Press release from PR Newswire
Hanwha SolarOne Reports First Quarter 2011 Results
Tuesday, May 24, 2011
Hanwha SolarOne Reports First Quarter 2011 Results07:21 EDT Tuesday, May 24, 2011SHANGHAI, May 24, 2011 /PRNewswire/ -- Hanwha SolarOne Co., Ltd. ("SolarOne" or the "Company") (Nasdaq: HSOL), a vertically integrated manufacturer of silicon ingots, wafers and photovoltaic ("PV") cells and modules in China, today reported its unaudited financial results for the quarter ended March 31, 2011. The Company will host a conference call to discuss the results at 8:00 am Eastern Time (8:00 pm Shanghai Time) on May 24, 2011. A slide presentation with details of the results will also be available on the Company's website prior to the call.FIRST QUARTER 2011 HIGHLIGHTS Total net revenues were RMB2,194.8 million (US$335.2 million), an increase of 3.9% from 4Q10 and an increase of 48.7% from 1Q10.PV module shipments, including module processing services, reached 248.5 MW, an increase of 13.6% from 218.8 MW in 4Q10 and an increase of 65.0% from 1Q10.Average selling price ("ASP"), excluding module processing services, decreased to RMB11.23 per watt (US$1.71) from RMB11.82 per watt in 4Q10. Gross profit decreased 16.7% to RMB356.9 million (US$54.5 million) from RMB428.7 million in 4Q10, and increased 31.0% from RMB272.5 million in 1Q10. Gross margin decreased to 16.3% from 20.3% in 4Q10, primarily due to a combination of a decline in ASP and an increase in raw material costs. Gross margin in 1Q10 was 18.5%.Operating profit declined 14.3% to RMB253.9 million (US$38.8 million) from RMB296.2 million in 4Q10 and increased 28.0% from RMB198.4 million in 1Q10. The sequential decrease in operating profit was primarily due to the lower gross profit and was partially offset by lower operating expenses.Operating margin decreased to 11.6% from 14.0% in 4Q10 and 13.4% in 1Q10.Net income attributable to shareholders on a non-GAAP basis(1) was RMB154.4 million (US$23.6 million), a decrease of 38.4% from RMB250.7 million in 4Q10 and a decrease of 2.3% from RMB158.1 million in 1Q10.Net income per basic ADS on a non-GAAP basis(1) was RMB1.84 (US$0.28), a decrease of 45.7% from RMB3.39 in 4Q10 and a 32.6% decline from 1Q10. Net income attributable to shareholders on a GAAP basis was RMB149.4 million (US$22.8 million), compared with net income attributable to shareholders of RMB370.8 million and RMB138.9 million in 4Q10 and 1Q10, respectively.Net income per basic ADS on a GAAP basis was RMB1.78 (US$0.27), compared with net income per basic ADS on a GAAP basis of RMB5.02 in 4Q10 and RMB2.40 in 1Q10. Annualized Return on Equity ("ROE") on a non-GAAP basis(1) was 12.6% in 1Q11, compared with 24.1% in 4Q10 and 26.6% in 1Q10. Annualized ROE on a GAAP basis was 11.3% in 1Q11, compared with 33.2% in 4Q10 and 19.2% in 1Q10.Dr. Peter Xie, President and CEO of Hanwha SolarOne, commented, "During a period of demand uncertainty resulting from regulatory changes in large markets such as Germany and Italy, we are quite pleased that we were able to record good shipment growth during the quarter. Although the demand environment for the second quarter of 2011 remains fluid, we are confident that there will be a rebound in the second half of 2011. This, combined with our new lower-cost manufacturing capacity coming on stream, should enable us to achieve improved operating performance as the year progresses."FIRST QUARTER 2011 RESULTS Total net revenues were RMB2,194.8 million (US$335.2 million), an increase of 3.9% from RMB2,112.7 million in 4Q10 and an increase of 48.7% from 1Q10. The increase compared with 4Q10 was primarily due to higher shipments, and was somewhat offset by the lower average selling price. Revenue