Quarterly Report • Nov 12, 2010
Quarterly Report
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| SMA Group | Q1–Q3 2010 |
Q1–Q3 2009 |
Change | Year 2009 |
|
|---|---|---|---|---|---|
| Sales | € million | 1,442.5 | 559.5 | 158% | 934.3 |
| Export ratio | % | 38.7 | 37.7 | 38.4 | |
| Inverter output sold | MW | 5,738 | 1,966 | 192% | 3,381 |
| Capital expenditure1 | € million | 120.0 | 46.8 | 156% | 74.9 |
| Depreciation | € million | 21.3 | 11.4 | 87% | 16.3 |
| Operating profit (EBIT) | € million | 418.2 | 120.8 | 246% | 228.4 |
| Operating profit margin | % | 29.0 | 21.6 | 24.4 | |
| Consolidated net profit | € million | 296.9 | 86.0 | 245% | 161.1 |
| Earnings per share2 | € | 8.56 | 2.48 | 4.64 | |
| Employees3 | 5,373 | 3,174 | 69% | 3,412 | |
| in Germany | 5,023 | 3,010 | 67% | 3,266 | |
| abroad | 350 | 164 | 113% | 176 | |
| SMA Group | 09/30/2010 | 12/31/2009 | Change | |
|---|---|---|---|---|
| Total assets | € million | 1,243.9 | 718.6 | 73% |
| Equity | € million | 660.1 | 407.6 | 62% |
| Equity ratio | % | 53.1 | 56.7 | |
| Net working capital4 | € million | 335.9 | 98.6 | 241% |
| Net working capital ratio5 | % | 18.5 | 10.6 | |
| Cash and cash equivalents | € million | 494.3 | 365.0 | 35% |
excl. finance leases and excl. development projects to be capitalized
2 converted to 34,700,000 shares
3 average during the period; incl. temporary employees
4 inventories and trade receivables minus trade payables
5 relating to the last twelve months (LTM)
6 rebased to 100%
SMA Solar Technology AG develops, produces and sells solar inverters and monitoring systems for photovoltaic applications. SMA is the world's largest producer in this segment and is the only vendor that has a product range with the matching inverter type for any module type and any power class. This applies for grid-tied applications as well as island and backup operation.
The inverter is technologically the most important component in any solar power system: It converts the direct current generated in photovoltaic cells into alternating current suitable for the grid. In addition, it is an intelligent system manager, responsible for yield monitoring and grid management. SMA' solar inverters are characterized by a particularly high efficiency. The Sunny Tripower produced by SMA already has an efficiency of 98 %, which allows for increased electricity production.
SMA's business model is driven by technological progress. Due to its flexible and scalable production, SMA is in a position to quickly respond to customer demands and promptly implement product innovations. This allows the Company to keep pace with the dynamic market trends of the photovoltaics industry and at the same time absorb short-term fluctuations in demand for solar inverters.
SMA Solar Technology AG is headquartered in Niestetal, near Kassel, and is represented on four continents by 15 foreign subsidiaries. This group of companies employs more than 5,500 employees (incl. temporary staff) and has been distinguished several times in previous years with awards for its outstanding performance as an employer.
Since June 27, 2008, the Company has been listed in the Prime Standard of the Frankfurt Stock Exchange (S92), and since September 22, 2008, the Company's shares have been listed in the TecDAX. In 2009, SMA generated an earnings before interest and taxes (EBIT) of more than € 228 million from sales of more than € 930 million. This corresponds to an EBIT margin of over 24 %.
058 Other Information
| The | share | 006 |
|---|---|---|
| inte | rim management report |
012 |
| 014 | Economic conditions | |
| 016 | Results of operations, financial position and net assets | |
| 022 | Investments | |
| 022 R | esearch and development | |
| 025 | Employees / Human resources | |
| 027 | Supplementary report | |
| 027 R | isks and opportunities report | |
| 027 F | orecast report |
Contents Quarterly Financial Report
The Share 006
Interim Management Report 012
Interim Consolidated Financial Statements 032
Other Information 058
032 Interim Consolidated Financial Statements
WKN A0DJ6J ISIN DE000A0DJ6J9 Stock market code S92 Reuters S92G.DE Bloomberg S92 GR Listing Prime Standard of
Share class Bearer shares without par value Share capital € 34.7 million Number of shares 34.7 million Index TecDAX ®
Frankfurt Stock Exchange
058 Other Information
basic data
SMA shares started the third quarter at a price of € 84.07 (July 1, Xetra closing price). On July 6, 2010, SMA published the preliminary results for the first six months. This led to a price increase of 16% within one day to € 98.00 (closing price July 5: € 84.41). In the first six months, SMA generated almost the same sales volume as in the entire year 2009. In the announcement of the preliminary results for the first half year, SMA's Managing Board raised its previous expectations for the worldwide photovoltaics market from between 9 and 11 GW to 14 GW. On the basis of these excellent results for the first six months and the positive market assessment as well as gradually improving material supply in the semiconductor field, the Managing Board increased its sales and earnings forecast for the current fiscal year. Thereafter, SMA shares climbed to their quarterly peak of € 99.60 (July 15, Xetra closing price) by the middle of July. They stabilized at a price level of above € 90.00 until the beginning of August.
On August 13, 2010, SMA published its audited results for the first six months. Due to its strong market position, SMA was able to benefit from the high demand in the first half year in particular. The photovoltaics market in Germany offered significant stimuli for demand. In view of the early adjustment of feed-in remuneration for solar energy from July 1, 2010, many operators of photovoltaic systems in Germany pulled their investments forward. Stronger demand was also recognizable in foreign markets.
in%, rebased to 100 points
After considerable price losses at the beginning of the quarter, the price of SMA shares has stabilized successfully.
SMA share TecDAX®
ÖkoDAX®
012 Interim Management Report
032 Interim Consolidated Financial Statements
058 Other Information
In the third quarter, the early reduction of the feed-in remuneration on July 1, 2010 showed its effects; new construction of solar systems in Germany decelerated noticeably. SMA estimates that new output installed fell from about 5.3 GW in the first half year to about 1.5 GW in the third quarter. Foreign markets with attractive framework conditions were able to compensate, in part, for the decline in demand in Germany. Among the foreign markets with the largest new output installed in the first nine months were France, Italy, North America, the Czech Republic, Australia, and Belgium.
Uncertainty regarding potential future changes in incentive programs of several countries and the resulting effects on the development of the worldwide PV market are reflected in the price trend of SMA shares. In the second half of August, the shares fell within a few days from € 90.01 (August 17) by 13% to € 78.32 (August 25, each Xetra closing price), but recovered during the following days to € 88.52 (September 14, Xetra closing price).
After various discussions with customers at the European PV conference in Valencia (Spain), the Managing Board increased its sales and earnings forecast for the current year in the middle of September for a second time. Although it is very difficult to forecast the development of global demand in solar power systems in 2011 due to the expected changes in incentive conditions in individual countries, the Managing Board specified its market expectations for 2011 in more detail.
Given the strong growth rates in 2010, the Managing Board expects changing growth dynamics in the next year. For 2011, SMA's management assumes a growth of global new PV output installed of up to 20%. At the same time, the management cannot rule out a slight market decrease of up to 10%. According to the Managing Board, foreign markets – in particular the United States and Italy – will gain in importance considerably in 2011. For 2011, SMA's Managing Board expects 1.5 to 1.9 billion euro in sales and an EBIT margin of between 21% and 25%.
| Volume-weighted average price (Ø) | € 86.52 |
|---|---|
| Market capitalization (Ø) | € 3.04 billion |
| Daily trading volume (Ø) | 107,805 shares |
| High (January 22) | € 103.70 |
| Low (February 12) | € 73.75 |
| Closing price (September 30) | € 81.03 |
Following the outlook for 2011 published on September 15, a declining trend was recognizable in the price of SMA shares. At the end of the quarter, the price of SMA shares closed at € 81.03. This means that the price of SMA shares fell slightly by 3.6% in the third quarter and faced a loss of over 14% in the first nine months (January 4, Xetra closing price: € 94.51).
The TecDAX benchmark index, with – 6.35%, lost less than the SMA shares in the first nine months (opened at 834.46 points on January 4, closed at 781.47 points). The ÖkoDAX opened at 322.07 points and closed with a minus of about 29% at 229.60 points at the end of the reporting period. The DAX, however, closed at 6229.02 points on September 30, thus rising by over 3% in the period under review (opened at 6,048.30 points).
The volume-weighted average price was € 86.52 in the reporting period from January to September. The average trading volume of SMA shares in the same period was 107.805 shares per day (Xetra).
Directly after the end of the reporting period, the shareholder structure changed. The volume of free float is not affected by this change. The four founders and majority shareholders of SMA Solar Technology AG Günther Cramer, Peter Drews, Prof. (em.) Dr. Werner Kleinkauf and Reiner Wettlaufer each transferred 6.3% of SMA shares held by them to the next generation by way of a gift. The transferred shares at a total volume of 25.2% are bundled in a pooling agreement. The pooling agreement stipulates that the voting rights under the transferred shares can only be exercised uniformly. With this step, SMA's founders and majority shareholders have created the key prerequisites for SMA's independence and, thus, for a stable future. The founders and majority shareholders have emphasized that the Company's independent development is of top priority for them.
In addition, SMA's four founders and majority shareholders announced that they intend to contribute a further portion of their shares to charitable foundations. This measure is also intended to ensure that SMA will have a highly stable shareholder structure in the future. Günther Cramer and Peter Drews are members of the Managing Board, Reiner Wettlaufer and Prof. (em.) Dr. Werner Kleinkauf members of the Supervisory Board.
27.14% Free float 25.20% Pool SMA Solar Technology AG 12.79% Günther Cramer 12.81% Peter Drews 12.81% Reiner Wettlaufer 9.25% Prof. (em.) Dr. Werner Kleinkauf
Free float is calculated in accordance with the guidelines for share indices of Deutsche Börse AG.
012 Interim Management Report
032 Interim Consolidated Financial Statements
058 Other Information
At the end of the reporting period, 21 banks, investment firms and independent institutions reported on SMA shares. The institutions and responsible analysts are set forth below.
| Institution | Analyst |
|---|---|
| Arete Research Services | Joel Silverman / Jim Fontanelli |
| Bank of America/Merrill Lynch | Claus Roller /Gerhard Orgonas |
| Barclays Capital | Rupesh Madlani /Arindam Basu / Julien Roques |
| Berenberg Bank | Lars Dannenberg |
| Bryan, Garnier&Co | Ben Lynch |
| Cheuvreux | Philipp Bumm |
| Citi | Andrew Benson |
| Commerzbank | Robert Schramm/ Lauren Licuanan |
| Deutsche Bank | Alexander Karnick |
| DZ Bank | Sven Kürten |
| Goldman Sachs Group | Stephen Benson |
| HSBC Trinkaus&Burkhardt | Christian Rath |
| HVB UniCredit | Michael Tappeiner |
| Jefferies International | Michael McNamara |
| Landesbank Baden-Württemberg | Walter Schneider |
| Macquarie Group | Dr. Benjamin Kluftinger |
| Metzler | Ruxandra Haradau-Döser |
| Nomura | Catharina Saponar |
| Steubing | Alla Gorelova |
| UBS | Patrick Hummel |
| WestLB | Peter Wirtz |
SMA is committed to a culture of open communication, including in its dialog with the capital market. The heart of the activities is a shareholder-oriented communication policy, which is characterized mainly by the principles of transparency, continuity and trustworthiness. The objectives are the buildingup and maintenance of long-term and trusting relationships with all players in the capital markets. In respect of this, we refer to our Investor Relations Web site at www.IR.SMA.de. Investors, financial analysts, journalists and the interested public will find comprehensive and up-to-date information about the Company on this Web site. It includes financial reports, presentations, statutory company statements and a financial calendar. SMA also provides all current information with regard to the corporate governance topic on this site. Moreover, the site offers an interactive share price chart, which allows comparing the SMA share price with selected stock exchange indices. The menu "FAQ" provides answers to frequently asked questions.
