SMA Solar Technology : Annual Financial Report SMA Group 2023 (3 MB)

SMA Solar Technology AG
at a glance
SMA Group	2023	2022	2021	2020	2019
Sales	€ million	1,904.1	1,065.9	983.4	1,026.6	915.1
Export ratio	%	63.4	68.8	74.9	79.6	76.1
Inverter output sold	MW	20,454	12,225	13,584	14,416	11,409
Capital expenditure1	€ million	95.1	65.8	56.4	57.1	54.4
Depreciation	€ million	41.5	38.1	41.7	43.6	46.0
EBITDA	€ million	311.0	70.0	8.5	71.5	34.2
EBITDA margin	%	16.3	6.6	0.9	7.0	3.7
Net income	€ million	225.7	55.8	-23.2	28.1	-8.6
Earnings per share2	€	6.50	1.61	-0.67	0.81	-0.25
Employees3, 7	4,377	3,635	3,510	3,264	3,124
in Germany	3,039	2,610	2,506	2,293	2,207
abroad	1,338	1,025	1,004	971	917
SMA Group	2023/12/31	2022/12/31	2021/12/31	2020/12/31	2019/12/31
Total assets	€ million	1,621.9	1,110.0	1,053.7	1,051.2	1,107.3
Equity	€ million	686.2	463.5	408.0	439.1	416.9
Equity ratio	%	42.3	41.8	38.7	41.8	37.6
Net working capital4	€ million	392.1	238.5	257.5	210.6	159.5
Net working capital ratio5	%	20.6	22.4	26.2	20.5	17.4
Net cash6	€ million	283.3	220.1	221.7	226.0	303.0

• 1 Investments including additions of rights of use in accordance with IFRS 16

• 2 Converted to 34,700,000 shares

• 3 Reporting date; including trainees and learners; excluding temporary employees

• 4 Inventories and trade receivables minus trade payables and liabilities from advanced payments received for orders

• 5 Relating to the last twelve months (LTM)

• 6 Total cash minus interest-bearing financial liabilities to banks

• 7 The distribution of employees in Germany and abroad was adjusted for the years 2018 to 2021 due to a change in allocation.

ENERGY

THAT CHANGES

As a leading global specialist in system technology, the SMA Group is setting the standards for the decentralized and renewable energy supply of tomorrow.

More than 4,300 SMA employees in 20 countries have devoted themselves to this task.

Our innovative solutions for the sustainable generation, storage and use of energy enable people and companies around the world to meet their energy needs with greater independence.

In collaboration with our partners and customers, we are helping the world transition to a digital, decentralized and renewable energy supply. Our energy inspires the world's most important customer. Our future.

DR.-ING. JÜRGEN REINERT

Chief Executive Officer SMA Solar Technology AG

FOREWORD BY THE

MANAGING BOARD

A look back on the past year reveals a mixed picture. We have seen that geopolitical tensions have not dissipated in 2023, but have instead become even more acute. The effects of the global climate crisis are also becoming increasingly noticeable: Severe droughts, forest fires and floods seemed to be the order of the day in 2023.

If we look at Germany and the current political situation, we can see that important political decisions have yet to be made. The German economy's urgently necessary path toward climate neutrality needs a stable and reliable framework in order to be successful. The government is called upon to courageously and resolu-tely join forces with the democratic opposition to facilitate the transformation that is essential for Germany's competitiveness.

We are increasingly concerned about the rise of antidemocratic and populist movements and parties - both in Germany and globally. Democracy and freedom are the foundation on which our company is built. SMA employs people from a wide variety of origins and backgrounds. This diversity and openness is a key value for us, which we see as part of our culture and our success. That is why it is important to us to take a clear stance against xenophobia and intolerance at all times.

A STRONG YEAR FOR RENEWABLES AND SMA

So what gives us hope in the face of so many challenges? For us at SMA, it is clearly the progress of the global energy transition. We saw in 2023 that the age of fossil fuels is coming to an end. At the climate con-ference in Dubai, the world agreed to move away from coal, oil and gas. Countries are being called upon to triple their renewable energy capacities by 2030. At the same time, the proportion of renewable energies in the German fuel mix has risen above the 50% mark for the first time.

There are therefore many reasons to be optimistic about the future.

Renewable energies are making unstoppable inroads around the world. The PV industry has a key role to play here. According to our estimates, PV installations worldwide increased by over 70% to a total of around 368 to 374 GW in 2023.

SMA is ideally positioned in this growth market. This is also shown by our extraordinary results for the 2023 fiscal year. With sales of €1,904.1 million (2022: €1,065.9 million), operating earnings before interest, taxes, depreciation and amortization (EBITDA) of €311.0 million (2022: €70.0 million) and EBIT of €269.5 million (2022: €31.9 million), we are closing an extraordinarily successful year. In the past fiscal year, we sold a total of 20.5 GW (2022: 12.2 GW) of inverter output and thus grew faster than the market as a whole.

In the second half of 2023, we saw a slight decline in order volumes in the Home Solutions and Commer-cial & Industrial Solutions segments. We had already forecasted this development at the beginning of the year, but like the majority of experts, we assume that this is not a trend reversal but a temporary effect. On the contrary, the market for photovoltaic solutions will continue to grow globally.