contribution from PV module processing services as a percentage of total net revenues was 10.7%, compared with 8.0% in 4Q10 and 7.8% in 1Q10.PV module shipments, including module processing services, reached 248.5 MW, an increase of 13.6% from 218.8 MW in 4Q10 and 150.6 MW in 1Q10.Module revenue attributable to Germany increased to 39% in 1Q11 from 25% in 4Q10. Italy decreased from 19% in 4Q10 to 11% in 1Q11, largely due to the pending regulatory changes announced during 1Q11. Newer growth markets such as China and the United States remained vibrant, totaling 9% and 10% of shipments, respectively, in 1Q11. Other notable markets were the Netherlands, a port of destination for deliveries to countries throughout Europe, which accounted for 10% of shipments in 1Q11. This was an increase from 7% in the prior quarter. Australia remained a consistently strong market for the Company, rising to 10% of shipments in 1Q11.(Photo: http://photos.prnewswire.com/prnh/20110524/LA07797-a)(Photo: http://photos.prnewswire.com/prnh/20110524/LA07797-b)Average selling price ("ASP"), excluding module processing services, decreased to RMB11.23 per watt (US$1.71) from RMB11.82 per watt in 4Q10. Gross profit decreased 16.7% to RMB356.9 million (US$54.5 million) from RMB428.7 million in 4Q10 and rose 31.0% from RMB272.5 million in the same quarter a year ago. Gross margin decreased to 16.3% from 20.3% in 4Q10, primarily due to a combination of a decline in ASP and an increase in raw material costs. Gross margin in 1Q10 was 18.5%.(Photo: http://photos.prnewswire.com/prnh/20110524/LA07797-c)(Photo: http://photos.prnewswire.com/prnh/20110524/LA07797-d)The blended cost of goods sold ("COGS") per watt, excluding module processing services, was US$1.43, representing a 1.4% increase from US$1.41 in 4Q10. The blended COGS takes into account the production cost (silicon and non-silicon) using internally sourced wafers, purchase costs and additional processing costs of externally sourced wafers and cells, as well as freight costs.The production cost (including both silicon and non-silicon costs) using internal wafers was US$1.27 per watt, representing a 5.8% increase from US$1.20 per watt in 4Q10. The increase was primarily due to an increase in the price of polysilicon. The cost of polysilicon used in our production increased to US$73/kg in 1Q11 from US$67/kg in 4Q10. The Company believes the price of polysilicon peaked in 1Q11 and will decline from 2Q11 onwards.Operating profit decreased 14.3% to RMB253.9 million (US$38.8 million) from RMB296.2 million in 4Q10. Operating margin decreased to 11.6% from 14.0% in 4Q10. In 1Q10, the operating profit was RMB198.4 million and the operating margin was 13.4%.Operating expenses as a percentage of total net revenues were 4.7% in 1Q11, compared with 6.3% in 4Q10 and 5.0% in 1Q10. The lower operating expenses in 1Q11 compared with 4Q10 were primarily due to a reversal of accrued operating expenses.Interest expense was RMB41.8 million (US$6.4 million), compared with RMB40.7 million in 4Q10 and RMB40.9 million in 1Q10. The Company recorded a net foreign exchange loss of RMB36.8 million (US$5.6 million), compared with a net foreign exchange gain of RMB1.3 million in 4Q10 and RMB3.7 million in 1Q10.Gain from the change in fair value of the conversion feature of the Company's convertible bonds was RMB47.9 million (US$7.3 million), compared with a gain of RMB255.6 million in 4Q10 and a loss of RMB2.5 million in 1Q10. The fluctuations resulting from applying ASC 815-40 were primarily due to changes in the Company's ADS price during the quarter. This line item has fluctuated, and is expected to continue to fluctuate quarter-to-quarter. The Company has no direct