UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 20-F

(Mark One)

o	REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
OR
x	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2017.
OR
o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
OR
o	SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Date of event requiring this shell company report . . . . . . . . . . . . . . . . . . .

For the transition period from                       to                        

Commission file number 001-36703

Sky Solar Holdings, Ltd.

(Exact name of Registrant as specified in its charter)

Cayman Islands

(Jurisdiction of incorporation or organization)

Unit 402, 4th Floor, Fairmont House

No.8 Cotton Tree Drive, Admiralty

Hong Kong Special Administrative Region

People’s Republic of China

(Address of principal executive offices)

Contact Person:  Mr. Andrew Wang

Chief Financial Officer

Phone:  +852 3960 6548

Facsimile:  +852 3180 9399

Address:  Unit 402, 4th Floor, Fairmont House

No.8 Cotton Tree Drive, Admiralty

Hong Kong Special Administrative Region

People’s Republic of China

*(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)

Securities registered or to be registered pursuant to Section 12(b) of the Act.

Title of each class	Name of each exchange on which registered
Ordinary Shares, par value US$0.0001 per share	NASDAQ Stock Market LLC (the NASDAQ Capital Market)

Securities registered or to be registered pursuant to Section 12(g) of the Act.

None

(Title of Class)

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act.

None

(Title of Class)

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report.

419,546,514 Ordinary Shares were issued and outstanding as of December 31, 2017

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

o Yes   x No

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

o Yes   x No

Note — Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligations under those Sections.

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registration was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

x Yes   o No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

x Yes   o No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer o Accelerated filer o Non-accelerated filer x Emerging growth company x

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act. o

† The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

U.S. GAAP o International Financial Reporting Standards as issued
by the International Accounting Standards Board x Other o

If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.

o Item 17   o Item 18

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

o Yes   x No

(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.

o Yes   o No

SKY SOLAR HOLDINGS, LTD.

FORM 20-F ANNUAL REPORT
FISCAL YEAR ENDED DECEMBER 31, 2017

	Page
PART I	5
ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS	5
ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE	5
ITEM 3. KEY INFORMATION	5
ITEM 4. INFORMATION ON THE COMPANY	40
ITEM 4A. UNRESOLVED STAFF COMMENTS	82
ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS	82
ITEM 6. DIRECTORS, SENIOR MANAGEMENT, AND EMPLOYEES	107
ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS	116
ITEM 8. FINANCIAL INFORMATION	121
ITEM 9. THE OFFER AND LISTING	122
ITEM 10. ADDITIONAL INFORMATION	123
ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	129
ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES	132
PART II	133
ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES	133
ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS	133
ITEM 15. CONTROLS AND PROCEDURES	134
ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT	136
ITEM 16B. CODE OF ETHICS	136
ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES	136
ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES	136
ITEM 16E. PURCHASE OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS	136
ITEM 16F. CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT	136
ITEM 16G. CORPORATE GOVERNANCE	137
ITEM 16H. MINE SAFETY DISCLOSURE	138
PART III	139
ITEM 17. FINANCIAL STATEMENTS	139
ITEM 18. FINANCIAL STATEMENTS	139
ITEM 19. EXHIBITS	139

CONVENTIONS THAT APPLY TO THIS ANNUAL REPORT ON FORM 20-F

Unless otherwise indicated, references in this annual report on Form 20-F:

·“ADRs” are to the American depositary receipts, which, if issued, evidence our ADSs;

·“ADSs” are to our American depositary shares, each of which represents eight ordinary shares, par value US$0.0001 per ordinary share;

·“CAD” and “Canadian dollar” are to the legal currency of Canada;

·“China” and the “PRC” are to the People’s Republic of China, excluding, for the purposes of this annual report only, Taiwan and the special administrative regions or Hong Kong and Macau;

·“DG” are to distributed generation;

·“EPC” are to engineering, procurement and construction services;

·“Euro” or “EUR” are to the legal currency of the 19 countries comprising the Eurozone;

·“FIT” are to feed-in tariff(s);

·“historical project affiliates” are to certain operating entities in which we have had or currently have non-controlling interests, ChaoriSky Solar Energy S.a r.l., RisenSky Solar Energy S.a r.l., China New Era International Limited, Oky Solar Holdings, Ltd., 1088526 B.C. Ltd. and its subsidiaries, 1091187 B.C, Ltd., OKY Solar 1 K.K and OKY Solar Omut K.K;

·“HK$” are to the legal currency of the special administrative region of Hong Kong;

·“IPP” are to independent power producer and refer to our business where we own and operate solar parks and derive revenue from selling electricity to the power grid;

·“IPP solar park(s)” are to solar generators which we own for the purpose of generating income from the sale of electricity over the life of the solar park(s);

·“JPY” and “Japanese yen” are to the legal currency of Japan;

·“kWh” are to kilowatt hour(s);

·“MW” are to megawatt(s);

·“O&M” are to operations and maintenance services provided for commercially operating solar parks;

·“ordinary shares” are to our ordinary shares, par value US$0.0001 per share;

·“PPA” are to power purchase agreements;

·“PV” are to photovoltaic;

·“RMB” and “Renminbi” are to the legal currency of China;

·“shovel-ready projects” are to projects that have all permits required for construction and grid connection, even if those projects may lack certain non-discretionary permits for which we have begun the application process and which will be granted and maintained based on our compliance with certain administrative procedures. For more information about our shovel-ready projects, including the anticipated timing of any outstanding permits, see “Item 4. Information on the Company — B. Business Overview — Our IPP Solar Parks.”

1

·“Silent Partner” are to the third party investor under the two silent partnership agreements entered into by Sky Solar Japan K.K., or SSJ, in September 9 2014.

·“solar energy system sales” or “selling solar energy systems” refer to projects where we have derived revenue from selling permits and providing EPC services or selling commercially operational solar parks.

·“solar parks in operation” are to solar parks that have completed construction and are selling electricity. For more information about our solar parks in operation, see “Item 4. Information on the Company — B. Business Overview — Our IPP Solar Parks.”

·“solar parks under construction” are to solar parks that have secured site control, energy permits, all key agreements, zoning and environmental permissions and construction permits. For more information about our solar parks under construction, see “Item 4. Information on the Company — B. Business Overview — Our IPP Solar Parks.”

·“solar projects in pipeline” are to solar parks that are being studied for feasibility or have achieved certain milestones, but are not yet ready for construction. For more information about solar parks in our pipeline, see “Item 4. Information on the Company — B. Business Overview — Our IPP Solar Parks.”

·“US$” and “U.S. dollar” are to the legal currency of the United States of America;

·“watt” or “W” are to the measurement of total electrical power, where “kilowatt” or “kW” means one thousand watts, “megawatts” or “MW” means one million watts and “gigawatt” or “GW” means one billion watts; and

·“we,” “us,” “our company,” “our” and “Sky Solar” are to Sky Solar Holdings, Ltd., its former parent company Sky Power Group Ltd., its predecessor entities and its consolidated subsidiaries.

We calculate the size of the PV market based on the volume of PV modules delivered to installation sites, including modules awaiting installation or connection to the power grid. Unless otherwise stated, the PV market relates to annual volume. PV panels generate direct current (DC) electricity, while electricity systems are based on alternating current (AC) electricity. The data presented in DC power numbers are, on average, greater by approximately 15% than the equivalent AC power numbers. All historical and forecast data are presented in DC power numbers. Certain reported AC power numbers have been converted to the equivalent DC power numbers. Our permits are generally calculated using AC power numbers and such AC power numbers have been converted to the equivalent DC power numbers in this annual report.

We calculate the attributable capacity of a solar park by multiplying the percentage of our equity ownership in the solar park by the total capacity of the solar park. Unless specifically indicated or the context otherwise requires, capacity of a solar park in this annual report refers to attributable capacity.

The conversion of Euros, Japanese yen, Renminbi, CAD and Hong Kong dollars into U.S. dollars in this annual report, made solely for the convenience of readers, is based on the noon buying rates in the city of New York for cable transfers of Euros, Japanese yen, Renminbi, CAD and Hong Kong dollars, respectively, as certified for customs purposes by the Federal Reserve Bank of New York as of December 29, 2017, which was EUR1.2022 to US$1.00, JPY112.6900 to US$1.00, RMB6.5063 to US$1.00, CAD1.2517 to US$1.00 and HK$7.8128 to US$1.00, respectively, unless indicated otherwise. No representation is intended to imply that the Euro, Japanese yen, Renminbi and Hong Kong dollar amounts could have been, or could be, converted, realized or settled into U.S. dollars at the foregoing rates or any other rate.

2

FORWARD-LOOKING STATEMENTS

This annual report on Form 20-F contains statements of a forward-looking nature. All statements other than statements of historical facts are forward-looking statements. These forward-looking statements are made under the “safe harbor” provision under Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act, and as defined in the Private Securities Litigation Reform Act of 1995. These statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from those expressed or implied by the forward-looking statements. In some cases, these forward-looking statements can be identified by words or phrases such as “may,” “will,” “expect,” “anticipate,” “aim,” “estimate,” “intend,” “plan,” “believe,” “potential,” “continue,” “is/are likely to” or other similar expressions. These forward-looking statements relate to, among others:

·permitting, development and construction of our project pipeline according to schedule;

·average solar radiation hours globally and in the regions in which we operate;

·developments in, or changes to, laws, regulations, governmental policies and incentives, taxation affecting our operations;

·adverse changes or developments in the industry we operate;

·our ability to maintain and enhance our market position;

·our ability to successfully implement any of our business strategies;

·our ability to manage the exit of the Silent Partner;

·our ability to establish and operate new solar parks;

·our intention to operate in new markets and jurisdictions;

·general political and economic conditions and macro-economic measures taken by the governments to manage economic growth in the geographical markets where we conduct our business;

·material changes in the costs of the PV modules and other equipment required for our operations;

·fluctuations in inflation, interest rates and exchange rates;

·a putative shareholder class action against our company, our chief executive officer and chief financial officer and our directors; the ramifications of our recent senior management changes, including public perception that our future direction, strategy or leadership is uncertain, the implementation of the settlement agreement with our former chief executive officer and former chairman of the board, Mr. Weili Su, the resolution of disputes with our Silent Partner concerning our business in Japan and the costs and expenses and diversion of our management’s attention from our business related to all of the above;

·our dividend policy;

·other risks outlined in our filings with the United States Securities and Exchange Commission, or the SEC, including our registration statements on Form F-1, as amended; and

·those other risks identified in “Item 3. Key Information — D. Risk Factors” of this annual report on Form 20-F.

These forward-looking statements involve various risks and uncertainties. Although we believe that our expectations expressed in these forward-looking statements are reasonable, we cannot assure you that our expectations will turn out to be correct. Our actual results could be materially different from or worse than our expectations.

3

The forward-looking statements made in this annual report on Form 20-F relate only to events or information as of the date on which the statements are made in this annual report on Form 20-F. We undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date on which the statements are made or to reflect the occurrence of unanticipated events.

Moreover, we operate in an evolving environment. New risk factors and uncertainties emerge from time to time and it is not possible for our management to predict all risk factors and uncertainties, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. We qualify all of our forward-looking statements by these cautionary statements.

4

PART I

ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

Not applicable.

ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE

Not applicable.

ITEM 3. KEY INFORMATION

A.Selected Financial Data

The following selected consolidated statements of profit or loss and other comprehensive income (expense) data for the years ended December 31, 2015, 2016 and 2017 and the selected consolidated statements of financial position data as of December 31, 2016 and 2017 have been derived from our audited consolidated financial statements included elsewhere in this annual report on Form 20-F. Our selected consolidated statements of profit or loss and other comprehensive income (expense) data for the year ended December 31, 2013 and 2014 and our selected consolidated statements of financial position data as of December 31, 2013, 2014 and 2015 have been derived from our audited consolidated financial statements not included in this annual report on Form 20-F. Our audited consolidated financial statements are prepared and presented in accordance with International Financial Reporting Standards, or IFRS, issued by International Accounting Standards Board.

Our historical results for any period are not necessarily indicative of results to be expected for any future period. You should read the following selected consolidated financial data in conjunction with the consolidated financial statements and related notes and the information under “Item 5. Operating and Financial Review and Prospects.”

Selected Consolidated Statements of Profit or Loss and other Comprehensive Income (Expense)

	Year Ended December 31,
	2013		2014		2015		2016		2017
	(US$ in thousands, except for per share information or as otherwise noted)
Revenue
Related parties	5,564		1,788		4,450		788		286
Non-related parties	30,893		31,097		42,705		65,137		56,447
Total revenue	36,457		32,885		47,155		65,925		56,733
Cost of sales and services	(29,270	)	(20,747	)	(18,533	)	(30,911	)	(23,201	)
Gross profit	7,187		12,138		28,622		35,014		33,532
Impairment loss on IPP solar parks	(21,645	)	(1,549	)	(1,835	)	(2,151	)	(5,221	)
Provision on receivables	(3,521	)	(2,200	)	(1,071	)	—		—
Selling expenses	(848	)	(1,160	)	(1,171	)	(882	)	(554	)
Administrative expenses	(25,030	)	(63,770	)(1)	(22,556	)	(29,744	)	(25,110	)
Other operating income	484		6,293		197		13,163		2,068
Reversal of provision for other taxes	—		—		6,025		—		—
(Loss) profit from operations	(43,373	)	(50,248	)	8,211		15,400		4,715
Investment income	960		405		349		498		7,891
Other losses	(3,488	)	(15,647	)	(6,901	)	(4,971	)	(39,986	)
Finance costs	(2,352	)	(3,817	)	(3,897	)	(6,368	)	(12,200	)
Other expenses	(2,266	)	(3,526	)	—		—		—
(Loss) profit before taxation	(50,519	)	(72,833	)	(2,238	)	4,559		(39,580	)
Income tax (expense) credit	(3,372	)	(910	)	684		(1,277	)	6,530
(Loss) profit for the year	(53,891	)	(73,743	)	(1,554	)	3,282		(33,050	)
Other comprehensive (expense) income that may be subsequently reclassified to profit or loss:
Currency translation difference	(352	)	(11,114	)	(10,310	)	(57	)	5,579
Share of other comprehensive income of associates	—		—		—		136		—
Fair value loss arising from cash flow hedges	—		—		(680	)	(446	)	—
Release of cumulative fair value loss from cash flow hedges upon disposal of subsidiary	—		—		—		1,126		—
Total comprehensive income	(54,243	)	(84,857	)	(12,544	)	4,041		(27,471	)
Earnings (loss) per share
Basic	(0.16	)	(0.21	)	0.00		0.01		(0.1	)
Diluted	(0.16	)	(0.21	)	0.00		0.01		(0.1	)
Earnings (loss) per ADS(2)
Basic	(1.28	)	(1.66	)	(0.03	)	0.08		(0.8	)
Diluted	(1.28	)	(1.66	)	(0.03	)	0.08		(0.8	)
Other Financial Data:
Adjusted EBITDA(3)	(12,038	)	(1,232	)	15,708		32,223		31,136

(1)Includes a one-time equity incentive fee expense of US$42.9 million in 2014.

(2)Each ADS represents eight ordinary shares.

(3)See “—Adjusted EBITDA” below.

5

Revenue Categories

	Year Ended December 31,
	2013	2014	2015	2016	2017
	(US$ in thousands)
Electricity generation income(1)	8,020	22,205	35,479	53,658	53,614
Solar energy system sales	21,462	6,939	9,392	9,711	285
Other(2)	6,975	3,741	2,284	2,556	2,834
Total Revenue	36,457	32,885	47,155	65,925	56,733

(1)Represents revenue from selling electricity from IPP solar parks

(2)Represents revenue from the sale of solar modules and the provisions of O&M services.

Selected Consolidated Statements of Financial Position

	Year Ended December 31,
	2013	2014	2015	2016	2017
	(US$ in thousands)
Current assets	122,861	95,496	80,973	166,168	138,402
Non-current assets	128,406	194,090	280,107	310,078	442,706
IPP solar parks	119,506	180,610	259,423	271,253	397,405
Total assets	251,267	289,586	361,080	476,246	581,108
Current liabilities	130,653	100,859	74,210	69,112	171,933
Non-current liabilities	22,510	64,978	174,151	273,212	302,947
Total equity	98,104	123,749	112,719	133,922	106,228

Adjusted EBITDA

To provide investors with additional information regarding our financial results, we have disclosed in this annual report Adjusted EBITDA, a non-IFRS financial measure. We present this non-IFRS financial measure because it is used by our management to evaluate our operating performance. We also believe that this non-IFRS financial measure provides useful information to investors and others in understanding and evaluating our consolidated results of operations in the same manner as our management and in comparing financial results across accounting periods and to those of our peer companies.

6

Adjusted EBITDA, as we present it, represents profit or loss for the period before taxes, depreciation and amortization, adjusted to eliminate the impact of share-based compensation expense, interest expenses, impairment loss and IPO expenses.

The use of the Adjusted EBITDA has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our financial results as reported under IFRS. Some of these limitations are:  (a) although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future, and Adjusted EBITDA does not reflect cash capital expenditure requirements for such replacements or for new capital expenditure requirements; (b) Adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs; (c) Adjusted EBITDA does not reflect the potentially dilutive impact of equity-based compensation; (d) Adjusted EBITDA does not reflect tax payments that may represent a reduction in cash available to us; and (e) other companies, including companies in our industry, may calculate Adjusted EBITDA or similarly titled measures differently, which reduces their usefulness as a comparative measure. Because of these and other limitations, you should consider Adjusted EBITDA alongside our other IFRS-based financial performance measures, such as (loss) profit for the period and our other IFRS financial results. The following table presents a reconciliation of Adjusted EBITDA to (loss) profit for the period, the most directly comparable IFRS measure, for each of the periods indicated:

	As of and for the Year Ended December 31,
	2013		2014		2015		2016	2017
	(US$ in thousands)
(Loss) profit for the year	(53,891	)	(73,743	)	(1,554	)	3,282	(33,050	)
Adjustments:
Income tax expense (benefit)	3,372		910		(684	)	1,277	(6,530	)
Depreciation of property, plant and equipment	283		531		281		271	298
Depreciation of solar parks	4,395		6,177		9,229		14,208	14,272
Amortization	101		214		102		71	44
Share-based payment charged into profit or loss	4,576		43,941		1,389		997	(223	)
Interest expenses	2,352		3,817		3,897		6,368	12,200
Impairment loss on IPP solar parks	21,645		1,549		1,835		2,151	5,221
Fair value changes of financial liabilities-FVTPL	—		9,646		5,686		2,957	39,105
Hedge ineffectiveness on cash flow hedges and net loss arising on interest rate swap designated as FVTPL	—		—		585		641	(201	)
IPO expenses	1,608		3,526		—		—	—
Reversal of provision for other taxes	—		—		(6,025	)	—	—
Impairment on the receivable	3,521		2,200		1,071		—	—
Adjusted EBITDA	(12,038	)	(1,232	)	15,708		32,223	31,136

We do not consider historical Adjusted EBITDA prior to the year 2014 to be representative of future Adjusted EBITDA, as our revenue model changed from primarily generating revenue from selling solar energy systems to primarily generating revenue from selling electricity in the fourth quarter of 2013. We believe that Adjusted EBITDA is an important measure for evaluating the results of our IPP business.

B.Capitalization and Indebtedness

Not applicable.

C.Reasons for the Offer and Use of Proceeds

Not applicable.

D.Risk Factors

An investment in our ADSs involves a high degree of risk. You should carefully consider the risks described below, together with all of the other information contained in this prospectus, before making an investment decision.

7

Our business, financial condition and results of operations could be materially and adversely affected by any of the risks set forth herein, which could cause the trading price of our ADSs to decline and cause you to lose all or part of your investment. In assessing the risks described below, you should also refer to the other information contained in this prospectus, including our consolidated financial statements and the related notes thereto, before deciding to purchase any ADSs.

Risks Related to Our Business and Industry

The reduction, modification or elimination of government subsidies and economic incentives may reduce the economic benefits of our existing solar parks and our opportunities to develop or acquire suitable new solar parks.

In many countries where we are currently or intend to become active, solar power markets, particularly the market of on-grid PV systems, would not be commercially viable without government subsidies or economic incentives. The cost of generating electricity from solar energy in these markets currently exceeds, and very likely will continue to exceed for the foreseeable future, the cost of generating electricity from conventional or some other non-solar renewable energy sources. These subsidies and incentives have been primarily in the form of FIT price support schemes, tax credits, net metering and other incentives to end users, distributors, system integrators and manufacturers of solar energy products.

The availability and size of such subsidies and incentives depend, to a large extent, on political and policy developments relating to environmental concerns in a given country. Changes in policies could lead to a significant reduction in or a discontinuation of the support for renewable energies in such country. Government subsidies and incentives for solar energy were recently reduced in some countries and may be further reduced or eliminated in the future. For example, in December 2015, following a ministerial decision, a levy of 3.6% was imposed on the electricity sold by PV stations in Greece from January 1, 2016 onwards. While some of the reductions in government subsidies and economic incentives apply only to future solar parks, they could diminish our opportunities to continue to develop or acquire suitable newly developed solar parks. Some of these reductions may apply retroactively to existing solar parks, which could significantly reduce the economic benefits we receive from the existing solar parks. Moreover, some of the solar program subsidies and incentives expire or decline over time, are limited in total funding, require renewal from regulatory authorities or require us to meet certain investment or performance criteria. A significant reduction in the scope or discontinuation of government incentive programs in our target markets and globally could have a material adverse effect on our business, financial condition, results of operations and prospects.

We conduct our business operations globally and are subject to global and local risks related to economic, regulatory, social and political uncertainties.

We conduct our business operations in a number of countries and, as of December 31, 2017, had completed 377.2 MW of solar parks globally. As of December 31, 2017, we owned and operated 196.7 MW of solar parks as an IPP. In addition, as of December 31, 2017, we had 6.6 MW of solar parks under construction, 180.1 MW of shovel-ready projects and 245.7 MW of solar parks in pipeline in four countries. Our business is therefore subject to diverse and constantly changing economic, regulatory, social and political conditions in the jurisdictions in which we operate.

Operating in the international marketplace exposes us to a number of risks globally and in each of the jurisdictions where we operate, including, without limitation:

·economic and financial conditions, including the stability of credit markets, foreign currency controls and fluctuations;

·the supply and prices of other energy products such as oil, coal and natural gas in the relevant jurisdictions;

·changes in government regulations, policies, tax, subsidies and incentives, particularly those concerning the electric utility industry and the solar industry;

8

·complex regulations in numerous jurisdictions, including trade restrictions or embargoes;

·political risks, including risks of expropriation and nationalization of assets, potential losses due to civil unrests, acts of terrorism and war, regional and global political or military tensions, strained or altered foreign relations, and trade protectionism, restrictions or embargoes;

·compliance with local environmental, safety, health and other labor laws and regulations, which can be onerous and costly, as the magnitude, complexity and continuous amendments to the laws and regulations are difficult to predict and liabilities, costs, obligations and requirements associated with these laws and regulations can be substantial;

·dependence on governments, utility companies and other entities for electricity, water, telecommunications, transportation and other utilities or infrastructure needs;

·local corporate governance and other legal requirements;

·difficulties with local operating and market conditions, particularly regarding customs, taxation and labor; and

·failure of our contractual parties to honor their obligations to us, and potential disputes with clients, contractors, suppliers or local residents or communities.

At the end of September 2014, five out of the ten general electricity utilities in Japan announced plans to temporarily suspend reviews of proposals from solar energy producers, such as us, due to a foreseeable shortage in their available power transmission capacity in light of the popularity of the FIT program. The five utilities in question are Kyushu Electric Power, Shikoku Electric Power and Okinawa Electric Power, which operate in the west of Japan, and Hokkaido Electric Power and Tohoku Electric Power, which operate in the northeast. Such temporary suspension has been lifted in exchange for the introduction of a new rule referred to as the “designated electric company system.” In cases where the interconnection amounts applied for have already surpassed or are expected to surpass available interconnection amounts under the current rules, electric companies will be able to use the “designated electric company system” to grant interconnection on the premise that such interconnection may be subject to uncompensated curtailment beyond 30 days or 360 hours per year. Installment of remote Power Co., Inc., Tohoku Electric Power Co., Inc., Hokuriku Electric Power Co., Inc., Chugoku Electric Power Co., Inc., Shikoku Electric Power Co., Ltd., Kyushu Electric Power Co., Ltd., and Okinawa Electric Power Co., Inc.) out of the ten general electricity utilities in Japan have been designated as “designated electric companies” for solar projects. While such uncompensated unlimited curtailment will not apply to projects that received the interconnection acceptance before the interconnection application amount surpassed the available interconnection capacity for each relevant electricity utility, we may still experience adverse effect in relation thereto and our future expansion options under the FIT program may be materially and adversely affected. In addition, the Ministry of Economy, Trade and Industry, or METI, introduced reform measures in April 2015, which amended the dates and criteria for electricity price determinations, added conditions under which a grid-connection agreement can be terminated, and introduced criteria for electricity price changes in relation to plants that change solar cells or increase capacity. Furthermore, an announcement was made in February 2016 regarding a cabinet decision concerning the “Amendment Bill for Partial Amendment of the Act on Special Measures Concerning Procurement of Electricity from Renewable Energy Sources by Electricity Utilities (FIT Act), etc.” which was submitted in the 190th ordinary session of the Diet. On April 1, 2017, the Amendment of the FIT Act has been enacted. The Amendment of the FIT Act has drastically revised the FIT scheme in order to achieve the dual goal of “maximal implementation of renewable energy and suppression of burden by the citizens.” Some of the main points of the revision are establishing a new FIT approval (setsubi nintei) system in light of the incidence of non-operational projects, refining existing schemes in order to ensure the appropriate operation of business throughout the entire business period, setting targets on the mid- to long-term FIT price and disclosure of the FIT price for a multiple-year period, and revising the method of FIT price determination, for example, by implementing a bidding system and changing the entities that are obligated to purchase renewable electricity.

9

Furthermore, since the latter part of 2016, there have been certain notable changes in the Ontario government’s energy policy regarding PPAs. As a result, the second Large Renewal Project program (LRP II) was cancelled, and there will be no further rounds of FIT applications for renewable energy project applications in Ontario.  In addition, the outcome Ontario Provincial election scheduled for June 7, 2018 could result in additional uncertainty with the Ontario renewable energy sector.  Accordingly, Ontario is no longer a key market for obtaining future PPAs. However, other provinces in Canada have begun work on potential new programs to encourage greater use of renewable energy, potentially utilizing PPAs or otherwise.

In May 2017, U.S. International Trade Commission initiated global safeguard investigation to determine whether crystalline silicon photovoltaic (“CSPV”) cells (whether or not partially or fully assembled into other products) are being imported into the United States in such increased quantities as to be a substantial cause of serious injury, or the threat thereof, to the domestic industry producing an article like or directly competitive with the imported articles (“Section 201 Investigation”). The Section 201 Investigations are not country specific. They involve imports of the products under investigation from all sources, including China. In September 2017, the U.S. International Trade Commission voted affirmatively in respect of whether imports of CSPV cells (whether or not partially or fully assembled into other products) are causing serious injury to domestic producers of CSPV products. On January 22, 2018, the U.S. President made the final decision to provide a remedy to the U.S. industry, and the CSPV cells/modules concerned are subject to the safeguard measures established in the U.S. President’s final result, which includes that the CSPV cells and modules imported will be subject to additional duties of 30%, 25%, 20% and 15% from the first year to the fourth year, respectively, except for the first 2.5 GW of all imported CSPV cells concerned in each of those four years, which are excluded from the additional tariff. It is believed that the costs of solar power projects in the United States may increase and the demand for solar PV products in the United States may be adversely impacted due to the decision of the White House under the Section 201 Investigation. The final decision of the Section 201 Investigation may directly lead to an increase in the cost of U.S. solar power projects, which may lead to an overall reduction in our profitability.

To the extent that our business operations are affected by unexpected and adverse economic, regulatory, social and political conditions in the jurisdictions in which we have operations, we may experience project disruptions, loss of assets and personnel, and other indirect losses that could adversely affect our business, financial condition and results of operations.

As we enter new markets in different jurisdictions and expand our business to new areas, we face different regulatory regimes, business practices, governmental requirements and industry conditions and we may spend substantial resources familiarizing ourselves with the new environment and conditions.

As we may enter new markets in different jurisdictions and expand our business to new areas, we will face different regulatory regimes, business practices, governmental requirements and industry conditions. As a result, our prior experiences and knowledge in other jurisdictions may not be relevant, and we may spend substantial resources familiarizing ourselves with the new environment and conditions. For example, as we are expanding further into the U.S. and China markets, additional risks and permitting delays, as well as, project development and timing issues in a highly regulated market may be significant.

In the United States, federal, state and local government regulations and policies concerning the electric utility industry, utility rate structures, interconnection procedures, and internal policies of electric utilities, heavily influence the market for electricity generation products and services. These regulations and policies often relate to electricity pricing and the interconnection of distributed electricity generation systems to the power grid. Policies and regulations that promote renewable energy have been challenged by traditional utilities and questioned by those in government and others arguing for less governmental spending and involvement in the energy market. To the extent that such views are reflected in government policy, the changes in such policies and regulations could adversely affect our results of operations, cost of capital and growth prospects.

Further, federal, regional, state or local regulations and policies could be changed to provide for new rate programs that undermine the economic returns for both new and existing solar parks in operation by charging additional, non-negotiable fixed or demand charges or other fees or reductions in the number of solar projects allowed under net metering policies. National, regional, state or local government energy policies, law and regulation supporting the creation of or regulating entry into wholesale energy markets is currently, and may continue to be, subject to challenges, modifications and restructuring proposals, which may result in limitations on the commercial strategies available to us for the sale of our power.

10

Regulatory and permitting changes in a jurisdiction in which we have a solar park in pipeline or solar park under construction may make the continued development of such solar park infeasible or economically disadvantageous and any expenditure we have made to date on such solar park in pipeline or solar park under construction may be wholly or partially written off. Any of these changes could significantly increase the regulatory-related compliance and other expenses incurred by the solar parks in pipeline or solar parks under construction and could significantly reduce or entirely eliminate any potential revenues that can be generated by one or more of such solar parks or result in significant additional expenses to us, our offtakers and customers, which could materially and adversely affect our business, financial condition, results of operations and cash flows.

We also face regulatory risks imposed by various transmission providers and operators, including regional transmission operators and independent system operators, and their corresponding market rules. These regulations may contain provisions that limit access to the transmission grid or allocate scarce transmission capacity in a particular manner, which could materially and adversely affect our business, financial condition, results of operations and cash flows.

We are also subject to the Foreign Corrupt Practices Act of 1977, or the FCPA, the U.S. domestic bribery statute, the U.S. Travel Act, the USA PATRIOT Act, and other applicable anti-bribery and anti-money laundering laws. We face significant liabilities if we fail to comply with the FCPA and other anticorruption or benefits to foreign government officials, political parties, and private-sector recipients for the purpose of obtaining or retaining business. We may have direct or indirect interactions with officials and employees of government agencies. In the United States, we need to obtain various approvals, permits and licenses from the federal, state of local government agencies. We can be held liable for the illegal activities of our employees, representatives, contractors, partners, and agents, even if we do not explicitly authorize such activities. Any violation of the FCPA, other applicable anticorruption laws, and anti-money laundering laws could result in whistleblower complaints, adverse media coverage, investigations, loss of certain privileges, severe criminal or civil sanctions, which could have a material adverse effect on our business, financial condition, cash flows and reputation. In addition, responding to any enforcement action may result in the diversion of management’s attention and resources, significant defense costs and other professional fees.

The United States federal government currently offers a 30% investment tax credit (“Federal ITC”) under Section 48 of the U.S. Internal Revenue Code, for the installation of commercial solar power facilities whose construction commences by December 31, 2019. The Federal ITC declines to 26% for systems that commence construction by December 31, 2020 and to 22% for systems that commence construction by December 31, 2021. Solar parks that meet the deadlines above for the commencement of construction must be placed in service before January 1, 2024 to qualify for the credits at the levels set out above. Solar parks that do not meet the above described rules qualify for a 10% Federal ITC. Certain of our solar parks in operation utilized the Federal ITC and certain of our solar parks under construction will utilize the Federal ITC. Reduction in, or expiration of, the Federal ITC could adversely impact our results of operations and ability to compete in our industry by increasing our cost of capital needed for the construction phase of our solar projects in pipeline.

Under recently enacted tax reform legislation in the United States, the tax rates applicable to corporations in the United States have been substantially reduced, from a maximum rate of 35% to a maximum rate of 21%. This may result in the reduced demand of investors in investments in solar parks with Federal ITC, which may in turn increase our costs of capital to be used in constructing these projects.

We may explore business in new areas with the proceeds received from the disposal of our assets in Japan. For our business in new areas, we may face new competition. If we cannot successfully address the foregoing new challenges and compete effectively, we may not be able to recover costs incurred for developing and marketing our new business, and eventually achieve profitability from these businesses, and, consequently, our future results of operations and growth prospects may be materially and adversely affected.

11

Our limited operating history, especially with large-scale IPP solar parks, and certain recent events may make it difficult to judge our future prospects and results of operations.

We began our business in 2009 and have a limited operating history. We started to develop our first solar park in 2009, and first began to operate solar parks in 2012 as an IPP. In 2015, 2016 and 2017, we derived 19.9% , 14.7% and 0.5 % of our total revenue from selling solar energy systems. In 2013, in order to internalize more value from project development and generate recurring revenue and cash flow, we began to focus on owning and operating solar parks as an IPP. As of December 31, 2017, we had a total of 196.7 MW of IPP solar parks in operation with a carrying value of US$397.4 million. In 2015, 2016 and 2017, we derived 75.2%, 81.4% and 94.5% respectively, of our total revenue from electricity sales from our IPP solar parks. Our historic track record of selling solar energy systems may not be a reliable indicator of our performance as an IPP.

Our rapidly evolving business and, in particular, our relatively limited operating history as an IPP, may not be an adequate basis for evaluating our business prospects and financial performance, and makes it difficult to predict the future results of operations. Our past success occurred in an environment where capital was readily accessible to our clients and economic incentives were more favorable for PV power in certain markets, such as Japan, Canada, Greece and Bulgaria. Therefore, period-to-period comparisons of our operating results and our results of operations for any period should not be relied upon as an indication of our performance for any future period. In particular, our results of operations, financial condition, and future success depend, to a significant extent, on our ability to continue to identify suitable sites, obtain required regulatory approvals, arrange financing from various sources, construct solar parks in a cost-effective and timely manner, expand our project pipeline and manage and operate solar parks that we develop. If we cannot do so, we may not be able to expand our business at a profit or at all, maintain our competitive position, satisfy our contractual obligations, or sustain growth and profitability.

In addition, as a result of the putative securities class action that is more generally described in “Item 8. Financial Information—A. Consolidated Statements and Other Financial Information—Legal Proceedings—Litigation,” we incurred substantial direct costs associated with ongoing legal proceedings in the United States, including fees and expenses of various professionals to advise us on this matter, including legal advisors, as well as substantial indirect costs to us resulting from the litigation, including potentially (in some cases), but not limited to distraction of management and staff from the core business to focus, and lost opportunities. We estimate that the total direct costs associated with the litigation were approximately $1.5 million for 2017.

On June 6, 2017, we named Mr. Hao Wu as our new chairman of the board of directors, replacing Mr. Weili Su, effective immediately. Also effective as of the same day, Mr. Su no longer served as our chief executive officer, or as director, officer, manager, legal representative or in any other management position of our subsidiaries or any other consolidated entities. On the same day, we set up a management committee, members of which include our directors Mr. Hao Wu, Mr. Xinhua Yu and Mr Xiaoguang Duan, and started to search for candidates for vacated management positions. On June 15, 2017, we established an independent committee consisting solely of our independent directors, who subsequently engaged a PRC law firm to investigate the conduct of our former chief executive officer and former chairman of the board, Mr. Weili Su, involving certain transactions and fund transfers, which appeared to lack proper board and audit committee authorization. On September 19, 2017, the PRC law firm concluded that the transactions and fund transfers between us and certain entities controlled by Mr. Su were not approved by the board or the audit committee, and in addition, there was insufficient documentary support of such fund transfer. As more fully described below in “Item 7 Major Shareholders and Related Party Transactions—B. Related Party Transactions—Transactions with Weili Su,” we entered into settlement arrangements with our director and former chief executive officer, Mr. Su to resolve all potential claims by us against Mr. Su and certain entities controlled by him concerning the fund transfers, as well as all potential claims that Mr. Su and such entities may have against us in connection with Mr. Su’s employment at our company. The ramifications of our recent senior management changes, including public perception that our future direction, strategy or leadership is uncertain, the implementation of the settlement agreement with our former chief executive officer and former chairman of the board, Mr. Weili Su, and the costs and expenses and diversion of our management’s attention from our business related to all of the above.

12

We may not be able to manage the exit of the Silent Partner, including to secure financing for our purchase of, or to secure a third-party offer to purchase, the SSJ Silent Partnership Assets, which represented 43.7% of the carrying value of our solar projects, or to agree with the Silent Partner on any adjustment to percentage of distribution to the Silent Partner by the deadline under the silent partnership agreement.

The silent partnership agreement with our Silent Partner in Japan has an initial term until August 27, 2018. As of April 27, 2018, the SSJ Silent Partnership Assets included an aggregate capacity of 107.9 MW, which was greater than 10.79 MW. Therefore, our subsidiary SSJ is obligated to either (1) purchase these SSJ Silent Partnership Assets for a price agreed upon by an agent for the Silent Partner or (2) secure a third party offer to purchase these SSJ Silent Partnership Assets, which represented 43.7% of the carrying value of our solar projects as of December 31, 2017, and should notify the Silent Partner by May 27, 2018 of its intent to settle in either case. If the Silent Partner is able to secure a third party offer that is more attractive within 90 days of being so notified, SSJ shall transfer the remaining SSJ Silent Partnership Assets to such third party. If the Silent Partner not only does not agree with the offer made by SSJ but also fails to find a third party offer that is more attractive, the Silent Partner may elect to change the percentages of contribution to such percentages that will result in the Silent Partner enjoying a 15% cumulative IRR. The Silent Partner has demanded to make such adjustment, as a result of which we incurred fair value changes of financial liabilities — FVTPL in the amount of negative US$37.9 million in 2017. See “Item 4. Information on the Company — B. Business Overview — Featured Countries — Japan — Japan Silent Partnership.”

During the exit process as stated above,  we may not be able to secure the financing on favorable terms or at all, see “— Our growth prospects and future profitability depend to a significant extent on global liquidity and the availability of additional funding options with acceptable terms” to secure a third-party offer to purchase the SSJ Silent Partnership Assets on terms acceptable to Silent Partners. Even if we are able to secure financing for our purchase of, or to secure a third-party offer to purchase, the SSJ Silent Partnership Assets, the Silent Partner may not agree with such offer, or we may not agree with the Silent Partner on any adjustment to percentage of distribution, for example, to result in the Silent Partner enjoying a 15% cumulative IRR or the amount of final distribution to be made to Silent Partner by the deadline under the silent partnership agreement. In any of these cases we will be in breach of silent partnership agreement. Such breach will expose us to litigations, demand for damages and injunctive relief from Silent Partner, which will have a material adverse impact on our business, reputations, results of operations and financial conditions.

In addition, as the SSJ Silent Partnership Assets accounted for 43.7% of the carrying value of our solar projects as of December 31, 2017, to the extent they are sold to a third party and we are unable to efficiently deploy the proceeds from such sale remaining after distribution to the Silent Partner, our solar projects portfolio may be significantly affected, which will materially and adversely affect our business and financial results, including revenue from selling electricity from IPP solar parks.

We have been named as a defendant in a putative class action lawsuit and have been, and in the future may be, the target of other lawsuits, harassment or other hostile conduct by third parties, including malicious allegations, which could generate adverse publicity and harm our reputation and could adversely affect our business, financial conditions, results of operations, cash flows and the trading price of our ADSs.

We are currently involved in a putative securities class action and we have been, and in the future may be, the target of lawsuits, harassment, or other hostile conduct by third parties. Such conduct has in the past included, and may in the future include, shareholder class action lawsuits, malicious allegations, anonymous or otherwise, regarding our personnel, business, operations, accounting, corporate history, prospects or business ethics. For example, we will have to defend against the securities class action lawsuit described in “Item 8. Financial Information—A. Consolidated Statements and Other Financial Information—Legal Proceedings—Litigation,” including any appeals of such lawsuit should our initial defense be unsuccessful. We are currently unable to estimate the possible loss or possible range of loss, if any, associated with the resolution of these lawsuits. In the event that our initial defense of these lawsuits is unsuccessful, there can be no assurance that we will prevail in any appeal. Any adverse outcome of these cases, including any plaintiff’s appeal of a judgment in these lawsuits, could have a material adverse effect on our reputation, business, financial condition, results of operation, cash flows and the trading price of our ADSs. In addition, there can be no assurance that our insurance carriers will cover all or part of the defense costs, or any liabilities that may arise from these matters. The litigation process may utilize a significant portion of our cash resources and divert management’s attention from the day-to-day operations of our company, all of which could harm our business. We also may be subject to claims for indemnification related to these matters, and we cannot predict the impact that indemnification claims may have on our business or financial results.

13

Furthermore, since the middle of 2017, our Silent Partner in Japan has sent us notices, which allege that we have breached certain terms of the silent partnership agreement. See “Item 4. Information on the Company—B. Business Overview—Featured Countries—Japan—Japan Silent Partnership.” Based on the advice of our Japanese counsel, we do not believe these allegations are reasonable, but nonetheless intend to amicably resolve the disputes with the Silent Partner to minimize the distraction of our management and disruption to our business. Any adverse outcome could have a material adverse effect on our reputation, business, financial condition, results of operation, cash flows and the trading price of our ADSs.

In addition, in October 2014, counsel representing certain former employees of Sky Solar Holdings Co., Ltd., a former shareholder of Sky Solar Power Ltd., have sent letters threatening litigation, and certain of these claimants have sent harassing emails, short messages and letters to certain of our shareholders, directors and professional advisors alleging that they were deprived of the economic benefits of their holdings in Sky Solar Holdings Co., Ltd. as a result of (i) our failure to provide sufficient advance notice of the restructuring of Sky Solar Holdings Co., Ltd. and the transfer of assets from Sky Solar Holdings Co., Ltd. to us, and (ii) Mr. Su’s improper use of the proxy that such shareholders had granted him to attend shareholder meetings and vote shares on their behalf. In March 2015, a group of former employees and shareholders of Sky Solar Holdings Co., Ltd commenced an arbitration with the Hong Kong International Arbitration Centre, or HKIAC, against our former chairman, Mr. Weili Su, and certain other shareholders in connection with the restructuring of Sky Solar Holdings Co., Ltd. Sky Solar Holdings Co., Ltd is not a party to the arbitration. Since the commencement of these proceedings, three of the six claimants have withdrawn their claims. As of the date of this annual report, this arbitration remains pending. We believe that these claims are without merit, and that these claimants may be attempting to extort economic benefits from us and our executives. Nevertheless, these allegations could become a significant distraction for our management. It is also possible that any such allegations against us or our executives will be publicly disseminated through various media, including, without limitation, internet chat rooms, blogs, social networks or other websites. Despite our belief that such claims are without merit, if any of these claimants were to prevail in any claim brought against us or against our executives or were to publicly disseminate any of these allegations, our reputation, business, financial conditions, results of operations, cash flows and the trading price of our ADSs could be adversely affected.

Other claims may be brought against or by us from time to time regarding, for example, defective or incomplete work, defective products, personal injuries or deaths, damage to or destruction of property, breach of warranty, late completion of work, delayed payments, intellectual property rights or regulatory compliance, and may subject us to litigation, arbitration and other legal proceedings, which may be expensive, lengthy, disruptive to normal business operations and require significant attention from our management. If we were found to be liable on any of claims made against us, we would incur a charge against earnings to the extent that a reserve had not been would incur a charge against earnings to the extent profit had already been accrued. Charges and write-downs associated with such legal proceedings could have a material adverse effect on our financial condition, results of operations and cash flow. Moreover, legal proceedings, particularly those resulting in judgments or findings against us, may harm our reputation and competitiveness in the market.

Our growth prospects and future profitability depend to a significant extent on global liquidity and the availability of additional funding options with acceptable terms.

We require a significant amount of cash to fund the installation and construction of our projects and other aspects of our operations. We may also require additional cash due to changing business conditions or other future developments, including any investments or acquisitions we may decide to pursue in order to remain competitive. Historically, we have used bank loans, proceeds from our IPO, and our own equity contribution to fund our project development. We expect to continue to expand our business with securities offerings and third-party financing options, including bank loans, equity partners, financial leases and securitization.

For example, we entered into a strategic partnership agreement with Hudson Clean Energy Partners, or Hudson, in September 2015 to fund solar projects in Latin America, and to collaborate on identifying and acquiring suitable renewable assets in Japan and the United States. Our partners may fail to fully perform their obligations or meet our expectations or cooperate with us satisfactorily for various reasons. Conversely, we may fail to fully perform our obligations due to changing market conditions or other factors. In addition, there can be no assurance that we will be able to maintain such relationship or enter into new relationships. Any deterioration in our existing relationships or failure to enter into new relationships with suitable partners on commercially acceptable terms to finance our project developments may have an adverse impact on our growth prospects and future profitability.

14

In addition, in the first half of 2017, we issued preferred shares in the Canadian portfolio with an existing strategic partner and closed project financing for our projects in Uruguay. However, we cannot guarantee that we will be successful in locating additional suitable sources of financing in the time periods required or at all, or on terms or at costs that we find attractive or acceptable, which may render it impossible for us to fully execute our growth plan. In addition, rising interest rates could adversely impact our ability to secure financing on favorable terms and our cost of capital.

In early 2013, we began to strategically expand our IPP portfolio. Installing and constructing solar parks requires significant upfront capital expenditure and there may be a significant delay before we can recoup our investments through the long-term recurring revenue of our IPP solar parks. Our ability to obtain external financing is subject to a number of uncertainties, including:

·our future financial condition, results of operations and cash flows;

·the general condition of global equity and debt capital markets;

·regulatory and government support in the form of tax credits, rebates, FIT price support schemes and other incentives;

·the continued confidence of banks and other financial institutions in our company and the PV industry;

·economic, political and other conditions in the jurisdictions where we operate; and

·our ability to comply with any financial covenants under the debt financing.

In addition, historical project affiliates in which we have held non-controlling interests have secured financing from financial institutions where our affiliates’ other equity owners have acted as financial guarantors. The ability of our affiliates to obtain financing depends on the ability of our affiliates’ other equity owners to secure financing, provide acceptable guarantees for financing and comply with any applicable financial covenants. Due to our minority position, we may not be able to control the ability of the affiliate to comply with any applicable financial covenants or other obligations under the loan. See “Item 3. Key Information —D. Risk Factors—Risks Related to our Business and Industry—Disputes with our historical project affiliates’ other equity owners may adversely affect our business.”

Any additional equity financing may be dilutive to our shareholders and any debt financing may require restrictive covenants. Additional funds may not be available on terms commercially acceptable to us. Failure to manage discretionary spending and raise additional capital or debt financing as required may adversely impact our ability to achieve our intended business objectives. We may from time to time offer additional securities, which may cause significant dilution. See “—We may issue additional ordinary shares, other equity or equity-linked or debt securities, which may materially and adversely affect the price of our ordinary shares or ADSs. Hedging activities may depress the trading price of our ordinary shares.”

The delay between making significant upfront investments in our solar parks and receiving revenue could materially and adversely affect our liquidity, business and results of operations.

There are generally many months or even years between our initial significant upfront investments in developing permits to build solar parks we expect to own and operate and when we commence to receive revenue from the sale of electricity generated by such solar parks after grid connection. Such investments include, without limitation, legal, accounting and other third-party fees, costs associated with feasibility study, payments for land rights, government permits, large transmission and PPA deposits or other payments, which may be non-refundable. Furthermore, we have historically relied on our own equity contribution and bank loans to pay for costs and expenses incurred during project development, especially to third parties for PV modules and balance-of-system components and EPC and O&M services. Solar parks typically generate revenue only after becoming commercially operational and starting to sell electricity to the power grid. There may be an especially long delay from initial land and interconnection assessments to projects becoming shovel-ready, especially when we obtain permits directly from regulators and site control rights directly from prior rights holders under our primary permit development model. Between our initial investments in the development of permits for solar parks and their connection to the transmission grid, there may be adverse developments to such solar parks. We consider parks “shovel-ready” even if we have not obtained non-discretionary permits, that is, such permits which we expect to be granted if we comply with the relevant administrative procedures and criteria. In certain jurisdictions, such as Chile, maintaining our permits and operating our plants involve meeting ongoing compliance and other legal obligations. Furthermore, we may not be able to obtain all of the permits as anticipated, permits that were obtained may expire or become ineffective or we may not be able to obtain debt financing as anticipated. In addition, the timing gap between our upfront investments and actual generation of revenue, or any added delay in between due to unforeseen events, could put strains on our liquidity and resources, and materially and adversely affect our profitability and results of operations.

15

We are expanding our business into China, which may expose our business to new risks that may materially and adversely affect our future prospects and results of operations.

On December 23, 2014, we announced our intention to expand our business into the Chinese solar market, and although we expected to make our first investments in China during 2015, we delayed entry for various market condition. In March 2018, Suzhou Tianlian New Energy Limited, one of our subsidiaries, entered into a 25-year PPA with a wholly-owned subsidiary of Shenzhen Kaifa Technology Co., Ltd. to develop a 1.7 MW rooftop solar project in Suzhou, China, which is our first DG project in China. Our ability to successfully implement our business expansion strategy into China is subject to various risks and uncertainties, including:

·access to project financing and other sources of capital to finance our China investments, which may not be available on reasonable terms or at all given the fact that Chinese capital and foreign exchange markets are less developed relative to the countries where we have worked in the past;

·curtailment of power purchase amounts promised by utilities due to lack of sufficient transmission grid infrastructure;

·regulations creating significant burdens or limiting entirely the ability of Chinese residents to repatriate capital into China, which affects our ability to finance Chinese investment through funds we have obtained or we will obtain from abroad;

·our short operational history as a downstream solar park developer in China;

·delays in obtaining land rights and related permits and other required governmental permits and approvals;

·potential difficulties in collecting payments from large state-owned enterprises or utilities related to the Chinese legal system;

·potential challenges from local residents, government organizations, and others who may not support our projects;

·potential conflict with our module and other equipment suppliers as a result of our direct competition with certain of their downstream ventures; and

·the enforcement of the deed of non-competition and right of first refusal with our director and former chief executive officer Mr. Weili Su with respect to his business in China. See “—We have entered into a deed of non-competition and right of first refusal with our director and former chief executive officer Mr. Weili Su with respect to his businesses in China, which may result in a transaction that is not on an arm’s length basis” and “—We rely on licensing arrangements with entities controlled by our director and former chief executive officer, Mr. Su to use the trademark ‘Sky Solar.’ Any improper use of these trademarks by our licensor or any other third parties could materially and adversely affect our business, financial condition and results of operations.”

16

If we are unable to effectively manage these risks, we may not be able to successfully execute our expansion plan in China and face a loss of the time, effort and capital invested there. We may not be able to manage our business growth strategy as planned and our results of operations may be adversely affected.

We have entered into a deed of non-competition and right of first refusal with our director and former chief executive officer Mr. Weili Su with respect to his businesses in China, which may result in a transaction that is not on an arm’s length basis.

We have entered into a deed of non-competition and right of first refusal with Mr. Weili Su (“Mr. Su”) whereby he promises that he and any company he controls will not engage in any business that competes with us and grants us the right of first refusal to purchase shares in his businesses in China in which he owns more than 50% of the voting shares in the event that Mr. Su receives from or otherwise negotiate with a third party a bona fide offer to purchase Mr. Su’s shares in any of the business and the sale of such shares will result in Mr. Su ceasing control of that business. We cannot assure you that we will be able to enforce the agreement or exercise the right of first refusal when Mr. Su wishes to sell his business interests in China. Moreover, the non-competition clause will terminate at the earlier of (i) the delisting of our ADSs and ordinary shares from the NASDAQ Capital Market, (ii) the time when Mr. Su ceases to be our largest shareholder and (iii) upon the mutual agreement of Mr. Su and our company to terminate the non-competition clause. In connection with the settlement agreement Mr. Su entered into with us, Mr. Su agrees to pay back to our company approximately US$15 million and failing this, authorize us to sell on behalf of him and/or transfer to our company the ADSs that he holds in our company to pay for such settlement amount. See “Item 7 Major Shareholders and Related Party Transactions—B. Related Party Transactions—Transactions with Weili Su.” Therefore, in the event and to the extent Mr. Su fails to pay back to our company approximately US$15 million in correction with the settlement agreement, we may sell the shares held by Mr. Su and/or transfer to our company the ADSs that he holds in our company, which could result in Mr. Su ceasing to be our largest shareholder and hence, termination of the non-competition clause.

We will have the right of first refusal to purchase Mr. Su’s shares in his business in China when the sale of the shares will result in Mr. Su ceasing control of that business and the right will terminate at the earlier of (i) the delisting of our ADSs and ordinary shares from the NASDAQ Capital Market, and (ii) upon the mutual agreement to terminate by Mr. Su and our company. The right of first refusal does not extend to the sale of individual solar assets. “Control” is defined as the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting shares, by contract, or otherwise. Additionally, under the laws and practice of the Cayman Islands, shareholders may not be afforded the same level of protection from an affiliate transaction that would typically be the case for a Delaware corporation, such as fairness opinions and an independent due diligence process. We cannot assure you that the deed of non-competition and the right of first refusal, or the subsequent sale of Mr. Su’s businesses to us, if any, will be negotiated or administered on an arm’s length basis. In addition, we cannot assure you that Mr. Su will ever wish to sell his business in China, or that our right of first refusal will ever be exercised or that any purchase by us of any of Mr. Su’s businesses in China would be on terms equivalent to an arm’s length transaction.

We rely on licensing arrangements with entities controlled by our director and former chief executive officer, Mr. Su to use the trademark “Sky Solar.” Any improper use of these trademarks by us, our licensor or any other third parties could materially and adversely affect our business, financial condition and results of operations.

Our rights to our trade names and trademarks are among the most important factor in marketing our services and operating our business. The trademark “Sky Solar,” or “天华阳光” in Chinese, is owned by an entity controlled by Mr. Su, and we have obtained, under a license agreement, the non-exclusive right to use this trademark so long as the trademark is valid. Our license authorizes the use of the trademark in jurisdictions such as the United States, Chile, Japan, Greece, Bulgaria, South Africa, and Hong Kong, but we are not licensed to use the trademark in China, which may limit our ability to operate business in China. Under the trademark license agreement, we are required to pay 0.05% of our revenue, not exceeding HK$10 million, to this entity for the trademark license starting from 2014 at the end of each year. The trademark “Sky Solar” or “天华阳光” is also used by the entity, its subsidiaries and affiliated entities, which are controlled by Mr. Su. If the entity, any of its subsidiaries or affiliated entities, or any third party uses the trade name “Sky Solar,” “天华阳光” or trademarks we use to develop our services and operations in ways that adversely affect such trade name or trademark, our reputation could suffer damage, which in turn could have a material adverse effect on our business, financial condition and results of operations. In addition, if for any reason we are no longer able to use the “Sky Solar” or “天华阳光” trademark due to a dispute with the entity, or be found to have infringed the “Sky Solar” or “天华阳光” trademark in any jurisdictions, including China, or otherwise, our reputation, marketing ability, business and results of operations could be materially and adversely affected.

17

We may not be able to develop or acquire additional attractive solar assets to grow our business.

Our current business strategy includes plans to further grow our solar business by developing or acquiring additional solar assets. As part of our growth plan, we may acquire solar parks in various development stages through a competitive bidding process. We compete for project awards based on, among other things, pricing, technical and engineering expertise, financing capabilities, past experience and track record. It is difficult to predict whether and when we will be awarded a new solar park. The bidding and selection process is also affected by a number of factors, including factors which may be beyond our control, such as market conditions or government incentive programs. Our competitors may have greater financial resources, a more effective or established localized business presence or a greater willingness or ability to operate with little or no operating margins for sustained periods of time. Any increase in competition during the bidding process or reduction in our competitive capabilities could have a significant adverse impact on our market share and on the margins we generate from our solar parks.

·Other difficulties executing this growth strategy, particularly in new jurisdictions we may enter, include: accurately prioritizing geographic markets for entry, including estimates on addressable market demand;

·obtaining construction, environmental and other permits and approvals;

·securing land, rooftop or other site control;

·managing local operational, capital investment or components sourcing regulatory requirements;

·connecting to the power grid on schedule and within budget;

·connecting to the power grid if there is insufficient grid capacity;

·identifying, attracting and retaining qualified development specialists, technical engineering specialists and other personnel;

·managing any acquired assets or assets held under affiliates;

·securing cost-competitive financing on attractive terms;

·operating and maintaining solar parks to maintain the power output and system performance;

·collecting FIT payments and other economic incentives as expected; and

·transferring our permits and solar modules, and commercially operational solar parks at prices and on terms and timing that are acceptable to us.

We may not be able to find suitable sites for the development of solar parks.

Solar parks require solar and geological conditions that can only be found in a limited number of geographic areas. Further, large, utility-scale solar parks must be interconnected to the power grid in order to deliver electricity, which requires us to find suitable sites with capacity on the power grid available. Our competitors may impede our development efforts by acquiring control of all or a portion of a PV site we seek to develop. In addition, we acquire land with the understanding that such land may be rezoned for solar park development. However, rezoning has, at times, taken longer than expected or has not been possible. For example, we encounter difficulties registering certain leasehold interests due to other land owners’ opposition to the rezoning process from time to time. Although our operations were not materially affected by this delay, or the costs involved, future rezoning efforts may materially and adversely impact our business and results of operation. Even when we have identified a desirable site for a solar park, our ability to obtain site control with respect to the site is subject to our ability to finance the transaction and manage growing competition from other solar power producers that may have better access to local government support, financial or other resources. If we were unable to find or obtain site control for suitable PV sites on commercially acceptable terms, our ability to develop new solar parks on a timely basis or at all might be harmed, which could have a material adverse effect on our business, financial condition and results of operations.

18

Our legal rights to certain real properties used for our solar parks are subject to third party rights and may be challenged by property owners or third parties.

Our rights to the properties used for our solar parks may be challenged by property owners and other third parties. For example, in Chile we have had to negotiate and clarify with other mining concession holders about the priority of our mining concession rights over certain areas where we intend to construct a solar park, which may delay our timetable for construction. An adverse decision from a court or the absence of an agreement with such third-parties may result in additional costs and delays in the construction and operating phases of any solar park so situated. In addition, certain real properties used for our solar parks in Spain and Uruguay were mortgaged to third parties by the relevant landlords to secure other debts before we obtained our rights with respect to such properties and, as a result, our rights are subject to the mortgages. In the event of failure by the relevant debtor to comply with its payment obligations, the mortgagee will be entitled to sell the properties. By authorization granted by the Uruguayan mortgagee dated November 2016, the mortgagee or the purchaser of such properties shall respect our rights to the properties, including the original terms and extensions of the land lease agreements. In addition, some properties used for our solar parks are subject to other third-party rights such as right of passage and right to place cables and other equipment on the properties, which may result in certain interferences with our use of the properties. Our rights to the properties used for our solar parks may be challenged by property owners and other third parties for various other reasons as well. For example, we do not always have the exclusive right to use a given site. Any such challenge, if successful, could impair the development or operations of our solar parks on such properties. We are also subject to the risk of potential disputes with property owners or third parties who otherwise have rights to or interests in the properties used for our solar parks. Such disputes, whether resolved in our favor or not, may divert management’s attention, harm our reputation or otherwise disrupt our business.

Failure to manage our growing and changing business could have a material adverse effect on our business, prospects, financial condition and results of operations.

We intend to expand our business significantly within selected existing markets and in a number of new locations in the future. For example, we entered the U.S. market in 2015, with the formation of Sky Capital America Inc. and have targeted the U.S. market as a market with high growth potential. We acquired 22.1 MW operating solar parks and 44.4 MW development stage permits in the U.S. in 2016. In March 2018, Suzhou Tianlian New Energy Limited entered into a 25-year PPA with a wholly-owned subsidiary of Shenzhen Kaifa Technology Co., Ltd. to develop, own and operate a 1.7 MW rooftop solar project in Suzhou, China. As we grow, we expect to encounter additional challenges to our internal processes, external construction management, capital commitment process, project funding infrastructure, financing capabilities and regulatory compliance. Our existing operations, personnel, systems and internal control may not be adequate to support our growth and expansion and may require us to make additional unanticipated investments in our infrastructure. In addition, our experience developing, building and selling solar energy systems may not be applicable to our IPP solar parks, since IPP solar parks require enhanced financing and O&M capabilities. To manage the future growth of our operations, we will be required to improve our administrative, operational and financial systems, procedures and controls, and maintain, expand, train and manage our growing employee base. We will need to hire and train project development personnel to expand and manage our project development efforts. If we are unable to manage our growth effectively, we may not be able to take advantage of market opportunities, execute our business strategies successfully or respond to competitive pressures. As a result, our business, prospects, financial condition and results of operations could be materially and adversely affected.

19

Our future success depends significantly on the continued service of our senior management team and our ability to attract, train and retain qualified personnel.

The industry experience, expertise and contributions of our senior management are essential to our continuing success. We will continue to rely on the contributions of our senior management, regional management and other key employees to implement our growth plans. If we were to lose the services of any of our senior management members and were unable to train or recruit and retain personnel with comparable qualifications, the management and growth of our business could be adversely affected.

On June 6, 2017, we named Mr. Hao Wu as our new chairman of the board of directors, replacing Mr. Weili Su, effective immediately. Also effective as of the same day, Mr. Su no longer served as our chief executive officer, or as director, officer, manager, legal representative or in any other management position of our subsidiaries or any other consolidated entities. On the same day, we set up a management committee, members of which include our directors Mr. Hao Wu, Mr. Xinhua Yu and Mr Xiaoguang Duan, and started to search for candidates for vacated management positions. On June 15, 2017, we established an independent committee consisting solely of our independent directors, who subsequently engaged a PRC law firm to investigate the conduct of Mr. Su, involving certain transactions and fund transfers, which appeared to lack proper board and audit committee authorization. On September 19, 2017, the PRC law firm concluded that the transactions and fund transfers between us and certain entities controlled by Mr. Su were not approved by the board or the audit committee, and in addition, there was insufficient documentary support of such fund transfer. On the same day, we entered into a settlement agreement with Mr. Su to resolve all our potential claims against Mr. Su and certain entities controlled by him concerning the fund transfers, as well as all potential claims that Mr. Su and such entities may have against us in connection with our employment of Mr. Su. See “Item 7 Major Shareholders and Related Party Transactions—B. Related Party Transactions—Transactions with Weili Su.” The ramifications of these recent senior management changes, including public perception that our future direction, strategy or leadership is uncertain, the implementation of the settlement agreement with our former chief executive officer and former chairman of the board and the costs and expenses and diversion of our management’s attention from our business related thereto could materially and adversely affect our business, prospects, financial condition and results of operations.

Our success is also largely attributable to the qualified and experienced project development teams that we have been able to train, attract and retain in the past. We may not be able to continue to train, attract and retain high quality personnel, including executive officers, project development personnel, project management personnel and other key qualified personnel who have the necessary and required experience and expertise. In particular, as we enter new markets in different jurisdictions, we always face challenges to find and retain qualified local personnel who are familiar with local regulatory regimes and adequately experienced in project development and operations.

There is substantial competition for qualified personnel in the downstream PV industry. Our competitors may be able to offer more competitive packages, or otherwise attract our personnel. Our costs to retain qualified personnel may also increase in response to competition. If we fail to attract and retain personnel with suitable managerial, technical or marketing expertise or maintain an adequate labor force on a continuous basis, our business operations could be adversely affected and our future growth and expansions may be inhibited.

Our international operations require significant management resources and present legal, compliance and execution risks in multiple jurisdictions.

We have adopted a global business model under which we maintain significant operations and facilities through our subsidiaries located in Europe, South America, North America and Asia, while our corporate management team and directors are primarily based in Hong Kong and Shanghai. Although we have appointed managing directors who oversee Europe, Latin America, East Asia and North America, the global nature of our business may stretch our management resources as well as make it difficult for our corporate management to effectively monitor local execution teams. The global nature of our operations and limited resources of our management may create risks and uncertainties when executing our strategy and conducting operations in multiple jurisdictions, which could affect our costs and results of operations.

20

Decreases in the spot market price of electricity could harm our IPP revenue and reduce the competitiveness of solar parks in grid-parity markets.

The electricity prices for solar parks are either fixed through long-term PPAs or are variable and determined by the spot market. Although the price of electricity as of December 31, 2017 was fixed or specially fixed through PPAs for 100% of our solar parks in operation, in countries where the price of electricity is sufficiently high that solar parks can be profitably developed without the need for government price supports, a condition known as “grid-parity,” solar parks may choose not to enter into fixed PPAs and sell based on the spot market price of electricity. The market price of electricity can be subject to significant fluctuations and can be affected by drivers such as the cost of traditional fossil fuels used for electricity generation, the discovery of new fossil fuel sources, additional electricity generation capacity, additional electric transmission and distribution lines, technological or regulatory changes, increased energy conservation or for a number of other reasons.

Decreases in the spot price of electricity in such countries would render PV energy less competitive compared to other forms of electricity. For example, PV may no longer be in grid parity if the price of fossil fuels used for electricity generation decreased sufficiently. In this situation, our solar parks may no longer be profitable in that market and we may not be able to recoup the time and effort invested in applying for permits or developing solar parks. A reduction in electricity prices would render our solar parks less economically attractive. If the retail price of energy were to decrease due to any of these reasons, or others, our business.

If sufficient demand for solar parks does not develop or takes longer to develop than we anticipate, our business, financial condition, results of operations and prospects could be materially and adversely affected.

The PV market is at a relatively early stage of development in many of the markets that we have entered or intend to enter. The PV industry continues to experience lower costs, improved efficiency and higher electricity output. However, trends in the PV industry are based only on limited data and may not be reliable. Many factors may affect the demand for solar parks, including:

·the cost and availability of credit, loans and other forms of financing for solar parks;

·fluctuations in economic and market conditions that affect the viability of conventional and non-solar renewable energy sources;

·the cost-effectiveness of solar parks compared to conventional and other non-solar energy sources;

·the performance and reliability of solar parks compared to conventional and other non-solar energy sources;

·the availability of grid capacity to dispatch power generated from solar parks;

·environmental concerns related to solar parks and other local permit issues;

·the availability of government subsidies and incentives to support the development of the PV industry;

·public perceptions of the direct and indirect benefits of adopting renewable energy technology;

·the success of other alternative energy generation technologies, such as fuel cells, wind power and biomass;

·regulations and policies governing the electric utility industry that may present technical, regulatory and economic barriers to the purchase and use of solar energy; and

·the deregulation of the electric power industry and the broader energy industry.

21

If market demand for solar parks fails to develop sufficiently, our business, financial condition, results of operations and prospects could be materially and adversely affected.

We face significant competition in certain markets in which we operate.

We face significant competition in certain markets in which we operate. Our primary competitors are local and international developers and operators of solar parks, many of which are integrated with upstream PV manufacturers. We also compete with utilities generating power from conventional fossil fuels and other sources of renewable energy in regions that have achieved grid parity, such as Chile. As we further expand into downstream markets, we will face increasing competition from these companies.

In certain of our target markets, such as China, state-owned and private companies have emerged to take advantage of the significant market opportunity created by attractive financial incentives and favorable regulatory environment provided by the governments. State-owned companies may have stronger relationships with local governments in certain regions and private companies may be more focused and experienced in developing solar power projects in the markets where we compete. Accordingly, we need to continue to be able to compete against both state-owned and private companies in these markets.

Some of our competitors may have advantages over us in terms of greater operational, financial, technical, management or other resources in particular markets or in general. Our market position depends on our financing, development and operation capabilities, reputation, experience and track record. Our competitors may also enter into strategic alliances or form affiliates with other competitors to our detriment. Suppliers or contractors may merge with our competitors which may limit our choices of contractors and hence the flexibility of our overall project execution capabilities. There can be no assurance that our current or potential competitors will not offer solar parks or services comparable or superior to those that we offer at the same or lower prices or adapt more quickly than we do. Increased competition may result in price reductions, reduced profit margins and loss of market share.

We are subject to risks associated with fluctuations in the prices of PV modules and balance-of-system components or in the costs of design, construction and labor.

We procure supplies for solar parks construction, such as PV modules and balance-of-system components, from third-party suppliers. We typically enter into contracts with our suppliers and contractors on a project-by-project basis or a project portfolio basis. We generally do not maintain long-term contracts with our suppliers. Although some of our EPC contracts allow us to reclaim additional costs incurred as a result of unexpected increases in procurement costs, we are still exposed to fluctuations in prices for our PV modules and balance-of-system components. The price for procuring PV modules may increase as a result of application of laws and regulations. For example, the final decision of Section 201 Investigation may directly lead to the increase of prices for the PV modules. See “-We conduct our business operations globally and are subject to global and local risks related to economic, regulatory, social and political uncertainties.” Increases in the prices of PV products or balance-of-system components or fluctuations in design, construction, labor and installation costs may increase the cost of procuring equipment and engaging contractors and hence materially and adversely affect our results of operations.

Solar project development and construction is challenging and may ultimately not be successful; solar parks in pipeline may not receive required permits, property rights, PPAs, interconnection transmission arrangements; and financing or construction of solar parts under construction may not commence or continue as scheduled, all of which could increase our costs, delay or cancel a project, and have a material adverse effect on our business, financial condition and results of operations.

The development and construction of solar projects involve numerous risks and uncertainties and requires extensive research, planning and due diligence. We may be required to incur significant amounts of capital expenditure for land and interconnection rights, preliminary engineering, permitting, legal and other expenses before we can determine whether a solar park is economically, technologically or otherwise feasible. Success in developing a particular solar park is contingent upon, among other things:

22

·securing suitable project sites, necessary rights of way, satisfactory land rights in the appropriate locations with capacity on the transmission grid and related permits, including completing environmental review and implementing any required mitigation measures;

·rezoning land, as necessary, to support a solar park;

·negotiating satisfactory engineering, procurement and construction agreements and land use and access rights;

·negotiating and receiving required permits and approvals for project development from government authorities on schedule;

·completing all required regulatory and administrative procedures needed to obtain permits and agreements;

·procuring rights to interconnect the solar park to the electric grid or to transmit energy;

·paying interconnection and other deposits, some of which are non-refundable;

·negotiating favorable payment terms with suppliers;

·signing PPAs or other arrangements that are commercially acceptable, including adequate for providing financing;

·obtaining construction financing, including debt financing and own equity contribution; and

·satisfactorily completing construction on schedule.

Successful completion of a particular solar project may be adversely affected by numerous factors, including without limitation:

·unanticipated changes in project plans or defective or late execution;

·difficulties in obtaining and maintaining governmental permits, licenses and approvals required by existing laws and regulations or additional regulatory requirements not previously anticipated;

·the inability to procure adequate financing with acceptable terms, especially for engineering, procurement and construction;

·unforeseeable engineering problems, construction or other unexpected delays and contractor performance shortfalls;

·labor, equipment and materials supply delays, shortages or disruptions, or work stoppages;

·adverse weather, environmental and geological conditions, force majeure and other events out of our control; and

·cost over-runs, due to any one or more of the foregoing factors.

Accordingly, some of the solar parks in our pipeline may not be completed or even proceed to construction. If a number of solar parks are not completed, our business, financial condition and results of operations could be materially and adversely affected.

23

Our construction activities may be subject to cost overruns or delays.

Construction of our solar parks may be adversely affected by circumstances outside of our control, including inclement weather, a failure to receive regulatory approvals on schedule or third-party delays in providing PV modules, inverters or other materials. Obtaining full permits for our solar parks is time consuming and we may not be able to meet our expected timetable for obtaining full permits for our solar parks in the pipeline. We may not be able to negotiate satisfactory engineering, procurement and construction agreements with third parties. Changes in project plans or designs, or defective or late execution may increase our costs and cause delays. Increases in the prices of PV products and balance-of-system components may increase procurement costs. Labor shortages, required construction permits could also delay or hinder the construction of our solar parks. A lack of proper construction permits or post-construction approvals could delay or prevent us from commencing operation and connecting to the relevant grid.

Moreover, we rely on a limited number of third-party suppliers for certain components and equipment used in the construction of our solar parks, such as PV modules. The failure of a supplier to supply components and equipment in a timely manner, or at all, or to supply components and equipment that meet our quality, quantity and cost requirements, could impair our ability to install solar parks or may increase our costs. To the extent the processes that our suppliers use to manufacture components are proprietary, we may be unable to obtain comparable components from alternative suppliers.

In addition, we typically utilize and rely on third-party contractors to construct and install our solar parks. If our contractors do not satisfy their obligations or do not perform work that meets our quality standards or if there is a shortage of third-party contractors or if there are labor strikes that interfere with the ability of our employees or contractors to complete their work on time or within budget, we could experience significant delays or cost overruns.

We may not be able to recover any of these losses in connection with construction cost overruns or delays. In addition, if we are unable to connect a solar park to the power grid on schedule, we may experience lower FIT, as FIT regimes generally ratchet down the FIT awarded to solar parks that connect later to the power grid. In addition, in certain cases of delay, we might not be able to obtain any FIT or PPA at all, as certain PPAs require that we connect to the transmission grid by a certain date. If the solar park is significantly delayed, we may forfeit the PPA and we may only be able to obtain reduced FIT payments or may even become ineligible for FIT payments at all. A reduction or forfeiture of FIT payments or would materially and adversely affect the financial results and results of operations for that solar park, even to the point of rendering the project no longer profitable. In Chile, a country where FIT payments are not necessarily required for solar power to be economically competitive, failure to meet certain deadlines may result in the cancellation of key permits and jeopardize the viability of a project. Any of the contingencies discussed above could lead us to fail to generate our expected return from our solar parks and result in unanticipated and significant revenue and earnings losses.

