UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
(Amendment No. 1)
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report: February 13, 2015
(Date of earliest event reported: December 1, 2014)
SOLAR POWER, INC.
(Exact name of registrant as specified in its charter)
California |
000-50142 |
20- 4956638 |
3400 Douglas Boulevard, Suite 285
Roseville, California 95661-3875
(Address and telephone number of principal executive offices) (Zip Code)
(916) 770-8100
(Registrant's telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
[ ] |
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
[ ] |
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
[ ] |
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
[ ] |
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.01 Completion of Acquisition or Disposition of Assets.
This Current Report on Form 8-K/A (the “Form 8-K/A”) amends and supplements the Current Report on Form 8-K of Solar Power, Inc. (the “Company”) filed with the Securities and Exchange Commission (“SEC”) on December 5, 2014 (the “Original Form 8-K”) disclosing, among other things, the Company’s acquisition of all the outstanding capital stock of Sinsin Renewable Investment Limited on December 1, 2014. This Form 8-K/A includes the historical financial information of Sinsin Renewable Investment Limited and the pro forma financial information required by Item 9.01 of Form 8-K.
Item 9.01 Unregistered Sales of Equity Securities.
(a) |
Financial Statements of Business Acquired. |
The audited consolidated balance sheet of Sinsin Renewable Investment Limited and its subsidiaries as of December 31, 2013, and the related consolidated statement of profit or loss and other comprehensive income, changes in equity, and cash flows for the period from May 8, 2013 (date of incorporation) to December 31, 2013, including the notes thereto, and the related report of KPMG Huazhen (SGP) (“KPMG Huazhen”), independent accounting firm, are attached as Exhibit 99.1 to this Form 8-K/A.
The audited balance sheet of Photovoltaika Parka Verioa I Anonymi Etaireia as of December 31, 2013 and 2012, and the related statements of profit or loss and other comprehensive income, changes in equity, and cash flows for the year ended December 31, 2013 and the period from February 15, 2012 (date of incorporation) to December 31, 2012, including the notes thereto, and the related report of KPMG Huazhen are attached as Exhibit 99.2 to this Form 8-K/A.
The audited balance sheet of Jasper PV Makedonia Production of Energiaki S.A. as of December 31, 2013 and 2012, and the related statements of profit or loss and other comprehensive income, changes in equity, and cash flows for the year ended December 31, 2013 and the period from April 10, 2012 (date of incorporation) to December 31, 2012, including the notes thereto, and the related report of KPMG Huazhen are attached as Exhibit 99.3 to this Form 8-K/A.
The audited balance sheet of Astraios Energeiaki Photovoltaic Projects A.E. as of December 31, 2013 and 2012, and the related statements of profit or loss and other comprehensive income, changes in equity, and cash flows for the years then ended, including the notes thereto, and the related report of KPMG Huazhen are attached as Exhibit 99.4 to this Form 8-K/A.
The audited balance sheet of Orion Energeiaki Anonimi Etaireia as of December 31, 2013 and 2012, and the related statements of profit or loss and other comprehensive income, changes in equity, and cash flows for the years then ended, including the notes thereto, and the related report of KPMG Huazhen are attached as Exhibit 99.5 to this Form 8-K/A.
The unaudited interim condensed consolidated balance sheet of Sinsin Renewable Investment Limited as of June 30, 2014, and the related interim condensed consolidated statements of profit or loss and other comprehensive income, changes in equity, and cash flows for the six-month period ended June 30, 2014 and the period from May 8, 2013 (date of incorporation) to June 30, 2013, including the notes thereto, are attached as Exhibit 99.6 to this Form 8-K/A.
(b) |
Pro Forma Financial Information. |
The unaudited pro forma interim condensed combined balance sheet as of September 30, 2014, and the pro forma interim condensed combined statement of operations for the nine-month period ended September 30, 2014, and the accompanying notes, are attached as Exhibit 99.7 to this Form 8-K/A.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
Exhibit No. | Exhibit Description | |
99.1 |
Audited consolidated balance sheet of Sinsin Renewable Investment Limited and its subsidiaries as of December 31, 2013, and the related consolidated statement of profit or loss and other comprehensive income, changes in equity, and cash flows for the period from May 8, 2013 (date of incorporation) to December 31, 2013, including the notes thereto. |
99.2 |
Audited balance sheet of Photovoltaika Parka Verioa I Anonymi Etaireia as of December 31, 2013 and 2012, and the related statements of profit or loss and other comprehensive income, changes in equity, and cash flows for the year ended December 31, 2013 and the period from February 15, 2012 (date of incorporation) to December 31, 2012, including the notes thereto. |
99.3 |
Audited balance sheet of Jasper PV Makedonia Production of Energiaki S.A. as of December 31, 2013 and 2012, and the related statements of profit or loss and other comprehensive income, changes in equity, and cash flows for the year ended December 31, 2013 and the period from April 10, 2012 (date of incorporation) to December 31, 2012, including the notes thereto. |
99.4 |
Audited balance sheet of Astraios Energeiaki Photovoltaic Projects A.E. as of December 31, 2013 and 2012, and the related statements of profit or loss and other comprehensive income, changes in equity, and cash flows for the years then ended, including the notes thereto. |
99.5 |
Audited balance sheet of Orion Energeiaki Anonimi Etaireia as of December 31, 2013 and 2012, and the related statements of profit or loss and other comprehensive income, changes in equity, and cash flows for the years then ended, including the notes thereto. |
99.6 |
Unaudited condensed consolidated balance sheet of Sinsin Renewable Investment Limited as of June 30, 2014, the related condensed consolidated statements of profit or loss and other comprehensive income, changes in equity, and cash flows for the six-month period ended June 30, 2014 and the period from May 8, 2013 (date of incorporation) to June 30, 2013, including the notes thereto. |
99.7 |
Unaudited pro forma interim condensed combined balance sheet as of September 30, 2014, and the pro forma interim condensed combined statement of operations for the nine-month period ended September 30, 2014, and the accompanying notes. |
Forward-Looking Statements
This Form 8-K/A contains forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995, particularly with respect to the Company’s acquisition of all the outstanding capital stock of Sinsin. Forward-looking statements describe future expectations, plans, results or strategies and can often be identified by the use of terminology such as “may,” “will,” “estimate,” “project,” “assume,” “intend,” “continue,” “believe,” “expect,” “anticipate,” “should,” “could,” “potential,” “opportunity,” or similar terminology. These statements are based upon management’s current expectations, assumptions and estimates, including the estimates and assumptions related to the preparation of the pro forma financial information contained herein, and are not guarantees of timing, future results or performance. Actual results may differ materially from those contemplated in the forward-looking statements due to a variety of risks and uncertainties and other factors.
Additional information regarding risks and uncertainties and other factors that could cause actual results to differ materially from those contemplated in forward-looking statements is included from time to time in the Company’s filings with the SEC, including the Company’s most recent Quarterly Report on Form 10-Q filed with the SEC on November 13, 2014 (including under the headings “Forward Looking Statements” and “Risk Factors”) and other reports filed with the SEC. Forward-looking statements speak only as of the date they are made and, except for the Company's ongoing obligations under the U.S. federal securities laws, the Company undertakes no obligation to publicly update any forward-looking statements whether as a result of new information, future events or otherwise.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
SOLAR POWER, INC. a California Corporation | |
Dated: February 13, 2015 |
/s/ Amy Jing Liu Name: Amy Jing Liu Title: Chief Financial Officer |
5
Exhibit 99.1
SINSIN RENEWABLE INVESTMENT LIMITED
CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2013
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS | |
|
|
Report of Independent Auditors |
2 |
Consolidated Statement of Profit or Loss and Other Comprehensive Income |
3 |
Consolidated Balance Sheet |
4 |
Consolidated Statement of Changes in Equity |
5 |
Consolidated Statement of Cash Flows |
6 |
Notes to the Consolidated Financial Statements |
7 |
Independent Auditors’ Report
The Board of Directors
Sinsin Renewable Investment Limited:
We have audited the accompanying consolidated balance sheet of Sinsin Renewable Investment Limited and its subsidiaries (the “Company”) as of December 31, 2013, and the related consolidated statements of profit or loss and other comprehensive income, changes in equity, and cash flows for the period from May 8, 2013 (date of incorporation) to December 31, 2013. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company and its subsidiaries as of December 31, 2013, and the results of their operations and their cash flows for the period from May 8, 2013 (date of incorporation) to December 31, 2013, in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board.
/s/ KPMG Huazhen (SGP)
Shanghai, China
February 13, 2015
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
FOR THE PERIOD FROM MAY 8, 2013 (DATE OF INCORPORATION) TO DECEMBER 31, 2013
From May 8 to December 31 |
||||
In Euro |
2013 |
|||
Revenues (note 11) |
694,176 | |||
Cost of sales |
(637,225 | ) | ||
Gross profit |
56,951 | |||
Other income |
33,457 | |||
Administrative expenses |
(560,434 | ) | ||
Impairment loss on property, plant and equipment (note 7) |
(3,529,699 | ) | ||
Other expenses |
(63,135 | ) | ||
Operating loss |
(4,062,860 | ) | ||
Finance costs |
(1,868,298 | ) | ||
Loss before income taxes |
(5,931,158 | ) | ||
Income taxes (note 8) |
(15,761 | ) | ||
Loss for the period |
(5,946,919 | ) | ||
Other comprehensive income for the period |
- | |||
Total comprehensive income for the period |
(5,946,919 | ) |
The accompanying notes are an integral part of these consolidated financial statements.
CONSOLIDATED BALANCE SHEET AS OF DECEMBER 31, 2013
In Euro |
As of December 31, |
|||
2013 |
||||
ASSETS: |
||||
Property, plant and equipment (note 7) |
54,832,707 | |||
Goodwill |
7,312,728 | |||
Other non-current assets |
8,805 | |||
Deferred tax assets (note 8) |
523,008 | |||
TOTAL NON-CURRENT ASSETS |
62,677,248 | |||
CURRENT ASSETS: |
||||
Trade and other receivables (note 6) |
5,346,987 | |||
Cash and cash equivalents (note 5) |
2,674,375 | |||
TOTAL CURRENT ASSETS |
8,021,362 | |||
TOTAL ASSETS |
70,698,610 | |||
LIABILITIES AND EQUITY: |
||||
CURRENT LIABILITIES: |
||||
Income tax payables |
710,345 | |||
Borrowings (note 9) |
64,989,000 | |||
Trade and other payables (note 10) |
6,805,009 | |||
TOTAL CURRENT LIABILITIES |
72,504,354 | |||
NON-CURRENT LIABILITIES: |
||||
Deferred tax liabilities |
4,038,174 | |||
Other non-current liabilities |
3,001 | |||
TOTAL NON-CURRENT LIABILITIES |
4,041,175 | |||
TOTAL LIABILITIES |
76,545,529 | |||
EQUITY: |
||||
Share capital (note 14) |
100,000 | |||
Accumulated losses |
(5,946,919 | ) | ||
TOTAL EQUITY |
(5,846,919 | ) | ||
TOTAL LIABILITIES AND EQUITY |
70,698,610 |
The accompanying notes are an integral part of these consolidated financial statements.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE PERIOD FROM MAY 8, 2013 (DATE OF INCORPORATION) TO DECEMBER 31, 2013
In Euro |
Share Capital |
Accumulated Losses |
Total |
|||||||||
|
|
|
|
|||||||||
Balance at May 8, 2013 (date of incorporation) |
- | - | - | |||||||||
|
|
|
|
|||||||||
Changes in equity for the period |
||||||||||||
Loss for the period |
- | (5,946,919 | ) | (5,946,919 | ) | |||||||
Other comprehensive income |
- | - | - | |||||||||
Total comprehensive income |
- | (5,946,919 | ) | (5,946,919 | ) | |||||||
Issuance of shares |
100,000 | - | 100,000 | |||||||||
|
||||||||||||
Balance at December 31, 2013 |
100,000 | (5,946,919 | ) | (5,846,919 | ) |
The accompanying notes are an integral part of these consolidated financial statements.
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE PERIOD FROM MAY 8, 2013 (DATE OF INCORPORATION) TO DECEMBER 31, 2013
From May 8, 2013 to December 31, 2013 |
||||
In Euro |
||||
Cash flows from operating activities |
||||
Loss before taxation |
(5,931,158 | ) | ||
Adjustments for: |
||||
Depreciation |
228,476 | |||
Finance costs |
1,868,298 | |||
Impairment loss of property plant and equipment |
3,529,699 | |||
Changes in: |
||||
Trade and other receivables |
(620,846 | ) | ||
Trade and other payables |
(392,404 | ) | ||
Cash used in operating activities |
(1,317,935 | ) | ||
Tax paid |
- | |||
Net cash used in operating activities |
(1,317,935 | ) | ||
Cash flows from investing activities |
||||
Purchase of property, plant and equipment |
(15,840,901 | ) | ||
Payment for acquisition of subsidiaries, net of cash acquired |
(26,366,343 | ) | ||
Net cash used in investing activities |
(42,207,244 | ) | ||
Cash flows from financing activities |
||||
Issuance of shares |
100,000 | |||
Proceeds from borrowings |
64,989,000 | |||
Payments of borrowings |
(18,881,191 | ) | ||
Interest paid |
(8,255 | ) | ||
Net cash from financing activities |
46,199,554 | |||
Net increase in cash and cash equivalents |
2,674,375 | |||
Cash and cash equivalents at beginning of the period |
- | |||
Cash and cash equivalents at end of the period |
2,674,375 |
The accompanying notes are an integral part of these consolidated financial statements.
NOTE 1— REPORTING ENTITY
Sinsin Renewable Investment Limited (the “Company”) was incorporated on May 8, 2013. The address of its registered office is Strand Towers, Floor 2, 36, The Strand, Sliema SLM 1022, Malta. At December 31, 2013, the Company was a wholly-owned subsidiary of Sinsin Euro Solar Asset Limited Partnership (“Sinsin Euro”), which was a subsidiary of Xinxing Pipes Ductile Iron Pipes Co., Ltd (“Xinxing Pipes”). On December 1, 2014, 100% of the Company’s shares were purchased by Solar Power, Inc. (“SPI”), an entity whose common stock is traded on the Over the Counter Bulletin Board in the United States.
These consolidated financial statements comprise the Company and its subsidiaries (collectively the “Group”). The Group’s principal activities are the development, investment and operation of Photovoltaic parks through four indirectly wholly-owned subsidiaries in Greece (the “Operating Subsidiaries”). These Operating Subsidiaries were acquired by the Company during the reporting period (see note 4 and 7).
These consolidated financial statements were authorized for issue by the Board of Directors of the Company on February 13, 2015.
NOTE 2— BASIS OF PREPARATION OF FINANCIAL STATEMENTS
The consolidated financial statements of the Company have been prepared in accordance with all applicable International Financial Reporting Standards (“IFRSs”), which collective term includes all applicable individual International Financial Reporting Standards, International Accounting Standards (“IASs”) and Interpretations issued by the International Accounting Standards Board (“IASB”).
The accounting policies set out in note 3 have been applied in preparing the consolidated financial statements for the period from the date of the Company’s incorporation of May 8, 2013 to December 31, 2013.
The consolidated financial statements have been prepared under the historical cost convention.
The preparation of consolidated financial statements in conformity with IFRSs requires the use of certain critical accounting estimates. It also requires management to exercise its judgment in the process of applying the Company’s accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in note 18. Actual results could differ from those estimates and such differences could affect the results of operations reported in future periods.
The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Group incurred a loss of Euros 5,946,919 during the period. As at December 31, 2013, the Group had net current liabilities and net liabilities of Euros 64,482,992 and Euros 5,846,919 respectively.
In view of these circumstances, the directors have given careful consideration to the future liquidity and performance of the Group and its available sources of finance in assessing whether the Group will have sufficient financial resources to continue as a going concern.
The directors believe the Group will generate sufficient cash flow and continue as a going concern on the basis that SPI, the Group’s parent company since December 1, 2014, has undertaken to provide financial support to the Group to the extent necessarily enabling it to meet its liabilities as and when they fall due prior to December 31, 2015. Accordingly, the consolidated financial statements have been prepared on a going concern basis.
NOTE 3—SIGNIFICANT ACCOUNTING POLICIES
The principal accounting policies applied in the preparation of these consolidated financial statements are set out below.
3.1 BASIS OF CONSOLIDATION
i. Business combinations
The Company accounts for business combinations using the acquisition method when control is transferred to the Company (see note 3.1 (ii)). The consideration transferred in the acquisition is measured at fair value, as are the identifiable net assets acquired. Any goodwill that arises is tested annually for impairment. Any gain on a bargain purchase is recognized in profit or loss immediately. Transaction costs are expensed as incurred, except if related to the issue of debt or equity securities.
The consideration transferred does not include amounts related to the settlement of pre-existing relationships. Such amounts are generally recognized in profit or loss.
Any contingent consideration is measured at fair value at the date of acquisition. If an obligation to pay contingent consideration that meets the definition of a financial instrument is classified as equity, then it is not remeasured and settlement is accounted for within equity. Otherwise, subsequent changes in the fair value of the contingent consideration are recognized in profit or loss.
ii. Subsidiaries
Subsidiaries are entities controlled by the Company. The Company controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. The financial statements of subsidiaries are included in the consolidated financial statements from the date on which control commences until the date on which control ceases.
iii. Non-controlling interests
Non-controlling interests (“NCI”) are measured at their proportionate share of the acquiree’s identifiable net assets at the date of acquisition.
Changes in the Company’s interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions.
iv. Loss of control
When the Company loses control over a subsidiary, it derecognizes the assets and liabilities of the subsidiary, and any related NCI and other components of equity. Any resulting gain or loss is recognized in profit or loss. Any interest retained in the former subsidiary is measured at fair value when control is lost.
v. Transactions eliminated on consolidation
Intra-group balances and transactions, and any unrealized income and expenses arising from intra-group transactions, are eliminated. Unrealized gains arising from transactions with equity-accounted investees are eliminated against the investment to the extent of the Company’s interest in the investee. Unrealized losses are eliminated in the same way as unrealized gains, but only to the extent that there is no evidence of impairment.
3.2 GOODWILL
Goodwill represents the excess of
(i) |
the aggregate of the fair value of the consideration transferred, the amount of any non-controlling interest in the acquire and the fair value of the Company’s previously held equity interest in the acquire; over |
(ii) |
the net fair value of the acquiree’s identifiable assets and liabilities measured as at the acquisition date. |
When (ii) is greater than (i), then this excess is recognized immediately in the profit or loss as a gain on a bargain purchase.
Goodwill is stated at cost less accumulated impairment losses. Goodwill arising on a business combination is allocated to each cash-generating unit, or groups of cash-generating units, that is expected to benefit from the synergies of the combination and is tested annually for impairment (see note 3.7).
On disposal of a cash-generating unit during the year, any attributable amount of purchased goodwill is included in the calculation of the profit or loss on disposal.
3.3 CASH AND CASH EQUIVALENTS
Cash and cash equivalents consist of cash on hand and cash at banks with maturities of three months or less from the acquisition date that are subject to an insignificant risk of changes in their fair value, and are used by the Group in the management of its short-term commitments.
3.4 TRADE AND OTHER RECEIVABLES
Trade and other receivables are initially recognized at fair value and thereafter stated at amortized cost using the effective interest method, less allowance for impairment of doubtful debts (see note 3.7(b)), except where the receivables are interest-free loans made to related parties without any fixed repayment terms or the effect of discounting would be immaterial. In such cases, the receivables are stated at cost less allowance for impairment of doubtful debts.
3.5 FOREIGN CURRENCY TRANSACTIONS
The Company’s consolidated financial statements are presented in Euros, which is also the functional currency of the Company and its subsidiaries.
Transactions denominated in foreign currencies are translated to the functional currency of the Company and subsidiaries at the foreign exchange rates ruling at the transaction dates. Monetary assets and liabilities denominated in foreign currencies are translated at the foreign exchange rates ruling at the balance sheet date. Exchange gains and losses are recognized in profit or loss.
3.6 PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are stated at historical cost less accumulated depreciation and impairment losses (note 3.7(a)).
Cost includes expenditure that is directly attributable to the acquisition of the items. Subsequent costs are included in the asset’s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the entity and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognized. All other repairs and maintenance are charged to the profit or loss as incurred. Subsequent costs are depreciated over the remaining useful life of the related asset.
Depreciation is calculated using the straight-line method to allocate the cost of the assets to their residual values over their estimated useful lives as follows:
Description |
Useful life (in years) |
|||
Photovoltaic park assets |
25 | |||
Fixtures and other equipment |
1 to 5 |
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each reporting date.
An item of property, plant and equipment and any significant part initially recognized is derecognized upon disposal or when no future economic benefits are expected from its use or disposal. Gains and losses on disposals are determined by comparing proceeds with carrying amount and are included in operating profit. Interest costs on borrowings specifically used to finance the construction of property, plant and equipment are capitalized during the construction period if recognition criteria are met.
3.7 IMPAIRMENT OF ASSETS
(a) Impairment of Property, Plant and Equipment
Property, plant and equipment are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognized for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. In assessing the value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflect current market assessments of the time value of money and the risks specific to the assets. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are independently identifiable cash flows (cash-generating units). Impairment loss is reversed if there has been a favourable change in the estimates used in determining the recoverable amount. A reversal in impairment loss is limited to the asset’s carrying amount that would have been determined had no impairment loss been recognized in prior years. Reversals of impairment losses are credited to profit or loss in the year in which the reversals are recognized.
(b) Impairment of Trade and Other Receivables
The Group assesses at the end of each reporting period whether there is objective evidence that trade and other receivable stated at amortized costs is impaired. Trade and other receivables is impaired and impairment losses are incurred only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the receivables (a ‘loss event’) and that loss event (or events) has an impact on the estimated future cash flows of the receivables that can be reliably estimated. The criteria that the Group uses to determine that there is objective evidence of an impairment loss include:
● |
significant financial difficulty of the debtor; |
● |
a breach of contract, such as a default or delinquency in interest or principal payments; |
● |
significant changes in the market, economic or legal environment that have an adverse effect on the debtor. |
For trade and other receivables, the impairment loss is measured as the difference between the receivables’ carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate, when the effect of discounting is material. The assessment is made collectively when the receivables share similar risk characteristics, such as similar past due status, and have not been individually assessed as impaired. The carrying amount of the receivables is reduced through the use of an allowance account when their recoverability are considered doubtful but not remote, and the amount of the loss is recognized in the profit and loss. When an amount of receivables is uncollectible, it is written off against the allowance account for receivables. Subsequent recoveries of amounts previously written off are credited to the profit or loss.
(c) Impairment of Goodwill
Goodwill impairment are undertaken annually or more frequently if events or changes in circumstances indicate a potential impairment. The carrying value of goodwill is compared to the recoverable amount, which is the higher of value in use and the fair value less costs to sell. Any impairment is recognized immediately as an expense and is not subsequently reversed.
3.8 TAXATION
The tax expense for the period comprises current and deferred tax. Tax is recognized in the profit or loss, except to the extent that it relates to items recognized in other comprehensive income or directly in equity. In this case, the tax is also recognized in other comprehensive income or directly in equity, respectively.
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date in Greece. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.
Deferred income tax is recognized, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. However, the deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantively enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realized or the deferred income tax liability is settled.
Deferred income tax assets are recognized only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilized.
Deferred income tax is provided on temporary differences arising on investments in subsidiaries, except where the timing of the reversal of the temporary difference is controlled by the Company and it is probable that the temporary difference will not reverse in the foreseeable future.
Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income taxes assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where there is an intention to settle the balances on a net basis.
3.9 TRADE AND OTHER PAYABLES
Trade and other payables are recognized initially at fair value and subsequently measured at amortized cost unless the effect of discounting would be immaterial, in which case they are stated at cost.
3.10 INTEREST-BEARING BORROWINGS
Interest-bearing borrowings are recognized initially at fair value less attributable transaction costs. Subsequent to initial recognition, interest-bearing borrowings are stated at amortized cost with any difference between the amount initially recognized and redemption value being recognized in the profit or loss over the period of the borrowings, together with any interest and fees payable, using the effective interest method.
3.11 PROVISION AND CONTINGENCIES
Provisions are recognized for other liabilities of uncertain timing or amount when the Group has a legal or constructive obligation arising as a result of a past event, it is probable that an outflow of economic benefits will be required to settle the obligation and a reliable estimate can be made. Where the time value of money is material, provisions are stated at the present value of the expenditure expected to settle the obligation.
Where it is not probable that an outflow of economic benefits will be required, or the amount cannot be estimated reliably, the obligation is disclosed as a contingent liability, unless the probability of outflow of economic benefits is remote. Possible obligations, whose existence will only be confirmed by the occurrence or non-occurrence of one or more future events are also disclosed as contingent liabilities unless the probability of outflow of economic benefits is remote.
3.12 REVENUE
Revenue is measured at the fair value of the consideration received or receivable. Provided it is probable that the economic benefits will flow to the Group and the revenue and costs, if applicable, can be measured reliably, revenue is recognized in profit or loss as follows.
(a) |
Sales of Electricity |
Revenue from the sales of electricity is recognized when electricity has been delivered on grid and is measured based on the tariff rates determined by the relevant local government authority.
3.13 RELATED PARTY
a) |
A person, or a close member of that person’s family, is related to the Group if that person: |
i) |
has control or joint control over the Group; |
ii) |
has significant influence over the Group; or |
iii) |
is a member of the key management personnel of the Group or the Group’s parent or ultimate controlling shareholders. |
b) |
An entity is related to the Group if any of the following conditions applies: |
i) |
The entity and the Group are members of the same group; |
ii) |
One entity is an associate or joint venture of the other entity (or an associate of joint venture of a member of a group of with the other entity is a member); |
iii) |
Both entities are joint ventures of the same third party; |
iv) |
One entity is a joint venture of a third entity and the other entity is an associate of the third entity; |
v) |
The entity is a post-employment benefit plan for the benefit of employees of the Group or an entity related to the Group; |
vi) |
The entity is controlled or jointly controlled by a person identified in (a); |
vii) |
A person identified in (a)(i) has significant influence over the entity or is a member of the key management personnel of the entity (or of a parent of the entity); |
Close members of the family of a person are those family members who may be expected to influence, or be influenced by, that person in their dealings with the entity.
NOTE 4—ACQUISITION OF SUBSIDIARIES
On October 2, 2013, the Company completed the acquisition of 100% equity interests in Jasper PV Makedonia Production of Energiaki S.A. (“Jasper”) at a cash consideration of Euros 4,341,480. Jasper was incorporated in Greece and owned and operated 2 photovoltaic parks in Greece as of the date of acquisition.
On November 28, 2013, the Company completed the acquisition of 100% equity interests in Veltimo Ltd. (“Veltimo”), a company incorporated in Cyprus, at a cash consideration of Euros 23,801,357. Prior to the date of acquisition, Veltimo owned and operated 5 photovoltaic parks in Greece through 2 wholly-owned subsidiaries incorporated in Greece, which are Astraios Energeiaki Photovoltaic Projects A.E. and Orion Energeiaki A.E.
These acquisitions enables the Group to achieve a reasonable size of portfolio of photovoltaic parks in Greece that could facilitate the Group building up its profile and reputation in this industry sector for further projects in photovoltaic parks business.
The following table summarizes the considerations paid and the fair value of assets acquired and liabilities assumed for each of the above acquisitions.
Fair value of net identifiable assets acquired as at the acquisition date |
||||||||||||
In ‘000 Euro |
Veltimo |
Jasper |
Total |
|||||||||
|
|
|
||||||||||
Property, plant and equipment |
34,020,707 | 6,287,259 | 40,307,966 | |||||||||
Cash and cash equivalents |
447,655 | 328,839 | 776,494 | |||||||||
Trade and other receivables |
3,955,598 | 779,068 | 4,734,666 | |||||||||
Deferred tax assets |
446,235 | 83,641 | 529,875 | |||||||||
Trade and other payables |
(1,212,589 | ) | (683,944 | ) | (1,896,533 | ) | ||||||
Income tax payables |
(572,997 | ) | (129,996 | ) | (702,993 | ) | ||||||
Borrowings |
(14,718,691 | ) | (4,162,500 | ) | (18,881,191 | ) | ||||||
Deferred tax liability |
(3,679,031 | ) | (359,145 | ) | (4,038,174 | ) | ||||||
|
||||||||||||
Total identifiable net assets |
18,686,887 | 2,143,222 | 20,830,109 | |||||||||
Goodwill |
5,114,470 | 2,198,258 | 7,312,728 | |||||||||
Cash considerations |
23,801,357 | 4,341,480 | 28,142,837 | |||||||||
Less: cash consideration made in 2014 |
(1,000,000 | ) | - | (1,000,000 | ) | |||||||
Less: cash acquired |
(447,655 | ) | (328,839 | ) | (776,494 | ) | ||||||
|
|
|||||||||||
Net cash outflow arising from the acquisitions in 2013 |
22,353,702 | 4,012,641 | 26,366,343 |
The goodwill is allocated to photovoltaic parks business, which is the sole operating segment of the Group. None of the goodwill is expected to be deductible for tax purpose.
