Tag Archives: utilities

Negative Rates Could Send S&P 500 To 925 If Not Eliminated

Unless the world’s central banks take immediate action to rid the world of the insidious NIRPs and negative interest rates, the likely outcome will be that all of the world’s income-producing assets will have to undergo significant markdowns. Should the yields of U.S. Treasury debt securities become negative, a meltdown of the global banking system and a crash of global markets might be inescapable. Should that happen the S&P 500 could potentially decline by more than 50% from its most recent 2,045 to 925. My calculation is based on what the S&P 500’s dividend yield was on March 9, 2009. The yen’s appreciation against all of the world’s major currencies since the bank of Japan instituted its negative interest rate policy (NIRP) on January 31, 2016 is signaling that a crash of the world’s markets could soon begin. After observing the most volatility that I had seen in my 40 years in the markets in early 2016, I conducted research on the crash of 2008. This led to my developing the NIRP Crash Indicator, which is powered by metrics that could have been utilized to predict the crash of 2008 and its V-shaped reversal. Throughout the month of March, the NIRP Crash Indicator’s signal remained a Cautionary Yellow. At the close of April 1, 2016 – the day the S&P 500 and Dow 30 closed at their highs for 2016 – the signal was elevated to Pre-Crash Orange. During the week ended April 8, volatility of the markets returned to February 2016 levels, with all of the major global market indices closing down by more than 1%. Following are reports that I have produced covering the negative rates crisis: The best solution to stop the spreading of NIRPs and negative interest rates is for central banks of the world to immediately enact or redact policies to abolish them. This would be the catalyst for the yields of the sovereign securities of Japan and Germany becoming positive. In the absence of this happening, a possible remedy to fight the NIRP and negative interest rate contagion could be the resetting of valuations of all income-producing assets to a discount in the marketplace as compared to their most recent valuations. The decline in valuations of income-producing assets would result in a significant increase in their yields. The yields increasing to sufficient levels should motivate safe haven and other investors to liquidate their holdings in negative- and low-yielding sovereign debt securities to purchase the less secure and much higher-yielding income-producing assets. The availability of significantly higher yields on income-producing assets would, hopefully, discourage safe haven and other savvy investors from “being fearful”, and encourage them to “become greedy”. With significant declines in the values of all less secured income-producing assets, and resultant increase in their yields, market forces would take over. The result would be that markets would drive down prices of treasuries and other sovereign debt securities, and their yields upward into substantial positive territory. Upon yields of the world’s sovereign debt securities skyrocketing, the demand for and prices of negative and low interest rate securities will collapse. The need for central banks to utilize NIRPs will have been completely exhausted. Case Study: American Electric Power versus 10-Year U.S. Treasury Note: To prove my theory and validate my suggested remedy, I conducted research on the share price and dividend yield behavior of the public utility company, American Electric Power (NYSE: AEP ), before and after the crash of 2008. I also focused my research on the price action and yields of 10-Year U.S. Treasury bonds over the same period. My focus was on a utility company because shares of a utility have always been considered the safest form of equity investments. If a utility bill is not paid, the electricity is turned off. For this reason, a utility’s dividend payments are reliable. Thus, the dividends of a utility company are much more secure than are dividends of any non-utility company. During the Great Depression, AEP was able to maintain and increase cash dividends. For these reasons, it is assumed that the yield for shares owned of a utility will always be lower than the yield that one might expect to receive from shares they hold of a dividend-paying, non-utility company. The shares of American Electric Power is a good example of a safe income-producing asset that could potentially motivate a holder of negative or extremely low interest rate sovereign securities to liquidate them to purchase its shares. With a current annual dividend of $2.24, and a most recent share price of $67.00, AEP has a yield of 3.39%. Based on how AEP’s yield and share price behaved before and after the crash of 2008, an increase of its yield to 10% would likely be sufficient to motivate a holder of low or negative interest rate sovereign securities to buy its shares. A decline in AEP’s shares by approximately $45, or by 66%, to a share price of $22 would increase its dividend yield to 10%. Should such a scenario unfold, it would be very similar to what happened to AEP’s share price and yield before and after the crash of 2008. The chart below graphically illustrates the share price and dividend yields of AEP over the last 10 years. On July 31, 2008, AEP’s share price was $27.84, and its annual dividend yield was 5.9%. From the end of July 2008 to March 9, 2009 – the same date that the S&P 500 Index (the Index) bottomed – AEP’s share price declined by almost $10 (or by 36%) to a 5-year low of $17.73 and to an equivalent dividend yield of 9.2%. Over the same period, the price of a 10-year U.S. Treasury note increased by 33%, and the yield fell from 4% to 3%. In June of 2009, three months after AEP’s share price had bottomed, the price of AEP’s shares had increased by 21% and its yield had fallen to 7.6%. Over the same three months, the price of the 10-year Treasury bond declined