Scatec Asa

It's been a very strong start of 2025 for Skatec. And financially, we've also had a strong first quarter. We have made significant progress in the quarter towards our strategic ambitions. We have and we continue to grow renewables within our core areas. And we also continue to progress well in terms of optimizing our portfolio and bring down corporate debt on overall level. And I will usually start with an overall summary, and then Hans-Jakob will take us through the financials. So let us first start with the highlights of the quarter. Firstly, as I said, we've had a very strong financial quarter with 2.4 billion in revenues on a proportionate basis and 1.4 billion in EBITDA. These are figures that are significantly up relative to the same quarter last year. Secondly, we currently have 4.2 gigawatts in backlog and in construction. This is an all-time high number and enables us to have significant construction activity going forward and also enables us to double our operating capacity over the next couple of years. Finally, we've also made significant progress on optimizing our portfolio. And we are now having a corporate net debt, interest-bearing debt of 5.2 billion. And this is based on proceeds from divestments, as well as a very strong cash position in the company. Let me also mention the fact that we've issued a new green bond during the quarter of 1.25 billion Norwegian kroners at very attractive terms. And we've used the proceeds from this bond, including our available cash position, to also pay down our Euro bond. And through this, we have significantly improved the maturity profile of our debt on corporate level. And I'd like to thank our investors for the confidence that they are putting in us related to this. So altogether, this puts us in a very robust position in terms of exercising and realizing our growth portfolio, even in the current turbulent times that we're seeing in the capital market. On that note, let me also comment on what's going on globally in terms of tariff discussions and tariff negotiations. I would like to say that Skatec and our growth portfolio, we see no direct impact on our growth portfolio in terms of those tariff negotiations that are currently ongoing. Let me then move to power production. We continue to see high availability and stable operations across our portfolio of operating assets. And I think that our O&M teams, they are doing a stellar job in keeping this up. Power production for the quarter reached 979 gigawatt hours, and this is up from 901 gigawatt hours, same quarter last year. And if you adjust from divestments, up from 811 gigawatt hours, and this is a 21% increase in power production. And this is partly driven by the positive contributions from our new projects that has come into operation. We have Botswana that came into operation during the first quarter this year. And we also had Brazil and Pakistan coming into operation in first quarter last year. And all of these projects have contributed positively to the increase in power generation. In addition, we've also had very good hydrology in Laos and the Philippines that has also contributed positively to our power generation. The strong production has contributed to a 72% increase in our revenues in the power production segment. We are now reaching just about 1.6 billion in total revenues. And this has been driven by strong performance, obviously, across the portfolio. But we have also seen accounting gains related to the divestments of Uganda and of Vietnam. And we are also seeing a very strong quarter in the Philippines, which I will come back to. And in addition to that, we have also seen a one-off payment from a tariff true-up in Pakistan. And we've also seen other net positive movements. So let me then talk about the Philippines. The Philippines delivered an exceptional quarter, both in terms of power production and auxiliary services, and also in terms of financial contribution. And in the Philippines, we reached a power production of 149 gigawatt hours, which is, in principle, a doubling or close to a doubling of power generation relative to the same quarter the year before. This is due to strong hydrology. We had good water levels when we came into the quarter, and we have also had good water inflows during the quarter to contribute to this. Also, please notice in terms of this quarter, despite being in the dry season, we have a long energy position. This is obviously partly due to the fact that we have a very strong generation, but also partly due to the fact that we have reduced our contract portfolio in the Philippines, which is then putting us in a more robust position in terms of the dry season in the Philippines. Net revenues in the Philippines increased by 2.8 times, now reaching 320 million in the quarter. And we see that we have strong contributions, both from power sales as well as from ancillary services. And this again shows the strategic value of the flexible position that we have with hydropower and with batteries in the Philippines. Further, ancillary services revenues reached 224 million. And batteries are now playing an important role in the revenue generation that we're having in the Philippines. And we see that batteries is out-competing hydropower in terms of the short response ancillary services market. And on the back of this, we continue to develop and build out more battery capacity in the country. So in terms of EBITDA, this increased them to 270 million, which is an increase by 3.6 times. So overall, again, this quarter highlights the earnings potential of the Philippines, and particularly the growing contribution from the ancillary services segment and also from batteries. Let me then move to construction. We are growing our portfolio, and we currently have close to two gigawatts of projects in construction. This