We may be subject to unforeseen costs, liabilities or obligations when operating and maintaining solar parks.

We operate and maintain the solar parks in our IPP portfolio. In addition, we have entered into separate contractual agreements to operate and maintain substantially all of the solar parks built by us. Pursuant to these agreements, we generally perform scheduled and unscheduled maintenance and operating and other asset management services. We subcontract certain on-the-ground O&M services, including security and repair, to third-parties, who may not perform their services adequately.

If we or our third-party contractors fail to properly operate and maintain the solar parks, the solar parks may experience decreased performance, reduced useful life or shut downs. Through changes in our own operation or in local conditions, the costs of operating the project may increase, including costs related to labor, equipment, insurance and taxes. If they are careless or negligent, resulting in damage to third parties, we may become liable for the consequences of any resulting damage. We may also experience equipment malfunction or failure, leading to unexpected maintenance needs, unplanned outages or other operational issues. In addition, inconsistencies in the quality of solar panels, PV modules, balance-of-system components or maintenance services for our solar parks may affect the system efficiency of our solar parks. We may also encounter difficulties selling electricity to the power grid due to failures in infrastructure or transmission systems. To the extent that any of the foregoing affects our ability to sell electricity to the power grid, or we incur increased costs in relation to operating and maintaining solar parks, our business, financial condition and results of operation could be materially and adversely affected.

24

Our project operations may be adversely affected by weather and climate conditions, natural disasters and adverse work environments.

Solar parks depend on the amount and intensity of sunlight, which is affected by weather and climate conditions. Any change of such conditions in the areas we operate that reduces solar radiation will adversely affect our business and results of operations. In addition, we may operate in areas that are under the threat of floods, earthquakes, landslides, mudslides, sandstorms, drought, or other inclement weather and climate conditions or natural disasters. If inclement weather or climatic conditions or natural disasters occur in areas where our solar parks and project teams are located, project development, connectivity to the power grid and the provision of O&M services may be adversely affected. In particular, materials may not be delivered as scheduled and labor may not be available. As many of our solar parks are located in the same region, such solar parks may be simultaneously affected by weather and climate conditions, natural disasters and adverse work environments.

During periods of curtailed activity, we may continue to incur operating expenses. We may bear some or all of the losses associated with such unforeseen events. Moreover, natural disasters which are beyond our control may adversely affect the economy, infrastructure and communities in the countries and regions where we conduct our business operations. Such conditions may result in personal injuries or fatalities or have an adverse effect on our work performance, progress and efficiency or even result in personal injuries or fatalities.

We are subject to counterparty risks under our FIT price support schemes and PPAs.

As an IPP, we generate electricity income primarily pursuant to FIT price support schemes or PPAs, which subjects us to counterparty risks with respect to electric utilities and regulatory regimes. Our FIT price support schemes and PPAs in one region or country are generally signed with a limited number of electric utilities. We rely on these electric utilities to fulfill their responsibilities for the full and timely payment of our tariffs. As we expand our DG business, we may sign PPAs with commercial and industrial (“C&I”) buyers directly. As C&I buyers generally have less credit worthiness than utilities companies, we may be exposed to increased risk in collecting our current and future electricity revenue. In addition, the relevant regulatory authorities may retroactively alter their FIT price support regimes in light of changing economic circumstances, changing industry conditions or for any number of other reasons. For example, the Greek government passed a law in April 2014 reducing FIT currently in effect in existing contracts by roughly 30%, while imposing a discount on electricity already sold in 2013. In December 2015, following a ministerial decision, a levy of 3.6% was imposed on the electricity sold by PV stations in Greece from January 1, 2016 onwards. In December 2013, the Bulgarian government imposed a 20% fee on revenue generated from PV and wind energy installations. Subsequently, the Constitutional Court of Bulgaria determined the fee to be unconstitutional, and renewable energy producers are no longer required to pay this fee. Furthermore, starting on July 24, 2015, all energy producers in Bulgaria shall pay monthly contributions in favor of the Electric Power Grid Security Fund amounting to 5% of their monthly revenues generated from electricity sold, VAT excluded. If the relevant government authorities, the local power grid companies or other counterparties or responsible parties do not perform their obligations under the FIT price support schemes and PPAs and we are unable to enforce our contractual rights, our results of operations and financial condition may be materially and adversely affected.

Our results of operations may be subject to fluctuations.

Prior to 2013, we primarily generated revenue from selling permits, providing EPC services and selling commercially operational solar parks. In a given period, our revenue was affected by the limited number of solar parks that are under development and sold to third parties, and therefore subject to significant fluctuations. Although we currently derive a majority of our revenue from electricity sale from our solar parks, we will continue to develop, build and sell solar energy systems and solar parks from time to time to take advantage of attractive market opportunities. As a result, we may generate more of our revenues from the one-time sale of solar parks for certain periods. To the extent that we continue to develop, build and sell solar energy systems, we may be exposed to similar risks going forward.

25

Moreover, certain aspects of our IPP business are also subject to seasonal variations. For example, certain economic incentive programs, such as FIT regimes, generally include mechanisms that ratcheted down the incentives over time in line with the general trend of decreasing system costs of solar parks. As a result, we may schedule significant construction activities to connect solar parks to the power grids prior to scheduled decreases in FIT rates, which vary from country to country, in order to qualify for more favorable FIT policies.

Disputes with our historical project affiliates’ other equity owners may adversely affect our business.

We do not have control over the management and strategy with respect to solar parks held by the historical project affiliates in which we hold less than 50% equity interests. See “Item 4. Information on the Company—B. Business Overview—Our Historical Project Affiliates.”

Our ability to direct the actions of or influence the decisions in relation to these affiliates or the solar parks held by them is dependent on a number of factors, including reaching agreement with other stakeholders with respect to certain decisions, our rights and obligations under the relevant stakeholders’ agreements and the decision-making process by the board of directors or other governing bodies.

We may not successfully engage business partners that are reliable and capable. In addition, in the course of cooperation, our business partners may:

·have economic or business interests or goals that are inconsistent with ours;

·take actions contrary to our instructions or make requests contrary to our policies or objectives;

·be unable or unwilling to fulfill their obligations under the relevant cooperative arrangements, including their obligation to make the required capital contribution; or

·experience financial difficulties.

In particular, under the current contractual arrangements, if our affiliates’ other equity owners decide to secure permits, EPC or O&M services from other parties or otherwise take any action that may not be in our best interest or fail to perform their respective obligations or otherwise breach the terms and conditions of the governing agreements, it could have an adverse effect on our business, financial condition and results of operations. In addition, a dispute may arise with our current or future affiliate’s other equity owners and cause the loss of business opportunities or disruption to or termination of the relevant solar parks. Such dispute may also give rise to litigation or other legal proceedings, which will divert our management’s attention and other resources. In the event that we encounter any of the foregoing problems, our business, financial condition and results of operations may be materially and adversely affected.

We may incur warranty expenses in connection with the solar energy systems we have sold.

We provide two to five year warranties to the clients of our EPC services and purchasers of our solar parks. Although we generally obtain warranties from our equipment suppliers, we may be responsible for claims during the warranty period with respect to defects in our EPC services and solar parks sold. We are required to remove such defects generally within 48 hours after the defects occur, and to bear all the costs associated with our repair work. Our expenses for repairs have historically not been material. If significant defects arise from our EPC services or solar parks sold to clients, we may suffer adverse impacts on our financial condition and business.

The development, construction and operation of solar parks are highly regulated activities. We conduct our operations in many countries and jurisdictions and are governed by different laws and regulations, including national and local regulations relating to building codes, taxes, safety, environmental protection, utility interconnection and metering and other matters. We also set up subsidiaries in these countries and jurisdictions which are required to comply with various local laws and regulations. While we strive to work with our local counsel and other advisers to comply with the laws and regulations of each jurisdiction in which we have operations, there have been, and continue to be, instances of noncompliance such as late filings of annual accounts with the appropriate governmental authorities, failure to notify governmental authorities of certain transactions, failure to hold annual meetings as required, failure to register directors or office changes or other local requirements, which may result in fines, sanctions and other penalties against the non-complying subsidiaries and its directors and officers. While we do not believe our past and continuing non-compliances, singularly or in the aggregate, will have a material adverse effect on our business, financial condition or results of operation, we cannot assure you that similar or other non-compliances will not occur in the future which may materially and adversely affect our business, financial condition or results of operation.

26

In order to develop solar parks we must obtain a variety of approvals, permits and licenses from various authorities. The procedures for obtaining such approvals, permits and licenses vary from country to country, making it onerous and costly to track the requirements of individual localities and comply with the varying standards. Failure to obtain the required approvals, permits or licenses or to comply with the conditions associated therewith could result in fines, sanctions, suspension, revocation or non-renewal of approvals, permits or licenses, or even criminal penalties, which could have a material adverse effect on our business, financial condition and results of operations.

Any new government regulations pertaining to our business or solar parks may result in significant additional expenses. We cannot assure you that we will be able to promptly and adequately respond to changes of laws and regulations in various jurisdictions, or that our employees and contractors will act in accordance with such laws. Failure to comply with laws and regulations where we develop, construct and operate solar parks may materially and adversely affect our business, results of operations and financial condition.

We may become regulated as a utility company in certain jurisdictions in the future.

We currently are not subject to regulation as a utility company in any jurisdiction. Our business strategy includes plans to further grow our solar business by developing or acquiring additional solar assets. Operation of these solar parks and sales of electricity from such solar parks could change our regulatory position in certain jurisdictions in the future. Utility companies are typically subject to complex regulations at the local, state or national level in various jurisdictions, and these regulations could place significant restrictions on our ability to operate our business and execute our business plan by prohibiting or otherwise restricting our sale of electricity. If we were subject to regulation as a utility company, our operating costs could materially increase.

If we fail to comply with financial and other covenants under our loan agreements, our financial condition, results of operations and business prospects may be materially and adversely affected.

We enter into loan agreements containing financial and other covenants that require us to maintain certain financial ratios or impose certain restrictions on disposition of our assets or the conduct of our business. While we are currently in compliance with all financial and other covenants, we may not be able to comply with some of those financial and other covenants from time to time. In addition, we typically pledge over our solar park assets or account or trade receivables to raise debt financing, and we are restricted from creating additional security over our assets. Such account or trade receivables will include all income generated from the sale of electricity in the solar parks. If we are in breach of one or more financial or other covenants or negative pledges clause under any of our loan agreements and are not able to obtain waivers from the lenders or prepay such loan, such breach would constitute an event of default under the loan agreement. As a result, repayment of the indebtedness under the relevant loan agreement may be accelerated, which may in turn require us to repay the entire principal amount including interest accrued, if any, of certain of our other existing indebtedness prior to their maturity under cross-default provisions of other loan agreements. If we are required to repay a significant portion or all of our existing indebtedness prior to their maturity, we may lack sufficient financial resources to do so. In that case, the pledgees may auction or sell the assets or interest of our solar parks to enforce their rights under the pledge contracts and loan agreements. Furthermore, a breach of those financial and other covenants will also restrict our ability to pay dividends. Any of those events could have a material adverse effect on our financial condition, results of operations and business prospects.

Our substantial indebtedness could adversely affect our business, financial condition and results of operations.

We require a significant amount of cash to meet our capital requirements and fund our operations, including payments to suppliers for PV modules and balance-of-system components and to contractors for design, engineering, procurement and construction services. We believe our substantial indebtedness will increase as we continue to develop our IPP business. As of December 31, 2017, we had US$19.7 million in outstanding short-term borrowings (including the current portion of long-term bank borrowings) and US$230 million in outstanding long-term bank borrowings (excluding the current portion).

27

Our debt could have significant consequences on our operations, including:

·reducing the availability of our cash flow to fund working capital, capital expenditures, acquisitions and other general corporate purposes as a result of our debt service obligations;

·limiting our ability to obtain additional financing;

·limiting our flexibility in planning for, or reacting to economic downturns;

·increasing our vulnerability to, changes in our business, the industry in which we operate and the general economy; and

·potentially increasing the cost of any additional financing.

Any of these factors and other consequences that may result from our substantial indebtedness could have an adverse effect on our business, financial condition and results of operations as well as our ability to meet our payment obligations under our debt. Our ability to meet our payment obligations under our outstanding debt depends on our ability to generate significant cash flow in the future. This, to some extent, is subject to general economic, financial, competitive, legislative and regulatory factors as well as other factors that are beyond our control.

If we do not successfully execute our financing plan, we may have to sell certain of our IPP solar parks or risk not being able to continue as a going concern.

As of December 31, 2017, our current liabilities of US$171.9 million, which included US$120.8 million other current liability due on August 27, 2018 under the silent partnership agreement in connection with our obligations to enable the exit of the Silent Partner by such deadline, exceeded our current assets by approximately US$33.5 million. In addition, in 2017, we had negative cash flow from operations of US$1.4 million and incurred net loss of US$33.1 million in 2017.  Furthermore, we have committed to capital expenditure of US$21.1 million in the next 12 months relating to the construction of solar parks contracted for but not provided in the consolidated financial statements as of December 31, 2017. Our principal sources of liquidity to date have been borrowings from banks and our shareholders, proceeds from our initial public offering and cash from our operations. We leverage bank facilities in certain countries in order to meet working capital requirements for construction activities.

We are in need of additional funding to sustain our business as a going concern. Our management reviews our forecasted cash flows on an on-going basis to ensure that we will have sufficient capital from a combination of internally generated cash flows and proceeds from financing activities, if required, in order to fund our working capital and capital expenditures. For example, to satisfy our obligation to enable the exit of the Silent Partner by August 27, 2018, we are exploring the options of either seeking financing for our purchase of, or a third-party offer to purchase, the SSJ Silent Partnership Assets.  As of December 31, 2017, excluding the US$47.9 million current assets and US$120.8 million current liabilities in connection with the silent partnership agreement, our remaining other current assets of US$90.5 million were US$39.4 million higher than our remaining current liability of US$51.1 million. Furthermore, we have historically been able to effectively manage our business with a working capital deficit based on our arrangements with suppliers who typically do not require payment until such time as IPP solar parks are completed, at which point we are able to either sell the parks, or obtain collateralized financing. In addition, following project connection, we typically pledge solar park assets or account or trade receivables to raise debt financing in order to optimize the project’s capital structure, pay our contractors and replenish our working capital. Such debt financing usually has a term of over 15 years and we are restricted from creating additional security over our assets. Such account or trade receivables will include all income generated from the sale of electricity in the solar parks. We believe that our current operating IPP solar parks and projects under construction are highly liquid assets that can be pledged to raise new capital or sold to raise additional capital to finance new development when necessary. Based on the above factors, we believe that adequate sources of liquidity will exist to fund our working capital and capital expenditures, and to meet our short term debt obligations, other liabilities and commitments as they become due for the next 12 months.

28

We cannot assure you that we will successfully execute our financing plan. If we do not successfully execute this plan, we may not be able to continue as a going concern. Such failure could materially and adversely affect our financial condition, results of operations and business prospects.

If we fail to implement and maintain an effective system of internal controls, we may be unable to accurately report our results of operations or prevent fraud or fail to meet our reporting obligations and investor confidence and the market price of our ADSs may be materially and adversely affected.

As a public company in the United States, we are subject to Section 404 of the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act, which requires that we include a report of management on our internal control over financial reporting in our annual report on Form 20-F beginning with our annual report for the fiscal year ending December 31, 2017. See “Item 15. Controls and Procedures.” In connection with the preparation and external audit of our consolidated financial statements for the year ended December 31, 2017, we and our independent public accounting firm identified three material weaknesses and other control deficiencies, each as defined in Audit Standard No. 5 published by the Public Company Accounting Oversight Board (United States), or PCAOB, in our internal control over financial reporting. As defined in Audit Standard No. 5, a “material weakness” is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis. The material weaknesses identified related to among other deficiencies, (i) insufficient accounting resources and process including implementations of policies and procedures necessary to comply with reporting and compliance requirements of IFRS and the SEC, (ii) lack of sufficient written policies and proper procedures in relation to certain internal control over financial reporting as well as the financial closing and reporting procedures at certain overseas components, and (iii) lack of an independent internal audit function to perform management self-assessment on internal controls. Our independent registered public accounting firm did not undertake a comprehensive assessment of our internal control for purposes of identifying and reporting material weaknesses and other control deficiencies in our internal control over financial reporting. In light of the material weaknesses and other control deficiencies, we believe it is possible that, had our independent registered public accounting firm performed an audit of our internal control over financial reporting, additional control deficiencies may have been identified. We have begun and plan to continue to take various measures to remediate the material weaknesses and other deficiencies identified. However, these measures may not fully address the material weaknesses and other control deficiencies in our internal control over financial reporting that we have identified or may identify in the future.

In addition, once we cease to be an “emerging growth company” as such term is defined in the JOBS Act, our independent registered public accounting firm may need to attest to and report on the effectiveness of our internal control over financial reporting. Our management may conclude that our internal control over financial reporting is not effective. Moreover, even if our management concludes that our internal control over financial reporting is effective, our independent registered public accounting firm, after conducting its own independent testing, may issue a report that is qualified if it is not satisfied with our internal controls or the level at which our controls are documented, designed, operated or reviewed, or if it interprets the relevant requirements differently from us. In addition, our reporting obligations may place a significant strain on our management, operational and financial resources and systems for the foreseeable future. We may be unable to timely complete our evaluation testing and any required remediation.

Failure to achieve and maintain an effective internal control environment could result in material misstatements in our financial statements and our failure to meet our reporting obligations, which would likely cause investors to lose confidence in our reported financial information. This could in turn limit our access to capital markets, harm our results of operations and lead to a decline in the trading price of our ADSs. Additionally, ineffective internal control over financial reporting could expose us to increased risk of fraud or misuse of corporate assets and subject us to potential delisting from the stock exchange on which we list, regulatory investigations and civil or criminal sanctions. We may also be required to restate our financial statements from prior periods.

29

We face uncertainties with respect to indirect transfers of equity interests in PRC resident enterprises by their non-PRC holding companies.

The State Administration of Taxation has promulgated several rules and notices to tighten the scrutiny over acquisition transactions in recent years, including the Notice on Strengthening Administration of Enterprise Income Tax for Share Transfers by Non-PRC Resident Enterprises in 2009 with retroactive effect from January 1, 2008, or SAT Circular 698, the Notice on Several Issues Regarding the Income Tax of Non-PRC Resident Enterprises in 2011, or SAT Circular 24, and the Notice on Certain Corporate Income Tax Matters on Indirect Transfer of Properties by Non-PRC Resident Enterprises in February 2015, or SAT Circular 7. Pursuant to these rules and notices, if a non-PRC resident enterprise transfers its equity interests in a PRC tax resident enterprise, such non-PRC resident transferor must report to the tax authorities at the place where the PRC tax resident enterprise is located and is subject to a PRC withholding tax of up to 10%. In addition, if a non-PRC resident enterprise indirectly transfers so-called PRC Taxable Properties, referring to properties of an establishment or a place of business in China, real estate properties in China and equity investments in a PRC tax resident enterprise, by disposition of the equity interests in an overseas non-public holding company without a reasonable commercial purpose and resulting in the avoidance of PRC enterprise income tax, the transfer will be re-characterized as a direct transfer of the PRC Taxable Properties and gains derived from the transfer may be subject to a PRC withholding tax of up to 10%. SAT Circular 7 has listed several factors to be taken into consideration by the tax authorities in determining if an indirect transfer has a reasonable commercial purpose. However, regardless of these factors, an indirect transfer satisfying all the following criteria will be deemed to lack a reasonable commercial purpose and be taxable in the PRC:  (i) 75% or more of the equity value of the intermediary enterprise being transferred is derived directly or indirectly from PRC Taxable Properties; (ii) at any time during the one year period before the indirect transfer, 90% or more of the asset value of the intermediary enterprise (excluding cash) is comprised directly or indirectly of investments in the PRC, or 90% or more of its income is derived directly or indirectly from the PRC; (iii) the functions performed and risks assumed by the intermediary enterprise and any of its subsidiaries that directly or indirectly hold the PRC Taxable Properties are limited and are insufficient to prove their economic substance; and (iv) the foreign tax payable on the gain derived from the indirect transfer of the PRC Taxable Properties is lower than the potential PRC tax on the direct transfer of those assets. On the other hand, indirect transfers falling into the scope of the safe harbors under SAT Circular 7 may not be subject to PRC tax. The safe harbors include qualified group restructurings, public market trades and exemptions under tax treaties.

Under SAT Circular 7 and other PRC tax regulations, in the case of an indirect transfer, entities or individuals obligated to pay the transfer price to the transferor must act as withholding agents and are required to withhold the PRC tax from the transfer price. If they fail to do so, the seller is required to report and pay the PRC tax to the PRC tax authorities. If neither party complies with the tax payment or withholding obligations under SAT Circular 7, the tax authority may impose penalties such as late payment interest on the seller. In addition, the tax authority may also hold the withholding agents liable and impose a penalty of 50% to 300% of the unpaid tax on them. The penalty imposed on the purchasers may be reduced or waived if the withholding agents have submitted the relevant materials in connection with the indirect transfer to the PRC tax authorities in accordance with SAT Circular 7.

Accordingly, one of our affiliates established in the PRC, Tany International (Baoding) Solar Electric Co., Ltd., or Tany Baoding, is a PRC resident enterprise and one of our subsidiaries established in Hong Kong, Sky International Enterprise Group Limited, or Sky International Enterprise, may be deemed as a non-PRC resident enterprise under SAT Circular 7 and other PRC tax regulations. Sky International Enterprise disposed of 100% of the equity interests in Tany International (Hong Kong) Co Limited, or Tany Hong Kong, which holds 100% of the equity interests in Tany Baoding, to Sky Solar (Hong Kong) International Co. Limited on May 28, 2013. This disposal may be categorized as an “Indirect Transfer” of equity interests in a PRC resident enterprise by a non-PRC resident enterprise as defined under SAT Circular 7 and other PRC tax regulations. Therefore, Tany Baoding may be liable to assist tax authorities in collecting such tax from Sky International Enterprise if the transfer of equity interests in Tany Hong Kong is subject to SAT Circular 7 and other PRC tax regulations, in which case, Sky International Enterprise would incur tax obligations when the relevant equity transfer contract took effect and the transfer was completed. The tax obligation for this transaction may incur on the date when relevant transfer contract took effect or procedures were closed, pursuant to Article 15 of SAT Circular 7. However, it currently unclear how the relevant PRC tax authority will implement or enforce SAT Circular 7 and other PRC tax regulations and whether the enterprise income tax on capital gains will be subject to any further change resulting in any adverse impact on us.

30

Our global income may become subject to PRC income tax if we are deemed to be a PRC resident enterprise for PRC tax purposes and our non-PRC shareholders may be subject to PRC tax on dividends and gain realized on our shares.

In connection with the EIT Law which came into effect on January 1, 2008, the Implementing Rules of the EIT Law, or the Implementing Rules, were enacted on December 6, 2007 and became effective on January 1, 2008. Under the EIT Law and the Implementing Rules, an enterprise established outside the PRC may be considered a “PRC resident enterprise” and be subject to PRC enterprise income tax on its global income at the rate of 25%, if its “de facto management body” is located within the PRC. The Implementing Rules define the term “de facto management body” as the body that exercises full and substantial control and overall management over the business, production processes, personnel, accounts and properties of an enterprise incorporated outside the PRC. At present, it is unclear how the foregoing factors will be applied by the PRC tax authorities to determine whether we have a de facto management body in the PRC. Since some of our management personnel currently reside in the PRC but the majority of our turnover arises from our operations outside the PRC, there is a possibility that the PRC tax authorities could determine that we are a PRC resident enterprise, which would make us subject to PRC tax on our worldwide income at a rate of 25%. Moreover, the risk that we will be found to be a PRC resident enterprise will increase as we execute our strategic entry into the Chinese market. This may have an adverse effect on our financial condition and results of operation. However, our PRC legal counsel does not believe that we or any of our subsidiaries outside of China meet all of the conditions necessary to be considered a PRC resident enterprise based on their review of surrounding facts and circumstances.

In addition, if we are treated as a “PRC resident enterprise” under PRC law, dividends we pay on our ADSs to non-PRC ADS holders or on our ordinary shares to non-PRC shareholders, and capital gains realized by such ADS holders or shareholders on the sale or other disposition of ADSs or ordinary shares, may be treated as PRC-source income. Accordingly, we may be required to withhold PRC income tax from dividends paid to non-PRC resident ADS holders or shareholders, and the transfer of ADSs or ordinary shares by such ADS holders or shareholders, as the case may be, may be subject to PRC income tax. Such tax on the income of non-PRC resident enterprise ADS holders or shareholders may be imposed at a rate of 10% (and may be imposed at a rate of 20% in the case of non-PRC resident individual ADS holders or shareholders), subject to the provisions of any applicable tax treaty. If we are required to withhold PRC income tax on dividends payable to our non-PRC resident ADS holders or shareholders, or if you are required to pay PRC income tax on the transfer of the ADSs, or ordinary shares, the value of your investment in our ADSs, or ordinary shares, may be materially and adversely affected.

We may not be able to adequately protect our intellectual property rights, including trademarks and know-how, which could harm our competitiveness.

We rely on a combination of trademarks and know-how to protect our intellectual property. As of December 31, 2017, we have two licenses granting us the right to use 30 trademarks in 23 jurisdictions, including the brand name “Sky Solar,” which we believe have been vital to our competitiveness and success and for us to attract and retain our clients and business partners. We license the brand name “Sky Solar” from our director and former chief executive officer, Mr. Su. See “—We rely on licensing arrangements with entities controlled by our director and former chief executive officer, Mr. Su to use the trademark “Sky Solar.” Any improper use of these trademarks by us, our licensor or any other third parties could materially and adversely affect our business, financial condition and results of operations.” We cannot assure you that the measures we have taken will be sufficient to prevent any misappropriation of our intellectual property.

Intellectual property laws and means of enforcement of intellectual property laws vary by jurisdiction. Enforcement of our intellectual property rights could be time-consuming and costly. We may not be able to immediately detect and remediate unauthorized use of our intellectual property. In the event that the measures taken by us or the protection afforded by law do not adequately safeguard our intellectual property rights, we could suffer losses in revenue and profit due to competing offerings of services that exploit our intellectual properties. Furthermore, we cannot assure that any of our intellectual property rights will not be challenged by third parties. Adverse rulings in any litigation or proceedings could result in the loss of our proprietary rights and subject us to substantial liabilities, or even disrupt our business operations.

31

Fluctuations in foreign currency exchange rates may negatively affect our revenue, cost of sales and gross margins and could result in exchange losses.

Our subsidiaries trade in their functional currencies in the course of their business operations. Our investment holding companies transact in functional currencies of their subsidiaries. Our investment holding companies have foreign financing and investing activities, which expose them to foreign currency risk. As a result, we are subject to significant risks associated with foreign currency exchange rate fluctuations. For example, in 2015, we recorded net foreign exchange gain of US$0.4 million, primarily due to the appreciation of JPY. In 2016, we recorded net foreign exchange gain of US$1.2 million, primarily due to appreciation of the U.S. dollar. Changes in the value of local currencies could increase our U.S. dollar costs or reduce our U.S. dollar revenue. In 2017 we recorded net foreign exchange gain of US$1.8 million, primarily due to the fluctuation of Euro. Any increased costs or reduced revenue as a result of foreign exchange rate fluctuations could adversely affect our profit margins. The fluctuation of foreign exchange rates also affects the value of our monetary and other assets and liabilities denominated in local currencies, primarily the Euro, JPY and CAD. Generally, an appreciation of the U.S. dollar against relevant local currencies could result in a foreign exchange loss for assets denominated in such local currencies and a foreign exchange gain for liabilities denominated in such local currencies. Conversely, a devaluation of the U.S. dollar against relevant local currencies could result in a foreign exchange gain for assets denominated in such local currencies and a foreign exchange loss for liabilities denominated in such local currencies.

We could also expand our business into emerging markets, some of which may have an uncertain regulatory environment relating to currency policy.

Conducting business in such emerging markets could cause our exposure to foreign exchange rate fluctuation risks to increase. Although we access a variety of financing solutions that are tailored to the geographic location of our projects and to local regulations, we have not entered into any hedging transactions to reduce the foreign exchange rate fluctuation risks, but may do so in the future when we deem it appropriate in light of the significance of such risks. However, if we decide to hedge our foreign exchange exposure in the future, we cannot assure you that we will be able to reduce our foreign currency risk exposure in an effective manner, at reasonable costs, or at all.

If our independent registered public accounting firm ceases to be subject to inspections by the Public Company Accounting Oversight Board, or PCAOB, our investors may be deprived of the benefits of such inspections.

The independent registered public accounting firms operating in China, including our current and previous independent registered public accounting firms, are required by the laws of the United States to undergo regular inspections by PCAOB to assess their compliance with the laws of the United States and professional standards. Our previous and current independent registered public accounting firms are both located in China. Without the approval of the PRC authorities, PCAOB is currently unable to conduct inspections of certain independent registered public accounting firms in China, including our previous independent registered public accounting firm. Therefore, our current and previous auditors, like other independent registered public accounting firms operating in China, are not currently inspected by the PCAOB.

32

Inspections of other firms that the PCAOB has conducted outside of China have identified deficiencies in those firms’ audit procedures and quality control procedures, and such deficiencies may be addressed as part of the inspection process to improve future audit quality. The inability of the PCAOB to conduct inspections of independent registered public accounting firms operating in China makes it more difficult to evaluate the effectiveness of our auditor’s audit procedures or quality control procedures, and to the extent that such inspections might have facilitated improvements in our auditor’s audit procedures and quality control procedures, investors may be deprived of such benefits.

Our senior management, directors, principal shareholders and affiliated entities have substantial control and influence over our corporate actions and business, and their interests may not be aligned with our other shareholders.

Our senior management, directors, principal shareholders and their affiliated entities beneficially own approximately 27.8% of our outstanding shares as of March 31, 2018. Our director and former chief executive officer, Mr. Su, has the ability to vote or the proxy to vote an aggregate of 24.5% of our outstanding shares. As a result, Mr. Su exerts substantial influence over matters requiring approval by our shareholders, including electing directors and approving mergers or other business combination transactions and he may not act in the best interests of other shareholders. Mr. Su also controls the “Sky Solar” and “天华阳光” trademarks licensed to us, and holds solar parks in Greece and China under the “Sky Solar” and “天华阳光” brand that are not part of our company. This concentration of ownership may also discourage, delay or prevent a change in control of our company, which could deprive our shareholders of an opportunity to receive a premium for their shares as part of a sale of our company and reduce the price of our ADSs. These actions may be taken even if they are opposed by our other shareholders, including you. Without Mr. Su’s and other management’s consents, we could be prevented from entering into transactions that could be beneficial to us. Although Mr. Su has fiduciary obligations to our company as a director, his interests may not always be aligned with the interests of our other shareholders. Mr. Su may also take actions to prevent us from continuing to use the trademarks.

Our transactions with our historical project affiliates may not be on an arm’s length basis.

We have historically leveraged our historical project affiliates as vehicles to expand our business overseas through delivering our permit development capabilities, EPC services and O&M services to them. We have entered, and expect to continue to enter, into various transactions including sale of primary development rights and provision of EPC services with these affiliates, which historically contributed to a significant portion of our revenue. See “Item 4. Information on the Company—B. Business Overview—Our Historical Project Affiliates.” These affiliates were formed with the intention that our affiliates’ other equity owners who are module manufacturers, such as Risen, provide their modules to such affiliates and that we provide our permits and EPC services to the affiliate. In these transactions going forward, there can be no assurance that independent parties negotiating at arm’s length would have arrived at the same terms. Since we hold substantial interest in these affiliates and therefore have significant influence over these affiliates, there is a risk that any decisions or actions taken by either our affiliates or us in these transactions (including with respect to pricing, amendments, disputes or enforcement proceedings) may not be the same if we operated on an arm’s length basis.

We have limited business insurance coverage internationally.

The insurance industry in many parts of the world is still in an early stage of development. Insurance companies in many countries offer only limited business insurance options. As a result, we have not maintained, and generally do not maintain, full liability, hazard or other insurance covering our services, business, operations, errors, acts or omissions, personnel or properties. To the extent that we are unable to recover from others for any uninsured losses, such losses could result in a loss of capital and significant harm to our business. If any action, suit, or proceeding is brought against us and we are unable to pay a judgment rendered against us or defend ourselves against such action, suit, or proceeding, our business, financial condition and operations could be negatively affected.

33

RISKS RELATED TO OUR ADSS AND OUR TRADING MARKETS

The trading prices of our ADSs may be volatile, which could result in substantial losses to investors.

The market price for our ADSs has fluctuated significantly since we first listed our ADSs in November 13, 2014 with closing prices ranging from US$0.832 to US$12.72 per ADS as of April 26, 2018. The price and trading volume of our ADSs may become highly volatile and subject to wide fluctuations due to factors beyond our control. This may happen because of broad market and industry factors. For example, the prices of some foreign companies’ securities, including companies in the solar industry, have experienced significant volatility in recent years. Furthermore, as a result of the narrow band of our ADSs publicly available for trading, small trades can cause significant percentage changes in valuation in a short time period. Such volatility may affect the attitude of investors towards our securities, which consequently may impact the trading performance of our ADSs, regardless of our actual operating performance. In addition, any negative news or perceptions about inadequate corporate governance practices or fraudulent accounting or other practices at other foreign companies may also negatively affect the attitudes of investors towards foreign companies in general, including us, regardless of whether we have engaged in such practices. In addition, securities markets may from time to time experience significant price and volume fluctuations that are not related to our operating performance, such as the recent global economic crisis or other macroeconomic events, which may have a material adverse effect on the market price of our ADSs.

In addition to market factors, the price and trading volume for our ADSs may be highly volatile for factors specific to our own operations and the solar industry, including the following:

·actual or anticipated fluctuations in our financial results and operating metrics;

·changes in earnings estimates or recommendations by securities analysts;

·announcements of new investments, acquisitions, strategic partnerships, or affiliates or disposition of material assets, business or investments;

·announcements of new services and expansions by us or our competitors;

·additions or departures of key personnel;

·release of lock-up or other transfer restrictions on our outstanding equity securities, which could result in downward price pressure on our ADSs and increase the number of ADSs traded in the market;

·sales of additional securities;

·changes in policies and developments relating to the solar industry;

·the valuation of publicly traded companies that are engaged in business activities similar to ours;

·news regarding recruitment or loss of key personnel by us or our competitors; and

·potential litigation or regulatory investigations.

Any of these factors may result in large and sudden changes in the volume and price at which our ADSs trade. Furthermore, the securities market has from time to time experienced significant price and volume fluctuations that are not related to the operating performance of particular companies. These market fluctuations may also have a material adverse effect on the market price of our ADSs.

34

If we fail to meet the applicable listing requirements, NASDAQ may delist our ADSs from trading on its exchange in which case the liquidity and market price of our ADSs could decline and our ability to raise additional capital would be adversely affected.

Our ADSs are currently listed for trading on the NASDAQ Capital Market. There are a number of requirements that must be met in order for our ADSs to remain listed on the NASDAQ Capital Market, including but not limited to the minimum bid price of at least $1.00 per ADS, and the failure to meet any of these listing standards could result in the delisting of our ADSs from NASDAQ. We cannot assure you that we will be able to comply with all Nasdaq Listing Rules at all times in the future, or regain compliance in a timely manner in case of a default and avoid any subsequent adverse action taken by NASDAQ, including but not limited to delisting.

Any potential delisting of our ADSs from the NASDAQ would make it impossible for our shareholders to sell our ADSs in the public market and will result in decreased liquidity, limited availability of market quotations for our ADSs, limited availability of news and analyst coverage on us and decrease in our ability to issue additional securities.

Because we do not expect to pay dividends in the foreseeable future, you must rely on price appreciation of our ADSs for return on your investment.

We currently intend to retain most, if not all, of our available funds and any future earnings to fund the development and growth of our business. As a result, we do not expect to pay any cash dividends in the foreseeable future. Therefore, you should not rely on an investment in our ADSs as a source for any future dividend income.

Our board of directors has complete discretion as to whether to distribute dividends. Even if our board of directors decides to declare and pay dividends, the timing, amount and form of future dividends, if any, will depend on, among other things, our future results of operations and cash flow, our capital requirements and surplus, the amount of distributions, if any, received by us from our subsidiary, our financial condition, contractual restrictions and other factors deemed relevant by our board of directors. Accordingly, the return on your investment in our ADSs will likely depend entirely upon any future price appreciation of our ADSs. There is no guarantee that our ADSs will appreciate in value or even maintain the price at which you purchased the ADSs. You may not realize a return on your investment in our ADSs and you may even lose your entire investment in our ADSs.

You may not receive dividends or other distributions on our ordinary shares and you may not receive any value for them, if it is illegal or impractical to make them available to you.

The depositary of our ADSs has agreed to pay to you the cash dividends or other distributions it or the custodian receives on ordinary shares or other deposited securities underlying our ADSs, after deducting its fees and expenses. You will receive these distributions in proportion to the number of ordinary shares your ADSs represent. However, the depositary is not responsible if it decides that it is unlawful or impractical to make a distribution available to any holders of ADSs. For example, it would be unlawful to make a distribution to a holder of ADSs if it consists of securities that require registration under the Securities Act of 1933, as amended, or the Securities Act, but that are not properly registered or distributed under an applicable exemption from registration. The depositary may also determine that it is not feasible to distribute certain property through the mail. Additionally, the value of certain distributions may be less than the cost of mailing them. In these cases, the depositary may determine not to distribute such property. We have no obligation to register under U.S. securities laws any ADSs, ordinary shares, rights or other securities in connection with such distributions. We also have no obligation to take any other action to permit the distribution of ADSs, ordinary shares, rights or anything else to holders of ADSs. This means that you may not receive distributions we make on our ordinary shares or any value for them if it is illegal or impractical for us to make them available to you. These restrictions may cause a material decline in the value of our ADSs.

Substantial future sales or perceived sales of our ADSs in the public market could cause the price of our ADSs to decline.

Sales of substantial amount of our ADSs or ordinary shares in the public market, or the perception that these sales could occur, could cause the market price of our ADSs to decline. As of December 31, 2017, we had 419,546,514 ordinary shares outstanding, including 6,353,750 ADSs sold in our initial public offering. All of our ADSs sold in the offering are freely transferable without restriction or additional registration under the Securities Act. The remaining ordinary shares outstanding are available for sale subject to volume and other restrictions as applicable under Rule 144 and Rule 701 under the Securities Act. As of December 31, 2017, 221,802,288 of these remaining ordinary shares had been converted into ADSs. In addition, we may also issue additional options in the future which may be exercised for additional ordinary shares. We cannot predict what effect, if any, market sales of securities held by our significant shareholders or any other shareholder or the availability of these securities for future sale will have on the market price of our ADSs.

35

Our articles of association contain anti-takeover provisions that could have a material and adverse effect on the rights of holders of our ordinary shares and ADSs.

Our articles of association limit the ability of others to acquire control of our company or cause us to engage in change-of-control transactions. These provisions could have the effect of depriving our shareholders of an opportunity to sell their shares at a premium over prevailing market prices by discouraging third parties from seeking to obtain control of our company in a tender offer or similar transaction. For example, our board of directors has the authority, without further action by our shareholders, to issue preferred shares in one or more series and to fix their designations, powers, preferences, privileges and relative participating, optional or special rights and the qualifications, limitations or restrictions, including dividend rights, conversion rights, voting rights, terms of redemption and liquidation preferences, any or all of which may be greater than the rights associated with our ordinary shares, in the form of ADS or otherwise. Preferred shares could be issued quickly with terms calculated to delay or prevent a change in control of our company or make removal of management more difficult. If our board of directors decides to issue preferred shares, the price of our ADSs may fall and the voting and other rights of the holders of our ordinary shares and ADSs may be materially and adversely affected.

Holders of ADSs have fewer rights than shareholders and must act through the depositary to exercise those rights.

Holders of ADSs do not have the same rights as our shareholders and may only exercise the voting rights with respect to the underlying ordinary shares in accordance with the provisions of the deposit agreement. Under our amended and restated articles of association, the minimum notice period required to convene a general meeting is ten days. When a general meeting is convened, you may not receive sufficient notice of a shareholders’ meeting to permit you to withdraw your ordinary shares to allow you to cast your vote with respect to any specific matter. In addition, the depositary and its agents may not be able to send voting instructions to you or carry out your voting instructions in a timely manner. We will make all reasonable efforts to cause the depositary to extend voting rights to you in a timely manner, but you may not receive the voting materials in time to ensure that you can instruct the depositary to vote the ordinary underlying your ADSs. Furthermore, the depositary and its agents will not be responsible for any failure to carry out any instructions to vote, for the manner in which any vote is cast or for the effect of any such vote. As a result, you may not be able to exercise your right to vote and you may lack recourse if the underlying ordinary shares of your ADSs are not voted as you requested. In addition, in your capacity as an ADS holder, you will not be able to call a shareholders’ meeting.

The depositary for our ADSs may give us a discretionary proxy to vote the ordinary shares underlying your ADSs if you do not vote at shareholders’ meetings, which could adversely affect your interests.

Under the deposit agreement for our ADSs, if we asked for your voting instructions but the depositary does not receive your instructions by the cut-off date specified in the related notice, the depositary will give us a discretionary proxy to vote the ordinary shares underlying your ADSs as to all matters at the shareholders’ meeting unless:

·we have failed to timely provide the depositary with notice of meeting and related voting materials;

·we have instructed the depositary that we do not wish a discretionary proxy to be given;

·we have informed the depositary that there is substantial opposition as to a matter to be voted on at the meeting;

·a matter to be voted on at the meeting would have a material adverse impact on shareholders; or

·the voting at the meeting is to be made on a show of hands.

36

The effect of this discretionary proxy is that if you do not vote at shareholders’ meetings, you cannot prevent the ordinary shares underlying your ADSs from being voted, except under the circumstances described above. This may make it more difficult for shareholders to influence the management of our company. Holders of our ordinary shares are not subject to this discretionary proxy.

You may be subject to limitations on transfers of your ADSs.

Your ADSs are transferable on the books of the depositary. However, the depositary may close its transfer books at any time or from time to time when it deems expedient in connection with the performance of its duties. In addition, the depositary may refuse to deliver, transfer or register transfers of ADSs generally when our books or the books of the depositary are closed, or at any time if we or the depositary deem it advisable to do so because of any requirement of law or of any government or governmental body, or under any provision of the deposit agreement, or for any other reason.

You may face difficulties in protecting your interests and your ability to protect your rights through the U.S. federal courts may be limited.

We are an exempted company with limited liability incorporated under the laws of the Cayman Islands. Most of our business operations are located outside the United States. A substantial majority of our directors and a substantial majority of our senior management team are residing outside of the United States, and a substantial portion of their assets are located outside of the United States. As a result, it may be difficult or impossible for you to bring an original action against us or against these individuals in a U.S. court in the event that you believe that your rights have been infringed under the U.S. federal securities laws or otherwise. Even if you are successful in bringing an action of this kind, the laws of the Cayman Islands, China and many other jurisdictions where we have operations may render you unable to enforce a judgment against our assets or the assets of our directors and officers located in those jurisdictions. There is no statutory recognition in the Cayman Islands of judgments obtained in the United States, and there is uncertainty as to whether the courts of the Cayman Islands would (1) recognize or enforce judgments of United States courts obtained against us or our directors or officers predicated upon the civil liability provisions of the securities laws of the United States or any state in the United States, or (2) entertain original actions brought in the Cayman Islands against us or our directors or officers predicated upon the securities laws of the United States or any state in the United States. The uncertainty with regard to Cayman Islands law relates to whether a judgment obtained from the U.S. courts under civil liability provisions of the securities law will be determined by the courts of the Cayman Islands as penal or punitive in nature. The courts of the Cayman Islands may not recognize or enforce such judgments against a Cayman company, and because such a determination has not yet been made by a court of the Cayman Islands, it is uncertain whether such civil liability judgments from U.S. courts would be enforceable in the Cayman Islands. Further, the courts of the Cayman Islands would recognize a final and conclusive judgment in the federal or state courts of the United States under which a sum of money is payable (other than a sum of money payable in respect of multiple damages, taxes or other charges of a like nature or in respect of a fine or other penalty) or, in certain circumstances, an in personam judgment for non-monetary relief, and would give a judgment based thereon provided that and would give a judgment based thereon provided that (a) such courts had proper jurisdiction over the parties subject to such judgment; (b) such courts did not contravene the rules of natural justice of the Cayman Islands; (c) such judgment was not obtained by fraud; (d) the enforcement of the judgment would not be contrary to the public policy of the Cayman Islands; (e) no new admissible evidence relevant to the action is submitted prior to the rendering of the judgment by the courts of the Cayman Islands; and (f) there is due compliance with the correct procedures under the laws of the Cayman Islands.

In addition, China does not have any treaties or other agreements that provide for reciprocal recognition and enforcement of foreign judgments with the United States.

Our corporate affairs are governed by our memorandum and articles of association and by the Companies Law (2013 Revision) and common law of the Cayman Islands. The rights of shareholders to take legal action against our directors and us, actions by minority shareholders and the fiduciary responsibilities of our directors to us under Cayman Islands law are to a large extent governed by the common law of the Cayman Islands. The common law of the Cayman Islands is derived in part from comparatively limited judicial precedent in the Cayman Islands as well as from English common law, which has persuasive, but not binding, authority on a court in the Cayman Islands.

37

The rights of our shareholders and the fiduciary responsibilities of our directors under Cayman Islands law are not as clearly established as they would be under statutes or judicial precedents in the United States. In particular, the Cayman Islands have a less developed body of securities laws as compared to the United States, and provide significantly less protection to investors. In addition, Cayman Islands companies may not have standing to initiate a shareholder derivative action before the federal courts of the United States. As a result, your ability to protect your interests if you are harmed in a manner that would otherwise enable you to sue in a United States federal court may be limited to direct shareholder lawsuits.

Shareholders of Cayman Islands exempted companies such as ourselves have no general rights under Cayman Islands law to inspect corporate records and accounts or to obtain copies of lists of shareholders of these companies. Our directors have discretion under our amended and restated articles of association to determine whether or not, and under what conditions, our corporate records may be inspected by our shareholders, but are not obliged to make them available to our shareholders. This may make it more difficult for you to obtain the information needed to establish any facts necessary for a shareholder motion or to solicit proxies from other shareholders in connection with a proxy contest.

As a result of all of the above, our public shareholders may have more difficulty in protecting their interests through actions against our management, directors or major shareholders than would shareholders of a corporation incorporated in a jurisdiction in the United States.

We rely on the foreign private issuer exemption from most of the corporate governance requirements under the NASDAQ Stock Market Rules.

We are exempt from certain corporate governance requirements of NASDAQ by virtue of being a foreign private issuer. We are required to provide a brief description of the significant differences between our corporate governance practices and the corporate governance practices required to be followed by U.S. domestic companies under the NASDAQ Stock Market Rules. The standards applicable to us are considerably different than the standards applied to U.S. domestic issuers. The significantly different standards applicable to us do not require us to:

·have a majority of the board be independent;

·have independent directors involved in the selection of director nominees, by having a nominating and corporate governance committee that is composed entirely of independent directors or by having director nominees selected or recommended by a majority of independent directors meeting in executive session;

·have independent directors involved in the determination of executive compensation, by having a compensation committee that is composed entirely of independent directors or by submitting such matters for approval or recommendation by a majority of independent directors meeting in executive session;

·have a minimum of two members on our compensation committee that is composed entirely of independent directors; and

·have a minimum of three members on our audit committee that is composed entirely of independent directors.

We are not required to and will not voluntarily meet these requirements. As a result of our use of the “foreign private issuer” exemptions, you will not have the same protection afforded to shareholders of companies that are subject to all of NASDAQ’s corporate governance requirements. For a description of the material corporate governance differences between NASDAQ requirements and Cayman Islands law, see “Item 16G. Corporate Governance.”

We have incurred increased costs as a result of becoming a public company, and our compliance costs may continue to increase in the future, particularly when we cease to qualify as an “emerging growth company.”

As a public company, we have incurred significant legal, accounting and other expenses that we did not have as a private company prior to our initial public offering. When we cease to be an “emerging growth company”, we expect to incur additional significant expenses and devote substantial management effort toward ensuring compliance with the requirements of Section 404 of the Sarbanes Oxley Act and the other rules and regulations of the SEC. We will cease to be an “emerging growth company” on the earliest of (a) the last day of the fiscal year during which we have total annual gross revenues of at least US$1.07 billion; (b) the last day of our fiscal year following the fifth anniversary of our initial public offering; (c) the date on which we have, during the preceding three-year period, issued more than US$1.0 billion in non-convertible debt; or (d) the date on which we are deemed to be a “large accelerated filer” under the Exchange Act, which would occur if the market value of our ADSs that are held by non-affiliates exceeds US$700 million as of the last business day of our most recently completed second fiscal quarter. In addition, new rules and regulations relating to information disclosure, financial reporting and control and corporate governance, which could be adopted by the SEC, NASDAQ and other regulatory bodies and exchange entities from time to time, could result in a significant increase in legal, accounting and other compliance costs and to make certain corporate activities more time-consuming and costly, which could materially affect our business, financial condition and results of operations.

38

We are a “foreign private issuer,” and our disclosure obligations differ from those of U.S. domestic reporting companies. As a result, we may not provide you the same information as U.S. domestic reporting companies or we may provide information at different times, which may make it more difficult for you to evaluate our performance and prospects.

We are a foreign private issuer and, as a result, we are not subject to the same requirements as U.S. domestic issuers. Under the Exchange Act, we are subject to reporting obligations that, to some extent, are more lenient and less frequent than those of U.S. domestic reporting companies. For example, we are not required to issue proxy statements. We are not required to disclose detailed individual executive compensation information. Furthermore, our directors and executive officers are not required to report equity holdings under Section 16 of the Exchange Act and are not subject to the insider short-swing profit disclosure and recovery regime. Although we are not required to issue quarterly reports, we furnish our interim financial information on Form 6-K and publish our results on a quarterly basis as press releases, distributed pursuant to the rules and regulations of NASDAQ.

As a foreign private issuer, we are also exempt from the requirements of Regulation FD (Fair Disclosure) which, generally, are meant to ensure that select groups of investors are not privy to specific information about an issuer before other investors. However, we are still subject to the anti-fraud and anti-manipulation rules of the SEC, such as Rule 10b-5 under the Exchange Act. Since many of the disclosure obligations imposed on us as a foreign private issuer differ from those imposed on U.S. domestic reporting companies, you should not expect to receive the same information about us and at the same time as the information provided by U.S. domestic reporting companies.

We are an “emerging growth company” and we cannot be certain if the reduced disclosure requirements applicable to emerging growth companies make our ADSs less attractive to investors.

We are an “emerging growth company,” as defined in the JOBS Act, and we take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies” including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act for so long as we qualify as an “emerging growth company”. Section 404(b) of the Sarbanes-Oxley Act requires our independent registered public accounting firm to attest to and report on the effectiveness of the internal control structure and procedures for financial reporting.

We will cease to be an “emerging growth company” upon the earliest of:  (i) the last day of the fiscal year during which we have gross revenues of US$1.07 billion or more, (ii) the last day of the fiscal year following the fifth anniversary of the date of our initial public offering, (iii) the date on which we have issued more than US$1 billion in non-convertible debt during the previous three-year period, or (iv) when we become a “large accelerated filer,” as defined in Rule 12b-2 under the Exchange Act.

We may issue additional ordinary shares, other equity or equity-linked or debt securities, which may materially and adversely affect the price of our ordinary shares or ADSs. Hedging activities may depress the trading price of our ordinary shares.

We may issue additional equity, equity-linked or debt securities for a number of reasons, including to finance our operations and business strategy (including in connection with acquisitions, strategic collaborations or other transactions), to satisfy our obligations for the repayment of existing indebtedness, to adjust our ratio of debt to equity, to satisfy our obligations upon the exercise of outstanding warrants or options or for other reasons. Any future issuances of equity securities or equity-linked securities could substantially dilute your interests and may materially and adversely affect the price of our ordinary shares or ADSs. We cannot predict the timing or size of any future issuances or sales of equity, equity-linked or debt securities, or the effect, if any, that such issuances or sales may have on the market price of our ordinary shares or ADSs. Market conditions could require us to accept less favorable terms for the issuance of our securities in the future.

39

Your right to participate in any future rights offerings may be limited, which may cause dilution to your holdings.

We may from time to time distribute rights to our shareholders, including rights to acquire our securities. However, we cannot make these rights available in the United States unless we register the rights and the securities to which the rights relate under the Securities Act or an exemption from the registration requirements is available. We are under no obligation to file a registration statement with respect to any such rights or securities or to endeavor to cause a registration statement to be declared effective. Moreover, we may not be able to establish an exemption from registration under the Securities Act. Accordingly, you may be unable to participate in our rights offerings and may experience dilution in your holdings.

There is a significant risk that we will become a passive foreign investment company for U.S. federal income tax purposes, which could result in adverse U.S. federal income tax consequences to U.S. investors in our ADSs or ordinary shares.

A non-U.S. corporation will be a passive foreign investment company, or a PFIC, for any taxable year in which (1) at least 75% of its gross income is passive income or (2) at least 50% of the value (based on an average of quarterly values) of its assets is attributable to assets that produce or are held for the production of passive income. The factual determination of whether we are a PFIC will be made annually. Accordingly, it is possible that we may become a PFIC in the current or any future taxable year due to changes in our asset or income composition. Because we have valued our goodwill based on the projected market value of our equity, a decrease in the price of our ADSs may also result in our becoming a PFIC. If we are classified as a PFIC, our ADSs or ordinary shares will continue to be treated as shares in a PFIC for all succeeding years during which a U.S. Holder holds our ADSs or ordinary shares, unless we cease to be a PFIC and the U.S. Holder makes certain elections with respect to the ADSs or ordinary shares.

We believe that we were not a PFIC for U.S. federal income tax purposes for our taxable year ended December 31, 2017. Based on the current and projected composition of our income and valuation of our assets, there is a significant risk that we will become a PFIC during our current taxable year. Our PFIC status will depend upon the composition of our income and assets from time to time, including the value of our ADSs at any such time. Our holding of a substantial amount of cash and the manner in which we manage certain solar assets may result in our treatment as a PFIC for our current taxable year. There can be no assurance that we will not be a PFIC for our current taxable year or any future taxable year. If we were treated as a PFIC for any taxable year during which a U.S. Holder (as defined in “Item 10. Additional Information—E. Taxation—United States Federal Income Taxation”) holds our ADSs or ordinary shares, such U.S. Holder may incur significantly increased U.S. income tax on gain recognized on the sale or other disposition of our ADSs or ordinary shares and on the receipt of distributions on the shares to the extent such distribution is treated as an “excess distribution” under the U.S. federal income tax rules. Additionally, if we were to be or become classified as a PFIC, a U.S. Holder may be subject to additional U.S. tax form filing requirements, and the statute of limitations for collections may be suspended if the Holder does not file the appropriate form. You are urged to consult your tax advisor regarding our possible status as a PFIC. See “Item 10. Additional Information—E. Taxation—United States Federal Income Taxation—Passive Foreign Investment Company.”

ITEM 4. INFORMATION ON THE COMPANY

A.History and Development of the Company

We are a Cayman Islands holding company and conduct all of our business through and derive all of our income from our investment holding subsidiaries and operating subsidiaries in various countries around the world. In 2007, our director and former chief executive officer, Mr. Su, already a successful businessman and founder of a few solar companies in China, made investments in Europe and began to develop renewable energy power parks in Germany, the Czech Republic and Spain. Beginning in 2009, he expanded his investments to Japan, Canada and the United States, focusing on the construction and operation of solar parks. A number of these ventures became part of our current operations.

40

In 2009, Mr. Su incorporated Sky Solar Holdings Co., Ltd. in the Cayman Islands as a vehicle to consolidate his interests in various ventures involving solar parks and to facilitate capital-raising activities. Sky Solar Holdings Co., Ltd. was the immediate holding company of Sky Solar Power Ltd., a limited liability company incorporated in the British Virgin Islands before our establishment. In 2009, we connected our first projects in the Czech Republic. In 2011, we expanded into Latin America. In 2012, we shifted our focus to IPP and commenced our strategic operations in South Africa. On August 19, 2013, in order to facilitate the listing of the business, Mr. Su incorporated our company under our former name Sky Power Holdings, Ltd., as a listing vehicle and concurrently we became the holding company of Sky Solar Power Ltd. The immediate holding company of our company was Sky Power Group Ltd., which was incorporated on June 24, 2013 as an exempted company with limited liability in the Cayman Islands. On June 26, 2014, we changed the name of Sky Power Holdings Ltd. to Sky Solar Holdings, Ltd.

In September 2013, Sky Solar Holdings Co., Ltd. and Sky Power Group, Ltd. completed a one-for-one share swap, or the 2013 Share Swap. Upon completion of the 2013 Share Swap, shareholders holding approximately 94.8% of the equity interest in Sky Solar Holdings Co., Ltd., on an as-converted basis, as well as convertible promissory noteholders of Sky Solar Holdings Co., Ltd., exchanged their interest in Sky Solar Holdings Co., Ltd. for an equivalent equity interest in the corresponding classes of shares or in the form of convertible promissory notes in Sky Power Group, Ltd., on an as-converted and one-share-to-one-share basis. The attributable interests of the shareholders and convertible promissory noteholders of Sky Solar Holdings Co., Ltd. in our company remained the same before and after the 2013 Share Swap.

We have been strengthening our presence in our existing core markets, expanding into new markets as well as strategically monetizing solar parks in certain existing jurisdictions to deploy in our core growth markets. See “—B. Business Overview—Our IPP Solar Parks” and “—B. Business Overview—Featured Countries.”

Our legal and commercial name is Sky Solar Holdings, Ltd. Our principal executive offices are located at Unit 402, 4th Floor, Fairmont House, No.8 Cotton Tree Drive, Admiralty, Hong Kong Special Administrative Region, People’s Republic of China. Our telephone number at this address is + 852 3960 6548 and our fax number is + 852 3180 9399. Our registered office in the Cayman Islands is located at the offices of Codan Trust Company (Cayman) Limited at Cricket Square, Hutchins Drive, PO Box 2681, Grand Cayman, KY1-1111, Cayman Islands. Our website is www.skysolarholdings.com.

INITIAL PUBLIC OFFERING

In November 2014, we completed our initial public offering, in which we offered and sold 50,830,000 ordinary shares in the form of ADSs (6,630,000 of which were purchased by our underwriters through exercise of the over-allotment option granted to them by us), raising net proceeds of approximately US$46.1 million (US$6.6 million of which was raised in through the underwriters’ exercise of their option to purchase additional ADSs in full). Each of our ADSs represents eight of our ordinary shares. Our ADSs are listed on the NASDAQ Capital Market under the symbol SKYS.

B.Business Overview

OVERVIEW

We are a global IPP. We develop, own and operate solar parks and generate revenue primarily by selling electricity. We have focused on the downstream solar market since our inception and have developed projects primarily in Asia, South America, Europe and North America. We believe our broad geographic reach and established presence across key solar markets are significant differentiators that provide global opportunities and mitigate country-specific risks. We aim to expand our current operations such as those in Japan, Chile, Uruguay, China, Canada and the United States and establish operations in other select geographies with highly attractive solar radiation, regulatory environments, power pricing, land availability, financial access and overall power market trends. By design, we focus on the downstream PV segment, and as a result, we are technology agnostic and we can customize our solar parks based on local environmental and regulatory requirements.

41

Prior to becoming an IPP, we sold the solar parks and systems that we developed. We initiated our global IPP model in 2012. In 2013, we began to strategically reduce our system sale business in favor of the IPP model in order to internalize more value from project development and generate stable and recurring long-term cash flow. By the fourth quarter of 2013, we began to generate a majority of our revenue from selling electricity from IPP solar parks. We intend to leverage our established pipeline projects and increased financing capabilities to expand our IPP business. We also optimize our portfolio from time to time by selling solar energy systems or establishing joint ventures, depending on project economics, local power markets and the regulatory conditions.

We have access to a variety of financing sources and a demonstrated ability to design cost-effective project funding solutions. We are well positioned to create efficient financing solutions that are responsive to local regulatory conditions and financial markets. We believe we can leverage our global presence to reduce our financing costs with alternatives from different geographies.

As of December 31, 2017, we developed 318 solar parks with an aggregate capacity of 377.2 MW in Japan, Bulgaria, the Czech Republic, Spain, Canada, the United States and Uruguay. Under our IPP revenue model, we owned and operated 196.7 MW of solar parks, including 96.3 MW in Japan, 5.6 MW in the Czech Republic, 0.2 MW in Canada, 0.9 MW in Spain, 22.1 MW in the United States and 71.6 MW in Uruguay. A majority of our PPAs fix the price of electricity sold by our IPP solar parks for 20 years or more. In addition to our existing operational project portfolio, as of December 31, 2017, we had more than 400 MW of solar projects in various stages of development in countries such as Chile, Japan, Canada and the United States, consisting of 6.6 MW under construction, 180.1 MW of shovel-ready projects and approximately 250 MW of solar parks in pipeline. We classify 143.6 MW of these solar projects under development as advanced or qualified pipeline.

We believe that our proven track record of identifying and developing revenue-producing solar parks, operating under local conditions, developing local relationships and managing a global platform provide us with substantial advantages over both local and international solar park developers. We have been strengthening our presence in our existing core markets, expanding into new markets as well as strategically monetizing solar parks in certain existing jurisdictions to deploy in our core growth markets. We intend to continue selectively expanding our operations with a near-term focus on key solar markets, such as Japan, Chile, Canada, the United States and China which we recently entered with our first DG project.

On June 6, 2017, we named Mr. Hao Wu as our new chairman of the board of directors, replacing Mr. Weili Su, effective immediately. Also effective as of the same day, Mr. Su no longer served as our chief executive officer, or as director, officer, manager, legal representative or in any other management position of our subsidiaries or any other consolidated entities. On the same day, we set up a management committee, members of which include our directors Mr. Hao Wu, Mr. Xinhua Yu and Mr Xiaoguang Duan, and started to search for candidates for vacated management positions. On April 5, 2018, we confirmed the assumption of the principal executive officer functions by Dr. Wu acting on behalf of the management committee.

On June 15, 2017, we established an independent committee consisting solely of our independent directors, who subsequently engage a PRC law firm to investigate the conduct of our former chief executive officer and former chairman of the board, Mr. Weili Su, involving certain transactions and fund transfers, which appeared to lack proper board and audit committee authorization. On September 19, 2017, the PRC law firm concluded that the transactions and fund transfers between us and certain entities controlled by Mr. Su were not approved by the board or the audit committee, and in addition, there was insufficient documentary support of such fund transfer. On the same day, we entered into a settlement agreement with Mr. Su to resolve all our potential claims against Mr. Su and certain entities controlled by him concerning the fund transfers, as well as all potential claims that Mr. Su and such entities may have against us in connection with our employment of Mr. Su. For impacts and ramifications of these developments relating to our senior management, please refer to “Item 3. Key Information—D. Risk Factors—Risks Related to our Business and Industry—Our future success depends significantly on the continued service of our senior management team and our ability to attract, train and retain qualified personnel,” “Item 5. Operating and Financial Review and Prospects—Major Components of Our Results of Operations” and “Item 7. Major Shareholders and Related Party Transactions— B. Related Party Transactions”

42

Our revenue was US$47.2 million, US$65.9 million and US$56.7 million in 2015, 2016 and 2017, respectively. Our gross profit was US$28.6 million, US$35.0 million and US$33.5 million in 2015, 2016 and 2017, respectively. We incurred losses of US$1.6 million in 2015, and gains of US$3.3 million in 2016 and losses of US$33.1 million in 2017. Our IPP solar parks provide attractive long-term recurring revenue from selling electricity. From 2015 to 2016 and to 2017, our revenue from selling electricity from IPP solar parks changed from US$35.5 million to US$53.7 million and to US$53.6 million, representing 75.2%, 81.4% and 94.5% of our revenue, respectively. The total capacity of our IPP solar parks was 128.6MW, 159.8 MW and 196.7MW, and the total carrying value of our IPP solar parks was US$259.4 million, US$271.3 million and US$397.4 million as of December 31, 2015, 2016 and 2017, respectively.

OUR IPP SOLAR PARKS

IPP solar parks are solar power plants that we own and operate as an independent power producer. These parks sell electricity to the grid throughout their operational lives. In countries such as Japan, Bulgaria, the Czech Republic, Spain, Uruguay, Canada and the United States, our IPP solar parks sell power under PPAs. In countries like Chile, where the market for electricity has reached grid-parity, which occurs when the market price of energy from renewable sources is competitive with the price of conventional sources, our IPP assets will sell power in the electricity market.

The process for developing a solar park varies according to local regulations in each jurisdiction, although there are certain key milestones common to many jurisdictions. Generally, a developer first secures site control, typically by acquisition of the land or a long-term lease arrangement, obtains key energy permits, such as operational licenses, and enters into key agreements, such as grid connection agreements, PPAs and other off-take agreements. Prior to construction, the developer secures the appropriate zoning and environmental permissions, applicable construction permits, and project funding. When construction is complete, the solar park may be connected and begin selling electricity to the transmission grid. We classify our IPP solar parks based on these key milestones.

·Solar Parks in Operation. These solar parks have completed construction and are selling electricity.

·Solar Parks Under Construction. These solar parks have secured site control, energy permits, all key agreements, zoning and environmental permissions and construction permits.

·Shovel-ready projects. These projects have all permits required for construction and grid connection, even if those projects may lack certain non-discretionary permits for which we have begun the application process and which will be granted and maintained based on our compliance with certain administrative procedures. We must also still submit certain administrative notifications at least one month prior to construction to begin building certain shovel-ready projects in Japan. For detailed permitting requirements in each country where we have shovel-ready projects, see “—Featured Countries.”

·Solar Projects in Pipeline. These solar parks are being studied for feasibility or have achieved certain milestones, but are not yet ready for construction. Our solar projects in pipeline are classified as either “advanced pipeline,” “qualified pipeline” or “development pipeline.” We generally expect solar projects to be shovel-ready within 12 months of their designation as advanced pipeline. We expect finalization of at least one key permit or agreement for our solar projects within six months of their designation as qualified pipeline. Development pipeline solar projects are under evaluation. For more information about our solar projects in pipeline, see “—Solar Projects in Pipeline.”

43

Solar Parks in Operation

The following table sets forth our IPP solar parks grouped by commercial operation dates that we owned and operated or in which we held a minority equity interest as of December 31, 2017:

Location	Connected in	Number of Parks	Sky Solar Equity Holding		Sky Solar’s Attributable Capacity (MW)	Installation (ground- mounted or rooftop- mounted)	FIT Terms(1)	Price of Electricity (per kWh)	Contract Life	Counterparties
Japan	2013Q1	1	100	%	0.6	Ground	Fixed	JPY32-40	20 years	Tokyo Electric; North East Electric; Hokkaido Electric; Kyushu Electric;
	2013Q2	1	100	%	2.4	Ground
	2013Q3	2	100	%	3.9	Ground
	2013Q4	3	100	%	4.4	Ground
	2014Q1	1	100	%	2.0	Ground
	2014Q2	4	100	%	5.4	Ground
	2014Q4	4	100	%	7.9	Ground
	2015Q1	16	100	%	26.4	Ground
	2015Q3	9	100	%	12.3	Ground
	2015Q4	8	100	%	11.9	Ground
	2016Q1	3	100	%	6.3	Ground
	2016Q3	2	100	%	3.7	Ground
	2016Q4	6	100	%	7.5	Ground
	2017Q2	2	100	%	1.6	Ground
Czech Republic	2009Q4	1	100	%	2.3	Ground	Fixed with 2% annual inflation rate(2)	EUR0. 45-0.47	20 years	CEZ Distribuce a.s.; E. ON Distribuce; CEZ Prodej s. r. o.
	2010Q2	1	100	%	1.0	Ground
	2010Q3	1	100	%	2.3	Ground
Canada	2014Q4	2	100	%	0.2	Rooftop	Fixed	CAD 0. 713	20 years	IESO(3)
Spain	2010Q2	10	100	%	0.7	Rooftop	No PPAs	EUR0.25	N/A	Iberdrola
	2010Q4	2	100	%	0.2	Rooftop
The United States	2014Q4	1	100	%	0.1	Rooftop	Fixed	US$0 21	20 years	Private Business
	2016Q3	23	100	%	22.0	Ground			20 years
Uruguay	2015Q3	1	85	%	8.0	Ground	Fixed in each term	US$0.13	20 years	Private Business
	2017Q3	5	85	%	63.6
Total					196.7

(1)Pricing terms are stipulated in the relevant laws and regulations in each country as referred to by the relevant PPAs

(2)The FIT term is fixed FIT based on a pricing matrix established by the Energy Regulatory Office with a 2% annual inflation adjustment to market rate reset by the Energy Regulatory Office.

(3)The Independent Electricity System Operator (“IESO”) is the successor entity to the Ontario Power Authority.

*As of December 31, 2017, we owned four solar parks totaling 3.6 MW through our minority equity positions in RisenSky Solar Energy S.a r.l., which we operated and maintained. In 2017, these IPP solar parks received approximately 1,188 to 1,405 radiation hours. We do not foresee having a significant number of development solar parks in our pipeline in Bulgaria. We will continue to operate our existing assets in Bulgaria and currently have no plans to divest such assets. However, we do not expect that Bulgaria will be a significant contributor to our capacity growth going forward.

Solar Parks Under Construction

The following table sets forth our solar parks under construction grouped by region as of December 31, 2017:

Location	Sky Solar Equity Holding	Number of Solar Parks	Attributable Capacity	Ground/ Rooftop	Scheduled Commercial Operation Date	PPA Terms
			(MW)
Japan	Sky Solar 100%	4	6.6	Ground	2018Q1	20 years fixed FIT
Total		4	6.6

44

Shovel-Ready Projects

The following table sets forth our shovel-ready projects grouped by region and percentage of ownership as of December 31, 2017:

Location	Equity Holding	Number of Solar Parks	Attributable Capacity	Ground/ Rooftop	PPA Terms
Japan(1)	Sky Solar 100%	23	114.7	Ground	20 years fixed FIT
Canada	Sky Solar 100%	1	0.1	Rooftop	20 years fixed FIT
Chile(2)	Sky Solar 100%	4	65.3	Ground	specially stated in PPAs
Total		28	180.1

(1)In Japan, after securing a site and applying for zoning and environmental permits, we seek a Facility Certification from the energy authority. We may then pursue a connection agreement with the local utility, which contains the material terms for the final PPA, which is formally entered into after construction has been completed. In addition, we normally submit certain administrative notifications at the time we receive funding. As of December 31, 2017, 23 of our shovel-ready projects representing a total of 114.7 MW were still waiting for at least one or more permissions under either the Forest Land Act (shinrin hou) Law No. 249 of 1951, as amended) and the Agricultural Land Act (nou chi hou) (Law No. 229 of 1952, as amended) and the submission or notifications under the Soil Contamination Act (dojo osen taisaku hou) (Law No. 53 of 2002, as amended). These permissions are generally considered granted unless our application falls into one of the non-grant categories provided for in these laws and their related administrative ordinances.

(2)In Chile, there is no requirement for a license to produce electricity, and a PPA is not necessary if electricity is to be sold in the spot market. Once a project has site control for the plant and transmission lines, it may seek an interconnection agreement. Prior to commencing construction, it must have an approved environmental plan. Construction permits are obtained through the local municipality. Our shovel-ready projects in Chile have secured all permits for construction and construction can begin upon receipt of funding.

Solar Projects in Pipeline

Solar parks in the pipeline are divided into three categories:

·              Advanced pipeline solar projects. These solar parks have secured both site control and at least one other milestone permit or agreement. In order for them to obtain the necessary permits and agreements for project funding, we must complete additional administrative and regulatory steps in adherence with applicable regulations. We generally expect solar parks to be shovel-ready within 12 months of their designation as advanced pipeline.

·              Qualified pipeline solar projects. These solar parks have been approved for investment by the investment committee and have secured site control, but have only begun applying or negotiating for key permits or agreements. The time required to obtain these permits and agreements varies according to the local regulations in each jurisdiction, but we expect finalization of at least one key permit or agreement within six months of a project’s classification as qualified pipeline.

·              Development pipeline solar projects. These are solar parks are in markets that are under evaluation by our regional development teams and investment committee for development feasibility, but for which we have not otherwise taken any steps in the project development process.

The following table sets forth our current pipeline solar parks according to the classifications described above. Due to our ongoing business, the numbers in this chart are subject to change as solar parks continue through the development process:

	Stage of Development
Location	Advanced Pipeline	Qualified Pipeline	Development Pipeline
	(MW)
North America	25.5	21.3	6.9
Latin America	96.8	—	—
Asia	—	—	95.2
Total	122.3	21.3	102.1

45

OUR SOLAR ENERGY SYSTEM SALES BUSINESS

Solar Energy System Sales consists of our provision of Pipeline plus EPC services and the transfer of completed solar parks. The following table outlines the capacities of the solar energy systems we sold during the periods indicated:

	Year Ended December 31,
	2015		2016		2017
Location	Capacity (MW)	Number of Solar Parks	Capacity (MW)	Number of Solar Parks	Capacity (MW)	Number of Solar Parks
Europe
Greece	—	—	—	—	23.0	20
North America
Canada	1.7	5	9.2	17	1.6	6
Asia
Japan	—	—	—	—	0.5	6
Total	1.7	5	9.2	17	25.1	32

FEATURED COUNTRIES

Japan

We entered the Japanese market in 2009. As of December 31, 2017, we owned and operated 62 IPP solar parks totaling 96.3 MW, which are located in Tokyo, Kyushu, Hokkaido and Tohoku. In 2017, these IPP solar parks received approximately 1,200 to 1,300 radiation hours. We also had 6.6 MW of solar parks under construction and 114.7 MW of shovel-ready projects ready to be developed upon receipt of funding. Additionally, we had 95.2 MW of solar parks in our pipeline in Japan. In Japan, our projects eligible for FIT 1 included 84.2 MW in operation, 2.3 MW under construction and 18.7 MW shovel-ready, and our projects eligible for FIT 2 include 12.1 MW in operation, 4.3 MW under construction and 50.8 MW shovel-ready projects, and our projects eligible for FIT 3 include 45.2 MW shovel-ready as of December 31, 2017. We cooperated with Renova, a listing company in Japan, and NEC Capital, to invest in a 40.8 MW project in Japan on March 30, 2018. We invested JPY529 million (US$4.7 million) for 45% of the distribution of profit or loss on such project. This project is expected to complete in October 2021.

