March 15, 2012

Hanwha SolarOne Reports Fourth Quarter 2011 and Full Year 2011 Results

SHANGHAI,  March 15, 2012 /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, 2011.  The Company will host a conference call to discuss the results at 8:00 am Eastern Time (8:00 pm Shanghai Time) on March 15, 2012.  A slide presentation with details of the results will also be available on the Company's website prior to the call.

FOURTH QUARTER 2011 HIGHLIGHTS

  • Total net revenues were RMB978.3 million (US$155.4 million), a decrease of 31.9% from 3Q11, and a decrease of 53.8% from 4Q10.
  • PV module shipments, including module processing services, were 189.1 MW, a decrease of 5.9% from 200.9 MW in 3Q11, and a decrease of 13.6% from 218.8 MW in 4Q10.
  • Average selling price ("ASP"), excluding module processing services, decreased to RMB6.29 per watt (US$1.00) from RMB7.86 per watt in 3Q11, and decreased from RMB11.82 per watt in 4Q10.
  • The Company recorded certain non-cash charges totaling RMB596.7 million (US$94.8 million), including RMB119.8 million (US$19.0 million) from inventory write-down, RMB342.2 million (US$54.4 million) from provisions for advance payments on the Company's purchase commitment under long-term supply contracts, and RMB134.7 million (US$21.4 million) from goodwill impairment.
  • Gross loss increased 289.5% to RMB604.6 million (US$96.1 million) from a gross loss of RMB155.2 million in 3Q11, compared to a gross profit of RMB465.0 million in 4Q10. Gross loss in 4Q11 included the non-cash charges from inventory write-down and provisions for advance payments associated with long-term supply contracts totaling RMB407.5 million (US$64.7 million).
  • Gross margin decreased to negative 61.8%, compared with negative 10.8% in 3Q11, due to both the lower ASP and the non-cash charges from inventory write-down and provisions for advance payments associated with long-term supply contracts. Gross margin in 4Q10 was positive 21.9%. Gross margin excluding the aforementioned provisions would have been negative 20.1% in 4Q11.
  • Operating loss increased by 206.7% to RMB1,005.2 million (US$159.7 million) from an operating loss of RMB327.8 million in 3Q11, compared to an operating profit of RMB302.5 million in 4Q10.  The increase in operating loss in 4Q11 from 3Q11 was primarily due to the significantly higher gross loss, higher selling and general and administrative expenses, and RMB134.7 million (US$21.4 million) from goodwill impairment.
  • Operating margin decreased to negative 102.8% from negative 22.8% in 3Q11, compared with positive 14.3% in 4Q10.
  • Net loss attributable to shareholders on a non-GAAP basis(1) was RMB862.3 million (US$137.0 million), compared with net loss of RMB295.7 million in 3Q11 and net income of RMB250.7 million in 4Q10.
  • Net loss per basic ADS on a non-GAAP basis was RMB10.22 (US$1.62), compared with net loss per basic ADS of RMB3.51 in 3Q11 and net income per ADS on a non-GAAP basis of RMB3.39 in 4Q10.  
  • Net loss attributable to shareholders on a GAAP basis was RMB832.9 million (US$132.3 million), compared with net loss attributable to shareholders on a GAAP basis of RMB177.6 million in 3Q11.  The Company recorded a non-cash gain of RMB33.2 million (US$5.3 million) from the change in fair value of the convertible feature of the Company's convertible bonds as compared to a non-cash gain of RMB131.4 million in 3Q11.  Net income attributable to shareholders on a GAAP basis in 4Q10 was RMB370.8 million, including a non-cash gain of RMB255.6 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 loss per basic ADS on a GAAP basis was RMB9.88 (US$1.57), compared with net loss per basic ADS on a GAAP basis of RMB2.11 in 3Q11 and a net income per basic ADS on a GAAP basis of RMB5.02 in 4Q10.
  • Annualized Return on Equity ("ROE") on a non-GAAP basis was negative 81.5% in 4Q11, compared with negative 24.6% in 3Q11 and positive 24.1% in 4Q10.  
  • Annualized ROE on a GAAP basis was negative 70.6% in 4Q11, compared to negative 13.6% in 3Q11 and positive 33.2% in 4Q10.

