Charisma Energy Services Limited FY2025: Financial Results and Analysis

Charisma Energy Services Limited, a Singapore-listed renewable energy operator, has released its condensed interim financial statements for the fourth quarter and full year ended 31 December 2025. The company completed a major restructuring in 2025, including significant debt reduction, recapitalization, and a return to profitability. This article provides a detailed analysis of the reported results, key financial metrics, and business developments, offering insights for investors.

Key Financial Metrics and YoY/QoQ Analysis

Historical Performance and Exceptional Items

• Revenue: FY2025 revenue decreased by 15% YoY primarily due to lower rainfall in Sri Lanka, a decrease in generation output, a lower average tariff rate after power purchase agreement renewals, and curtailment imposed by the national grid operator.
• Profit Reversal: Despite lower revenue, Charisma Energy posted an exceptional turnaround to a net profit of \$42.21 million (FY2024: \$1.24 million net loss). This swing was almost entirely due to a one-off gain of \$42.1 million arising from debt forgiveness and completion of a major restructuring exercise.
• Gross Margin: Gross profit margin remained stable at 70-78% throughout the periods, indicating cost controls and resilient operating efficiency despite revenue headwinds.
• Debt Restructuring: Total liabilities dropped dramatically to \$5.4 million (FY2024: \$72.3 million) following the restructuring, with net assets swinging positive to \$13.3 million (FY2024: net liabilities of \$50.9 million).
• Cash Position: Cash and bank balances increased from \$0.2 million to \$10.7 million, reflecting the recapitalization and lifting of cash restrictions post-restructuring.

Dividends

No dividend was declared for the current financial period or the previous financial year. The board stated that cash will be preserved for future investments and acquisition opportunities.

Major Corporate Actions and Events

• Debt Restructuring: A successful scheme of arrangement reduced debts from \$70.6 million to \$4.5 million. This involved the issuance of new shares, settlement shares, and a convertible loan from Cosmic Marvel International Limited (CMIL), the controlling shareholder.
• Share Consolidation: On 16 June 2025, every 1,000 existing shares were consolidated into one share, resulting in 273.2 million new shares (from 13.7 billion previously).
• Convertible Debt Security: A 5-year, S\$8.2 million (US\$6.4 million) convertible loan agreement was entered with CMIL, convertible into shares at S\$0.0842 per share.
• Strike-off of Dormant Subsidiaries: Three dormant subsidiaries were struck off to streamline the group structure.
• Divestment: The Yichang solar asset was transferred for the benefit of scheme creditors, resulting in the derecognition of deferred consideration receivables.

Macroeconomic and Industry Developments

• Renewable Energy Outlook in Sri Lanka: The Ceylon Electricity Board targets 70% renewables by 2030, with steady demand growth of 4.5% per annum expected.
• Climate Risks: The group’s mini-hydro power plants are exposed to weather volatility. Cyclone Ditwah in December 2025 temporarily shut down one plant, causing some lost revenue.
• Sector Trends in China: The report highlights risks from rising raw material costs (notably silver for PV modules, up 48% in two months) and the announced phase-out of China’s VAT export rebate for solar products, which may increase costs for future projects.

Business Developments and Outlook

• Sri Lanka Focus: While Sri Lanka remains the core focus, the company is seeking shareholder approval (EGM on 2 March 2026) to diversify into new jurisdictions and activities and to change its name to Khen Energy Limited.
• Growth Projects: A new 5MW solar plant in Sri Lanka is expected to be commissioned in 2H 2026, and the group has won a Letter of Award to build and operate a grid-connected battery storage system.

Related Party Transactions and Fund Flows

• A significant portion of interest expenses was paid to CMIL, the controlling shareholder, but these were not classified as interested person transactions at the time of the loan agreement.
• All proceeds from the S\$13.6 million subscription were fully allocated to debt capitalization, settlement of liabilities, transaction expenses, and working capital, with no outstanding unutilized balances.

Errors, Inconsistencies, and Asset Revaluation

• There were no reported errors or inconsistencies in the financials.
• There was no asset revaluation or delay in the process.

Chairman’s Statement

No explicit Chairman’s Statement was provided in the condensed interim report.

Directors’ Remuneration

The report does not disclose directors’ pay or remuneration.

Conclusion and Investment Recommendations

Overall Assessment: Charisma Energy Services has executed a dramatic turnaround, moving from financial distress and net liabilities to a stable, positive net asset position. This was achieved through a sweeping restructuring, debt forgiveness, recapitalization, and a focus on core Sri Lankan renewable energy operations. The company is now leaner, with a cleaner balance sheet, improved cash position, and new growth projects in the pipeline.

However, the underlying business remains exposed to weather and tariff risk in Sri Lanka, and core operating profit (excluding the one-off restructuring gain) would have been modest. No dividends are being paid, and future expansion will depend on successful project execution and navigating sector risks such as commodity price increases and regulatory changes.

Investor Recommendations

• If you currently hold Charisma Energy stock:
  • The company has significantly de-risked its balance sheet and is positioned for future growth, but the investment thesis now shifts to execution of new projects and expansion beyond Sri Lanka. Consider holding your position to participate in the potential upside, especially if you are comfortable with emerging market and renewable energy sector risks. Closely monitor project progress, regulatory developments, and quarterly earnings for continued operational improvement.
• If you do not currently hold Charisma Energy stock:
  • The restructuring has removed imminent insolvency risk, and the company is now in a healthier financial position. However, prospective investors should be aware that the exceptional profit in FY2025 was due to one-off gains, and core revenues and profits have declined. Consider initiating a position only if you are optimistic about the company’s growth strategy, the Sri Lankan renewable energy market, and are willing to accept the risks of project execution and macroeconomic uncertainty.

Disclaimer: This analysis is based solely on information provided in the company’s official filings and does not constitute investment advice. All investments are subject to risk, including loss of principal. Please consult your financial advisor before making investment decisions.

View CharismaEnergy Historical chart here