Our shovel-ready projects in Japan have secured site control, energy permits and all key agreements that are required for construction of solar parks in Japan. As of December 31, 2017, 23 of our shovel-ready projects representing a total of 114.7 MW were still waiting for at least one or more permissions under either the Forest Land Act (shinrin hou) Law No. 249 of 1951, as amended) and the Agricultural Land Act (nou chi hou) (Law No. 229 of 1952, as amended) and the submission or notifications under the Soil Contamination Act (dojo osen taisaku hou) (Law No. 53 of 2002, as amended). These permissions are generally considered granted unless our application falls into one of the non-grant categories provided for in these laws and their related administrative ordinances. We applied for these permissions no later than nine months prior to the scheduled date of construction for a particular project, and as a result, we expect these permissions to be approved approximately at the commencement of construction. We consider Japan to be a core growth area going forward.

Japan Silent Partnership

Sky Solar Japan K.K., or SSJ, our wholly owned subsidiary in Japan, entered into two silent partnership agreements on September 9, 2014 with two groups of third party investors, or the Silent Partners, pursuant to which the Silent Partners provided financing and SSJ was to develop and operate certain solar parks in Japan, or the SSJ Silent Partnership Assets. On August 28, 2015, the two silent partnership agreements were amended and restated. On the same day, one of the two Silent Partners transferred its interests in the silent partnership to the other Silent Partner, which is, currently serving as the sole Silent Partner under the two silent partnership agreements.

In accordance with the agreements, SSJ contributed solar power projects with an agreed valuation of approximately JPY5.2 billion (US$46.1 million) pursuant to the original agreements and solar power projects with an agreed valuation of approximately JPY4.1 billion (US$36.4 million) pursuant to the amended agreements, which means that SSJ has contributed solar power projects with an agreed valuation of approximately JPY9.3 billion (US$82.5 million) in total so far. The Silent Partner contributed JPY9 billion (US$79.0 million) in cash, including JPY5 billion (US$43.5 million) in cash pursuant to the original agreements, and JPY4 billion (US$35.5 million) in cash pursuant to the amended agreements, JPY2 billion (US$17.7 million) of which would be used by SSJ to extend a loan, or upstream loan, of the same principal amount to Sky International Enterprise for, among others, the development of certain PV projects in Asia and the Americas, and the remaining JPY2 billion (US$17.7 million) of which would be used by SSJ to continue executing project pipelines in Japan. The upstream loan is secured by a pledge of all shares held by Sky International Enterprise in SSJ. As a result of these contributions, the SSJ and Silent Partner’s original distribution percentages were 51.07% and 48.93%, which may be adjusted subsequently, for example, to result in the Silent Partner enjoying a 15% cumulative IRR under the silent partnership agreement. There were a total of 67 contributed solar parks with an aggregate capacity of 107.9 MW, consisting of approximately 87.2 MW which were completed and in operation and approximately 20.7 MW shovel-ready as of December 31, 2017.

46

No separate legal entity was established in connection with the silent partnership agreement. The SSJ Silent Partnership Assets are held and managed through the SSJ legal entity, subject to the provisions of the silent partnership agreement. The Silent Partner is not involved in the investment decisions associated with management of the SSJ Silent Partnership Assets or other assets and businesses which continue to be held and operated by SSJ, outside the auspices of the silent partnership agreement. Pursuant to the original agreements, distributable profits from the SSJ Silent Partnership Assets shall be subject to a preferred 15% internal rate of return, or IRR, priority distribution, as follows: first distributed to the Silent Partner in proportion to its respective capital contributions, until a cumulative annual IRR of 15% on capital contributions is achieved, and any remaining profits shall be distributed to SSJ until a cumulative annual IRR of 15% of SSJ’s contributed amount, based on the agreed valuation, is achieved. The amended agreements removed the preferred 15% IRR priority distribution requirement, and therefore, any distributable profits from the SSJ Silent Partnership Assets shall be distributed to SSJ and the Silent Partner pursuant to their respective percentages of contribution. The Silent Partner shall only bear losses up to the amount of money they financed.

Upon the completion of the solar power projects, SSJ is expected to transfer the ownership of one or more of the completed projects to a special purpose company formed by it or other third parties to recover the investments. Upon such transfer, it is contemplated that the Silent Partner and SSJ will receive the distributable profits derived from the proceeds of such transfer pursuant to their respective percentages of contribution. As of April 27, 2018, the SSJ Silent Partnership Assets included an aggregate capacity of 107.9 MW, which was greater than 10.79 MW. Therefore, our subsidiary SSJ is obligated to either (1) purchase these SSJ Silent Partnership Assets for a price agreed upon by an agent for the Silent Partner or (2) secure a third-party offer to purchase these SSJ Silent Partnership Assets, to enable the exit of the Silent Partner by August 27, 2018, and should notify the Silent Partner by May 27, 2018 of its intent to settle in either case. If the Silent Partner is able to secure a third party offer that is more attractive within 90 days of being so notified, SSJ shall transfer the remaining SSJ Silent Partnership Assets to such third party. If the Silent Partner not only does not agree with the offer made by SSJ but also fails to find a third party offer that is more attractive, the Silent Partner may elect to change the percentages of distribution to such percentages that will result in the Silent Partner enjoying a 15% cumulative IRR. The Silent Partner has demanded to make such adjustment, as a result of which we incurred fair value changes of financial liabilities — FVTPL in the amount of negative US$37.9 million in 2017.

The term of the silent partnership expires on August 27, 2018. Certain obligations of SSJ and the Silent Partner, including the obligation of SSJ to enable the exit of the Silent Partner as described above, shall survive the termination. We have been exploring options of either seeking financing sources or interested buyers for the SSJ Silent Partnership Assets. For risks related to the liquidation, please refer to “Item 3. Key Information—D. Risk Factors—Risks Related to Our Business and Industry— We may not be able to manage the exit of the Silent Partner, including to secure financing for our purchase of, or to secure a third-party offer to purchase, the SSJ Silent Partnership Assets, which represented 43.7% of the carrying value of our solar projects, or to agree with the Silent Partner on any adjustment to percentage of distribution to the Silent Partner by the deadline under the silent partnership agreement.”

Since the middle of 2017, our Silent Partner in Japan has sent us notices, which allege that we have breached certain terms of the silent partnership agreement. Based on the advice of our Japanese counsel, we do not believe these allegations are reasonable, but nonetheless intend to amicably resolve the disputes with the Silent Partner to minimize the distraction of our management and disruption to our business. See “Item 3. Key Information—D. Risk Factors—Risks Related to Our Business and Industry— We have been named as a defendant in a putative class action lawsuit and have been, and in the future may be, the target of other lawsuits, harassment or other hostile conduct by third parties, including malicious allegations, which could generate adverse publicity and harm our reputation and could adversely affect our business, financial conditions, results of operations, cash flows and the trading price of our ADSs.”

47

Chile

We entered the Chilean market in 2011. As of December 31, 2017, we had 65.3 MW of shovel-ready projects ready to be developed upon receipt of funding. Additionally, we had 96.8 MW of advanced pipeline in our Chilean pipeline. In 2017, these solar parks received approximately 1600 radiation hours per year. We believe our solar parks in Chile will have operating lives of 25 to 30 years. Continued reduction of EPC costs related to our Chilean projects are driving more favorable project economics.  In 2017, we have extend our presence into the DG opportunities. We have acquired 24 MW shovel ready DG permits, expecting to be connected in year 2019.

Our shovel-ready projects in Chile have secured site control, energy permits and have received any zoning, environmental or other permits required for construction of solar parks in Chile. We believe we will be able to finalize key agreements and begin construction upon the receipt of funding via project financing arrangements that are being negotiated. It typically takes one to two years to develop a shovel-ready project in Chile.

China

We announced our entry into the China market in December 2014. Due to various market conditions, we continued to evaluate opportunities in China but made no acquisitions or investments throughout 2015, 2016 and 2017. In January 2017, we established Wuxi Tianlian New Energy Development Co., Ltd, through which entity we expect to develop and invest DG projects in China. In March 2018, Suzhou Tianlian New Energy Co., Ltd, which is 100% held by Wuxi Tianlian New Energy Development Co., Ltd, entered into a 25-year PPA with a wholly-owned subsidiary of Shenzhen Kaifa Technology Co., Ltd. To develop, own and operate a 1.7 MW rooftop solar project in Suzhou, China. We anticipate the development of the project to be completed by the end of 2018. Upon completion, Shenzhen Kaifa Technology Co., Ltd. Will purchase more than 85% of the electricity generated from the project, with the balance being sold to the State Grid. This marked our first DG project in China.

We currently derive a majority of our revenue from electricity sale from our owned and operated solar parks, and be oriented to develop self-use industrial and commercial spare-net projects, household projects, and poverty alleviation projects, through both independent development and collaborations. We also intend to own fully operational solar assets, as well as solar energy system sales assets to external third parties, which are mainly state-owned conglomerates and public companies. We will continue evaluate acquisition targets to build the operating assets in China and explore the multi-energy complementary energy solutions including PV power generation with energy storage, smart micro-grid, and other forms of energy based on PV.

We consider China a core growth area going forward, where our primary focus will be on the DG market.

Uruguay

We entered the Uruguayan market in 2012. As of December 31, 2017, we owned and operated 71.6 MW solar parks, 63.6 MW of which were connected in September 2017. In 2017, these solar parks received radiation of approximately 1,600 to 1,700 hours per year.

We consider Uruguay to be a core growth area going forward.

Canada

We entered the Canadian market in 2009. In 2017, we had completed and sold 1.9 MW of solar systems in Canada pursuant to third party transactions. As of December 31, 2017, we fully owned two rooftop solar projects totaling 0.2 MW and held a partial interest in a further one rooftop solar project totaling 0.5 MW. Additionally, we had 9.3 MW in other pipeline in Canada.

In September 2016, we sold 2.01 MW of operating rooftop solar projects in Canada to a third party, followed by an additional sale of a 480kW operating rooftop solar project to that same third party in November 2016. In the last quarter of 2016, we sold 575kW of operating rooftop solar projects in Canada pursuant to another third party transaction. The proceeds from these sales have been, and are expected to continue to be, used for operating expenses of our Canadian operations. In September 2016, we sold 25% interest of 6.13 MW of operating rooftop solar projects in Canada subject to the terms and conditions of a shareholder agreement to a third party investor. In January 2017, we also sold 25% interest of a further 1.62 MW of operating rooftop solar projects in Canada subject to the terms and conditions of a shareholder agreement to the same third party investor. The proceeds from these third-party investment transactions were initially used primarily to retire construction debt associated with those projects, with the remaining proceeds to be used for operating expenses and investment activities of our Canadian and U.S. operations. Going forward, the revenues generated from these transferred assets will be applied primarily towards cash distribution commitments to the third party investor, which will terminate upon a specific level of return being met.

48

In 2017, our operating solar parks in Canada received radiation of approximately 1,150 kwh/kw. Our projects and large renewable procurement contracts in Canada sell electricity to utility companies via the IESO.

In recent months, there have been certain notable changes in the Ontario government’s energy policy regarding PPAs. As a result, the second Large Renewal Project program (LRP II) has been cancelled, and there will not be a further round of FIT application for renewable energy project applications (i.e. FIT6). Therefore, Ontario is now no longer expected to be a key market for obtaining future PPAs. However, other provinces have begun work on potential new programs to encourage greater use of renewable energy, perhaps both utilizing PPAs and otherwise.

United States

We entered the US market in 2015, with the formation of Sky Capital America Inc. Through this subsidiary, we have been evaluating and pursuing potential opportunities to acquire secondary permits and operating solar park assets. We have brought on additional personnel and resources to develop, analyze and execute significant pipeline opportunities. In 2017, our wholly-owned subsidiary, Sky Capital America Inc., made a strategic investment in AmberWave Inc., a silicon-based Building Integrated Photovoltaic, or BIPV, technology company.

As of December 31, 2017, we owned and operated 24 solar parks in the United States totaling 22.1 MW. Additionally, we had 25.5 MW of solar parks in advanced pipeline and 18.9 in other pipeline in the United States. Further, we closed on 25 MW of permit acquisitions in 2017.

We are combining United States and Canada operation as North America region and are continuing evaluating and pursuing additional opportunities to either acquire US projects for our development pipeline or through joint venture or other arrangements. We expect it will be a core growth area going forward.

In addition, we are also exploring new applications of solar energy, or other source of renewable energy, which we believe can bring us new business opportunities in the future:

Remote and Mining Micro-Grid

The combination of utility-scale solar energy with energy storage may have significantly cost advantage compare to the oil-based source of energy, for mining business in remote communities.  We are exploring the business opportunities in the North America region.

Energy Storage with Solar Energy in Commercial Market

Many commercial customers are face increasing or unpredictable energy costs due to outages, peak load costs and the time of use costs. The combination of solar energy and energy storage has been recognized as one of the solutions to manage the energy cost. We are working with some potential commercial partners and exploring the business opportunities.

Electric Vehicles

The continuously growing of EV market is driving the vehicle batteries cost down, and is also creating a growing market for the batteries recharging business.  With that growth, we are exploring business opportunities that Solar Energy to be applied for the EV batteries recharging process.

49

Anaerobic Digestor (AD)

In multiple states, oncoming legislatively-driven mandates to divert organics from landfills are forcing many companies and Municipalities to seek alternative disposal methods. AD technology can convert these wastes into a baseload renewable energy and can decrease disposal trucking and tipping fees while at the same time providing a source of revenue and offsetting energy needs.

Strategic Partnership with Hudson Clean Energy Partners

In September 2015, we, through our wholly-owned subsidiary Energy Capital Investment S.à.r.l., formed a strategic partnership with Hudson Clean Energy Partners, or Hudson. Hudson is a private equity and infrastructure firm dedicated exclusively to investing in renewable power and clean energy.

As part of this partnership, Hudson has committed to invest US$50 million by way of convertible notes to fund our construction of approximately 84.2 MW of solar projects in Uruguay as well as the acquisition of approximately 22 MW of operating solar assets in the United States. The convertible notes will mature on the earlier of (i) the twentieth anniversary of the initial amortization date and (ii) August 19, 2036. The initial amortization date in this context refers to the earlier of (i) the date which is nine months after the date on which a project enters into full commercial operation, achieves preliminary acceptances, achieves technical acceptance or achieves other similar milestones, as determined in accordance with the primary construction contract(s) for such project and (ii) twenty-four months after the convertible note purchase date. According to the convertible notes documents, a portion of outstanding amount of the notes and interests equal to the equity value of the relevant project company multiplied by the percentage ownership in such project company can be converted into holding company or project company equity owned by Hudson. This conversion feature contemplates a 49% stake in the holding company which owns the 22 MW of United States projects and a 34% to 49% stake in the project companies which own the 84MW of the Uruguayan projects. If an equity conversion has not occurred or is delayed by the dates determined by the notes associated with the relevant project, we shall repay the principal and interest on a semi-annually basis according to the applicable note repayment schedule.

In addition, Hudson and we have also agreed to collaborate on identifying and acquiring suitable renewable assets in the United States and Japan. In light of the current spot market environment in Chile, including diminished spot pricing curve, we and Hudson are evaluating our strategies in Chile.  We are currently evaluating several DG opportunities in Chile.

As of December 31, 2017, Hudson had funded US$48.2 million under these convertible notes to fund the transaction costs in connection with the Hudson partnership.

Czech Republic

We entered the Czech market in 2009. As of December 31, 2017, we owned and operated three IPP solar parks totaling 5.6 MW. In 2017, these IPP solar parks received approximately 1,100 to 1,200 radiation hours.

We do not foresee having a significant number of development projects in our pipeline in the Czech Republic. We will continue to operate our existing assets in the Czech Republic and currently have no plans to divest such assets. However, we do not expect that the Czech Republic will be a significant contributor to our capacity growth going forward.

Spain

We entered the Spanish market in 2009. As of December 31, 2017, we owned and operated 12 solar parks totaling 0.9 MW in Spain. In 2017, these solar parks received approximately 1,100 to 1,300 radiation hours.

We do not foresee obtaining a significant number of development solar parks in our pipeline in Spain. We will continue to operate our existing assets in Spain and currently have no plans to divest such assets. However, we do not expect that Spain will be a significant contributor to our capacity growth going forward.

50

Greece

We entered the Greek market in 2009. On January 12, 2017, we entered into share purchase agreements with A.W. Aktina Wind Limited, a non-affiliate of us. Pursuant to this agreement, the buyer shall purchase all equity interest in 23.0 MW of solar projects from our wholly-owned subsidiaries in Greece for a total purchase price of EUR39.7 million. This transaction was closed in April 2017. As of December 31, 2017, we did not own or operate any IPP solar parks, or have any shovel-ready projects ready to be developed or any solar parks in our pipeline in Greece.

Customers and Marketing

We have historically sold solar energy systems to off-takers and sold electricity to the transmission grid. Purchasers of our solar energy systems included utility companies, independent power developers and producers, commercial and industrial companies, and other solar energy system owners. Purchasers of our electricity include government electricity utilities in each country where we operate, among others. For detailed information about our customers who contribute over 10% of our total revenue during the relevant periods, see “Item 5. Operating and Financial Review and Prospects—Major Components of Our Results of Operations.”

Members of our senior and local management team routinely meet with industry players and interested investors. Our business development teams around the world have significant experience building business in local markets and actively pursue growth opportunities in all major markets. We promote our industry reputation by participating in local trade conferences and other industry events and forums, which provide access to key local industry players and government authorities that can help us identify leads and other growth opportunities. We intend to continue to increase our marketing efforts.

Market Due Diligence

Before we enter into a new market or make any major investments, our regional development teams prepare market analysis reports and financial models, including key financial assumptions, to guide us in sourcing, evaluating and executing solar parks.

The report includes information on overall market conditions, renewable resources regulations, an analysis of our local strengths and weaknesses, average cost estimates, project development procedures, a detailed list and analysis of tasks and requisite authorizations, a list of key project milestones, the major risks of projects in the market and an action plan outlining requirements for pursuing projects in the market.

We update the market analysis report quarterly, and as needed, based on changes in the market or more accurate information.

We also engage reputable law firms and consulting firms to investigate the validity of regulatory permits, property laws, solar regulations, environmental laws, and tax and incentive policies, with particular focus on any PV or other renewable energy regulatory environment and policies.

Permit Development

We generally act as a primary developer, especially in markets with abundant solar resources, attractive financing sources or long-term green energy subsidies, such as Japan. Under our primary development model, we obtain site control rights for a solar park, obtain permits required for construction and negotiate grid connection agreements and PPAs.

We may also act as a secondary developer. Under our secondary development model, we buy projects in various stages of permit development and continue developing those solar parks. We pursue secondary permit development in markets with relatively liquid markets for permits such as in the United States or Canada.

As of December 31, 2017, a majority of our solar parks and solar projects in pipeline in terms of capacity have been undertaken by us as a primary developer. We expect the proportion of solar parks which we pursue under primary development to decrease going forward, as we ramp up acquisitions and secondary permit development.

51

Primary Permit Development

The following diagram illustrates our primary permit development:

Site Selection

We typically receive details of potential project sites from our business partners, previous solar park owners, national or local governments, public sources of local information, overseas engineering exhibitions or overseas business liaison organizations. We systematically source solar parks in each of the different markets in which we operate based on land cost, solar radiation, grid connection capacity, protected land status and other project information. If the project site is suitable for development, the regional development team submits a site assessment report on the land and other related information to the regional managing director, who submits a project budget to our corporate headquarters for approval.

Feasibility Study

After selecting a site, we strive to reduce risks by conducting a thorough feasibility study and identifying potential issues. We target projects we believe to have an appropriate balance of financial returns, costs and risks.

Our in-house technical team, along with external experts we engage as-needed, investigate items such as engineering specifications and solar radiation analysis. We pay specific attention to potential delays and cost overruns, grid capacity and additional costs which may not be captured in the technical design.

Our investment and financial teams perform financial forecasts based on information about the financial prospects of the solar park and the local energy market to make a profitability estimate and adjust our capital plan accordingly.

Securing Permits

After the project development budget is approved, the regional development team begins project development. Permit and licensing requirements vary, depending on the jurisdiction of the solar park, but the key permits, licenses and agreements typically required for solar parks include land acquisition or lease contracts, environmental impact assessments, building permits, planning consents, grid connection contracts and PPAs. The government authorities and other stakeholders that are consulted vary from country to country but usually include the local or regional planning authority, electricity utilities, local communities, environmental agencies, as well as health and safety agencies.

The regional development team provides an update on project development to the relevant regional and corporate departments on a regular basis, including, among other things, information on the status of the requisite permits and, for more significant solar parks, detailed action and status updates.

52

Secondary Permit Development

The following diagram illustrates our secondary permit development:

For our secondary development solar parks, we acquire shovel-ready projects or close to shovel-ready projects from third parties. When we identify a suitable solar park for acquisition, we perform thorough due diligence based on documentation, financial projections and the legal status of each permit. Our regional and corporate EPC teams analyze engineering, design and technical risks. We also retain external EPC consultants for particular regions or solar parks as needed.

Prior to signing a definitive acquisition agreement, the regional development team provides an application to our investment committee which includes the major terms of the solar park acquisition agreements, an economic analysis, an internal technical due diligence report and other project materials.

ENGINEERING, PROCUREMENT AND CONSTRUCTION

EPC services include engineering design, construction contracting and management, procurement of PV modules, balance-of-system components and other components. We generally outsource construction to third parties and use our in-house capabilities for engineering and procurement.

Engineering

Through engineering design, we aim to reduce the risks, reduce the costs and improve the performance of our solar parks. The engineering design process includes the site layout and the electrical design as well as assessing a variety of factors to choose an appropriate technology and the modules and inverters in particular.

Procurement and Construction

We procure PV modules and other key equipment for the construction of our solar parks from third-party suppliers and contract work to third-party contractors in areas such as logistics, installation, construction and supervision. We believe this allows us to focus our resources on higher value-added tasks. We maintain an updated list of qualified and reliable suppliers and third-party contractors with a proven track record with which we have established relationships.

We choose our suppliers and third-party contractors through a bidding process or through our affiliates or other cooperative arrangements with various manufacturers and contractors. The relevant departments of our headquarters organize and collect bids, communicate with bidders and coordinate with our regional development teams to meet local technical and legal requirements.

53

PV Module Procurement

PV modules are the primary equipment of our solar parks and the costs of PV modules generally constitute a substantial portion of the average total system costs. We procure our PV modules from a broad range of suppliers.

Our purchasing decisions take into consideration technical specifications (including size, type and power output) bid price, warranty and insurance programs, spectral response, performance in low light, nominal power tolerance levels, degradation rate, technical support and the reputation of the supplier. We generally require warranties for defects in materials or workmanship for a typical duration of 5 to 10 years and a warranty for module capacity under normal testing conditions for a duration ranging from 10 to 25 years (97.5% of capacity for the first year with a 0.7% linear degradation in capacity every year thereafter).

We are generally required to pay 100% of the purchase price within a period ranging from three months to six months after receipt, inspection and acceptance of the PV modules.

Third-party Contractors

We engage third-party contractors for construction. We employ a number of measures to manage and monitor the performance of such contractors in terms of both quality and delivery time and to ensure compliance with the applicable safety and other requirements. For example, we generally have on-site supervisors and hold regular on-site meetings with the third-party contractors to monitor their work to ensure that projects progress according to schedule and adhere to quality standards. We also conduct periodic inspections to examine project implementation and quality standards compared to our project planning and prepare periodic reports for review and approval by the relevant departments in our corporate headquarters. If we identify any quality or progress issues which are attributable to the work of the third-party contractors, we will have further follow-up discussions with the third party contractors and monitor their rectification work.

We also require our third-party contractors for construction and installation to comply with applicable laws and regulations regarding work safety as well as our own production safety rules and policies. We examine and keep records of the production-related safety documentation and insurance policies of our third-party contractors. All production-related tools and equipment used by our third party contractors must be compliant with and certified by applicable regulatory standards. Our third-party contractors should also regularly provide their internal records relating to production safety (for example safety production training and safety inspections) to us, and we also conduct regular safety supervision and inspection on the third-party contractors.

Under our third-party contracting agreements, we are generally entitled to compensation if the third-party contractors fail to meet the prescribed requirements and deadlines under their contracting agreements. We generally negotiate to pay our contractors approximately 10% of the contract price after the expiration of the quality warranty period, which generally lasts two years, or, if we pay all of the contract price upon completion of the solar park, require the contractor to provide a bond in respect of the warranty obligations.

Commissioning and Warranties

When the EPC contractor notifies the regional solar park team of on-grid operation, the regional solar park team thoroughly tests each aspect of the solar park, usually for a period of one month. Commissioning tests generally include a detailed visual inspection of all significant aspects of the plant, an open circuit voltage test and short circuit current test prior to grid connection, and a direct-current test after connecting to the power grid. These tests are conducted in order to ensure that the plant is structurally and electrically safe, and is sufficiently robust to operate as designed for the specified project lifetime. We have not experienced any material delays in construction or unsatisfactory workmanship with respect to our solar parks. Following the commissioning, the solar park is handed over to the new owner.

In addition to the warranties provided by the manufacturers of modules and balance-of-system components, EPC contractors also typically provide a limited warranty against defects in workmanship, engineering design, and installation services under normal use and service conditions for a period of one to two years following the energizing of a section of a solar power plant or upon substantial completion of the entire solar power plant. In resolving claims under the workmanship, design and installation warranties, the new owner has the option of remedying the defect to the warranted level through repair, refurbishment, or replacement.

54

Operations and Maintenance

We operate and maintain our own IPP portfolio and substantially all of the solar parks built by us, including solar parks held by other parties pursuant to separate contractual agreements. We utilize customized software to monitor the performance and security of our solar parks in a real-time basis. Our O&M platform in Bulgaria monitors solar parks in Europe, while our platform in Tokyo monitors solar parks in Japan.

We regularly maintain our solar farms with an intention to maximize the utilization rate, rate of power generation and system life of our solar parks. We engage on-the-ground contractors who are on-call to promptly remedy any issues that may arise.

Solar parks have no moving parts and consequently low operations and maintenance costs. The warranty period of inverters and transformers is 5 to 10 years, while the warranty period for PV modules is 25 years and the FIT regime is generally 20 years. The effective life of inverters and transformers is 10 years, while the effective life of PV modules is 25 years. The owners of the solar parks will bear the costs of replacing equipment after the expiration of the warranty periods.

Solar Park Project Financing

The financing of a solar park is typically arranged by the project sponsor who sets up a project company, a special purpose vehicle, to own a particular solar park or portfolio. Contracts and other agreements are typically entered into under the name of the project company, which in certain cases is an affiliate of which we hold the non-controlling interests.

Construction costs are funded by our working capital. Where possible, we seek to negotiate favorable credit terms with our equipment suppliers or EPC contractor, such that payment is not due until several months following the completion of construction and connection. Following connection in order to optimize the solar park’s capital structure, pay our contractors and replenish our working capital, we typically pledge the solar park assets to raise debt financing. Such debt financing usually has a term of over 15 years.

Debt financing for our solar parks in the Czech Republic, Canada, United States and Japan is typically obtained from local banks. For example, in December 2015, we entered into project-specific facility agreements with total amount of CAD23.2 million (US$16.8 million) with a bank in Canada. In 2015, we entered into facility agreements with total amount of JPY 2,300,000,000 (US$19.1 million) with a bank in Japan. In 2016, we entered into facility agreements with total amount of JPY 6,223,601,618 with local banks in Japan. In 2017, we entered into facility agreements with US$20.7 million for our projects in the United States with banks in the United States.

In Latin America, we are also seeking to arrange debt financing for projects from regional banks in that area as well as international financing sources. In July 2015, debt financing application for six of our projects in Uruguay was officially approved by Inter-American Development Bank, with total amount of US$82.3 million, which was secured in part with equity from a strategic partner. In 2016, we closed such project financing, and US$$84.9 million had been drawn down as of December 31, 2017.

Acquisition of Assets

We may from time to time acquire businesses, solar parks or other assets from related parties or independent third parties which we believe will complement our current operations and expansion strategies. A majority of our directors, including all of our independent directors, must approve such acquisitions.

With respect to the acquisition of solar parks, our board of directors shall formulate a uniformed standard accessing target assets, and such standard may be adjusted from time to time based on our company’s business, financial condition and results of operations. Our board of directors may consider the following criteria, among others:

55

·the internal rate of return of the project before leverage;

·our debt-service coverage ratio;

·the effective sun irradiation hours of the project, after discounting for performance;

·the use of reliable, financeable brands for and technical specifications of the key components, including modules, invertors, mounting systems, racks/tracking system, EPC integration services;

·any guarantees on performance, as well as any compensation for failing to perform;

·clear and reliable opinions from third party professionals after thorough technical, financial, tax and legal due diligence; and

·adequate payment terms matching relevant milestones.

In connection with the acquisition of any business from a related party, if any part of the consideration in such acquisition is our securities, the value of such acquisition is equivalent to 20% or more of our market capitalization (as measured as an average over the 30 days prior to the date of determination) and our market capitalization as so measured is less than US$1.0 billion, we will engage an independent consulting or valuation firm to assess the transaction. Such acquisition will be subject to the approval of two-thirds of all shareholders who participate (in person or by proxy) in a shareholders’ meeting approving such transaction after sufficient notice is given to ADR holders to participate in any such meetings.

If we have purchased assets from a related party during any twelve month period (the “Related Party Purchases”), and the aggregate dollar value of the consideration for the Related Party Purchases during the twelve month period preceding the most recent Related Party Purchase, together with the most recent Related Party Purchase, is at least equivalent to 20% or more of our market capitalization (as measured as an average over the 30 days prior to the most recent Related Party Purchase) and our market capitalization as so measured is less than US$1.0 billion, the most recent Related Party Purchase will be subject to the approval of two-thirds of all shareholders who participate (in person or by proxy) in a shareholders’ meeting approving such transaction after sufficient notice is given to ADR holders to participate in any such meetings. For more information about acquisitions from related parties, see “Item 7. Major Shareholders and Related Party Transactions—B. Related Party Transactions.”

Our Historical Project Affiliates

We have historically formed project affiliates for solar park co-investment with partners who seek to build PV assets overseas. We adopted minority positions in each of the affiliates, with rights that give us significant influence over the entity. The majority owner of our affiliate maintains control and management over the affiliate. Participating in these entities allows us to provide our project development services to the affiliate, while increasing the confidence of our partners in our interest in the long-term potential of the IPP solar parks. As of the date of this annual report, we or Sky Solar Holdings Co., Ltd., a former shareholder of our parent company, held equity interests or are currently holding equity interests in eight affiliates, ChaoriSky Solar Energy S.a r.l., RisenSky Solar Energy S.a r.l., China New Era International Limited, Oky Solar Holdings, Ltd., 1088526 B.C. Ltd. and its subsidiaries, 1091187 B.C, Ltd. and its subsidiaries, OKY Solar 1 K.K and OKY Solar Omut K.K. See “Item 7. Major Shareholders and Related Party Transactions—B. Related Party Transactions.”

Partners that are module manufacturers are able to contribute their modules to the affiliates and we are able to sell permits and provide EPC services. In addition, the majority owner of our affiliates generally provides EPC bridge financing or corporate guarantees for long-term loans. When the solar park is complete, the majority owner may purchase our minority equity position in the affiliate or continue with the existing equity arrangement. In addition, the affiliate may sell the solar park to an independent third-party or to the affiliate’s other owner itself or hold it and sell electricity to the power grid, as an IPP. We have also developed permits and solar parks, which were sold directly to our affiliates.

56

Historically, a significant portion of the revenue that we derived from our affiliates was through selling permits and providing EPC services to the affiliates. Going forward, we expect to derive revenue from providing O&M services under long-term contracts to the solar parks constructed by these entities.

The following table sets forth the contribution to our revenue of each of our historical project affiliates and certain significant current and former related parties for the periods indicated:

	Year Ended December 31,
	2015		2016		2017
	(US$ in thousands)	(%)	(US$ in thousands)	(%)	(US$ in thousands)	(%)
RisenSky Solar and its subsidiaries	323	0.7	254	0.4	277	0.5
Oky Solar Holdings and its subsidiaries	4,119	8.7	525	0.8	—	—
Sky Global Solar S.A.	8	0.0	9	0.0	9	—
Total	4,450	9.4	788	1.2	286	0.5

In September 2011, we jointly formed an affiliate with Risen Energy Co., Ltd. (300118:Shenzhen), or Risen. Risen through its affiliate Risen Energy (Hong Kong) Co., Ltd. held 70% of the share capital of the entity, RisenSky Solar Energy S.a r.l., or RisenSky, and we held 30%. RisenSky is organized as a limited liability company under the laws of Luxembourg, and our cooperation under the venture is governed by the articles of association of that company. In March 2012, China Development Bank extended loans to RisenSky in an amount of EUR26.2 million for the development of four solar parks in Bulgaria with an aggregate capacity of 12.1 MW, which was guaranteed by Risen. As of December 31, 2017, RisenSky had completed 12.3 MW of solar parks in Bulgaria.

In 2013, SSJ entered into an agreement with Orix K.K. (a publicly-listed company in Japan and the United States) to register in Japan a private limited liability company, Oky Solar Holdings, in which 30% of the share capital is subscribed by Sky Solar Japan while the remaining 70% is subscribed by Orix K.K. Oky Solar Holdings is engaged in the business of developing solar parks. In March 2017, SSJ entered into a share transfer agreement with Orix Holdings to sell the share interest in OKY Solar 1 K.K and OKY Solar Omut K.K at the consideration of JPY1,068 million (US$9.18 million), which was closed on March 29, 2017 with all consideration paid in cash.

In September 2016, Energy Capital Investment II sarl entered into a share purchase agreement with Jade Fair Precision Ltd. to sell its 25 preferred share in the capital of 1088526 B.C. Ltd. (a company incorporated under the laws of the Province of British Columbia), with total purchase price of CAD 10,600,000 (US$7,997,700), which is determined applying the pre-determined annual cash distribution rate and using the Discounted Cashflow model reflecting the future cash flow prepared as the base model as of transaction date. This purchase price represents majority (approximately 87%) of the total fair value of the Project Company as of transaction date.

In January 2017, Energy Capital Investment II sarl entered into a share purchase agreement with Jade Fair Precision Ltd. to sell its 25 preferred share in the capital of 1091187 B.C, Ltd., with total purchase price of CAD 4.0 million (US$3.0 million), which was completed in January 2017. 1091187 B.C, Ltd. was incorporated with total capital of 75 common shares and 25 preferred shares, and owns Sky Solar (Canada) FIT 2 LP and its six operating solar facilities.

Competition

We believe that our primary competitors are local and international developers of solar parks, many of whom are integrated with upstream manufacturers.

57

We believe that we can compete favorably given that the key competitive factors for solar park development and operation include, without limitation:

·access to financing, including debt and equity financing at the project and company levels;

·site selection and sourcing of solar parks;

·permit and project development experience and expertise;

·reputation and track record;

·relationship with government authorities and knowledge of local policies;

·ability to secure high-quality PV modules and balance-of-system components at favorable prices and terms;

·control over the quality, efficiency and reliability of solar park development; and

·expertise in providing operation and maintenance services.

However, we cannot guarantee that some of our competitors do not or will not have advantages over us in terms of greater operational, financial, technical, management or other resources in particular markets or in general. See “Item 3. Key Information—D. Risk Factors—Risks Related to our Business and Industry— We face significant competition in certain markets in which we operate.”

Facilities

Our principal executive offices are located at Unit 402, 4th Floor, Fairmont House, No.8 Cotton Tree Drive, Admiralty, Hong Kong Special Administrative Region, People’s Republic of China. We also have 8 leased offices in the China, Japan, Greece, Canada, Chile, Uruguay, Bulgaria and the United States.

We believe that our facilities are in good condition and generally suitable and adequate for our needs in the foreseeable future. However, we will continue to seek additional space as needed to satisfy our growth.

Seasonality

Changes in climate, geography, weather patterns, and other phenomena in the regions where we operate may significantly affect our business. For example, solar parks depend on the amount and intensity of sunlight, which is affected by weather and climate conditions. As a result, our IPP electricity production and amount of electricity sold and therefore our IPP revenue tend to be higher during periods or seasons when there is more irradiation.

Regulatory Matters

We develop, sell and operate our solar parks around the world, and as such we are subject to laws in multiple jurisdictions that affect companies developing and operating solar parks, many of which are still evolving and could be interpreted in ways that could harm our business. For example, we are subject to laws relating to:  permit development for solar parks; engineering and constructing solar parks; solar park operations and power generation; connecting and selling electricity to the power grid; and PV and other applicable renewable energy tariffs and incentives.

Although we develop and operate solar parks all over the world, our current solar park development business is primarily based in Japan, Canada, Uruguay, Chile, Bulgaria, and the United States and as such, we are primarily governed by and especially sensitive to the laws and regulations of such jurisdictions, including the following:

58

Japanese Regulations

Electricity Business Act (Denki Jigyo Ho)

The Electricity Business Act provides a regulatory framework of the electricity business. It regulates the construction, maintenance and operation of electric facilities for the purpose of assuring public safety and promoting environmental preservation. As of April 1, 2016, the Electricity Business Act was significantly amended to liberalize the retail electricity sales.

Notification.

In cases where a person intends to conduct a power generation project which falls under a “power generation business” (hatsuden jigyo) as defined in the Electricity Business Act (“Power Generation Business”), a notification must be submitted to METI before the business commences and a power supply plan (kyoukyu keikaku) must also be submitted to METI annually.

Whether a power generation project to be conducted by a solar park operator falls under a Power Generation Business (as defined below) depends on its capacity and supply destination.

A Power Generation Business is defined as a power generation business that generates more than 10,000 kW of the maximum connected electricity in total for the use of a retail electricity business, a general power transmission and distribution business, or a specified power transmission and distribution business in its power generation facility which meets the following requirements (i) to (iii) (“Specified Electric Facility for Power Generation”): (i) output capacity is more than 1,000 kW; (ii) electricity for the use of a retail electricity business, etc. is more than 50% of the output capacity (or more than 10% if the output capacity is more than 10,000 kW); and (iii) the quantity of electricity for the use of a retail electricity business, etc. is expected to be more than 50% of the quantity of the generated electricity (kWh) (or more than 10% if the output capacity is more than 10,000 kW).

Regulations on Electric Facilities

In addition, in most of the cases, solar park facilities are likely to fall under the category of “private electric facilities” (jikayou denki kousakubutsu), as defined in the Electricity Business Act, and the Act requires a solar park operator to take several measures when operating such private electric facilities. The details of the measures to be taken vary depending on the size of the output capacity.

Based on the timeline for implementing the project, there are three key measures that need to be taken:

·A construction plan (kouji keikaku) must be submitted to METI by no later than 30 days prior to the commencement date of construction project, except for projects with capacities less than 2,000 kW;

·Safety regulations (hoan kitei) must be submitted to METI by the commencement of the use of the facilities (or before the commencement of construction in some cases); and

·A chief engineer for the electricity facilities must be appointed and notified to the METI before the commencement of construction.

Feed-in Tariff

The FIT scheme is established by The Act on Special Measures concerning the Procurement of Renewable Electric Energy by Operators of Electric Utilities, or the FIT Act.

Under the FIT Act, electric utility operators are obliged to enter into PPAs and interconnect their electric transmission and other electricity facilities with power generation facilities with suppliers of renewable electricity only when the suppliers of renewable electricity obtain the license from, and comply with other requirements of, METI. On an annual basis, METI is to set the electricity price for the contracts during such term and to report the same to the Diet.

Certification. In order to participate in the FIT scheme, under the amended Act on Special Measures Concerning Procurement of Renewable Electric Energy by Operators of Electric Utilities, certification of business plan is required pursuant to Article 9 under FIT Act, and, for the certification, a business plan is required to meet the following requirements:

59

·The content of the business plan conforms to the standards prescribed by the Ordinance of METI;

·The business plan is expected to be implemented smoothly and certainly;

·The facility for supplying renewable electricity conforms to the standards prescribed by the Ordinance of METI;

·The method of generating electricity conforms to the standards prescribed by the Ordinance of METI; and

·METI  may reject the application for the certification in cases where METI finds that the business plan does not meet the requirements.

Determination of price. The price and term for PPAs varies depending on the type, installation mode, scale and other factors of the relevant renewable electricity source, and is to be determined by METI after their consideration of the opinions of other relevant governmental ministries as well as the opinion of a procurement price calculation committee, consisting of five members appointed by METI with the approval of the Diet.

The Minister of METI has set the procurement price for solar power electricity when the total size of the output capacity of the facility for supplying renewable electricity exceeds 10 kW:

·as 40 yen (tax excluded) per kWh over the next 20 years, for those facilities receiving a connection offer from the grid utility between July 1, 2012 and March 31, 2013;

·as 36 yen (tax excluded) per kWh over the next 20 years, for those facilities a connection offer from the grid utility between April 1, 2013 and March 31, 2014;

·as 32 yen (tax excluded) per kWh over the next 20 years, for those facilities receiving a connection offer from the grid utility after between April 1, 2014 and March 31, 2015;

·as 29 yen (tax excluded) per kWh over the next 20 years, for those facilities entering into a grid-connection agreement during the period from April 1, 2015 to June 30, 2015;

·as 27 yen (tax excluded) per kWh over the next 20 years, for those facilities entering into a grid-connection agreement during the period from July 1, 2015 to March 31, 2016;

·as 24 yen (tax excluded) per kWh over the next 20 years, for those facilities entering into a grid-connection agreement during the period from July 1, 2016 to March 31, 2017;

·as 21 yen (tax excluded) per kWh over the next 20 years, for those facilities entering into a grid-connection agreement during the period from July 1, 2017 to March 31, 2018 for supplying renewable electricity less than 2,000 kW; and

·as determined by bid, for those facilities entering into a grid-connection agreement during the period from July 1, 2017 to March 31, 2018 for supplying renewable electricity no less than 2,000 kW.

In addition METI considered reform measures on their solar energy policies and introduced these reform measures in April 2015. These reform measures include the following:

·For facilities with respect to which a connection offer was not received by March 31, 2015, the electricity purchase price shall be fixed at the rate applicable when the grid-connection agreement is executed between the grid utility and the solar energy producer;

60

·For facilities contemplating an increase in capacity on or after February 15, 2015 or to change on or after the same date such to solar cells differing in type, decline in conversion efficiency, etc. from those originally notified, the electricity purchase price shall be generally fixed at the rate applicable when the capacity increase or the change of solar cells is consummated;

·General electricity utilities are allowed to terminate a grid-connection agreement, if (i) a solar energy producer does not start its output operation on the commencement date provided for in the grid-connection agreement without exceptional reasons or (ii) a solar energy producer does not pay, within one month of the conclusion date of the grid-connection agreement, the construction fee provided for in the agreement; and

·In addition to Hokkaido Electric Power, six general electric utilities (Tohoku Electric Power, Hokuriku Electric Power, Chugoku Electric Power, Shikoku Electric Power, Kyushu Electric Power and Okinawa Electric Power) are newly allowed to enter into a grid-connection agreement, where those general electricity utilities may restrict output hours of each solar energy producer by longer than 360 hours per year in cases where the interconnection amounts applied for to such electricity utility have already surpassed or are expected to surpass available interconnection amounts of such electricity utility under the current rules.

In order to execute an electricity supply agreement with an operator of electric utilities under the FIT Act, a written application detailing the outline of solar power electricity, the format of which is usually prepared by the operator of electric utilities must be submitted to the operator of electric utilities, after which such operator will approve the application unless there is “a likelihood of unjust harm to the benefit of operators of electric utilities” or “a just reason as set forth in the FIT Act.”

Furthermore, the FIT Act was revised and the revisions came into force on April 1, 2017. In this regard, if a power plant owner fails to execute an electricity supply agreement with an operator of electric utilities including an agreement regarding construction costs by April 1, 2017, a certification by the Minister of Economy which is certified on or before June 30, 2017 will be automatically terminated on April 1, 2017. If a power plant owner fails to execute an electricity supply agreement with an operator of electric utilities including an agreement regarding construction costs on or before 9 months after the certification, a certification by the Minister of Economy which is certified on or after July 1, 2017 will be automatically terminated 9 months after the certification.

Regulations Specifically Relating to Construction

The following is a list of the major acts that stipulate regulations depending on the nature of the land where a power plant is to be constructed:

Name of the Act	Applicable Case (subject to possible exceptions)
Agricultural Land Act (Nochi Hou)	When the targeted land is an agricultural land.
Agricultural Promotion Region Establishment Act (Nougyou Shinkou Chiiki No Seibi Ni Kansuru Houritsu)	When the targeted land is within an agricultural purpose area (noouyouchi kuiki).
Forest Act (Shinrin Hou)	When the targeted land is located in an area where a local forest plan (Chiiki Shinrin Keikaku) is to be implemented.
Civil Aeronautics Act (Koku Hou)	When the targeted land is located close to an airport.
Soil Contamination Countermeasures Act (Dojo Osen Taisaku Ho)	When a person extracts soil or takes any other action that changes the character of the targeted land and such targeted land has more than a certain area as stipulated in the Soil Contamination Countermeasures Act.
Local environmental impact assessment ordinances	Local environmental impact assessment ordinances of some local governments require environmental impact assessment for solar park businesses.
Landscape Law	When the targeted lands are located within a landscape planning area.
Local land use regulation ordinances	Typically, when a project intends to change the land use of an area of or greater than 5 ha or something like that.

61

Chilean Regulations

Electric Energy Specific Applicable Permits. To construct, it will depend on the energy project´s characteristics and the environmental impacts that it may generate, it may be necessary to obtain an environmental assessment resolution that certify the project as environmentally favorable. This resolution will also identify the required permits by the project, depending on the particular characteristics of it. In addition, the project must obtain other relevant permits such as constructions permits for permanent buildings, issued by the Departments of Works of the relevant Municipality, and the corresponding health and electric permits, issued by the Regional Authority of Health and the Superintendency of Electricity and Fuels, respectively.

To operate a power project in Chile, no general or specific governmental authorizations or permits are required, except for the authorizations or permits required by the concession system for public distribution services or other sector-specific regulations including, but not limited to, regulations on environment and construction.

Electric Concession and Other Production Licenses. Chilean energy market consists of three segments:  generation, transportation and distribution. Chilean regulations, in particular the Electrical Services General Law (Decree Law No. 4/2007 and its amendments), do not require an electric concession or a production or operation license to build and operate PV power plants or to commercialize its production, or for transmission services. Only distribution services require an electric concession.

Interconnection to the Electric System. Usually a power plant will be interconnected to the grid. To be interconnected to the grid, it will need to pass interconnection and synchronization tests before the Independent Electric National System Coordinator (CISEN), which is a non-profit, technical and independent entity, in charge of the coordination of the operation of all the installations of the National Electric System that operate interconnected among themselves, promoting the stability of the system. In addition, this entity is responsible for preserving the safety of the National Electric System, and for ensuring the most economical operation for all the electrical system installations, and the open access to all transmission systems. New generators must not affect the stability and quality of the electric system and must comply with certain technical requirements to interconnection and supply energy into the electric system.

Use of Third Parties Transmission Lines. Generators have guaranteed access to use all electric installations that occupy public property or if the facilities have been built under an electric concession if capacity is available, power lines, power substations and other components of the transmission system. Any complaint regarding a restriction to this right to free access can be brought before a specialized and technical committee regulated under the Electric Law (“Expert’s Panel” regulated on Article No. 208 and followings). Generators must pay the full cost of increasing the transmission capacity to meet the generator’s needs.

Generators will pay a fee for the use of transmission installations. The fee must comply with the legal requirements of non-discrimination or overcharge. The right to free access is also constrained by the actual technical available for the capacity of the transmission grid.

Environmental Approval. Environmental approval is needed for any electric power plant over 3 MW of gross capacity before it can begin construction. The environmental approval process will be more or less complex depending on the particular characteristics of the project. If the power plant has less than 3 MW of gross capacity, it may require only a statement that the project will not have a major environmental impact, thus, not requiring an environmental approval resolution. However, a complete environmental assessment study may be required for those projects that may produce any of the negative effects referred to in Article No. 11 of the Environmental Law (Law No. 19.300).

Right of Way for Electrical Transmission Line. A right of way for electrical transmission line is not required if the developer obtains private agreements (right of way’s contracts) with the owners of all affected properties. Otherwise, a right of way must be obtained through legal servitudes and electric concessions, regulated both in the Electric Law.

Direct Authorization of Use of Public Properties. The direct authorization of use of public properties is required for projects that occupy public goods. In order to obtain the direct authorization, a project owner must apply to the authority, giving information in regard with the expected use of the public goods. Since there is a public interest for the development of clean energy sources, getting such authorization should not represent a complex process.

62

Favorable Construction Report (former land use change). Projects located in rural areas (outside the urban limits) must obtain the relevant report which allows the construction even the land remains a rural zone. This permit is granted through an administrative proceeding. Such proceeding could become more demanding and complex if the land has some preferred uses, as environmental conservation or tourism. A project that has been granted with an environmental approval shall not meet an complex issue obtaining this authorization.

Construction Permit. A construction permit must be granted by the Works Department from the relevant Municipality (Dirección de Obras Municipales), which analyzes whether such construction meets the relevant safety and engineering construction requirements—basically will be focus on inhabited buildings, for the safety considerations before referred-it will also be necessary to obtain a verification of construction work upon completion, certifying that as-built construction is consistent with the granted construction permit. In some projects, this building in only necessary to begin the construction of all buildings such as offices and others (not the power plant or the transmission line).

Dispatch and Commercialization of the Chilean Electricity Market. The energy purchase and sale market is structured as a mandatory pool-type market restricted to generators, not allowing brokers or energy traders. Generators can freely choose between selling their production in the spot market at a spot price, or commercializing their production through PPAs, without price fixing, either directly, with medium and large consumers, or in public biddings to provide distribution companies with PPA. Generators can even sell, if taking the second option, more capacity than that they could produce with their own power plants, but in this case, will have to obtain or pay the energy to supply the negative balance from other generators. The balance between generators, off-takers, injections and withdrawals is determined actually by the CISEN.

Green Energy Credits—Quota System. Generators are required to generate or to be able to prove that a certain portion of the energy that they sell to grid from non-conventional renewable sources. In particular, Law No. 20,257 and Law No. 20,698 establish the obligation for generation companies to accredit a minimum of 5% of their energy injections with non-conventional renewable sources, directly or indirectly. The percentage will be increasing until reaching 20% in 2025. Non-compliance fines have issued to generators that have not sourced a sufficient amount of energy from non-conventional renewable sources. For those PPAs signed between August 31, 2007 and July 1, 2013, 5% of total energy sold must be from non-conventional renewable sources, and this minimum requirement percentage rises by 0.5% per year each year, reaching 10% in 2024. For those PPAs signed subsequent to July 1, 2013, the percentage of energy required to be sourced from non-conventional renewable sources increases each year by 1% between 2013 and 2020, 1.5% from 2021 to 2024 and 2% in 2025, until reaching 20% by 2025. The annual percentage increase will vary for different PPAs, depending on the date that they commenced operations.

In order to comply with the quota, some generators have to buy renewable energy credits from third parties. Generators that generate a surplus of renewable energy may sell their surplus energy on open markets. The balance of renewable energy credits is determined by the CISEN.

Taxation. There is no special tax regime for electricity generation. For this reason, generators are usually taxed at the ordinary corporate income tax rate. According to a recent modification to Chilean tax law, the present corporate income tax rate is declared annually with a rate of 27.8% in 2018.

An “Additional Tax” is imposed on non-resident investors on any income derived from Chilean sources by non-resident investors. The general rate of this “Additional Tax” is 35%. When distributing dividends abroad, the amount of tax paid by the Chilean corporation can be credited against this “Additional Tax.”

For the projects to be developed in the northernmost Administrative Region XV of Chile, pursuant to D.F.L. No. 1/2001 issued by the Ministry of Economy, which consolidated Law 19.420 and its amendments, industrial investments, including energy investments, will enjoy certain benefits with respect to taxes and customs duties. These benefits can be accumulated up to 2015 and applied through 2045 on the eligible companies’ annual income tax return. These benefits will allow developers to enjoy a 30% tax credit for investments in the acquisition of fixed assets related to construction, machinery and equipment, under certain specified conditions.

63

PRC Regulations

Government subsidies for solar PV projects in China are granted through special programs, such as the PV Building Demonstration Program, the Golden Sun Program and the FIT. China is currently changing the present solar FIT in order to further improve the domestic solar market.

Following the issue of the State Council’s policy on improving the Chinese solar PV industry since 2013, various central government departments have intensively promulgated detailed policies in relation to the solar FIT, tax incentives, development of DG and simplifying the project approval procedures.

Regulatory Framework

The major legislative provisions related with the Chinese renewable industry are as below:

Electric Power Law of the People’s Republic of China, 2015: the Electric Power Law sets out the basic regulatory principles and framework for the electricity industry.

Administrative Regulations on the Power Business Permit, 2005: this regulation establishes a market-entry system for electricity companies, under which the generation, transmission, distribution and supply of electricity will require separate certificates and approvals.

Interim Regulation on the On-grid Tariff, 2005: this regulation sets the government-approved nation-wide standard on-grid tariff and provides for the gradual introduction of a competition-based market price.

Renewable Energy Law of the People’s Republic of China, 2009: the Renewable Energy Law provides the framework for securing the development of renewable energy in China. Under the Renewable Energy Law, grid companies must purchase electricity generated by renewable energy plants and are liable for any unpurchased renewable power.

Administrative Provisions on Renewable Energy Power Generation, 2006: the provisions sets out the applicable government approval processes and pricing mechanisms for renewable projects.

Trial Measures for the Management of Prices and Allocation of Costs for Electricity Generated from Renewable Energy: the Trial Measures sets out more detailed rules on the pricing of renewable power and the relevant government subsidies. Particularly, the recently promulgated policies encouraging the development of downstream solar market which have been released during the second half of 2013, include:

Relevant Opinion of the State Council in Improving the Healthy Development of Solar PV Industry, July 15, 2013: the opinion is the most recent high-level policy dealing with improving the solar PV industry in China. It identifies problems with the current FIT and provides for the revision of the current FIT to better develop the Chinese solar industry. More detailed rules are expected to be promulgated in accordance with this opinion later on in this year.

The Notice of the Ministry of Finance regarding the Subsidies to the Distributed Solar PV Power Generation according to the Quantity of Power, July 24, 2013.

·The Notice of the National Energy Administration on Carrying out the Establishment of Demonstration Area of Distributed Solar PV Power Generation, August 9, 2013.

·The Notice of the National Energy Administration and China Development Bank on Supporting the Financial Services to the Distributed Solar PV Power Generation August 22, 2013.

·The National Energy Administration’s Temporary Administration Rules of Solar PV Power Generation Plants, August 29, 2013.

·The Notice of the National Development and Reform Commission on Improving the Development of Solar PV Industry by Utilizing the Price Leverage Effect, August 30, 2013.

·The Notice of the National Energy Administration on Application of Large-scale Usage Demonstration Area of Distributed Solar PV Power Generation, September 14, 2012.

·The Notice of the Ministry of Finance on the VAT Policies on Solar PV Power Generation, September 23, 2013.

64

Regulatory Authorities and Approvals Process

Regulatory Authorities

All solar PV projects (whether domestic or foreign) will require approval from the National Development and Reform Commission and/or its competent local counterparts (the “NDRC”).

The NRDC is China’s national authority for accepting and approving all fixed-asset investment projects including renewable projects and the National Energy Administration (the “NEA”) is the department within the NDRC primarily in charge of energy related projects.

Before applying for final NDRC approval, the relevant approvals will need to be obtained from the following bodies (note this is not an exhaustive list):

·Ministry of Land and Resources (“MOLAR”)-MOLAR are responsible for approving the land-use rights for all projects;

·Ministry of Environmental Protection (“MEP”) -MEP are responsible for approving the project’s environmental impact assessment reports;

·Ministry of Water Resources (“MWR”) - MWR is responsible for approving the project’s soil and water conservation plan;

·State Administration of Culture Heritage (“SACH”) -SACH is responsible for reviewing the project’s impact on cultural heritage;

·Ministry of Finance (“MOF”) - MOF is the government authority which assesses and approves any government subsidies for a renewable project; and

·The grid companies - the grid companies are not government authorities but they determine whether the intended power project can connect to the grid.

Depending on the nature of the specific project, additional departments such as the Ministry of Housing and Urban-Rural Development and the Ministry of Health, etc. might be involved.

Project Approvals Process

The project approvals process is typically as set out below:

(i) NRDC Preliminary Opinion/Approval

The approval process starts with obtaining the NDRC’s preliminary opinion on the proposed solar PV project.

(ii) Relevant Regulatory Authority Approval

After obtaining NRDC’s preliminary opinion, the necessary approvals are then obtained from the other relevant bodies, for example, MOF and MOLAR (as set out above).

(iii) Final NRDC Approval

65

After obtaining all the necessary approvals from the various bodies, NRDC then gives their final and formal project approval. The NRDC formal approval documentation, will set out all the important details of the approved solar PV project. It will include details of:

·the approved location of the project;

·term of operation of the project;

·capacity;

·on-grid price; and

·any government subsidy.

Feed-in-tariff

The 2018 Feed-in-Tariff (Solar) (the “FIT Policy”)

In January 1, 2018, the Chinese government set the new unified national benchmark price for solar PV projects.  The NDRC released The 2018 Feed-in-Tariff (Solar) Notice for solar PV projects and it splits the country into three different regions based on its location. It provides a differentiated FIT for each region which would be more proportionate because it is determined by the level of solar radiation in each region. However, since the western regions in China are generally less developed with lower population densities and consequently low energy demands, the installations in those areas were faced with issues related to grid connection, transmission and distribution. The FITs under the FIT Policy are:

(1) RMB0.55 per kWh for regular PV power plants and RMB0.65 per kWh for village-level PV power plants to alleviate poverty. The type-I areas include Ningxia; Haixi of Qinghai Province; Jiayuguan,Wuwei, Zhangye, Jiuquan, Dunhuang and Jinchang of Gansu Province; Hami, Tacheng, Aertai and Kelamayi of Xinjiang Province; Inner Mongolia (other than Chifeng, Tongliao, Xinganmeng and Hulunbuir);

(2) RMB0.65 per kWh for regular PV power plants and RMB0.75 per kWh for Village-Level PV Power Plants. The type-II areas include Beijing; Tianjin; Heilongjiang; Jilin; Liaoning; Sichuan; Yunnan; Chifeng, Tongliao, Xinganmeng and Hulunbuir of Inner Mongolia; Chengde, Zhangjiakou, Tangshan and Qinhuangdao of Hebei Province; Datong, Suzhou and Yizhou of Shanxi Province; Yulin and Yanan of Shannxi Province; places other than the type-I areas in Qinghai, Gansu and Xinjiang; and

(3) RMB0.75 per kWh for regular PV power plants and RMB0.85 per kWh for village-level PV power plants for type-III for areas other than the above.

There is also an additional FIT specifically aimed at improving the market for distributed solar PV projects. For distributed solar PV projects which approved and have achieved commercial operation after January 1, 2018, the policy provides an additional RMB0.37/kWh FIT for regular solar projects and to alleviate poverty in rural-area the rate will be RMB0.42/kwh. This additional FIT will generally be for a 20-year period. However, the amount and period of the additional FIT will depend on the project and the specific region.

Obtaining the FIT for the solar project

The FIT Policy does not provide for any additional or specific approval procedures for obtaining the FITs for the solar project. The NEA will prepare the detailed application of the rules, in regards to how to calculate the power generated, how to settle the power price and how to implement the government subsidies and tax incentives. These rules will provide practical guidance encouraging solar power generation.

66

Approvals checklist for solar projects

In order to construct a solar PV project the following will need to be obtained (note this is not an exhaustive list):

·NRDC initial approval/preliminary opinion

·land use permits

·planning permits

·construction permits

·environmental impact assessments

·fire safety assessments

·approval of the project’s soil and water conservation plan

·cultural heritage assessments

·MOF assessment for government subsidies

·grid company approval to connect to the grid

·final NRDC approval (which will set out all the important aspects of the solar project and the applicable FIT)

·foreign investment verification and approval.

67

Uruguayan Regulations

Under Uruguayan Law, the provision of electric energy constitutes a public service. The rendering of such service is mainly regulated by:

(i)the National Electricity Act Nº 14.694 dated September 1 1979 and its Regulatory Decree Nº 339/979;

(ii)Organic Act of Public Utility UTE dated July 4 1980;

(iii)   Act No. 16,832 Regulatory Act of the Energy Market dated June 17 1997 and its Regulatory Decree No. 22/999 and other Decrees of amendment of certain provisions;

(iv)   Decree No. 276/002 which approves the General Regulation of the Regulatory Framework of the National Electric System and its amendments;

(v)    Decree No 277/002 which approves the Regulation on Distribution of Electric Energy and its amendments;

(vi)   Decree No. 360/002 which approves the Regulation of the Wholesale Electricity Market.

(vii)  Decree Nº 310/07 approving National Policy on Climate Change;

(viii) Decree Nº 327/017 exhorting Public Utility UTE to admit the Certificates crediting national component related to the Power Purchase Agreements of renewable energy sources.

(ix)Decree No. 360/002 which approves the Regulation of the Wholesale Electricity Market.

Under the applicable Uruguay regulatory framework, there are two categories of electric energy services:

·Transmission, transformation and distribution of electric energy. When such service is provided to third parties on a regular and permanent basis, it is considered a public service and therefore, shall be rendered either directly by the public utility Administración Nacional de Usinas y Trasmisiones Eléctricas (“UTE”) or under a concession regime.

·Generation, importation, exportation and commercialization of electric energy. Such service does not constitute a public service, and therefore is regulated by the Regulation of the Electricity Market.

As a generator, our Uruguayan subsidiaries shall obtain the following permits and authorizations:

A.Constitution of Rights over the real estate property over which the solar power plant shall be constructed. Such agreement can vary, but generally such right is granted by means of a land lease agreement.

B.Contractual Terms Agreement entered into by and between the project companies and UTE regarding the terms and conditions to be included in the PPA.

C.Resolution issued by the Board of Directors of UTE authorizing the subscription of the PPA.

D.Authorization of Generation granted by the National Energy Agency of the Ministry of Industry, Energy and Mining (MIEM) in accordance with Decree 360/002 and its amendments introduced by Decree 72/010.

E.PPA entered into by and between the project companies and UTE and its Interconnection Annexes.

F.Registry of the PPA with the Regulatory Agency of Services of Energy and Water (URSEA).

G.Territorial Planning:  the Executive Office of the Local Government of the department where the solar plant is located shall grant the territorial viability for the construction of the solar power plant, insofar as it complies with the provisions set forth in the Territorial Planning Act No. 18,308, its Regulatory Decrees, Territorial and Local Plans issued within the framework of such Act.

68

H.Environmental Approvals (for solar power plants with a power exceeding 10 MW):

·Viability of Location (VAL) granted by the National Direction of the Environment (DINAMA) of the Ministry of Housing, Territorial Planning and Environment;

·Prior Environmental Authorization (AAP) issued by the Ministry of Housing, Territorial Planning and Environment in accordance with Decree 349/005. The AAP establishes the terms and conditions that have to be complied with in order to abide by the environmental regulations;

·Environmental Authorization of Operation (AAO) of the energy generator in accordance with section 23 of Decree 349/005, which implies the analysis by DINAMA of the compliance with the terms and conditions in which the AAP was granted.

I.Construction Permit:  the Executive Office of the Local Government of the Department where the solar power plant is located shall grant a construction permit.

J.Easements of transmission lines, if applicable:  the granting of easements is regulated by Acts No. 14,197, 14,936 and 14,694. The holder of the easement is UTE given it is the entity in charge of the public service. Nevertheless, the Companies in their capacities as generators have to actively cooperate and follow up UTE´s activities within the different stages to be complied with for the easement to be granted given such granting is a condition precedent for the interconnection to UTE´s grid and thus it has a direct impact on compliance with the term of installation of the solar power plant that has been stipulated in the Power Purchase Agreement.

K.Habilitation of the competent municipal authority to dig and install underground cable:  if applicable.

L.Authorization to be participant of the Wholesale Electric Energy Market to be granted by the Administration of the Electric Market (ADME).

M.Permit for tests and/or rehearsals by virtue of which the generator can perform operation tests of the generators of electric energy which still do not count with the Minutes of Habilitation granted by UTE.

N.Temporary Reception of the interconnection works by UTE.

O.Definite Reception of the Works to be granted by UTE.

P.Minutes of Habilitation as defined in the PPA.

Q.Certificate of Termination of Works and Valuation of Free of Debt to be issued by the Social Security Bank (BPS).

R.Fire Fighters Authorization of the solar power plant.

Certificate in respect of the national component requirement (“Certificado de Componente Nacional de la Inversión”), if applicable.

Taxation

Our Uruguayan companies have obtained a tax exemption of a set of Uruguayan Taxes under the Investment Act No. 16, 906 and its Regulatory Decree 455/007 and Decree 2/2012, including Corporate Income Tax and Net Worth Tax under the terms and conditions stipulated therein.

69

Canadian Regulations

Regulation of PV and the Renewable Energy Power Industry

In 2009, the government of Ontario passed the Green Energy and Green Economy Act (2009), or the GEGEA. The FIT Program was administered by the Ontario Power Authority, or the OPA, until December 31, 2014. The OPA was an independent, non-profit corporation established through the Electricity Restructuring Act, 2004. Licensed by the Ontario Energy Board, or the OEB, the OPA reported to the Ontario legislature through Ontario’s Ministry of Energy. On January 1, 2015, the OPA merged with the Independent Electricity System Operator, or IESO. The new organization carries the name IESO and combines the mandates of the former OPA and IESO. The IESO is a not-for-profit corporate entity established in 1998 by the Electricity Act of Ontario. It is governed by an independent board whose chair and directors are appointed by the Government of Ontario. Its fees and licenses to operate are set by the Ontario Energy Board and it operates independently of all other participants in the electricity market.

IESO’s responsibilities include: assessing the long-term adequacy of electricity resources in Ontario; forecasting future demand and the potential for conservation and renewable energy; preparing an integrated system plan for conservation, generation and transmission; procuring new supply, transmission and demand management either by competition or by contract; and achieving the targets set by government for conservation and renewable energy.

The FIT Program involves a variety of fuel types, including wind, PV (rooftop- and ground-mounted), hydropower and biomass. IESO rules govern, among other things, FIT program eligibility criteria for project developers. Historically, as in other jurisdictions in which PPAs are pursued, those criteria include access to the underlying real property assets used to support the project (i.e. site control) as well as pre- and post-application security deposits. FIT program PPAs also involved IESO, along with the power grid operator, determining the availability of connection resources, and, if suitable connection resources were available, a FIT contract offer.  The experience gained by participating in the Ontario FIT program is often applicable to other jurisdictions as new programs come online.  For example, site control is a key aspect of the Alberta REP application process.

Ontario PPAs have the following material terms and conditions:

·20-year terms with the IESO as the electricity buyer;

·a requirement that the project developer reach commercial operations within one to three years of the signing date of the IESO. The exact timeline is set by fuel and facility type. For example, solar non-roof facilities are required to reach commercial operations within 3 years from the Ontario PPA signing date, and rooftop solar facilities on existing buildings shall reach commercial operation within 18 months following the Ontario PPA signing date;

·a requirement that the project developer comply throughout the term with all relevant Ontario electricity system distribution and transmission market rules; and

·restrictions on the assignment of the Ontario PPA or the change of control of the project developer.

The FIT Program was introduced to the market in several iterations. FIT 1.0 was the original GEGEA program introduced in 2009. Under FIT 1.0, the OPA entered into PPAs representing approximately 4,500 MW of new generation. FIT 2.1 was introduced in August 2012. The OPA accepted applications under FIT 2.1 starting in December 2012 through to January 2013. In July 2013, the OPA offered to enter into PPAs representing 146.5 MW. FIT 3.0 was introduced in July 2013. The OPA accepted applications under FIT 3.0 starting November 4, 2013 and ending December 13, 2013. On July 30, 2014, the OPA offered 500 new contracts under FIT 3.0. On August 29, 2014, the Minister of Energy directed the OPA to extend the FIT 3.0 procurement period. On December 19, 2014, the extended FIT 3.0 procurement period concluded with the OPA preparing to offer 332 new FIT contracts. FIT 4 was introduced in June 2015 by IESO with a proposed capacity of more than 10 kilowatts and generally up to 500 kW. The IESO received 1,968 applications from October 5, 2015 to December 11, 2015, including 967 net applications for solar (PV) (rooftop) with 193 MW and 614 net applications for solar (PV) non-rooftop with 267 MW. 936 contracts were offered in June 2016. These contracts represented 241.430 MW of power. The procurement target for FIT 4 was 241.438 MW. FIT 5.0 final materials were posted on August 26, 2016. During the FIT 5 application period (November 7 to November 26, 2016), the IESO received 1,127 applications, which represent a total of 397 MW, including 307 net applications for solar (PV) (rooftop) with 80.1 MW and 699 net applications for solar (PV) non-rooftop with 282 MW. The results of the FIT 5 application process, which did not result in the award of any FIT5 contracts to our Canadian division, were announced on September 20, 2017. FIT 6.0 (up to 150 MW of small projects) was cancelled on December 16, 2016.

70

Large Renewable Procurement I (“LRP I”). The LRP I process began early in 2014 and concluded in April, 2016, with the execution of 454.885 MW of new wind, solar, and waterpower contracts. LRP I consisted of both a Request for Qualifications (RFQ) and a Request for Proposals(RFP) stage. During the LRP I RFQ stage 42 applicants were qualified based on their ability to meet a set of mandatory requirements. The IESO received 103 proposals in response to the LRP I RFP, and executed 16 LRP I Contracts with successful applicants.

Large Renewable Procurement II. The second process, LRP II, began with an extensive stakeholder engagement component beginning in late March 2016, and was followed by the launch of the LRP II Request for Qualifications (RFQ) process in July. Then, on September 27, 2016, the Minister of Energy announced the suspension of the LRP II, and the RFQ process was cancelled.

The focus for Canada in the near term does not involve any additional PPAs for Ontario.  Our efforts are currently focused on the continued development of the LRP contract and certain FIT4 contracts. We continue to monitor possible programs in other provinces, with the most advanced program currently being the Alberta REP.  In addition, other initiatives that do not involve the PPA model are also being considered.

Under FIT 1.0 and FIT 2.1, PV developers were required to source 60% of the project inputs from Ontario-based sources. Pursuant to an August 2013 OPA announcement, Ontario content requirements for solar parks developed under the FIT 3.0 program were reduced as indicated below:

Renewable Energy Technology	Minimum Required Domestic Content Level
PV facilities utilizing crystalline silicon PV technology	22	%
PV facilities utilizing thin-film PV technology	28	%
PV facilities utilizing concentrated PV technology	19	%

In FIT Contract Version 3.0.1, dated August 26, 2014, the domestic content requirement has been deleted. There is no domestic content requirement in FIT 4 contracts.

Development. Subject to certain exemptions, renewable power project developers in the Province of Ontario must obtain a renewable energy approval, or a REA, from Ontario’s Ministry of the Environment (“MOE”) in order to reach commercial operations under the terms and conditions of Ontario PPAs. The REA is a comprehensive approval encompassing environmental, First Nations and municipal matters. The mandated review period is up to six months in duration.  The REA application for our LRP project was submitted on January 22, 2018,  and is currently under review by the MOE. Solar parks which are located on walls or rooftops are exempt from the requirement to obtain a REA.

Distribution. In most circumstances, project developers must apply to the OEB for an electricity generation license in order to generate electricity that is sold onto the Ontario electricity grid. The OEB also administers the Distribution System Code which sets out the minimum conditions that participants of the distribution system must meet. Participants include retailers, generators, distributors, transmitters and consumers of electricity who use the distribution system.

Construction. In order to connect a renewable power project exceeding 0.500MW to the Ontario electricity grid, a project developer must complete a connection assessment which determines the suitability of connecting the particular project to the local distribution company’s distribution grid. For larger projects, a connection assessment may also be required for connection to the transmission grid. Generally, PV rooftop projects would not require a transmission grid connection assessment. Project developers with successful connection assessments then enter into contractual connection arrangements with the particular local distribution company.

71

Project developers must comply with the Electrical Safety Code as administered by the Electrical Safety Authority during both the construction and operational phases of a renewable power generation project. Project developers must also comply with local municipal regulations which include obtaining building permits.

U.S. Regulations

In connection with our energy development and electricity generation activities in the United States, we are subject to numerous federal, state and local laws and regulations, including among others the Federal Power Act, or FPA, the Public Utility Regulatory Policies Act of 1978, or PURPA, the Public Utility Holding Company Act of 2005, or PUHCA, and the Energy Policy Act of 2005, or EPA.

We are not a “regulated utility” in the United States under applicable federal, state or other local regulatory regimes where we conduct business. Our solar parks in operation are exempt from the extensive regulations applicable to the non-exempt electric utility companies under PUHCA pursuant to the exemption filings with the Federal Energy Regulatory Commission, or FERC. The two most commonly applied for exemptions are for the solar parks in operation to be treated as qualifying facilities or exempt wholesale generators.