In the reporting period from January to September 2010, Pierre-Pascal Urbon, Chief Financial Officer, and the members of the Investor Relations department had about 200 individual discussions with investors in Germany and abroad. Investors' demand for phone conferences with SMA rose again significantly in the course of the year, whereby US investors were particularly interested.
SMA also looked for personal contact with investors and held ten road shows in other European countries in the first nine months of the current year. The Chief Financial Officer or members of Investor Relations had discussions on site in London and Edinburgh, in Brussels, Amsterdam, Paris, in Zurich and Geneva as well as in Vienna. In addition, SMA took part in Commerzbank and WestLB investor conferences in Frankfurt.
On March 31, the Managing Board held its press conference on the annual results for journalists in Frankfurt am Main, when the Consolidated Financial Statements for the last fiscal year were also published. SMA maintains its dialog with financial analysts through quarterly phone conferences and regular discussions.
In addition, SMA organizes an information day for capital market representatives, the so-called "Capital Markets Day", once a year. In 2010, about 70 international financial analysts and investors attended this event in September at SMA's headquarters in Niestetal. This figure provides proof yet again of the great interest of investors in the Company and investment in SMA.
012 Interim Management Report
032 Interim Consolidated Financial Statements
058 Other Information
The day started with a presentation by the Managing Board, followed by a questions and answers session. The program continued with various workshops held by trainers from the SMA Solar Academy, who explained to the participants the complex functionality of an SMA inverter, the dimensions of ease of maintenance and installation as well as the technological progress in product development over the past few years. The program was finalized with a tour of the production facilities for the product groups Sunny Boy and Sunny Central.
The Annual General Meeting was held at Kongress Palais Kassel on May 27, 2010 with about 600 shareholders attending. The Annual General Meeting granted discharge to the Managing and Supervisory Boards by a large majority and accepted the proposal to pay out a dividend of € 1.30 per qualifying bearer share. Accordingly, the dividend per share increased significantly compared to the previous year (2009: € 1.00 per share) and reflects the excellent results of SMA in the 2009 fiscal year. The dividend payout ratio is approx. 30%.
In February, SMA's Managing Board adopted a resolution to expand the Supervisory Board from six to twelve members and a parity-based composition of the body with six shareholder representatives and six employee representatives. In doing so, SMA has fulfilled the statutory provisions applicable as a result of the higher number of staff.
The General Meeting reelected Dr. Erik Ehrentraut, Dr. Winfried Hoffmann and the company founders Prof. (em.) Dr. Werner Kleinkauf and Reiner Wettlaufer as the shareholders' Supervisory Board members. In addition, the shareholders elected Siegfried L. Drueker and Dr.-Ing. Martin Hoppe-Kilpper as new Supervisory Board members. Dr. Günther Häckl, Johannes Häde, Ullrich Meßmer, Alexander Naujoks, Joachim Schlosser and Mirko Zeidler were the employee representatives elected to the Supervisory Board before the Annual General Meeting.
At the constituent meeting of the Supervisory Board following the General Meeting, Dr. Erik Ehrentraut was elected as the Chairman of the Supervisory Board and Mr. Reiner Wettlaufer as the Deputy Chairman of the Supervisory Board. In addition, the members of the presidial, audit, nomination and mediation committees were appointed. Furthermore, the Annual General Meeting approved the remuneration system for the Supervisory Board members by a large majority. The remuneration is determined in accordance with the principles of the German Corporate Governance Code.
The speech of the CEO and all relevant documents regarding the 2010 Annual General Meeting are available in German language on SMA's Web site at www.SMA.de/Hauptversammlung.
032 Interim Consolidated Financial Statements
058 Other Information Economic conditions
The world economy has continued to recover in the third quarter. Global economic activity is still supported by strong economic growth in emerging economies such as China and India. While the economy has stabilized noticeably in Europe, recovery in North America is only proceeding slowly. Germany leads economic growth in Europe. In the USA, the sustained high employment rate and high indebtedness of private households are slowing down the upswing. According to the estimates of the International Monetary Fund (IMF), risks to the overall economy continue to exist.
The development of the PV sector depends on country-specific incentive programs for the expansion of photovoltaic systems as well as the financing terms. Due to the attractive framework conditions, the world market for solar power plants has seen a very positive development. For the entire year of 2010, SMA's Managing Board expects a new output installed of up to 17 GW. This corresponds to growth of about 113% as compared to 2009 (about 8 GW).
Germany continues to be the largest photovoltaics market. According to SMA's estimates, new solar power systems with a total output of about 5.3 GW were installed up to September 30, 2010. The early reduction of feed-in remuneration for solar energy from July 1, 2010 has had a decisive influence on the development in Germany. Pull-forward effects in the first six months led to a real boom in demand, resulting in new output of 3.8 GW installed. The political measures to restrict expansion of solar power systems have shown their effects in the third quarter already and resulted in a significant decline in new installations. According to SMA's estimates, new output installed has reduced to 1.5 GW. The declining demand in Germany was compensated, in part, by the demand in foreign solar markets. Among the foreign markets with the largest new output installed in the first nine months were France, Italy, North America, the Czech Republic, Australia, and Belgium. The development of demand in these countries is also attributable to attractive framework conditions.
Economic conditions
012 Interim Management Report
032 Interim Consolidated Financial Statements
058 Other Information
SMA Solar Technology AG ("SMA") is the sole inverter manufacturer worldwide that is able to offer the optimum technical solar inverter solution independent of the module technology used or the performance level. This unique position enabled SMA and its subsidiaries ("SMA Group") to benefit from the development of the global photovoltaics market again and to defend its high market share of more than 40% worldwide according to the estimates of SMA's management.
SMA produces only based on orders and, thus, responds quickly to changed demands. In view of the market growth to be expected for 2010, SMA's Managing Board expanded significantly the production capacities at the sites in Kassel and Denver, Colorado (USA). SMA had a maximum annual production capacity worldwide of approx. 11 GW on the reporting date. This corresponds to double the annual production capacity in comparison to the end of 2009.
Owing to the better availability of electronic components, SMA was able to utilize almost fully its existing production capacities in the third quarter of 2010 with an inverter output sold of nearly 2.6 GW. Delivery periods fell distinctly to normally two to three weeks for inverters of the Medium Power Solutions segment and to six to eight weeks for central inverters of the High Power Solutions segment at present.
032 Interim Consolidated Financial Statements
058 Other Information
In the first nine months of fiscal 2010, the SMA Group again achieved record sales of € 1,442.5 million (Q1 – Q3 2009: € 559.5 million). Following a strong first half year, the third quarter contributed € 626.7 million or 43.4% to sales (Q3 2009: € 312.4 million). The reasons for this enormous sales increase were the aforementioned pull-forward effects resulting from the reduction of feed-in remuneration in Germany in the context of the Renewable Energy Sources Act (EEG) and better availability of electronic components.
The main sales driver was the Medium Power Solutions segment. In this segment, SMA generated external turnover of € 1,237.3 million as compared to € 487.3 million in the same period of the previous year. As in the previous quarters, the most successful products were the high-performance inverters. Sales in the High Power Solutions segment tripled compared to the previous year's period and had a share of 12.8% in Group sales (Q1 – Q3 2009: 10.4%). The expansion of large solar projects was characterized significantly by the announced changes in promotion conditions in Germany and by the attractive financing conditions. The Railway Technology segment also saw a positive development in the first nine months of 2010. External sales increased by 47.1% to € 17.8 million as compared to the same period of the previous year.
Germany, at € 916.0 million, was the strongest market in terms of sales in the first nine months of 2010. Amongst others, this was caused by pull-forward effects resulting from the reduction of feed-in remuneration. The increasing importance of the foreign business is also reflected in the foreign share.
012 Interim Management Report
032 Interim Consolidated Financial Statements
058 Other Information
After 37.7% in the previous year, it amounted to 38.7% in the period under review. Gross sales generated in foreign markets – before sales deductions – amounted to € 579.3 million (Q1 – Q3 2009: € 215.7 million). France, Italy, North America, the Czech Republic, Australia, and Belgium were among the most important foreign markets.
Due to the excellent development of sales in the third quarter, the SMA Group was able to increase again its earnings before interest and taxes (EBIT) in the first nine months of 2010. EBIT of € 418.2 million were significantly above the comparable value of the previous year of € 120.8 million. The third quarter contributed € 198.3 million (Q3 2009: € 85.8 million), which corresponds to almost 50%. SMA Group's fixed cost increased slower than sales so that the strong sales growth had a positive effect on the EBIT margin. The EBIT margin improved to the record value of 29.0% (Q1 – Q3 2009: 21.6%).
The SMA Group's consolidated profit was € 296.9 million in the period under review, which corresponds to 20.6% of sales. The earnings per share of the SMA Group rose to € 8.56 (Q1 – Q3 2009: € 2.48).
In the Photovoltaics Technology division, external sales of € 1,421.5 million in the first nine months of 2010 were more than twice as high as in the same period of the previous year (Q1 – Q3 2009: € 545.5 million). The inverter output sold to generate these sales rose to approx. 5.7 GW (Q1 – Q3 2009: approx. 2.0 GW).
The sales driver of this division was the Medium Power Solutions segment. Sales in this segment accounted for 87.0% of total sales of the division (Q1 – Q3 2009: 89.3%). The High Power Solutions segment contributed 13.0% to total sales of the Photovoltaics Technology division (Q1 – Q3 2009: 10.7%).
The Medium Power Solutions segment covers the products Sunny Boy, Sunny Mini Central, Sunny Tripower, Sunny Island, Sunny Backup, and communication products. The grid-connected inverters and Sunny Backup inverters are deployed mainly in residential and commercial buildings, while Sunny Island is used for stand-alone systems, so-called off-grid applications. The product families of one-phase inverters have power classes ranging from 700 watts to 11 kilowatts (kW). The three-phase inverters of the Sunny Tripower product family, introduced in the market in the first half year of 2010, are offered in the performance classes from 10 kW to 17 kW.
External sales in the Medium Power Solutions segment totaled € 1,237.3 million in the period under review (Q1 – Q3 2009: € 487.3 million). This means that SMA management's expectations were exceeded. In the third quarter of 2010, sales in this segment with € 538.2 million rose by 38.1%, including in comparison to the high-sales previous quarter (Q2 2010: € 389.7 million).
