SHANGHAI, December 11, 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 September 30, 2012. The Company will host a conference call to discuss the results at 8:00 am Eastern Time (9:00 pm Shanghai Time) on December 11, 2012. A slide presentation with details of the results will also be available on the Company's website prior to the call.
Third QUARTER 2012 HIGHLIGHTS[1]
Mr. Ki-Joon HONG, Chairman and CEO of Hanwha SolarOne commented, "In spite of a difficult operating environment, we achieved some good progress in shipment and production costs during the third quarter even though we suffered from continued ASP decline. Our shipment volumes grew nicely quarter-to-quarter, our production costs continued to decline and now are reaching our year-end target, and we are increasingly seeing synergies with our parent company, particularly in downstream activities. We also anticipate opportunities resulting from the cooperation with Q CELLS, which was recently acquired by our parent company. We remain optimistic that our presence in large new growth markets such as China, Japan and the US, will provide incremental volume potential in 2013. Challenging industry conditions remain: overcapacity, a spike in manufacturer's inventories, declining prices, and regulatory issues pertaining to duties in the US and possibly Europe. In spite of these, we continue to move forward with our long-term goals, in concert with support from our largest shareholder. We believe we have established the brand, a competitive cost structure, balance sheet and a management team to enter the next growth stage of the industry."
THIRD QUARTER 2012 RESULTS
FINANCIAL POSITION
The Company is in the process of assessing potential impairments of its long-lived assets, deferred tax assets and the provision for certain accounts receivable and advanced payments. The Company will report its outcome and any impairment when it is completed. If impairment charges are made, they will be non-cash accounting charges.
As of September 30, 2012, the Company had cash and cash equivalents of RMB1,607.2 million (US$255.7 million) and net working capital of RMB915.4 million (US$145.6 million), compared with cash and cash equivalents of RMB1,789.3 million and net working capital of RMB1,280.4 million as of June 30, 2012. Total short-term bank borrowings (including the current portion of long-term bank borrowings) were RMB1,917.7 million (US$305.1 million), compared with RMB1,941.6 million as of June 30, 2012. The decrease in short-term bank borrowings was primarily due to the Company's ongoing strategy to shift debt to longer-term bank borrowings.
As of September 30, 2012, the Company had total long-term debt of RMB2,757.9 million (US$438.8 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, which range from 2 to 4 years. Holders of the convertible notes have the option to require the Company to redeem the notes beginning on January 15, 2015.
Net cash used in operating activities in 3Q12 was RMB 322.1 million (US$51.2 million), compared with net cash used in operating activities of RMB335.4 million in 2Q12 and net cash used in operating activities of RMB432.1 million in 3Q11.
As of September 30, 2012, accounts receivable were RMB 1,154.6 million (US$183.7 million), compared with RMB 802.9 million as of June 30, 2012 and RMB 537.5 million as of December 31, 2011. Days sales outstanding were 126 days in 3Q12, compared with 77 days in 2Q12 and 80 days in 3Q11. The Company increased its payment terms as a market strategy.
As of September 30, 2012, inventories increased to RMB757.0 million (US$120.4 million) from RMB684.9 million as of June 30, 2012, and from RMB684.0 million as of December 31, 2011. Days inventory were 63 days in 3Q12, compared with 60 days in 2Q12 and 59 days in 3Q11.
Capital expenditures were RMB80.1 million (US$12.7 million) in 3Q12. In 3Q12, the Company repurchased an additional $22 million of its convertible bonds. The Company previously repurchased approximately $50 million of its convertible bonds during 1Q12.
CAPACITY
As of September 30, 2012, the Company had production capacity of 800 MW for ingots and wafers, 1.3 GW for cells and 1.5 GW for modules. The Company currently has no near-term plan to add additional capacity. 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:
OTHER DEVELOPMENTS
On September 6, 2012, the European Commission launched an anti-dumping investigation regarding whether Chinese producers are selling solar panels at unfairly low prices in Europe. The Company believes its pricing practices have been fair and lawful in Europe and other jurisdictions. In any event, the Company intends to vigorously defend itself and rebut all allegations.