In order to further develop our solar parks in pipeline, we obtain interconnection agreements from the applicable local primary electricity utility. Depending on the size of the solar park in pipeline and local law requirements, interconnection agreements are between the local utility and either us or our customer. In almost all cases, interconnection agreements are standard form agreements that have been preapproved by the state or local public utility regulatory body with jurisdiction over interconnection agreements.

More than eighty percent of the states, Washington, D.C. and Puerto Rico have a regulatory policy known as net energy metering, or net metering, available to new customers. Net metering typically allows the owners of solar PV systems to interconnect their onsite solar PV systems to the utility grid and offset their utility electricity purchases by receiving a bill credit at the utility’s retail rate for energy generated by their solar PV system that is exported to the grid in excess of electric load used by such owners. Typically, at the end of the billing period, the owner of the solar PV system simply pays for the net energy used or receives a credit at the retail rate if more energy is produced than consumed, although the exact contours of these rules can vary significantly from jurisdiction to jurisdiction.

Many states also have adopted procurement requirements for renewable energy production. About thirty states and Washington, D.C. have adopted an enforceable renewable portfolio standard, or RPS, or other mandated renewable capacity policy that requires covered entities to procure a specified percentage of total electricity delivered to customers in the state from eligible renewable energy sources, such as solar PV systems, by a specified date. Eight states have voluntary goals for renewable generation. Various states’ RPS programs vary in terms of their structure, application, size and enforcement mechanisms. For example California and New York require suppliers to source 50% of their energy from renewable sources by 2030. Although there are no RPS programs at the federal level, federal agencies are mandated to source a portion of their energy from renewable sources.

Bulgarian Regulations

Renewable energy in Bulgaria is subject to extensive regulations governing a wide range of areas including, among others, project approvals, power generation, transmission and distribution, construction, on-grid tariffs and environmental protection:

·The Energy and Water Regulatory Commission, or CEWR, is primarily responsible for:  examining and issuing permits for the production of electricity to the power grid; setting incentives; and setting installed capacities and voltage classes in designated areas, determination of the prices in the energy sector.

·The Regional Inspectorate of Environment and Water and the Ministry of Environment and Water are primarily responsible for the examination and approval for the environmental assessment including ecological assessment, environmental impact assessment and compatibility assessment.

72

·The State Construction Supervisory Commission is responsible for the issuance of operation permits.

·The Agency of Sustainable Energy Development, or the ASED, is responsible for issuing certificates of origin to plant operators to certify that electricity was generated from renewable sources.

Regulation of PV and the Renewable Energy Power Industry

The regulatory framework of Bulgaria power industry is set out in the Energy Law of Bulgaria, effective as of December 9, 2003, as further amended, and the Energy from Renewable Sources Act, or the ERSA, effective as of May 3, 2011, as further amended.

One of the purposes of Energy Law is to ascertain the safety and reliability of the Bulgarian energy sector. The Energy Law sets forth the main regulatory requirements for the power industry in Bulgaria, including, among others, the issuance of permits for the production of electricity to the power grid.

The Renewable Energy Law specifies the criteria for connecting a power plant to grid and the incentives provided for development of renewable energy projects.

The Bulgarian Act on the Economic and Financial Relations with Companies Registered in Preferential Tax Regime Jurisdictions, the Persons Controlled by Them and Their Beneficial Owners effective as of 2014, imposes a prohibition for companies registered in preferential tax regime jurisdictions, and the persons controlled by them, to be directly or indirectly involved in activities explicitly listed in the Act, including activities under the ERSA. The scope of the Act is limited in certain cases, but if so this must be officially declared in the Bulgarian Trade Register.

Special Electric Power Generation Permit. Pursuant to the Energy Law, a permit is needed for the production of electricity to the power grid for power plants with capacities equal to or exceeding 5 MW. The permit will only be granted if the applicant:  (i) is a company incorporated under the Bulgaria Commercial Law or the laws of a member of European Union; (ii) has property rights over the power plant; and (iii) has technological, financial and operational capacity as specified by a number of regulatory requirements. The maximum initial term of the permit is 35 years and, if the CEWR finds that the applicant’s energy resources and financial situation are stable, can be extended for up to another 35 years.

Grid Interconnection (special procedure). Pursuant to ERSA and No. 6 Regulation from February 24, 2014 on Connection of Electricity Producers and Customers to Transmission or to the Distribution Electricity Networks promulgated on and in force from April 4, 2014, electric power generated in Bulgaria shall be connected to power grids. Each year by June 30, the Energy and Water Regulatory Commission approves and publishes on its website the anticipated electric power capacities for the one year period commencing from July 1 that can be provided for connection to the electricity transmission and distribution networks from facilities for the production of electricity from renewable sources, classified by areas of connection and voltage levels.

Plant operators shall apply to the power grid operator for connection (art. 23 ERSA). The plant operator shall provide a guarantee of BGN5,000 per MW of the planned capacity to the power grid operator as an advance payment for the connection costs (art. 23 par. 8 ERSA). The requirements of article 23 of ERSA do not apply to the following solar electricity plants:  (i) plants with a total installed capacity of up to 30 kW which are built on the roof or facades of buildings connected to the power distribution network and over the land to them, within urban areas; and (ii) plants with a total installed capacity of up to 200 kW which are built on the roof or facades of industrial or warehouse buildings and connected to the power transportation or power distribution network within urban areas.

If the plant operator meets all connection requirements, the power generation company and the power grid operation company shall enter into a preliminary agreement specifying the technical requirements for the project design. When entering into a preliminary agreement, if the capacity of the plant does not exceed 5 MW, the plant operator shall make another advance payment of BGN25,000 per MW to the power grid operation company or, if the capacity exceeds 5 MW, BGN50,000 per MW (art. 29 par. 1 ERSA).

73

Before construction of the solar park, which usually lasts between 6 and 24 months, a final interconnection agreement entered into between the power generation company and the grid operation company. Then, the interconnection to the grid is constructed and the power plant is interconnected to the power grid in accordance with the agreement.

Capacity limits (quantitative criteria). As of July 1, 2012, grid operators will only be obliged to grant access to power generation companies if the annual grid capacity limits as set by the regulatory authorities have not yet been reached. The capacity limits will not apply to rooftop and facade-integrated plants with a capacity of up to 30 kW, to plants on the roofs and facades of factories and storage buildings of up to 200 kW and to plants that have not applied for a FIT (art. 24 ERSA).

Grid Interconnection (general procedure):  The general procedure for connection to the electricity grid is set out in the No. 6 Regulation dated February 24, 2014 on Connection of Electricity Producers and Customers to Transmission or to the Distribution Electricity Networks. This procedure is generally the same as the special procedure described in the ERSA, i.e. the plant operators apply to the power grid operator for connection, then the power generation company and the grid operation company enter into a preliminary agreement followed by a final interconnection agreement. However, no advance payments are made by power generation companies and no annual power capacity limits are applied.

National Action Plan for Energy from Renewable Sources (NAPERS). In order to achieve the national target of the Republic of Bulgaria to obtain 16% of its energy end consumption from renewable sources, including 10% from renewable sources in transport, the Minister of Energy has developed the NAPERS, which covers the period from 2010 to 2020. The Minister of Energy will develop and produce to the European Commission every two years by December 31, 2021 a report on the implementation of the NAPERS and publish the reports on the internet site of the Ministry of Energy.

According to the second national report on the implementation of NAPERS, the national purpose of 16% share of renewable energy of total internal energy consumption was achieved by December 27, 2013. Encouragements of ERSA related to preferential price, long term agreements and the special procedure for joining to the electricity grid under Section II of the Energy from Renewable Sources Act (described above in section “Grid Interconnection (special procedure)”) shall not apply to energy facilities for the production of electricity from renewable sources that can be applied for joining after December 27, 2013.

Balancing Groups. The new Electricity Trading Rules approved by the Commission on Energy and Water Regulation promulgated in State Gazette on July 26, 2013, as further amended, established new rules related to balancing supply and demand in the electricity market. The CEWR issues licenses to group coordinators to balance the supply and demand of electricity generated by a group of electricity power producers. Each electricity power producer is required to join a balancing group and coordinate its production schedule with the group’s demands. In case of breaching the given schedule and in case there is excess supply or demand, the group coordinator and respective participants must pay a fee proportional to the excess in accordance with the calculation methodology established by the CEWR.

On-grid Tariff and Incentives. The obligation to purchase electricity is based on long-term purchase agreements, which have a duration of (i) 20 years for electricity produced from geo-thermal and solar energy as well as for electricity produced from biomass (ii) 12 years for electricity, produced from wind energy, and (iii) 15 years for electricity produced from waterpower stations with installed power of up to 10 MW as well as for electricity produced from other kinds of renewable sources. (art. 31 par. 2 ERSA).

The price of the electricity from renewable sources will remain unchanged at the price in force when the power plant is entered into operation during the term of the long-term electricity purchase agreement, unless in the cases under Art, 32, Para. 4 for bio-mass produced electricity. After the expiration of this term, preferential prices are not provided.

The public provider, respectively the end suppliers purchase the generated electricity from renewable sources under the following terms and conditions:  (i) at a preferential price for quantities of electricity up to the net specific production for the different renewable energy producers as determined in the relevant decision of CEWR; (ii) at a price determined for the excess of the balancing market for the quantities exceeding the production under item (i). According to amended Energy Law the producers may enter into agreements for sell the electricity quantities under item (ii) on the freely negotiated prices.

74

The CEWR determines preferential prices for buying electricity produced from renewable sources annually by June 30th, with the exception of the energy produced from waterpower stations with installed power above 10 MW, and whenever its analysis has found a significant change in the price-forming elements.

The on-grid tariffs announced for the PV energy for the period from June 2011 to July 2017 are as follows:

	Announced on
	June 2011	June 2012	Sept 2012	July 2013	July 2014	July 2015		July 2016		July 2017
	(BGN/MWh)
Mounted on roofs and facades
<5 kWp	N/A	400.70	381.18	353.97	211.81	228		255.39		271,67
>5 <30 kWp	605.23	400.70	289.96	284.18	203.97	211.71		213.92		231,20
>30 <200 kWp	596.50	369.08	226.87	211.40	169.12	N/A	(1)	N/A	(1)	N/A	(1)
<1,000 kWp	583.77	316.11	206.34	196.58	144.68	N/A	(1)	N/A	(1)	N/A	(1)
Land
<30 kWp	576.5	268.68	193.42	195.44	152.19	N/A	(1)	N/A	(1)	N/A	(1)
<200 kWp	567.41	260.77	188.10	191.13	143.35	N/A	(1)	N/A	(1)	N/A	(1)
<10,000 kWp	485.60	237.05	171.37	176.29	134.03	N/A	(1)	N/A	(1)	N/A	(1)
>10,000 kWp	N/A	236.26	169.85	160.20	131.36	N/A	(1)	N/A	(1)	N/A	(1)

(1)The last change of the on-grid tariffs (preferential prices) for renewable energy was adopted by decision of CEWR in accordance with art. 32 par. 1 subpar. 1 ERSA issued and effective on July 1, 2015. According to amendments of the Energy Law, the electricity produced by renewable sources which have been entered into exploitation after March 6, 2015 shall not be purchased at preferential prices on the basis of long-term agreements except for:

·Renewable sources projects with total installed capacity not exceeding 30 kW which shall be mounted on roofs and/or facades of buildings located within urbanized territories, and

·Biomass projects with combined cycle and indirect usage of biomass which shall be constructed within urbanized zones, agricultural sites or production zones and total installed capacity not exceeding:  (i) 1.5 MW when at least 60% of the used biomass represents animal fertilizer and meet some mandatory criteria, and (ii) 500 kW when using vegetable biomass which is their own production. The gratis period for these biomass projects was until January 1, 2016 — all such biomass projects which have been entered into exploitation after January 1, 2016 shall be subject to the above restrictions.

Deductions from the preferential prices:  As of July 24, 2015, all energy producers in Bulgaria shall pay monthly contributions in favor of the Electric Power Grid Security Fund amounting to 5% of their monthly revenues generated from electricity sold, VAT excluded (art. 36e, par.1 subpar.1 of the Energy Law).

As of July 1, 2017, the CEWR determined the access fee, which shall be paid to the operator of the transmission electricity grid for electricity produced by solar and wind power plants. This fee amounts to BGN6,68 per MWh, net of VAT.

Construction of Solar Parks

Pursuant to the Land Structure Law, the following permits must be obtained:

·Road Special Purpose Permit:  If construction occurs near a road or crosses a road or when a company intends to build, repair or develop facilities under ground or in the air, a road special purpose permit is required prior to construction.

·Construction Permit:  A construction permit must be obtained prior to the construction of the solar park. The relevant municipality authority will issue a construction permit after it approves the investment design, which contains the full design of the future power plant and all other objects related that shall be constructed.

75

·Operation Permit:  An operation permit must be obtained from the State Construction Supervisory Commission prior to the operation of the plant. The solar park owner must prove that the construction process has complied with laws and regulations.

Environmental Protection

The Regional Inspectorate of Environment and Waters or the Ministry of Environment and Waters will examine and approve our solar parks for compliance with environmental protection standards based on an ecological assessment, environmental impact assessment and compatibility assessment. In some cases such agencies may also set special requirements for environmental protection to be followed during the construction and operation of the plant.

Ecological Assessment. Plans and programs that may have a comparatively large adverse impact on the ecology must pass an ecological assessment. The Regional Inspectorate of Environment and Waters or the Ministry of Environment and Waters may, at their sole discretion, require an ecological assessment, if it believes that the plan or the program may threaten environment. Normally, the ecological assessment is independent from the environmental impact assessment. However, if one solar park requires both assessments under the regulations, an officer of the Regional Inspectorate of Environment and Waters or an officer of the Ministry of Environment and Waters may decide to run only one assessment at their sole discretion.

Environmental Impact Assessment. Investment projects enlisted in Appendix No 1 to the Environmental Protection Law that may have a significant adverse impact on environment must pass an environmental impact assessment. The Regional Inspectorate of Environment and Waters or the Minister of Environment and Waters may, at their sole discretion, require an environmental impact assessment for the investment projects enlisted in Appendix No 2 to the Environmental Protection Law.

Compatibility Assessment. A compatibility assessment tests for the likelihood and severity of adverse environmental conditions. Plans, programs, and investment projects, which are not required for the management of or connected with, the protected zones and might have adverse negative impact on the protected zones shall be subject to compatibility assessment.

Greek Regulations

Regulation of PV and the Renewable Energy Power Industry

Production License. Pursuant to Law 3468/2006, a production license must be obtained from the Regulatory Authority for Energy, or RAE, for power plants with installed capacities over 1 MW. Production licenses are valid for up to 25 years upon issuance and can be renewed for another 25 years. Production licenses will be void if an installation license is not obtained within 30 months after the issuance of the production license. The PV stations with installed capacity less than or equal to 1 MW are exempted from the prerequisite to obtain a production license, as well as from the prerequisite to obtain an installation and operation license.

Law 3468/2006, provides for the following agreements:

Offer for Connection:  An offer for connection is required in order for solar parks to be connected to the grid (for solar parks that must be connected to low or medium voltage lines) or to the system (for projects that must be connected to high voltage lines). Pursuant to the provisions of Law 4152/2013, an offer for connection is issued by the HEDNO S.A. The offer for connection will outline the necessary grid development work that the operator is obligated to conclude before the PV station can be connected to the power grid, the deadline for the construction of such work and the fees that must be paid to the HEDNO S.A. The offer becomes final and binding for both parties after the submission of the environmental terms approval to the relevant operator of the electricity market, the written acceptance of such operator and the payment of the relevant fee by the owner of the PV station.

·Connection Works Agreement:  A connection works agreement for the construction of the power grid connection works shall be entered by and between the owner of the PV station and the operator. Pursuant to Law 4001/2011, a connection works agreement is a condition precedent for the signing of the PPA. The connection works agreement outlines the necessary grid development work for the connection of the PV station to the power grid, the deadline for the construction of the work and the cost as referred to the offer for connection.

76

·Power Purchase Agreement:  A PPA must be signed by and between the owner of the PV station and the operator of the electricity market. Until January 31, 2012, the PPA was entered into by the owner of the PV station and the Hellenic Transmission System Operator (in Greek abbreviation DESMIE S.A.). After Law 4001/2011 came into force, and pursuant to the decisions No 56 and 57/ January 31, 2012 of RAE, from February 1, 2012, the PPA shall be entered into by the owner of the PV station and LAGIE S.A. as the operator of the electricity market was renamed. By virtue of the PPA, the operator of the electricity market is obliged to buy the energy produced by the PV station. The terms of the PPA are standard and have been defined by Ministerial Decision AY/F1/oik 17149 (BoGG B 1497/6.9.2010). The PPA will define the duration of the PPA, the power purchase price, the method of payment and the settlement of disputes. The PPA is binding for both parties on the date of the signing or on the date of the issuance of the installation license, in case it is required. It starts from the date of the issuance of the operation license or from the successful completion of the testing period of operation, in case the PV park is exempted from the obligation of granting such a license, and will last for 20 years.

Installation License. Pursuant to article 8 of Law 3468/2006 as amended by article 3 par. 2 of Law 3851/2010 the PV parks with installed capacity over 1 MW are obliged to be granted an installation license. The local technical control council is responsible for issuing the installation license. The term of validity is two years. The construction must be completed within the term of validity. It may be prolonged for another two years if:  (i) within the period of two years, the solar park has been constructed at a percentage corresponding to more than the 50% of the total investment; (ii) the PV park is not operating, but the relevant purchase agreements for the modules, inverters and other equipment have been signed, or (iii) any of the required licenses for the installation of the solar park are suspended via a judicial decision.

Due to a modification of article 8 of Law 3468/2006 by article 1 of the Law 4203/2013 (BoGG A 235/1.11.2013) the installation can be prolonged:  (a) for 2 years if:  (i) the fundamental works corresponding to the 50% of the total budget have been completed; or (ii) the relevant purchase agreements for the equipment have been signed or the owner of the PV station has already paid the cost corresponding to the 50% of the total budget; and (b) for 18 months additionally if the completed works correspond to the 40% of the total budget.

Construction Approval for Small Scale Solar Parks. Pursuant to the Ministerial Decisions YA 36720 (BoGG B 376/6.9.2010) and YA 40158 (BoGG B 1556/22.9.2010), the local city plan department must issue a construction approval for small-scale works. Such licenses are valid for six months, and may be extended. If any structural parts of the solar parks require the use of concrete, the owner of the PV station will also have to obtain a building permit before beginning construction. Such a permit requires the submission of a civil engineer’s study to the local city plan department. The issuance of such permits usually can be concluded within a few months from the submission.

Operation License. Pursuant to Law 3468/2006, solar parks with installed capacity above 1 MW must acquire an operation license from the local technical control council. Such licenses are granted after the successful commencement of the testing operation period. According to the Ministerial Decision YA 13310/2007 (BoGG B 1153/10.7.2007), the operator considers the commencement of the testing operation period successful when the PV station functions for 15 days in a row and without any problem from its connection to the power grid. Such licenses are valid for 20 years, and may be extended for another 20 years.

Feed-in Tariff (FIT). According to article 27A par. 5 of Law 3734/2009, as amended by article 186 par. 1 of Law 4001/2011, the FIT shall be determined based on the signing date of the PPA, provided that:  (a) the completion of the documentation required for application, including the production license, in case it is applicable, the offer for the connection, the signed connection works agreement, the approval for environmental terms or the exemption, the documentation attesting the corporate status of the owner of the PV station, the documentation attesting the ownership or the lease agreement of the installation plot; and (b) solar parks with installed capacity less than 10 MW are connected within 18 months and solar parks with installed capacity equal or above to 10 MW are connected within 36 months respectively from the date of the filing.

77

Following an amendment of the relevant legislation by Law 4254/2014, the FIT applied to all the operating PV stations was adjusted as follows (prices are quoted in Euro/MWh) starting from April 1, 2014:

	Connection System
	<100 kW		100 kW<P(1) <500 kW		500 kW<P <1 MW		1 MW<P <5 MW		P>5 MW
Connection Period	WOS (2)	WS (3)	No	Yes	No	Yes	No	Yes	No	Yes
Before 2009	—	445	—	390	—	385	—	385	—	385
1st quarter 2009	—	440	—	375	—	365	—	365	—	355
2nd quarter 2009	—	435	—	370	—	345	—	345	—	325
3rd quarter 2009	—	430	—	365	—	325	—	325	—	315
4th quarter 2009	—	425	—	350	—	315	—	300	400	300
1st quarter 2010	—	400	—	335	—	315	—	290	390	280
2nd quarter 2010	—	380	—	315	—	315	400	285	390	270
3rd quarter 2010	—	365	—	295	400	295	380	260	375	255
4th quarter 2010	—	345	395	280	395	280	355	245	360	240
1st quarter 2011	—	335	390	270	375	260	340	235	335	225
2nd quarter 2011	—	320	375	260	365	250	330	225	320	220
3rd quarter 2011	430	305	360	250	360	245	310	215	300	205
4th quarter 2011	405	285	330	230	325	225	290	200	280	190
1st quarter 2012	375	265	305	215	295	205	260	180	260	180
2nd quarter 2012	360	240	280	195	265	185	235	165	230	155
3rd quarter 2012	360	225	265	185	250	175	215	150	210	145
4th quarter 2012	340	215	255	180	240	165	205	145	195	135
1st quarter 2013	285	205	240	170	240	145	195	140	190	130
2nd quarter 2013	270	195	185	160	185	145	185	140	180	130

(1)“P” stands for power capacity.

(2)“WOS” refers to solar parks that have not received any Subsidy (as defined below).

(3)“WS” refers to solar parks that have received Subsidy.

Under Law 4254/2014, “subsidy” refers to any subsidy, which equals to at least 20% of the cost of the investment for the solar park, provided by Greek law favoring investment in and development of solar parks, or provided through admission to programs financed by Greek’s national or/and European Union’s resources. The FIT prices indicated by the foregoing chart may be adjusted by a decision of the Ministry of Environment, Energy and Climate Change, and such adjustment decision will only apply to PV stations that connect to grid two years since December 31 of the year in which such decision is issued.

The prices indicated by the foregoing chart do not apply when higher than the prices under the PPA for January 2014. For PV stations with capacities equal to or over 20 kW, the prices indicated above will be increased by 10%, as long as the increased prices do not exceed the prices under the PPA for January 2014.

For the application of the foregoing FIT, all PV stations are considered as having received Subsidy. Within four months of April 1, 2014, LAGIE S.A. will create an electronic database where each PV station will need to file, no later than two months after the database starts operating, a declaration in electronic form specifying the amount of investment for such PV station and whether it has received any Subsidy. If this declaration is not timely filed than the PV stations that qualify as WOS, will be classified as such from the first day of the month that follows the month the declaration is filed.

Moreover, Law 4254/2014 provides that within two months of April 7, 2014, PV stations are obliged to provide a discount, ranging from 34% to 37.5% for PV stations with capacities more than 100 kW and at 20% for PV stations with capacities less than or equal to 100 kW, retroactively to the electricity sold to LAGIE S.A. in 2013.

Unless the above discount is provided, LAGIE S.A. will suspend its obligation to pay for the electricity that has been delivered by the PV stations but the bill of which has not been settled.

For the PV stations that agree to the foregoing discounts, the levy as described in the Taxation section below will be recalculated based on the reduced revenue due to the discounts.

78

For PV stations with less than 12 years of operating history and for which FIT is adjusted according to the chart above, the duration of PPA for such PV stations will be extended for another 7 years. For the extension period, a qualifying PV station can choose, between the following two options concerning the price for the electricity it generates not later than six months before commencement of the extension period:

(1)that the price will be calculated based on a method defined by a decision of the Ministry of Environment, Energy and Climate Change, taking into account the characteristics of the technology employed by the PV station and the technology’s contribution to the stability of the electric system as well as the market prices of electricity; or

(2)a price of 90 Euro/MWh for a maximum amount of generated energy per annum to be calculated according to the following formulation:  Energy (in kWh) = Installed Power (kW) multiplied by an efficiency factor, which for a qualifying PV station equals 1,500.

If a qualifying PV station fails to submit its choice of the foregoing options within six months prior to the extension period, the applicable electricity price will be calculated based on the lower of the outcome of (1) or (2).

The Ministerial Decision UAPE/F1/1288/oik 9011 (BoGG 1103/2.5.2013) valid from June 1, 2013 has changed the prices as follows:

	Connection System
Year	Month	>100 kW	<100 kW
		Euro/MWh	Euro/MWh
2013	February	95.0	120.0
	August	95.0	120.0
2014	February	90.0	115.0
	August	90.0	115.0

Environmental Protection

Pursuant to Laws 3468/2006 and 3851/2010, an approval of the environmental terms conditions must be obtained from the regional Department of Environment and Land Planning prior to the construction of any solar parks with installed capacity from 500 kW to 1 MW. An approval of the environmental terms is also required for the construction of solar parks with installed capacity less than 500 kW, when the respective PV stations are to be installed in NATURA areas, coastal areas, or in a distance of less than 150 m from another RES project. For solar parks that are exempted from the requirement to obtain an approval of the environmental terms conditions, an exemption is issued by the competent authority prior to construction. Owners of solar parks with installed capacity above 1 MW must apply for an approval of environmental terms in order to be granted an installation license. The application shall be submitted with an environmental impact study and opinions from competent environmental protection departments and other authorities, such as the chief of staff of the Ministry of Defense, the Administration for Tourism, the Administration for Forest, the Agriculture Development Council, the city plan council, the local land plan and environment commission), depending on the solar park, concerning whether the solar park can be installed to the exact spot and under which conditions. The competent authority examines the environmental impact of the solar park and the proposed mitigation measures and opines on whether to issue an approval of environmental terms within four months from the completion of the folder. This approval is valid for 10 years and can be extended twice for the same period of time, if a relevant application is submitted up to six months before the expiration of the said decision.

Forest Impact Assessment. If a solar park is located in a forest area, a forest impact assessment is mandatory and the competent forestry office is responsible for the approval.

Taxation

Law 4093/2012 (Par. I, Subpar. I.2.), as amended by law 4152/2013 (Par. I., Subpar. I.4.8.), provided for an imposition of a levy, ranging from 25% to 42%, on the sale price (without Value-Added Tax) of electricity produced by renewable energy sources stations for every sale that takes place for the time period between July 1, 2012 to June 30, 2014. This levy is repealed by Law 4254/2014, effective from April 1, 2014.

79

According to Law 4152/2013 (Par. I, Subpar. I.2.3.), as amended by Law 4254/2014, an annual levy of 1,000 Euro/MWh will be imposed to the holders of PV production licenses, starting from January 1, 2015 and onwards, payable during the first quarter of each year. This levy is due until the holder of the PV production license produces a bank guarantee along with its acceptance of the Offer for Connection. PV stations that are connected to the grid are exempted from the above levy.

Corporate income tax rate on profits for operating year 2017 is 27.8%, decreased by 4.1% from 2016. Distributed dividends are subject to a withholding tax rate of 15%. The 15% withholding tax does not apply when dividends are paid to an EU affiliate provided certain conditions of EU Directive 2011/96, as amended by EU Directives 2014/86 and 2015/121, are met, such as the affiliated company has for an uninterrupted period of at least 24 months a minimum holding of 10% in the capital of the distributing company and the dividends are not deductible by the distributing company. The benefit of the exemption from withholding tax is not granted to an arrangement or a series of arrangements which, having been put into place for the main purpose or one of the main purposes of obtaining a tax advantage that defeats the object or purpose of the EU Directive, are not genuine having regard to all relevant facts and circumstances. An arrangement or a series of arrangements shall be regarded as not genuine to the extent that they are not put into place for valid commercial reasons which reflect economic reality.

In December 2015 the Ministry of Environment and Energy issued Ministerial Decision ΑΠΕΗΛ/Γ/Φ1/οικ. 184898 (BoGG 2861/28.12.2015) according to which from January 1, 2016 a Transitional Levy for the Safety of the Supply of electric energy of 3,6% will be imposed until December 31, 2019 on the sale price of electric energy produced by PV stations. The total revenue from this levy shall not exceed the amount required for the provision of the relevant service for the Safety of the Supply of electric energy. Any surplus generated at the end of the year shall be reimbursed proportionally to the PV stations.

C.Organizational Structure

The following chart illustrates the principal entities as of the date of this annual report:

*100% owned except for one share.

**Several Goudou Kaisha (合同会社) established in Japan are either under common control of, or controlled by Sky Solar Japan, K.K. Goudou Kaisha is a form of limited liability companies under Japanese jurisdiction, which has more than one member(s) (社員) who have shares in it. The members’ liabilities are limited to their shares in such Goudou Kaisha.

80

Several Ippann Shadan Houjin entities were established in Japan. They are either under common control of, or controlled by Sky Solar Japan, K.K. Ippann Shadan Houjin are legal entities based on Japanese judiciary. Unlike corporations, they do not have equities and their founding members do not have rights to their residual assets.

All entities 100% owned unless otherwise indicated.

We currently conduct our business through the following principal subsidiaries:

Entity	Place of Incorporation	Ownership	Function
Sky Solar Power Ltd.	British Virgin Islands	100%	Holding entity
Sky International Enterprise Group Ltd.	Hong Kong	100%	Holding entity
Sky Solar Energy S.à.r.l.	Luxembourg	100%	Holding entity
Sky Capital Europe S.à.r.l.	Luxembourg	100%(1)	Holding entity
Energy Capital Investment S.à.r.l.(2)	Luxembourg	100%	Holding entity
Sky Capital Advisory GmbH	Germany	100%	Holding entity
Moktap Holdings Ltd.(2)	Cyprus	100%(1)	Holding entity
Sky Solar Japan K.K.(2)	Japan	100%	Holding entity
Sky Solar Iberica S.L.	Spain	100%	Operating entity engaged in the construction of solar parks and provision of EPC services
Sky Development Renewable Energy Resources S.A.	Greece	100%	Operating entity engaged in the construction, installation and management of solar parks
Sky Solar Bulgaria Co., EOOD	Bulgaria	100%	Operating entity, engaged in the construction and management of solar parks and production and trading of solar equipment
Sky Solar (Canada) Ltd.(2)	Canada	100%	Operating entity, together with its seven subsidiaries, engaged in the development, construction and sale of solar parks
Neurlus Ltd.(2)	Cyprus	100%	Holding entity
Sky Capital America Inc.	USA	100%	Operating entity engaged in the development of solar parks
Skylink O&M S.à.r.l.	Luxemburg	100%	Operating entity engaged in operation and maintenance of solar parks
Sky Renewable Energy Ltd	Canada	100%	Holding entity
Energy Capital Investment S.à.r.l.	Luxemburg	100%	Holding entity
Energy Capital Investment II S.à.r.l.	Luxemburg	100%	Holding entity
Renewable Capital Investment 1 S.L	Spain	100%	Holding entity
Renewable Capital Investment 2 S.L	Spain	100%	Holding entity
Sky Solar New Energy Technology (Wuxi) Ltd.	China	100%	Holding entity
Wuxi Tianlian New Energy Development Ltd	China	100%	Operating entity, engaged in development and investment for DG projects in mainland China
Suzhou Tianlian New Energy Ltd	China	100%	Operating entity, engaged in the construction and management of DG projects in mainland China

(1)100% owned except for one share

(2)Denotes significant subsidiaries

D.Property, Plants and Equipment

Please refer to “ —B. Business Overview—Facilities” for a discussion of our property, plants and equipment.

81

ITEM 4A. UNRESOLVED STAFF COMMENTS

Not applicable.

ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS

You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our consolidated financial statements and the related notes included elsewhere in this annual report on Form 20-F. Our consolidated financial statements have been prepared in accordance with IFRS. The following discussion and analysis contain forward-looking statements that involve risks and uncertainties. Our actual results and the timing of selected events could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under “Item 3. Key Information—D. Risk Factors” and elsewhere in this annual report.

OVERVIEW

We have successfully developed and operated solar parks on a global basis. Since we began our business in 2009, we have focused on downstream services for the development, construction and operation of solar parks. As of December 31, 2017, we have developed 318 solar parks with an aggregate capacity of 377.2 MW in seven countries including Japan, Bulgaria, the Czech Republic, Spain, Canada, the United States and Uruguay. Under our IPP revenue model, we currently own and operate 196.7 MW of solar parks in Japan, the Czech Republic, Canada, the United States, Spain and Uruguay.

We primarily derive revenue from selling electricity to the transmission grid under our IPP business model. Prior to 2014, we generated revenue primarily from selling solar energy systems to off-takers, which included investor-owned utilities, independent power developers and producers and commercial and industrial companies, and generated additional revenue by selling PV modules we purchased from third-party manufacturers. We have strategically reduced the sale of our solar energy systems in favor of our IPP business since 2013. Our IPP solar parks generate recurring revenue by selling electricity to the power grid over the operational lifetime of the solar parks. We first derived a majority of revenue from selling electricity in the fourth quarter of 2013.

We also strategically plan to monetize and sell operating solar parks from time to time to take advantage of favorable market conditions, which allows us to recycle capital and strengthen our presence in our core growth markets.

To date our operations have been focused on Japan, Canada, the Czech Republic, Uruguay and the United States. We plan to expand or continue to expand our business operations in Japan, Canada, Uruguay, Chile, the United States and China. We expect such expansion to further diversify our revenue base internationally.

Our revenue was US$47.2 million, US$65.9 million and US$56.7 million in 2015, 2016 and 2017, respectively. Our gross profit was US$28.6 million, US$35.0 million and US$33.5 million in 2015, 2016 and 2017, respectively. We recorded losses of US$1.6 million in 2015, gains of US$3.3 million in 2016 and losses of US$33.1 million in 2017. The increase in revenue from 2015 to 2016 was primarily due to increased capacity of our operating solar parks. The decrease in revenue from 2016 to 2017 was primarily due to decreased of our solar energy system sales.

Our IPP solar parks provide attractive long-term recurring revenue from selling electricity. From 2015 to 2016 and to 2017, our revenue from selling electricity from IPP solar parks grew from US$35.5 million to US$53.7 million and to US$53.6 million, representing 75.2%, 81.4% and 94.5% of our revenue, respectively. The total capacity of our IPP solar parks was 128.6 MW, 159.8 MW and 196.7 MW, and the total carrying value of our IPP solar parks was US$259.4 million, US$271.3 million and US$397.4 million as of December 31, 2015, 2016 and 2017, respectively.

82

Factors Affecting Our Results of Operations

We believe the most significant factors that directly or indirectly affect our overall growth, financial performance and results of operations include:

·market demand for and price of PV power;

·access to adequate financing with competitive interest rates and terms;

·the business and geographic mix of our project portfolio;

·EPC costs for PV systems;

·FIT price support schemes for solar parks and spot market electricity tariffs; and

·our project development and operations capabilities.

Market demand for and price of PV power

Our revenue and profitability depend substantially on the demand for solar parks, which is driven by the economics of PV systems, including the availability and size of government subsidies and economic incentives, government support and cost improvements in solar power, as well as environmental concerns and energy demand. The world PV market in terms of new annual installations is expected to grow significantly in the next five years, providing solar park developers like us with significant opportunities to continue to grow our business.

Many markets in the PV industry continue to be affected by government subsidies and economic incentives. A number of countries have introduced highly favorable FIT price support regimes. For example, Japan, which has a high demand for power and low domestic fossil fuel reserves, faces relatively high energy costs. As a result, the Japanese government has introduced an attractive FIT price support regime to encourage the development of solar parks. Other countries, such as Greece, Bulgaria, the Czech Republic and Germany, have reduced their support for the PV industry in light of the recent global economic crisis. The United States continues to provide investment tax credits for solar assets meeting certain criteria. While governments generally ratchet down PV subsidies over time to reflect anticipated declines in the system costs of solar parks, the ratchet down schedules often underestimate our actual realized decrease in costs thus their effect on our margins is manageable. To foster our growth, we have shifted our focus away from countries with less favorable subsidy regimes and towards countries with more favorable subsidy regimes.

In the long term, as PV technology advances and the average system costs of solar parks decrease, we expect the market for electricity in a growing number of countries to achieve grid parity. As the PV industry becomes more competitive against other forms of energy and widespread grid parity strengthens demand for solar parks, we expect our costs of sales to decrease and our revenue and profitability to increase. In light of these favorable conditions and our improved access to financing since our initial public offering, we will continue to increase the proportion of solar parks that we own and operate as IPP solar parks, and will monetize the solar parks when it is necessary to maximize our investment returns. In the years ended December 31, 2015, 2016 and 2017, selling electricity from IPP solar parks was our largest revenue stream, growing from 75.2% in the year ended December 31, 2015 to 81.4% in the year ended December 31, 2016, and further to 94.5% in the year ended December 31, 2017.

Access to adequate financing with competitive interest rates and terms

We require large capital investments to expand our project pipeline. Historically, apart from bank borrowing, shareholder contributions and our own operating cash flows, we have relied on financing for the construction of large solar parks, including project funding, pre-financing agreements with off-takers and supply-chain financing. Construction costs are funded by our working capital and bank loans. We generally negotiate favorable credit terms with our equipment suppliers or EPC contractors, such that payment is not due until several months following the completion of construction and connection. Following connection, we typically pledge solar park assets and raise debt financing in order to optimize a project’s capital structure, pay our contractors and replenish our working capital. Such debt financing usually carries a term of over 15 years.

As an international solar park developer with a strong track record, we have received financing from a number of global financial institutions. See “Item 4. Information on the Company—B. Business Overview—Solar Park Project Financing.” Project funding for our solar parks is typically obtained from local banks in countries with well-developed appetite for renewable energy investments, such as Japan, Canada, Czech Republic and the United States. For solar parks in countries with more constrained access to local debt financing, such as Eastern Europe, Latin America and other emerging markets, we seek to arrange debt financing by leveraging our strong relationships with international financing sources. We have also established affiliates with other entities who provide financing or guarantees to the affiliate to assist with long-term debt financing.

83

As our business continues to grow and as we develop solar parks as an IPP, our success depends on securing sufficient amounts of financing on suitable terms within the time periods required. As our IPP portfolio continues to grow, especially with the addition of larger capacity solar parks, we expect to incur significantly more borrowings from banks or other institutions. Fluctuations in interest rates and currencies, for which we currently do not hedge our exposure, may impact our cost of financing and affect our financial condition and results of operations.

Our revenue model and the geographic mix of our project portfolio

We have derived revenue under two revenue models. Under our solar energy system sales business model, we sell permits and solar modules, provide EPC services, and build and sell commercially operational solar parks. Under our IPP business model, we own and operate solar parks and DG projects and generate revenue from selling electricity. The revenue model we utilize affects our revenue, profitability and capital requirements.

In 2015, 2016 and 2017, we derived 19.9%, 14.7% and 0.5% of our total revenue for the respective periods from selling solar energy systems. We derived our solar energy system sales revenue primarily from our historical project affiliates before 2014, which, in aggregate, represented 15.3% of our revenue in 2013. In 2015, 2016 and 2017, we derived US$4.5 million, US$0.8 million and US$286 thousand, or 9.4%, 1.2% and 0.5% of our revenue, respectively, from our historical project affiliates. In early 2013, we began to shift our strategy from selling solar energy systems to selling electricity from IPP solar parks in order to internalize more value from project development and generate recurring revenue and cash flow. Building and operating IPP solar parks also require large amounts of initial capital investment and strong financing capabilities. As of December 31, 2017, we had a total of 196.7 MW of IPP solar parks in operation with a carrying value of US$397.4 million. Most of our PPAs fix the price of electricity sold by our IPP solar parks for 20 years or more. We expect to generate attractive long-term returns and stable cash flows from selling electricity from IPP solar parks.

In the fourth quarter of 2013, we began to derive a majority of our revenue from selling electricity to the power grid as an IPP. In 2015, 2016 and 2017, we derived 75.2%, 81.4% and 94.5% of our revenue from electricity sales from IPP solar parks, respectively. As we grow our IPP business, we will also increase the number of our IPP solar parks. The carrying value of our IPP solar parks was US$259.4 million, US$271.3 million and US$397.4 million as of December 31, 2015, 2016 and 2017, respectively.

Although we currently derive a majority of our revenue from electricity sale from our solar parks, we will continue to sell permits and solar modules, provide EPC services, and build and sell commercially operational solar parks from time to time to take advantage of attractive market opportunities. As a result, we may generate more of our revenues from the one-time sale of solar parks for certain periods.

Our results of operations and profitability may also be affected by our project mix in terms of the geographic locations of our solar parks, as different countries tend to have different regulatory regimes and investment return profiles. We generally expect higher gross margins under both our IPP business and our solar energy system sales business in countries with a high FIT, such as Japan and Canada. In addition, our cost of financing depends on the rates of return on other assets in the respective markets. Investors from countries with high liquidity and low interest rates, such as Japan and the United States, are generally willing to accept single-digit rates of return on our solar parks, which allows us to more easily finance or refinance the development of our solar parks, or to sell our solar parks for higher prices and higher margins.

See “Item 3. Key Information—D. Risk Factors—Risks Related to our Business and Industry— Our limited operating history, especially with large-scale IPP solar parks, and certain recent events may make it difficult to judge our future prospects and results of operations.”

84

EPC costs for PV systems

EPC costs for PV systems include the costs of construction, connection and procurement. The most significant contributor to EPC costs is the cost of components such as modules, inverters and mounting systems. Our supplier- and technology-agnosticism, our strong supply chain management and our strong relationships with equipment suppliers have enabled us to historically purchase equipment at relatively competitive technical performance, prices, terms and conditions.

In recent years, the prices of modules, inverters and mounting systems have decreased as a result of oversupply and improving technology. As the costs of our components have decreased, our solar parks have become more cost competitive and our profitability has increased. As a result, our solar parks have begun to offer electricity at increasingly competitive rates, which has increased the attractiveness of our investment return and our revenue. We expect the cost of components will continue to gradually decrease. Moreover, newly commercialized PV technologies are expected to further drive down EPC costs and increase the energy output of PV systems, which will further increase the competitiveness of our solar parks and allow solar energy to achieve grid parity in more and more markets.

We expect that EPC costs will continue to impact our costs and financial results.

Subsidies for solar parks and spot market electricity tariffs

Our electricity sales from IPP solar parks increased significantly since 2013 when we decided to shift its business model from system sales to the IPP. We first generated a majority of our revenue from selling electricity from our IPP solar parks in the fourth quarter of 2013. In 2015, 2016 and 2017, we derived 75.2%, 81.4% and 94.5% of our total revenue from electricity sales from our IPP solar parks, respectively. As of December 31, 2017, the total capacities of our IPP solar parks in operation in Japan, the Czech Republic, Canada, Spain, the United States and Uruguay were 96.3 MW, 5.6 MW, 0.2 MW, 0.9 MW, 22.1 MW and 71.6  MW, respectively. Electricity sales reflect the price of electricity, the capacity of our solar parks and solar radiation in the local area.

The price of electricity in different countries is either (i) fixed or specially fixed through PPAs or (ii)  variable and determined by the spot market. As of December 31, 2017, the percentage of our owned capacity for which the price of electricity was fixed or specially fixed through PPAs was 100% while the percentage of owned capacity for which the price of electricity was variable and determined by the spot market specially stated through PPAs was nil. Historically, we have derived our electricity income from markets where electricity is sold through PPAs backed by FIT price support schemes. The price of electricity is specified by laws or contractual terms under our PPAs and is fixed for the life of the PPAs, most of which have a term of 20 years. Legal changes in FIT price support schemes or PPAs are generally only applied prospectively, and consequently do not affect our solar parks in operation for the remaining life of their PPA. Nevertheless, a few jurisdictions, including Bulgaria, Greece and Spain, have proposed or enacted laws that have imposed fees on or effected changes to finalized PPAs or FIT price support schemes during the contractual term. We have been deriving IPP revenue directly through solar parks that we hold in Japan, the Czech Republic, Canada, Spain, the United States, Uruguay and Greece and investment income indirectly through IPP solar parks held by our historical project affiliates in which we have minority equity positions in Bulgaria.

Notwithstanding any changes in electricity prices, solar parks in such markets are still expected to generate relatively stable revenue. We primarily plan to expand our investments on solar parks in Japan, the United States, Latin America and China, where electricity prices are fixed by PPAs for periods varying from 15 years to 30 years.

In countries where the electricity market has achieved grid parity, solar parks lacking fixed price PPAs are subject to the spot market price of electricity. Spot prices can vary for large scale projects versus DG projects in Chile. We expect that a certain portion of our solar parks in Chile will not have signed PPAs, while others will enter into commercial PPAs with large industrial end consumers. IPP revenue from solar parks operating without PPAs will fluctuate with Chile’s spot electricity prices. Revenue for solar parks will also fluctuate with the electricity spot market after the expiration of any PPA or FIT price support schemes, unless renewed.

The market price of electricity can be subject to significant fluctuations and can be affected by drivers such as the cost of traditional fossil fuels used for electricity generation, the discovery of new fossil fuel sources, additional electricity generation capacity, additional electric transmission and distribution lines, technological or regulatory changes, increased energy conservation or a number of other reasons. See “Item 3. Key Information—D. Risk Factors—Risks Related to our Business and Industry—The reduction, modification or elimination of government subsidies and economic incentives may reduce the economic benefits of our existing solar parks and our opportunities to develop or acquire suitable new solar parks” and “—Decreases in the spot market price of electricity could harm our IPP revenue and reduce the competitiveness of solar parks in grid-parity markets.”

85

Our project development and operations capabilities

Our financial condition and results of operations depend on our ability to successfully continue to develop new solar parks and operate our existing solar parks. As we continue to grow, we expect to build and manage a greater number of large-scale solar parks and to enter new geographies, which we expect to present additional challenges to our internal processes, external construction management, working capital management and financing capabilities. Our financial condition, results of operations and future success depend, to a significant extent, on our ability to continue to identify suitable sites, expand our pipeline of solar parks with attractive returns, obtain required regulatory approvals, arrange necessary financing, manage the construction of our solar parks on time and within budget and successfully operate solar parks.

Operating Metrics

We regularly review a number of operating metrics, including the following, to evaluate our performance, identify trends affecting our business, formulate financial projections and make certain strategic decisions:  (i) solar parks connected and (ii) total IPP solar parks in operation.

The following table sets forth the metrics for the periods and as of the dates indicated.

	2015	2016	2017
Solar parks connected during the period (MW)(1)(2)	66.6	35.9	84.9
Total IPP solar parks in operation at the end of the period (MW)(3)	128.6	159.8	196.7

(1)We consider a solar park connected to the grid when it has achieved connection and has all approvals needed to begin selling electricity through the grid.

(2)This represents total solar parks connected for both solar energy system sales and selling electricity as an IPP.

(3)Total solar parks in operation include solar parks operated by us and our historical project affiliates under our IPP business model.

The increase in solar parks connected from 2015 to 2017 was primarily due to our global business expansion.

Major Components of Our Results of Operations

Revenue

Prior to 2014, we derived our revenue primarily from selling solar energy systems, electricity and PV modules. Under our solar energy system sales business, we sell permits, provide EPC services and construction services and build and sell commercially operational solar parks. We also derived revenue from the sale of solar modules and the provisions of O&M services.

We began to generate electricity income from IPP solar parks in 2012 and have been generating an increasing proportion of our revenue from our IPP solar parks. In early 2013, we began to strategically reduce the sales of our solar energy systems in favor of selling electricity from IPP solar parks in order to internalize more value from project development and generate recurring revenue and cash flow. We first generated a majority of our revenue from selling electricity from our IPP solar parks in the fourth quarter of 2013. We also began to generate revenue from the provision of operations and maintenance service in 2013.

As of December 31, 2017, we had a total of 196.7 MW of IPP solar parks in operation with a carrying value of US$397.4 million.

86

We started to derive a majority of revenue from selling electricity from IPP solar parks since the fourth quarter of 2013. Revenue from electricity generation in 2015, 2016 and 2017 was US$35.5 million, US$53.7 million and US$53.6 million, representing 75.2%, 81.4% and 94.5% of our revenue, respectively.

Although we currently derive a majority of our revenue from electricity sale from our owned and operated solar parks, we may continue to sell our solar parks and related assets or services from time to time to increase liquidity, reduce liabilities, optimize our project portfolio and take advantage of attractive market opportunities.

Our solar energy system sales business consists of (i) sale of permits, (ii) sourcing and sales of solar modules as part of providing EPC services, (iii) construction services and (iv) building and sale of solar parks.

The following table summarizes the solar energy systems we sold during the periods indicated:

	Year Ended December 31,
	2015		2016		2017
	Capacity (MW)	Number of Solar Parks	Capacity (MW)	Number of Solar Parks	Capacity (MW)	Number of Solar Parks
Europe
Greece	—	—			23.0	20
North America
Canada	1.7	5	9.2	17	1.6	6
Asia
Japan	—	—	—	—	0.5	6
Total	1.7	5	9.2	17	25.1	32

The following table sets forth a breakdown of our revenue streams for the periods indicated:

	Year Ended December 31,
	2015		2016		2017
	(US$ in thousands)	(% of total revenue)	(US$ in thousands)	(% of total revenue)	(US$ in thousands)	(% of total revenue)
Electricity generation income	35,479	75.2	53,658	81.4	53,614	94.5
Solar energy system sales	9,392	19.9	9,711	14.7	285	0.5
Other	2,284	4.9	2,556	3.9	2,834	5.0
Total Revenue	47,155	100.0	65,925	100.0	56,733	100.0

Our operations are located in Japan, Canada, the United States, the Czech Republic, Uruguay and Bulgaria. The table below expresses our revenue from the different regions where we operated.

	Revenue for the year ended December 31,
	2015	2016	2017
	(US$ in thousands)
Japan	24,728	37,757	37,887
Greece	8,849	8,748	1,650
Canada	8,327	8,724	382
United States	31	3,797	6,681
Czech Republic	3,284	3,197	3,548
Uruguay	401	2,425	5,198
Bulgaria	881	871	966
Spain	405	379	421
Germany	249	27	—
	47,155	65,925	56,733

We have historically derived a substantial portion of our revenue in a given reporting period from the sale of a limited number of solar parks to a limited number of key purchasers of our solar energy systems. Our key clients changed from period to period, as we changed our geographic focus. The following table sets forth revenue from our clients contributing over 10% of our total revenue during the periods indicated.

87

	Year Ended December 31,
	2015		2016		2017
	(US$ in thousands)	(% of total revenue)	(US$ in thousands)	(% of total revenue)	(US$ in thousands)	(% of total revenue)
Client A	6,951	14.7	10,861	16.5	13,056	23.0
Client B	7,420	15.7	10,504	15.9	11,684	20.6
Client C	*	*	8,164	12.4	9,912	17.5
Client D	7,834	16.6	7,103	10.8	*	*
Total(1)	22,205	47.0	36,632	55.6	34,562	61.1

*Revenue from such client represented less than 10% of total revenue during the period.

(1)Total is total amount from clients who individually represented more than 10% of total revenue.

Cost of sales and services

Our cost of sales in developing solar energy systems for sale primarily consists of (i) equipment costs, consisting primarily of costs for PV modules and balance-of-system components such as inverters and mounting systems; (ii) development costs, such as fees paid for permits, site control, grid connection and transmission upgrades, and development staff and due diligence costs; (iii) engineering and construction related costs, including fees paid to third-party contractors, and project management costs; and (iv) overhead costs.

Under our IPP business, we capitalize the equipment costs, development costs, engineering and construction related costs and interests incurred. Our cost of sales with regards to our IPP solar parks primarily is a result of the depreciation of these capitalized costs, as well as tax, insurance and operating and management costs. Certain economic incentive programs, such as FIT regimes, generally include mechanisms that ratchet down incentives over time. As a result, we seek to connect our IPP solar parks to the local power grids and commence operations in a timely manner to benefit from more favorable existing incentives. Therefore, we generally seek to make capital investments during times when incentives are most favorable.

We generally incur substantial expenditures to develop a solar park in a given period only to recognize revenue for the solar parks in a later period, especially for our IPP business and solar energy system sales business. If regulatory approvals are delayed or denied or if construction, module delivery, financing, warranty or operational issues arise, the reporting of revenue may be further delayed or impairment charges may be incurred. Furthermore, we may pursue development of larger solar parks in the future, which may also exacerbate such timing effects.

The development costs for our solar parks vary depending on, among other things, whether we pursue solar parks as a primary developer or a secondary developer, the locations of solar parks, and the regulatory environment and competitive landscape in the local markets. As a secondary developer, we acquire permits on the secondary market and therefore incur acquisition costs instead of permit development costs.

Our largest supplier during 2015, 2016 and 2017 accounted for 10.3%, 39.0% and 22.6% of our total purchase, respectively. Cost of sales attributable to our top five suppliers in 2015, 2016 and 2017 accounted for 34.7%, 76.6% and 70.2% of our total purchase, respectively.

Gross profit

Gross profit is equal to revenue less cost of sales. Gross profit margin is equal to gross profit divided by revenue. Our gross profit margin depends on a combination of factors, including primarily our revenue model, the geographic distribution of the solar parks, the mix of projects, services and electricity sold during the reporting period, the prices at which the solar parks and services are sold, the costs of PV modules and balance-of-system components, the costs of services outsourced to third-party contractors and management costs (including share-based compensation costs) attributable to project development. Our gross profit margin was 60.7%, 53.1% and 59.1% for 2015, 2016 and 2017, respectively.

Our gross profit can also vary from one region to another. We generally expect higher gross margins under both our IPP business and our solar energy system sales business in countries with high FIT, such as Japan and Canada. In addition, off-takers and investors will compare the returns presented by our solar parks with returns on other assets in their respective markets. Investors from countries with high liquidity and low interest rates, such as Japan and the United States, are generally willing to accept single-digit rates of return on our solar parks, which allows us to more easily finance or refinance the development of our solar parks, or to sell our solar parks for higher prices and higher margins.

88

Impairment loss on IPP solar parks

We recorded an impairment loss of US$1.8 million, US$2.2 million and US$5.2 million on IPP solar parks in 2015, 2016 and 2017, respectively. The impairment loss on IPP solar parks in 2015 was primarily a result of discontinued licenses in Canada and Spain due to certain project timing and technical issues. The impairment loss on IPP solar parks in 2016 was primarily a result of discontinued licenses in South America due to certain project timing and technical issues. The impairment loss on IPP solar parks in 2017 was primarily due to several developing licenses were discontinued in Latin America and the developing permits in North America were evaluated for impairment.

Provision on receivables

We recorded provision on receivable of US$1.1 million, nil and nil in 2015, 2016 and 2017, respectively.

We made the determination on the amount of the impairment loss based on our on-going communication with China New Era on the collectability of its receivables due to us, which totaled US$6.8 million, US$4.5 million and US$3.7 million for the year ended December 31, 2015, 2016 and 2017, respectively. We believe the remaining amount due from China New Era is recoverable for the following reasons: (i) China New Era made an installment payment to us in the amount of US$592 thousand from April to May 2017, and (ii) we have offered a discount on the amounts due from China New Era, to which China New Era has agreed in writing, which we believe will expedite the repayment by China New Era. The impairment is the amount of discount.

The provision on receivable in 2015 and 2017 primarily related to receivable in connection with our claims against certain contractors who failed to construct a solar park for us.

Selling expenses

Selling expenses primarily consist of expenses and costs related to labor and exhibition fees.

Other operating income

Other operating income consists of (i) gain on disposal of IPP solar parks, (ii) gain on disposal of subsidiaries and (iii) others.

For the year ended December 31, 2016, we recorded a gain on disposal of subsidiaries of US$11.8 million, of which US$1.7 million was from the disposal of Solar Tech K.K. in March 2016 and US$10.1 million was from the sale of 25 preferred shares in 1088526 B.C. Ltd. to Jade Fair Precision Ltd. in September 2016.

For the year ended December 31, 2017, we recorded a gain on disposal of subsidiaries of US$1.9 million, of which US$ 416 thousand was from the disposal of Sonusco Limited and Neurlus Limited in Greece, and US$1.5 million was from the sale of 25 preferred shares in 1091187 B.C. Ltd. to Jade Fair Precision Ltd. in January 2017 in Canada, offset by loss of US$5 thousand on disposal of Tokyo Solar Electricity KK in Japan.

Administrative expenses

Administrative expenses consist primarily of operational expenses, such as those related to employee salaries and benefits, professional fees and expenses, office, rental and travel expenses and other expenses, as well as share-based compensation expenses.

Aside from share-based compensation, our administrative expenses also include operational expenses. Our legal and professional expenses are mainly related to pipeline development, which we conduct for both our solar energy system sales business and IPP business, as well as corporate financing activities. Employee salaries and benefits, office, rental and travel expenses and share-based compensation are mainly affected by the total number of employees.

89

Reversal of provision for other taxes

In August 2015, we received a tax audit report from one of our subsidiaries’ tax authorities upon the completion of the audit for tax years 2009 to 2013 period. As a result of the completion of this audit, the tax related to the audit period was determined to be US$0.4 million by the relevant tax authorities. As such, we reversed our provision for other taxes (VAT) of US$6.0 million in 2015, among others.

Investment income

Investment income consists primarily of interest income, disposal of associates and other income.

Other losses

Other losses consist primarily of (i) change of financial liabilities with fair value through profit and loss; (ii) hedge ineffectiveness on cash flow hedges and net loss arising on interest rate swap designated as financial liabilities at fair value through profit or loss (“FVTPL”); (iii) net foreign exchange gains (losses); and (iv) transaction cost related to FVTPL liabilities. In 2014, our other losses also included charge for call option issued by our founder in connection with our Japan silent partnership.

For the year ended December 31, 2017, we recorded US$40.0 million of other losses, mainly attributable to the accrued expenses for the silent partnership projects in Japan.

Finance costs

Finance costs primarily consist of interest on loans and the balance between us and our former shareholder, Sky Solar Holdings Co., Ltd.

Other expenses

Other expenses consist primarily of legal and professional fees in connection with the preparation for our initial public offering and other miscellaneous expenses.

Income tax expense

Our income tax expense represents the sum of current income tax and deferred tax.

We are an exempted company incorporated in the Cayman Islands. Under the laws of the Cayman Islands, we are not subject to income or capital gains tax in the Cayman Islands. Additionally, dividend payments made by us are not subject to withholding tax in the Cayman Islands.

As a British Virgin Islands (BVI) business company, our BVI subsidiary is exempt from all provisions of the Income Tax Ordinance of the British Virgin Islands including with respect to all dividends, interests, rents, royalties, compensations and other amounts payable by the company to persons who are not resident in the British Virgin Islands. There is no capital gain tax, estate or inheritance tax payable by persons who are not persons resident in the British Virgin Islands.

Income tax of Bulgaria, Germany, Hong Kong and Canada is calculated at 10%, 15%, 16.5% and 26.5%, respectively, of the estimated assessable profit of our respective subsidiaries for the three years ended December 31, 2017. Income tax rate in Japan is 33%, 30% and 27.8% for the three years ended December 31, 2017, respectively. Income tax rate in Greece is 26%, 29%, and 29% for the three years ended December 31, 2017, respectively. Taxation arising in other jurisdictions is calculated at the rates prevailing in the relevant jurisdictions.

In August 2015, we received a tax audit report from one of our subsidiaries’ tax authorities upon the completion of the audit for tax years 2009 to 2013 period. As a result of the completion of this audit, the tax related to the audit period was determined to be US$0.4 million by the relevant tax authorities. As such, we reversed the overprovision of income tax in the amount of US$4.2 million, among others.

90

Our effective income tax rates were positive 30.6%, positive 28.0% and positive 16% in 2015, 2016 and 2017, respectively. We recorded income tax credit of US$0.7 million in 2015 primarily due to (i) our loss before taxation, (ii) the tax effect of our non-taxable income relating to our income in connection with the reversal of the provision for other taxes (VAT) as a result of a tax audit in 2015 for one of our subsidiaries, and (iii) a reversal of corporate income tax provision as a result of a tax audit in 2015 for one of our subsidiaries, partially offset by the effects of different tax rates of subsidiaries operating in other jurisdictions. We incurred income tax expenses of US$1.3 million in 2016 primarily because of our income before taxation of US$4.6 million in 2016 compared to our loss before taxation of US$2.2 million in 2015. We incurred income tax gain of US$6.5 million in 2017 mainly attributable to our deferred tax income recorded in Japan.

Critical Accounting Policies

We have identified below the accounting policies that we believe are the most critical to the presentation of our consolidated financial information. These accounting policies require subjective or complex judgments by our management, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. The estimates and assumptions are based on our historical experience and various other factors that we believe are reasonable under the circumstances, the results of which form the basis of making judgments about matters that are not readily apparent from other sources. We review our estimates and underlying assumptions on an on-going basis.

Revenue recognition

Our revenue is measured at the fair value of the consideration received or receivable and represents amounts receivable for goods sold and services provided in the normal course of business, net of discounts and sales related taxes, if any.

We have historically derived revenue primarily from selling solar energy systems and selling electricity generated from our IPP solar parks. We sell solar energy systems as “Pipeline + EPC” projects, where we obtain permits required for pipeline projects and provide engineering, construction and procurement services, or as “BT projects”, where we develop permits, build and sell commercially operational solar parks. We have also generated revenue by trading modules to third parties and providing maintenance services for solar parks.

Electricity sales income

When we own and operate solar parks for the purpose of generating income from the sale of electricity over the life of the solar parks, electricity generation income is classified as revenue. When electricity income is generated from solar parks which we hold as inventories, the electricity income is considered incidental and classified as other operating income. Electricity generation income is recognized when it is probable that the economic benefits will flow to us and the amount of income can be measured reliably.

EPC services solar energy system sales - Provision of Pipeline plus EPC Services

The provision of Pipeline plus EPC services involves application of permits, sourcing of solar modules, and provision of construction services.

We either apply for the permits required to construct and operate solar parks ourselves or acquire the permits through the acquisition of the equity interests in project companies, which are typically formed for the specific purpose of holding such permits. In the course of providing Pipeline plus EPC services, we sell the permits to customers through the disposal of project companies holding the relevant permits. Revenue from disposing project companies holding permits is recognized when equity interests in the relevant project companies are transferred to customers by us at which time control is transferred.

In addition to revenue from sales of permits as discussed above, we also enter into separate contracts with customers for sourcing of modules and provision of construction services for their project companies if it is requested by the customers. Revenue from modules sourced and provision of construction service is recognized in accordance with sales of solar modules and construction contract discussed below.

91

EPC services solar energy system sales - Build and transfer of solar parks

Revenue from BT represents the sale of completed solar parks and is recognized when titles to the solar parks have been transferred at which point control is passed to the customer.

Other sales - Sales of solar modules

Revenue from the sales of solar modules is recognized when the modules are delivered and titles have passed. Solar modules are considered delivered and their titles have passed, at the point at which all the following conditions are satisfied:

·we have transferred to the buyer the significant risks and rewards of ownership of the goods;

·we retain neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold;

·the amount of revenue can be measured reliably;

·it is probable that the economic benefits associated with the transaction will flow to us; and

·the costs incurred or to be incurred in respect of the transaction can be measured reliably.

Other sales — O&M service

Income from provision of O&M service and other administrative service is recognized when services are provided.

Others

Interest income from financial assets is recognized when it is probable that the economic benefits will flow to us and the amount of income can be measured reliably. Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset’s net carrying amount on initial recognition.

Construction contracts

When the outcome of a construction contract can be estimated reliably, revenue and costs are recognized by reference to the stage of completion of the contract activity at the end of the reporting period, measured based on the proportion of contract costs incurred for work performed to date relative to the estimated total contract costs. Variations in contract work, claims and incentive payments are included to the extent that the amount can be measured reliably and its receipt is considered probable.

When the outcome of a construction contract cannot be estimated reliably, contract revenue is recognized to the extent of contract costs incurred that it is probable will be recoverable. Contract costs are recognized as expenses in the period in which they are incurred.

When it is probable that total contract costs will exceed total contract revenue, the expected loss is recognized as an expense immediately.

Where contract costs incurred to date plus recognized profits less recognized losses exceed progress billings, the surplus is shown as amounts due from customers for contract work. For contracts where progress billings exceed contract costs incurred to date plus recognized profits less recognized losses, the surplus is shown as the amounts due to customers for contract work. Amounts received before the related work is performed are included in the consolidated statement of financial position as a liability under advances received. Amounts billed for work performed but not yet paid by the customer are included in the consolidated statements of financial position under trade and other receivables.

92

IPP solar parks

IPP solar parks include completed solar parks held for generation of electricity income and solar parks under development with an intention to be held for generation of electricity income. Solar parks under development will be transferred to completed solar parks upon completion and when they are ready for intended use. IPP solar parks are stated in the consolidated statements of financial position at cost less subsequent accumulated depreciation of completed solar parks and subsequent accumulated impairment losses, if any.

Costs include expenditures capitalized during the course of obtaining permits required for solar parks (for example legal expenses, consultancy fees, staff costs and other costs), cost of land on which solar parks are developed or to be developed and costs of construction, such as costs for procurement of solar modules, inverters and other equipment, costs for designing, engineering and installation and other direct costs capitalized in the course of construction. Such costs are capitalized starting from the point in time it is determined that development of the IPP solar park is probable.

Depreciation of completed solar parks commences once the solar parks are successfully connected to grids and begin generating electricity. Depreciation is recognized, so as to write off the cost of assets (other than solar parks under development), over their estimated useful lives of the solar parks (less residual value if any), using the straight-line method. The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis.

IPP solar parks are derecognized upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of solar parks is determined as the difference between the sales proceeds and the carrying amount of the solar parks and is recognized in other operating income. The IPP solar parks are reclassified as non-current assets held for sale when certain criteria are met with our intention to sell.

At the end of each reporting period, we review the carrying amounts of our IPP solar parks to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, we determine the extent of the impairment loss (if any) and record the recoverable amount of the asset.

We define each operational solar park generating electricity income as a cash generating unit, or CGU, for impairment purposes. We test a CGU for impairment whenever events or changes in circumstance indicate that the carrying amount of the CGU may not be recoverable. These events or changes in circumstances include:

·Significant adverse changes in a FIT policy affecting the PPA for completed solar parks;

·Significant restrictions on power generation by local authorities;

·Material adverse changes in local tax structures applied in the renewable energy sector;

·Sustaining or forecasted significant operational losses or net operating cash outflows;

·Physical damage or obsolescence of solar parks; or

·Decreases in system efficiency, mainly due to decreased performance of solar panels, PV modules and balance-of-system components, or decreased quality of maintenance services performed.

We had 121, 119 and 117 CGUs as at December 31, 2015, 2016 and 2017, respectively. In 2013, 17 of the 39 CGUs located in Greece showed indicators of impairment and were tested for impairment. The other 22 CGUs located in Japan, Spain and the Czech Republic had no indicators of impairment. After performing the impairment test, we determined that 13 of the CGUs were impaired and recorded an impairment loss of US$21.6 million. The total remaining carrying value after impairment for the 13 CGUs was EUR28.6 million (equivalent to approximately US$39.5 million based on the historical exchange rate on the date of settlement of relevant transactions) as of December 31, 2013. The total carrying amount of the 4 CGUs that passed the impairment testing was US$4.6 million, and the carrying amount of each CGU was less than the respective estimated recoverable amount by approximately 5%.

93

The recoverable amounts of the CGUs were determined from value in use calculations. The key assumptions for the value in use calculation consisted of discount rate, estimated net electricity income and direct costs and growth rate. The discount rate and growth rate used in the impairment testing was 13.6% and 0.0%, respectively, for each of the solar parks, as all of these solar parks subject to impairment testing have similar economic characteristics. The solar parks in Greece are built with the same brand of solar panels and equipment. They are also affected by the same FIT policies, cost structures, tax schemes, capital structures and risk profiles.

We performed the following sensitivity analysis to test the exposure of the 17 IPP solar parks with indicators of impairment to fluctuations in the discount rate, estimated net change in electricity income and direct costs and growth rate during the useful lives of IPP solar parks. We assumed, for purposes of this analysis, that the other assumptions during the forecasted period were constant.

Assumptions	Change in assumption	Total Increase/Decrease in the amount of impairment charges
Discount rate	Increase/decrease by 1%	Increase/decrease US$2.3 million
Estimated net change in electricity income and direct costs	Increase/decrease by 5%	Decrease/increase US$1.7 million
Growth rate	Increase/decrease by 1%	Decrease/increase US$2.8 million

During the year ended December 31, 2015, 20 CGUs located in Greece were evaluated for impairment given the primary indicator related to the general adverse and unstable economic and political environment was prevailing in the country, while other CGUs located in Japan, Spain, the Czech Republic and Uruguay did not show any indicators of impairment. After we performed the impairment tests on these twenty CGUs, we recorded an impairment loss of US$0.1 million on one of the twenty CGUs.

During the year ended December 31, 2016, 46 CGUs located in Spain were evaluated for impairment given the primary indicator related to the general adverse and unstable economic and political environment was prevailing in the country, while other CGUs located in Japan, Greece, Chile, the Czech Republic, Canada, the United States and Uruguay did not show any indicators of impairment. After we performed the impairment tests on these 46 CGUs, we recorded an impairment loss of US$2.2 million on one of the 46 CGUs.

During the year ended December 31, 2017, 37 CGUs located in Chile and the United States were evaluated for impairment given the primary indicator related to the general adverse and unstable economic and political environment was prevailing in the country, while other CGUs located in Japan, Spain, the Czech Republic, Canada and Uruguay did not show any indicators of impairment. After we performed the impairment tests on these 37 CGUs, we recorded an impairment loss of US$5.2 million on three of the 37 CGUs.

For IPP solar parks in certain countries where customers purchase electricity from us under PPAs, facts and circumstances of the FIT policies were changed mandatorily which triggered re-assessment on accounting for these arrangements. As a result, the newly issued FIT policies may indicate that it is remote that one or more parties other than the purchaser will take more than an insignificant amount of the output or other utility that will be produced or generated by the asset during the term of the arrangement, and the price that the purchaser will pay for the output is neither contractually fixed per unit of output nor equal to the current market price per unit of output as of the time of delivery of the output. These agreements will be accounted for as operating leases under such circumstance pursuant to IFRIC 4, Determine whether an Arrangement Contains a Lease, and IAS 17, Leases. Revenue is recognized based upon the amount of electricity delivered as determined by remote monitoring equipment at rates specified under the contracts, assuming all other revenue recognition criteria are met. We present the rental income from operating leases of these IPP solar parks as electricity generation income in revenue. There is no minimum lease payment since all lease payments are contingent on actual volume of electricity produced.

94

Inventories

Our inventories mainly comprise permits and related costs capitalized during the course of obtaining permits, solar modules and solar parks under development or completed solar parks that are held for sale by us within normal operating cycle, which is usually twelve months since their completion of construction.

Inventories are stated at the lower of cost and net realizable value. Costs of solar modules are calculated using weighted average method. Costs of permits include capitalized costs incurred to obtaining such permits (for example legal expenses, consultancy fees, staff costs and other costs). Costs of solar parks under development include costs relating to solar parks capitalized before construction is completed, such as modules installed and development costs incurred (for example legal expenses, consultancy fees, staff costs and other costs).

The proceeds from the sale of solar parks held for sale is recognized as revenue and the carrying amount of the solar parks which is recognized as costs of sales.

Net realizable value represents the estimated selling price for inventories less all estimated costs of completion and costs necessary to make the sale. Provisions are made for inventory whose carrying value is in excess of net realizable value. Certain factors could impact the realizable value, so we continually evaluate the recoverability based on assumptions about market conditions. We regularly review the cost against its estimated net realizable value and record the lower of cost and net realizable value to cost of sales, if inventories have costs in excess of estimated net realizable values.

Asset classified as held for sale

Assets and disposal groups are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use. This condition is regarded as met only when the asset (or disposal group) is available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such asset (or disposal group) and its sale is highly probable. Management must be committed to the sale, which should be expected to qualify for recognition as a completed sale within one year from the date of classification.

When we are committed to a sale plan involving loss of control of a subsidiary, all of the assets and liabilities of that subsidiary are classified as held for sale when the criteria described above are met, regardless of whether we will retain a non-controlling interest in our former subsidiary after the sale.

When we are committed to a sale plan involving disposal of an investment, or a portion of an investment, in an associate or joint venture, the investment or the portion of the investment that will be disposed of is classified as held for sale when the criteria described above are met, and we discontinue the use of the equity method in relation to the portion that is classified a held for sale. Any retained portion of an investment in an associate or a joint venture that has not been classified as held for sale continues to be accounted for using the equity method. We discontinue the use of the equity method at the time of disposal when the disposal results in we losing significant influence over the associate or joint venture.

After the disposal takes place, we account for any retained interest in the associate or joint venture in accordance with IAS 39 unless the retained interest continues to be an associate or a joint venture, in which case we use the equity method (see the accounting policy regarding investments in associates or joint ventures above).

Non-current assets (and disposal groups) classified as held for sale are measured at the lower of their carrying amount and fair value less costs to sell.

Impairment of tangible and intangible assets other than goodwill

At the end of each reporting period, we review the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). When it is not possible to estimate the recoverable amount of an individual asset, we estimate the recoverable amount of the cash-generating unit to which the asset belongs. When a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual cash-generating units, or otherwise they are allocated to the smallest group of cash-generating units for which a reasonable and consistent allocation basis can be identified.

95

Recoverable amount is the higher of fair value less costs of disposal and value in use.

In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted. If the recoverable amount of an asset (or a cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or the cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognized immediately in profit or loss.

Share-based payment arrangements

Shares granted to the directors and eligible employees

For shares granted or transferred by controlling shareholders in exchange of services received by us that are conditional within a vesting period, the fair value of services received is determined by reference to the fair values of relevant shares granted or transferred. The fair value of shares granted or transferred at the date of grant or date of transfer is expensed as share-based compensation on a straight-line basis over the vesting period, with a corresponding increase in equity (share-based compensation reserve). The forfeitures will be estimated to adjust over the requisite service period to the extent that actual forfeitures differ, or are expected to differ, from such original estimates. Changes in estimated forfeitures will be recognized through a cumulative catch-up adjustment in the period of change.

At the time when the shares were cancelled during the vesting period, we account for the cancellation as an acceleration of vesting, and recognizes immediately the amount that otherwise would have been recognized for services received over the remainder of the vesting period. The amount previously recognized in share-based compensation reserve will remain in that reserve.

