March 17, 2011

Hanwha SolarOne Reports Fourth Quarter 2010 and Full Year 2010 Results

SHANGHAI, March 17, 2011 /PRNewswire/ -- Hanwha SolarOne Co., Ltd. ( "SolarOne" or the "Company") (Nasdaq: HSOL), a vertically integrated manufacturer of silicon ingots, wafers and photovoltaic ("PV") cells and modules in China, today reported its unaudited financial results for the quarter ended December 31, 2010.  The Company will host a conference call to discuss the results at 8:00 am Eastern Time (8:00 pm Shanghai Time) on March 17, 2011.  A slide presentation with details of the results will also be available on the Company's website prior to the call.

FOURTH QUARTER 2010 HIGHLIGHTS

  • Total net revenues were RMB2,112.7 million (US$320.1 million), a decrease of 3.3% from 3Q10, but an increase of 68.7% from 4Q09.
  • PV module shipments, including module processing services, reached 218.8 MW, a decrease of 2.3% from 223.9 MW in 3Q10, but an increase of 97.5% from 110.8 MW in 4Q09.
  • Total net revenues and PV module shipments for 4Q10 reported above are lower than the estimated total revenues and PV module shipments for 4Q10 reported in the Company's pre-announcement dated February 24, 2011.  Subsequent to the Company's pre-announcement, the Company experienced a cancellation of one order totaling 4.1 MW of PV modules, an equivalent to Euro5.4 million in revenue. This order had been shipped to the intended customer in 4Q10.  Due to the rapidly changing regulatory conditions in Europe, the customer has notified us that it could not complete the sales contract. The Company plans to sell these PV modules to other customers in a later period.
  • Average selling price ("ASP"), excluding module processing services, increased to RMB11.82 per watt (US$1.79) from RMB11.72 per watt in 3Q10, but decreased 11.2% from RMB13.31 per watt in 4Q09.
  • Gross profit decreased 13.6% to RMB428.7 million (US$64.9 million) from RMB496.4 million in 3Q10, but increased 82.0% from RMB235.6 million in 4Q09.  
  • Gross margin decreased to 20.3%, compared with 22.7% in 3Q10, primarily due to an increase in the raw material costs. Gross margin in 4Q09 was 18.8%.
  • Operating profit decreased 24.8% to RMB296.2 million (US$44.9 million) from RMB393.9 million in 3Q10, but increased from RMB127.7 million in 4Q09.  The decrease in operating income in 4Q10 from 3Q10 was primarily due to lower gross profit and higher selling expenses and research and development expenses.
  • Operating margin decreased to 14.0% from 18.0% in 3Q10, but increased from 10.2% in 4Q09.
  • Income tax expense in 4Q10 increased to RMB 148.9 million (US$ 22.6 million) compared with RMB 75.5 million in 3Q10 and RMB 7.3 million in 4Q09.  In accordance with the People's Republic of China ("PRC") income tax laws, an enterprise awarded with a High and New Technology Enterprise ("HNTE") status may be eligible to apply for a reduced Enterprise Income Tax ("EIT") rate of 15% instead of the statutory EIT rate of 25%, subject to an annual self-assessment to determine whether it continues to satisfy the criteria as an HNTE for each tax year. One of the Company's major operating subsidiaries was certified by the PRC taxation authorities as an HNTE and obtained its HNTE certificate in 2008, which is valid for a three-year period through 2010.  In the fourth quarter of 2010, the Company recognized an incremental income tax expense of RMB 116.1 million (US$17.6 million) and a corresponding liability due to the uncertainty as to whether this subsidiary met certain requirement of HNTE in 2010.  The Company did not recognize a similar uncertain tax position in the first three quarters of 2010 because the self-assessment for the 2010 tax year could only be conducted when the full-year 2010 financial statements were available in January 2011. The PRC taxation authorities may determine, within a three-year statute of limitation period starting from December 31, 2010, that this subsidiary was not eligible for applying the EIT rate of 15% for the 2010 tax year. In the absence of such determination during the three-year period, the liability for this uncertain tax position will be reversed.
  • Net income attributable to shareholders on a non-GAAP basis(1) was RMB134.6million (US$20.4million), a decrease of 50.8% from RMB273.7million in 3Q10, but an increase of 40.4% from RMB95.9 million in 4Q09.
  • Net income per basic ADS on a non-GAAP basis was RMB1.82 (US$0.28), a decrease of 60.6% from RMB4.62 in 3Q10, but an increase of 9.0% from RMB1.67 in 4Q09.  
  • Net income attributable to shareholders on a GAAP basis was RMB370.8 million (US$56.2million), compared with net loss attributable to shareholders of RMB25.2 million in 3Q10.  The Company recorded a non-cash gain of RMB255.6 million (US$38.7 million) from the change in fair value of the convertible feature of the Company's convertible bonds as compared to a non-cash loss of RMB279.2 million in 3Q10.  Net income attributable to shareholders on a GAAP basis in 4Q09 was RMB10.6 million including a non-cash loss of RMB71.3 million from the change in fair value of the convertible feature of the Company's convertible bonds.  As explained in prior quarters, the fluctuations in the fair value of the convertible feature of the Company's convertible bonds are primarily due to changes in the Company's ADS price, over which the Company has no direct control, and does not reflect the operating performance of the Company.  
  • Net income per basic ADS on a GAAP basis was RMB5.02 (US$0.76), compared with net loss per basic ADS on a GAAP basis of RMB0.43 in 3Q10 and RMB0.18 in 4Q09.
  • Annualized Return on Equity ("ROE") on a non-GAAP basis was 13.1% in 4Q10, compared with 35.3% in 3Q10 and 17.4% in 4Q09.  
  • Annualized ROE on a GAAP basis was 33.2% in 4Q10, compared with negative 2.9% in 3Q10 and 1.5 in 4Q09.