Since the acquisition of Veltimo, Veltimo contributed revenue of Euros 300,531 and loss of Euros 132,117 to the Group’s results for the period ended December 31, 2013. Since the acquisition of Jasper, Jasper contributed revenue of Euros 204,923 and loss of Euros 57,023 to the Groups results for the period ended December 31, 2013. As both Veltimo and Jasper have only commenced sales operation since February 2013 and the Company was only incorporated in May 2013, the disclosure of the pro-forma consolidated revenue and consolidated profit or loss of Veltimo and Jasper had they been consolidated since the Company’s date of incorporation on May 8, 2013 is not presented as the directors consider that it does not provide meaningful information.
NOTE 5—CASH AND CASH EQUIVALENTS
As of December 31, |
||||
In Euro |
2013 |
|||
|
||||
Cash on hand |
1,290 | |||
Cash at banks |
2,673,085 | |||
Total |
2,674,375 |
NOTE 6—TRADE AND OTHER RECEIVABLES
As of December 31 |
||||
In Euro |
2013 |
|||
|
||||
Trade receivables |
4,290,937 | |||
Value added tax recoverable |
729,138 | |||
Prepayment and other receivables |
326,912 | |||
Total |
5,346,987 |
Trade receivable represent amount due from Lagie SA for the sales of electricity. Credit period of one month is normally granted to the customer. All trade receivables balances have been settled.
NOTE 7—PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are summarized as follows:
In Euro |
Photovoltaic parks’ assets |
Fixtures and equipment |
Construction in progress |
Total |
||||||||||||
|
|
|
|
|||||||||||||
|
|
|
|
|||||||||||||
Cost: |
||||||||||||||||
Balance at May 8, 2013 |
- | - | - | - | ||||||||||||
Acquisition of subsidiaries |
40,307,966 | - | - | 40,307,966 | ||||||||||||
Additions |
- | 62,474 | 18,220,442 | 18,282,916 | ||||||||||||
Transfer from Construction in progress |
18,220,442 | - | (18,220,442 | ) | - | |||||||||||
Balance at December 31, 2013 |
58,528,408 | 62,474 | - | 58,590,882 | ||||||||||||
|
||||||||||||||||
Accumulated depreciation and impairment losses: |
||||||||||||||||
Balance at May 8, 2013 |
- | - | - | - | ||||||||||||
Depreciation for the period |
(215,924 | ) | (12,552 | ) | - | (228,476 | ) | |||||||||
Impairment losses for the period |
(3,529,699 | ) |
- |
- |
(3,529,699 | ) | ||||||||||
Balance at December 31, 2013 |
(3,745,623 | ) | (12,552 | ) | - | (3,758,175 | ) | |||||||||
|
|
|||||||||||||||
Net book value |
||||||||||||||||
At December 31, 2013 |
54,782,785 | 49,922 | - | 54,832,707 |
Photovoltaic parks’ assets primarily included costs of acquiring permits and power purchase contracts with customers, construction fees of the park, costs of items installed in the park including solar panels, and other costs incurred that are directly attributable to getting the parks ready for its intended use of grid connection with customer for supply of electricity.
On August 9, 2013, the Group acquired 100% equity interest over Photovoltcia Parka Veroia I Malta Limited (“Veroia Malta”), a company incorporated in Malta, at a cash consideration of Euros 2,860,854. At the date of acquisition, Veroia Malta and its wholly-owned subsidiary, Photovoltacia Parka Veroia I A.E. (“Veroia Greece”) incorporated in Greece, did not carry out any business operation except that Veroia Greece owned a permit to construct a photovoltaic park and a power purchase contract with Lagie SA, the Group’s sole customer. This acquisition does not fall within business acquisition and has been accounted for as assets’ acquisition as certain significant inputs and process for the operation of a photovoltaic park did not exist at the date of acquisition.
Due to the excessive actual costs incurred for the construction of a Photovoltaic park as compared to other Photovoltaic parks with similar capacity and the reduction in tariff rate for the sales of electricity as pronounced by the Greek government in April 2014 (see note 20), the Group assessed the recoverable amount of that Photovoltaic park’s assets. Based on the assessment, the carrying value of such Photovoltaic park assets exceeds its recoverable amount as at December 31, 2013 and an impairment loss of Euro 3,529,699 was recognized. The recoverable amount is determined based on value-in-use calculations. These calculations use cash flow projections with the cash flows discounted using a discount rate of 10%. The discount rate used is pre-tax and reflected specific risks relating to the relevant cash-generating unit.
NOTE 8—TAXATION
(a) |
Taxation in the profit or loss represents: |
From May 8 to December 31, |
||||
In Euro |
2013 |
|||
Current tax |
(6,796 | ) | ||
Deferred tax – origination and reversal of temporary differences |
(8,965 | ) | ||
Tax credit |
(15,761 | ) |
Pursuant to the tax law in Malta, the statutory income tax rate applicable to the Company in 2013 was 35%.
Pursuant to the tax law in Greece, the statutory income tax rate applicable to the Operating Subsidiaries in 2013 was 26%.
(b) |
Reconciliation between tax expense and accounting loss at applicable tax rate: |
From May 8 to December 31, |
||||
In Euro |
2013 |
|||
|
|
|||
Loss before taxation |
(5,931,158 | ) | ||
National tax on loss before tax, calculated at the rates applicable to profit or loss in the countries concerned |
973,058 |
|||
Tax losses for which no deferred tax assets was recognized |
(657,737 | ) | ||
Deductible temporary differences not recognized |
||||
Non-deductible expenses |
(273,756 | ) | ||
Others |
(57,326 | ) | ||
Total |
(15,761 | ) |
No deferred tax assets were recognized in respect of i) tax losses of the Company, Veroia Malta and Veltimo and ii) all deductible temporary differences of Veroia Greece as the directors consider that no sufficient taxable profit would be available for these entities to utilize the tax benefits for these tax losses and deductible temporary difference in the foreseeable future.
(c) |
Deferred tax assets and liabilities recognized: |
The components of deferred tax assets recognized in the balance sheet and the movements during the period are as follows:
In Euro |
Property plant and equipment |
Special levy * |
Others |
Total |
||||||||||||
|
|
|
|
|
||||||||||||
Balance at May 8, 2013 (date of incorporation) |
- | - | - | - | ||||||||||||
Acquisition of subsidiaries |
30,273 | 457,891 | 41,711 | 529,875 | ||||||||||||
Others |
2,098 | - | - | 2,098 | ||||||||||||
Credit/(Charged) to profit or loss |
(9,684 | ) | 41,014 | (40,295 | ) | (8,965 | ) | |||||||||
|
||||||||||||||||
Balance at December 31, 2013 |
22,687 | 498,905 | 1,416 | 523,008 | ||||||||||||
|
* |
Special levy is deductible for tax purpose over 5 years but was expensed as incurred in the profit or loss when incurred in the consolidated statement of profit or loss and other comprehensive income. |
The components of deferred tax liabilities recognized in the balance sheet and the movement during the period are as follows:
In Euro |
Fair value adjustment of Veltimo |
Fair value adjustment of Jasper |
Total |
|||||||||
|
|
|
|
|||||||||
Balance at May 8, 2013 (date of incorporation) |
- | - | - | |||||||||
Acquisition of subsidiaries |
(3,679,030 | ) | (359,144 | ) | (4,038,174 | ) | ||||||
Credit/(Charged) to profit or loss |
- | - | - | |||||||||
|
||||||||||||
Balance at December 31, 2013 |
(3,679,030 | ) | (359,144 | ) | (4,038,174 | ) |
NOTE 9—BORROWINGS
As of December 31, |
||||
In Euro |
2013 |
|||
Unsecured borrowings |
64,989,000 |
The Group’s borrowings at December 31, 2013 represent unsecured loans from a related party (see note 16(b)), which are charged at a fixed annual interest rate of 7.5%. Pursuant to the loan contracts, the entire loans principal are wholly repayable in 2033 but would also become immediately repayable on demand by the lender at any time during the loan period. Accordingly, these borrowings were classified as current liabilities.
NOTE 10—TRADE AND OTHER PAYABLES
As of December 31, |
||||
In Euro |
2013 |
|||
Payables for property, plant and equipment |
3,599,349 | |||
Accrued interests on borrowings |
1,860,043 | |||
Other payable and accruals |
1,345,617 | |||
Total |
6,805,009 |
NOTE 11—REVENUE
From May 8 to December 31, |
||||
In Euro |
2013 |
|||
|
|
|||
Sales of electricity |
694,176 |
Revenue represents sales of electricity generated from Photovoltaic park assets owned by the Company. The Group entered into long-term power purchase contracts with Lagie SA in Greece, the sole customer of the Group, for the supply of electricity at the prevailing effective tariff rates determined by the relevant local government authority in Greece. Lagie SA is a state-controlled company in Greece.
On April 7, 2014, Law 4254/2014 (the “Law 4254/2014”) was voted and passed in Greece. Pursuant to the Law 4254/2014, the tariff for sales of electricity by Photovoltaic parks in Greece was reduced by 30%~37.5% effective from January 1, 2013. As of December 31, 2013, management considered the likelihood of a downward adjustment of the tariff for electricity sale of the Group made to the customer and concluded that it was probable such a retrospective adjustment would be imposed by the government authority upon passage of the new law. Accordingly, management has recorded the Group’s revenue for the period from May 8, 2013 (date of incorporation) to December 31, 2013 in the accompanying financial statements based on the adjusted 2013 tariff under the Law 4254/2014.
NOTE 12—FINANCE COSTS
From May 8 to December 31, |
||||
In Euro |
2013 |
|||
|
|
|||
Interest expenses on borrowings |
1,860,043 | |||
Other finance charges |
8,255 | |||
Finance costs recognized in profit or loss |
1,868,298 |
NOTE 13—FINANCIAL INSTRUMENTS—RISK MANAGEMENT AND FAIR VALUES
The Group’s activities in the normal course expose the Group to credit risk, liquidity risk and interest rate risk.
The Group’s exposure to these risks and the financial risk management policies and practices used by the Group to manage these risks are described below.
(a) |
Credit risk |
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Group’s receivables from customers. Management monitors the exposures to these credit risks on an ongoing basis.
The Group only has one customer, which is Lagie SA. The Group has significant concentration of credit risk on trade and other receivables. Given Lagie SA is a state-controlled company, the management considered that the credit risk is at a low level and the trade receivable amounts are fully recoverable.
The maximum exposure to credit risk is represented by the carrying amount of each financial asset in the consolidated statement of financial position. The Group does not provide any guarantees which would expose the Group to credit risk.
(b) |
Liquidity risk |
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. Management’s approach in managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group’s reputation. The Group is one of the subsidiaries of a larger group. The liquidity of the Group is primarily dependent on its ability to maintain adequate cash inflows from operations and obtain adequate finance from or through its holding companies.
As at December 31, 2013, the Group had net current liabilities and net liabilities of approximately Euros 64,482,992 and Euros 5,846,919 respectively. In addition, the Group incurred loss of Euros 5,946,919 during the period. SPI, which has become the parent company following the acquisition of 100% equity interests of the Company on December 1, 2014, has undertaken to provide financial support to the Group to the extent necessarily enabling it to meet its liabilities as and when they fall due prior to December 31, 2015.
The following table detail the remaining contractual maturities at the end of the reporting period of the Group’s financial liabilities, which are based on the contractual undiscounted cash flows (including interest payments computed using contractual rates) and the earliest date the Group can be required to pay:
As of December 31, 2013
Carrying amount |
Contractual undiscounted cash outflow |
|||||||||||||||||||||||
Within 1 year |
More than 1 year but less than 2 years |
More than 2 year but less than 5 years |
More than 5 years |
Total |
||||||||||||||||||||
Trade and other payables |
6,805,009 | 6,805,009 | - | - | - | 6,805,009 | ||||||||||||||||||
Borrowings |
64,989,000 | 4,874,175 | 4,874,175 | 14,622,525 | 138,101,625 | 162,472,500 | ||||||||||||||||||
Other non-current liabilities |
3,001 | - | - | - | 3,001 | 3,001 | ||||||||||||||||||
Total |
71,797,010 | 11,679,184 | 4,874,175 | 14,622,525 | 138,104,626 | 169,280,510 |
The contractual undiscounted cash flows for the Borrowings were prepared based on the contractual instalments payment schedule set in the loan contracts assuming the lender would not exercise its contractual right to request immediate repayment on demand throughout the loan period.
(c) |
Interest rate risk |
The Group’s interest rate risk arises primarily from interest-bearing borrowings. Borrowings issued at variable rates and at fixed rates expose the Group to cash flow interest rate risk, and fair value interest rate risk respectively. The Group normally borrows long term loans which carry fixed rates in order to limit its exposure to interest rate risk.
The following table details the interest rate profile of the Group’s borrowings at the end of reporting periods.
2013 | ||||||||
Effective interest rate | Carrying value | |||||||
Euro |
||||||||
Fixed rate instruments: |
||||||||
Borrowings |
7.5 | % | 64,989,000 |
(d) |
Fair value measurement |
The Group did not hold any financial assets and liabilities carried at fair value as at December 31, 2013.
The carrying amount of the Group’s financial assets and liabilities carried at cost or amortized cost are not materially different from their fair value as at December 31, 2013.
NOTE 14—SHARE CAPITAL
(a) |
Movement of share capital |
2013 |
||||||||
Number of Ordinary A Shares |
Number of Ordinary B Shares |
|||||||
In issue at May 8, 2013 |
- | - | ||||||
Issued for cash |
99,999 | 1 | ||||||
In issue at December 31 |
99,999 | 1 | ||||||
Authorized – par value Euros 1 |
99,999 | 1 |
During the period ended December 31, 2013, 99,999 ordinary A shares and 1 ordinary B share were issued at par value to the shareholders of the Company.
The holders of ordinary A shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at general meetings of the Company. All ordinary A shares rank equally with regard to the Company’s residual asset.
The holder of ordinary B share is not entitled to receive dividends and is not entitled to vote at general meetings of the Company. The holder of ordinary B share is also not entitled to any surplus assets of the Company on a winding up but shall have a prior claim over the holders of ordinary A shares for the return of the par value of the ordinary B shares.
(b) Capital management
The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern so that it can provide returns for equity holders and benefits for other stakeholders and secure access to finance at a reasonable cost.
NOTE 15—OPERATING LEASE COMMITMENT
At December 31, 2013, total future minimum lease payments under non-cancellable operating leases are payable as follows:
2013 |
||||
Euro |
||||
No later than 1 year |
544,073 | |||
Later than 1 year and no later than 5 years |
2,193,093 | |||
Later than 5 years |
7,971,121 | |||
Total |
10,708,287 |
The Group is the lessee in respect of certain pieces of land on which the Group’s Photovoltaic parks are located. These leases are held under operating leases and do not include contingent rentals.
NOTE 16—RELATED PARTY TRANSACTIONS
The Group entered into the following material transactions with its related party during the reporting period:
(a) |
Finance Expenses |
From May 8 to December 31, |
||||
In Euro |
2013 |
|||
|
|
|||
Immediate holding company: |
||||
Sinsin Europe Solar Asset Limited Partnership |
1,860,043 |
The Group had the following balances with its related party at the end of the reporting period:
(b) |
Borrowings |
As of December 31 |
||||
In Euro |
2013 |
|||
|
||||
Immediate holding company: |
||||
Sinsin Europe Solar Asset Limited Partnership |
64,989,000 |
(c) |
Trade and other payables |
As of December 31 |
||||
In Euro |
2013 |
|||
|
||||
Inmmediate holding company: |
||||
Sinsin Europe Solar Asset Limited Partnership |
1,860,043 |
NOTE 17—IMMEDIATE AND ULTIMATE CONTROLLING PARTY
At December 31, 2013, the director consider the immediate holding company to be Sinsin Europe Solar Asset Limited Partnership, which is incorporated in Cayman Islands, and ultimate holding company to be Xinxing Pipes, which is incorporated in the PRC. Xinxing Pipes produces financial statements in accordance with PRC accounting standards that are available for public use.
On December 1, 2014, SPI acquired all the equity interest of Sinsin Renewable Investment Limited at a total consideration of approximately US$ 126 million (equivalent to approximately Euros 104 million) and becomes the ultimate controlling party of the Company.
NOTE 18—SIGNIFICANT ACCOUNTING ESTIMATES AND JUDGEMENTS
Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.
The selection of critical accounting policies, the judgements and other uncertainties affecting application of those policies and the sensitivity of reported results to changes in conditions and assumptions are factors to be considered when reviewing the financial statements. The principal accounting policies are set forth in note 3. The Group believes the following critical accounting policies involve the most significant judgements and estimates used in the preparation of the consolidated financial statements.
(a) |
Acquisition accounting |
Accounting for acquisitions require the Group to allocate the cost of acquisition to specific assets acquired and liabilities assumed based on their estimated fair values at the date of acquisition. In connection with the acquisition of Veltimo and Jasper (see Note 4), the Group has undertaken a process to identify all identifiable assets and liabilities acquired,. Judgements made in identifying all acquired assets, determining the estimated fair value assigned to each class of assets acquired and liabilities assumed, as well as asset’s useful lives, could materially impact the calculation of goodwill and depreciation charges in subsequent periods. Estimated fair values are based on information available near the acquisition date and on expectations and assumptions that have been deemed reasonable by management. Determining the estimated useful lives of tangible assets acquired also requires judgement.
(b) Impairment of goodwill
The Group conducts reviews for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. The recoverable amounts have been determined based on value-in-use calculations or fair value less costs to sell. These calculations require the use of judgements and estimates. Management judgement is required in the area of asset impairment particularly in assessing: (i) whether an event has occurred that may indicate that the related asset values may not be recoverable; (ii) whether the carrying value of an asset can be supported by the recoverable amount, being the higher of fair value less costs to sell and net present value of future cash flows which are estimated based upon the continued use of the asset in the business; and (iii) the appropriate key assumptions to be applied in preparing cash flow projections including whether these cash flow projections are discounted using an appropriate rate. Changing the assumptions selected by management in assessing impairment, including the discount rates or the growth rate assumptions in the cash flow projections, could materially affect the net present value used in the impairment test and as a result affect the Group’s financial condition and results of operations.
(c) Impairment of property, plant and equipment
The Group conducts impairment reviews on property, plant and equipment when events of changes in circumstances indicate that their carrying amounts may not be recoverable. An impairment loss is recognized when the carrying amount of an asset is lower than the greater of its fair value less cost to sell or the value in use. In determining the value in use, management assess the present value of the estimated future cash flows expected to arise from the continuing use of the asset and from its disposal at the end of its useful life. Significant estimates and judgements are applied in determining these future cash flows and the discount rate.
(d)Useful lives of property, plant and equipment
The Group’s management determines the estimated useful lives and related depreciation charges for its property, plant and equipment. This estimate is based on the historical experience of the actual useful lives of property, plant and equipment of similar nature and functions. It could change significantly as a result of technical innovations and competitor actions in response to severe industry cycles. Management will increase the depreciation charge where useful lives are less than previously estimated lives, or it will write-off or write-down technically obsolete or non-strategic assets that have been abandoned or sold.
(e)Provision for income taxes
The Group is subject to income taxes in the Greece. Significant judgment is required in determining the provision for income taxes. There are many transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made.
Deferred income tax assets relating to temporary differences and tax losses are recognized when management expects it is probable that future taxable profits will be available to utilize against the temporary difference or tax losses. Where the expectations are different from the original estimates, such differences will impact the recognition of deferred income tax assets in the period in which such estimates have been changed.
NOTE 19—POSSIBLE IMPACT OF AMENDMENTS, NEW STANDARDS AND INTERPRETATIONS ISSUED BUT NOT YET EFFECTIVE FOR THE ANNUAL ACCOUNTING PERIOD ENDED 31 DECEMBER 2013
Up to the date of issue of these financial statements, the IASB has issued a number of amendments, new standards and interpretations which are not yet effective for the period ended December 31, 2013 and which have not been adopted in these financial statements.
Effective annual financial periods beginning on or after | |
Amendments to IFRS 10, IFRS 12 and IAS 27, Investment entities |
January 1, 2014 |
Amendments to IAS 32, Financial instruments: Presentation - Offsetting financial assets and financial liabilities |
January 1, 2014 |
Amendments to IAS 36, Recoverable amount disclosure for non-financial assets |
January 1, 2014 |
Amendments to IAS 39, Novation of derivatives and continuation of hedge accounting |
January 1, 2014 |
IFRIC 21, Levies |
January 1, 2014 |
Amendments to IAS 19, Defined benefit plans: Employee contributions |
July 1, 2014 |
Annual improvements to IFRS 2010-2012 cycle |
July 1, 2014 |
Annual improvements to IFRS 2011-2013 cycle |
July 1, 2014 |
Annual improvements to IFRS 2012-2014 cycle |
January 1, 2016 |
Amendments to IFRS 11, Accounting for acquisitions of interests in joint ventures |
January 1, 2016 |
Amendments to IAS 16 and IAS 38, Clarification of acceptable methods of depreciation and amortization |
January 1, 2016 |
Amendments to IAS 27, Equity method in separate financial statements |
January 1, 2016 |
Amendments to IFRS 10 and IAS 28, Sale or contribution of assets between an investor and its associate or joint venture |
January 1, 2016 |
IFRS 15, Revenue from contracts with customers |
January 1, 2017 |
IFRS 9, Financial Instruments |
January 1, 2018 |
Management has made an initial assessment of what the impact of these amendments and new standards is expected to be in the period of initial application and has so far concluded that the adoption of them is unlikely to have a significant impact on the Group’s results of operations and financial position.
NOTE 20- SUBSEQUENT EVENT
In addition to those subsequent events disclosed in note 11 and note 17, the following event has taken place after December 31, 2013.
The Group’s revenue is subject to a special levy under the law of 4093/2012 pronounced in November 12, 2012 (the “Law 4093/2012”). Pursuant to the Law 4093/2012, the special levy would be charged for a period of 2 years starting from July 1, 2012. Pursuant to the Law of 4254/2014 voted and passed on April 7, 2014, the special levy under the Law 4093/2012 would no longer be charged from April 2014 onwards.
21
Exhibit 99.2
PHOTOVOLTAIKA PARKA VERIOA I ANONYMI ETAIREIA
FINANCIAL STATEMENTS
DECEMBER 31, 2013 AND 2012
INDEX TO FINANCIAL STATEMENTS | |
|
|
Report of Independent Auditors |
2 |
Statements of Profit or Loss and Other Comprehensive Income |
3 |
Balance Sheets |
4 |
Statements of Changes in Equity |
5 |
Statements of Cash Flows |
6 |
Notes to the Financial Statements |
7 |
Independent Auditors’ Report
The Board of Directors
Photovoltaika Parka Verioa I Anonymi Etaireia:
We have audited the accompanying balance sheets of Photovoltaika Parka Verioa I Anonymi Etaireia (the “Company”) as of December 31, 2013 and 2012, and the related statements of profit or loss and other comprehensive income, changes in equity, and cash flows for the year ended December 31, 2013 and the period from February 15, 2012 (date of incorporation) to December 31, 2012. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2013 and 2012, and the results of its operations and its cash flows for the year ended December 31, 2013 and the period from February 15, 2012 (date of incorporation) to December 31, 2012, in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board.
/s/ KPMG Huazhen (SGP)
Shanghai, China
February 13, 2015
STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED DECEMBER 31, 2013 AND THE PERIOD FROM FEBRUARY 15, 2012 (DATE OF INCORPORATION) to DECEMBER 31, 2012
Year ended December 31 |
Period ended December 31 |
|||||||
In Euro |
2013 |
2012 |
||||||
Revenues (note 10) |
188,723 | - | ||||||
Cost of sales |
(289,662 | ) | - | |||||
Gross loss |
(100,939 | ) | - | |||||
Other income |
38,299 | - | ||||||
Administrative expenses |
(46,956 | ) | (6,022 | ) | ||||
Impairment loss on property, plant and equipment (note 6) |
(670,955 | ) | - | |||||
Other expenses |
(47,069 | ) | (65 | ) | ||||
Operating loss |
(827,620 | ) | (6,087 | ) | ||||
Finance costs (note 11) |
(240,113 | ) | (82 | ) | ||||
Loss before income taxes |
(1,067,733 | ) | (6,169 | ) | ||||
Income taxes (expense)/credit (note 7) |
(8,400 | ) | 1,604 | |||||
Loss for the year/period |
(1,076,133 | ) | (4,565 | ) | ||||
Other comprehensive income for the year/period |
- | - | ||||||
Total comprehensive income for the year/period |
(1,076,133 | ) | (4,565 | ) |
The accompanying notes are an integral part of these financial statements.
BALANCE SHEETS AS OF DECEMBER 31, 2013 AND 2012
As of December 31 |
As of December 31 |
|||||||
In Euro |
2013 |
2012 |
||||||
ASSETS: |
||||||||
Property, plant and equipment (note 6) |
14,593,000 | - | ||||||
Other non-current assets |
3,305 | - | ||||||
Deferred tax assets (note 7(c)) |
- | 1,604 | ||||||
TOTAL NON-CURRENT ASSETS |
14,596,305 | 1,604 | ||||||
CURRENT ASSETS: |
||||||||
Trade and other receivables (note 5) |
658,658 | 36,962 | ||||||
Cash and cash equivalents (note 4) |
1,725,206 | 18,970 | ||||||
TOTAL CURRENT ASSETS |
2,383,864 | 55,932 | ||||||
TOTAL ASSETS |
16,980,169 | 57,536 | ||||||
LIABILITIES AND EQUITY: |
||||||||
CURRENT LIABILITIES: |
||||||||
Income tax payables |
42,915 | 93 | ||||||
Borrowings (note 8) |
265,082 | - | ||||||
Trade and other payables (note 9) |
1,834,252 | 2,008 | ||||||
TOTAL CURRENT LIABILITIES |
2,142,249 | 2,101 | ||||||
NON-CURRENT LIABILITIES: |
||||||||
Borrowings (note 8) |
11,865,618 | - | ||||||
Other long term liabilities |
3,000 | - | ||||||
TOTAL NON-CURRENT LIABILITIES |
11,868,618 | - | ||||||
TOTAL LIABILITIES |
14,010,867 | 2,101 | ||||||
EQUITY: |
||||||||
Share Capital (note 13) |
459,000 | 60,000 | ||||||
Share premium |
3,591,000 | - | ||||||
Accumulated losses |
(1,080,698 | ) | (4,565 | ) | ||||
TOTAL EQUITY |
2,969,302 | 55,435 | ||||||
TOTAL LIABILITIES AND EQUITY |
16,980,169 | 57,536 |
The accompanying notes are an integral part of these financial statements.
STATEMENTS OF CHANGES IN EQUITY
FOR THE YEAR ENDED DECEMBER 31, 2013 AND THE PERIOD FROM FEBRUARY 15, 2012 (DATE OF INCORPORATION) to DECEMBER 31, 2012
In Euro |
Share Capital |
Share premium |
Accumulated Losses |
Total |
||||||||||||
|
|
|
|
|
||||||||||||
Balance at February 15, 2012 (date of incorporation) |
- | - | - | - | ||||||||||||
|
||||||||||||||||
Changes in equity for the period |
||||||||||||||||
Loss for the period |
- | - | (4,565 | ) | (4,565 | ) | ||||||||||
Other comprehensive income |
- | - | - | - | ||||||||||||
Total comprehensive income |
- | - | (4,565 | ) | (4,565 | ) | ||||||||||
Issuance of shares |
60,000 | - | - | 60,000 | ||||||||||||
|
||||||||||||||||
Balance at December 31, 2012 |
60,000 | - | (4,565 | ) | 55,435 | |||||||||||
|
||||||||||||||||
|
||||||||||||||||
Balance at January 1, 2013 |
60,000 | - | (4,565 | ) | 55,435 | |||||||||||
|
||||||||||||||||
Changes in equity for the year |
||||||||||||||||
Loss for the year |
- | - | (1,076,133 | ) | (1,076,133 | ) | ||||||||||
Other comprehensive income |
- | - | - | - | ||||||||||||
Total comprehensive income |
- | - | (1,076,133 | ) | (1,076,133 | ) | ||||||||||
Issuance of shares |
399,000 | 3,591,000 | - | 3,990,000 | ||||||||||||
Balance at December 31, 2013 |
459,000 | 3,591,000 | (1,080,698 | ) | 2,969,302 |
The accompanying notes are an integral part of these financial statements.