032 Interim Consolidated Financial Statements
058 Other Information
Of gross sales, 63.4% were generated in Germany. The Medium Power Solutions segment achieved its highest sales abroad in France, Italy, North America, the Czech Republic, Australia, and Belgium. The inverter types Sunny Mini Central 10000TL, Sunny Mini Central 11000TL and Sunny Boy 5000TL were the top-selling products in the first nine months of 2010. In the previous year, Sunny Boy 5000TL and Sunny Mini Central 10000TL had been the major sales drivers as well. Operating income (EBIT) improved by € 253.7 million to € 350.8 million (Q1 – Q3 2009: € 97.1 million). This corresponds to an EBIT margin of 27.1% (Q1 – Q3 2009: 19.2%) in relation to internal and external sales revenues.
The High Power Solutions segment includes the central inverters of the type Sunny Central. With these units, SMA serves primarily the market for large solar power plants with an output ranging from above 100 kW to several megawatts. As presented at the Intersolar trade show in Munich, the product range was supplemented by the new device family Sunny Central Compact Power (CP). Since the traditional concrete substation has been eliminated, this new product family is easy to install in free-field systems and reduces significantly the total costs of large-scale solar power plants.
In the High Power Solutions segment, external sales rose by € 126.0 million to € 184.2 million in the first nine months of 2010 (Q1–Q3 2009: € 58.2 million). With 48.3% of generated gross sales, Germany was the strongest market in terms of sales. In the first nine months of this year, SMA was able to develop the US market for central inverters successfully and to gain new market shares according to its estimates. Italy and North America were among the most successful foreign markets in the period under review. As in the comparable period of the previous year, Sunny Central 630HE and Sunny Central 500HE were the best-selling products. Operating income (EBIT) increased to € 42.5 million in the first nine months of 2010 (Q1 – Q3 2009: € 12.2 million). This corresponds to an EBIT margin of 21.4% (Q1 – Q3 2009: 18.9%) in relation to internal and external sales revenues.
The Railway Technology division develops and distributes modular energy supply systems for the various applications in the field of short- and long-distance railway traffic. External sales in this division improved by 47.1% million to € 17.8 million in the period under review (Q1 – Q3 2009: € 12.1 million). It was possible to achieve a substantial increase in foreign sales owing to intensified sales activities abroad. Operating income (EBIT) improved to € 2.7 million (Q1 – Q3 2009: € 1.2 million). The EBIT margin was 9.0% (Q1 – Q3 2009: 6.1%) in relation to internal and external sales. Owing to a business that was characterized by long-term large projects, the division had extremely good capacity utilization at the end of the reporting period.
006 The Share
012 Interim Management Report
032 Interim Consolidated Financial Statements
058 Other Information
019
The Electronics Manufacturing segment acts mainly as a sub-supplier for other segments, in particular the Medium Power Solutions segment. The production area was well utilized throughout the period. The share of electronic assemblies manufactured by third parties was raised in line with the high demand. Total sales from external and internal revenues improved by € 200.8 million to € 332.7 million (Q1 – Q3 2009: € 131.9 million). Operating income (EBIT) amounted to € 29.6 million (Q1 – Q3 2009: € 12.1 million). In relation to internal and external sales revenues, this corresponds to an EBIT margin of 8.9% (Q1 – Q3 2009: 9.2%).
The share of manufacturing costs of sales amounted to € 888.6 million (Q1 – Q3 2009: € 361.3 million). This means that costs reduced significantly to 61.6% in relation to sales revenues when compared to the previous year (Q1 – Q3 2009: 64.6%). This reduction is due primarily to the change in the product mix. In the first nine months of 2009, SMA sold a greater number of small output inverters, while in the first nine months of 2010 high-output inverters were among the best-selling products of SMA. Cost of sales is attributable as follows: 70.2% to material expenses, 16.7% to personnel expenses and 13.1% to other expenses.
Selling expenses in absolute figures increased by € 15.1 million to € 40.6 million (Q1 – Q3 2009: € 25.5 million) in comparison to the previous year. This accounts for 2.8% of sales (Q1 – Q3 2009: 4.6%). With a view to the competitive environment, SMA expanded its national and international sales structures consistently. On the reporting date, SMA had 399 employees (September 30, 2009: 267 employees) in distribution, in technical sales support and in marketing. SMA, like no other solar inverter manufacturer, is present with solar system wholesalers, solar energy specialists and system integrators and thus is able not only to communicate efficiently the specific benefits of SMA's products but also to identify attractive business opportunities early on.
Research and development expenses, excluding capitalized development projects, in the first nine months totaled € 53.3 million (Q1 – Q3 2009: € 32.5 million). The total research and development expenses, including capitalized development projects, amounted to € 63.2 million (Q1 – Q3 2009: € 37.2 million). Personnel expenses accounted for the largest share in research and development costs. During the financial and economic crises, SMA invested deliberately into the expansion of the research and development division and recruited talented engineers. In this year alone, SMA had an additional 148 employees in the research and development field on the closing date of September 30, 2010. Thus, the number of staff in this area increased to a total of 776 (December 31, 2009: 628).
Administrative expenses amounted to € 34.8 million in the first nine months of 2010 (Q1 – Q3 2009: € 19.7 million). Administrative expenses as a share in sales fell by 1.1 percentage points to 2.4% (Q1 – Q3 2009: 3.5%).
See also section Research and development, p.22 f.
SMA Group's high profitability in the first nine months of 2010 is reflected in the gross cash flow, which was € 410.7 million and thus substantially above the comparable value of the previous year of € 117.0 million.
Against the backdrop of the delivery bottlenecks for electronic components and the growth opportunities in the solar industry, SMA increased its net working capital (in particular raw materials, consumables and supplies) significantly in the period under review. The outflow of funds was compensated for, in part, by the growth-related increase in liabilities for guarantee extensions, for prepayments received and for employee bonus payment obligations as well as for obligations under holiday and flexitime commitments. The net cash flow from operating activities totaled € 296.9 million in the period under review (Q1 – Q3 2009: € 79.2 million).
The expansion of infrastructure at the Kassel site and the erection of the new inverter production plant in Denver, Colorado (USA), resulted in an increase in investments on a year-on-year basis. In the first nine months of 2010, the Company invested € 104.1 million in property, plant and equipment. The outflow of funds due to investment in intangible assets amounted to € 15.9 million in this period.
Cash and cash equivalents of € 284.3 million (December 31, 2009: € 225.0 million) include cash in hand, bank balances, short-term deposits with an original term to maturity of less than three months as well as any credits on current accounts used. Together with the time deposits with a term to maturity of more than three months, this results in financial resources of € 494.3 million (December 31, 2009: € 365.0 million).
Since the beginning of 2010, SMA has invested € 242.9 million into net working capital – adjusted by non-cash items – and € 104.1 million into property, plant and equipment, and distributed a dividend of € 45.1 million. In the same period, cash and cash equivalents, including time deposits, increased by € 129.3 million, thus underlining the attractiveness of SMA's business model.
012 Interim Management Report
032 Interim Consolidated Financial Statements
058 Other Information
The total assets increased by € 525.3 million to € 1,243.9 million as at September 30, 2010 (December 31, 2009: € 718.6 million).
The net working capital went up to € 335.9 million (December 31, 2009: € 98.6 million) and was 18.5% of sales of the last twelve months. In essence, the rise in the net working capital is attributable to the planned increase in inventories (in particular in raw materials, consumables and supplies). Inventories of € 277.6 million were more than doubled (December 31, 2009: € 112.5 million).
As at September 30, 2010, trade receivables rose by € 113.0 million to € 171.1 million (December 31, 2009: € 58.1 million), while trade payables increased by 56.6% to € 112.9 million (December 31, 2009: € 72.1 million).
The SMA Group's equity as at September 30, 2010 went up by 61.9% to € 660.1 million (December 31, 2009: € 407.6 million). With its equity ratio of 53.1%, the SMA Group has a highly solid balance sheet structure .
058 Other Information
Strong growth in the last few years has led to the need to make investments in infrastructure. SMA has planned investments of about € 210 million for the 2010 fiscal year.
In the first nine months of 2010, the SMA Group invested € 110.1 million (Q1–Q3 2009: € 46.8 million) in fixed assets as well as intangible assets (excluding capitalized development costs). With € 104.1 million, the majority of investments were attributable to fixed assets (Q1–Q3 2009: € 43.1 million). Of investments in fixed assets, 49.9% was attributable to land and buildings and 50.1% to machinery and equipment. At about € 40.5 million, the major portion of investment in fixed assets related to the expansion of the Sandershäuser Berg site, the expansion of the production site at Kassel-Waldau as well as the expansion and completion of the production facility in Denver, Colorado (USA). With an investment sum of € 15.7 million, other important projects were the construction of the new service center in Kassel and the completion of the SMA Solar Academy at the Niestetal headquarters. The SMA Solar Academy stands out by its special energy concept. This off-the-grid building is operated as a solar stand-alone system and is climate-neutral. Renewable energies (sun and biogas) are used exclusively for its operation.
Investment in intangible assets, excluding capitalized development projects, amounting to € 6.0 million is above the level of the previous year (Q1 – Q3 2010: € 3.6 million).
A main differentiating characteristic of SMA compared to competitors is its high innovative power. In order to secure the Company's future success, it is decisive that SMA continues to launch innovative products in the market, which are characterized by a lower specific selling price and which set new standards in technology. For this reason, the management of SMA decided to expand SMA's research and development area on a consistent basis. Excluding capitalized development projects, the Company has a budget of € 80 million for this purpose in fiscal 2010.
Research and development expenses in the first nine months of 2010 totaled € 53.3 million (Q1–Q3 2009: € 32.5 million). In addition, SMA capitalized an amount of € 9.9 million for development projects (Q1–Q3 2009: € 4.7 million). Research and development costs, including capitalized development projects, as a share of sales were 3.7% in the period under review (Q1–Q3 2009: 5.8%).
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SMA's high innovative power in the various market segments was acknowledged again this year by renowned awards. For example, the Sunny Central 800CP received the Intersolar Award at the leading trade fair in Munich. The jury was convinced by this entirely redesigned central inverter particularly because of its huge cost-saving potential and high efficiency. The Sunny Central 800CP can be installed in free-field systems, without the concrete station traditionally required in this performance class. In addition, plant monitoring has been integrated, which eliminates significant planning and installation expenditure in the field. With the inverter's high performance and its simultaneously high efficiency of 98.6%, SMA has set new standards in the photovoltaics sector. The strong demand for the Sunny Central 800CP confirms the many advantages of this new central inverter.
On the occasion of the 25th Photovoltaics Solar Energy Symposium in Bad Staffelstein, SMA received the innovation award for its new three-phase multi-string inverter Sunny Tripower. In the September issue of the Photon Profi trade magazine, the Sunny Tripower 17000TL was declared a "top-quality product" with an overall grade of "A+". The new Sunny Tripower features a concept for highly flexible plant configuration (Optiflex) and a worldwide unique multi-security concept (Optiprotect). Optiprotect consists of a string failure detection, an electronic string fuse and a lightning protection function that can be integrated and thus guarantees a maximum operating safety of the PV plant. Furthermore, the new DC plug system SUNCLIX as the fifth innovation significantly simplifies installation of the Sunny Tripower. Since the third quarter, the Sunny Tripower has been offered in four different performance classes. SMA recently finalized the development of the Sunny Tripower in the 10 kW and 12 kW performance classes, thus completing the product family and expanding the performance range to lower levels so that installers can now choose from four different performance classes (10 kW, 12 kW, 15 kW and 17 kW) of this three-phase PV inverter for use in large-scale residential and commercial systems up to utility plants.
