SHANGHAI, Aug. 18 /PRNewswire-FirstCall/ -- Solarfun Power Holdings
Co., Ltd. ( "Solarfun" or the "Company") (NASDAQ:SOLF), 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 June 30, 2009.
SECOND QUARTER 2009 RESULTS -- Total net revenues were RMB 854.6
million (US$125.1 million) in the second quarter of 2009,
representing a decrease of 36.8% from RMB 1,352.2 million in the
second quarter of 2008, but an increase of 24.9% from RMB 684.2
million in the first quarter of 2009. -- PV module shipments
reached 64.3 MW in the second quarter of 2009, an increase from
43.1 MW in the second quarter of 2008 and 35.7 MW in the first
quarter of 2009. The increase from the first quarter of 2009 was
due to increases in PV module shipments and PV module processing
services, which represented approximately 36% of the total PV
module shipments in the second quarter of 2009. In the second
quarter of 2009, excluding module processing, Germany accounted for
83% of the Company's total PV module shipments. The Czech Republic,
a new market for the Company, Australia, Korea and Spain accounted
for 6%, 5%, 3% and 2% of the Company's total module shipments,
respectively. -- Average selling price further declined, as
expected, to US$2.66 per watt in the second quarter of 2009 from
US$2.78 per watt in the first quarter of 2009, primarily due to the
decrease in the market prices of PV products. -- The Company's
management determined that a provision of RMB 236.5 million
(US$34.6 million) in the second quarter of 2009 was required for
pre-payments already made on certain existing supply agreements
because the continued performance of these contracts would not be
in the best long term economic interest of the Company in view of
current prevailing market prices. -- On a U.S. GAAP basis, gross
loss was RMB 53.0 million (US$7.8 million) in the second quarter of
2009, compared to a gross profit of RMB 185.6 million in the second
quarter of 2008 and a gross profit of RMB 49.4 million in the first
quarter of 2009. Excluding the provision for pre-payments, on a
non-GAAP basis, gross profit was RMB 183.5 million (US$26.8
million) and gross margin was 21.5% in the second quarter of 2009.
This compares to a gross margin of 7.2% in the first quarter of
2009 and 13.7% in the second quarter of 2008, both of which were
calculated on a U.S. GAAP basis. The sequential and year-over-year
increase was primarily due to the Company's ability to renegotiate
the majority of its existing silicon-based raw material supply
agreements to obtain reduced prices and its ability to source these
materials in many cases on the spot market, as well as the vertical
integration to the ingot and wafer level. -- On a U.S. GAAP basis,
operating loss was RMB 121.9 million (US$17.8 million) in the
second quarter of 2009, compared to an operating profit of RMB
116.4 million in the second quarter of 2008 and an operating loss
of RMB 15.3 million in the first quarter of 2009. Excluding the
provision for pre-payments, on a non-GAAP basis, operating profit
was RMB 114.6 million (US$16.8 million) and the operating margin
was 13.4% in the second quarter of 2009. This compares to an
operating profit of RMB 116.4 million in the second quarter of 2008
and an operating loss of RMB 15.3 million in the first quarter of
2009, both of which were calculated on a U.S. GAAP basis. The
increase in operating profit from the first quarter of 2009
reflects the Company's continuing focus on managing its operating
expenses. -- Interest expense was RMB 36.1 million (US$5.3 million)
in the second quarter of 2009, an increase from RMB 28.1 million in
the second quarter of 2008, but a decrease from RMB 41.4 million in
the first quarter of 2009. -- Fair value of the conversion feature
of the Company's convertible bonds increased by RMB 113.4 million
(US$16.6 million) in the second quarter of 2009, as a result of the
increase of the Company's ADS prices during the second quarter of
2009. -- On a U.S. GAAP basis, net loss attributable to
shareholders was RMB 319.9 million (US$ 46.8 million) in the second
quarter of 2009, compared to net income attributable to
shareholders of RMB 78.1 million in the second quarter of 2008 and
net income of 27.4 million in the first quarter of 2009. Net loss
per basic ADS was RMB 5.95 (US$0.87) in the second quarter of 2009,
compared to net income per basic ADS of RMB 1.62 in the second
quarter of 2008 and net income per basic ADS of RMB 0.51 in the
first quarter of 2009. Excluding the provision for pre-payments and
the increase in fair value of the conversion feature of the
Company's convertible bonds, on a non-GAAP basis, net income
attributable to shareholders was RMB 30.0 million (US$4.4 million)
and net income per basic ADS was RMB 0.55 (US$0.08) in the second
quarter of 2009. Peter Xie, President of Solarfun, commented, "We
are quite pleased with our operating performance during the second
quarter. These results reflect the significant progress we have
made in reducing our raw material costs and returning the Company
to profitability prior to the one-time, non-cash provision. This
positions us well to aggressively compete for business going
forward, and to do so profitably. We are determined to capture an
increasing market share if demand for PV products recovers in the
second half of 2009. The first shipments to Q-Cells as part of our
multi-year manufacturing services agreement occurred during the
second quarter and we look forward to higher volumes going
forward." FINANCIAL POSITION As of June 30, 2009, the Company had
cash and cash equivalents of RMB 494.7 million (US$72.4 million)
and working capital of RMB 1,289.0 million (US$188.7 million).