by 25% and its yield had gone back to the 4% from which it started a year earlier. Based on the opposite behavior of yields, the price action of AEP’s shares, and the 10-year Treasury notes from July of 2008 through June of 2009, it is very likely that holders of the notes were selling them to purchase shares of AEP and other high-yielding utility companies. See CNBC’s historical yields chart for 10-Year U.S. Treasury notes. My research confirms that holders of Treasuries and sovereign debt securities will sell them for less secure income-paying securities upon the yields increasing substantially. On April 8, 2016, the dividend yield for the S&P 500 – based on its close of 2,045 – was 2.1%. Under the assumption that the dividend yield of the Index would have to increase to 4.7%, which was the S&P 500’s yield when it hit bottom on March 9, 2009, the index would have to decline to 925 (based on its annual dividend rate of $43.00 on 12/31/15). The video below titled, “Why Negative Rates could send the S&P 500 to 925”, covers the content of this article, including AEP and the S&P 500. It also provides the rationale as to why I believe the final solution to rid the world of negative rates would require a significant mark-down of most of the world’s non-sovereign income producing assets. There are two concerns or questions that I have about whether or not 925 will be the final bottom for the S&P 500 should a significant markdown of non-sovereign income producing assets occur. The first is that I doubt the yield of 4.7% will be high enough to coax safe-haven investors out of their sovereign bond bunkers. Had the Obama administration not injected massive and immediate fiscal stimulus into the economy as soon as the new President was inaugurated, the S&P 500 would have probably fallen to a much lower level. It speaks volumes that American Electric Power and other utility companies had dividends yielding in excess of 9% at the March 2009 market bottom. After all, why would any red-blooded, dividend-seeking investor want to hold shares in a non-utility company having a dividend yield that is at a 50% discount to a utility? My other concern, or question is, “Will the S&P 500 be able to maintain its dividend rate?” Uncertainty within the energy industry, and the resultant recent volatility in the price of oil will make this more difficult. Also, a sudden and significant decline for the S&P 500 to even near 1,000 would likely induce a U.S. recession. Because many of the world’s economies are either in – or close to entering – a recession, a decline of the S&P to much lower than 925 could be the catalyst for the world entering its first economic depression since the 1930s. In 1930, a year after the crash of 1929, the S&P 500’s dividend rate went to an all-time high. By 1935, the index’s dividend declined by 44%. The S&P 500’s dividend rate did not eclipse its 1930 high until 1955. For the world’s safe-haven investors to liquidate their sovereign debt holdings will likely require that the yields on less secure income-producing assets, including the dividend paying S&P 500 and utility companies, increase to at least 10%. The world is much more financially fragile in 2016 than it was in 2009. The debt of the U.S. has doubled since 2008 from $10 trillion to $20 trillion. The world’s central banks have taken drastic actions to prop up their economies… to no avail. Until the negative interest rates are totally eliminated, investors will remain fearful. Based on my 40 years of experience, I predict that double-digit cash flow returns will be the minimum threshold required for savvy and conservative investors to no longer be fearful. Assuming that all of the world’s central banks that have instituted NIRPs do not repeal them, the issue would become how the resets of the world’s income-producing equity and non-sovereign debt markets – required to exterminate the NIRPs and negative interest rates – might take form? Will it be a swift crash, or a gradual correction? Based on my experience, it is not likely that the markdown will be from a cliff-dive. The correction would most likely occur with valuations of the markets ratcheting downward in stages. Markets would not likely bottom until late 2017, or early 2018 for two reasons, as follows: A correction of more than 40% from a market’s all-time high to its trough has historically taken time. There have been five such corrections over the last 100 years, as follows: 1919 to 1921, 1929 to 1932, 1973 to 1974, 2000 to 2002, and 2007 to 2009. (The four corrections, prior to the one ending in 2009, lasted at least 24 months.) Had massive fiscal and monetary stimulus not been applied in October of 2008, after Lehman filed for bankruptcy, this most recent correction would likely have lasted at least 24 months. If the dividend yield of the S&P 500 Index should go from a most recent 2% to 10% to kill the NIRPs and negative interest rates, the peak-to-trough decline of the Index would be 80%. The only other time over the last 100 years in the U.S. that a decline of more than 50% occurred was from 1929 through 1932. After the market had declined by an initial 40% in October of 1929, the market experienced six powerful rallies that generated trough-to-peak rallies providing returns ranging from 20% to 50%. When the market finally bottomed in the middle of 1932, it had declined by 90% from its 1929 all-time high. I would expect no less drama from a secular bear market that was likely birthed after the market hit an all-time high in May of 2015. The most important issue remaining is that of timing, and when the S&P 500 Index will begin to ratchet downward to new multi-year lows that could eventually take the Index to well below 1,000 by late 2017 or early 2018. The latest significant developments are the NIRP Crash Indicator going to an Orange Pre-Crash reading on April 1, 2016, and the heightened volatility that followed for the Japanese yen and all of the world’s major stock indices for the week