is really an all-time high for Scartech. Since the last reporting, we have added three new projects to our construction portfolio. We have the 1.1 gigawatt solar and 100 megawatt battery project Obelisk in Egypt. In addition, we have two battery projects in the Philippines. While these two projects are merely 56 megawatts, They will represent a tripling of our battery capacity in the Philippines, and this is significantly improving our position in terms of the ancillary services market going forward. In total, now we have a construction portfolio that is spanning six different countries. We have South Africa, where we have Grote Fonteyn, which is now nearing completion, and we expect to put into operation during Q2 this year. And we also have the Mogobe battery project that is now progressing well in terms of construction. In addition, we have Botswana, where we took phase one into operation in the first quarter, and they're now also well underway with constructing the second phase in Botswana, another 60 megawatt project. Construction is also further progressing well in Brazil, Tunisia, and the Philippines, and we expect all of these projects to come into operation during the first half of 2026. And finally, we have the Obelisk project in Egypt that I just mentioned. This is a 1.1 gigawatt project with 100 megawatts of battery capacity. It's being implemented on an accelerated schedule, and we aim to get the first half of the capacity, solar capacity, plus the batteries into operation first half next year, and the second phase into operation during second half next year. I think that the breadth of our construction portfolio is obviously showing, and it's the result of the development approach, the solid development approach and activities that we've had over the last couple of years. When these projects are being brought into operation during 2026, we will reach more than six gigawatts in operational capacity. So I will now zoom out a bit and talk about sort of the overall growth profile. So we continue to expand our near-term growth platform. And in addition to the two gigawatts that I have currently talked about in construction, we also have 2.2 gigawatts in backlog. and we have since the start of the year added 1.5 gigawatts into the backlog which is a significant number and in addition to the romania project that we talked about during the first quarter first quarter or the q4 reporting we have also now added 120 megawatts where we've signed the ppa in tunisia which is then doubling our potential capacity in Tunisia. Tunisia is emerging as a very interesting market for us. And then we have also signed 1.1 gigawatt PPA with Egypt Aluminium. And this is a very interesting project. It's the first corporate PPA in Egypt. It's being backed by Sovereign Guarantee. Egypt aluminium is the largest electricity consumer in Egypt. It's also the largest CO2 emitter in Egypt. This is a very important project in terms of industrial decarbonization in the country. We will implement this portfolio based on our integrated model. Let me also then add some comments in terms of how we capture value and also in terms of how we manage working capital of this portfolio going forward. So our growth is underpinned by a strong DNC revenue model and also limited equity exposure, enabling us to scale through a self-funded model without overstretching our balance sheet. And on the left side here, you see our construction portfolio, which I've already talked about. It has a DNC or an EPC revenue value of about 9.2 billion Norwegian kroners. And the remaining contract value related to this portfolio is 6.7 billion. And then in addition, you will see that in terms of the backlog, we also have about 9.3 billion in EPC revenue value linked into that portfolio. So in total, with these projects together, we are seeing a remaining EPC value related to backlog and construction of about 16 billion. In terms of the backlog, you will see that three of these projects are expected to reach financial close by the end of 2025. Among these three projects, we will also see our Egypt green hydrogen project, where we now expect financial close rather in the second half, as we see that the structuring and the financing of this project is taking more time than what we have previously communicated. And for the full near-term growth portfolio, so for all of these projects, we are expecting to realize a gross margin in a range of 10 to 12%. So this margin generated from our construction is key to our strategic strategy of capital efficient growth. And this is funding a large part of the equity injections that we will put into these projects. And also on the top right side here, you will see that we will continue to implement this obviously based on an S-curve. So all projects, they will have slower revenue recognition during the first and the last parts of the construction period. and then they will have a more aggressive revenue recognition during the middle part of the construction period. And importantly, we strive to obtain and maintain positive working capital during the construction period, as we are illustrated at the bottom right here, by trying to get milestone payments under the EPC contract in the beginning of the construction period, and then push out payments to suppliers and to contractors towards the end of the construction period. As you understand now, we have a transformative period ahead of us. We will implement this and all this portfolio as part of our self-funded growth plan. And you will see that we have high construction activity now. For the next two to three years, we aim to implement this whole portfolio by the end of 2027, which means that by the end of 2027, we target to double our operating portfolio. So with that, I will hand it over to Hans Jakob to take you through the financials.