These awards again demonstrate SMA's technology and innovation leadership. The Sunny Central 800CP and the Sunny Tripower are in absolute compliance with SMA's development strategy of integrating maximum performance and the most recent technology into a highly compact inverter at simultaneously low specific prices.
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Research and development
In the third quarter of 2010, SMA's developers in the Medium Power Solutions segment finalized development of the Sunny Boy 3000HF. The Sunny Boy 3000HF is equipped with a high-frequency transformer. Based on the latest SMA technology, these new inverters offer particularly high yields for galvanically isolated equipment in the 2,000 watt, 2,500 watt and 3,000 watt power classes. At present, developers are focusing their activities on the certification of the products for the US market. Development of the design was concentrated, among other things, on the specific assembly prerequisites in the USA: Owing to its slim housing, the Sunny Boy 3000HF can be integrated to fit in post-and-beam structure walls.
SMA's Sunny Central 400, 500 and 600HE-11 were the first central inverters to receive certification in accordance with the Medium Voltage Directive issued by the German Association of Energy and Water Industries (BDEW). This certificate confirms an inverter's ability to contribute to voltage stability during normal grid operation by feeding in a desired amount of reactive power, instead of immediately disconnecting from the grid in the case of a failure. SMA has been active in the area of grid management from an early stage to ensure that a greater number of PV systems can be integrated into the distribution grid.
In the off-grid development area, SMA completed a new technology for stand-alone systems in the third quarter. Now, for the first time, it has become possible to set up modular isolated systems with a capacity of up to 300 kW. With this new SMA multi-cluster technology, SMA is realizing a further major step in the direction of an extensive supply of outlying regions using renewable energies. At present, developers are focusing on a PV in-house consumption solution in which energy is saved in a battery system when solar radiation is high in order to use this energy in times of bad weather, in the night or in the event of a power failure. By saving excessive output of solar power systems, it is possible to increase the share of internal consumption and to relieve electricity grids.
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As at the balance sheet date of September 30, 2010, the number of staff in the SMA Group amounted to 6,274, including 2,178 temporary employees (December 31, 2009: 4,231, including 1,277 temporary employees). The temporary employees are deployed primarily in the production areas. The number of temporary employees is adjusted regularly to the degree of utilization in production.
SMA expanded its existing foreign companies in growth markets in the first nine months of 2010 in terms of staff. The number of staff abroad increased by September 30, 2010 to 375 employees (December 31, 2009: 218).
SMA was honored again in Germany and at the European level as one of the top employers. In the Great Place to Work® competition for "Europe's Best Employers", SMA reached the third place in the category "Companies with more than 500 employees". In February, SMA was honored in the Federal competition and reached the second place among "Germany's Best Employers 2010". In addition, SMA received a special award for "Lifelong Learning" for its overall concept in the field of employee development.
To evaluate the attractiveness of participating enterprises as an employer, the Great Place to Work® Institute prepares benchmark surveys which determine factors such as team spirit, credibility and fairness of the management as well as the employees' identification with the company.
www.greatplacetowork.de
| 09/30/2010 | 09/30/2009 | 09/30/2008 | |
|---|---|---|---|
| Employees (excl. temporary employees) | 4,096 | 2,707 | 2,118 |
| of which domestic | 3,721 | 2,523 | 1,993 |
| of which abroad | 375 | 184 | 125 |
| Temporary employees | 2,178 | 1,165 | 767 |
| Total employees (incl. temporary employees) | 6,274 | 3,872 | 2,885 |
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Employees / Human resources
This year's awards for being one of the best employers in Germany and Europe have shown that SMA was able to maintain its special corporate culture in spite of the strong growth of the Company over recent years. In addition to a good working climate, this company culture also promotes flexibility and innovation at SMA.
On April 1, 2010, the Managing Board was expanded from five to seven members, until the retirement of the founding members in the summer of 2011. Uwe Hertel (Chief Operating Officer) and Jürgen Dolle (Chief Human Resources Officer) were appointed as new members of the Managing Board. With the expansion of the Managing Board, the Supervisory Board intends to ensure the optimum familiarization with these functions and a smooth transfer of responsibilities.
As early as in February, SMA's Managing Board adopted a resolution to expand the Supervisory Board from six to twelve members and a parity-based composition of the body with six shareholder representatives and six employee representatives. Dr. Erik Ehrentraut, Dr. Winfried Hoffmann, Prof. (em) Dr. Werner Kleinkauf and Reiner Wettlaufer were reelected as the shareholders' Supervisory Board members. In addition, the shareholders elected Siegfried L. Drueker and Dr.-Ing. Martin Hoppe-Kilpper as new Supervisory Board members. Dr. Günther Häckl, Johannes Häde, Ullrich Meßmer, Alexander Naujoks, Joachim Schlosser and Mirko Zeidler were the employee representatives elected in advance to the Supervisory Board.
At the constituent meeting of the Supervisory Board following the General Meeting, Dr. Erik Ehrentraut was elected as the Chairman of the Supervisory Board and Mr. Reiner Wettlaufer as the Deputy Chairman of the Supervisory Board. In addition, the members of the presidial, audit, nomination and mediation committees were appointed.
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After the period under review, the Company's business activities have developed in line with expectations. There have been no significant changes in the general economic conditions or in the situation of the sector in which SMA is active. No events that might have a material impact on the Company's results of operations, financial position and assets have occurred. In addition, there are no other reportable events that are of particular importance to the SMA Group.
The Group's risk and opportunities management as well as possible individual risks are described in detail in the Annual Report 2009. Essentially, the comments made there remain applicable. At the moment, no risks that could seriously jeopardize the Company's continuing existence or could significantly impair its performance are discernible.
In the third quarter of 2010, worldwide growth was stronger than previously expected. Accordingly, the International Monetary Fund (IMF) raised its growth forecast for the global economy for 2010 by 0.2 percentage points to 4.8% compared to the July forecast (IMF, World Economic Outlook Update, October 2010). Simultaneously, economic experts are warning of risks to growth, caused by the large budgetary deficits in Europe and North America.
According to the IMF, the individual regions are growing at different speeds. The global economy is supported by strong recovery tendencies in Asia, with forecast economic growth of 7.9% this year. However, total economic production in the USA is expected to grow by only 2.6%, which is 0.7 percentage points less than forecast to date. The IMF anticipates greater economic growth of 3.3% for Germany due to increased exports (previous IMF forecast: 1.4%, July 2010). This figure is 1.9 percentage points above the previous IMF estimate and the strongest upwards revision made by the Fund for a country.
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In order to reduce greenhouse gas emissions and dependency on fossil fuels, many countries decided to grant targeted incentives for photovoltaic systems. Accordingly, the demand in solar power systems depends upon the development of country-specific incentive programs. In addition, financing terms play a major role in the expansion of photovoltaics. SMA's Managing Board expects that the worldwide solar market will grow in the year 2010 to up to 17 GW due to the attractive framework conditions (2009: about 8 GW).
Adjustments to incentive conditions will have a decisive influence on growth dynamics in the key photovoltaics markets. For example, the further reduction of feed-in remuneration in Germany, on July 1 and on October 1, 2010, will lead to a distinct decline in demand for solar power systems in the fourth quarter, as expected by SMA's Managing Board. Nevertheless, Germany will remain the largest solar market worldwide this year with new output installed of 6 to 8 GW. With its attractive incentive conditions for solar power systems, France, Italy, North America, the Czech Republic, Australia, and Belgium are the most important foreign markets in 2010.
SMA's Managing Board is convinced that photovoltaics, due to electricity generation near the point of consumption, will experience significant, medium- to long-term growth stimuli and make a greater contribution to power generation.
The following disclosures on the future development of the SMA Group are based on the estimates of SMA's Managing Board. They result from the expectations presented above regarding the development of global photovoltaics markets.
Owing to its broad product portfolio, its high level of flexibility and its global presence, SMA has a unique position in the solar market. SMA is the world market leader, when measured by the inverter output sold of about 3.4 GW in 2009. According to SMA's own estimates, this is a market share of over 40%. The Managing Board aims to defend or even expand this high market share in 2010 again.
Forecast report
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Against the backdrop of higher assumptions regarding the market growth of the solar sector and the unique position in the global market for photovoltaic inverters, the Managing Board of SMA raised its sales and earnings forecast on September 15, 2010 for the second time this year. For the entire year of 2010, the Managing Board expects sales to increase to € 1.7 to 1.9 billion (previous sales forecast: € 1.5 to 1.8 billion). For 2011, SMA's Managing Board expects sales of € 1.5 to 1.9 billion.
The German photovoltaics market will continue to be SMA's largest sales market in 2010 as well. North America, France, Italy, Belgium, the Czech Republic and Australia are among the most important foreign markets in this financial year. SMA developed these markets early on by its own distribution and service companies. Due to its comprehensive range of services and extensive service network, SMA is perceived as a reliable partner in foreign markets. SMA's Managing Board regards the well-established presence in foreign countries as a significant competitive edge.
Due to the incentive structure, SMA's growth markets are characterized by a high share of new installations in the Residential and Commercial market segments. The Managing Board estimates that the Medium Power Solutions Segment will grow strongly in 2010 and will account for about 80% of total sales. The product groups Sunny Boy and Sunny Mini Central will be the key sales drivers. SMA plans to expand its technology leadership in 2010 in the Medium Power Solutions segment, including through the market launch of the Sunny Tripower and the Sunny Boy 3000HF.
According to the management's estimates, large-scale solar projects will gain importance in 2010. SMA is in a good position in Germany and abroad to benefit from this development. The Managing Board expects that the High Power Solutions segment will account for up to 20% of SMA's total sales in 2010. The Sunny Central 630HE and Sunny Central 500HE are expected to be the best-selling products in 2010. In the USA, SMA gained significant market shares by the Sunny Central inverters, which are certified for this market. SMA intends to further expand its technological edge as regards large-scale solar power plants in 2010 through new innovative products, in particular the Sunny Central 800CP.
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Forecast report
In the Railway Technology division, the Managing Board is expecting a sales plus in 2010 owing to the high number of orders on hand. SMA is expecting that the foreign share will amount to about 80%. The Railway Technology division is expected to contribute approx. 3% to the SMA Group's total sales.
SMA plans to further expand its research and development activities in 2010. It is our objective to introduce a series of new products offering key innovations to our customers. For this purpose, SMA will raise its research and development expenditure (excluding capitalized development projects) to up to € 80 million. SMA will expand its development area in the next years in order to enlarge its technological advantages over competitors. In addition, the Managing Board will strengthen, on an interdisciplinary basis, selective cost reduction for our inverters with our new function for Systematic Product Cost Reduction. SMA's Managing Board estimates that substantial savings potentials can be realized, in particular, by the increased integration of components and reduction of complexity. In addition, SMA's development activities also increasingly take into account the total costs of a photovoltaic system over its life cycle. Through these development approaches, we will continuously improve our competitive position in the next few years.
