Sunpower

?

IR Home
 
 

Email This Print ThisGo to DownloadsOperations Review

Extracted from Annual Report 2021

Resilient GI Financial Performance Despite Headwinds Due To Strong Steam Demand

In 2021, the GI business saw robust demand for industrial steam continue unabated throughout the year. Total steam sales volume grew 45.2% YoY to a record high of 7.93 million tons, a firm testament to its leading position as an industrial steam supplier in China.

GI recurring revenue1 grew 53.3% YOY to RMB2,047.3 million. GI recurring EBITDA2 emained robust at RMB466.2 million while GI recurring PATMI3 stayed positive at RMB135.7 million due to the Group's strong operational management capabilities, implementation of mitigation measures and the price formation mechanism that links the cost of feedstock to the price of steam. GI operating cashflow4 grew 43.4% YoY to RMB270.6 million, which continues to demonstrate the GI projects' ability to generate strong recurring cashflow.

The resilient GI results were achieved despite cost pressures on the production operations of the GI projects caused by an extraordinary and exceptional surge in feedstock price amidst the across-the-board uptrend in commodity prices in 2021.

As the existing GI projects are still ramping up and additional contribution from new plants and expansion of existing plants are expected, the long-term Net Present Value (“NPV”) of future cash flows of the GI business is expected to be substantially higher than the latest reported period.5



Note: The Company uses the terms “GI recurring revenue”, “GI recurring EBITDA”, “GI recurring PATMI”, and “GI operating cashflow” to reflect the true operating results of the GI business. This section should be read in conjunction with the Financial Statements section.

1 GI recurring revenue refers to recurring revenue generated by the GI business. It excludes one-time contributions from internal EPC services for BOT projects that are provided by the Group's internal project management department, recognised in accordance with IFRIC 12 Service Concession Arrangements.

2 GI recurring EBITDA refers to the recurring Earnings before Interest, Tax, Depreciation and Amortisation of the GI Business. It excludes gains or costs incurred by way of the M&S disposal such as excess cash dividends, gain on disposal, withholding tax, etc.; one-time contributions from internal EPC services for BOT projects that are provided by the Group's internal project management department, recognised under IFRIC 12 Service Concession Arrangements; as well as expenses incurred by the Company that are not related to the running of the GI Business, such as listing-related expenses and remuneration of the employees at the group level, etc., which reflects the true operating results of the GI business.

3 GI recurring PATMI refers to the recurring Profit After Tax and Minority Interests of the GI Business. It excludes gains or costs incurred by way of the M&S disposal such as excess cash dividends, gain on disposal, withholding tax, etc.; one-time revenue contributions from internal EPC services for BOT projects that are provided by the Group's internal project management department, recognised under IFRIC 12 Service Concession Arrangements; as well as expenses incurred by the Company that are not related to the running of the GI Business, such as listing-related expenses and remuneration of the employees at the group level, etc., which reflects the profit of GI business attributable to the Group.

4 GI operating cashflow refers to cashflow generated by operating activities of the GI Business.

5 Based on the company's long-term discounted cashflow forecasts.



Note: The M&S business was deconsolidated on 30 April 2021 following its disposal, hence the M&S business contributed 4 months to the group financial results in 2021 vs 12 months in 2020. As a result, the group's financial results are not directly comparable.

Including the substantial gain on disposal recorded and expenses incurred by the Company in connection with the disposal1, Group PATMI without the financial effects of Convertible Bonds (CBs) rose 15.6% YoY to RMB435.8 million in 2021. Excluding these items, Group PATMI without the financial effects of CBs in FY2021 was RMB154.8 million, which reflects the operating results of the Group. Group underlying operating cash flow was a robust RMB244.3 million in 20212.

The Group expects to continue to generate a high Net Present Value (NPV) of high-quality, recurring income and cashflows over the long term. Sunpower remains in a strong position to benefit from the long-term development of industrial parks as it has a strong supplier role in the provision of steam, a nondiscretionary production input, to industrial users.



Note: The 2017-2020 financial figures are before the disposal of the M&S business.

1 Expenses include the excess cash dividend paid to Convertible Bond holders which is recognised as finance cost, project adviser fees and withholding taxes.

2Underlying operating cash flow excludes CB interest paid annually. The underlying operating cashflow in 2021 excludes CB interest of RMB21.0 million.