control over the fluctuations.Income tax expense in 1Q11 decreased to RMB84.3 million (US$12.9 million) compared with RMB148.9 million in 4Q10 and RMB21.4 million in 1Q10. As noted in the prior quarter, the Company recorded incremental tax expenses relating to an uncertain tax position of its subsidiary as to whether the subsidiary continues to satisfy the criteria as a High and New Technology Enterprise ("HNTE"). The Company recorded incremental tax expenses of RMB30.1 million (US$4.6 million) in 1Q11, compared with RMB116.1 million in 4Q10.Net income attributable to shareholders on a non-GAAP basis(1) was RMB154.4 million (US$23.6 million), a decrease of 38.4% from RMB250.7 million in 4Q10 and a decrease of 2.3% from RMB158.1 million in 1Q10. Net income per basic ADS on a non-GAAP basis(1) was RMB1.84 (US$0.28), a decrease of 45.7% from RMB3.39 in 4Q10 and a 32.6% decline from RMB2.73 in 1Q10. Net income attributable to shareholders on a GAAP basis was RMB149.4 million (US$22.8 million), compared with net income of RMB370.8 million for 4Q10.The 1Q11 amount is 7.5% higher than the same figure for 1Q10. Net income per basic ADS on a GAAP basis was RMB1.78 (US$0.27), compared with net income per basic ADS of RMB5.02 in 4Q10 and RMB2.40 for 1Q10.Annualized ROE on a non-GAAP basis(1) was 12.6% in 1Q11, compared with 24.1% in 4Q10 and 26.6% in 1Q10.Annualized ROE on a GAAP basis was 11.3% in 1Q11, compared to 33.2% in 4Q10 and 19.2% in 1Q10.FINANCIAL POSITION As of March 31, 2011, the Company had cash and cash equivalents of RMB1,354.4 million (US$206.8 million) and net working capital of RMB2,486.3 million (US$379.7 million), compared with cash and cash equivalents of RMB1,630.8 million and net working capital of RMB3,179.9 million as of December 31, 2010. Total short-term bank borrowings and the current portion of long-term bank borrowings was RMB987.2 million (US$150.8 million), compared with RMB533.9 million as of December 31, 2010. The increase was because the Company drew down some of its bank credit facilities to finance its 2011 capital expenditure program. As of March 31, 2011, the Company had total long-term debt of RMB748.1 million (US$114.3 million), which was comprised of both the non-current portion of long-term bank borrowings and convertible bonds. The Company's long-term bank borrowings are to be repaid in installments until their maturities in 2011 and 2012. Holders of the convertible bonds, which have a final maturity in 2018, have an option to require the Company to redeem the bonds on January 15, 2015. Net cash used in operating activities in 1Q11 was RMB67.5 million (US$10.3 million), compared with net cash generated from operating activities of RMB50.4 million in 4Q10. Net cash used in operating activities in 1Q10 was RMB5.4 million.As of March 31, 2011, accounts receivable were RMB1,722.0 million (US$263.0 million) compared with RMB1,282.8 million as of December 31, 2010. Days sales outstanding increased to 62 days in 1Q11 from 55 days in 4Q10 and 47 days in 1Q10. As of March 31, 2011, inventories increased to RMB990.7 million (US$151.3 million) from RMB790.8 million as of December 31,2010. Days inventory was 44 days in 1Q11 compared with 40 days in 4Q10 and 57 days in 1Q10.Capital expenditures were RMB618.1 million (US$94.4 million) in 1Q11. CAPACITY EXPANSION Details on the Company's annual production capacities and expected annual production capacities as of end of the stated quarter are as follows: Capacity ramp-up plan End of Q4 2010End of Q1 2011 End of Q2 2011 (Projected)End of Q3 2011 (Projected)End of Q4 2011 (Projected)Ingot MW4004004156501,000WaferMW4004505007001,000CellMW6006509001,2001,300Module MW9009001,1001,5001,500BUSINESS OUTLOOK