Shares granted to non-employees

Shares issued in exchange of services are measured at the fair values of the services received, unless that fair value cannot be reliably measured, in which case the services received are measured by reference to the fair value of the shares issued. The fair values of the services received are recognized as expenses, with a corresponding increase in equity (share capital and share premium), when the counterparties render services, unless the services qualify for recognition as assets.

Share options granted to eligible employees

Share options granted by our company or controlling shareholders in exchange for service received by us are measured by reference to the fair value of the share options granted. The fair value of services received is expensed as share-based compensation on a straight-line basis over the vesting period with a corresponding increase in equity (share-based compensation reserve).

At the end of each reporting period, we revise our estimates of the number of options that are expected to ultimately vest. The impact of the revision of the original estimates during the vesting period, if any, is recognized in profit or loss such that the cumulative expense reflects the revised estimate, with a corresponding adjustment to equity.

When share options are exercised, the amount previously recognized in equity will be recognized in share capital and share premium. When the share options are forfeited after the vesting date or are still not exercised at the expiry date, the amount previously recognized equity will be remained in the share-based compensation reserve.

96

Financial liabilities at fair value through profit or loss (“FVTPL”)

We classified financial liabilities as at FVTPL when the financial liabilities are either held for trading or those designated as at FVTPL on initial recognition.

A financial liability is classified as held for trading if:

·it has been acquired principally for the purpose of selling it in the near term; or

·on initial recognition it is a part of a portfolio of identified financial instruments that we manage together and have a recent actual pattern of short-term profit-taking; or

·it is a derivative that is not designated and effective as a hedging instrument.

A financial liability other than a financial liability held for trading may be designated as at FVTPL upon initial recognition if:

·such designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise; or

·the financial liability forms part of a group of financial assets or financial liabilities or both, which is managed and its performance is evaluated on a fair value basis, in accordance with our documented risk management or investment strategy, and information about the grouping is provided internally on that basis; or

·it forms part of a contract containing one or more embedded derivatives, and IAS 39 permits the entire combined contract (asset or liability) to be designated as at FVTPL.

Financial liabilities at FVTPL are stated at fair value, with any gains or losses arising on remeasurement recognized in profit or loss. The net gain or loss is included in the “other losses” line item in profit or loss and includes any interest paid on the financial liabilities.

Our finance department, which is headed by our Chief Financial Officer, (“CFO”) is responsible for determination of appropriate valuation techniques and inputs for fair value measures. In estimating the fair value of a liability, we use market-observable data to the extent it is available. Where Level 1 inputs are not available, we perform the valuation with the assistance from third party qualified valuation specialists. The finance department works closely with the qualified external valuation specialists to establish the appropriate valuation techniques and inputs to the model. Our CFO reports the finance department’s findings to our board of directors every quarter to explain the cause of fluctuations in the fair value of assets and liabilities.

INTERNAL CONTROL OVER FINANCIAL REPORTING

For a discussion on our internal control over financial reporting, please see “Item 15. Controls and Procedures—Management’s Annual Report on Internal Control Over Financial Reporting” and “—Changes in Internal Control over Financial Reporting.”

A.Operating Results

Results of Operations

The following table sets forth our results of operations for the periods indicated, both in absolute amounts and as percentages of our total revenue for the respective periods. Our historical results presented below are not necessarily indicative of the results that may be expected for future periods.

97

	Year Ended December 31,
	2015				2016				2017
	(US$ in thousands)		(% of total revenue)		(US$ in thousands)		(% of total revenue)		(US$ in thousands)		(% of total revenue)
Revenue
Related Parties	4,450		9.4		788		1.2		286		0.5
Non-related Parties	42,705		90.6		65,137		98.8		56,447		99.5
Total revenue	47,155		100.0		65,925		100.0		56,733		100
Cost of sales and services	(18,533	)	(39.3	)	(30,911	)	(46.9	)	(23,201	)	(40.9	)
Gross profit	28,622		60.7		35,014		53.1		33,532		59.1
Impairment loss on IPP solar parks	(1,835	)	(3.9	)	(2,151	)	(3.3	)	(5,221	)	(9.2	)
Provision on receivables	(1,071	)	(2.3	)	—		—		—		—
Selling expenses	(1,171	)	(2.5	)	(882	)	(1.3	)	(554	)	(1.0	)
Administrative expenses	(22,556	)	(47.8	)	(29,744	)	(45.1	)	(25,110	)	(44.3	)
Other operating income	197		0.4		13,163		20.0		2,068		3.6
Reversal of provision for other taxes	6,025		12.8		—		—		—		—
(Loss) profit from operations	8,211		17.4		15,400		23.4		4,715		8.3
Investment gains	349		0.7		498		0.8		7,891		13.9
Other losses	(6,901	)	(14.6	)	(4,971	)	(7.5	)	(39,986	)	(70.5	)
Finance costs	(3,897	)	(8.3	)	(6,368	)	(9.7	)	(12,200	)	(21.5	)
Other expenses	—		—		—		—		—		—
(Loss) profit before taxation	(2,238	)	(4.7	)	4,559		6.9		(39,580	)	(69.8	)
Income tax (expense) credit	684		1.5		(1,277	)	(1.9	)	6,530		11.5
(Loss) profit for the year	(1,554	)	(3.3	)	3,282		5.0		(33,050	)	(58.3	)
Other comprehensive (expense) income that may be subsequently reclassified to profit or loss:
Currency translation difference	(10,310	)	(21.9	)	(57	)	(0.1	)	5,579		9.8
Share of other comprehensive income of associates	—		—		136		0.2		—		—
Fair value loss arising from cash flow hedges	(680	)	(1.4	)	(446	)	(0.7	)	—		—
Release of cumulative fair value loss from cash flow hedges upon disposal of subsidiary	—		—		1,126		1.7		—		—
Total comprehensive (expense) income for the year	(12,544	)	(26.6	)	4,041		6.1		(27,471	)	(48.4	)

98

The following table sets forth a breakdown of our revenue streams for the period indicated:

	Year Ended December 31,
	2015		2016		2017
	(US$ in thousands)	(% of total revenue)	(US$ in thousands)	(% of total revenue)	(US$ in thousands)	(% of total revenue)
Electricity generation income(1)	35,479	75.2	53,658	81.4	53,614	94.5
Solar energy system sales	9,392	19.9	9,711	14.7	285	0.5
Other(2)	2,284	4.9	2,556	3.9	2,834	5.0
Total Revenue	47,155	100.0	65,925	100.0	56,733	100.0

(1)Represents revenue from selling electricity from IPP solar parks.

(2)Represents revenue from the sale of solar modules and the provision of O&M services.

Year Ended December 31, 2017 Compared to Year Ended December 31, 2016

Revenue. Our total revenue decreased by 13.9% from US$65.9 million in 2016 to US$56.7 million in 2017, primarily as a result of a decrease in revenue from our solar energy system sales business.

·Revenue from selling electricity from IPP solar parks. Our revenue from selling electricity from IPP solar parks was US$53.6 million in 2017, compared to US$53.7 million in 2016.

·Revenue from solar energy system sales. Our revenue from solar energy system sales decreased by 97.1% from US$9.7 million in 2016 to US$0.3 million in 2017, primarily due to the decrease in solar energy systems and construction services.

·Other revenue. Our other revenue increased by 10.8% from US$2.6 million in 2016 to US$2.8 million in 2017, primarily because of the development of our O&M service business.

Cost of sales and services. Our cost of sales and services decreased by 24.9% from US$30.9 million in 2016 to US$23.2 million in 2017, primarily due to the decrease in the sales of build and sell solar energy systems and construction services sales in Japan and Canada, where the costs of sales and services are higher than other regions.

Gross profit. Our gross profit decreased by 4.2% from US$35.0 million in 2016 to US$33.5 million in 2017, and our gross profit margin increased from 53.1% in 2016 to 59.1% in 2017, primarily due to an increase of revenue from selling electricity from IPP solar parks, which provides higher gross margin compared to solar energy system sales.

Impairment loss on IPP solar parks. Our impairment loss on IPP solar parks increased by 142.7% from US$2.2 million in 2016 to US$5.2 million in 2017. Our impairment loss in 2017 primarily due to several developing licenses were discontinued in Latin America and the developing permits in North America were evaluated for impairment.

Provision on Receivables. Our provision on receivables is nil in 2016 as well as 2017.

Selling expenses. Our selling expenses decreased by 37.1% from US$0.9 million in 2016 to US$0.6 million in 2017 primarily attributable to the reallocation of human resources in Europe and the United States. Selling expense as a percentage of revenue decreased from 1.3% in 2016 to 1.0% in 2017.

Administrative expenses. Our administrative expenses decreased from US$29.7 million in 2016 to US$25.1 million in 2017, primarily due to the reallocation of resources, and the decrease of professional fees related to financing in core markets. As a result, administrative expenses as a percentage of revenue also decreased from 45.1% in 2016 to 44.3% in 2017.

Other operating income. Our other operating income decreased from US$13.2 million in 2016 to US$2.1 million in 2017. The other operating income in 2016 was primarily due to the gain on disposal of interest in solar parks in Canada and Japan. The other operating income in 2017 was primarily due to the gain on disposal of interest in subsidiaries in Greece and Canada in 2017, which was US$1.9 million.

Investment income. Our investment income increased from US$0.5 million in 2016 to US$7.9 million in 2017, primarily due to the disposal of interest in associates in Japan.

99

Other losses. Our other losses increased by 704.4% from US$5.0 million in 2016 to US$40.0 million in 2017, primarily because of the fair value changes of financial liabilities relating to the Silent Partner’s demand to make adjustments to Silent Partnership Assets distribution percentage to receive a accumulative 15% IRR. See “Item 4. Information on the Company — B. Business Overview — Featured Countries — Japan — Japan Silent Partnership.”

Finance costs. Our finance costs increased from US$6.4 million in 2016 to US$12.2 million in 2017, due to our increased use of loans leading to increased outstanding borrowing balance.

Income tax (expense) credit. We incurred income tax credit of US$6.5 million in 2017, compared to income tax expense increased from US$1.3 million in 2016, primarily because of our increasing operating profit in Japan.

(Loss) profit for the year. As a result of the foregoing, we recorded a loss of US$33.1 million for 2017, compared to a profit of US$3.3 million for 2016.

Year Ended December 31, 2016 Compared to Year Ended December 31, 2015

Revenue. Our total revenue increased by 39.8% from US$47.2 million in 2015 to US$65.9 million in 2016, primarily as a result of increased capacity IPP Solar parks.

·Revenue from selling electricity from IPP solar parks. Our revenue from selling electricity from IPP solar parks increased by 51.2% from US$35.5 million in 2015 to US$53.7 million in 2016, as we increased the capacity of our IPP portfolio from 128.6 MW as of December 31, 2015 to 159.8 MW as of December 31, 2016. The amount of electricity we produced and sold increased from 110.0 million kWh in 2015 to 187.6 million kWh in 2016 while the average selling price per kWh decreased from US$0.32 in 2015 to US$0.29 in 2016. The increase in the amount of electricity we sold was primarily due to the additional electricity sold by projects added to our portfolio in Japan, United States and Uruguay. The decrease in average selling price was primarily because of lower FIT in United States and Uruguay.

·Revenue from solar energy system sales. Our revenue from solar energy system sales increased by 3.4% from US$9.4 million in 2015 to US$9.7 million in 2016, primarily due to the 3.1 MW system sales to third parties in Canada in 2016. We derived revenue of US$0.5 million in 2016 from sales of permits.

·Other revenue. Our other revenue increased by 11.9% from US$2.3 million in 2015 to US$2.6 million in 2016, primarily because of our market expansion in Japan.

Cost of sales and services. Our cost of sales and services increased by 66.8% from US$18.5 million in 2015 to US$30.9 million in 2016, primarily due to the increase of system sales in Canada and increased capacity of IPP portfolio during 2016.

Gross profit. Our gross profit increased by 22.4% from US$28.6 million in 2015 to US$35.0 million in 2016, and our gross profit margin decreased from 60.7% in 2015 to 53.1% in 2016, primarily due to the higher percentage of revenue contribution from North America and South America, which had lower margin compared to Japan.

Impairment loss on IPP solar parks. Our impairment loss on IPP solar parks increased by 17.2% from US$1.8 million in 2015 to US$2.2 million in 2016. Our impairment loss in 2016 primarily related to discontinued permit development in South America.

Provision on Receivables. Our provision on receivables decreased from US$1.1 million in 2015 to nil in 2016.

Selling expenses. Our selling expenses decreased by 24.7% from US$1.2 million in 2015 to US$0.9 million in 2016. Selling expense as a percentage of revenue decreased from 2.5% in 2015 to 1.3% in 2016.

Administrative expenses. Our administrative expenses increased from US$22.6 million in 2015 to US$29.7 million in 2016, primarily due to our additional professional fees related to financing in core market such as Japan, United States and Uruguay and a US$4.2 million service fee related to obtaining the 140 MW permits in Japan. Administrative expenses as a percentage of revenue also decreased from 47.8% in 2015 to 45.1% in 2016.

100

In October 2016, we sold two subsidiaries with no substantial business or projects under development to a managing director upon his resignation and recognized expense of US$30 thousand from disposal of subsidiaries. Contemporaneous with the resignation, we also entered into permit development agreement with the individual, to seek for his assistance, on a best efforts basis, in obtaining 140MW of permits. The related service fee of US$4.2 million paid up front, was recorded in administrative expenses, and a remaining contingent fee of approximately US$1.66 million, denominated in JPY, will be paid if and when the additional 140MW of permits are secured for us. Further, on November 21, 2016, the individual transferred 2.6 million of our ordinary shares to Flash Bright Power Ltd., a BVI company owned by Mr. Su, our major shareholder and director, with a fair value on the date of transfer of US$0.8 million, for no consideration.

Other operating income. Our other operating income increased from US$0.2 million in 2015 to US$13.2 million in 2016, primarily because of the disposal of interest in solar parks in Canada and Japan.

Investment income. Our investment income increased from US$0.3 million in 2015 to US$0.5 million in 2016.

Other losses. Our other losses decreased by 28.0% from US$6.9 million in 2015 to US$5.0 million in 2016, primarily because of less fair value changes of financial liabilities.

Finance costs. Our finance costs increased from US$3.9 million in 2015 to US$6.4 million in 2016.

Income tax expense. We incurred income tax expense of US$1.3 million in 2016, compared to the income tax credit of US$0.7 million in 2015, primarily because of our income before taxation of US$4.6 million in 2016 compared to our loss before taxation of US$2.2 million in 2015.

Profit (loss) for the year. As a result of the foregoing, we recorded a profit of US$3.3 million for 2016, compared to a loss of US$1.6 million in 2015.

B.Liquidity and Capital Resources

Cash Flow and Working Capital

Our principal sources of liquidity to date have been cash from the proceeds of our initial public offering as well as cash flow generated from our operations and borrowings from banks and our shareholders. We leverage bank facilities in certain countries in order to meet working capital requirements for construction activities. Our principal uses of cash have been for pipeline development, working capital and general corporate purposes.

Other than the capital control imposed by the Greek government as mentioned elsewhere in this annual report, we do not anticipate any legal or economic restrictions on the ability of our subsidiaries outside of China to transfer funds to us in the form of cash dividends, loans or advances. Subsidiaries in China which we may establish in the future are required under Chinese law to set aside at least 10% of their after-tax profits each year, if any, to fund certain statutory reserves until the accumulated amount of such reserves reaches 50% of their respective registered capital. Although the statutory reserves can be used, among other ways, to increase the registered capital and eliminate future losses in excess of retained earnings of the respective companies, the reserve funds are not distributable as cash dividends except in the event of liquidation. Our future subsidiaries may be permitted to pay dividends to us only out of their retained earnings, if any, as determined in accordance with Chinese accounting standards and regulations.

As of December 31, 2017, we had cash of US$46.1 million, restricted cash of US$40.7 million which represented deposits placed in banks for the purpose of securing current portion of project financing as well as bidding for potential project permits, US$19.7 million in outstanding short-term borrowings (including the current portion of long-term bank borrowings) and US$230.0 million in long-term bank borrowings (excluding the current portion). Other than as described in “Item 7. Major shareholders and related party transactions-B. Related party transactions-Loans from and to affiliates”, as of December 31, 2017, there was US$120.8 million other current liability, which represents the liability under the Silent Partnership agreement. We were in compliance with all material terms and covenants of our loan credit agreements.

101

As of December 31, 2017, our current liabilities of US$171.9 million, which included US$120.8 million other current liability under the Silent Partnership agreement, which is due on August 27, 2018, exceeded our current assets by approximately US$33.5 million. The net book value of all Silent Partnership Assets is approximately US$173.6 million, which we recorded as IPP solar park, and current assets associated with the Silent Partnership agreement is approximately US$47.9 million. Furthermore, we have committed to capital expenditure of US$21.1 million in the next 12 months relating to the construction of solar parks contracted for but not provided in our consolidated financial statements as of December 31, 2017. In order to manage our working capital requirements, we reviewed our forecasted cash flows on an on-going basis to ensure we will have sufficient working capital from internally generated cash flows and proceeds from financing activities. Subsequent to December 31, 2017, we have been exploring the options of either secure financing for the purchase of the SSJ Silent Partnership Assets, or to liquidate the SSJ Silent Partnership Assets for the final distribution, and the net book value of the Silent Partnership Assets was approximate US$173.6 million which we recorded as IPP solar park. In addition, besides the current assets of US$47.9 million associated with the Silent Partnership agreement, the remaining other current assets is US$90.5 million, which is US$39.4 million higher than the current liability of US$51.1 million excluding the payable under the Silent Partnership agreement. Furthermore, we have historically been able to effectively manage our business with a working capital deficit based on our arrangements with suppliers who typically do not require payment until such time as IPP solar parks are completed, at which point we are able to either sell the parks, or obtain collateralized financing. In addition, following project connection, we typically pledge solar park assets or account or trade receivables to raise debt financing in order to optimize the project’s capital structure, pay our contractors and replenish our working capital. Such debt financing usually has a term of over 15 years and we are restricted from creating additional security over our assets. Such account or trade receivables will include all income generated from the sale of electricity in the solar parks. We believe that our current operating IPP solar parks and projects under construction are highly liquid assets that can be pledged to raise new capital or sold to raise additional capital to finance new development when necessary. Based on the above factors, we believe that adequate sources of liquidity will exist to fund our working capital and capital expenditures, and to meet our short term debt obligations, other liabilities and commitments as they become due for the next 12 months. Based on these factors, we believe that adequate sources of liquidity will exist to fund our working capital and capital expenditures requirements, and to meet its short term debt obligations, other liabilities and commitments as they fall due.

Partly due to the intense market competition, we have been able to negotiate flexible credit terms with our suppliers. Our EPC services and balance-of-system suppliers in Japan typically require us to pay an average 30% of the contract price at the time of signing the contract and 30% or more at the time of delivery of the services, with the remaining amount not due until completion of the solar parks. In Uruguay, we engage general EPC contractor, and we settle EPC payment based on the project milestone. In Canada, typically, the entire EPC cost is financed by the EPC company or the designated project buyer. The construction financing is settled at long term debt closing or project transfer after the commercial operation date. In the United States, typically, the cost of construction is funded approximately 20% from cash equity, 30% from tax equity and 50% from debt.

We require significant financial resources to expand and develop our existing project pipeline. The development of IPP solar parks can take months or years. We may need to make significant upfront investments, such as payments for site control and transmission and PPA deposits, in advance of the receipt of any revenue. Historically, apart from bank borrowing, shareholder contributions and our own operating cash flows, we have relied on financing for the construction of large IPP solar parks, including project funding, pre-financing agreements with off-takers and supply-chain financing. Following connection, we typically pledge solar park assets or account or trade receivables to raise debt financing in order to optimize a project’s capital structure, pay our contractors and replenish our working capital. Such debt financing usually has a term of over 15 years and restricts us from creating additional security over the assets. Such account or trade receivables include all income generated from the sale of electricity in the solar parks. We believe that our current operating IPP solar parks and projects under construction are highly liquid assets that can be pledged to raise new capital or sold to raise additional capital to finance new development when necessary.

102

Electricity sales are only generated after significant initial capital investments. The delayed completion of solar parks and inability to generate electricity income from IPP solar parks after making such upfront investments could adversely affect our business and results of operations and as a result we may become constrained in our ability to simultaneously undertake multiple projects. Our liquidity may be adversely affected to the extent the solar market weakens and we are unable to sell our solar parks or services on pricing, terms and timing favorable or acceptable to us.

We may need additional cash resources in the future if we experience changed business conditions or other developments or if we decide to pursue opportunities for investment, acquisition, strategic cooperation or other similar actions. If we determine that our cash requirements exceed our amounts of cash and cash equivalents on hand, we may seek to issue debt, equity or equity-linked securities or obtain a credit facility. Any issuance of equity or equity-linked securities could cause dilution for our shareholders. Any incurrence of indebtedness could increase our debt service obligations and subject us to restrictive operating and financial covenants. It is possible that, when we need additional cash resources, financing will not be available to us in amounts or on terms acceptable to us, or at all.

We target to maintain the sufficiency of cash flows with availability of unutilized banking facilities, internally generated funds and funds obtained from financing activities, if required. We review our forecasted cash flows on an on-going basis to ensure that we will have sufficient capital from a combination of internally generated cash flows and proceeds from financing activities, if required, in order to fund our working capital and capital expenditure requirements and to meet our short term debt obligations and other liabilities and commitments as they become due.

The following table sets forth a summary of our net cash flows for the periods indicated:

	Year Ended December 31,
	2015		2016		2017
	(US$ in thousands)
Net cash from (used in) operating activities	3,793		(42,554	)	(1,409	)
Net cash used in investing activities	(110,587	)	(58,122	)	(50,802	)
Net cash generated from (used in) financing activities	81,064		89,972		80,258
Net increase (decrease) in cash and cash equivalents	(25,730	)	(10,704	)	28,047
Cash and cash equivalents at beginning of the year	52,993		26,272		12,518
Effects of exchange rate changes on the balance of cash held in foreign currencies	(991	)	867		5,519
Cash and cash equivalents classified as held for sale	—		(3,917	)	—
Cash and cash equivalents at end of the year	26,272		12,518		46,084

Operating Activities

Our net cash used in operating activities in 2017 was US$1.4 million, which was mainly attributable to loss before taxation of US$39.6 million, a net decrease in the working capital of US$21.1 million and income taxes paid of US$9.5 million, partially offset by adjustments of US$65.6 million. The net decrease in the working capital of US$21.1 million was primarily attributable to an increase in amounts due from other related parties of US$10.4 million, a decrease in amounts due to other related parties of US$5.9 million, both which was primarily related to the transactions and fund transfers between us and certain entities controlled by Mr. Su as disclosed elsewhere in this annual report under “Item 7 Major Shareholders and Related Party Transactions—B. Related Party Transactions—Transactions with Weili Su.”, and an increase in trade and other receivables of US$4.5 million. The adjustments of US$65.6 were primarily attributable to fair value changes on other non-current liability of negative US$39.1 million, which was primarily related to the Silent Partner demanding to make certain adjustment to percentage of distribution to enjoy 15% cumulative IRR under our silent partnership agreement as disclosed elsewhere in this annual report under “Item 4. Information on the Company—B. Business Overview—Featured Countries—Japan—Japan Silent Partnership.”, a depreciation of IPP solar parks of US$14.3 million and finance costs of US$12.2 million.

103

Our net cash used in operating activities in 2016 was US$42.6 million, which was mainly attributable to a net decrease in the working capital of US$91.4 million and income taxes paid of US$6.3 million, partially offset by profit before taxation of US$4.6 million and adjustments of US$14.0 million. The net decrease in the working capital of US$91.4 million was primarily attributable to cash used in operations of US$36.3 million and an increase in inventories of US$32.7 million. The adjustments were primarily attributable to depreciation of IPP solar parks of US$14.2 million and finance costs of US$6.4 million.

Our net cash generated from operating activities in 2015 was US$3.8 million, which was mainly attributable to adjustments of US$19.5 million, partially offset by loss before taxation of US$2.2 million, a net decrease in the working capital of US$6.8 million and income taxes paid of US$1.4 million. The adjustments of US$19.5 million were primarily attributable to an increase in trade and other receivables of US$11.8 million. The net decrease in the working capital of US$6.8 million was primarily attributable to a depreciation of IPP solar parks of US$9.2 million and fair value changes on other non-current liability of US$5.7 million.

Investment Activities

Our net cash used in investing activities in 2017 was US$50.8 million. This cash outflow was primarily attributable to (i) payments for IPP solar parks of US$92.9 million, as a result of our construction of solar parks in Japan, and (ii) placement of restricted cash of US$40.7 million. This cash outflow was primarily offset by (i) withdrawal of restricted cash of US$29.9 million, (ii) disposal of subsidiaries of US$41.1 million, (iii) disposal of associates of US$9.5 million, and (iv) disposal of IPP solar parks of US$2.0 million.

Our net cash used in investing activities in 2016 was US$58.1 million. This cash outflow was primarily attributable to (i) payments for IPP solar parks of US$43.6 million, as a result of our construction of solar parks in Japan, (ii) placement of restricted cash of US$29.9 million and (iii) acquisition of subsidiaries of US$1.1 million. This cash outflow was primarily offset by (i) withdrawal of restricted cash of US$5.6 million, (ii) proceeds from disposal of IPP solar parks of US$4.8 million and (iii) disposal of subsidiaries of US$4.1 million.

Our net cash used in investing activities in 2015 was US$110.6 million. This cash outflow was primarily attributable to (i) payments for IPP solar parks of US$100.8 million, as a result of our construction of IPP solar parks in Japan, Canada and Uruguay, (ii) investment in associates of US$5.7 million, and (iii) placement of restricted cash of US$5.6 million. This cash outflow was primarily offset by (i) withdrawal of restricted cash of US$5.4 million, and (ii) collection of advances to other related parties of US$1.0 million.

Financing Activities

Our net cash generated from financing activities in 2017 was US$80.3 million. This cash inflow was primarily attributable to (i) proceeds from bank borrowings of US$84.9 million, and (ii) proceeds of other borrowings of US$35.1 million. This cash inflow was primarily offset by (i) repayment of other borrowings of US$25.1 million, (ii) interest paid of US$12.4 million and (iii) repayment of banking borrowings of US$2.2 million.

Our net cash generated from financing activities in 2016 was US$90.0 million. This cash inflow was primarily attributable to (i) proceeds of other borrowings of US$51.8 million, (ii) changes to financial liabilities of US$44.0 million, and (iii) proceeds from bank borrowings of US$11.4 million. This cash inflow was primarily offset by (i) repayment of other borrowings of US$6.4 million, (ii) interest paid of US$6.4 million and (iii) repayment of banking borrowings of US$4.4 million.

Our net cash generated from financing activities in 2015 was US$81.1 million. This cash inflow was primarily attributable to (i) proceeds from bank borrowings of US$47.1 million, primarily for bank borrowings of solar park projects (ii) proceeds of other borrowings of US$46.9 million, and (iii) changes to financial liabilities of US$36.7 million, consisting of proceeds from our silent partnership in Japan. This cash inflow was primarily offset by (i) repayment of banking borrowings of US$40.8 million, (ii) repayment of other borrowings of US$5.5 million, and (iii) interest paid of US$3.9 million.

104

Capital Expenditures

Our capital expenditures amounted to US$95.0 million, US$45.5 million and US$93.3 million for 2015, 2016 and 2017, respectively. Our capital expenditure in 2015, 2016 and 2017 related primarily to our investment in solar parks under the IPP model.

Recent Accounting Pronouncements

We have not early applied the following new and amendments to IFRSs that have been issued but are not yet effective:

IFRS 9	Financial Instruments (2)
IFRS 15	Revenue from Contracts with Customers and the related Amendments (2)
IFRS 16	Leases (3)
IFRIC 22	Foreign Currency Transactions and Advance Consideration (2)
Amendments to IFRS 2	Classification and Measurement of Share-based Payment Transactions(2)
Amendments to IFRS 4	Applying IFRS 9 Financial Instruments with IFRS 4 Insurance Contracts(2)
Amendment to IFRS 10 and IAS 28	Sale or Contribution of Assets between an Investor and its Associate or Joint Venture (4)
Amendments to IAS 7	Disclosure Initiative (1)
Amendments to IAS 12	Recognition of Deferred Tax Assets for Unrealized Losses (1)
Amendments to IAS 40	Transfers of Investment Property (2)
Amendments to IFRSs	Annual Improvements to IFRS Standards 2014-2016 Cycle (5)

(1) Effective for annual periods beginning on or after January 1, 2017, with earlier application permitted.

(2) Effective for annual periods beginning on or after January 1, 2018, with earlier application permitted.

(3) Effective for annual periods beginning on or after January 1, 2019, with earlier application permitted.

(4) Effective for annual periods beginning on or after a date to be determined.

(5) Effective for annual periods beginning on or after January 1, 2017 or January 1, 2018, as appropriate.

We have not early adopted these new amendments to standards in the preparation of the consolidated financial statements. Our management anticipates that the application of these new and revised standards, amendments to standards will have no material impact on our results and financial position, except for potentially IFRS 9 and IFRS 16.

IFRS 9 Financial Instruments

IFRS 9 issued in November 2009 introduced new requirements for the classification and measurement of financial assets. IFRS 9 was subsequently amended in October 2010 to include requirements for the classification and measurement of financial liabilities and for derecognition, and in November 2013 to include the new requirements for general hedge accounting. Another revised version of IFRS 9 was issued in July 2014 mainly to include a) impairment requirements for financial assets and b) limited amendments to the classification and measurement requirements by introducing a ‘fair value through other comprehensive income’ (FVTOCI) measurement category for certain simple debt instruments.

Key requirements of IFRS 9 are: all recognized financial assets that are within the scope of IAS 39 Financial Instruments: Recognition and Measurement are required to be subsequently measured at amortized cost or fair value. Specifically, debt investments that are held within a business model whose objective is to collect the contractual cash flows, and that have contractual cash flows that are solely payments of principal and interest on the principal outstanding are generally measured at amortized cost at the end of subsequent accounting periods. Debt instruments that are held within a business model whose objective is achieved both by collecting contractual cash flows and selling financial assets, and that have contractual terms that give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding, are generally measured at FVTOCI. All other debt investments and equity investments are measured at their fair value at the end of subsequent accounting periods. In addition, under IFRS 9, entities may make an irrevocable election to present subsequent changes in the fair value of an equity investment (that is not held for trading) in other comprehensive income, with only dividend income generally recognized in profit or loss.

105

C.Research, Development and Intellectual Property

Research and Development

We do not incur significant research and development expenditures.

Patents and Trademarks

For information about the agreements under which we are licensed to use our trademarks, please see “Item 7. Major Shareholders and Related Party Transactions—B. Related Party Transactions—Trademark License Agreements.”

D.Trend Information

Other than as disclosed elsewhere in this annual report, we are not aware of any trends, uncertainties, demands, commitments or events for 2017 that are reasonably likely to have a material effect on our net revenues, income, profitability, liquidity or capital resources, or that would cause reported consolidated financial information not necessarily to be indicative of future operating results or financial conditions.

E.Off-balance Sheet Arrangements

We have not entered into any financial guarantees or other commitments to guarantee the payment obligations of any third parties. In addition, we have not entered into any derivative contracts that are indexed to our own shares and classified as shareholder’s equity, or that are not reflected in our consolidated financial statements. Furthermore, we do not have any retained or contingent interest in assets transferred to an unconsolidated entity that serves as credit, liquidity or market risk support to such entity. Moreover, we do not have any variable interest in any unconsolidated entity that provides financing, liquidity, market risk or credit support to us or engages in leasing, hedging or research and development services with us.

F.Tabular Disclosure of Contractual Obligations

The following table sets forth our contractual obligations as of December 31, 2017:

	Less Than 1 Year	1-2 Years	3-5 Years	More Than 5 Years	Total
	(US$ in thousands)
Commitment to settle EPC subcontracting cost	34,279	—	—	—	34,279
Lease commitment	4,420	3,817	11,449	44,594	64,280
Borrowings	19,702	17,593	46,881	165,553	249,729
Other non-current liabilities	120,820	3,507	10,520	56,109	190,956
Total	179,221	24,917	68,850	266,256	539,244

G.Safe Harbor

Please see “Forward-Looking Statements.”

106

ITEM 6. DIRECTORS, SENIOR MANAGEMENT, AND EMPLOYEES

A.Directors and Senior Management

The following table sets forth information regarding our directors and executive officers as of the date of this annual report:

Directors and Senior Management	Age	Position/Title
Dr. Hao Wu	52	Chairman of the Board of Directors and principal executive officer
Weili Su	50	Director
Xiaoguang Duan	62	Director
Xinhua Yu	44	Director
Andrew (Jianmin) Wang	47	Director and Chief Financial Officer
Naiwei Chen	61	Independent Director
Qiang Zhan	57	Independent Director
Xuelong Pei	48	Independent Director
Zhi Hao	41	Chief Risk Officer
Sanjay Shrestha	43	Chief Investment Officer and President of Sky Capital Americas
Peter (Ping) Liu	51	Managing Director for the North American Region
Rui Chen	41	Representative Director of Sky Solar Japan
Wen Qian	35	President for mainland China
Aditya Satghare	39	Vice President, Finance & Corporate Strategy for Sky Capital Americas
Hong Chen	34	Vice President of Sky Capital Americas

** The business address of our directors and executive officers is Unit 402, 4th Floor, Fairmont House, No.8 Cotton Tree Drive, Admiralty, Hong Kong, People’s Republic of China.

BIOGRAPHICAL INFORMATION

Dr. Hao Wu. Dr. Wu has been our director since July 2012 and has been chairman of our board of directors since June 2017. Dr. Wu has been serving on our management committee since June 2017 and assumed the functions of principal executive officer since April 2018. Our management committee was set up in June 2017 to identify the candidates for our chief executive officer position and to assume other functions and authorities as may be delegated by the board of directors. Dr. Wu is a Chartered Financial Analyst registered with the CFA Institute since December 1998 and a member of the New York Society of Securities Analysts since April 2002. He has served as president of The Chinese Finance Association (TCFA). Since August 2005, Dr. Wu has been managing partner and chief executive officer of Sino Century. Prior to that, Dr. Wu advised AIG Global Investments as senior financial analyst from January 1997 to August 2000. He had broad responsibilities including advising AIG companies in Asia and Europe on investment and risk management strategies. He was also managing director and Head of Global Financial Products of Radian Group from October 2000 to August 2005. Dr. Wu was awarded a Bachelor of Science (Physics) by Fudan University in July 1988. He was also awarded a Doctorate in Electrical Engineering and a Master of Business Administration in Finance by the University of Southern California in December 1996 and May 1996, respectively. Dr. Wu completed a course on leading professional service firms at Harvard Business School in March 2005.

Weili Su. Mr. Su was the founder of our company, our chairman of the board from October 2009 to June 2017 and chief executive officer from December 2014 to June 2017. Mr. Su was primarily responsible for our strategic planning, business operation and overall management. Mr. Su has over 14 years of working experience in the solar power industry. From 2005 and 2010, Mr. Su founded a number of solar companies, which completed the development and construction of solar parks in Europe with a total capacity of approximately 100.0 MW. He also supervised the largest solar park in Spain in terms of capacity in 2008. He established the only privately-funded independent national testing center for PV products in the PRC as of December 31, 2014, which is a laboratory designated by the PRC Finance Ministry for qualifying solar parks for national subsidies. He was a cofounder, director and secretary of Yingli Green Energy Holding Co., Ltd., an NYSE-listed company from November 2001 to September 2004. He was also a judge at the Court of the Baoding City Xinshiqu from September 1992 to July 2000. Mr. Su was awarded a Bachelor of Law by Hebei University in July 1992. He also received an Executive Master of Business Administration from the University of International Business and Economics in December 2005.

107

Xiaoguang Duan. Mr. Duan has been our director since May 2011 and has been member of our management committee since June 2017. Mr. Duan primarily has taken part in the reconstruction and stock issuance of companies such as Ningbo Huanlian and Shanghai Shenergy. From May 1994 to November 2007, Mr. Duan was director and vice president of Shenzhen Huayuan Limited Company, a Shenzhen-listed company. He was engaged in the establishment of Shengzhen Hengfeng Shidai Investment Limited Company and served as managing director from November 1997 to December 2003. He has been involved in the equity-linked investment of pre-IPO companies, and successfully took part in the reformation and floatation of Qinghai Gelatin Co. Ltd., Tongcheng Group, Leaguer Stock Co., Ltd. and Kweichow Moutai Co., Ltd., each of which is listed on the Shenzhen Stock Exchange. Mr. Duan founded Jolmo Capital Management Ltd., which initiated and managed RMB3,000,000,000, primarily invested in businesses in Jiangsu and Guangdong Province, including seven PV companies. From September 1986 to July 1987, Mr. Duan was a lecturer at John Hopkins University and studied China-US economics and politics. Since October 1991, he has been a director of Shanghai Economic Development Institute, and serves as the “Shanghai Economy” Producer. Mr. Duan graduated from Anhui University with a bachelor’s degree in 1979. He was awarded a Master of Philosophy by the University of Nanjing in July 1985.

Xinhua Yu. Mr. Yu has been our director since December 2016 and has been member of our management committee since June 2017. Since July 2012, Mr. Yu has been the partner of IDG Capital Investment Consultancy (Shanghai) Co., Ltd. He was the vice president of IDG Capital Investment Consultancy (Beijing) Co., Ltd. from October 2006 to June 2012 and the project manager of International Data (China) Investment Co., Ltd. from October 2005 to October 2006. He has engaged in and led many investments in new energy, new materials, and semiconductor design. Prior to joining IDG Capital, Mr. Yu was the manager in charge of marketing department of ICM Group of Siemens China from October 2003 to October 2004. He was the manager of marketing department of Siemens Shanghai Mobile Communications Co., Ltd. from July 1997 to September 2003. Mr. Yu was awarded a Bachelor of Science by Zhejiang University in July 1997. He also received a Master of Business Administration from Cheung Kong Graduate School of Business in October 2005.

Andrew (Jianmin) Wang. Mr. Wang has been our chief financial officer since May 2011 and has been our director since October 2015. He is responsible for all financial accounting and capital management aspects. He also leads the information and technology and corporate legal compliance function. Mr. Wang is a professional accountant, having been a member of the China Institute of Certified Public Accountant since August 1995. Mr. Wang has extensive experience with financial services and accounting. He served as Audit Manager at Deloitte Touche Tohmatsu (Shanghai) from July 1993 to February 1999. He moved to Avery (China) Co., Ltd. to serve as finance director from March 1999 to December 2005. He was financial director at Invista Apparel Asia Pacific from January 2006 to May 2007. He then worked at Otis China Holdings Ltd. as their Financial Controller from June 2007 to April 2008. Immediately prior to joining us, he was corporate finance director of Suntech Power Holdings Ltd. from April 2008 to April 2011. Mr. Wang was awarded an Executive Master of Business Administration by Washington University in St. Louis in December 2004. Mr. Wang was awarded a Bachelor of Accounting by Shanghai University of Science and Engineering in July 1993.

Naiwei Chen. Mr. Chen has been our independence director since July 2017. He is a professor at Fudan University, Law School, and the executive dean of Fudan University’s Institute of Senior Lawyers. He also serves as President of Shanghai FTA Intellectual Property Association, and Vice President of Shanghai Modern Enterprise Association, China Law Association On Science & Technology, and Shanghai Intellectual Property Law Research Association. Mr. Chen has served as an arbitrator at China International Economic and Trade Arbitration Commission, Shanghai International Arbitration Center, Hong Kong International Arbitration Center, International Chamber of Commerce International Court of Arbitration, and Court of Arbitration for Sport. In addition, Mr. Chen is a scholar of the Overseas IP Protection Program sponsored by China’s Ministry of Commerce, and was a Fulbright visiting scholar at the University of Pennsylvania, Law School from 2001 to 2002 and a senior visiting scholar at University of Washington from 1993 to 1994. He was the director of the Law Department and Intellectual Property Research Center of Shanghai Jiao Tong University, the vice president of the 8th and 9th general assembly of Shanghai Bar Association and a founding and senior partner of Allbright Law Offices. Currently, Mr. Chen also serves as an independent director of Shanghai Jiaoyun Group Co., Ltd., Shanghai Jiabao Group Co., Ltd., Spring Airlines Co,. Ltd., and Shanghai Rural Commercial Bank. Mr. Chen earned his Doctor of Jurisprudence degree from Macau University of Science and Technology.

108

Qiang Zhan. Mr. Zhan has been our independence director since June 2017. He is a proven leader with Global 500 European and American companies. Mr. Zhan has extensive experience in senior financial roles with companies such as Polymer Group Inc. (now known as AVINTIV Inc.), Feidong Lighting Co., Philips China Investment Co., and Eaton-Vickers Hydraulics. He also has meaningful experience in a variety of sales, marketing and operating roles. Mr. Zhan earned an MBA degree from the State University of New York at Buffalo, and a Bachelor of Engineering degree from Nanjing Institute of Technology (now known as Southeast University).

Xuelong Pei. Mr. Pei has been our independence director since June 2017. He has served as the Chief Executive Officer at Ganshang Corporation, General Manager at Jiangxi Electronic Group Corporation Ltd., and the head of legal department at Shanghai Juneyao (Group) Co., Ltd. Mr. Pei has also served as a director at Shanghai Huarui Bank Co., Ltd. Mr. Pei received his bachelor degree of law from Renmin University of China and his master degree of law from East China University of Political Science and Law. Mr. Pei is a panel arbitrator at Shanghai International Arbitration Center and Shanghai Arbitration Center.

Zhi Hao. Mr. Hao has been our chief risk officer since December 2016. He is responsible for the Holdings Company’s legal and contract management, responsible for the preservation of the original contracts signed by the Headquarters and all the Subsidiaries, responsible for copying the contracts to the Global Data Archives of IT department for electronic archiving, responsible for building, maintenance and operation of the company’s risk control system; responsible for Risk Assessment, Risk Control, Risk Checking, and issuing Risk Warning and Risk Assessment report; responsible for the supervision of project, issuing risk early warning of project, controlling project risk and so on. He was appointed our managing director for China in December 2014, responsible for executing our strategy to enter the China market. Mr. Hao has over 16 years of international experience specializing in corporate finance and project funding, including working for PricewaterhouseCoopers in their Singapore office. In his role prior to Sky Solar, Mr. Hao spent five years with Suntech Power, including his most recent position as investment director. Mr. Hao was awarded an Master of Business Administration by the National University of Singapore in June 2002 and was awarded a bachelor’s degree by Wuhan University in July 1998.

Sanjay Shrestha. Mr. Shrestha has been the President of Sky Capital Americas since April 2015 and has been our chief investment officer since August 2015. He brings over 15 years of experience in the broader clean tech sector to our team. Most recently he led the renewables investment banking effort at FBR Capital markets. During 2014, and under his leadership, the firm was ranked among the top renewable energy underwriters in the U.S. Prior to joining FBR, Mr. Shrestha spent seven years as the global head of renewables research coverage at Lazard Capital Markets. During his tenure at Lazard Capital Markets, he was a member of the Institutional Investor All America Research team and was also ranked as one of the top five stock pickers on a global basis. Prior to Lazard Capital Markets, Mr. Shrestha spent seven years at First Albany Capital, where he built the firm’s renewables and industrial research practice. Starmine/Forbes Magazine ranked him the number 1 stock picker and the number 1 earnings estimator during his tenure at First Albany Capital. Mr. Shrestha also serves as an independent director on the board of directors of Fusemachines.

Peter (Ping) Liu. Mr. Liu joined Sky Solar in October 2009 as managing director of Sky Solar Canada, and was appointed our managing director for the North American region in August 2011. Mr. Liu is responsible for general business operations, project development and project transfer. Prior to joining us, Mr. Liu held various positions within the global 3M Company from May 1994 to August 2004. Mr. Liu then joined SPX Corporation between September 2004 to May 2006 before joining ENSTA Solar (Canada) Ltd. from June 2006 to September 2009. Mr. Liu graduated from Shanghai Tongji University with a Bachelor of Electrical Engineering in July 1986, and completed a Masters of Business Administration from the Shanghai University of Finance and Economics/Webster University in February 2001.

Rui Chen. Mr. Chen has been the representative director of Sky Solar Japan since November 2017, responsible for projects development and operations. Mr. Chen had been representative director of Sky Solar Japan from October 2009 to October 2016, responsible for overseeing its corporate management and operations. From July 2006 until first joining our company, Mr. Chen was general manager of Solar Technology & Investment Co., Ltd. From October 2000 to May 2003, Mr. Chen studied international management at the Reitaku University.

Wen Qian. Mr. Qian has been the President of Sky Solar China since January 2017. Mr. Qian joined our company in September 2009 and served as corporate financial controller. In 2013, he was appointed as an officer of the CEO office and be responsible for corporate strategies development. Prior to joining us, Mr. Qian was corporate senior financial analyst of JA Solar Holdings Co., Ltd (NASDAQ: JASO) from November 2006 to September 2009. Mr. Qian graduated from Zhongnan University of Economics and Law with a Bachelor and Master of Accounting in July 2006 and July 2008, respectively. Mr. Qian was a non-practicing member of certified public accountant in China since 2009.

109

Aditya Satghare. Mr. Satghare joined Sky Solar in July 2015, in the role of Vice President, Finance & Corporate Strategy for Sky Capital Americas. His primary responsibilities include leading the financial underwriting, new project evaluation and project execution finance functions for the Americas Region. In addition, Mr. Satghare also assists in new business development for the US region, along with assisting with corporate capital raising for Sky Solar. Prior to joining Sky Solar, Mr. Satghare was Vice President, Renewable Energy Research at FBR Capital Markets and responsible for leading the firm’s research activities in renewable energy generation, clean transportation and renewable energy financing. Prior to this, Mr. Satghare was a member of the Renewable Energy Research team for Lazard Capital Markets and also worked within the Investments group at Citigroup Asset Management. Mr. Satghare brings 14 years of financial industry experience, including 10 years of Renewable Energy experience to Sky Solar. He has a Bachelors in Mechanical Engineering from University of Mumbai and a Masters in Financial Engineering from NYU Polytechnic, New York.

Hong Chen. Mr. Chen has been appointed the vice president of Sky Capital Americas since December 2016. He is our managing director for Latin America and Spain since January 21, 2009. He is responsible for project development in Latin America and Spain, which includes leading Sky Solar’s business operations in the region as well as coordination with relevant parties such as governments, local authorities, institutions, banks and energy off takers, including the negotiation of EPC contracts, PPAs and project financing. Prior to his present position, Mr. Chen was the assistant to Sky Solar’s chairman, Mr. Su, from July 2007 to January 2009. During that period he actively participated in all of Sky Solar’s business development in Spain, including 26.0 MW of project development and transfer, as well around 100.0 MW of solar module trading. Mr. Chen was also involved in the entire logistics process for these solar parks. From September 2004 to June 2006, Mr. Chen studied at the Technical University of Madrid.

B.Compensation

Directors and Senior Management

In 2017, the aggregate cash compensation to all of our directors and our senior management was US$$2.0 million and the aggregate total compensation to all of our directors and our executive officers was US$2.3 million.

Employment Agreements

We have entered into employment agreements with all of our executive officers. Under these agreements, we may generally terminate the employment of our executive officers without prior written notice for cause, including but not limited to refusal to perform lawful duties, a breach of the employment agreement, material misconduct, material failure to follow company rules and policies, destruction or theft of company property or breach of any non-disclosure and non-competition agreements. We may terminate the employment agreement at any time without cause upon advance written notice to the other party. We are entitled to pay the employee salary in lieu of any applicable notice period.

Each executive officer has agreed to hold, both during and subsequent to the terms of his or her agreement, in confidence and not to use for the officer’s own benefit or the benefit of any third party, any trade secrets, other information of a confidential nature or non-public information of or relating to us in respect of which we owe a duty of confidentiality to a third party. Each executive officer has also agreed to disclose to us all work product, and acknowledged that all work product shall constitute work made for hire with respect to copyright, patents, trade secrets, trademarks and other proprietary rights. Each executive officer has agreed to execute all documents and perform all lawful acts necessary or advisable for us to secure these rights.

110

Share-based Compensation

2009 Stock Incentive Plan

Our 2009 Stock Incentive Plan provides for the grant of incentive stock options, nonqualified stock options, restricted stock, restricted stock units and other awards to our officers, employees, directors, consultants and other service providers. The maximum aggregate number of ordinary shares with respect of which options may be granted under the 2009 Stock Incentive Plan shall not exceed 12,195,122 ordinary shares. The purpose of the 2009 Stock Incentive Plan is to strengthen the commitment of such persons to us, motivate such persons to faithfully and diligently perform their responsibilities and attract and retain competent and dedicated persons whose efforts will result in our long-term growth and profitability.

The following are principal terms under our 2009 Stock Incentive Plan:

Administration. Our 2009 Stock Incentive Plan is administered by the board or any committee appointed by the board of directors. The administrator shall be able to (i) to select the participants of the plan; (ii) determine whether and to what extent are to be granted; (iii) determine the number of shares to be covered by each award granted hereunder; (iv) determine the terms and conditions, not inconsistent with the terms of the plan, of each award granted hereunder and which shall govern all written instruments evidencing options or awards of restricted stock, restricted stock units or other awards granted hereunder; (v) adopt, alter and repeal such administrative rules, guidelines and practices governing the plan as it shall from time to time deem advisable; (vi) reconcile any inconsistency in, correct any defect in and/or supply any omission in the plan and any instrument or agreement relating to, or award granted under, the plan; and (vii) interpret the terms and provisions of the plan and any award issued under the plan (and any award agreement relating thereto), and to otherwise supervise the administration of the plan.

The administrator may, in its absolute discretion, without amendment to the 2009 Stock Incentive Plan, (i) accelerate the date on which any option granted under the plan becomes exercisable, waive or amend the operation of plan provisions respecting exercise after termination of employment or otherwise adjust any of the terms of such option, and (ii) accelerate the lapse of restrictions, or waive any condition imposed hereunder, with respect to any share of restricted stock or restricted stock unit or otherwise adjust any of the terms applicable to any such award; provided that no action taken in this paragraph adversely affects any outstanding award without the consent of the holder thereof.

Terms of Awards. Options and restricted shares shall have specified terms set forth in an award agreement, as determined by the administrator.

Option Exercise. The term of options granted under the 2009 Stock Incentive Plan may not exceed ten years from the date of grant. The method for paying for our ordinary shares upon exercise of an option or purchase of shares underlying the option may include (i) cash and cash equivalent, (ii) broker’s cashless exercise procedure, (iii) certain forms of unrestricted shares or restricted stock, (iv) any other form of consideration approved by the administrator and permitted by applicable law or (v) any combination of the foregoing.

Amendment and Termination of Plan. Our board of directors may amend, alter or discontinue the 2009 Stock Incentive Plan, but no amendment, alteration, or discontinuation shall be made that would impair the rights of a participant under any Award theretofore granted without such participant’s consent. Unless the board determines otherwise, the board shall obtain approval of our shareholders for any amendment that would require such approval in order to satisfy any applicable regulatory requirements of laws.

No award shall be granted pursuant to the 2009 Stock Incentive Plan on or after the tenth anniversary of the effective date, but awards theretofore granted may extend beyond that date. For more information on the share-based compensation pursuant to the 2009 Stock Incentive Plan, see note 32 to our audited consolidated financial statements included elsewhere in this annual report.

111

2014 Equity Incentive Plan

We adopted our 2014 Equity Incentive in 2014. Our 2014 Equity Incentive Plan originally provided for the grant of options, share appreciation rights and other stock-based awards such as restricted shares, referred to as “awards,” to our directors, officers and employees up to from 10,000,000 of our ordinary shares. In 2017, we increased 90,000,000 of our ordinary shares. The purpose of the plan is to aid us and our affiliates in recruiting and retaining key employees, directors or consultants of outstanding ability and to motivate such employees, directors or consultants to exert their best efforts on behalf of our company and our affiliates by providing incentives through the granting of awards. Our board of directors believes that our company’s long-term success is dependent upon our ability to attract and retain superior individuals who, by virtue of their ability, experience and qualifications, make important contributions to our business.

The following are principal terms under our 2014 Equity Incentive Plan:

Termination of Awards. Options and restricted shares shall have specified terms set forth in an award agreement. The compensation committee will determine in the relevant award agreement whether options granted under the award agreement will be exercisable following the recipient’s termination of services with us.

Administration. Our 2014 Equity Incentive Plan is administered by the compensation committee of our board of directors. The committee is authorized to interpret the plan, to establish, amend and rescind any rules and regulations relating to the plan, and to make any other determinations that it deems necessary or desirable for the administration of the plan. The committee will determine the provisions, terms and conditions of each award consistent with the provisions of our 2014 Equity Incentive Plan, including, but not limited to, the exercise price for an option, vesting schedule of options and restricted shares, forfeiture provisions, form of payment of exercise price and other applicable terms.

Option Exercise. The term of options granted under the 2014 Equity Incentive Plan may not exceed ten years from the date of grant. The consideration to be paid for our ordinary shares upon exercise of an option or purchase of shares underlying the option may include cash, or its equivalent, ordinary shares of our company, or any combination of the foregoing methods of payment, or consideration received by us in a cashless exercise.

Change in Control. In the case of a change in control event, which is the sale or disposal of all, or substantially all of our assets, the acquisition by a third party of more than 50% of the voting power in our company by way of a merger, consolidation, tender or exchange offer or otherwise, or during any period of two consecutive years, our directors at the beginning of such period ceasing to constitute a majority of our board of directors, the compensation committee may decide that all outstanding awards that are unexercisable or otherwise unvested or subject to lapse restrictions will automatically be deemed exercisable or otherwise vested or no longer subject to lapse restrictions, as the case may be, as of immediately prior to such change in control event. The compensation committee may also decide to cancel such awards for fair value (as determined in its sole discretion), provide for the issuance of substitute awards that will substantially preserve the otherwise applicable terms of any affected awards previously granted, or provide that affected options will be exercisable for a period of at least 15 days prior to the change in control event but not thereafter.

Amendment and Termination of Plan. Our board of directors may at any time amend, alter or discontinue our 2014 Equity Incentive Plan. Amendments or alterations to our 2014 Equity Incentive Plan are subject to shareholder approval if they increase the total number of shares reserved for the purposes of the plan or change the maximum number of shares for which awards may be granted to any participant, provided in each case only to the extent such shareholder approval is required by stock exchange rules. Amendment, alteration or discontinuation of our 2014 Equity Incentive Plan cannot be made without the consent of a recipient of awards if such action would diminish the rights of that recipient under the awards, provided that the compensation committee may amend the plan as it deems necessary to permit the granting of awards to meet the requirements of applicable laws and stock exchange rules.

Unless terminated earlier, our 2014 Equity Incentive Plan shall continue in effect for a term of ten years from the date of adoption.

112

Option / Restricted Share Awards

As of March 31, 2018, options to purchase 220,000 ordinary shares and no restricted shares are outstanding. The following table summarizes the outstanding options and restricted shares that we granted to our directors and senior management and to other individuals as a group under our share incentive plan as of March 31, 2018. We did not grant any outstanding options or restricted shares other than to the individuals named below.

Name	Number of shares	Exercise Price (for Option Only) (US$)	Grant Date	Expiration Date
Dr. Hao Wu	—	—	—	—
Weili Su	—	—	—	—
Xiaoguang Duan	—	—	—	—
Xinhua Yu	—	—	—	—
Arthur (Lap Tat) Wong	120,000	1.00	November 13, 2014	November 13, 2024
Andrew Y. Yan	100,000	1.00	November 13, 2014	November 13, 2024
Andrew (Jianmin) Wang	—	—	—	—
Zhi Hao	—	—	—	—
Sanjay Shrestha	—	—	—	—
Peter (Ping) Liu	—	—	—	—
Rui Chen	—	—	—	—
Wen Qian	—	—	—	—
Aditya Satghare	—	—	—	—
Hong Chen	—	—	—	—
Other Employees	—	—	—	—

C.Board Practices

Duties of Directors

Under Cayman Islands law, our directors have a fiduciary duty to act honestly, in good faith and with a view to our best interests. Our directors also have a duty to exercise the skill they actually possess and such care and diligence that a reasonably prudent person would exercise in comparable circumstances. In fulfilling their duty of care to us, our directors must ensure compliance with our memorandum and articles of association, as amended and restated from time to time. A shareholder has the right to seek damages if a duty owed by our directors is breached.

The functions and powers of our board of directors include, among others:

·convening shareholders’ annual general meetings and reporting its work to shareholders at such meetings;

·declaring dividends and distributions;

·appointing officers and determining the term of office of officers;

·exercising the borrowing powers of our company and mortgaging the property of our company; and

·approving the transfer of shares of our company, including registering such shares in our share register.

Board Committees

Our board of directors has established an audit committee, a compensation committee, and a nominating and corporate governance committee.

113

Audit Committee

Our audit committee consists of Mr. Qiang Zhan and Mr. Xuelong Pei. Mr. Qiang Zhan is the chairman of our audit committee and meets the criteria of an audit committee financial expert as set forth under the applicable rules of the SEC and the NASDAQ Stock Market. Each member of the audit committee is an “independent director” within the meaning of the NASDAQ Stock Market Rules and meets the criteria for independence set forth in Rule 10A-3 under the Exchange Act. The audit committee oversees our accounting and financial reporting processes and the audits of the financial statements of our company. The audit committee is responsible for, among other things:

·selecting our independent registered public accounting firm and pre approving all auditing and non-auditing services permitted to be performed by our independent registered public accounting firm;

·reviewing with our independent registered public accounting firm any audit problems or difficulties and management’s response;

·reviewing and approving all proposed related party transactions, defined as those transactions required to be discussed pursuant to Form 20F, Item 7.8 and NASDAQ Listing Rule 5630(a);

·discussing the annual audited financial statements with management and our independent registered public accounting firm;

·reviewing major issues as to the adequacy of our internal controls and any special audit steps adopted in light of significant control deficiencies;

·annually reviewing and reassessing the adequacy of our audit committee charter;

·such other matters that are specifically delegated to our audit committee by our board of directors from time to time; and

·meeting separately and periodically with management and our internal auditor and independent registered public accounting firm.

Compensation Committee

Our compensation committee consists of Dr. Hao Wu, Mr. Xuelong Pei and Mr. Andrew (Jianmin) Wang. Dr. Hao Wu is the chairman of our compensation committee. Mr. Xuelong Pei satisfies the “independence” requirement of the NASDAQ Stock Market Rules. Our compensation committee assists the board in reviewing and approving the compensation structure of our directors and executive officers, including all forms of compensation to be provided to our directors and executive officers. Members of the compensation committee are not prohibited from direct involvement in determining their own compensation. Our chief executive officer may not be present at any committee meeting during which his compensation is deliberated. The compensation committee is responsible for, among other things:

·approving and overseeing the compensation package for our executive officers;

·reviewing and making recommendations to the board with respect to the compensation of our directors; and

·reviewing periodically and making recommendations to the board regarding any long term incentive compensation or equity plans, programs or similar arrangements, annual bonuses, employee pension and welfare benefit plans.

114

Nominating and Corporate Governance Committee

Our nominating and corporate governance committee consists of Dr. Hao Wu, Mr. Xuelong Pei, Mr. Naiwei Chen and Mr. Qiang Zhan. Dr. Hao Wu is the chairman of our nominating and corporate governance committee. Mr. Xuelong Pei, Mr. Naiwei Chen and Mr. Qiang Zhan satisfy the “independence” requirement of the NASDAQ Stock Market Rules. The nominating and corporate governance committee assists the board of directors in identifying individuals qualified to become our directors and in determining the composition of the board and its committees. The nominating and corporate governance committee is responsible for, among other things:

·identifying and recommending to the board nominees for election or reelection to the board, or for appointment to fill any vacancy;

·reviewing annually with the board the current composition of the board in light of the characteristics of independence, age, skills, experience and availability of service to us;

·advising the board periodically with respect to significant developments in the law and practice of corporate governance as well as our compliance with applicable laws and regulations, and making recommendations to the board on all matters of corporate governance and on any corrective action to be taken; and

·monitoring compliance with our code of business conduct and ethics, including reviewing the adequacy and effectiveness of our procedures to ensure proper compliance.

Interested Transactions

Subject to any separate requirement for Audit Committee approval under applicable law or the NASDAQ Stock Market Rules, a director may vote in respect of any contract or transaction in which he or she is interested, provided that the nature of the interest of any directors in such contract or transaction is disclosed by him or her at or prior to its consideration and any vote in that matter.

Remuneration and Borrowing

The directors may determine remuneration to be paid to the directors. The compensation committee assists the directors in reviewing and approving the compensation structure for the directors. The directors may exercise all the powers of Sky Solar to borrow money and to mortgage or charge its undertaking, property and uncalled capital, and to issue debentures or other securities whether outright or as security for any debt obligations of our company or of any third party.

Qualification

There is no shareholding qualification for directors.

Terms of Directors and Executive Officers

Our officers are elected by and serve at the discretion of the board. Our directors may be appointed by the board or by the shareholders through ordinary resolutions. Any director appointed by the board to fill a vacancy or as a new addition to the board shall hold office only until our next annual general meeting and shall then be eligible for re-election at that meeting. At each annual general meeting of our company, one-third of the directors at that time, or, if their number is not three or a multiple of three, then the number nearest to, but not greater than, one-third, shall retire from office by rotation, provided that the chairman of the board shall not, whilst holding such office, be subject to retirement by rotation or be taken into account in determining the number of directors to retire in each year. A retiring director shall retain office until the close of the meeting at which he retires, and shall be eligible for re-election at the annual general meeting. A director may be removed from office by way of an ordinary resolution of the shareholders at any time before the expiration of his period of office.

Our directors are divided into three classes of directors in Class I, Class II and Class III, with no more than one class eligible for re-election at any annual shareholders meeting. The three Class I directors have been elected for a term expiring on the date of our 2018 annual shareholders meeting and thereafter will be eligible to be elected to serve terms of three years. The three Class II directors have been elected for a term expiring on the date of our 2019 annual shareholders meeting and thereafter will be eligible to be elected to serve terms of three years. The two Class III directors have been elected for a term expiring on the date of our 2020 annual shareholders meeting and thereafter will be eligible to be elected to serve terms of three years. The division of our board of directors into three classes with staggered three-year terms may delay or prevent a change of our management or a change in control.

115

The following table sets forth the names and classes of our current directors:

Class I	Class II	Class III
Mr. Weili Su	Mr. Naiwei Chen
Mr. Andrew (Jianmin) Wang	Mr. Xinhua Yu	Mr. Xiaoguang Duan
Dr. Hao Wu	Mr. Qiang Zhan	Mr. Xuelong Pei

D.Employees

As of December 31, 2015, 2016 and 2017, we had a total of 158 employees, 164 employees and 161 employees, respectively. As of December 31, 2017, we had 36 employees in Europe, 69 employees in Japan, 26 employees in China and 30 employees in the Americas. The following table sets forth the number of our employees for each of the major functions as of December 31, 2017:

	Number of employees
Permit Development	19
Engineering, Procurement and Construction Management	53
Operations and Maintenance	13
Management and administrative	76
Total	161

E.Share Ownership

For information regarding the share ownership of our directors and officers, see “Item 7. Major Shareholders and Related Party Transactions—A. Major Shareholders.”  For information as to stock options granted to our directors, executive officers and other employees, see “—B. Compensation—Share-based Compensation” above.

ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

A.Major Shareholders

The following table sets forth the beneficial ownership, within the meaning of Rule 13d-3 under the Exchange Act, of our ordinary shares, as of March 31, 2018, unless otherwise indicated, of:

·each of our directors and executive officers; and

·each person known to us to own beneficially more than 5.0% of our ordinary shares.

Beneficial ownership is determined in accordance with the rules and regulations of the SEC. In computing the number of shares beneficially owned by a person and the percentage ownership of that person, we have included shares that the person has the right to acquire within 60 days of March 31, 2018, unless otherwise indicated, including through the exercise of any option, warrant or other right, the vesting of restricted shares or the conversion of any other security. These shares, however, are not included in the computation of the percentage ownership of any other person.

116

	Ordinary Shares Beneficially Owned
	Number	%(1)
Directors and Senior Management:
Dr. Hao Wu	—	—
Weili Su(2)	102,618,110	24.5
Xiaoguang Duan	—	—
Xinhua Yu	—	—
Andrew (Jianmin) Wang	*	*
Zhi Hao	*	*
Sanjay Shrestha	—	—
Peter (Ping) Liu	*	*
Rui Chen	*	*
Aditya Satghare	—	—
Hong Chen	*	*
All directors and executive officers as a group	116,818,110	27.8
Major Shareholders
Flash Bright Power Ltd.(3)	102,618,110	24.5
IDG-ACCEL China Capital Entities(4)	101,949,906	24.3
Sunpeak Universal Holdings, Inc.(5)	29,519,844	7.0

*Less than 1% of our total outstanding shares.

(1)For each person included in this column, percentage ownership is calculated by dividing the number of shares beneficially owned by such person or group by the sum of the total number of ordinary shares outstanding, which is (i) 419,546,514 ordinary shares outstanding, and (ii) the number of ordinary shares such person or group has the right to acquire upon the exercise of options, warrants or other rights within 60 days after March 31, 2018, unless otherwise indicated.

(2)Represents (i) 2,600,006 ordinary shares and 100,018,104 ordinary shares in the form of ADSs held by Flash Bright Power Ltd. Flash Bright Power Ltd., a British Virgin Islands company that is wholly-owned by the trust of Mr. Su. The registered address of Flash Bright Power Ltd. is Trinity Chambers, PO Box 4301, Road Town, Tortola, British Virgin Islands. Mr. Su holds a 100% interest in Flash Bright Power Ltd.

(3)Flash Bright Power Ltd. is a British Virgin Islands company that is wholly-owned by the trust of Mr. Su. The registered address of Flash Bright Power Ltd. is Trinity Chambers, PO Box 4301, Road Town, Tortola, British Virgin Islands.

(4)Represents 97,453,914 issued and outstanding ordinary shares held by IDG-ACCEL China Capital L.P., a Cayman Islands exempted limited partnership, and 4,495,992 held by IDG-ACCEL China Capital Investors L.P., a Cayman Islands exempted limited partnership. IDG-Accel China Capital L.P. and IDG-Accel China Capital Investors L.P. have the same ultimate general partner, IDG-Accel China Capital GP Associates Ltd.  By virtue of such relationship, IDG-Accel China Capital L.P. may be deemed the beneficial owner of the number of ordinary shares beneficially owned by IDG-Accel China Capital Investors L.P. IDG-Accel China Capital GP Associates Ltd. is the general partner of both IDG-Accel China Capital Associates L.P. and IDG-Accel China Capital Investors L.P.  By virtue of such relationship, IDG-Accel China Capital Associates L.P. may be deemed the beneficial owner of the number of Ordinary Shares beneficially owned by IDG-Accel China Capital L.P. and IDG-Accel China Capital Investors L.P. Quan Zhou and Chi Sing Ho are directors of IDG-Accel China Capital GP Associates Ltd.  By virtue of such relationship, Quan Zhou and Chi Sing Ho may be deemed the beneficial owner of the number of ordinary shares beneficially owned by IDG-Accel China Capital GP Associates Ltd. The registered address of both IDG-ACCEL China Capital L.P. and IDG-ACCEL China Capital Investors L.P. is c/o Walkers SPV Limited, Walker House, 87 Mary Street, George Town, Grand Cayman KY1-9002, Cayman Islands.

(5)The registred address of Sunpeak Universal Holdings, Inc. is 1825 South Grant Street, Suite 240, San Mateo, CA 94402.

As of the date of this annual report, none of our shareholders have different voting rights from other shareholders, nor are we aware of any arrangement the operation of which may at a subsequent date result in a change in control of our company other than in connection with the enforcement of settlement agreement with Mr. Su, as disclosed under “Item 7 Major Shareholders and Related Party Transactions—B. Related Party Transactions—Transactions with Weili Su.”

B.RELATED PARTY TRANSACTIONS

After the completion of our initial public offering in November 2014, we adopted an audit committee charter, which requires that the audit committee review all related party transactions on an ongoing basis and that all such transactions be approved by the committee. Set forth below is a description of all of our material related party transactions in 2017.

117

Transactions with Certain Affiliates and Shareholders

Transactions with RisenSky Solar and its subsidiaries

We provided EPC and O&M services with an aggregate revenue of US$0.3 million in 2017 to RisenSky Solar S.a r.l., or RisenSky Solar, a company in which we hold 30% of its outstanding share capital, and its subsidiaries. See “Item 4. Information on the Company—B. Business Overview—Historical Project Affiliates” for a discussion of our affiliate arrangements related to RisenSky Solar.

Transactions with Sky Global Solar S.A.

We provided O&M services with an aggregate revenue of US$9 thousand in 2017 to Sky Global Solar S.A., a company in which Mr. Su held 40% equity interests as at December 31, 2015, 2016 and 2017.

Transactions with Weili Su

In October, 2015, we entered into an agreement with Mr. Su to sell and transfer all the shares in our wholly-owned subsidiary Sky Solar Investment Limited. As of December 31, 2016, Sky Solar Investment Limited was controlled by Mr. Su.

As of December 31, 2016, we had non-trade related amounts due to Mr. Su of US$2.2 million. These non-trade related amounts consisted of a compensation due to Mr. Su in connection with our disposal of a subsidiary, Sky Solar Investment Limited, with net liabilities to Mr. Su.

On September 19, 2017, we entered into a settlement agreement with Mr. Su to resolve all potential claims by us against Mr. Su and certain entities controlled by him concerning certain fund transfers, which were not approved by the board or the audit committee and which lacked insufficient documentary support, as well as all potential claims that Mr. Su and such entities may have against us in connection with Mr. Su’s employment at our company.  Under this agreement, various debt assignment agreements signed among our company, certain third parties, and certain entities controlled by Mr. Su in April 2017 shall have no effect and be rescinded immediately; and Mr. Su agrees to pay back to our company approximately US$15.2 million and failing this, authorize our company to sell on behalf of him and /or transfer to our company the ADSs that he holds in our company to pay for such settlement amount.

Loans from and to Affiliates

The following table includes loans from our affiliates in 2017. These loans are for our corporate and working capital purposes:

	Largest amount outstanding during 2017	Outstanding balance as of December 31, 2017
	(US$ in thousands)	(US$ in thousands)
Sky Solar (Hong Kong) International Co., Ltd.	2,181	—
China New Era	176	—
Sky Solar New Energy	2,825	—
Beijing Sky Solar Investment Management Co., Ltd.(1)	109	28

*These unsecured loans generally have a term of up to one-year and bear interest at prevailing market interest rates ranging from nil to 5.0% per annum.

(1)The entity was controlled by Mr. Su as at December 31, 2015, 2016 and 2017

118

The following table includes loans to our affiliates in 2017. These loans are for the general corporate and working capital purposes of these affiliates:

	Largest amount outstanding during 2017	Outstanding balance as of December 31, 2017
	(US$ in thousands)	(US$ in thousands)
SWL Flash Bright Limited(1)	67	—
Sky Solar (Hong Kong) International Co., Ltd.(2)	1,339	—
Sky Solar New Energy(3)	1,480	—
Tany International (Baoding) Solar Electric Co., Ltd.(4)	816	—
Sky Solar Holdings Co., Ltd.(5)	1,430	—
China New Era(6)	4,526	3,693
RisenSky Solar and its subsidiaries(7)	4,842	5,632
Sky Global Solar S.A.(8)	2	—
Oky Solar Holdings	3,283	—
Sky Solar (Canada) FIT 1 Limited Partnership(9)	203	—

*These unsecured loans generally have a term of up to one-year and bear interest at prevailing market interest rates ranging from nil to 5.0% per annum.

(1)SWL Flash Bright Limited was a 100% owned subsidiary of Sky Solar (Hong Kong) International Co., Ltd. as at December 31, 2016 and 2017.

(2)The entity is 100% owned by Mr. Su as at December 31, 2016 and 2017.

(3)The entity was controlled by Mr. Su as at December 31, 2016 and 2017.

(4)The entity was controlled by Mr. Su as at December 31, 2016 and 2017.

(5)Sky Solar Holdings Co., Ltd. is a former shareholder of Sky Solar Holdings, Ltd.

(6)Sky Solar Holdings is able to exercise significant influence over China New Era through its 49% ownership interest and participation on the board. In addition, certain of our key management acts as legal representatives of the solar plant entities controlled by China New Era. China New Era is therefore an associate of Sky Solar Holdings and considered as our related party.

Included in the balance amount due from China New Era as of December 31, 2017, an allowance for doubtful debt of US$2.2 million is provided for receivables for which they have defaulted on payment obligation.

(7)In 2011, Sky Europe entered into an agreement with Risen Energy (Hong Kong) Co., Ltd. (“Risen HK”) (a subsidiary of a company listed on the security market in the PRC) to establish a private limited liability company, namely RisenSky Solar Energy S.a r.l. (“RisenSky Solar”). We are able to exercise significant influence over RisenSky Solar through our 30% ownership interest and participation on the board. RisenSky is therefore classified as our associate.

(8)Mr. Su held 40% equity interests in Sky Global Solar S.A. as at December 31, 2015, 2016 and 2017. Mr. Su has significant influence over the entity, and as such, Sky Global Solar S.A. is considered a related party.

(9)Sky Solar (Canada) FIT 1 Limited Partnership is controlled by 1088526 B. C. Ltd.

Deed of Non-competition and Right of First Refusal

Pursuant to a deed of non-competition we entered into with Mr. Su on September 15, 2014, Mr. Su has unconditionally and irrevocably agreed, undertaken and covenanted with us that he would not, and would procure that his associates (other than any members of our company) would not, directly or indirectly, engage in any business which competes or is likely to compete, directly or indirectly, with the business from time to time conducted, carried on or contemplated to be carried on by any member of our company or in which any member of our company is engaged or has invested or which any member of our company has otherwise publicly announced its intention to enter into, engage in or invest in (the “Non-competition Clause”).

