Press Release: Sky Solar Holdings, Ltd. Reports Unaudited Financial Results for First Half of Fiscal Year 2019
Sky Solar Holdings, Ltd. Reports Unaudited Financial Results for First Half of Fiscal Year 2019
HONG KONG, Dec. 11, 2019 (GLOBE NEWSWIRE) -- Sky Solar Holdings, Ltd. (NASDAQ: SKYS) ("Sky Solar" or "the Company"), a global developer, owner and operator of solar parks, today announced its financial results for and as of the first six months ended June 30, 2019.
First Half 2019 Highlights
-- Revenue of $25.9 million, compared to $33.2 million in the first half of
2018
-- Electricity revenue of $24.3 million, compared to $31.9 million in the
first half of 2018
-- Adjusted EBITDA of $18.6 million, compared to $34.2 million in the first
half of 2018
-- 117.1 MW of IPP assets in operation as of June 30, 2019, compared to
211.0 MW as of December 31, 2018
-- 16.9MW of projects under construction as of June 30, 2019.
Business Updates
During the first half of 2019, the Company completed multiple strategic developments, including:
-- Sold rights of a 24.5 MW project in Japan for $91.0 million, and
-- 2.2 MW of projects connected in Japan.
On January 24, 2019, one of Sky Solar's lenders, Hudson Solar Cayman, LP ("Hudson"), appropriated the shares of Energy Capital Investment S.à.r.l. ("ECI")(1) and, as a result, took control of ECI, Renewable Capital Investment 2 S.L.("RCI 2") and Sky Solar's five consolidated Uruguayan special purpose vehicle entities (the "Former Uruguay Subsidiaries(2) "), despite the Company's strong objection.
In February 2019, Hudson filed an action against the Company in the Supreme Court of the State of New York (the "Court"), seeking summary judgment in lieu of a complaint to, among other things, accelerate amounts allegedly due by ECI under Hudson's note purchase agreement and enforce certain guaranties related to the note purchase agreement against the Company. Sky Solar opposed Hudson's lawsuit, strongly denied all relevant claims alleged by Hudson and defended itself vigorously.
Major events occurred subsequent to the first half
of 2019:
In October 2019, Sky Solar arranged to change its
American Depositary Share ("ADS") to its ordinary
share ("Ordinary Share") ratio from one (1) ADS representing
eight (8) Ordinary Shares (the "ADS Ratio Change")
to one (1) ADS representing twenty (20) Ordinary Shares.
The ADS Ratio Change became effective on November
8, 2019 (the "Effective Date").
In November 2019, Sky Solar and its affiliates entered
into a settlement agreement with Hudson and its affiliates
in connection with the lawsuit filed by Hudson against
the Company earlier this year in the Court. The settlement
agreement resolved the disputes in connection with
Hudson's lawsuit and both parties also agreed to release
each other from liabilities in connection with Hudson's
lawsuit.
As a result of the settlement agreement, on November
22, 2019, the Court ordered that Hudson's motion for
summary judgment is denied as moot in light of the
stipulation of discontinuance without prejudice filed
jointly by Hudson and Sky Solar on November 14, 2019.
As a part of the settlement agreement, the Company
anticipates that it will be compensated by Hudson
for, among other assets, the Former Uruguay Subsidiaries
based on the mutually agreed valuation.
The settlement agreement remains subject to Hudson's
and the Company's entering into further definitive
documentation to close the transactions agreed to
in the settlement agreement.
First Half 2019 Financial Results
Revenue was $25.9 million in the first half of 2019, compared to $33.2 million in the same period of 2018.
Electricity sales were $24.3 million in the first half of 2019, compared to $31.5 million in the same period of 2018. The period-over-period decrease in electricity sales was primarily due to the removal of solar parks with 71.7 MW of production capacity in Uruguay because the Former Uruguay Subsidiaries which held these solar parks are no longer consolidated into the Company's financial statement.
Systems and other sales were $1.6 million in the first half of 2019, compared to $1.7 million in the same period of 2018. The systems and other sales maintained almost at the same level by the O&M service in Europe and North America both in the first half of 2018 and 2019.
The following table shows the Company's sequential and period-over-period change in revenue for each category, geographic region and period indicated.