FULL YEAR 2011 HIGHLIGHTS

  • Total net revenues were RMB6,416.5 million (US$1,019.5 million), representing a decrease of 15.0% from RMB7,548.5 million in 2010.
  • PV module shipments, including module processing services, reached 844.4 MW, representing an increase of 5.8% from 797.9 MW in 2010. Module processing services accounted for 8.5% of total shipment revenues in 2011.
  • The Company recorded total non-cash charges of RMB835.1 million (US$132.7 million), including RMB358.1 million (US$56.9 million) from inventory write-down as a result of a lower of cost or market assessment and a regular provision for obsolescence, RMB342.2 million (US$54.4 million) from provisions for advance payments associated with long-term supply contracts, and RMB134.7 million (US$21.4 million) from goodwill impairment. The inventory write-down and a portion of the provisions for advance payments were classified in cost of goods sold. The remaining provisions for advance payments and the goodwill impairment were classified as operating expenses.
  • Gross loss in 2011 was RMB217.1 million (US$34.5 million), compared with a gross profit of RMB1,679.0 million in 2010.  
  • Gross margin was negative 3.4%, compared with positive 22.2% in 2010.
  • Operating loss for 2011 was RMB1,096.4 million (US$174.2 million), compared with an operating profit of RMB1,184.5 million in 2010.
  • Operating margin decreased to negative 17.1%, compared with positive 15.7% in 2010.
  • Net loss attributable to shareholders on a non-GAAP basis(1) was RMB1,068.5 million (US$169.8 million), compared with net income attributable to shareholders of RMB914.3 million in 2010.
  • Net loss per basic ADS on a non-GAAP basis was RMB12.71 (US$2.03), compared with net income per basic ADS of RMB14.68 in 2010.  
  • Net loss attributable to shareholders on a GAAP basis was RMB930.1 million (US$147.8 million), compared with net income attributable to shareholders of RMB757.4 million in 2010.
  • Net loss per basic ADS on a GAAP basis was RMB11.06 (US$1.76), compared with net income per basic ADS of RMB12.17 in 2010.
  • ROE on a non-GAAP basis was negative 24.8% in 2011, compared with positive 25.7% in 2010.  
  • ROE on a GAAP basis was negative 19.6% in 2011, compared with positive 18.9% in 2010.

Mr. Ki-Joon HONG, Chairman and CEO of Hanwha SolarOne, commented, "The year 2011 was a period of adjustment and consolidation for the industry. Excess capacity throughout the solar value chain, combined with incentive reductions in key markets, drove selling prices down at a rate faster than input costs, resulting in pressure on profitability. We believe the Company continued to make progress in a number of areas, including growing synergies with our largest shareholder Hanwha. We continued to invest in branding, technology, management systems and people. We also made progress in reducing non-poly processing costs in spite of reduced utilization, penetrated new important growth markets including the US and China, and increased shipments nearly 20%. Hanwha remains unwavering in its support for the solar market overall and for our Company. The business environment will remain challenging for much, if not all, of 2012. Our balance sheet is strong and our access to additional capital remains in place. Looking forward, we believe that lower prices will drive additional demand, the industry will consolidate at an accelerated pace, and we will exit this downturn in a strong competitive position."

FOURTH QUARTER 2011 RESULTS

  • Total net revenues were RMB978.3 million (US$155.4 million), a decrease of 31.9% from RMB1,437.3 million in 3Q11, and a decrease of 53.8% from RMB2,119.0 million in 4Q10. The decrease in total net revenues in 4Q11 compared with 3Q11 was primarily due to lower shipments and reduced ASP.
  • Revenue contribution from PV module processing services as a percentage of total net revenues was 8.9%, compared with 7.2% in 3Q11.
  • PV module shipments, including module processing services, were 189.1 MW, a decrease from 200.9 MW in 3Q11, and a decrease from 218.8 MW in 4Q10.

(Photo: http://photos.prnewswire.com/prnh/20120315/LA70856-a)

(Photo: http://photos.prnewswire.com/prnh/20120315/LA70856-b)

  • Module revenue attributable to shipments to the U.S. grew from 13% in 3Q11 to 33% in 4Q11, due to a spike in demand before the expiration of cash grant from the government. The China market remained solid for the Company and increased from 7% in 3Q11 to 13% of module revenue in 4Q11. India, a relatively new and potentially attractive market for the Company, rose to 11% of module revenue in 4Q11.  Module revenue attributable to shipments to Germany decreased to 23% in 4Q11 from 45% in 3Q11, while module revenue attributable to shipments to Italy remained stable at 2% as compared to 3Q11. In 2011, module revenue attributable to shipments to Europe, Middle East and Africa (EMEA) were 53% of the total module revenue, with Asia accounting for 20%, North America 19% and Australia 8%.
  • Average selling price ("ASP"), excluding module processing services, decreased to RMB6.29 per watt (US$1.00) from RMB7.86 per watt in 3Q11 from RMB11.82 per watt in 4Q10.  
  • Gross loss of 4Q11 was RMB604.6 million (US$96.1 million), compared with a gross loss of RMB155.2 million in 3Q11 and a gross profit of RMB465.0 million in 4Q10.  
  • Gross margin decreased to negative 61.8%, compared with negative 10.8% in 3Q11, due to both the lower ASP and the non-cash charges from inventory write-down and provisions for advance payments on the Company's purchase commitment under long-term supply contracts. Gross margin in 4Q10 was 21.9%.

