Sky Solar Holdings, Ltd. Reports Second Quarter 2016 Unaudited Financial Results
- Q2 2016 total revenue of $17.0 million, up 34.6% over Q2 2015
- Q2 2016 electricity revenue of $15.6 million, up 40.2% over Q2 2015
- Q2 2016 Adjusted EBITDA of $8.6 million, compared to $4.5 million in Q2 2015, up 91.5% year-over-year; Q2 2016 annualized Adjusted EBITDA return on equity ratio of 28.4%1
- 133.1 MW of IPP assets in operation as of
June 30, 2016. Including the recent acquisition of operating assets in the U.S. on July 15, 2016, total IPP assets in operation currently stand at 155 MW.
- As of
June 30, 2016, 27.9 MW under construction, 232.3 MW of shovel-ready projects, and 1.0 GW of solar parks in pipeline.
Second Quarter 2016 Financial Results
Electricity sales were
Systems and other sales were
The following table shows the Company’s sequential and year-over-year change in revenue for each category, geographic region and period indicated.
|(US$ in thousands, except percentages)|
|System Sales and Other||438||-68.1||%||1,372||-43.4||%||774|
|System Sales and Other||566||33.5||%||424||-15.6||%||671|
|System Sales and Other||282||-||-||-||-|
|System Sales and Other||71||-||-||222.7||%||22|
|System Sales and Other||1,357||-24.4||%||1,796||-7.5||%||1,467|
Cost of sales and services were
Gross profit was
Selling, general and administrative (“SG&A”) expenses were
Other operating income was
Operating profit was
Finance costs were
Other non-operating expenses of
As a result of the above, the net loss for the second quarter of 2016 was
Basic and diluted loss per share was
Adjusted EBITDA was
The Company had 27.9 MW of projects under construction as of
In total, the Company had 1.2 GW of projects in various stages of development as of
Balance Sheet and Liquidity
Use of Non-IFRS Measures
To provide investors with additional information regarding the Company’s financial results, the Company has disclosed Adjusted EBITDA and annualized Adjusted EBITDA return on equity ratio, 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.
Annualized Adjusted EBITDA return on equity ratio is Adjusted EBITDA of the applicable quarter multiplied by four, and divided by total equity as of the applicable quarter end.
The use of Adjusted EBITDA and annualized Adjusted EBITDA return on equity ratio 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. In addition, the annualized Adjusted EBITDA return on equity ratio does not take into account effects of seasonality from quarter to quarter. Because of these and other limitations, you should consider Adjusted EBITDA and annualized Adjusted EBITDA return on equity 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:
|Three months ended June 30,|
|US$ in Thousands|
|(Loss) profit for the period/year||(1,379||)||8,831|
|Income tax expense||2,654||(2,597||)|
|Depreciation of property, plant and equipment||3,450||2,621|
|Share-based payment charged into profit or loss||294||285|
|Fair value changes of financial liabilities-FVTPL||1,368||585|
|Loss from hedge ineffectiveness on cash flow hedges||652||-|
|Reversal of tax provision||-||(6,025||)|
The following table presents a reconciliation of annualized Adjusted EBITDA return on equity to annualized profit (loss) return on equity for the period, the most directly comparable IFRS measure, for each of the periods indicated. Annualized profit (loss) return on equity is profit (loss) return of the applicable quarter multiplied by four, and divided by total equity as of the applicable quarter end.
|Three months ended June 30,|
|Annualised net (loss) profit return on equity||-4.6||%||28.3||%|
|Income tax expense||8.8||%||-8.3||%|
|Depreciation of property, plant and equipment||11.4||%||8.4||%|
|Share-based payment charged into profit or loss||1.0||%||0.9||%|
|Fair value changes of financial liabilities-FVTPL||4.5||%||1.9||%|
|Loss from hedge ineffectiveness on cash flow hedges||2.2||%||-|
|Reversal of tax provision||-||-19.3||%|
|Annualised Adjusted EBITDA return on equity||28.4||%||14.4||%|
The Company does not consider historical Adjusted EBITDA or annualized Adjusted EBITDA return on equity ratio to be representative of future Adjusted EBITDA or annualized Adjusted EBITDA return on equity ratio, as the Company’s revenue model changed from primarily generating revenue from selling solar energy systems to primarily generating revenue from selling electricity in the fourth quarter of 2013 and the Company continues to shift its business towards IPP business. The Company believes that Adjusted EBITDA and annualized Adjusted EBITDA return on equity ratio are important measures for evaluating the results of its IPP business.
