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Sky Solar Holdings, Ltd. Reports Unaudited Financial Results for the First Half of Fiscal Year 2018
First Half 2018 Highlights
- Revenue of
$33.2 million , up 8.4% from 1H 2017 - Electricity revenue of
$31.5 million , up 12.9% from 1H 2017 - Adjusted EBITDA of
$34.2 million , compared to$18.5 million in 1H 2017 - 203.5 MW of IPP assets in operation as of
June 30, 2018 , compared to 196.7 MW as ofDecember 31, 2017 - The Company had 13.8MW of projects under construction as of
June 30, 2018 .
Business Updates
During the first half of 2018, the Company completed multiple strategic transactions including:
- Sold rights of a 40.8MW project in
Japan for$18.4 million . The Company continued to cooperate with a listing company inJapan , and investedJPY 529 million (USD 4.7 million ) to this 40.8 MW project for 45% distribution of profit or loss. This project is expected to complete onOctober 2021 . - During the first half year of 2018, 6.6 MW of projects are connected in
Japan . - Secured construction and term financing for the 5.7MW project in the U.S., which reached substantial completion in
July 2018 .
Several material and ongoing events occurred subsequent to the first half of 2018. In
On
The Company has made meaningful progress in advancing development of its permits in Northeast US, with over 100MW under development.
First Half 2018 Financial Results
Revenue was
Electricity sales were
Systems and other sales were
The following table shows the Company's sequential and period-over-period change in revenue for each category, geographic region and period indicated.
1st Half 2018 | Period-To-period Change | 1st Half 2017 | Sequential Change | 2nd Half 2017 | ||||||
(US$ in thousands, except percentages) | ||||||||||
Asia | 21,472 | 2.9 | % | 20,877 | 26.2 | % | 17,009 | |||
IPP | 21,364 | 3.3 | % | 20,677 | 25.7 | % | 16,994 | |||
System and other sales | 108 | -46.0 | % | 200 | 620.0 | % | 15 | |||
Europe | 3,729 | 11.8 | % | 3,336 | 80.2 | % | 2,069 | |||
IPP | 2,376 | 6.9 | % | 2,223 | 25.6 | % | 1,892 | |||
System and other sales | 1,353 | 21.6 | % | 1,113 | 664.4 | % | 177 | |||
South America | 5,429 | 94.7 | % | 2,788 | 51.2 | % | 3,590 | |||
IPP | 5,429 | 268.6 | % | 1,473 | 51.5 | % | 3,583 | |||
System and other sales | — | -100.0 | % | 1,315 | -100.0 | % | 7 | |||
North America | 2,570 | -29.0 | % | 3,618 | -25.4 | % | 3,446 | |||
IPP | 2,313 | -34.0 | % | 3,505 | -29.2 | % | 3,268 | |||
System and other sales | 257 | 127.4 | % | 113 | 44.4 | % | 178 | |||
IPP | 31,482 | 12.9 | % | 27,878 | 22.3 | % | 25,737 | |||
System and other sales | 1,718 | -37.3 | % | 2,741 | 355.7 | % | 377 | |||
Total | 33,200 | 8.4 | % | 30,619 | 27.1 | % | 26,114 | |||
Cost of sales and services was
Gross profit was
Selling, general and administrative expenses were
Other operating income was
Gain on disposal of interest in subsidiaries was nil in the first half of 2018, compared to
Operating profit was
Financing costs were
Other non-operating income was
Net income in the first half of 2018 was
Basic and diluted income per share was
Basic and diluted income per ADS in the first half of 2018 was
Adjusted EBITDA was
Pipeline
As of
The Company had 13.8 MW of projects under construction as of
Balance Sheet and Liquidity
As of
Use of Non-IFRS Measures
To provide investors with additional information regarding the Company's financial results, the Company has disclosed Adjusted EBITDA, non-IFRS financial measures, below. The Company presents these non-IFRS financial measures because they are used by the Company's management to evaluate its operating performance. The Company also believes that these non-IFRS financial measures provide useful information to investors and others in understanding and evaluating the Company's consolidated results of operations in the same manner as the Company's management does and in comparing financial results across accounting periods and to those of its peers.
Adjusted EBITDA, as the Company presents it, represents profit or loss for the period before taxes, depreciation and amortization, adjusted to eliminate the impacts of share-based compensation expenses, impairment charges, interest expenses, fair value changes of financial liabilities, loss from hedge ineffectiveness on cash flow hedges and reversal of tax provision.