STATEMENTS OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 2013 AND THE PERIOD FROM FEBRUARY 15, 2012 (DATE OF INCORPORATION) to DECEMBER 31, 2012
Year ended December 31 |
Period ended December 31 |
|||||||
In Euro |
2013 |
2012 |
||||||
Cash flows from operating activities |
||||||||
Loss before taxation |
(1,067,733 | ) | (6,169 | ) | ||||
Adjustments for: |
||||||||
Depreciation |
109,877 | - | ||||||
Impairment losses on property, plant and equipment |
670,955 | - | ||||||
Finance costs |
240,113 | 82 | ||||||
(46,788 | ) | (6,087 | ) | |||||
Changes in: |
||||||||
Trade and other receivables |
(625,001 | ) | (36,962 | ) | ||||
Trade and other payables |
55,129 | 2,101 | ||||||
Cash used in operating activities |
(616,660 | ) | (40,948 | ) | ||||
Tax paid |
- | - | ||||||
Net cash used in operating activities |
(616,660 | ) | (40,948 | ) | ||||
Cash flows from investing activities |
||||||||
Purchase of property, plant and equipment |
(13,797,804 | ) | - | |||||
Net cash used in investing activities |
(13,797,804 | ) | - | |||||
Cash flows from financing activities |
||||||||
Issuance of shares |
3,990,000 | 60,000 | ||||||
Proceeds from borrowings |
12,130,700 | - | ||||||
Finance costs paid |
- | (82 | ) | |||||
Net cash from financing activities |
16,120,700 | 59,918 | ||||||
Net increase in cash and cash equivalents |
1,706,236 | 18,970 | ||||||
Cash and cash equivalents at beginning of the year/period |
18,970 | - | ||||||
Cash and cash equivalents at end of the year/period |
1,725,206 | 18,970 |
The accompanying notes are an integral part of these financial statements.
NOTE 1— REPORTING ENTITY
Photovoltaika Parka Verioa I Anonymi Etaireia (the “Company”) is principally engaged in the development, investment and operation of Photovoltaica Park.
The Company was incorporated on February 15, 2012. The address of its registered office is AGIAS BARBARAS 35, 15231 CHALANDRI. At December 31, 2013, all equity interests of the Company were indirectly held by Sinsin Renewable Investment Limited (“Sinsin Renewable”), which was a subsidiary of Xinxing Pipes Ductile Iron Pipes Co., Ltd (“Xinxing Pipes”). On December 1, 2014, all equity interests of the Sinsin Renewable were acquired by Solar Power, Inc. (“SPI”), an entity whose common stock is traded on the Over the Counter Bulletin Board in the United States.
The accompanying financial statements were authorized for issue by the Board of Directors of the Company on February 13, 2015.
NOTE 2— BASIS OF PREPARATION OF FINANCIAL STATEMENTS
The accompanying financial statements of the Company have been prepared in accordance with all applicable International Financial Reporting Standards (“IFRSs”), which collective term includes all applicable individual International Financial Reporting Standards, International Accounting Standards (“IASs”) and Interpretations issued by the International Accounting Standards Board (“IASB”).
These are the Company’s first set of financial statements prepared in accordance with IFRSs and IFRS 1, “First Time Adoption of International Financial Reporting Standards”, has been applied. For local statutory filings in Greece, the Company has prepared its annual financial statements in accordance with generally accepted accounting principles in Greece (“Greece GAAP”) or “Previous GAAP”, as defined in IFRS1, since its date of incorporation on February 15, 2012.
The accounting policies set out in note 3 have been applied in preparing the financial statements for the year ended December 31, 2013 and the comparative information presented in these financial statements for the period from date of incorporation of February 15, 2012 to December 31, 2012.
The financial statements have been prepared under the historical cost convention.
The preparation of financial statements in conformity with IFRSs requires the use of certain critical accounting estimates. It also requires management to exercise its judgment in the process of applying the Company’s accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in note 17. Actual results could differ from those estimates and such differences could affect the results of operations reported in future periods.
The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The realization of assets and the satisfaction of liabilities in the normal course of business are dependent on, among other things, the Company’s ability to operate profitably, to generate cash flows from operations, and to pursue financing arrangements to support its working capital requirements.
NOTE 3—SIGNIFICANT ACCOUNTING POLICIES
The principal accounting policies applied in the preparation of these financial statements are set out below.
3.1 CASH AND CASH EQUIVALENTS
Cash and cash equivalents consist of cash on hand and cash at banks with maturities of three months or less from the acquisition date that are subject to an insignificant risk of changes in their fair value, and are used by the Company in the management of its short-term commitments.
3.2 TRADE AND OTHER RECEIVABLES
Trade and other receivables are initially recognized at fair value and thereafter stated at amortized cost using the effective interest method, less allowance for impairment of doubtful debts (see note 3.5(b)), except where the receivables are interest-free loans made to related parties without any fixed repayment terms or the effect of discounting would be immaterial. In such cases, the receivables are stated at cost less allowance for impairment of doubtful debts.
3.3 FOREIGN CURRENCY TRANSACTIONS
The Company’s financial statements are presented in Euros, which is the functional currency of the Company.
Transactions denominated in foreign currencies are translated to the functional currency of the Company at the foreign exchange rates ruling at the transaction dates. Monetary assets and liabilities denominated in foreign currencies are translated at the foreign exchange rates ruling at the balance sheet date. Exchange gains and losses are recognized in profit or loss.
3.4 PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are stated at historical cost less accumulated depreciation and impairment losses (see note 3.5(a)).
Cost includes expenditure that is directly attributable to the acquisition of the items. Subsequent costs are included in the asset’s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the entity and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognized. All other repairs and maintenance are charged to the profit or loss as incurred. Subsequent costs are depreciated over the remaining useful life of the related asset.
Depreciation is calculated using the straight-line method to allocate the cost of the assets to their residual values over their estimated useful lives as follows:
Description |
Useful life (in years) |
|||
Photovoltaic park assets |
25 | |||
Fixtures and equipment |
1-5 |
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each reporting date.
An item of property, plant and equipment and any significant part initially recognized is derecognized upon disposal or when no future economic benefits are expected from its use or disposal. Gains and losses on disposals are determined by comparing proceeds with carrying amount and are included in operating profit. Interest costs on borrowings specifically used to finance the construction of property, plant and equipment are capitalized during the construction period if recognition criteria are met.
3.5 IMPAIRMENT OF ASSETS
(a) Impairment of Property, Plant and Equipment
Property, plant and equipment are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognized for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. In assessing the value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflect current market assessments of the time value of money and the risks specific to the assets. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are independently identifiable cash flows (cash-generating units). Impairment loss is reversed if there has been a favorable change in the estimates used in determining the recoverable amount. A reversal in impairment loss is limited to the asset’s carrying amount that would have been determined had no impairment loss been recognized in prior years. Reversals of impairment losses are credited to profit or loss in the year in which the reversals are recognized.
(b) Impairment of Trade and Other Receivables
The Company assesses at the end of each reporting period whether there is objective evidence that trade and other receivable stated at amortized costs is impaired. Trade and other receivables is impaired and impairment losses are incurred only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the receivables (a ‘loss event’) and that loss event (or events) has an impact on the estimated future cash flows of the receivables that can be reliably estimated. The criteria that the Company uses to determine that there is objective evidence of an impairment loss include:
● |
significant financial difficulty of the debtor; |
● |
a breach of contract, such as a default or delinquency in interest or principal payments; |
● |
significant changes in the market, economic or legal environment that have an adverse effect on the debtor. |
For trade and other receivables, the impairment loss is measured as the difference between the receivables’ carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate, when the effect of discounting is material. The assessment is made collectively when the receivables share similar risk characteristics, such as similar past due status, and have not been individually assessed as impaired. The carrying amount of the receivables is reduced through the use of an allowance account when their recoverability are considered doubtful but not remote, and the amount of the loss is recognized in the profit or loss. When an amount of receivables is uncollectible, it is written off against the allowance account for receivables. Subsequent recoveries of amounts previously written off are credited to the profit or loss.
3.6 TAXATION
The tax expense for the period comprises current and deferred tax. Tax is recognized in the profit or loss, except to the extent that it relates to items recognized in other comprehensive income or directly in equity. In this case, the tax is also recognized in other comprehensive income or directly in equity, respectively.
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date in Greece. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.
Deferred income tax is recognized, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. However, the deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantively enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realized or the deferred income tax liability is settled.
Deferred income tax assets are recognized only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilized.
Deferred income tax is provided on temporary differences arising on investments in subsidiaries, except where the timing of the reversal of the temporary difference is controlled by the Company and it is probable that the temporary difference will not reverse in the foreseeable future.
Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income taxes assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where there is an intention to settle the balances on a net basis.
3.7 TRADE AND OTHER PAYABLES
Trade and other payables are recognized initially at fair value and subsequently measured at amortized cost unless the effect of discounting would be immaterial, in which case they are stated at cost.
3.8 INTEREST-BEARING BORROWINGS
Interest-bearing borrowings are recognized initially at fair value less attributable transaction costs. Subsequent to initial recognition, interest-bearing borrowings are stated at amortized cost with any difference between the amount initially recognized and redemption value being recognized in the profit or loss over the period of the borrowings, together with any interest and fees payable, using the effective interest method.
3.9 PROVISION AND CONTINGENCIES
Provisions are recognized for other liabilities of uncertain timing or amount when the Company has a legal or constructive obligation arising as a result of a past event, it is probable that an outflow of economic benefits will be required to settle the obligation and a reliable estimate can be made. Where the time value of money is material, provisions are stated at the present value of the expenditure expected to settle the obligation.
Where it is not probable that an outflow of economic benefits will be required, or the amount cannot be estimated reliably, the obligation is disclosed as a contingent liability, unless the probability of outflow of economic benefits is remote. Possible obligations, whose existence will only be confirmed by the occurrence or non-occurrence of one or more future events are also disclosed as contingent liabilities unless the probability of outflow of economic benefits is remote.
3.10 REVENUE
Revenue is measured at the fair value of the consideration received or receivable. Provided it is probable that the economic benefits will flow to the Company and the revenue and costs, if applicable, can be measured reliably, revenue is recognized in profit or loss as follows.
(a) |
Sales of Electricity |
Revenue from the sales of electricity is recognized when electricity has been delivered on grid and is measured based on the tariff rates determined by the relevant local government authority.
3.11 RELATED PARTY
a) |
A person, or a close member of that person’s family, is related to the Company if that person: |
i) |
has control or joint control over the Company; |
ii) |
has significant influence over the Company; or |
iii) |
is a member of the key management personnel of the Company or the Company’s parent or ultimate controlling shareholders. |
b) |
An entity is related to the Company if any of the following conditions applies: |
i) |
The entity and the Company are members of the same group; |
ii) |
One entity is an associate or joint venture of the other entity (or an associate of joint venture of a member of a group of with the other entity is a member); |
iii) |
Both entities are joint ventures of the same third party; |
iv) |
One entity is a joint venture of a third entity and the other entity is an associate of the third entity; |
v) |
The entity is a post-employment benefit plan for the benefit of employees of the Company or an entity related to the Company; |
vi) |
The entity is controlled or jointly controlled by a person identified in (a); |
vii) |
A person identified in (a)(i) has significant influence over the entity or is a member of the key management personnel of the entity (or of a parent of the entity); |
Close members of the family of a person are those family members who may be expected to influence, or be influenced by, that person in their dealings with the entity.
NOTE 4—CASH AND CASH EQUIVALENTS
As of December 31 |
As of December 31 |
|||||||
In Euro |
2013 |
2012 |
||||||
Cash at banks |
1,725,206 | 18,970 | ||||||
Total |
1,725,206 | 18,970 |
NOTE 5—TRADE AND OTHER RECEIVABLES
As of December 31 |
As of December 31 |
|||||||
In Euro |
2013 |
2012 |
||||||
|
||||||||
Trade receivables |
48,940 | - | ||||||
Value added tax recoverable |
520,270 | 263 | ||||||
Prepayment and other receivables |
89,448 | 36,699 | ||||||
Total |
658,658 | 36,962 |
Trade receivable represent amount due from Lagie SA for the sales of electricity. Credit period of one month is normally granted to the customer. All trade receivables balances have been settled.
NOTE 6—PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are summarized as follows:
In Euro |
Photovoltaic park assets |
Construction in progress |
Fixtures and equipment |
Total |
||||||||||||
Cost: |
||||||||||||||||
Balance at February 15, 2012 |
- | - | - | |||||||||||||
Additions |
- | - | - | |||||||||||||
Transfer from Construction in progress |
- | - | - | |||||||||||||
Balance at December 31, 2012 |
- | - | - | |||||||||||||
Balance at January 1, 2013 |
- | - | - | |||||||||||||
Additions |
- | 15,361,699 | 12,133 | 15,373,832 | ||||||||||||
Transfer from Construction in progress |
15,361,699 | (15,361,699 | ) | - | - | |||||||||||
Balance at December 31, 2013 |
15,361,699 | - | 12,133 | 15,373,832 | ||||||||||||
Accumulated depreciation and impairment losses: |
||||||||||||||||
Balance at February 15, 2012 |
- | - | - | |||||||||||||
Depreciation for the period |
- | - | - | |||||||||||||
Balance at December 31, 2012 |
- | - | - | |||||||||||||
Balance at January 1, 2013 |
- | - | - | |||||||||||||
Depreciation for the year |
(97,745 | ) | - | (12,132 | ) | (109,877 | ) | |||||||||
Impairment losses for the year |
(670,955 | ) | - | (670,955 | ) | |||||||||||
Balance at December 31, 2013 |
(768,700 |
) | (12,132 | ) | (780,832 | ) | ||||||||||
|
||||||||||||||||
Net book value |
||||||||||||||||
At December 31, 2012 |
- | - | - | - | ||||||||||||
At December 31, 2013 |
14,592,999 | - | 1 | 14,593,000 |
Photovoltaic park assets primarily included costs of acquiring permits, construction fees of the park, costs of items installed in the park including solar panels, and other costs incurred that are directly attributable to getting the park ready for its intended use of grid connection with customer for supply of electricity.
Due to the excessive actual costs incurred for the construction of the Photovoltaic Park as compared to other Photovoltaic Park with similar capacity and the reduction in tariff rate for the sales of electricity as pronounced by the Greek government in April 2014 (see note 19), the Company assessed the recoverable amount of the Photovoltaic Park assets. Based on the assessment, the carrying value of the Photovoltaic Park assets exceeds its recoverable as at December 31, 2013 and an impairment loss of Euro 670,955 was recognised in respect of the Photovoltaic Park assets. The recoverable amount is determined based on value-in-use calculations. These calculations use cash flow projections with the cash flows discounted using a discount rate of 10%. The discount rate used is pre-tax and reflected specific risks relating to the relevant cash-generating unit.
NOTE 7—TAXATION
(a) |
Taxation in the profit or loss represents: |
Year ended December 31 |
Period ended December 31 | ||||||||
In Euro |
2013 |
2012 | |||||||
Current tax |
(6,796 | ) | - | ||||||
Deferred tax – origination and reversal of temporary differences |
(1,604 | ) | 1,604 | ||||||
Tax credit |
(8,400 | ) | 1,604 |
On January 11, 2013, the Parliament of Greece enacted a new tax law-4110/2013 “Income Tax Provisions, Issues Related to the Authorities of the Ministry of Finance And other Regulations” (the “New Tax Law”). Under the New Tax Law, the income tax rate for entities incorporated in Greece changed from 20% to 26% effective for the statutory year ended from August 31, 2013 and thereafter. Therefore, the applicable income tax rate of the Company changed from 20% for the year ended December 31, 2012 to 26% for the year ended December 31, 2013.
(b) |
Reconciliation between tax credit and accounting loss at applicable tax rate: |
Year ended December 31 |
Period ended December 31 |
|||||||
In Euro |
2013 |
2012 |
||||||
|
||||||||
Loss before taxation |
(1,067,733 | ) | (6,169 | ) | ||||
Notional tax on loss before tax, calculated at the statutory tax rate of 26% (2012: 20%) |
277,611 | 1,234 | ||||||
Non-deductible expenses |
(12,255 | ) | - | |||||
Deductible temporary differences not recognised * |
(273,756 | ) | ||||||
Others |
- | 370 | ||||||
Total |
(8,400 | ) | 1,604 |
* |
The Company has not recognised deferred tax assets in respect of deductible temporary difference as it is not probable that future taxable profits against which the temporary difference can be utilized will be available in the Company. |
(c) |
Deferred tax assets and liabilities recognized: |
The components of deferred tax assets recognized in the balance sheet and the movements during the year/period are as follows:
In Euro |
Others |
Total |
||||||
|
|
|
||||||
Balance at February 15, 2012 |
- | - | ||||||
|
||||||||
Credit/(Charged) to profit or loss |
1,604 | 1,604 | ||||||
|
||||||||
Balance at December 31, 2012 |
1,604 | 1,604 | ||||||
|
||||||||
|
||||||||
Balance at January 1, 2013 |
1,604 | 1,604 | ||||||
|
||||||||
Credit/(Charged) to profit or loss |
(1,604 | ) | (1,604 | ) | ||||
Balance at December 31, 2013 |
- | - | ||||||
|
|
|
NOTE 8—BORROWINGS
As of December 31 |
As of December 31 |
|||||||
In Euro |
2013 |
2012 |
||||||
Total borrowings |
12,130,700 | - | ||||||
Less-current portion of borrowings payable within one year |
(265,082 | ) | - | |||||
Borrowings – non-current portion |
11,865,618 | - |
The Company’s borrowings at December 31, 2013 represent unsecured loans from related parties (see note 15(b)), which are charged at a fixed annual interest rate of 8% and is repayable by instalments with the last instalments due on December 31, 2033.
NOTE 9—TRADE AND OTHER PAYABLES
As of December 31 |
As of December 31 |
|||||||
In Euro |
2013 |
2012 |
||||||
Payables for property, plants and equipment |
1,576,028 | - | ||||||
Accrued interest on borrowings |
240,113 | - | ||||||
Other payables and accruals |
18,111 | 2,008 | ||||||
Total |
1,834,252 | 2,008 |
NOTE 10—REVENUE
Year ended December 31 |
Period ended December 31 |
|||||||
In Euro |
2013 |
2012 |
||||||
|
||||||||
Sales of electricity |
188,723 | - |
Revenue represents sales of electricity generated from Photovoltaic Park assets owned by the Company. The Company entered into long-term power purchase contract with Lagie SA in Greece, the sole customer of the Company, for the supply of electricity at the prevailing effective tariff rate determined by the relevant local government authority in Greece. Lagie SA is a state-controlled company in Greece.
On April 7, 2014, Law 4254/2014 (the “Law 4254/2014”) was voted and passed in Greece. Pursuant to the Law 4254/2014, the tariff for sales of electricity by Photovoltaic Parks in Greece was reduced by 30%~37.5% effective from January 1, 2013. As of December 31, 2013, management considered the likelihood of a downward adjustment of the tariff for electricity sale of the Company made to the customer and concluded that it was probable such a retrospective adjustment would be imposed by the government authority upon passage of the new law. Accordingly, management has recorded the Company’s revenue for the year ended December 31, 2013 in the accompanying financial statements based on the adjusted 2013 tariff rate under the Law 4254/2014.
NOTE 11—FINANCE COSTS
Year ended December 31 |
Period ended December 31 |
|||||||
In Euro |
2013 |
2012 |
||||||
|
||||||||
Interest expenses on borrowings |
240,113 | - | ||||||
Other finance charges |
- | 82 | ||||||
Finance costs recognized in profit or loss |
240,113 | 82 |
NOTE 12—FINANCIAL INSTRUMENTS—RISK MANAGEMENT AND FAIR VALUES
The Company’s activities in the normal course expose the Company to credit risk, liquidity risk and interest rate risk.
The Company’s exposure to these risks and the financial risk management policies and practices used by the Company to manage these risks are described below.
(a) |
Credit risk |
Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Company’s receivables from customers. Management monitors the exposures to these credit risks on an ongoing basis.
The company only has one customer, which is Lagie SA. The Company has significant concentration of credit risk on trade and other receivables. Given Lagie SA is a state-controlled company, the management considered that the credit risk is at a low level and the trade receivable amounts are fully recoverable.
The maximum exposure to credit risk is represented by the carrying amount of each financial asset in the statement of financial position. The Company does not provide any guarantees which would expose the Company to credit risk.
(b) |
Liquidity risk |
Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. Management’s approach in managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company’s reputation. The Company is one of the subsidiaries of a larger group. The liquidity of the Company is primarily dependent on its ability to maintain adequate cash inflows from operations and obtain adequate finance from or through its holding companies.
As at December 31, 2013, the Company had net current assets of approximately Euros 241,615 (2012: Euros 53,831)
The following table detail the remaining contractual maturities at the end of the reporting period of the Company’s financial liabilities, which are based on the contractual undiscounted cash flows (including interest payments computed using contractual rates) and the earliest date the Company can be required to pay:
As of December 31, 2012
Carrying amount |
Contractual undiscounted cash outflow |
|||||||||||||||||||
Within 1 year |
More than 1 year but less than 2 years |
More than 2 year but less than 5 years |
Total |
|||||||||||||||||
Trade and other payables |
2,008 | 2,008 | - | - | 2,008 | |||||||||||||||
Total |
2,008 | 2,008 | - | - | 2,008 |
As of December 31, 2013
Carrying amount |
Contractual undiscounted cash outflow |
|||||||||||||||||||||||
Within 1 year |
More than 1 year but less than 2 years |
More than 2 year but less than 5 years |
More than 5 years |
Total |
||||||||||||||||||||
Trade and other payables |
1,834,252 | 1,834,252 | - | - | - | 1,834,252 | ||||||||||||||||||
Borrowings |
12,130,700 | 1,235,538 | 1,235,538 | 3,706,614 | 18,533,070 | 24,710,760 | ||||||||||||||||||
Other long term liabilities |
3,000 | - | - | - | 3,000 | 3,000 | ||||||||||||||||||
Total |
13,967,952 | 3,069,790 | 1,235,538 | 3,706,614 | 18,536,070 | 26,548,012 |
(c) |
Interest rate risk |
The Company’s interest rate risk arises primarily from interest-bearing borrowings. Borrowings issued at variable rates and at fixed rates expose the Company to cash flow interest rate risk, and fair value interest rate risk respectively. The Company normally borrows long term loans which carry fixed rates in order to limit its exposure to interest rate risk.
The following table details the interest rate profile of the Company’s borrowings at the end of reporting periods.
2013 |
2012 |
|||||||||||||||
Effective interest rate |
Carrying value |
Effective interest rate |
Carrying value |
|||||||||||||
Euro |
Euro |
|||||||||||||||
Fixed rate instruments: |
||||||||||||||||
Borrowings |
8 | % | 12,130,700 | - | - |
(d) |
Fair value measurement |
The Company did not hold any financial assets and liabilities carried at fair value as at December 31, 2013 and 2012.
The carrying amount of the Company’s financial assets and liabilities carried at cost or amortized cost are not materially different from their fair value as at December 31, 2013 and 2012.
NOTE 13—SHARE CAPITAL
(a) |
Movement of share capital |
2013 |
2012 |
|||||||
Number of Shares |
Number of Shares |
|||||||
In issue at January 1 |
600 | - | ||||||
Issued for cash |
3,990 | 600 | ||||||
In issue at December 31 |
4,590 | 600 | ||||||
Authorized – par value Euros 100 |
4,590 | 600 |
The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at general meetings of the Company. All ordinary shares rank equally with regard to the Company’s residual asset.
During the year ended December 31, 2012, 600 ordinary shares were issued at a consideration of Euro 100 per share to the prevailing shareholder of the Company.
During the year ended December 31, 2013, 3,990 ordinary shares were issued at a consideration of Euro 1,000 per share to the prevailing shareholder of the Company.
(b) Capital management
The Company’s objectives when managing capital are to safeguard the Company’s ability to continue as a going concern so that it can provide returns for equity holders and benefits for other stakeholders and secure access to finance at a reasonable cost.
NOTE 14—OPERATING LEASE COMMITMENT
At December 31, 2013 and 2012, total future minimum lease payments under non-cancellable operating leases are payable as follows:
2013 |
2012 |
|||||||
Euro |
Euro |
|||||||
No later than 1 year |
78,293 | 65,393 | ||||||
Later than 1 year and no later than 5 years |
316,773 | 315,874 | ||||||
Later than 5 years |
1,058,287 | 1,137,481 | ||||||
Total |
1,453,353 | 1,518,748 |
The Company is the lessee in respect of the land on which the Photovoltaic Park is located. The lease is held under operating leases and does not include contingent rentals.
NOTE 15—RELATED PARTY TRANSACTIONS
Names of related parties |
Relationship with the Company | |
Sinsin Renewable |
Intermediate holding company | |
PHOTOVOLTAICA PARKA VEROIA 1 MALTA LIMITED (“VEROIA MALTA”) |
Immediate holding company |
The Company entered into the following material transactions with its related parties during the reporting period:
(a) |
FINANCE COSTS |
Year ended December 31 |
Period ended December 31 |
|||||||
In Euro |
2013 |
2012 |
||||||
|
||||||||
Sinsin Renewable |
236,261 | - | ||||||
VEROIA MALTA |
3,852 | - | ||||||
Total |
240,113 | - |
The Company had the following balances with its related parties at the end of the reporting period:
(b) |
BORROWINGS |
As of December 31 |
As of December 31 |
|||||||
In Euro |
2013 |
2012 |
||||||
|
||||||||
Sinsin Renewable |
10,917,630 | - | ||||||
VEROIA MALTA |
1,213,070 | - | ||||||
Total |
12,130,700 | - |
(c) |
TRADE AND OTHER PAYABLES |
As of December 31 |
As of December 31 |
|||||||
In Euro |
2013 |
2012 |
||||||
|
||||||||
Sinsin Renewable |
236,261 | - | ||||||
VEROIA MALTA |
3,852 | - | ||||||
Total |
240,113 | - |
NOTE 16—IMMEDIATE AND ULTIMATE CONTROLLING PARTY
At December 31, 2013, the directors considered the immediate holding company to be VELTIMO MALTA, which is incorporated in Cyprus and wholly owned by Sinsin Renewable, and ultimate holding company to be XINXING PIPES, which is incorporated in the PRC. XINXING PIPES produces financial statements in accordance with PRC accounting standards that are available for public use.
On December 1, 2014, SPI acquired all the equity interests of Sinsin Renewable and becomes the ultimate controlling party of the Company.
NOTE 17—SIGNIFICANT ACCOUNTING ESTIMATES AND JUDGEMENTS
Estimates and judgments are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.
The selection of critical accounting policies, the judgments and other uncertainties affecting application of those policies and the sensitivity of reported results to changes in conditions and assumptions are factors to be considered when reviewing the financial statements. The principal accounting policies are set forth in note 3. The Company believes the following critical accounting policies involve the most significant judgments and estimates used in the preparation of the financial statements.
(a) Impairment of property, plant and equipment
The Company conducts impairment reviews on property, plant and equipment when events of changes in circumstances indicate that their carrying amounts may not be recoverable. An impairment loss is recognized when the carrying amount of an asset is lower than the greater of its net selling price or the value in use. In determining the value in use, management assess the present value of the estimated future cash flows expected to arise from the continuing use of the asset and from its disposal at the end of its useful life. Significant estimates and judgments are applied in determining these future cash flows and the discount rate.
(b)Useful lives of property, plant and equipment
The Company’s management determines the estimated useful lives and related depreciation charges for its property, plant and equipment. This estimate is based on the historical experience of the actual useful lives of property, plant and equipment of similar nature and functions. It could change significantly as a result of technical innovations and competitor actions in response to severe industry cycles. Management will increase the depreciation charge where useful lives are less than previously estimated lives, or it will write-off or write-down technically obsolete or non-strategic assets that have been abandoned or sold.
(c)Provision for income taxes
The Company is subject to income taxes in the Greece. Significant judgment is required in determining the provision for income taxes. There are many transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made.
Deferred income tax assets relating to temporary differences and tax losses are recognized when management expects it is probable that future taxable profits will be available to utilize against the temporary difference or tax losses. Where the expectations are different from the original estimates, such differences will impact the recognition of deferred income tax assets in the period in which such estimates have been changed.
NOTE 18- POSSIBLE IMPACT OF AMENDMENTS, NEW STANDARDS AND INTERPRETATIONS ISSUED BUT NOT YET EFFECTIVE FOR THE ANNUAL ACCOUNTING PERIOD ENDED 31 DECEMBER 2013
Up to the date of issue of these financial statements, the IASB has issued a number of amendments, new standards and interpretations which are not yet effective for the year ended December 31, 2013 and which have not been adopted in these financial statements.
Effective annual financial periods beginning on or after | |
Amendments to IFRS 10, IFRS 12 and IAS 27, Investment entities |
January 1, 2014 |
Amendments to IAS 32, Financial instruments: Presentation - Offsetting financial assets and financial liabilities |
January 1, 2014 |
Amendments to IAS 36, Recoverable amount disclosure for non-financial assets |
January 1, 2014 |
Amendments to IAS 39, Novation of derivatives and continuation of hedge accounting |
January 1, 2014 |
IFRIC 21, Levies |
January 1, 2014 |
Amendments to IAS 19, Defined benefit plans: Employee contributions |
July 1, 2014 |
Annual improvements to IFRS 2010-2012 cycle |
July 1, 2014 |
Annual improvements to IFRS 2011-2013 cycle |
July 1, 2014 |
Annual improvements to IFRS 2012-2014 cycle |
January 1, 2016 |
Amendments to IFRS 11, Accounting for acquisitions of interests in joint ventures |
January 1, 2016 |
Amendments to IAS 16 and IAS 38, Clarification of acceptable methods of depreciation and amortization |
January 1, 2016 |
Amendments to IAS 27, Equity method in separate financial statements |
January 1, 2016 |
Amendments to IFRS 10 and IAS 28, Sale or contribution of assets between an investor and its associate or joint venture |
January 1, 2016 |
IFRS 15, Revenue from contracts with customers |
January 1, 2017 |
IFRS 9, Financial Instruments |
January 1, 2018 |
Management has made an initial assessment of what the impact of these amendments and new standards is expected to be in the period of initial application and has so far concluded that the adoption of them is unlikely to have a significant impact on the Company’s results of operations and financial position.