119

Mr. Su has also unconditionally and irrevocably granted to us a right of first refusal in respect of his businesses in China in which he owns more than 50% of the equity interests (“Mr. Su’s China Business”) when (i) Mr. Su receives during the right of the first refusal period (as defined below) from or otherwise negotiate with a third party a bona fide offer to purchase any equity interests in any of Mr. Su’s China Business (for the avoidance of doubt, the bona fide offer excludes any offer which results in any transaction that does not involve any change of beneficial ownership of Mr. Su in relation to his China Business) and which will result in Mr. Su ceasing to retain control of any of his China Business, and (ii) Mr. Su intends to sell his equity interests in that China Business to that third party. In those circumstances, Mr. Su has agreed to promptly deliver written notice to us. Upon receiving such notice, we must notify Mr. Su within 30 days that we will purchase the relevant China Business at the price and on the terms of the third party if we decide to do so.

A majority of our directors and a majority of our independent directors must approve any amendment of the agreement.

The right of first refusal period begins upon the effectiveness of the deed of non-competition and terminates at the earlier of (i) the delisting of our ADSs and ordinary shares from the NASDAQ Capital Market, or (ii) upon the mutual agreement by Mr. Su and our company to terminate the deed of non-competition. The Non-competition Clause begins upon the effectiveness of the deed of non-competition and terminates at the earlier of (i) the delisting of our ADSs and ordinary shares from the NASDAQ Capital Market, (ii) when Mr. Su ceases to be the largest shareholder of his China Business, or (iii) upon the mutual agreement by Mr. Su and our company to terminate the deed of non-competition. The termination of the agreement or any amendment of the provisions would also require the approval of two-thirds of shareholders who attend a shareholders meeting (in person or by proxy) approving such amendment or termination after sufficient notice is given to ADR holders to participate in any such meetings.

Any amendment or termination of the deed of non-competition or the rights of first refusal agreement, any acquisition of assets from Mr. Su’s China Business and the exercise of the right of first refusal would be “related party transactions” under Item 7.B of Form 20-F, requiring the affirmative vote of the independent directors and subject to our internal corporate governance procedures regarding acquisitions of assets. See “Item 4. Information on the Company—B. Business Overview—Acquisition of Assets.”

Trademark License Agreements

The rights to the Sky Solar trademark are held by certain of our affiliates.

Pursuant to a license agreement we entered into in September 2013 with Beijing Sky Solar Investment Management Company, or Beijing Sky Solar, an entity controlled by Mr. Su, we are required to pay 0.05% of our revenue, not exceeding HK$10 million (approximately US$1.3 million), to Beijing Sky Solar for the licensing of the trademark “Sky Solar,” or “天华阳光” registered in certain jurisdictions such as the U.S., Chile and Saudi Arabia, one month after our audited annual financial statements are issued each year starting from 2014. As of December 31, 2014, we have not made any licensing fee payment for the use of the trademark “Sky Solar,” or “天华阳光” under the license agreement.

We also entered into a trademark license agreement with Sky Solar Holdings Co., Ltd. in September 2013, pursuant to which we pay nominal consideration to Sky Solar Holdings Co., Ltd. for the licensing of the trademark “Sky Solar,” or “天华阳光” registered in certain jurisdictions such as Japan, South Africa, Greece, Bulgaria and Hong Kong, which has been effective since October 2013.

Employment Agreements

See “Item 6. Directors, Senior Management, and Employees—B. Compensation—Employment Agreements.”

120

Equity Incentive Plan

See “Item 6. Directors, Senior Management, and Employees—B. Compensation—Share-based Compensation.”

C.Interests of Experts and Counsel

Not applicable.

ITEM 8. FINANCIAL INFORMATION

A.Consolidated Statements and Other Financial Information

Please refer to Item 18 for a list of our annual consolidated financial statements filed as part of this annual report on Form 20-F.

Legal Proceedings

From time to time, we are subject to certain legal and administrative proceedings that arise in the ordinary course of our business, including claims regarding intellectual property rights, business contracts, employment and other matters. It is possible that an unfavorable resolution of one or more of such proceedings could materially and adversely affect our future operating results or financial position in a particular period.

Litigation

On July 16, 2017, a putative securities class action captioned Barilli et al. v. Sky Solar Holdings, Ltd., et al. was filed in the United States District Court for the Southern District of New York. Plaintiffs allege that our prospectus filed in the initial public offering (“IPO”) in 2014 on the Nasdaq Stock Market misrepresented a number of subjects, including (i) the background of its former chief executive officer, Mr. Su; (ii) Sky Solar’s internal controls regarding related party transactions; (iii) a fraud committed against a Spanish subsidiary of a predecessor company in 2010; (iv) the state of the Chilean and Japanese solar markets; (v) Sky Solar’s access to financing; and (vi) Sky Solar’s business history, geographic reach, and prospects for future growth. In addition, Plaintiffs allege that since the IPO, we have made misrepresentations concerning Mr. Su’s credentials and our internal controls. Plaintiffs seek to represent a class of investors who claim to have suffered losses as a result of their trading of our ADSs acquired from November 13, 2014 to June 12, 2017. Plaintiffs assert federal securities law claims under the Securities Act of 1933 and the Securities Exchange Act of 1934, and seek unspecified money damages. On February 16, 2018, the plaintiffs filed their second amended complaint. We filed a motion to dismiss the second amended complaint on April 20, 2018. Additional information concerning this action is publicly available in court filings under the docket number 17 Civ 4572 (S.D.N.Y.) (Swain, J.).

The action remain at its preliminary stages. We have engaged a U.S. firm as legal counsel and intend to defend these actions vigorously. For risks and uncertainties relating to the pending case against us, please see “Item 3. Key Information—D. Risk Factors—Risks Related to Our Business and Industry— We have been named as a defendant in a putative class action lawsuit and have been, and in the future may be, the target of other lawsuits, harassment or other hostile conduct by third parties, including malicious allegations, which could generate adverse publicity and harm our reputation and could adversely affect our business, financial conditions, results of operations, cash flows and the trading price of our ADSs.”

Dividend Policy

We have not and do not intend to declare or pay any dividends on our ordinary shares in the near future. We currently intend to retain most, if not all, of our available funds and any future earnings to operate and expand our business. Any determination to pay dividends in the future will be made at the discretion of our board of directors and will depend on our results of operations, financial condition, contractual restrictions, restrictions imposed by applicable law and other factors our board of directors deems relevant.

121

Our board of directors has complete discretion on whether to pay dividends, subject to the approval of our shareholders. Even if our board of directors decides to pay dividends, the form, frequency and amount will depend upon our future operations and earnings, capital requirements and surplus, general financial condition, contractual restrictions and other factors that the board of directors may deem relevant. If we pay any dividends, we will pay our ADS holders to the same extent as holders of our ordinary shares, subject to the terms of the deposit agreement, including the fees and expenses payable thereunder. See “Item 12. Description of Securities other than Equity Securities—D. American Depositary Shares.” Cash dividends on our ordinary shares, if any, will be paid in U.S. dollars.

B.Significant Changes

Except as disclosed elsewhere in this annual report, we have not experienced any significant changes since the date of our audited consolidated financial statements included in this annual report.

ITEM 9. THE OFFER AND LISTING

A.Offer and Listing Details

The following table provides the high and low trading prices for our ADSs on the NASDAQ Capital Market for the periods indicated.

	Market Price for Each ADS
	High	Low
	US$	US$
Annual Highs and Lows
2014 (from November 13, 2014)	14.00	6.00
2015	12.95	4.29
2016	7.20	1.12
2017	3.62	1.00
Quarterly Highs and Lows
First Quarter 2016	7.20	2.04
Second Quarter 2016	6.52	2.44
Third Quarter 2016	5.40	2.42
Fourth Quarter 2016	3.14	2.00
First Quarter 2017	3.62	1.50
Second Quarter 2017	2.17	1.00
Third Quarter 2017	2.43	1.27
Fourth Quarter 2017	2.00	1.39
First Quarter 2018	1.67	0.82
Monthly Highs and Lows
October 2017	2.00	1.61
November 2017	1.88	1.46
December 2017	1.73	1.39
January 2018	1.67	1.14
February 2018	1.19	0.82
March 2018	1.36	0.98
April 2018 (until April 26, 2018)	1.35	1.10

B.Plan of Distribution

Not applicable.

C.Markets

Our ADSs, each representing eight ordinary shares, have been listed on the NASDAQ Capital Market since November 13, 2014 and trade under the symbol “SKYS.”

D.Selling Shareholders

Not applicable.

122

E.Dilution

Not applicable.

F.Expenses of the Issue

Not applicable.

ITEM 10. ADDITIONAL INFORMATION

A.Share Capital

Not applicable.

B.Memorandum and Articles of Association

We incorporate by reference into this annual report on Form 20-F the description of our amended and restated memorandum and articles of association contained in our Form F-1 registration statement on Form F-1 (Registration No. 333-198817), as amended, initially filed with the Commission on September 18, 2014.

C.Material Contracts

In the past two fiscal years immediately preceding the date of this annual report, we have not entered into any material contracts other than in the ordinary course of business and other than those described in “Item 4. Information on the Company—B. Business Overview,” “Item 7, Major Shareholders and Related Party Transactions—B. Related Party Transactions.” or elsewhere in this annual report on Form 20-F.

D.Exchange Controls

There are no exchange control regulations or currency restrictions in the Cayman Islands.

E.Taxation

The following discussion of the material Cayman Island and U.S. federal income tax consequences of an investment in our ADSs or ordinary shares is based upon laws and relevant interpretations thereof in effect as of the date of this annual report, all of which are subject to change. This discussion does not deal with all possible tax consequences relating to an investment in our ADSs or ordinary shares, such as the tax consequences under U.S. state, local and other tax laws.

Cayman Islands Taxation

Pursuant to section 6 of the Tax Concessions Law (2011 Revision) of the Cayman Islands, we have obtained an undertaking from the Acting Clerk of the Cabinet (1) that no law which is enacted in the Cayman Islands imposing any tax to be levied on profits, income, gains or appreciation shall apply to us or our operations; and (2) that no tax to be levied on profits, income, gains or appreciations or which is in the nature of estate duty or inheritance tax shall be payable (i) on or in respect of our share debentures or other obligations or (ii) by way of the withholding in whole or in part of any relevant payment as defined in Section 6(3) of the Tax Concession Law (2011 Revision). The undertaking for us is for a period of twenty years from September 10, 2013.

The Cayman Islands currently levy no taxes on individuals or corporations based upon profits, income, gains or appreciations and there is no taxation in the nature of inheritance tax or estate duty. There are no other taxes likely to be material to us levied by the Government of the Cayman Islands save for certain stamp duties which may be applicable, from time to time, on certain instruments executed in or brought within the jurisdiction of the Cayman Islands. The Cayman Islands are a party to a double tax treaty entered into with the United Kingdom in 2010 but otherwise is not party to any double tax treaties.

123

No stamp duty is payable in the Cayman Islands on transfers of shares of Cayman Islands companies except those which hold interests in land in the Cayman Islands.

An exempted company shall make available at its registered office, in electronic form or any other medium, such register of members, including any branch register of members, as may be required of it upon service of an order or notice by the Tax Information Authority pursuant to the Tax Information Authority Law of the Cayman Islands.

United States Federal Income Taxation

The following are the material U.S. federal income tax consequences of an investment in our ADSs or ordinary shares. This discussion is applicable to U.S. Holders (as defined below) who hold our ADSs or ordinary shares as capital assets within the meaning of Section 1221 of the U.S. Internal Revenue Code of 1986, as amended, or the Code. For purposes of this discussion you are a “U.S. Holder” if you are a beneficial owner of an ADS or ordinary share that is:

·an individual citizen or resident of the United States, as determined for U.S. federal income tax purposes;

·a corporation (or other entity treated as a corporation for U.S. federal income tax purposes) created or organized in or under the laws of the United States, any state thereof or the District of Columbia;

·an estate the income of which is subject to U.S. federal income taxation regardless of its source; or

·a trust if it (i) is subject to the primary supervision of a court within the United States and one or more U.S. persons have the authority to control all substantial decisions of the trust or (ii) has a valid election in effect under applicable U.S. Treasury regulations to be treated as a U.S. person.

This discussion does not address all U.S. federal income tax consequences applicable to you if you are subject to special treatment under the U.S. federal income tax laws, including if you are:

·a dealer in securities or currencies;

·a financial institution or a member of a financial services group;

·a regulated investment company;

·a real estate investment trust;

·an insurance company;

·a tax-exempt organization;

·an entity treated as a partnership for U.S. federal income tax purposes, or a partner therein;

·a person holding our ADSs or ordinary shares as part of a hedging, integrated or conversion transaction, a constructive sale or a straddle;

·a trader in securities that has elected the mark-to-market method of accounting for your securities;

·a U.S. expatriate or former U.S. citizen or long-term resident;

·a person who actually or constructively (including through attribution rules) owns 10% or more of our stock (measured by vote or value); or

·a person whose “functional currency” is not the U.S. dollar.

124

The discussion below is based upon the provisions of the Code, and U.S. Treasury regulations, rulings and judicial decisions thereunder as of the date hereof. Such authorities are subject to change, which could apply retroactively, and could affect the U.S. federal income tax consequences discussed below. In addition, this discussion assumes that the deposit agreement, and any other related agreements, will be performed in accordance with their terms.

This discussion does not address all of the U.S. federal income tax consequences that may apply to you in light of your particular circumstances. Moreover, this discussion does not address any state, local or non-U.S. tax consequences, the Medicare tax on net investment income, the alternative minimum tax or any aspects of U.S. federal tax law other than income taxation. If you are considering the purchase, ownership or disposition of our ADSs or ordinary shares, you should consult your own tax advisors concerning the U.S. federal income tax consequences to you in light of your particular circumstances as well as any consequences arising under the laws of any other taxing jurisdiction.

ADSs

If you hold ADSs, for U.S. federal income tax purposes, you generally will be treated as the owner of the underlying ordinary shares that are represented by such ADSs. Accordingly, deposits or withdrawals of ordinary shares for ADSs will not be subject to U.S. federal income tax.

Distributions

Subject to the discussion under “Passive Foreign Investment Company” below, the gross amount of distributions will be includible in your income as dividends to the extent paid out of our current or accumulated earnings and profits, as determined under U.S. federal income tax principles. We do not expect to calculate our earnings and profits in accordance with U.S. federal income tax principles. Accordingly, you should expect that a distribution will generally be reported as a dividend even if that distribution (or a portion thereof) would otherwise be treated as a tax-free return of capital or as capital gain. Such dividends will be taxable on the date of receipt by the depositary in the case of ADSs, or on the date of receipt by you in the case of ordinary shares. Such dividends will not be eligible for the dividends received deduction allowed to U.S. corporations under the Code for dividends received from other U.S. corporations.

Dividends received from a qualified foreign corporation are generally treated as qualified dividends provided that an investor holds the stock for at least 61 days within a specified 121-day period beginning on the date which is 60 days before the ex-dividend date. A non-U.S. corporation is treated as a qualified foreign corporation with respect to dividends received from that corporation on shares (or ADSs backed by such shares) that are readily tradable on an established securities market in the United States. U.S. Department of the Treasury guidance indicates that ordinary shares (or ADSs backed by such shares) are considered to be readily tradable on an established securities market in the United States if they are listed on the NASDAQ Capital Market, as our ADSs (but not our ordinary shares) are expected to be. Because the ordinary shares are not themselves listed on a U.S. exchange, dividends received with respect to the ordinary shares may not be treated as qualified dividends. In addition, in order to be treated as a qualified foreign corporation, we must neither be a PFIC nor be treated as such with respect to you for the taxable year in which the dividend was paid and the preceding taxable year. As discussed below in “—Passive Foreign Investment Company,” there is a significant risk that we will become a PFIC during the current taxable year. Qualified dividends received by non-corporate U.S. investors are taxed at the rates applicable to long-term capital gains, which are currently lower than the rates applicable to ordinary income. You should consult your own tax advisors regarding the application of these rules given your particular circumstances. There can be no assurance that we will be a qualified foreign corporation at the time any future dividend is paid.

Dividends will constitute non-U.S. source income for U.S. foreign tax credit purposes and generally will be “passive category” income. In the event we are required to withhold PRC income tax on dividends paid to you with respect to our ADSs or ordinary shares under the EIT Law and its Implementing Rules (as described under “Risk Factors—Risks Related to Our Business and Industry” above), you may, subject to certain limitations, be eligible to claim a U.S. foreign tax credit or a deduction for the PRC tax withheld. The rules governing the U.S. foreign tax credit are complex. You are urged to consult your tax advisors regarding the availability of the U.S. foreign tax credit under your particular circumstances.

125

Sale, Exchange or Other Disposition

Subject to the discussion under “Passive Foreign Investment Company” below, you will recognize capital gain or loss on any sale, exchange or other taxable disposition of ADSs or ordinary shares in an amount equal to the difference between the amount realized for the ADSs or ordinary shares and your tax basis in the ADSs or ordinary shares. Your tax basis in the ADS or ordinary shares will generally be the cost of such ADSs or ordinary shares. Capital gains of non-corporate U.S. Holders derived with respect to capital assets held for more than one year are long-term capital gains, which are currently taxed at rates lower than the rates applicable to ordinary income. The deductibility of capital losses is subject to limitations. In particular, if you are a non-corporate U.S. Holder, the excess of your capital losses over your capital gains in any year may generally only be used to offset the first US$3,000 of your ordinary income, with any balance being carried forward indefinitely for use in subsequent years, subject to the same limitations. If you are a corporate U.S. Holder, you may use capital losses only to offset your capital gains, with unused capital losses carried back three years and carried forward five years. Any gain or loss recognized by you will generally be treated as U.S. source gain or loss for U.S. foreign tax credit purposes. However, as described under “Risk Factors—Risks Related to Our Business and Industry” above, gains recognized on the sale, exchange or other disposition of our ADSs or ordinary shares may be subject to PRC withholding tax under the EIT Law and its Implementing Rules. If PRC tax were to be imposed on any gain recognized on the disposition of ADSs or ordinary shares by a U.S. Holder, such a U.S. Holder that is eligible for the benefits of the income tax treaty between the United States and the PRC may elect to treat the gain as PRC source income for U.S. foreign tax credit purposes. You are urged to consult your tax advisors regarding the tax consequences if PRC withholding tax is imposed on the disposition of our ADSs or ordinary shares, including the availability of the U.S. foreign tax credit under your particular circumstances.

Passive Foreign Investment Company

We believe that we were not a PFIC for our taxable year ending December 31, 2017. Based on the current and projected composition of our income and assets and the valuation of our assets, there is a significant risk that we will become a PFIC during the current taxable year. Our holding of a substantial amount of cash and the manner in which we manage certain solar assets may result in our treatment as a PFIC for our current taxable year. Because our PFIC status for a taxable year will not be determinable until the close of the taxable year, there can be no assurance that we will not be a PFIC for our current taxable year or any future taxable year.

In general, we will be a PFIC for any taxable year in which:

·at least 75% of our gross income is passive income, or

·at least 50% of the value (based on an average of quarterly values) of our assets is attributable to assets that produce or are held for the production of passive income.

For this purpose, passive income generally includes dividends, interest, royalties and rents (other than royalties and rents that are received from unrelated parties in connection with the active conduct of a trade or business) and gains from the disposition of passive assets. If we own, directly or indirectly, at least 25% (by value) of the stock of another corporation, we will be treated, for purposes of the PFIC tests, as owning our proportionate share of the other corporation’s assets and receiving our proportionate share of the other corporation’s income.

The factual determination of whether we are a PFIC will be made annually. Accordingly, it is possible that we may become a PFIC in the current or any future taxable year due to changes in our asset or income composition. Because we have valued our goodwill based on the projected market value of our equity, a decrease in the price of our ADSs may also result in our becoming a PFIC. If we are classified as a PFIC, our ADSs or ordinary shares will continue to be treated as shares in a PFIC for all succeeding years during which a U.S. Holder holds our ADSs or ordinary shares, unless we cease to be a PFIC and the U.S. Holder makes certain elections with respect to the ADSs or ordinary shares.

If we are a PFIC for any taxable year during which you hold our ADSs or ordinary shares, you will be subject to special tax rules with respect to any “excess distribution” received and any gain realized from a sale or other disposition, including a pledge, of ADSs or ordinary shares. Distributions received in a taxable year that are greater than 125% of the average annual distributions received during the shorter of the three preceding taxable years or your holding period for the ADSs or ordinary shares will be treated as excess distributions. Under these special tax rules:

126

·the excess distribution or gain will be allocated ratably over your holding period for the ADSs or ordinary shares,

·the amount allocated to the current taxable year, and any taxable year prior to the first taxable year in which we were a PFIC, will be treated as ordinary income, and

·the amount allocated to each other year will be subject to tax at the highest tax rate in effect for that year and the interest charge applicable to underpayments of tax will be imposed on the resulting tax attributable to each such year.

The tax liability for amounts allocated to taxable years prior to the year of disposition or excess distribution cannot be offset by any net operating losses for such years, and gains (but not losses) realized on the sale or other disposition of the ADSs or ordinary shares cannot be treated as capital, even if you hold the ADSs or ordinary shares as capital assets. If you hold ADSs or ordinary shares in any year in which we are a PFIC, you are required to file Internal Revenue Service, or IRS, Form 8621 (or any other form specified by the U.S. Department of the Treasury) on an annual basis as described in the Instructions for Form 8621, subject to certain exceptions based on the value of PFIC stock held, and the statute of limitations for collections may be suspended if you do not file such form. If we are or become a PFIC, you should consult your tax advisors regarding any reporting requirements that may apply to you.

If we are a PFIC for any taxable year and any of our non-U.S. subsidiaries is also a PFIC, or a lower-tier PFIC, a U.S. Holder would be treated as owning a proportionate amount (by value) of the shares of the lower-tier PFIC for purposes of the application of these rules. You are urged to consult your tax advisors about the application of the PFIC rules to any of our subsidiaries.

In lieu of being subject to the excess distribution rules discussed above, you may make an election to include gain on the stock of a PFIC as ordinary income under a mark-to-market method, provided that such stock is regularly traded on a qualified exchange. Under current law, the mark-to-market election may be available to holders of ADSs, but not ordinary shares, provided the ADSs are listed on the NASDAQ Capital Market, which constitutes a qualified exchange. There can be no assurance that the ADSs will be “regularly traded” for purposes of the mark-to-market election. In addition, because a mark-to-market election cannot be made for equity interests in any lower-tier PFICs that we own, you will continue to be subject to the PFIC rules with respect to your indirect interest in any investments held by us that are treated as an equity interest in a PFIC for U.S. federal income tax purposes.

If you make an effective mark-to-market election for our ADSs for the first year that we are a PFIC, you will include as ordinary income in each year that we are a PFIC the excess of the fair market value of your ADSs at the end of the year over your adjusted tax basis in the ADSs. Consequently, gain (if any) attributable to the period before we became a PFIC would be taxed as ordinary income. You will be entitled to deduct as an ordinary loss each year the excess of your adjusted tax basis in the ADSs over their fair market value at the end of the year, but only to the extent of the net amount previously included in income as a result of the mark-to-market election. Your adjusted tax basis in the ADSs will be increased by the amount of any income inclusion and decreased by the amount of any deductions under the mark-to-market rules. Any gain you recognize upon the sale or other disposition of your ADSs in a year that we are a PFIC will be treated as ordinary income, and any loss will be treated as ordinary loss, but only to the extent of the net amount previously included in income as a result of the mark-to-market election, and generally as capital loss to the extent of any remaining loss. Any distribution that we make would generally be subject to the rules discussed above under “—Distributions,” except that the lower rate applicable to qualified dividend income would not apply. If you make a mark-to-market election, it will be effective for the taxable year for which the election is made and all subsequent taxable years unless the ADSs are no longer regularly traded on a qualified exchange or the IRS consents to the revocation of the election. You are urged to consult your tax advisor about the availability of the mark-to-market election, the consequences of not making a mark-to-market election for the first year we are a PFIC, and of making the election if we later cease to qualify as a PFIC, and whether making the election would be advisable in your particular circumstances.

127

A U.S. investor in a PFIC may in certain circumstances mitigate the tax consequences described above by electing to treat the PFIC as a “qualified electing fund” under Section 1295 of the Code. This option is not available to you because we do not intend to provide the information necessary to permit you to make this election.

Further, our classification as a PFIC may also have other adverse tax consequences, including, in the case of individuals, the denial of a step-up in the basis of your ordinary shares or ADSs at death. You are urged to consult your tax advisors concerning the U.S. federal income tax consequences of holding ADSs or ordinary shares if we are a PFIC in any taxable year.

Information Reporting and Backup Withholding

Information reporting will apply to dividends in respect of our ADSs or ordinary shares and the proceeds from the sale, exchange or redemption of our ADSs or ordinary shares that are paid to you within the United States (or through U.S.-related financial intermediaries), unless you are an exempt recipient. Backup withholding may apply to such payments if you fail to provide a taxpayer identification number or certification of other exempt status or fail to report in full dividend and interest income. U.S. Holders who are required to provide their taxpayer identification number or establish their exempt status can provide such information and certification on IRS Form W-9.

Backup withholding is not an additional tax. Amounts withheld under the backup withholding rules may be credited against your U.S. federal income tax liability, and you may obtain a refund of any excess amounts withheld under the backup withholding rules by filing the appropriate claim for refund with the IRS and furnishing any required information in a timely manner.

Specified Foreign Financial Assets

Certain U.S. Holders that own “specified foreign financial assets” with an aggregate value in excess of US$50,000 are generally required to file an information statement along with their tax returns, currently on Form 8938, with respect to such assets. “Specified foreign financial assets” include any financial accounts held at a non-U.S. financial institution, as well as securities issued by a non-U.S. issuer that are not held in accounts maintained by financial institutions. Higher reporting thresholds apply to certain individuals living abroad and to certain married individuals. Regulations extend this reporting requirement to certain entities that are treated as formed or availed of to hold direct or indirect interests in specified foreign financial assets based on certain objective criteria. U.S. Holders who fail to report the required information could be subject to substantial penalties. In addition, the statute of limitations for assessment of tax would be suspended, in whole or part. You should consult your own tax advisors concerning the application of these rules to your particular circumstances.

PROSPECTIVE PURCHASERS SHOULD CONSULT WITH THEIR OWN TAX ADVISORS REGARDING THE APPLICATION OF THE UNITED STATES FEDERAL INCOME TAX LAWS TO THEIR PARTICULAR SITUATIONS AS WELL AS ANY ADDITIONAL TAX CONSEQUENCES RESULTING FROM PURCHASING, HOLDING OR DISPOSING OF ORDINARY SHARES OR ADSS, INCLUDING THE APPLICABILITY AND EFFECT OF THE TAX LAWS OF ANY STATE, LOCAL OR FOREIGN JURISDICTION, OR ANY ESTATE, GIFT OR INHERITANCE LAWS.

F.Dividends and Paying Agents

Not applicable.

G.Statement by Experts

Not applicable.

H.Documents on Display

We have filed this annual report on Form 20-F, including exhibits, with the SEC. We have previously filed with the SEC our registration statement on Form F-1 (File No. 333-198817), as amended. As allowed by the SEC, in Item 19 of this annual report on Form 20-F, we incorporate by reference certain information we filed with the SEC.

128

This means that we can disclose important information to you by referring you to another document filed separately with the SEC. The information incorporated by reference is considered to be part of this annual report on Form 20-F.

You may read and copy this annual report, including the exhibits incorporated by reference in this annual report, at the SEC’s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549 and at the SEC’s regional offices in New York, New York and Chicago, Illinois. You can also request copies of this annual report, including the exhibits incorporated by reference in this annual report, upon payment of a duplicating fee, by writing information on the operation of the SEC’s Public Reference Room.

The SEC also maintains a website at that contains reports and other information regarding registrants that file electronically with the SEC. Our annual report and some of the other information submitted by us to the SEC may be accessed through this website.

As a foreign private issuer, we are exempt from the rules under the Exchange Act prescribing the furnishing and content of quarterly reports and proxy statements, and officers, directors and principal shareholders are exempt from the reporting and short-swing profit recovery provisions contained in Section 16 of the Exchange Act.

We will post this annual report on our website. In addition, we will provide hardcopies of our annual report to shareholders, including ADS holders, free of charge upon request.

I.Subsidiary Information

Not applicable.

ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Currency Risk

The monetary assets and monetary liabilities of our subsidiaries are primarily denominated in U.S. dollars, Japanese yen, Euros and CAD, whichever is the functional currency of the respective subsidiary, at the end of each reporting date. We have not entered into any hedging transactions to reduce the foreign exchange rate fluctuation risks, but may do so in the future when we deem it appropriate to do in light of the significance of such risks. However, if we decide to hedge our foreign exchange exposure in the future, we cannot assure you that we will be able to reduce our foreign currency risk exposure in an effective manner, at reasonable costs, or at all. See “Item 3. Key Information—D. Risk Factors—Risks Related to our Business and Industry—Fluctuations in foreign currency exchange rates may negatively affect our revenue, cost of sales and gross margins and could result in exchange losses.”

Sensitivity Analysis

We are mainly exposed to foreign currency risk from the fluctuations of U.S. dollar, which is our reporting currency against the Euro, Japanese Yen and CAD, which are the functional currencies of a majority of our operating subsidiaries. Our operations in Japan, Bulgaria, South Africa and Canada are transacted in their respective local currency. The following table details our sensitivity and the sensitivity of our subsidiaries to a 10% increase and decrease in the respective functional currency against the U.S. dollar. The sensitivity rate of 10% represents management’s assessment of the reasonably possible change in foreign exchange rates. The sensitivity analysis includes only outstanding foreign currency denominated monetary items and adjusts their translation at the end of each reporting period for a 10% change in their respective functional currency. A positive number below indicates an increase in profit where the respective functional currencies strengthen 10% against the U.S. dollar. For a 10% weakening of their respective functional currencies against the U.S. dollar, there would be an equal and opposite impact on the equity and the balances below would be negative.

	Year Ended December 31,
	2016		2017
	US$ in thousands		US$ in thousands
EURO	502		523
CAD	130		142
JPY	(12,306	)	(22,760	)

129

We currently do not have a foreign currency hedging policy, but we monitor our foreign risks and will consider hedging significant foreign currency exposure, should we determine that it is appropriate.

Interest Rate Risk

Our cashflow interest rate risk relates primarily to variable-rates on restricted cash, cash and cash equivalents and borrowings.

Our fair value interest rate risk relates mainly to fixed-rate borrowings.

To mitigate the risk of changing interest rates on the fair value of issued fixed rate debt and the cash flow exposures on the issued variable rate debt, we entered into certain interest rate swap contracts. Under these contracts, we agree to exchange the difference between fixed and floating rate interest amounts calculated on agreed notional principal amounts. The fair value of interest rate swaps at the end of the reporting period is determined by discounting the future cash flows using the curves at the end of the reporting period and the credit risk inherent in the contract, and is disclosed below. The average interest rate is based on the outstanding balances at the end of the reporting period.

The sensitivity analysis below has been determined based on the exposure to interest rates for interest bearing bank balances and floating rate borrowings at the end of the reporting period. The analysis is prepared assuming that those balances outstanding at the end of the reporting period were outstanding for the whole year. A 5% increase or decrease which represents the management’s assessment of the reasonably possible charge in interest rates is used.

If the interest rate on bank balances and other borrowings with variable interest rates had been 5% higher/lower and all other variables were held constant, our post-tax profit would increase/decrease by approximately US$22 thousand and US$268 thousand for the year ended December 31, 2016 and 2017 respectively.

In management’s opinion, the sensitivity analysis is unrepresentative of the inherent interest rate risk as the exposure at the end of each reporting period does not reflect the exposure at the end of each reporting period.

The following tables detail the notional principal amounts and remaining terms of interest swap contracts outstanding at the end of the reporting period.

Credit Risk

Our maximum exposure to credit risk arises from the carrying amounts of the respective recognized financial assets as stated in our consolidated statements of financial position.

In order to minimize the credit risk, we have delegated a team responsible for determining credit limits, credit approvals and other monitoring procedures to ensure that follow-up action is taken to recover overdue debts. In addition, we review the recoverable amount of each individual debtor at the end of each reporting period to ensure that adequate impairment losses are made for irrecoverable amounts. We will negotiate with the counterparties of the debts for settlement plans or changes in credit terms, should the need arise. In this regard, we consider that our credit risk is significantly reduced.

Our credit risk primarily relates to our trade and other receivables, restricted cash, cash and cash equivalents and amounts due from related parties. We generally grant credit only to clients and related parties with good credit ratings and also closely monitors overdue debts. In this regard, we consider that the credit risk arising from our balances with counterparties is significantly reduced.

Our credit risk as at December 31, 2016 was concentrated on trade receivables from electricity companies in Japan, Europe and the US, that amounted to approximately US$8.3 million and accounted for 91.9% of our total trade receivables. Our credit risk as at December 31, 2017 was concentrated on trade receivables from electricity companies in Japan, Europe, USA and Uruguay , that amounted to approximately US$8.0 million and accounted for 95.8% of our total trade receivables.

130

Our credit risk as at December 31, 2016 and 2017 on balances with related parties was concentrated on four and two related parties, respectively, which are engaged in solar industry in the PRC and overseas countries and amounted to approximately US$10.7 million and US$20.9 million, representing 73.2% and 93.3%, respectively, of our total balances from related parties.

The credit risk on our liquid funds and restricted cash of is limited because the counterparties are banks with high credit ratings assigned by international credit-rating agencies and good reputation. We do not have concentration of credit risk on liquid funds at the end of each reporting period.

Liquidity Risk

We have built an appropriate liquidity risk management framework for the management of short-term and long-term funding and liquidity. We manage liquidity risk by closely and continuously monitoring its financial positions. We aim to maintain sufficient cash flows with internally generated funds and banking facilities. We also review forecasted cash flows on an on-going basis to ensure that.

The following tables detail the remaining contractual maturity for our financial liabilities based on the agreed repayment terms. The table has been drawn up based on the undiscounted cash flows, including both principal and interest, of financial liabilities based on the earliest date on which we can be required to pay.

	Weighted average interest rate		<1 year	1 - 2 years	2 - 3 years	>3 years	Total undiscounted cash flows	Total carrying amount
			US$ in thousands	US$ in thousands	US$ in thousands	US$ in thousands	US$ in thousands	US$ in thousands
At December 31, 2016
Trade and other payables	N/A		18,668	—	—	—	18,668	18,668
Amounts due to other related parties	N/A		7,512	—	—	—	7,512	7,512
Borrowings— variable rate	3.63	%	843	1,133	1,133	10,200	13,309	11,162
Borrowings— fixed rate	4.13	%	27,643	13,781	10,876	125,359	177,659	147,999
			54,666	14,914	12,009	135,559	217,148	185,341
At December 31, 2017
Trade and other payables	N/A		26,644	—	—	—	26,644	26,644
Amounts due to other related parties	N/A		28	—	—	—	28	28
Borrowings— variable rate	4.82	%	4,854	8,173	8,164	118,998	140,189	95,216
Borrowings— fixed rate	3.52	%	14,848	17,527	15,611	146,977	194,963	154,513
			46,374	25,700	23,775	265,975	361,824	276,401

The amounts included above for variable interest rate instruments for non-derivative financial liabilities are subject to change if changes in variable interest rates differ to those estimates of interest rates determined at the end of each reporting period.

The following table details our liquidity analysis for our financial liabilities at FVTPL, representing liabilities we recorded during the year ended December 31, 2016 and 2017 for arrangements with certain third parties as at December 31, 2016 and 2017. The table is presented based on the undiscounted projected cash outflows on such instruments that we expect to settle. The liquidity analysis for our financial liabilities at FVTPL was prepared based on the management’s understanding of the timing of the cash flows of the derivatives.

	Weighted average effective interest rate		<1 year	1 - 2 years	2 - 3 years	>3 years	Total undiscounted cash flows	Total carrying amount
			US$ in thousands	US$ in thousands	US$ in thousands	US$ in thousands	US$ in thousands	US$ in thousands
At December 31, 2016
Other non-current liabilities	13.8		14,698	14,818	15,251	204,264	249,031	133,553
At December 31, 2017
Other Current liabilities	15	%	120,820	—	—	—	120,820	120,820
Other non-current liabilities	10.99	%	5,310	8,420	8,440	132,234	154,404	57,885
			126,130	8,420	8,440	132,234	275,224	178,705

131

ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

A.Debt securities

Not applicable.

B.Warrants and Rights

Not applicable.

C.Other securities

Not applicable.

D.American Depositary Shares

Fees and Expenses

As an ADS holder, you will be required to pay the following fees under the terms of the deposit agreement:

Service	Fees
Issuance of ADSs upon deposit of ordinary shares (excluding issuances as a result of distributions of ordinary shares)	Up to US$0.05 per ADS issued
Cancellation of ADSs	Up to US$0.05 per ADS cancelled
Distribution of cash dividends or other cash distributions (i.e., sale of rights and other entitlements)	Up to US$0.05 per ADS held
Distribution of ADSs pursuant to (i) share dividends or other free share distributions, or (ii) exercise of rights to purchase additional ADSs	Up to US$0.05 per ADS held
Distribution of securities other than ADSs or rights to purchase additional ADSs (i.e., spin-off shares)	Up to US$0.05 per ADS held
ADS services	Up to US$0.05 per ADS held on the applicable record date(s) established by the depositary

You will also be responsible for paying certain charges including:

·taxes (including applicable interest and penalties) and other governmental charges;

·certain registration fees as may from time to time be in effect for the registration of shares or other deposited securities on the share register and applicable to transfers of Shares or other deposited securities to or from the name of the custodian, the depositary or any nominees upon the making of deposits and withdrawals, respectively;

·certain cable, telex and facsimile transmission and delivery expenses;

·the expenses and charges incurred by the depositary in the conversion of foreign currency;

·such fees and expenses as are incurred by the depositary in connection with compliance with exchange control regulations and other regulatory requirements applicable to Shares, deposited securities, ADSs and ADRs; and

·the fees and expenses incurred by the depositary, the custodian, or any nominee in connection with the servicing or delivery of deposited property.

ADS fees and charges payable upon (i) deposit of ordinary shares against issuance of ADSs and (ii) surrender of ADSs for cancellation and withdrawal of ordinary shares are charged to the person to whom the ADSs are delivered (in the case of ADS issuances) and to the person who delivers the ADSs for cancellation (in the case of ADS cancellations). In the case of ADSs issued by the depositary into The Depository Trust Company, or DTC, or presented to the depositary via DTC, the ADS issuance and cancellation fees and charges are charged to the DTC participant(s) receiving the ADSs or the DTC participant(s) surrendering the ADSs for cancellation, as the case may be, on behalf of the beneficial owner(s) and will be charged by the DTC participant(s) to the account(s) of the applicable beneficial owner(s) in accordance with the procedures and practices of the DTC participant(s) as in effect at the time. ADS fees and charges in respect of distributions and the ADS service fee are charged to the holders as of the applicable ADS record date. In the case of distributions of cash, the amount of the applicable ADS fees and charges is deducted from the funds being distributed. In the case of (i) distributions other than cash and (ii) the ADS service fee, holders as of the ADS record date will be invoiced for the amount of the ADS fees and charges and such fees may be deducted from distributions made to applicable holders of ADSs. For ADSs held through DTC, the ADS fees and charges for distributions other than cash and the ADS service fee may be deducted from distributions made to holders of ADSs through DTC or charged to the DTC participants in accordance with the procedures and practices prescribed by DTC and the DTC participants in turn charge the amount of such ADS fees and charges to the beneficial owners for whom they hold ADSs.

132

In the event of refusal to pay the depositary fees, the depositary may, under the terms of the deposit agreement, refuse the requested service until payment is received or may set off the amount of the depositary fees from any distribution to be made to the ADS holder. Note that the fees and charges you may be required to pay may vary over time and may be changed by us and by the depositary. You will receive prior notice of such changes. The depositary may reimburse us for certain expenses incurred by us in respect of the ADR program, by making available a portion of the ADS fees charged in respect of the ADR program or otherwise, upon such terms and conditions as we and the depositary agree from time to time.

Payment of Taxes

You will be responsible for any taxes or other governmental charges payable on your ADSs or on the deposited securities represented by any of your ADSs. The depositary may refuse to register any transfer of your ADSs or allow you to withdraw the deposited securities represented by your ADSs until such taxes or other charges are paid. It may apply payments owed to you or sell deposited securities represented by your American Depositary Shares to pay any taxes owed and you will remain liable for any deficiency. If the depositary sells deposited securities, it will, if appropriate, reduce the number of ADSs to reflect the sale and pay to ADS holders any proceeds, or send to ADS holders any property, remaining after it has paid the taxes.

Fees and Other Payments Made by the Depositary to Us

Citibank N.A., as depositary, has agreed to reimburse us for a portion of certain expenses we incur that are related to establishment and maintenance of the ADR program, including investor relations expenses. There are limits on the amount of expenses for which the depositary will reimburse us, but the amount of reimbursement available to us is not related to the amounts of fees the depositary collects from investors. Further, the depositary has agreed to reimburse us certain fees payable to the depositary by holders of ADSs. In 2017, we didn’t received any payment, directly or indirectly, from the depositary in connection with the establishment and maintenance of the ADR program.

PART II

ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

Other than as described in “Item 4. Information on the Company—B. Business Overview—Featured Countries—Japan—Japan Silent Partnership”, as of December 31, 2017, we were in compliance with all material terms and covenants of our loan credit agreements.

ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS

A-D. Material Modifications to the Rights of Security Holders.

None.

133

E. Use of Proceeds.

Not applicable.

ITEM 15. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures designed to provide reasonable assurance that information required to be disclosed in reports filed under the Exchange Act is recorded, processed, summarized and reported within the specified time periods and accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.

Our management, under the supervision and with the participation of our management committee and our principal financial officer, evaluated the effectiveness of our disclosure controls and procedures, as defined in Rules 13a-15(e) or 15d-15(e) promulgated under the Exchange Act, as of December 31, 2017. Based on that evaluation, our management committee and principal financial officer have concluded that our disclosure controls and procedures are ineffective in ensuring that material information required to be disclosed in this annual report is recorded, processed, summarized and reported to them for assessment, and required disclosure is made within the time period specified in the rules and forms of the SEC.

Management’s Annual Report on Internal Control over Financial Reporting

Our management is responsible for designing, establishing and maintaining a system of internal controls over financial reporting (as defined in Exchange Act Rule 13a-15(f) and 15d-15(f)) to provide reasonable assurance that the financial information prepared by us for external purposes is reliable and has been recorded, processed and reported in an accurate and timely manner in accordance with IFRS. Our board of directors is responsible for ensuring that management fulfills its responsibilities. Because of its inherent limitations, our internal control over financial reporting may not prevent or detect all possible misstatements or frauds. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with policies or procedures may deteriorate.

To evaluate the effectiveness of our internal control over financial reporting, our management has used the Internal Control - Integrated Framework (1992), which is a suitable, recognized control framework established by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). In connection with this assessment, management identified three material weaknesses related to, among other deficiencies, (i) insufficient accounting resources and processes necessary to comply with reporting and compliance requirements of IFRS and the SEC, (ii) lack of sufficient written policies and proper procedures in relation to certain internal control over financial reporting as well as the financial closing and reporting procedures at certain overseas components and (iii) lack of an independent internal audit function to perform management self-assessment on internal controls. Because of the material weaknesses identified above, our management has concluded that our internal control over financial reporting was not effective as of December 31, 2017.

134

Remediation Actions and Plans

We have taken a number of measures to address the material weaknesses and other control deficiencies identified. Specifically, we formed an audit committee, which consists of independent directors to oversee the operation of our finance department, and to approve all related party transactions and other significant transactions. We have also recruited new accounting leadership in the key regions, who have both IFRS and internal control knowledge and experiences. We will further enhance our internal control team with additional personnel, to provide policy training from time to time at both corporate and regional level, and to perform internal audit on a regular basis.

In cooperation with our board’s audit committee, we plan to further take a number of measures to address the material weaknesses and other control deficiencies identified. Specifically, to address the material weakness related to insufficient accounting resources and process necessary to comply with reporting and compliance requirements of IFRS and the SEC, we are in the progress of (i) further enrich our human resources at the corporate level by putting personnel who have IFRS and SEC reporting and compliance knowledge and experience; (ii) provide time to time IFRS and company policy training to both corporate and the regional accounting staff; and (iii) re-establish internal control function by refilling the key position which was absence since early 2016. To address the material weakness related to the lack of sufficient written policies and proper procedures in relation certain internal control over financial reporting as well as the financial closing and reporting procedures at certain overseas components, we plan to strengthen the internal control function to lead the design, development, update and provide training of the company policy, at both the corporate and regional level. To address the material weakness of lack of independent internal audit function, we will recruit qualified personnel to lead the internal audit function.

As of December 31, 2017, we determined that the remediation of the above-mentioned material weaknesses and other control deficiencies was in progress. The ongoing implementation of these measures may not fully address the material weaknesses and other control deficiencies in our internal control over financial reporting. We are not able to estimate with reasonable certainty the costs that we will need to incur to implement these and other measures designed to improve our internal control over financial reporting.

The process of designing and implementing an effective financial reporting system is a continuous effort that requires us to anticipate and react to changes in our business and the economic and regulatory environments and to expend significant resources to maintain a financial reporting system that is adequate to satisfy our reporting obligations. See “Item 3. Key Information—D. Risk Factors—Risks Relating to Our Business— If we fail to implement and maintain an effective system of internal controls, we may be unable to accurately report our results of operations or prevent fraud or fail to meet our reporting obligations and investor confidence and the market price of our ADSs may be materially and adversely affected.”

Attestation Report of the Independent Registered Public Accounting Firm

Since we are an “emerging growth company” as defined under the JOBS Act, we are exempt from the requirement to comply with the auditor attestation requirements that our independent registered public accounting firm attest to and report on the effectiveness of our internal control structure and procedures for financial reporting. See “Item 3. Key Information—D. Risk Factors—If we fail to implement and maintain an effective system of internal controls, we may be unable to accurately report our results of operations or prevent fraud or fail to meet our reporting obligations and investor confidence and the market price of our ADSs may be materially and adversely affected.”

Changes in Internal Control over Financial Reporting

The matters described above constitute the changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting during the period covered by this annual report on Form 20-F.

135

ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT

Our Board of Directors has determined that Qiang Zhan, who is an independent director, qualifies as an audit committee financial expert as defined in Item 16A of the instruction to Form 20-F. See “Item 6. Directors, Senior Management and Employees—C. Board Practices—Board Committees—Audit Committee.”

ITEM 16B. CODE OF ETHICS

Our board of directors adopted a code of business conduct and ethics on September 10, 2014, which applies to our directors, officers and employees. No changes have been made to the code of ethics since its adoption and no waivers have been granted therefrom to our directors or employees. We have filed this code of ethics as an exhibit to this annual report on Form 20-F, and a copy is available to any shareholder upon request. Our code of business conduct and ethics is publicly available on our website at http://media.corporate-ir.net/media_files/IROL/25/253697/Code_of_Business_Conduct_and_Ethics%20without%20certificate.pdf.

ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES

The following table presents the aggregate fees for professional services and other services rendered by Deloitte Touche Tohmatsu Certified Public Accountants LLP and BDO China Shu Lun Pan Certified Public Accountants LLP (“BDO”) to us in 2016 and 2017, respectively.

	For the years ended December 31,
	2016	2017
	(US$ in thousands)
Audit Fees(1)	1,200	1,050
Audit—related Fees(2)	398	193
Tax Fees(3)	22	173
Total	1,620	1,416

(1)Audit fees consist of fees associated with the annual audit, the reviews of our quarterly financial statements and statutory audits required internationally. They also include fees billed for those services that are normally provided by the independent accountants in connection with statutory and regulatory filings.

(2)Audit-related fees include fees billed for professional services rendered in connection with the assurance and related services.

(3)Tax fees include fees billed for professional services in connection with our tax consulting service.

The policy of our audit committee is to pre-approve all audit and non-audit services provided by our independent registered public accounting firm, including audit services, audit-related services, tax services and other services, as described above.

ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES

Not Applicable.

ITEM 16E. PURCHASE OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS

Not Applicable.

ITEM 16F. CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT

On November 24, 2017, we dismissed Deloitte Touche Tohmatsu Certified Public Accountants LLP (“Deloitte”), as our independent registered public accounting firm, effective immediately, and engaged BDO as our independent registered public accounting firm in connection with the audit of our consolidated financial statements for the year ended December 31, 2017, effective as of November 24, 2017. Our decision to dismiss Deloitte and engage BDO was approved by the audit committee of our board of directors on November 24, 2017.

136

Deloitte’s audit report on our consolidated financial statements as of December 31, 2015 and 2016 and for each of the years ended December 31, 2015 and 2016 did not contain an adverse opinion or a disclaimer of opinion and was not qualified or modified as to uncertainty, audit scope or accounting principles. Deloitte did not audit any financial statements of our company as of any date or for any period subsequent to December 31, 2016.

During each of the years ended December 31, 2015 and 2016 and the subsequent interim period through our dismissal of Deloitte on November 24, 2017, there were (i) no disagreements, as that term is defined in Item 16F(a)(1)(iv) of Form 20-F and the related instructions to Item 16F of Form 20-F, between us and Deloitte on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, any of which, if not resolved to Deloitte’s satisfaction, would have caused Deloitte to make reference to the subject matter of the disagreement in connection with their reports on the financial statements for such years, and (ii) no “reportable events” requiring disclosure pursuant to Item 16F(a)(1)(v) of the instructions to Form 20-F in connection with our annual report on Form 20-F.

We provided Deloitte with a copy of the disclosures under this Item 16F and requested from Deloitte a letter addressed to the SEC indicating whether it agrees with such disclosures, and if not, stating the respects in which it does not agree. We have received the requested letter from Deloitte, a copy of which is included as Exhibit 16.1 attached herein.

During each of the years ended December 31, 2016 and 2017 and the subsequent interim period through November 24, 2017, neither we nor anyone on behalf of us has consulted with BDO regarding (i) the application of accounting principles to a specific transaction, either completed or proposed, or the type of audit opinion that might be rendered on our consolidated financial statements, and neither a written report nor oral advice was provided to us that BDO concluded was an important factor considered by us in reaching a decision as to any accounting, auditing, or financial reporting issue, (ii) any matter that was the subject of a disagreement pursuant to Item 16F(a)(1)(iv) of the instructions to Form 20-F, or (iii) any reportable event pursuant to Item 16F(a)(1)(v) of the instructions to Form 20-F.

ITEM 16G. CORPORATE GOVERNANCE

We have followed and intend to continue to follow the applicable corporate governance standards under the NASDAQ Stock Market Rules.

We are a “foreign private issuer” (as such term is defined in Rule 3b-4 under the Exchange Act), and our ADSs, each representing eight ordinary shares, are listed on the NASDAQ Capital Market. Under Section 5615 of the NASDAQ Stock Market Rules, NASDAQ-listed companies that are foreign private issuers are permitted to follow home country practice in lieu of the corporate governance provisions specified by NASDAQ with limited exceptions. The following table summarizes the significant way in which our corporate governance practices differ from those followed by domestic companies under the listing standards of NASDAQ.

	NASDAQ Listing Rules	Our Practice
Board of Directors	NASDAQ Listing Rules require issuers to have a board of directors that is majority independent.	We have a board of directors that is comprised of eight members, three of whom are independent directors.
Audit Committee	NASDAQ Listing Rules require issuers to have an audit committee that has at least three members, each of whom is an independent director	We have an audit committee that consists of two directors, both of whom are independent directors.
Compensation Committee	NASDAQ Listing Rules require issuers to have a compensation committee that has at least two members, each of whom is an independent director.	We have a compensation committee that consists of one independent director and two executive directors.
Independent Director Oversight of Executive Officer Compensation	NASDAQ Listing Rules require issuers to have independent director involvement in the determination of executive compensation by having a compensation committee comprised solely of independent directors or by submitting such matters for approval or recommendation by a majority of the independent directors meeting in executive sessions.	Our compensation committee, which is comprised of one independent director and two executive directors, oversees executive officer compensation.
Independent Director Oversight of Director Nomination	NASDAQ Listing Rules require issuers to have independent director involvement in the selection and recommendation of director nominees, by having a nomination committee comprised solely of independent directors or by having director nominees selected or recommended by a majority of its independent directors meeting in executive sessions.	Our nominating & corporate governance committee, which is comprised of three independent directors and one executive director, oversees the selection and recommendation of director nominees.

137

ITEM 16H. MINE SAFETY DISCLOSURE

Not applicable.

138

PART III

ITEM 17. FINANCIAL STATEMENTS

We have elected to provide the financial statements and related information specified in Item 18.

ITEM 18. FINANCIAL STATEMENTS

The following is a list of the audited financial statements and a report of the independent registered public accounting firm included in this annual report on Form 20-F beginning on page F-1.

Contents	Pages
Report of Independent Registered Public Accounting Firm	F-2
Consolidated statements of profit or loss and other comprehensive income or expense for the years ended December 31, 2015, 2016 and 2017	F-4
Consolidated statements of financial position as of December 31, 2016 and 2017	F-5
Consolidated statements of changes in equity for the years ended December 31, 2015, 2016 and 2017	F-6
Consolidated statements of cash flows for the years ended December 31, 2015, 2016 and 2017	F-7—F-8
Notes to the consolidated financial statements	F-9—F-77

ITEM 19. EXHIBITS

Exhibit Number	Description of Exhibits
1.1	Amended and Restated Memorandum of Association and Articles of Association of the Registrant, as currently in effect (previously filed with the Registration Statement on Form F-1 (File 333-198817) filed on September 18, 2014 and incorporated herein by reference)
2.1	Registrant’s Specimen American Depositary Receipt (previously filed with the Registration Statement on Form F-1 (File 333-198817) filed on September 18, 2014 and incorporated herein by reference)
2.2	Registrant’s Specimen Certificate for Ordinary Shares (previously filed with the Registration Statement on Form F-1 (File 333-198817) filed on September 18, 2014 and incorporated herein by reference)
2.3	Form of Deposit Agreement, among the Registrant, the Depositary and holders of the American Depositary Receipts (previously filed with the Registration Statement on Form F-6 (File 333-199512) filed on October 22, 2014 and incorporated herein by reference)
4.1	2009 Stock Incentive Plan (previously filed with the Registration Statement on Form F-1 (File 333-198817) filed on September 18, 2014 and incorporated herein by reference)
4.2	2014 Equity Incentive Plan (previously filed with the Registration Statement on Form F-1 (File 333-198817) filed on September 18, 2014 and incorporated herein by reference)
4.3	Form of Employment Agreement with the Registrants’ executive officers (previously filed with the Registration Statement on Form F-1 (File 333-198817) filed on September 18, 2014 and incorporated herein by reference)
4.4	Form of Indemnification Agreement with the Registrants’ directors (previously filed with the Registration Statement on Form F-1 (File 333-198817) filed on September 18, 2014 and incorporated herein by reference)
4.5	Trademark License Agreement dated September 3, 2013 (previously filed with the Registration Statement on Form F-1 (File 333-198817) filed on September 18, 2014 and incorporated herein by reference)
4.6	Trademark License Agreement dated September 6, 2013 (previously filed with the Registration Statement on Form F-1 (File 333-198817) filed on September 18, 2014 and incorporated herein by reference)
4.7	Translation of Deed of Non-competition and Right of First Refusal (previously filed with the Registration Statement on Form F-1 (File 333-198817) filed on September 18, 2014 and incorporated herein by reference)
4.8	Registration Rights Agreement between Sky Solar Holdings, Ltd., IDG-ACCEL China Capital L.P., IDG-ACCEL China Capital Investors L.P., CES Holdings Ltd., Sino-Century HX Investments Limited and Permal Select Opportunities Ltd. (previously filed with the Registration Statement on Form F-1 (File 333-198817) filed on September 18, 2014 and incorporated herein by reference)
4.9	Registration Rights Agreement between Sky Solar Holdings, Ltd. and Solar Partnership Capital II Ltd. dated October 10, 2014 (previously filed with Amendment No. 1 to the Registration Statement on Form F-1 (File 333-198817) filed on October 22, 2014 and incorporated herein by reference)
4.10	Translation of Amendment to Deed of Non-competition and Right of First Refusal dated October 22, 2014 (previously filed with Amendment No. 1 to the Registration Statement on Form F-1 (File 333-198817) filed on October 22, 2014 and incorporated herein by reference)

139

8.1*	Subsidiaries of the Registrant
11.1	Code of Business Conduct and Ethics of the Registrant (previously filed with the Registration Statement on Form F-1 (File 333-198817) filed on September 18, 2014 and incorporated herein by reference)
12.1*	Principal Executive Officer Certification Pursuant to Section 302 of the Sarbanes-Oxley Act
12.2*	Principal Financial Officer Certification Pursuant to Section 302 of the Sarbanes-Oxley Act
13.1**	Principal Executive Officer Certification Pursuant to Section 906 of the Sarbanes-Oxley Act
13.2**	Principal Financial Officer Certification Pursuant to Section 906 of the Sarbanes-Oxley Act
15.1*	Consent of Independent Registered Accounting Firm (BDO China Shu Lun Pan Certified Public Accountants LLP)
15.2*	Consent of Independent Registered Accounting Firm (Deloitte Touche Tohmatsu Certified Public Accountants LLP)
16.1*	Letter from Deloitte Touche Tohmatsu Certified Public Accountants LLP to the Securities and Exchange Commission
101.INS*	XBRL Instance Document
101.SCH*	XBRL Taxonomy Extension Schema Document
101.CAL*	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*	XBRL Taxonomy Extension Label Linkbase Document
101.PRE*	XBRL Taxonomy Extension Presentation Linkbase Document

* Filed herewith
** Furnished herewith

140

SIGNATURES

The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on this Form 20-F on its behalf.

Sky Solar Holdings, Ltd.
By:	/s/ Hao Wu
Name:	Hao Wu
Title:	Chairman and principal executive officer

Date: April 27, 2018

141

SKY SOLAR HOLDINGS, LTD.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

	Pages
Report of Independent Registered Public Accounting Firm	F-2
Consolidated statements of profit or loss and other comprehensive income or expense for the years ended December 31, 2015, 2016 and 2017	F-4
Consolidated statements of financial position as of December 31, 2016 and 2017	F-5
Consolidated statements of changes in equity for the years ended December 31, 2015, 2016 and 2017	F-6
Consolidated statements of cash flows for the years ended December 31, 2015, 2016 and 2017	F-7—F-8
Notes to the consolidated financial statements	F-9—F-77

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

TO THE BOARD OF DIRECTORS AND SHAREHOLDERS OF SKY SOLAR HOLDINGS, LTD.

We have audited the accompanying consolidated statements of financial position of Sky Solar Holdings, Ltd. (the “Company”) and its subsidiaries (collectively referred as the “Group”) as of December 31, 2017, and the related consolidated statements of profit or loss and other comprehensive income or expense, changes in equity, and cash flows for the year then ended. These financial statements are the responsibility of the Group’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the Standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. The Group is not required to have, nor were we engaged to perform, an audit of internal control over financial reporting. Our audits included 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 Group’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 consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Group as of December 31, 2017, and the results of its operations and its cash flows for each of the for the year then ended in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board.

/s/BDO China Shu Lun Pan Certified Public Accountants LLP

BDO China Shu Lun Pan Certified Public Accountants LLP

Shanghai, People’s Republic of China

We have served as the Company’s auditor since 2017.

April 27, 2018

F-2

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

TO THE BOARD OF DIRECTORS AND SHAREHOLDERS OF SKY SOLAR HOLDINGS, LTD.

We have audited the accompanying consolidated statements of financial position of Sky Solar Holdings, Ltd. (the “Company”) and its subsidiaries (collectively referred as the “Group”) as of December 31, 2016, and the related consolidated statements of profit or loss and other comprehensive income or expense, changes in equity, and cash flows for each of the two years in the period ended December 31, 2016. These financial statements are the responsibility of the Group’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the Standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. The Group is not required to have, nor were we engaged to perform, an audit of internal control over financial reporting. Our audits included 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 Group’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 consolidated financial statements present fairly, in all material respects, the financial position of the Group as of December 31, 2016, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2016 in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board.

/s/ Deloitte Touche Tohmatsu Certified Public Accountants LLP

Deloitte Touche Tohmatsu Certified Public Accountants LLP

Shanghai, China

May 15, 2017

F-3

SKY SOLAR HOLDINGS, LTD.

CONSOLIDATED STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME OR EXPENSE

(U.S. dollars in thousands, except for per share information or as otherwise noted)

		Year ended December 31,
	Notes	2015		2016		2017
Revenue	5
Related parties		4,450		788		286
Non-related parties		42,705		65,137		56,447
Total revenue		47,155		65,925		56,733
Cost of sales and services		(18,533	)	(30,911	)	(23,201	)
Gross profit		28,622		35,014		33,532
Impairment loss on IPP solar parks	21	(1,835	)	(2,151	)	(5,221	)
Provision on receivables	16, 17	(1,071	)	—		—
Selling expenses		(1,171	)	(882	)	(554	)
Administrative expenses		(22,556	)	(29,744	)	(25,110	)
Other operating income	14	197		13,163		2,068
Reversal of provision for other taxes	11	6,025		—		—
Profit from operations		8,211		15,400		4,715
Investment income	7	349		498		7,891
Other losses	8	(6,901	)	(4,971	)	(39,986	)
Finance costs	9	(3,897	)	(6,368	)	(12,200	)
(Loss) profit before taxation		(2,238	)	4,559		(39,580	)
Income tax (expense) credit	11	684		(1,277	)	6,530
(Loss) profit for the year		(1,554	)	3,282		(33,050	)
Other comprehensive (expense) income that may be subsequently reclassified to profit or loss:
Currency translation difference		(10,310	)	(57	)	5,579
Share of other comprehensive income of associates		—		136		—
Fair value loss arising from cash flow hedges		(680	)	(446	)	—
Release of cumulative fair value loss from cash flow hedges upon disposal of subsidiary		—		1,126		—
Total comprehensive (expense) income for the year		(12,544	)	4,041		(27,471	)
(Loss) profit for the year attributable to owners of the Company		(1,397	)	3,784		(33,171	)
(Loss) profit for the year attributable to non-controlling interests		(157	)	(502	)	121
(Loss) profit for the year		(1,554	)	3,282		(33,050	)
Total comprehensive (expense) income attributable to:
Owners of the Company		(12,379	)	4,242		(26,738	)
Non-controlling interests		(165	)	(201	)	(733	)
Total comprehensive (expense) income for the year		(12,544	)	4,041		(27,471	)
(Loss) earnings per share—Basic	13	0.00		0.01		(0.1	)
(Loss) earnings per share—Diluted	13	0.00		0.01		(0.1	)

F-4

SKY SOLAR HOLDINGS, LTD.

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

(U.S. dollars in thousands, except for per share information or as otherwise noted)

		As of December 31,
	Notes	2016	2017
Current assets:
Cash and cash equivalents		12,518	46,084
Restricted cash		29,850	40,716
Amount due from Sky Solar Holdings Co., Ltd.	15	1,430	—
Amounts due from other related parties	16	6,233	16,713
Trade and other receivables	17	30,097	34,582
Inventories	18	39,034	307
Assets classified as held for sale	19	47,006	—
		166,168	138,402
Non-current assets:
Property, plant and equipment	20	823	916
Investment property	21	1,568	1,516
IPP solar parks	21	271,253	397,405
Intangible assets	22	122	126
Interests in associates	23	4,092	2,566
Amounts due from other related parties	16	8,125	5,632
Deferred tax assets	24	9,581	23,500
Other non-current assets	25	14,514	11,045
		310,078	442,706
Total assets		476,246	581,108
Current liabilities:
Trade and other payables	26	24,037	29,043
Amounts due to other related parties	27	7,512	28
Taxes payable		6,903	2,340
Borrowings	28	27,280	19,702
Other current liabilities	29	—	120,820
Liabilities directly associated with assets classified as held for sale	19	3,380	—
		69,112	171,933
Non-current liabilities:
Borrowings	28	131,881	230,027
Other non-current liabilities	30	141,001	70,136
Deferred tax liabilities	24	330	2,784
		273,212	302,947
Total liabilities		342,324	474,880
Total assets less total liabilities		133,922	106,228
Equity:
Share capital	31	8	8
Reserves		128,076	101,115
Equity attributable to owners of the Company		128,084	101,123
Non-controlling interests		5,838	5,105
Total equity		133,922	106,228
Total liabilities and equity		476,246	581,108

F-5

SKY SOLAR HOLDINGS, LTD.

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(U.S. dollars in thousands, except for per share information or as otherwise noted)

	Attributable to owners of the Company
	Share capital	Share-based compensation reserve		Translation reserve		Cash flow Hedge reserve		Accumulated losses		Additional paid-in capital		Legal reserve	Total		Non- controlling interests		Total
				(Note a)		(Note 28 a)						(Note b)
At January 1, 2015	5	41,754		(11,325	)	—		(147,417	)	240,305		394	123,716		33		123,749
Loss for the year	—	—		—				(1,397	)	—		—	(1,397	)	(157	)	(1,554	)
Other comprehensive expense for the year	—	—		(10,302	)	(680	)	—		—		—	(10,982	)	(8	)	(10,990	)
Total comprehensive expense for the year	—	—		(10,302	)	(680	)	(1,397	)	—		—	(12,379	)	(165	)	(12,544	)
Transfer to legal reserve	—	—		—		—		(133	)	—		133	—		—		—
Reversal of IPO expense (Note a)	—	—		—		—		—		125		—	125		—		125
Share-based compensation	—	1,389		—		—		—		—		—	1,389		—		1,389
At December 31, 2015	5	43,143		(21,627	)	(680	)	(148,947	)	240,430		527	112,851		(132	)	112,719
Profit (loss) for the year	—	—		—		—		3,784		—		—	3,784		(502	)	3,282
Currency translation difference	—	—		(358	)	—		—		—		—	(358	)	301		(57	)
Share of other comprehensive income of associates	—	—		136		—		—		—		—	136		—		136
Fair value loss arising from cash flow hedges	—	—				(446	)	—		—		—	(446	)	—		(446	)
Release of cumulative fair value loss from cash flow hedges upon disposal of subsidiary (Note 28 a)	—	—		—		1,126		—		—		—	1,126		—		1,126
Total comprehensive (expense) income for the year	—	—		(222	)	680		3,784		—		—	4,242		(201	)	4,041
Share-based compensation	—	997		—		—		—		—		—	997		—		997
Transfer to legal reserve	—	—		—		—		(240	)	—		240	—		—		—
Non-controlling interest addition (Note b)	—	—		—		—		—		—		—	—		6,171		6,171
Ordinary shares consideration for business combination (Note c)	3	—		—		—		—		10,144		—	10,147		—		10,147
Issuance cost (Note d)	—	—		—		—		—		(153	)	—	(153	)	—		(153	)
At December 31, 2016	8	44,140		(21,849	)	—		(145,403	)	250,421		767	128,084		5,838		133,922
Profit (loss) for the year	—	—		—		—		(33,171	)	—		—	(33,171	)	121		(33,050	)
Currency translation difference	—	—		6,433		—		—		—		—	6,433		(854	)	5,579
Share of other comprehensive income of associates	—	—		—		—		—		—		—	—		—		—
Total comprehensive (expense) income for the year	—	—		6,433		—		(33,171	)	—		—	(26,738	)	(733	)	(27,471	)
Share-based compensation	—	(223	)	—		—		—		—		—	(223	)	—		(223	)
At December 31, 2017	8	43,917		(15,416	)	—		(178,574	)	250,421		767	101,123		5,105		106,228

Notes:

(a)             On June 23, 2015, the Company received a refund amounting to US$125 thousand from NASDAQ for the change of listing tiers from Global Select Market to Global Market.

(b)              During the year ended December 31, 2016, the Group has non-controlling interest addition amounting to US$1.4 million upon acquisition of 23 solar parks in USA. During the year ended December 31, 2016, Renewable Capital Investment II (“RCI 2”) entered into equity conversion agreements with its EPC supplier to convert account payable for EPC service amounting to US$4.8 million into the equity of the 5 Uruguay project companies of RCI 2.

(c)              On July 15, 2016, the Group completed acquisition of 23 solar parks with 22MW capacity in USA (Note 32). As part of the consideration, 29,519,844 ordinary shares were validly issued with par value of 0.0001 per share. As of the acquisition date, the closing stock price was US$2.75/ADS or US$0.34375 per share, which made the value of total issued shares US$10.1 million.

(d)              During the year ended December 31, 2016, the Group incurred US$153 thousand cost directly related to issuance of restricted shares and recorded it in additional paid in capital.

F-6

SKY SOLAR HOLDINGS, LTD.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(U.S. dollars in thousands, except for per share information or as otherwise noted)

		Year ended December 31,
	Notes	2015		2016		2017
Operating activities
(Loss) profit before taxation		(2,238	)	4,559		(39,580	)
Adjustments for:
Interest income		(200	)	(325	)	(445	)
Finance costs		3,897		6,368		12,200
Depreciation of property, plant and equipment		281		271		298
Depreciation of IPP solar parks		9,229		14,208		14,272
Amortization of intangible assets		102		71		44
Warranty reversal	26	(334	)	(451	)	(308	)
Share-based compensation		1,389		997		(223	)
Fair value changes on other non-current liability	29,30	5,686		2,957		39,105
Loss on disposal of property, plant and equipment		64		15		—
Loss on disposal of intangible assets		6		1		—
Impairment loss on IPP solar parks		1,835		2,151		5,221
Provision on receivables		1,071		—		—
Gain on disposal of associates		—		—		(7,448	)
Share of profit of associates		(149	)	(173	)	—
Gain on disposal of IPP solar parks	14	—		(1,248	)	—
Gain on disposal of a subsidiary	15,34	—		(11,768	)	(1,875	)
Reversal of provision for other taxes	12	(6,025	)	—		—
Hedge ineffectiveness on cash flow hedges and net loss arising on interest rate swap designated as FVTPL	30	585		641		(201	)
Unrealized gain from sales to associates	23	2,040		242		—
Operating cash flows before movements in working capital		17,239		18,516		21,060
Increase in inventories		(1,726	)	(32,739	)	(271	)
(Increase)/ decrease in trade and other receivables		(11,790	)	(5,962	)	(4,484	)
(Increase)/ decrease in amounts due from other related parties		(2,902	)	2,145		(10,436	)
Decrease in amount due from customers for contract work		—		—
Increase/ (decrease) in trade and other payables		5,591		(18,249	)	8,085
Decrease in amounts due to other related parties		(22	)	—		(5,893	)
Decrease in amounts due to customers for contract work		(1,194	)	—		—
Cash generated from/ (used in) operations		5,196		(36,289	)	—
Income taxes paid		(1,403	)	(6,265	)	(9,470	)
Net cash generated from/ (used in) operating activities		3,793		(42,554	)	(1,409	)

F-7

SKY SOLAR HOLDINGS, LTD.

CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)

(U.S. dollars in thousands, except for per share information or as otherwise noted)

		Year ended December 31,
	Notes	2015		2016		2017
Investing activities
Withdrawal of restricted cash		5,438		5,560		29,850
Placement of restricted cash		(5,560	)	(29,850	)	(40,716	)
Collection of advances to other related parties		1,043		—
Advances to other related parties		(30	)	—
Interest income received		200		325		445
Purchases of property, plant and equipment		(327	)	(349	)	(375	)
Purchases of intangible assets		(241	)	(40	)	(42	)
Payments for IPP solar parks		(100,823	)	(43,581	)	(92,931	)
Proceeds from disposal of property, plant and equipment		56		—		—
Proceeds from disposal of intangible assets		180		—		—
Proceeds from disposal of IPP solar parks		—		4,839		1,979
Investment in associates	23	(5,692	)	—		—
Return of investment in associates	23	—		1,554		9,505
Dividends received from associates		—		415		427
Disposal of subsidiaries	34	(4,831	)	4,118		41,056
Acquisition of subsidiaries	33	—		(1,113	)	—
Net cash used in investing activities		(110,587	)	(58,122	)	(50,802	)
Financing activities
Proceeds from bank borrowings		47,126		11,403		84,865
Repayment of bank borrowings		(40,751	)	(4,371	)	(2,164	)
Proceeds from other borrowings		46,949		51,833		35,059
Repayment of other borrowings		(5,470	)	(6,372	)	(25,116	)
Issuance cost of IPO/restricted shares		—		(153	)
Refund of IPO expense		125		—		—
Advances from other related parties		480		—		—
Repayment of advances from other related parties		(218	)	—		—
Changes of financial liabilities	29,30	36,720		44,000		—
Interest paid		(3,897	)	(6,368	)	(12,386	)
Net cash generated from financing activities		81,064		89,972		80,258
Net (decrease)/ increase in cash and cash equivalents		(25,730	)	(10,704	)	28,047
Cash and cash equivalents at beginning of the year		52,993		26,272		12,518
Effects of exchange rate changes on the balance of cash held in foreign currencies		(991	)	867		5,519
Cash and cash equivalents at end of the year		26,272		16,435		46,084
Analysis of the balances of cash and cash equivalents
Bank balances and cash		26,272		12,518		46,084
Bank balances and cash included in assets classified as held for sale		—		3,917		—
		26,272		16,435		46,084

Supplemental information of non-cash transactions:

Details of other non-cash transactions regarding the disposal of subsidiaries and classification of held for sale assets and liabilities are set out in notes 33, 34 and 19, respectively. Details of the assignment and settlement of amounts due from (to) related parties are set out in Note 15 and Note 16. Unsettled trade and other payables for acquisitions of property, plant and equipment and IPP solar parks are USD26.1 million, USD 12.6 million and USD 7.1 million as of December 31, 2015, 2016 and 2017, respectively.

