ACWA Power : 3Q 2023 Earnings Call Transcript

ACWA Power Company

3Q2023 Earnings Call

02 November 2023

For the three and nine months ended 30 September 2023

DISCLAIMER

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This document and the information contained therein (the "Information") has been prepared by ACWA POWER Company (the "Company" or "ACWA Power") for background purposes only and does not purport to be full, accurate or complete. No reliance may be placed for any purpose on the Information or its accuracy, fairness or completeness. The Information and opinions contained herein are provided as at the date of the presentation and are subject to change without notice. The presentation is the sole responsibility of the Company and has not been reviewed or approved by any regulatory or supervisory authority.

This presentation contains financial information regarding the businesses and assets of the Company. Such financial information may not have been audited, reviewed or verified by any independent accounting firm. The inclusion of such financial information in this presentation or any related presentation should not be regarded as a representation or warranty by the Company or its affiliates, advisors or representatives or any other person as to the accuracy or completeness of such information's portrayal of the financial condition or results of operations of the Company and its consolidated subsidiaries. Certain information contained in this presentation is based on management accounts, current financial statements and estimates of the Company and has not been audited or reviewed by the Company's auditors. Recipients should not place undue reliance on this information. This presentation includes certain non-IFRS financial measures and other metrics which have not been subject to a financial audit for any period. Certain financial and statistical information in this presentation has been subject to rounding off adjustments. Accordingly, the sum of certain data may not conform to the expressed total.

To the extent available, the industry, market and competitive position data contained in the Information come from official or third party sources. Third party industry publications, studies and surveys generally state that the data contained therein have been obtained from sources believed to be reliable, but that there is no guarantee of the accuracy or completeness of such data. While the Company reasonably believes that each of these publications, studies and surveys has been prepared by a reputable party, neither the Company nor any of its directors, officers, employees, affiliates, advisors or agents have independently verified the data contained therein. In addition, certain industry, market and competitive position data contained in the Information come from the Company's own internal research and estimates based on the knowledge and experience of the Company's management in the markets in which the Company operates. While the Company reasonably believes that such research and estimates are reasonable and reliable, they, and their underlying methodology and assumptions, have not been verified by any independent source for accuracy or completeness and are subject to change. Accordingly, reliance should not be placed on any of the industry, market or competitive position data contained in the Information.

The Information does not purport to be comprehensive, complete or without error or omission. To the fullest extent permitted by law, neither the Company nor any of its directors, officers, employees, agents, affiliates or advisors, accepts any responsibility or liability whatsoever for (whether in contract, tort or otherwise) or makes any representation, warranty or undertaking, express or implied, as to the truth, fullness, fairness, accuracy or completeness of the Information (or whether any information has been omitted from it) or any other information or opinion relating to the Company, its subsidiaries, affiliates or associated companies, whether written, oral or in a visual or electronic form, and howsoever transmitted or made available or for any loss or liability (including in respect of direct, indirect or consequential loss or damage) howsoever arising from any use of the Information or otherwise arising in connection therewith. In giving this presentation, neither the Company nor any of its directors, officers, employees, agents, affiliates or advisors undertake any obligation to provide access to any additional information or to update the Information, or to correct any inaccuracies in the Information, including any data or forward-looking statements.

The Information may include forward-looking statements, which are based on current expectations and projections about future events. These statements may include, without limitation, any statements preceded by, followed by or including words such as "target", "believe", "expect", "aim", "intend", "may", "anticipate", "estimate", "plan", "project", "will", "can have", "likely", "should", "would", "could" and other words and terms of similar meaning or the negative thereof. These forward-looking statements are subject to risks, uncertainties and assumptions about the Company and its subsidiaries and its investments, including, among other things, the development of its business, financial condition, prospects, growth, strategies, as well as the trends in the industry and macroeconomic developments in Saudi Arabia and other countries in which the Company operates. Many of these risks and uncertainties relate to factors that are beyond the Company's ability to control or estimate precisely, such as future market conditions, currency fluctuations, the behaviour of other market participants, the actions of regulators and any changes in applicable laws or government policies. In light of these risks, uncertainties and assumptions, the events in the forward-looking statements may not occur and past performance should not be taken as a guarantee of future results. No representation or warranty is made that any forward-looking statement will come to pass. No one undertakes to update, supplement, amend or revise any such forward-looking statement. Except where otherwise indicated, the Information and the opinions contained herein are provided as at the date of the presentation and are subject to change without notice. Past performance of the Company cannot be relied on as a guide to future performance. Nothing in this presentation is to be construed as a profit forecast.

Acronyms and abbreviations

FC: Financial Close; ICOD: Initial Commercial Operation Date; IPP: Independent Power Project; IWP: Independent Water Project; IWPP: Independent Water and Power Project; KSA: Kingdom of Saudi Arabia; MW: Megawatts;

Mwac: Megawatt, alternating current; O&M: Operations and Maintenance; PCOD: Project Commercial Operation Date; PIF: Public Investment Fund (of the KSA); PPA: Power Purchase Agreement; PPP: Public Private

Partnership; PV: Photovoltaic; RO: Reverse Osmosis; SWRO: Seawater Reverse Osmosis.

