In 2010 Photon Energy recorded CZK 2.489 billion (EUR 98.4 million, PLN 392.9 million) in revenues (+373% year-on-year) and CZK 435.6 million (EUR 17.4 million, PLN 68.9 million) in total comprehensive income (+632% year-on-year). Without the retroactive taxation of PV plants in the Czech Republic Photon Energy’s total comprehensive income would have reached CZK 665 million (EUR 26.3 million, PLN 105 million).
Prague, Warsaw, 15 February 2011 – Photon Energy a.s. (NewConnect: PHO), a leading integrated solar energy company in Central Europe, today announced its preliminary consolidated full-year financial results in accordance with IFRS for 2010.
The fourth quarter of 2010 represented a major milestone in Photon Energy’s development as 14.2 MWp of PV plants were added to the company’s proprietary portfolio in the Czech Republic and 4.7 MWp (3.1 MWp pro-rata based on Photon Energy’s ownership interest) in Slovakia. Photon Energy managed the transformation from a pure service provider to a sizeable investor in energy generating assets. All these plants were completed and connected in time to secure the respective 2010 feed-in-tariffs despite a toxic environment as the looming retroactive taxation in the Czech Republic created havoc among the financing banks and other partners in the solar industry value chain. Photon Energy’s 100% success rate is the reward for a year’s worth of hard work by its dedicated team across the entire group’s operating businesses.
In 2010 Photon Energy managed to beat its original consolidated revenue forecast of CZK 1.9 billion and the updated forecast of CZK 2.25 billion (see EBI report 66/2010) by generating CZK 2.489 billion, representing a 373% increase on the CZK 525.9 million of revenues in 2009. Photon Energy’s outperformance was even more pronounced based on total comprehensive income (TCI), a measure combining net profit from operating activities and the value created by the company’s investments in PV plants as established by marking them to fair value based on a discounted cash flow model in accordance with IAS 16. In 2010 Photon Energy’s TCI grew by 632% from CZK 59.5 million to CZK 435.6 million. Without the impact of the retroactive taxation of PV plants in the Czech Republic Photon Energy’s TCI would have reached CZK 665 million, representing a 1018% year-on-year increase.
The reported TCI of CZK 435.6 million represents a 632% return on the 2010 starting group equity of CZK 68.9 million and the year-end 2010 group equity of CZK 505.8 million implies that the CZK 17 million of equity capital (ever) invested into the company during 2008 has been multiplied nearly 30-fold. Photon Energy’s net profit from operating activities increased by 45.5% to CZK 57.9 million, which represents a decline by CZK 35.7 million compared to the 2010Q3 level. This is mainly due to the group’s focus on building proprietary plants and virtually no external EPC business in 2010Q4, the elimination of all revenues and margins from proprietary projects from the consolidated income statement while the income tax liability of Photon Engineering resulting from proprietary projects impacts the net profit line and, last but not least, the company’s conservative provisioning of inventories and receivables at year-end 2010.
The full-year 2010 financials do not include the revaluation of the company’s share in the 4.7 MWp of projects completed and connected in Slovakia as by year-end 2010 they were not officially handed over to the project companies and therefore are not recorded in their respective accounts. These plants, where Photon Energy holds equity interests between 60% and 70%, are consolidated using the equity method and will be subject to IAS 16 revaluation in 2011Q1.
The legislation in the Czech Republic to tax photovoltaic power plants connected in 2009 and 2010 in the years 2011 to 2013 to the tune of 26% of their revenues, the cancellation of a six-year tax holiday and the acceleration of the depreciation of power plants have had a major impact on Photon Energy’s business and the value of its power plants built for its proprietary portfolio. The total effect on the value of the Czech portfolio according to Photon Energy’s valuation model is approximately CZK 229 million (EUR 9.1 million, PLN 36.2 million), which has a major impact on the revaluation of Photon Energy’s proprietary portfolio plants in the Czech Republic. Management will use all available means to safeguard the value of the company’s assets. At the same time the lessons for the company’s strategy are very clear in as that regulatory risk is real and diversification across several markets with an emphasis on countries with stable legal and regulatory frameworks is paramount.
In 2011 Photon Energy’s emphasis will be on the two new core markets Italy and Germany with several other markets in focus. In January 2011 Photon Energy established three subsidiaries, hired an experienced country head and signed the lease on office space and a warehouse in Milano Assago. Concurrently our efforts to prepare our market entry in Germany are continuing.
After the implementation of our corporate restructuring Photon Energy continues with steps leading to an exchange offer by Photon Energy N.V. to Photon Energy a.s. shareholders, a capital increase of Photon Energy N.V. and a listing on the main market of the Warsaw Stock Exchange.
ABOUT PHOTON ENERGY
Photon Energy a.s. is an integrated solar power company developing and building greenfield and rooftop photovoltaic solar power plants and offering a full range of specialised services for PV projects. The company built and connected 18 MWp of PV plants for its proprietary portfolio in the Czech Republic and Slovakia by year-end 2010. For more information please visit www.photonenergy.as.
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