The use of Adjusted EBITDA has limitations as an analytical tool, and you should not consider them in isolation or as substitutes for analysis of the Company's financial results as reported under IFRS. Some of these limitations are: (a) although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future, and Adjusted EBITDA does not reflect cash capital expenditure requirements for such replacements or for new capital expenditure requirements; (b) Adjusted EBITDA does not reflect changes in, or cash requirements for, the Company's working capital needs; (c) Adjusted EBITDA does not reflect the potentially dilutive impact of equity-based compensation; (d) Adjusted EBITDA does not reflect tax payments that may represent a reduction in cash available to the Company; and (e) other companies, including companies in the Company's industry, may calculate Adjusted EBITDA or similarly titled measures differently, which reduces their usefulness as a comparative measure. Because of these and other limitations, you should consider Adjusted EBITDA alongside the Company's IFRS-based financial performance measures, such as profit (loss) for the period and the Company's other IFRS financial results.
The following table presents a reconciliation of Adjusted EBITDA to profit (loss) for the period, the most directly comparable IFRS measure, for each of the periods indicated:
Six Months ended in June 30, | |||||
2018 | 2017 | ||||
(US$ in Thousands) | |||||
Profit (loss) for the period | 8,155 | 5,188 | |||
Adjustments: | |||||
Income tax expense | 9,738 | 4,631 | |||
Depreciation of property, plant and equipment | 9,391 | 6,277 | |||
Share-based payment charged into profit or loss | — | (691 | ) | ||
Interest expenses | 8,527 | 5,529 | |||
Fair value changes of financial liabilities-FVTPL | (1,372 | ) | (2,272 | ) | |
Gain from hedge ineffectiveness on cash flow hedges | (273 | ) | (127 | ) | |
Adjusted EBITDA1 | 34,166 | 18,535 | |||
___________________ |
1 Adjusted EBITDA on equity are non-IFRS measures used by the Company to better understand its results. Adjusted EBITDA represents profit or loss for the period before taxes, depreciation and amortization, adjusted to eliminate the impacts of share-based compensation expenses, interest expenses, fair value changes of financial liabilities, loss from hedge ineffectiveness on cash flow hedges.
These measures are not intended to represent or substitute numbers as measured under IFRS. The submission of non-IFRS numbers is voluntary and should be reviewed together with IFRS results.
Project Capacities
Unless specifically indicated or the context otherwise requires, megawatt capacity values in this earnings release refer to the attributable capacity of a solar park. We calculate the attributable capacity of a solar park by multiplying the percentage of our equity ownership in the solar park by the total capacity of the solar park.
About Sky Solar Holdings, Ltd.
Sky Solar is a global independent power producer ("IPP") that develops, owns, and operates solar parks and generates revenue primarily by selling electricity. Since its inception, Sky Solar has focused on the downstream solar market and has developed projects in Asia, South America, Europe, and North America. The Company's broad geographic reach and established presence across key solar markets are significant differentiators that provide global opportunities and mitigate country-specific risks. Sky Solar aims to establish operations in select geographies with highly attractive solar radiation, regulatory environments, power pricing, land availability, financial access and overall power market trends. As a result of its focus on the downstream photovoltaic segment, Sky Solar is technology agnostic and is able to customize its solar parks based on local environmental and regulatory requirements. As of June 30, 2018, the Company owned and operated 203.5 MW of solar parks.
Safe-Harbor Statement
This press release contains forward-looking statements. These statements constitute "forward-looking" statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and as defined in the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates" and similar statements. Among other things, the quotations from management in this press release and the Company's operations and business outlook contain forward-looking statements. Such statements involve certain risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. These risks and uncertainties include, but are not limited to the following: the reduction, modification or elimination of government subsidies and economic incentives; global and local risks related to economic, regulatory, social and political uncertainties; resources we may need to familiarize ourselves with the regulatory regimes, business practices, governmental requirements and industry conditions as we enter into new markets; our ability to successfully implement our on-going strategic review to unlock shareholder value; global liquidity and the availability of additional funding options; the delay between making significant upfront investments in the Company's solar parks and receiving revenue; expansion of the Company's business in the U.S. and into China; risk associated with the Company's limited operating history, especially with large-scale IPP solar parks; risk associated with development or acquisition of additional attractive IPP solar parks to grow the Company's project portfolio; and competition. Further information regarding these and other risks is included in Sky Solar's filings with the U.S. Securities and Exchange Commission, including its annual report on Form 20-F. Except as required by law, the Company does not undertake any obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.