The Company provides the following guidance based on current operating trends and market conditions. For 2Q11, the Company expects Total module shipments to be approximately 200MW, of which about 20% will be for PV module processing services. For the full year 2011, the Company expects: Module shipments to be approximately 1GW to 1.2GW, of which about 20 to 25% will be for PV module processing services.Capital expenditures to be approximately US$450 million.CONFERENCE CALL The Company will host a conference call to discuss the first quarter 2011 results at 8:00 AM Eastern Time (8:00 PM Shanghai Time) on May 24, 2011. Mr. Peter Xie, CEO and President, Mr. Gareth Kung, Chief Financial Officer, and Mr. Paul Combs, Vice President of Investor Relations, will discuss the results and take questions following the prepared remarks. The dial-in details for the live conference call are as follows: U.S. Toll Free Number:+1 800 261 3417International dial-in number:+1 617 614 3673China Toll Free Number (North): +10 800 152 1490China Toll Free Number (South): +10 800 130 0399China Toll Free Number (South):+10 800 852 1490Passcode: HSOL A live webcast of the conference call will be available on the investor relations section of the Company's website at: http://www.hanwha-solarone.com. A replay of the webcast will be available for one month. A telephone replay of the call will be available for seven days after the conclusion of the conference call. The dial-in details for the replay are as follows: U.S. Toll Free Number: 1 888 286 8010 International dial-in number: +1 617 801 6888 Passcode: 86707974FOREIGN CURRENCY CONVERSION The conversion in this release of Renminbi into U.S. dollars is made solely for the convenience of the reader, and is based on the exchange rate as set forth in the H.10 statistical release of the Federal Reserve Board as of March 31, 2011, which was RMB 6.5483 to US$1.00. No representation is intended to imply that the Renminbi amounts could have been, or could be, converted, realized or settled into U.S. dollars at that rate on March 31, 2011 or at any other date. The percentages stated in this press release are calculated based on Renminbi amounts. USE OF NON-GAAP FINANCIAL MEASURES The Company has included in this press release certain non-GAAP financial measures, including certain line items presented on the basis that the accounting impact of ASC 815-40 and ASC 740-10-25 had not been recorded. Prior quarter non-GAAP financial measures were adjusted to include the accounting impact of ASC 740-10-25 to ensure comparability of current quarter non-GAAP financial measure. The Company believes that both management and investors benefit from referring to these non-GAAP financial measures in assessing the performance of the Company and when planning and forecasting future periods. Readers are cautioned not to view non-GAAP financial measures on a stand-alone basis or as a substitute for GAAP measures, or as being comparable to results reported or forecasted by other companies, and should refer to the reconciliation of GAAP measures with non-GAAP measures also included herein. SAFE HARBOR STATEMENT This press release contains forward-looking statements. These statements constitute "forward-looking" statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and as defined in the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements include 1Q and full-year 2011 estimates for PV product shipments, ASPs, production capacities and other results of operations. Forward-looking statements involve inherent risks and uncertainties and actual results may differ materially from such estimates depending on future events and other changes in business climate and market