises when power is produced and delivered and the
right to invoice the consideration will normally correspond
directly with the value to the customer.
Delivery is deemed complete when all the risks and rewards
associated with ownership have been transferred to the buyer
as contractually agreed, compensation has been contractually
established and collection of the resulting receivable is
probable. For all sales contracts the Group had per the end of
year, indexation of tariffs is recognised when they come into
force.
Finance and operation of the plants is mainly ring-fenced in
power plant companies with a non-recourse finance structure.
This implies that the project debt is only secured and serviced
by project assets and the cash flows generated by the project,
and that there is no obligation for project equity investors to
contribute additional funding in the event of a default. Free
cash flows after debt service are distributed from these power
plant companies to Scatec, and any other project equity
investors in accordance with the shareholding and the terms of
the finance documents.
Services
The Services segment comprises Operations & Maintenance
(O&M) and Asset Management services provided to solar and
hydro power plants where Scatec has economic interest. The
services are delivered to ensure optimised operations of solar
and hydro 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
Scatec ASA - Annual Report 2021
53
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 solar, wind
and hydro power plants. These transactions are primarily
made with entities that are under the control of the Group and
hence eliminated when consolidated.
Construction services include operations where Scatec is
responsible for the total scope of a turnkey installation of a
power plant through a contract covering Engineering,
Procurement and Construction. Revenues from construction
services are based on fixed price contracts and are accounted
for using the percentage of completion method. The
percentage of completion of a contract is determined by
actual cost incurred over total estimated costs to complete.
Scatec periodically revise contract profit estimates and
immediately recognises any losses on contracts. Incurred costs
include all direct materials, costs for modules, labor,
subcontractor costs, and other direct costs related to contract
performance. Scatec recognises direct material costs as
incurred costs when the main direct materials have been
installed. Scatec considers direct materials to be installed when
they are permanently attached or fitted to the solar power
systems as required by engineering designs.
Some construction contracts include product warranties. The
expected warranty amounts are recognised as an expense at
the time of sale and are adjusted for subsequent changes in
estimates or actual outcomes. The group has currently
ongoing construction projects in Pakistan and related to
Release in Cameroon, Chad and South Africa.
Corporate
Corporate consists of the activities of corporate and
management services.
No segments have been aggregated to form these reporting
segments. Revenues from transactions between the D&C,
Services and PP segments, where Scatec is deemed to hold a
controlling interest, are presented as internal revenues in the
segment reporting, and eliminated in the consolidated
statement of profit or loss.
Use of proportionate financials
The segment financials are reported on proportionate basis.
With proportionate financials Scatec reports its share of
revenues, expenses, profits and cash flows from its subsidiaries
without eliminations based on Scatec’s economic interest in
the subsidiaries. The Group introduced Proportionate
Financials as the Group is of the opinion that this method
improves earnings visibility and to improve transparency on
underlying value creation across Scatec’s business activity.
Revenues from transactions between group companies, where
Scatec is deemed to hold a controlling interest, are presented
as internal revenues in the segment reporting. These
transactions are based on international contract standards and
terms negotiated at arm’s length with lenders and co-investors
in each power plant company. No operating segments have
been aggregated to form these reporting segments.
The consolidated revenues and profits are mainly generated in
the Power Production segment. Activities in the Services and
Development & Construction segment mainly reflect deliveries
to other companies controlled by Scatec, or which revenues
and profits are eliminated in the consolidated financial
statements. The key differences between the proportionate
and the consolidated (IFRS) financials are that:
●
In the consolidated financials fully consolidated companies
are presented on a 100% basis. In the proportionate
financials the fully consolidated companies are presented
based on Scatec’s ownership percentage/economic interest.
The residual ownerships interests in the table below
represent the share of the proportionate financials in fully
consolidated subsidiaries where Scatec do not have 100%
economic interest.
●
In the consolidated financials joint venture and associate
companies are equity consolidated and are presented with
Scatec’s share of the net profit on a single line in the
statement of profit or loss. In the proportionate financials
the joint venture and associate companies are presented in
the same way as other subsidiaries on a gross basis in each
account in the statement of profit or loss. In the table below
is the column elimination of equity consolidated entities the
elimination of proportionate financials from equity
consolidated entities adjusted for Scatec’s share of net
income/(loss).
●
Internal gains are eliminated in the consolidated financials
but are retained in the proportionate financials. These
internal gains primarily relate to gross profit on D&C goods
and services delivered to project companies. Hence, the
consolidated financials have lower book value of solar plants
and corresponding lower depreciation charges because
internal gain is eliminated. Internal gain eliminations also
include profit on Operations and Maintenance - and Asset
Management services delivered to project companies.
●
The management team assesses the performance of the
operating segments based on a measure of gross profit and
operating profit; hence interest income/expense is not
disclosed on proportionate basis.
The acquisition of SN Power from January 2021 is structured so
that the economic risk of the acquired companies is
transferred to Scatec from 1 January 2021. Consequently, SN
Power is included in the proportionate segment financials from
1 January 2021. In the Group consolidated IFRS financials the
date of inclusion is 29 January 2021, which is the date of
completion when Scatec obtained control over the project
companies as defined by IFRS. The proportionate amount of
total revenues, EBITDA, EBIT and net profit included for the SN
Power entities for January 2021 are NOK 184 million, NOK 119
54
million, NOK 92 million and NOK 45 million respectively. Of
this a net profit of NOK 57 million from equity consolidated
entities and NOK -12 million is from fully consolidated entities
Bridge proportionate – to consolidated financials 2021
2021
Proportionate financials
NOK million
Power
Production
Services
Development
&
Construction
Corporate
Total
Residual
ownership
for fully
consolidated
entities
Elimination
of equity
consolidated
entities
Other
eliminations
Consolidated
financials
External revenues
1)
4,176
5
3
6
4,189
1,162
-2,312
-1
3,038
Internal revenues
-
256
134
36
426
34
-22
-438
-
Net income from JV and associates
2)
-
-
-
-
-
-
765
-
765
Total revenues and other income
4,176
260
137
42
4,615
1,196
-1,569
-439
3,803
Cost of sales
-557
1
-120
-
-676
-10
560
126
-
Gross profit
3)
3,620
261
16
42
3,939
1,186
-1,009
-313
3,803
Personnel expenses
-99
-97
-162
-92
-449
-7
49
10
-397
Other operating expenses
-572
-90
-78
-65
-804
-208
208
302
-503
EBITDA
2,949
75
-223
-114
2,686
970
-752
-1
2,903
D&A and impairment
4)
-972
-5
-78
-26
-1,081
-330
369
151
-892
Operating profit (EBIT)
1,977
70
-301
-140
1,606
640
-383
149
2,012
1) In addition to ancillary services and spot market sales, the reported revenues and cost of sales from the Philippines reflect the power market settlement mechanism for bilateral
contracts – implying that both the sale and a buy transaction related to the gross contract business is included and not eliminated
2) Refer to Note 13 Investments in joint venture and associated companies for details on Net income from JV and associates
3) Equivalent to Net revenues
4) Included in the Power Production segment is amortisation of excess values related to the acquisition of SN Power (ref Note 13) and included in Development & Construction
segment is the impairment of discontinued development of projects (ref Note 12)
Bridge proportionate – to consolidated financials 2020
2020
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
1,708
1
12
5
1,727
1,131
-77
-10
2,771
Internal revenues
-
231
861
28
1,118
310
-25
-1,403
-
Net income from JV and associates
-
-
-
-
-
-
-16
-
-16
Total revenues and other income
1,708
232
873
33
2,844
1,442
-119
-1,414
2,754
Cost of sales
-
-
-764
-
-764
-271
17
1,017
-
Gross profit
1,708
232
109
33
2,080
1,171
-102
-396
2,754
Personnel expenses
-28
-75
-85
-72
-259
-3
6
-7
-262
Other operating expenses
-276
-75
-52
-113
-517
-189
26
256
-423
EBITDA
1,404
82
-28
-153
1,306
979
-69
-147
2,069
D&A and impairment
-566
-3
-26
-20
-615
-321
29
131
-777
Operating profit (EBIT)
838
79
-54
-173
690
658
-40
-16
1,292
Scatec ASA - Annual Report 2021
55
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
2021
2020
South Africa
1,135
1,040
Egypt
596
629
Malaysia
348
335
Ukraine
303
150
Honduras
197
214
Jordan
143
156
Czech Republic
122
128
Mozambique
83
88
Vietnam
70
-
Rwanda
20
22
Other
21
10
Total
3,038
2,771
Property, plant and equipment per country
NOK million
2021
2020
South Africa
3,245
3,563
Egypt
3,074
3,086
Malaysia
2,683
2,777
Ukraine
2,616
3,013
Honduras
1,359
1,404
Jordan
820
829
Mozambique
456
468
Vietnam
444
-
Norway
348
271
Czech Republic
330
357
Netherlands
256
151
Rwanda
136
139
Pakistan
108
-
Other
12
12
Total
15,885
16,070
Major customers
In South Africa, revenues (3 plants which commenced
operations in 2013 and 2014 and 3 plants which commenced
operations in 2020) are earned under 20-year Power Purchase
Agreements (PPA) with Eskom Holdings (South African
incumbent utility), which was awarded under the Renewable
Independent Power Producer Procurement Programme
(REIPPPP) administrated by the Department of Energy. Eskom’s
financial commitments under the PPA are guaranteed by the
South African National Treasury under the Implementation
Agreement.
The Benban plant in Egypt commenced operation in 2019. The
electricity is sold under a 25-year Power Purchase Agreement
with Egyptian Electricity Transmission Company, S.A.E. The
financial commitments of Egyptian Electricity Transmission
Company, S.A.E under the PPA are guaranteed by the
sovereign guarantee from The Ministry of Finance under the
Egyptian Law.
The Gurun plant in Malaysia commenced operation in 2018,
the Merchang and Jasin plant commenced operation in 2019,
and RedSol commenced operations in 2020. The electricity is
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.
56
The Rengy plant in Ukraine commenced operation in 2019,
Boguslav and Kamianka commenced operations in 2020 and
Chigrin and Progressovka commenced operations in 2021. The
electricity is sold under Power Purchase Agreement’s all
ending 31 December 2029 with the stateowned company
Guaranteed Buyer. The financial commitments of Guaranteed
Buyer under the PPA are guaranteed by the State under the
law on Alternative Energy Sources and the
Law on Electric
Energy Market.
The Agua Fria power plants in Honduras commenced
operations 2015, whereas the Los Prados plants in Honduras
commenced operation in 2018. The electricity from the plants
is sold under a 20-year Power Purchase Agreement with the
utility Empresa Nacional de Energia Electricia (ENEE). The
financial commitments of ENEE under the PPA are guaranteed
by the sovereign guarantee executed by the Honduran
attorney general and the secretary of finance, approved by the
National Congress of Honduras.
The Oryx, GLAE and EJRE power plants in Jordan commenced
operations in 2016. The electricity is sold under a 20-year
Power Purchase Agreement with National Electric Power
Company (NEPCO). NEPCO’s financial commitments under the
PPA are guaranteed by the Government of Jordan
represented by its Ministry of Finance under the Government
Guarantee Agreement.
The Czech power plants commenced operations in 2009 (1
plant) and 2010 (3 plants) and have entered into power
purchase agreements with utilities CEZ Distribuce and EON
Distribuce, based on the terms of the Czech Energy Act and
Czech Renewable Energy Act. This legislation requires the
utilities to purchase the power produced from renewable
energy sources for a period of 20 years at the Feed-in-Tariff
(FiT) prescribed by law and applicable regulation, adjusted
annually.
The Mocuba plant in Mozambique commenced operation in
2019. The electricity is sold under a 25-year Power Purchase
Agreement with Electricidade de Moçambique (EDM). The
financial commitments of EDM under the PPA are guaranteed
by The Mozabican government under the concession
agreement approved under law 88/2016 of 5 December 2016
for 30 years.
The Dam Nai wind farm in Vietnam was acquired by SN Power
on 27 January 2021 and has a capacity of 39.4 MW. The wind
farm was constructed in two phases and Phase I started
operations in October 2017 (7.9 MW) and Phase II in
December 2018 (31.5 MW). The electricity is sold under a 20-
year Power Purchase Agreement with Vietnam Electricity; a
state-owned company established by the government in
Vietnam.
The ASYV power plant in Rwanda commenced operations in
2014. The power is sold under a 25-year Power Purchase
Agreement with the state-owned utility EWSA, with an annual
price adjustment of 100% of Rwandan CPI. EWSA’s financial
commitments under the PPA are guaranteed by the
Government of Rwanda represented by its Ministry of Finance
and Economic Planning under the Government Guarantee
Agreement.
Note 4 Employee benefits
Accounting principle
Wages, salaries, bonuses, pension and social security
contributions, paid annual leave and sick leave are accrued in
the period in which the associated services are rendered by
employees of the Company.
The cost of equity-settled transactions is determined by the
fair value at the date when the grant is made using an
appropriate option-pricing model. That cost is recognised in
personnel expenses, together with a corresponding increase in
equity over the vesting period. The cumulative expense
recognised for equity-settled transactions at each reporting
date until the vesting date reflects the extent to which the
vesting period has expired and the company’s best estimate of
the number of equity instruments that will ultimately vest.
Service and non-market performance conditions are not
considered when determining the grant date fair value of
awards, but the likelihood of the conditions being met is
assessed as part of the company’s best estimate of the
number of equity instruments that will ultimately vest. Market
performance conditions are reflected within the grant date fair
value. Any other conditions attached to an award, but without
an associated service requirement, is considered to be non-
vesting conditions. Non-vesting conditions are reflected in the
fair value of an award and lead to an immediate expensing of
an award unless there are also service and/or performance
conditions. The dilutive effect of outstanding options is
reflected as additional share dilution in the computation of
diluted earnings per share.
A liability is recognised for the fair value of cash-settled
transactions over the period until the vesting date. The fair
value is measured initially and at each reporting date up to
and including the settlement date, with changes in fair value
recognised in personnel expenses.
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. Expected volatility is calculated on
the historical volatility based on the company’s own share
prices.
Scatec ASA - Annual Report 2021
57
Salaries and other personnel costs
NOK million
2021
2020
Salaries
363
256
Share-based payment
27
14
Payroll tax
31
52
Pension costs
24
17
Other personnel costs
21
11
Capitalised to PP&E (project assets)
-68
-88
Total
397
262
Paid salaries and personnel expenses for the management
NOK million
2021
2020
Salary and bonus
35
26
Pension
1
1
Total
36
27
For further details refer to Note 4 Personnel expenses, number of employees and auditor’s fee in the separate financial statements for
the Parent Company. No severance package agreements have been established with management.
Long term incentive programmes
In line with the terms adopted by the Annual General Meeting
of Scatec ASA on 4 May 2016, and prolonged in the following
years, the Board of Directors have established an option
programme for leading employees of the company. Options
are vested in tranches over a three-year period, with the first
tranche vesting one year from award. As of 31 December
2021, there are options not fully vested from the grants
awarded in 2019 and onwards. The strike prices are equivalent
to the volume weighted average price of the shares the ten
preceding trading days of the grant.
1/2/2019
1/2/2020
1/4/2021
2/24/2021
5/6/2021
Amount
494,510
595,140
251,242
32,999
219,566
Strike price
72.03
114.83
314.91
314.91
244.28
A total of 26 employees were awarded options in 2019 of
which 3 has subsequently left the Company. A total of 39
employees were awarded options in 2020 of which 5 have
subsequently left the company. A total of 82 employees were
awarded options in 2021 of which 10 have subsequently left
the company.
For the options granted in 2021 the assumptions used in
calculating the fair value of the options are as follows: 2.84
years (2.5 years) for expected lifetime, 44.87% (33.7%) for the
expected volatility and 0 (0) for expected dividend.
During 2021 the employees exercised 515 thousand options
(540 thousand) at the weighted average strike and share price
of NOK 80.10 and NOK 279.18 (NOK 47.02 and NOK 123.40)
respectively. Total number of outstanding options under the
long-term incentive programme is 978 thousand (1,071
thousand) as of 31 December 2021. The fair value of the
options are expensed over the vesting period, and in 2021
NOK 27 million (14) have been expensed.
Pensions schemes
The Group has established pension schemes that are classified
as defined contribution plans. Contributions to defined
contribution schemes are recognised in the consolidated
statement of profit and loss in the period in which the
contribution amounts are earned by the employees.
58
Number of FTE’s employed during the financial year in the consolidated entities
2021
2020
South Africa
179
159
Norway
116
94
Egypt
48
41
Malaysia
34
31
Ukraine
37
27
Honduras
18
15
Netherlands
17
8
Vietnam
8
6
Mozambique
7
7
Thailand
5
-
India
5
-
Other
28
12
Total
502
400
Note 5 Other operating expenses
NOK million
2021
2020
Facilities
182
142
Professional fees
138
147
Other office costs
56
45
Travel costs
14
11
Social development contributions
54
33
O&M external fees
20
7
Other costs
39
39
Total other operating expenses
503
423
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 2021 recognised
government grants of NOK 4 million (3) in cost reductions
and NOK 58 million (5) as deductions of the development and
construction asset’s carrying amount. NOK 40 million of the
amount deducted from development and construction asset's
relates to the Sukkur project in Pakistan under development.
Remuneration to the auditors (EY and other independent auditors)
NOK million
2021
2020
Audit services
9
7
Other attestation services
-
1
Tax services
3
7
Other services
1
7
Total remuneration
13
22
VAT is not included in the numbers above. Non-audit fee for 2020 mainly relates to due diligence services in connection with the
acquisition of SN Power.
Scatec ASA - Annual Report 2021
59
Note 6 Financial income and expenses
NOK million
2021
2020
Interest income
43
48
Other financial income
4
8
Interest and other financial income
47
57
Interest expenses
1,303
1,131
Change in fair value of forward exchange contracts
-2
7
Other financial expenses
67
51
Interest and other financial expenses
1,368
1,189
Net foreign exchange gain/(loss)
69
-398
Net fiancial expenses
1,253
1,530
See Note 19 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.
Note 7 Tax
Accounting principle
Income tax expense comprises current tax and change in net
deferred tax.
Current income 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 in the financial statements and their respective
tax bases. The amount of net deferred tax provided is based
on the expected manner of realisation or settlement of the
carrying amount of assets and liabilities, using tax rates
enacted or substantially enacted at the consolidated statement
of financial position date. Deferred tax assets and liabilities are
offset if a legally enforceable right exists to set off current tax
assets against current income tax liabilities and the deferred
taxes relate to the same taxable entity and the same taxation
authority.
Current and change in net deferred tax are recognised as
expense or income in the consolidated statement of profit or
loss, except where they relate to items recognised in other
comprehensive income or directly to equity, in which case the
tax is also recognised as other comprehensive income or
directly to equity.
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. 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.
When assessing the probability of utilising these losses several
factors are considered, including all available positive and
negative evidence. These factors include, 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 solar power plants and
its reversal is merely a timing effect. At year-end 2021 the
Group has recorded a valuation allowance of NOK
530
million
(108) related to tax losses carried forward which are not
expected to be used to offset future taxable income.
60
NOK million
2021
2020
Tax payable
-84
-142
Change in deferred tax
-232
25
Withholding tax
-49
-13
Adjustments of tax concerning previous years
63
-
Income tax expense
-303
-130
Reconciliation of Norwegian nominal tax rate to effective tax rate
Profit before income tax
759
-238
Nominal tax rate (22%)
-167
52
Tax effect of:
Permanent differences
-25
-138
Tax rate different from Norwegian rate
-5
-14
Current tax on dividend received and withholding tax
-49
-13
Valuation allowance loss carried forward
-177
-9
Adjustments of tax concerning previous years
-
5
Share of net income from associated companies
168
-4
Use and capitalisation of previously unrecognised losses carried forward
9
-
Other items
-11
-3
Currency translation
-46
-7
Calculated tax expense
-303
-130
Effective tax rate
40%
-55%
The Gro
up recognised an income tax expense of NOK 303
million (130) in
2021
, equivalent to an effective tax rate of 40%.
The difference between the Group’s actual tax expense and a
calculated tax expense based on the Norwegian tax rate of
22% is mainly due to different tax rates in the jurisdictions in
which the companies operates, withholding taxes paid on
dividends, currency effects, revised assessment of deferred tax
asset and
operating power plants
. 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. The effective tax rate has been and will be
impacted by the volume of construction activities as the tax
rate in the construction companies normally is higher than in
the power plant companies. This means that the full tax
expense on the internal profit will not be eliminated and hence
increases the effective tax rate during construction. The
opposite effect will occur when the eliminated internal profit is
reversed through lower depreciation at the tax rate of the
power plant company.