NOTE 19- SUBSEQUENT EVENT
In addition to those subsequent events disclosed in note 10 and note 16, the following event has taken place after December 31, 2013.
The Company’s revenue is subject to a special levy under the law of 4093/2012 pronounced in November 12, 2012 (the “Law 4093/2012”). Pursuant to the Law 4093/2012, the special levy would be charged for a period of 2 years starting from July 1, 2012. Pursuant to the Law of 4254/2014 voted and passed on April 7, 2014, the special levy under the Law 4093/2012 would no longer be charged from April 2014 onwards.
19
Exhibit 99.3
JASPER PV MAKEDONIA PRODUCTION OF ENERGIAKI S.A.
FINANCIAL STATEMENTS
DECEMBER 31, 2013 AND 2012
INDEX TO FINANCIAL STATEMENTS | |
|
|
Report of Independent Auditors |
2 |
Statements of Profit or Loss and Other Comprehensive Income |
3 |
Balance Sheets |
4 |
Statements of Changes in Equity |
5 |
Statements of Cash Flows |
6 |
Notes to the Financial Statements |
7 |
Independent Auditors’ Report
The Board of Directors
Jasper PV Makedonia Production of Energiaki S.A.:
We have audited the accompanying balance sheets of Jasper PV Makedonia Production of Energiaki S.A. (the “Company”) as of December 31, 2013 and 2012, and the related statements of profit or loss and other comprehensive income, changes in equity, and cash flows for the year ended December 31, 2013 and the period from April 10, 2012 (date of incorporation) to December 31, 2012. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2013 and 2012, and the results of its operations and its cash flows for the year ended December 31, 2013 and the period from April 10, 2012 (date of incorporation) to December 31, 2012, in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board.
/s/ KPMG Huazhen (SGP)
Shanghai, China
February 13, 2015
STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED DECEMBER 31, 2013 AND
PERIOD FROM APRIL 10, 2012 (DATE OF INCORPORATION) TO DECEMBER 31, 2012
Year ended December 31 |
Period ended December 31 |
|||||||
In Euro |
2013 |
2012 |
||||||
Revenues (note 10) |
1,120,013 | - | ||||||
Cost of sales |
(598,697 | ) | - | |||||
Gross profit |
521,316 | - | ||||||
Other income |
- | - | ||||||
Administrative expenses |
(247,054 | ) | (15,080 | ) | ||||
Other expenses (note 15(b)) |
(510,084 | ) | - | |||||
Operating loss |
(235,822 | ) | (15,080 | ) | ||||
Finance costs (note 11) |
(88,096 | ) | - | |||||
Loss before income taxes |
(323,918 | ) | (15,080 | ) | ||||
Income taxes (expense) / credit (note 7) |
(48,404 | ) | 3,921 | |||||
Loss for the year/period |
(372,322 | ) | (11,159 | ) | ||||
Other comprehensive income for the year/period |
- | - | ||||||
Total comprehensive income for the year/period |
(372,322 | ) | (11,159 | ) |
The accompanying notes are an integral part of these financial statements.
BALANCE SHEETS AS OF DECEMBER 31, 2013 AND 2012
As of December 31 |
||||||||
In Euro |
2013 |
2012 |
||||||
ASSETS: |
||||||||
Property, plant and equipment (note 6) |
4,906,195 | 4,605,905 | ||||||
Other long term assets |
5,500 | 4,500 | ||||||
Deferred tax assets (note 7(c)) |
51,613 | 3,921 | ||||||
TOTAL NON-CURRENT ASSETS |
4,963,308 | 4,614,326 | ||||||
CURRENT ASSETS: |
||||||||
Trade and other receivables (note 5) |
517,608 | 215,900 | ||||||
Cash and cash equivalents (note 4) |
428,958 | 26 | ||||||
TOTAL CURRENT ASSETS |
946,566 | 215,926 | ||||||
TOTAL ASSETS |
5,909,874 | 4,830,252 | ||||||
LIABILITIES AND EQUITY: |
||||||||
CURRENT LIABILITIES: |
||||||||
Income tax payables |
96,353 | - | ||||||
Trade and other payables (note 9) |
837,002 | 4,676,411 | ||||||
TOTAL CURRENT LIABILITIES |
933,355 | 4,676,411 | ||||||
NON-CURRENT LIABILITIES: |
||||||||
Borrowings (note 8) |
3,912,500 | 105,000 | ||||||
TOTAL NON-CURRENT LIABILITIES |
3,912,500 | 105,000 | ||||||
TOTAL LIABILITIES |
4,845,855 | 4,781,411 | ||||||
EQUITY: |
||||||||
Share capital (note 13) |
198,750 | 60,000 | ||||||
Share premium |
1,248,750 | - | ||||||
Accumulated losses |
(383,481 | ) | (11,159 | ) | ||||
TOTAL EQUITY |
1,064,019 | 48,841 | ||||||
TOTAL LIABILITIES AND EQUITY |
5,909,874 | 4,830,252 |
The accompanying notes are an integral part of these financial statements.
STATEMENTS OF CHANGES IN EQUITY
FOR THE YEAR ENDED DECEMBER 31, 2013 AND
PERIOD FROM APRIL 10, 2012 (DATE OF INCORPORATION) TO DECEMBER 31, 2012
In Euro |
Share capital |
Share premium |
Accumulated losses |
Total |
||||||||||||
|
||||||||||||||||
Balance at April 10, 2012 (date of incorporation) |
- | - | - | - | ||||||||||||
|
||||||||||||||||
Changes in equity for the period |
||||||||||||||||
Loss for the period |
- | - | (11,159 | ) | (11,159 | ) | ||||||||||
Other comprehensive income |
- | - | - | - | ||||||||||||
Total comprehensive income |
- | - | (11,159 | ) | (11,159 | ) | ||||||||||
Issuance of shares |
60,000 | - | - | 60,000 | ||||||||||||
|
||||||||||||||||
Balance at December 31, 2012 |
60,000 | - | (11,159 | ) | 48,841 | |||||||||||
|
||||||||||||||||
|
||||||||||||||||
Balance at January 1, 2013 |
60,000 | - | (11,159 | ) | 48,841 | |||||||||||
|
||||||||||||||||
Changes in equity for the year |
||||||||||||||||
Loss for the year |
(372,322 | ) | (372,322 | ) | ||||||||||||
Other comprehensive income |
- | - | - | - | ||||||||||||
Total comprehensive income |
- | - | (372,322 | ) | (372,322 | ) | ||||||||||
Issuance of shares |
138,750 | 1,248,750 | - | 1,387,500 | ||||||||||||
Balance at December 31, 2013 |
198,750 | 1,248,750 | (383,481 | ) | 1,064,019 |
The accompanying notes are an integral part of these financial statements.
STATEMENTS OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 2013 AND
PERIOD FROM APRIL 10, 2012 (DATE OF INCORPORATION) TO DECEMBER 31, 2012
Year ended December 31 |
Period ended December 31 |
|||||||
In Euro |
2013 |
2012 |
||||||
Cash flows from operating activities |
||||||||
Loss before taxation |
(323,918 | ) | (15,080 | ) | ||||
Adjustments for: |
||||||||
Depreciation |
198,551 | - | ||||||
Finance costs |
88,096 | - | ||||||
Tax expenses |
- | - | ||||||
Changes in: |
||||||||
Trade and other receivables |
(302,708 | ) | (220,400 | ) | ||||
Trade and other payables |
6,806 | 176,411 | ||||||
Cash generated from/ (used in) operating activities |
(333,173 | ) | (59,069 | ) | ||||
|
|
|||||||
Tax paid |
- | - | ||||||
Net cash generated from/ (used in) operating activities |
(333,173 | ) | (59,069 | ) | ||||
Cash flows from investing activities |
||||||||
Purchase of property, plant and equipment |
(4,429,130 | ) | (105,905 | ) | ||||
Net cash used in investing activities |
(4,429,130 | ) | (105,905 | ) | ||||
Cash flows from financing activities |
||||||||
Issuance of shares |
1,387,500 | 60,000 | ||||||
Proceeds from borrowings |
3,912,500 | 105,000 | ||||||
Payments of borrowings |
(105,000 | ) | - | |||||
Interest paid |
(3,765 | ) | - | |||||
Net cash from financing activities |
5,191,235 | 165,000 | ||||||
Net increase in cash and cash equivalents |
428,932 | 26 | ||||||
Cash and cash equivalents at beginning of the year/period |
26 | - | ||||||
Cash and cash equivalents at end of the year/period |
428,958 | 26 |
The accompanying notes are an integral part of these financial statements.
NOTE 1— REPORTING ENTITY
Jasper PV Makedonia Production of Energiaki S.A. (the “Company”) is principally engaged in the development, investment and operation of Photovoltaica Park.
The Company was incorporated on April 10, 2012. The address of its registered office is 6, Charilaou Trikoupi str.., 18536-Piraeus. At 31 December, 2013, all equity interests of the Company were directly held by Sinsin Renewable Investment Limited (“Sinsin Renewable”), which was a subsidiary of Xinxing Pipes Ductile Iron Pipes Co., Ltd (“Xinxing Pipes”). On December 1, 2014, all equity interests of the Sinsin Renewable were acquired by Solar Power, Inc. (“SPI”), an entity whose common stock is traded on the Over the Counter Bulletin Board in the United States.
The accompanying financial statements were authorized for issue by the Board of Directors of the Company on February 13, 2015.
NOTE 2— BASIS OF PREPARATION OF FINANCIAL STATEMENTS
The accompanying financial statements of the Company have been prepared in accordance with all applicable International Financial Reporting Standards (“IFRSs”), which collective term includes all applicable individual International Financial Reporting Standards, International Accounting Standards (“IASs”) and Interpretations issued by the International Accounting Standards Board (“IASB”).
The accounting policies set out in note 3 have been applied in preparing the financial statements for the year ended December 31, 2013 and the comparative information presented in these financial statements for the period from date of incorporation of April 10, 2012 to December 31, 2012.
The financial statements have been prepared under the historical cost convention.
The preparation of financial statements in conformity with IFRSs requires the use of certain critical accounting estimates. It also requires management to exercise its judgment in the process of applying the Company’s accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in note 17. Actual results could differ from those estimates and such differences could affect the results of operations reported in future periods.
The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The realization of assets and the satisfaction of liabilities in the normal course of business are dependent on, among other things, the Company’s ability to operate profitably, to generate cash flows from operations, and to pursue financing arrangements to support its working capital requirements.
NOTE 3—SIGNIFICANT ACCOUNTING POLICIES
The principal accounting policies applied in the preparation of these financial statements are set out below.
3.1 CASH AND CASH EQUIVALENTS
Cash and cash equivalents consist of cash on hand and cash at banks with maturities of three months or less from the acquisition date that are subject to an insignificant risk of changes in their fair value, and are used by the Company in the management of its short-term commitments.
3.2 TRADE AND OTHER RECEIVABLES
Trade and other receivables are initially recognized at fair value and thereafter stated at amortized cost using the effective interest method, less allowance for impairment of doubtful debts (see note 3.5(b)), except where the receivables are interest-free loans made to related parties without any fixed repayment terms or the effect of discounting would be immaterial. In such cases, the receivables are stated at cost less allowance for impairment of doubtful debts.
3.3 FOREIGN CURRENCY TRANSACTIONS
The Company’s financial statements are presented in Euros, which is the functional currency of the Company.
Transactions denominated in foreign currencies are translated to the functional currency of the Company at the foreign exchange rates ruling at the transaction dates. Monetary assets and liabilities denominated in foreign currencies are translated at the foreign exchange rates ruling at the balance sheet date. Exchange gains and losses are recognized in profit or loss.
3.4 PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are stated at historical cost less accumulated depreciation and impairment losses (see note 3.5(a)).
Cost includes expenditure that is directly attributable to the acquisition of the items. Subsequent costs are included in the asset’s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the entity and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognized. All other repairs and maintenance are charged to the profit or loss as incurred. Subsequent costs are depreciated over the remaining useful life of the related asset.
Depreciation is calculated using the straight-line method to allocate the cost of the assets to their residual values over their estimated useful lives as follows:
Description |
Useful life (in years) |
|||
Photovoltaic park assets |
25 | |||
Fixtures and equipment |
1-5 |
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each reporting date.
An item of property, plant and equipment and any significant part initially recognized is derecognized upon disposal or when no future economic benefits are expected from its use or disposal. Gains and losses on disposals are determined by comparing proceeds with carrying amount and are included in operating profit. Interest costs on borrowings specifically used to finance the construction of property, plant and equipment are capitalized during the construction period if recognition criteria are met.
3.5 IMPAIRMENT OF ASSETS
(a) Impairment of Property, Plant and Equipment
Property, plant and equipment are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognized for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. In assessing the value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflect current market assessments of the time value of money and the risks specific to the assets. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are independently identifiable cash flows (cash-generating units). Impairment loss is reversed if there has been a favourable change in the estimates used in determining the recoverable amount. A reversal in impairment loss is limited to the asset’s carrying amount that would have been determined had no impairment loss been recognized in prior years. Reversals of impairment losses are credited to profit or loss in the year in which the reversals are recognized.
(b) Impairment of Trade and Other Receivables
The Company assesses at the end of each reporting period whether there is objective evidence that trade and other receivable stated at amortized costs is impaired. Trade and other receivables is impaired and impairment losses are incurred only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the receivables (a ‘loss event’) and that loss event (or events) has an impact on the estimated future cash flows of the receivables that can be reliably estimated. The criteria that the Company uses to determine that there is objective evidence of an impairment loss include:
● |
significant financial difficulty of the debtor; |
● |
a breach of contract, such as a default or delinquency in interest or principal payments; |
● |
significant changes in the market, economic or legal environment that have an adverse effect on the debtor. |
For trade and other receivables, the impairment loss is measured as the difference between the receivables’ carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate, when the effect of discounting is material. The assessment is made collectively when the receivables share similar risk characteristics, such as similar past due status, and have not been individually assessed as impaired. The carrying amount of the receivables is reduced through the use of an allowance account when their recoverability are considered doubtful but not remote, and the amount of the loss is recognized in the profit or loss. When an amount of receivables is uncollectible, it is written off against the allowance account for receivables. Subsequent recoveries of amounts previously written off are credited to the profit or loss.
3.6 TAXATION
The tax expense for the period comprises current and deferred tax. Tax is recognized in the profit or loss, except to the extent that it relates to items recognized in other comprehensive income or directly in equity. In this case, the tax is also recognized in other comprehensive income or directly in equity, respectively.
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date in Greece. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.
Deferred income tax is recognized, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. However, the deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantively enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realized or the deferred income tax liability is settled.
Deferred income tax assets are recognized only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilized.
Deferred income tax is provided on temporary differences arising on investments in subsidiaries, except where the timing of the reversal of the temporary difference is controlled by the Company and it is probable that the temporary difference will not reverse in the foreseeable future.
Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income taxes assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where there is an intention to settle the balances on a net basis.
3.7 TRADE AND OTHER PAYABLES
Trade and other payables are recognized initially at fair value and subsequently measured at amortized cost unless the effect of discounting would be immaterial, in which case they are stated at cost.
3.8 INTEREST-BEARING BORROWINGS
Interest-bearing borrowings are recognized initially at fair value less attributable transaction costs. Subsequent to initial recognition, interest-bearing borrowings are stated at amortized cost with any difference between the amount initially recognized and redemption value being recognized in the profit or loss over the period of the borrowings, together with any interest and fees payable, using the effective interest method.
3.9 PROVISION AND CONTINGENCIES
Provisions are recognized for other liabilities of uncertain timing or amount when the Company has a legal or constructive obligation arising as a result of a past event, it is probable that an outflow of economic benefits will be required to settle the obligation and a reliable estimate can be made. Where the time value of money is material, provisions are stated at the present value of the expenditure expected to settle the obligation.
Where it is not probable that an outflow of economic benefits will be required, or the amount cannot be estimated reliably, the obligation is disclosed as a contingent liability, unless the probability of outflow of economic benefits is remote. Possible obligations, whose existence will only be confirmed by the occurrence or non-occurrence of one or more future events are also disclosed as contingent liabilities unless the probability of outflow of economic benefits is remote.
3.10 REVENUE
Revenue is measured at the fair value of the consideration received or receivable. Provided it is probable that the economic benefits will flow to the Company and the revenue and costs, if applicable, can be measured reliably, revenue is recognized in profit or loss as follows.
(a) |
Sales of Electricity |
Revenue from the sales of electricity is recognized when electricity has been delivered on grid and is measured based on the tariff rates determined by the relevant local government authority.
3.11 RELATED PARTY
a) |
A person, or a close member of that person’s family, is related to the Company if that person: |
i) |
has control or joint control over the Company; |
ii) |
has significant influence over the Company; or |
iii) |
is a member of the key management personnel of the Company or the Company’s parent or ultimate controlling shareholders. |
b) |
An entity is related to the Company if any of the following conditions applies: |
i) |
The entity and the Company are members of the same group; |
ii) |
One entity is an associate or joint venture of the other entity (or an associate of joint venture of a member of a group of with the other entity is a member); |
iii) |
Both entities are joint ventures of the same third party; |
iv) |
One entity is a joint venture of a third entity and the other entity is an associate of the third entity; |
v) |
The entity is a post-employment benefit plan for the benefit of employees of the Company or an entity related to the Company; |
vi) |
The entity is controlled or jointly controlled by a person identified in (a); |
vii) |
A person identified in (a)(i) has significant influence over the entity or is a member of the key management personnel of the entity (or of a parent of the entity); |
Close members of the family of a person are those family members who may be expected to influence, or be influenced by, that person in their dealings with the entity.
NOTE 4—CASH AND CASH EQUIVALENTS
As of December 31 |
||||||||
In Euro |
2013 |
2012 |
||||||
|
||||||||
Cash at banks |
428,958 | 26 | ||||||
Total |
428,958 | 26 |
NOTE 5—TRADE AND OTHER RECEIVABLES
As of December 31 |
||||||||
In Euro |
2013 |
2012 |
||||||
|
||||||||
Trade receivables |
384,443 | - | ||||||
Value added tax recoverable |
48,057 | 133,400 | ||||||
Prepayment and other receivables |
85,108 | 82,500 | ||||||
Total |
517,608 | 215,900 |
Trade receivables represent amount due from Lagie SA for the sales of electricity. Credit period of one month is normally granted to the customer. All trade receivables balances have been settled.
NOTE 6—PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are summarized as follows:
In Euro |
Photovoltaic park assets |
Fixtures and equipment |
Construction in progress |
Total |
||||||||||||
|
|
|
|
|||||||||||||
Cost: |
||||||||||||||||
Balance at April 10, 2012 |
- | - | - | - | ||||||||||||
Additions |
- | - | 4,605,905 | 4,605,905 | ||||||||||||
Transfer from Construction in progress |
1,375,905 | - | (1,375,905 | ) | - | |||||||||||
Balance at December 31, 2012 |
1,375,905 | - | 3,230,000 | 4,605,905 | ||||||||||||
Balance at January 1, 2013 |
1,375,905 | - | 3,230,000 | 4,605,905 | ||||||||||||
Additions |
- | 50,341 | 448,500 | 498,841 | ||||||||||||
Transfer from Construction in progress |
3,678,500 | - | (3,678,500 | ) | - | |||||||||||
Balance at December 31, 2013 |
5,054,405 | 50,341 | - | 5,104,746 | ||||||||||||
|
||||||||||||||||
Accumulated depreciation: |
||||||||||||||||
Balance at April 10, 2012 |
- | - | - | - | ||||||||||||
Depreciation for the period |
- | - | - | - | ||||||||||||
Balance at December 31, 2012 |
- | - | - | - | ||||||||||||
Balance at January 1, 2013 |
- | - | - | - | ||||||||||||
Depreciation for the year |
(198,131 | ) | (420 | ) | - | (198,551 | ) | |||||||||
Balance at December 31, 2013 |
(198,131 | ) | (420 | ) | - | (198,551 | ) | |||||||||
|
|
|||||||||||||||
Net book value |
||||||||||||||||
At December 31, 2012 |
1,375,905 | - | 3,230,000 | 4,605,905 | ||||||||||||
At December 31, 2013 |
4,856,274 | 49,921 | - | 4,906,195 |
Photovoltaic park assets primarily included costs of acquiring permits, construction fees of the park, costs of items installed in the park including solar panels, and other costs incurred that are directly attributable to getting the park ready for its intended use of grid connection with customer for supply of electricity.
NOTE 7—TAXATION
(a) |
Taxation in the profit or loss represents: |
Year ended December 31 |
Period ended December 31 |
|||||||
In Euro |
2013 |
2012 |
||||||
Current tax |
(96,096 | ) | - | |||||
Deferred tax – origination and reversal of temporary differences |
47,692 | 3,921 | ||||||
Tax (expense)/ credit |
(48,404 | ) | 3,921 |
On January 11, 2013, the Parliament of Greece enacted a new tax law-4110/2013 “Income Tax Provisions, Issues Related to the Authorities of the Ministry of Finance And other Regulations” (the “New Tax Law”). Under the New Tax Law, the income tax rate for entities incorporated in Greece changed from 20% to 26% effective for the statutory year ended from August 31, 2013 and thereafter. Therefore, the applicable income tax rate of the Company changed from 20% for the year ended December 31, 2012 to 26% for the year ended December 31, 2013.
(b) |
Reconciliation between tax (expense)/credit and accounting loss at applicable tax rate: |
Year ended December 31 |
Period ended December 31 |
|||||||
In Euro |
2013 |
2012 |
||||||
|
|
|
||||||
Loss before taxation |
(323,918 | ) | (15,080 | ) | ||||
Notional tax on loss before tax, calculated at the statutory tax rate of 26% (2012: 20%) |
84,219 | 3,016 | ||||||
Non-deductible expenses* |
(132,623 | ) | - | |||||
Others |
- | 905 | ||||||
Total |
(48,404 | ) | 3,921 |
* Non-deductible expenses are primarily related to the consultancy services fees charged by the related parties of the former shareholders of the Company (see note 15(b)).
(c) |
Deferred tax assets and liabilities recognized: |
The components of deferred tax assets/(liabilities) recognized in the balance sheet and the movements during the year/period are as follows:
In Euro |
Property plant and equipment |
Special levy * |
Others |
Total |
||||||||||||
|
|
|
|
|
||||||||||||
Balance at April 10, 2012(date of incorporation) |
- | - | - | - | ||||||||||||
|
||||||||||||||||
Credit/(Charged) to profit or loss |
- | - | 3,921 | 3,921 | ||||||||||||
|
||||||||||||||||
Balance at December 31, 2012 |
- | - | 3,921 | 3,921 | ||||||||||||
|
||||||||||||||||
|
||||||||||||||||
Balance at January 1, 2013 |
- | - | 3,921 | 3,921 | ||||||||||||
|
||||||||||||||||
Credit/(Charged) to profit or loss |
(31,123 | ) | 82,736 | (3,921 | ) | 47,692 | ||||||||||
Balance at December 31, 2013 |
(31,123 | ) | 82,736 | - | 51,613 | |||||||||||
|
|
|
|
|
* |
Special levy is deductible for tax purposes over 5 years but was expensed as incurred in the Company’s statement of profit or loss and other comprehensive income. |
NOTE 8—BORROWINGS
As of December 31 |
||||||||
In Euro |
2013 |
2012 |
||||||
Long term borrowings |
3,912,500 | 105,000 |
The Company’s borrowings at December 31, 2013 represent unsecured loans from Sinsin Renewable (see note 15(c)). The loan is charged at a fixed annual interest rate of 5.95% and is wholly repayable on August 9, 2033.
The Company’s borrowings at December 31, 2012 represent unsecured long term loan from an unrelated third party. The Company borrowed the loan in July 2012. The loan is wholly repayable in June 2022. The loan carries interest-free period up to December 31, 2016 and is charged at an annual interest rate of 15% thereafter. The loan was early repaid in October 2013 when Sinsin Renewable acquired the entire equity interests of the Company.
NOTE 9—TRADE AND OTHER PAYABLES
As of December 31 |
||||||||
In Euro |
2013 |
2012 |
||||||
Payables for property plants and equipment |
746,122 | 4,676,411 | ||||||
Accrued interests on borrowings |
84,331 | - | ||||||
Other payable and accruals |
6,549 | - | ||||||
Total |
837,002 | 4,676,411 |
NOTE 10—REVENUE
Year ended December 31 |
Period ended December 31 |
|||||||
In Euro |
2013 |
2012 |
||||||
|
|
|
||||||
Sales of electricity |
1,120,013 | - |
Revenue represents sales of electricity generated from Photovoltaic Park assets owned by the Company. The Company entered into long-term power purchase contract with Lagie SA in Greece, the sole customer of the Company, for the supply of electricity at the prevailing effective tariff rate determined by the relevant local government authority in Greece. Lagie SA is a state-controlled company in Greece.
On April 7, 2014, Law 4254/2014 (the “Law 4254/2014”) was voted and passed in Greece. Pursuant to the Law 4254/2014, the tariff for sales of electricity by Photovoltaic Parks in Greece was reduced by 30%~37.5% effective from January 1, 2013. As of December 31, 2013, management considered the likelihood of a downward adjustment of the tariff for electricity sale of the Company made to the customer and concluded that it was probable such a retrospective adjustment would be imposed by the government authority upon passage of the new law. Accordingly, management has recorded the Company’s revenue for the year ended December 31, 2013 in the accompanying financial statements based on the adjusted 2013 tariff rate under the Law 4254/2014.
NOTE 11—FINANCE COSTS
Year ended December 31 |
Period ended December 31 |
|||||||
In Euro |
2013 |
2012 |
||||||
Interest expenses on borrowings |
87,848 | - | ||||||
Other finance charges |
248 | - | ||||||
Finance costs recognized in profit or loss |
88,096 | - |
NOTE 12—FINANCIAL INSTRUMENTS—RISK MANAGEMENT AND FAIR VALUES
The Company’s activities in the normal course expose the Company to credit risk, liquidity risk and interest rate risk.
The Company’s exposure to these risks and the financial risk management policies and practices used by the Company to manage these risks are described below.
(a) |
Credit risk |
Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Company’s receivables from customers. Management monitors the exposures to these credit risks on an ongoing basis.
The company only has one customer, which is Lagie SA. The Company has significant concentration of credit risk on trade and other receivables. Given Lagie SA is a state-controlled company, the management considered that the credit risk is at a low level and the trade receivable amounts are fully recoverable.
The maximum exposure to credit risk is represented by the carrying amount of each financial asset in the statement of financial position. The Company does not provide any guarantees which would expose the Company to credit risk.
(b) |
Liquidity risk |
Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. Management’s approach in managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company’s reputation. The Company is one of the subsidiaries of a larger group. The liquidity of the Company is primarily dependent on its ability to maintain adequate cash inflows from operations and obtain adequate finance from or through its holding companies.
As at December 31, 2013, the Company had net current assets of approximately Euros 13,211 (2012: Euros (4,460,485)).
The following table detail the remaining contractual maturities at the end of the reporting period of the Company’s financial liabilities, which are based on the contractual undiscounted cash flows (including interest payments computed using contractual rates) and the earliest date the Company can be required to pay:
As of December 31, 2012
Carrying amount |
Contractual undiscounted cash outflow |
|||||||||||||||||||
Within 1 year |
More than 1 year but less than 2 years |
More than 2 year but less than 5 years |
Total |
|||||||||||||||||
Trade and other payables |
4,676,411 | 4,676,411 | - | - | 4,676,411 | |||||||||||||||
Borrowings |
105,000 | - | - | 105,000 | 105,000 | |||||||||||||||
Total |
4,781,411 | 4,676,411 | - | 105,000 | 4,781,411 |
As of December 31, 2013
Carrying amount |
Contractual undiscounted cash outflow |
|||||||||||||||||||||||
Within 1 year |
More than 1 year but less than 2 years |
More than 2 years but less than 5 years |
More than 5 years |
Total |
||||||||||||||||||||
Trade and other payables |
837,002 | 837,002 | - | - | - | 837,002 | ||||||||||||||||||
Borrowings |
3,912,500 | - | 465,588 | 698,381 | 7,404,406 | 8,568,375 | ||||||||||||||||||
Total |
4,749,502 | 837,002 | 465,588 | 698,381 | 7,404,406 | 9,405,377 |
(c) |
Interest rate risk |
The Company’s interest rate risk arises primarily from interest-bearing borrowings. Borrowings issued at variable rates and at fixed rates expose the Company to cash flow interest rate risk, and fair value interest rate risk respectively. The Company normally borrows long term loans which carry fixed rates in order to limit its exposure to interest rate risk.