SMA will enlarge its international presence in 2010 again. Through our new company in Ontario (Canada), we will be able to benefit from the local incentive program. This stipulates, amongst other things, that a part of the value created is provided in Ontario. SMA expects that its first products will be produced in Ontario at the beginning of the second quarter of 2011. In addition, SMA will establish a distribution and service company in Mumbai (India), by the end of 2010. SMA will position itself in this growth market as one of the first inverter manufacturers. Our broad product range in particular will have a positive impact on market development. SMA is the only inverter manufacturer that is able to offer a technically stable solution for backup systems in addition to the most advanced system technology for grid-connected solar power systems. SMA is currently preparing a further incorporation of companies in Europe and Asia.
In the first nine months, SMA has expanded its production capacity in Germany and the USA, partially using interim solutions, up to an inverter output of above 11 GW per year. In the second half of the year, SMA succeeded in increasing output volumes substantially and in returning to the usual short delivery periods. SMA will utilize available flexible measures in the fourth quarter in order to adapt production to lower demands. In order to avoid any production bottlenecks in the future, SMA has increased substantially its stock of critical components. Accordingly, at the end of this year, net working capital is expected to be at the upper end of the corridor of between 18% and 20% of sales of the last 12 months (previously: between 16% and 18%).
Forecast report
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The Managing Board is expecting an EBIT margin of 26.5% to 28.5% (previous forecast for EBIT margin: 24% to 27%) for fiscal 2010. SMA is planning investments of about € 210 million for the current fiscal year. About € 104 million thereof is attributable to land and buildings, about € 86 million thereof to the acquisition of machinery and equipment, and about € 20 million thereof to intangible assets.
Development in the forthcoming financial year depends largely on country-specific incentive programs. It is very difficult to forecast the development of global demand in solar power systems in 2011 due to the expected changes in incentive conditions in the individual countries. For example, the early reduction of feed-in remuneration in Germany has shown how quickly changes in the framework conditions can have the desired effect. Against this backdrop, SMA's Managing Board is expecting growth of global new output installed of up to 20% in 2011. At the same time, we cannot preclude a slight market decline of up to 10%. Changed growth dynamics and higher competitive intensity will have an impact on the SMA Group's development of results. The Managing Board anticipates an EBIT margin of between 21% and 25% for 2011.
Niestetal, November 5, 2010
SMA Solar Technology AG The Managing Board
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| Income statement and statement of comprehensive income sma group |
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| Consolidated balance sheet SMA group |
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| Consolidated statements of cash flows sma Group | 036 |
| Statement of Changes in Equity SMA Group |
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| Notes to the Condensed Interim Financial Statements as at september 30, 2010 |
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| 038 1. Basic information |
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| 039 2. Consolidated group and principles of consolidation |
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| 040 3. Accounting policies 041 4. Segment reporting |
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| Selected notes to the income statement and statement of comprehensive income SMA Group |
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| 045 5. Cost of sales |
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| 045 6. Selling expenses |
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| 046 7. Research and development expenses |
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| 046 8. General administrative expenses |
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| 047 9. Other operating income /other operating expenses |
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| 047 10. Benefits to employees and temporary employees | |
| 048 11. Financial result |
048 12. Earnings per share
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| Notes to the statements of CASH FLOWS SMA GROUP |
053 |
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| 053 24. Net cash flow from operating activities 054 25. Net cash flow from investing activities 054 26. Net cash flow from financing activities |
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| 054 27. Cash and cash equivalents | |
| Other disclosures | 055 |
| 055 28. Events after the balance sheet date 055 29. Related party disclosures |
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| Auditor's Review report | 056 |
| Other Information | 058 |
| 058 D isclaimer |
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| Inside: Financial Calendar, Imprint, Contact Details |
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| Note | July–Sept. (Q3) 2010 € '000 |
July–Sept. (Q3) 2009 € '000 |
Jan.–Sept. (Q1–Q3) 2010 € '000 |
Jan.–Sept. (Q1–Q3) 2009 € '000 |
|
|---|---|---|---|---|---|
| Sales | 4 | 626,714 | 312,361 | 1,442,469 | 559,474 |
| Cost of sales | 5 | 380,131 | 196,463 | 888,590 | 361,316 |
| Gross profit | 246,583 | 115,898 | 553,879 | 198,158 | |
| Selling expenses | 6 | 14,565 | 9,792 | 40,584 | 25,490 |
| Research and development expenses | 7 | 18,885 | 14,622 | 53,291 | 32,496 |
| General administrative expenses | 8 | 14,539 | 5,851 | 34,773 | 19,678 |
| Other operating income | 9 | –307 | 1,231 | 11,561 | 6,643 |
| Other operating expenses | 9 | 27 | 1,009 | 18,585 | 6,322 |
| Operating profit (EBIT) | 198,260 | 85,855 | 418,207 | 120,815 | |
| Financial income | 747 | 1,360 | 1,963 | 5,236 | |
| Financial expenses | 514 | 500 | 1,552 | 1,277 | |
| Financial result | 11 | 233 | 860 | 411 | 3,959 |
| Profit before income taxes | 198,493 | 86,715 | 418,618 | 124,774 | |
| Income tax expense | 59,745 | 26,702 | 121,681 | 38,806 | |
| Consolidated net profit | 138,748 | 60,013 | 296,937 | 85,968 | |
| of which attributable to non-controlling interest |
0 | 0 | –27 | 0 | |
| of which attributable to the shareholders of SMA AG |
138,748 | 60,013 | 296,964 | 85,968 | |
| Earnings per share, basic (€) | 12 | 4.00 | 1.73 | 8.56 | 2.48 |
| Earnings per share, diluted (€) | 12 | 4.00 | 1.73 | 8.56 | 2.48 |
| Number of ordinary shares (in thousands) | 34,700 | 34,700 | 34,700 | 34,700 | |
| Consolidated net profit | 138,748 | 60,013 | 296,937 | 85,968 | |
| Unrealized gains (losses) from foreign | |||||
| currency translation | –1,429 | –10 | 561 | 101 | |
| Overall result | 137,319 | 60,003 | 297,498 | 86,069 | |
| of which attributable to non-controlling interest |
0 | 0 | –27 | 0 | |
| of which attributable to the shareholders of SMA AG |
137,319 | 60,003 | 297,525 | 86,069 |
Interim Consolidated Financial Statements
Consolidated Balance Sheet SMA Group
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032
| Note | 09/30/2010 € '000 |
12/31/2009 € '000 |
|
|---|---|---|---|
| Non-current assets | |||
| Intangible assets | 13 | 28,485 | 15,372 |
| Fixed assets | 14 | 240,792 | 149,119 |
| Other financial investments | 73 | 73 | |
| Other financial assets | 16 | 3,817 | 3,602 |
| Deferred taxes | 19,572 | 7,066 | |
| 292,739 | 175,232 | ||
| Current assets | |||
| Inventories | 15 | 277,639 | 112,569 |
| Trade receivables | 171,142 | 58,077 | |
| Other financial assets | 16 | 212,931 | 143,787 |
| Claims for income tax refunds | 3,061 | 349 | |
| Other receivables | 2,020 | 3,626 | |
| Cash and cash equivalents | 27 | 284,321 | 225,010 |
| 951,114 | 543,418 | ||
| Total assets | 1,243,853 | 718,650 | |
| Shareholders' equity | |||
| Share capital | 34,700 | 34,700 | |
| Capital reserves | 119,200 | 119,200 | |
| Retained earnings | 506,102 | 253,687 | |
| Non-controlling interest | 56 | 0 | |
| 17 | 660,058 | 407,587 | |
| Non-current liabilities | |||
| Other provisions | 18 | 71,056 | 41,243 |
| Financial liabilities | 19 | 20,138 | 18,772 |
| Other liabilities | 21 | 44,641 | 29,944 |
| Deferred taxes | 10,132 | 5,145 | |
| 145,967 | 95,104 | ||
| Current liabilities | |||
| Other provisions | 18 | 59,234 | 30,453 |
| Financial liabilities | 19 | 2,151 | 1,411 |
| Trade payables | 112,931 | 72,067 | |
| Other financial liabilities | 20 | 145,086 | 71,819 |
| Income tax liabilities | 63,199 | 24,943 | |
| Other liabilities | 21 | 55,227 | 15,266 |
| 437,828 | 215,959 | ||
| Total equity and liabilities | 1,243,853 | 718,650 |
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| Note | Jan.–Sept. (Q1–Q3) 2010 € '000 |
Jan.–Sept. (Q1–Q3) 2009 € '000 |
|
|---|---|---|---|
| Consolidated net profit | 296,937 | 85,968 | |
| Income tax expenses | 121,681 | 38,806 | |
| Financial result | –411 | –3,959 | |
| Depreciation and amortization | 21,344 | 11,453 | |
| Change in other provisions | 58,594 | 16,218 | |
| Losses from the disposal of assets | 865 | 30 | |
| Other non-cash expenses / revenue | 4,761 | 355 | |
| Interest received | 1,196 | 4,958 | |
| Interest paid | –554 | –4 | |
| Income tax paid | –93,655 | –36,838 | |
| Gross cash flow | 410,758 | 116,987 | |
| Increase of inventories | –165,108 | –34,615 | |
| Increase in trade receivables | –118,002 | –59,556 | |
| Increase in trade payables | 40,176 | 32,412 | |
| Change in other net assets /other non-cash transactions | 129,067 | 23,990 | |
| Net cash flow from operating activities | 24 | 296,891 | 79,218 |
| Payments for investments in fixed assets | –104,108 | –43,139 | |
| Proceeds from the disposal of fixed assets | 116 | 58 | |
| Payments for investments in intangible assets | –15,871 | –8,322 | |
| Payments for the acquisition of business units | –2,418 | 0 | |
| Proceeds from the disposal /payments for the acquisition of securities and other financial assets |
–70,000 | –59,404 | |
| Net cash flow from investing activities | 25 | –192,281 | –110,807 |
| Changes in minority interests | 1 | 0 | |
| Change in financial liabilities | –560 | –1,016 | |
| Dividends paid by SMA Solar Technology AG | –45,110 | –34,700 | |
| Net cash flow from financing activities | 26 | –45,669 | –35,716 |
| Net decrease in cash and cash equivalents | 58,941 | –67,305 | |
| Change in cash and cash equivalents | |||
| due to exchange rate effects | 370 | 135 | |
| Cash and cash equivalents as of 01/01 | 225,010 | 240,682 | |
| Cash and cash equivalents as of 09/30 | 27 | 284,321 | 173,512 |
Interim Consolidated Financial Statements
Statement of Changes in Equity SMA Group
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032
| Equity attributable to the shareholders of the parent company |
||||||
|---|---|---|---|---|---|---|
| Share capital € '000 |
Capital reserves € '000 |
Retained earnings € '000 |
Total € '000 |
Equity attribu table to non controlling interest € '000 |
Consolidated shareholders' equity € '000 |
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| Shareholders' equity as of January 1, 2010 |
34,700 | 119,200 | 253,687 | 407,587 | 0 | 407,587 |
| Changes in minority interests | 0 | 0 | 0 | 0 | 83 | 83 |
| Consolidated net profit Q1–Q3 2010 |
0 | 0 | 296,964 | 296,964 | –27 | 296,937 |
| Dividend payments of SMA Solar Technology AG |
0 | 0 | –45,110 | –45,110 | 0 | –45,110 |
| Differences from currency translation |
0 | 0 | 561 | 561 | 0 | 561 |
| Shareholders' equity as of September 30, 2010 |
34,700 | 119,200 | 506,102 | 660,002 | 56 | 660,058 |
| Equity attributable to the shareholders of the parent company |
||||||
|---|---|---|---|---|---|---|
| Share capital € '000 |
Capital reserves € '000 |
Retained earnings € '000 |
Total € '000 |
Equity attribu table to non controlling interest € '000 |
Consolidated shareholders' equity € '000 |
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| Shareholders' equity as of January 1, 2009 |
34,700 | 119,200 | 126,857 | 280,757 | 0 | 280,757 |
| Consolidated net profit Q1–Q3 2009 |
0 | 0 | 85,968 | 85,968 | 0 | 85,968 |
| Dividend payments of SMA Solar Technology AG |
0 | 0 | –34,700 | –34,700 | –34,700 | |
| Differences from currency translation |
0 | 0 | 101 | 101 | 0 | 101 |
| Shareholders' equity as of September 30, 2009 |
34,700 | 119,200 | 178,226 | 332,126 | 0 | 332,126 |
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The Condensed Interim Consolidated Financial Statements of SMA Solar Technology AG as at September 30, 2010 were prepared, as were the Consolidated Financial Statements as at December 31, 2009, in compliance with the International Financial Reporting Standards (IFRS), adopted and published by the International Accounting Standards Board (IASB), as adopted by the European Union, and whose application is mandatory. Accordingly, the Interim Financial Statements of SMA Technology AG are prepared in line with IAS 34 Interim Financial Reporting in the 2010 fiscal year. In accordance with the regulations of IAS 34, a condensed reporting format compared with the Consolidated Financial Statements as at December 31, 2009 was chosen. The Condensed Financial Statements do not include all the information and disclosures required for Consolidated Financial Statements and are therefore to be read in conjunction with the Consolidated Financial Statements as at December 31, 2009.