Total short term bank borrowings as of June 30, 2009 were RMB
1,394.0 million (US$204.1 million), a decrease from RMB 1,435.0
million as of March 31, 2009. The lending environment in China
remains accommodative and as of June 30, 2009, the Company had
approximately US$84.9 million of undrawn credit lines with a number
of commercial banks. Accounts receivable increased to RMB 514.3
million (US$75.3 million) as of June 30, 2009 from RMB 202.1
million as of March 31, 2009. This increase was primarily due to a
large percentage of shipments occurring in the latter part of the
second quarter. Days sales outstanding increased from 35 days in
the first quarter of 2009 to 38 days in the second quarter of 2009.
Inventories declined to RMB 695.7 million (US$101.9 million) as of
June 30, 2009 from RMB 747.6 million as of March 31, 2009. Capital
expenditures were RMB 24.8 million (US$3.6 million) in the second
quarter. The Company currently has a module capacity of 460 MW. The
Company plans to expand its module capacity by 50 MW during the
third quarter of 2009, and plans to further increase its nameplate
capacity to 700 MW in 2010. BUSINESS OUTLOOK Based on current
operating trends and market conditions, the Company provides the
following outlook. The Company expects: -- Total module shipments
to exceed 100 MW in the third quarter. -- Total module shipments to
be approximately 80 MW in the fourth quarter, although visibility
currently remains quite low. -- Average selling prices to further
decline to US$2.00 per watt, or below, by the end of 2009. Peter
Xie concluded, "The demand environment appears to be improving in
the second half of the year. We will increase our focus on
enhancing product performance and quality and on further enhancing
our relationships with both new and existing customers. We are
enthused about the long term market opportunity in China and have
built an internal organization to capture those opportunities. We
have been approved by Jiangsu Development and Reform Commission to
construct two projects totaling 20 MW in our home province, Jiangsu
Province. In the second quarter of 2009, we entered into a number
of new framework sales agreements in Europe, totaling approximately
30 MW, to cover our module shipments in the second half of 2009. We
are enhancing both our senior level technical team and marketing
team in both Europe and the US to better serve our customers and to
grow our business." CONFERENCE CALL Management will host a
conference call to discuss the results at 8:00 am U.S. Eastern Time
(8:00 pm Shanghai time) on Tuesday, August 18, 2009. The dial-in
details for the live conference call are as follows: - U.S. Toll
Free Number: +1 800 299 0433 - International dial-in number: +1 617
801 9712 - South China Toll Free Number: +10 800 130 0399 - North
China Toll Free Number: +10 800 152 1490 Passcode: SOLF A live
webcast of the conference call will be available on the investor
relations section of the Company's website at:
http://www.solarfun.com.cn/. A replay of the webcast will be
available for one month. A telephone replay of the call will be
available until August 25, 2009. The dial-in details for the replay
are as follows: - U.S. Toll Free Number: +1 888 286 8010 -
International dial-in number: +1 617 801 6888 Passcode: 68474346
SECOND QUARTER 2009 FINANCIAL STATEMENTS SOLARFUN POWER HOLDINGS
CO., LTD. CONSOLIDATED BALANCE SHEETS (Amounts in thousands of
Renminbi ("RMB") and U.S. dollars ("US$"), except for number of
shares and per share data) As of As of December 31 March 31 June 30
June30 2008 2009 2009 2009 (Audited) (Unaudited) (Unaudited)
(Unaudited) RMB RMB RMB USD ASSETS Current assets Cash and cash
equivalents 410,901 466,276 494,740 72,434 Restricted cash 88,137
270,398 260,749 38,176 Derivative contracts 39,665 63,079 5,062 741
Accounts receivable, net 319,537 202,096 514,328 75,304
Inventories, net 731,708 747,587 695,743 101,863 Advance to
suppliers, net 1,145, 614 1,154,252 877,909 128,535 Other current
assets 481, 749 425,131 376,277 55,089 Deferred tax assets 57,992
68,872 65,453 9,583 Amount due from related parties 19 19 24,435
3,577 --- --- ------ ----- Total current assets 3,275,322 3,397,710
3,314,696 485,302 --------- --------- --------- ------- Non-current
