Half-Yearly Financial Report: January to June 2021

Half-Yearly Financial Report January to June 2021 SMA Solar Technology AG

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SMA Solar Technology AG at a glance

SMA group				H1 2021		H1 2020		Change		Full Year 2020
Sales		€ million		488.3		514.2		-5.0%		1,026.6
Export ratio		%		74.2		77.3				79.6
Inverter output sold		MW		6,798		7,105		-4.3%		14,416
Capital expenditure		€ million		19.6		14.7		33.3%		38.8
Depreciation and amortization		€ million		21.0		21.3		-1.4%		43.6
EBITDA		€ million		38.1		24.0		58.8%		71.5
EBITDA margin		%		7.8		4.7				7.0
Net income		€ million		13.3		2.7		392.6%		28.1
Earnings per share 1		€		0.38		0.08				0.81
Employees 2				3,452		3,199		7.9%		3,264
in Germany				2,425		2,215		9.5%		2,262
abroad			1,027	984	4.4%	1,002

SMA group			2021/06/30	2020/12/31		Change
Total assets		€ million		1,046.3		1,051.2		0%
Equity		€ million		443.9		439.1		1%
Equity ratio		%		42.4		41.8
Net working capital 3		€ million		280.1		210.6		33%
Net working capital ratio 4		%		28.0		20.5
Net cash 5		€ million	170.0	226.0		-25%

1. Converted to 34,700,000 shares
2. Reporting date; without temporary employees
3. Inventories and trade receivables minus trade payables and liabilities from advanced payments received for orders
4. Relating to the last twelve months (LTM)
5. Total cash minus interest-bearing financial liabilities to banks

CONTENTS

2 BASIC INFORMATION ABOUT THE GROUP

1. Business activity and organization
2. Research and development

5 ECONOMIC REPORT

1. General economic conditions and economic conditions in the sector
2. Results of operations

1. Financial position
2. Net assets
3. RISKS AND OPPORTUNITIES REPORT

1. Risk and opportunity management
2. FORECAST REPORT

12 Preamble

12 The general economic situation

12 Future general economic conditions in the photovoltaics sector

15 Overall statement from the Managing Board on expected development of the SMA group

18 HALF-YEAR CONSOLIDATED FINANCIAL STATEMENTS

18 Income Statement SMA group

1. Statement of Comprehensive Income SMA group
2. Balance Sheet SMA group
3. Statement of Cash Flows SMA group
4. Statement of Changes in Equity SMA group
5. CONDENSED NOTES AS OF JUNE 30, 2021

22 General Information

24 Financial ratios by segments and regions

1. Selected notes to the SMA group income statement

1. Selected notes to the SMA group balance sheet

1. Other Disclosures

31 RESPONSIBILITY STATEMENT

32 AUDITOR'S REPORT

2Basic information about the group

BASIC INFORMATION ABOUT THE GROUP

Business activity and organization

SMA Solar Technology AG (SMA) and its subsidiaries (SMA group) develop, produce and sell solar and battery inverters, monitoring systems for PV systems, medium-voltage technology and high-performance power supplies for hydrogen production. In addition, the company offers charging solutions for electric vehicles, intelligent energy management solutions and services, including operation and maintenance services for photovoltaic power plants (O&M business). Another business segment is digital services for the future energy supply.

Organizational structure

LEGAL STRUCTURE OF THE GROUP

As the parent company of the SMA group, SMA AG, headquartered in Niestetal near Kassel, Germany, takes over all of the functions required for its operative business. The parent company holds, either directly or indirectly, 100% of the shares of all the operating companies that belong to the SMA group. The Annual Report includes information regarding the parent company and all 28 group companies (H1 2020: 28), including seven domestic companies and 21 companies based abroad. In addition, SMA Solar Technology AG holds a 42% interest in elexon GmbH. The joint venture in the field of charging infrastructure facilities was established in 2019 and is recognized as an associate in the Consolidated Financial Statements according to the equity method.

ORGANIZATIONAL AND REPORTING STRUCTURE

The SMA group operates under a functional matrix organization. In this organization, the Home & Business Solutions and Large Scale & Project Solutions business units manage development, operational service and sales as well as production and pro- curement/logistics. The Home Solutions and Business Solutions ­segments are presented separately in the reporting structure.