ended April 8, 2016. They have increased the probability that the mark-down of the world’s income-producing assets will begin in 2016. Assuming that the renewed volatility proves temporary, there will be plenty of reasons for the market to have an excuse to go to new lows between now and the end of 2016. Extreme controversy surrounding NIRPs and negative interest rates will continue to escalate. Because NIRPs were created by the world’s central banks and bankers who have obtained rockstar status, the next downturn to lower lows will likely be fueled by public statements that will be made by central bankers about NIRPs, negative rates, stimulus, currencies and the health of economies, etc. From April through December of 2016, each of the world’s three leading central banks have six scheduled public policy meetings. The most probable outcome will be that the S&P 500 and the indices for the other global markets will hit new multi-year lows during some or all of the months the meetings are scheduled. Schedule of Remaining Policy Meetings of Central Banks for 2016 European Central Bank (ECB) Bank of Japan (BOJ) U.S. Federal Reserve (FOMC) April 21, 2016 April 28, 2016 April 27, 2016 June 2, 2016 June 16, 2016 June 16, 2016 July 21, 2016 July 29, 2016 July 27, 2016 September 8, 2016 September 21, 2016 September 21, 2016 October 20, 2016 November 1, 2016 November 2, 2016 December 8, 2016 December 20, 2016 December 14, 2016 Based on my analysis, I am recommending that the shares of the Utilities Select Sector SPDR ETF (NYSEARCA: XLU ) and the shares of its components be sold at their current prices. The shares of the companies that I am recommending be sold include NextEra Energy (NYSE: NEE ), Duke Energy (NYSE: DUK ), Southern (NYSE: SO ), Dominion Resources (NYSE: D ), American Electric Power, Exelon (NYSE: EXC ), PG&E (NYSE: PCG ), PPL (NYSE: PPL ), Sempra Energy (NYSE: SRE ) and Edison International (NYSE: EIX ). The share prices of the XLU and its components have increased by an average of 10% since the beginning of 2016 as a result of investors seeking shelter from the market’s extreme volatility. Investors have bid up the share prices of most utility companies to all-time highs since the start of 2016. Unfortunately, when the mark-downs begin, shares of utility companies will decline significantly along with all other non-sovereign income producing assets. Utility companies and related mutual funds, and ETFs should be sold, and should not be repurchased until negative interest rates have been eliminated. Sell Recommendations for Utilities and ETFs Utility/ETF Symbol Price @ 04/08/16 Utilities Sector SPDR XLU $48.85 Duke Energy DUK 79.77 NextEra Energy NEE 116.81 Southern SO 50.73 Dominion Resources D 73.04 American Electric Power AEP 66.01 Exelon EXC 34.70 PG&E PCG 59.30 PPL PPL 37.40 Sempra Energy SRE 104.24 Edison International EIX 70.69 Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

ETF Update: Smart Beta Launches As Far As The Eye Can See

Welcome back to the SA ETF Update. My goal is to keep Seeking Alpha readers up to date on the ETF universe and to gain some visibility, both for the ETF community and for me as its editor (so users know who to approach with issues, article ideas, to become a contributor, etc.). Every other week (depending on the reader response and submission volumes) we will highlight fund launches and closures for the week, as well as any news items that could impact ETF investors. As you might have noticed from the title, smart beta funds were on my mind this week. This might have something to do with the last 8 launches falling into that self-proclaimed category. It might also be due to a great read from Abnormal Returns, ” Finance blogger wisdom: smart beta bubble? ” In the linked article the author presented the following question to his online peers: The ‘smart beta’ or factor-investing bubble seems to be in full bloom. Is ‘smart beta’ simply the new active investing? If so, what happens to the entire fund industry which was built on the high fees associated with active management? This is a question that many have also covered on Seeking Alpha, but the most recent example is from Benjamin Lavine, CFA , whose article was posted on Wednesday (3/30). I would highly recommend it for any readers wondering what is behind the smart beta trend and how to interpret the term when considering an investment. With that disclaimer aside, let’s jump into the most recent round of smart beta launches: Fund launches for the week of March 21st, 2016 Principal expands into smart beta (3/22): The Principal Price Setters Index ETF (NASDAQ: PSET ) and the Principal Shareholder Yield Index ETF (NASDAQ: PY ) are the first smart beta launches from Principal Funds; both target mid- and large-cap domestic firms. However, PSET “focuses on companies with sustainable pricing power, consistent sales growth, high/stable margins, quality earnings, low leverage, and high levels of profitability,” while PY is for investors more concerned with “sustainable shareholder yield, strong cash flow generation, and capacity to increase dividends and/or buybacks.” Both funds are a relatively large departure from the Principal EDGE Active Income ETF (NYSEARCA: YLD ), which was launched in July 2015. This first venture into ETFs is an active fund investing across multiple income-producing asset classes in search of high-income investments. Victory Capital Management rolls out an emerging market fund (3/23): The Victory CEMP Emerging Market Volatility Wtd Index ETF (NASDAQ: CEZ ) was the third smart beta launch of the week. The in-house CEMP Emerging Market 500 Volatility Weighted Index “combines fundamental criteria with volatility weighting to seek to improve an investor’s ability to outperform traditional indexing strategies.” It is worth noting that the top countries represented at this time are Taiwan, China, South Korea and India; all of which are still considered emerging by MSCI , but many have argued that they