Scatec ASA - Annual Report 2021
61
Significant components of deferred tax assets
NOK million
2021
2020
Tax losses carried forward
1,724
1,013
Valuation allowance of deferred tax assets
-530
-108
Financial instruments
87
191
Property, plant and equipment and intangible
100
268
Construction projects
-
89
Lease liabilities
51
30
Other items
14
19
Offsetting of tax balances
1)
-699
-780
Total deferred tax assets
748
722
Significant components of deferred tax liabilities
NOK million
2021
2020
Property, plant and equipment and intangible
1,282
950
Construction projects
1
31
Financial instruments
4
2
Other items
1
3
Offsetting of tax balances
1)
-699
-780
Total deferred tax liabilities
589
206
1) Deferred tax assets and liabilities are offset to the extent that the deferred taxes relate 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
2021
2020
Country
Loss carried
forward
Deferred
tax asset
Loss carried
forward
Deferred
tax asset
South Africa
2,444
675
2,083
579
Norway
2,054
260
700
150
Egypt
1,050
78
2
-
Ukraine
899
162
704
160
Jordan
480
18
464
15
Netherlands
339
-
-
-
Malaysia
231
-
140
-
Other
18
-
34
-
Total
7,514
1,195
4,127
905
The Group has NOK 7,514 million (4,127) of tax losses carried
forward. 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 is determined by the useful life of the
assets. The increase in losses carried forward for the Group in
2021 mainly derives from losses in recourse group companies
and revised taxable depreciation profile for one of the
operating power plants.
The tax losses in Egypt and Jordan can be carried forward for
5 years while losses in Netherlands can be carried forward for
6 years. The Group had at the end of 2021 capitalised
approximately NOK 6 million (6) in deferred tax asset related
to deferred interest expenses, which can be carried forward for
10 years until 2027 in Norway. All other tax losses in the group
can be carried forward indefinitely.
The Group has recognized tax assets on unused tax losses to
the extent that the Group expects there will be sufficient future
taxable profits available to utilise the losses.
62
Movement in net deferred tax asset
NOK million
2021
2020
Net deferred tax asset at 1 January
517
343
Recognised in the consolidated statement of profit or loss
-232
25
Deferred tax other comprehensive income
-108
98
Deferred tax on excess values from acquisition of SN Power
-19
0
Recognised in the consolidated statement of changes in equity
0
41
Translation differences
2
9
Net deferred tax asset at 31 December
159
517
Note 8 Earnings per share
Earnings per share is calculated as profit/(loss) attributable to the equity holders of the parent company divided by the average number
of shares outstanding.
Diluted earnings per share is affected by the option programme for equity-settled share-based payment transaction, refer to Note 4
Employee benefits.
NOK million
2021
2020
Profit/(loss) attributable to the equity holders of the company and for the purpose of diluted shares
388
-478
Weighted average number of shares outstanding for the purpose of basic earnings per share
158.8
135.9
Earnings per share for income attributable to the equity holders of the company - basic (NOK)
2.45
-3.51
Effect of potential dilutive shares:
Weighted average number of shares outstanding for the purpose of diluted earnings per share
159.7
135.9
Earnings per share for income attributable to the equity holders of the company - diluted (NOK)
2.43
-3.51
Note 9 Property, plant and equipment
Accounting principle
Power plants in operation
Power plants in operation is stated at cost, less accumulated
depreciation and impairment losses. 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 a decommissioning obligation, if any, and, for
qualifying assets, borrowing costs incurred in the construction
period. Capitalisation of borrowing costs commences when the
activities to prepare the asset for its intended use are undertaken
and continue to be capitalised until the date in which
development of the relevant asset is complete. All other
borrowing costs are recognised in the profit or loss in the period
in which they incur.
Maintenance expenses are recognised in the statement of profit
or loss as incurred. Replacement of damaged components is
accounted for as an impairment with capitalization of the
replacement cost as a new item of PPE.
Each component of an item of power plants in operation with a
cost that is significant in relation to the total cost of the item is
depreciated separately on a straightline basis over the estimated
useful life of the component. 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.
The residual value of the plant is taken into consideration when
calculating the annual depreciation.
An item of power plants in operation is derecognised upon
disposal or when no future economic benefits are expected to
arise from the continued use of the asset. Any gain or loss arising
on de-recognition of the asset (calculated as the difference
between the net disposal proceeds and the carrying amount of
the item) is included in profit or loss in the period the item is de-
recognised.
Power plants under development
Expenses relating to research activities (project opportunities) are
recognised in the statement of profit or loss as they incur.
Expenses relating to development activities (project pipeline and
backlog) are capitalised to the extent that the project is technically
and commercially viable and the Group has sufficient resources to
complete the development work
Scatec ASA - Annual Report 2021
63
Expenses that are capitalised include the costs of materials, direct
wage costs and other directly attributable expenses.
Asset retirement obligations
Provision for 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. The asset retirement
cost is capitalised as part of the carrying value of the power plant
and depreciated over the useful life of the plants. Expenditures
related to asset retirement obligations are expected to be paid in
the period between 2030 and 2046.
Other fixed assets
Other fixed assets mainly include right of use assets. For
accounting principles related to right to use lease assets, details
are provided in Note 11 Leases.
Estimation uncertainty
Estimated useful life of power plants
The estimated useful lives of power plants are reviewed on an
annual basis and changes in useful lives are accounted for
prospectively.
When determining the useful life of a plant, the following factors
are considered:
a)
expected usage of the plant. Usage is assessed by reference
to the asset’s expected capacity, physical output as well as
market regulations and maturity;
b)
expected physical wear and tear, which depends on
operational factors and the repair and maintenance
programme;
c)
technical or commercial obsolescence;
d)
legal or similar limits on the use of the plants, such as the
expiry dates of related leases.
The power plants currently in operation have 15 to 25 years off-
take agreements. Whether or not these agreements will be
extended is not currently known. The technical useful life for the
power plants is deemed to be at least 25 years. In most of these
markets the sale of electricity depends on having a PPA, hence,
the length of the PPA is deemed to be the critical factor for
determine useful life. Most of the Group’s power plants are
depreciated over the length of the PPA . The assessment is made
on a plant by plant basis.
Asset retirement obligations
Scatec’s future asset retirement obligation depends on several
factors such as the possible existence of a power market for the
plants after the end of the PPA, future recycling arrangements
and/or their second-hand value, future value of steel and copper
as well as future development of interest and currency exchange
rates. The calculation of the asset retirement obligation includes
significant judgment and is done on a plant-by-plant basis, taking
into consideration relevant project specifics.
Impairments
Power plants and projects under development/ construction are
tested for impairment to the extent that indicators of impairment
exist, please
refer to Note
12 Impairment testing
for details.
64
Property, plant and equipment
NOK million
Power plants
Power plants
under development
and construction
Other fixed assets
Total
Accumulated cost at 1 January 2021
15,938
2,142
290
18,370
Additions
620
435
10
1,065
Transfers
1)
1,572
-1,856
18
-266
Cost of disposed assets
-
-2
-10
-12
Effect of movements in foreign exchange
-103
-21
8
-116
Accumulated cost at 31 December 2021
18,026
698
316
19,040
Accumulated depreciation and impairment losses at 1 January 2021
2,173
46
82
2,301
Depreciation for the year
766
-
37
803
Impairment losses
6
70
-
76
Accumulated depreciation and impairment losses disposed assets
-
-
-3
-3
Effect of movements in foreign exchange
-26
1
3
-24
Accumulated depreciation and impairment losses at 31 December 2021
2,918
116
118
3,152
Carrying amount at 31 December 2021
15,106
580
198
15,885
Estimated useful life (years)
20-25
N/A
3-5
Accumulated cost at 1 January 2020
13,118
3,631
260
17,009
Additions
149
1,581
35
1,765
Transfers
2,936
-2,936
0
-
Cost of disposed assets
-25
-
-1
-26
Effect of movements in foreign exchange
-240
-132
-4
-376
Accumulated cost at 31 December 2020
15,938
2,142
290
18,370
Accumulated depreciation and impairment at 1 January 2020
1,534
35
45
1,614
Depreciation for the year
727
-
39
766
Impairment losses
-
11
-
11
Accumulated depreciation and impairment losses disposed assets
-3
-
-1
-4
Effect of movements in foreign exchange
-85
-
-2
-87
Accumulated depreciation and impairment losses at 31 December 2020
2,173
46
82
2,301
Carrying amount at 31 December 2020
13,765
2,096
210
16,071
Estimated useful life (years)
20-25
N/A
3-5
1) NOK 266 million of Transfer of assets relates to reclassification of concept assets for Release and right to transmit electricity from PPE to intangible assets in 2021. Of the NOK 266 million, approximately NOK 90 millions are
additions in 2021. Refer to note 10.
The Group’s power plants accounted for using the equity method are not included in the table above. The carrying value of
development projects that have not yet reached the construction
phase was NOK 364 million
(275)
at 31 December 2021. The power
plant entities’ assets, are pledged as security for the non-recourse financing. During 2021, the Group impaired NOK
76
11
)
mainly related to discontinued development projects.
Note 10 Goodwill and other intangible assets
Accounting principle
Intangible assets acquired separately are measured on initial
recognition at cost while the cost of intangible assets acquired
in a business combination is their fair value at the date of
acquisition. Following initial recognition, intangible assets are
carried at cost less any accumulated amortisation and
accumulated impairment losses.
Goodwill and other intangible assets with an indefinite useful
life are not amortised on a regular basis but are tested for
impairment annually or more frequently if there are
circumstances indicating that the carrying amount may be
impaired. The Group’s goodwill derives from business
acquisitions. The Group had no other intangible assets with an
Scatec ASA - Annual Report 2021
65
indefinite useful life than goodwill as of 31 December 2021 and
2020.
Intangible assets with a finite lifetime are amortised over the
useful life of the assets and assessed for impairment whenever
there is an indication that the intangible asset may be
impaired. The Group’s Other intangible assets consist of
renewable operating license, right to transmit electricity,
sof
tware and internally developed asset related to the Release
concept.
Estimation uncertainty
There is considerable estimate uncertainty associated to the
value of intangible assets. 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 recognized in 2021 related to
intangible assets, please refer to Note 12 Impairment testing.
In 2020, intangible assets with a finite lifetime were presented
as part of Property, plant and equipment.
Carrying value of goodwill and other intangible assets
NOK million
Goodwill
Other
intangible assets
Total
Accumulated cost at 1 January 2021
25
20
45
Additions
290
198
488
Transfer
-
266
266
Effect of movements in foreign exchange
6
8
14
Accumulated cost at 31 December 2021
321
492
813
Accumulated depreciation and impairment losses at 1 January 1 2021
-
5
5
Depreciation for the year
-
11
11
Accumulated depreciation and impairment losses at 31 December 2021
-
16
16
Carrying amount at 31 December 2021
321
476
797
Accumulated cost at 1 January 2020
24
10
34
Additions and reclassifications
-
10
10
Effect of movements in foreign exchange
1
-
1
Accumulated cost at 31 December 2020
25
20
45
Accumulated depreciation and impairment losses at 1 January 2020
-
4
4
Depreciation for the year
-
1
2
Accumulated depreciation and impairment losses at 31 December 2020
-
5
5
Carrying amount at 31 December 2020
25
15
40
Estimated useful life
N/A
3-25
1) NOK 266 million relates to reclassification of assets related to the Release concept and right to transmit electricity from Property, plant and equipment to Intangible assets.
The goodwill is associated with the acquisitions of Solar
competence GmbH in 2007 and SN Power in 2021. The
additions of other intangible assets mainly relate to renewable
operating license for Dam Nai (acquired as part of the SN
Power acquisition) and reclassification from PPE. Please refer
to Note 14 Business Combinations for more details of the SN
Power acquisition.
66
Note 11 Leases
Accounting principle
IFRS 16 requires a lessee to account for lease contracts by
recognizing a liability representing the future lease payments,
and an asset representing the right to use the underlying
asset. The group primarily leases office and land, accounted
for in accordance with IFRS 16.
Identifying a lease
At the inception of a contract, the Group assesses whether the
contract is, or contains, a lease. A contract is, or contains, a
lease if the contract conveys the right to control the use of an
identified asset for a period in exchange for consideration.
Recognition of leases and exemptions
At the lease commencement date, the Group recognises a
lease liability and corresponding right-of-use asset for all lease
agreements in which it is the lessee.
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.
Measuring the lease liability
The lease liability is initially measured as the present value of
future lease payments made during the lease term. The lease
term represents the non-cancellable period of the lease, and
periods covered by an option to extend the lease when the
Group is reasonably certain to exercise the option.
The future lease payments includes fixed lease payments and
variable lease payments that depends on an index or a rate.
The Group does not include variable lease payments arising
from future events in the lease
liability. Instead, the Group
recognises these costs in profit or loss in the period in which
the event that triggers those payments occurs. Land leases
where the lease payment is based on power production have
been excluded from the liability measure.
Measuring the right-of-use asset
The right-of-use asset is initially measured at cost and include
the amount of the initial measurement of the lease liability and
lease pre-payments made at or before the commencement
date.
The right-of-use asset is subsequently measured at cost less
accumulated depreciation and any impairment losses in
accordance with the accounting principles set out in Note 9
Property, plant and equipment.
Group as a lessor - Leases previously classified as
operating leases under IAS 17 and IFRIC 4
The Groups Power Purchase Agreements in Jordan and
Malaysia have a pricing mechanism which require power
produced above a certain volume to be made available to the
buyers at a discount. Hence, the pricing is not “contractually
fixed per unit” and these two contracts were accounted for as
operational leases as set forth by IFRIC 4. IFRIC 4 was
superseded by IFRS 16 as of 1 January 2019 and the Group has
based on the guidance in IFRS 16 concluded that these
contracts do not contain leases. The change does however not
have an impact on the presentation of revenue as operating
lease revenues are presented together with revenues from sale
of electricity in the statement of profit and loss.
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 subsidiaries with
plants, 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.
In addition, several of the Group’s lease agreements contain
options to extend the lease agreement beyond the contractual
lease term. As the the extension period is 20-25 years ahead
for land leases it is uncertain whether the option will be
exercised. The Group has evaluated all these options, but it’s
not deemed 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 2021
67
Reconciliation of movement in right-of-use asset in 2021
NOK million
Land
Office & cars
Total
Right-of-use asset at 1 January 2021
157
107
264
Additions
-
11
11
Depreciation for the year
-8
-23
-31
Effect of movement in foreign exchange and other changes
-11
-3
-14
Right-of-use asset at 31 December 2021
138
90
228
Reconciliation of movement in lease liabilities
NOK million
2021
2020
Lease liability at 1 January
262
245
Lease agreements entered into during the year
18
37
Lease payments made during the year
-41
-36
Interest expense on lease liabilities
15
18
Effect of movement in foreign exchange and other changes
-8
-2
Lease liability at 31 Desember
246
262
Leases in the income statement
NOK million
2021
2020
Operating expenses
Short term- low value and variable lease payment expenses
-39
-36
Depreciation expenses
Depreciation of right-of-use assets (land lease)
-8
-10
Depreciation of right-of-use assets (office lease and other)
-23
-23
Total depreciation
-31
-33
Financial expenses
Interest expense on lease liability
-15
-18
Total lease expense in the income statement
-85
-87
Leases in the statement of financial position
NOK million
2021
2020
Assets
Right-of-use assets - land lease
138
157
Right-of-use assets - office lease and other
90
107
Total right-of-use assets
228
264
Liabilities
Non-current liabilities
Lease liabilities (see Note 18 Other non-current and current liabilities)
206
227
Current liabilities
Lease liabilities (see Note 18 Other non-current and current liabilities)
39
35
Lease liabilities included in the balance sheet
246
262
68
Leases in the statement of cash flows
NOK million
2021
2020
Cash flow from operating activities
Short-term and variable lease payments
39
36
Cash flow from financing activities
Payments of principal portion on lease liabilities
26
16
Interest paid on lease liabilities
15
18
Maturity analysis – Undiscounted contractual cash flows
NOK million
2021
2020
One year
38
35
One to two years
31
33
Two to three years
28
28
Three to four years
28
27
Four to five years
27
27
More than five years
206
230
Total undiscounted lease liabilities
358
381
Lease liabilities included in the balance sheet
246
262
Note 12 Impairment testing
Accounting principle
The Group assesses property, plant and equipment for
impairment whenever events or changes in circumstances
indicate that the carrying value of an asset may not be
recoverable. Goodwill and intangible assets with an indefinite
useful life are tested for impairment annually or more
frequently if there are circumstances indicating that the
carrying amount may be impaired. The recoverable amount is
the higher of the assets fair value less costs to sell and its value
in use.
Assets are grouped to the lowest level that provides separately
identifiable and independent cash flows, cash-generating units
(CGUs). An impairment loss is recognised when an asset or
cash generating units carrying value exceeds the recoverable
amount. Impairment losses is recognised to the profit and
loss.
Impairment losses are reversed to the extent that conditions
for impairment are no longer present. Impairments for
goodwill are not reversed.
The right-of-use asset is subsequently measured at cost less
accumulated depreciation and any impairment losses in
accordance with the accounting principles set out in Note 9
Property, plant and equipment.
Estimation uncertainty
Factors which trigger impairment testing include, but is not
limited to, political changes, macroeconomic fluctuations,
changes to the Group’s strategy, project delays,
underperforming, changes to tariffs and similar. Value in use
calculation is based on a discounted cash flow model. The
future cash flows include a number of estimates and
assumptions, including future market conditions, discount rates
and estimated useful life etc. 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 related to climate matters. Legal changes
may impact key assumptions in the value in use calculations in
future periods.
Impairment test
Tests for impairment have been performed for CGUs with
mandatory annual tests and the CGUs where impairment
indicators have been identified. The recoverable amount for
these units have been determined estimating the value in use
of the assets and comparing against the carrying value of the
CGUs. Impairment of property, plant and equipment in 2021
Scatec ASA - Annual Report 2021
69
amounts to NOK 76 million and is mainly related to
discontinued development projects.
Annual mandatory impairment test - goodwill
The goodwill of the Group mainly relates to the acquisition of
SN Power AS in 2021, which has been allocated to the
acquired entities (a group of CGUs) including the hydropower
assets in the Philippines, Laos and Uganda, and the wind farm
Dam Nai in Vietnam. All CGUs to which the goodwill has been
allocated are accounted for as equity investments, except for
Dam Nai in Vietnam. The goodwill relates to the portfolio of
identified project development opportunities and assembled
workforce.
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 each CGU, taking
into consideration any individual risks of the underlying assets
that have not been incorporated in the cash flow estimates.
Discount rates used in the value in use calculation is based on
a discount rate after tax.
The after-tax discount rate applied in 2021 for the CGUs are in
the range from; 8% to 12%.
Future cash flows:
The cash flows for the electricity sold in
Vietnam, Laos and Uganda are based long term, fixed, PPA
contracts during the concession periods which end in 2038,
2039 and 2042 respectively. No terminal value is assumed for
the power plants.
The electricity produced from the power plants in the
Philippines is sold on bilateral contracts, in the spot market and
as ancillary services, hence a combination of assumptions is
used for the cash flow estimates of these power plants. The
cash flow estimates are based on available market data and
Scatec’s long-term market outlook. In all material respect, the
cash flow from the power plants are generated during the
renewable operating license with options to extend until 2066.
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.
The Group has not recognised any impairments related to
goodwill in 2021 or 2020 as the recoverable amounts exceed
the carrying amount.
70
Note 13 Investments in joint venture and associated companies
Accounting principle
An associate is an entity over which the Group has significant
influence. Significant influence is the power to participate in
the financial and operating policy decisions of the investee but
is not control or joint control over those policies. A joint
venture (JV) is a type of joint arrangement whereby the parties
that have joint control of the arrangement have rights to the
net assets of the joint venture. Joint control is the contractually
agreed sharing of control of an arrangement, which exists only
when decisions about the relevant activities require the
unanimous consent of the parties sharing control. The
considerations made in determining significant influence or
joint control are similar to those necessary to determine
control over subsidiaries. Refer to Note 2 Key sources of
estimation uncertainty, judgements and assumptions for
significant judgements related to the assessment whether
Scatec controls an entity.
The Group’s investments in its associates and joint ventures
are accounted for using the equity method. Under the equity
method, the investment in an associate or a joint venture is
initially recognised at cost. The carrying value of the
investments includes share capital and loans, and are
subsequently adjusted for further investments and the Group’s
share of the net income of the associate or joint venture. The
carrying amount of the investment is adjusted to recognise
changes in the Group’s share of net assets of the associate or
joint venture since the acquisition date.
When the Group’s share of a loss exceeds the Group’s
investment in an associate or joint venture, the amount carried
in the Group’s statement of financial position is reduced to
zero and further losses are not recognised unless the Group
has an obligation to cover any such loss.
Any change in OCI of those investees is presented as part of
the Group’s OCI. In addition, when there has been a change
recognised directly in the equity of the associate or joint
venture, the Group recognises its share of any changes, when
applicable, in the statement of changes in equity. Unrealised
gains and losses resulting from transactions between the
Group and the associate or joint venture are eliminated to the
extent of the interest in the associate or joint venture.