FULL YEAR 2010 HIGHLIGHTS

  • Total net revenues were RMB7,527.0 million (US$1,140.5 million), representing an increase of 99.2% from RMB3,778.3 million in 2009.
  • PV module shipments, including module processing services, reached 797.9 MW, representing an increase of 154.6% from 313.4 MW in 2009.
  • Gross profit increased to RMB1,566.3 million (US$237.3 million) from RMB436.4 million in 2009.  
  • Gross margin increased to 20.8% from 11.5% in 2009.
  • Operating profit increased to RMB1,162.9 million (US$176.2 million) from RMB125.5 million in 2009.
  • Operating margin increased to 15.5% from 3.3% in 2009.
  • Net income attributable to shareholders on a non-GAAP basis(1) was RMB798.2 million (US$120.9 million), compared with net loss attributable to shareholders of RMB 20.0 million in 2009.
  • Net income per basic ADS on a non-GAAP basis was RMB12.82 (US$1.94), compared with net loss per basic ADS of RMB0.36 in 2009.  
  • Net income attributable to shareholders on a GAAP basis was RMB757.4 million ( US$114.8 million), compared with net loss attributable to shareholders of RMB145.2 million in 2009.
  • Net income per basic ADS on a GAAP basis was RMB12.17 (US$1.84), compared with net loss per basic ADS of RMB2.65 in 2009.
  • ROE on a non-GAAP basis was 22.8% in 2010, compared with negative 0.9% in 2009.  
  • ROE on a GAAP basis was 18.9% in 2010, compared with negative 5.2% in 2009.

Dr. Peter Xie, President and CEO of Hanwha SolarOne, commented, " We concluded the year 2010 with another profitable quarter, a stronger balance sheet, and diversified our shipments towards new longer term growth markets. For the full year, our revenues nearly doubled to over $1 billion, our shipments rose 155%, and we returned to a healthy level of profitability. We enter 2011 with a high degree of enthusiasm and confidence: our capabilities and brand is strengthened with our strategic partnership with Hanwha, we have good visibility of orders into mid-year, new technology initiatives are progressing towards completion, and significant new capacity will come on stream soon enhancing our ability to meet customer demand and to improve our cost structure."

FOURTH QUARTER 2010 RESULTS

  • Total net revenues were RMB2,112.7 million (US$320.1 million), a decrease of 3.3% from RMB2,185.7 million in 3Q10, but an increase of 68.7% from RMB1,252.7 million in 4Q09. The decrease in net revenues in 4Q10 compared with 3Q10 was primarily due to lower shipments and was partially offset by higher ASP.
  • Revenue contribution from PV module processing services as a percentage of total net revenues was 8.0%, compared with 6.9% in 3Q10.
  • PV module shipments, including module processing services, reached 218.8 MW, a decrease from 223.9 MW in 3Q10, but an increase from 110.8 MW in 4Q09.

(Photo:   http://photos.prnewswire.com/prnh/20110317/LA66986-a)

(Photo:  http://photos.prnewswire.com/prnh/20110317/LA66986-b)

  • Module revenue attributable to shipments to Germany decreased to 25% in 4Q10 from 53% in 3Q10, while shipments to Italy, China, USA, Australia, France and the Netherlands increased during the quarter.
  • Average selling price ("ASP"), excluding module processing services, increased to RMB11.82 per watt (US$1.79) from RMB11.72 per watt in 3Q10, but decreased 11.2% from RMB13.31 per watt in 4Q09.  
  • Gross profit decreased 13.6% to RMB428.7 million (US$64.9 million) from RMB496.4 million in 3Q10, but increased 82.0% from RMB235.6 million in 4Q09.  
  • Gross margin decreased to 20.3% compared with 22.7% in 3Q10, primarily due to an increase in raw material costs.  Gross margin in 4Q09 was 18.8%. The decrease from 4Q10 was primarily due to the increase in the cost of silicon materials, including polysilicon and externally sourced wafers and cells.  