are quickly evolving out of the traditional definition. Fund launches for the week of March 28th, 2016 Fund closures for the weeks of March 21st and 28th, 2016 Direxion Value Line Conservative Equity ETF (NYSEARCA: VLLV ) Direxion Value Line Mid- and Large-Cap High Dividend ETF (NYSEARCA: VLML ) Direxion Value Line Small- and Mid-Cap High Dividend ETF (NYSEARCA: VLSM ) ALPS Sector Leaders ETF (NYSEARCA: SLDR ) ALPS Sector Low Volatility ETF (NYSEARCA: SLOW ) ALPS STOXX Europe 600 ETF (NYSEARCA: STXX ) Global Commodity Equity ETF (NYSEARCA: CRBQ ) iSharesBond 2016 Corporate Term ETF (NYSEARCA: IBDA ) iSharesBond 2016 Corporate ex-Financials Term ETF (NYSEARCA: IBCB ) Have any other questions on ETFs or ETNs? Please comment below and I will try to clear things up. As an author and editor, I have found that constructive feedback is the best way to grow. What you would like to see discussed in the future? How can I improve this series to meet reader needs? Please share your thoughts on this first edition of the ETF Update series in the comments section below. Have a view on something that’s coming up or a new fund? Submit an article. Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

Sky Solar Holdings (SKYS) Q4 2015 Results – Earnings Call Transcript

Sky Solar Holdings (NASDAQ: SKYS ) Q4 2015 Earnings Conference Call March 31, 2016 8:30 AM ET Executives Armin Seifart – Vice President and Corporate Counsel Sanjay Shrestha – President and Chief Investment Officer Andrew Wang – Chief Financial Officer Analysts Philip Shen – ROTH Capital Partners, LLC Colin Rusch – Oppenheimer & Co. Inc. Jesse Pichel – ROTH Capital Partners LLC Operator Thank you for standing by, and welcome to the Sky Solar Fourth Quarter 2015 Earnings Conference Call. At this time, all participants are in a listen-only mode. There will be a presentation followed by a question-and-answer session. [Operator Instructions] I must advise you that this conference is being recorded today, Thursday, [March 31], 2016. I would like now to turn the conference over to your first speaker today, Mr. Armin Seifart with Sky Solar. Please go ahead, sir. Armin Seifart Thank you, and welcome to Sky Solar’s fourth quarter and full-year 2015 earnings conference call. Joining us today on the call from the Company are Sky Solar’s Chief Financial Officer, Mr. Andrew Wang, and Sky Solar’s Chief Investment Officer and President of Sky Capital, Mr. Sanjay Shrestha. Before we begin the formal remarks, I would like to remind you that certain statements on today’s call, including statements regarding expected future financial and industry growth, development and construction of projects, constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and as defined in the U.S. Private Securities Litigation Reform Act of 1995. Such statements involve certain risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Further information regarding these and other risks is included in Sky Holdings filings with the U.S. Securities and Exchange Commission, including its Annual Report on Form 20-F. Except as required by law, the Company does not undertake any obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise. Now, I’d like to turn the call over to our Chief Investment Officer, Mr. Sanjay Shrestha. Sanjay, if you like to start? Sanjay Shrestha Thank you, Armin, and thank you everybody for joining our conference call today. I thought what I would like to do is begin our call by recapping our key accomplishments during 2015 and then discussing some of the key initiatives we are undertaking for 2016 and beyond. So let’s start with 2015. During 2015, we established a key partnership with Hudson Clean Energy to expand our presence in Latin America and Japan as well as further potentially expand our presence in the U.S. market. We also established our U.S. operating subsidiary made key strategic hires and have made significant progress on our efforts to expand in the U.S. market by targeting potential opportunity to acquire operating assets and project pipeline. We also began the process of realigning our internal resources in the Americas Region and I am pleased to report that we have made significant progress on that front. We have also made significant progress in strengthening our financial underwriting, technical and business development activities here and expect these efforts to have a meaningful positive impact in 2016 and beyond. In addition, we grew our operating portfolio from 53 megawatt to 83 megawatt in Japan as a result of our expanded partnership with Farallon. On an operational level, our results in 2015 were modestly below our expectation driven primarily by lower than expected connection in Japan in fourth quarter of 2015. We only ended up connecting 11 megawatt in Japan in fourth quarter versus our prior guidance of 30 megawatt to 40 megawatt this was primarily driven by construction timing and some of you guys know in the solar space a month delay can result for being in one quarter to the next. As a result we ended the year with 83 megawatt of operating assets in Japan and we currently have 28 megawatt under construction in Japan. As all of you know Sky Solar has remained very focused on its key target markets with operations in Japan, U.S., Canada and Latin America. As a part of our internal capital allocation strategy we believe it is very important for us to review any potential changes in operating conditions in our key markets and then reflect that in our corporate capital allocation decision. As it stands today we see increasing attractiveness in the U.S. market to expand our footprint. Our scale and focus should enable us to expand into both solar and non-solar opportunity in U.S. and broadly speaking North America. To give you some incremental color we are pleased with several ongoing initiatives in North America, which includes closing on operating assets, and acquiring sizable pipeline from multiple parties. In Canada, we were recently one of the only