Annual Report 2023 // SMA Solar Technology AG

CONSISTENTLY ON COURSE FOR FURTHER GROWTH

We see the best opportunities in the market for large-scale PV power plants and storage solutions in parti-cular. We are ideally prepared for this development with our new GIGAWATT FACTORY, which will double our production capacity to 40 gigawatts. We broke ground here in April 2023, and from 2025, we will be supplying innovative system solutions for large-scale PV power plants all over the world from our Niestetal site. We are also strengthening our production internationally. We will build a production capacity of

3.5 GW in North America and put it into operation in 2025.

The significant year-on-year increase in sales reflects the strong demand for SMA products and the impro- ved delivery situation since the beginning of the year. For the 2024 fiscal year, the Managing Board is optimistic that we will be able to continue our success story and grow further with our segment-specific platform strategy. At the same time, further development will be influenced by important factors for our industry such as the speed of expansion, functioning supply chains, inventory management on the customer side and overall economic momentum. In light of this, for the current fiscal year, we are anticipating sales of between €1,950 million and €2,220 million and an operating result (EBITDA) of between €220 million and €290 million.

OUR STRATEGY FOR THE FUTURE

2023 was also the year in which we continued to consistently position SMA as an energy transition company in a future-oriented and customer-centric manner. In line with our Strategy 2025, we strengthe-ned the three segments, aligned processes and structures with customer needs and anchored the new ways of working in the company. Our primary goal here was to develop and deliver our solutions faster, more seamlessly and in a more needs-oriented manner. The implementation of this goal took a major step forward last year. We have structured the company along the added value processes, strengthened our international focus and, at the same time, set up central functions such as Sales, HR, Communication and Sustainability in a powerful way.

We are also consistently implementing the requirements of a modern, global and networked energy market in our products. SMA is developing into a solution provider with a strong focus on comprehensive system solutions for grid stability, virtual service options as well as power supply solutions for green hydrogen applications.

We achieved a lot in 2023, and we have big plans for 2024. To achieve this, all of more than 4,300 SMA employees worldwide will need to pull together and consistently exploit the opportunities offered by the market in the interests of our customers.

Our thanks therefore go first and foremost to SMA's employees, who work with passion and commitment every day in 20 countries to make the energy transition a reality. They are the ones who make our company not only successful but also unique.

Dear Shareholders, we would like to thank you for your trust and would be pleased if you continued to accompany the SMA Group on its path in the future.

Dr.-Ing. Jürgen Reinert

Chief Executive Officer SMA Solar Technology AG

5
6	The Managing Board Team
8	Supervisory Board Report
12	COMBINED MANAGEMENT REPORT
14	Basic information about the Group
26	Combined non-financial statement
75	Fiscal year 2023
90	Risks and opportunities
108	Forecast report
114	Corporate Governance
121	CONSOLIDATED FINANCIAL STATEMENTS
126	Notes SMA Group
161	Responsibility statement
162	Independent Auditor's Report
172	Note about the Audit of the combined non-financial statement
175	REMUNERATION REPORT
175	Remuneration Report
185	Report on the Audit of the Remuneration Report
187	OTHER INFORMATION
188	Financial glossary
190	Registered trademarks
190	Disclaimer
191	Financial calendar
191	Publication information, contact
Annual Report 2023 // SMA Solar Technology AG

CONTENTS

THE MANAGING BOARD TEAM

BARBARA GREGOR

Board Member for Finance and Legal

Barbara Gregor (b. 1970) started her career at the thyssenkrupp group after graduating in business management. She held a number of positions in Germany and abroad as well as at the group headquarters (central corporate function of controlling). Between 2002 and 2013, she worked in the group's stainless steel segment, where she supported the establish-ment of the Shanghai Krupp Stainless joint venture in Shanghai. Her last role was head of controlling and authorized officer for the thyssenkrupp Stainless International Group. From 2013 to 2015, she was CFO of the apt Hiller Group where she spearheaded internati-onal growth and M&A projects. Before joining SMA, Barbara Gregor was CFO of the inter-national operating unit thyssenkrupp Materials Trading and Managing Director (CFO) of thyssenkrupp Materials Trading GmbH, where she was responsible for managing and further developing the areas of Finance, Controlling, Accounting, Risk Management, Human Resour-ces and IT. Since December 1, 2022, Barbara Gregor has been responsible for Finance, Investor Relations and Real Estate Manage-ment, Digitalisation/IT, Legal, Governance, Compliance, Risk Management and Internal Audit on the SMA Managing Board.

DR.-ING. JÜRGEN REINERT

Chief Executive Officer

After studying electrical engineering in South Africa, Dr.-Ing. Jürgen Reinert (b. 1968) recei-ved his doctorate at the Institute for Power Electronics and Electrical Drives (ISEA) at RWTH Aachen, Germany, and began his career as senior engineer there. From 1999 to 2011, he worked for Emotron AB in Sweden, where in his last position, as General Mana-ger, he was responsible for Technology and Operations. From 2011 to 2014, as Executive Vice President, he was responsible for the divi-sion Power Plant Solutions at SMA. Under his leadership, SMA was successful in expanding its worldwide project business and developing turnkey system solutions for large-scale PV power plants. Since April 2014, Dr. Reinert has been a member of the Managing Board.