The Group determines whether it is necessary to recognise an
impairment loss on its investment in its associate or joint
venture. At each reporting date, the Group determines
whether there is objective evidence that the investment in the
associate or joint venture should be impaired. If there is such
evidence, the Group calculates the amount of impairment as
the difference between the recoverable amount of the
associate or joint venture and its carrying value, and then
recognises the loss as “Net income/(loss) from JV and
associates” in the statement of profit or loss.
Estimation uncertainty
There is considerable estimate uncertainty associated to the
value of 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.
Investments in joint venture and associated companies
The tables below show the material joint ventures and
associated companies recognised in the Group and the
reconciliation of the carrying amount. For the full year 2021,
net income from the newly acquired joint ventures in Laos,
Philippines and Uganda includes the share of profit for the
period from 29 January to 31 December 2021.
Scatec ASA - Annual Report 2021
71
Material joint ventures and associated companies
Company
Registered office
2021
2020
Kube Energy AS
Oslo, Norway
25.00%
25.00%
Scatec Solar Brazil BV
Amsterdam, Netherlands
50.00%
50.00%
Apodi I Energia SPE S.A
Quixeré, Brazil
43.75%
43.75%
Apodi II Energia SPE S.A
Quixeré, Brazil
43.75%
43.75%
Apodi III Energia SPE S.A
Quixeré, Brazil
43.75%
43.75%
Apodi IV Energia SPE S.A
Quixeré, Brazil
43.75%
43.75%
Mendubim Holding B.V.
Amsterdam, Netherlands
51.00%
-
Mendubim Geração de Energia Ltda.
Assu, Brazil
50.00%
-
Scatec Solar Solutions Brazil BV
Amsterdam, Netherlands
50.00%
50.00%
Scatec Solar Brasil Servicos De Engenharia LTDA
Recife, Brazil
50.00%
50.00%
Scatec Equinor Solutions Argentina S.A
Buenos Aires, Argentina
50.00%
50.00%
Cordilleras Solar VIII S.A
Buenos Aires, Argentina
50.00%
50.00%
Theun-Hinboun Power Company
Vientiane, Laos
20.00%
-
SN Aboitiz Power – Magat Inc
Manila, Phillippines
50.00%
-
Manila-Oslo Reneweable Enterprise
Manila, Phillippines
16.70%
-
SN Aboitiz Power – Benguet Inc
Manila, Phillippines
50.00%
-
SN Aboitiz Power – RES Inc
Manila, Phillippines
50.00%
-
SN Aboitiz Power – Generation Inc
Manila, Phillippines
50.00%
-
SN Power Uganda Ltd. ¹⁾
Kampala, Uganda
51.00%
-
Bujagali Energy Ltd. ¹⁾
Jinja, Uganda
28.28%
-
Campganie Générale D`Hydroelectrciite de Volobe SA ¹⁾
Antananarivo, Madagascar
12.75%
-
Ruzizi Holding Power Company Ltd ¹⁾
Kigali, Rwanda
20.40%
-
Ruzizi Energy Ltd ¹⁾
Kigali, Rwanda
20.40%
-
SN Power Africa Ltd ¹⁾
Nairobi, Kenya
51.00%
-
1) The ownership reflects that Norfund retains a 49% stake in these investments, as communicated in the acquisition announcement (16 October 2020).
Carrying amount of investments in material joint venture and associated companies
Country
Carrying value 31
December 2020
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 2021
Philippines
-
6,663
451
-547
-
-202
6,366
Uganda
-
1,068
138
-160
26
29
1,101
Laos
-
1,568
133
-112
-
43
1,632
Other ¹⁾
612
-7
44
-
-
-3
646
Total
612
9,293
765
-819
26
-133
9,745
1) Other includes Brazil, Argentina, Rwanda, Madagascar and Kenya.
72
100% figures of summarised profit and loss for material joint venture and associated companies (standalone basis)
2021
NOK million
Philippines
Uganda
Laos
Other
Revenues
3,582
1,103
1,486
280
Operating expenses
-355
-70
-178
-91
Operating profit/(loss)
1,556
822
1,090
137
Net financial items
-302
-113
28
-130
Profit before income tax
1,254
709
1,118
7
Income tax
-145
-20
-168
18
Profit/(loss) after tax
1,109
689
950
25
Scatec’s share of profit/(loss) after tax
545
195
195
14
SN Power January figures not included in consolidated figures ¹⁾
-86
-47
-17
-
Amortisaton of excess values (net of tax) - Scatec`s share ¹⁾
-58
-44
-53
-
Elimination of internal transacitions and internal profit
50
34
9
30
Net profit/loss
451
138
133
44
1)
Refer to Note 3 Operating Segment and Note 14 Business Combinations for further details on the acquisition of SN Power.
2020
NOK million
Philippines
Uganda
Laos
Other
Revenues
-
-
-
214
Operating expenses
-
-
-
-197
Operating profit/(loss)
-
-
-
17
Net financial items
-
-
-
-90
Profit before income tax
-
-
-
-73
Income tax
-
-
-
-26
Profit/(loss) after tax
-
-
-
-99
Scatec’s share of profit/(loss) after tax
-
-
-
-49
-
Elimination of internal transacitions and internal profit
-
-
-
32
Net profit/loss
-
-
-
-16
Scatec ASA - Annual Report 2021
73
100% figures of summarised financial positions for material joint venture and associated companies (standalone basis)
2021
NOK million
Philippines
Uganda
Laos
Other
Non-current assets
7,766
7,104
3,973
2,911
Current assets
497
235
265
125
Cash and cash equivalents
633
419
678
57
Total assets
8,895
7,758
4,915
3,093
Non-current liabilities
5,258
5,313
1,238
1,918
Current liabilities
829
64
707
445
Total liabilities
6,086
5,377
1,945
2,363
Total Equity
2,808
2,381
2,970
730
Scatec share of equity
1,392
674
594
346
Excess value at acquistion date of SN Power ¹⁾
3,319
127
239
-
Excess values from previous acquisitions
1,674
304
979
-
Amortisation of excess values
-65
-19
-64
-
Loan to joint venture as investment
137
2
-
-
Other / foregin currency translation
-91
14
-115
309
Net investment in joint venture
6,366
1,101
1,632
-9
1)
Refer to Note 14 Business Combinations for further details on the excess values related to the acquisition of SN Power.
2020
NOK million
Philippines
Uganda
Laos
Other
Non-current assets
-
-
-
2,221
Current assets
-
-
-
105
Cash and cash equivalents
-
-
-
80
Total assets
-
-
-
2,405
Non-current liabilities
-
-
-
1,183
Current liabilities
-
-
-
731
Total liabilities
-
-
-
1,914
Total Equity
-
-
-
491
Scatec share of equity
230
-
Fair value adjustments
-
-
-
125
Loan to joint venture as investment
-
-
-
317
Other / foregin currency translation
-
-
-
-62
Net investment in joint venture
-
-
-
612
74
Note 14 Business combinations
Accounting policy
Business combinations are accounted for using the acquisition
method. The cost of an acquisition is measured to fair value of
the consideration transferred at the acquisition date, including
any amount of non-controlling interests in the acquiree. The
acquisition date is the date when control is transferred to the
Group.
When the Group acquires a business, a purchase price
allocation is carried out, and assets and liabilities are valued to
fair value at the time of the acquisition. The Group assesses
the assets and liabilities assumed for appropriate classification
and designation in accordance with the contractual terms,
economic circumstances and pertinent conditions. Acquisition
related costs are booked to operating expenses.
The residual value in the acquisition is goodwill, which is
initially measured at cost. After initial recognition, goodwill is
measured at cost less any accumulated impairment losses.
Estimation uncertainty
The purchase price allocation is by nature judgmental as it
includes allocation of the purchase price to underlying assets
and liabilities. The consideration paid is allocated to the
acquired assets and liabilities based on their estimated fair
values. The purchase price allocation requires management to
apply significant judgements about valuation method,
estimates and assumptions. There is an inherent uncertainty
related to management’s estimates of significant assumptions
such as discount rate, cash flow estimates and useful life which
impact the split of the allocated fair values of the assets.
Acquisition of SN Power
On 29 January 2021, Scatec ASA acquired 100% of the shares
of SN Power AS, a leading hydropower developer and
Independent Power Producer (IPP), from Norfund for a total
consideration of USD 1,211 million (NOK 10,405 million), which
was finally agreed in the fourth quarter of 2021. The
transaction included SN Power’s portfolio of hydropower
assets in the
Philippines, Laos and Uganda with a total gross capacity of 1.4
GW (net 0.5 GW) and gross median production of 6.1 TWh
(net 1.8 TWh) and the wind farm Dam Nai in Vietnam. Dam
Nai was acquired by SN Power on 27 January 2021 and has a
capacity of 39.4 MW.
The acquisition forms an important part of Scatec’s broadened
growth strategy, with an ambition to become a global large-
scale player in solar, hydro, wind and storage solutions, and an
integrator of high-value infrastructure solutions. Scatec and SN
Power have a unique and complementary portfolio of assets,
geographical footprint and capabilities, and will together hold
a large project pipeline across solar, hydro, wind and storage.
The acquisition was financed by debt and available cash. See
Note 23 for overview of the financing of the acquisition.
The table below gives details of net assets acquired and
goodwill identified in the acquisition. Excess values of NOK
3,684 million are identified for investments in JVs and
associated companies. The excess values relate to water rights
and infrastructure assets in the hydropower companies in the
Philippines (NOK 3,319 million), Laos (NOK 239 million) and
Uganda (NOK 127 million). The hydropower assets in the
Philippines are operating under a renewable operating license
with options to extend until 2066, and the excess values are
amortized over the remaining operating license period. The
hydropower assets in Laos and Uganda are operating under
concession agreements which end in 2039 and 2042
respectively, and the excess values for Laos and Uganda are
amortized over the remaining concession period.
Scatec have recognised USD 34 million (NOK 289 million) in
goodwill, mainly related to the portfolio of identified project
development opportunities and assembled workforce.
Goodwill is recorded in functional currency and as a result,
changes in currency exchange rates affect the value of
goodwill in NOK. The goodwill is not deductible for tax
purposes.
Scatec ASA - Annual Report 2021
75
Purchase price allocation for the acquisition of SN Power
NOK million
Book value
Excess value
Fair value
Consideration
Total consideration
10,405
Amounts of assets and liabilites recognized
Property, plant and equipment
431
431
Other intangible assets
152
152
Investments in JV and associated companies
5,434
3,684
9,118
Other non-current assets
71
71
Trade and other receivables
101
101
Cash and cash equivalents
826
826
Total assets
7,014
3,684
10,698
Deferred tax liabilities
19
19
Non-recourse project financing
318
318
Other non-current liabilities
21
29
51
Non-recourse financing
57
57
Trade and other payables
7
7
Other current liabilities
60
71
131
Total liabilites
481
101
582
Total identifable net assets at fair value
6,533
3,584
10,116
Goodwill
289
289
Total net assets
6,533
3,872
10,405
Refer to Note 13 for details about profit and loss and financial position at stand alone basis for the acquired joint ventures, 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.
The proportionate financials include all transactions in the acquired companies since the commencement of the reporting period. Refer
to Note 3 for revenue and net income stated as the acquisition took place at the commencement of the reporting period.
Note 15 Cash and cash equivalents
Accounting principle
Cash includes cash in hand and at bank. Cash equivalents are
short-term liquid investments that can be immediately
converted into a known amount of cash and have a maximum
term to maturity of three months. Restricted cash is cash
reserved for a specific purpose and therefore not available for
immediate and general use by the Group.
Refer to Note 21 Financial instruments by category for the
accounting principles for financial instruments.
Cash and cash equivalents
NOK million
2021
2020
Cash in power plant companies in operation
1,711
1,741
Cash in power plant companies under development / construction
34
11
Other restricted cash
91
87
Free cash
2,335
5,949
Total cash and cash equivalents
4,171
7,788
Cash in power plant companies in operation
restricted cash in proceeds accounts, debt service reserve
accounts, disbursements accounts, maintenance and insurance
reserve accounts and similar. These cash and cash equivalents
are only available to the Group through distributions as
determined by shareholder and non-recourse financing
agreements.
76
Cash in power plant companies under development and
construction
on loan facilities to settle outstanding external EPC invoices.
Other restricted cash
withholding tax, guarantees, VAT and rent, NCI’s share of free
cash as well as collateralised shareholder financing of power
plant companies not yet distributed to the power plant
companies.
Reconciliation of movement in free cash at Group level (in recourse group as defined in bond & loan facilities)
NOK million
2021
2020
Free cash at beginning of the period
5,949
758
Free cash in acquired SN Power entities at 1 January 2021
491
-
Proportionate share of cash flow to equity O&M
1)
60
65
Proportionate share of cash flow to equity D&C
1)
-164
-15
Proportionate share of cash flow to equity CORP
1)
-252
-153
Project development capex
-307
-156
Equity contributions to power plant companies
-564
-756
Distributions from power plant companies
1,603
346
Share capital increase, net after transaction cost and tax
-
6,576
Dividend distribution
-173
-131
Net cash considerations from acquisition of SN Power
-3,753
-
Working capital / Other
-556
-584
Free cash at end of the period
2,335
5,949
Available under credit facilities
1,632
813
Total free cash and indrawn credit facilities at the end of the period
3,967
6,762
1) Proportionate share of cash flow to equity is defined in Alternative Performance Measures Appendix
Refer to Note 23 Corporate Financing for further information on credit facilities.
Note 16 Trade receivables
Trade receivables are recognized for unconditional amounts due from the customer. For details on accounting principles and
estimation uncertainty for financial instruments, see Note 20 – Financial instruments: measurement.
Trade receivables
NOK million
2021
2020
Accounts receivables
557
435
Accrued income and other receivables
183
189
Total trade receivables
740
623
Information on credit risk and foreign exchange risk regarding accounts receivables is further provided in Note 19 - Financial risk
management. Accrued income represents contract assets related to energy production in the last month of the year, which is invoiced
in January the following year.
Ageing of trade receivables at year-end was as follows:
NOK million
Total
Not due
Overdue
2021
557
306
251
2020
435
254
181
Scatec ASA - Annual Report 2021
77
The overdue receivables are mainly related to sale of electricity from power plants in Ukraine and Honduras.
Scatec has in previous periods experienced increased delays in payments from the state-owned off-taker of power in Ukraine and
increased overdue payments. In the fourth quarter of 2021, the off-taker secured new financing and paid a significant amount of the
debt
and the overdue receivables decreased with NOK 102 million.
The
remaining overdue amount as of 31 December 2021 is NOK 63
million and no bad debt allowance has hence been recognised in 2021. Refer to Note 32 Subsequent events for an update of the
situation in Ukraine.
Scatec has also experienced increased delays in payments from the state-owned off-takers of power in Honduras. Overdue payments
have accumulated in Honduras to a varying degree since the second quarter of 2020. At the end of 2021, the total accumulated
overdue receivables on a 100%-basis from Honduras amounted to NOK 153 million. Payments are secured by sovereign guarantees and
Scatec’s experience is that delayed payments in Honduras are being paid in full. Scatec therefore expects the outstanding amounts to
be paid in full and no bad debt allowance has hence been recognized.
The provision for bad debt is based on an individual assessment of each receivable. In all other countries, there are no indications that
the off-takers will not be able to meet their payment obligations, and hence no provision for bad debt allowance has been recognized.
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
2021
10
26
18
197
2020
20
34
19
108
Note 17 Other non-current and current asset
Other non-current assets
NOK million
2021
2020
Loan to non-controlling interest
1
45
Other non-current investments
32
2
Other non-current receivables
177
97
Total other non-current assets
210
144
Other current assets
NOK million
2021
2020
Prepayments related to assets under development/construction
22
18
Receivables from public authorities/prepaid taxes, VAT etc
393
457
Other receivables and prepaid expenses
320
187
Total other current assets
734
663
78
Note 18 Other non-current and current liabilities
Accounting principle
Provisions are recognised when the Group has a present
obligation (legal or constructive) because of a past event, it is
probable that an outflow of resources embodying economic
benefits will be required to settle the obligation and a reliable
estimate can be made of the amount of the obligation. If the
effect of the time value of money is material, provisions are
determined by discounting the expected future cash flows at a
pre-tax rate that reflects current market assessments of the
time value of money and, where appropriate, the risks specific
to the liability. Where discounting is used, the increase in the
provision
due to the passage of time is recognised as finance expenses
in the consolidated statement of profit or loss.
Contingent liabilities arising from past events and for which it is
not probable that an outflow of resources will be required to
settle the obligation, if any, are not recognised but disclosed
with indication of uncertainties relating to amounts and timing
involved. Disclosures are not given if the possibility of an
outflow in settlement is remote.
For accounting principles regarding asset retirement
obligations, see Note 9 Property, plant and equipment. For
accounting principles regarding leases, see Note 11 Leases.
Other non-current liabilities comprise the following:
NOK million
2021
2020
Shareholder loan from co-investors (ref Note 25)
610
717
Non-current lease liability (ref Note 11)
206
227
Asset retirement obligations (ref Note 9)
270
266
Other long-term provisions and accruals
301
365
Total other non-current liabilities
1,387
1,575
Other current liabilities comprise the following
:
NOK million
2021
2020
Accrued expenses related to solar power plants
237
295
Public dues other than income taxes
44
114
Accrued interest expenses
65
6
Accrued payroll
57
39
Current lease liability (ref Note 11)
39
35
Other accrued expenses
399
363
Total other current liabilities
841
852
Liabilities related to solar power plants reflects both working capital requirements for development/construction contracts and
cost accruals on completed projects.
Scatec ASA - Annual Report 2021
79
Note 19 Financial risk management
Through its business activities Scatec is exposed to the
following financial risks:
●
Market risk (including commodity price risk, currency risk
and interest rate risk)
●
Liquidity risk
●
Credit risk
Guidelines for risk management have been approved by the
Board of Directors and are carried out by Scatec’s group
finance department in cooperation with the individual
operational units. The Group’s overall risk management
programme focuses on the unpredictability of financial
markets and seeks to minimise potential adverse effects on the
Group’s financial performance. The Group uses derivative
financial instruments to hedge certain risk exposures.
Market risk
Scatec is exposed to various market risks, including fluctuations
in commodity prices, foreign currency rates and interest rates
that can affect the revenues and costs of operating, investing
and financing activites.
Commodity price risk
Scatec’s sales of electricity constitute a material share of its
revenues. As a result, the Group’s business, financial position,
results of operation and cash flow are affected by changes in
the electricity prices. The Group seeks to reduce the effect of
price fluctuation by entering into longterm, fixed price
contracts. The power plants produce electricity for sale
primarily under long term 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 18 years. Some of the
off-take agreements that have been entered into do not
contain inflation-based price increase provisions or provisions
that only partially allows for inflation-based increases. Some of
the countries in which the Company operates, or into which
the Company may expand in the future, have in the past
experienced high inflation. The fixed price contracts are
classified as “own use” contracts (with reference to IFRS 9.2.4),
and hence not considered to be in scope of IFRS 9. The
electricity produced from the power plants in the Philippines is
sold on bilateral contracts and in the spot market under a
renewable operating license, and as ancillary services.
Price of electricity is influenced by government support
schemes, the future development of the renewable power
plant industry in general, and the Group in particular, will to a
significant degree depend on the development in electricity
market prices over time. Electricity prices depend on a number
of factors including, but not limited to, availability and costs of
primary energy sources (including oil, coal, natural gas and
uranium), and the development in cost, efficiency and
equipment investment need for other electricity producing
technologies, including other renewable energy sources.
A decline in the costs of other sources of electricity, such as
fossil fuel or nuclear power, could reduce the wholesale price
of electricity. A significant amount of new electricity generation
capacity becoming available could also reduce the wholesale
price of electricity. Broader regulatory changes to the
electricity market, such as regulatory environmental changes,
changes to integration of transmission allocation and changes
to energy trading and transmission, could have an impact on
electricity prices. A decline in the market price of electricity
could materially adversely affect the financial attractiveness of
new projects.
Currency risk
Scatec operates internationally and is subject to currency risks
arising from foreign currency transactions and exposures. As
the Group has reported its consolidated results in NOK, any
change in exchange rates between NOK and functional
currencies for the reporting entities, which mainly are USD,
ZAR, EUR, MYR, BRL, CZK, PHP and VND, affects the
consolidated statements when the results of those reporting
entities are translated into NOK.
The sensitivity analysis shows how profit and loss, or equity
would have been affected by changes in currencies the Group
is exposed to. The sensitivities have been calculated based on
what Scatec views to be reasonably possible changes in the
foreign exchange rates for the coming year.