conditions. Hanwha SolarOne disclaims any obligation to update or correct any forward-looking statements. About Hanwha SolarOneHanwha SolarOne Co., Ltd. (NASDAQ: HSOL) is a leading manufacturer of solar PV cells and modules in China, focusing on delivering high quality and reliable products at competitive prices. Hanwha SolarOne produces its monocrystalline and polycrystalline products at its internationally certified, vertically-integrated manufacturing facilities. Hanwha SolarOne partners with third-party distributors, OEM manufacturers, and system integrators to sell its modules into large-scale utility, commercial and governmental, and residential/small commercial markets. Hanwha SolarOne maintains a strong global presence with local staff throughout Europe, North America, and Asia. Hanwha SolarOne embraces environmental responsibility and sustainability by taking an active role in the photovoltaic cycle voluntary recycling program. (1) All non-GAAP numbers used in this press release exclude the accounting impact from applying ASC 815-40, which relates to the accounting treatment for the convertible bonds, and also the incremental tax expenses recognized in connection to the uncertain tax position of the Company's subsidiary. Please refer to the attached financial statements for the reconciliation between the GAAP and non-GAAP financial results. Non-GAAP financial results for prior quarters have been adjusted for comparability with the current quarter. For further information, please contact: Hanwha SolarOne Co., Ltd. Investor Contact: Paul Combs V.P. Investor Relations Building 1, 18th Floor1199 Minsheng Road, Shanghai, PRC 200135 P. R. China Tel: 86 21 3852 1533 / Mobile: 86 138 1612 2768 E-mail: email@example.com Christensen Kathy Li Tel: +1 480 614 3036 E-mail: kli@ChristensenIR.com Tip Fleming Tel: +85 2 9212 0684 E-mail: tfleming@ChristensenIR.comHanwha SolarOne Co., Ltd.CONSOLIDATED BALANCE SHEETS(Amounts in thousands of Renminbi ("RMB") and U.S. dollars ("US$")March 31December 31March 31March 312010201020112011(Unaudited)(Unaudited)(Unaudited)(Unaudited)RMB'000RMB'000RMB'000US$'000ASSETSCurrent assetsCash and cash equivalents936,3131,630,7771,354,392206,831Restricted cash83,440100,490152,63623,309Derivative contracts47,2757,48914,2582,177Accounts receivable, net848,9591,282,8071,722,038262,975Notes receivable-10,000--Inventories, net720,860790,773990,708151,293Advance to suppliers, net557,776764,063825,224126,021Other current assets224,419255,431243,37737,167Deferred tax assets - net69,46091,61194,45314,424Amount due from related parties86,73027,81917,3472,649 Total current assets3,575,2324,976,2605,414,433826,846Non-current assetsFixed assets ? net1,599,2472,084,0272,774,846423,751Intangible assets ? net209,042205,763204,66931,255Goodwill134,735134,735134,73520,575Deferred tax assets - net14,41716,75918,4772,822Long-term deferred expenses31,52727,27325,5783,906Amount due from related parites-15,00010,0001,527Long-term prepayment437,766394,283469,78871,742 Total non-current assets2,426,7342,862,8403,638,093555,578TOTAL ASSETS6,001,9667,839,1009,052,5261,382,424LIABILITIESCurrent liabilitiesDerivative contracts1,1318,04740,4246,173Short-term bank borrowings783,132318,919777,214118,690Long-term bank borrowings, current portion147,500215,000210,00032,069Accounts payable416,885478,1291,001,172152,891Notes payable266,650181,265263,30940,210Accrued expenses and other liabilities212,716404,826387,88959,235Customer deposits141,42633,53850,3297,686Unrecognized tax benefit27,385143,473173,58526,508Amount due to related parties38,07413,18324,1833,693 Total current liabilities2,034,8991,796,3802,928,105447,155-Non-current liabilitiesLong-term bank