Thank you, Terje, and thank you for coming and listening to SCARTech today. So, we present strong results across the group, driven by the higher power production, the high DNC activity, and gains from divestments. I'll walk you through the group financials and the performance of our operating segments, and I'll also cover the improved capital structure and strategic progress. Starting with the group level performance, the strong results in the first quarter is backed by consolidated revenues significantly up 42% to 1.8 billion. EBITDA, 1.5 billion, up 48%. To the right, you see the proportionate financials. Revenues increased by 95% to 2.4 billion. while EBITDA grew by 63% to 1.4 billion. The increase was mainly driven by higher power production, especially in the Philippines. The divestment gains and our proportionate figure also reflect the high DNC activity in the quarter. Our power production segment delivered another strong quarter. The revenues reached 1.6 billion, up 53% from the same quarter last year, and the EBITDA was 1.4 billion, a 60% increase year on year. As mentioned, the growth was mainly driven by the Philippines and the divestment gains. On a 12-month rolling basis, the segment has delivered more than 6 billion in revenues and 5.2 billion in EBITDA, underlying the strength of the cash flow in our portfolio. Overall, we are very pleased with the value generated from our operating assets. In our development and construction segment, activity levels continued to increase. Proportionate revenues of 751 million and EBITDA of 26 million. In this segment, the quarterly performance shows variability, pending on project phasing. But the trend from the last 12 months confirmed the long-term strength and scalability of our DNC platform. It gives a clearer picture of the strong momentum we are building. Over the past year, DNC revenues have reached 2.9 billion, with a steady increase over the last three quarters, and we aim to continue. Keep in mind that the 12-month rolling figures from Q1 last year includes the very busy construction period of 2023. The rolling EBITDA ended at 202 million, with contribution from high-margin projects and disciplined cost control. The increasing trend reflects higher activity levels across several geographies. With a strong backlog moving into construction, we expect DNC to remain a key engine of our continued profitable growth. At the end of the quarter, we had an all-time high available liquidity of 5 billion NOK. This was impacted by significant divestment proceeds and it has continued to strengthen. In total, the liquidity including undrawn RCF increased by 1.2 billion. Let me explain some of the main movements. We received 155 million in distribution from power plants, 2 billion in net proceeds from announced transactions, We invested net 214 million in growth projects and paid 391 million of interest and debt repayments. Additionally, we have increased our RCF by 50 million to 230 million dollars after the reporting date. In total, we now have close to 5.5 billion NOC in available liquidities. We continue to strengthen our capital structure. Net corporate debt was reduced to 5.2 billion from 7 billion in Q4. The reduction was mainly driven by cash received from divestments. The cash position and net interest-bearing debt will vary over time, dependent on cash movements. We also repaid 240 million of debt in combination of regular amortization and through refinancing. On project level, the net debt decreased to 13.4 billion, down from 14.9 billion, and this was primarily due to the removal of debt from divestments of the Uganda and Vietnam projects. We also report a 200 million net increase of debt related to projects under construction. These reductions reflect our continued commitment to capital efficiency and balance sheet strength. They position us well to finance growth without increasing corporate leverage. Now, let me look at the progress on divestments and the leverage. We have set out a clear strategy to rotate assets and reduce corporate debt. We are targeting to self-fund our growth while strengthening the capital structure by 2027. In the strategic update last year, you might recall that we specified divestment proceeds of minimum 4 billion NOC, of which 75% would be used for debt repayments. I'm pleased to say that we have come quite far already. Since the Q3 last year, we have generated 2.6 billion in proceeds from asset divestments, including transactions in Uganda, Vietnam, and South Africa. This demonstrates both the market's appetite for our assets and our ability to execute divestments timely. As a result of these divestments, our net corporate debt is down by 2.9 billion since the Q3 last year. We are on track to deliver on our 2027 targets. Here you can see the debt maturity profile of the corporate debt following the transactions in the quarter. In the quarter, we took further steps to extend and optimize our corporate debt profile. We successfully placed a four-year 125 billion green bond with a margin of three-month NIBOR plus 315 basis points with the help and support of our core banks. This reflects the credit market's confidence in our ability to continue to deliver strong operational and financial results in the future. These proceeds from the bond, together with the existing liquidity, were used to repay the 114 million euro bond, and we have repaid or refinanced all major short-term debt. We have our next large maturity in 2027. Overall, we have a well-structured and extended maturity schedule with solid headroom to support growth and navigate market volatility. Let me share the outlook for 2025. For the full year, we estimate a power production between 4,100 and 4,500 gigawatt hours, unchanged from last quarter. We have, however, increased our expected full year 2025 EBITDA midpoint by 400 million. The range of 4,150 to 4,450 million for the power production segment is what we guide on. The update is driven by divestment proceeds over performance in the quarter and partly offset by negative FX effects. For the second quarter, we expect a total power production between 900 and 1,000 gigawatt hours. EBITDA in the Philippines of 180 to 220 million based on normal hydrology and strong contribution from ancillary services. In our DNC segment, we currently have a remaining contract value, as Terje said, of 6.7 billion. And we keep a gross margin guidance of 10 to 12% on average across portfolio for project under construction and in backlog. For corporate, we expect a full year EBITDA of 115 to 125 million negative in line with previous guidance. These estimates reflect a strong base for operating assets, high construction activity, and in line with the previous guidance. A good start of the year, positioning as well for reaching our 2025 targets. And then I welcome Thalia to do the quick summary.