First First Second
half half half
2019 Period-To-Period 2018 Sequential 2018
Amount Change Amount Change Amount
(US$ in thousands, except percentages)
Asia 19,866 (7.5) % 21,472 0.9 % 19,697
IPP 19,468 (8.9) % 21,364 (0.6) % 19,590
System
sales 398 268.5 % 108 272.0 % 107
Europe 3,245 (13.0) % 3,729 0.5 % 3,228
IPP 2,139 (10.0) % 2,376 4.0 % 2,056
System
sales 1,106 (18.3) % 1,353 (5.6) % 1,172
South - (100.0) % 5,429 (100.0) % 5,839
IPP - (100.0) % 5,429 (100.0) % 5,658
System
sales - (100.0) % - (100.0) % 181
North
America 2,778 8.1 % 2,570 2.7 % 2,705
IPP 2,714 17.3 % 2,313 2.3 % 2,652
System
sales 64 (75.1) % 257 20.8 % 53
IPP 24,321 (22.7) % 31,482 (18.8) % 29,956
System
sales 1,568 (8.7) % 1,718 3.6 % 1,513
Total 25,889 (22.0) % 33,200 (17.7) % 31,469
Cost of sales and services was $12.9 million in the first half of 2019, compared to $15.0 million in the same period in 2018. The decrease was mainly a result of the decrease in operating assets capacity in the first half of 2019.
Gross profit was $13.0 million in the first half of 2019, compared to $18.2 million in the same period in 2018. Gross margin of 50.1% in the first half of 2019 was down from 54.9% in the same period in 2018.
Selling, general and administrative expenses were $12.2 million in the first half of 2019, largely flat compared to the same period in 2018.
Other operating income was $45.3 million in the first half of 2019, up from $18.4 million in the same period in 2018 due to the disposal of 13 IPP solar parks in Japan.
Loss on disposal of interest in subsidiaries was $36.0 million in the first half of 2019, compared to nil in the same period in 2018. The loss was mainly attributed to the removal of ECI and RCI 2 and the Former Uruguay Subsidiaries during the first half of 2019, which, as discussed above, Hudson appropriated by unilaterally enforcing its share pledge agreement under the note purchase agreement despite the Company's objection. Therefore, no consideration was recognized for the first half of 2019 according to the principle of prudence in accounting. As a part of the settlement agreement, as discussed above, the Company will be compensated by Hudson for the Former Uruguay Subsidiaries based on the mutually agreed valuation.
Impairment loss on IPP was $0.04 million in the first half of 2019, compared to nil in the same period in 2018. The loss was due to cancellation of projects in Japan.
Operating profit was $10.3 million in the first half of 2019, compared to $24.4 million in the same period in 2018.
Investment gain was $0.6 million in the first half of 2019, compared to $0.1 million in the same period in 2018. The increase was mainly due to the change of the investment gain from associates.
Financing costs were $7.3 million in the first half of 2019, compared to $8.5 million in the same period in 2018. The decrease in financing costs was mainly due to the removal of solar parks of the Former Uruguay Subsidiaries.
Other non-operating income was $0.2 million in the first half of 2019, compared to $1.9 million in the same period in 2018, primarily due to a government grant in Canada in the same period in 2018.
Income tax expense was $17.5 million in the first half of 2019, compared to $9.7 million in the same period of 2018. The increase in tax expense was attributable to the disposal of IPP solar parks in Japan in the first half of 2019.
Net loss was $13.9 million in the first half of 2019, compared to net income of $8.2 million in the same period in 2018.
Basic and diluted loss per share was $0.033 in the first half of 2019, compared to basic and diluted income per share of $0.019 in the same period in 2018.
Basic and diluted loss per ADS was $0.26 in the first half of 2019, compared to basic and diluted income per ADS of $0.16 in the same period in 2018.
Adjusted EBITDA was $18.6 million in the first half of 2019, compared to $34.2 million in the same period in 2018, mostly due to the increasing net loss.
Pipeline
As of June 30, 2019, the Company owned and operated 117.1 MW of IPP assets, compared to 211.0 MW as of December 31, 2018. This decrease reflects the removal of solar parks of the Former Uruguay Subsidiaries and the disposal of 13 IPP solar parks in Japan.
The Company had 16.9 MW of projects under construction as of June 30, 2019, comprised of 10.9 MW of projects in Japan and a 6.0 MW project in Chile. This compares to 5.4 MW under construction as of December 31, 2018. Our total pipeline stands at 374.4 MW as of June 30, 2019, which includes shovel ready, development, advanced and qualified projects in Canada, U.S., Chile and Japan.
Balance Sheet and Liquidity
(MORE TO FOLLOW) Dow Jones Newswires
December 11, 2019 10:05 ET (15:05 GMT)