REPORTING STRUCTURE

			SMA group
Segment		Segment		Segment
		Large Scale & Project
Home Solutions		Business Solutions
		Solutions

MANAGEMENT AND CONTROL

In accordance with the German Stock Corporation Act, the executive bodies consist of the Annual General Meeting, the Managing Board and the Supervisory Board. The Managing Board manages the company. The Supervisory Board appoints, supervises and advises the Managing Board. The Annual General Meeting elects shareholder representatives to the Supervisory Board and grants or refuses discharge to the Managing Board and the Supervisory Board.

COMPOSITION OF THE MANAGING BOARD

Since October 15, 2018, the Managing Board of SMA Solar Technology AG has comprised the following members:

Dr­ .-Ing. Jürgen­ Reinert (Chief Executive Officer, Board Member­ for ­Strategy, Sales and Service, Operations and Technology)­

and Ulrich Hadding (Board Member for Finance, Human Resources and Legal).

COMPOSITION OF THE SUPERVISORY BOARD

The SMA Supervisory Board, which represents shareholders and employees in equal measure, consists of Roland Bent, Kim Fausing (Deputy Chairman), Alexa Hergenröther, Uwe Kleinkauf (Chair- man), Ilonka Nussbaumer and Jan-Henrik Supady as shareholder representatives. The employees are represented on the Supervisory Board by Martin Breul, Oliver Dietzel, Johannes Häde, Yvonne Siebert, Romy Siegert and Dr. Matthias Victor.

SMA Solar Technology AG // Half-Yearly Financial Report January to June 2021

Basic information about the group

3

Research and development

SMA uses its systems expertise to develop holistic solutions for different photovoltaic applications and for comprehensive energy management across all segments and sectors (power generators, household appliances, storage systems, heating, ventilation and air-conditioning,e-mobility). To offer our customers technically mature and economic system solutions in all market segments and regions, we selectively collaborate with strong partners. With our continuous research and our market- and customer-focused devel- opment, we can further reduce the consumer cost of PV electricity and decrease the complexity in the new, decentralized and digital energy world, thus making a significant contribution to a successful global energy transition.

Forward-looking development approach

Thorough understanding of different market requirements and close proximity to our customers enable us to anticipate future system technology demands. With the growing importance of photovoltaics for the global power generation and the increasing integration of PV systems into complete systems, system integration and connectivity are taking center stage. In addition, cyber security is playing an ever more important role. In this context, the PV inverter is classified as a system-critical component, so customers place higher demands on the transparency of companies.1

In product development, we are pursuing a platform strategy aimed at systematically reducing product costs and being able to quickly react to market changes. By standardizing the core inverter, we are capable of increasing the proportion of identical components across the entire portfolio. Customization in line with different markets and customer needs is implemented partly through the connection area and software as well as through ­different power classes based on the platform.1

SMA was granted 1,669 patents and utility models worldwide by the end of the reporting period. In addition, about 500 other

patent­ applications were still pending as of June 30, 2021. ­Furthermore, SMA holds the rights to 1,391 trademarks.

In addition to the (further) development of solutions for the efficient generation, storage and use of solar energy and intelligent energy management across various sectors, the focus of development is also increasingly on charging solutions for electric vehicles and solutions for optimizing hydrogen production.

Integrated solutions for the global energy transition 2

RESIDENTIAL SYSTEMS: HYBRID INVERTERS

AND ADDITIONAL APP FUNCTIONS

In the Home Solutions segment, the focus in the reporting period was on the simple and efficient integration of storage and the functional expansion of energy apps for installers and system operators.

SMA is closing a gap in its portfolio with the market launch of the Sunny Tripower Smart Energy planned for the end of 2021. The three-phase hybrid inverter with integrated backup function offers maximum convenience for users. With four power classes, it is ideal for use in private homes. As a solar and battery inverter in one, it manages all energy flows between the PV generator, the connected battery and the household's electricity supply together with the Sunny Home Manager 2.0. The Sunny Tripower Smart Energy thus significantly reduces the power drawn from the utility grid and, thanks to the backup function, continues supplying important appliances in the event of a power outage. Integrated services and software solutions ensure maximum user convenience and utmost safety. This includes the automated SMA Smart Connected inverter monitoring for swift service in the event of a fault.

The SMA 360° app for solar power professionals now allows installers to connect system simulation, planning, commissioning and monitoring as well as automatic notifications when servicing is required. The SMA Energy app for end users was expanded by a module for managing the charging of electric vehicles.

1 This paragraph is not a subject of the financial audit.

2 This section is not a subject of the financial audit.

Half-Yearly Financial Report January to June 2021 // SMA Solar Technology AG