(Photo:  http://photos.prnewswire.com/prnh/20110317/LA66986-c)

(Photo:  http://photos.prnewswire.com/prnh/20110317/LA66986-d)

  • The blended cost of goods sold ("COGS") per watt, excluding module processing services, was US$1.41, representing a 4.4% increase from US$ 1.35 in 3Q10. The blended COGS takes into account the production cost (silicon and non-silicon) using internally sourced wafers, purchase costs and additional processing costs of externally sourced wafers and cells, as well as freight costs.
  • The production cost (including both silicon and non-silicon costs) using internal wafers was US$1.20 per watt, representing a 3.4% increase from US$1.16 per watt in 3Q10.  The increase was primarily due to the increase in polysilicon price.
  • Operating profit decreased 24.8% to RMB296.2 million (US$44.9 million) from RMB393.9 million in 3Q10, but increased from RMB127.7 million in 4Q09.  Operating margin decreased to 14.0% from 18.0% in 3Q10, but increased from 10.2% in 4Q09.
  • Operating expenses as a percentage of total net revenues were 6.3% in 4Q10, as compared with 4.7% in 3Q10 and 8.6% in 4Q09.  The higher operating expenses in 4Q10 compared with 3Q10 was primarily due to higher selling expenses and research and development expenses.
  • Interest expense was RMB40.7 million (US$6.2 million), compared with RMB39.9 million in 3Q10 and RMB39.7 million in 4Q09.  
  • The Company recorded a net foreign exchange loss of RMB 4.5 million (US$ 0.7 million), which combined a foreign exchange loss with a loss from the change in fair value of foreign currency derivatives.  The Company recorded a net foreign exchange loss of RMB34.1 million in 3Q10 and a net foreign exchange loss of RMB0.7 million in 4Q09.
  • Gain from the change in fair value of the conversion feature of the Company's convertible bonds was RMB255.6 million (US$38.7 million), compared with a loss of RMB279.2 million in 3Q10 and a loss of RMB71.3 million in 4Q09.  The fluctuations resulting from the adoption of ASC 815-40 on January 1, 2009, were primarily due to changes in the Company's ADS price during the quarter. This line item has fluctuated, and is expected to continue to fluctuate quarter-to-quarter. The Company has no direct control over the fluctuations.
  • Income tax expense in 4Q10 increased to RMB 148.9 million (US$ 22.6 million) compared with RMB 75.5 million in 3Q10 and RMB 7.3 million in 4Q09.  In accordance with the People's Republic of China ("PRC") income tax laws, an enterprise awarded with a High and New Technology Enterprise ("HNTE") status may be eligible to apply a reduced Enterprise Income Tax ("EIT") rate of 15% instead of the statutory EIT rate of 25%, subject to an annual self-assessment to determine whether it continues to satisfy the criteria as an HNTE for each tax year. One of the Company's major operating subsidiaries, was certified by the PRC taxation authorities as an HNTE and obtained its HNTE certificate in 2008, which is valid for a three-year period through 2010.  In the fourth quarter of 2010, the Company recognized an incremental income tax expense of RMB 116.1 million (US$17.6 million) and a corresponding liability due to the uncertainty as to whether this subsidiary would meet certain requirement of HNTE.  The Company had not recognized a similar uncertain tax position in prior three quarters of 2010 because the self-assessment for the 2010 tax year could only be conducted when the full-year 2010 financial statements were available in January 2011. The PRC taxation authorities may determine, within a three-year statute of limitation period starting from December 31, 2010, that this subsidiary was not eligible for applying the EIT rate of 15% for the 2010 tax year. In the absence of such determination during the three-year period, the liability for this uncertain tax position will be reversed.
  • Net income attributable to shareholders on a non-GAAP basis(1) was RMB134.6million (US$20.4million ), a decrease of 50.8% from RMB273.7 million in 3Q10, but an increase of 40.4% from RMB95.9 million in 4Q09.
  • Net income per basic ADS on a non-GAAP basis was RMB1.82 (US$0.28), a decrease of 60.6% from RMB4.62 in 3Q10, but an increase of 9.0% from RMB1.67 in 4Q09.  
  • Net income attributable to shareholders on a GAAP basis was RMB370.8 million (US$56.2million), compared with net loss attributable to shareholders of RMB25.2 million in 3Q10 and net income attributable to shareholders of RMB10.6 million in 4Q09.
  • Net income per basic ADS on a GAAP basis was RMB5.02 (US$0.76), compared with net loss per basic ADS of RMB0.43 in 3Q10 and net income per basic ADS of RMB0.18 in 4Q09.
  • Annualized ROE on a non-GAAP basis was 13.1% in 4Q10, compared with 35.3% in 3Q10 and 17.4% in 4Q09.
  • Annualized ROE on a GAAP basis was 33.2% in 4Q10, compared with negative 2.9% in 3Q10 and 1.5% in 4Q09.

FINANCIAL POSITION

As of December 31, 2010, the Company had cash and cash equivalents of RMB1,630.8 million (US$247.1 million) and net working capital of RMB3,179.9 million (US$481.8 million), compared with cash and cash equivalents of RMB1,296.7 million and net working capital of RMB2,286.5 million as of September 30, 2010.  Total short-term bank borrowings (including the current portion of long-term bank borrowings) were RMB533.9 million (US$80.9 million), compared with RMB950.5 million as of September 30, 2010.  The decrease in short-term borrowings was because the Company repaid some of its bank borrowings with the proceeds from its equity offering in November 2010.    