(Photo: http://photos.prnewswire.com/prnh/20120315/LA70856-c)

(Photo: http://photos.prnewswire.com/prnh/20120315/LA70856-d)

  • The blended cost of goods sold ("COGS") per watt, excluding module processing services, was US$1.61 (including $0.45 non-cash charges from inventory write-down and provisions for advance payments associated with long-term supply contract), representing a 19.3% increase from US$1.35 in 3Q11. 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. Excluding non-cash charges, the Company would have achieved a 1.7% reduction in blended COGS to $1.16.
  • The production cost (including both silicon and non-silicon costs) using internally sourced wafers was US$1.03 per watt, representing a 8.8% decrease from US$1.13 per watt in 3Q11.  The decrease was primarily due to reduced polysilicon costs as well as operational improvements.
  • Operating loss of 4Q11 was RMB1,005.2 million (US$159.7 million), compared with an operating loss of RMB327.8 million in 3Q11 and an operating profit of RMB302.5 million in 4Q10. Operating margin decreased to negative 102.8% from negative 22.8% in 3Q11, compared to positive 14.3% in 4Q10.
  • Operating expenses as a percentage of total net revenues were 40.9% in 4Q11, compared with 12.0% in 3Q11 and 7.7% in 4Q10.  The higher operating expenses in 4Q11 compared with 3Q11 was primarily due to higher selling expenses, general and administrative expenses, and the adverse impact from RMB54.5 million (US$8.7 million) provisions for advance payments associated with long-term supply contracts as well as RMB134.7 million (US$21.4 million) goodwill impairment.
  • Interest expense was RMB41.7 million (US$6.6 million), compared with RMB47.2 million in 3Q11 and RMB40.7 million in 4Q10.  
  • The Company recorded a net loss of RMB0.1 million (US$0.02 million), which combined a foreign exchange loss with a loss from the change in fair value of derivatives.  The Company recorded a net gain of RMB0.4 million in 3Q11 and a net gain of RMB1.3 million in 4Q10 for the foreign exchange loss and the gain from change in fair value of derivatives.
  • Gain from the change in fair value of the conversion feature of the Company's convertible bonds was RMB33.2 million (US$5.3 million), compared with RMB131.4 million in 3Q11 and RMB255.6 million in 4Q10.  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 benefit in 4Q11 increased to RMB179.9 million (US$28.6 million), compared with RMB65.4 million in 3Q11 and income tax expense of RMB148.9 million in 4Q10.
  • Net loss attributable to shareholders on a non-GAAP basis(1) was RMB862.3 million (US$137.0 million), compared with a net loss attributable to shareholders of RMB295.7 million in 3Q11 and a net income attributable to shareholders of RMB250.7 million in 4Q10.
  • Net loss per basic ADS on a non-GAAP basis was RMB10.22 (US$1.62), compared with net loss per basic ADS on a non-GAAP basis of RMB3.51 in 3Q11 and net income per basic ADS on a non-GAAP basis of RMB3.39 in 4Q10.  
  • Net loss attributable to shareholders on a GAAP basis was RMB832.9 million (US$132.3 million), compared with net loss attributable to shareholders of RMB177.6 million in 3Q11 and net income attributable to shareholders of RMB370.8 million in 4Q10.
  • Net loss per basic ADS on a GAAP basis was RMB9.88 (US$1.57), compared with net loss per basic ADS of RMB2.11 in 3Q11 and net income per basic ADS of RMB5.02 in 4Q10.
  • Annualized ROE on a non-GAAP basis was negative 81.5% in 4Q11, compared with negative 24.6% in 3Q11 and positive 24.1% in 4Q10.
  • Annualized ROE on a GAAP basis was negative 70.6% in 4Q11, compared with negative 13.6% in 3Q11 and positive 33.2% in 4Q10.

FINANCIAL POSITION

As of December 31, 2011, the Company had cash and cash equivalents of RMB1,976.6 million (US$314.0 million) and net working capital of RMB908.3 million (US$144.3 million), compared with cash and cash equivalents of RMB1,835.2 million and net working capital of RMB1,778.2 million as of September 30, 2011.  Total short-term bank borrowings (including the current portion of long-term bank borrowings) were RMB2,006.9 million (US$318.9 million), compared with RMB1,683.7 million as of September 30, 2011.  The increase in short-term borrowings was primarily for working capital needs.

As of December 31, 2011, the Company had total long-term debt of RMB1,851.0 million (US$294.1 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 ranging from 2 to 5 years.  Holders of the convertible notes have the option to require the Company to redeem the notes beginning on January 15, 2015.

Net cash generated from operating activities in 4Q11 was RMB311.3 million (US$49.5 million), compared with net cash used in operating activities of RMB432.1 million in 3Q11 and net cash generated from operating activities of RMB50.4 million in 4Q10.