The following table details the interest rate profile of the Company’s borrowings at the end of reporting periods.
2013 |
2012 |
|||||||||||||||
Effective interest rate |
Carrying value |
Effective interest rate |
Carrying value |
|||||||||||||
Euro |
Euro |
|||||||||||||||
Fixed rate instruments: |
||||||||||||||||
Borrowings |
5.95 | % | 3,912,500 | 6.75 | % | 105,000 |
(d) |
Fair value measurement |
The Company did not hold any financial assets and liabilities carried at fair value as at December 31, 2013 and 2012.
The carrying amount of the Company’s financial assets and liabilities carried at cost or amortized cost are not materially different from their fair value as at December 31, 2013 and 2012.
NOTE 13—SHARE CAPITAL
(a) |
Movement of share capital |
2013 |
2012 |
|||||||
Number of Shares |
Number of Shares |
|||||||
In issue at January 1/date of incorporation |
6,000 | - | ||||||
Issued for cash |
13,875 | 6,000 | ||||||
In issue at December 31 |
19,875 | 6,000 |
The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at general meetings of the Company. All ordinary shares rank equally with regard to the Company’s residual asset.
During the period ended December 31, 2012, 6,000 ordinary shares were issued at a consideration of 60,000 to the prevailing shareholder of the Company.
During the year ended December 31, 2013, 138,750 ordinary shares were issued at a consideration of Euro 1,387,500 to the prevailing shareholder of the Company.
(b) Capital management
The Company’s objectives when managing capital are to safeguard the Company’s ability to continue as a going concern so that it can provide returns for equity holders and benefits for other stakeholders and secure access to finance at a reasonable cost.
NOTE 14—OPERATING LEASE COMMITMENT
At December 31, 2013, total future minimum lease payments under non-cancellable operating leases are payable as follows:
2013 |
2012 |
|||||||
Euro |
Euro |
|||||||
No later than 1 year |
12,300 | - | ||||||
Later than 1 year and no later than 5 years |
52,800 | - | ||||||
Later than 5 years |
13,200 | - | ||||||
Total |
78,300 | - |
The Company is the lessee in respect of the land on which the Photovoltaic Park is located. The lease is held under operating leases and does not include contingent rentals.
NOTE 15—RELATED PARTY TRANSACTIONS
The Company entered into the following material transactions with its related party during the reporting period:
(a) |
Finance Costs |
Year ended December 31 |
Period ended December 31 |
|||||||
In Euro |
2013 |
2012 |
||||||
|
|
|
||||||
Immediate holding company: |
||||||||
Sinsin Renewable |
84,331 | - |
The Company had the following balances with its related party at the end of the reporting period:
(b) |
Consultancy services fees |
In April 2013, the Company entered into services contracts with Dionic Energy S.A., Dionic AEBE and ATCOM Internet & Mutilmedia S.A. (“ATCOM”), related companies of Possession Limited (the prevailing shareholder of the Company), which agreed to provide the Company with consultancy services including but not limited to administration and information technology for a period ranging from 3 months to one year. The contract services fees payable to Dionic Energy S.A., Dionic AEBE and ATCOM amounted to Euros 210,000, Euros 295,000 and Euros 129,000 respectively. These services contracts had either been expired or early terminated when Sinsin Renewable acquired the entire equity interests of the Company on October 2, 2013 and becomes the shareholder of the Company. Upon the expiry or early termination of these services contracts, the Company paid the entire contract services fees totaling Euros 634,000, of which Euros 505,000 and Euros 129,000 were recognised in other expenses and administrative expenses respectively in the Company’s statement of profit or loss and other comprehensive income.
(c) |
Borrowings |
As of December 31 |
||||||||
In Euro |
2013 |
2012 |
||||||
|
||||||||
Immediate holding company: |
||||||||
Sinsin Renewable |
3,912,500 | - |
(d) |
Trade and other payables |
As of December 31 |
||||||||
In Euro |
2013 |
2012 |
||||||
|
||||||||
Immediate holding company: |
||||||||
Sinsin Renewable |
84,331 | - |
NOTE 16—IMMEDIATE AND ULTIMATE CONTROLLING PARTY
At December 31, 2013, the directors considered the immediate holding company to be Sinsin Renewable, which is incorporated in Malta, and ultimate holding company to be XINXING PIPES, which is incorporated in the PRC. XINXING PIPES produces financial statements in accordance with PRC accounting standards that are available for public use.
On December 1, 2014, SPI acquired all the equity interests of Sinsin Renewable and becomes the ultimate controlling party of the Company.
NOTE 17—SIGNIFICANT ACCOUNTING ESTIMATES AND JUDGEMENTS
Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.
The selection of critical accounting policies, the judgements and other uncertainties affecting application of those policies and the sensitivity of reported results to changes in conditions and assumptions are factors to be considered when reviewing the financial statements. The principal accounting policies are set forth in note 3. The Company believes the following critical accounting policies involve the most significant judgements and estimates used in the preparation of the financial statements.
(a) Impairment of property, plant and equipment
The Company conducts impairment reviews on property, plant and equipment when events of changes in circumstances indicate that their carrying amounts may not be recoverable. An impairment loss is recognised when the carrying amount of an asset is lower than the greater of its net selling price or the value in use. In determining the value in use, management assess the present value of the estimated future cash flows expected to arise from the continuing use of the asset and from its disposal at the end of its useful life. Significant estimates and judgements are applied in determining these future cash flows and the discount rate.
(b)Useful lives of property, plant and equipment
The Company’s management determines the estimated useful lives and related depreciation charges for its property, plant and equipment. This estimate is based on the historical experience of the actual useful lives of property, plant and equipment of similar nature and functions. It could change significantly as a result of technical innovations and competitor actions in response to severe industry cycles. Management will increase the depreciation charge where useful lives are less than previously estimated lives, or it will write-off or write-down technically obsolete or non-strategic assets that have been abandoned or sold.
(c)Provision for income taxes
The Company is subject to income taxes in the Greece. Significant judgment is required in determining the provision for income taxes. There are many transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made.
Deferred income tax assets relating to temporary differences and tax losses are recognised when management expects it is probable that future taxable profits will be available to utilise against the temporary difference or tax losses. Where the expectations are different from the original estimates, such differences will impact the recognition of deferred income tax assets in the period in which such estimates have been changed.
NOTE 18- POSSIBLE IMPACT OF AMENDMENTS, NEW STANDARDS AND INTERPRETATIONS ISSUED BUT NOT YET EFFECTIVE FOR THE ANNUAL ACCOUNTING PERIOD ENDED 31 DECEMBER 2013
Up to the date of issue of these financial statements, the IASB has issued a number of amendments, new standards and interpretations which are not yet effective for the year ended December 31, 2013 and which have not been adopted in these financial statements.
Effective annual financial periods beginning on or after | |
Amendments to IFRS 10, IFRS 12 and IAS 27, Investment entities |
January 1, 2014 |
Amendments to IAS 32, Financial instruments: Presentation - Offsetting financial assets and financial liabilities |
January 1, 2014 |
Amendments to IAS 36, Recoverable amount disclosure for non-financial assets |
January 1, 2014 |
Amendments to IAS 39, Novation of derivatives and continuation of hedge accounting |
January 1, 2014 |
IFRIC 21, Levies |
January 1, 2014 |
Amendments to IAS 19, Defined benefit plans: Employee contributions |
July 1, 2014 |
Annual improvements to IFRS 2010-2012 cycle |
July 1, 2014 |
Annual improvements to IFRS 2011-2013 cycle |
July 1, 2014 |
Annual improvements to IFRS 2012-2014 cycle |
January 1, 2016 |
Amendments to IFRS 11, Accounting for acquisitions of interests in joint ventures |
January 1, 2016 |
Amendments to IAS 16 and IAS 38, Clarification of acceptable methods of depreciation and amortization |
January 1, 2016 |
Amendments to IAS 27, Equity method in separate financial statements |
January 1, 2016 |
Amendments to IFRS 10 and IAS 28, Sale or contribution of assets between an investor and its associate or joint venture |
January 1, 2016 |
IFRS 15, Revenue from contracts with customers |
January 1, 2017 |
IFRS 9, Financial Instruments |
January 1, 2018 |
Management has made an initial assessment of what the impact of these amendments and new standards is expected to be in the period of initial application and has so far concluded that the adoption of them is unlikely to have a significant impact on the Company’s results of operations and financial position.
NOTE 19- SUBSEQUENT EVENT
In addition to those subsequent events disclosed in note 10 and note 16, the following event has taken place after December 31, 2013.
The Company’s revenue is subject to a special levy under the law of 4093/2012 pronounced in November 12, 2012 (the “Law 4093/2012”). Pursuant to the Law 4093/2012, the special levy would be charged for a period of 2 years starting from July 1, 2012. Pursuant to the Law of 4254/2014 voted and passed on April 7, 2014, the special levy under the Law 4093/2012 would no longer be charged from April 2014 onwards.
19
Exhibit 99.4
ASTRAIOS ENERGEIAKI PHOTOVOLTAIC PROJECTS A.E.
FINANCIAL STATEMENTS
DECEMBER 31, 2013 AND 2012
INDEX TO FINANCIAL STATEMENTS | |
|
|
Report of Independent Auditors |
2 |
Statements of Profit or Loss and Other Comprehensive Income |
3 |
Balance Sheets |
4 |
Statements of Changes in Equity |
5 |
Statements of Cash Flows |
6 |
Notes to the Financial Statements |
7 |
Independent Auditors’ Report
The Board of Directors
Astraios Energeiaki Photovoltaic Projects A.E.:
We have audited the accompanying balances sheets of Astraios Energeiaki Photovoltaic Projects A.E. (the “Company”) as of December 31, 2013 and 2012, and the related statements of profit or loss and other comprehensive income, changes in equity, and cash flows for the years then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2013 and 2012, and the results of its operations and its cash flows for the years then ended in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board.
/s/ KPMG Huazhen (SGP)
Shanghai, China
February 13, 2015
STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012
Year ended December 31 |
Year ended December 31 |
|||||||
In Euro |
2013 |
2012 |
||||||
Revenues (note 10) |
2,830,415 | - | ||||||
Cost of sales |
(1,775,154 | ) | - | |||||
Gross profit |
1,055,261 | - | ||||||
Other income |
1,800 | - | ||||||
Administrative expenses |
(78,636 | ) | (165,963 | ) | ||||
Other expenses |
(16 | ) | (9,462 | ) | ||||
Operating income/(loss) |
978,409 | (175,425 | ) | |||||
Finance costs (note 11) |
(660,545 | ) | (135 | ) | ||||
Profit/(Loss) before income taxes |
317,864 | (175,560 | ) | |||||
Income taxes (expense) / credit (note 7) |
(62,763 | ) | 33,090 | |||||
Profit/(Loss) for the year |
255,101 | (142,470 | ) | |||||
Other comprehensive income for the year |
- | - | ||||||
Total comprehensive income for the year |
255,101 | (142,470 | ) |
The accompanying notes are an integral part of these financial statements.
BALANCE SHEETS AS OF DECEMBER 31, 2013, DECEMBER 31, 2012 AND JANUARY 1, 2012
As of December 31 |
As of December 31 |
As of January 1 |
||||||||||
In Euro |
2013 |
2012 |
2012 |
|||||||||
ASSETS: |
||||||||||||
Property, plant and equipment (note 6) |
10,857,673 | 10,095,527 | 16,058 | |||||||||
Deferred tax assets (note 7(c)) |
250,681 | 33,090 | - | |||||||||
TOTAL NON-CURRENT ASSETS |
11,108,354 | 10,128,617 | 16,058 | |||||||||
CURRENT ASSETS: |
||||||||||||
Trade and other receivables (note 5) |
2,244,696 | 445,478 | 11,772 | |||||||||
Cash and cash equivalents (note 4) |
192,003 | 1,173,706 | 16,479 | |||||||||
TOTAL CURRENT ASSETS |
2,436,699 | 1,619,184 | 28,251 | |||||||||
TOTAL ASSETS |
13,545,053 | 11,747,801 | 44,309 | |||||||||
LIABILITIES AND EQUITY: |
||||||||||||
CURRENT LIABILITIES: |
||||||||||||
Income tax payables |
281,004 | 47,823 | - | |||||||||
Borrowings (note 8) |
177,411 | - | - | |||||||||
Trade and other payables (note 9) |
781,337 | 7,591,058 | 22,919 | |||||||||
TOTAL CURRENT LIABILITIES |
1,239,752 | 7,638,881 | 22,919 | |||||||||
NON-CURRENT LIABILITIES: |
||||||||||||
Borrowings (note 8) |
7,941,280 | - | - | |||||||||
TOTAL NON-CURRENT LIABILITIES |
7,941,280 | - | - | |||||||||
TOTAL LIABILITIES |
9,181,032 | 7,638,881 | 22,919 | |||||||||
EQUITY: |
||||||||||||
Share Capital (note 13) |
94,230 | 94,230 | 90,000 | |||||||||
Share premium |
4,225,770 | 4,225,770 | - | |||||||||
Retained earnings/(Accumulated losses) |
44,021 | (211,080 | ) | (68,610 | ) | |||||||
TOTAL EQUITY |
4,364,021 | 4,108,920 | 21,390 | |||||||||
TOTAL LIABILITIES AND EQUITY |
13,545,053 | 11,747,801 | 44,309 |
The accompanying notes are an integral part of these financial statements.
STATEMENTS OF CHANGES IN EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012
In Euro |
Share Capital |
Share premium |
Retained Earnings/ (Accumulated Losses) |
Total |
||||||||||||
|
|
|
|
|
||||||||||||
Balance at January 1, 2012 |
90,000 | - | (68,610 | ) | 21,390 | |||||||||||
|
||||||||||||||||
Changes in equity for the year |
||||||||||||||||
Loss for the year |
- | - | (142,470 | ) | (142,470 | ) | ||||||||||
Other comprehensive income |
- | - | - | - | ||||||||||||
Total comprehensive income |
- | - | (142,470 | ) | (142,470 | ) | ||||||||||
Issuance of shares |
4,230 | 4,225,770 | - | 4,230,000 | ||||||||||||
|
||||||||||||||||
Balance at December 31, 2012 |
94,230 | 4,225,770 | (211,080 | ) | 4,108,920 | |||||||||||
|
||||||||||||||||
|
||||||||||||||||
Balance at January 1, 2013 |
94,230 | 4,225,770 | (211,080 | ) | 4,108,920 | |||||||||||
|
||||||||||||||||
Changes in equity for the year |
||||||||||||||||
Profit for the year |
255,101 | 255,101 | ||||||||||||||
Other comprehensive income |
- | - | - | - | ||||||||||||
Total comprehensive income |
255,101 | 255,101 | ||||||||||||||
Balance at December 31, 2013 |
94,230 | 4,225,770 | 44,021 | 4,364,021 |
The accompanying notes are an integral part of these financial statements.
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012
Year ended December 31 |
Year ended December 31 |
|||||||
In Euro |
2013 |
2012 |
||||||
Cash flows from operating activities |
||||||||
Loss before taxation |
317,864 | (175,560 | ) | |||||
Adjustments for: |
||||||||
Depreciation |
413,268 | - | ||||||
Finance costs |
660,545 | 135 | ||||||
1,391,677 | (175,425 | ) | ||||||
Changes in: |
||||||||
Trade and other receivables |
(1,799,218 | ) | (433,706 | ) | ||||
Trade and other payables |
10,729 | 47,823 | ||||||
Cash used in operating activities |
(396,812 | ) | (561,308 | ) | ||||
Tax paid |
(47,173 | ) | - | |||||
Net cash used in operating activities |
(443,985 | ) | (561,308 | ) | ||||
Cash flows from investing activities |
||||||||
Purchase of property, plant and equipment |
(8,053,597 | ) | (2,511,330 | ) | ||||
Net cash used in investing activities |
(8,053,597 | ) | (2,511,330 | ) | ||||
Cash flows from financing activities |
||||||||
Issuance of shares |
- | 4,230,000 | ||||||
Proceeds from borrowings |
15,968,691 | - | ||||||
Payments of borrowings |
(7,850,000 | ) | - | |||||
Interest paid |
(602,812 | ) | (135 | ) | ||||
Net cash from financing activities |
7,515,879 | 4,229,865 | ||||||
Net (decrease)/increase in cash and cash equivalents |
(981,703 | ) | 1,157,227 | |||||
Cash and cash equivalents at beginning of the year |
1,173,706 | 16,479 | ||||||
Cash and cash equivalents at end of the year |
192,003 | 1,173,706 |
The accompanying notes are an integral part of these financial statements.
NOTE 1— REPORTING ENTITY
Astraios Energeiaki Photovoltaic Projects A.E. (the “Company”) is principally engaged in the development, investment and operation of Photovoltaica Parks.
The Company was incorporated on June 4, 2007. The address of its registered office is Acadimias 7, P.C. 10671, Athens. At 31 December, 2013, all equity interests of the Company were indirectly held by Sinsin Renewable Investment Limited (“Sinsin Renewable”), which was a subsidiary of Xinxing Pipes Ductile Iron Pipes Co., Ltd (“Xinxing Pipes”). On December 1, 2014, all equity interests of the Sinsin Renewable were acquired by Solar Power, Inc. (“SPI”), an entity whose common stock is traded on the Over the Counter Bulletin Board in the United States.
The accompanying financial statements were authorized for issue by the Board of Directors of the Company on February 13, 2015.
NOTE 2— BASIS OF PREPARATION OF FINANCIAL STATEMENTS
The accompanying financial statements of the Company have been prepared in accordance with all applicable International Financial Reporting Standards (“IFRSs”), which collective term includes all applicable individual International Financial Reporting Standards, International Accounting Standards (“IASs”) and Interpretations issued by the International Accounting Standards Board (“IASB”).
These are the Company’s first set of financial statements prepared in accordance with IFRSs and IFRS 1, “First Time Adoption of International Financial Reporting Standards”, has been applied. For local statutory filings in Greece, the Company has prepared its annual financial statements in accordance with generally accepted accounting principles in Greece (“Greece GAAP”) or “Previous GAAP”, as defined in IFRS1, since its date of incorporation on June 4, 2007.
The accounting policies set out in note 3 have been applied in preparing the financial statements for the year ended December 31, 2013 and the comparative information presented in these financial statements for the year ended December 31, 2012 and in the preparation of an opening IFRS balance sheet at January 1, 2012 (the date of transition). There were no material differences between IFRS and previous GAAP that were applicable to the Company’s balance sheet at January 1, 2012.
The financial statements have been prepared under the historical cost convention.
The preparation of financial statements in conformity with IFRSs requires the use of certain critical accounting estimates. It also requires management to exercise its judgment in the process of applying the Company’s accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in note 17. Actual results could differ from those estimates and such differences could affect the results of operations reported in future periods.
The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The realization of assets and the satisfaction of liabilities in the normal course of business are dependent on, among other things, the Company’s ability to operate profitably, to generate cash flows from operations, and to pursue financing arrangements to support its working capital requirements.
NOTE 3—SIGNIFICANT ACCOUNTING POLICIES
The principal accounting policies applied in the preparation of these financial statements are set out below.
3.1 CASH AND CASH EQUIVALENTS
Cash and cash equivalents consist of cash on hand and cash at banks with maturities of three months or less from the acquisition date that are subject to an insignificant risk of changes in their fair value, and are used by the Company in the management of its short-term commitments.
3.2 TRADE AND OTHER RECEIVABLES
Trade and other receivables are initially recognized at fair value and thereafter stated at amortized cost using the effective interest method, less allowance for impairment of doubtful debts (see note 3.5(b)), except where the receivables are interest-free loans made to related parties without any fixed repayment terms or the effect of discounting would be immaterial. In such cases, the receivables are stated at cost less allowance for impairment of doubtful debts.
3.3 FOREIGN CURRENCY TRANSACTIONS
The Company’s financial statements are presented in Euros, which is the functional currency of the Company.
Transactions denominated in foreign currencies are translated to the functional currency of the Company at the foreign exchange rates ruling at the transaction dates. Monetary assets and liabilities denominated in foreign currencies are translated at the foreign exchange rates ruling at the balance sheet date. Exchange gains and losses are recognized in profit or loss.
3.4 PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are stated at historical cost less accumulated depreciation and impairment losses (see note 3.5(a)).
Cost includes expenditure that is directly attributable to the acquisition of the items. Subsequent costs are included in the asset’s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the entity and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognized. All other repairs and maintenance are charged to the profit or loss as incurred. Subsequent costs are depreciated over the remaining useful life of the related asset.
Depreciation is calculated using the straight-line method to allocate the cost of the assets to their residual values over their estimated useful lives as follows:
Description |
Useful life (in years) |
|||
Photovoltaic park assets |
25 |
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each reporting date.
An item of property, plant and equipment and any significant part initially recognized is derecognized upon disposal or when no future economic benefits are expected from its use or disposal. Gains and losses on disposals are determined by comparing proceeds with carrying amount and are included in operating profit. Interest costs on borrowings specifically used to finance the construction of property, plant and equipment are capitalized during the construction period if recognition criteria are met.
3.5 IMPAIRMENT OF ASSETS
(a) Impairment of Property, Plant and Equipment
Property, plant and equipment are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognized for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. In assessing the value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflect current market assessments of the time value of money and the risks specific to the assets. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are independently identifiable cash flows (cash-generating units). Impairment loss is reversed if there has been a favorable change in the estimates used in determining the recoverable amount. A reversal in impairment loss is limited to the asset’s carrying amount that would have been determined had no impairment loss been recognized in prior years. Reversals of impairment losses are credited to profit or loss in the year in which the reversals are recognized.
(b) Impairment of Trade and Other Receivables
The Company assesses at the end of each reporting period whether there is objective evidence that trade and other receivable stated at amortized costs is impaired. Trade and other receivables is impaired and impairment losses are incurred only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the receivables (a ‘loss event’) and that loss event (or events) has an impact on the estimated future cash flows of the receivables that can be reliably estimated. The criteria that the Company uses to determine that there is objective evidence of an impairment loss include:
● |
significant financial difficulty of the debtor; |
● |
a breach of contract, such as a default or delinquency in interest or principal payments; |
● |
significant changes in the market, economic or legal environment that have an adverse effect on the debtor. |
For trade and other receivables, the impairment loss is measured as the difference between the receivables’ carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate, when the effect of discounting is material. The assessment is made collectively when the receivables share similar risk characteristics, such as similar past due status, and have not been individually assessed as impaired. The carrying amount of the receivables is reduced through the use of an allowance account when their recoverability are considered doubtful but not remote, and the amount of the loss is recognized in the profit or loss. When an amount of receivables is uncollectible, it is written off against the allowance account for receivables. Subsequent recoveries of amounts previously written off are credited to the profit or loss.
3.6 TAXATION
The tax expense for the period comprises current and deferred tax. Tax is recognized in the profit or loss, except to the extent that it relates to items recognized in other comprehensive income or directly in equity. In this case, the tax is also recognized in other comprehensive income or directly in equity, respectively.
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date in Greece. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.
Deferred income tax is recognized, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. However, the deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantively enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realized or the deferred income tax liability is settled.
Deferred income tax assets are recognized only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilized.
Deferred income tax is provided on temporary differences arising on investments in subsidiaries, except where the timing of the reversal of the temporary difference is controlled by the Company and it is probable that the temporary difference will not reverse in the foreseeable future.
Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income taxes assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where there is an intention to settle the balances on a net basis.
3.7 TRADE AND OTHER PAYABLES
Trade and other payables are recognized initially at fair value and subsequently measured at amortized cost unless the effect of discounting would be immaterial, in which case they are stated at cost.
3.8 INTEREST-BEARING BORROWINGS
Interest-bearing borrowings are recognized initially at fair value less attributable transaction costs. Subsequent to initial recognition, interest-bearing borrowings are stated at amortized cost with any difference between the amount initially recognized and redemption value being recognized in the profit or loss over the period of the borrowings, together with any interest and fees payable, using the effective interest method.
3.9 PROVISION AND CONTINGENCIES
Provisions are recognized for other liabilities of uncertain timing or amount when the Company has a legal or constructive obligation arising as a result of a past event, it is probable that an outflow of economic benefits will be required to settle the obligation and a reliable estimate can be made. Where the time value of money is material, provisions are stated at the present value of the expenditure expected to settle the obligation.
Where it is not probable that an outflow of economic benefits will be required, or the amount cannot be estimated reliably, the obligation is disclosed as a contingent liability, unless the probability of outflow of economic benefits is remote. Possible obligations, whose existence will only be confirmed by the occurrence or non-occurrence of one or more future events are also disclosed as contingent liabilities unless the probability of outflow of economic benefits is remote.
3.10 REVENUE
Revenue is measured at the fair value of the consideration received or receivable. Provided it is probable that the economic benefits will flow to the Company and the revenue and costs, if applicable, can be measured reliably, revenue is recognized in profit or loss as follows.
(a) |
Sales of Electricity |
Revenue from the sales of electricity is recognized when electricity has been delivered on grid and is measured based on the tariff rates determined by the relevant local government authority.
3.11 RELATED PARTY
a) |
A person, or a close member of that person’s family, is related to the Company if that person: |
i) |
has control or joint control over the Company; |
ii) |
has significant influence over the Company; or |
iii) |
is a member of the key management personnel of the Company or the Company’s parent or ultimate controlling shareholders. |
b) |
An entity is related to the Company if any of the following conditions applies: |
i) |
The entity and the Company are members of the same group; |
ii) |
One entity is an associate or joint venture of the other entity (or an associate of joint venture of a member of a group of with the other entity is a member); |
iii) |
Both entities are joint ventures of the same third party; |
iv) |
One entity is a joint venture of a third entity and the other entity is an associate of the third entity; |
v) |
The entity is a post-employment benefit plan for the benefit of employees of the Company or an entity related to the Company; |
vi) |
The entity is controlled or jointly controlled by a person identified in (a); |
vii) |
A person identified in (a)(i) has significant influence over the entity or is a member of the key management personnel of the entity (or of a parent of the entity); |
Close members of the family of a person are those family members who may be expected to influence, or be influenced by, that person in their dealings with the entity.
NOTE 4—CASH AND CASH EQUIVALENTS
As of December 31 |
As of December 31 |
As of January 1 |
||||||||||
In Euro |
2013 |
2012 |
2012 |
|||||||||
Cash on hand |
645 | - | - | |||||||||
Cash at banks |
191,358 | 1,173,706 | 16,479 | |||||||||
Total |
192,003 | 1,173,706 | 16,479 |
NOTE 5—TRADE AND OTHER RECEIVABLES
As of December 31 |
As of December 31 |
As of January 1 |
||||||||||
In Euro |
2013 |
2012 |
2012 |
|||||||||
|
||||||||||||
Trade receivables |
2,078,202 | - | - | |||||||||
Value added tax recoverable |
111,739 | 372,979 | - | |||||||||
Prepayment and others receivables |
54,755 | 72,499 | 11,772 | |||||||||
Total |
2,244,696 | 445,478 | 11,772 |
Trade receivable represent amount due from Lagie SA for the sales of electricity. Credit period of one month is normally granted to the customer. All trade receivables balances have been settled.
NOTE 6—PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are summarized as follows:
In Euro |
Photovoltaic park assets |
Construction in progress |
Total |
|||||||||
|
||||||||||||
|
|
|
||||||||||
Cost: |
||||||||||||
Balance at January 1, 2012 |
- | 16,058 | 16,058 | |||||||||
Additions |
- | 10,079,469 | 10,079,469 | |||||||||
Transfer from Construction in progress |
- | - | - | |||||||||
Balance at December 31, 2012 |
- | 10,095,527 | 10,095,527 | |||||||||
Balance at January 1, 2013 |
- | 10,095,527 | 10,095,527 | |||||||||
Additions |
1,175,414 | 1,175,414 | ||||||||||
Transfer from Construction in progress |
11,270,941 | (11,270,941 | ) | - | ||||||||
Balance at December 31, 2013 |
11,270,941 | - | 11,270,941 | |||||||||
|
||||||||||||
Accumulated depreciation: |
||||||||||||
Balance at January 1, 2012 |
- | - | - | |||||||||
Depreciation for the year |
- | - | - | |||||||||
Balance at December 31, 2012 |
- | - | - | |||||||||
Balance at January 1, 2013 |
- | - | - | |||||||||
Depreciation for the year |
(413,268 | ) | - | (413,268 | ) | |||||||
Balance at December 31, 2013 |
(413,268 |
) | - | (413,268 | ) | |||||||
|
||||||||||||
Net book value |
||||||||||||
At December 31, 2012 |
- | 10,095,527 | 10,095,527 | |||||||||
At December 31, 2013 |
10,857,673 | - | 10,857,673 |
Photovoltaic park assets primarily included costs of acquiring permits, construction fees of the park, costs of items installed in the park including solar panels, and other costs incurred that are directly attributable to getting the park ready for its intended use of grid connection with customer for supply of electricity.
