“Savosolar’s revenue grew in January–June by 22 per cent year-on-year to EUR 2.0 million. The Covid-19 pandemic delayed installations, deliveries and contract negotiations on new projects during the second quarter. The commissioning of France’s largest solar thermal system in Issoudun, France, was postponed because of delays from July to October. The completion of the solar thermal system commissioned in Ettenheim, Germany in July was delayed by approximately two months. The handover of the Creutzwald project currently being delivered is also expected to be postponed by about two months. The postponement of the tender and contract negotiations and thus of new deliveries hampered not only the increase of revenue but also the accumulation of the order backlog. Despite this, the company’s order backlog at the end of the reporting period stood at EUR 2.9 million, being only EUR 0.1 million the end of the comparison period. However, due to the delays caused by the pandemic, we had to initiate the statutory co-operation procedure, as a result of which we laid temporarily off some of our staff in April–June.
The corona situation and potential new restrictions imposed in different countries may further postpone the clients’ investment decisions and deliveries later than what has been planned. We seek to prepare for the potential additional effects of the corona situation in our business operations.
During the reporting period, we won the competitive tendering for solar district heating systems to be delivered to NewHeat SAS in the cities of Narbonne and Pons in France. After the reporting period, we signed a contract on the Narbonne delivery in August, and negotiations on the Pons contract are currently under way. Additionally, we entered into an agreement on a pilot project for the City of Cadaujac in France, in connection of which we also agreed with the client on an exclusive right to negotiate the delivery of a major greenhouse project after the pilot project.
Our operating result was EUR -1.7 million, compared to EUR -2.3 million a year ago. Despite the negative effects of Covid-19, our profitability developed favourably. The actions to improve our internal efficiency have yielded results, and we will continue to pursue them with determined efforts. The rights issue arranged to finance our growth succeeded well, and we raised approximately EUR 3.5 million after the transaction costs to support our growth. The issue was over-subscribed, and it is great to see that the shareholders trust in us and our expertise and want to be involved in the development of emission-free renewable energy.
A significant change in the competitor field took place during the early part of the year when the owner of our Danish competitor Arcon-Sunmark disposed of its solar thermal system business and sold the main parts of the company to other operators. In my opinion, Arcon-Sunmark’s exit from the market will direct solar thermal investments to an even more lifecycle-oriented direction. I believe that for Savosolar in particular, this will provide even better opportunities to strengthen its market position, as our efficient and high-quality solar thermal collectors were from the beginning designed to optimise the competitiveness of our clients’ long-term energy production.
Savosolar is strongly involved in the fight against climate change. Solar heat produces emission-free renewable energy, the popularity of which increases both in industrial process heating and in district heat generation. Incentives to this end include both environmental effects and the fact that the competitiveness of solar heat further improves when the volume increases.
Savosolar Plc is a Finnish public limited liability company listed in Nasdaq First North Growth Market Sweden and Nasdaq First North Growth Market Finland that designs and supplies large solar thermal systems for district heat producers and industry. The systems are based on Savosolar’s highly efficient solar heat collectors, at the heart of which are Savosolar’s proprietary nano-coated direct flow absorbers. With this leading technology, Savosolar helps globally its customers to produce competitive clean energy. According to the information available to the company’s management, Savosolar’s collectors are the most efficient large solar heat collectors in the word.
Savosolar’s vision is to be the first-choice supplier of high performance large solar installations on a global scale.
Savosolar’s registered office and production plant is located in Mikkeli, Finland, in addition to which the company also has an office in Vantaa, Finland as well as fully owned subsidiaries in Denmark and Germany. In its sales activities, Savosolar also utilises partners who are familiar with the local markets. The company has such partners, for example, in China, the Latin America and Australia.
This half-year report is unaudited. The release has been prepared in accordance with the Finnish Accounting Standards (FAS) using the same principles as in the 2019 financial statements. Savosolar applies the percentage of completion (PoC) principle in the revenue recognition of projects. According to the percentage of completion principle, the recognition of revenue and operating income in long-term contracts is carried out on the basis of the percentage of completion of the project during the reporting period.
The comparison figures refer to the corresponding period in 2019, unless otherwise indicated.
Savosolar’s revenue for January–June increased by 22 per cent and amounted to EUR 2.0 million (January–June 2019: EUR 1.7 million).
The revenue growth fell short of expectations because the restrictions related to the Covid-19 pandemic delayed project deliveries in France and Germany. The estimated effect of these delays on the revenue of January–June was about EUR 1.3–1.5 million. The signing of new project contracts was also delayed in the second quarter as some clients postponed their investment decisions. At the end of the reporting period, the movement restrictions were largely lifted, and our operations returned to nearly the normal level.