As of December 31, 2011, accounts receivable were RMB537.5 million (US$85.4 million), compared with RMB1,252.5 million as of September 30, 2011 and RMB1,282.8 million as of December 31, 2010.  Days sales outstanding increased slightly to 82 days in 4Q11 from 80 days in 3Q11 and 55 days in 4Q10. The decline in receivables from 3Q11 to 4Q11 reflects lower shipments and revenues, and expedited collection of receivables. As of December 31, 2011, inventories decreased to RMB684.0 million (US$108.7 million) from RMB1,185.3 million as of September 30, 2011, and from RMB790.8 million as of December 31, 2010.  Days inventory was 53 days in 4Q11 compared with 59 days in 3Q11 and 40 days in 4Q10.

Capital expenditures were RMB262.3 million (US$41.7 million) in 4Q11.  For full year 2011, total capital expenditures were RMB2,437.9 million (US$387.3 million).

The Company has from time to time been buying back its convertible bonds since January 1, 2012 and may do so in the future, subject to market conditions and other factors. The Company has purchased approximately $50 million in face value year-to-date.

CAPACITY EXPANSION

As of December 31, 2011, the Company had production capacities of 800 MW for ingot and wafer, 1.3 GW for cell and 1.5 GW for module. The Company currently has no near-term plan to add additional capacities. Management will review expansion needs in the future in line with changes in overall market demand.

BUSINESS OUTLOOK

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

For the full year 2012, the Company expects:

  • Module shipments of approximately 1 GW of which about 10-15% will be for PV module processing services.
  • Capital expenditures of $100 million depending on demand and other market conditions.

CONFERENCE CALL

The Company will host a conference call to discuss the fourth quarter and full year of 2011 results at 8:00 AM Eastern Time (8:00 PM Shanghai Time) on March 15, 2012.

Mr. Ki-Joon HONG, Chairman and CEO; Mr. Hee Cheul KIM, President; Mr. Dong Kwan KIM, Chief Strategy Officer; Mr. Jung Pyo SEO, 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:

1 866 519 4004

 

* U.S. New York local number:

1 718 354 1231  

 

* International dial-in number:

+65 6723 9381

 

* China Toll Free Number:

800 819 0121

 
 

400 620 8038

 
     

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:

1 866 214 5335

 

* International dial-in number:

+1 612 8235 5000

 
     

Passcode: 55275126

   
   

 

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, 2011, which was RMB6.2939 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, 2011 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 2012 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 vertically-integrated manufacturer of silicon ingots, wafers, PV cells and modules. Hanwha SolarOne offers high-quality, reliable products and services at competitive prices. Partnering with third-party distributors, OEM manufacturers, and systems integrators, Hanwha SolarOne serves the utility, commercial, government, and residential markets. The Company maintains a strong presence worldwide, with employees located throughout Europe, North America and Asia, and embraces environmental responsibility and sustainability, with an active role in the voluntary photovoltaic recycling program. Hanwha Group, Hanwha SolarOne's largest shareholder, is active in solar project development and financing, and plans to produce polysilicon in the future. For more information, please visit: http://www.hanwha-solarone.com.

(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. Investor Relations

 
 

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

 
     
 

Tip Fleming

 
 

Tel:  +852 9212 0684

 
 

E-mail:  tfleming@christensenIR.com

 
     
 

Teal Willingham

 
 

Tel:  +86 10 5826 4988

 
 

E-mail:  twillingham@christensenIR.com

 
     

 

Hanwha SolarOne Co., Ltd.

 

CONSOLIDATED BALANCE SHEETS

 

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

 
           
 

December 31

September 31

December 31

December 31

 
 

2010

2011

2011

2011

 
 

(Audited)

(Unaudited)

(Unaudited)

(Unaudited)

 
 

RMB'000

RMB'000

RMB'000

USD'000

 

ASSETS

         

Current assets

         

Cash and cash equivalents

1,630,777

1,835,160

1,976,555

314,043

 

Restricted cash

100,490

220,238

281,626

44,746

 

Derivative contracts

7,489

17,374

29,091

4,622

 

Accounts receivable, net

1,282,807

1,252,454

537,540

85,407

 

Notes receivable

10,000

71,348

60,208

9,566

 

Inventories, net

790,773

1,185,337

684,049

108,684

 

Advance to suppliers, net

764,063

755,882

475,645

75,572

 

Other current assets

255,432

335,650

528,572

83,982

 

Deferred tax assets - net

91,611

147,659

264,590

42,039

 

Amount due from related parties

27,819

96,784

241,453

38,363

 
           

   Total current assets

4,961,261

5,917,886

5,079,329

807,024

 
           

Non-current assets

         