As of December 31, 2010, the Company had total long-term debt of RMB822.4 million (US$124.6 million), which comprised both long-term bank borrowings and convertible notes payable. The Company's long-term bank borrowings are to be repaid in installments until their maturities in 2011 and 2012.  Holders of the convertible notes have the option to require the Company to redeem the notes on January 15, 2015.

Net cash generated from operating activities in 4Q10 was RMB50.4million (US$7.6million), compared with net cash used in operating activities of RMB194.0 million in 3Q10 and RMB336.9 million in 4Q09.

As of December 31, 2010, accounts receivable were RMB1,282.8 million (US$194.4 million) compared with RMB1,289.9 million as of September 30, 2010 and RMB587.5 million as of December 31, 2009.  Days sales outstanding increased to 55 days in 4Q10 from 46 days in 3Q10 and 47 days in 4Q09.

As of December 31, 2010, inventories increased to RMB790.8 million (US$119.8 million) from RMB689.6 million as of September 30, 2010, and from RMB784.0 million as of December 31, 2009.  Days inventory was 40 days in 4Q10 compared with 35 days in 3Q10 and 71 days in 4Q10.

Capital expenditures were RMB332.7 million (US$50.4 million) in 4Q10.  For full year 2010, the total capital expenditures were RMB717.8 million (US$108.8 million).

CAPACITY EXPANSION

Details on the Company's annual production capacities and expected production capacities are as follows:

Capacity ramp-up plan



Q4 2010

Q1 2011 (Projected)

Q2 2011 (Projected)

Q3 2011 (Projected)

Q4 2011 (Projected)

Ingot

MW

400

400

450

710

800

Wafer

MW

400

400

450

700

800

Cell

MW

600

650

900

1,200

1,300

Module

MW

900

900

1,000

1,500

1,500



BUSINESS OUTLOOK

The Company provides the following guidance based on current operating trends and market conditions.

For 1Q11, the Company expects:

  • Total module shipments to be 235MW to 245MW, of which about 25% to 30% will be for PV module processing services.
  • ASP excluding PV module processing services to decrease approximately 5% from 4Q10, assuming that the average Euro/US dollar exchange rate stays at around 1.36 the rest of 1Q11.

For the full year 2011, the Company expects:

  • Module shipments ranging from 1GW to 1.2GW of which about 20-25% will be for PV module processing services.
  • Capital expenditures to be approximately US$450 million

CONFERENCE CALL

The Company will host a conference call to discuss the fourth quarter and full year of 2010 results at 8:00 AM Eastern Time (8:00 PM Shanghai Time) on March 17, 2011.

Mr. Peter Xie, CEO and President, Mr. Gareth Kung, Chief Financial Officer, and Mr. Paul Combs, Vice President of Investor Relations, will discuss the results and take questions following the prepared remarks.  

The dial-in details for the live conference call are as follows:

U.S. Toll Free Number:

+1 866 700 5192

International dial-in number:

+1 617 213 8833

China Toll Free Number (North):  

+10 800 152 1490

China Toll Free Number (South):

+10 800 130 0399

China Toll Free Number (South):

+10 800 852 1490




Passcode: HSOL



A live webcast of the conference call will be available on the investor relations section of the Company's website at: http://www.hanwha-solarone.com. A replay of the webcast will be available for one month.

A telephone replay of the call will be available for seven days after the conclusion of the conference call. The dial-in details for the replay are as follows:

  • U.S. Toll Free Number: 1 888 286 8010
  • International dial-in number: +1 617 801 6888

Passcode: 36339192

FOREIGN CURRENCY CONVERSION

The conversion in this release of Renminbi into U.S. dollars is made solely for the convenience of the reader, and is based on the exchange rate as set forth in the H.10 statistical release of the Federal Reserve Board as of December 31, 2010, which was RMB 6.6000 to US$1.00. No representation is intended to imply that the Renminbi amounts could have been, or could be, converted, realized or settled into U.S. dollars at that rate on December 31, 2010 or at any other date.  The percentages stated in this press release are calculated based on Renminbi amounts.

USE OF NON-GAAP FINANCIAL MEASURES

The Company has included in this press release certain non-GAAP financial measures, including certain line items presented on the basis that the accounting impact of ASC 815-40 had not been recorded.  The Company believes that both management and investors benefit from referring to these non-GAAP financial measures in assessing the performance of the Company and when planning and forecasting future periods. Readers are cautioned not to view non-GAAP financial measures on a stand-alone basis or as a substitute for GAAP measures, or as being comparable to results reported or forecasted by other companies, and should refer to the reconciliation of GAAP measures with non-GAAP measures also included herein.