NOK million
Profit (loss)
before taxes
At 31 December 2021
EUR - Net gain/(loss) (-5%)
-154
USD - Net gain/(loss) (-5%)
-24
BRL - Net gain/(loss) (-5%)
-
ZAR - Net gain/(loss) (-5%)
2
MYR - Net gain/(loss) (-5%)
6
EUR - Net gain/(loss) (+5%)
154
USD - Net gain/(loss) (+5%)
24
BRL - Net gain/(loss) (+5%)
-
ZAR - Net gain/(loss) (+5%)
-2
MYR - Net gain/(loss) (+5%)
-6
80
NOK million
Profit (loss)
before taxes
At 31 December 2020
EUR - Net gain/(loss) (-5%)
73
USD - Net gain/(loss) (-5%)
250
BRL - Net gain/(loss) (-5%)
3
ZAR - Net gain/(loss) (-5%)
2
MYR - Net gain/(loss) (-5%)
6
EUR - Net gain/(loss) (+5%)
-73
USD - Net gain/(loss) (+5%)
-250
BRL - Net gain/(loss) (+5%)
-3
ZAR - Net gain/(loss) (+5%)
-2
MYR - Net gain/(loss) (+5%)
-6
The general policy of the Group is to not hedge foreign
currency exposure on long term cash flows from the
companies operating the power plants. For the Group’s power
plant entities, currency risk is managed based on functional
currency and expected cash flows. This is done through the
setup of the SPVs with ring-fenced financing and significant
non-controlling interests. The Company’s segment revenues,
cost of sales and gross profit may be subject to significant
currency fluctuations (inter alia with respect to construction
contracts). However, multi-currency construction contracts
contribute to a natural hedge of cost of sales. To the extent
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.
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 64% for the
period 2022-2035. This includes corporate debt of NOK 7.3
billion of which approximately 24% is swapped to fixed rate.
Including the JVs, the interest rate hedge ratio (weighted
average) is 70%.
The interest rate risk on the debt at the power plant level is
predominantly hedged by way of interest rate swaps, fixed rate
loans or inflation rate adjusted interest following the indexed
PPAs. 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, or equity
would have been affected by changes in interest rates.
NOK million
At 31 December 2021
1%
-1%
Net gain/(loss)
-27
27
At 31 December 2020
1%
-1%
Net gain/(loss)
44
-44
The impact on the profit and loss, or equity, including the JVs
with a decrease or increase in interest rate of 1% would result
in a gain of NOK 23 million and loss of NOK 23 million
respectively.
Liquidity risk
Liquidity risk is the risk that Scatec will not be able to meet
financial obligations when due. The Group manages liquidity
risk through a regular review of future commitments, cash
flows from operations and credit facilities. Due to the dynamic
nature of the underlying business, the Group maintains
flexibility in funding by maintaining availability under
committed credit facilities. In addition, the Group has available
funding through the USD 180 million Revolving Credit Facility
(RCF) and the USD 5 million Overdraft Facility. Scatec has per
31 December 2021 not drawn on the revolving credit facility or
the overdraft facility.
For information about the Group’s financial liabilities, refer to
Note 23 – Corporate Financing and Note 24 – Non-recourse
financing.
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 has not
experienced any significant delays to date and are seeking to
minimise such risk through assessments of the relevant
jurisdictions and regulations and adapt accordingly.
A break-down of free and restricted cash is provided in Note
15 – Cash and cash equivalents.
Credit risk
Credit risk is the risk that Scatec’s customers or counterparties
will cause financial loss by failing to honour their obligations.
The Group is exposed to third party credit risk in several
instances, including off-take partners who have committed to
buy electricity produced by or on behalf of the Group,
suppliers and/or contractors who are engaged to construct or
operate assets held by the Group, property owners who are
leasing land to the Group, banks providing financing and
guarantees of the obligations of other parties, insurance
companies providing coverage against various risks applicable
to the Group’s assets, and other third parties who may have
obligations towards the Group. Except for the energy sold to
the whole sale market in the Philippines, all 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
Scatec ASA - Annual Report 2021
81
Purchase Agreements (PPAs) or similar support mechanisms
governed by law. If, for any reason, any of the counterparties
to these contracts are unable or unwilling to fulfil their
contractual obligations, refuse to accept delivery of power
delivered thereunder or if they otherwise terminate such
agreements prior to the expiration thereof, our assets,
liabilities, business, financial condition, results of operations
and cash flows could be materially and adversely affected. For
the Group’s current projects in operation, the majority of these
are supported by government guarantees or have obligations
regulated by law. However, there is still a risk of legislative or
other political action that may impair their contractual
performance.
The Group’s main credit risks arise from credit exposures with
accounts receivables and deposits with financial institutions.
All major deposits and investments with financial institutions
are kept with entities carrying a minimum International credit
rating from Moodys/ S&P of at least A-.
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 provisions for bad debt, as well as cash and cash
equivalents, equaling NOK 5,797 million at 31 December 2021.
Refer to Note 16 – Trade receivables for information on the
provision for bad debt related to trade receivables.
Note 20 Financial instruments: measurement
Accounting principle
Initial recognition and measurement of
financial assets
Financial assets are, at initial recognition, measured using
amortised cost, fair value through other comprehensive
income (OCI) or fair value through profit or loss.
The classification of financial assets at initial recognition
depends on the financial asset’s contractual cash flow
characteristics and the Group’s business model for managing
them. The Group initially measures a financial asset at its fair
value plus, in the case of a financial asset at fair value through
OCI, transaction costs. Trade receivables that do not contain a
significant financing component or for which the Group has
applied the practical expedient are measured at the
transaction price determined under IFRS 15.
Subsequent measurement
For purposes of subsequent measurement, financial assets are
classified in four categories:
●
Financial assets at amortised cost
●
Financial assets at fair value through OCI with recycling of
cumulative gains and losses
●
Financial assets designated at fair value through OCI with
no recycling of cumulative gains and losses upon
derecognition (equity instruments)
●
Financial assets at fair value through profit or loss
At 31 December 2021, the Group has financial assets at
amortised cost and at fair value through profit or loss and to
fair value through OCI.
These categories are described below:
Financial assets at amortised cost
The Group measures financial assets at amortised cost if both
of the following conditions are met:
●
The financial asset is held within a business model with
the objective to hold financial assets in order to collect
contractual cash flows and
●
The contractual terms of the financial asset give rise to
cash flows that are solely payments of principal and
interest on the principal amount outstanding on specified
dates
Financial assets at amortised cost are subsequently measured
using the effective interest (EIR) method and are subject to
impairment assessment. Gains and losses are recognised in
profit or loss when the asset is derecognised, modified or
impaired. The Group’s financial assets at amortised cost
includes trade receivables and cash and cash equivalents
Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss are carried
in the statement of financial position at fair value with net
changes in fair value recognised in the statement of profit or
loss. This include financial assets designated upon initial
recognition at fair value or financial assets mandatorily
required to be measured at fair value. Derivatives, including
separated embedded derivatives, are classified as fair value
through profit or loss unless they are designated as effective
hedging instruments.
Impairment and derecognition of financial assets
The Group assesses, at each reporting date, whether there is
objective evidence that a financial asset or a group of financial
assets is impaired. This assessment is conducted through an
expected credit loss (ECL) approach, under which forward-
looking information is taken into account. Under the ECL-
approach an allowance for expected credit losses should be
recognised for all contract assets not held at fair value through
profit or loss.
A financial asset is primarily derecognised and removed from
the Group’s consolidated statement of financial position when
the rights to receive cash flows from the asset have expired,
the Group has transferred substantially all the risks and
rewards of the asset, or has transferred control of the asset.
82
Initial recognition and measurement of financial
liabilities
All financial liabilities are recognised initially at fair value
through profit or loss and, 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.
Subsequent measurement of financial liabilities
For purposes of subsequent measurement, financial liabilities
are classified in two categories:
●
Financial liabilities at fair value through profit or loss
●
Financial liabilities at amortised cost (loans and
borrowings)
Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss include
financial liabilities held for trading, such as trade and other
payables.
Financial liabilities at amortised cost (loans and
borrowings)
After initial recognition, interest-bearing loans and borrowings
are subsequently measured at amortised cost using the EIR
method. Gains and losses are recognised in profit or loss when
the liabilities are derecognised as well as through the EIR
amortisation process. Amortised cost is calculated by taking
into account any discount or premium on acquisition and fees
or costs that are an integral part of the EIR. The EIR
amortisation is included as finance costs in the statement of
profit or loss. Refer to Note 21 Financial instruments by
category for details.
Derecognition of financial liabilities
A financial liability is derecognised when the obligation under
the liability is discharged, cancelled or expires. When an
existing financial liability is replaced by another from the same
lender on substantially different terms, or the terms of an
existing liability are substantially modified, the exchange or
modification is treated as de-recognition of the original liability
and recognition of a new liability. The difference in the
respective carrying amounts is recognised in the statement of
profit or loss.
Offsetting of financial instruments
Financial assets and financial liabilities are offset, and the net
amount is reported in the consolidated statement of financial
position if there is a current enforceable legal right to offset
the recognised amounts, there is an intention to settle on a net
basis and to realise the assets and settle the liabilities
simultaneously.
Definition of equity instrument
Entities within the Group have issued certain instruments as
part of the project financing structures to minority
shareholders (shareholder loans). These shareholder loans are
considered equity instruments only if both of the definitions in
IFRS are met. See Note 25 Project equity financing provided by
co-investors for further information.
Estimation uncertainty
Fair value measurement
Fair value is the price that would be received to sell an asset or
paid to transfer a liability in an orderly transaction between
market participants at the measurement date. All assets and
liabilities for which fair value is measured or disclosed in the
financial statements are categorised within the fair value
hierarchy from IFRS 13 based on the lowest level input that is
significant to the fair value measurement as a whole:
●
Level 1
markets for identical assets or
●
Level 2
input that is significant to the fair value measurement is
directly or indirectly observable
●
Level 3
input that is significant to the fair value measurement is
unobservable
For assets and liabilities that are recognised in the financial
statements on a recurring basis, the Group determines
whether transfers have occurred between levels in the
hierarchy by re-assessing categorisation (based on the lowest
level input that is significant to the fair value measurement as a
whole) at the end of each reporting period.
During the reporting period ending 31 December 2021, there
have been no transfers between the fair value levels.
The fair value of interest rate swaps is calculated as the present
value of the estimated future cash flows based on the
observable yield curves (level 2). This imply to take into
account input from external parties and compare the terms
agreed under each derivative contract to the market terms for
a similar contract on the valuation date. Changes in the fair
value relate to daily changes in market prices of the derivative
contracts and the volume of contracts.
As of 31 December 2021 the group had financial assets and
financial liabilities related to the interest rate swaps classified as
derivate financial instruments on level 2. Refer to Note 22
Derivative financial instruments for details.
Scatec ASA - Annual Report 2021
83
Note 21 Financial instruments by category
For details on accounting principles and estimation uncertainty for financial instruments, see Note 20 Financial instruments –
Measurement.
NOK million
Measurement category
2021
2020
Assets
Derivatives
Interest rate swap
Fair value – hedging instruments through OCI
26
-
Debt instruments
Cash and cash equivalents
Amortised cost
4,171
7,788
Accounts receivable
Amortised cost
557
435
Other debt instruments and receivables
Amortised cost
759
789
Total financial assets
5,513
9,012
Total current
5,303
8,868
Total non-current
210
144
Liabilities
Interest bearing loans and borrowings
Corporate financing
Amortised cost
7,264
748
Non-recourse financing loans
Amortised cost
11,855
12,263
Derivatives
Interest rate swap
Fair value – hedging instruments through OCI
339
703
Other financial liabilities
Trade and other financial liabilities
Amortised cost
1,422
1,478
Total financial liabilities
20,880
15,191
Total current
2,049
2,553
Total non-current
18,831
12,638
Financial instruments and their carrying amounts are recognised in the consolidated statement of financial position at 31 December,
with categories as defined by IFRS 9, as presented above. There are no significant differences between total carrying value and fair
value for financial instruments measured at amortised cost.
The table below provides a reconciliation of the movement of liabilities arising from financing activities, disaggregated by cash and non-
cash movements. Please refer to Note 11 Leases for a reconciliation of lease liabilities.
2021
Non-cash changes
NOK million
2020
Cashflows
Foreign
exchange
movement
Fair value
changes
Other/
Reclassifi-
cations
2021
Non-recourse financing
12,263
(708)
(103)
-
403
11,855
Corporate financing
748
4,699
-
-
1,817
7,264
Derivatives (net)
703
(203)
-
(168)
7
339
Shareholder loan from non-controlling interests
717
(122)
15
-
(1)
610
Trade and accounts payables
760
52
-
-
-
812
Total liabilities arising from financing activities
15,191
3,719
(87)
(168)
2,226
20,880
84
2020
Non-cash changes
NOK million
2019
Cashflows
Foreign
exchange
movement
Fair value
changes
Other/
Reclassifi-
cations
2020
Non-recourse financing
13,064
(543)
(374)
-
116
12,263
Corporate financing
745
-
-
-
3
748
Derivatives (net)
351
(121)
-
469
4
703
Shareholder loan from non-controlling interests
761
(14)
(30)
-
1
717
Trade and accounts payables
887
(127)
-
-
-
760
Total liabilities arising from finaning activities
15,808
(806)
(404)
469
124
15,191
Note 22 Derivative financial instruments
Hedge accounting
The Group uses derivative financial instruments, such as
interest rate swaps, to hedge its interest rate risks related to
financing of renewable power plants. Such derivative financial
instruments are initially recognised at fair value on the date of
which a derivative contract is entered and are subsequently re-
measured at fair value. The effective portion of cash flow
hedges is recognised in OCI and later reclassified to profit or
loss when the underlaying hedge item affects profit or loss.
The Group only applies hedge accounting for cash flow
hedges that meet the criteria in IFRS 9. At the inception of
each hedge relationship, the Group designates and
documents the hedge accounting relationship, the risk
management objective and strategy for undertaking the
hedge. The documentation includes identification of the
hedging instrument, the hedged item or transaction, the
nature of the risk being hedged and how the entity will assess
the hedging instrument’s effectiveness in offsetting the
exposure to changes in expected cash flows from the hedged
item. Such hedges are expected to be highly effective in
achieving offsetting changes in the expected cash flows and
are assessed on an ongoing basis to determine that they
actually have been highly effective throughout the financial
reporting periods for which they were designated. If a hedge
of a forecasted transaction subsequently results in the
recognition of a non-financial asset or liability, the gain or loss
on the hedge instrument that was recognised in other
comprehensive income is reclassified to the income statement
in the same period or periods during which the asset acquired
or liability assumed affects the statement of profit or loss. If the
forecast transaction is no longer expected to occur, amounts
previously recognised in other comprehensive income are
reclassified to the statement of profit or loss. If the hedging
instrument expires or is sold, terminated or exercised without
replacement or rollover, or if its designation as a hedge is
revoked, amounts previously recognised in other
comprehensive income remain in other comprehensive
income until the forecasted transaction occurs.
Derivative financial assets and liabilities
NOK million
2021
2020
Interest rate swap contracts financial assets measured at level 2 in the fair value hierarchy
Non-current portion
26
-
Total derivative financial assets
26
-
Interest rate swap contracts financial liabilities measured at level 2 in the fair value hierarchy
Current portion
90
131
Non-current portion
249
572
Total derivative financial liabilities
339
703
The tables above show the market value of the derivatives for the year ending 2021 and 2020, 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.
Interest rate Swaps – Norway
The notional principal amount of the outstanding interest rate
swap contracts at 31 December 2021 was NOK 1,323 million
(0). The fixed interest swap rate is 0.4%, and the floating rate is
based on 3-month USD Libor. The maturity profile of the
interest rate swap is set up to match the USD 150 million Green
Term Loan and maturity is in 2025. Please refer to Note 23 for
further information on corporate funding.
Interest rate Swaps - South Africa
The notional principal amount of the outstanding interest rate
swap contracts at 31 December 2021 was NOK 2,082 million
(2,350). The fixed interest rates vary from 8.4% to 8.7%, and
Scatec ASA - Annual Report 2021
85
the floating rates is based on to 3-month JIBAR. The maturity
profile of the interest rate swaps is set up in order to match the
non-recourse financing, and maturity is in 2028.
Interest rate Swaps - Egypt
The notional principal amount of the outstanding interest rate
swap contracts at 31 December 2021 was NOK 2,811 million
(2,792). The fixed interest swap rate varies from 5.4% to 8.0%,
and the main floating rates based on 6-month USD Libor. The
maturity profile of the interest rate swaps is set up in order to
match the non-recourse financing, and maturity is in 2035.
Interest rate Swaps - Mozambique
The notional principal amount of the outstanding interest rate
swap contracts at 31 December 2021 was NOK 346 million
(357). The fixed interest swap rate is 3.3%, and the floating rate
is based on 6-month USD Libor. The maturity profile of the
interest rate swaps is set up in order to match the non-
recourse financing, and maturity is in 2035.
Interest rate Swaps - Malaysia
The notional principal amount of the outstanding interest rate
swap contracts at 31 December 2021 was NOK 216 million
(238). The fixed interest swap rate is 4.3%, and the floating rate
is based on 6-month KLIBOR. The maturity profile of the
interest rate swaps is set up in order to match the non-
recourse financing, and maturity is in 2028.
NOK
Reconciliation of hedging reserve - interest rate swap contracts
NOK million
2021
2020
Opening balance
-522
-268
Recycling during the year to profit or loss, gross
203
121
Recycling during the year to profit or loss, tax effect
-61
-33
Unrealised gain/(loss) during the year
193
-469
Unrealised gain/(loss) during the year, tax effect OCI
-56
128
Closing balance
-242
-522
Of which equity holders of the parent company
-111
-261
The interest rate swap contracts described in this note are
exposed to the IBOR transition, as the fair values of the interest
rate swaps today are based on the following reference rates;
6-month KLIBOR, 6-month USD Libor and 3-month JIBAR, and
a change from these reference rates to the new reference
rates described in the IBOR reform could affect the fair value
of the financial instruments. The notional amounts for interest
rate swap contracts based on 3-month USD Libor, 6-month
USD Libor, 6-month KLIBOR 3-month JIBAR are
NOK 1,323, NOK 3,157 million, NOK 216 million and NOK 2,082
million respectively. The Group pays attention to the
development of the IBOR transition, and will consider to
initiate any actions deemed appropriate. Based on a
preliminary assessment, the Group does not expect that the
IBOR transition will cause a material change in the fair value of
the Group’s interest rate swaps.
86
Note 23 Corporate financing
Currency
Denominated
currency value
(million)
Maturity
Interest terms
Carrying value
2021
(NOK million)
Carrying value
2020
(NOK million)
Bond: (Ticker: SS002 NO0010809684)
NOK
750
Q3 2021
3M NIBOR + 4.75%
-
748
Green Bond (Ticker: SCATC03 NO0010931181)
EUR
250
Q3 2025
3M EURIBOR + 2,50%
2,475
-
Total unsecured bonds
2,475
748
Green Term Loan
USD
150
Q1 2025
1,323
-
Bridge to Bond
USD
193
Q1 2023
1,702
-
Total secured acquisition financing
3,025
-
Vendor Financing (Norfund)
USD
200
Q1 2028
1,764
-
Total unsecured acquisition financing
1,764
-
Revolving credit facility
USD
180
Q1 2024
-
-
Overdraft facility
USD
5
-
-
Total secured back-stop bank facilities
-
-
Total
7,264
748
As of non current
7,264
-
As of current
-
748
Green bond
In the first quarter of 2021 Scatec issued a EUR 250 million
senior unsecured green bond with maturity in August 2025.
The bond carries a coupon of 3-months EURIBOR (with no
floor) + 2.50%, to be settled on a quarterly basis. The bond
was listed on the Oslo Stock Exchange 23 June 2021 with ticker
SCATC03 ESG. The proceeds from the bond issue were used
to
●
Redeem in whole the NOK 750 million senior unsecured
green bond issued in 2017, with ticker SSO02 ESG,
including any call premium and accrued interest.
●
To partially refinance the bridge to bond facility that was
committed in 2020 in relation to the acquisition of SN
Power.
●
Cover for other eligible activities as set out in Scatec’s
Green Financing Framework.
During the term of the bond, Scatec shall comply with the
following financial covenants at all times:
●
Minimum liquidity: free cash of minimum NOK 150
million
●
Maximum debt to capitalisation ratio: 50%
●
Minimum interest coverage ratio: 3.0x.
Refer to the loan agreement available on
www.scatec.com/investor-overview for further information and
definitions.
Outstanding acquisition finance related to the SN Power acquisition
The following facilities and amounts are currently outstanding
of the initial USD 1,030 million financing package related to the
acquisition of SN Power in the first quarter of 2021:
●
USD 150 million Green Term Loan provided by Nordea,
Swedbank and DNB with maturity in the first quarter of
2025.
●
USD 193 million outstanding of the USD 400 million
bridge to bond facility provided by Nordea, Swedbank
and DNB. The first maturity date for the facility is July
2022, with an option to extend maturity with six months
to January 2023.
●
USD 200 million Vendor Financing provided by Norfund
with maturity in the first quarter of 2028.