Fixed assets – net

2,084,027

4,391,411

4,715,962

749,291

 

Intangible assets – net

205,763

337,202

334,987

53,224

 

Goodwill

134,735

134,735

-

-

 

Deferred tax assets - net

16,759

20,931

16,493

2,620

 

Long-term deferred expenses

27,273

32,162

49,702

7,897

 

Amount due from related parties

15,000

-

-

-

 

Long-term prepayment

394,282

441,020

204,570

32,503

 
           

   Total non-current assets

2,877,839

5,357,461

5,321,714

845,535

 
           

TOTAL ASSETS

7,839,100

11,275,347

10,401,043

1,652,559

 
           

LIABILITIES

         

Current liabilities

         

Derivative contracts

8,047

50,107

30,670

4,873

 

Short-term bank borrowings

318,919

1,605,211

1,764,251

280,311

 

Long-term bank borrowings, current portion

215,000

78,471

242,604

38,546

 

Accounts payable

478,129

1,144,922

1,024,947

162,848

 

Notes payable

181,265

617,326

462,602

73,500

 

Accrued expenses and other liabilities

404,826

361,295

375,238

59,619

 

Customer deposits

33,538

58,916

84,871

13,485

 

Unrecognized tax benefit

143,473

169,817

143,473

22,796

 

Amount due to related parties

13,183

53,662

42,342

6,727

 
           

   Total current liabilities

1,796,380

4,139,727

4,170,998

662,705

 
           

Non-current liabilities

         

Long-term bank borrowings

135,000

1,419,991

1,352,373

214,870

 

Convertible bonds

687,435

505,694

498,646

79,227

 

Long term payable

-

50,000.00

50,000

7,944

 

Deferred tax liabilities

25,977

25,535

25,387

4,034

 
           

   Total non-current liabilities

848,412

2,001,220

1,926,406

306,075

 
           

TOTAL LIABILITIES

2,644,792

6,140,947

6,097,404

968,780

 
           

Redeemable ordinary shares

55

55

24

4

 
           

EQUITY

         

Shareholders' equity

         

Ordinary shares

314

315

315

50

 

Additional paid-in capital

3,956,953

3,994,209

3,996,418

634,967

 

Statutory reserves

170,000

190,484

174,456

27,718

 

Retained earnings

1,066,986

949,337

132,426

21,040

 
           

   Total shareholders' equity

5,194,253

5,134,345

4,303,615

683,775

 
           

TOTAL EQUITY

5,194,308

5,134,400

4,303,639

683,779

 
           

TOTAL LIABILITIES, REDEEMABLE ORDINARY SHARES AND SHAREHOLDERS' EQUITY

7,839,100

11,275,347

10,401,043

1,652,559

 
         

 

Hanwha SolarOne Co., Ltd.

 

CONSOLIDATED STATEMENTS OF OPERATIONS

 

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

 

except for number of shares (ADS) and per share (ADS) data

 
   
 

For the three months ended

For the years ended

 
 

December 31

September 30

December 31

December 31

December 31

December 31

December 31

 
 

2010

2011

2011

2011

2010

2011

2011

 
 

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

(Audited)

(Unaudited)

(Unaudited)

 
 

RMB'000

RMB'000

RMB'000

US$'000

RMB'000

RMB'000

US$'000

 
                 

Net revenues

2,118,995

1,437,306

978,272

155,432

7,548,545

6,416,485

1,019,477

 
                 

Cost of revenues

(1,654,024)

(1,592,546)

(1,582,900)

(251,498)

(5,869,503)

(6,633,542)

(1,053,964)

 
                 

Gross profit

464,971

(155,240)

(604,628)

(96,066)

1,679,042

(217,057)

(34,487)

 
                 

Operating expenses

               

Selling expenses

(95,172)

(76,614)

(98,185)

(15,600)

(269,202)

(279,788)

(44,454)

 

G&A expenses

(54,760)

(81,089)

(154,135)

(24,490)

(190,594)

(411,076)

(65,313)

 

R&D expenses

(14,622)

(17,741)

(22,071)

(3,507)

(53,500)

(68,217)

(10,839)

 

Loss on goodwill impairment

-

-

(134,735)

(21,407)

-

(134,735)

(21,407)

 

Government grant

2,121

2,922

8,570

1,362

18,755

14,437

2,294

 
                 

   Total operating expenses

(162,433)

(172,522)

(400,556)

(63,642)

(494,541)

(879,379)

(139,719)

 
                 

Operating profit

302,538

(327,762)

(1,005,184)

(159,708)

1,184,501

(1,096,436)

(174,206)

 
                 

Interest expenses

(40,658)

(47,236)

(41,732)

(6,631)

(161,677)

(171,059)

(27,179)

 

Interest income

2,350

1,878

3,207

509

6,141

11,763

1,869

 