For investor and media inquiries, please contact:
Sky Solar:
IR@skysolarholdings.com
SKYS Investor Relations:
The Blueshirt Group
US or Mandarin
Ralph Fong
+1 (415) 489-2195
ralph@blueshirtgroup.com
China
Gary Dvorchak, CFA
+86 (138) 1079-1480
gary@blueshirtgroup.com
Sky Solar Holdings Ltd. | |||||
Condensed Consolidated Statements of Operations | |||||
USD In Thousands, Except Per Share Amounts | |||||
Six Months | |||||
Ended June 30 | |||||
2018 (Unaudited) | 2017 (Unaudited) | ||||
Revenue: | |||||
Electricity generation income | 31,482 | 27,878 | |||
Solar energy system and other sales | 1,718 | 2,741 | |||
Total revenue | 33,200 | 30,619 | |||
Cost of sales and services | (14,969 | ) | (12,777 | ) | |
Gross profit | 18,231 | 17,842 | |||
Selling expenses | (1,464 | ) | (363 | ) | |
Administrative expenses | (10,787 | ) | (12,226 | ) | |
Other operating income | 18,380 | 45 | |||
Gain on disposal of interest in subsidiaries | — | 1,464 | |||
(Loss) profit from operations | 24,360 | 6,762 | |||
Investment (losses) gains | 147 | 186 | |||
Finance costs | (8,527 | ) | (5,529 | ) | |
Other non-operating income (expenses) | 1,913 | 8,399 | |||
(Loss) profit before taxation | 17,893 | 9,818 | |||
Income tax expense | (9,738 | ) | (4,630 | ) | |
Profit (loss) for the period | 8,155 | 5,188 | |||
Other comprehensive income (loss) that may be subsequently reclassified to profit or loss: | |||||
Exchange differences on translation of financial statements of foreign operations | (2,167 | ) | 5,405 | ||
Total comprehensive (loss) income for the period | 5,988 | 10,593 | |||
Profit (loss) for the period attributable to owners of the Company | 8,168 | 5,103 | |||
Gains (losses) for the period attributable to non-controlling interests | (13 | ) | 85 | ||
8,155 | 5,188 | ||||
Total comprehensive (loss) income attributable to: | |||||
Owners of the Company | 5,964 | 10,598 | |||
Non-controlling interests | 24 | (5 | ) | ||
5,988 | 10,593 | ||||
(Loss) earning per share — Basic | 0.019 | 0.012 | |||
(Loss) earning per share — Diluted | 0.019 | 0.012 | |||
(Loss) earning per ADS — Basic | 0.16 | 0.10 | |||
(Loss) earning per ADS — Diluted | 0.16 | 0.10 |
Sky Solar Holdings Ltd. | ||||||
Condensed Consolidated Statements of Operations | ||||||
USD In Thousands, Except Per Share Amounts | ||||||
June 30, 2018 (Unaudited) | December 31, 2017 (Audited) | |||||
Thousand | Thousand | |||||
Current assets: | ||||||
Bank balances and cash | 68,108 | 46,084 | ||||
Restricted cash | 40,490 | 40,716 | ||||
Amounts due from related parties | 16,296 | 16,713 | ||||
Trade and other receivables | 30,384 | 34,582 | ||||
Inventories | 323 | 307 | ||||
155,601 | 138,402 | |||||
Non-current assets: | ||||||
IPP solar parks | 403,305 | 397,405 | ||||
Amounts due from related parties | 5,167 | 5,632 | ||||
Other non-current assets | 48,117 | 39,669 | ||||
456,589 | 442,706 | |||||
Total assets | 612,190 | 581,108 | ||||
June 30, 2018 (Unaudited) | December 31, 2017 (Audited) | |||||
Thousand | Thousand | |||||
Current liabilities: | ||||||
Trade and other payables | 21,819 | 29,043 | ||||
Amount due to related parties | 28 | 28 | ||||
Tax payable | 10,195 | 2,340 | ||||
Borrowings | 23,956 | 19,702 | ||||
Other current liabilities | 122,177 | 120,820 | ||||
178,175 | 171,933 | |||||
Non-current liabilities: | ||||||
Borrowings | 248,662 | 230,027 | ||||
Other non-current liabilities | 73,137 | 72,920 | ||||
321,799 | 302,947 | |||||
Total liabilities | 499,974 | 474,880 | ||||
Total assets less total liabilities | 112,216 | 106,228 | ||||
Equity: | ||||||
Share capital | 8 | 8 | ||||
Reserves | 107,079 | 101,115 | ||||
Equity attributable to owners of the Company | 107,087 | 101,123 | ||||
Non-controlling interests | 5,129 | 5,105 | ||||
Total equity | 112,216 | 106,228 | ||||
Total liabilities and equity | 612,190 | 581,108 |