Revolving credit facility
In the first quarter of 2021 Scatec increased the existing
revolving credit facility (RCF) from USD 90 million to USD 180
million, with Nordea Bank as agent and Nordea Bank, DNB,
Swedbank and BNP Paribas as equal Lenders. The facility can
be drawn in USD, NOK, EUR or an optional currency agreed
with the banks. The facility is ESG (Environmental, Social and
Governance) linked and has a three-year tenor. The facility
margin is linked to the following ESG KPIs:
●
A targeted level for LTIFR (Lost time incident frequency
rate) for the Group
●
Anti-Corruption training for all employees
●
Environmental and social baseline studies and risk
assessment on all power plants by external experts
Scatec has not drawn on the revolving credit facility per 31
December 2021.
Scatec ASA - Annual Report 2021
87
Overdraft facility
In the second quarter of 2018 Scatec entered into a USD 5
million overdraft facility with Nordea Bank. Scatec has not
drawn on the overdraft facility per 31 December 2021.
Per 31 December 2021, Scatec was in compliance with all
financial covenants for the above facilities. The book equity of
the recourse group, as defined in the facility agreements, was
NOK 11,244 million per year end. During 2021, interest
amounting to NOK 250 million ( 98) was expensed for the
bond, acquisition finance, overdraft- and revolving credit
facility.
Guarantee facilities
In the first quarter of 2021, Scatec refinanced the guarantee
facility and intercreditor agreement that was established in
2017. The guarantee facility (GFA) has Nordea Bank as agent
and issuer, with Nordea Bank, Swedbank, DNB and BNP
Paribas as guarantee instrument lenders. DNB was included as
instrument lender from the closing of the SN Power acquisition
in January 2021. The guarantee facility is mainly used to
provide advance payment-, performance and warranty bonds
under construction agreements, as well as trade letter of
credits. The intercreditor agreement is entered into by Scatec,
the issuing banks under the guarantee facility and Eksfin
(Eksportfinansiering Norge). Eksfin can issue counter indemnity
of 50% in favour of the issuing banks. In addition to the GFA,
Scatec has guarantee facilities with Standard Bank South
Africa, Lombard insurance company in South Africa and
MBank in Malaysia. These facilities are mostly used to cover
short term bid bonds.
88
Note 24 Non-recourse financing
See Note 20 Financial instruments: Measurement and market
risk sensitivities for accounting principle.
The table below specifies non-recourse financing at 31
December 2021 and 2020. The amounts in the table are
nominal amounts and not amortised cost. The rate of interest
is a calculated average. All loans are fixed or swapped to fixed
rate interests, except for the loans in South Africa Upington
where the interest rates are inflation-linked to match the
profile of the PPA indexations.
NOK million
Interest rate
Maturity date
2021
2020
Loan facilities (ZAR) - South Africa portfolio, Kalkbult, Linde and
Dreunberg
12.26%
12/31/2029
1,616
1,887
Loan facilities (CZK) - Czech portfolio
5.02%
5/11/2029
318
334
Loan facilities (USD) - Gigawatt Global Rwanda Ltd (ASYV)
8.21%
1/11/2030
108
109
Loan facilities (USD) - Jordan portfolio
5.68%
1/10/2032
644
672
Loan facilities (USD) - Produccion De Energia S.A (Aqua Fria)
6.59%
12/31/2026
346
394
Loan facilities (MYR) – Quantum Solar Park (Semenanjung) SDN.
6.13%
2/23/2035
1,796
1,906
Loan facilities (USD) - Aswan portfolio Egypt
6.75%
10/31/2035
2,847
2,845
Loan facilities (USD) - Central Solar de Mocuba, Mozambique
6.41%
1/31/2035
438
452
Loan facilities (ZAR) - South Africa Upington
1)
8.58%
3/31/2037
2,157
2,283
Loan facilities (MYR) – Red Sol
3.86%
12/31/2028
267
240
Loan facilities (EUR) - Ukraine
6.05%
5/31/2029
969
1,142
Loan facilities (VND) - Vietnam
10.00%
1/31/2035
347
-
Total non-recourse financial liabilites
11,855
12,263
Of which non-current non-recourse financial liabilities
10,708
11,350
Of which current non-recourse financial liabilities
1,147
913
1) Parts of the loans in South Africa Upington are structured as CPI-linked loans where the principal loan amount is uplifted based on the yearly observed CPI factor. Hence, the
effective interest including the CPI factor is higher than the nominal interest rate of the loan. For 2021 the CPI factor applied to the loans was 1.17%
.
Scatec mainly uses non-recourse financing for constructing
and/or acquiring assets, exclusively using as guarantee the
assets and cash flows of the special purpose vehicle carrying
out the activities financed. Compared to corporate financing,
non-recourse financing has certain key advantages, including a
clearly defined and limited risk profile. In this respect, the
banks recover the financing solely through the cash flows
generated by the projects financed. For four of the five
companies operating in the Czech Republic, the non-recourse
financing
agreements include a cross default clause within the Czech
group. Please refer to Note 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 14,508 million
(14,877) at 31 December
2021.
Scatec ASA - Annual Report 2021
89
Repayment structure
NOK million
Loan repayment
Interest payment
Total
2022
747
737
1,484
2023
865
698
1,563
2024
950
634
1,585
2025
978
574
1,553
2026
1033
511
1,544
2027
998
444
1,441
2028
1160
386
1,546
2029
931
305
1,236
2030
671
268
939
2031
666
214
880
2032
621
194
815
2033
608
142
750
2034
639
124
763
2035
642
65
707
2036
177
67
245
2037
122
45
167
Total future loan repayment
11,807
5,409
17,216
Covenants
Ukraine portfolio
Due to the previously announced tariff reductions by the
authorities in Ukraine, the project level debt for Scatec’s solar
power plants has been, or is in the process of being,
restructured. For the Boguslav, Rengy and Kamianka projects,
Scatec has completed the restructuring and is compliant with
all covenants on 31 December 2021. For the Chigrin project,
Scatec is not in compliance with all financial covenants on 31
December 2021. Project level debt amount of NOK 275 million
for the Chigrin project has therefore been classified as current
liabilities in the statement of financial position on 31 December
2021. Refer to note 32 Subsequent events for an update of the
situation in Ukraine.
The Loan Facilities and the Common Terms Agreements (CTA)
contain financial covenants including, but not limited to:
Default Ratios: the Twelve Month Historic DSCR is equal to or
exceeds 1.10:1, the Twelve Month Projected DSCR is equal to or
exceeds 1.10:1, until the Final Maturity Date the projects
maintain a Debt to Equity Ratio of not more than 70:30.
Distribution Conditions: restricted until Financial Completion
Date, thereafter the Historic and Projected DSCRs must exceed
1.20:1. The Agreements contain further restrictions on, inter
alia, hedging policies, asset sales and entering into new
activities, amendments to the key agreements, insurance 86
Annual Accounts Group policies, pledges and guarantees,
additional financial indebtedness, project accounts, capital
expenditures and changes of shareholder structure and
auditors, as well as a number of undertakings related to e.g.,
budgets, financial, operational and environmental reporting
and information.
Scatec Solar SA 166 (Pty) Ltd. (Kalkbult)
The Loan Facility and the Common Terms Agreements contain
financial covenants including, but not limited to: minimum
compliance ratios: DSCR of 1.30 : 1, Loan Life Coverage Ratio
(LLCR) of 1.30 : 1 and Project Life Coverage Ratio (PLCR) of 1.40
: 1; 50% distribution cash sweep if DSCR is between 1.30 : 1 and
1.20 : 1; lock-in and full cash sweep ratios: DSCR of 1.20 : 1,
LLCR of 1.20 : 1 and PLCR of 1.35 : 1; and default ratios: DSCR
of 1.10 : 1, LLCR of 1.15 : 1 and PLCDR of 1.30 : 1 as well as
funding on debt service and maintenance reserve accounts.
The Agreements contain further restrictions on, inter alia,
hedging policies, subsidiaries and new activities, amendments
to the key agreements and insurance policies, new consents,
pledges and guarantees, financial indebtedness and giving
financial support, capital expenditures and changes of
shareholder structure and auditors, as well as a number of
undertakings related to e.g. budgets, financial and operational
reporting and information.
Simacel 155 (Pty) Ltd. (Linde)
The Loan Facility and the Common Terms Agreements contain
financial covenants including, but not limited to: minimum
compliance ratios: senior DSCR of 1.30 : 1 (total meaning senior
+ subordinated DSCR of 1.15 : 1), senior LLCR of 1.30 : 1 (total
LLCR of 1.20 : 1), and senior PLCR of 1.40 : 1 (total PLCR of 1.30
: 1); 50% distribution cash sweep if DSCR is between 1.30 : 1
and 1.20 : 1; lock-in and full cash sweep ratios: senior DSCR of
1.20 : 1 (total DSCR of 1.10 : 1), senior LLCR of 1.20 : 1 (total
LLCR of 1.15 : 1) and senior PLCR of 1.35 : 1 (total PLCR of 1.25 :
1); and default ratios: senior DSCR of 1.10 : 1 (total DSCR of 1.05
: 1), senior LLCR of 1.15 : 1 (total of LLCR 1.10 : 1) and senior PLR
of 1.30 : 1 (total PLCR of 1.20 : 1), as well as funding on debt
service and maintenance reserve accounts. The restrictions
90
and undertakings contained in the Facility Agreements are
similar to those listed for Scatec Solar SA 166 (Pty) Ltd.
Simacel 160 (Pty) Ltd. (Dreunberg)
The Loan Facility and the Common Terms Agreements contain
financial covenants similar to those mentioned above for
Simacel 155 (Pty) Ltd RF. The restrictions and undertakings
contained in the Facility Agreements are similar to those listed
for Scatec Solar SA 166 (Pty) Ltd.
South Africa Upington portfolio
The Loan Facility and the Common Terms Agreements contain
financial covenants including, but not limited to: minimum
compliance ratios: senior historic DSCR of 1.10 : 1, senior
projected DSCR of 1.10 and senior LLCR of 1.15 : 1.
The Agreements contain further restrictions on, inter alia,
hedging policies, subsidiaries and new activities, amendments
to the key agreements and insurance policies, new consents,
pledges and guarantees, financial indebtedness and giving
financial support, capital expenditures and changes of
shareholder structure and auditors, as well as a number of
undertakings related to e.g. budgets, financial and operational
reporting and information.
Czech portfolio
The Facilities Agreement contains financial covenants
including, but not limited to: lock-in and default Debt Service
Coverage Ratio (DSCR) of 1.20: 1 and minimum (adjusted)
Equity Ratio of 20%, as well as funding on debt service reserve
account. The Agreement contains further restrictions on, inter
alia, environmental compliance, changes of business and
certain corporate acts, amendments to the key agreements
and insurance policies, new consents, pledges and guarantees,
financial indebtedness and giving financial support, capital
expenditures and changes of shareholder structure and
auditors, as well as a number of undertakings related to e.g.
budgets, financial reporting and information.
Gigawatt Global Rwanda Ltd (ASYV)
The loan agreement includes financial covenants requiring that
the borrower must ensure that on each Calculation Date from
the Financial Completion Date: Historic Audited DSCR and
Historic Unaudited DSCR must exceed 1.10 : 1; and Projected
Minimum DSCR must exceed 1.10 : 1.
Jordan portfolio (Oryx/EJRE/GLAE)
The loan agreement includes financial covenants requiring that
the borrower must ensure that on each Calculation Date from
the Commercial Operation Date: Historic Unaudited DSCR
(HUDSCR) and Forecast Minimum DSCR (PMDSCR) must
exceed 1.10 : 1.
Produccion De Energia S.A (Aqua Fria)
The loan facilities agreement contains financial covenants
included, but not limited to: maintain a Minimum Debt Service
Coverage of 1.10; maintain a Financial Debt to Total Assets not
more than 70%.
Quantum Solar Park (Semenanjung) SDN. BHD.
The loan agreement contains financial covenants included, but
not limited to: maintain a Financial Service Coverage Ratio
(FSCR) of minimum 1.25. FSCR with cash post distribution: min
1.5x. FSRA (Finance Service Reserve Account) of 6 months. The
agreement contains further restriction on MRA to be funded in
stages after COD, no changes to shareholders structure, no
other financial indebtedness and no material amendments to
project documents.
Egypt portfolio
The Loan Facilities and the Common Terms Agreements
contain financial covenants including, but not limited to:
Default Ratios: the Six Month Historic DSCR is equal to or
exceeds 1.15:1, the Twelve Month Historic DSCR is equal to or
exceeds 1.15:1, the Twelve Month Projected DSCR is equal to or
exceeds 1.15:1, until the Financial Completion Date the projects
maintain a Debt to Equity Ratio of not more than 75:25.
Distribution Conditions: Historic and Projected DSCRs exceed
1.20:1.The Agreements contain further restrictions on, inter alia,
hedging policies, subsidiaries and new activities, amendments
to the key agreements and insurance policies, new consents,
pledges and guarantees, financial indebtedness and giving
financial support, capital expenditures and changes of
shareholder structure and auditors, as well as a number of
undertakings related to e.g. budgets, financial and operational
reporting and information.
Mozambique:
The loan agreement contains financial covenants including,
but not limited to: Default ratios: For any calculation period,
the historic DSCR must exceed 1.10:1 or LLCR must exceed
1.20:1. Distribution conditions: The prospective and Historic
DSCR exceed 1.20:1 and LLCR exceed 1.30:1.
The Agreements contain further restrictions on, inter alia,
hedging policies, subsidiaries and new activities, amendments
to the key agreements and insurance policies, new consents,
pledges and guarantees, financial indebtedness and giving
financial support, capital expenditures and changes of
shareholder structure and auditors, as well as a number of
undertakings related to e.g. budgets, financial and operational
reporting and information.
Scatec ASA - Annual Report 2021
91
Red Sol, Malaysia:
The Facility Agreement contains financial covenants including,
but not limited to: Default Ratios: the Twelve Month Historic
DSCR is equal to or exceeds 1.10:1, the Twelve Month Projected
DSCR is equal to or exceeds 1.10:1, until the first Repayment
Date the projects maintain a Debt to Equity Ratio of not more
than 73:27. Distribution Conditions: Historic and Projected
DSCRs exceed 1.15:1.
The Agreements contain further restrictions on, inter alia,
hedging policies, subsidiaries and new activities, amendments
to the key agreements and insurance policies, new consents,
pledges and guarantees, financial indebtedness and giving
financial support, capital expenditures and changes of
shareholder structure and auditors, as well as a number of
undertakings related to e.g. budgets, financial and operational
reporting and information.
Dam Nai Wind Power JSC (Vietnam)
The loan agreement contains financial covenants included, but
not limited to: (a) maintaining a current asset over current
liabilities ratio of minimum 1 and (b) an adjusted DSCR ratio of
minimum 1. Additionally, the lender also require borrower to
maintain a DSRA with funds equals to one quarterly principal
payment plus three months of interest at any time during the
loan tenure.
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. Repayment of shareholder
loans are at the discretion of the power plant company, accordingly these shareholder loans are accounted for as equity.
At 31 December 2021, the following financing have been granted by co-investors to consolidated power plant companies:
Shareholder loan recognized
NOK million
Country of
incorporation
Total
financing
Paid-in
equity
in equity
as financial
liability
Scatec Solar SA 166 (Pty) Ltd (Kalkbult)
South Africa
52
52
Simacel 155 (Pty) Ltd (Linde)
South Africa
20
20
Simacel 160 (Pty) Ltd (Dreunberg)
South Africa
40
40
Gigawatt Global Rwanda (ASYV)
Rwanda
17
5
12
Anwar Al Ardh for Solar Energy Generation PSC (EJRE)
Jordan
81
1
80
Ardh Al Amal for Solar Energy Generation PSC (GLAE)
Jordan
38
1
37
Producción de Energía Solar y Demás Renovables, S.A.
(Agua Fria)
Honduras
226
99
127
Los Prados, Honduras
Honduras
192
192
Aswan Solar Power SAE (BB1)
Egypt
29
29
Zafarana Solar Power SAE (ZAF1)
Egypt
119
33
86
Red Sea Solar Power SAE (ZAF2)
Egypt
98
29
68
Upper Egypt Solar Power (BB2)
Egypt
83
33
50
Kom Ombo Renewable Energy SAE (BB3)
Egypt
124
38
86
Daraw Solar Power SAE (BB4)
Egypt
65
35
29
Kamianka / Chysta Energiya
Ukraine
52
1
51
Rengy Bioenergy
Ukraine
85
1
84
Central Solar de Mocuba, Mozambique
Mozambique
43
26
17
Dyason's Klip 1
South Africa
107
107
Dyason's Klip 2
South Africa
108
108
Sirius Solar PV Project One
South Africa
106
106
Helios Power (Private) Limited
Pakistan
9
6
3
Meridian Energy (Private) Limited
Pakistan
9
6
3
HNDS Energy (Private) Limited
Pakistan
9
6
3
Total project financing from co-investors
1,711
973
130
610
92
At 31 December 2020, 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
-
-
Simacel 155 (Pty) Ltd (Linde)
South Africa
23
23
-
-
Simacel 160 (Pty) Ltd (Dreunberg)
South Africa
40
40
-
-
Gigawatt Global Rwanda (ASYV)
Rwanda
15
4
10
-
Anwar Al Ardh for Solar Energy Generation PSC (EJRE)
Jordan
79
1
78
-
Ardh Al Amal for Solar Energy Generation PSC (GLAE)
Jordan
37
1
36
-
Producción de Energía Solar y Demás Renovables, S.A.
(Agua Fria)
Honduras
236
96
-
140
Los Prados, Honduras
Honduras
196
196
-
-
Aswan Solar Power SAE (BB1)
Egypt
6
6
-
-
Zafarana Solar Power SAE (ZAF1)
Egypt
94
5
-
89
Red Sea Solar Power SAE (ZAF2)
Egypt
94
5
-
89
Upper Egypt Solar Power (BB2)
Egypt
76
6
-
70
Kom Ombo Renewable Energy SAE (BB3)
Egypt
99
5
-
94
Daraw Solar Power SAE (BB4)
Egypt
97
8
-
88
Kamianka / Chysta Energiya
Ukraine
50
1
-
49
Rengy Bioenergy
Ukraine
83
1
-
82
Central Solar de Mocuba, Mozambique
Mozambique
42
26
-
16
Dyason's Klip 1
South Africa
112
112
-
-
Dyason's Klip 2
South Africa
114
114
-
-
Sirius Solar PV Project One
South Africa
111
111
-
-
Total project financing from co-investors
1,660
816
124
717
For the year 2021, interest expenses on
financing from co-investors of NOK 38 million have been expensed (NOK 56 million for 2020),
of which NOK 1 million is recognised directly
in equity (NOK 1 million for 2020).
The equity and loan financing provided by the co-investors is repaid according to a pre-determined waterfall structure, meaning that
the financing presented above will be settled after external non-recourse financing, and only when distributable cash as defined by the
financing agreements is available. Normally this would occur twice a year.
For some of the project companies in the above table the co-investor funding has been provided indirectly through jointly owned
holding companies.
Note 26 Guarantees and commitments
Scatec is mainly issuing corporate guarantees as security
for
EPC and construction contract performance, but may also in
exceptional circumstances issue corporate guarantees to support
power plant company performance.
Scatec provides the following types of guarantees
for EPC
contract performance:
●
Advance Payment Guarantees in exchange for advance
payment under the EPC contract (typically represents 15%-
20% of the contract value),
●
Performance Guarantees to cover contract obligations
(typically represents 10%-15% of the contract value) and
●
Warranty Bonds (typically 5%-10% of the contract value) to
cover operational performance for the first two years of
operation.
Advance payment, performance and warranty guarantees are
mainly issued in relation to construction contracts entered with
project companies where Scatec has a controlling interest. The
total nominal exposure from such guarantees may become
significant as the level of construction activities increases.
Scatec is often required to issue Bid Bonds to secure
performance during submission of project bids.
For power plants in operation Scatec may offer Commitment
Bonds to cover the obligations under PPAs and
Implementation Agreements. These obligations are connected
Scatec ASA - Annual Report 2021
93
to project performance where Scatec is in control and hold the
O&M and Asset management agreements.
In addition, Scatec provides Payment Guarantees for limited
situations:
●
Equity injection in project companies where project lenders
disburse debt before equity is paid in
●
Debt Service Reserve to replace cash reserves in the project
companies
For the Progressovka solar plant in Ukraine, which reached
commercial operation in 2021, Power China provided
construction services and supplier financing. Scatec has
provided a corporate guarantee to Power China (NOK 638
million) of which a bank guarantee of EUR 20 million is issued
in support of this obligation.
For four of the power plants in Ukraine Scatec has provided
additional corporate guarantees of NOK 132 million related to
establishment of debt service reserve accounts and contingent
equity.
Guarantees provided as of 31 December 2021
The volumes of guarantees specified below are bank
guarantees issued by Scatec ASA to project companies
(subsidiaries) mainly in relation to Scatec provided EPC
services.