Exchange gain (loss)

(36,222)

(18,739)

(5,029)

(799)

(89,272)

(3,965)

(630)

 

Gain (loss) on change in fair value of derivative

37,505

19,169

4,919

782

77,531

(70,778)

(11,245)

 

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

255,591

131,445

33,181

5,272

31,623

264,384

42,006

 

Other income

772

2,360

1,808

287

2,801

5,144

817

 

Other expenses

(2,133)

(4,174)

(3,986)

(633)

(5,903)

(14,102)

(2,240)

 

Government grant

-

-

-

-

9,595

-

-

 
                 

Net income before income tax

519,743

(243,059)

(1,012,816)

(160,921)

1,055,340

(1,075,049)

(170,808)

 
                 

Income tax expenses

(148,927)

65,424

179,877

28,580

(297,983)

144,945

23,029

 
                 

Net income

370,816

(177,635)

(832,939)

(132,341)

757,357

(930,104)

(147,779)

 
                 

Net income attributable

               

to shareholders

370,816

(177,635)

(832,939)

(132,341)

757,357

(930,104)

(147,779)

 
                 
                 
                 

Net income per share

               

Basic

1.00

(0.42)

(1.98)

(0.31)

2.43

(2.21)

(0.35)

 

Diluted

0.35

(0.42)

(1.98)

(0.31)

2.36

(2.21)

(0.35)

 
                 

Shares used in computation

               

Basic

369,518,133

420,655,036

421,676,232

421,676,232

311,263,308

420,325,701

420,325,701

 

Diluted

415,850,842

420,655,036

421,676,232

421,676,232

357,272,605

420,325,701

420,325,701

 
                 
                 

Net income per ADS

               

Basic

5.02

(2.11)

(9.88)

(1.57)

12.17

(11.06)

(1.76)

 

Diluted

1.76

(2.11)

(9.88)

(1.57)

11.82

(11.06)

(1.76)

 
                 

ADSs used in computation

               

Basic

73,903,627

84,131,007

84,335,246

84,335,246

62,252,662

84,065,140

84,065,140

 

Diluted

83,170,168

84,131,007

84,335,246

84,335,246

71,454,521

84,065,140

84,065,140

 
               

 

Hanwha SolarOne Co., Ltd.

 

CONSOLIDATED STATEMENTS OF CASH FLOWS

 

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

 
   
 

For the three months ended

 

For the years ended

 
 

December 31, 2010

September 30, 2011

December 31, 2011

December 31, 2011

 

December 31, 2010

December 31, 2011

December 31, 2011

 
 

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

 

(Audited)

(Unaudited)

(Unaudited)

 
 

RMB'000

RMB'000

RMB'000

US$'000

 

RMB'000

RMB'000

US$'000

 
                   

Cash flow from operating activities

                 

Net income

370,816

(177,635)

(832,939)

(132,341)

 

757,357

(930,104)

(147,779)

 
                   
 

Adjustments to reconcile net income (loss) to net cash

                 
   

provided (used) in operating activities:

                 
   

Unrealised (gain)/loss from derivative contracts

(68,138)

(18,149)

(31,154)

(4,950)

 

6,770

1,021

162

 
   

Amortization of convertible bonds discount

14,657

13,981

26,133

4,152

 

60,405

75,595

12,011

 
   

Changes in fair value of conversion feature of convertible
 bonds

(255,591)

(131,445)

(33,181)

(5,272)

 

(31,623)

(264,384)

(42,006)

 
   

Loss from disposal of fixed assets

139

1,037

473

75

 

957

1,714

272

 
   

Depreciation and amortization

51,490

59,351

52,464

8,336

 

187,587

218,641

34,739

 
   

Loss on goodwill impairment

-

-

134,735

21,407

 

-

134,735

21,407

 
   

Amortization of long-term deferred expenses

1,816

1,648

6,129

974

 

7,194

11,408

1,813

 
   

Provision for doubtful debt of advance to suppliers

-

-

287,749

45,719

 

117

287,742

45,718

 
   

Provision for doubtful debt of other receivables

-

-

54,456

8,652

 

-

54,456

8,652

 
   

Reversal of doubtful debt of advance to suppliers

-

(7)

-

-

 

-

-

-

 
   

Provision for doubtful debt of accounts receivable

-

316

-

-

 

-

1,778

282

 
   

Reversal of doubtful debt for accounts receivable

(1,006)

-

-

-

 

(278)

-

-

 
   

Write down of inventories

35,266

194,850

305,820

48,590

 

134,489

583,097

92,645

 
   

Stock compensation expense

6,736

5,298

2,208

351

 

31,963

38,331

6,090

 
   

Warranty provision

11,768

15,718

8,641

1,373

 

60,073

61,059

9,701

 
   

Warranty reversal

(1,843)