The Condensed Interim Financial Statements were prepared in euro. Unless indicated otherwise, all amounts stated were rounded to full thousands of euro (€ '000) or million of euro (€ million) for the sake of clarity and clearness.
The Managing Board of SMA Solar Technology AG authorized the Interim Consolidated Financial Statements for submission to the Supervisory Board on November 5, 2010.
The registered office of the Company is at Sonnenallee 1, 34266 Niestetal, Germany. The shares of SMA Solar Technology AG are traded publicly; they are listed in the Prime Standard of the Frankfurt Stock Exchange. Since September 22, 2008, the Company's shares have been listed in the technology index TecDAX.
The SMA Group produces in Germany as well as in the USA and distributes inverters throughout the world. More detailed information on the segments is provided in section 4.
058 Other Information
Interim Management Report
006 012
The scope of consolidation as at December 31, 2009 has changed versus December 31, 2008 and now includes the newly incorporated companies SMA America Holdings LLC (Denver), SMA America Production LLC (Denver), SMA Benelux SPRL (Brussels), SMA Czech Republic s.r.o. (Prague), SMA Middle East Ltd. (Abu Dhabi), Niestetal Services, Unipessoal LDA (Lisbon) and SMA Services GmbH (Niestetal). All new companies are fully consolidated. The company so far operating under the name of SMA America, Inc. in Rocklin (USA), was renamed SMA Solar Technology America LLC.
The scope of consolidation as at September 30, 2010 was expanded versus December 31, 2009 by the new companies SMA Immo GmbH & Co. KG (Niestetal) ("SMA Immo"), formerly SMA Immo GmbH (Niestetal), SMA Solar Technology Beteiligungsgesellschaft mbH (Niestetal) and the newly incorporated companies SMA Solar Technology Canada Inc. (Vancouver) and SMA Solar India Private Limited (Mumbai). All companies are fully consolidated. The company so far operating under the name of SMA Service GmbH in Niestetal was renamed SMA Immo Beteiligungs GmbH (Niestetal). The shares of non-controlling interests in equity of the consolidated companies are shown separately within equity.
The acquisition of the shares in SMA Immo was not valued as a business combination pursuant to IFRS 3. In accordance with this standard, it is not necessary to account a transaction as a business combination if the acquisition does not relate to a business within the meaning of IFRS 3. Instead, it is an acquisition of a group of assets. The cost of acquisition was allocated to the individual identifiable assets based on their relevant fair values. This has not resulted in significant effects on the net assets, financial position and results of operations in the Consolidated Financial Statements of SMA Solar Technology AG.
The Interim Consolidated Financial Statements are based on the financial statements of SMA Solar Technology AG and of the subsidiaries included in consolidation, which are prepared in accordance with uniform accounting policies applicable throughout the Group.
More detailed information is provided in the Notes to the Consolidated Financial Statements as at December 31, 2009.
032 Interim Consolidated Financial Statements
058 Other Information
There were no changes to the accounting and valuation policies in the present Interim Consolidated Financial Statements as at September 30, 2010 compared with the Consolidated Financial Statements of SMA Solar Technology AG as at December 31, 2009. A detailed description of these policies is published in the Notes to the Consolidated Financial Statements as at December 31, 2009.
The SMA Group has implemented all accounting standards that are to be applied mandatorily from the 2010 fiscal year in the preparation of the Interim Consolidated Financial Statements. This relates primarily to IAS 1 "Presentation of Financial Statements". The other standards to be applied initially in the fiscal year 2010 have no significant impact on the Consolidated Interim Financial Statements.
012 The Share Interim Management Report
032 Interim Consolidated Financial Statements
058 Other Information
041
006
The SMA Group has implemented all accounting standards that are to be applied mandatorily from the 2010 fiscal year in the preparation of the Interim Consolidated Financial Statements.
The standards to be applied initially in the fiscal year 2010 have no significant impact on the Interim Consolidated Financial Statements. The Consolidated Financial Statements as at December 31, 2009 contain a detailed description of the new accounting standards that are on principle relevant to the SMA Group.
The Group's operating segments were defined in compliance with the regulations contained in IFRS 8 and match those of the Consolidated Financial Statements as at December 31, 2009. Sales in the Photovoltaics Technology division are subject to fluctuations because of discontinuous incentive programs.
032 Interim Consolidated Financial Statements
058 Other Information
Financial ratios by segments
| Segment | Photovoltaics Technology | |||
|---|---|---|---|---|
| Medium Power Solutions | High Power Solutions | |||
| € million | Q3 2010 | Q3 2009 | Q3 2010 | Q3 2009 |
| External sales | 538.2 | 269.3 | 81.8 | 37.3 |
| Internal sales | 26.3 | 5.8 | 3.8 | 4.5 |
| Total sales | 564.5 | 275.1 | 85.6 | 41.8 |
| Depreciation and amortization | 6.0 | 3.0 | 0.9 | 0.5 |
| Operating profit (EBIT ) |
165.4 | 66.6 | 17.8 | 14.2 |
| Sales by regions | ||||
| Germany | 332.3 | 187.7 | 33.3 | 22.8 |
| European Union | 172.1 | 56.0 | 41.8 | 10.7 |
| Third-party countries | 57.2 | 32.3 | 7.8 | 4.0 |
| Sales deductions | –23.4 | –6.7 | –1.1 | –0.2 |
| External sales | 538.2 | 269.3 | 81.8 | 37.3 |
The segment information pursuant to IFRS 8 is made up as follows for the first nine months of the years 2010 and 2009:
| Segment | Photovoltaics Technology | ||||
|---|---|---|---|---|---|
| Medium Power Solutions | High Power Solutions | ||||
| € million | Q1–Q3 2010 | Q1–Q3 2009 | Q1–Q3 2010 | Q1–Q3 2009 | |
| External sales | 1,237.3 | 487.3 | 184.2 | 58.2 | |
| Internal sales | 56.9 | 18.9 | 14.6 | 6.3 | |
| Total sales | 1,294.2 | 506.2 | 198.8 | 64.5 | |
| Depreciation and amortization | 14.5 | 7.5 | 2.3 | 1.4 | |
| Operating profit (EBIT ) |
350.8 | 97.1 | 42.5 | 12.2 | |
| Sales by regions | |||||
| Germany | 816.9 | 311.5 | 90.1 | 38.2 | |
| European Union | 320.5 | 116.1 | 69.3 | 15.0 | |
| Third-party countries | 150.2 | 71.9 | 27.3 | 5.3 | |
| Sales deductions | –50.3 | –12.2 | –2.5 | –0.3 | |
| External sales | 1,237.3 | 487.3 | 184.2 | 58.2 |
Interim Consolidated Financial Statements
Notes to the Condensed Interim Financial Statements as at September 30, 2010
058 Other Information
032
| Railway Technology | Electronics Manufacturing | ||||||
|---|---|---|---|---|---|---|---|
| Railway Technology | Electronics Manufacturing | Reconciliation | Continuing operations | ||||
| Q3 2010 | Q3 2009 | Q3 2010 | Q3 2009 | Q3 2010 | Q3 2009 | Q3 2010 | Q3 2009 |
| 5.7 | 5.1 | 1.0 | 0.7 | 0.0 | 0.0 | 626.7 | 312.4 |
| 4.6 | 4.0 | 148.8 | 68.1 | –183.5 | –82.4 | 0.0 | 0.0 |
| 10.3 | 9.1 | 149.8 | 68.8 | –183.5 | –82.4 | 626.7 | 312.4 |
| 0.1 | 0.1 | 1.3 | 0.9 | 0.2 | 0.0 | 8.5 | 4.5 |
| 1.6 | 0.4 | 16.8 | 6.3 | –3.3 | –1.7 | 198.3 | 85.8 |
| 2.0 | 1.4 | 1.0 | 0.7 | 0.0 | 0.0 | 368.6 | 212.6 |
| 2.2 | 2.3 | 0.0 | 0.0 | 0.0 | 0.0 | 216.1 | 69.0 |
| 1.5 | 1.4 | 0.0 | 0.0 | 0.0 | 0.0 | 66.5 | 37.7 |
| 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | –24.5 | –6.9 |
| 5.7 | 5.1 | 1.0 | 0.7 | 0.0 | 0.0 | 626.7 | 312.4 |
| Railway Technology | Electronics Manufacturing | ||||||
|---|---|---|---|---|---|---|---|
| Railway Technology | Electronics Manufacturing | Reconciliation | Continuing operations | ||||
| Q1–Q3 2010 | Q1–Q3 2009 | Q1–Q3 2010 | Q1–Q3 2009 | Q1–Q3 2010 | Q1–Q3 2009 | Q1–Q3 2010 | Q1–Q3 2009 |
| 17.8 | 12.1 | 3.2 | 1.9 | 0.0 | 0.0 | 1,442.5 | 559.5 |
| 12.3 | 7.5 | 329.5 | 130.0 | –413.3 | –162.7 | 0.0 | 0.0 |
| 30.1 | 19.6 | 332.7 | 131.9 | –413.3 | –162.7 | 1,442.5 | 559.5 |
| 0.3 | 0.2 | 3.6 | 2.3 | 0.6 | 0.0 | 21.3 | 11.4 |
| 2.7 | 1.2 | 29.6 | 12.1 | –7.4 | –1.8 | 418.2 | 120.8 |
| 5.9 | 4.7 | 3.1 | 1.9 | 0.0 | 0.0 | 916.0 | 356.3 |
| 6.6 | 5.3 | 0.1 | 0.0 | 0.0 | 0.0 | 396.5 | 136.4 |
| 5.3 | 2.1 | 0.0 | 0.0 | 0.0 | 0.0 | 182.8 | 79.3 |
| 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | –52.8 | –12.5 |
| 17.8 | 12.1 | 3.2 | 1.9 | 0.0 | 0.0 | 1,442.5 | 559.5 |
012 Interim Management Report
032 Interim Consolidated Financial Statements
058 Other Information Notes to the Condensed Interim Financial Statements as at September 30, 2010
The reconciliation of the total segment operating profit (EBIT) pursuant to IFRS 8 to profit before income taxes produces the following figures:
| Reconciliation | ||||
|---|---|---|---|---|
| € million | Q3 2010 | Q3 2009 | Q1–Q3 2010 | Q1–Q3 2009 |
| Total segment earnings (EBIT ) |
201.6 | 87.5 | 425.6 | 122.6 |
| Eliminations | –3.3 | –1.7 | –7.4 | –1.8 |
| Consolidated operating profit (EBIT ) |
198.3 | 85.8 | 418.2 | 120.8 |
| Financial result | 0.2 | 0.9 | 0.4 | 4.0 |
| Profit before income taxes | 198.5 | 86.7 | 418.6 | 124.8 |
The reconciliation includes circumstances that by definition are not part of the segments. In addition, unallocated parts of Group head office, e. g. from circumstances that are accounted for centrally, are included therein. Business relations between the segments are eliminated in the reconciliation.