The guarantees have the following duration (closing balance
of total guarantee exposure):
Guarantees duration
NOK million
2022
2023
2024
>2024
Advance payment guarantees
61
-
-
-
Performance guarantees
183
57
-
-
Warranty guarantees
278
-
-
-
Bid Bonds
170
-
-
-
SPV Performance / commitments
30
20
19
19
Other payment guarantees (includes 20 MEUR to Power China)
426
13
9
9
Total
1,148
90
28
28
The guarantees issued by Scatec ASA and other recourse
group entities are issued by Nordea Bank under the guarantee
facility with Nordea Bank as agent, and Nordea Bank, BNP
Paribas, Swedbank and DNB as guarantee instrument lenders.
DNB was included as instrument lender from closing of the SN
Power acquisition in January 2021.
In addition to this facility, Scatec has guarantee facilities with
Standard Bank of South Africa and Lombard, an insurance
company in South Africa as well as a commercial bank in
Malaysia.
The bid bonds, advance payment guarantees, performance
guarantees, and warranty guarantees are for the most part
counter guaranteed by The Norwegian Export Credit
Guarantee Agency (Eksfin).
The financial covenants in the Guarantee Facility Agreement
are:
●
Free cash of no less than NOK 150,000,000
●
Debt to capitalization ratio 50%
●
Minimum interest coverage ratio 3.0x
Per 31 December 2021, Scatec was in compliance with all
covenants in the Guarantee Facility Agreement.
94
Note 27 Share capital, shareholder information and dividend
Share capital and shareholder information
At year-end 2021 the total number of shareholders in Scatec
was
16,487 (12,622). The
total number of outstanding shares
was 158,864,018 (
158,335,667) at par
value NOK 0.025 per
share as of 31 December 2021.
In January 2021, Scatec increased the share capital by 528,351
new shares as part of the share option programme. In May
2021, Scatec bought back 43,907 shares at an average volume
weighted price per share of NOK 204,4785 related to the
employee share purchase programme.
Refer to Note 12
–
Equity and shareholder information in the
Parent financial statement for an overview of the largest
shareholders of Scatec ASA and shares held by Management
and Board of Directors at 31 December 2021.
Refer to Note 4 – Employee benefits for information on share
options granted to the management.
Dividend
The Company recognises a liability to make cash or non-cash
distributions to equity holders of the parent when the
distribution is authorised, and the distribution is no longer at
the discretion of the Company. As per the corporate laws in
Norway, a distribution is authorised when it is approved by the
General Meeting.
The Group’s objective is to pay shareholders consistent and
growing cash dividends. In line with the dividend policy, Scatec
will pay out a minimum of 25 % of the cash distributions
received from the power plants.
On 1 February 2021, the Board of Directors announced its
intention to propose a dividend of NOK 1.09 per share to the
Annual General Meeting, totalling NOK 173 million. The
amount was paid out in April 2021. On 2 February 2022, the
Board of Directors announced its intention to propose a
dividend of NOK 2.54 per share to the Annual General
Meeting, totalling NOK 402 million.
Scatec ASA - Annual Report 2021
95
Note 28 Consolidated subsidiaries
The consolidated financial statement of Scatec comprises more than 200 legal companies that are controlled by Scatec. The following
table include material consolidated subsidiaries, including material holding companies. Consolidated economic interests correspond to
the voting interests if not otherwise stated. For subsidiaries of the ultimate Parent’s subsidiaries, the economic interests stated is the
mathematically indirect consolidated economic interests. For information on associated companies and joint venture companies, refer
to Note 13 Investments in JV and associated companies.
Company
Registered office
Consolidated
economic
interests 2021
SN Power AS
Oslo, Norway
100.00%
Scatec Solar Netherlands BV
Amsterdam, Netherlands
100.00%
Release Management B.V.
Amsterdam, Netherlands
100.00%
Scatec Solar s.r.o.
Prague, Czech
100.00%
Signo Solar PP01 s.r.o.
Prague, Czech
100.00%
Signo Solar PP02 s.r.o.
Prague, Czech
100.00%
Signo Solar PP03 s.r.o.
Prague, Czech
100.00%
Signo Solar PP04 s.r.o.
Prague, Czech
100.00%
Signo Solar PV1 s.r.o.
Prague, Czech
100.00%
Scatec Solar Solutions Ukraine LLC
Kyiv, Ukraine
100.00%
Chysta Energhiaa 2011 LLC
Kyiv, Ukraine
60.00%
Boguslav Energy LLC
Bohuslav, Ukraine
100.00%
Greenteco SES LLC
Kyiv, Ukraine
100.00%
Rengy Bioenergy LLC
Kyiv, Ukraine
51.00%
PV Progressovka Gamma LLC
Berezanka, Ukraine
100.00%
PV Progressovka ALpha LLC
Berezanka, Ukraine
100.00%
PV Progressovka Beta LLC
Berezanka, Ukraine
100.00%
Scatec Solar Jordan (EPC)
Amman, Jordan
100.00%
Scatec Solar AS/ Jordan PSC
Amman, Jordan
100.00%
Anwar Al Ardh For Solar Energy Generation PSC
Amman, Jordan
50.10%
Ardh Al Amal For Solar Energy Generation PSC
Amman, Jordan
50.10%
Scatec Solar Africa (Pty) Ltd
Cape Town, South Africa
100.00%
Scatec Solar Management Services (Pty) Ltd
Sandton, South Africa
100.00%
Scatec Solar SA 163 (Pty) Ltd.
Sandton, South Africa
92.00%
Scatec Solar SA (pty) Ltd.
Sandton, South Africa
100.00%
Scatec Solar SA 165 (Pty) Ltd.
Sandton, South Africa
76.60%
Scatec Solar SA 166 (Pty) Ltd.
Sandton, South Africa
46.00%
Scatec Solar SA 164 (Pty) Ltd.
Sandton, South Africa
80.70%
Simacel 155 (Pty) Ltd.
Sandton, South Africa
44.40%
Simacel 160 (Pty) Ltd.
Sandton, South Africa
44.40%
Dyason's Klip 1 (Pty) Ltd
Cape Town, South Africa
45.50%
Dyason's Klip 2 (Pty) Ltd
Cape Town, South Africa
45.50%
Scatec Solar Construction R4
Cape Town, South Africa
51.00%
Scatec Solar Operations R4
Cape Town, South Africa
51.00%
Sirius Solar PV Project One (RF) (Pty) Ltd
Cape Town, South Africa
45.50%
Scatec Solar Honduras SA
Tegucigalpa, Honduras
100.00%
Energias Solares S.A.
Tegucigalpa, Honduras
70.00%
Fotovoltaica Los Prados S.A.
Tegucigalpa, Honduras
70.00%
Fotovoltaica Surena S.A.
Tegucigalpa, Honduras
70.00%
Continues on following page
96
Quantum Solar Park (Kedah) Sdn Bhd 1)
Registered office
Consolidated
economic
interests 2021
Generaciones Energeticas S.A.
Tegucigalpa, Honduras
70.00%
Produccion de Energia Solar Demas Renovables S.A
Tegucigalpa, Honduras
40.00%
Central Solar de Mocuba S.A.
Maputo, Mozambique
52.50%
Scatec Solar Mozambique Limitada
Maputo, Mozambique
100.00%
Scatec Solar Solutions Egypt LLC
Cairo, Egypt
100.00%
Aswan Solar Power SAE
Cairo, Egypt
51.00%
Daraw Solar Power SAE
Cairo, Egypt
51.00%
Kom Ombo Renewable Energy SAE
Cairo, Egypt
51.00%
Red Sea Solar Power SAE.
Cairo, Egypt
51.00%
Upper Egypt Solar Power
Cairo, Egypt
51.00%
Zafarana Power SAE
Cairo, Egypt
51.00%
Scatec Solar Solutions Malaysia Sdn Bhd
Kuala Lumpur, Malaysia
100.00%
Quantum Solar Park (Kedah) Sdn Bhd ¹⁾
Kuala Lumpur, Malaysia
100.00%
Quantum Solar Park (Melaka) Sdn Bhd ¹⁾
Kuala Lumpur, Malaysia
100.00%
Quantum Solar Park (Terengganu) Sdn Bhd ¹⁾
Kuala Lumpur, Malaysia
100.00%
Quantum Solar Park Semenanjung Sdn Bhd ¹⁾
Kuala Lumpur, Malaysia
100.00%
Red Sol
Kuala Lumpur, Malaysia
100.00%
Helios Power Ltd
Clifton Karachi, Pakistan
100.00%
HNDS Energy Ltd
Clifton Karachi, Pakistan
100.00%
Meridian Energy Ltd
Clifton Karachi, Pakistan
100.00%
Scatec Solar Pvt Ltd (Pakistan)
Clifton Karachi, Pakistan
100.00%
Scatec Solar Solutions Vietnam Co. Ltd.
Ho Chi Minh City, Vietnam
100.00%
Dam Nai Wind Power JSC
Ninh Thuan, Vietnam
100.00%
Release Cameroon SARL
Douala, Cameroon
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.
Refer to Note 31 for further description of the project’s investment structure.
Note 29 Non-controlling interests
Accounting principle
Non-controlling interests are calculated on the respective subsidiaries’ stand-alone reporting, adjusted for intercompany transactions –
i.e. unrealised profits and losses for the Group are not taken into account. Furthermore, unrealised intercompany 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.
When recognising a non-controlling interest through an acquisition, the difference between the cost of the non-controlling interest and
the non-controlling interest’s share of the assets and liabilities is reflected in the consolidated statement of financial position at the date
of acquisition as an equity transaction.
Non-controlling interests
Scatec’s value chain comprises all downstream activities such as project development, financing, construction, operations as well as
having an asset management role trough ownership of the solar power plants. Normally Scatec enter into partnerships for the
shareholding of the power plant company owning the power plants while maintaining control, leading to material non-controlling
interest.
Consolidation of power plant companies are identified as a significant judgement for the consolidated financial statements, please refer
to Note 2 for further information.
Scatec ASA - Annual Report 2021
97
In the table below the non-controlling interests are presented in groups for companies that share the same non-controlling interests.
Proportion of equity interest held by non-controlling interests
Name
Country of incorporation
and operation
2021
2020
Egypt
Aswan Solar Power SAE
Egypt
In operation
49%
49%
Daraw Solar Power SAE (Philadelphia)
Egypt
In operation
49%
49%
Kom Ombo Renewable Energy SAE (KOM Ombo)
Egypt
In operation
49%
49%
Red Sear Solar Power SAE (Red Sea)
Egypt
In operation
49%
49%
Upper Egypt Solar Power SAE (Sun Infinite)
Egypt
In operation
49%
49%
Zafarana Solar Power SAE (Zafarana)
Egypt
In operation
49%
49%
Daraw BV
Netherlands
In operation
49%
49%
Egypt Solar BV
Netherlands
In operation
49%
49%
Kom Ombo BV
Netherlands
In operation
49%
49%
Zafarana B.V.
Netherlands
In operation
49%
49%
Zafarana B.V.
Netherlands
In operation
49%
49%
Red Sear Solar Power B.V.
Netherlands
In operation
49%
49%
Honduras Agua Fria
Producción de Energia Solary Demás Renovables, S.A.
(Agua Fria)
Honduras
In operation
60%
60%
Honduras Los Prados
Fotovoltaica Surena S.A
Honduras
In operation
30%
30%
Generaciones Energeticas S.A
Honduras
In operation
30%
30%
Energias Solares S.A
Honduras
In operation
30%
30%
Fotovoltaica Los Prados S.A
Honduras
Under development
30%
30%
Foto Sol S.A
Honduras
Under development
30%
30%
Jordan
Anwar Al Ardh for Solar Energy Generation PSC (EJRE)
Jordan
In operation
50%
50%
Ardh Al Amal for Solar Energy Generation PSC (GLAE)
Jordan
In operation
50%
50%
Mozambique
Central Solar de Mocuba (Mocuba)
Mozambique
In operation
48%
48%
Pakistan
Helios Power Ltd
Pakistan
Under construction
25%
0%
Meridian Energy Ltd
Pakistan
Under construction
25%
0%
HNDS Energy Ltd
Pakistan
Under construction
25%
0%
Rwanda
Gigawatt Global Rwanda (ASYV)
Rwanda
In operation
46%
46%
South Africa Upington
Scatec Solar South Africa BV
Netherland
In operation
30%
30%
Dyason's Klip 1
South Africa
In operation
55%
55%
Dyason's Klip 2
South Africa
In operation
55%
55%
Sirius Solar PV Project One (RF) (Pty) Ltd
South Africa
In operation
55%
55%
Scatec Solar Construction
South Africa
In operation
49%
49%
Scatec Solar Operations (Pty) Ltd
South Africa
In operation
49%
49%
South Africa Linde/Dreunberg
Scatec Solar SA 164 (Pty) Ltd
South Africa
In operation
19%
19%
Simacel 155 (Pty) Ltd (Linde)
South Africa
In operation
56%
56%
Simacel 160 (Pty) Ltd (Dreunberg)
South Africa
In operation
56%
56%
98
Name
Country of incorporation
and operation
2021
2020
South Africa Kalkbult
Scatec Solar SA 165 (Pty) Ltd
South Africa
In operation
23%
23%
Scatec Solar SA 166 (Pty) (Kalkbult)
South Africa
In operation
54%
54%
South Africa Other
Scatec Solar SA 163 (Pty) Ltd
South Africa
In operation
8%
8%
Ukraine
Scatec Solar Ukraine B.V.
Netherland
Under construction
40%
40%
Chysta Enerhiaa 2011 LLC
Ukraine
Under construction
40%
40%
Rengy Bioenergy LLC
Netherland
In operation
49%
49%
Rengy Bioenergy LLC
Ukraine
In operation
49%
49%
Accumulated balances of non-controlling interest and the allocation of profit and loss are presented below, where they are presented
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.
Total balances of material non-controlling interest
NOK million
2021
2020
Egypt
-24
-71
Honduras
318
302
Jordan
149
135
Mozambique
-5
7
Pakistan
11
-
Rwanda
7
9
South Africa
178
294
Ukraine
14
-3
Total non-controlling interests
649
673
Profit/(loss) allocated to material non-controlling interest
NOK million
2021
2020
Egypt
-41
-4
Honduras
8
14
Jordan
10
3
Mozambique
-1
4
Pakistan
-6
-
Rwanda
-3
-2
South Africa
82
104
Ukraine
18
-9
Total non-controlling interests
68
110
Scatec ASA - Annual Report 2021
99
Financial information of subsidiaries that have material non-controlling interests is provided below:
Summarised statement of profit or loss for 2021 (before group eliminations)
NOK million
Revenues
Operating
expenses
Operating
profit
Net financial
expenses
Profit before
income tax
Profit/(loss) for
the period
Profit/loss
attributable to
non-controlling
interest
Dividends paid
to non-
controlling
interest 1)
#REF!
Egypt
596
(250)
345
(215)
130
(85)
(42)
-
Honduras
196
(128)
68
(44)
24
24
8
-
Jordan
109
(56)
54
(32)
22
20
10
-
Mozambique
82
(40)
42
(41)
1
(2)
(1)
-
Pakistan
-
(34)
(34)
(1)
(34)
(25)
(6)
-
Rwanda
20
(12)
8
(14)
(5)
(5)
(3)
-
South Africa
1,245
(628)
617
(369)
248
217
83
209
Ukraine
119
(47)
73
(22)
50
38
18
-
1) Excluding repayments of shareholders loans
Summarised statement of profit or loss for 2020 (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
628
(262)
366
(277)
89
(7)
(4)
-
Honduras
214
(120)
94
(54)
40
40
14
-
Jordan
119
(123)
28
(41)
(45)
(47)
3
-
Mozambique
90
(43)
47
(37)
10
9
4
-
Pakistan
-
-
-
-
-
-
-
-
Rwanda
22
(12)
9
(14)
(5)
(5)
(2)
-
South Africa
1,719
(988)
763
(405)
325
232
104
148
Ukraine
87
(46)
41
(54)
(13)
(11)
(10)
-
1) Excluding repayments of shareholders loans
100
Summarised statement of financial position as at 31 December 2021
Attributable to
NOK million
Property,
plant and
equipment
Other non-
current asstes
Cash and
cash
equivalent
Other current
assets
Non-resource
financing
Other non-
current
liabilities
Current
liabilities
Total equity
Non-
controlling
interests
Equity
holders of
the parent
#REF!
Egypt
3,035
1,226
316
94
(2,847)
(1,854)
(84)
(113)
(24)
(89)
Honduras
1,194
3
40
186
(346)
(271)
(15)
791
318
473
Jordan
792
-
298
21
(658)
(49)
(79)
325
149
176
Mozambique
478
4
99
11
(438)
(84)
(105)
(35)
(5)
(29)
Pakistan
111
-
33
3
-
(32)
(69)
46
11
34
Rwanda
137
-
5
4
(108)
(56)
(1)
(19)
7
(26)
South Africa
3,819
774
466
503
(3,773)
(807)
(325)
657
178
479
Ukraine
578
361
63
77
(404)
(639)
(22)
14
14
(0)
Summarised statement of financial position as at 31 December 2020
Attributable to
NOK million
Property,
plant and
equipment
Other non-
current asstes
Cash and
cash
equivalent
Other current
assets
Non-resource
financing
Other non-
current
liabilities
Current
liabilities
Total equity
Non-
controlling
interests
Equity
holders of
the parent
#REF!
Egypt
3,280
2,036
451
53
(2,845)
(3,134)
(135)
(185)
(92)
(94)
Honduras
1,332
12
130
91
(394)
(310)
(4)
857
301
556
Jordan
865
(194)
246
1
(685)
64
(44)
253
135
118
Mozambique
535
25
93
33
(452)
(196)
(28)
10
7
4
Rwanda
146
-
5
3
(109)
(53)
(0)
(8)
9
(17)
South Africa
4,079
471
555
411
(4,170)
(765)
(207)
1,047
316
732
Ukraine
703
325
24
92
(488)
(634)
(18)
5
(3)
7
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.
See Note 13 Investments in JV and associated companies for overview of the companies included and further information about the
investments. Transactions with joint ventures and associates are primarily financing provided to the companies and dividends received
from the companies.
For remuneration to Management, see Note 4 Employee benefits and further details in Note 4 - Personnel expenses in the Parent
financial statement. The Note also includes remuneration to Board of Directors. The company has no significant agreements with
companies in which a board member has a material interest. Scatec has loans to Executive Management given in relation to the long-
term incentive programme amounting to NOK 0.2 million (1.4) as of 31 December 2021.
Scatec ASA - Annual Report 2021
101
Note 31 Basis for preparation and accounting policies
The accounting principles in the Annual Report are largely
incorporated into the individual notes. Principles and policies
that are presented in this note are more general descriptions
which do not naturally belong in the individual notes.
Basis for preparation
The Scatec Group’s consolidated financial statements have
been prepared in accordance with International Financial
Reporting Standards (IFRSs) and interpretations issued by the
International Accounting Standards Board (IASB) and as
adopted by the European Union (EU). In compliance with the
Norwegian Accounting Act, additional disclosure requirements
are included in the notes to the financial statements of Scatec
ASA.
The consolidated financial statements have been prepared on
a historical cost basis, except for financial instruments
measured at fair value.
The 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 consolidated financial statements are presented in
Norwegian kroner (NOK) and all values are rounded to the
nearest million (NOK 1,000,000) except when otherwise
indicated. Because of these rounding adjustments, the figures
in some columns may not add up to the total of that column.
Basis of consolidation
The consolidated financial statements comprise the financial
statements of the Parent and its subsidiaries as of 31
December 2021. 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.
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. The Group re-assesses whether it controls an
investee if facts and circumstances indicate that there are
changes to one or more of the three elements of control.
Profit or loss and each component of other comprehensive
income (OCI) are attributed to the equity holders of the parent
of the Group and to the non-controlling interests, even if this
results in the non-controlling interests having a deficit balance.
When necessary, adjustments are made to the financial
statements of subsidiaries to bring their accounting policies in
line with the Group’s accounting policies.
All intra-group assets and liabilities, equity, income, expenses
and cash flows relating to transactions between members of
the Group are eliminated in full on consolidation.
See Note 29 - Non-controlling interests for information on the
non-controlling interests share of profit/loss and equity prior
to intercompany eliminations.
Statement of cash flows
The statement of cash flows is prepared under the indirect
method.
Foreign currencies
The Group’s consolidated financial statements are presented in
NOK. For each entity the Group determines the functional
currency, and items included in the financial statements of
each entity are measured using that functional currency.
Transactions in foreign currencies are initially recorded by the
Group’s entities at their respective functional currency spot
rates at the date the transaction first qualifies for recognition.
Monetary assets and liabilities denominated in foreign
currencies are translated at the functional currency spot rates
of exchange at the end of reporting period. Differences arising
on settlement or translation of monetary items are recognised
in profit or loss.
Non-monetary items that are measured in terms of historical
cost in a foreign currency are translated using the exchange
rates at the dates of the initial transactions.