assets Fixed assets - net 1,492,575 1,629,544 1,616,596 236,684
Intangible assets - net 212,736 211,559 210,512 30,821 Goodwill
134,735 134,735 134,735 19,726 Deferred tax assets 4,489 13,653
6,920 1,013 Long-term deferred expenses 37,444 37,075 37,908 5,550
------ ------ ------ ----- Total non-current assets 1,881,979
2,026,566 2,006,671 293,794 --------- --------- --------- -------
TOTAL ASSETS 5,157,301 5,424,276 5,321,367 779,096 =========
========= ========= ======= LIABILITIES Current liabilities
Derivative contracts 5,792 5,273 18,584 2,721 Short-term bank
borrowings 1,098,832 1,435,000 1,394,014 204,096 Long-term bank
borrowings, current portion 30,000 45,000 60,000 8,785 Accounts
payable 217,026 187,987 268,971 39,380 Notes payable 39,341 76,377
107,610 15,755 Accrued expenses and other liabilities 189,028
129,392 136,131 19,931 Customer deposits 9,494 2,956 3,346 490
Deferred tax liabilities 1,416 3,263 709 104 Unrecognized tax
benefit 27,385 27,385 28,199 4,129 Amount due to related parties
39,766 10,109 8,103 1,186 ------ ------ ----- ----- Total current
liabilities 1,658,080 1,922,742 2,025,667 296,577 ---------
--------- --------- ------- Non-current liabilities Long-term bank
borrowings 170,000 147,500 125,000 18,301 Convertible bonds
1,178,969 519,365 642,925 94,130 Deferred tax liabilities 27,155
27,008 26,861 3,933 ------ ------ ------ ----- Total non-current
liabilities 1,376,124 693,873 794,786 116,364 --------- -------
------- ------- TOTAL LIABILITIES 3,034,204 2,616,615 2,820,453
412,941 Redeemable ordinary shares 32 32 32 5 Solarfun Power
Holding Co., Ltd. Shareholders' equity Ordinary shares 214 214 214
32 Additional paid-in capital 2,138,624 2,151,026 2,164,186 316,854
Statutory reserves 47,638 47,638 49,589 7,260 (Accumulated deficit)
Retained earnings (67,594) 604,653 282,797 41,404 ------ -------
------- ------ Total Solarfun Power Holding Co., Ltd. shareholders'
equity 2,118,882 2,803,531 2,496,786 365,550 Noncontrolling
interest 4,183 4,098 4,096 600 ----- ----- ----- --- TOTAL
SHAREHOLDERS' EQUITY 2,123,065 2,807,629 2,500,882 366,150
--------- --------- --------- ------- TOTAL LIABILITIES, AND
SHAREHOLDERS' EQUITY 5,157,301 5,424,276 5,321,367 779,096
========= ========= ========= ======= SOLARFUN POWER HOLDINGS 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 June 30 March
31 June 30 June 30 2008 2009 2009 2009 (Unaudited) (Unaudited)
(Unaudited) (Unaudited) RMB RMB RMB USD Net revenue Photovoltaic
modules 1,233,527 678,136 742,004 108,636 Photovoltaic cells
104,217 6,043 5,538 811 Others 14,449 18 107,068 15,676 ------ ---
------- ------ Total net revenue 1,352,193 684,197 854,610 125,123
--------- ------- ------- ------- Cost of revenue Photovoltaic
modules (1,056,912) (521,338) (741,664) (108,586) Photovoltaic
cells (97,244) (7,284) (18,529) (2,713) Others (12,481) (281)
(83,038) (12,158) Write down of inventories (105,848) (64,414)
(9,431) --- ------- ------ ----- Total cost of revenue (1,166,637)
(634,751) (907,645) (132,888) --------- ------- ------- -------
Gross profit / (losses) 185,556 49,446 (53,035) (7,765) -------
------ ------ ----- Operating expenses Selling expenses (26,482)
(16,328) (18,206) (2,665) General and administrative expenses
(34,956) (40,233) (47,002) (6,881) Research and development
expenses (7,697) (8,185) (3,673) (538) ----- ----- ----- --- Total
operating expenses (69,135) (64,746) (68,881) (10,084) ------
------ ------ ------ Operating profit / (losses) 116,421 (15,300)
(121,916) (17,849) Interest expenses (28,148) (41,397) (36,091)
(5,284) Interest income 1,368 494 1,060 155 Exchange gain /
(losses) 4,136 (32,849) 15,590 2,283 Change in fair value of
derivative contracts 0 71,086 (49,423) (7,236) Change in fair value
of conversion feature of convertible bond 28,458 (113,423) (16,606)
Other income 4,383 3,533 276 40 Other expenses (6,140) (3,584)
(4,302) (630) Government grants 114 1,907 1,797 263 --- ----- -----
--- Income / (losses) before income tax 92,134 12,348 (306,432)
(44,864) ------ ------ ------- ------ Income tax benefit /
(expenses) (8,282) 15,002 (13,475) (1,973) ----- ------ ------
----- Consolidated Net income / (losses) 83,852 27,350 (319,907)
(46,837) ------ ------ ------- ------ Net (income) / losses
attributable to noncontrolling interest 5,763 (85) (2) 0 ----- ---