(6,822)

(7,022)

(1,116)

 

(1,843)

(30,615)

(4,864)

 
   

Deferred tax benefit

(17,310)

(41,640)

(112,641)

(17,897)

 

(32,055)

(173,303)

(27,535)

 
   

Unrecognized tax benefit

116,089

(8,772)

(26,344)

(4,186)

 

116,088

-

-

 
 

Changes in operating assets and liabilities

             

-

 
   

Restricted cash

(8,559)

(36,643)

25,974

4,127

 

(5,298)

(28,693)

(4,559)

 
   

Inventory

(136,472)

(495,237)

195,468

31,057

 

(141,289)

(476,373)

(75,688)

 
   

Account and notes receivables

(1,870)

25,989

726,054

115,358

 

(705,041)

693,281

110,152

 
   

Advance to suppliers and long-term prepayments

87,991

(91,230)

124,433

19,770

 

(178,700)

85,883

13,645

 
   

Long-term deferred expenses

-

-

(2,322)

(369)

 

-

(2,322)

(369)

 
   

Intangible assets

-

(88,119)

-

-

 

(1,678)

(134,719)

(21,405)

 
   

Other current assets

(19,147)

(47,794)

(128,730)

(20,453)

 

(75,117)

(206,408)

(32,795)

 
   

Amount due from related parties

(42,819)

(4,155)

(144,669)

(22,986)

 

(30,361)

(198,634)

(31,560)

 
   

Accounts and notes payable

(37,112)

376,076

(360,070)

(57,209)

 

(17,908)

381,841

60,669

 
   

Accrued expenses and other liabilities

38,041

(35,016)

25,049

3,981

 

154,680

(60,025)

(9,537)

 
   

Customer deposits

(93,960)

12,484

25,955

4,124

 

(26,147)

51,333

8,156

 
   

Amount due to related parties

(584)

(6,207)

(11,320)

(1,799)

 

(3,582)

29,159

4,633

 
   

Long-term payable

-

50,000

-

-

 

-

50,000

7,944

 
                   

Net cash provided (used) in operating activities

50,398

(432,123)

311,349

49,468

 

266,760

255,494

40,594

 
                   
                   

Cash flows from investing activities

                 
   

Acquisition of fixed assets

(279,523)

(847,612)

(289,902)

(46,061)

 

(634,506)

(2,400,481)

(381,398)

 
   

Change of restricted cash

(28,074)

(8,127)

27,638

4,391

 

(34,653)

(37,443)

(5,949)

 
               

-

 

Net cash provided (used) in investing activities

(307,597)

(855,739)

(262,264)

(41,670)

 

(669,159)

(2,437,924)

(387,347)

 
                   
                   

Cash flows from financing activities

                 
   

Proceeds from share lending

-

-

-

-

 

21

9

1

 
   

Proceeds from exercise of stock option

2,048

-

-

-

 

12,166

1,135

180

 
   

Proceeds from issuance of ordinary shares

1,070,784

-

-

-

 

1,581,114

-

-

 
   

Payment for repurchase of redeemable ordinary shares

-

-

(18)

(3)

 

-

(18)

(3)

 
   

Payment for repurchase of shares lending to Hanwha

-

-

(16)

(2)

 

-

(16)

(2)

 
   

Change of restricted cash

-

-

(115,000)

(18,272)

 

-

(115,000)

(18,272)

 
   

Proceeds from short-term bank borrowings

32,687

1,132,522

1,045,751

166,154

 

1,098,911

3,322,480

527,890

 
   

Proceeds from long-term bank borrowings

 

1,150,768

116,515

18,512

   

1,594,977

253,416

 
   

Payment of short term bank borrowings

(461,777)

(415,945)

(886,711)

(140,884)

 

(1,184,756)

(1,877,148)

(298,249)

 
   

Payment for long term bank borrowings

(52,500)

(230,000)

(20,000)

(3,178)

 

(120,000)

(350,000)

(55,609)

 
   

Repayment of advances from related parties

     

-

     

-

 
   

Payment of arrangement fee of long-term loans

-

-

(42,586)

(6,766)

 

-

(42,586)

(6,766)

 
   

Payment of arrangement fee of short-term loans

-

-

(5,625)

(894)

 

-

(5,625)

(894)

 
                   

Net cash provided (used) by financing activities

591,242

1,637,345

92,310

14,667

 

1,387,456

2,528,208

401,692

 
                   

Net increase (decrease) in cash and cash equivalents

334,043

349,483

141,395

22,465

 

985,057

345,778

54,939

 
                   

Cash and cash equivalents at the beginning of period

1,296,734

1,485,677

1,835,160

291,578

 

645,720

1,630,777

259,104

 
                   

Cash and cash equivalents at the end of period

1,630,777

1,835,160

1,976,555

314,043

 