Despite the Covid-19 pandemic, reasonable progress has been made in the delivery of a solar thermal system to Kyotherm Solar in Issoudun, France, and its commissioning is scheduled to take place in October. Exceptionally strong wind brought down some of the solar heat collectors that were waiting for installation in the Issoudun project field at the beginning of June, however, the incident is not expected to have effect on the company schedule-wise or result-wise. When completed, the Issoudun solar thermal system will be the largest system of its kind in France, and also Savosolar’s largest delivery to date in value. The system is more than 14,000 square metres in size, and the value of the delivery to Savosolar is about EUR 3.9 million
In Germany, the Fernwärme Ettenheim’s 1,700 square-metre solar thermal system and 200 square-metre heat storage were commissioned in July. The value of the system is approximately EUR 0.8 million, and it was Savosolar’s first delivery to Germany.
In February, Savosolar announced that it had signed a contract worth over EUR 1.3 million with a subsidiary of the French company La Francaise de l’Energie (LFDE) on the delivery of a solar heating system in Creutzwald, France. The system delivery and construction on site have been delayed because of the Covid-19 pandemic. The handover is planned to take place during 2020. The LFDE subsidiary will own and operate the solar heating system to be delivered and sell heat to ENES Creutzwald, the energy service company of the municipality of Creutzwald. The size of the solar heating system is over 6,000 square metres, and it will generate over 2,600 MWh of clean energy annually. Savosolar will deliver the largest part of the whole solar thermal plant.
In April, Savosolar Plc announced that it had agreed on the delivery of a solar thermal system of over 900 square metres for AbSOLAR SAS pilot project in the City of Cadaujac in France. The value of the delivery for Savosolar’s is about EUR 300 thousand. The project awaits the final investment subsidy decision from France. At the same time, Savosolar Plc signed an exclusivity agreement for designing and delivering AbSOLAR’s second solar thermal plant for a greenhouse. The final decision on the implementation of the project worth about EUR 2.5 million is expected to be made towards the end of this year. AbSOLAR SAS develops and delivers heating applications for industrial and residential use, using solar energy and seasonal storage.
In June, Savosolar Plc was selected as a preferred bidder to deliver two solar heating systems to NewHeat SAS in France. The size of the solar heating plant of the City of Narbonne is about 3,000 square metres, and its value for Savosolar is EUR 850 thousand. The field of the City of Pons is about 1,700 square metres in size, and its value for Savosolar is about EUR 700 thousand. The deliveries are scheduled to commence already during 2020, and they are due for completion during the first half of 2021. Savosolar has already delivered a solar heating system to NewHeat in Condat, France in 2019 for the process heat generation of a paper mill.
In Asia, Savosolar continued its cooperation with the Chinese company named Jiangsu Holly Environmental Technology Industrial Co. Ltd on the use of Savosolar’s products in the solar thermal systems delivered by Jiangsu Holly. Also, the cooperation with the Chinese company Guangzhou Power Supply Co., Ltd. advanced as planned after the Covid-19 delay during the early part of the year. The goal is to build a demonstration project of micro-energy network complementary with renewable energy in Nansha, Guangzhou. The project is part of the Finland-China Energy Programme. The objective is that the cooperation with our Chinese partners will result in the first order in China in 2020.
Savosolar’s order backlog increased and stood at about EUR 2.9 (0.1) million at the end of the reporting period. The value of the projects in the company’s sales pipeline at the end of the reporting period was about EUR 260 (121) million. Of this, the total value of projects in the tendering and planning stage amounted to approximately EUR 94 (54) million. Among other things, the growth is due to the increased activity in the French and German markets to produce clean thermal energy. The sales pipeline includes all the active projects entered in the company’s sales management system.
Personnel costs amounted to EUR 1.1 (1.0) million. Personnel costs increased because of the new recruitments in line with the strategy implementation during the latter half of 2019 and in 2020. Following the Covid-19 pandemic, Savosolar Plc laid off 22 people, part-time or full-time, in April–June for production and economic reasons based on the outcome of the co-operation negotiations. Through personnel arrangements and other ongoing and new savings measures launched, the company achieved net savings of around EUR 0.3 million during the first half of the year. Other operating expenses decreased and totalled EUR 1.0 (1.2) million.
The operating result (EBIT) for January–June 2020 amounted to EUR -1.7 (-2.3) million. The improvement of the profitability of projects was hampered by the delays caused by the Covid-19 pandemic in the implementation of ongoing projects together with the additional arrangements made for the advancement of the projects.
Net financial income and expenses amounted to EUR -0.8 (-1.0) million. The majority of the financing costs resulted from the right issue arrangement costs, which amounted to EUR 0.8 (0.9) million.
|(EUR 1,000)||Jan-Jun 2020||Jan-Jun 2019||Jan-Dec 2019|
|Operating profit/loss (EBIT)||-1,717||-2,332||-4,999|
|Profit/loss for the period||-2,564||-3,314||-6,760|
|Earnings per share, EUR*|
|undiluted||-0.128||-0.007 (-0.725)||-0.006 (-0.584)|
|diluted||-0.028||-0.002 (-0,188)||-0.003 (-0.350)|