CONFERENCE CALL
The Company will host a conference call to discuss the third quarter of 2012 results at 8:00 am Eastern Time (9:00 pm Shanghai Time) on December 11, 2012. Mr. Ki-Joon HONG, Chairman and CEO, Mr. Min Su 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 |
- International dial-in number: | + 656 723 9381 |
- China Toll Free Number: | 800 819 0121 |
4006208038 | |
Pass code: | 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: | 18554525696 |
- International dial-in number: | +61 2 8199 0299 |
Pass code: | 74880535 |
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 September 28, 2012, which was RMB6.2848 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 September 28, 2012 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 full-year 2012 estimates for PV product shipments, ASPs, gross margin, production capacities, production costs, capital expenditures 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.
For further information, please contact:
Hanwha SolarOne Co., Ltd.
Paul Combs
V.P. of Investor Relations
Tel: +86 21 3852 1533 / Mobile: +86 138 1612 2768
Email: paul.combs@hanwha-solarone.com
Hanwha SolarOne Co., Ltd. | |||||
CONSOLIDATED BALANCE SHEETS | |||||
(Amounts in thousands of Renminbi ("RMB") and U.S. dollars ("US$") | |||||
December 31 | June 30 | September 30 | September 30 | ||
2011 | 2012 | 2012 | 2012 | ||
(Audited) | (Unaudited) | (Unaudited) | (Unaudited) | ||
RMB'000 | RMB'000 | RMB'000 | US$'000 | ||
ASSETS | |||||
Current assets | |||||
Cash and cash equivalents | 1,976,555 | 1,789,265 | 1,607,164 | 255,722 | |
Restricted cash | 281,626 | 603,157 | 228,132 | 36,299 | |
Derivative contracts | 29,091 | 6,778 | - | - | |
Accounts receivable, net | 537,540 | 802,939 | 1,154,597 | 183,713 | |
Notes receivable | 60,208 | 7,210 | 5,429 | 864 | |
Inventories, net | 684,049 | 684,887 | 756,966 | 120,444 | |
Advance to suppliers, net | 475,645 | 406,806 | 401,675 | 63,912 | |
Other current assets | 528,572 | 353,433 | 344,587 | 54,828 | |
Deferred tax assets - net | 264,590 | 232,698 | 249,136 | 39,641 | |
Amount due from related parties | 241,453 | 323,828 | 422,205 | 67,179 | |
Total current assets | 5,079,329 | 5,211,001 | 5,169,891 | 822,602 | |
Non-current assets | |||||
Fixed assets - net | 4,715,962 | 4,828,485 | 4,784,458 | 761,275 | |
Intangible assets - net | 334,987 | 338,518 | 336,819 | 53,593 | |
Goodwill | - | - | - | - | |
Deferred tax assets - net | 16,493 | 9,581 | 8,237 | 1,311 | |
Long-term deferred expenses | 49,702 | 35,751 | 29,854 | 4,750 | |
Amount due from related parties | - | - | - | - | |
Long-term prepayment | 204,570 | 197,841 | 176,884 | 28,145 | |
Total non-current assets | 5,321,714 | 5,410,176 | 5,336,252 | 849,074 | |
TOTAL ASSETS | 10,401,043 | 10,621,177 | 10,506,143 | 1,671,676 | |
LIABILITIES | |||||
Current liabilities | |||||
Derivative contracts | 30,670 | 9,701 | 13,834 | 2,201 | |
Short-term bank borrowings | 1,764,251 | 1,520,570 | 1,459,990 | 232,305 | |
Long-term bank borrowings, current portion | 242,604 | 420,980 | 457,725 | 72,830 | |
Accounts payable | 1,024,947 | 826,174 | 1,076,029 | 171,211 | |
Notes payable | 462,602 | 562,783 | 641,135 | 102,014 | |
Accrued expenses and other liabilities | 375,238 | 339,854 | 364,028 | 57,922 | |
Customer deposits | 84,871 | 63,904 | 46,490 | 7,397 | |