strong power production, good progress on other investment plans, and we also have very good D&C activity level and progress there. In terms of the growth part, we are now seeing that we have a portfolio, a near-term growth portfolio, linked to backlog and construction, that is set to double our operating capital. our operating capacity in a 2027 perspective. And finally, we are progressing well in terms of optimizing the portfolio and that activity with the divesting activities, refinancing activities is strengthening our balances, enabling us to take down corporate debt now to 5.2 billion And we also have a liquidity position, as Hans Jakob talked about, of 5 billion and including the recent increase in the RCF, 5.5 billion. And all of this enables us and puts us in a good position to continue to implement and push forward with our self-funded growth plan. Thank you. Then we open up for Q&A.

for questions. We will start with questions in the room, and then we'll have some online questions as well. Andreas?

Do you see any reason why that should not continue into 2027, that you are that you will be able to continue adding backlog for construction into 2027 in a way that actually keeps the activity level at the same level or higher than 2026.

I can get the microphone. Yeah, so I mean, 2027 is obviously our current sort of near-term planning horizon. And as we said, we currently have 16 billion in remaining EPC contract value related to the projects we have in construction and in backlog. And that will take us also well into 2027 in terms of construction activity. And then looking at 2027 and beyond, I think you also then should look at what we have in pipeline. We still have close to nine gigawatts of projects in pipeline. It's a good diversification between solar, between wind, batteries, and also green hydrogen. And as you said, there's no reason why we will not be able to continue to convert new projects from pipeline into backlog and into construction. It is still so that renewable energy is the most competitive source of electricity not only on an intermittent basis but also as a base load and capacity energy in most if not all of the contract countries that we operate in and the competitiveness of renewable is only going to continue to improve as costs come down and as we see technology development and scaling up of this within this industry

Thank you, and congratulations on a good quarter. You've previously talked about the price increases on the long-term ancillary service contracts in the Philippines, and you've also talked about the opportunity the spot ancillary service market in the Philippines gives you. The outperformance this quarter, is that the price increase on the longer-term contracts, or is it playing in the spot market? You mentioned batteries, so...