He was appointed Chief Executive Officer in October 2018. With the extension of his contract in July 2023, the Supervisory Board appointed him Chairman of the Managing Board. Dr. Reinert is responsible for Strat-egy, Research & Development, Operations, the Home Solutions, Commercial & Industrial Solutions and Large Scale & Project Solutions segments as well as Sales & Service, Commu-nication & Sustainability and Human Resources and also serves as labor director of SMA.

He is a member of the Supervisory Board at Danfoss A/S.

Annual Report 2023 // SMA Solar Technology AG

Supervisory Board Report

SUPERVISORY BOARD REPORT

Dear Shareholders,

Prospects for renewable energy sources continuing to become positive and the progressing development of the SMA Group into a solutions provider have enabled SMA to increase its profitabi- lity. This is particularly pleasing in view of the simultaneous signifi-cant growth of the SMA Group and the associated challenges.

In the reporting year, collaboration within the Supervisory Board and between the Supervisory Board and Managing Board was characterized by openness, intensity and constructiveness. The Supervisory Board assisted the Managing Board in an advisory capacity and continuously monitored the Managing Board with regard to the management of the company in accordance with the law, Articles of Incorporation and Rules of Procedure. For its part, the Managing Board involved the Supervisory Board and its com-mittees early on in all decisions of fundamental importance to the SMA Group. Furthermore, the Supervisory Board was kept infor-med, both in writing and verbally, of all strategy issues relevant to the company, the market and competitive situation, and busi-ness developments. The Managing Board also regularly updated the Supervisory Board on the SMA Group's sales, earnings and general situation. Furthermore, the Managing Board presented detailed information on proposed business policies and other important questions concerning corporate planning, in particular financial, investment, production and personnel planning, as well as significant business transactions to the Supervisory Board. Devi-ations in how events actually transpired in comparison to planned projects or objectives were provided, including reasons for the variances. Plus, the Supervisory Board was informed about the SMA Group's profitability, above all the return on equity, risk and opportunity management, risk status and compliance.

The Supervisory Board closely scrutinized and discussed business transactions requiring the approval of the Supervisory Board as well as instances where business performance deviated from corporate planning. Even beyond the regular Supervisory Board and Audit Committee meetings, the Chairman of the Supervisory Board and his deputy as well as the Audit Committee Chair-woman were in frequent contact with the Managing Board and discussed subjects concerning strategy, planning, business deve-lopment, position of risk, risk management and compliance, as well as significant business transactions and upcoming decisions.

The Supervisory Board members took general and specialized training necessary for their tasks of their own accord, and in doing so, they received appropriate support from the company if nee-ded. No Supervisory Board or Managing Board members repor- ted any conflicts of interest to the Supervisory Board.

Focus of Supervisory Board consultations

The Supervisory Board examined all material events and dis- cussed them with the Managing Board at five meetings in person and adopted necessary resolutions in accordance with the law, Articles of Incorporation and Rules of Procedure. Kim Fausing participated in three meetings. Roland Bent, Martin Breul, Oliver Dietzel, Alexa Hergenröther and Yvonne Siebert participated in four meetings. The other Supervisory Board members participated in all five meetings.

In preparation for the meetings, the Supervisory Board received written reports from the Managing Board on a regular basis and on time. At each regular meeting, the subject matter of the deli-berations were current business developments, the evolution of markets of particular importance to the SMA Group and corpo-rate planning. Members of the Managing Board participated in all regular Supervisory Board and Audit Committee meetings, but were not present for discussions of matters relating to the Super-visory Board or Managing Board itself.

At its meeting on February 8, 2023, the Supervisory Board dealt with the Corporate Governance Report included in the 2022 Annual Report, the Remuneration Report and the Super-visory Board Report for 2022. In addition, the Supervisory Board discussed the contents of the combined non-financial statement presented by the Managing Board and possible proposals to the Annual General Meeting on profit appropriation. The compe- tence profile of the Supervisory Board, proposals to amend the company's Articles of Incorporation and the composition of the Managing Board were also the subject of deliberations and discussions.

At its meeting convened to adopt the accounts on March 22, 2023, the Supervisory Board acknowledged the 2022 Annual Financial Statements, approved the 2022 Consolidated Financial Statements after in-depth consultation and also passed the pro- posal to the Annual General Meeting on profit appropriation for 2022, the Corporate Governance Report, the Supervisory Board Report, the non-financial statement and the Remuneration Report.

Additionally, the Supervisory Board passed the proposal for selec-tion of the auditors of the Financial Statements and the Consolida-ted Financial Statements for 2023 and approved the Managing Board's proposal for a virtual Annual General Meeting. Changes to the remuneration systems for the Managing Board and Super-visory Board were also the subject of deliberations and discus-sions. Finally, the Supervisory Board evaluated the achievement of objectives by the Managing Board members in 2022 and adopted the Managing Board's objectives for 2023.