handful of companies to be awarded a 14 megawatt large renewable project, which was a very highly competitive bidding process. However, in Latin America and particularly in Chile we see substantial changes in near-term financing and power market condition. We have a meaningful pipeline in Chile and we’re continuing to assess the impact of these changes on our shovel-ready project as well as our pipeline in Chile. This could potentially impact timing of project construction in Chile as we focus on making sure that anticipated project returns meet our internal target. However, on a positive note, we are also seeing sizable distributed generation opportunity with very attractive returns in this market. As you all know we have a meaningful presence in Japan with 83 megawatt of operating asset and another 28 megawatt under construction as I just mentioned. In addition, I would like to point out that our current operating assets in Japan are meaningfully under levered and furthermore we have another 135 megawatt of shovel-ready pipeline in this market. Now, in light of some of the changes in Latin America, as I just talked about more specifically in Chile and our highly under levered FIT 1 operating assets in Japan and our expanding presence in the U.S. market, Management and Board had [Audio Dip] strategic review of our global operation in order to unlock shareholder value, while we are considering a number of possible path forward, we will update you on the progress made in this respect in the coming months. As a result, we are withdrawing our prior guidance for 2016 at this point. Now, I would like to turn the call over to Andrew, our Chief Financial Officer to go over details of our fourth quarter results. Andrew? Andrew Wang Thanks, Sanjay. First, I’d like to note that we encourage you to review our financial results on an adjusted non-IFRS basis. By looking at the ongoing elements and the removing the effect of what we expect to be one-time items, you will see the Company in the way we are looking at it. We believe that this will give you the best understanding both of our historical results and prospect going forward. Also note unless I stated otherwise, all financial figures refer to the fourth quarter of 2015. Any comparison characterized as year-over-year is comparing to the fourth quarter of 2014 and any characterized as sequential is comparing to the third quarter of 2015. Okay, now onto the results. Electricity sales in the quarter was $7.9 million, an increase of 128.4% year-over-year, but down 30.1% sequentially. The year-over-year growth in electricity sales was primarily due to the increase in the Company’s operating IPP assets globally, which include additional project connected in Japan during the fourth quarter. The sequential decline in the electricity sales was impacted by seasonally lower sun hours grow across other Company major geography markets. Electricity sales in Asia were up 197.4% year-over-year, but down 18.1% sequentially, primarily due to the revenue contributed by the solar parks in Japan that were connected during the year and the lower seasonality in the fourth quarter of 2015. Electricity sales in North America were up 185.3% year-over-year, but down 64.1% sequentially, primarily due to the seasonality and devaluation of Canadian dollars against the U.S. dollar. Electricity sales in Europe were up 24.2% year-over-year as a result of higher solar irradiation compared to last year and also sales were down 46.8% sequentially due to the seasonality as well. Total revenue were $12.2 million, increased by 49% year-over-year, and 1% sequentially. Revenue from system and other sales was down 8.4% year-over-year, but up 456.4% sequentially. The year-over-year decrease in revenue from system and other sales was primarily due to the ongoing shift in our business model from system sales services to IPP electricity sales, while the sequential increase was due to increased system sales services in Canada during the fourth quarter. Cost of sales and services was $7.6 million compared to $7.1 million in the same period of 2014. As a result of above, gross profit, which was $4.6 million for this quarter, was up 318% year-over-year and gross margin increased to 37.9% for the quarter from 13.1% in the same quarter of 2014. During the fourth quarter, we also recorded an impairment loss of $1.1 million as a result of disconnected license in Canada and Latin America due to the certain project timing and technical issues compared to $269,000 in the same period of 2014. SG&A expenses were $7.4 million down 85% year-over-year. The decrease was primarily due to a non-recurring equity incentive fee expense of $43.7 million recorded in the fourth quarter of 2014. Other operating income was $42,000 compared to $346,000 in the same quarter of 2014. The decrease was due to a non-recurring disposal of permits in the fourth quarter of 2014, no such disposal was recorded in the fourth quarter of 2015. Operating loss was $4.9 million compared to operating loss of $48.1 million in the fourth quarter of last year. Finance costs were $1.2 million compared to $2.1 million in the same period of 2014. The decrease in financing costs was primarily due to the lower interest rate of a bank loan denominated in Japanese YEN in the fourth quarter of 2015, compared to that of the loan denominated in U.S. dollar in the fourth quarter of 2014. Other non-operating expenses were $1.2 million, which mainly represented foreign exchange losses resulting from the depreciation of the Euro against the U.S. dollar. This compared to a non-operating expenses of $9.9 million in the same period of 2014. The decrease in other non-operating expenses were primarily due to a decrease of fair value changes as compared with the same period of 2014. Net loss was $7.4 million compared to a net loss of $16 million in the same period of 2014. Basic and diluted losses per share was $0.02, basic and diluted loss per ADS was $0.15. Adjusted EBITDA was $542,000. Keep in mind that adjusted EBITDA is a non-IFRS measure. Our calculation removes certain effects noted above as well as other items. Please be sure to study the reconciliation table included in the press release for full details on how we arrived after the adjusted EBITDA calculation. The use of adjusted EBITDA has limitation as analytical tools. And you should not consider it in isolation or as substitute for analyze of the Company’s financial results as reported in IFRS. Now let me turn to our balance sheet. At end of Q4, we have bank balance of cash of $26.3 million. The decreased cash balance compared to the end of third quarter 2015 reflect additional investments to build projects mainly in Japan. Cash including received cash was 28.2% of equity compared to 44.6% at the end of Q3 2015. In Q4, we spent more than – around $20 million related to our solar park assets, all related to new project constructions. Recurring amount of IPP solar parks was $259.4 million or 1.8% of our total assets of $361.1 million. Total borrowings of $98.3 million represented 27.2% of our capitalization. Long-term borrowings of $84.7 million were primarily non-recourse project financing. Short-term borrowings of $13.4 million were deployed for working capital. Now, let me briefly look at full-year financial results. Again all figures of our quarter year – for the full-year 2015 unless otherwise noted and the comparison all with full-year 2014. Revenue was $47.2 million up 43.5% year-over-year in line with our strategy shift to IPP electricity sales were $35.5 million up 59.8%, while system sales were $11.7 million up 9.4%. Electricity sales in Europe were down 19.2% to $11.2 million, while electricity sales in Asia were up 155.8% to $19.4 million. North America especially Canada was due mainly in system sales market for us with system sales were up 63.1% to $8.4 million. Gross profit was $28.6 million representing the gross margin of 60.6%. SG&A expenses was $23.7 million. Operating profit for the year was $8.2 million. Net loss was $1.6 million or $0.04 per share and the negative $0.03 per ADS. Adjusted EBITDA was positive $15.7 million. Remind again for the year adjusted EBITDA remove certain effects noted above as well as other items. Please be sure to study the reconciliation table included in the press release for full details on how we arrived at these calculations. Finally, our balance sheet remains healthy. We remain EBITDA positive and we look forward to updating you without overall outlook as we undertake key strategy initiatives to unlock shareholder value. Now I will return the call over to the operator for the question-and-answer session. Operator? Question-and-Answer Session Operator Thank you. We will now begin the question-and-answer session. [Operator Instructions] We will now take our first question it comes from the line of Philip Shen from ROTH Capital. Please go ahead your line is now open. Philip Shen Good morning, guys. What are the strategic options on the table to unlock shareholder value at the upcoming Board meeting? Are we talking about JVs or partnership or new sources of capital? Can you just give us some color as to what you guys are exploring? Sanjay Shrestha Hey Philip, how are you? This is Sanjay. Again, I think it’s a little bit of all of the above but again I think getting into too many specific at this point in time is bit premature that is really what going to be the topic of discussion here in the month of April, right. And I just want to point out few things to you however one we’ve been talking about building the team here in the U.S. which we have done, we’ve been talking about realigning our resources in the Americas region we have done that we feel very good about our platform as it stands today, we see a lot of opportunity and I recognize that we obviously have had any incremental announcement yet but we feel pretty good about what we are that’s number one. Number two, second thing I would like to highlight here is we have sizable amount of operating assets in Japan now and the amount of the debt on those operating assets remains very low right. So that’s something I just want to point out, but again totally appreciate the question, but give us a month or two here before we can give you a concrete answer on exactly what it’s going to look like, but it is fair to say that all the options are on the table right now. Philip Shen Okay. Great, in terms of where we’re winding down Q1 today. Can you talk about the connections you might expect or we could see from this quarter in Q1 from you guys? Sanjay Shrestha Andrew, do you want to take that real quick. Andrew Wang Right, as we mentioning previously that we have 28 megawatts working progress basically expected to be connected during the quarter and all these projects are in Japan. Philip Shen [Indiscernible] Andrew Wang I think that’s the key region that we have expected I mean this major connection during the first quarter. Philip Shen Okay, cool. With – I think Sanjay you mentioned some of the challenges in Chile. I was wondering if you might be able to provide some more color there I am guessing given some of the issues with commodity exposed industries it seems like the merchant power pricing levels are quite low there. And so is there a scenario where a – what is the outlook for the Chile and projects for you guys. And then you also mentioned that there was some or more constructive outlook for the DG market in Chile perhaps you can sketch out the opportunities there? Thanks. Sanjay Shrestha Happy to do so. So first of all as you know we have 44 megawatt shovel-ready project in Chile right and we are pretty happy with the project, location of the project and it’s a good project. And another thing we’ve also gotten is extension of the timeline in terms of one, we can actually connect the project, we’ve actually got an incremental 18 month extension. So which allows us to really be opportunistic in terms of when we break the ground