SAFE HARBOR STATEMENT

This press release contains forward-looking statements.  These statements constitute "forward-looking" statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and as defined in the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements include 1Q and full-year 2011 estimates for PV product shipments, ASPs, production capacities and other results of operations. Forward-looking statements involve inherent risks and uncertainties and actual results may differ materially from such estimates depending on future events and other changes in business climate and market conditions.  Hanwha SolarOne disclaims any obligation to update or correct any forward-looking statements.

About Hanwha SolarOne

Hanwha SolarOne Co., Ltd. (NASDAQ: HSOL) is a leading manufacturer of solar PV cells and modules in China, focusing on delivering high quality and reliable products at competitive prices. Hanwha SolarOne produces its monocrystalline and polycrystalline products at its internationally certified, vertically-integrated manufacturing facilities. Hanwha SolarOne partners with third-party distributors, OEM manufacturers, and system integrators to sell its modules into large-scale utility, commercial and governmental, and residential/small commercial markets. Hanwha SolarOne maintains a strong global presence with local staff throughout Europe, North America, and Asia.  Hanwha SolarOne embraces environmental responsibility and sustainability by taking an active role in the photovoltaic cycle voluntary recycling program.

(1)  All non-GAAP numbers used in this press release exclude the accounting impact from the adoption of ASC 815-40, which relates to the accounting treatment for the convertible bonds.   Please refer to the attached financial statements for the reconciliation between the GAAP and non-GAAP financial results.

For further information, please contact:

   Hanwha SolarOne Co., Ltd.


          Investor Contact:

             Paul Combs

             V.P. Strategic Planning

             Building 1, 18th Floor

             1199 Minsheng Road, Shanghai, PRC 200135

             P. R. China

             Tel:  86-21-3852 1533 / Mobile:  86 138 1612 2768

             E-mail: paul.combs@hanwha-solarone.com


   Christensen


             Kathy Li

             Tel:  +1 480 614 3036

             E-mail:  kli@ChristensenIR.com


             Tip Fleming

             Tel:  +852 9212 0684

             E-mail:  tfleming@ChristensenIR.com



Hanwha SolarOne Co, Ltd.

CONSOLIDATED BALANCE SHEETS

(Amounts in thousands of Renminbi ("RMB") and U.S. dollars ("US$"))








December 31


September 30


December 31


December 31


2009


2010


2010


2010




(Unaudited)


(Unaudited)


(Unaudited)


RMB


RMB


RMB


USD

ASSETS








Current assets








Cash and cash equivalents

645,720


1,296,734


1,630,777


247,087

Restricted cash

60,539


63,858


100,490


15,226

Derivative contracts

7,360


1,910


7,489


1,135

Accounts receivable, net

587,488


1,289,932


1,282,807


194,365

Notes receivable





10,000


1,515

Inventories, net

783,973


689,566


790,773


119,814

Advance to suppliers, net

540,145


851,329


764,063


115,767

Other current assets

180,315


236,285


255,431


38,702

Deferred tax assets - net

63,115


75,734


91,611


13,880

Amount due from related parties

12,458


-


42,819


6,488









   Total current assets

2,881,113


4,505,348


4,976,260


753,979









Non-current assets








Fixed assets — net

1,586,283


1,829,395


2,084,027


315,762

Intangible assets — net

208,563


206,856


205,763


31,176

Goodwill

134,735


134,735


134,735


20,414

Deferred tax assets - net

13,789


16,239


16,759


2,539

Long-term deferred expenses

33,158


29,639


27,273


4,132

Long-term prepayment

439,617


395,007


394,283


59,741









   Total non-current assets

2,416,145


2,611,871


2,862,840


433,764









TOTAL ASSETS

5,297,258


7,117,219


7,839,100


1,187,743









LIABILITIES








Current liabilities








Derivative contracts

1,148


70,605


8,047


1,219

Short-term bank borrowings

404,764


748,010


318,919


48,321

Long-term bank borrowings, current portion

120,000


202,500


215,000


32,576

Accounts payable

441,768


528,902


478,129


72,444

Notes payable

186,921


142,509


181,265


27,464

Accrued expenses and other liabilities

191,895


356,860


404,826


61,337

Customer deposits

59,685


127,498


33,538


5,082

Deferred tax liabilities

-


766


-


-

Unrecognized tax benefit

27,385


27,385


143,473


21,738

Amount due to related parties

16,765


13,767


13,183


1,997









   Total current liabilities

1,450,331


2,218,802


1,796,380


272,178









Non-current liabilities








Long-term bank borrowings

350,000


200,000


135,000


20,455

Convertible bonds

658,653


928,369


687,435


104,157

Deferred tax liabilities

26,566


26,124


25,977


3,936









   Total non-current liabilities

1,035,219


1,154,493


848,412


128,548









TOTAL LIABILITIES

2,485,550


3,373,295


2,644,792


400,726









Redeemable ordinary shares

55


55


55


8









EQUITY








Shareholders' equity








Ordinary shares

227


252


314


48

Additional paid-in capital

2,331,797


2,877,447


3,956,953


599,538

Statutory reserves

69,564


151,541


170,000


25,758

Retained earnings

410,065


714,629


1,066,986


161,665









   Total shareholders' equity

2,811,653


3,743,869


5,194,253


787,009

Noncontrolling interest

-


-













TOTAL EQUITY

2,811,653


3,743,869


5,194,253


787,009









TOTAL LIABILITIES, MEZZANINE EQUITY AND SHAREHOLDERS' EQUITY

5,297,258


7,117,219


7,839,100


1,187,743


















0.00


0.00


0.00


0.00



Hanwha SolarOne Co, Ltd.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Amounts in thousands of Renminbi ("RMB") and U.S. dollars ("US$"),

except for number of shares and per share data)
