On consolidation, the assets and liabilities of foreign entities
with functional currencies other than NOK are translated into
NOK at the rate of exchange prevailing at the end of reporting
period and their income statements are translated at average
monthly exchange rates. The exchange differences arising on
translation for consolidation are recognised in other
comprehensive income.
Current versus non-current classification
The Group presents assets and liabilities in the statement of
financial position based on current/non-current classification.
An asset is current when it is:
●
Held primarily for the purpose of trading
●
Expected to be realised within twelve months after the
reporting period, or
●
Cash or cash equivalent unless restricted from being
exchanged or used to settle a liability for at least twelve
months after the reporting period
All other assets are classified as non-current.
A liability is current when:
●
It is expected to be settled in the normal operating cycle
●
It is held primarily for trading
102
●
It is due to be settled within twelve months after the
reporting period, or
●
There is no unconditional right to defer the settlement of
the liability for at least twelve months after the reporting
period
The Group classifies all other liabilities as non-current.
Deferred tax assets and liabilities are classified as non-current
assets and liabilities.
Dividends
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.
Changes in accounting policies and disclosures
New standards and interpretations
There are no new standards, not yet adopted, expected to
have material effect for the Group in 2021.
Note 32 Subsequent events
Accounting principle
Subsequent events are viewed as new information on the
company’s financial position that becomes known after the
reporting period. In evaluating such, the Group distinguishes
between
adjusting
and
non-adjusting
events after the
reporting period. Adjusting events refer to those that provide
evidence of conditions that existed at the end of the reporting
period, whereas non-adjusting events refer to those that are
indicative of conditions that arose after the reporting period.
Events after the reporting period that do not affect the
company’s financial position at the end of the reporting
period, but which will affect the company’s financial position in
the future, are disclosed if significant.
Adjusting subsequent events
No adjusting events have occurred after the balance sheet
date.
Non-adjusting subsequent event
On 24 February 2022, Russia invaded Ukraine where Scatec
currently operate five solar power plants, located in the central
and southern parts of the country. The situation is extremely
challenging, and Scatec's top priority is the safety of our
Ukrainian employees. The outcome is still highly uncertain, but
the event may significantly impact Scatec’s financial
performance in Ukraine,
including restructuring of the loan for
Chigirin.
Based on the current circumstances we anticipate to
be in breach of loan covenants as of end of Q1 2022 and we
have a continuous and constructive dialogue with the lenders
on this matter.
Please refer to Note 3 Operating segments, Note 24 Non-
recourse financing and Note 26 Guarantees and commitments
for further details on Scatec’s financial performance and
commitments in Ukraine.
The table
below includes key financial information of Scatec’s
financial position and performance in Ukraine as per 31
December 2021 as well as an overview of insurance coverage.
All entities within Ukraine, including both power plant
companies and the operating company, are consolidated on a
100% basis in the consolidated statement of financial position.
The type of undertaking presented below related to
construction financing of Progressovka with recourse to Scatec
ASA only exist in Ukraine and is not standard practice.
Scatec ASA - Annual Report 2021
103
NOK million
Progressovka
(1)
Other Ukraine
(2)
Total Ukraine
Production and capacity (100 %)
Installed capacity
148
187
335
Power production(GWh)
79
125
204
Economic interest
100%
83%
89%
Consolidated statement of profit and loss 2021
Revenues
66
237
303
EBITDA
43
198
241
Condensed consolidated statement of financial position per 31.12.2021
Property, plant and equipment
1,245
1,371
2,616
Cash and cash equivalent
34
103
138
Other current - and non-current assets
315
344
659
Total assets
1,594
1,819
3,413
Equity incl. shareholder loans
825
755
1,580
Non-recourse project financing
-
968
968
Trade and other payables
686
24
710
Other current - and non-current liabilities
83
71
155
Total equity and liabilities
1,594
1,819
3,413
Proportionate statement of profit and loss 2021
Revenues
66
183
249
EBITDA
43
154
197
Corporate guarantees with recourse to Scatec ASA - net
Corporate guarantee for construction financing
(3)
638
-
638
Other guarantees
(4)
-
132
132
Insurance coverage - net
Political Violence Insurance
(5)
Property Damage
891
955
1,846
Business Interruption
199
68
267
Notes
Comments
(1)
Progressovka started producing power and generate revenues in July 2021. In 2021 Progressovka accounted for 26% of
total revenues in Ukraine.
(2)
Chigirin started producing power and generate revenues in July 2021. In 2021 Chigirin accounted for 15% of total
revenues in Ukraine.
(3)
The Progressovka power plant has been a collaboration with PowerChina Guizhou Engineering Co. Ltd who has provided
construction financing and Engineering Procurement and Construction (EPC) services to the project. The construction
financing from PowerChina is classified as trade and other payables in the statement of financial position. The amount is
due in June 2022 and subject to uncertainty following an assessment by Scatec of the construction performance by
PowerChina. The construction financing is covered by a corporate guarantee from Scatec ASA. Scatec has no other
recourse construction financing arrangements for other projects.
(4)
Other guarantees consist of Debt Service Reserve Account (DSRA) and Stand-by equity.
A Debt Service Reserve Account (DSRA) is a liquidity reserve covering debt service for a given period in case of breach of
certain covenants in the loan agreement. The liquidity reserve related to the project financing of Kamianka and Boguslav
are covered by bank guarantees issued on behalf of Scatec ASA
.
Stand-by equity is a contingent liability which can be called upon by the lenders in case of breach of certain covenants in
the loan agreement. The reason for including stand-by equity clauses in Ukraine is the limited time between the maturity
dates of the FiTs (10 years) and the maturity dates of the project financing (9 years). The stand-by equity amounts in the
table above are linked to the project financing of Chigirin and Rengy and are financial obligations with recourse to Scatec
ASA.
(5)
Scatec has secured Political Violence Insurance in Ukraine which covers physical damage of the power plants up to a
predetermined amount (as stated in the table above). The insurance covers the replacement value for rebuilding the
power plants as well as for business interruptions for 6-12 months.
104
Parent company
financial
statements
Scatec ASA - Annual Report 2021
105
Statement of income
106
Statement of financial position - assets
107
Statement of financial position – equity and liabilities
108
Statement of cash flow
109
Notes to the parent company financial statements
110
Note 1
General information
110
Note 2
Accounting principles
110
Note 3
Revenues
112
Note 4
Personnel expenses, number of employees and auditor’s fee
113
Note 5
Other operating expenses
114
Note 6
Financial income and expenses
115
Note 7
Tax
116
Note 8
Property, plant and equipment
117
Note 9
Investments in subsidiaries, joint ventures and
associated companies
118
Note 10
Inventory
119
Note 11
Cash and cash equivalents
119
Note 12
Equity and shareholder information
120
Note 13
Guarantees, contractual obligations and contingent liabilities
121
Note 14
Transactions with related parties
122
Note 15
Provision for bad debt
122
Note 16
Corporate financing
123
Note 17
Other current liabilities
123
Note 18
Subsequent events
123
106
Statement of income
1 JANUARY – 31 DECEMBER
NOK million
Note
2021
2020
Revenues
3
166
622
Total revenues
166
622
Costs of sales
2
-104
-437
Personnel expenses
4
-209
-156
Other operating expenses
5, 14, 15
-143
-82
Depreciation, amortisation and impairment
8, 10
-53
-10
Operating profit/(loss)
-343
-63
Interest and other financial income
6, 14
402
977
Interest and other financial expenses
6, 14
-262
-107
Net foreign exchange gain/(loss)
33
-345
Profit before tax
-171
462
Income tax (expense)/benefit
7
97
56
Profit/(loss) for the period
-74
518
Allocation of profit/(loss) for the period
Dividend
12
404
173
Transfer to/(from) other equity
12
-478
345
Total allocation of profit/(loss) for the period
-74
518
Scatec ASA - Annual Report 2021
107
Statement of financial position
1 JANUARY – 31 DECEMBER
NOK million
Note
2021
2020
Non-current assets
Deferred tax assets
7
261
157
Property plant and equipment
8
60
57
Investments in subsidiaries
9
14,666
2,620
Loan to group companies
14
2,633
2,533
Interest rate swap (cash flow hedge)
16
26
-
Other non-current receivables
57
63
Total non-current assets
17,702
5,430
Current assets
Inventory
10
311
186
Trade and other receivables
15
49
103
Trade and other receivables group companies
3, 15
301
245
Other current assets
64
30
Cash and cash equivalents
11
1,620
5,664
Total current assets
2,345
6,228
Total assets
20,048
11,658
108
Statement of
financial position
AS OF 31 DECEMBER
NOK million
Note
2021
2020
Paid in capital
Share capital
12
4
4
Share premium
12
10,122
9,720
Total paid in capital
10,126
9,724
Other equity
Other equity
12
-385
191
Reserve for valuation variances
20
-
Total other equity
-365
191
Total equity
9,761
9,915
Non-current liabilities
Corporate financing
16
7,264
-
Liabilities to group companies
14
549
413
Other non-current liabilities
4
4
Total non-current liabilities
7,818
417
Current liabilities
Trade and other payables
16
5
Trade payables group companies
127
109
Public duties payable
19
41
Dividend
12
404
173
Other current liabilities
17
1,903
252
Other current financial liabilities
16
-
748
Total current liabilities
2,469
1,327
Total liabilities
10,287
1,744
Total equity and liabilities
20,048
11,658
Oslo, 17 March 2022
The Board of Directors Scatec ASA
Scatec ASA - Annual Report 2021
109
Statement of cash flow
1 JANUARY – 31 DECEMBER
NOK million
Notes
2021
2020
Cash flow from operating activities
Profit before taxes
-171
462
Depreciation, amortisation and impairment
5
53
10
Interest and other financial income
7
-402
-519
Interest and other financial expenses
7
262
6
Foreign exchange gain/(loss)
-33
310
Increase)/decrease in inventories
10
-125
88
(Increase)/decrease in trade receivables
15
-22
-36
Increase/(decrease) in trade payables
146
-1,008
Taxes paid
8
-
-11
(Increase)/decrease in current assets and current liabilities
261
1,005
Net cash flow from operating activities
-31
307
Cash flows from investing activities
Investments in property, plant and equipment
5
-56
-17
Net increase in loans to subsidiaries
14
-100
139
Interest received
127
-141
Investments in subsidiaries and associated companies
9
-8,577
-636
Dividends from and capital decrease in subsidiaries
9
277
-282
Net cash flow used in investing activities
-8,329
-938
Cash flow from financing activities
Proceeds from share capital increase
12
41
6,576
Dividends paid to equity holders
12
-173
-131
Interest paid
-251
101
Proceeds from corporate financing
16
4,699
-745
Net cash flow from financing activities
4,316
5,801
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
5,664
494
Cash and cash equivalents at end of period
1,620
5,664
Net increase/(decrease) in cash and cash equivalents
-4,044
5,170
110
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 2021
were authorized for issue in accordance with a resolution by
the Board of Directors on 17 March 2022.
Note 2 Accounting principles
Basis for preparation
The financial statements of Scatec ASA are prepared in
accordance with the Norwegian Accounting Act of 1998 and
Norwegian Generally Accepted Accounting Principles
(NGAAP). The financial statements have been prepared on a
historical cost basis.
Accounting estimates and judgements
In preparing the financial statements, management has made
assumptions and estimates about future events and applied
judgements that affect the reported values of assets, liabilities,
revenues, expenses, and related disclosures. Therefore, future
actual results may differ from current figures.
Foreign currency translation
The functional currency of the Company is US dollar (USD).
The functional currency was changed from NOK in 2021 due to
USD being the currency which primarily affects the financials
including corporate financing, the acquisition of SN Power and
revenues from construction activities. Prior year figures are not
restated. Transactions in foreign currency are translated at the
rate applicable on the transaction date. Monetary items in a
foreign currency are translated into USD using the exchange
rate applicable on the balance sheet date. Non-monetary
items that are measured at their historical cost expressed in a
foreign currency are translated into USD using the exchange
rate applicable on the transaction date. 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 recognized 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. Capitalized
project rights are expensed as cost of sale upon the transfer of
title or when a project is abandoned and impaired.
Revenues from construction services are based on fixed price
contracts and are accounted for using the percentage of
completion method. The stage of completion of a contract is
determined by actual cost incurred over total estimated costs
to complete. Incurred costs include all direct materials, costs
for modules, labour, subcontractor costs, and other direct
costs related to contract performance. Scatec recognises direct
material costs as incurred costs when the direct materials have
been installed. Scatec considers direct materials to be installed
when they are permanently attached or fitted to the power
systems as required by engineering designs.
Scatec ASA periodically revise contract margin estimates and
immediately recognises any losses on onerous contracts. Some
construction contracts include product warranties. The
expected warranty amounts are expensed at the time of sale
and are adjusted for subsequent changes in assumptions or
actual outcomes.
Scatec ASA - Annual Report 2021
111
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
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. The amount of
deferred tax provided is based on the expected manner of
realisation or settlement of the carrying amount of assets and
liabilities, using tax rates enacted or substantially enacted at
the balance sheet date.
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.
Intangible assets and property, plant and equipment
Intangible assets and property, plant and equipment are stated
at cost, less accumulated depreciation and accumulated
impairment losses.
Intangible assets and 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.
An item of intangible assets and property, plant and
equipment is derecognised upon disposal or when no future
economic benefits are expected to arise from the continued
use of the asset. Any gain or loss arising on derecognition of
the asset is recognised in the statement of income in the
period the item is derecognised.
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.
Other current assets
Inventories are measured at the lower of cost and net
realisable value. Inventories consist primarily of project assets
in various stages of development. Capitalized 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 that are directly attributable 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
112
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.
Dividends
Distribution of dividends is resolved by a majority vote at the
Annual General Meeting of the shareholders of Scatec ASA,
based on a proposal from the Board of Directors.
Dividends are recognised as a liability at the reporting date of
the financial year that the proposal of dividend relates to.
Additional proposed dividends based on the previous fiscal
year approved financial statements (i.e. between 1 January and
the date that the current year financial statements will be
approved) are recognised as a liability at the balance sheet
date.
Events after the reporting period
New information on the Company’s financial position on the
end of the reporting period which becomes known after the
reporting period, is recorded in the annual accounts. Events
after the reporting period that do not affect the Company’s
financial position on the end of the reporting period, but
which will affect the Company’s financial position in the future,
are disclosed if significant.
Statement of cash flow
The cash flow statement is prepared using the indirect
method.
Note 3 Revenues
Revenue by business area
NOK million
2021
2020
Services
153
616
Other revenue
13
6
Sum
166
622
Services comprise EPC services, sale of project rights and management services – all rendered to Group companies and associates.
Revenue by geographical distribution
NOK million
2021
2020
Pakistan
67
-
Netherlands
25
15
South-Africa
22
291
Ukraine
15
140
Egypt
7
5
Brazil
6
4
Argentina
5
22
Malaysia
3
118
Honduras
2
2
Mozambique
1
16
Jordan
-
3
Sum
153
616
Refer to Note 14 - Transactions with related parties for further information.
Scatec ASA - Annual Report 2021
113
Note 4 Personnel expenses, number of employees and auditor’s fee
Personnel expenses
NOK million
2021
2020
Salaries
171
127
Share-based payment
27
14
Payroll tax
19
46
Pension costs
14
10
Other benefits and personnel costs
6
2
Capitalised to inventory
-28
-42
Total personnel expenses
209
156
The average number of FTEs that has been employed in the company through 2021 was 116 (94).
Pension costs
The Company has a defined contribution plan in line with the requirement of the law. NOK 14 million (10) is expensed related to the
defined contribution plan in 2021.
Paid salaries and personnel expenses for the management of Scatec ASA
2021
NOK thousand
Title
Salary
1)
Bonus
2)
Number
of options
awarded
Exercise
of share
options
Out-
standing
share
options
Other
benefits
Pension
cost
Loans
out-
standing
Raymond Carlsen
Chief Executive Officer
3,995
2,763
18
-59
68
15
157
22
Mikkel Tørud
Chief Financial Officer
2,718
1,975
13
-43
50
15
165
22
Snorre
Valdimarsson
EVP General Counsel
2,292
1,632
11
-34
40
15
162
22
Terje Pilskog
EVP Project Development & Project
Finance
2,594
1,797
12
-38
45
15
162
22
Roar Haugland
EVP Sustainable Business & HSSE
2,105
1,173
10
-34
38
15
164
22
Torstein Berntsen
EVP Power Production & Asset Management
2,383
1,246
11
-36
41
15
172
22
Pål Helsing
EVP Solutions
2,396
1,262
11
-21
41
15
160
22
Toril Haaland
EVP People & Organisation
1,978
1,071
9
-18
35
15
161
22
Jarl Arve Kosberg
EVP Hydropower Project Development
1,943
-
13
-
13
13
143
22
2020
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
Chief Executive Officer
3,557
1,418
48
-82
109
45
156
-
Mikkel Tørud
Chief Financial Officer
2,454
930
36
-61
80
45
156
273
Snorre
Valdimarsson
EVP General Counsel
2,024
768
29
-47
64
42
157
432
Terje Pilskog
EVP Project Development & Project
Finance
2,225
845
32
-53
71
45
158
316
Roar Haugland
EVP Sustainable Business & HSSE
1,924
722
28
-47
62
43
161
-
Torstein Berntsen
EVP Power Production & Asset Management
2,026
768
29
-51
66
43
164
370
Pål Helsing
EVP Solutions
2,069
776
30
-11
51
43
157
-
Toril Haaland
EVP People & Organisation
1,707
660
25
-9
43
42
157
-
1) Including paid out holiday allowance and car allowance.
2) Bonus paid based on performance for the previous year.
3) Other benefits include benefits such as insurance and free phone.
114
Remuneration for the Board of Directors
1)
2021
2020
NOK thousand
Board
remuner-
ation
Audit
committee
Remuner-
ation
committee
Nomination
committee
Board
remuner-
ation
Audit
committee
Remuner-
ation
committee
Nomination
committee
John Andersen jr.
530
65
50
-
480
59
32
-
John Giverholt
-
-
-
-
300
-
32
-
Jan Skogseth
340
-
35
-
300
-
32
-
Gisele Marchand
340
90
-
-
300
59
32
-
Maria Moræus
340
-
35
-
300
59
-
-
Jørgen Kildahl
340
65
-
-
-
-
-
-
Alf Inge Gjerde
-
-
-
-
-
-
-
54
Kristine Ryssdal
-
-
-
57
-
-
-
37
Svein Høgseth
-
-
-
39
-
-
-
37
Mats Holm
-
-
-
39
-
-
-
-
Annie Bersagel
-
-
-
39
-
-
-
-
1) Annual fees paid for 2020 and accrued for 2021 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 2021.
Audit
NOK million
2021
2020
Audit fees
3
2
Other attestation services
0
1
Tax services
2
7
Other services
0
7
Total
5
17
VAT is not included in the numbers above.
Note 5 Other operating expenses
NOK million
2021
2020
Facilities
23
14
Professional fees
51
6
IT and communications
36
26
Travel costs
4
2
O&M costs
1
-
Other costs
28
34
Total other operating expenses
143
82
Scatec ASA - Annual Report 2021
115
Note 6 Financial income and expenses
Interest and other financial income
NOK million
2021
2020
Interest income from group companies
114
132
Other interest income
13
9
Gain/(loss) on sale of financial investments
-2
35
Dividend from group companies
277
282
Gain from financial investment
-
519
Total interest and other financial income
402
977
The write down of financial investment in 2020 is due to the liquidation of Scatec Solar Solutions GmbH, Germany. When Scatec Solar
Solutions GmbH was liquidated, the net positions Scatec ASA had towards the company was a debt of NOK Million 519 which is written
down and recognised as a gain.
Interest and other financial expenses
NOK million
2021
2020
Interest expenses from group companies
-1
-4
Other interest expenses
-250
-98
Other financial expenses
-11
-6
Total interest and other financial expenses
-262
-107
During 2021, interest amounting to NOK 250 million (98) was expensed for corporate financing, refer to Note 23 Corporate Financing in
the consolidated financial statement of the Group. The increase in interest expenses is due to the financing package related to the
acquisition of SN Power in the first quarter of 2021.
116
Note 7 Tax
NOK million
2021
2020
Income tax expense:
Current taxes
-
-
Withholding tax on received dividends
10
11
Change in deferred tax
-104
-67
Taxes related to previous years
-3
-
Total tax expense/(income)
-97
-56
Tax basis:
Profit before taxes
-171
462
Permanent differences
1)
-297
-958
Changes in temporary differences
-16
185
Increase of tax losses carried forward
484
311
Tax base
-
-
Current taxes according to statutory tax rate (22%)
-
-
1) Net non-deductible income and expenses for 2021 and 2020 are mainly related to non-taxable dividends partly offset by non-deductible share based payment expenses. The
items also include tax-deduction on transaction costs from capital increase recognised in equity.