NOTE 7—TAXATION
(a) |
Taxation in the profit or loss represents: |
Year ended December 31 |
Year ended December 31 |
|||||||
In Euro |
2013 |
2012 |
||||||
Current tax |
(280,354 | ) | - | |||||
Deferred tax – origination and reversal of temporary differences |
217,591 | 33,090 | ||||||
Tax (expense)/ credit |
(62,763 | ) | 33,090 |
On January 11, 2013, the Parliament of Greece enacted a new tax law-4110/2013 “Income Tax Provisions, Issues Related to the Authorities of the Ministry of Finance and other Regulations” (the “New Tax Law”). Under the New Tax Law, the income tax rate for entities incorporated in Greece changed from 20% to 26% for the statutory year ended from August 31, 2013 and thereafter. Therefore, the applicable income tax rate of the Company changed from 20% for the year ended December 31, 2012 to 26% for the year ended December 31, 2013.
(b) |
Reconciliation between tax (expense)/credit and accounting loss at applicable tax rate: |
Year ended December 31 |
Year ended December 31 |
|||||||
In Euro |
2013 |
2012 |
||||||
|
||||||||
Profit/(Loss) before taxation |
317,864 | (175,560 | ) | |||||
Notional tax on profit/(loss) before tax, calculated at the statutory tax rate of 26% (2012: 20%) |
(82,645 | ) | 35,112 | |||||
Change in tax rate |
9,927 | - | ||||||
Non-deductible expenses |
1,838 | - | ||||||
Others |
8,117 | (2,022 | ) | |||||
Total |
(62,763 | ) | 33,090 |
(c) |
Deferred tax assets and liabilities recognized: |
The components of deferred tax assets/ (liabilities) recognized in the balance sheet and the movements during the year are as follows:
In Euro |
Property plant and equipment |
Special levy * |
Others |
Total |
||||||||||||
|
|
|
|
|
||||||||||||
Balance at January 1, 2012 |
- | - | - | - | ||||||||||||
|
||||||||||||||||
Credit/(Charged) to profit or loss |
- | - | 33,090 | 33,090 | ||||||||||||
|
||||||||||||||||
Balance at December 31, 2012 |
- | - | 33,090 | 33,090 | ||||||||||||
|
||||||||||||||||
|
||||||||||||||||
Balance at January 1, 2013 |
- | - | 33,090 | 33,090 | ||||||||||||
|
||||||||||||||||
Credit/(Charged) to profit or loss |
29,560 | 220,343 | (32,312 | ) | 217,591 | |||||||||||
Balance at December 31, 2013 |
29,560 | 220,343 | 778 | 250,681 | ||||||||||||
|
|
|
|
|
* |
Special levy is deductible for tax purposes over 5 years but was expensed as incurred in the Company’s statement of profit or loss and other comprehensive income. |
NOTE 8—BORROWINGS
As of December 31 |
As of December 31 |
As of January 1 |
||||||||||
In Euro |
2013 |
2012 |
2012 |
|||||||||
Total borrowings |
8,118,691 | - | - | |||||||||
Less-current portion of borrowings payable within one year |
(177,411 | ) | - | - | ||||||||
Borrowings – non-current portion |
7,941,280 | - | - |
The Company’s borrowings at December 31, 2013 represent unsecured loans from related parties (see note 15(c)), which are charged at a fixed annual interest rate of 8% and is repayable by instalments with the last instalments due on November 28, 2033.
NOTE 9—TRADE AND OTHER PAYABLES
As of December 31 |
As of December 31 |
As of January 1 |
||||||||||
In Euro |
2013 |
2012 |
2012 |
|||||||||
Payables for property plants and equipment |
712,875 | 7,591,058 | 14,998 | |||||||||
Accrued interests on borrowings |
57,733 | - | - | |||||||||
Other payable and accruals |
10,729 | - | 7,921 | |||||||||
Total |
781,337 | 7,591,058 | 22,919 |
NOTE 10—REVENUE
Year ended December 31 |
Year ended December 31 |
|||||||
In Euro |
2013 |
2012 |
||||||
|
||||||||
Sales of electricity |
2,830,415 | - |
Revenue represents sales of electricity generated from Photovoltaic Park assets owned by the Company. The Company entered into long-term power purchase contract with Lagie SA in Greece, the sole customer of the Company, for the supply of electricity at the prevailing effective tariff rate determined by the relevant local government authority in Greece. Lagie SA is a state-controlled company in Greece.
On April 7, 2014, Law 4254/2014 (the “Law 4254/2014”) was voted and passed in Greece. Pursuant to the Law 4254/2014, the tariff for sales of electricity by Photovoltaic Parks in Greece was reduced by 30%~37.5% effective from January 1, 2013. As of December 31, 2013, management considered the likelihood of a downward adjustment of the tariff for electricity sale of the Company made to the customer and concluded that it was probable such a retrospective adjustment would be imposed by the government authority upon passage of the new law. Accordingly, management has recorded the Company’s revenue for the year ended December 31, 2013 in the accompanying financial statements based on the adjusted 2013 tariff rate under the Law 4254/2014.
NOTE 11—FINANCE COSTS
Year ended December 31 |
Year ended December 31 |
|||||||
In Euro |
2013 |
2012 |
||||||
|
||||||||
Interest expenses on borrowings |
516,451 | - | ||||||
Other finance charges |
144,094 | 135 | ||||||
Finance costs recognized in profit or loss |
660,545 | 135 |
NOTE 12—FINANCIAL INSTRUMENTS—RISK MANAGEMENT AND FAIR VALUES
The Company’s activities in the normal course expose the Company to credit risk, liquidity risk and interest rate risk.
The Company’s exposure to these risks and the financial risk management policies and practices used by the Company to manage these risks are described below.
(a) |
Credit risk |
Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Company’s receivables from customers. Management monitors the exposures to these credit risks on an ongoing basis.
The company only has one customer, which is Lagie SA. The Company has significant concentration of credit risk on trade and other receivables. Given Lagie SA is a state-controlled company, the management considered that the credit risk is at a low level and the trade receivable amounts are fully recoverable.
The maximum exposure to credit risk is represented by the carrying amount of each financial asset in the statement of financial position. The Company does not provide any guarantees which would expose the Company to credit risk.
(b) |
Liquidity risk |
Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. Management’s approach in managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company’s reputation. The Company is one of the subsidiaries of a larger group. The liquidity of the Company is primarily dependent on its ability to maintain adequate cash inflows from operations and obtain adequate finance from or through its holding companies.
As at December 31, 2013, the Company had net current assets of approximately Euros 1,196,947 (2012: net current liabilities of Euros 6,019,697).
The following table detail the remaining contractual maturities at the end of the reporting period of the Company’s financial liabilities, which are based on the contractual undiscounted cash flows (including interest payments computed using contractual rates) and the earliest date the Company can be required to pay:
As of December 31, 2012
Carrying amount |
Contractual undiscounted cash outflow |
|||||||||||||||||||
Within 1 year |
More than 1 year but less than 2 years |
More than 2 year but less than 5 years |
Total |
|||||||||||||||||
Trade and other payables |
7,591,058 | 7,591,058 | - | - | 7,591,058 | |||||||||||||||
Total |
7,591,058 | 7,591,058 | - | - | 7,591,058 |
As of December 31, 2013
Carrying amount |
Contractual undiscounted cash outflow |
|||||||||||||||||||||||
Within 1 year |
More than 1 year but less than 2 years |
More than 2 year but less than 5 years |
More than 5 years |
Total |
||||||||||||||||||||
Trade and other payables |
781,337 | 781,337 | - | - | - | 781,337 | ||||||||||||||||||
Borrowings |
8,118,691 | 826,906 | 826,906 | 2,480,718 | 12,403,590 | 16,538,120 | ||||||||||||||||||
Total |
8,900,028 | 1,608,243 | 826,906 | 2,480,718 | 12,403,590 | 17,319,457 |
(c) |
Interest rate risk |
The Company’s interest rate risk arises primarily from interest-bearing borrowings. Borrowings issued at variable rates and at fixed rates expose the Company to cash flow interest rate risk, and fair value interest rate risk respectively. The Company normally borrows long term loans which carry fixed rates in order to limit its exposure to interest rate risk.
The following table details the interest rate profile of the Company’s borrowings at the end of reporting periods.
2013 |
2012 |
|||||||||||||||
Effective interest rate |
Carrying value |
Effective interest rate |
Carrying value |
|||||||||||||
Euro |
Euro |
|||||||||||||||
Fixed rate instruments: |
||||||||||||||||
Borrowings |
8 | % | 8,118,691 | - | - |
(d) |
Fair value measurement |
The Company did not hold any financial assets and liabilities carried at fair value as at December 31, 2013 and 2012.
The carrying amount of the Company’s financial assets and liabilities carried at cost or amortized cost are not materially different from their fair value as at December 31, 2013 and 2012.
NOTE 13—SHARE CAPITAL
(a) |
Movement of share capital |
2013 |
2012 |
|||||||
Number of Shares |
Number of Shares |
|||||||
In issue at January 1 |
9,423 | 9,000 | ||||||
Issued for cash |
- | 423 | ||||||
In issue at December 31 |
9,423 | 9,423 | ||||||
Authorized – par value Euros 10 |
9,423 | 9,423 |
The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at general meetings of the Company. All ordinary shares rank equally with regard to the Company’s residual asset.
During the year ended December 31, 2012, 423 ordinary shares were issued at a consideration of Euro 10,000 per share to the prevailing shareholder of the Company.
(b) Capital management
The Company’s objectives when managing capital are to safeguard the Company’s ability to continue as a going concern so that it can provide returns for equity holders and benefits for other stakeholders and secure access to finance at a reasonable cost.
NOTE 14—OPERATING LEASE COMMITMENT
At December 31, 2013 and 2012, total future minimum lease payments under non-cancellable operating leases are payable as follows:
2013 |
2012 | ||
Euro |
Euro | ||
No later than 1 year |
279,000 |
238,568 | |
Later than 1 year and no later than 5 years |
1,120,800 |
1,119,600 | |
Later than 5 years |
4,358,712 |
4,638,912 | |
Total |
5,758,512 |
5,997,080 |
The Company is the lessee in respect of the land on which the Photovoltaic Park is located. The lease is held under operating leases and does not include contingent rentals.
NOTE 15—RELATED PARTY TRANSACTIONS
Names of related parties |
Relationship with the Company |
Sinsin Renewable |
Intermediate holding company |
PHOTOVOLTAICA PARKA VEROIA 1 MALTA LIMITED (“VEROIA MALTA”) |
Fellow subsidiary |
ETVA VIPE S.A. |
Former shareholder |
Bank of Piraeus |
Ultimate parent company of the former shareholder |
The Company entered into the following material transactions with its related parties during the reporting period:
(a) |
FINANCE COSTS |
Year ended December 31 |
Year ended December 31 |
|||||||
In Euro |
2013 |
2012 |
||||||
|
||||||||
Sinsin Renewable |
51,960 | - | ||||||
VEROIA MALTA |
5,773 | - | ||||||
Bank of Piraeus |
602,812 | 135 | ||||||
Total |
660,545 | 135 |
During the year ended December 31, 2013, the Company borrowed from Bank of Piraeus a pledged loan of Euro 7,850,000 (“Piraeus Loan”), which bears interests at an annual rate of 6.94% and is repayable in December 20, 2022. In November 2013, the Company borrowed loans from Sinsin Renewable and VEROIA MALTA of Euro 7,306,822 and Euro 811,869, respectively, which had been fully used to settle all the outstanding balances of loan principal and interests relating to the Piraeus Loan.
(b) |
LEASE EXPENSES |
Year ended December 31 |
Year ended December 31 |
|||||||
In Euro |
2013 |
2012 |
||||||
|
||||||||
ETVA VIPE S.A. |
217,191 | 119,412 |
The Company had the following balances with its related parties at the end of the reporting period:
(c) |
BORROWINGS |
As of December 31 |
As of December 31 |
As of January 1 |
||||||||||
In Euro |
2013 |
2012 |
2012 |
|||||||||
|
||||||||||||
Sinsin Renewable |
7,306,822 | - | - | |||||||||
VEROIA MALTA |
811,869 | - | - | |||||||||
Total |
8,118,691 | - | - |
(d) |
TRADE AND OTHER PAYABLES |
As of December 31 |
As of December 31 |
As of January 1 |
||||||||||
In Euro |
2013 |
2012 |
2012 |
|||||||||
ETVA VIPE S.A. |
132,541* | 130,728 | 7,961 | |||||||||
Sinsin Renewable |
51,960 | - | - | |||||||||
VEROIA MALTA |
5,773 | - | - | |||||||||
Total |
190,274 | 130,728 | 7,961 |
* ETVA VIPE S.A. had been the Company’s shareholder until November 2013 when Sinsin Renewable acquired all the equity interests of the Company from ETVA VIPE S.A.
NOTE 16—IMMEDIATE AND ULTIMATE CONTROLLING PARTY
At December 31, 2013, the directors considered the immediate holding company to be VELTIMO LTD, which is incorporated in Cyprus and wholly owned by Sinsin Renewable, and ultimate holding company to be XINXING PIPES, which is incorporated in the PRC. XINXING PIPES produces financial statements in accordance with PRC accounting standards that are available for public use.
On December 1, 2014, SPI acquired all the equity interests of Sinsin Renewable and becomes the ultimate controlling party of the Company.
NOTE 17—SIGNIFICANT ACCOUNTING ESTIMATES AND JUDGEMENTS
Estimates and judgments are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.
The selection of critical accounting policies, the judgments and other uncertainties affecting application of those policies and the sensitivity of reported results to changes in conditions and assumptions are factors to be considered when reviewing the financial statements. The principal accounting policies are set forth in note 3. The Company believes the following critical accounting policies involve the most significant judgments and estimates used in the preparation of the financial statements.
(a) Impairment of property, plant and equipment
The Company conducts impairment reviews on property, plant and equipment when events of changes in circumstances indicate that their carrying amounts may not be recoverable. An impairment loss is recognized when the carrying amount of an asset is lower than the greater of its net selling price or the value in use. In determining the value in use, management assess the present value of the estimated future cash flows expected to arise from the continuing use of the asset and from its disposal at the end of its useful life. Significant estimates and judgments are applied in determining these future cash flows and the discount rate.
(b)Useful lives of property, plant and equipment
The Company’s management determines the estimated useful lives and related depreciation charges for its property, plant and equipment. This estimate is based on the historical experience of the actual useful lives of property, plant and equipment of similar nature and functions. It could change significantly as a result of technical innovations and competitor actions in response to severe industry cycles. Management will increase the depreciation charge where useful lives are less than previously estimated lives, or it will write-off or write-down technically obsolete or non-strategic assets that have been abandoned or sold.
(c)Provision for income taxes
The Company is subject to income taxes in the Greece. Significant judgment is required in determining the provision for income taxes. There are many transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made.
Deferred income tax assets relating to temporary differences and tax losses are recognized when management expects it is probable that future taxable profits will be available to utilize against the temporary difference or tax losses. Where the expectations are different from the original estimates, such differences will impact the recognition of deferred income tax assets in the period in which such estimates have been changed.
NOTE 18- POSSIBLE IMPACT OF AMENDMENTS, NEW STANDARDS AND INTERPRETATIONS ISSUED BUT NOT YET EFFECTIVE FOR THE ANNUAL ACCOUNTING PERIOD ENDED 31 DECEMBER 2013
Up to the date of issue of these financial statements, the IASB has issued a number of amendments, new standards and interpretations which are not yet effective for the year ended December 31, 2013 and which have not been adopted in these financial statements.
Effective annual financial periods beginning on or after | |
Amendments to IFRS 10, IFRS 12 and IAS 27, Investment entities |
1 January 2014 |
Amendments to IAS 32, Financial instruments: Presentation - Offsetting financial assets and financial liabilities |
1 January 2014 |
Amendments to IAS 36, Recoverable amount disclosure for non-financial assets |
1 January 2014 |
Amendments to IAS 39, Novation of derivatives and continuation of hedge accounting |
1 January 2014 |
IFRIC 21, Levies |
1 January 2014 |
Amendments to IAS 19, Defined benefit plans: Employee contributions |
1 July 2014 |
Annual improvements to IFRS 2010-2012 cycle |
1 July 2014 |
Annual improvements to IFRS 2011-2013 cycle |
1 July 2014 |
Annual improvements to IFRS 2012-2014 cycle |
1 January 2016 |
Amendments to IFRS 11, Accounting for acquisitions of interests in joint ventures |
1 January 2016 |
Amendments to IAS 16 and IAS 38, Clarification of acceptable methods of depreciation and amortization |
1 January 2016 |
Amendments to IAS 27, Equity method in separate financial statements |
1 January 2016 |
Amendments to IFRS 10 and IAS 28, Sale or contribution of assets between an investor and its associate or joint venture |
1 January 2016 |
IFRS 15, Revenue from contracts with customers |
1 January 2017 |
IFRS 9, Financial Instruments |
1 January 2018 |
Management has made an initial assessment of what the impact of these amendments and new standards is expected to be in the period of initial application and has so far concluded that the adoption of them is unlikely to have a significant impact on the Company’s results of operations and financial position.
NOTE 19- SUBSEQUENT EVENT
In addition to those subsequent events disclosed in note 10 and note 16, the following event has taken place after December 31, 2013.
The Company’s revenue is subject to a special levy under the law of 4093/2012 pronounced in November 12, 2012 (the “Law 4093/2012”). Pursuant to the Law 4093/2012, the special levy would be charged for a period of 2 years starting from July 1, 2012. Pursuant to the Law of 4254/2014 voted and passed on April 7, 2014, the special levy under the Law 4093/2012 would no longer be charged from April 2014 onwards.
19
Exhibit 99.5
ORION ENERGEIAKI ANONIMI ETAIREIA
FINANCIAL STATEMENTS
DECEMBER 31, 2013 AND 2012
INDEX TO FINANCIAL STATEMENTS | |
|
|
Report of Independent Auditors |
2 |
Statements of Profit or Loss and Other Comprehensive Income |
3 |
Balance Sheets |
4 |
Statements of Changes in Equity |
5 |
Statements of Cash Flows |
6 |
Notes to the Financial Statements |
7 |
Independent Auditors’ Report
The Board of Directors
Orion Energeiaki Anonimi Etaireia:
We have audited the accompanying balance sheets of Orion Energeiaki Anonimi Etaireia (the “Company”) as of December 31, 2013 and 2012, and the related statements of profit or loss and other comprehensive income, changes in equity, and cash flows for the years then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2013 and 2012, and the results of its operations and its cash flows for the years then ended in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board.
/s/ KPMG Huazhen (SGP)
Shanghai, China
February 13, 2015
STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012
Year ended December 31 |
Year ended December 31 |
|||||||
In Euro |
2013 |
2012 |
||||||
Revenues (note 10) |
2,512,852 | - | ||||||
Cost of sales |
(1,461,857 | ) | - | |||||
Gross profit |
1,050,995 | - | ||||||
Other income |
1,800 | - | ||||||
Administrative expenses |
(88,338 | ) | (112,148 | ) | ||||
Other expenses |
(14 | ) | (9,564 | ) | ||||
Operating profit/(loss) |
964,443 | (121,712 | ) | |||||
Finance costs (note 11) |
(549,640 | ) | (75 | ) | ||||
Profit/(loss) before income taxes |
414,803 | (121,787 | ) | |||||
Income taxes (expense)/credit (note 7) |
(91,216 | ) | 22,412 | |||||
Profit/(loss) for the year |
323,587 | (99,375 | ) | |||||
Other comprehensive income for the year |
- | - | ||||||
Total comprehensive income for the year |
323,587 | (99,375 | ) |
The accompanying notes are an integral part of these financial statements.
BALANCE SHEETS AS OF DECEMBER 31, 2013, DECEMBER 31, 2012 AND JANUARY 1, 2012
As of December 31 |
As of December 31 |
As of January 1 |
||||||||||
In Euro |
2013 |
2012 |
2012 |
|||||||||
ASSETS: |
||||||||||||
Property, plant and equipment (note 6) |
8,944,400 | 8,549,147 | 16,104 | |||||||||
Deferred tax assets (note 7(c)) |
220,713 | 22,412 | - | |||||||||
TOTAL NON-CURRENT ASSETS |
9,165,113 | 8,571,559 | 16,104 | |||||||||
CURRENT ASSETS: |
||||||||||||
Trade and other receivables (note 5) |
1,926,025 | 442,894 | 11,830 | |||||||||
Cash and cash equivalents (note 4) |
242,180 | 874,683 | 17,152 | |||||||||
TOTAL CURRENT ASSETS |
2,168,205 | 1,317,577 | 28,982 | |||||||||
TOTAL ASSETS |
11,333,318 | 9,889,136 | 45,086 | |||||||||
LIABILITIES AND EQUITY: |
||||||||||||
CURRENT LIABILITIES: |
||||||||||||
Income tax payables |
290,073 | 45,080 | - | |||||||||
Borrowings (note 8) |
146,518 | - | - | |||||||||
Trade and other payables (note 9) |
622,231 | 6,451,580 | 23,235 | |||||||||
TOTAL CURRENT LIABILITIES |
1,058,822 | 6,496,660 | 23,235 | |||||||||
NON-CURRENT LIABILITIES: |
||||||||||||
Borrowings (note 8) |
6,558,433 | - | - | |||||||||
TOTAL NON-CURRENT LIABILITIES |
6,558,433 | - | - | |||||||||
TOTAL LIABILITIES |
7,617,255 | 6,496,660 | 23,235 | |||||||||
EQUITY: |
||||||||||||
Share Capital (note 13) |
94,470 | 94,470 | 91,000 | |||||||||
Share premium |
3,466,530 | 3,466,530 | - | |||||||||
Retained earnings/(accumulated losses) |
155,063 | (168,524 | ) | (69,149 | ) | |||||||
TOTAL EQUITY |
3,716,063 | 3,392,476 | 21,851 | |||||||||
TOTAL LIABILITIES AND EQUITY |
11,333,318 | 9,889,136 | 45,086 |
The accompanying notes are an integral part of these financial statements.
STATEMENTS OF CHANGES IN EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012
In Euro |
Share Capital |
Share premium |
(Accumulated losses)/ retained earnings |
Total |
||||||||||||
|
|
|
|
|
||||||||||||
Balance at January 1, 2012 |
91,000 | - | (69,149 | ) | 21,851 | |||||||||||
|
||||||||||||||||
Changes in equity for the year |
||||||||||||||||
Loss for the year |
- | - | (99,375 | ) | (99,375 | ) | ||||||||||
Other comprehensive income |
- | - | - | - | ||||||||||||
Total comprehensive income |
- | - | (99,375 | ) | (99,375 | ) | ||||||||||
Issuance of shares |
3,470 | 3,466,530 | - | 3,470,000 | ||||||||||||
|
||||||||||||||||
Balance at December 31, 2012 |
94,470 | 3,466,530 | (168,524 | ) | 3,392,476 | |||||||||||
|
||||||||||||||||
|
||||||||||||||||
Balance at January 1, 2013 |
94,470 | 3,466,530 | (168,524 | ) | 3,392,476 | |||||||||||
|
||||||||||||||||
Changes in equity for the year |
||||||||||||||||
Profit for the year |
- | - | 323,587 | 323,587 | ||||||||||||
Other comprehensive income |
- | - | - | - | ||||||||||||
Total comprehensive income |
- | - | 323,587 | 323,587 | ||||||||||||
Balance at December 31, 2013 |
94,470 | 3,466,530 | 155,063 | 3,716,063 |
The accompanying notes are an integral part of these financial statements.
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012
Year ended December 31 |
Year ended December 31 |
|||||||
In Euro |
2013 |
2012 |
||||||
Cash flows from operating activities |
||||||||
Profit/(loss) before taxation |
414,803 | (121,787 | ) | |||||
Adjustments for: |
||||||||
Depreciation |
340,444 | - | ||||||
Finance costs |
549,640 | 75 | ||||||
Changes in: |
||||||||
Trade and other receivables |
(1,483,131 | ) | (431,064 | ) | ||||
Trade and other payables |
10,227 | 45,080 | ||||||
Cash used in operating activities |
(168,017 | ) | (507,696 | ) | ||||
Tax paid |
(44,524 | ) | - | |||||
Net cash used in operating activities |
(212,541 | ) | (507,696 | ) | ||||
Cash flows from investing activities |
||||||||
Purchase of property, plant and equipment |
(6,622,953 | ) | (2,104,698 | ) | ||||
Net cash used in investing activities |
(6,622,953 | ) | (2,104,698 | ) | ||||
Cash flows from financing activities |
||||||||
Issuance of shares |
- | 3,470,000 | ||||||
Proceeds from borrowings |
13,304,951 | - | ||||||
Payments of borrowings |
(6,600,000 | ) | - | |||||
Interest paid |
(501,960 | ) | (75 | ) | ||||
Net cash from financing activities |
6,202,991 | 3,469,925 | ||||||
Net (decrease)/increase in cash and cash equivalents |
(632,503 | ) | 857,531 | |||||
Cash and cash equivalents at beginning of the year |
874,683 | 17,152 | ||||||
Cash and cash equivalents at end of the year |
242,180 | 874,683 |
The accompanying notes are an integral part of these financial statements.
NOTE 1— REPORTING ENTITY
Orion Energeiaki Anonimi Etaireia (the “Company”) is principally engaged in the development, investment and operation of Photovoltaica Park.
The Company was incorporated on June 4, 2007. The address of its registered office is 75 VAS. SOFIAS AVE., 11521 ATHENS. At December 31, 2013, all equity interests of the Company were indirectly held by Sin Sin Renewable Investment Limited (“Sinsin Renewable”), which was a subsidiary of Xinxing Pipes Ductile Iron Pipes Co., Ltd (“Xinxing Pipes ”). On December 1, 2014, all equity interests of the Sinsin Renewable were acquired by Solar Power, Inc. (“SPI”), an entity whose common stock is traded on the Over the Counter Bulletin Board in the United States.
The accompanying financial statements were authorized for issue by the Board of Directors of the Company on February 13, 2015.
NOTE 2— BASIS OF PREPARATION OF FINANCIAL STATEMENTS
The accompanying financial statements of the Company have been prepared in accordance with all applicable International Financial Reporting Standards (“IFRSs”), which collective term includes all applicable individual International Financial Reporting Standards, International Accounting Standards (“IASs”) and Interpretations issued by the International Accounting Standards Board (“IASB”).
These are the Company’s first set of financial statements prepared in accordance with IFRSs and IFRS 1, “First Time Adoption of International Financial Reporting Standards”, has been applied. For local statutory filings in Greece, the Company has prepared its annual financial statements in accordance with generally accepted accounting principles in Greece (“Greece GAAP”) or “Previous GAAP”, as defined in IFRS1, since its date of incorporation on June 4, 2007.
The accounting policies set out in note 3 have been applied in preparing the financial statements for the year ended December 31, 2013 and the comparative information presented in these financial statements for the year ended December 31, 2012 and in the preparation of an opening IFRS balance sheet at January 1, 2012 (the date of transition). There were no significant differences between IFRS and previous GAAP that were applicable to the Company’s balance sheet at January 1, 2012.
The financial statements have been prepared under the historical cost convention.
The preparation of financial statements in conformity with IFRSs requires the use of certain critical accounting estimates. It also requires management to exercise its judgment in the process of applying the Company’s accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in note 17. Actual results could differ from those estimates and such differences could affect the results of operations reported in future periods.
The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The realization of assets and the satisfaction of liabilities in the normal course of business are dependent on, among other things, the Company’s ability to operate profitably, to generate cash flows from operations, and to pursue financing arrangements to support its working capital requirements.
NOTE 3—SIGNIFICANT ACCOUNTING POLICIES
The principal accounting policies applied in the preparation of these financial statements are set out below.
3.1 CASH AND CASH EQUIVALENTS
Cash and cash equivalents consist of cash on hand and cash at banks with maturities of three months or less from the acquisition date that are subject to an insignificant risk of changes in their fair value, and are used by the Company in the management of its short-term commitments.
3.2 TRADE AND OTHER RECEIVABLES
Trade and other receivables are initially recognized at fair value and thereafter stated at amortized cost using the effective interest method, less allowance for impairment of doubtful debts (see note 3.5(b)), except where the receivables are interest-free loans made to related parties without any fixed repayment terms or the effect of discounting would be immaterial. In such cases, the receivables are stated at cost less allowance for impairment of doubtful debts.
3.3 FOREIGN CURRENCY TRANSACTIONS
The Company’s financial statements are presented in Euros, which is the functional currency of the Company.
Transactions denominated in foreign currencies are translated to the functional currency of the Company at the foreign exchange rates ruling at the transaction dates. Monetary assets and liabilities denominated in foreign currencies are translated at the foreign exchange rates ruling at the balance sheet date. Exchange gains and losses are recognized in profit or loss.
3.4 PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are stated at historical cost less accumulated depreciation and impairment losses (see note 3.5(a)).
Cost includes expenditure that is directly attributable to the acquisition of the items. Subsequent costs are included in the asset’s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the entity and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognized. All other repairs and maintenance are charged to the profit or loss as incurred. Subsequent costs are depreciated over the remaining useful life of the related asset.