Unrecognized tax benefit | 143,473 | 143,473 | 143,473 | 22,829 | |
Amount due to related parties | 42,342 | 43,151 | 51,815 | 8,244 | |
Total current liabilities | 4,170,998 | 3,930,590 | 4,254,519 | 676,953 | |
Non-current liabilities | |||||
Long-term bank borrowings | 1,352,373 | 2,475,305 | 2,406,121 | 382,848 | |
Convertible bonds | 498,646 | 403,055 | 351,778 | 55,973 | |
Long term payable | 50,000 | 50,000 | 52,450 | 8,346 | |
Deferred tax liabilities | 25,387 | 25,093 | 24,945 | 3,969 | |
Total non-current liabilities | 1,926,406 | 2,953,453 | 2,835,294 | 451,136 | |
TOTAL LIABILITIES | 6,097,404 | 6,884,043 | 7,089,813 | 1,128,089 | |
Redeemable ordinary shares | 24 | 24 | 24 | 4 | |
EQUITY | |||||
Shareholders' equity | |||||
Ordinary shares | 315 | 315 | 316 | 50 | |
Additional paid-in capital | 3,996,418 | 4,000,222 | 4,002,418 | 636,841 | |
Statutory reserves | 174,456 | 174,727 | 174,727 | 27,802 | |
Retained earnings | 132,426 | (438,160) | (760,294) | (120,973) | |
Accumulated other comprehensive income | - | 6 | (861) | (137) | |
Total shareholders' equity | 4,303,615 | 3,737,110 | 3,416,306 | 543,583 | |
TOTAL EQUITY | 4,303,639 | 3,737,134 | 3,416,330 | 543,587 | |
TOTAL LIABILITIES, REDEEMABLE ORDINARY SHARES AND SHAREHOLDERS' EQUITY | 10,401,043 | 10,621,177 | 10,506,143 | 1,671,676 |
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 | ||||
September 30 | June 30 | September 30 | September 30 | |
2011 | 2012 | 2012 | 2012 | |
(Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |
RMB'000 | RMB'000 | RMB'000 | US$'000 | |
Net revenues | 1,437,306 | 1,071,715 | 966,129 | 153,725 |
Cost of revenues | (1,592,546) | (1,004,179) | (1,022,182) | (162,644) |
- | - | - | - | |
Gross profit / (loss) | (155,240) | 67,536 | (56,053) | (8,919) |
Operating expenses | ||||
Selling expenses | (76,614) | (75,888) | (98,322) | (15,644) |
G&A expenses | (78,167) | (56,918) | (73,807) | (11,744) |
R&D expenses | (17,741) | (17,514) | (23,001) | (3,660) |
- | - | - | - | |
Total operating expenses | (172,522) | (150,320) | (195,130) | (31,048) |
- | - | - | - | |
Operating loss | (327,762) | (82,784) | (251,183) | (39,967) |
Interest expenses | (47,236) | (76,601) | (79,876) | (12,709) |
Interest income | 1,878 | 4,447 | 5,489 | 873 |
Exchange gain (loss) | (18,739) | (41,207) | 25,783 | 4,102 |
Gain (loss) on change in fair value of derivative | 19,169 | 6,939 | (7,667) | (1,220) |
Gain (loss) on change in conversion feature fair value of convertible bond | 131,445 | 1,150 | 1,219 | 194 |
Loss on extinguishment of debt | - | 2,455 | (29,054) | (4,623) |
Other income | 2,360 | 2,367 | 2,259 | 359 |
Other expenses | (4,174) | (5,651) | (4,880) | (776) |
- | - | - | - | |
Net loss before income tax | (243,059) | (188,885) | (337,910) | (53,767) |
Income tax expenses | 65,424 | (77,772) | 15,776 | 2,510 |
- | - | - | - | |
Net loss | (177,635) | (266,657) | (322,134) | (51,257) |
- | - | - | - | |
Net loss attributable | ||||
to shareholders | (177,635) | (266,657) | (322,134) | (51,257) |
Net loss per share | ||||
Basic | (0.42) | (0.63) | (0.76) | (0.12) |
Diluted | (0.42) | (0.63) | (0.76) | (0.12) |
Shares used in computation | ||||
Basic | 420,655,036 | 422,023,107 | 422,255,918 | 422,255,918 |
Diluted | 420,655,036 | 422,023,107 | 422,255,918 | 422,255,918 |