1,630,777

1,976,555

314,043

 
                   
                   

Supplemental disclosure of cash flow information:

                 
 

Interest paid

11,621

40,408

33,348

5,298

 

89,855

113,862

18,091

 
 

Income tax paid

79,080

12,227

3,442

547

 

160,615

152,681

24,259

 
 

Realized gain/(loss) from derivative contracts

(30,633)

1,019

(26,235)

(4,168)

 

84,301

(69,757)

(11,083)

 

Supplemental schedule of non-cash activities:

             

-

 
 

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

25,096

(37,381)

85,371

13,564

 

48,613

446,314

70,912

 
                     

 
 

For the three months ended

For the years ended

 
 

December 31,
2010

September 30,
2011

December 31,
2011

December 31,
2011

December 31,
2010

December 31,
2011

December 31,
2011

 
 

(RMB million)

(RMB million)

(RMB million)

(US$ milllion)

(RMB million)

(RMB million)

(US$ milllion)

 
                 

Non-GAAP net income/(loss)

250.7

(295.7)

(862.3)

(137.0)

914.3

(1,068.5)

(169.8)

 
                 

Fair value changes of the conversion features of the Convertible bonds

255.6

131.4

33.3

5.3

31.6

264.4

42.0

 
                 

Accretion of interest of the Convertible bonds

(19.4)

(22.2)

(30.2)

(4.8)

(72.4)

(97.5)

(15.5)

 
                 

Unrecognized tax benefit

(116.1)

8.9

26.3

4.2

(116.1)

-

-

 
                 

Severance fee to previous senior management

-

-

-

-

-

(32.6)

(5.2)

 
                 

Tax impact of severance fee to previous senior management

-

-

-

-

-

4.1

0.7

 
                 

GAAP net income/(loss)

370.8

(177.6)

(832.9)

(132.3)

757.4

(930.1)

(147.8)

 
                 
 

For the three months ended

For the years ended

 
 

December 31, 2010

September 30, 2011

December 31, 2011

December 31, 2011

December 31, 2010

December 31, 2011

December 31, 2011

 
 

(RMB)

(RMB)

(RMB)

(US$)

(RMB million)

(RMB million)

(US$ milllion)

 
                 

Non GAAP net income per ADS - Basic

3.39

(3.51)

(10.22)

(1.62)

14.68

(12.71)

(2.03)

 
                 

Fair value changes of the conversion features of the Convertible bonds

3.46

1.56

0.39

0.06

0.51

3.14

0.51

 
                 

Accretion of interest of the Convertible bonds

(0.26)

(0.26)

(0.36)

(0.06)

(1.16)

(1.16)

(0.18)

 
                 

Unrecognized tax benefit

(1.57)

0.10

0.31

0.05

(1.86)

-

-

 
                 

Severance fee to previous senior management

-

-

-

-

-

(0.38)

(0.07)

 
                 

Tax impact of severance fee to previous senior management

-

-

-

-

-

0.05

0.01

 
                 

Net profit contributed to shareholders per ADS - Basic

5.02

(2.11)

(9.88)

(1.57)

12.17

(11.06)

(1.76)

 
                 

ADS (Basic)

73,903,627

84,131,007

84,335,246

84,335,246

62,252,662

84,065,140

84,065,140

 
               

 
 

For thee months ended

 

Annualized for
Q4,2010

Annualized for
Q3,2011

Annualized for
Q4,2011

 

For the twelve months ended

For the twelve months ended

 
 

December 31, 2010

September 30, 2011

December 31, 2011

 

December 31, 2010

September 30, 2011

December 31, 2011

 

December 31, 2010

December 31, 2011

 
                       

Non-GAAP Return on Equity

6.02%

-6.15%

-20.37%

 

24.08%

-24.60%

-81.48%

 

25.67%

-24.75%

 
                       

Fair value changes of the conversion features of the Convertible bonds

5.31%

3.00%

2.80%

 

21.25%

12.01%

11.20%

 

-2.04%

7.81%

 
                       

Accretion of interest of the Convertible bonds

-0.43%

-0.42%

-0.64%

 

-1.74%

-1.69%

-2.56%

 

-1.81%

-2.05%

 
                       

Unrecognized tax benefit

-2.60%

0.17%

0.56%

 

-10.39%

0.68%

2.24%

 

-2.90%

-

 
                       

Severance fee to previous senior management

-

-

-

 

-

-

-

 

-

-0.69%

 
                       

Tax impact of severance fee to previous senior management

-

-

-

 

-

-

-

 

-

0.09%

 
                       

GAAP Return on equity

8.30%

-3.40%

-17.65%

 

33.20%

-13.60%

-70.60%

 

18.92%

-19.59%

 
                     

 

 

SOURCE Hanwha SolarOne Co., Ltd.

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