Depreciation is calculated using the straight-line method to allocate the cost of the assets to their residual values over their estimated useful lives as follows:
Description |
Useful life (in years) |
|||
Photovoltaic park assets |
25 |
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each reporting date.
An item of property, plant and equipment and any significant part initially recognized is derecognized upon disposal or when no future economic benefits are expected from its use or disposal. Gains and losses on disposals are determined by comparing proceeds with carrying amount and are included in operating profit. Interest costs on borrowings specifically used to finance the construction of property, plant and equipment are capitalized during the construction period if recognition criteria are met.
3.5 IMPAIRMENT OF ASSETS
(a) Impairment of Property, Plant and Equipment
Property, plant and equipment are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognized for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. In assessing the value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflect current market assessments of the time value of money and the risks specific to the assets. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are independently identifiable cash flows (cash-generating units). Impairment loss is reversed if there has been a favourable change in the estimates used in determining the recoverable amount. A reversal in impairment loss is limited to the asset’s carrying amount that would have been determined had no impairment loss been recognized in prior years. Reversals of impairment losses are credited to profit or loss in the year in which the reversals are recognized.
(b) Impairment of Trade and Other Receivables
The Company assesses at the end of each reporting period whether there is objective evidence that trade and other receivable stated at amortized costs is impaired. Trade and other receivables is impaired and impairment losses are incurred only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the receivables (a ‘loss event’) and that loss event (or events) has an impact on the estimated future cash flows of the receivables that can be reliably estimated. The criteria that the Company uses to determine that there is objective evidence of an impairment loss include:
● |
significant financial difficulty of the debtor; |
● |
a breach of contract, such as a default or delinquency in interest or principal payments; |
● |
significant changes in the market, economic or legal environment that have an adverse effect on the debtor. |
For trade and other receivables, the impairment loss is measured as the difference between the receivables’ carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate, when the effect of discounting is material. The assessment is made collectively when the receivables share similar risk characteristics, such as similar past due status, and have not been individually assessed as impaired. The carrying amount of the receivables is reduced through the use of an allowance account when their recoverability are considered doubtful but not remote, and the amount of the loss is recognized in the profit or loss. When an amount of receivables is uncollectible, it is written off against the allowance account for receivables. Subsequent recoveries of amounts previously written off are credited to the profit or loss.
3.6 TAXATION
The tax expense for the period comprises current and deferred tax. Tax is recognized in the profit or loss, except to the extent that it relates to items recognized in other comprehensive income or directly in equity. In this case, the tax is also recognized in other comprehensive income or directly in equity, respectively.
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date in Greece. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.
Deferred income tax is recognized, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. However, the deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantively enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realized or the deferred income tax liability is settled.
Deferred income tax assets are recognized only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilized.
Deferred income tax is provided on temporary differences arising on investments in subsidiaries, except where the timing of the reversal of the temporary difference is controlled by the Company and it is probable that the temporary difference will not reverse in the foreseeable future.
Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income taxes assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where there is an intention to settle the balances on a net basis.
3.7 TRADE AND OTHER PAYABLES
Trade and other payables are recognized initially at fair value and subsequently measured at amortized cost unless the effect of discounting would be immaterial, in which case they are stated at cost.
3.8 INTEREST-BEARING BORROWINGS
Interest-bearing borrowings are recognized initially at fair value less attributable transaction costs. Subsequent to initial recognition, interest-bearing borrowings are stated at amortized cost with any difference between the amount initially recognized and redemption value being recognized in the profit or loss over the period of the borrowings, together with any interest and fees payable, using the effective interest method.
3.9 PROVISION AND CONTINGENCIES
Provisions are recognized for other liabilities of uncertain timing or amount when the Company has a legal or constructive obligation arising as a result of a past event, it is probable that an outflow of economic benefits will be required to settle the obligation and a reliable estimate can be made. Where the time value of money is material, provisions are stated at the present value of the expenditure expected to settle the obligation.
Where it is not probable that an outflow of economic benefits will be required, or the amount cannot be estimated reliably, the obligation is disclosed as a contingent liability, unless the probability of outflow of economic benefits is remote. Possible obligations, whose existence will only be confirmed by the occurrence or non-occurrence of one or more future events are also disclosed as contingent liabilities unless the probability of outflow of economic benefits is remote.
3.10 REVENUE
Revenue is measured at the fair value of the consideration received or receivable. Provided it is probable that the economic benefits will flow to the Company and the revenue and costs, if applicable, can be measured reliably, revenue is recognized in profit or loss as follows.
(a) |
Sales of Electricity |
Revenue from the sales of electricity is recognized when electricity has been delivered on grid and is measured based on the tariff rates determined by the relevant local government authority.
3.11 RELATED PARTY
a) |
A person, or a close member of that person’s family, is related to the Company if that person: |
i) |
has control or joint control over the Company; |
ii) |
has significant influence over the Company; or |
iii) |
is a member of the key management personnel of the Company or the Company’s parent or ultimate controlling shareholders. |
b) |
An entity is related to the Company if any of the following conditions applies: |
i) |
The entity and the Company are members of the same group; |
ii) |
One entity is an associate or joint venture of the other entity (or an associate of joint venture of a member of a group of with the other entity is a member); |
iii) |
Both entities are joint ventures of the same third party; |
iv) |
One entity is a joint venture of a third entity and the other entity is an associate of the third entity; |
v) |
The entity is a post-employment benefit plan for the benefit of employees of the Company or an entity related to the Company; |
vi) |
The entity is controlled or jointly controlled by a person identified in (a); |
vii) |
A person identified in (a)(i) has significant influence over the entity or is a member of the key management personnel of the entity (or of a parent of the entity); |
Close members of the family of a person are those family members who may be expected to influence, or be influenced by, that person in their dealings with the entity.
NOTE 4—CASH AND CASH EQUIVALENTS
As of December 31 |
As of December 31 |
As of January 1 |
||||||||||
In Euro |
2013 |
2012 |
2012 |
|||||||||
Cash on hand |
645 | - | - | |||||||||
Cash at banks |
241,535 | 874,683 | 17,152 | |||||||||
Total |
242,180 | 874,683 | 17,152 |
NOTE 5—TRADE AND OTHER RECEIVABLES
As of December 31 |
As of December 31 |
As of January 1 |
||||||||||
In Euro |
2013 |
2012 |
2012 |
|||||||||
|
||||||||||||
Trade receivables |
1,779,352 | - | - | |||||||||
Value added tax recoverable |
49,073 | 352,811 | 11,410 | |||||||||
Prepayment and others receivables |
97,600 | 90,083 | 420 | |||||||||
Total |
1,926,025 | 442,894 | 11,830 |
Trade receivable represent amount due from Lagie SA for the sales of electricity. Credit period of one month is normally granted to the customer. All trade receivables balances have been settled.
NOTE 6—PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are summarized as follows:
In Euro |
Photovoltaic park assets |
Construction in progress |
Total |
|||||||||
|
||||||||||||
|
|
|
||||||||||
Cost: |
||||||||||||
Balance at January 1, 2012 |
- | 16,104 | 16,104 | |||||||||
Additions |
- | 8,533,043 | 8,533,043 | |||||||||
Transfer from Construction in progress |
- | - | - | |||||||||
Balance at December 31, 2012 |
- | 8,549,147 | 8,549,147 | |||||||||
Balance at January 1, 2013 |
- | 8,549,147 | 8,549,147 | |||||||||
Additions |
- | 735,697 | 735,697 | |||||||||
Transfer from Construction in progress |
9,284,844 | (9,284,844 | ) | - | ||||||||
Balance at December 31, 2013 |
9,284,844 | - | 9,284,844 | |||||||||
|
||||||||||||
Accumulated depreciation: |
||||||||||||
Balance at January 1, 2012 |
- | - | - | |||||||||
Depreciation for the year |
- | - | - | |||||||||
Balance at December 31, 2012 |
- | - | - | |||||||||
Balance at January 1, 2013 |
- | - | - | |||||||||
Depreciation for the year |
(340,444 | ) | - | (340,444 | ) | |||||||
Balance at December 31, 2013 |
(340,444 | ) | - | (340,444 | ) | |||||||
|
|
|||||||||||
Net book value |
||||||||||||
At December 31, 2012 |
8,549,147 | - | 8,549,147 | |||||||||
At December 31, 2013 |
8,944,400 | - | 8,944,400 |
Photovoltaic park assets primarily included costs of acquiring permits, construction fees of the park, costs of items installed in the park including solar panels, and other costs incurred that are directly attributable to getting the park ready for its intended use of grid connection with customer for supply of electricity.
NOTE 7—TAXATION
(a) |
Taxation in the profit or loss represents: |
Year ended December 31 |
Year ended December 31 |
|||||||
In Euro |
2013 |
2012 |
||||||
Current tax |
(289,517 | ) | - | |||||
Deferred tax – origination and reversal of temporary differences |
198,301 | 22,412 | ||||||
Tax (expense)/credit |
(91,216 | ) | 22,412 |
On January 11, 2013, the Parliament of Greece enacted a new tax law-4110/2013 “Income Tax Provisions, Issues Related to the Authorities of the Ministry of Finance And other Regulations” (the “New Tax Law”). Under the New Tax Law, the income tax rate for entities incorporated in Greece changed from 20% to 26% effective for the statutory year ended from August 31, 2013 and thereafter. Therefore, the applicable income tax rate of the Company changed from 20% for the year ended December 31, 2012 to 26% for the year ended December 31, 2013.
(b) |
Reconciliation between tax (expense)/credit and accounting profit/(loss) at applicable tax rate: |
Year ended December 31 |
Year ended December 31 |
|||||||
In Euro |
2013 |
2012 |
||||||
|
||||||||
Profit/(loss) before taxation |
414,803 | (121,787 | ) | |||||
Notional tax on loss before tax, calculated at the statutory tax rate of 26% (2012: 20%) |
(107,849 | ) | 24,357 | |||||
Change in tax rate |
6,724 | - | ||||||
Non-deductible expenses |
1,813 | - | ||||||
Others |
8,096 | (1,945 | ) | |||||
Total |
(91,216 | ) | 22,412 |
(c) |
Deferred tax assets and liabilities recognized: |
The components of deferred tax assets/ (liabilities) recognized in the balance sheet and the movements during the year are as follows:
In Euro |
Property plant and equipment |
Special levy * |
Others |
Total |
||||||||||||
|
|
|
|
|
||||||||||||
Balance at January 1, 2012 |
- | - | - | - | ||||||||||||
|
||||||||||||||||
Credit/(Charged) to profit or loss |
- | - | 22,412 | 22,412 | ||||||||||||
|
||||||||||||||||
Balance at December 31, 2012 |
- | - | 22,412 | 22,412 | ||||||||||||
|
||||||||||||||||
|
||||||||||||||||
Balance at January 1, 2013 |
- | - | 22,412 | 22,412 | ||||||||||||
|
||||||||||||||||
Credit/(Charged) to profit or loss |
24,250 | 195,825 | (21,774 | ) | 198,301 | |||||||||||
Balance at December 31, 2013 |
24,250 | 195,825 | 638 | 220,713 | ||||||||||||
|
|
|
|
|
* |
Special levy is deductible for tax purposes over 5 years but was expensed as incurred in the profit or loss when incurred in the Company’s financial statements. |
NOTE 8—BORROWINGS
As of December 31 |
As of December 31 |
As of January 1 |
||||||||||
In Euro |
2013 |
2012 |
2012 |
|||||||||
Total borrowings |
6,704,951 | - | - | |||||||||
Less-current portion of borrowings payable within one year |
(146,518 | ) | - | - | ||||||||
Borrowings – non-current portion |
6,558,433 | - | - |
The Company’s borrowings at December 31, 2013 represent unsecured loans from related parties (see note 15(c)), which are charged at a fixed annual interest rate of 8% and is repayable by instalments with the last instalments due in 2033.
NOTE 9—TRADE AND OTHER PAYABLES
As of December 31 |
As of December 31 |
As of January 1 |
||||||||||
In Euro |
2013 |
2012 |
2012 |
|||||||||
Payables for property plants and equipment |
564,324 | 6,451,580 | 23,235 | |||||||||
Accrued interests on borrowings |
47,680 | - | - | |||||||||
Other payable and accruals |
10,227 | - | - | |||||||||
Total |
622,231 | 6,451,580 | 23,235 |
NOTE 10—REVENUE
Year ended December 31 |
Year ended December 31 |
|||||||
In Euro |
2013 |
2012 |
||||||
|
||||||||
Sales of electricity |
2,512,852 | - |
Revenue represents sales of electricity generated from Photovoltaic Park assets owned by the Company. The Company entered into long-term power purchase contract with Lagie SA in Greece, the sole customer of the Company, for the supply of electricity at the prevailing effective tariff rate determined by the relevant local government authority in Greece. Lagie SA is a state-controlled company in Greece.
On April 7, 2014, Law 4254/2014 (the “Law 4254/2014”) was voted and passed in Greece. Pursuant to the Law 4254/2014, the tariff for sales of electricity by Photovoltaic Parks in Greece was reduced by 30%~37.5% effective from January 1, 2013. As of December 31, 2013, management considered the likelihood of a downward adjustment of the tariff for electricity sale of the Company made to the customer and concluded that it was probable such a retrospective adjustment would be imposed by the government authority upon passage of the new law. Accordingly, management has recorded the Company’s revenue for the year ended December 31, 2013 in the accompanying financial statements based on the adjusted 2013 tariff rate under the Law 4254/2014.
NOTE 11—FINANCE COSTS
Year ended December 31 |
Year ended December 31 |
|||||||
In Euro |
2013 |
2012 |
||||||
|
||||||||
Interest expenses on borrowings |
431,890 | - | ||||||
Other finance charges |
117,750 | 75 | ||||||
Finance costs recognized in profit or loss |
549,640 | 75 |
NOTE 12—FINANCIAL INSTRUMENTS—RISK MANAGEMENT AND FAIR VALUES
The Company’s activities in the normal course expose the Company to credit risk, liquidity risk and interest rate risk.
The Company’s exposure to these risks and the financial risk management policies and practices used by the Company to manage these risks are described below.
(a) |
Credit risk |
Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Company’s receivables from customers. Management monitors the exposures to these credit risks on an ongoing basis.
The company only has one customer, which is Lagie SA. The Company has significant concentration of credit risk on trade and other receivables. Given Lagie SA is a state-controlled company in Greece, the management considered that the credit risk is at a low level and the trade receivable amounts are fully recoverable.
The maximum exposure to credit risk is represented by the carrying amount of each financial asset in the statement of financial position. The Company does not provide any guarantees which would expose the Company to credit risk.
(b) |
Liquidity risk |
Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. Management’s approach in managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company’s reputation. The Company is one of the subsidiaries of a larger group. The liquidity of the Company is primarily dependent on its ability to maintain adequate cash inflows from operations and obtain adequate finance from or through its holding companies.
As at December 31, 2013 and 2012, the Company had net current assets of approximately Euros 1,109,383 (2012: net current liability of Euros 5,179,083)
The following table detail the remaining contractual maturities at the end of the reporting period of the Company’s financial liabilities, which are based on the contractual undiscounted cash flows (including interest payments computed using contractual rates) and the earliest date the Company can be required to pay:
As of December 31, 2012
Carrying amount |
Contractual undiscounted cash outflow |
|||||||||||||||||||
Within 1 year |
More than 1 year but less than 2 years |
More than 2 years but less than 5 years |
Total |
|||||||||||||||||
Trade and other payables |
6,451,580 | 6,451,580 | - | - | 6,451,580 | |||||||||||||||
Total |
6,451,580 | 6,451,580 | - | - | 6,451,580 |
As of December 31, 2013
Carrying amount |
Contractual undiscounted cash outflow |
|||||||||||||||||||||||
Within 1 year |
More than 1 year but less than 2 years |
More than 2 years but less than 5 years |
More than 5 years |
Total |
||||||||||||||||||||
Trade and other payables |
622,231 | 622,231 | 622,231 | |||||||||||||||||||||
Borrowings |
6,704,951 | 682,914 | 682,914 | 2,048,742 | 10,243,710 | 13,658,280 | ||||||||||||||||||
Total |
7,327,182 | 1,305,145 | 682,914 | 2,048,742 | 10,243,710 | 14,280,511 |
(c) |
Interest rate risk |
The Company’s interest rate risk arises primarily from interest-bearing borrowings. Borrowings issued at variable rates and at fixed rates expose the Company to cash flow interest rate risk, and fair value interest rate risk respectively. The Company normally borrows long term loans which carry fixed rates in order to limit its exposure to interest rate risk.
The following table details the interest rate profile of the Company’s borrowings at the end of reporting periods.
2013 |
2012 |
|||||||||||||||
Effective interest rate |
Carrying value |
Effective interest rate |
Carrying value |
|||||||||||||
Euro |
Euro |
|||||||||||||||
Fixed rate instruments: |
||||||||||||||||
Borrowings |
8 | % | 6,704,951 | - | - |
(d) |
Fair value measurement |
The Company did not hold any financial assets and liabilities carried at fair value as at December 31, 2013 and 2012.
The carrying amount of the Company’s financial assets and liabilities carried at cost or amortized cost are not materially different from their fair value as at December 31, 2013 and 2012.
NOTE 13—SHARE CAPITAL
(a) |
Movement of share capital |
2013 |
2012 |
|||||||
Number of Shares |
Number of Shares |
|||||||
In issue at January 1 |
9,447 | 9,100 | ||||||
Issued for cash |
- | 347 | ||||||
In issue at December 31 |
9,447 | 9,447 | ||||||
Authorized – par value Euros 10 |
9,447 | 9,447 |
The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at general meetings of the Company. All ordinary shares rank equally with regard to the Company’s residual asset.
During the year ended December 31, 2012, 347 ordinary shares were issued at a consideration of Euro 10,000 per share to the prevailing shareholder of the Company.
(b) Capital management
The Company’s objectives when managing capital are to safeguard the Company’s ability to continue as a going concern so that it can provide returns for equity holders and benefits for other stakeholders and secure access to finance at a reasonable cost.
NOTE 14—OPERATING LEASE COMMITMENT
At December 31, 2013 and 2012, total future minimum lease payments under non-cancellable operating leases are payable as follows:
2013 |
2012 |
|||||||
Euro |
Euro |
|||||||
No later than 1 year |
174,480 | 139,951 | ||||||
Later than 1 year and no later than 5 years |
702,720 | 701,520 | ||||||
Later than 5 years |
2,544,222 | 2,717,763 | ||||||
Total |
3,421,422 | 3,559,234 |
The Company is the lessee in respect of the land on which the Photovoltaic Park is located. The lease is held under operating leases and does not include contingent rentals.
NOTE 15—RELATED PARTY TRANSACTIONS
Names of related parties |
Relationship with the Company |
Sinsin Renewable |
Intermediate holding company |
PHOTOVOLTAICA PARKA VEROIA 1 MALTA LIMITED (“VEROIA MALTA”) |
Fellow subsidiary |
ETVA VIPE S.A. |
Former shareholder company |
Bank of Piraeus |
Ultimate parent company of ETVA VIPE S.A. |
The Company entered into the following material transactions with its related parties during the reporting period:
(a) |
Finance Costs |
Year ended December 31 |
Year ended December 31 |
|||||||
In Euro |
2013 |
2012 |
||||||
|
||||||||
Sinsin Renewable |
42,912 | - | ||||||
VEROIA MALTA |
4,768 | - | ||||||
Bank of Piraeus |
501,960 | - | ||||||
Total |
549,640 | - |
During the year ended December 31, 2013, the Company borrowed from Bank of Piraeus a pledged loan of Euro 6,600,000 (“Piraeus Loan”), which bears interests at an annual rate of 6.94% and is repayable on December 20, 2022. In November 2013, the Company borrowed loans from Sinsin Renewable and VEROIA MALTA of Euro 6,034,456 and Euro 670,495, respectively, which had been fully used to settle all the outstanding balances of loan principal and interests relating to the Piraeus Loan .
(b) |
Lease Expenses |
Year ended December 31 |
Year ended December 31 |
|||||||
In Euro |
2013 |
2012 |
||||||
|
||||||||
ETVA VIPE S.A. |
126,584 | 69,900 |
The Company had the following balances with its related parties at the end of the reporting period:
(c) |
Borrowings |
As of December 31 |
As of December 31 |
As of January 1 |
||||||||||
In Euro |
2013 |
2012 |
2012 |
|||||||||
|
||||||||||||
Sinsin Renewable |
6,034,456 | - | - | |||||||||
VEROIA MALTA |
670,495 | - | - | |||||||||
Total |
6,704,951 | - | - |
(d) |
Trade and other payables |
As of December 31 |
As of December 31 |
As of January 1 |
||||||||||
In Euro |
2013 |
2012 |
2012 |
|||||||||
ETVA VIPE S.A. |
98,119* | 84,168 | - | |||||||||
Sinsin Renewable |
42,912 | - | - | |||||||||
VEROIA MALTA |
4,768 | - | - | |||||||||
Total |
145,799 | 84,168 | - |
* ETVA VIPE S.A. had been the Company’s shareholder until November 2013 when Sinsin Renewable acquired all the equity interests of the Company from ETVA VIPE S.A.
NOTE 16—IMMEDIATE AND ULTIMATE CONTROLLING PARTY
At December 31, 2013, the directors considered the immediate holding company to be VELTIMO LTD, which is incorporated in Cyprus and wholly owned by Sinsin Renewable, and ultimate holding company to be XINXING PIPES, which is incorporated in the PRC. XINXING PIPES produces financial statements in accordance with PRC accounting standards that are available for public use.
On December 1, 2014, SPI acquired all the equity interests of Sinsin Renewable and becomes the ultimate controlling party of the Company.
NOTE 17—SIGNIFICANT ACCOUNTING ESTIMATES AND JUDGEMENTS
Estimates and judgments are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.
The selection of critical accounting policies, the judgments and other uncertainties affecting application of those policies and the sensitivity of reported results to changes in conditions and assumptions are factors to be considered when reviewing the financial statements. The principal accounting policies are set forth in note 3. The Company believes the following critical accounting policies involve the most significant judgments and estimates used in the preparation of the financial statements.
(a) Impairment of property, plant and equipment
The Company conducts impairment reviews on property, plant and equipment when events of changes in circumstances indicate that their carrying amounts may not be recoverable. An impairment loss is recognised when the carrying amount of an asset is lower than the greater of its net selling price or the value in use. In determining the value in use, management assess the present value of the estimated future cash flows expected to arise from the continuing use of the asset and from its disposal at the end of its useful life. Significant estimates and judgments are applied in determining these future cash flows and the discount rate.
(b)Useful lives of property, plant and equipment
The Company’s management determines the estimated useful lives and related depreciation charges for its property, plant and equipment. This estimate is based on the historical experience of the actual useful lives of property, plant and equipment of similar nature and functions. It could change significantly as a result of technical innovations and competitor actions in response to severe industry cycles. Management will increase the depreciation charge where useful lives are less than previously estimated lives, or it will write-off or write-down technically obsolete or non-strategic assets that have been abandoned or sold.
(c)Provision for income taxes
The Company is subject to income taxes in the Greece. Significant judgment is required in determining the provision for income taxes. There are many transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made.
Deferred income tax assets relating to temporary differences and tax losses are recognised when management expects it is probable that future taxable profits will be available to utilise against the temporary difference or tax losses. Where the expectations are different from the original estimates, such differences will impact the recognition of deferred income tax assets in the period in which such estimates have been changed.
NOTE 18- POSSIBLE IMPACT OF AMENDMENTS, NEW STANDARDS AND INTERPRETATIONS ISSUED BUT NOT YET EFFECTIVE FOR THE ANNUAL ACCOUNTING PERIOD ENDED 31 DECEMBER 2013
Up to the date of issue of these financial statements, the IASB has issued a number of amendments, new standards and interpretations which are not yet effective for the year ended December 31, 2013 and which have not been adopted in these financial statements.
Effective annual financial periods beginning on or after | |
Amendments to IFRS 10, IFRS 12 and IAS 27, Investment entities |
January 1, 2014 |
Amendments to IAS 32, Financial instruments: Presentation - Offsetting financial assets and financial liabilities |
January 1, 2014 |
Amendments to IAS 36, Recoverable amount disclosure for non-financial assets |
January 1, 2014 |
Amendments to IAS 39, Novation of derivatives and continuation of hedge accounting |
January 1, 2014 |
IFRIC 21, Levies |
January 1, 2014 |
Amendments to IAS 39, Novation of derivatives and continuation of hedge accounting |
July 1, 2014 |
IFRIC 21, Levies |
July 1, 2014 |
Amendments to IAS 19, Defined benefit plans: Employee contributions |
July 1, 2014 |
Annual improvements to IFRS 2010-2012 cycle |
January 1, 2016 |
Annual improvements to IFRS 2011-2013 cycle |
January 1, 2016 |
Annual improvements to IFRS 2012-2014 cycle |
January 1, 2016 |
Amendments to IFRS 11, Accounting for acquisitions of interests in joint ventures |
January 1, 2016 |
Amendments to IAS 16 and IAS 38, Clarification of acceptable methods of depreciation and amortization |
January 1, 2016 |
Amendments to IAS 27, Equity method in separate financial statements |
January 1, 2017 |
Amendments to IFRS 10 and IAS 28, Sale or contribution of assets between an investor and its associate or joint venture |
January 1, 2018 |
Management has made an initial assessment of what the impact of these amendments and new standards is expected to be in the period of initial application and has so far concluded that the adoption of them is unlikely to have a significant impact on the Company’s results of operations and financial position.
NOTE 19- SUBSEQUENT EVENT
In addition to those subsequent events disclosed in note 10 and note 16, the following event has taken place after December 31, 2013.
The Company’s revenue is subject to a special levy under the law of 4093/2012 pronounced in November 12, 2012 (the “Law 4093/2012”). Pursuant to the Law 4093/2012, the special levy would be charged for a period of 2 years starting from July 1, 2012. Pursuant to the Law of 4254/2014 voted and passed on April 7, 2014, the special levy under the Law 4093/2012 would no longer be charged from April 2014 onwards.
19
Exhibit 99.6
SINSIN RENEWABLE INVESTMENT LIMITED
UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2014 AND 2013
INDEX TO UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS | |
|
|
Unaudited Interim Condensed Consolidated Statements of Profit or Loss and Other Comprehensive Income |
2 |
Unaudited Interim Condensed Consolidated Balance Sheets |
3 |
Unaudited Interim Condensed Consolidated Statements of Changes in Equity |
4 |
Unaudited Interim Condensed Consolidated Statements of Cash Flows |
5 |
Notes to the Unaudited Interim Condensed Consolidated Financial Statements |
6 |
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF PROFIT OR LOSS
AND OTHER COMPREHENSIVE INCOME
FOR THE SIX-MONTHS ENDED JUNE 30, 2014
AND THE PERIOD FROM MAY 8, 2013 (DATE OF INCORPORATION) TO JUNE 30, 2013
Six-months ended June 30, |
From May 8 to June 30, |
|||||||
In Euro |
2014 |
2013 |
||||||
Revenues (note 7) |
4,972,940 | - | ||||||
Cost of sales |
(2,795,428 | ) | - | |||||
Gross profit |
2,177,512 | - | ||||||
Other income |
18,000 | - | ||||||
Administrative expenses |
(221,982 | ) | - | |||||
Other expenses |
(47,507 | ) | - | |||||
Operating income |
1,926,023 | - | ||||||
Finance costs (note 8) |
(2,412,760 | ) | - | |||||
Loss before income taxes |
(486,737 | ) | - | |||||
Income taxes (note 4) |
(252,162 | ) | - | |||||
Loss for the period |
(738,899 | ) | - | |||||
Other comprehensive income for the period |
- | - | ||||||
Total comprehensive income for the period |
(738,899 | ) | - |
The accompanying notes form part of these unaudited interim condensed consolidated financial statements.
UNAUDITED INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF JUNE 30, 2014 AND DECEMBER 31, 2013
As of June 30, |
As of December 31, |
|||||||
In Euro |
2014 |
2013 |
||||||
ASSETS: |
||||||||
Property, plant and equipment |
53,768,884 | 54,832,707 | ||||||
Goodwill |
7,312,728 | 7,312,728 | ||||||
Other non-current assets |
9,806 | 8,805 | ||||||
Deferred tax assets |
556,724 | 523,008 | ||||||
TOTAL NON-CURRENT ASSETS |
61,648,142 | 62,677,248 | ||||||
CURRENT ASSETS: |
||||||||
Trade and other receivables (note 3) |
6,326,495 | 5,346,987 | ||||||
Cash and cash equivalents |
2,537,128 | 2,674,375 | ||||||
TOTAL CURRENT ASSETS |
8,863,623 | 8,021,362 | ||||||
TOTAL ASSETS |
70,511,765 | 70,698,610 | ||||||
LIABILITIES AND EQUITY |
||||||||
CURRENT LIABILITIES: |
||||||||
Income tax payables |
753,314 | 710,345 | ||||||
Borrowings (note 5) |
64,989,000 | 64,989,000 | ||||||
Trade and other payables (note 6) |
7,394,857 | 6,805,009 | ||||||
TOTAL CURRENT LIABILITIES |
73,137,171 | 72,504,354 | ||||||
NON-CURRENT LIABILITIES: |
||||||||
Other non-current liabilities |
3,001 | 3,001 | ||||||
Deferred tax liabilities |
3,957,411 | 4,038,174 | ||||||
TOTAL NON-CURRENT LIABILITIES |
3,960,412 | 4,041,175 | ||||||
TOTAL LIABILITIES |
77,097,583 | 76,545,529 | ||||||
EQUITY: |
||||||||
Share Capital |
100,000 | 100,000 | ||||||
Accumulated losses |
(6,685,818 | ) | (5,946,919 | ) | ||||
TOTAL EQUITY |
(6,585,818 | ) | (5,846,919 | ) | ||||
TOTAL LIABILITIES AND EQUITY |
70,511,765 | 70,698,610 |
The accompanying notes form part of these unaudited interim condensed consolidated financial statements.