Net loss per ADS | ||||
Basic | (2.11) | (3.16) | (3.81) | (0.61) |
Diluted | (2.11) | (3.16) | (3.81) | (0.61) |
ADSs used in computation | ||||
Basic | 84,131,007 | 84,404,621 | 84,451,184 | 84,451,184 |
Diluted | 84,131,007 | 84,404,621 | 84,451,184 | 84,451,184 |
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 | ||||||
September 30, 2011 | June 30, 2012 | September 30, 2012 | September 30, 2012 | |||
(Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |||
RMB'000 | RMB'000 | RMB'000 | US$'000 | |||
Cash flow from operating activities | ||||||
Net loss | (177,635) | (266,657) | (322,134) | (51,257) | ||
Adjustments to reconcile net income (loss) to net cash | ||||||
provided (used) in operating activities: | ||||||
Unrealised (gain)/loss from derivative contracts | (18,149) | 27 | 10,911 | 1,736 | ||
Amortization of convertible bonds discount | 13,981 | 23,728 | 22,454 | 3,572 | ||
Changes in fair value of conversion feature of convertible bonds | (131,445) | (1,140) | (1,229) | |||
Loss on extinguishment of debt | 1,037 | (2,455) | 29,054 | 4,623 | ||
Loss from disposal of fixed assets | - | 3,884 | 2,986 | 475 | ||
Depreciation and amortization | 59,351 | 88,299 | 92,769 | 14,761 | ||
Amortization of long-term deferred expenses | 1,648 | 11,015 | 4,551 | 724 | ||
Reversal of doubtful debt of advance to suppliers | (7) | - | ||||
Provision for doubtful debt of accounts receivable | 316 | - | - | |||
Write down of inventories | 194,850 | 20,395 | 44,916 | 7,147 | ||
Stock compensation expense | 5,298 | 1,737 | 2,197 | 350 | ||
Warranty provision | 15,718 | 9,812 | 4,662 | 742 | ||
Warranty reversal | (6,822) | (686) | (6,688) | (1,064) | ||
Deferred tax benefit | (41,640) | 76,477 | (15,242) | (2,425) | ||
Unrecognized tax benefit | (8,772) | - | - | - | ||
Other comprehensive income | - | 6 | (867) | (138) | ||
Changes in operating assets and liabilities | - | |||||
Restricted cash | (36,643) | (40,184) | (44,117) | (7,020) | ||
Inventory | (495,237) | (46,166) | (116,995) | (18,616) | ||
Account and notes receivables | 25,989 | (198,490) | (349,877) | (55,671) | ||
Advance to suppliers and long-term prepayments | (91,230) | 173,510 | 26,088 | 4,151 | ||
Long-term deferred expenses | - | (1,484) | - | - | ||
Intangible assets | (88,119) | - | - | - | ||
Other current assets | (47,794) | 31,340 | 9,550 | 1,522 | ||
Amount due from related parties | (4,155) | (227,260) | (98,377) | (15,653) | ||
Accounts and notes payable | 376,076 | (40,690) | 364,254 | 57,958 | ||
Accrued expenses and other liabilities | (35,016) | (7,603) | 31,388 | 4,994 | ||
Customer deposits | 12,484 | 25,906 | (17,414) | (2,771) | ||
Amount due to related parties | (6,207) | 31,230 | 2,640 | 420 | ||
Long-term payable | 50,000 | 2,450 | 390 | |||
Net cash provided (used) in operating activities | (432,123) | (335,449) | (322,070) | (51,246) | ||
Cash flows from investing activities | ||||||
Acquisition of fixed assets | (847,612) | (39,615) | (80,052) | (12,737) | ||
Change of restricted cash | (8,127) | 15,989 | 1,472 | 234 | ||
Net cash provided (used) in investing activities | (855,739) | (23,626) | (78,580) | (12,503) | ||
Cash flows from financing activities | ||||||
Proceeds from exercise of stock option | - | - | - | - | ||
Payment for repurchase of redeemable ordinary shares | - | - | - | - | ||