F-8

SKY SOLAR HOLDINGS, LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(U.S. dollars in thousands, except for earnings (loss) per share or otherwise noted)

1.CORPORATION INFORMATION AND BASIS OF PRESENTATION OF CONSOLIDATED FINANCIAL STATEMENTS

SKY SOLAR HOLDINGS, LTD. (the “Company”) was incorporated on August 19, 2013 as an exempted company with limited liability in the Cayman Islands under the Companies Law of the Cayman Islands. Concurrent with the establishment of the Company, the Company became the holding company of Sky Solar Power Ltd., which is a limited liability entity incorporated in the British Virgin Islands (“BVI”) and its subsidiaries (together with the Company hereinafter collectively referred to as the “Group”). Sky Solar Holdings Co., Ltd. (“Sky Solar Holdings”) which is controlled by Mr. Su Weili, was the holding company of Sky Solar Power Ltd. immediately before the establishment of the Company. The immediate holding company of the Company is Sky Power Group Ltd., which was incorporated on June 24, 2013 as an exempted company with limited liability in the Cayman Islands. The ultimate holding company is Flash Bright Power Ltd., which is a private limited entity established in the BVI and is controlled by Mr. Su. Accordingly, the assets and liabilities of the Group are the same immediately before and after the reorganization. This legal reorganization, whereby the Company and Sky Power Group Ltd. were established as intermediate entities between Sky Solar Holdings and Sky Solar Power Ltd., through a one-to-one share swap, has been accounted for as a reorganization of entities under common control. The assets and liabilities of the Group are the same immediately before and after the legal reorganization and the financial statements of the Company have been presented as if the legal reorganization was consummated on the first date of the periods presented. The Company completed its IPO on the NASDAQ on November 13, 2014, with Capital Market symbol of “SKYS”.

The Company is an investment holding company. The subsidiaries of the Company are principally engaged in the following activities: (i) sell electricity generated from solar parks owned by the Group as independent power producer (“IPP”); (ii) pipeline (including obtaining permits required for solar power projects and sourcing of solar modules) and provide engineering, construction and procurement services (“Pipeline plus EPC”); (iii) provide operating and maintenance services for solar parks (“Provision of O&M services”); (iv) sales of solar modules and (v) build and transfer of solar parks (“BT”).

The consolidated financial statements are presented in United States dollars (“USD”), which is the functional currency of the Company. The functional currencies of the subsidiaries of the Company are the currencies in which the transactions of principal operations of each subsidiary are predominantly denominated.

F-9

2.APPLICATION OF NEW AND AMENDMENTS TO INTERNATIONAL FINANCIAL REPORTING STANDARDS

2.1Amendments to IFRSs that are mandatorily effective for current year

In the current year, the Group has applied a number of amendments to IFRSs issued by the International Accounting Standards Board (IASB) that are mandatorily effective for an accounting period that begins on or after 1 January 2016. The application of these amendments has had no impact on the disclosures or amounts recognised in the Group’s consolidated financial statements.

2.2New and Amendments to IFRSs in issue but not yet effective

The Group has not early applied the following new and amendments to IFRSs that have been issued but are not yet effective:

IFRS 9	Financial Instruments (2)
IFRS 15	Revenue from Contracts with Customers and the related amendments(2)
IFRS 16	Leases (3)
IFRIC 22	Foreign Currency Transactions and Advance Consideration (2)
Amendments to IFRS 2	Classification and Measurement of Share-based Payment Transactions(2)
Amendments to IFRS 4	Applying IFRS 9 Financial Instruments with IFRS 4 Insurance Contracts(2)
Amendment to IFRS 10 and IAS 28	Sale or Contribution of Assets between an Investor and its Associate or Joint Venture (4)
Amendments to IAS 7	Disclosure Initiative (1)
Amendments to IAS 12	Recognition of Deferred Tax Assets for Unrealised Losses (1)
Amendments to IAS 40	Transfers of Investment Property (2)
Amendments to IFRSs	Annual Improvements to IFRS Standards 2014-2016 Cycle (5)

(1) Effective for annual periods beginning on or after January 1, 2017, with earlier application permitted.

(2) Effective for annual periods beginning on or after January 1, 2018, with earlier application permitted.

(3) Effective for annual periods beginning on or after January 1, 2019, with earlier application permitted.

(4) Effective for annual periods beginning on or after a date to be determined.

(5) Effective for annual periods beginning on or after January 1, 2017 or January 1, 2018, as appropriate.

The Group has not early adopted these new amendments to standards in the preparation of the consolidated financial statements. The management of the Group anticipates that the application of these new and revised standards, amendments to standards will have no material impact on the results and the financial position of the Group, except for potentially IFRS 9 and IFRS 16.

IFRS 9 Financial Instruments

IFRS 9 issued in November 2009 introduced new requirements for the classification and measurement of financial assets. IFRS 9 was subsequently amended in October 2010 to include requirements for the classification and measurement of financial liabilities and for derecognition, and in November 2013 to include the new requirements for general hedge accounting. Another revised version of IFRS 9 was issued in July 2014 mainly to include a) impairment requirements for financial assets and b) limited amendments to the classification and measurement requirements by introducing a ‘fair value through other comprehensive income’ (FVTOCI) measurement category for certain simple debt instruments.

F-10

Key requirements of IFRS 9 are:

·all recognised financial assets that are within the scope of IAS 39 Financial Instruments: Recognition and Measurement are required to be subsequently measured at amortised cost or fair value. Specifically, debt investments that are held within a business model whose objective is to collect the contractual cash flows, and that have contractual cash flows that are solely payments of principal and interest on the principal outstanding are generally measured at amortised cost at the end of subsequent accounting periods. Debt instruments that are held within a business model whose objective is achieved both by collecting contractual cash flows and selling financial assets, and that have contractual terms that give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding, are generally measured at FVTOCI. All other debt investments and equity investments are measured at their fair value at the end of subsequent accounting periods. In addition, under IFRS 9, entities may make an irrevocable election to present subsequent changes in the fair value of an equity investment (that is not held for trading) in other comprehensive income, with only dividend income generally recognised in profit or loss;

·with regard to the measurement of financial liabilities designated as at fair value through profit or loss, IFRS 9 requires that the amount of change in the fair value of the financial liability that is attributable to changes in the credit risk of that liability is presented in other comprehensive income, unless the recognition of the effects of changes in the liability’s credit risk in other comprehensive income would create or enlarge an accounting mismatch in profit or loss. Changes in fair value attributable to a financial liability’s credit risk are not subsequently reclassified to profit or loss. Under IAS 39, the entire amount of the change in the fair value of the financial liability designated as fair value through profit or loss is presented in profit or loss;

·in relation to the impairment of financial assets, IFRS 9 requires an expected credit loss model, as opposed to an incurred credit loss model under IAS 39. The expected credit loss model requires an entity to account for expected credit losses and changes in those expected credit losses at each reporting date to reflect changes in credit risk since initial recognition. In other words, it is no longer necessary for a credit event to have occurred before credit losses are recognised; and

·the new general hedge accounting requirements retain the three types of hedge accounting mechanisms currently available in IAS 39. Under IFRS 9, greater flexibility has been introduced to the types of transactions eligible for hedge accounting, specifically broadening the types of instruments that qualify for hedging instruments and the types of risk components of non-financial items that are eligible for hedge accounting. In addition, the effectiveness test has been overhauled and replaced with the principle of an ‘economic relationship’. Retrospective assessment of hedge effectiveness is also no longer required. Enhanced disclosure requirements about an entity’s risk management activities have also been introduced.

The directors of the Company anticipate that the application of IFRS 9 in the future may have impact on the classification and disclosure of financial assets and liabilities in the Group’s consolidated financial statements. The new model requires the recognition of provisions based on expected credit losses rather than only incurred credit losses as is the case under IAS 39. While the Group has not yet undertaken a detailed assessment of how its impairment provisions would be affected by the new model, management expects it might result in an earlier recognition of credit losses. The changes in the fair value of a financial liability designated as at FVTPL attributable to changes in the credit risk of that liability are presented in other comprehensive income unless the presentation of the effect of the change in the liability’s credit risk in other comprehensive income would create or enlarge an accounting mismatch in profit or loss. Changes in fair value attributable to a financial liability’s credit risks are not subsequently reclassified to profit or loss.

F-11

IFRS 15 Revenue from Contracts with Customers

In May 2014, IFRS 15 was issued which establishes a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers. IFRS 15 will supersede the current revenue recognition guidance including IAS 18 Revenue, IAS 11 Construction Contracts and the related Interpretations when it becomes effective.

The core principle of IFRS 15 is that an entity should recognise revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Specifically, the Standard introduces a 5-step approach to revenue recognition:

·Step 1: Identify the contract(s) with a customer.

·Step 2: Identify the performance obligations in the contract.

·Step 3: Determine the transaction price.

·Step 4: Allocate the transaction price to the performance obligations in the contract.

·Step 5: Recognise revenue when (or as) the entity satisfies a performance obligation.

Under IFRS 15, an entity recognises revenue when (or as) a performance obligation is satisfied, i.e. when ‘control’ of the goods or services underlying the particular performance obligation is transferred to the customer. Far more prescriptive guidance has been added in IFRS 15 to deal with specific scenarios. Furthermore, extensive disclosures are required by IFRS 15.

In 2016, the IASB issued Clarification to IFRS 15 in relation to the identification of performance obligations, principal versus agent considerations, as well as licensing application guidance.

The directors of the Company have assessed the impact of IFRS 15 on the Group’s consolidated financial statements and it is not expected to have a material impact on the Group’s consolidated financial statements but may require additional disclosures.

IFRS 16 Leases

IFRS 16, which upon the effective date will supersede IAS 17 Leases, introduces a single lessee accounting model and requires a lessee to recognise assets and liabilities for all leases with a term of more than 12 months, unless the underlying asset is of low value. Specifically, under IFRS 16, a lessee is required to recognise a right-of-use asset representing its right to use the underlying leased asset and a lease liability representing its obligation to make lease payments. Accordingly, a lessee should recognise depreciation of the right-of-use asset and interest on the lease liability, and also classifies cash repayments of the lease liability into a principal portion and an interest portion and presents them in the statement of cash flows. Also, the right-of-use asset and the lease liability are initially measured on a present value basis. The measurement includes non-cancellable lease payments and also includes payments to be made in optional periods if the lessee is reasonably certain to exercise an option to extend the lease, or not to exercise an option to terminate the lease. This accounting treatment is significantly different from the lessee accounting for leases that are classified as operating leases under the predecessor standard, IAS 17.

In respect of the lessor accounting, IFRS 16 substantially carries forward the lessor accounting requirements in IAS 17. Accordingly, a lessor continues to classify its leases as operating leases or finance leases, and to account for those two types of leases differently.

The directors of the Company anticipate that the application of IFRS 16 in the future may have impact on lease accounting made in the Group’s consolidated financial statements. The Group is required to recognise a right-of-use asset representing its right to use the underlying leased asset and a lease liability representing its obligation to make lease payments and recognise depreciation of the right-of-use asset and interest on the lease liability, and also classifies cash repayments of the lease liability into a principal portion and an interest portion and presents them in the statement of cash flows. As of December 31, 2016, the Group had commitments of USD 98.8 million for future minimum lease payments under non-cancellable operating leases (Note 36) and the directors of the Company anticipate that the application of IFRS 16 in the future may have material impact on the consolidated financial statement of the Group. For the moment, it is not practicable to provide a reasonable estimate of the effect of the application of IFRS 16 until the Group performs a detailed review.

F-12

3.SIGNIFICANT ACCOUNTING POLICIES

3.1Statement of compliance

The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards.

3.2Basis of preparation

The consolidated financial statements have been prepared on the historical cost basis except for certain financial instruments that are measured at fair values at the end of each reporting period, as explained in the accounting policies below.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or a liability, the Group takes into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date. Fair value for measurement and/or disclosure purposes in these consolidated financial statements is determined on such a basis, except for share-based payment transactions that are within the scope of IFRS 2, leasing transactions that are within the scope of IAS 17, and measurements that have some similarities to fair value but are not fair value, such as net realisable value in IAS 2 or value in use in IAS 36.

In addition, for financial reporting purposes, fair value measurements are categorized into Level 1, 2 or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows:

·Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date;

·Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly; and

·Level 3 inputs are unobservable inputs for the asset or liability.

These policies have been consistently applied throughout the periods presented.

3.3Basis of consolidation

The consolidated financial statements incorporate the financial statements of the Company and entities (including structured entities) controlled by the Company and its subsidiaries. Control is achieved when the Company:

·has power over the investee;

·is exposed, or has rights, to variable returns from its involvement with the investee; and

·has the ability to use its power to affect its returns.

The Company reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control listed above.

F-13

When the Company has less than a majority of the voting rights of an investee, it has power over the investee when the voting rights are sufficient to give it the practical ability to direct the relevant activities of the investee unilaterally. The Company considers all relevant facts and circumstances in assessing whether or not the Company’s voting rights in an investee are sufficient to give it power, including:

·the size of the Company’s holding of voting rights relative to the size and dispersion of holdings of the other vote holders;

·potential voting rights held by the Company, other vote holders or other parties;

·rights arising from other contractual arrangements; and

·any additional facts and circumstances that indicate that the Company has, or does not have, the current ability to direct the relevant activities at the time that decisions need to be made, including voting patterns at previous shareholders’ meetings.

Consolidation of a subsidiary begins when the Company obtains control over the subsidiary and ceases when the Company loses control of the subsidiary. Specifically, income and expenses of a subsidiary acquired or disposed of during the year are included in the consolidated statement of profit or loss and other comprehensive income (expense) from the date the Company gains control until the date when the Company ceases to control the subsidiary.

Profit or loss and each component of other comprehensive income (expense) are attributed to the owners of the Company and to the non-controlling interests. Total comprehensive income of subsidiaries is attributed to the owners of the Company and to the non-controlling interests even if this results in the non-controlling interests having a deficit balance.

When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with those used by other members of the Group.

All intra-group transactions, balances, income and expenses are eliminated in full on consolidation.

Non-controlling interests in subsidiaries are presented separately from the Group’s equity therein.

F-14

Changes in the Group’s ownership interests in existing subsidiaries

Changes in the Group’s ownership interests in subsidiaries that do not result in the Group losing control over the subsidiaries are accounted for as equity transactions. The carrying amounts of the Group’s interests and the non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiaries. Any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received is recognized directly in equity and attributed to owners of the Company.

When the Group loses control of a subsidiary, a gain or loss is recognized in profit or loss and is calculated as the difference between (i) the aggregate of the fair value of the consideration received and the fair value of any retained interest and (ii) the previous carrying amount of the assets (including goodwill), and liabilities of the subsidiary and any non-controlling interests. All amounts previously recognized in other comprehensive income in relation to that subsidiary are accounted for as if the Group had directly disposed of the related assets or liabilities of the subsidiary (i.e. reclassified to profit or loss or transferred to another category of equity as specified/permitted by applicable IFRSs). The fair value of any investment retained in the former subsidiary at the date when control is lost is regarded as the fair value on initial recognition for subsequent accounting under IAS 39, when applicable, the cost on initial recognition of an investment in an associate or a joint venture.

3.4Business combinations

Acquisitions of businesses are accounted for using the acquisition method. The consideration transferred in a business combination is measured at fair value, which is calculated as the sum of the acquisition-date fair values of the assets transferred by the Group, liabilities incurred by the Group to the former owners of the acquiree and the equity interests issued by the Group in exchange for control of the acquiree. Acquisition-related costs are generally recognized in profit or loss as incurred.

At the acquisition date, the identifiable assets acquired and the liabilities assumed are recognized at their fair value, except that:

·deferred tax assets or liabilities, and asset or liabilities related to employee benefit arrangements are recognized and measured in accordance with IAS12  Income Taxes  and IAS 19  Employee Benefits  respectively;

·liabilities or equity instruments related to share-based payment arrangements of the acquiree or share-based payment arrangements of the Group entered into to replace share-based payment arrangements of the acquiree are measured in accordance with IFRS 2  Share-based Payment  at the acquisition date (see note 3.17.2); and

·assets (or disposal groups) that are classified as held for sale in accordance with IFRS 5 Non-current Assets Held for Sale and Discontinued Operations  are measured in accordance with that Standard.

Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree, and the fair value of the acquirer’s previously held equity interest in the acquiree (if any) over the net of the acquisition-date amounts of the identifiable assets acquired and the liabilities assumed. If, after reassessment, the net of the acquisition-date amounts of the identifiable assets acquired and liabilities assumed exceeds the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree and the fair value of the acquirer’s previously held interest in the acquiree (if any), the excess is recognized immediately in profit or loss as a bargain purchase gain.

Non-controlling interests that are present ownership interests and entitle their holders to a proportionate share of the entity’s net assets in the event of liquidation may be initially measured either at fair value or at the non-controlling interests’ proportionate share of the recognised amounts of the acquiree’s identifiable net assets. The choice of measurement basis is made on a transaction-by-transaction basis. Other types of non-controlling interests are measured at fair value or, when applicable, on the basis specified in another IFRS.

3.5Investments in associates

An associate is an entity over which the Group has significant influence. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those policies.

F-15

The results and assets and liabilities of associates are incorporated in these consolidated financial statements using the equity method of accounting, except when the investment, or a portion thereof, is classified as held for sale, in which case it is accounted for in accordance with IFRS 5. Under the equity method, an investment in an associate is initially recognized in the consolidated statement of financial position at cost and adjusted thereafter to recognize the Group’s share of the profit or loss and other comprehensive income of the associate. When the Group’s share of losses of an associate exceeds the Group’s interest in that associate (which includes any long-term interests that, in substance, form part of the Group’s net investment in the associate), the Group discontinues recognizing its share of further losses. Additional losses are recognized only to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of the associate.

An investment in an associate is accounted for using the equity method from the date on which the investee becomes an associate. On acquisition of the investment in an associate, any excess of the cost of the investment over the Group’s share of the net fair value of the identifiable assets and liabilities of the investee is recognized as goodwill, which is included within the carrying amount of the investment. Any excess of the Group’s share of the net fair value of the identifiable assets and liabilities over the cost of the investment, after reassessment, is recognized immediately in profit or loss in the period in which the investment is acquired.

The requirements of IAS 39 are applied to determine whether it is necessary to recognize any impairment loss with respect to the Group’s investment in an associate. When necessary, the entire carrying amount of the investment (including goodwill) is tested for impairment in accordance with IAS 36 Impairment of Assets as a single asset by comparing its recoverable amount (higher of value in use and fair value less costs of disposal) with its carrying amount, Any impairment loss recognized forms part of the carrying amount of the investment. Any reversal of that impairment loss is recognized in accordance with IAS 36 to the extent that the recoverable amount of the investment subsequently increases.

The Group discontinues the use of the equity method from the date when the investment ceases to be an associate, or when the investment is classified as held for sale. When the Group retains an interest in the former associate and the retained interest is a financial asset, the Group measures the retained interest at fair value at that date and the fair value is regarded as its fair value on initial recognition in accordance with IAS 39. The difference between the carrying amount of the associate at the date the equity method was discontinued, and the fair value of any retained interest and any proceeds from disposing of a part interest in the associate is included in the determination of the gain or loss on disposal of the associate. In addition, the Group accounts for all amounts previously recognized in other comprehensive income in relation to that associate on the same basis as would be required if that associate had directly disposed of the related assets or liabilities. Therefore, if a gain or loss previously recognized in other comprehensive income by that associate would be reclassified to profit or loss on the disposal of the related assets or liabilities, the Group reclassifies the gain or loss from equity to profit or loss (as a reclassification adjustment) when the equity method is discontinued.

When the Group reduces its ownership interest in an associate but the Group continues to use the equity method, the Group reclassifies to profit or loss the proportion of the gain or loss that had previously been recognized in other comprehensive income relating to that reduction in ownership interest if that gain or loss would be reclassified to profit or loss on the disposal of the related assets or liabilities.

When a group entity transacts with an associate of the Group, profits and losses resulting from the transactions with the associate are recognized in the Group’s consolidated financial statements only to the extent of interests in the associate that are not related to the Group.

3.6Revenue recognition

Revenue is measured at the fair value of the consideration received or receivable and represents amounts of goods sold and services provided in the normal course of business, net of discounts and sales related taxes, if any.

Electricity sales income

When the Group owns and operates solar parks for the purpose of generating income from the sale of electricity over the life of the solar parks, electricity generation income is classified as revenue. When electricity income is generated from solar parks which the Group holds as inventories, the electricity income is considered incidental and classified as other operating income. Electricity generation income is recognized when it is probable that the economic benefits will flow to the Group and the amount of income can be measured reliably.

F-16

EPC services solar energy system sales - Provision of pipeline plus EPC services

The provision of Pipeline plus EPC services involves application of permits, sourcing of solar modules, and provision of construction services.

The Group either applies for the permits required to construct and operate solar parks itself or acquires the permits through the acquisition of the equity interests in project companies, which are typically formed for the specific purpose of holding such permits. In the course of providing Pipeline plus EPC services, the Group sells the permits to customers through the disposal of project companies holding the relevant permits. Revenue from disposing project companies holding permits is recognized when equity interests in the relevant project companies are transferred to customers by the Group at which time control is transferred.

In addition to revenue from sales of permits as discussed above, the Group also enters into separate contracts with customers for sourcing of modules and provision of construction services for their project companies if it is requested by the customers. Revenue from modules sourced and provision of construction service is recognized in accordance with sales of solar modules and construction contract discussed below.

EPC services solar energy system sales - Build and transfer of solar parks

Revenue from BT represents the sale of completed solar parks and is recognized when titles to the solar parks have been transferred at which point control is passed to the customer.

Other sales - Sales of solar modules

Revenue from the sales of solar modules is recognized when the modules are delivered and titles have passed.

Solar modules are considered delivered and their titles have passed, at the point at which all the following conditions are satisfied:

·the Group has transferred to the buyer the significant risks and rewards of ownership of the goods;

·the Group retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold;

·the amount of revenue can be measured reliably;

·it is probable that the economic benefits associated with the transaction will flow to the Group; and

·the costs incurred or to be incurred in respect of the transaction can be measured reliably.

Other sales — O&M service

Income from provision of O&M service and other administrative service is recognized when services are provided.

Others

Interest income from financial assets is recognized when it is probable that the economic benefits will flow to the Group and the amount of income can be measured reliably. Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset’s net carrying amount on initial recognition.

F-17

3.7Construction contracts

When the outcome of a construction contract can be estimated reliably, revenue and costs are recognized by reference to the stage of completion of the contract activity at the end of the reporting period, measured based on the proportion of contract costs incurred for work performed to date relative to the estimated total contract costs. Variations in contract work, claims and incentive payments are included to the extent that the amount can be measured reliably and its receipt is considered probable.

When the outcome of a construction contract cannot be estimated reliably, contract revenue is recognized to the extent of contract costs incurred that it is probable will be recoverable. Contract costs are recognized as expenses in the period in which they are incurred.

When it is probable that total contract costs will exceed total contract revenue, the expected loss is recognized as an expense immediately.

Where contract costs incurred to date plus recognized profits less recognized losses exceed progress billings, the surplus is shown as amounts due from customers for contract work. For contracts where progress billings exceed contract costs incurred to date plus recognized profits less recognized losses, the surplus is shown as the amounts due to customers for contract work. Amounts received before the related work is performed are included in the consolidated statement of financial position as a liability under advances received. Amounts billed for work performed but not yet paid by the customer are included in the consolidated statement of financial position under trade and other receivables.

3.8Inventories

The Group’s inventories mainly comprise permits and related costs capitalized during the course of obtaining permits, solar modules and solar parks under development or completed solar parks that are held for sale by the Group within normal operating cycle which is usually twelve months since their completion of construction.

Inventories are stated at the lower of cost and net realizable value. Costs of solar modules are calculated using weighted average method. Costs of permits include capitalized costs incurred to obtaining such permits (for example legal expenses, consultancy fees, staff costs and other costs). Costs of solar parks under development include costs relating to solar parks capitalized before construction is completed, such as modules installed and development costs incurred.

The proceeds from the sale of solar parks held for sale is recognized as revenue of the Group and the carrying amount of the solar parks which is recognized as costs of sales of the Group.

Net realizable value represents the estimated selling price for inventories less all estimated costs of completion and costs necessary to make the sale. Provisions are made for inventory whose carrying value is in excess of net realizable value. Certain factors could impact the realizable value, so the Group continually evaluates the recoverability based on assumptions about market conditions. The Group regularly reviews the cost against its estimated net realizable value and records lower of cost and net realizable value to cost of sales, if inventories have costs in excess of estimated net realizable values.

3.9Assets classified as held for sale

Assets and disposal groups are classified as held for sale if their carrying amount will be recovered   principally through a sale transaction rather than through continuing use.  This condition is regarded as met only when the asset (or disposal group) is available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such asset (or disposal group) and its sale is highly probable. Management must be committed to the sale, which should be expected to qualify for recognition as a completed sale within one year from the date of classification.

When the Group is committed to a sale plan involving loss of control of a subsidiary, all of the assets and liabilities of that subsidiary are classified as held for sale when the criteria described above are met, regardless of whether the Group will retain a non-controlling interest in its former subsidiary after the sale.

When the Group is committed to a sale plan involving disposal of an investment, or a portion of an investment, in an associate or joint venture, the investment or the portion of the investment that will be disposed of is classified as held for sale when the criteria described above are met, and the Group discontinues the use of the equity method in relation to the portion that is classified a held for sale. Any retained portion of an investment in an associate or a joint venture that has not been classified as held for sale continues to be accounted for using the equity method. The Group discontinues the use of the equity method at the time of disposal when the disposal results in the Group losing significant influence over the associate or joint venture.

After the disposal takes place, the Group accounts for any retained interest in the associate or joint venture in accordance with IAS 39 unless the retained interest continues to be an associate or a joint venture, in which case the Group uses the equity method (see the accounting policy regarding investments in associates or joint ventures above).

Non-current assets (and disposal groups) classified as held for sale are measured at the lower of their carrying amount and fair value less costs to sell.

F-18

3.10 IPP solar parks

IPP solar parks are stated in the consolidated statement of financial position at cost, less subsequent accumulated depreciation and subsequent accumulated impairment losses, if any. Costs include expenditures for solar modules, permits and other direct costs capitalized in the course of construction. Such costs are capitalized starting from the point in time it is determined that development of the IPP solar project is probable.

Permits and related costs capitalized during the course of obtaining permits and solar parks under development are stated in the consolidated statement of financial position at cost less subsequent accumulated impairment losses, if any.

Depreciation of completed solar parks commences once the solar parks are successfully connected to grids and begin generating electricity. Depreciation is recognized over their estimated useful lives of the solar parks (less residual value if any), using the straight-line method. The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis.

IPP solar parks are derecognized upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of solar parks is determined as the difference between the sales proceeds and the carrying amount of the solar parks and is recognized in other operating income and loss.

At the end of each reporting period, the Group performs impairment review on IPP solar parks when impairment indicators arise in different regions, if any.

3.11Property, plant and equipment

Property, plant and equipment are stated in the consolidated statement of financial position at cost, less subsequent accumulated depreciation and subsequent accumulated impairment losses, if any.

Depreciation is recognized so as to write off the cost of assets less their residual values over their estimated useful lives, using the straight-line method. The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis.

The property, plant and equipment are depreciated on a straight-line basis over the following estimated useful lives after taking into account the residual values:

Leasehold improvement	20 years
Motor vehicles	5 years
Furniture and fixtures	5 years

An item of property, plant and equipment is derecognized upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognized in profit or loss.

3.12 Intangible assets

Intangible assets acquired separately

Intangible assets with finite useful lives that are acquired separately are carried at cost less accumulated amortization and accumulated impairment losses. Amortization is recognized on a straight-line basis over their estimated useful lives. The estimated useful life and amortization method are reviewed at the end of each reporting period, with the effect of any changes in estimate being accounted for on a prospective basis. Intangible assets with indefinite useful lives that are acquired separately are carried at cost less accumulated impairment losses.

Derecognition of intangible assets

An intangible asset is derecognized on disposal, or when no future economic benefits are expected from use or disposal. Gains or losses arising from derecognition of an intangible asset, measured as the difference between the net disposal proceeds and the carrying amount of the asset, are recognized in profit or loss when the asset is derecognized.

F-19

3.13 Investment property

Investment property are properties held to earn rentals and/or for capital appreciation (including property under construction for such purposes). Investment properties are measured initially at cost, including transaction costs. Subsequent to initial recognition, investment properties are measured at cost, less subsequent accumulated depreciation and subsequent accumulated impairment losses, if any.

An investment property is derecognized upon disposal or when the investment property is permanently withdrawn from use and no future economic benefits are expected from the disposal. Any gain or loss arising on derecognition of the investment property (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in profit or loss in the period in which the investment property is derecognized.

3.14 Leasing

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.

The Group as lessor

Contingent rental arising under operating leases are recognized as rental income in the period in which they are incurred. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognized on a straight-line basis over the lease term.

IPP solar parks—the Group as lessor

For IPP solar parks where customers purchase electricity from the Group under power purchase agreements in certain countries, facts and circumstances of the Feed-in-Tariff policies were changed mandatorily which triggered re-assessment on accounting for these agreements. As a result, the newly issued Feed-in-Tariff policies may indicate that it is remote that one or more parties other than the purchaser will take more than an insignificant amount of the output or other utility that will be produced or generated by the asset during the term of the arrangement, and the price that the purchaser will pay for the output is neither contractually fixed per unit of output nor equal to the current market price per unit of output as of the time of delivery of the output. These agreements will be accounted for under such circumstance pursuant to IFRIC 4, Determine whether an Arrangement Contains a Lease and IAS 17, Leases as an operating lease. Revenue is recognized based upon the amount of electricity delivered as determined by remote monitoring equipment at rates specified under the contracts, assuming all other revenue recognition criteria are met. The rental income from operating lease of these IPP solar parks is presented as electricity generation income in note 3. There is no minimum lease payment since all lease payment are contingent based on actual volume of electricity produced.

The Group as lessee

Operating lease payments are recognized as an expense on a straight-line basis over the lease term, except where another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.

F-20

3.15 Foreign currencies

In preparing the financial statements of each individual group entity, transactions in currencies other than the functional currency of that entity (i.e. foreign currencies) are recorded in the respective functional currency (i.e. the currency of the primary economic environment in which the entity operates) at the rates of exchanges prevailing on the dates of the transactions. At the end of the reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.

Exchange differences arising on the settlement of monetary items, and on the retranslation of monetary items, are recognized in profit or loss in the period in which they arise.

For the purposes of presenting the consolidated financial statements, the assets and liabilities of the Group’s foreign operations are translated into the presentation currency of the Group using exchange rates prevailing at the end of each reporting period. Income and expenses items are translated at the average exchange rates for the year. Exchange differences arising, if any, are recognized in other comprehensive income (expense) and accumulated in equity under the heading of translation reserve (attributed to non-controlling interests as appropriate).

On the disposal of a foreign operation (i.e. a disposal of the Group’s entire interest in a foreign operation, or a disposal involving loss of control over a subsidiary that includes a foreign operation, or a disposal involving loss of significant influence over an associate that includes a foreign operation), all of the exchange differences accumulated in equity in respect of that operation attributable to the owners of the Company are reclassified to profit or loss. In addition, in relation to a partial disposal of a subsidiary that does not result in the Group losing control over the subsidiary, the proportionate share of accumulated exchange differences are re-attributed to non-controlling interests and are not recognized in profit or loss. For all other partial disposals (i.e. partial disposals of associates that do not result in the Group losing significant influence), the proportionate share of the accumulated exchange differences is reclassified to profit or loss.

3.16 Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale.

All other borrowing costs are recognized in profit or loss in the year in which they are incurred.

F-21

3.17 Taxation

Income tax expense represents the sum of the tax currently payable and deferred tax.

3.17.1 Current tax

The tax currently payable is based on taxable profit for the year. Taxable profit differs from ‘(loss) profit before taxation’ as reported in the consolidated statement of profit or loss and other comprehensive income (expense) because of items of income or expense that are taxable or deductible in other years and items that are never taxable or deductible. The Group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the end of the reporting period.

3.17.2 Deferred tax

Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities in the consolidated financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognized for all taxable temporary differences. Deferred tax assets are generally recognized for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilized. Such deferred tax assets and liabilities are not recognized if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.

Deferred tax liabilities are recognized for taxable temporary differences associated with investments in subsidiaries and associates, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences associated with such investments and interests are only recognized to the extent that it is probable that there will be sufficient taxable profits against which to utilize the benefits of the temporary differences and they are expected to reverse in the foreseeable future.

The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realized, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. In addition, Group’s subsidiaries have legally enforceable rights to set off a tax asset and tax liability when they relate to income taxes levied by the same taxation authority and the taxation authority permits the Group’s subsidiaries to make or receive a single net payment. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Group expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.

3.17.3 Current and deferred tax for the year

Current and deferred tax are recognized in profit or loss, except when they relate to items that are recognized in other comprehensive income (expense) or directly in equity, in which case, the current and deferred tax are also recognized in other comprehensive income (expense) or directly in equity respectively. Where current tax or deferred tax arises from the initial accounting for a business combination, the tax effect is included in the accounting for the business combination.

F-22

3.18 Impairment of tangible and intangible assets other than goodwill

At the end of each reporting period, the Group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). When it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. When a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual cash-generating units, or otherwise they are allocated to the smallest group of cash-generating units for which a reasonable and consistent allocation basis can be identified.

Recoverable amount is the higher of fair value less costs of disposal and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss.

When an impairment loss subsequently reverses, the carrying amount of the asset (or a cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss.

F-23

SKY SOLAR HOLDINGS, LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

3.19 Financial instruments

Financial assets and financial liabilities are recognized when a group entity becomes a party to the contractual provisions of the instrument.

Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognized immediately in profit or loss.

3.20 Financial assets

Financial assets of the Group consist of loans and receivables.

3.20.1 Effective interest method

The effective interest method is a method of calculating the amortized cost of a debt instrument and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the debt instrument, or, where appropriate, a shorter period, to the net carrying amount on initial recognition.

Income is recognized on an effective interest basis for debt instruments other than those financial assets classified as at FVTPL.

3.20.2 Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Loans and receivables (including trade and other receivables, amounts due from other related parties, amounts due from Sky Solar Holdings, restricted cash and cash and cash equivalents) are measured at amortized cost using the effective interest method, less any impairment.

Restricted cash represents bank deposits pledged for borrowings and its related interest due within one year, bank deposits with predetermined usage under certain agreement and others are not available for general use.

Interest income is recognized by applying the effective interest rate, except for short-term receivables when the effect of discounting is immaterial.

3.20.3 Impairment of financial assets

Financial assets, other than those at FVTPL, are assessed for indicators of impairment at the end of each reporting period. Financial assets are considered to be impaired when there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the investment have been affected.

For all other financial assets, objective evidence of impairment could include:

·significant financial difficulty of the issuer or counterparty;

·breach of contract, such as a default or delinquency in interest or principal payments;

·it becomes probable that the borrower will enter bankruptcy or financial re-organization; or

F-24

For certain categories of financial assets, such as trade receivables, assets that are assessed not to be impaired individually are, in addition, assessed for impairment on a collective basis. Objective evidence of impairment for a portfolio of receivables could include the Group’s past experience of collecting payments, an increase in the number of delayed payments in the portfolio past the average credit period of 365 days, observable changes in national or local economic conditions that correlate with default on receivables.

For financial assets carried at amortized cost, the amount of impairment loss recognized is the difference between the asset’s carrying amount and the present value of the estimated future cash flows discounted at the financial asset’s original effective interest rate.

The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade and other receivables and amounts due from other related parties, where the carrying amount is reduced through the use of an allowance account. Changes in the carrying amount of the allowance account are recognized in profit or loss. When a receivable is considered uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited to profit or loss.

For financial assets measured at amortized cost, if, in a subsequent period, the amount of impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment losses was recognized, the previously recognized impairment loss is reversed through profit or loss to the extent that the carrying amount of the asset at the date the impairment is reversed does not exceed what the amortized cost would have been had the impairment not been recognized.

3.21 Hedge accounting

The Group designates certain hedging instruments, which include derivatives, embedded derivatives and non-derivatives in respect of foreign currency risk, as either fair value hedges, cash flow hedges, or hedges of net investments in foreign operations. Hedges of foreign exchange risk on firm commitments are accounted for as cash flow hedges.

At the inception of the hedge relationship, the entity documents the relationship between the hedging instrument and the hedged item, along with its risk management objectives and its strategy for undertaking various hedge transactions. Furthermore, at the inception of the hedge and on an ongoing basis, the Group documents whether the hedging instrument is highly effective in offsetting changes in fair values or cash flows of the hedged item attributable to the hedged risk.

Cash flow hedges

The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognised in other comprehensive income and accumulated under the heading of cash flow hedging reserve. The gain or loss relating to the ineffective portion is recognised immediately in profit or loss, and is included in the ‘other losses’ line item.

Amounts previously recognised in other comprehensive income and accumulated in equity are reclassified to profit or loss in the periods when the hedged item affects profit or loss, in the same line as the recognised hedged item. However, when the hedged forecast transaction results in the recognition of a non-financial asset or a non-financial liability, the gains and losses previously recognised in other comprehensive income and accumulated in equity are transferred from equity and included in the initial measurement of the cost of the non-financial asset or non-financial liability.

Hedge accounting is discontinued when the Group revokes the hedging relationship, when the hedging instrument expires or is sold, terminated, or exercised, or when it no longer qualifies for hedge accounting. Any gain or loss recognised in other comprehensive income and accumulated in equity at that time remains in equity and is recognised when the forecast transaction is ultimately recognised in profit or loss. When a forecast transaction is no longer expected to occur, the gain or loss accumulated in equity is recognised immediately in profit or loss.

3.22 Financial liabilities and equity instruments

3.22.1 Classification as debt or equity

Debt and equity instruments issued by a group entity are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.

3.22.2 Equity instruments

An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by the Group are recognized at the proceeds received, net of direct issue costs.

F-25

3.22.3 Financial liabilities at fair value through profit or loss (“FVTPL”)

Financial liabilities are classified as at FVTPL when the financial liabilities are either held for trading or those designated as at FVTPL on initial recognition.

A financial liability is classified as held for trading if:

·it has been acquired principally for the purpose of selling it in the near term; or

·on initial recognition it is a part of a portfolio of identified financial instruments that the Group manages together and has a recent actual pattern of short-term profit-taking; or

·it is a derivative that is not designated and effective as a hedging instrument.

A financial liability other than a financial liability held for trading may be designated as at FVTPL upon initial recognition if:

·such designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise; or

·the financial liability forms part of a group of financial assets or financial liabilities or both, which is managed and its performance is evaluated on a fair value basis, in accordance with the Group’s documented risk management or investment strategy, and information about the grouping is provided internally on that basis; or

·it forms part of a contract containing one or more embedded derivatives, and IAS 39 permits the entire combined contract (asset or liability) to be designated as at FVTPL.

Financial liabilities at FVTPL are stated at fair value, with any gains or losses arising on remeasurement recognized in profit or loss. The net gain or loss is included in the ‘other losses’ line item in profit or loss and includes any interest paid on the financial liabilities.

F-26

3.22.4 Financial liabilities of amortized cost

Other financial liabilities (including trade and other payables, amounts due to other related parties, borrowings, amounts due to Sky Solar Holdings) are subsequently measured at amortized cost using the effective interest method.

The effective interest method is a method of calculating the amortized cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial liability, or, where appropriate, a shorter period, to the net carrying amount on initial recognition.

Interest expense is recognized on an effective interest basis.

3.22.5 Derecognition

The Group derecognizes a financial asset only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. If the Group neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Group continues to recognize the asset to the extent of its continuing involvement and recognizes an associated liability. If the Group retains substantially all the risks and rewards of ownership of a transferred financial asset, the Group continues to recognize the financial asset and also recognizes a collateralized borrowing for the proceeds received.

On derecognition of a financial asset in its entirety, the difference between the asset’s carrying amount and the sum of the consideration received and receivable and the cumulative gain or loss that had been recognized in other comprehensive income (expense) and accumulated in equity is recognized in profit or loss.

The Group derecognizes financial liabilities when, and only when, the Group’s obligations are discharged, cancelled or they expire. The difference between the carrying amount of the financial liability derecognized and the consideration paid and payable is recognized in profit or loss.

3.23 Share-based compensation

Shares granted to the directors and eligible employees

For shares granted or transferred by controlling shareholders in exchange of services received by the Group that are conditional within a vesting period, the fair value of services received is determined by reference to the fair values of relevant shares granted or transferred. Vesting conditions, other than market conditions, shall not be taken into account when estimating the fair value of the shares at the measurement date. Instead, vesting conditions shall be taken into account by adjusting the number of equity instruments included in the measurement of the transaction amount. The amount recognized for goods or services received as consideration for the equity instruments granted shall be based on the number of equity instruments that eventually vest. The fair value of shares granted or transferred at the date of grant or date of transfer is expensed as share-based compensation on a straight-line basis over the vesting period, with a corresponding increase in equity (share-based compensation reserve). The forfeitures will be estimated to adjust over the requisite service period to the extent that actual forfeitures differ, or are expected to differ, from such original estimates. Changes in estimated forfeitures will be recognized through a cumulative catch-up adjustment in the period of change.

At the time when the shares were cancelled during the vesting period, the Group accounts for the cancellation as an acceleration of vesting, and recognizes immediately the amount that otherwise would have been recognized for services received over the remainder of the vesting period. The amount previously recognized in share-based compensation reserve will remain in that reserve.

Shares granted to non-employees

Shares issued in exchange of services are measured at the fair values of the services received, unless that fair value cannot be reliably measured, in which case the services received are measured by reference to the fair value of the shares issued. The fair values of the services received are recognized as expenses, with a corresponding increase in equity (share capital and share premium), when the counterparties render services, unless the services qualify for recognition as assets.

F-27

Share options granted to eligible employees

Share options granted by the Company or controlling shareholders in exchange for service received by the Group are measured by reference to the fair value of the share options granted. The fair value of services received is expensed as share-based compensation on a straight-line basis over the vesting period with a corresponding increase in equity (share-based compensation reserve).

At the end of each reporting period, the Group revises its estimates of the number of options that are expected to ultimately vest. The impact of the revision of the original estimates during the vesting period, if any, is recognized in profit or loss such that the cumulative expense reflects the revised estimate, with a corresponding adjustment to equity.

When share options are exercised, the amount previously recognized in equity will be recognized in share capital and share premium. When the share options are forfeited after the vesting date or are still not exercised at the expiry date, the amount previously recognized equity will be remained in the share-based compensation reserve.

3.24 Provisions

Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that the Group will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.

The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. When a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows (when the effect of the time value of money is material).

When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, a receivable is recognised as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably.

3.24.1 Warranties

Provisions for the expected cost of warranty obligations under local sale of goods legislation are recognised at the date of sale of the relevant products, at the directors’ best estimate of the expenditure required to settle the Group’s obligation.

3.24.2 Contingent liabilities

Unless the possibility of an outflow of resources embodying economic benefits is remote, contingent liabilities are disclosed where it is not probable that the Company will make a transfer of economic benefit to settle the obligation or the amount of the obligation cannot be measured with sufficient reliability.

4.KEY SOURCES OF ESTIMATES AND JUDGEMENTS

In the application of the Group’s accounting policies, the management of the Company are required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and underlying assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods.

A.KEY SOURCES OF ESTIMATION UNCERTAINTY

(a)Impairment of trade and other receivables, amounts due from other related parties and amounts due from Sky Solar Holdings.

When there is an objective evidence of impairment loss, the Group takes into consideration the estimation of future cash flows. The amount of the impairment is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset’s original effective interest rate (i.e. the effective interest rate computed at initial recognition). In the event the expected actual future cash flows are less than the amount owed, a material impairment loss may arise. The carrying amounts of the Group’s trade and other receivables as at December 31, 2016 and December 31, 2017 are approximately USD30,097 thousand and USD34,582 thousand and net of allowance of doubtful debts of USD1,329 thousand and USD1,403 thousand, respectively. The carrying amounts of the Group’s amounts due from other related parties as at December 31, 2016 and December 31, 2017 were USD14,358 thousand and USD22,345 thousand and net of allowance of doubtful debts of USD2,200 thousand and USD2,200 thousand, respectively. The carrying amounts of the Group’s amounts due from Sky Solar Holdings Co., Ltd. as at December 31, 2016 and December 31, 2017 were USD1, 430 thousand and nil, respectively.

F-28

(b)Impairment losses in relation to IPP solar parks

IPP solar parks are stated in the consolidated statement of financial position at cost less subsequent accumulated depreciation and subsequent accumulated impairment losses, if any. When there is an objective evidence of impairment loss, such as changes of technological advancement, changes of regulatory policies for solar industry, damages of solar park due to natural disaster or economic performance of the IPP solar parks is, or will be, worse than expected, for example, the Group takes into consideration the estimation of future cash flows. The amount of the impairment is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the financial asset’s original effective interest rate (i.e. the effective interest rate computed at initial recognition).

(c)Fair value measurements and valuation process

Some of the Group’s liabilities are measured at fair value for financial reporting purposes. The Group’s finance department, which is headed by the Chief Financial Officer (“CFO”), is responsible for determination of appropriate valuation techniques and inputs for fair value measures.

In estimating the fair value of an asset or a liability, the Group uses market-observable data to the extent it is available. Where Level 1 inputs are not available, the Group performs the valuation with the assistance from third party qualified valuation specialists. The finance department works closely with the qualified external valuation specialists to establish the appropriate valuation techniques and inputs to the model. The CFO reports the finance department’s findings to the board of directors of the Company every quarter to explain the cause of fluctuations in the fair value of assets and liabilities.

The Group uses valuation techniques that include inputs that are not based on observable market data to estimate the fair value of certain types of financial instruments. Note 35 provides detailed information about the valuation techniques, inputs and key assumptions used in the determination of the fair value of various liabilities.

(d)Asset retirement obligations

Asset retirement obligations are recognized in the consolidated statement of financial position when the Group has a legal or constructive obligation as a result of past events, and it is probable that an outflow of economic benefit will be required to settle the obligation.  If the effect is material, asset retirement obligations are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability.

The Group made the provision for asset retirement obligation based on its best estimate of future cash flow. When the future costs are higher or lower than expected and where events or changes in circumstances indicate that the amount of asset retirement obligation provision may not be adequate or may be excessive, such difference will impact the carrying values and provision expenses in the years in which such estimate has been changed.

B.CRITICAL ACCOUNTING JUDGEMENTS

(a)Significant influence over 1088526 B.C. Ltd (“1088526”) and 1091187 B.C. Ltd (“1091187”)

1088526 B.C. Ltd. and 1091187 B.C. Ltd each is considered as an associate of the Group although the Group owns 75% equity interest in both 1088526 and 1091187, and contractual right to appoint two out of four directors to the board of directors of both 1088526 and 1091187. The Group only has significant influence over both 1088526 and 1091187 are explained by the facts that (1) all the key relevant activities, including appointment or removal of the O&M manager and asset manager, determination and amendment of the annual budget, capital expenditure, and approval of bank borrowing etc., of both 1088526 and 1091187 requires consent from the other shareholders; (2) the other shareholder has the rights to the majority of the variable returns from its involvement with the investee. (Note 23).

F-29

SKY SOLAR HOLDINGS, LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

5.REVENUE

The Group’s revenue streams are mainly composed of pipeline plus EPC services, BT, sales of solar modules, O&M services and income from the sale of electricity generated by IPP solar parks. The following table summarizes the categories of the Group’s revenue:

	Year ended December 31,
	2015	2016	2017
	Thousand USD	Thousand USD	Thousand USD
Related parties:
—EPC services solar energy system sales
Sales of permits	4,119	525	—
—Other sales
-O&M services	331	263	286
-Sales of solar modules	—	—	—
	331	263	286
Subtotal	4,450	788	286
Non-related parties
—Electricity sales income	35,479	53,658	53,614
—EPC services solar energy system sales
-Provision of Pipeline plus EPC services
Sales of permits	434	—	—
Provision of construction services	827	4,954	285
- BT	4,012	4,232	—
	5,273	9,186	285
—Other sales
-O&M services	1,835	2,290	2,548
-Sales of solar modules	118	3	—
	1,953	2,293	2,548
Subtotal	42,705	65,137	56,447
Total	47,155	65,925	56,733

F-30

6.SEGMENT INFORMATION

Operating segments are defined as components of a group entity about which discrete financial information is available for regular evaluation by the chief operating decision maker, in deciding how to allocate resources and in assessing performance. The Company’s chief operating decision maker is the executive team.

The executive team regularly reviews revenue analysis and the Group’s consolidated results for the periods presented for the purposes of resource allocation and performance assessment. As no other discrete financial information is available for the assessment of different business activities, no segment information is presented other than entity-wide disclosures.

Based on the financial information presented to and reviewed by the chief operating decision maker in deciding how to allocate the resources and in assessing the performance of the Company, the Company has determined that it has one operating segment which is the development and operation of solar parks and related business activities.

Geographical information

The Group’s operations are located in the respective countries of domicile of the Group’s subsidiaries. The operations of the Group include the Republic of Bulgaria (“Bulgaria”), the Federal Republic of Germany (“Germany”), the Hellenic Republic (“Greece”), Czech, Japan, Spain, Uruguay, Canada and USA during the periods presented.

Information about the Group’s revenue is presented based on the location of the operations. Information about the Group’s non-current assets is presented based on the geographical location of the assets.

	Revenue for the year ended December 31,
	2015	2016	2017
	Thousand USD	Thousand USD	Thousand USD
Bulgaria	881	871	966
Canada	8,327	8,724	382
Czech	3,284	3,197	3,548
Germany	249	27	—
Greece	8,849	8,748	1,650
Japan	24,728	37,757	37,887
Spain	405	379	421
USA	31	3,797	6,681
Uruguay	401	2,425	5,198
	47,155	65,925	56,733

	Non-current assets At December 31,
	2016	2017
	Thousand USD	Thousand USD
Bulgaria	65	92
Canada	1,037	1,956
Chile	122	3,164
Czech	15,409	15,127
Greece	17	109
Japan	217,432	234,398
PRC	2,161	268
Spain	2,998	6,446
USA	42,904	45,137
Uruguay	10,227	106,877
	292,372	413,574

Non-current assets excluded deferred tax assets and amounts due from other related parties.

F-31

Information about major customers

Revenue from customers during the periods presented contributing over 10% of the total sales of the Group for each of the respective reporting periods are as follows:

	Year ended December 31,
	2015		2016	2017
	Thousand USD		Thousand USD	Thousand USD
Customer A	7,420		10,504	13,056
Customer B	6,951		10,861	11,684
Customer C		*	8,164	9,912
Customer D	7,834		7,103		*

*The corresponding revenue does not contribute over 10% of the total revenue of the Group in the respective periods.

7.INVESTMENT INCOME

	Year ended December 31,
	2015	2016	2017
	Thousand USD	Thousand USD	Thousand USD
Interest income	144	83	186
Interest income from amounts due from related parties	56	242	259
Share of profit of associates	149	173	—
Disposal of associates(Note a)	—	—	7,446
	349	498	7,891

(a)In March 2017, Sky Solar Japan KK entered into a share transfer agreement with Orix Holdings to sell the share interest in OKY Solar 1 K.K and OKY Solar Omut K.K at the consideration of JPY1,068 million (US$9.18 million), which was closed on March 29, 2017 with all consideration paid in cash. The company recorded a gain on disposal of subsidiaries of JPY 837 million (USD 7.4 million).

8.OTHER LOSSES

	Year ended December 31,
	2015		2016		2017
	Thousand USD		Thousand USD		Thousand USD
Change of financial liabilities with fair value through profit and loss (Note 29, Note 30)	(5,686	)	(2,957	)	(39,105	)
Hedge ineffectiveness on cash flow hedges and net loss arising on interest rate swap designated as at FVTPL (Note 30)	(585	)	(641	)	201
Transaction cost related to FVTPL liabilities (Note a)	—		(4,041	)	—
Net foreign exchange (losses) gains	400		1,145		1,814
Others, net	(1,030	)	1,523		(2,896	)
	(6,901	)	(4,971	)	(39,986	)

(a)The transaction cost represents the professional fee directly attributable to the issue of the financial liability to Hudson.

9.FINANCE COSTS

	Year ended December 31,
	2015		2016		2017
	Thousand USD		Thousand USD		Thousand USD
Interest on:
Bank borrowings	(2,780	)	(2,611	)	(3,865	)
Other borrowings	(1,117	)	(3,757	)	(8,335	)
	(3,897	)	(6,368	)	(12,200	)

F-32

10.STAFF COSTS, ADMINISTRATIVE EXPENSES AND COST OF SALES AND SERVICES

(Loss) profit before taxation has been arrived at after charging:

	Year ended December 31,
	2015	2016	2017
	Thousand USD	Thousand USD	Thousand USD
Depreciation of property, plant and equipment	281	271	298
Amortization of intangible assets	102	71	44
Depreciation of solar parks	9,229	14,208	14,272
Auditor’s remuneration	1,155	1,200	1,050
Directors’ emoluments:
Salaries and other benefits (Note a)	592	392	887
Retirement benefits scheme contributions	32	27	36
Share-based compensation	104	46	(43	)
	728	465	880
Others staff:
Other staff costs	7,337	8,090	7,625
Retirement benefits scheme contributions	704	1,046	591
Share-based compensation	1,285	951	(180	)
	9,326	10,087	8,036
Total staff costs	10,054	10,552	8,916

11.INCOME TAX (EXPENSE) CREDIT

	Year ended December 31,
	2015		2016		2017
	Thousand USD		Thousand USD		Thousand USD
Current tax	(2,372	)	(10,976	)	(4,906	)
Overprovision in prior years	4,258		—		—
	1,886		(10,976	)	(4,906	)
Deferred tax	(1,202	)	(9,699	)	11,436
	684		(1,277	)	6,530

Income tax of Bulgaria, Germany, Hong Kong, and Canada is calculated at 10%, 15%, 16.5%, and 26.5%, respectively, of the estimated assessable profit of respective Group’s subsidiaries for the three years ended December 31, 2017. Income tax rate in Japan is 33% , 30% and 27.8% for the three years ended December 31, 2017, respectively. Income tax rate in Greece is 26%, 29%, and 29% for the three years ended December 31, 2017, respectively. Taxation arising in other jurisdictions is calculated at the rates prevailing in the relevant jurisdictions.

F-33

In August 2015, the Group received a tax audit report from the tax authority of one subsidiary of the Group upon the completion of the audit for tax years 2009 to 2013 period. As a result of the completion of this audit, the tax related to the audit period was determined to be USD0.4 million by the relevant tax authorities. As such the Group reversed the overprovision of income tax for USD4.2 million and other taxes for USD6.0 million.

The taxation for the year can be reconciled to the profit (loss) before taxation per the consolidated statement of profit or loss and other comprehensive income as follows:

	Year ended December 31,
	2015		2016		2017
	Thousand USD		Thousand USD		Thousand USD
(Loss) profit before taxation	(2,238	)	4,559		(39,580	)
Tax at the domestic income tax rate (2015: 26%, 2016: 29%, 2017: 27.8%,)	(581	)	1,322		(11,003	)
Tax effect of income not taxable for tax purpose	(2,711	)	(1,802	)	—
Tax effect of expenses not deductible	1,466		716		1,898
Overprovision in prior years	(4,258	)	—		(715	)
Tax effect of tax losses not recognized	969		5,321		3,007
Recognition of deferred tax assets previously not recognized	—		(3,646	)	—
Utilization of tax losses previously not recognized	—		(2,463	)	(601	)
Effect of different tax rates of subsidiaries operating in other jurisdictions	4,431		1,829		884
Income tax expense (benefit)	(684	)	1,277		(6,530	)
Effective income tax rate	31	%	28	%	16	%

The domestic income tax rate represents statutory rate in the jurisdictions where the operation of the Group was most significant during the year presented; which is the income tax rate in Greece for the years ended December 31, 2015 and 2016. Since the group disposed all the solar park assets in Greece in 2017, the most significant operation of the Group of 2017 was Japan. As a result, the domestic income tax rate was 27.8% for the year ended December 31, 2017.

12.DIVIDENDS

No dividend was paid or proposed during the periods presented, nor has any dividend been proposed since the end of the reporting period.

13.(LOSS) EARNINGS PER SHARE

The calculation of the basic and diluted (loss) earnings per share attributable to the owners of the Company is based on the following data:

	Year ended December 31,
	2015		2016	2017
	Thousand USD		Thousand USD	Thousand USD
(Loss) profit
(Loss) profit for the purpose of basic and diluted (loss) earnings per share	(1,397	)	3,784	(33,171	)

	Year ended December 31,
	2015	2016	2017
Number of shares
Weighted average number of ordinary share outstanding- basic and diluted	387,517,503	401,602,159	418,314,541
Basic net (loss) earnings per share	0.00	0.01	(0.1	)
Diluted net (loss) earnings per share	0.00	0.01	(0.1	)

F-34

For the year ended December 31, 2015, diluted loss per share are the same as basic loss per share as the Company did not have any equity instruments that have dilutive effect on loss per share during the periods presented.

For the year ended December 31, 2016 and 2017, diluted net income (loss) per share does not include the 330,000 share options, of which the exercise price is higher than the average market price, as their inclusion would be anti-dilutive.

For the year ended December 31, 2016, diluted net income (loss) per share does not include the 330,000 share options, of which the exercise price is higher than the average market price, or 1,430,000 unvested restricted shares, of which assumed exercise price is higher than the average market price for year ended December 31, 2016, as their inclusion would be anti-dilutive.

For the year ended December 31, 2017, diluted net income (loss) per share does not include the 220,000 share options, of which the exercise price is higher than the average market price, or 940,000 unvested restricted shares, of which assumed exercise price is higher than the average market price for year ended December 31, 2017, as their inclusion would be anti-dilutive.

The following potential ordinary shares are anti-dilutive and are therefore excluded from the weighted average number of ordinary shares for the purpose of diluted loss per share.

	Year ended December 31,
	2015	2016	2017
Options	330,000	330,000	220,000
Non-vested restricted shares	1,900,000	950,000	940,000
	2,230,000	1,280,000	1,160,000

14.OTHER OPERATING INCOME

	Year ended December 31,
	2015	2016	2017
	Thousand USD	Thousand USD	Thousand USD
Gain(Loss) on disposal of IPP solar parks	—	1,248	—
Gain(Loss) on disposal of subsidiaries (Note 21, Note 34)	—	11,768	1,875
Others	197	147	193
	197	13,163	2,068

15.AMOUNT DUE FROM SKY SOLAR HOLDINGS CO., LTD.

	At December 31,
	2016	2017
	Thousand USD	Thousand USD
Amount due from Sky Solar Holdings Co., Ltd.
—Current	1,430	—

The balances were unsecured.

In September of 2015, the Group has entered into several assignment agreements with multiple parties, including Sky Solar Holdings, two other related parties (Note 27) and two other third parties to settle its payables to these third parties for approximately USD1.2 million. After this assignment, the Group has increased its amount due from Sky Solar Holdings Co., Ltd. by USD1.6 million and amount due to the other related parties amounting to USD2.8 million.

In September of 2017, the group has entered into a deed of non-competition and right of first refusal with Mr. Weili Su (“Mr. Su”) whereby he promises that he and any company he controls will not engage in any business that competes with us and grants us the right of first refusal to purchase shares in his businesses in China in which he owns more than 50% of the voting shares in the event that Mr. Su receives from or otherwise negotiate with a third party a bona fide offer to purchase Mr. Su’s shares in any of the business and the sale of such shares will result in Mr. Su ceasing control of that business. In connection with the settlement agreement entered with Mr. Su, he agrees to pay back to the Company approximately US$15 million to settle all its receivables and payables with his related companies, including Sky Solar Holdings. Thus the Group has assigned its both amount due from and amount due to Sky Solar Holdings Co., Ltd to Mr. Su.

F-35

16.AMOUNTS DUE FROM OTHER RELATED PARTIES

		At December 31,
	Notes	2016		2017
		Thousand USD		Thousand USD
Current:
Trade
China New Era	a	4,166		3,334
Sky Global Solar S.A.	h	2		—
Less: allowance for doubtful debts	a	(1,970	)	(1,970	)
		2,198		1,364
Non-Trade
Sky Solar (Hong Kong) International Co., Ltd.	b	1,339		—
SWL Flash Bright Limited	d	67		—
China New Era	a	360		359
Sky Solar New Energy Investment Ltd.	e	1,480		—
Tany International (Hong Kong) Co., Ltd.	f	816		—
Sky Solar (Canada) FIT 1 Limited Partnership	i	203		—
Su Weili	j	—		15,220
Less: allowance for doubtful debts	a	(230	)	(230	)
		4,035		15,349
		6,233		16,713
Non-Current:
Trade
Oky Solar Holdings, Ltd. and its subsidiaries	g	3,283		—
RisenSky Solar (defined in Note 23) and its subsidiaries		1,021		1,247
		4,304		1,247
Non-Trade
RisenSky Solar (defined in Note 23) and its subsidiaries	c	3,821		4,385
		8,125		5,632

Notes:

(a)Sky Solar Holdings is able to exercise significant influence over China New Era through its 49% ownership interest and participation on the board. In addition, certain key management of the Group acts as legal representatives of the solar plant entities controlled by China New Era. China New Era is therefore an associate of Sky Solar Holdings and considered as a related party of the Group.

Included in the balance amount due from China New Era as of December 31, 2016 and December 31, 2017, an allowance for doubtful debt of USD 2.2 million is provided for receivables for which they have defaulted on payment obligation.

(b)Sky Solar (Hong Kong) International Co., Ltd. is an entity which is a 100% owned and controlled by Mr. Su as at December 31, 2016 and 2017.

(c)Included in the balance was a carrying amount of USD 3.8 million and as USD 4.4 million at December 31, 2016 and 2017, respectively, which carried interest at 3.0% per annum. The balance was reclassified from current to non-current as the Group does not expect to receive the repayment within twelve months after the end of the reporting period.

(d)SWL Flash Bright Limited is a 100% owned subsidiary of Sky Solar (Hong Kong) International Co., Ltd. as at December 31, 2016 and 2017.

(e)The entity is controlled by Mr. Su as at December 31, 2016 and 2017.

(f)The entity is controlled by Mr. Su as at December 31, 2016 and 2017.

F-36

(g)Sky Solar Japan Co., Ltd. (“Sky Solar Japan” or “SSJ”), a wholly owned subsidiary of the Group, holds 30% equity interests in Oky Solar Holdings, Ltd. (“Oky Solar Holdings”) as at December 31, 2016 and sold it in March 2017.

(h)Mr. Su holds 40% equity interests in Sky Global Solar S.A. as at December 31, 2016 and December 31, 2017. Mr. Su has significant influence over the entity, and as such, Sky Global Solar S.A. is considered a related party.

(i)Sky Solar (Canada) FIT 1 Limited Partnership (“FIT 1”) is controlled by 10088526 B.C, Ltd (“1088526”), an equity investee in which the Group holds 75% equity interest. (Note 23)

(j)On September 19, 2017, the Company entered into a settlement agreement with Mr. Su to resolve all potential claims by the Company against Mr. Su and certain entities controlled by him concerning certain fund transfers, which were not approved by the board or the audit committee and which lacked insufficient documentary support, as well as all potential claims that Mr. Su and such entities may have against the Company in connection with Mr. Su’s employment at the Company.  Under this agreement, various debt assignment agreements signed among the Company, certain third parties, and certain entities controlled by Mr. Su in April 2017 shall have no effect and be rescinded immediately; and Mr. Su agrees to pay back to the Company approximately US$15.2 million and failing this, authorize the Company to sell on behalf of him and /or transfer to the Company the American depositary shares that he holds in the Company to pay for such settlement amount. After this agreement, the Group has amount due from Mr. Su to USD 15.2 million.

Other than the non-current amounts which mature after one year in accordance to contracts since the end of reporting period, the remaining balances are repayable on demand. Save as disclosed above, the balances are unsecured and interest-free.

Amounts due from other related parties which are non-trade in nature mainly represented loans or advances to these related parties by the Group.

The Group normally allows credit period up to one year to related parties from the date of invoice on a case-by-case basis. The allowance for doubtful debts as at December 31, 2016 and December 31, 2017 was USD2.2 million. This provision was mainly due to the collectability of O&M revenue provided for and the expenses paid on behalf of China New Era in 2013. The group made individual assessments on the collectability of the balances.

Movements in the allowance for doubtful debts of amounts due from related parties during the periods presented are as follows:

	At December 31,
	2016		2017
	Thousand USD		Thousand USD
Balance at beginning of year	(2,200	)	(2,200	)
Provisions recognized on receivables	—		—
Balance at end of the year	(2,200	)	(2,200	)

F-37

17.TRADE AND OTHER RECEIVABLES

	At December 31,
	2016		2017
	Thousand USD		Thousand USD
Trade receivables	9,016		10,206
Value-added tax recoverable	2,336		2,044
Prepaid assets and prepayments	4,913		6,755
Deposits (Note a)	10,855		7,186
Others (Note c)	4,306		9,794
Less: allowance for doubtful debts (Note b)	(1,329	)	(1,403	)
	30,097		34,582

Note:

(a)The balance as of December 31, 2016 includes (1) USD3.7 million guarantee paid under the power purchase agreements related to the solar parks in Uruguay and will be collected once the solar projects are connected to grid in 2017 (Note 25) and (2) USD7.0 million deposit under the arrangement of Hudson Note and will be collected upon completion of construction of underlying solar projects in USA and Uruguay (Note 30).

The balance as of December 31, 2017 includes (1) USD 2.5 million deposit under the arrangement of Hudson Note, (2) USD 1.4 million for the EPC deposit in Canada and (3) USD 1.8 million for the litigation deposit in Japan and this deposit was received by January 2018.

(b)The balance as of December 31, 2016 and 2017 mainly includes an amount receivable due from a third party to the Group of approximately USD1.1 million (equivalent to EUR1.0 million), which was incurred in 2012, claim against two third party contractors who failed to construct a solar park for one subsidiary of the Group, who delivered solar modules and made prepayment already. A settlement agreement was made in September 2012, however the two contractors failed to repay after made the first repayment of total three installments. The Group is negotiating for another settlement agreement, and based on the recent communications among the Group and two contractors, management concluded to make full provision for doubtful receivables in the amount of USD1.1 million in 2015.

(c)The balance as of December 31, 2017 mainly includes (1) USD 2.6 million receivable from the sold subsidiary, (2) USD 1.3 million receivable from the EPC construction service, and (3) USD 2 million deposit for issuing the guarantee of EPC construction in Uruguay.

The Group allows credit periods of up to one year to certain customers on a case-by-case basis. Trade receivables of the Group are assessed to be impaired individually with reference to the nature of trading balances, length of credit period offered by the Group to the customers and historical recoverability of the balances.

No interest is charged on trade receivables. The Group does not have collateral over the balances. Before accepting any new customer, the management of the Group will assess the potential customer’s credit quality and grant credit limits to each customer.

Movements in the allowance for doubtful debts of trade and other receivables during the periods presented are as follows:

	At December 31,
	2016		2017
	Thousand USD		Thousand USD
Balance at beginning of year	1,366		1,329
Provisions recognized on receivables	—		—
Write off	—		—
Exchange difference	(37	)	74
Balance at end of the year	1,329		1,403

The allowance for doubtful debt at the end of each reporting period represented individually impaired receivables which were either with financial difficulties or have defaulted on payment obligation. Included in the Group’s trade receivables balance were debtors with aggregate carrying amounts of approximately USD938 thousand and USD1.1 million at December 31, 2016 and December 31, 2017, respectively, which were past due, but the Group did not provide for provisions since the debtors credit worthiness is qualified or guaranteed.

F-38

The balances that are neither past due nor impaired as at the end of each reporting period are at good credit quality.

These debtors were either placed under liquidation or in severe financial difficulties and such amounts were not likely to be recovered in the future.

In determining the recoverability of a trade receivable, the Group considers any change in the credit quality of the debtor from the date credit was initially granted up to the end of each reporting period.

18.       INVENTORIES

		At December 31,
		2016	2017
		Thousand USD	Thousand USD
Solar modules		479	166
Permits and related costs capitalized during the course of obtaining permits	(a)	3,623	141
Solar parks completed or under development those are held for sale	(b)	34,932	—
		39,034	307

Note:

(a)In August 2016, the Group acquired 22.5MW development stage permits for the solar projects in California and Vermont. In 2017, the group was in the process of developing 11.8 MW permits in Canada.

(b)The balance as of December 31, 2016 represents the cost capitalized, including land costs and cost for construction of solar parks relating to the solar parks under development in South America. These solar parks are connected at August 2017, and held as IPP solar parks.

19.ASSETS CLASSIFIED AS HELD FOR SALE

	At December 31,
	2016	2017
	Thousand USD	Thousand USD
	Total	Total
IPP solar parks held for sale	34,684	—
Cash and cash equivalents	3,917	—
Trade and other receivable	6,968	—
Other assets	1,437	—
	47,006	—
Liabilities associated with assets held for sale	3,380	—

(a)As at December 31, 2016, the board of directors of the Group has approved the transaction to dispose the 20 operating solar parks with capacity of 23MW in Greece. The negotiation of the transaction was at final stage and the agreement was signed on January 4, 2017. Therefore, as of December 31, 2016, these solar projects related assets and liabilities, which were expected to be sold within twelve months, were classified as held for sale. The transaction was completed in April 2017 disposal of subsidiaries. (Note 34)

(b)As at December 31, 2016, the board of directors of the Group has approved the transaction to dispose 6 operating solar parks in Canada. The negotiation of the transaction was at final stage and the agreements were signed on January 3, 2017. Therefore, as of December 31, 2016, these solar projects related assets and liabilities, which were expected to be sold within twelve months, were classified as held for sale. The transaction was completed in January 2017 as disposal of subsidiaries. (Note 34)

F-39

20.  PROPERTY, PLANT AND EQUIPMENT

	Leasehold improvement		Motor vehicles		Furniture and fixtures		Total
	Thousand USD		Thousand USD		Thousand USD		Thousand USD
COST
At January 1, 2015	107		820		1,303		2,230
Additions	32		11		164		207
Disposals	—		(196	)	(88	)	(284	)
Exchange adjustments	(1	)	(13	)	(141	)	(155	)
At December 31, 2015	138		622		1,238		1,998
Additions	42		205		102		349
Disposals	—		(24	)	(104	)	(128	)
Exchange adjustments	5		(17	)	(27	)	(39	)
At December 31, 2016	185		786		1,209		2,180
Additions	—		198		177		375
Disposals	(65	)	(174	)	(58	)	(297	)
Exchange adjustments	8		32		79		119
At December 31, 2017	128		842		1,407		2,377
DEPRECIATION
At January 1, 2015	44		403		772		1,219
Provided for the year	32		106		143		281
Eliminated on disposals	—		(139	)	(24	)	(163	)
Exchange adjustments	(5	)	1		(134	)	(138	)
At December 31, 2015	71		371		757		1,199
Provided for the year	15		127		129		271
Eliminated on disposals	—		(21	)	(92	)	(113	)
Exchange adjustments	10		(5	)	(5	)	—
At December 31, 2016	96		472		789		1,357
Provided for the year	17		148		133		298
Eliminated on disposals	(66	)	(173	)	(45	)	(284	)
Exchange adjustments	(6	)	43		53		90
At December 31, 2017	41		490		930		1,461
CARRYING VALUES
At December 31, 2015	67		251		481		799
At December 31, 2016	89		314		420		823
At December 31, 2017	87		352		477		916

The above items of property, plant and equipment are depreciated on a straight-line basis over the following estimated useful lives after taking into account the residual values:

Leasehold improvement	20 years
Motor vehicles	5 years
Furniture and fixtures	5 years

F-40

21.  IPP SOLAR PARKS, INVESTMENT PROPERTY

(1) IPP Solar Parks

At the end of each reporting period, the Group’s solar parks, which are held for use, consisted of the following:

	Permits (including related costs capitalized in the course of obtaining permits) and solar parks under development		Completed solar parks		Total
	Thousand USD		Thousand USD		Thousand USD
At January 1, 2015	61,877		151,481		213,358
Additions	104,727		—		104,727
Transfer	(126,494	)	126,494		—
Exchange adjustments	(2,751	)	(15,307	)	(18,058	)
At December 31, 2015	37,359		262,668		300,027
Additions	42,895		2,575		45,470
Acquisition of subsidiaries (Note 33)	—		34,158		34,158
Transfer to investment property	(104	)	—		(104	)
Reclassified as held for sale (Note 19)	—		(60,667	)	(60,667	)
Disposal of subsidiaries (Note 34)	—		(18,407	)	(18,407	)
Disposal of solar parks	—		(3,671	)	(3,671	)
Transfer	(42,330	)	42,330		—
Exchange adjustments	(1,344	)	2,975		1,631
At December 31, 2016	36,476		261,961		298,437
Additions	36,589		110,210		146,799
Disposal of solar parks	(1,979	)	—		(1,979	)
Disposal of subsidiaries (Note a)	(669	)	(834	)	(1,503	)
Transfer	(17,150	)	17,150		—
Exchange adjustments	(636	)	4,702		4,066
At December 31, 2017	52,631		393,189		445,820
DEPRECIATION AND IMPAIRMENT
At January 1, 2015	270		32,478		32,748
Provided for the year	—		9,229		9,229
Impairment provided for the year	1,706		129		1,835
Exchange adjustments	—		(3,208	)	(3,208	)
At December 31, 2015	1,976		38,628		40,604
Provided for the year	—		14,208		14,208
Impairment provided for the year	2,151		—		2,151
Reclassified as held-for-sale (Note 19)	—		(25,983	)	(25,983	)
Disposal of subsidiaries (Note 34)	—		(1,560	)	(1,560	)
Disposal of solar parks	—		(80	)	(80	)
Exchange adjustments	(217	)	(1,939	)	(2,156	)
At December 31, 2016	3,910		23,274		27,184
Provided for the year	—		14,272		14,272
Impairment provided for the year	5,120		101		5,221
Disposal of subsidiaries (Note a)	—		(19	)	(19	)
Exchange adjustments	357		1,400		1,757
At December 31, 2017	9,387		39,028		48,415
CARRYING VALUES
At December 31, 2015	35,383		224,040		259,423
At December 31, 2016	32,566		238,687		271,253
At December 31, 2017	43,244		354,161		397,405

F-41

a)    In February 2017, Sky Solar Japan KK(“SSJ”), a wholly-owned subsidiary of the Group, entered into a share purchase agreement to sell its all shares of Tokyo Solar Electricity KK(“TS”), with total purchase price of JPY 9.3 million (USD83 thousand). This disposal was aimed to maintain the strategy on high-voltage solar business, while TS was operated on low-voltage solar business with small sizes but high costs. The transaction was completed in February 2017, and the Group recorded a loss of USD 5 thousand.