Reconciliation of nominal statutory tax rate to effective tax rate
NOK million
2021
2020
Expected income tax expense according to statutory tax rate (22%)
-38
102
Non-taxable income
-65
-170
Allowance for losses carried forward
25
-
Withholding tax on received dividends
10
11
Taxes related to previous years
-3
1
Foreign exchange variations between functional and tax currency
-26
-
Income tax expense/(income)
-97
-56
Effective tax rate (%)
56.71%
12.40%
Temporary differences as of 31 December
NOK million
2021
2020
Change
Tax loss carried forward
-1,301
-700
601
Allowance for deferred tax assets
114
-
-114
Receivables
-
-
-
Property, plant and equipment
-
2
2
Work in progress
6
10
4
Shared based payments and amortised Interests on corporate financing
-4
-25
-21
Total temporary differences
-1,185
-713
472
Recognised tax liability/(asset)
-261
-157
104
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.
Scatec ASA has recognised tax assets on unused tax losses to the extent that Scatec ASA expects there will be sufficient future taxable
profits available to utilise the losses. NOK 29 million of the tax losses carried forward is related to non-deductible interest which will
expire in 2024. The remaining tax loss can be carried forward indefinitely.
Scatec ASA - Annual Report 2021
117
Note 8 Property, plant and equipment
Office equipment
NOK million
2021
2020
Accumulated cost at 1 January
75
59
Additions
11
17
Foreign currency translation
2
-
Disposed assets at cost
-
-
Accumulated cost at 31 December
87
76
Accumulated depreciation at 1 January
19
10
Depreciations for the year
7
9
Accumulated depreciation disposed assets
-
-
Foreign currency translation
2
-
Accumulated depreciation at 31 December
28
19
Carrying amount at 31 December
60
57
Estimated useful life (years)
3-10
3-10
118
Note 9 Investments in subsidiaries, joint ventures and associated companies
The table below include material subsidiaries of Scatec ASA. Ownership interest corresponds to voting interest if not otherwise stated.
NOK million
Company
Registered office
Ownership
interest
Carryring
value 2021
Carryring
value 2020
SN Power AS
Norway
100.00%
2,595
-
Scatec Solar Netherlands BV
Netherlands
100.00%
10,933
1,523
Release Management BV
Netherlands
100.00%
409
170
Scatec Solar SA (pty) Ltd.
Sandton, South-Africa
100.00%
-
3
Scatec Solar SA 163 (Pty) Ltd.
South-Africa
100.00%
1
16
Scatec Solar SA 164 (Pty) Ltd.
Sandton, South-Africa
80.70%
5
71
Scatec Solar SA 165 (Pty) Ltd.
Sandton, South-Africa
76.60%
7
96
Gigawatt Global Rwanda Ltd
Rwanda
54.00%
7
27
Scatec Solar Mozambique Limitada
Mozambique
53.00%
9
8
Scatec Solar Jordan
Amman, Jordan
100.00%
44
44
Anwar Al Ardh For Solar Energy Generation
PSC
Amman, Jordan
50.10%
86
75
Ardh Al Amal For Solar Energy Generation PSC
Amman, Jordan
50.10%
38
33
Aswan Solar Power SAE (BB1)
Egypt
-
2
2
Scatec Solar Honduras S.A.
Honduras
100.00%
3
22
Produccion de Energia Solar Demas
Renovables S.A
Honduras
40.00%
62
60
Fotovoltaica Los Prados
Honduras
70.00%
74
67
Fotovoltaica Surena
Honduras
70.00%
150
153
Generaciones Energeticas S.A
Honduras
70.00%
144
148
Energias Solares S.A
Honduras
70.00%
88
90
Foto Sol S.A
Honduras
70.00%
6
3
Scatec Solar PV1 S.R.O
Prague, Czech
100.00%
-
2
Scatec Solar S.R.O
Prague, Czech
100.00%
-
6
14,666
2,619
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 2021
Carrying value 2020
Kube Energy AS
Oslo, Norway
25%
2
2
Total
2
2
Scatec ASA - Annual Report 2021
119
Note 10 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.
Project geography
NOK million
2021
2020
Asia
149
39
Europe
38
92
West Africa
34
44
South Africa
49
-
North Africa
24
7
South America
16
4
East Africa
-
-
Carrying value of inventory at 31 December 2021
311
186
Impairment charges in 2021 were NOK 45 million (2) for “Power plant under development” related to development projects in Brazil and
Ukraine.
Note 11 Cash and cash equivalents
NOK million
2021
2020
Restricted cash
37
29
Free cash
1,584
5,635
Total cash and cash equivalents
1,620
5,664
Scatec ASA has not drawn on the revolving credit facility per 31 December 2021.
For more information about external financing and facilities, refer to Note 23 Corporate Financing in the consolidated financial
statement of the Group.
120
Note 12 Equity and shareholder information
Nok million
Issued capital
Share premium
Other equity
Total equity
Equity as of 31 December 2020
4
9,720
191
9,915
Profit/(loss) for the period
-
-
-75
-75
Share-based payment
-
27
-
27
Capital increase from exercised employee share
options, net of transaction cost after tax
1)
-
42
-
42
Share purchase program
-
-1
-
-1
Accrued dividend
-
-
-404
-404
Reserve for valuation variances
-
-
20
20
Foreign currency translation
-
334
-97
237
Equity as of 31 December 2021
4
10,122
-365
9,761
1) On 4 February 2021, as part of the Group’s incentive program, a share capital increase raised NOK 42 million net of transaction cost after tax, through an exercise of employee
share options consisting of 164 907 new shares at a price of NOK 46.70 per share, 165 321 new shares at a price of NOK 71.08 per share and 198 123 new shares at a price of
NOK 113.88 per share. At 31 December 2021, the share capital amounted to NOK 3,971 million. All shares rank in parity with one another and carry one vote per share.
On 30 April 2021, the Annual General Meeting of Scatec ASA resolved to pay a dividend of NOK 1,09 per share, totalling NOK 173
million. The dividend was paid to the shareholders on 7 May 2021.
The table below show the largest shareholders of Scatec ASA at 31 December 2021.
Shareholder
Number of shares
Ownership
EQUINOR ASA
20,776,200
13.08%
SCATEC INNOVATION AS
19,482,339
12.26%
FOLKETRYGDFONDET
15,233,197
9.59%
State Street Bank and Trust Comp
3,943,712
2.48%
State Street Bank and Trust Comp
3,696,234
2.33%
The Bank of New York Mellon
3,257,301
2.05%
The Bank of New York Mellon SA/NV
3,180,078
2.00%
ARGENTOS AS
3,068,116
1.93%
CLEARSTREAM BANKING S.A.
2,956,834
1.86%
State Street Bank and Trust Comp
2,335,929
1.47%
RAIFFEISEN BANK INTERNATIONAL AG
2,208,075
1.39%
JPMorgan Chase Bank, N.A., London
2,168,486
1.36%
State Street Bank and Trust Comp
2,108,050
1.33%
Citibank, N.A.
2,009,304
1.26%
VERDIPAPIRFONDET DNB MILJØINVEST
1,747,156
1.10%
Citibank Europe plc
1,427,050
0.90%
CACEIS Bank
1,359,077
0.86%
VERDIPAPIRFONDET KLP AKSJENORGE IN
1,205,458
0.76%
VPF DNB AM NORSKE AKSJER
1,175,227
0.74%
VERDIPAPIRFONDET STOREBRAND NORGE
1,134,841
0.71%
Total 20 largest shareholders
94,472,664
59.47%
Total other shareholders
64,391,354
40.53%
Total shares outstanding
158,864,018
100%
On 2 February 2022, the Board of Directors announced its intention to propose a dividend of NOK 2,54 per share to the Annual
General Meeting.
The tables below show shares held by Management and Board of Directors at 31 December 2021.
Scatec ASA - Annual Report 2021
121
Board of Directors
Number of shares
Ownership
John Andersen, Jr.
1)
-
0.00%
Jan Skogseth
23,000
0.01%
Gisele Marchand
2,586
0.00%
Maria Moræus Hanssen
2)
2,760
0.00%
Jørgen Kildahl
2,000
0.00%
Kristine Ryssdal
225
0.00%
Total at 31 December 2021
30,571
0.02%
1) Related parties control 19,482,339 shares through Scatec Inovation AS.
2) Held through the controlled company MMH Nysteen Invest AS.
Management
Number of shares
Ownership
Raymond Carlsen
1)
3,128,209
1.97%
Mikkel Tørud
226,636
0.14%
Terje Pilskog
2)
511,296
0.32%
Roar Haugland
3)
187,058
0.12%
Torstein Berntsen
4)
711,800
0.45%
Snorre Valdimarsson
12,419
0.01%
Pål Helsing
5,296
0.00%
Toril Haaland
3,996
0.00%
Jarl Kosberg
419
0.00%
Total at 31 December 2021
4,787,129
3.01%
1) Held through the controlled company Argentos AS, whereof 59,674 shares held by Raymond Carlsen directly
2) Held through the controlled company Océmar AS, whereof 877 shares held by Terje Pilskog directly
3) Held through the controlled company Buzz Aldrin AS, whereof 877 shares held by Roar Haugland directly
4) Held through the controlled company Belito AS, whereof 17,877 shares held by Torstein Berntsen directly. In addition, 895 shares are held by held by Torstein Berntsen’s
spouse. These are not included in the total presented in the table above.
Refer to Note 4 – Personnel expenses, number of employees and auditor’s fee for information on share options granted to the
management.
Note 13 Guarantees, contractual obligations, contingent liabilities
For information about guarantees, contractual obligations and contingent liabilities refer to Note 26 Guarantee and commitments in the
consolidated financial statement of the Group
Contractual obligations
Scatec ASA has contractual obligations primarily through office lease. Further, the group commitments in contracts with suppliers of
equipment and sub-EPC services related to the plants under construction in South Africa.
Nok million
2022
2023
2024
>2024
Leases (office rental)
18
12
12
63
Total purchase modules, inverters etc.
-
-
-
-
Total contractual obligations
18
12
12
63
122
Note 14 Transactions with related parties
Related parties
Subsidiaries and associates
Key management personnel
Transactions
Management, development and EPC services and financing
Loan and payroll
Board of Directors
Joint ventures
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 2021 and 2020 are:
Subsidiaries – EPC services
Scatec ASA sold EPC services amounting to NOK 76 million in total during 2021. Scatec ASA has been EPC contractor for the
construction of power plants in Ukraine, Egypt, Malaysia and Pakistan. During 2021 total revenue on these contracts amounted to NOK
73 million.
In 2020 Scatec ASA sold EPC services amounting to NOK 576 million. The company has been EPC contractor for the construction of
power plants in Ukraine, Malaysia and South-Africa. During 2020 total revenue on these contracts amounted to NOK 544 million.
Subsidiaries – development services
During 2021 the company sold development project rights amounting to NOK 10 million. The sale of rights related to the financial close
and transfer of rights for the Pakistan projects amounting to NOK 10 million.
Subsidiaries - management service income
Scatec ASA has during 2021 charged NOK 31 million (22) for corporate services provided to its subsidiaries.
Subsidiaries and associates – financing
In the course of the ordinary business, inter-company financing is provided from Scatec ASA to its subsidiaries. Long-term financing is
interest bearing and priced at arm’s length. Refer to Note 6 for specification of interest income/expenses from/to subsidiaries and Note
9 Investments in subsidiaries, joint ventures and associated companies.
Scatec Innovation AS – consultancy services
Related to the new company name Scatec ASA acquired certain administrative work from Scatec Innovation AS, NOK 605 thousand for
2021. Scatec ASA acquired certain consultancy services to maintain the global trademark Scatec ASA from Scatec Innovation AS, NOK
63 thousand for 2021. For the year ended 31 December 2021 the company incurred fair share of travel agency service cost of NOK 109
thousand (139). Travel agency service is presented as other operating expenses in the statement of income. In connection with the
Scatec ASA equity issue in 2020 and 2021, Scatec ASA entered a share lending agreement with the joint book-runners and Scatec
Innovation AS.
Refer to Note 4 – Personnel expenses, number of employees and auditor’s fee for information regarding transactions with key
management personnel.
Note 15 Provision for bad debt
No provision for bad debt has been made as the collection risk is considered low.
Scatec ASA - Annual Report 2021
123
Note 16 Corporate financing
For information about Corporate financing refer to Note 23 Corporate 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 17 Other current liabilities
Nok million
2021
2020
Deferred income EPC projects
128
103
Liabilities to co-developers
19
16
Accrued interest expenses
52
6
Vacation allowances, bonus accruals etc.
41
29
Other
43
98
Liability to Norfund
1)
1,620
-
Total current liabilities
1,903
252
1) Norfund’s 49% ownership stake in SN Power’s Sub-Saharan Africa hydro assets which will be exchanged for shares in the Sub-Saharan Africa JV without cash impact after
completion of agreed restructuring activities.
Note 18 Subsequent events
Adjusting subsequent events
No adjusting events have occurred after the balance sheet date.
Non-adjusting subsequent event
On 25 February 2022, Russia invaded Ukraine where Scatec Group currently operates five solar power plants, located in the central and
southern parts of the country. Please refer to note 32 in the in the consolidated financial statement of the Group for further details. The
indirect carrying value of the investment in Ukraine, through Scatec Solar Netherlands BV, per December 31, 2021, was NOK 1.6 billion,
including shareholder loans. Scatec ASA has issued guarantees for the vendor financing for Power China, Stand-by equity and the DSRA
as described in Note 32 in the consolidated financial statement of the Group.
124
Responsibility statement
We confirm to the best of our knowledge, that the consolidated financial statements for 2021 has been prepared in accordance with
IFRS as adopted by EU, and that the information gives a true and fair view of the Group’s assets, liabilities, financial position and result
for the period. We also confirm that presented information provides a fair overview of important events that have occurred during the
period and their impact on the financial statements, key risk and uncertainty factors that Scatec is facing during the next accounting
period.
Oslo, 17 March 2022
The Board of Directors Scatec ASA
Scatec ASA - Annual Report 2021
125
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 3for further
details.
Gross interest-bearing debt:
total debt obligations and consists of non-current and
current external non-recourse financing and external
corporate financing, 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.
126
Proportionate Financials
The group’s segment financials are reported on a proportionate
basis. The consolidated revenues and profits are mainly
generated in the Power Production segment. Activities in Services
and Development & Construction segment mainly reflect
deliveries to other companies controlled by Scatec (with from
39% to 100% economic interest), for which revenues and profits
are eliminated in the Consolidated Financial Statements. With
proportionate financials Scatec reports its share of revenues,
expenses, profits and cash flows from all its subsidiaries without
eliminations based on Scatec’s economic interest in the
subsidiaries. The Group introduced Proportionate Financials as
the Group is of the opinion that this method improves earnings
visibility. The key differences between the proportionate and the
consolidated IFRS financials are that;
•
Internal gains are eliminated in the consolidated financials
but are retained in the proportionate financials. These
internal gains primarily relate to gross profit on D&C
goods and services delivered to project companies which
are eliminated as a reduced group value of the power
plant compared to the stand-alone book value. Similarly,
the consolidated financials have lower power plant
depreciation charges than the proportionate financials
since the proportionate depreciations are based on
power plant values without elimination of internal gain.
Internal gain eliminations also include profit on Services
delivered to project companies.
•
The consolidated financials are presented on a 100%
basis, while the proportionate financials are presented
based on Scatec’s ownership percentage/economic
interest.
•
In the consolidated financials joint venture companies
(Brazil, Argentina, Phillipines, Uganda, Laos) 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 2021 Scatec reports a proportionate operating profit of NOK
1,606 million compared with an operating profit of NOK 2,012
million in the consolidated financials. To arrive at the
proportionate operating profit from the consolidated operating
profit the Group has;
1.
added back
to the proportionate statement of profit or loss the
internal gain on transactions between group companies with a
negative amount of NOK 53 million. Where NOK 16 million
comprise Scatec’s share of gross profit on D&C contracts, NOK
-140 million comprise increased depreciation charges from
internal gains and NOK 71 million comprise other items.
2.
removed the non-controlling interests share of the operating
profit of NOK 640 million to only leave the portion
corresponding to Scatec’s ownership share,
3.
replaced the consolidated net profit from joint venture
companies of NOK 765 million with Scatec’s share of the
Operating profit from the joint venture companies with NOK
1,051 million.
See Note 3 for further information on the reporting of
proportionate financial figures, including reconciliation of the
proportionate financials against the consolidated financials.
A bridge from proportionate to consolidated key figures including
APMs like gross interest-bearing debt, net interest-bearing debt
and net-working capital is included in the Q4 report of 2021 on
page 19.
Scatec ASA - Annual Report 2021
127
NOK million
2021
2020
EBITDA
Operating profit (EBIT)
2,012
1,292
Depreciation, amortisation and impairment
892
777
EBITDA
2,903
2,069
Total revenues and other income
3,803
2,754
EBITDA margin
76%
75%
Gross profit
Total revenues and other income
3,803
2,754
Cost of sales
-
-
Gross profit
3,803
2,754
Gross interest-bearing debt
Non-recourse project financing
10,708
11,350
Bonds
7,264
748
Non-recourse project financing - current
1,147
913
Gross interest-bearing debt
19,120
13,011
Net interest-bearing debt
Gross interest-bearing debt
19,120
13,011
Cash and cash equivalents
4,171
7,788
Net interest-bearing debt
14,949
5,223
Net working capital
Trade and other receivables
740
623
Other current assets
734
662
Trade and other payable
-812
-760
Income tax payable
-24
-90
Other current liabilities
-841
-852
Non-recourse project financing-current
-1,147
-913
Net working capital
-1,351
-1,330
Break-down of proportionate cash flow to equity
FY 2021
NOK million
Power Production
Services
Development &
Construction
Corporate
Total
EBITDA
2,949
75
-223
-114
2,686
Net interest expenses
-776
1
-8
-217
-1,000
Normalised loan repayments
-790
-
-
-
-790
Proceeds from refinancing
1)
397
-
-
-
397
Normalised income tax payment
-140
-16
68
78
-9
Cash flow to equity
1,640
60
-164
-252
1,284
1)
Refer to Note 15
FY 2020
NOK million
Power Production
Services
Development &
Construction
Corporate
Total
EBITDA
1,404
82
-28
-153
1,306
Net interest expenses
-542
1
1
-58
-598
Normalised loan repayments
-382
-
-
-
-382
Normalised income tax payment
-53
-18
12
58
-2
Cash flow to equity
427
65
-15
-153
324
128
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
Historically, about 50% of projects in pipeline have been
realised. The pipeline projects are in different stages of
development and maturity, but they are all typically in markets
with an established government framework for renewables
and for which project finance is available (from commercial
banks or multilateral development banks). The project sites
and concessions have been secured and negotiations related
power sales and other project implementation agreements are
in various stages of completion.
Lost time injury (LTI)
An occurrence that results in a fatality, permanent disability or
time lost from work of one day/shift or more.
Scatec’s economic interest
Scatec’s share of the total estimated economic return from its
subsidiaries. For projects in development and construction the
economic interest is subject to change from the development
of the financial model.
Cash in power plant companies in operation
Comprise restricted cash in proceed accounts, debt service
reserve accounts, disbursements accounts, maintenance and
insurance reserve accounts and similar. These cash and cash
equivalents are only available to the Group through
distribution as determined by shareholder and non-recourse
financing agreements.
Cash in power plant companies under
development/construction
Comprise shareholder financing and draw down on term loan
facilities by power plant companies to settle outstanding
external EPC invoices.
Project equity
Project equity comprise of equity and shareholder loans in
power plant companies.
Recourse Group
Recourse Group means all entities in the Group, excluding
renewable energy companies (each a recourse group
company).
Definition of project milestones
Commercial Operation Date (COD):
certain formal key milestones have been reached, typically
including grid compliance, approval of metering systems and
technical approval of plant by independent engineers.
Production volumes have reached normalised levels sold at
the agreed off-taker agreement price. This milestone is
regulated by the off-taker agreement with the power off-taker.
In the quarterly report grid connection is used as a synonym to
COD.
Financial close (FC):
precedent for drawdown of debt funding has been achieved
and equity funding has been subscribed for, including
execution of all project agreements. Notice to proceed for
commencement of construction of the power plant will
normally be given directly thereafter. Projects in Scatec defined
as “backlog” are classified as “under construction” upon
achievement of financial close.
Start of Production (SOP):
plant generates revenues through sale of power under the off-
take agreement. Production volumes and/or the price of the
power may be lower than when commercial operation date
(COD) is reached. This milestone is regulated by the off-take
agreement with the power off-taker. This milestone may be
reached prior to COD if the construction of a power plant is
completed earlier than anticipated in the off-take agreement.
Take Over Date (TOD):
contractor hands over the power plant to the power plant
company. COD must have been reached, in addition to
delivery of training and all technical documentation before
TOD takes place. The responsibility for Operations &
Maintenance (O&M) of the plant is handed over from the EPC
contractor to the O&M contractor at the TOD. This milestone
will normally occur shortly after the COD date.
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Auditor’s Report
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132
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