Segment assets as at September 30, 2010 increased as against the reporting date of the last Consolidated Financial Statements (December 31, 2009) by € 202.8 million in the Medium Power Solutions segment, by € 88.7 million in the High Power Solutions segment and by € 55.9 million in the Electronics Manufacturing segment.
In the reconciliations as at September 30, 2010, segment assets increased by € 34.1 million as compared to December 31, 2009.
032 Interim Consolidated Financial Statements
058 Other Information
| Q1–Q3 2010 € '000 |
Q1–Q3 2009 € '000 |
|
|---|---|---|
| Material expenses | 623,731 | 241,944 |
| Personnel expenses | 148,560 | 88,025 |
| Depreciation | 14,324 | 7,989 |
| Other | 101,975 | 23,358 |
| 888,590 | 361,316 |
Cost of sales includes, as direct costs, the product-related material expenses as well as all other expenses for production, purchasing and service. Production expenses include the cost for device production, production-related testing areas and warehouse management. Service expenses consist of the cost for global customer service, device repair and the service hotline.
| Q1–Q3 2010 € '000 |
Q1–Q3 2009 € '000 |
|
|---|---|---|
| Material expenses | 592 | 257 |
| Personnel expenses | 24,793 | 13,984 |
| Depreciation | 1,076 | 773 |
| Other | 14,123 | 10,476 |
| 40,584 | 25,490 |
Selling expenses include expenditure for global sales activities, internal sales departments and marketing.
032 Interim Consolidated Financial Statements
058 Other Information
| Q1–Q3 2010 € '000 |
Q1–Q3 2009 € '000 |
|
|---|---|---|
| Material expenses | 1,853 | 1,974 |
| Personnel expenses | 49,189 | 27,513 |
| Depreciation | 3,519 | 2,024 |
| Other | 8,655 | 5,642 |
| 63,216 | 37,153 | |
| Capitalized development projects | –9,925 | –4,657 |
| 53,291 | 32,496 |
Research and development costs include all expenses that can be attributed to product development, development-related testing areas and product management. In addition, costs for technical documentation and patent management are assigned to the research and development costs.
| Q1–Q3 2010 € '000 |
Q1–Q3 2009 € '000 |
|
|---|---|---|
| Material expenses | 95 | 44 |
| Personnel expenses | 28,653 | 15,331 |
| Depreciation | 2,425 | 667 |
| Other | 3,600 | 3,636 |
| 34,773 | 19,678 |
Administrative expenses include expenses for the Managing Board, for quality management as well as for the finance and human resources areas. The expenses for building management and IT were distributed, based on cost types, to all functional areas in line with planned consumption.
Interim Consolidated Financial Statements 032
Other Information 058
047
Other income mainly comprised income from foreign currency valuation and other non-operating income.
Other expenses include, in particular, expenses incurred from foreign currency valuation, impairment losses on receivables and inventories as well as expenses for the disposal of fixed assets.
| Q1–Q3 2010 € '000 |
Q1–Q3 2009 € '000 |
|
|---|---|---|
| Wages and salaries | 169,595 | 111,899 |
| Expenses for temporary employees | 56,363 | 20,783 |
| Social security contribution and welfare payments | 25,239 | 12,171 |
| 251,197 | 144,853 |
The average number of employees amounted to:
| Q1–Q3 2010 | Q1–Q3 2009 | |
|---|---|---|
| Research and development | 640 | 466 |
| Production and service | 1,759 | 1,154 |
| Sales and administrative | 835 | 579 |
| 3,234 | 2,199 | |
| Trainees and interns | 358 | 261 |
| Temporary employees | 1,781 | 714 |
| 5,373 | 3,174 |
032 Interim Consolidated Financial Statements
058 Other Information
| Q1–Q3 2010 | Q1–Q3 2009 | |
|---|---|---|
| € '000 | € '000 | |
| Interest income | 1,947 | 4,993 |
| Other financial income | 16 | 243 |
| Financial income | 1,963 | 5,236 |
| Interest expenses | 530 | 4 |
| Other financial expenses | 11 | 5 |
| Interest share from finance lease | 0 | 794 |
| Interest portion from valuation | 1,011 | 474 |
| Financial expenses | 1,552 | 1,277 |
| Financial result | 411 | 3,959 |
The lower interest income reflects the current development of interest levels. Interest expenses relate to loan interest on the part of the new subsidiary SMA Immo. Since the inclusion of SMA Immo in the scope of consolidation, the finance lease with SMA Solar Technology AG has been eliminated.
Earnings per share are calculated by dividing the consolidated earnings attributable to the shareholders by the weighted average of ordinary shares in circulation during the period.
The consolidated earnings attributable to the shareholders are the consolidated net income after tax, excluding the portion attributable to non-controlling interests. Since, at the reporting date, the Company does not hold any of its own shares and neither are there any other special cases, the number of ordinary shares issued equates the number of shares in circulation.
The calculation of earnings in relation to the weighted average number of shares in accordance with IAS 33 produces earnings of € 4.00 per share for the period from July 1 to September 30, 2010 and earnings of € 8.56 per share for the period from January 1 to September 30, 2010, each on the basis of 34.7 million shares. In relation to the weighted average number of shares in accordance with IAS 33, the earnings amount to € 1.73 per share for the period from July 1 to September 30, 2009 and to € 2.48 per share for the period from January 1 to September 30, 2009, each on the basis of 34.7 million shares.
Interim Consolidated Financial Statements 032
Other Information 058
There are no options or conversion rights at the reporting date. Therefore, there are no diluting effects so that the diluted and basic earnings per share are the same.
| 09/30/2010 € '000 |
12/31/2009 € '000 |
|
|---|---|---|
| Software | 8,379 | 5,917 |
| Research and development projects | 18,824 | 8,955 |
| Prepayments | 1,282 | 500 |
| 28,485 | 15,372 |
The additions to the development costs reflect the intensified development activities to secure the SMA Group's technology leadership. The additions to intangible assets result, among other things, from the purchase of software licenses for the growth-related expansion of the ERP system.
| 09/30/2010 € '000 |
12/31/2009 € '000 |
|
|---|---|---|
| Land and buildings, including buildings on third-party property | 105,973 | 54,040 |
| Technical equipment and machinery | 38,544 | 32,433 |
| Other equipment, fixtures and furniture | 66,963 | 38,225 |
| Prepayments | 29,312 | 24,421 |
| 240,792 | 149,119 |
The carrying amount of the buildings held under finance leases amounted to € 20.3 million as at December 31, 2009. Since the inclusion of SMA Immo in the scope of consolidation at the beginning of the current fiscal year, this finance lease has been eliminated. The fair value of the buildings owned by SMA Immo amounted to € 27.0 million on the date the company was included in the scope of
012 Interim Management Report
032 Interim Consolidated Financial Statements
058 Other Information Selected Notes to the Balance Sheet SMA Group
consolidation. In the context of SMA Solar Technology AG's expansion at the Sandershäuser Berg site, the expansion of the Kassel-Waldau production facility as well as the new service center and the Solar Academy, the Group invested a further amount of € 46.6 million.
The prepayments made in the period from January 1 to September 30, 2010 include investments in the construction of office buildings and for the expansion of the production facility in Denver (USA), in the total amount of € 9.6 million.
| 09/30/2010 € '000 |
12/31/2009 € '000 |
|
|---|---|---|
| Raw materials, consumables and supplies | 161,139 | 60,259 |
| Unfinished goods, work in progress | 28,355 | 13,586 |
| Finished goods and goods for resale | 87,712 | 36,036 |
| Prepayments | 433 | 2,688 |
| 277,639 | 112,569 |
Inventories are measured at the lower value of acquisition or manufacturing costs and net realizable value. The increase in inventories results from the significantly better order situation when compared to the previous year. The impairment on inventories, included in expenses as manufacturing costs, is € 0.0 million (Q1 – Q3 2009: € 0.6 million).
As at September 30, 2010, other current financial assets include primarily time deposits amounting to € 210.0 million, which have a term to maturity of more than three months, and interest accrued. Other non-current financial assets include a rent deposit in the amount of USD 5.0 million for buildings in the USA.
The change in equity, including effects not shown in the Income Statement, is presented in the Statement of Changes in Equity.
Selected Notes to the Balance Sheet SMA Group
The Share 006
Interim Management Report 012
Interim Consolidated Financial Statements 032
Other Information 058
051
On May 27, 2010, the General Meeting of SMA Solar Technology AG passed a resolution to distribute a dividend of € 45.1 million (€ 1.30 per qualifying share) for the 2009 fiscal year.