Payment for repurchase of convertible bonds | - | - | (99,440) | (15,822) | ||
Change of restricted cash | - | (361,121) | 417,670 | 66,457 | ||
Proceeds from short-term bank borrowings | 1,132,522 | 495,694 | 968,467 | 154,097 | ||
Proceeds from long-term bank borrowings | 1,150,768 | 1,258,676 | 6,457 | 1,027 | ||
Payment of short term bank borrowings | (415,945) | (1,078,660) | (1,029,047) | (163,736) | ||
Payment for long term bank borrowings | (230,000) | (61,605) | (38,896) | (6,189) | ||
Payment of arrangement fee of long-term loans | - | (10,571) | (5,188) | (825) | ||
Payment of arrangement fee of short-term loans | - | (2,932) | (1,474) | (235) | ||
Net cash provided (used) by financing activities | 1,637,345 | 239,481 | 218,549 | 34,774 | ||
Net increase (decrease) in cash and cash equivalents | 349,483 | (119,594) | (182,101) | (28,975) | ||
Cash and cash equivalents at the beginning of period | 1,485,677 | 1,908,859 | 1,789,265 | 284,697 | ||
Cash and cash equivalents at the end of period | 1,835,160 | 1,789,265 | 1,607,164 | 255,722 | ||
Supplemental disclosure of cash flow information: | ||||||
Interest paid | 40,408 | 47,116 | 51,848 | 8,250 | ||
Income tax paid | 12,227 | 30,610 | (10,331) | (1,644) | ||
Realized gain/(loss) from derivative contracts | 1,019 | 6,967 | 3,243 | 516 | ||
Supplemental schedule of non-cash activities: | ||||||
Acquisition of fixed assets included in accounts payable, | (37,381) | (19,837) | (30,023) | (4,777) |
For the three months ended | ||||
September 30, 2011 | June 30, 2012 | September 30, 2012 | September 30, 2012 | |
(RMB million) | (RMB million) | (RMB million) | (US$ million) | |
Non-GAAP net loss | (295.7) | (245.9) | (301.9) | (48.0) |
Fair value changes of the conversion features of the Convertible bonds | 131.4 | 1.1 | 1.2 | 0.1 |
Accretion of interest of the Convertible bonds | (22.2) | (21.9) | (21.4) | (3.4) |
Unrecognized tax benefit | 8.9 | - | - | - |
GAAP net loss | (177.6) | (266.7) | (322.1) | (51.3) |
For the three months ended | ||||
September 30, 2011 | June 30, 2012 | September 30, 2012 | September 30, 2012 | |
(RMB) | (RMB) | (RMB) | (US$) | |
Non GAAP net loss per ADS - Basic | (3.51) | (2.91) | (3.57) | (0.57) |
Fair value changes of the conversion features of the Convertible bonds | 1.56 | 0.01 | 0.01 | (0.00) |
Accretion of interest of the Convertible bonds | (0.26) | (0.26) | (0.25) | (0.04) |
Unrecognized tax benefit | 0.10 | - | - | |
Net loss contributed to shareholders per ADS - Basic | (2.11) | (3.16) | (3.81) | (0.61) |
ADS (Basic) | 84,131,007 | 84,404,621 | 84,451,184 | 84,451,184 |
For thee months ended | Annualized for the three months ended | |||||||
September 30, 2011 | June 30, 2012 | September 30, 2012 | September 30, 2011 | March 31, 2012 | June 30, 2012 | September 30, 2012 | ||
Non-GAAP Return on Equity | -6.15% | -7.21% | -9.62% | -24.60% | -29.44% | -28.84% | -38.48% | |
Fair value changes of the | 3.00% | 0.89% | 1.21% | 12.01% | 2.56% | 3.56% | 4.84% | |
Accretion of interest of the | -0.42% | -0.57% | -0.60% | -1.69% | -2.36% | -2.28% | -2.40% | |
Unrecognized tax benefit | 0.17% | - | - | 0.68% | - | - | - | |
GAAP Return on equity | -3.40% | -6.89% | -9.01% | -13.60% | -29.24% | -27.56% | -36.04% |
[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. |