Depreciation is calculated using the straight-line method over the estimated useful lives of 20 to 30 years for completed solar parks.

As at December 31, 2015, 2016 and 2017, the solar parks with carrying amounts of approximately USD 100.2 million, USD USD215.6 million and USD277.4 million, respectively, were pledged by the Group to secure borrowings with carrying amounts of approximately USD97.1 million, USD150.6 million and USD244.0 million, respectively. In addition, equity interests of an indirect wholly-owned subsidiary of the Company which held several IPP solar parks in Czech and trade receivables arising out of the business relations were pledged to a bank as at December 31, 2015, 2016 and 2017 to secure the respective borrowings.

During the year ended December 31, 2015, IPP solar parks operating in Greece were evaluated for impairment given the macroeconomic conditions prevailing in Greece. The recoverable amount of the IPP solar parks is calculated on the basis of value in use. During the year ended December 31, 2016, IPP solar parks operating in Greece were evaluated for impairment given the macroeconomic conditions prevailing in Spain. The recoverable amount of the IPP solar parks is calculated on the basis of value in use, and loss of USD 2.2 million was recorded.

During the year ended December 31, 2017, several developing licenses were discontinued in Latin America, and the developing permits in North America were evaluated for impairment given the difference between the assets’ carrying amount and present value of estimated future cash flow discounted at the effective interest rate. As a result, an impairment loss of USD 5.2 million was recorded by the Group. In the year ended December 31, 2015 and 2016, such impairment was USD 1.8 million and USD 2.2 million, respectively.

(2) Investment Property

Included in the Group’s IPP solar parks are land acquired by the Group with carrying amounts of approximately USD9.5 million, USD11.3 million and USD11.3 million, respectively, as at December 31, 2015, 2016 and 2017. The Group transferred certain pieces of land with carrying amount of approximately nil, USD 104 thousand and nil, during the year ended December 31, 2015, 2016 and 2017, respectively, from IPP solar parks to investment property upon commencement of leases. The transfer is triggered by the sales of IPP solar parks assets situated on these land to third party customers. The land, being accounted for as investment property, has indefinite useful lives and is measured at costs less accumulated impairment losses, if any. The lease of land is an operating lease in nature and the future minimum lease payments under non-cancellable operating leases is disclosed in note 37.

F-42

22. INTANGIBLE ASSETS

	Software
	Thousand USD
COST
At January 1, 2015	558
Additions	241
Disposals	(498	)
Exchange adjustments	(62	)
At December 31, 2015	239
Additions	40
Disposals	(32	)
Exchange adjustments	5
At December 31, 2016	252
Additions	42
Disposals	(1	)
Exchange adjustments	(12	)
At December 31, 2017	281
AMORTIZATION
At January 1, 2015	338
Charge for the year	102
Eliminated on disposals	(312	)
Exchange adjustments	(36	)
At December 31, 2015	92
Charge for the year	71
Eliminated on disposals	(31	)
Exchange adjustments	(2	)
At December 31, 2016	130
Charge for the year	44
Eliminated on disposals	(1	)
Exchange adjustments	(18	)
At December 31, 2017	155
CARRYING VALUES
At December 31, 2015	147
At December 31, 2016	122
At December 31, 2017	126

Most of the above intangible assets are software systems for solar park monitoring, which have finite useful lives. Such intangible assets are amortized on a straight-line basis over 5 years.

F-43

23. INTERESTS IN ASSOCIATES

	2016		2017
	Thousand USD		Thousand USD
As at January 1,	3,806		4,092
Investment in new affiliates	2,188		612
Return of investment in associates	(1,554	)	—
Add: Share of profit of associates	173		—
Less: Unrealized gain from sales to associates	(242	)	—
Less: Dividends received from the associates	(415	)	(427	)
Less: Disposal of associates(Note d)	—		(2,038	)
Exchange difference	136		327
As at December 31,	4,092		2,566

As at December 31, 2016 and December 31, 2017, the Group had interests in the following associates:

		Place of		Proportion of nominal
		incorporation/	Class of	value of issued capital				Proportion of voting
	Form of	principal place	shares	held				power held
Name of entity	Entity	of incorporation	Held	2016		2017		2016		2017		Principal activities
RisenSky Solar S.a.r.l. (a)	Limited liability	Luxemburg	Ordinary	30	%	30	%	30	%	30	%	Operating entity engaged in the investment, construction, financing and management of solar parks
1088526 B.C. Ltd. (b)	Limited liability	Canada	Ordinary	75	%	75	%	50	%	50	%	Operating entity engaged in the investment, construction, financing and management of solar parks
1091187 B.C. Ltd. (c)	Limited liability	Canada	Ordinary	—		75	%	—		50	%	Operating entity engaged in the investment, construction, financing and management of solar parks
Oky Solar Holdings (d)	Limited liability	Japan	Ordinary	30	%	N/A		30	%	N/A		Operating entity engaged in the investment, construction, financing and management of solar parks

Notes:

(a)         In 2011, Sky Europe entered into an agreement with Risen Energy (Hong Kong) Co., Ltd. (“Risen HK”) (a subsidiary of a company listed on the security market in the PRC) to establish a private limited liability company, namely RisenSky Solar Energy S.a.r.l. (“RisenSky Solar”). The Group is able to exercise significant influence over RisenSky Solar through its 30% ownership interest and participation on the board. RisenSky is therefore classified as an associate of the Group.

F-44

(b)         In 2016, Energy Capital Investment II sarl (“ECI”), a subsidiary of the Group, entered into a share purchase agreement with Jade Fair Precision Ltd. (“Jade”), to sell its 25 preferred shares in 1088526 B.C. Ltd. (“1088526”), who owns Sky Solar (Canada) FIT 1 LP and its 15 commercial and industrial solar facilities in Canada. Though the Group owns 75% equity interest and two out of four directors in the board of directors of 1088526 after the transaction, the Group concluded that only applied significant influence over the investee for (1) all the key relevant activities, including appointment or removal of the O&M manager and asset manager, determination and amendment of the annual budget, capital expenditure, and approval of bank borrowing etc., of 1088526 requires consent from the other shareholders; (2) the other shareholder has the rights to the majority of the variable returns from its involvement with the investee. The Group’s residual investment in 1088526 was measured at fair value. (Note 34)

(c)         In January 2017, Energy Capital Investment II sarl (“ECI”), a subsidiary of the Group, entered into a share purchase agreement with Jade Fair Precision Ltd. (“Jade”), to sell its 25 preferred shares in 1091187 B.C. Ltd. (“1091187”), who owns Sky Solar (Canada) FIT 2 LP in Canada. Though the Group owns 75% equity interest and two out of four directors in the board of directors of 1091187 after the transaction, the Group concluded that only applied significant influence over the investee for (1) all the key relevant activities, including appointment or removal of the O&M manager and asset manager, determination and amendment of the annual budget, capital expenditure, and approval of bank borrowing etc., of 1091187 requires consent from the other shareholders; (2) the other shareholder has the rights to the majority of the variable returns from its involvement with the investee. The Group’s residual investment in 1091187 was measured at fair value. (Note 34)

(d)         In 2014, Sky Solar Japan entered into an agreement with Orix KK (a company listed on the security market in Japan and United States) to establish a private limited liability company, namely Oky Solar Holdings, registered in Japan, in which 30% of the share capital is subscribed by Sky Solar Japan for JPY43.5 million (USD426 thousand) while the remaining 70% is subscribed by Orix KK. In 2015, additional investment of JPY 685.7 million (USD5.7 million) was injected by Sky Solar Japan to maintain its 30% of the share capital. In 2016, the Group received JPY 169 million (USD 1.55 million) investment return, and the share capital proportion remained the same. The Group is able to exercise significant influence over Oky Solar Holdings through 30% ownership interest and participation on the board. Oky Solar Holdings is there classified as an associate of the Group. The results, assets and liabilities of this associate are accounted for in the consolidated financial statements using the equity method of accounting. In March 2017, SSJ entered into a share transfer agreement with Orix Holdings to sell the share interest in OKY Solar 1 K.K and OKY Solar Omut K.K at the consideration of JPY1,068 million (US$9.18 million), which was closed on March 29, 2017 with all consideration paid in cash. This transaction resulted a gain of disposal JPY 837 million (USD 7.4 million).

F-45

The summarized financial information in respect of the Group’s associates is set out below:

			At December 31,
	RisenSky 2016		Oky Solar Holdings 2016	1088526 2016	Aggregate 2016	RisenSky 2017	1091187 2017	1088526 2017	Aggregate 2017
	Thousand USD		Thousand USD	Thousand USD	Thousand USD	Thousand USD	Thousand USD	Thousand USD	Thousand USD
Non-current assets
IPP solar parks	20,829		26,669	12,993	60,491	22,592	3,305	13,157	39,054
Other non-current assets	442		884	10,320	11,646	472	1,683	11,359	13,514
	21,271		27,553	23,313	72,137	23,064	4,988	24,516	52,568
Current assets	3,462		5,167	3,763	12,392	5,342	159	2,689	8,190
Current liabilities
Other current liabilities	1,325		3,461	1,143	5,929	2,739	154	1,312	4,205
Amount due to other related parties	880		—	—	880	967	—	—	967
	2,205		3,461	1,143	6,809	3,706	154	1,312	5,172
Non-current liability
Borrowings	22,940		10,702	15,866	49,508	24,034	1,321	15,109	40,464
Others	—		16,449	—	16,449	—	58	941	999
	22,940		27,151	15,866	65,957	24,034	1,379	16,050	41,463
Net assets (liabilities)	(412	)	2,108	10,067	11,763	666	3,614	9,843	14,123

		Year ended December 31,
	RisenSky 2016	Oky Solar Holdings 2016	1088526 2016		Aggregate 2016	RisenSky 2017	1091187 2017	1088526 2017		Aggregate 2017
	Thousand USD	Thousand USD	Thousand USD		Thousand USD	Thousand USD	Thousand USD	Thousand USD		Thousand USD
Revenue	3,701	1,662	447		5,810	3,840	709	3,268		7,817
Profit for the year	744	577	(29	)	1,292	1,076	134	(240	)	970
Group’s share of profit of associates of the year	—	173	—		173	—	—	—		—
Group’s share of profit of associates of the year not recognized	223	—	—		223	323	22	(43	)	302
Group’s share of other comprehensive income of associates	—	—	—		—	—	—	—		—

F-46

24. DEFERRED TAX ASSETS

The principal components of the deferred income tax assets and liabilities are as follows:

			Fair value change of		Unrealized gain on		Depreciation of
	Tax losses		financial instruments		inter-group sales		solar parks		Total
	Thousand USD		Thousand USD		Thousand USD		Thousand USD		Thousand USD
At January 1, 2016	364		202		6,273		(5,474	)	1,365
Credit (charge) to profit or loss	1,896		755		4,420		2,628		9,699
Reclassified to held-for-sale	(1,296	)	—		—		—		(1,296	)
Exchange differences	(100	)	(40	)	(237	)	(140	)	(517	)
At December 31, 2016	864		917		10,456		(2,986	)	9,251
Deferred tax assets	864		917		10,456		(2,656	)	9,581
Deferred tax liabilities	—		—		—		330		330
Credit (charge) to profit or loss	286		11,325		(1,843	)	1,668		11,436
Exchange differences	1		41		(7	)	(6	)	29
At December 31, 2017	1,151		12,283		8,606		(1,324	)	20,716
Deferred tax assets	1,151		12,283		8,606		1,460		23,500
Deferred tax liabilities	—		—		—		2,784		2,784

As at December 31, 2015, 2016 and 2017, the Group has unused tax losses of approximately USD135.8 million, USD152.2 million and USD 162.6 million, excludes tax losses recognized above, respectively, available for offset against future profits that may be carried forward indefinitely.

F-47

25. OTHER NON-CURRENT ASSETS

	At December 31,
	2016	2017
	Thousand USD	Thousand USD
Long term deposits relate to IPP solar parks (a)	4,947	1,660
Long-term loan to a third party (b)	9,208	7,974
Others	359	1,411
	14,514	11,045

(a)The balance of long term deposits were the guarantee deposits for power purchase agreements related to the IPP solar parks in Uruguay amounting to USD3.3 million and reduced to nil as at December 31, 2016 and 2017, respectively. The balance of long term deposits for land rental related to the IPP solar parks in Japan were USD1.6 million and USD 1.7 million as at December 31, 2016 and 2017, respectively.

(b)The loan to a third party represents the USD 9.2 million and USD 8.0 million long-term note receivable as at December 31, 2016 and 2017, respectively, which was obtained in connection with the acquisition of a subsidiary in the USA in 2016 which holds 23MW of solar parks (Note 33). The note receivable bears annual interest of 1% and is with principle payment schedule from 2018 to 2041.

26. TRADE AND OTHER PAYABLES

	At December 31,
	2016	2017
	Thousand USD	Thousand USD
Trade payables(Note a)	14,303	22,613
Other payables	4,365	4,031
Warranty provision to customers for supply of modules	332	24
Other accrued expenses	1,933	711
Other tax payables	2,404	1,410
Advances from customers	700	254
	24,037	29,043

The credit periods on purchases of goods range from three months to a year.

(a)The trade payable balance included the EPC construction payable of USD 8.3 million in Uruguay as of December 31, 2017.

F-48

Movements in the warranty provision balance for provision of modules during the periods presented are as follows:

	At December 31,
	2016		2017
	Thousand USD		Thousand USD
Balance at beginning of year	783		332
Provided for the year	—		—
Reversal for the year	(451	)	(308	)
Balance at end of the year	332		24

The Group is obliged to provide limited warranties to its customers of solar projects with respect to certain levels of performance. The Group is able to determine, at the point of delivery, that the solar projects are performing in accordance with the contractual terms and as such no warranties are provided for. To date, the Group has not experienced any significant claims.

F-49

27. AMOUNTS DUE TO OTHER RELATED PARTIES

		At December 31,
	Notes	2016	2017
		Thousand USD	Thousand USD
Current
Trade
China New Era		176	—
Non-Trade
Sky Solar (Hong Kong) International Co., Ltd.	a	2,181	—
Sky Solar New Energy Investment Limited	17	2,825	—
Mr. Su	b	2,221	—
Beijing Sky Solar Investment Management Co., Ltd.	c	109	28
		7,336	28
		7,512	28

Notes:

(a)The entity is 100% owned by Mr. Su as at December 31, 2016 and 2017. The Group has initially borrowed USD3 million from Sky Solar (Hong Kong) International Co., Ltd. The loan from Sky Solar (Hong Kong) International Co., Ltd. carried interest at 12% per annum.

(b)On October 1, 2015, the Group entered into an agreement with Mr. Su to sell and transfer all the shares in a 100% owned subsidiary namely Sky Solar Investment Limited. In accordance with the terms of the agreement, the Group will pay an amount of USD2.4 million to Mr. Su to assume the net liabilities of Sky Solar Investment Limited in the amount of USD2.3 million and miscellaneous expense of USD0.1 million.

(c)The entity is controlled by Mr. Su as at December 31, 2016 and 2017. During the year ended December 31, 2013, the Group obtained, under a license agreement entered into between the Group and the Founder for the use of a trademark “Sky Solar”. The amount is a result of the licensed trademark used.

On September 19, 2017, the Company entered into a settlement agreement with Mr. Su to resolve all potential claims by the Company against Mr. Su and certain entities controlled by him concerning certain fund transfers, which were not approved by the board or the audit committee and which lacked insufficient documentary support, as well as all potential claims that Mr. Su and such entities may have against the Company in connection with Mr. Su’s employment at the Company.  Under this agreement, various debt assignment agreements signed among the Company, certain third parties, and certain entities controlled by Mr. Su in April 2017 shall have no effect and be rescinded immediately; and Mr. Su agrees to pay back to the Company approximately US$15.2 million and failing this, authorize the Company to sell on behalf of him and /or transfer to the Company the American depositary shares that he holds in the Company to pay for such settlement amount.

For trade amounts due to other related parties, the credit periods on purchases of goods range from 90 to 365 days.

F-50

28. BORROWINGS

	At December 31,
	2016	2017
	Thousand USD	Thousand USD
Bank borrowings (a)	71,022	151,648
Other borrowings	88,139	98,081
	159,161	249,729
Secured	150,585	244,030
Unsecured	8,576	5,699
	159,161	249,729
Variable-rate borrowings	11,162	95,216
Fixed-rate borrowings	147,999	154,513
	159,161	249,729
Carrying amount repayable:
Within one year	27,280	19,702
More than one year but not exceeding two years	11,942	17,593
More than two years but not exceeding five years	29,752	46,881
More than five years	90,187	165,553
	159,161	249,729
Less: amounts repayable within one year shown under current liabilities	27,280	19,702
Amounts shown under non-current liabilities	131,881	230,027

(a)During the year ended December 31, 2014 and 2015, one of the subsidiary of the Group entered into a series of 15-year loan agreements with total principle of CAD 23.2 million (USD 16.8 million) with bank. The loan agreements specified a variable interest rate equal to 3-month Canadian Dollar Offered Rate (“CDOR”) plus 2.74% - 3.43%. The agreement also includes a fixed rate option, which allows the Group to swap variable to fixed interest rate of 5.75%, 5.50% or 4.50%.

The associated interest rate swap agreements with principle of USD16.3 million was qualified for hedge accounting under IAS39. The effective portion of changes in the fair value of cash flow hedges recorded in other comprehensive income was loss of USD680 thousand and USD 446 thousand for year ended December 31, 2015 and 2016, respectively.

During the year ended December 31, 2016, the subsidiary was disposed by the Group, and the accumulated other comprehensive expense of USD1,126 thousand under the heading of cash flow hedging reserve was recorded in profit or loss.

The amounts due are based on scheduled repayment dates set out in the loan agreements. Some loan agreements have financial covenants which require certain financial ratios to be kept at certain level. As of December 31, 2016 and 2017, the Group was in compliance with all the covenants.

The Group has variable-rate bank borrowings which carried interest at one-month bank interest rate in Czech and Uruguay plus margin as at December 31, 2016 and 2017.

The effective interest rates on the Group’s borrowings as at December 31, 2016 and 2017 are as follows:

	At December 31,
	2016		2017
Effective interest rate:
Fixed-rate borrowings	4.13	%	3.52	%
Variable-rate borrowings	3.63	%	4.82	%

As at December 31, 2016 and 2017, equity interests of an indirectly wholly-owned subsidiary of the Company in Czech, its IPP solar parks and its trade receivables arising out of the business relations were pledged to a bank. Details of this pledge are set out in note 21(1).

F-51

29. OTHER CURRENT LIABILITIES

	December 31, 2017
	Thousand USD
Financial liabilities designated as fair value through profit or loss
As at January 1,	80,107
Fair value effect during the year	37,918
Interest paid back for distribution	—
Exchange difference	2,795
As at December 31,(Note a)	120,820

(a)This transaction is related to the Silent Partnership in Japan, which was in Non-current liability as of December, 2016, and was reclassified into current liability as of December 31, 2017.

During the year ended December 31, 2014, Sky Solar Japan entered into silent partnership agreements that were amended and finalized on October 10, 2014 with two groups of third party investors (the “Silent Partners”), pursuant to which the Silent Partners provided financing and SSJ will develop and operate 21 solar parks with an aggregate capacity of 34.6 MW in Japan (the “SSJ Silent Partnership Assets”). In accordance with the agreements, SSJ contributed JPY750 million in cash and solar power projects with a carrying amount of JPY2.3 billion and an agreed valuation of approximately JPY4.6 billion. The Silent Partners contributed JPY5 billion in cash.

No separate legal entity was established in connection with the silent partnership agreement. The SSJ Silent Partnership Assets are held and managed through the SSJ legal entity, subject to the provisions of the silent partnership agreement. The Silent Partners are not involved in the investment decisions associated with management of the SSJ Silent Partnership Assets or other assets and businesses which continue to be held and operated by SSJ, outside the auspices of the silent partnership agreement. Over an expected maximum period from the date of the agreement through June 2017, distributable profits from the SSJ Silent Partnership Assets shall be first distributed to the Silent Partners in proportion to their respective capital contributions, until a cumulative annual internal rate of return, or IRR, of 15% on their capital contributions is achieved. Any remaining profits shall be distributed to SSJ until a cumulative annual IRR of 15% of SSJ’s contributed amount, based on the agreed valuation, is achieved. The remaining profits, if any, shall be distributed to SSJ and the Silent Partner at the ratio of approximately 51% and 49%, respectively. Silent Partners shall only bear losses up to the amount of money they financed.

The IRR of 15% is the discount rate required to make the present value of the total distributable profits expected to be generated by SSJ Silent Partnership Assets payable to certain members of Silent Partnership equal to the present value of the cumulative total of investments of certain Silent Partners. Distributable profits represent the cash that may be distributed to investors, including cash received from generating electricity or other sources, less the debts which fall due. Investments include the cash proceeds received from Silent Partners of JPY5 billion, cash contribution made from SSJ of JPY750 million and contribution of solar power projects with an agreed valuation of approximately USD45.5 million. Subject to the availability of distributable profits, the annual amount to be distributed to the Silent Partners is estimated to be approximately USD7.4 million (without considering the cumulative effect of IRR), before any amounts are distributable to the Company.

In connection with the above transaction, Flash Bright Power Ltd. (“Flash Bright”), the entity wholly owned by Mr. Su, granted to an affiliate of one of the Silent Partners (“Investor”) an option to purchase from Flash Bright up to USD30 million worth of existing ordinary shares of Sky Solar Holdings, Ltd. at a per share price equal to the per ordinary share initial public offering price. This option is exercisable during a two-year period with an option to a one-year extension at the request of the Investor which Flash Bright can, at its sole discretion, approve or deny, commencing 180 days after the pricing date of this initial public offering. If, on any date during the exercise period, the market price of an ordinary share of the Company equals or exceeds 200% of the per ordinary share initial public offering price, the Investor shall be automatically deemed to have exercised the then remaining portion of the call option. Upon any exercise of the call option, the Investor may elect to pay the purchase price to Flash Bright in cash or through cashless settlement procedures.

The call option was issued by Flash Bright for the benefit of the Group, to induce the Silent Partners to provide the financing and therefore the fair value associated with the call option of USD6,600 thousand measured on the grant date of October 10, 2014 was considered transaction costs and recorded within other losses in the consolidated statement of profit or loss and other comprehensive income. The fair value of the call option was determined by Income approach (Level 3 as defined in Note 3), in this approach, the discounted cash flow method was used to capture the present value of the expected future economic cash outflows to be derived, based on an appropriate discount rate. Weighted average cost of capital was determined using a Capital Asset Pricing Model at 13.5% per annum. This option was exercisable during a two-year period with an option to a one-year extension at the request of the investor which Flash Bright could, at its sole discretion, approve or deny, commencing 180 days after the pricing date of the initial public offering. The investor did not request the one-year extension and such share purchase right has expired.

F-52

In August 2015, SSJ further entered into certain definitive agreements (the “Amended Agreements”) with Silent Partners to increase the total capital contribution of JPY9 billion made by Silent Partners with respect to the total 67 solar parks (with additional 46 solar parks contributed by SSJ) with an aggregate capacity of 107.9 MW in Japan developed and operated by SSJ. According to the Amended Agreements, all the operating assets held under the original silent partnership agreement are transferred to the amended silent partnership agreement and the original silent partnership agreements are therefore terminated upon the transfer. In addition that:

·One of the Silent Partners, assigned its full position, rights and obligation to another party of the Silent Partners (the “TK partner”), and would have no further obligations as agreed by all parties;

·An amount of JPY 698 million (USD5.8 million) is agreed by SSJ being paid to the TK partner in order to amend the silent partnership agreements, and the new term of the Amended Agreements starts from August 28, 2015 to August 27, 2018 for three years.

·The TK partner further invested an additional JPY4 billion (USD33.2 million), JPY2 billion of which is used by SSJ to extend a loan (the “Up-Stream Loan”) of the same principal amount to Sky International Enterprise Group Ltd. (“SIE”), a wholly owned subsidiary of the Group. The Up-Stream Loan has a 12- month term and bears interest at a 5% rate per annum. The proceeds of the Up-Stream Loan shall be used for, among others, the development of certain PV projects in Asia and the Americas. The remaining JPY2 billion proceeds are used by SSJ to continue executing its project pipeline in Japan;

·For profit and loss distribution, it is agreed that during a distribution period, corresponding profits, after offset by the cumulative losses, multiplying the ratio of distribution, which is calculated as each party’s contribution ratio of total contributions, on the day of distribution will be distributed to SSJ and TK partner. In the case when the cumulative amount of losses exceeds the balance of total capital contribution, TK partner are only responsible for the amount of loss within the scope of capital contribution under the Amended Agreements, while the Company shall bear any excess amount;

·Upon the completion of the solar power projects, SSJ is expected to transfer the ownership of one or more of the completed projects to a special purpose company formed by it or other third parties to recover the investments. Upon such transfer, it is contemplated that TK partner and SSJ will receive the distributable profits derived from the proceeds of such transfer pursuant to their respective percentages of contribution. In the event that SSJ still holds SSJ Silent Partnership Assets in the aggregate capacity of 10.79 MW (which is 10% of the aggregate capacity of the SSJ Silent Partnership Assets currently held by SSJ) or greater as of April 27, 2018, SSJ should either (1) purchase the remaining SSJ Silent Partnership Assets for a price agreed upon by an agent for the TK Partner or (2) secure a third party offer to purchase the remaining SSJ Silent Partnership Assets, and should notify the TK Partner by May 27, 2018 of its intent to settle in either case. If the TK Partner is able to secure a third party offer that is more attractive within 90 days of being so notified, SSJ shall transfer the remaining SSJ Silent Partnership Assets to such third party. If the TK Partner not only does not agree with the offer made by SSJ but also fails to find a third party offer that is more attractive, the TK Partner may elect to change the percentages of contribution to such percentages that will result in the TK Partner enjoying a 15% cumulative IRR.

After completion of the changes of Amended Agreements, the Group continues to control the SSJ Silent Partnership Assets and retains substantially all the risks and rewards of ownership and as such will continue to consolidate these solar power projects in its consolidated financial statements. Considering the aforementioned changes in the Amended Agreements, the Group accounted for the financial liability associate with the amended silent partnership agreements as designated as fair value through profit or loss (“FVTPL”) in accordance with IAS 39, since the Silent Partnership Assets are managed and whose performance are evaluated by the Group on a fair value basis in accordance with a documented risk management strategy.

The fair value of the financial liabilities were USD80,107 thousand as at December 31, 2016, and was estimated based on the anticipated operating results and cash flows generated by the related solar parks. The assumptions used in the fair value evaluation are disclosed in note 35. During the year ended December 31, 2016, a loss associated with the change in fair value and extinguishment associated with the original silent partnership agreement was recognized in other loss of USD2,764 thousand.

During the year ended December 31, 2017, the Silent Partner has alleged that the Company had breached certain terms of the Silent Partnership Agreement, and demanded the exercise of its option right in connection with the Silent Partnership Agreement to adjust the original percentage of contribution ratio under the Silent Partnership Agreement so that it can enjoy15% cumulative IRR immediately. The Company recorded a fair value of JPY 13.6 billion (USD 120.8 million) as of December 31, 2017, and a loss of USD37.9 million associated with change of the fair value was recorded accordingly, which reflect Silent Partner’s claim for 15% cumulative IRR based on the option statements. According to the Silent Partnership Agreement, by August 27, 2018, SSJ should either secure financing for the purchase of, or secure a third-party offer to purchase, the SSJ Silent Partnership Assets, therefore such liability was reclassified as current liability.

F-53

30. OTHER NON-CURRENT LIABILITIES

	December 31,
	2016	2017
	Thousand USD	Thousand USD
Financial liabilities designated as fair value through profit or loss
Transaction (a)	80,107	—
Transaction (b)	829	1,253
Transaction (c)	51,143	55,426
Held for trading derivatives not designated in hedge accounting relationships (d)	1,364	1,128
Asset retirement obligation (e)	7,448	12,251
Others	110	78
	141,001	70,136

(a)   This transaction is related to the Silent Partnership in Japan, which was reclassified into current liability.(Note 29)

(b)During the year ended December 31, 2015, three subsidiaries of SSJ, which holds four IPP solar parks, entered into silent partnership agreements with JA Mitsui Lease (the “JAML”). JAML provided approximately JPY63 million (USD519 thousand) in cash at the inception of the agreements, which amounted to 10% portion of total contributions in each subsidiaries, and in return are entitled to receive return in the next 15 years from the date of agreements based on an amount specified in accordance with formulas in the agreements. The fair value of this instrument is estimated based on the anticipated operating results and cash flows generated by the related solar parks for the contractual period of 15 years. The carrying amount of financial liabilities are USD829 thousand and USD1,253 thousand as at December 31, 2016 and 2017 with a loss associated with a change in fair value to the other gain of USD 86 thousand in 2016 and other loss of USD 396 thousand in 2017. The amount is designated as financial liabilities at FVTPL on initial recognition on the consolidated statement of financial position since the amount and timing of return is variable.

The movement of the balance is as follows:

	2016		2017
	Thousand USD		Thousand USD
As at January 1,	882		829
Fair value effect during the year	(86	)	396
Exchange difference	33		28
As at December 31,	829		1,253

(c)On September 18, 2015, the Group’s wholly-owned subsidiary Energy Capital Investment S.a.r.l (“ECI”), and a third party Hudson Solar Cayman, LP (“Hudson”), a private equity and infrastructure firm entered into strategic partnership agreements to fund solar projects in Latin America. As part of this partnership, Hudson will invest USD50 million by way of the convertible notes issued by ECI for the constructions of solar projects in Chile and Uruguay, and then they will receive a 49 percent non-controlling equity in these projects upon their completion if it elects to convert the outstanding principal and interest on the notes into such equity interest. On July 15, 2016, the agreement was amended to change the underlying projects from those in Chile to US. As of December 31, 2017, USD48.2 million has been funded under this arrangement.

Under the note purchase agreement, initial amortization date means, for any notes, the earlier of the date which is nine months after the commercial operation date (for any projects, the date on which such projects enters into full commercial operation, achieves preliminary acceptance, achieves technical acceptance or other similar concept, as determined in accordance with the primary construction contract(s) for such project.) of the relevant project and twenty four months after the note purchase date. Then the maturity date of the notes will be the earlier of the twentieth anniversary of the initial amortization date or August 19, 2036. After all construction costs of project companies have been funded through long-term financing from Inter-American Development Bank, and upon completion of solar parks construction, the equity conversion will be effected. Hudson holds the conversion option and the mandatory prepayment option under the notes agreement.

If an equity conversion has not occurred or delayed more than one year, the repayment of principal and interest is paid semi-annually according to repayment schedule set out in each note and the date of the request for note purchase is based on the estimated commercial operation date. The outstanding principal balance of each note shall be due and payable in full on the maturity date. The share price for conversion is equal to the equity value of the relevant project company multiplied by the percentage ownership in such project company represented by such project company shares on the date of conversion. On each equity conversion date, the outstanding principal balance of the notes issued in connection with the project company that is the subject of the equity conversion.

F-54

The Group accounted for the Hudson notes agreement as a financial liability designated as fair value through profit or loss (“FVTPL”) in accordance with IAS39. The fair value on initial recognition is the transaction price. For the year ended December 31, 2016 and 2017, a loss of USD279 thousand and USD791 thousand was recognized respectively.

The movement of the balance is as follows:

	2016	2017
	Thousand USD	Thousand USD
As at January 1,	3,061	51,143
Additional received from Hudson	44,000	—
Interest addition during the year	3,803	5,756
Fair value effect during the year	279	791
Less: Interest paid back during the year	—	(2,264	)
As at December 31,	51,143	55,426

(d)During the year ended December 31, 2015, SSJ entered into two loan agreements totaling approximately JPY 2,300 million (USD19.1 million) in support of its business development. The loan agreements provide for a floating interest rate equal to 6-month Tokyo Interbank Offered Rate (“TIBOR”) plus 2.2%. To manage the interest rate exposure, SSJ entered into interest swap arrangements for the same period of the loan to swap the floating rate to a fixed interest rate equal to 3.16% and 3.08%.

During the years ended December 31, 2016, SSJ entered into one loan agreement totaling approximately JPY 1,570 million (USD13.5 million) in support of its business development. The loan agreement provides for a floating interest rate equal to 6-month TIBOR plus 2%. SSJ had interest swap arrangement for the same period of the loan to swap fixed interest rate equal to 2.68%.

The terms of the interest rate swap arrangements have been negotiated to match the terms of the respective designated hedged items. As not met the requirements, hedge accounting has not been applied, accordingly, the fair value changes of the interest rate swap, which amounted to a loss of USD744 thousand and a gain of USD204 thousand was recognized during the year ended December 31, 2016 and 2017 respectively.

The major terms of these contracts are as follows:

Notional amount	Maturity	Swaps
JPY 547,200,000	May 23, 2031	From 6-months JPY TIBOR+2.2% to 3.16%
JPY 1,752,800,000	May 31, 2032	From 6-months JPY TIBOR+ 2.2% to 3.08%
JPY 1,570,000,000	November 30, 2032	From 6-months JPY TIBOR+ 2% to 2.68%

Not designated for hedging Outstanding receive floating pay fixed contracts	Average contracted fixed interest rate		Notional principal value		Fair value liabilities
Japan	2017/12/31	2016/12/31	2017/12/31	2016/12/31	2017/12/31	2016/12/31
	%	%	Thousand	Thousand	Thousand	Thousand
From 2015 to 2032	2.93	2.93	34,443	33,282	1,064	1,255

During the year ended December 2016, the Group acquired 23 solar parks in the USA, and assumed three bank loans totaling USD5.65 million and interest rate swaps agreements. The loan agreement provides for a floating interest rate equal to USD Federal Reserve statistical release H.15 (“Prime H.15”) for the loans, and interest swap arrangements allow the Group to swap the variable rates to fixed interest rates equal to 5.75%, 6.00% and 6.27%, respectively. The 5.75% and 6.27% related interest swap arrangements were terminated in 2017, due to the termination of loan agreements. During the years ended December 31, 2017, the group entered into another loan agreement totaling approximately USD 20.2 million, which provides for a floating interest rate equal to Prime H.15 for the loans, and interest swap arrangements allow the Group to swap the variable rates to fixed interest rates equal to 5%.

The terms of the interest rate swap arrangements have been negotiated to match the terms of the respective designated hedged items. As not met the requirements, hedge accounting has not been applied, accordingly, the fair value changes of the interest rate swaps, which amounted to USD181 thousand gain and USD 3 thousand loss was recognized in the other losses for the year ended December 31, 2016 and 2017 respectively.

Notional amount	Maturity	Swaps
USD 20,200,000	December 8, 2027	From 3-month-USD Prime H.15 to 5%
USD 2,000,000	June 30, 2026	From 3-month-USD Prime H.15 to 6%

Not designated for hedging Outstanding receive floating pay fixed contracts	Average contracted fixed interest rate		Notional principal value		Fair value liabilities
USA	2017/12/31	2016/12/31	2017/12/31	2016/12/31	2017/12/31	2016/12/31
	%	%	Thousand	Thousand	Thousand	Thousand
From 2014 to 2019	5.09	5.98	19,764	5,650	64	139

The interest rate swaps settle on a quarter basis. The floating and fixed rate on the interest rate swaps is the local interbank rate of Japan and USA. The Group will settle the difference between the fixed and floating rate on a net basis.

F-55

(e)The asset retirement obligation liability reflects the present value of estimated cost of decommissioning associated with long-lived assets at a future date. The liabilities incurred, including those from acquisition, are USD 2.1 million for the year ended December 31, 2016, and USD 4.8 million for the year ended December 31, 2017. The accretion expenses are USD 355 thousand and USD 108 thousand for the year ended December 31, 2016 and 2017, respectively.

31. SHARE CAPITAL

	Number of shares	Share capital
		Thousand USD
The Company
Ordinary shares of USD0.0001 each
Authorized:
On August 19, 2013 and December 31, 2013	500,000,000	—
Issued:
On August 19, 2013 and December 31, 2013	339,196,670	—
Issued at IPO	50,830,000	5
On December 31, 2014 and 2015	390,026,670	5
Issued:
On July 15, 2016	29,519,844	3
On December 31, 2016 and 2017	419,546,514	8

During the year ended December 31, 2016, the Group issued 29,519,844 restricted ordinary shares to SunPeak Universal Holdings, Inc. as part of the consideration to acquire 23 solar parks in USA (note 33). The par value and fair value of shares issued was USD 2,952 and USD10, 147,446 as of the acquisition date.

As of December 31, 2016 and 2017, the Group had 1,430,000 and 940,000 ordinary shares respectively, including restricted shares, which were legally issued according to its share incentive plans, but were not deemed issued or outstanding from an accounting perspective.

F-56

SKY SOLAR HOLDINGS, LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

32. SHARE-BASED COMPENSATION

(A)                         SHARE OPTION SCHEME

A share option scheme (the “Share Option Scheme”) was adopted by Sky Solar Holdings pursuant to a resolution passed in 2009 for the primary purpose of providing incentives to directors and eligible employees. Under the Share Option Scheme, Sky Solar Holdings may grant options to eligible employees of the Group to subscribe for shares in Sky Solar Holdings.

The total number of shares in respect of which options may be granted under the Share Option Scheme is not permitted to exceed 22,195,122 shares of Sky Solar Holdings in issue at any point in time, without prior approval from the shareholders of Sky Solar Holdings. The number of shares issued and to be issued in respect of which options granted and may be granted to any individual in any one year is not permitted to exceed 1% of the shares of Sky Solar Holdings in issue at any point in time, without prior approval from the shareholders of Sky Solar Holdings.

No consideration is paid or payable on the grant of an option. Options may be exercised at any time upon vesting up to 10 years from the date of grant, at which point they expire.

In 2010, Sky Solar Holdings granted 2 tranches of share options to employees of the Group. The exercise price of the options under tranches 1 and 2 was USD0.6833 per share option. For the first tranche of options, 50% of the options vest on the first year anniversary from the date of grant and the remaining options vest on the second year anniversary from the date of grant. For the second tranche of options, 25% of the options vest on the first year anniversary from the date of grant, 25% of the options vest on the second year anniversary from the date of grant, 25% of the options vest on the third year anniversary from the date of grant and the remaining options would be vest on the fourth year anniversary from the date of grant.

The number of share options outstanding at the beginning and end of 2015, 2016 and 2017 was 729,000, and vested and exercisable at the end of 2015, 2016 and 2017 were 729,000, 729,000 and 729,000 respectively. The weighted average remaining contractual life as at December 31, 2017 was 2.05 years.

The estimated fair values of the Tranche 1 and 2 options granted were USD144 thousand and USD1,509 thousand, respectively.

F-57

(B)                          EQUITY INCENTIVE PLAN

The Company has adopted the 2014 Equity Incentive Plan made effective as of October 30, 2014. Under the Equity Incentive Plan, the Company may grant options and restricted shares to eligible employees or directors of the Group to subscribe for shares in the Company. No consideration is paid or payable on the grant of an option. Options may be exercised at any time upon vesting up to 10 years from the date of grant, at which point they expire.

On November 13, 2014, the Company granted 330,000 share options to directors of the Group under 2014 Equity Incentive Plan. The exercise price of the options under this tranche was USD1.0 per share option. The options shall vest and become exercisable with respect to one third of shares initially covered by the option on each of the first anniversary of the date of grant, the second anniversary of the date of grant, and the third anniversary of the date of grant. As the directors were resigned in June 2017, the option related to third anniversary of the date of grant cannot vest and be exercised.

F-58

As at the end of each reporting period, the number of unvested share options and fair values in relation to these unvested share options not yet recognized did not have material impacts to the Group’s results or financial position. The contractual life was ended in 2017.

On November 14, 2014, the Company granted 1,800,000 restricted shares to employees of the Group under 2014 Equity Incentive Plan. 25% of the restricted shares shall vest immediately upon the date of the listing of the Company’s American Depositary Shares on the NASDAQ Capital Market (the “IPO Date”). The rest 75% of the restricted shares shall vest with respect to 25% of restricted shares initially covered on each of the first anniversary of the IPO date, the second anniversary of the IPO date, and the third anniversary of the IPO date. As at December 31, 2016 and December 31, 2017, the unrecognized amounts of the unvested restricted shares were approximately USD174 thousand and nil, respectively. The Company measured the fair value of the restricted shares based on the open market quote of the Company’s shares on the IPO date which was US$1.14.”

On July 1, 2015 and August 1, 2015, the Company further granted 500,000 and 500,000 restricted shares, respectively, to one employee of the Group under 2014 Equity Incentive Plan. 50% of the restricted shares shall vest on each of the first anniversary of the date of grant, and the rest 50% shall vest of the restricted shares shall vest on the second anniversary of the date of grant. As at December 31, 2016 and 2017, the unrecognized amounts of the unvested restricted shares were approximately USD156 thousand and nil, respectively. The Company measured the fair value of the restricted shares based on the open market quote of the Company’s shares, which was US$1.18 and US$1.13, respectively.”

For the year ended December 31, 2015, 2016 and 2017, the fair values recognized in relation to the restricted shares amounted to approximately USD1,389 thousand, USD997 thousand and negative USD223 thousand, respectively, were recorded in the consolidated financial statements as follows:

	Year ended December 31,
	2015	2016	2017
	Thousand USD	Thousand USD	Thousand USD
Cost of sales	—	—	—
Administrative expenses	1,389	997	(223	)
	1,389	997	(223	)

The negative USD 223 thousand was due to the resignation of the directors and eligible employees of the Group in 2017.

F-59

33. ACQUISITION OF SUBSIDIARIES

To expand business in the USA, on May 6, 2016, the Group entered into an agreement with Greenleaf-TNX Management, LLC (“GTL”) and SunPeak Universal Holdings, Inc. (“Sunpeak”) to acquire all the shares held by them in Greenleaf Clear Skies I, Greenleaf Clear Skies II, and Greenleaf Clear Skies IV (the “Acquired Companies”). The Acquired Companies own 100% equity interest of Acquired Companies which control 23 solar parks in the USA, and the Acquired Companies with non-controlling interests are as follows:

·Greenleaf Clear Skies I owns 100% Class B membership interests of GLT NLH2 Solar, which in turns owns 100% Sun Harvest Solar;

·Greenleaf Clear Skies II owns 100% GLT Pioneer Solar, which in turns owns 90% of Greenfield PV Holdings, which owns 99.99% of Pioneer Vally Solar, which in turns owns Axio Green, LLC;

·Greenleaf Clear Skies IV owns 100% Class B membership interests of Cloverdale Solar, which in turns owns 100% Cloverdale Solar I.

The transaction is closed on July 15, 2016 and was recognized as a business combination. The fair value of the total consideration transferred at the date of acquisition was USD15.8 million, which consisted of USD5.7 million cash settled, 29,519,844 validly issued restricted ordinary shares, which can be traded freely in the market after 180 days, with USD 10.1 million fair value calculated at stock price as of the acquisition date.

The assets acquired and the associated liabilities assumed are as follows:

	Thousand USD
Current assets	5,673
Bank and cash	4,553
Trade and other receivables	1,120
Non-current assets	44,339
IPP solar parks	34,158
Other long-term assets	10,181
Current liabilities	(1,129	)
Trade and other payables	(344	)
Short-term bank loan	(785	)
Non-current liabilities	(31,665	)
Assets Retirement Obiligation	(714	)
Long-term bank loan	(20,076	)
Other long-term liabilities	(10,875	)
Non-controlling interest	1,405
Net assets acquired	15,813
Consideration and satisfied by:
Issuance of ordinary shares	10,147
Cash paid	5,666

Net cash outflow on acquisition of a subsidiary is as follows:

Cash paid as consideration	5,666
Less: cash received in acquired companies	4,553
Net cash outflow arising on acquisition:	1,113

Included in the profit for the year of the Group are net income amounting to approximately USD1,753 thousand attributable to the additional business generated by the above entities holding IPP solar parks. Revenue for the year included approximately USD3,836 thousand generated from the acquirees.

F-60

Had the acquisition been completed on January 1, 2016, total group revenue for the year would have been USD 69,761 thousand and profit for the year would have been USD5,100 thousand. The pro forma information is for illustrative purposes only and is not necessarily an indication of revenue and results of operations of the Group that actually would have been achieved had the acquisition been completed on January 1, 2016, nor is it intended to be a projection of future results.

In determining the “pro-forma” revenue and profit of the Group had the acquirees been acquired at the beginning of the current year, the management of the Group have calculated depreciation of plant and equipment acquired on the basis of the fair values arising in the initial accounting for the business combination rather than the carrying amounts recognized in the pre-acquisition financial statements.

There was no acquisition of subsidiaries during the year ended December 31, 2017.

34. DISPOSAL OF SUBSIDIARIES

On March 31, 2016, SSJ disposed Solar Tech K.K (“ST”), one of its subsidiaries, which was in a net liability position, to a third party for JPY 900,000 yen (USD 8 thousand) and recognized a gain of USD 1.7 million.

	Thousand USD
Current Assets	924
Cash and cash equivalents	628
Trade and other receivables	213
Deferred tax assets	83
Non-current Assets	4,578
IPP solar parks	3,758
Long term deposit and others	820
Current Liabilities	(696	)
Trade and other payables	(689	)
Tax payable	(7	)
Non-current Liabilities	(6,484	)
Borrowings	(6,484	)
Net liabilities disposed of	(1,678	)

Gain on disposal of a subsidiary is as follows:

	Thousand USD
Cash Consideration received	8
Net liabilities disposed of	1,678
Gain on disposal of a subsidiary	1,686

Net cash outflow on disposal of a subsidiary is as follows:

	Thousand USD
Cash and cash equivalent balances disposed of	628
Cash received as consideration	8
Net cash outflow arising on disposal	620

F-61

On September 29, 2016, Energy Capital Investment II sarl (“ECI”), a subsidiary of the Group, entered into a share purchase agreement with Jade Fair Precision Ltd. (“Jade”), to sell its 25 preferred shares in 1088526 B.C. Ltd. (“1088526”), who owns Sky Solar (Canada) FIT 1 LP and its 15 commercial and industrial solar facilities in Canada.  The Group continues to own a 75% equity interest and is able to appoint two out of four directors in the board of directors of 1088526.  As a result of the transaction, the Group concluded it no longer was able to exercise control, but continued to have significant influence over the investee for (1) all the key relevant activities, including appointment or removal of the O&M manager and asset manager, determination and amendment of the annual budget, capital expenditure, and approval of bank borrowing etc., of 1088526 requires consent from the other shareholders; and (2) the other shareholder have the rights to the majority of the variable returns from its involvement with the investee. The Group’s residual investment in 1088526 was measured at fair value, determined based on a discounted cash flow model of the underlying solar parks. The consideration received for the 25 preferred shares in 1088526 is CAD10.6 million (USD8.0 million). The Group recognized a gain of USD10 million upon the disposal of subsidiary.

	Thousand USD
Current Assets	3,882
Cash and cash equivalents	3,260
Trade and other receivables	397
Other current asset	225
Non-current Assets	13,089
IPP solar parks	13,089
Current Liabilities	(1,036	)
Trade and other payables	(134	)
Borrowing	(902	)
Non-current Liabilities	(16,957	)
Long-term borrowing	(15,539	)
Swap liability	(1,418	)
Net liabilities disposed of	(1,022	)

Gain on disposal of a subsidiary is as follows:

	Thousand USD
Cash Consideration received in:	7,998
Net liabilities disposed of	1,022
Cumulative gain/loss on hedging instrument reclassified from equity on loss of control of subsidiary	(1,126	)
Re-evaluate fair value of residual investment	2,188
Gain on disposal of a subsidiary	10,082

Net cash inflow on disposal of a subsidiary is as follows:

	Thousand USD
Consideration received in cash and cash equivalent	7,998
Less: Cash and cash equivalent balances disposed of	(3,260	)
Net cash inflow arising on disposal	4,738

F-62

In January 2017, Energy Capital Investment II sarl (“ECI”), a wholly-owned subsidiary of the Group, entered into a share purchase agreement with Jade Fair Precision Ltd. the (“Jade”), to sell its 25 preferred share in the capital of 1091187 B.C, Ltd. (“1091187”), with total purchase price of CAD4.0 million (USD3.0 million). 1091187 was incorporated with total capital of 75 common shares and 25 preferred shares, and owns Sky Solar (Canada) FIT 2 LP (“FTP 2LP”) and its 6 operating solar facilities.  The subsidiary was reclassified as held for sale as of December 31, 2016, and the transaction was completed in January 2017. The Company has significant influence over 1091187 B.C, Ltd. after this transaction. The Group’s residual investment in 1091187 was measured at fair value, determined based on a discounted cash flow model of the underlying solar parks. The consideration received for the 25 preferred shares in 1091187 is CAD4.0 million (USD3.0 million). The Group recognized a gain of USD1.4million upon the disposal of subsidiary.

	Thousand USD
Current Assets	295
Cash and cash equivalents	284
Trade and other receivables	11
Non-current Assets	3,294
IPP solar parks	3,253
Other Non-current Assets	41
Current Liabilities	(143	)
Trade and other payables	(62	)
Borrowing	(81	)
Non-current Liabilities	(1,319	)
Long-term borrowing	(1,319	)
Net Assets disposed of	2,127

Gain on disposal of a subsidiary is as follows:

	Thousand USD
Cash Consideration received in:	2,979
Net assets disposed of	(2,127	)
Re-evaluate fair value of residual investment	612
Gain on disposal of a subsidiary	1,464

Net cash inflow on disposal of a subsidiary is as follows:

	Thousand USD
Consideration received in cash and cash equivalent	2,979
Less: Cash and cash equivalent balances disposed of	(284	)
Net cash inflow arising on disposal	2,695

F-63

In January 2017, Sonusco Limited and Neurlus Limited, subsidiaries of the Group in Greece, entered into share purchase agreements with A.W. Aktina Wind Limited, to sell all shares of companies based in Cypriot, all of which hold 20 operating solar parks in Greece with capacity of 23.0 MW. The total purchase price was about EUR39.7 million (USD41.9 million). These subsidiaries were reclassified as held for sale as of December 31, 2016. The transaction was completed in April 2017, and the Group recorded a gain of USD 416 thousand.

	Thousand USD
Current Assets	10,590
Cash and cash equivalents	3,633
Trade and other receivables	6,957
Non-current Assets	32,827
IPP solar parks	31,431
Other Non-current Assets	1,396
Current Liabilities	(1,918	)
Trade and other payables	(1,918	)
Net Assets disposed of	41,499

Gain on disposal of a subsidiary is as follows:

	Thousand USD
Cash Consideration received in:	41,915
Net assets disposed of	(41,499	)
Gain/(Loss) on disposal of a subsidiary	416

Net cash inflow on disposal of a subsidiary is as follows:

	Thousand USD
Consideration received in cash and cash equivalent	41,915
Less: Cash and cash equivalent balances disposed of	(3,633	)
Net cash inflow arising on disposal	38,282

F-64

35.  FINANCIAL INSTRUMENTS

(a) Categories of financial instruments

	Year ended December 31,
	2016	2017
	Thousand USD	Thousand USD
Loans and receivables:
Trade and other receivables	22,848	25,783
Amounts due from other related parties	14,358	22,345
Amount due from Sky Solar Holdings Co., Ltd.	1,430	—
Restricted cash	29,850	40,716
Cash and cash equivalents	12,518	46,084
Total loans and receivables	81,004	134,497
Financial liabilities
Liabilities at amortized cost:
Trade and other payables	18,668	26,644
Amounts due to other related parties	7,512	—
Borrowings	159,161	249,729
Total liabilities at amortized cost	185,341	276,373
Liabilities at FVTPL
Other Current liabilities	—	120,820
Other non-current liabilities	133,553	57,885
Total liabilities at FVTPL	133,553	178,705

(b) Financial risk management objectives and policies

The Group’s activities expose it to a variety of financial risks including market risk, credit risk and liquidity risk. This note presents information about the Group’s exposure to each of these risks, and the objectives, policies and processes for measuring and managing them.

The management of the Company have the overall responsibility for the establishment and oversight of the Group’s risk management framework. The Group’s overall risk management program focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the financial performance of the Group. The Group uses different methods to measure different types of risk to which it is exposed. These methods include sensitivity analysis in the case of interest rate and foreign exchange rate to determine market risk.

Risk management is carried out under policies approved by the management of the Company. The finance department identifies and evaluates financial risks in close co-operation with the Group’s operating units. The management of the Company provide written principles for overall risk management, as well as policies covering specific areas, such as foreign exchange risk, interest rate risk, and credit risk and liquidity risk.

Currency risk

Certain monetary assets and liabilities of the Group’s subsidiaries denominated in currencies other than the functional currency USD, including EURO, JPY and CAD. The following table presents these monetary assets and liabilities in USD at the end of each reporting period using the exchange rates as of the end of the reporting period:

F-65

	Year ended December 31,
	2016	2016	2016	2017	2017	2017
	Thousand USD	Thousand USD	Thousand USD	Thousand USD	Thousand USD	Thousand USD
	Denominated in Euro	Denominated in JPY	Denominated in CAD	Denominated in Euro	Denominated in JPY	Denominated in CAD
Cash and cash equivalents	4,544	2,362	309	7,717	21,673	824
Restricted cash	847	24,603	736	952	26,537	470
Trade and other receivables	13,607	6,086	897	8,428	7,025	292
Amount due from other related parties	7,520	3,821	203	9,695	—	—
Total financial assets	26,518	36,872	2,145	26,792	55,235	1,586
Trade and other payables	4,144	11,553	341	5,129	10,076	362
Borrowings	15,396	114,099	—	17,152	118,233	—
Amounts due to other related parties	—	3	—	—	—	—
Other financial liabilities	—	82,161	—	—	123,136	—
Total financial liabilities	19,540	207,816	341	22,281	251,445	362

The Group’s subsidiaries are mainly exposed to the foreign currency risk with respect to the EURO, JPY and CAD. The following table details sensitivity of the Group’s subsidiaries and the Company to a 10% increase and decrease in their respective functional currencies against respective foreign currencies. The 10% sensitivity rate used represents management’s assessment of the reasonably possible change in foreign exchange rates. The sensitivity analysis includes only outstanding foreign currency denominated monetary items and adjusts their translation at the end of each reporting period for a 10% change in respective functional currencies of the Group’s subsidiaries. A positive number below indicates an increase in profit where their respective functional currencies strengthen 10% against the functional currency. For a 10% weakening of their respective functional currencies against foreign currencies, there would be an equal and opposite impact on the equity and the balances below would be negative.

	Year ended December 31,
	2016		2017
	Thousand USD		Thousand USD
EURO	502		523
CAD	130		142
JPY	(12,306	)	(22,760	)

The Group currently does not have a foreign currency hedging policy but monitors its foreign risks and will consider hedging significant foreign currency exposure should they determine it appropriate.

Interest rate risk

The Group’s cashflow interest rate risk relates primarily to variable-rates on restricted cash, cash and cash equivalents and borrowings.

The Group’s fair value interest rate risk relates mainly to fixed-rate borrowings.

Under interest rate swap contracts, the Group agrees to exchange the difference between fixed and floating rate interest amounts calculated on agreed notional principal amounts. Such contracts enable the Group to mitigate the risk of changing interest rates on the fair value of issued fixed rate debt and the cash flow exposures on the issued variable rate debt. The fair value of interest rate swaps at the end of the reporting period is determined by discounting the future cash flows using the curves at the end of the reporting period and the credit risk inherent in the contract. The average interest rate is based on the outstanding balances at the end of the reporting period.

The sensitivity analysis below has been determined based on the exposure to interest rates for interest bearing bank balances and floating rate borrowings at the end of the reporting period.  The analysis is prepared assuming that those balances outstanding at the end of the reporting period were outstanding for the whole year.  A 5% increase or decrease which represents the management’s assessment of the reasonably possible charge in interest rates is used.

F-66

If the interest rate on bank and other borrowings with variable interest rates had been 5% higher/lower and all other variables were held constant, the post-tax profit of the Group would increase/decrease by approximately USD22 thousand and USD268 thousand for the year ended December 31, 2016 and 2017 respectively.

In management’s opinion, the sensitivity analysis is unrepresentative of the inherent interest rate risk as the exposure at the end of each reporting period does not reflect the exposure at the end of each reporting period.

Credit risk

The Group’s maximum exposure to credit risk which will cause a financial loss to the Group due to failure to discharge an obligation by the counterparties is arising from the carrying amounts of the respective recognized financial assets as stated in the consolidated statement of financial position of the Group.

In order to minimize and account for the exposure to credit risk, the management of the Company has delegated a team responsible for determination of credit limits, credit approvals and other monitoring procedures to ensure that follow-up action is taken to recover overdue debts. This includes carrying out reviews the recoverable amount of each individual debtor at the end of each reporting period to ensure that adequate impairment losses are made for amounts considered irrecoverable. The Group will negotiate with the counterparties of the debts for settlement plans should the need arise.

The Group’s credit risk primarily relates to trade and other receivables, restricted cash, cash and cash equivalents, amount due from Sky Solar Holdings and amounts due from other related parties. The management of the Company generally grants credit only to customers and related parties with good credit ratings and also closely monitors overdue debts.

The credit risk of the Group as at December 31, 2016 is concentrated on trade receivables from electricity companies in Japan, Europe and USA, that amounted to approximately USD8.3 million and accounted for 91.9% of the Group’s total trade receivables. The credit risk of the Group as at December 31, 2017 is concentrated on trade receivables from electricity companies in Japan, Europe, USA and Uruguay, that amounted to approximately USD8.0 million and accounted for 78.4% of the Group’s total trade receivables.

F-67

The credit risk of the Group as at December 31, 2016 and 2017 on balances with related parties is concentrated on four and two related parties, respectively, which are engaged in solar industry in the People’s Republic of China (“PRC”) and overseas countries and amounted to approximately USD10.71 million and USD20.9 million, representing 73.2% and 93.3%, respectively, of the Group’s total balances from related parties.

The credit risk on liquid funds and restricted cash of the Group is limited because the counterparties are banks with high credit ratings assigned by international credit-rating agencies and good reputation. The Group does not have concentration of credit risk on liquid funds at the end of each reporting period.

Liquidity risk

As noted in note 1, the management of the Group manages liquidity risk by closely and continuously monitoring their financial positions.

The following tables detail the Group’s remaining contractual maturity for its financial liabilities based on the agreed repayment terms. The table has been drawn up based on the undiscounted cash flows, including both principal and interest, of financial liabilities based on the earliest date on which the Group can be required to pay.

	Weighted average interest rate		<1 year	1 - 2 years	2 - 3 years	>3 years	Total undiscounted cash flows	Total carrying amount
			Thousand USD	Thousand USD	Thousand USD	Thousand USD	Thousand USD	Thousand USD
At December 31, 2016
Trade and other payables	N/A		18,668	—	—	—	18,668	18,668
Amounts due to other related parties	N/A		7,512	—	—	—	7,512	7,512
Borrowings— variable rate	3.63	%	843	1,133	1,133	10,200	13,309	11,162
Borrowings— fixed rate	4.13	%	27,643	13,781	10,876	125,359	177,659	147,999
			54,666	14,914	12,009	135,559	217,148	185,341
At December 31, 2017
Trade and other payables	N/A		26,644	—	—	—	26,644	26,644
Amounts due to other related parties	N/A		28	—	—	—	28	28
Borrowings— variable rate	4.82	%	4,854	8,173	8,164	118,998	140,189	95,216
Borrowings— fixed rate	3.52	%	14,848	17,527	15,611	146,977	194,963	154,513
			46,374	25,700	23,775	265,975	361,824	276,401

The amounts included above for variable interest rate instruments for non-derivative financial liabilities are subject to change if changes in variable interest rates differ to those estimates of interest rates determined at the end of each reporting period.

F-68

The following table details the Group’s liquidity analysis for its financial liabilities at FVTPL, representing liabilities recorded by the Group during the year ended December 31, 2016 and 2017 for arrangements with the Parties defined in details in note 29 and note 30, as at December 31, 2016 and 2017. The table is presented based on the undiscounted projected cash outflows on such instruments that management of the Group expects to settle. The liquidity analysis for the Group’s financial liabilities at FVTPL was prepared based on the management’s understanding of the timing of the cash flows of the derivatives.

	Weighted average effective interest rate		<1 year	1 - 2 years	2 - 3 years	>3 years	Total undiscounted cash flows	Total carrying amount
			Thousand USD	Thousand USD	Thousand USD	Thousand USD	Thousand USD	Thousand USD
At December 31, 2016
Other non-current liabilities	13.8	%	14,698	14,818	15,251	204,264	249,031	133,553
At December 31, 2017
Other Current liabilities	15	%	120,820	—	—	—	120,820	120,820
Other non-current liabilities	10.99	%	5,310	8,420	8,440	132,234	154,404	57,885
			126,130	8,420	8,440	132,234	275,224	178,705

Fair value measurements

Some of the Group’s financial liabilities are measured at fair value at the end of each reporting period. The following table gives information about how the fair values of these financial assets and financial liabilities are determined (in particular, the valuation technique(s) and inputs used), as well as the level of the fair value hierarchy into which the fair value measurements are categorized (levels 1 to 3) based on the degree to which the inputs to the fair value measurements is observable.

F-69

Financial liabilities	Fair value	Fairvaluehierarchy	Valuation technique(s)and key input(s)	Significantunobservable inputs
1) Other Current liabilities classified as other financial instruments in the consolidated statement of financial position (Note 29)	Other non-current liabilities—USD80,107 thousand as of December 31, 2016 and Other current liabilities—USD120,820 thousand as of December 31, 2017, respectively.	Level 3	Income approach—in this approach, the discounted cash flow method was used to capture the present value of the expected future economic cash outflows to be derived, based on an appropriate discount rate.	Discount rate at 7% and 6% per annum for year 2015 and 2016, respectively. Estimated net change in electricity income and direct costs was taken into account based on management’s experience and knowledge of market conditions of the specific industries.
2) Other non-current liabilities classified as other financial instruments in the consolidated statement of financial position (Note 30)	Other non-current liabilities—USD829 thousand and USD1, 253 thousand as of December 31, 2016 and December 31, 2017, respectively.	Level 3	Income approach—in this approach, the discounted cash flow method was used to capture the present value of the expected future economic cash outflows to be derived, based on an appropriate discount rate.	Discount rate at 6% per annum. (Note 1) Estimated net change in electricity income and direct costs was taken into account management’s experience and knowledge of market conditions of the specific industries.

F-70

3) Other non-current liabilities classified as other financial instruments in the consolidated statement of financial position (Note 30)	Other non-current liabilities—USD51,143 thousand and USD55,426 thousand as of December 31, 2016 and December 31, 2017.	Level 3	Income approach—in this approach, the discounted cash flow method was used to capture the present value of the expected future economic cash outflows to be derived, based on an appropriate discount rate.	Discount rate at 10.8% for year 2016 and 2017 respectively. (Note 2)
4) Interest rate swaps not designated in hedge accounting relationships (Note 30)	Other non-current liabilities— USD1,225 thousand and USD1,064 thousand as at December 31, 2016 and December 31, 2017.	Level 2	Discounted cash flow. Future cash flows are estimated based on forward interest rates (from observable yield curves at the end of the reporting period) and contract interest rates, discounted at a rate that reflects the credit risk of various counterparties.	N/A
5) Interest rate swaps not designated in hedge accounting relationships (Note 30)	Other non-current liabilities—USD139 thousand and USD64 thousand as at December 31, 2016 and December 31, 2017.	Level 2	Discounted cash flow. Future cash flows are estimated based on forward interest rates (from observable yield curves at the end of the reporting period) and contract interest rates, discounted at a rate that reflects the credit risk of various counterparties.	N/A

Note:

(1)A 5% increase in the discount rate holding all other variables constant would decrease the carrying amount of other non-current liabilities by approximately USD22 thousand and USD32 thousand as at December 31, 2016 and December 31, 2017, respectively. A 5% increase in estimated net change in electricity income and direct cost would increase the carrying amount of the non-current liabilities by USD40 thousand and USD63 thousand as at December 31, 2016 and December 31, 2017, respectively.

(2)A 5% increase in the discount rate holding all other variables constant would decrease the carrying amount of other non-current liabilities by approximately USD194 thousand and USD510 thousand as at December 31, 2016 and December 31, 2017, respectively.

The management of the Group considers that the carrying amounts of the other financial assets and financial liabilities in the consolidated financial statements approximate their fair values.

There were no transfers between Level 1 and Level 2 in the years ended December 31, 2015, December 31, 2016 and December 31, 2017.

F-71

Fair value measurements and valuation processes

In estimating the fair value of the financial assets and financial liabilities of the Group, the management of the Group uses market-observable data to the extent it is available. Where Level 1 inputs are not available, the management of the Group performs the valuation themselves with competent and qualified team members. The team establishes the appropriate valuation techniques and inputs to the model. The Chief Financial Officer reports the valuation findings to the board of directors of the Company regularly to explain the cause of fluctuations in the fair value of the related financial assets and liabilities.

Information about the valuation techniques and inputs used in determining the fair value of the financial assets and liabilities are disclosed above.

(c)Capital management

The Group manages its capital to ensure that it will be able to continue as a going concern while maximizing the return to stakeholders through the optimization of the debt and equity balances.

The capital structure of the Group consists of net debt (which includes borrowings net of cash and cash equivalents) and equity attributable to owners of the Company (comprising issued share capital, share premium and other reserves) and to a limited extent, non-controlling interests.

The Group reviews the capital structure regularly. As part of this review, consideration is given to the cost of capital and the risks associated with each class of capital and will attempt to balance its overall capital structure through raising additional capital and overall use of bank borrowings.

F-72

36.DETAILS OF PRINCIPAL SUBSIDIARIES NOW COMPRISING THE GROUP

During the two years ended December 31, 2016 and December 31, 2017, The Company had direct and indirect interests in the following subsidiaries:

					Proportion ofnominal value
					of issued share
					capital/registered
		Establishment			capital held bythe Company		Principal
Name	Region	date	Currency	Share capital	2016.12.31	2017.12.31	activities
Sky Solar Bulgaria Co EOOD	Bulgaria	02/07/2009	BGN	2,364,800	100	100	Operating entity, together with its 16 subsidiaries, engaged in the construction and management of solar parks and production and trading of solar equipment
Sky Solar (Canada) Ltd.	Canada	13/04/2009	CAD	100,000	100	100	Operating entity, together with its seven subsidiaries, engaged in the development, construction and sale of solar parks
Moktap Holdings Ltd.	Cyprus	09/03/2011	EUR	1,800	100	100	Holding entity
Neurlus Ltd.	Cyprus	16/12/2011	EUR	2,000	100	100	Holding entity
Sky Development Renewable Energy Resources S.A.	Greece	02/12/2009	EUR	1,260,000	100	100	Operating entity engaged in the construction, installation and management of solar parks
Sky International Enterprise Group Ltd.	Hong Kong	23/11/2007	HKD	10,000	100	100	Holding entity
Sky Solar Japan K.K.	Japan	16/10/2009	JPY	89,100,000	100	100	Holding entity
Sky Solar Energy S.à.r.l.	Luxembourg	28/09/2009	EUR	12,500	100	100	Holding entity
Sky Capital Europe S.à.r.l.	Luxembourg	18/05/2010	EUR	12,500	100	100	Holding entity
Energy Capital Investment S.à.r.l. (Note b)	Luxembourg	25/10/2015	EUR	12,500	100	100	Holding entity
Energy Capital Investment II S.à.r.l. (Note b)	Luxembourg	25/10/2015	EUR	12,500	100	100	Holding entity
Sky Solar Iberica S.L.	Spain	03/12/2009	EUR	1,200,000	100	100	Operating entity engaged in the construction of solar parks and provision of EPC services
Sky Capital America Inc. (Note b)	USA	23/07/2015	USD	1	100	100	Operating entity engaged in the development of solar parks

Notes:

(a)                 The above table lists the subsidiaries of the Group which, in the opinion of the management, principally affected the results or assets of the Group. To give details of other subsidiaries would, in the opinion of the management result in particular of excessive length.

(b)                 The entity was newly established during the year ended December 31, 2015.

F-73

37.OPERATING LEASES

The Group as lessee

Operating leases relate to leases of premises and land with lease term between 5 to 20 years. The Group does not have an option to purchase the leased land at the expiry of the lease periods.

	Year ended December 31,
	2015	2016	2017
	Thousand USD	Thousand USD	Thousand USD
Minimum lease payments paid under operating leases	1,095	4,040	4,283

At the end of each reporting period, the Group had commitments for future minimum lease payments under non-cancellable operating leases which fall due as follows:

	At December 31,
	2015	2016	2017
	Thousand USD	Thousand USD	Thousand USD
Within one year	4,040	4,468	4,420
In the second to fifth years inclusive	15,060	15,154	15,266
Over five years	52,698	79,172	44,594
	71,798	98,794	64,280

The Group as lessor

Operating leases relate to the investment property owned by the Group with lease term of 20 years. The lessee does not have an option to purchase the investment property at the expiry of the lease period. At the end of each reporting period, the Group had non-cancellable operating lease receivables as follows:

	At December 31,
	2015	2016	2017
	Thousand USD	Thousand USD	Thousand USD
Within one year	182	196	195
In the second to fifth years inclusive	786	782	780
Over five years	2,838	2,585	3,338
	3,806	3,563	4,313

For IPP solar parks in certain countries consists of an operating lease, there is no minimum lease payment since all lease payment is contingent based on actual volume of electricity produced. The contingent rental income the Company recognized amounts to USD7.9 million and USD4.3 million for the year ended December 31, 2016 and 2017, respectively.

38.CAPITAL COMMITMENT

	At December 31,
	2015	2016	2017
	Thousand USD	Thousand USD	Thousand USD
Capital expenditure in respect of the acquisition of IPP solar parks contracted for but not provided in the consolidated financial statements	20,079	90,430	34,279

F-74

39.RETIREMENT BENEFIT SCHEMES

The Group operated defined contribution schemes for its qualifying employees.

The total costs charged to profit or loss of approximately USD734 thousand, USD816 thousand and USD627 thousand represent contributions payable to these schemes by the Group in the year ended December 31, 2015, 2016 and 2017, respectively. As at December 31, 2016 and 2017, contributions of USD89 thousand and nil due in respect of the year ended December 31, 2016 and 2017 had not been paid over the plans, respectively. The amounts were paid subsequent to the end of the reporting period.

40.RELATED PARTY TRANSACTIONS

Other than the balances and transactions with related parties as disclosed elsewhere in these consolidated financial statements, the Group entered into the following significant transactions with related parties:

(a)Sales to related parties

	Year ended December 31,
	2015	2016	2017
	Thousand USD	Thousand USD	Thousand USD
Chaorisky Solar and its subsidiaries	—	—	—
RisenSky Solar and its subsidiaries	323	254	277
China New Era	—	—	—
Oky Solar Holdings and its subsidiaries	4,119	525	—
Sky Global Solar S.A.	8	9	9
	4,450	788	286

F-75

(b)Compensation of key management personnel

The remuneration of directors and other members of key management were as follows:

	Year ended December 31,
	2015	2016	2017
	Thousand USD	Thousand USD	Thousand USD
Short-term benefits	2,413	1,630	2,049
Retirement benefit scheme contributions	121	99	149
Share-based payment expense	104	646	112
	2,638	2,375	2,310

The remuneration of directors and key executives is determined by the board of directors having regard to the performance of individuals and market trends.

(c)Interest charged by Beijing Sky Solar Investment and Sky Solar New Energy at a rate of 9.5% per annum, and charged by Sky Solar (Hong Kong) International at a rate of 12% per annum.

	Year ended December 31,
	2015	2016	2017
	Thousand USD	Thousand USD	Thousand USD
Beijing Sky Solar Investment Management Co., Ltd.	165	—	—
Sky Solar New Energy Investment Limited	592	—	—
Sky Solar (Hong Kong) International Co., Ltd.	134	292	—
	891	292	—

(d)During the year ended December 31, 2013, the Group obtained, under a license agreement entered into between the Group and the Founder for the use of a trademark “Sky Solar”. Annual license fee will be based on the lower of HK$10 million (approximately US$1.3 million) and 0.05% of gross revenue of the Group from the year ended December 31, 2014 onwards. During the year ended December 31, 2016 and 2017, the Group has accrued approximately USD33 thousand and USD28 thousand using this trademark, respectively.

(e)On September 19, 2017, the Company entered into a settlement agreement with Mr. Su to resolve all potential claims by the Company against Mr. Su and certain entities controlled by him concerning certain fund transfers, which were not approved by the board or the audit committee and which lacked insufficient documentary support, as well as all potential claims that Mr. Su and such entities may have against the Company in connection with Mr. Su’s employment at the Company.  Under this agreement, various debt assignment agreements signed among the Company, certain third parties, and certain entities controlled by Mr. Su in April 2017 shall have no effect and be rescinded immediately; and Mr. Su agrees to pay back to the Company approximately US$15.2 million and failing this, authorize the Company to sell on behalf of him and /or transfer to the Company the American depositary shares that he holds in the Company to pay for such settlement amount.

F-76

41.SUBSEQUENT EVENTS

On March 30, 2018, the company cooperated with Renova, a listing company in Japan, and NEC Capital, and invested to a 40.8 MW project in Japan, And the company invested JPY 529 million (USD 4.7 million) for 45% distribution of profit or loss. This project is expected to complete on October 2021.

F-77