For the three months ended


For the years ended


December 31


September 30


December 31


December 31


December 31


December 31


December 31


2009


2010


2010


2010


2009


2010


2010


(Unaudited)


(Unaudited)


(Unaudited)


(Unaudited)




(Unaudiued)


(Unaudiued)


RMB


RMB


RMB


USD


RMB


RMB


USD

Net revenue














Photovoltaic modules

1,153,184


1,988,801


1,851,940


280,597


3,375,638


6,658,642


1,008,885

Photovoltaic cells

12,567


32,909


18,886


2,862


38,396


100,566


15,237

PV cells processing

-


-


-


-


-


-


-

PV modules processing

78,909


151,037


168,280


25,497


336,485


644,037


97,581

Wafer processing

774


(1,922)


-


-


1,830


-


-

Raw materials

7,277


12,832


-


-


25,967


23,342


3,537

System integration

-


-


68,431


10,368


-


68,431


10,368

Others

-


2,092


5,167


783


-


31,975


4,845















Net revenues

1,252,711


2,185,749


2,112,704


320,107


3,778,316


7,526,993


1,140,453















Cost of revenue









-





Photovoltaic modules

(927,266)


(1,529,838)


(1,458,188)


(220,938)


(3,012,428)


(5,239,628)


(793,883)

Photovoltaic cells

(15,317)


(23,260)


(18,135)


(2,748)


(53,516)


(77,177)


(11,693)

PV cells processing

-


-


-


-


-


-


-

PV modules processing

(67,205)


(124,446)


(146,358)


(22,176)


(248,832)


(537,314)


(81,411)

Wafer processing

(965)


2,137


-


-


(2,339)


-


-

Raw materials

(6,388)


(13,129)


-


-


(24,821)


(23,582)


(3,573)

System integration

-


-


(56,114)


(8,502)


-


(56,114)


(8,502)

Others

-


(857)


(5,258)


(797)


-


(26,833)


(4,066)















Cost of revenues

(1,017,141)


(1,689,393)


(1,684,053)


(255,161)


(3,341,936)


(5,960,648)


(903,128)















Gross profit

235,570


496,356


428,651


64,946


436,380


1,566,345


237,325















Operating expenses













-

Selling expenses

(46,114)


(44,195)


(65,143)


(9,870)


(105,454)


(178,057)


(26,978)

G&A expenses

(50,866)


(55,716)


(54,760)


(8,297)


(180,989)


(190,594)


(28,878)

R&D expenses

(12,843)


(4,672)


(14,622)


(2,215)


(32,025)


(53,500)


(8,106)

Government grant

2,000


2,166


2,121


321


7,571


18,755


2,841















   Total operating expenses

(107,823)


(102,417)


(132,404)


(20,061)


(310,897)


(403,396)


(61,121)















Operating profit (loss)

127,747


393,939


296,247


44,885


125,483


1,162,949


176,204














-

Interest expenses

(39,662)


(39,870)


(40,658)


(6,160)


(157,907)


(161,677)


(24,497)

Interest income

1,298


1,962


2,350


356


5,002


6,141


930

Exchange gain (loss)

(14,694)


76,220


(36,222)


(5,488)


(23,814)


(89,272)


(13,526)

Gain (loss) on change in fair value of derivative

15,397


(108,042)


37,505


5,683


9,594


77,531


11,747

Gain (loss) on change in conversion feature fair value of convertible bond

(71,279)


(279,228)


255,591


38,726


(73,887)


31,623


4,791

Other income

1,265


5,086


7,063


1,070


6,286


24,353


3,691

Other expenses

(2,046)


(1,291)


(2,133)


(323)


(11,835)


(5,903)


(894)

Government grant



1,503


-


-


90


9,595


1,454















Net income (loss) before income tax

18,026


50,279


519,743


78,749


(120,988)


1,055,340


159,900















Income tax expenses

(7,338)


(75,525)


(148,927)


(22,565)


(23,928)


(297,983)


(45,149)















Net income (loss)

10,688


(25,246)


370,816


56,184


(144,916)


757,357


114,751















Net loss attributable to noncontrolling interest

67


-


-


-


311




-















Net income (loss) attributable













-

to shareholders

10,621


(25,246)


370,816


56,184


(145,227)


757,357


114,751











































Net income (loss) per share














Basic

0.04


(0.09)