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
FOR THE SIX-MONTHS ENDED JUNE 30, 2014
AND THE PERIOD FROM MAY 8, 2013 (DATE OF INCORPORATION) TO JUNE 30, 2013
In Euro |
Share Capital |
Accumulated Losses |
Total |
||||||||||
|
|
|
|
|
|||||||||
Balance at May 8, 2013 (date of incorporation) |
- | - | - | ||||||||||
|
|
|
|
|
|||||||||
Changes in equity for the period |
|||||||||||||
Loss for the period |
- | - | - | ||||||||||
Other comprehensive income |
- | - | - | ||||||||||
Total comprehensive income |
- | - | - | ||||||||||
Issuance of shares |
1,200 | - | 1,200 | ||||||||||
|
|||||||||||||
Balance at June 30, 2013 |
1,200 | - | 1,200 | ||||||||||
|
|
|
|
|
|||||||||
|
|
|
|
|
|||||||||
Balance at January 1, 2014 |
100,000 | (5,946,919 | ) | (5,846,919 | ) | ||||||||
|
|||||||||||||
Changes in equity for the period |
|||||||||||||
Loss for the period |
- | (738,899 | ) | (738,899 | ) | ||||||||
Other comprehensive income |
- | - | - | ||||||||||
Total comprehensive income |
- | (738,899 | ) | (738,899 | ) | ||||||||
Balance at June 30, 2014 |
100,000 | (6,685,818 | ) | (6,585,818 | ) |
The accompanying notes form part of these unaudited interim condensed consolidated financial statements.
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX-MONTHS ENDED JUNE 30, 2014
AND THE PERIOD FROM MAY 8, 2013 (DATE OF INCORPORATION) TO JUNE 30, 2013
Six-months ended June 30, |
From May 8 to June 30, |
|||||||
In Euro |
2014 |
2013 |
||||||
Cash flows from operating activities |
||||||||
Loss before taxation |
(486,737 | ) | - | |||||
Adjustments for: |
||||||||
Depreciation |
1,131,923 | - | ||||||
Finance costs |
2,412,760 | - | ||||||
Changes in: |
||||||||
Trade and other receivables |
1,088,491 | - | ||||||
Trade and other payables |
43,008 | - | ||||||
Cash generated from operating activities |
4,189,445 | - | ||||||
Tax paid |
(323,672 | ) | - | |||||
Net cash generated from operating activities |
3,865,773 | - | ||||||
Cash flows from investing activities |
||||||||
Purchase of property, plant and equipment |
(1,931,269 | ) | - | |||||
Advances to a related party | (2,069,000 | ) | - | |||||
Net cash used in investing activities |
(4,000,269 | ) | - | |||||
Cash flows from financing activities |
||||||||
Interest paid |
(2,751 | ) | - | |||||
Issuance of shares |
- | 240 | ||||||
Net cash (used in)/generated from financing activities |
(2,751 | ) | 240 | |||||
Net (decrease)/increase in cash and cash equivalents |
(137,247 | ) | 240 | |||||
Cash and cash equivalents at beginning of the period |
2,674,375 | - | ||||||
Cash and cash equivalents at end of the period |
2,537,128 | 240 |
The accompanying notes form part of these unaudited interim condensed consolidated financial statements.
NOTE 1— REPORTING ENTITY
Sinsin Renewable Investment Limited (the “Company”) was incorporated on May 8, 2013. The address of its registered office is Strand Towers, Floor 2, 36, The Strand, Sliema SLM 1022, Malta. At June 30, 2013, the Company was a wholly-owned subsidiary of Sinsin Euro Solar Asset Limited Partnership (“Sinsin Euro”), which was a subsidiary of Xinxing Pipes Ductile Iron Pipes Co., Ltd (“Xinxing Pipes”). On December 1, 2014, 100% of the Company’s shares were purchased by Solar Power, Inc. (“SPI”), an entity whose common stock is traded on the Over the Counter Bulletin Board in the United States.
These interim condensed consolidated financial statements comprise the Company and its subsidiaries (collectively the “Group”). The Group’s principal activities are the development, investment and operation of Photovoltaic parks through four indirectly wholly-owned subsidiaries in Greece (the “Operating Subsidiaries”).
NOTE 2— BASIS OF PREPARATION OF FINANCIAL STATEMENTS
These interim condensed consolidated financial statements have been prepared in accordance with International Accounting Standards (IAS) 34 “Interim Financial Reporting” issued by the International Accounting Standards Board (“IASB”). They do not include all the information required for a complete set of financial statements prepared in accordance with International Financial Reporting Standards (“IFRSs”). However, selected explanatory notes are included to explain events and transactions that are significant to an understanding of the changes in the Group’s financial position and performance since the consolidated financial statements for the period from May 8, 2013 (date of incorporation) to 31 December 2013.
IASB has issued a number of amendments to IFRSs and interpretations and new standards that are first effective for the accounting period beginning on January 1, 2014. These developments have had no material impact on the contents of these condensed consolidated interim financial statements. Except for these developments, the accounting policies applied by the Company in these interim condensed consolidated financial statements are the same as those applied by the Company in its annual consolidated financial statements for the period from May 8, 2013 (date of incorporation) to December 31, 2013. The Group has not applied any new standard or interpretation that is not yet effective for the current accounting period.
The interim condensed consolidated financial statements were authorized for issue by the Board of Directors of the Company on February 13, 2015.
The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgment in the process of applying the Company’s accounting policies. Actual results could differ from those estimates and such differences could affect the results of operations reported in future periods.
The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Group incurred a loss of Euros 738,899 during the period. As at June 30, 2014, the Group had net current liabilities and net liabilities of Euros 64,273,548 and Euros 6,585,818 respectively.
In view of these circumstances, the directors have given careful consideration to the future liquidity and performance of the Group and its available sources of finance in assessing whether the Group will have sufficient financial resources to continue as a going concern.
The directors believe the Group will generate sufficient cash flow and continue as a going concern on the basis that SPI, the Group’s parent company since December 1, 2014, has undertaken to provide financial support to the Group to the extent necessarily enabling it to meet its liabilities as and when they fall due prior to December 31, 2015. Accordingly, the consolidated financial statements have been prepared on a going concern basis.
NOTE 3—TRADE AND OTHER RECEIVABLES
As of June 30, |
As of December 31, |
|||||||
In Euro |
2014 |
2013 |
||||||
|
||||||||
Trade receivables |
3,134,500 | 4,290,937 | ||||||
Value added tax recoverable |
996,390 | 729,138 | ||||||
Prepayment and other receivables |
2,195,605 | 326,912 | ||||||
Total |
6,326,495 | 5,346,987 |
Trade receivables represent amount due from Lagie S.A. for the sales of electricity. Credit period of one month is normally granted to the customer. All trade receivables balances have been settled.
Included in the prepayment and other receivables was an amount of Euros 2,069,000 due from Sinsin Solar Capital Limited Partnership, the intermediate holding company. During the six-months ended June 30, 2014, the Company paid expenses of Euros 2,069,000 on behalf of Sinsin Solar Capital Limited Partnership. Such payments were classified as advances to a related party under cash flows from investing activities in the consolidated statements of cash flows. The amount due from Sinsin Solar Capital Limited Partnership of Euros 2,069,000 were fully settled in July 2014.
NOTE 4—TAXATION
(a) |
Taxation in the profit or loss represents: |
Period ended June 30, |
From May 8 to June 30, |
|||||||
In Euro |
2014 |
2013 |
||||||
Current tax |
366,642 | - | ||||||
Deferred tax – origination and reversal of temporary differences |
(114,480 | ) | - | |||||
Taxation expenses |
252,162 | - |
Pursuant to the tax law in Malta, the statutory income tax rate applicable to the Company in 2014 was 35% (2013: 35%).
Pursuant to the tax law in Greece, the statutory income tax rate applicable to the Company’s operating subsidiaries in Greece in 2014 was 26% (2013: 26%)
NOTE 5—BORROWINGS
As of June 30, |
As of December 31, |
|||||||
In Euro |
2014 |
2013 |
||||||
Total borrowings |
64,989,000 | 64,989,000 |
The Group’s borrowings at December 31, 2013 represent unsecured loans from a related party (see note 9(c)), which are charged at a fixed annual interest rate of 7.5%. Pursuant to the loan contracts, the entire loans principal are wholly repayable in 2033 but would also become immediately repayable on demand by the lender at any time during the loan period. Accordingly, these borrowings were classified as current liabilities.
NOTE 6—TRADE AND OTHER PAYABLES
As of June 30, |
As of December 31, |
|||||||
In Euro |
2014 |
2013 |
||||||
Payables for property, plant and equipment |
1,736,180 | 3,599,349 | ||||||
Accrued interests on borrowings |
4,270,052 | 1,860,043 | ||||||
Other payable and accruals |
1,388,625 | 1,345,617 | ||||||
Total |
7,394,857 | 6,805,009 |
NOTE 7—REVENUE
Six months ended June 30, 2014 |
From May 8, 2013 to June 30, 2013 |
|||||||
In Euro |
||||||||
|
|
|
||||||
Sales of electricity |
4,972,940 | - |
Revenue represents sales of electricity generated from Photovoltaic park assets owned by the Company. The Company entered into long-term power purchase contract with Lagie S.A. in Greece, the sole customer of the Company, for the supply of electricity at the prevailing effective tariff rate determined by the relevant local government authority in Greece.
NOTE 8—FINANCE COSTS
Six months ended June 30, 2014 |
From May 8, 2013 to June 30, 2013 |
|||||||
In Euro |
||||||||
|
|
|
||||||
Interest expenses on borrowings |
2,410,009 | - | ||||||
Other finance charges |
2,751 | - | ||||||
Finance costs recognized in profit or loss |
2,412,760 | - |
NOTE 9—RELATED PARTY TRANSACTIONS
The Company entered into the following material transactions with its related party during the reporting period:
(a) |
Finance Expenses |
Period ended June 30, |
From May 8 to June 30, |
|||||||
In Euro |
2014 |
2013 |
||||||
|
|
|
||||||
Immediate holding company |
||||||||
Sinsin Europe Solar Asset Limited Partnership |
2,410,009 | - |
The Company had the following balances with its related party at the end of the reporting period:
(b) |
Trade and Other Receivables |
As of June 30 |
As of December 31 |
|||||||
In Euros |
2014 |
2013 |
||||||
Intermediate holding company | ||||||||
Sinsin Solar Capital Limited Partnership |
2,069,000 | - |
During the six-months period ended June 30, 2014, the Group paid certain expenses on behalf of Sinsin Solar Capital Limited Partnership. The receivable balances were fully repaid by Sinsin Solar Capital Limited in July 2014.
(c) |
Borrowings |
Period ended June 30, |
As of December 31 |
|||||||
In Euro |
2014 |
2013 |
||||||
|
||||||||
Immediate holding company | ||||||||
Sinsin Europe Solar Asset Limited Partnership |
64,989,000 | 64,989,000 |
NOTE 10—IMMEDIATE AND ULTIMATE CONTROLLING PARTY
At June 30, 2014, the directors consider the immediate holding company to be Sinsin Europe Solar Asset Limited Partnership, which is incorporated in Greece, and ultimate holding company to be Xinxing Pipes, which is incorporated in the PRC. Xinxing Pipes produces financial statements in accordance with PRC accounting standards that are available for public use.
In December 2014, SPI acquired all the equity interest of Sinsin Renewable Investment Limited and becomes the ultimate controlling party of the Company.
9
Exhibit 99.7
Pro Forma Condensed Combined Financial Statements
(Unaudited)
(in thousands, unless otherwise noted)
The following unaudited pro forma condensed combined statement of operations gives effect to the December 2014 acquisition by Solar Power, Inc., of Sinsin Renewable Investment Limited (“Sinsin”) and its subsidiaries. On September 9, 2014, Solar Power, Inc. and its indirectly wholly-owned subsidiary, SPI China (HK) Limited, entered into a Share Sale & Purchase Agreement with Sinsin Europe Solar Asset Limited Partnership and Sinsin Solar Capital Limited Partnership to purchase all of their outstanding capital stock of Sinsin.
The historical financial information of Sinsin included elsewhere in this Form 8-K/A has been prepared in accordance with International Financial Reporting Standards (“IFRSs”) as issued by the International Accounting Standards Board (“IASB”) and presented in Euros. IFRSs includes International Accounting Standards (“IAS”) and related interpretations. The unaudited pro forma financial statements presented herein include adjustments to convert the basis of the financial statements of Sinsin from IFRSs to U.S. generally accepted accounting principles (“U.S. GAAP”) and to translate the Euro amounts into U.S. dollars.
The pro forma condensed combined balance sheet as of September 30, 2014, and the pro forma condensed combined statement of operations for the nine-month period ended September 30, 2014, and the notes thereto are included herein. No pro forma combined statement of operation for the year ended December 31, 2013 is presented as Sinsin was only incorporated on May 8, 2013 and its consolidated revenue was entirely generated by those wholly-owned subsidiaries acquired since its date of incorporation.
The unaudited pro forma condensed combined statement of operations is based on the individual historical consolidated statement of operations of Solar Power, Inc. and Sinsin for the nine-month period ended September 30, 2014 giving effect to the acquisition of Sinsin as if it had occurred on January 1, 2014. The pro forma statement of operations reflects only pro forma adjustments expected to have a continuing impact on the combined results. The unaudited pro forma condensed combined balance sheet is based on the individual historical consolidated balance sheet of Solar Power, Inc. and Sinsin as at September 30, 2014 giving effect to the acquisition of Sinsin as if it had occurred on September 30, 2014. The unaudited pro forma condensed combined financial statements reflects adjustments to give effect to pro forma events that are (1) directly attributable to the acquisition, (2) factually supportable, and (3) expected to have a continuing impact on the combined results. The unaudited pro forma condensed combined financial information should be read in conjunction with the accompanying notes to the unaudited pro forma condensed combined financial statements. In addition, the unaudited pro forma condensed combined financial statements and notes thereto should be read in conjunction with (1) Solar Power, Inc.’s annual report on Form 10-K, including the audited consolidated financial statements for the year ended December 31, 2013, and the notes relating thereto, (2) Sinsin’s audited consolidated financial statements for the period from May 8, 2013 (date of incorporation) to December 31, 2013, and the notes relating thereto, and (3) the Solar Power, Inc. Form 10-Q for the second quarter ended June 30, 2014, including the unaudited interim condensed consolidated financial statements for the six-months ended June 30, 2014.
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
Nine-month period ended September 30, 2014
(In thousands, except for share data)
Solar Power, Inc. | Sinsin | Pro Forma | Pro Forma | |||||||||||||
(U.S. GAAP) | Adjustments (3) | Combined | ||||||||||||||
Net sales: |
||||||||||||||||
Net sales |
$ | 36,593 | $ | 11,137 | $ | 47,730 | ||||||||||
Total net sales |
36,593 | 11,137 | 47,730 | |||||||||||||
Cost of goods sold: |
||||||||||||||||
Cost of goods sold |
30,393 | 4,933 | 629 | 35,955 | ||||||||||||
Total cost of goods sold |
30,393 | 4,933 | 629 | 35,955 | ||||||||||||
Gross profit |
6,200 | 6,204 | 11,775 | |||||||||||||
Operating expenses: |
||||||||||||||||
General and administrative |
4,190 | 506 | 4,696 | |||||||||||||
Sales, marketing and customer service |
1,025 | - | 1,025 | |||||||||||||
Total operating expenses |
5,215 | 506 | 5,721 | |||||||||||||
Operating income |
985 | 5,698 | 6,054 | |||||||||||||
Other income (expense): |
||||||||||||||||
Interest expense |
(2,090 | ) | (4,406 | ) | (6,496 | ) | ||||||||||
Interest income |
967 | - | 967 | |||||||||||||
Loss on extinguishment of convertible bonds |
(8,907 | ) | - | (8,907 | ) | |||||||||||
Change in market value of derivative liability |
310 | - | 310 | |||||||||||||
Other (expense)/income, net |
(197 | ) | (40 | ) | (237 | ) | ||||||||||
Total other expense |
(9,917 | ) | (4,446 | ) | (14,363 | ) | ||||||||||
Loss before income taxes |
(8,932 | ) | 1,252 | (8,309 | ) | |||||||||||
Provision for income taxes |
945 | 885 | 1,830 | |||||||||||||
Net loss |
$ | (9,877 | ) | $ | 367 | $ | (10,139 | ) | ||||||||
Net loss per common share |
||||||||||||||||
Basic and diluted |
$ | (0.04 | ) | $ | (0.04 | ) | ||||||||||
Weighted average number of common shares used in computing per share amounts |
||||||||||||||||
Basic and diluted |
246,240,974 | 284,415,889 |
See accompanying notes to the pro-forma condensed combined financial statements.
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
As of September 30, 2014
(In thousands, except for share data)
Solar Power, Inc. |
Sinsin (U.S. GAAP) |
Pro Forma Adjustments (1) |
Pro Forma Combined |
|||||||||||||
ASSETS |
||||||||||||||||
Current assets: |
||||||||||||||||
Cash and cash equivalents |
$ | 12,789 | $ | 2,678 | $ | (4,007 | ) | $ | 11,460 | |||||||
Accounts receivable, net of allowance for doubtful accounts |
7,020 | 6,493 | - | 13,513 | ||||||||||||
Accounts receivable, related party |
3,662 | - | - | 3,662 | ||||||||||||
Costs and estimated earnings in excess of billings on uncompleted contracts |
22,705 | - | - | 22,705 | ||||||||||||
Inventories, net |
2,719 | - | - | 2,719 | ||||||||||||
Prepaid expenses and other current assets |
2,191 | 2,285 | - | 4,476 | ||||||||||||
Total current assets |
51,086 | 11,456 | (4,007 | ) | 58,535 | |||||||||||
Intangible asset |
703 | - | - | 703 | ||||||||||||
Goodwill |
- | 9,236 | 48,719 | 57,955 | ||||||||||||
Restricted cash |
160 | - | - | 160 | ||||||||||||
Accounts recivable, non-current |
9,194 | - | - | 9,194 | ||||||||||||
Notes receivable, noncurrent |
13,416 | - | - | 13,416 | ||||||||||||
Construction in progress |
27,306 | - | - | 27,306 | ||||||||||||
Property, plant and equipment at cost, net |
10,991 | 67,714 | 2,325 | 81,030 | ||||||||||||
Other prepaid expenses and non-current assets |
- | 18 | - | 18 | ||||||||||||
Deferred tax asset - non-current portion |
- | 844 | - | 844 | ||||||||||||
Total assets |
$ | 112,856 | $ | 89,268 | $ | 47,037 | $ | 249,161 | ||||||||
LIABILITIES AND STOCKHOLDERS' EQUITY |
||||||||||||||||
Current liabilities: |
||||||||||||||||
Accounts payable |
$ | 11,859 | $ | 1,669 | $ | 32,123 | $ | 45,651 | ||||||||
Accounts payable, related party |
34,372 | - | - | 34,372 | ||||||||||||
Accrued liabilities |
813 | 2,035 | - | 2,848 | ||||||||||||
Income taxes payable |
911 | 1,480 | - | 2,391 | ||||||||||||
Interest payable |
- | 85 | - | 85 | ||||||||||||
Loans payable - current portion |
- | 86,216 | (86,216 | ) | - | |||||||||||
Derivative liability |
673 | - | - | 673 | ||||||||||||
Total current liabilities |
48,628 | 91,485 | (54,093 | ) | 86,020 | |||||||||||
Loans payable and capital lease obligations, net of current portion |
10,970 | - | - | 10,970 | ||||||||||||
Deferred tax liabilities |
- | 4,947 | - | 4,947 | ||||||||||||
Other liabilities |
1,584 | 394 | 27,534 | 29,512 | ||||||||||||
Total liabilities |
61,182 | 96,826 | (26,559 | ) | 131,449 | |||||||||||
Commitments and contingencies |
- | - | - | - | ||||||||||||
Stockholders' equity |
||||||||||||||||
Common stock |
43 | 126 | (122 | ) | 47 | |||||||||||
Additional paid in capital |
117,917 | - | 66,034 | 183,951 | ||||||||||||
Accumulated other comprehensive loss |
(335 | ) | - | - | (335 | ) | ||||||||||
Accumulated deficit |
(65,951 | ) | (7,684 | ) | 7,684 | (65,951 | ) | |||||||||
Total stockholders' equity |
51,674 | (7,558 | ) | 73,596 | 117,712 | |||||||||||
Total liabilities and stockholders' equity |
$ | 112,856 | $ | 89,268 | $ | 47,037 | $ | 249,161 |
See accompanying notes to the pro-forma condensed combined financial statements.
Notes to Unaudited Pro Forma Condensed Combined Financial Statements
(in thousands, unless otherwise noted)
Note 1 — Basis of Presentation
On September 9, 2014, Solar Power, Inc. and its wholly-owned indirect subsidiary, SPI China (HK) Limited entered into a Share Sale & Purchase Agreement (Purchase Agreement) with Sinsin Europe Solar Asset Limited Partnership and Sinsin Solar Capital Limited Partnership to purchase all of their outstanding capital stock of Sinsin. Under the Purchase Agreement, Solar Power, Inc. acquired 100% of the issued and outstanding shares of Sinsin from Sinsin shareholders in exchange for cash consideration of €49.3 million (approximately $64 million U.S. Dollars) and 38,174,915 shares common stock of the Solar Power, Inc.. Solar Power, Inc. issued the shares of common stock upon reliance of Regulation S as an exemption from registration under the Securities Act of 1933, as amended.
The acquisition was completed on December 1, 2014.
In accordance with guidance for pro forma financial statements, we are presenting the as-if-combined balance sheet of Solar Power, Inc. and Sinsin as if they were combined on September 30, 2014.
Note 2 — IFRS to U.S. GAAP Adjustments and Foreign Currency Translation
There is no adjustment made to the Sinsin consolidated statement of operations for the nine-month period ended September 30, 2014 to convert from IFRS to U.S. GAAP. In addition, the Euro based consolidated income statement for Sinsin for the nine-month period ended September 30, 2014 converted to U.S. GAAP has been translated to U.S. dollars using a historic exchange rate. The average historic spot rate for the nine-month period ended September, 2014 was $1.349 per Euro and the historic spot rate as of September 30, 2014 was $1.263 per Euro. A reader of this pro forma financial information should not construe this translation as representations by the Company that the real amounts actually represent these U.S. dollar amounts or could be converted into U.S. dollars at the rate indicated.
Sinsin (IFRS) (Euros) |
U.S. GAAP Adjustments (Euros) |
Sinsin (U.S. GAAP) (Euros) |
Translation Adjustment (Euro x 1.349) |
Sinsin (U.S. GAAP) (U.S. Dollars) |
||||||||||||||||
Net sales: |
||||||||||||||||||||
Net sales |
8,253 | - | 8,253 | 2,884 | 11,137 | |||||||||||||||
Total net sales |
8,253 | - | 8,253 | 2,884 | 11,137 | |||||||||||||||
Cost of goods sold: |
||||||||||||||||||||
Cost of goods sold |
4,122 | - | 4,122 | 1,440 | 5,562 | |||||||||||||||
Total cost of goods sold |
4,122 | - | 4,122 | 1,440 | 5,562 | |||||||||||||||
Gross profit |
4,131 | - | 4,131 | 1,444 | 5,575 | |||||||||||||||
Operating expenses: |
||||||||||||||||||||
General and administrative |
375 | - | 375 | 131 | 506 | |||||||||||||||
Total operating expenses |
375 | - | 375 | 131 | 506 | |||||||||||||||
Operating income |
3,756 | - | 3,756 | 1,313 | 5,069 | |||||||||||||||
Other income (expense): |
||||||||||||||||||||
Interest expense |
(3,265 | ) | - | (3,265 | ) | (1,141 | ) | (4,406 | ) | |||||||||||
Other (expense), net |
(30 | ) | - | (30 | ) | (10 | ) | (40 | ) | |||||||||||
Total other expense |
(3,295 | ) | - | (3,295 | ) | (1,151 | ) | (4,446 | ) | |||||||||||
Benefit from income taxes |
461 | - | 461 | 162 | 623 | |||||||||||||||
Provision for income taxes |
656 | - | 656 | 229 | 885 | |||||||||||||||
Net loss |
$ | (195 | ) | - | (195 | ) | - | $ | (262 | ) |
Pro forma condensed combined balance sheet
As of September 30, 2014
Sinsin | U.S. GAAP | Sinsin |
Translation |
Sinsin |
||||||||||||||||
(IFRS) | Adjustments | (U.S. GAAP) |
Adjustment |
(U.S. GAAP) |
||||||||||||||||
(Euros) | (Euros) | (Euros) |
(Euro x 1.263) |
(U.S. Dollars) |
||||||||||||||||
ASSETS: |
||||||||||||||||||||
Goodwill |
7,313 | - | 7,313 | 1,923 | 9,236 | |||||||||||||||
Property, plant and equipment |
53,614 | - | 53,614 | 14,100 | 67,714 | |||||||||||||||
Other non-current assets |
14 | - | 14 | 4 | 18 | |||||||||||||||
Deferred tax assets |
668 | - | 668 | 176 | 844 | |||||||||||||||
TOTAL NON-CURRENT ASSETS |
61,609 | - | 61,609 | 16,203 | 77,812 | |||||||||||||||
CURRENT ASSETS: |
||||||||||||||||||||
Trade and other receivables |
6,949 | - | 6,949 | 1,829 | 8,778 | |||||||||||||||
Cash and cash equivalents |
2,120 | - | 2,120 | 558 | 2,678 | |||||||||||||||
TOTAL CURRENT ASSETS |
9,069 | - | 9,069 | 2,387 | 11,456 | |||||||||||||||
TOTAL ASSETS |
70,678 | - | 70,678 | 18,590 | 89,268 | |||||||||||||||
LIABILITIES AND EQUITY |
||||||||||||||||||||
CURRENT LIABILITIES: |
||||||||||||||||||||
Interest payable |
67 | - | 67 | 18 | 85 | |||||||||||||||
Income tax payables |
1,172 | - | 1,172 | 308 | 1,480 | |||||||||||||||
Borrowings |
68,263 | - | 68,263 | 17,953 | 86,216 | |||||||||||||||
Trade and other payables |
2,931 | - | 2,931 | 773 | 3,704 | |||||||||||||||
TOTAL CURRENT LIABILITIES |
72,433 | - | 72,433 | 19,052 | 91,485 | |||||||||||||||
LONG TERM LIABILITIES: |
||||||||||||||||||||
Other non-current liabiliies |
312 | - | 312 | 82 | 394 | |||||||||||||||
Deferred tax liabilities |
3,917 | - | 3,917 | 1,030 | 4,947 | |||||||||||||||
TOTAL LONG TERM LIABILITIES |
4,229 | - | 4,229 | 1,112 | 5,341 | |||||||||||||||
TOTAL LIABILITIES |
76,662 | - | 76,662 | 20,164 | 96,826 | |||||||||||||||
EQUITY: |
||||||||||||||||||||
Share Capital |
100 | - | 100 | 26 | 126 | |||||||||||||||
Accumulated losses |
(6,084 | ) | - | (6,084 | ) | (1,600 | ) | (7,684 | ) | |||||||||||
TOTAL EQUITY-attributable to owners of the Company |
(5,984 | ) | - | (5,984 | ) | (1,574 | ) | (7,558 | ) | |||||||||||
TOTAL LIABILITIES AND EQUITY |
70,678 | - | 70,678 | 18,590 | 89,268 |
Note 3 —Pro Forma Adjustment (3)
It represented the effect of fair value adjustment made on 1 December 1, 2014 as a result of Solar Power, Inc.’s acquisition over the Sinsin as if the acquisition had been consummated on January 1, 2014.
The aggregate purchase price of USD 130 million comprised of cash consideration of USD 64 million and fair value of ordinary shares issued of USD 66 million. The fair value of the ordinary shares issued for purchase price allocation purposes was estimated using the closing market price for a reasonable period before and after the date of the announcement of the acquisition. The valuation was based on a valuation report provided by a third party valuation firm. The valuation report utilizes and considers generally accepted valuation methodologies such as the income, market, cost and actual transaction of shares approach. We have incorporated certain assumptions which include projected cash flows and replacement costs.