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.
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.
Sky Solar will hold a conference call on September 8, 2016 at 8:30 a.m. Eastern Time (8:30 p.m. Hong Kong Time) to discuss the Company’s second quarter 2016 results.
Dial-in details for the live conference call are as follows:
United States: +1-855-298-3404
Hong Kong: +852-5808-3202
A simultaneous live webcast will be available on the Investor Relations section of the Company's website at www.skysolargroup.com.
A telephone replay will be available approximately two hours after the call concludes through September 15, 2016. The dial-in details for the replay are as follows:
United States: +1-866-846-0868
Hong Kong: 800-966-697
1 Adjusted EBITDA and annualized Adjusted EBITDA return 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, impairment charges, fair value changes of financial liabilities, loss from hedge ineffectiveness on cash flow hedges and reversal of tax provision. Annualized Adjusted EBITDA return on equity ratio is Adjusted EBITDA of the applicable quarter multiplied by four, and divided by total equity as of the applicable quarter end. The Company urges you to study the reconciliations between IFRS net income and Adjusted EBITDA, and between annualized profit (loss) return on equity and annualized Adjusted EBITDA return on equity provided in this release.
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, North America and Africa. 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, 2016, the Company had developed 276 solar parks with an aggregate capacity of 259.1 MW and owned and operated 133.1 MW of solar parks.
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; potential expansion of the Company's business 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.
|Sky Solar Holdings Ltd.|
|Condensed Consolidated Statements of Operations|
|USD In Thousands, Except Per Share Amounts|
|Three Months||Six Months|
|Ended June 30||Ended June 30|
|Electricity generation income||15,639||11,158||25,577||16,282|
|Solar energy system and other sales||1,357||1,467||3,153||6,595|
|Cost of sales and services||(5,406||)||(4,273||)||(11,807||)||(7,344||)|
|Impairment loss on IPP solar parks||-||—||0||(42||)|
|Other operating income||119||75||2,042||117|
|Reversal of tax provision||—||6,025||—||6,025|
|Profit from operations||4,943||8,833||7,380||11,657|
|Other non-operating expenses||(2,239||)||(1,877||)||(3,802||)||(1,392||)|
|Profit before taxation||1,275||6,234||783||8,742|
|Income tax expense||(2,654||)||2,597||(2,985||)||2,675|
|(Loss) profit for the period||(1,379||)||8,831||(2,202||)||11,417|
|Other comprehensive income (loss) that may be subsequently reclassified to profit or loss:||-||-|
|Exchange differences on translation of financial statements of foreign operations||1,165||1,134||6,731||(10,835||)|
|Total comprehensive income (loss) for the year||(214||)||9,965||4,529||582|
|(Loss) profit for the year attributable to owners of the Company||(1,408||)||8,831||(2,227||)||11,417|
|Gains for the year attributable to non-controlling interests||29||—||25||—|
|Total comprehensive income (loss) attributable to:||-|
|Owners of the Company||(502||)||9,965||4,175||582|
|(Loss) earning per share — Basic||(0.004||)||0.02||(0.006||)||0.03|
|(Loss) earning per share — Diluted||(0.004||)||0.02||(0.006||)||0.03|
|(Loss) earning per ADS — Basic||(0.028||)||0.18||(0.045||)||0.24|
|(Loss) earning per ADS — Diluted||(0.028||)||0.18||(0.045||)||0.24|
|Sky Solar Holdings Ltd.|
|Condensed Consolidated Balance Sheets|
|USD In Thousands, Except Per Share Amounts|
|June 30, 2016||December 31, 2015|
|Bank balances and cash||36,987||26,272|
|Amounts due from related parties||12,918||14,794|
|Trade and other receivables||27,244||31,052|
|IPP solar parks||323,206||259,423|
|Amounts due from related parties||3,594||2,984|
|Other non-current assets||18,439||17,701|
|Trade and other payables||52,764||47,912|
|Amount due to related parties||7,691||7,606|
|Other non-current liabilities||103,989||89,480|
|Total assets less total liabilities||120,706||112,719|
|Equity attributable to owners of the Company||117,497||112,851|
|Total liabilities and equity||433,387||361,080|
For investor and media inquiries, please contact: Company: IR@skysolarholding.com Investor Relations:
ICR, LLC Vera Tang(646) 277-1215 Vera.firstname.lastname@example.org