and when we connect the project to the grid number one? Number two, there is also going to be a sort of the PPA auction if you would in the third quarter of this year and that is something we’re watching closely as well. But as you know price sort of the merchant price in Chile tends to be tied to the price of oil because its tied to the price of LNG and needless to say given what the price of oil has done, what the price of commodity has done, all the consultants that work for our debt financing provider have continued to reduce their expectation for the spot prices especially in 2016 and 2017, right, that has actually led to basically this becoming – the structure of the debt is becoming a little bit complicated. We haven’t again made a final decision here. We’ve actually been in a constant dialogue with our lending institution about it, but that’s the reality of the situation as to our comments here about how the market dynamics have gone from Chile a grid parity market 12 months ago to on a short-term basis or some other larger project economics in the near-term aren’t looking as attractive. However, we think this is a good project, there is an opportunity for us to one, lower the CapEx, two, potentially get some sort of a PPA, so we are obviously working on both of those. And fortunately for us, we have got on the land extension to be able to do that. Now on the distributed generation side, our team has been very active in that market as you know and we have actually been able to identify which again by the way is not in our backlog as we tend to be conservative in terms of what we put in our backlog. There is about 21 megawatt of potential near-term opportunity, and since this is a DG project, typical size of this projects were about 3 megawatt plus. So it’s really a small scale utility project if you would and most of this projects aren’t subject to your day time spot prices. They actually are allowed to basically capture the average spot price during the day. And as you probably know in Chile, the prices tend to be much higher during the night time, but that doesn’t benefit your day time spot price for the solar, right. But for the distributed generation since you are looking at an average price, there is a meaningful uplift in the price, you can actually capture for the cash flow and the return. So, again we are obviously going through a detailed evaluation of this, but we think that the returns on some of this DG projects should be substantially higher. So in short, there is two paths, right. One, monitor the 44 megawatt, see what we can do to make sure that the return is attractive. And two, continue to sort of work on this DG opportunity because the return is clearly higher, which one we move on first at this point in time I can’t give you that answer, which is what we are also trying to figure out, so that’s what we do. Philip Shen Okay, great. I’ll pass it on. Thanks. Sanjay Shrestha Of course. Thank you, Phil. Operator Our next question comes from the line of Mr. Colin Rusch from Oppenheimer. Please go ahead. Your line is now open. Colin Rusch Thanks so much. Can you guys talk a little bit about how close you are, how much diligence you’ve done to doing an AVS in Japan, the persistent that’s been set for 85% loan-to-value, 1.4% coupon over 20 years would suggest that there’s an awful lot of capital that could come into the Company just through refinancing those assets in Japan that you’ve got done? Sanjay Shrestha Hey, Colin, how are you? Thanks for that question. So look quite well noted, we are obviously well aware of that option and again as I said, right I mean I think there is a – in a multiple different ways there is a lot of capital recycling opportunity remains in Japan. And again we feel like we are one of the few companies in the space with a very sizeable operating asset as well as the very sizeable pipeline both FIT 1 and FIT 2 and even some FIT 3 which frankly I didn’t even mention on this call. So, again please give us few months here before we can come back to you with some concrete answers. So we are – we are putting all the options on the table right and we fully recognized that, we’re sitting with a very valuable asset here probably somewhat unique to us than anybody else in the sector. And we feel like it is also not being fully recognized with the market as well, but again give us at least few months here so that we can give you [four months] or rather than giving a lot of different hypothetical scenario of what path we might end up picking. Is that fair? Colin Rusch Yes. That’s totally fair. Can you walk through just the two impairment charges, what those were in the quarter? Sanjay Shrestha Impairment charges in the quarter. Can you tell… Andrew Wang So, basically that as you know that we do the primary developments in most of the markets including mainly the Canada and also North America. And when we are doing the – I mean the primary developments, we will capitalize some of the direct cost for example to develop legal or interconnection study. As well as we eventually will find some project will not be either commercially works or technically be able to connect it. And then we will basically impair these permits, if the permits will eventually materialize and we will view the projects and then these costs of the permits will be continuously capitalized in on the balance sheet as part of the IPP solar parks assets. During the quarter, we have recorded certain impairment losses for the permits which mostly are primarily development permits we have in Canada FIT 2 projects as well as some of the projects in the Latin America. Colin Rusch Okay, perfect guys. And just a final one from me is the sense that there is a lot of deal flow out there, how active can you be at this point in that bidding process and looking at that given kind of some of the strategic things that you are talking about doing? Sanjay Shrestha So Colin let me make sure, so you are specifically talking