The provisions account for all recognizable risks and contingent liabilities at the balance sheet date and are made up as follows:
| 09/30/2010 € '000 |
12/31/2009 € '000 |
|
|---|---|---|
| Production area | 113,090 | 64,679 |
| Personnel area | 1,472 | 1,216 |
| Other | 15,728 | 5,801 |
| 130,290 | 71,696 |
Provisions in the production area consist primarily of a warranty provision as well as provisions for other risks of the various production areas of the Group. Provisions in the staff area essentially relate to longservice anniversaries, death benefits and partial retirement benefits.
| 09/30/2010 € '000 |
12/31/2009 € '000 |
|
|---|---|---|
| Current finance lease liabilities | 5 | 1,405 |
| Non-current finance lease liabilities | 7 | 18,772 |
| Liabilities to banks | 21,269 | 0 |
| Derivative financial liabilities | 1,008 | 0 |
| Other financial liabilities | 0 | 6 |
| 22,289 | 20,183 |
012 Interim Management Report
032 Interim Consolidated Financial Statements
058 Other Information Selected Notes to the Balance Sheet SMA Group
052
Since the inclusion of SMA Immo in the scope of consolidation at the beginning of the 2010 fiscal year, the finance lease with SMA Solar Technology AG has been eliminated. The loans of SMA Immo were taken over to the Consolidated Financial Statements. The value of liabilities to credit institutions, stated at SMA Immo, amounted to € 22.8 million on the acquisition date. Derivative financial liabilities relate to interest derivatives in connection with historical real estate financing of SMA Immo.
| 09/30/2010 € '000 |
12/31/2009 € '000 |
|
|---|---|---|
| Liabilities Human Resources department | 105,597 | 57,200 |
| Liabilities Sales department | 38,676 | 14,352 |
| Other | 813 | 267 |
| 145,086 | 71,819 |
Liabilities in the personnel area contain obligations to employees regarding performance-based bonuses, positive holiday and flexitime balances as well as variable salary components and contributions to the worker's compensation association. The liabilities in the marketing area contain primarily liabilities to customers from advance payments received and bonus agreements.
| 09/30/2010 € '000 |
12/31/2009 € '000 |
|
|---|---|---|
| Deferred income for extended guarantees | 43,809 | 29,849 |
| Liabilities from prepayments received | 43,994 | 12,857 |
| Liabilities due to tax authorities | 10,002 | 1,559 |
| Liabilities from subsidies received | 1,598 | 826 |
| Other | 465 | 119 |
| 99,868 | 45,210 |
The accrual item for extended warranties includes liabilities from chargeable guarantee extensions granted for the products in the Photovoltaics Technology division. The main items included in the liabilities due to tax authorities are tax liabilities from payroll accounting as well as turnover tax liabilities.
Interim Consolidated Financial Statements 032
Other Information 058
The liabilities from subsidies received relate to taxable government grants from funds of the common-task program "Improvement of the Regional Economic Structure" (EU GA), granted as investment subsidies.
As at September 30, 2010, the Balance Sheet included one forward transaction intended to hedge the exchange rate risks of expected future sales generated with customers in the USA. The derivative is still classified as held for trading. It is not part of a hedging relationship as defined by IAS 39. The acquisition of SMA Immo has resulted in the initial recognition of interest derivatives. SMA Immo is exposed to interest risks due to existing financial liabilities. To secure the interest in the long term and to have a secure basis for calculating the financing, interest derivatives were concluded for a part of these financial liabilities. The derivatives are classified as held for trading. They are not part of a hedging relationship as defined by IAS 39.
As at the closing date of September 30, 2010, contingencies amounted to € 0.03 million (previous year: € 0.03 million).
The liquid funds shown in the Statements of Cash Flows correspond to the balance sheet item "Cash and cash equivalents".
The gross cash flow of € 410.7 million (previous year: € 117.0 million) reflects the operating income prior to commitment of funds.
The net cash flow from operating activities increased in fiscal 2010 to € 296.9 million (previous year: € 79.2 million). The increase is mainly the result of the year-on-year higher gross cash flow (€ + 293.7 million) due to strong growth of earnings.
032 Interim Consolidated Financial Statements
058 Other Information
Notes to the Statements of Cash Flows SMA Group
The increased net working capital results primarily from a targeted increase in raw material inventories in order to improve delivery capability against the backdrop of strong demand, in particular in the German market. Inventories increased on a year-on-year basis by € 165.1 million to a total of € 277.6 million as at September 30, 2010. The increase in trade receivables and trade payables resulted from strong sales growth in the first nine months. The changes in other net assets are due primarily to growth-related increases in liabilities for guarantee extensions, prepayments received, employee bonus payments and the liabilities under holiday and flexitime commitments.
As a result of the investments already made in new production capacities, the net cash flow from investing activities increased to € – 192.3 million in the reporting period, following € – 110.8 million in the same period of the previous year. The outflow of funds due to investments in property, plant and equipment as well as intangible assets amounted to € 120.0 million (previous year: € 51.4 million). Pursuant to IAS 7.17, monetary investments with a term to maturity of more than three months are allocated to the net cash flow from investing activities. The outflow of funds for the acquisition of the shares in SMA Immo at the beginning of the fiscal year 2010 amounted to € 1.3 million. In addition, short-term financial liabilities on current accounts of € 1.1 million were taken over with the acquisition.
In the current fiscal year, the value reflects the changes in the liabilities to credit institutions, which were taken over with the acquisition of SMA Immo. In the previous year, the net cash flow from financing activities included the changes in the finance lease liabilities to SMA Immo of € 0.2 million.
Cash and cash equivalents of € 284.3 million (December 31, 2009: € 225.0 million) include cash in hand, bank balances, short-term deposits with an original term to maturity of less than three months as well as any credits on current accounts used. Together with the time deposits with a term to maturity of more than three months, this results in financial resources of € 494.3 million (December 31, 2009: € 365.0 million).
006 The Share
055
There were no significant events on or after the reporting date other than those presented in or recognizable from the disclosures in the Notes to the Consolidated Financial Statements.
There were no significant changes in respect of related parties as against December 31, 2009, except for the changes in the Managing Board and the acquisition of the shares in SMA Immo. The scope of transactions with team-time GmbH in the first nine months of 2010 was based on the expansions of capacity of SMA Solar Technology AG.
Niestetal, November 5, 2010
SMA Solar Technology AG The Managing Board
| Günther Cramer | Peter Drews | Jürgen Dolle | Roland Grebe |
|---|---|---|---|
| Uwe Hertel | Pierre-Pascal Urbon | Marko Werner |
| 006 | The Share | ||
|---|---|---|---|
032 Interim Consolidated Financial Statements
058 Other Information Auditor's Review Report
To SMA Solar Technology AG, Niestetal
We have reviewed the Condensed Interim Consolidated Financial Statements – comprising the condensed income statement, condensed statement of comprehensive income, condensed balance sheet, condensed statement of changes in equity, condensed statement of cash flows and selected explanatory notes – together with the interim group management report of SMA Solar Technology AG, Niestetal, for the period from January 1, 2010 to September 30, 2010, which are components of the quarterly financial report pursuant to section 37x para. 3 of the German Securities Trading Act (WpHG). The preparation of the Condensed Interim Consolidated Financial Statements in accordance with the International Financial Reporting Standards (IFRS) applicable to interim financial reporting as adopted by the EU and of the interim group management report in accordance with the provisions of the German Securities Trading Act applicable to interim group management reports is the responsibility of the Company's Managing Board. Our responsibility is to issue a review report on the Condensed Interim Consolidated Financial Statements and on the interim group management report based on our review.
We conducted our review of the Condensed Interim Consolidated Financial Statements and of the interim group management report in accordance with German generally accepted standards for the review of financial statements promulgated by the Institute of Public Auditors in Germany (Institut der Wirtschaftsprüfer – IDW). Those standards require that we plan and perform the review so that we can preclude through critical evaluation, with moderate assurance, that the Condensed Interim Consolidated Financial Statements have not been prepared, in all material respects, in accordance with the IFRSs applicable to interim financial reporting as adopted by the EU and that the interim group
Auditor's Review Report
Interim Consolidated Financial Statements 032
The Share
Other Information 058
Interim Management Report
057
006 012
management report has not been prepared, in all material respects, in accordance with the provisions of the German Securities Trading Act applicable to interim group management reports. A review is limited primarily to inquiries of company personnel and analytical assessments and therefore does not provide the assurance attainable in a financial statements audit. Since, in accordance with our engagement, we have not performed a financial statement audit, we cannot express an audit opinion.
Based on our review, no matters have come to our attention that cause us to presume that the Condensed Interim Consolidated Financial Statements have not been prepared, in all material respects, in accordance with the IFRSs applicable to interim financial reporting as adopted by the EU nor that the interim group management report has not been prepared, in all material respects, in accordance with the provisions of the German Securities Trading Act applicable to interim group management reports.
Hanover, November 5, 2010
Deloitte&Touche GmbH Wirtschaftsprüfungsgesellschaft
| Scharpenberg | Schwibinger |
|---|---|
| Wirtschaftsprüfer | Wirtschaftsprüfer |
| (German Public Auditor) | (German Public Auditor) |
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032 Interim Consolidated Financial Statements
058 Other Information Disclaimer
058
This Quarterly Financial Report was published in German and English on November 12, 2010. The German version is authoritative. Both versions are available as downloads on our Web site:
www.SMA.de / IR / Finanzberichte www.SMA.de / IR / FinancialReports
This document contains forward-looking statements and information – that is, statements related to future, not past, events. These statements may be identified by words such as "expects", "looks forward to", "anticipates", "intend", "plans", "believes", "seeks", "estimates", "will", "project" or words of similar meaning. Such statements are based on our current expectations and certain assumptions, and are, therefore, subject to certain risks and uncertainties. A variety of factors, many of which are beyond SMA's control, affect our operations, performance, business strategy and results and could cause the actual results, performance or achievements of SMA to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements. For us, particular uncertainties arise, among others, from changes in general economic and business conditions (including margin developments), in the legal and regulatory framework, changes in currency exchange rates and interest rates. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described in the relevant forward-looking statement as expected, anticipated, intended, planned, believed, sought, estimated or projected. SMA does not intend or assume any obligation to update or revise these forward-looking statements in light of developments which differ from those anticipated.
| December 7, 2010 | Macquarie Alternative Energy Conference 2010: Powering Change, London |
|---|---|
| January 18–20, 2011 | CA Cheuvreux –10th German Corporate Conference, Frankfurt |
| March 16, 2011 | Commerzbank Growth & Responsibility Conference, Frankfurt |
| March 31, 2011 | Publication of Annual Report SMA Group 2010 and Annual Financial Statement SMA AG 2010 Analyst Conference Call: 9:00 a.m. (CET) Press Conference on Annual Results, Frankfurt |
| May 13, 2011 | Publication of Interim Financial Report January to March 2011 Analyst Conference Call: 9:00 a.m. (CET) |
| May 26, 2011 | Annual General Meeting 2011, Kassel, Kongress Palais |
| Publisher | SMA Solar Technology AG |
|---|---|
| Concept and design | First Rabbit GmbH, Cologne |
| Text | SMA Solar Technology AG |
| Photography | Steffen Jahn |
| PrePress | First Rabbit GmbH, Cologne |
| Publication date | November 12, 2010 |
| SMA Solar Technology AG | Investor Relations | Public Relations |
|---|---|---|
| Sonnenallee 1 | Anna Raudszus | Volker Wasgindt |
| 34266 Niestetal | Phone: +49 561 9522 2222 P | hone: +49 561 9522 1121 |
| Germany | Fax: +49 561 9522 2223 |
Fax: +49 561 9522 1103 |
| Phone: +49 561 9522 0 | E-mail: [email protected] | E-mail: [email protected] |
| www.SMA.de |
SMA Solar Technology AG Investor Relations Public Relations Sonnenallee 1 Anna Raudszus Volker Wasgindt 34266 Niestetal Phone: +49 561 9522 2222 Phone: +49 561 9522 1121 Germany Fax: +49 561 9522 2223 Fax: +49 561 9522 1103
Utility Interactive Battery Inverter– Made in Germany
Type Quarterly Financial Report Serial No. January to September 2010
Art. No. QB2010-UK-20101112
34266 Niestetal Germany
Phone: + 49 561 9522 0 Fax: + 49 561 9522 100 E-mail: [email protected] www.SMA.de
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