1.00


0.15


(0.53)


2.43


0.37

Diluted

0.04


(0.09)


0.35


0.05


(0.53)


2.36


0.36















Shares used in computation














Basic

287,982,207


296,202,329


369,518,133


369,518,133


274,067,760


311,263,308


311,263,308

Diluted

288,210,311


296,202,329


415,850,842


415,850,842


274,067,760


357,272,605


357,272,605





























Net income (loss) per ADS














Basic

0.18


(0.43)


5.02


0.76


(2.65)


12.17


1.84

Diluted

0.18


(0.43)


1.76


0.27


(2.65)


11.82


1.79















ADSs used in computation














Basic

57,596,441


59,240,466


73,903,627


73,903,627


54,813,552


62,252,662


62,252,662

Diluted

57,642,062


59,240,466


83,170,168


83,170,168


54,813,552


71,454,521


71,454,521




For the three months ended


For the twelve months ended




December 31,2009


September 30, 2010


December 31, 2010


December 31, 2010


December 31, 2010


December 31, 2010

December 31,2009




(RMB million)


(RMB million)


(RMB million)


(US$ million)


(RMB million)


(US$ million)

(RMB million)


















Non-GAAP net income/(loss)

95.9


273.7


134.6


20.4


798.2


120.9

(20.0)


















Fair value changes of the conversion features of the Convertible bonds

(71.3)


(279.2)


255.6


38.7


31.6


4.8

(73.9)


















Accretion of interest of the Convertible bonds

(14.0)


(19.7)


(19.4)


(2.9)


(72.4)


(11.0)

(51.3)


















GAAP net income/(loss)

10.6


(25.2)


370.8


56.2


757.4


114.8

-145.2

















































For the three months ended


For the twelve months ended




December 31,2009


September 30, 2010


December 31, 2010


December 31, 2010


December 31, 2010


December 31, 2010

December 31, 2009




(RMB million)


(RMB)


(RMB)


(USD)


(RMB)


(USD)

(RMB)


















Non GAAP net income per ADS - Basic

1.66


4.62


1.82


0.28


12.82


1.94

(0.36)


















Fair value changes of the conversion features of the Convertible bonds

(1.24)


(4.71)


3.46


0.52


0.51


0.08

(1.35)


















Accretion of interest of the Convertible bonds

(0.24)


(0.33)


(0.26)


(0.04)


(1.16)


(0.18)

(0.94)


















Net profit contributed to shareholders per ADS - Basic

0.18


(0.43)


5.02


0.76


12.17


1.84

(2.65)


















ADS (Basic)

57,596,441


59,240,466


73,903,627


73,903,627


62,252,662


62,252,662

54,813,552



















For the three months ended


Annualized for  Q4 2009


Annualized for Q3 2010


Annualized for Q4 2010

For the twelve months ended


For the twelve months ended


December 31,2009


September 30, 2010


December 31, 2010


December 31,2009


September 30, 2010


December 31, 2010

December 31, 2010


December 31,2009
















Non-GAAP Return on Equity

4.4%


8.8%


3.3%


17.4%


35.3%


13.1%

22.8%


-0.9%
















Fair value changes of the conversion features of the Convertible bonds

-3.3%


-9.0%


5.5%


-13.3%


-35.9%


21.8%

-2.1%


-2.5%
















Accretion of interest of the Convertible bonds

-0.7%


-0.6%


-0.4%


-2.6%


-2.3%


-1.7%

-1.8%


-1.8%
















GAAP Return on equity

0.4%


-0.7%


8.3%


1.5%


-2.9%


33.2%

18.9%


-5.2%



Hanwha SolarOne Co, Ltd.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands of Renminbi ("RMB") and U.S. dollars ("US$"))











For three months ended

For the years ended




December 31, 2009

September 30, 2010

December 31,2010

December 31,2010

December 31, 2009

December 31,2010

December 31,2010




(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)


(Unaudited)

(Unaudited)




RMB

RMB

RMB

USD

RMB

RMB

USD

Cash flow from operating activities









Net income (loss)

10,688

(25,246)

370,816

56,184

(144,916)

757,357

114,751












Adjustments to reconcile net income (loss) to net cash










provided (used) in operating activities:










Unrealised financial derivative

(47,701)

134,483

(68,138)

(10,324)

27,661

6,769

1,026



Amortization of convertible bonds discount

13,933

14,475

14,657

2,221

50,788

60,405

9,152



Changes in fair value of conversion feature of convertible
 bonds

71,279

279,228

(255,591)

(38,726)

73,887

(31,623)

(4,791)



Loss from disposal of fixed assets

96

133

139

21

719

957

145



Depreciation and amortization

43,072

48,064

51,490

7,802

153,174

187,587

28,422



Amortization of long-term deferred expense

1,570

1,802

1,816

275

6,670

7,194

1,090



Provision for doubtful debt of advance to suppliers

163

(46)

-

-

234,724

117

18



Reversal of doubtful debt for accounts receivable

3,723

-

-

-

3,723

(278)