about sort of the U.S. market from a deal flow standpoint, right? Colin Rusch Yes, exactly. Sanjay Shrestha Sure. So again, I mean in light of what we just mentioned here about undertaking the sort of the strategic review, right, because there is potential to recycle capital, we are sitting with a lot of valuable assets and we have now – we feel now pretty good about the team that we have in place for the Americas Region, right. We feel like we have very strong legal and financial underwriting capabilities and we are – I want to say is very disciplined about what we go after, right. Our focus is not just to add megawatt, but add right megawatt that is going to give us the returns that we look for. So we are fairly active and we are looking at a lot of opportunities and I think the pipeline of the prospect have gone up substantially for us and I will be the first one to say that obviously we haven’t had any confident announcements yet, but it is fair to say that we are active with parties ranging from various different sizes. And we are not looking for larger utility scale project. We are mostly focused on sort of smaller utility scale type opportunity. We are willing to look at 25 megawatt portfolio made out of number of different projects in just 125 megawatt portfolio or a 10 megawatt block. We are willing to do that led work which I think allows us to actually even get the better return than maybe some others. So short answer to your question is we are fairly active, we are looking at a lot of things and hopefully we can come back and report to you guys with some incremental update again during the coming months. Colin Rusch All right. Thanks a lot guys. I’ll take the rest of that one. Sanjay Shrestha Thank you. Operator [Operator Instructions] Our next question comes from the line of Jesse Pichel from ROTH Capital. Please go ahead. Your line is now open. Jesse Pichel I’m sorry ma’am that was mistake. I hit the button by mistake. Thank you. Sanjay Shrestha Good morning Jesse, how are you? Jesse Pichel Good, I don’t have a question, but thank you very much. Sanjay Shrestha Thanks Jesse. Operator Okay. Our next question comes from the line of Philip Shen from Roth Capital. Please go ahead. Your line is now open. Philip Shen Hey guys. Hey, just a quick follow-up here, in terms of non-solar opportunities, you touched on that in your prepared remarks. Can you provide some color on the type of non-solar assets, you may consider either developing or owning and can we – could we see any non-solar assets added to the balance sheet in 2016, and I know a lot depends on what you guys decide in the next month or so, but and so far as you give us some color as to your activity there, that would be great? Thanks. Sanjay Shrestha Right, happy to do so. So again that we touched on this a little bit on our last earnings call as well, so not a whole lot different than that, so – but again let me sort of give you some more color here, right so the things that we would be interested in. Number one, what we are not going to do is take a technology risk. We are definitely not going to do that, right. It has to be a renewable asset class where technology has been around for a long time and it’s proven. Second, the return that we get on this projects have to be meaningfully higher than the returns we are getting it on the solar side, right, because we are – at the end of the day we’ve been a developing Company that actually owns asset on a global basis in the solar space. We know that market pretty well so to do non-solar assets the return has to be meaningfully higher, but to add a little bit more to that there will be probably more likely there will be three buckets of things we would be very interested in, one would be combined heat and power, second would be potentially energy efficiency and third that we are looking at obviously very closely and I think this is something a lot of people are looking at as well in the energy storage, right. Now, in terms of a specific questions surrounding should you all expect something to be on the balance sheet or something we owned during 2016. I would really say this is more 2017 and beyond, if we end up having anything in 2016 it will be really more small scale and really sort of test of water to demonstrate that. There is a value proposition here and it is the right thing to do, but other than that I would say this is really more 2017 and beyond. Philip Shen Okay. That’s fair. Thanks Sanjay. Sanjay Shrestha Thank you. Operator There appear to be no further questions. I would like now to turn the call back over to the management for any closing remarks. Sanjay Shrestha Thank you, operator. One again everyone thank you for being on the call. We look forward to updating you all here in the coming months both for our upcoming quarter as well as for all the strategic initiatives we are undertaking here in order to unlock shareholder value. Thank you again and have a good day. Copyright policy: All transcripts on this site are the copyright of Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. (Until now investors have had to pay thousands of dollars in subscription fees for transcripts.) So our reproduction policy is as follows: You may quote up to 400 words of any transcript on the condition that you attribute the transcript to Seeking Alpha and either link to the original transcript or to www.SeekingAlpha.com. All other use is prohibited. THE INFORMATION CONTAINED HERE IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY’S CONFERENCE CALL, CONFERENCE PRESENTATION OR OTHER AUDIO PRESENTATION, AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE AUDIO PRESENTATIONS. IN NO WAY DOES SEEKING ALPHA ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY’S AUDIO PRESENTATION ITSELF AND THE APPLICABLE COMPANY’S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS. If you have any additional questions about our online transcripts, please contact us at: transcripts@seekingalpha.com . Thank you!