borrowings300,000135,00090,00013,744Convertible bonds677,738687,435658,143100,506Deferred tax liabilities26,41925,97725,8293,945 Total non-current liabilities1,004,157848,412773,972118,195TOTAL LIABILITIES3,039,0562,644,7923,702,077565,350Redeemable ordinary shares5555558EQUITYShareholders' equityOrdinary shares22731431448Additional paid-in capital2,344,0503,956,9533,963,670605,298Statutory reserves83,281170,000198,14130,258Retained earnings535,2971,066,9861,188,269181,462 Total shareholders' equity2,962,8555,194,2535,350,394817,066TOTAL EQUITY2,962,8555,194,2535,350,394817,066TOTAL LIABILITIES, REDEEMABLE ORDINARY SHARES AND SHAREHOLDERS' EQUITY6,001,9667,839,1009,052,5261,382,424Hanwha SolarOne Co., Ltd.CONSOLIDATED STATEMENTS OF OPERATIONS(Amounts in thousands of Renminbi ("RMB") and U.S. dollars ("US$"),except for number of shares (ADS) and per share (ADS) dataFor the three months endedMarch 31December 31March 31March 312010201020112011(Unaudited)(Unaudited) (Unaudited) (Unaudited) RMB'000RMB'000RMB'000US$'000Net revenues1,475,8322,112,7042,194,830335,176Cost of revenues(1,203,334)(1,684,053)(1,837,976)(280,680)Gross profit 272,498428,651356,85454,496Operating expensesSelling expenses(29,481)(65,143)(34,870)(5,325)G&A expenses(38,027)(54,760)(61,949)(9,460)R&D expenses(15,916)(14,622)(8,601)(1,313)Government grant9,3652,1212,438372 Total operating expenses(74,059)(132,404)(102,982)(15,726)Operating profit 198,439296,247253,87238,770Interest expenses(40,919)(40,658)(41,809)(6,385)Interest income5442,3504,059620Exchange gain (loss)(47,011)(36,222)16,6562,543Gain (loss) on change in fair value of derivative50,75637,505(53,492)(8,169)Gain (loss) on change in conversion feature fair value of convertible bond(2,505)255,59147,8987,315Other income3,0087,0639,0101,376Other expenses(1,996)(2,133)(2,474)(378)Net income before income tax160,316519,743233,72035,692Income tax expenses(21,367)(148,927)(84,296)(12,873)Net income138,949370,816149,42422,819Net income attributableto shareholders138,949370,816149,42422,819Net income per shareBasic0.481.000.360.05Diluted0.480.350.290.04Shares used in computationBasic289,674,891369,518,133419,408,428419,408,428Diluted290,187,034415,850,842465,445,803465,445,803Net income per ADSBasic2.405.021.780.27Diluted2.391.761.460.22ADSs used in computationBasic57,934,97873,903,62783,881,68683,881,686Diluted58,037,40783,170,16893,089,16193,089,161Hanwha SolarOne Co., Ltd. CONSOLIDATED STATEMENTS OF CASH FLOWS(Amounts in thousands of Renminbi ("RMB") and U.S. dollars ("US$")For the three months endedMarch 31, 2010December 31, 2010March 31, 2011March 31, 2011(Unaudited)(Unaudited)(Unaudited)(Unaudited)RMB'000RMB'000RMB'000US$'000Cash flow from operating activitiesNet income138,949370,816149,42422,819Adjustments to reconcile net income (loss) to net cashprovided (used) in operating activities:Unrealised (gain)/loss from derivative contracts(39,932)(68,138)25,6083,911Amortization of convertible bonds discount16,58014,65718,6072,842Changes in fair value of conversion feature of convertible bonds2,505(255,591)(47,898)(7,315)Loss from disposal of fixed assets58013920131Depreciation and amortization43,13451,49052,4648,012Amortization of long-term deferred expenses1,7801,8161,695259Provision for doubtful debt of advance to suppliers163---Reversal of doubtful debt for accounts receivable(278)---Provision for doubtful debt of accounts receivable1,005(1,006)--Write down of inventories37,84435,26637,9535,796Stock compensation expense7,1496,7365,504840Warranty settlements and reversals13,56211,76815,8052,414Warranty reversal-(1,843)(8,733)(1,334)Deferred tax benefit(7,120)(17,310)(4,707)(719)Unrecognized tax benefit-116,08930,1124,598Changes in operating assets and