(42)



Provision for doubtful debt of accounts receivable

-

-

(1,006)

(152)


-

-



Write down of inventory

40,341

41,498

35,266

5,343

282,574

134,489

20,377



Stock compensation expense

8,509

10,586

6,736

1,021

42,671

31,963

4,843



Warranty provision

2,744

21,705

9,925

1,504

24,824

58,230

8,823



Deferred tax benefit

(854)

(15,939)

(17,310)

(2,623)

(15,792)

(32,055)

(4,857)



Unrecognized tax benefit

(1,082)

-

116,089

17,589

-

116,089

17,589


Changes in operating assets and liabilities


-




-

-



Restricted cash

5,166

37,044

(8,559)

(1,297)

2,011

(5,298)

(803)



Inventory

(15,899)

(139,479)

(136,472)

(20,678)

(334,839)

(141,288)

(21,407)



Account receivables

116,024

(460,992)

(1,870)

(283)

(271,674)

(705,041)

(106,824)



Advances to suppliers

(165,766)

(310,268)

87,266

13,222

370,745

(224,035)

(33,945)



Prepaid expense

18,663

52,510

25,378

3,845

86,375

83,934

12,717



Other current assets

84,065

(63,457)

(44,525)

(6,746)

215,059

(159,052)

(24,099)



Long-term prepayment

13,721

18,198

725

110

(439,617)

45,335

6,869



Amount due from related parties

30,132

96,219

(42,819)

(6,488)

(12,439)

(30,361)

(4,600)



Accounts payable

51,946

42,067

(37,112)

(5,623)

238,804

(17,908)

(2,713)



Accrued expenses and other liabilities

10,811

64,461

38,041

5,764

33,648

154,680

23,436



Customer deposits

38,339

4,755

(93,960)

(14,236)

50,191

(26,147)

(3,962)



Amount due to related parties

3,201

(45,811)

(584)

(88)

10,362

(3,582)

(543)











Net cash provided (used) in operating activities

336,884

(194,010)

50,398

7,637

689,333

268,438

40,672





















Cash flows from investing activities










Acquisition of fixed assets

(27,468)

(103,397)

(279,523)

(42,352)

(260,054)

(634,506)

(96,137)



Change of restricted cash

65,832

(440)

(28,074)

(4,254)

25,587

(34,653)

(5,250)



Acquisition of intangible assets

(125)

-

-

-

(438)

(1,678)

(254)



Acquisition of subsidiaries

(850)

-

-

-

(89,818)

-

-











Net cash provided (used) in investing activities

37,389

(103,837)

(307,597)

(46,606)

(324,723)

(670,837)

(101,641)





















Cash flows from financing activities










Proceeds from share lending

-

21

-

-

-

21

3



Proceeds from exercise of stock option

22

4,263

2,048

310

1,103

12,166

1,843



Proceeds from issuance of ordinary shares

70,387

510,330

1,070,784

162,240

148,994

1,581,114

239,563



Proceeds from short-term bank borrowings

65,097

460,713

32,687

4,953

1,900,675

1,098,911

166,502



Payment of short term bank borrowings

(674,071)

(243,688)

(461,777)

(69,966)

(2,594,743)

(1,184,756)

(179,508)



Proceeds from long term bank borrowings

-

-

-

-

300,000

-

-



Payment for long term bank borrowings

(7,500)

(22,500)

(52,500)

(7,955)

(30,000)

(120,000)

(18,182)



Utilization of notes payable

27,726

-

-

-

147,580

-

-



Profit distribution

(3,400)

-

-

-

(3,400)

-

-





-






Net cash provided (used) by financing activities

(521,739)

709,139

591,242

89,582

(129,791)

1,387,456

210,221











Unrealised foreign exchange gain/loss


















Net increase (decrease) in cash and cash equivalents

(147,466)

411,292

334,043

50,612

234,819

985,057

149,251











Cash and cash equivalents at the beginning of period

793,186

885,442

1,296,734

196,475

410,901

645,720

97,836











Cash and cash equivalents at the end of period

645,720

1,296,734

1,630,777

247,087

645,720

1,630,777

247,087




-

0


-

-


-







-



-

Supplemental disclosure of cash flow information:




-



-


Interest paid

21,268

31,438

11,621

1,761

156,143

89,855

13,614


Income tax paid

30,978

41,589

79,080

11,982

39,159

160,615

24,336


Realized gain (loss) from derivative contracts

(32,305)

26,443

(30,633)

(4,641)

37,255

84,301

12,773

Supplemental schedule of non-cash activities:




-


-

-


Acquisition of fixed assets included in accounts payable, accrued expenses and other liabilities

(2,803)

9,694

25,096

3,802

21,842

48,613

7,366


Conversion of CB into ordinary shares

-

-

-

-

179

-

-


Transfer of unamortized debt issuance costs to equity










upon conversion of CB into ordinary shares

-

-

-

-

(5)

-

-



SOURCE Hanwha SolarOne Co., Ltd.

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