(PRC, Hong Kong, 30 March 2014) United Photovoltaics Group Limited (“United PV” or “the Company,” stock code: 00686.HK, whose largest shareholder is China Merchants New Energy Group “CMNE”), a leading solar power plant investor and operator in China, today announced its annual results for the year ended 31 December 2013 (“the year under review”).
During the year under review, the Group recognized a total revenue of approximately HK$338 million (2012: HK$223 million), representing an increase of 52% as compared to that of the year ended 31 December 2012. The turnover included the revenue from sales of electricity of approximately HK$40 million (2012: Nil) and sales of solar cells of approximately HK$298 million (2012: HK$213 million).
The increase in revenue was mainly due to (i) the acquisition of China Solar Power Group Limited (‘‘CSPG’’) which kicked off the Group’s expansion into downstream business and therefore diversified the Group’s revenue base with sales of electricity generated by the solar power plants; (ii) increase in the overseas sales of polysilicon solar cells; and (iii) the appreciation of RMB during the year.
However, as a result of the low utilization rate of the production facilities, as well as the depreciation charge of solar power plants, the Group recorded a gross loss of approximately HK$74 million for the year ended 31 December 2013 (Gross Loss in 2012: HK$67 million). Further undermined by HK$1,205 million of immediate impairment of goodwill, HK$819 million of the impairment of concession right, as well as HK$174 of the finance costs, etc., the loss attributable to the owners of the Company amounted to approximately HK$2,305 million (Net Loss in 2012: HK$815 million).
Investment and Operation of Solar Power Plants
There is an increasing demand for renewable energy along with the government’s urge to boost sustainable economic development and environmental improvement. National Energy Bureau of China has lifted its installation target for solar PV plants several times and now expects 35GW of solar power plants to be installed by 2015. Foreseeing the great market potential of solar energy as fueled by strong government support, the Group completed the acquisition of a 92.17% equity interest in CSPG in June 2013 with a view to tapping into the downstream solar power plant business. Since then, the Group has been primarily engaged in the investment and operation of solar power plants.
The Group boasted a profile of four solar power plants in operation incorporated in the financial statement, with an aggregate installed capacity of approximately 132.9MW as of 31 December 2013. In June 2013, the Group achieved grid-connection for a 100MW solar power plant in Gansu Province, as well as for a 10.8MW PV demonstration project in Fujian Province. In September 2013, a 20MW solar power plant in Qinghai Province was connected to the grid successfully. The 2.1MW roof-top PV demonstration project in Shenzhen has been connected to the grid and started running since October 2012.
On 27 December 2013, the Group completed the acquisition of 50% equity interest in Fengxian Huize Photovoltaic Energy Limited. It is primarily engaged in operating roof-top solar power projects and ecological agriculture business in Xuzhou City, Jiangsu Province, with an aggregate installed capacity of approximately 23.8MW. Upon the completion of the acquisition, the financial statement of the acquired company, which is an associate company thereby, will be consolidated into the Group’s books.
In December 2013, the Group entered into sale and purchase agreements with Photovoltaic Green Ecosystem Organization (“PGO”) members -- Forty-eighth Research Institute of China Electronics Technology Group Corp and GUODIAN Inner Mongolia New Energy Investment Ltd -- to conditionally acquire equities in their 195MW solar power plants projects in Inner Mongolia, marking a milestone step in advocating the efficient cooperation model. Initiated by the Group’s largest shareholder -- China Merchants New Energy Group Limited, PGO was established in August 2013. Other members of PGO are GD Solar Co., Ltd., NARI Technology Development Co., Ltd., GUODIAN Inner Mongolia New Energy Investment Co., Ltd., Poly Solar Technologies (Beijing) Co., Ltd. and Forty-eighth Research Institute of China Electronics Technology Group Corp. In PGO, based on the principles of mutual benefit, complementary advantages and comprehensive cooperation, all cooperating parties share the objective to promote the healthy and sustainable development of solar power industry, and join hands in propelling photovoltaic power plant projects.
Manufacturing and Sales of Solar Cells
The Group serves as a supplier of polysilicon solar cells to customers worldwide. Solar cells were sold to overseas markets at a higher selling price than those to domestic markets. Coupled with positive currency impact from Renminbi appreciation, revenue generated by sales of solar cells and modules registered a 40% increase to HK$298 million. Although the Group spared no efforts to reduce manufacturing costs, the business was still making losses due to the limited factory utilization.
Mr. Alan LI, Chairman of the Board and CEO of United PV, said: “Although the Company recorded a substantial loss in 2013 due to the fair value adjustments and the fact that recent acquisitions have not yet contributed to the revenue, we are expecting a significant improvement in 2014. The Group completed the acquisitions of two Inner Mongolia-based grid-connected solar power plants with an aggregate installed capacity of approximately 90MW from Guodian Chahaeryouyiqianqi Solar Power Company Limited and Guodian Wulatehouqi Solar Power Company Limited in 2014. Upon completion of the acquisition of the 105MW solar power plants in Inner Mongolia, the Group will own thirteen solar power plants with an aggregate installed capacity of approximately 531.7MW. We are determined to further enrich high quality grid-connected PV plants pipeline and strengthen the Group’s leading position in China’s solar power plant marketplace.”
“Looking ahead, China’s solar power plant market has been fueled by strong government support and the solar installations nationwide are expected to reach 14GW in 2014. Uncertainties in the global economy as well as the increasing competition, however, will continue to raise challenges to the industry players, especially in terms of obtaining necessary funding and source of high quality projects. With endeavors to explore a number of alternative financing approaches, including finance lease, project financing and internet funding, the Group will further strengthen its cooperation with China Development Bank, PGO, Yingli Green Energy Holding Company Limited, CNBM International Corporation, Huawei Technologies Company Limited and other major strategic partners for a greater presence in the solar power market.”
“Leveraging on our solid shareholder background and the joint efforts of the management and staff, we are committed to maintaining our focus on the operation of solar power plants and will seize appropriate opportunities arising at home and abroad to further expand our solar power plants business.” Mr. Li concluded.