2

SAFETY AND OPERATIONS

					YTD23 vs
			YTD22	YTD23	YTD22
[e-mail]|
	Lost Time Injury Rate	0.02	0.02	-
www.acwapower.com
	Water Availability	96.5%	96.2%	-30bps
		Power Availability	87.3%	92.4%	+501bps
|
RELATIONS		Renewable Power	90.0%	97.3%	+703bps
POWER INVESTOR		Availability
ACWA	Source: Company information.			3

ACWA POWER'S PORTFOLIO

Largest private	First mover in at-	World's one of the
company in	largest renewable
scale GH2
desalination	portfolio

ACWA POWER INVESTOR RELATIONS | www.acwapower.com | [e-mail]

Source: Company information.

	At	Change vs.
# of Assets	30/09/23	Dec. 2022
75	+7
Total Inv. Cost (SAR B)	298	+28
Power (GW)	50	+6
Renewable Pwr. (GW)	23	+6
Water(M m3/day)	7.6	+1.4

4

BUSINESS DEVELOPMENT - BIDDING SPACE

ACWA POWER INVESTOR RELATIONS | www.acwapower.com | [e-mail]

			Submitted Bids - 9M23
		Power (GW)		Water (M m3/day)
	Submit-		Pending		Submit-		Pending
	ted	Won	Decision		ted	Won	Decision
Negotiated	6.3	6.0	0.3	-	-	-

Competitive	9.6	3.61	0.4	0.8	0.82	-
Total	15.9	9.6	0.7	0.8	0.8	-

1. Announced as winning bidder in October 2023.
2. Excludes the 600,000 m3/day Rabigh 4 IWP submitted in 2022 and ACWA Power announced as preferred winner in December 2022.

Source: Company information.

5

IMMEDIATE PIPELINE

Bids and negotiated deals to be submitted or awaiting results

		Next 6 months	Power	Water	# of
		(GW)	(Mm3/day)	Countries
[e-mail]|		Active bids/deals	~8	~1.5	11
	Potential bids/deals	>20	~2	12
www.acwapower.com|	*	Till 2023-end
were reported by the Company together with 30/09/2023 results.
		*	5	2	4
		Wet Financial closes
RELATIONS	• Out of 7 expected financial closes, 3 have achieved their DRY financial closes and
	• Those are Nukus Wind IPP in Uzbekistan, Azeri Wind IPP in Azerbaijan and Rabigh
INVESTOR		4 IWP in KSA
	• 3 PV projects from PIF Round 4 in KSA and Hassyan IWP in UAE expected to
POWER		achieve dry and wet within 2023
ACWA	Source: Company information.			6

ACWA POWER GROWTH STRATEGY (2023 - 2030)

New horizons built upon the existing strong growth strategy

ACWA POWER INVESTOR RELATIONS | www.acwapower.com | [e-mail]

Provide

Essentials For

Life

The number 1 in

water desalination

One of the largest in

renewable power

Enable energy

transition needs of

nations

Source: Company information.

Lead Energy

Transition

First mover in at-

scale GH2

Vision 2030

Growth in

renewables

Innovation and

technology

Create

Sustainable

Value

Visible Growth

Financial returns and

shareholder value

Multiplier impact

ESG and CSR

More than triple our

assets under management

Be one of the top 3

in Desalination, Renewables and Green fuels globally

Continue to reinforce our People resources

7

ACWA POWER INVESTOR RELATIONS | www.acwapower.com | [e-mail]

OUTLOOK INTO 2024/25

• Increased business development activity…
• • Prelude to future growth
  • Rebalances legacy issues from projects that have been affected by the pandemic and geopolitical challenges
• High interest rate, high inflation and geopolitical conflicts environment to stay with us well into 2024
• • May result in delays to expected milestones in the short term
  • Business model provides headroom for rebalancing in the long term

8

ACWA POWER INVESTOR RELATIONS | www.acwapower.com | [e-mail]

3Q23 & 9M23 FINANCIAL RESULTS

					Fav /
	3Q23	Fav/(Unfav) vs.		(Unfav) vs.
SAR Million	3Q22	2Q23	9M23	9M22
Operating Income1	814	25.0%	11.5%	2,103	12.4%

Net Profit2	398	16.5%	(4.0%)	1,082	22.5%
Adjusted Net Profit3	398	16.5%	(4.0%)	1,082	26.2%

• Both operating income and net income up by double digits versus last year
• Mainly driven by better operational performance and new projects brought online
• Partly offset by
• • higher general and administrative expenses and project development cost provisions on account of increased business development activity
  • higher net financial charges due to higher market interest rates, additional Sukuk

Source: Company information. 1 Before impairment loss and other expenses. 2 Attributable to equity holders of the parent. 3 Adjusted net profit is a non-IFRS key performance indicator to adjust the Reported Net Profit for the impact of non-routine or non-operational transactions that are one-off or non-repeating or unusual in nature.

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FINANCIAL CLOSES (FC)

4 financial closes in the third quarter; 8 in YTD September

				Project	Time	Total investment	Contracted capacity
						cost (TIC)
				Shuaibah 3 RO	Oct'22	SAR3.1B	600K m3/day desal. Water
[e-mail]|				Bash Wind	Dec'22	SAR2.6B	500MW power
			Dzhankeldy Wind	Dec'22	SAR2.5B	500MW power
				Ar Rass Solar PV	Feb'23	SAR1.7B	700MW power
www.acwapower.com|				NGHC Green Hydrogen	Mar'23	SAR31.9B	1,250K tonnes green ammonia
			Kom Ombo PV	Apr'23	SAR0.7B	200MW power
				Karatau (Nukus) Wind IPP	May'23	SAR0.4B	100MW power
RELATIONSINVESTOR
		In 3Q23
POWER			Oct'23
ACWA		Source: Company information.			10