liabilitiesRestricted cash(17,761)(8,559)(32,144)(4,909)Inventory25,269(136,472)(237,889)(36,328)Account and notes receivables(262,198)(1,870)(429,231)(65,549)Advances to suppliers(15,943)87,266(61,161)(9,340)Prepaid expense12,86525,3787,5701,156Other current assets(56,967)(44,525)4,486685Long-term prepayment-725(75,506)(11,531)Amount due from related parties(74,272)(42,819)15,4722,363Accounts and notes payable57,354(37,112)460,78970,368Accrued expenses and other liabilities7,25938,041(23,752)(3,627)Customer deposits81,741(93,960)16,7912,564Amount due to related parties21,309(584)11,0001,680Net cash provided (used) in operating activities(5,423)50,398(67,540)(10,314)Cash flows from investing activitiesAcquisition of fixed assets(63,418)(279,523)(598,094)(91,336)Change of restricted cash-(28,074)(20,002)(3,054)Acquisition of intangible assets(1,538)---Net cash provided (used) in investing activities(64,956)(307,597)(618,096)(94,390)Cash flows from financing activitiesProceeds from share lending --91Proceeds from exercise of stock option5,1042,048947145Proceeds from issuance of ordinary shares-1,070,784--Proceeds from short-term bank borrowings508,36832,687666,561101,792Payment of short term bank borrowings(130,000)(461,777)(208,266)(31,805)Payment for long term bank borrowings(22,500)(52,500)(50,000)(7,636)Net cash provided (used) by financing activities360,972591,242409,25162,497Net increase (decrease) in cash and cash equivalents290,593334,043(276,385)(42,207)Cash and cash equivalents at the beginning of period645,7201,296,7341,630,777249,038Cash and cash equivalents at the end of period936,3131,630,7771,354,392206,831Supplemental disclosure of cash flow information:Interest paid33,06611,62129,2494,467Income tax paid8,40479,08051,5227,868Realized gain/(loss) from derivative contracts10,823(30,633)(27,884)(4,258)Supplemental schedule of non-cash activities:Acquisition of fixed assets included in accounts payable, accrued expenses and other liabilities(2,509)25,096144,29822,036For the three months endedMarch 31, 2010December 31, 2010March 31, 2011March 31, 2011(RMB million)(RMB million)(RMB million)(US$ million)Non-GAAP net income158.1250.7154.423.6Fair value changes of the conversion features of the convertible bonds(2.5)255.647.97.3Accretion of interest of the convertible bonds(16.7)(19.4)(22.8)(3.5)Unrecognized tax benefit (Note)(116.1)(30.1)(4.6)GAAP net income/(loss)138.9370.8149.422.8For the three months ended March 31, 2010December 31, 2010March 31, 2011March 31, 2011(RMB million)(RMB million)(RMB million)(RMB million)Non GAAP net income per ADS - Basic2.733.391.840.28Fair value changes of the conversion features of the convertible bonds(0.04)3.460.570.09Accretion of interest of the convertible bonds(0.29)(0.26)(0.27)(0.04)Unrecognized tax benefit (Note)(1.57)(0.36)(0.06)Net profit attributable to shareholders per ADS - Basic2.405.021.780.27ADS (Basic)57,934,97873,903,62783,881,68683,881,686For the three months ended Annualized for Q1 2011Annualized for Q1 2010Annualized for Q4 2010March 31, 2010December 31, 2010March 31, 2011March 31, 2011March 31, 2010December 31, 2010Non-GAAP Return on Equity 6.65%6.02%3.14%12.56%26.60%24.08%Fair value changes of the conversion features of the convertible bonds-1.26%5.31%0.69%2.77%-5.04%21.25%Accretion of interest of the convertible bonds-0.58%-0.43%-0.43%-1.73%-2.32%-1.74%Unrecognized tax benefit (Note)-2.60%-0.57%-2.28%-10.39%GAAP Return on equity4.81%8.30%2.83%11.32%19.24%33.20%Note:It relates to the incremental tax expenses for an uncertain tax position of the Company's subsidiary as to whether the subsidiary continues to satisfy the criteria as a High and New Technology Enterprise ("HNTE").SOURCE Hanwha SolarOne Co., Ltd.