Yeah, so approximately, I think that in terms of the ancillary services market, in terms of the market, it's about 50-50 contracts and spot market or reserves market, as we call it. Price variations is what we see in the spot market, while obviously the contract market, there the prices are fixed. So what we've seen in Q1 is that we have had price volatility in the spot market and that with batteries we've been able to capture high prices in that part of the segment. And this was the case last year as well? This was the case last year.

Just adding the hydrology that we commented on as well. So the two of them are the main explanation for this quarter. So I think it's harder to predict the hydrology. Remember the last year was quite a soft one in a 10-year perspective. So maybe this is more normal, but we still remain optimistic on ancillary services as we commented on. But both of them are important for this quarter.

I think it's difficult to say something firm about the longer term. If you continue to see extremely attractive prices, there will be built up more capacity. It will normalize over time, but we will continue to see that batteries are very competitive in the short response segment or part of this market. We believe that it's going to be possible to capture good value in that segment going forward. That's obviously also why we are now building out 56 megawatts in addition. and we are developing and looking at doing even more batteries in the future.

Yeah. Great to see so much activity as well, but we're seeing quite substantial construction in non-core markets and you're also completing projects in non-core markets. Could you shed some color on what the plan is for those projects in non-core markets? Will you hold on to them or are you planning to divest them?

In terms of what we're doing in the non-core markets, I think a general comment on non-core market is that we are only looking at markets where we believe there is a fundamental strong competitive position of renewables. and that there is a clear opportunity for significant renewables build-out over time, based on renewables being the most competitive technology, based on an agenda of energy transition, and also based on the general need for increasing electricity generation in the countries. So even though these are emerging technologies, markets where we have a bit of a more opportunistic perspective. If we see that we're able to build out scale in those markets, then it's not necessarily so that we will sell and divest those projects. If we see that these markets are changing and we don't see an opportunity to build out scale, then over time, it's natural that we'll look at possibilities of divesting those projects.

Thank you.

On corporate net debt, you're now at 5.2 billion. And say, if you are to double your asset base, does that mean that you're comfortable doubling the whole co-net debt ratio?

as well or or will net debt on corporate level remain roughly where it is going forward could you give us some guidance a short answer to that as we said the the net that will vary with cash movements but we have no plans to increase the corporate depth so adding new activity will be on project level non-recourse that is the profile So we are not adding corporate debt.

And we're still committed to what we have already said, target of four billion in divestments and using 75% of that to pay down corporate debt in a 2027 perspective.

Okay, any more questions from the audience here?

In terms of the equity investment target of 750 million, obviously I suppose that's maybe an average over some years. Is it fair to assume a bit more in 2025 and 2026, or am I mistaken?

Yeah, I can start and you can fill me in with color, but I think you're absolutely right. We said 750 to 27 as an average to give a pointer on our best estimates and also to nurture the discipline that we are progressing. If we go above, we will have to explain it. And when we wrap up the year, we will explain where we landed and where we are in this plan. That's a natural follow-up, but on the direct question, is there a risk that we'll go above this year? Yes, for commercial reasons. That's why we deliberately said this is an average for the three-year strategy period, basically.

One final. You're obviously guiding on the EPC gross margins of around 10% to 12%, and then I suppose that's excluding any contingencies. And you're closing in on Grotfontein, and you have some construction activity ongoing. CapEx levels are remaining at low levels. Is it fair to assume that we can see more contingencies?

That one is so hard.

Obviously not on the projects that you haven't started on constructing, but on the projects that have progressed.

Well, in the past, we have said very clearly that, well, at least I have been very impressed by the DNC organization. One thing is to lay out a plan, include a contingency and not use them. This is a disciplinary act on many moving parts, many players in an integrated approach of delivery. And if we can do that again, there will be more milk and honey. I guess that's the backing of your question. As happened with Kennart. But we cannot say that up front. But we always comment on it when it happens. Strong margins backed by. And then we explain.

Thank you.

It seems like you've done a lot of right things the last year or two. Debt is down, you've reignited growth, you've successfully constructed things on time, on budget and released contingencies. So everything seems to be moving in the right direction and it seems like the equity market is agreeing today. But what are the concerns right now? What are you worried about? Where can you step wrong?