--- --- Net income / (losses) attributable to Solarfun Power
Holding Co., Ltd. shareholders 78,089 27,435 (319,905) (46,837)
====== ====== ======= ====== Net income / (losses) attributable to
Solarfun Power Holding Co., Ltd. per share Basic 0.32 0.10 (1.19)
(0.17) Diluted 0.31 0.10 (1.19) (0.17) Shares used in computation
Basic 241,340,409 268,848,771 268,981,409 268,981,409 Diluted
287,007,417 268,848,771 268,981,409 268,981,409 Net income /
(losses) attributable to Solarfun Power Holding Co., Ltd. per ADS
Basic 1.62 0.51 (5.95) (0.87) Diluted 1.36 0.51 (5.95) (0.87) ADSs
used in computation Basic 48,268,082 53,769,754 53,796,282
53,796,282 Diluted 57,401,483 53,769,754 53,796,282 53,796,282 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 one-time
provisions recorded in the second quarter of 2009 had not been so
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. Reconciliation of Non-GAAP measures to GAAP
measures For the three months ended June 30, ----------------------
2009 2009 ---- ---- (RMB million) (US$million) Non-GAAP gross
profit 183.5 26.8 Prepayment provision (236.5) (34.6) ------ -----
GAAP gross loss (53.0) (7.8) ===== ==== For the three months ended
June 30, 2009 ------------- Non-GAAP gross margin 21.5% Prepayment
provision as % of revenue (27.7%) ------ GAAP gross margin (6.2%)
===== For the three months ended June 30, -------------------- 2009
2009 ---- ---- (RMB million) (US$million) Non-GAAP operating profit
114.6 16.8 Prepayment provision (236.5) (34.6) ------ ----- GAAP
operating loss (121.9) (17.8) ====== ===== For the three months
ended June 30, 2009 ------------- Non-GAAP operating margin 13.4%
Prepayment provision (27.7%) ------- Operating margin (14.3%)
======= For the three months ended June 30, --------------------
2009 2009 ---- ---- (RMB million) (US$million) Non-GAAP net income
30.0 4.4 Prepayment provision (236.5) (34.6) Changes in fair value
of conversion feature of convertible bonds (113.4) (16.6) ------
----- GAAP net loss (319.9) (46.8) ====== ===== For the three
months ended June 30, -------- 2009 2009 ---- ---- (RMB) (US$)
Non-GAAP net income per ADS 0.55 0.08 Prepayment provision (4.40)
(0.64) Changes in fair value of conversion feature of convertible
bonds (2.10) (0.31) ----- ----- Net loss attributable to Solarfun
Power Holdings Co., Ltd. (5.95) (0.87) ===== ===== 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 rates as set forth in the H.10 statistical
release of the Federal Reserve Board as of June 30, 2009,, which
was RMB6.8302 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 June 30,
2009, or at any other date. The percentages stated in this press
release are calculated based on Renminbi amounts. 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 third quarter,
fourth quarter and full year 2009 estimates for net revenue, PV
product shipments, raw materials and product prices, PV cell
production capacity and gross margins. 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.
Solarfun disclaims any obligation to update or correct any
forward-looking statements. About Solarfun Solarfun Power Holdings
Co, Ltd. manufactures ingots, PV cells and PV modules, and provides
PV module processing services to convert PV cells into PV modules.
Solarfun produces both monocrystalline and multicrystalline silicon
cells and modules. Solarfun sells its products both through
third-party distributors, OEM manufacturers and directly to system
integrators. Solarfun was founded in 2004 and its products have
been certified to TUV and UL safety and quality standards. SOLF-G
http://www.solarfun.com.cn/ For further information, contact:
Solarfun Power Holdings Co., Ltd. Paul Combs V.P. Strategic
Planning 26F BM Tower 218 Wusong Road Shanghai, 200080 P. R. China
Tel: 86 21-6393-8206 / Mobile: 86 138 1612 2768 E-mail: Christensen
Kathy Li Tel: 480 614 3036 E-mail: Roger Hu Tel: 852 2117 0861
E-mail: DATASOURCE: Solarfun Power Holdings Co., Ltd. CONTACT: Paul
Combs, V.P. Strategic Planning of Solarfun Power Holdings Co.,
Ltd., 86 21-6393-8206, Mobile, 86 138 1612 2768, ; or Kathy Li,
+1-480-614-3036, , or Roger Hu, 852 2117 0861, , both of
Christensen, for Solarfun Power Holdings Co., Ltd. Web Site:
http://www.solarfun.com.cn/
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