It's not necessarily about where we can step wrong, but I mean, it's about we need to continue to be very disciplined in terms of what we do. We need to be disciplined in terms of what projects we are moving forward, making sure that they are attractive from a from an economic point of view, making sure that we are not moving projects forward, that in this current situation is too marginal, right? And then we need to continue to have a very, very strong focus, as Hans Jacob said, on EPC execution. I mean, we have the largest EPC execution program that we have ever had in Skatec. We're looking at six different countries, two gigawatts. So obviously it's incredibly important for us to also have high focus on making sure that we are doing that in a good way.

These are internal risks, but external risks, what are you worried about externally?

I think while renewable energy is becoming more and more competitive, in the markets where we operate as an energy source. I mean, there is still competition out there. We still sort of have to address that competition and make sure that we are able to capture good projects that are competitive in the countries where we operate and putting us in a strong competitive positions where we are securing offtake and trying to get offtake for our projects. In terms of the geopolitical situation and the trade discussions going on politically, we are not so concerned given that we don't have operations in the US in terms of what is coming from the US. But there are obviously also potentially changes that are happening on the country by country level in terms of changing regulations. So that's going to be important for us watching closely going forward. And then obviously we have a special attention as Skaltech for Ukraine and the geopolitical situation and the war going on in Ukraine. But that's as much on the people's side, on the moral side, as well as it is from a business point of view.

Okay, thank you. Then we'll take a couple of questions from our online listeners. We have two questions from Anis Segeia from Odo BOF. Could you please update us on current best CapEx level per megawatt hours?

Yeah, obviously, we will not share any specific BESS capacity numbers. I think we are, in our data sheet, we are sharing the CAPEX levels of the projects that we're doing also within BESS, for instance, the Mogobe BESS project in South Africa. So those numbers are available. It should also be noted that implementation of a BESS project in terms of CAPEX will be very different country from country. and also relative to what services you provide, whether you just provide load shifting or if you also provide other types of grid stabilization types of services. On a general note, I can still say that we have seen battery capex coming down significantly over the last couple of years. And over the last two years, I think we've seen a reduction in capex on the batteries themselves in sort of a 60% to 70% range.

Thank you. Another one from Anis. What changed your mind about the attractiveness of the Tunisian market?

The economics of our projects, I would say. So obviously the first project that we are now implementing, and we've been very clear on that, we are implementing these together with Toyota, which is a very strong partner, and based on the climate funding, which is being provided by Japan. And this is something that we are seeing that we are able to replicate in Tunisia. And based on that climate finding, we're able to continue to be competitive in that market. Then I would say Tunisia has an aggressive ambition in terms of converting towards renewable energy, green energy. become more independent in terms of energy and electricity supply. And this is obviously also something which is fueling opportunity growth in the market, and that's why we are interested in the market.

I see one question regarding proceeds from divestments. Do the 4 billion NOC in targeted accumulated proceeds include farm downs in Egypt?

No, I mean the four billion that we have been talking about, those are related to divestments in non-core market. I think that's what we have indicated and that's also what sort of in terms of our plans are included in that figure.

Thank you. One question from Tammy Solomon from Barclays. What are your expectations for hydrology in Philippines and Laos for the rest of 2025?

That was actually commented on a normal hydrology for the remainder of the year, but still strong contributions in the Philippines from ancillary services, particularly commenting on the second quarter as we normally do.

Yeah, and obviously that is also reflected in our guidance when it comes to the full year. And the Philippines, there we provide guidance obviously on a shorter term basis. And it's obviously also important that when we talk about the full year in terms of guidance, we have included the catch up in terms of the ancillary services contract prices. where we have seen that there has been a positive decision in the Energy Regulatory Committee in the Philippines, but the decision has not been formalized and issued yet.

So these are the ASPE revenues, 200 million, which is not included in the Q2, but is included for the full year guidance.

Okay, we have no more questions online either. So I think with that, we'll just say thank you for listening and the presentation.