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Third Quarter 2012 Review and Update. December 11, 2012. Safe Harbor Statement.

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Third Quarter 2012 Review and Update

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Third quarter 2012 review and update

Third Quarter 2012Review and Update

December 11, 2012


Third quarter 2012 review and update

Safe Harbor Statement

The market and industry information contained in this presentation has not been independently verified. No representation or warranty, whether express or implied, is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of such information or opinions contained herein. Neither Hanwha SolarOne Co., Ltd, or the Company, nor any of its affiliates, advisers or representatives shall have any liability whatsoever (in negligence or otherwise) for any loss howsoever arising from any use of this presentation or its contents or otherwise arising in connection with this presentation.

This presentation contains statements that reflect the Company’s beliefs and expectations about the future. These forward-looking statements are based on a number of assumptions about the Company’s operations, and are subject to risks, uncertainties and other important factors, many of which are beyond the Company’s control, and, accordingly, actual results may differ materially from the results discussed in these forward-looking statements.

No part of this presentation may be reproduced, photocopied, redistributed or passed on, directly or indirectly, to any other person (whether within or outside your organization/firm) or published, in whole or in part, for any purpose. No part of this presentation may be distributed, reproduced, taken or transmitted into the United States, Canada or Japan.

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Third quarter 2012 review and update

Financial Highlights of 3Q 2012

  • Note:

  • All non-GAAP numbers exclude the accounting impact from the adoption of ASC 815-40, which relates to the accounting treatment for the convertible bonds. Non-GAAP financial results for prior quarters have been adjusted for comparability with the current quarter.


Third quarter 2012 review and update

Financial Trends

  • Note:

  • 3Q11 and 4Q11 exclude non-cash provisions

  • All non-GAAP numbers exclude the accounting impact from the adoption of ASC 815-40, which relates to the accounting treatment for the convertible bonds. Non-GAAP financial results for prior quarters have been adjusted for comparability with the current quarter.


Third quarter 2012 review and update

Module Revenue by Shipping Destination

Geographic distribution

3Q 2012

  • Germany is the largest (39%) but fell significantly due to July 1 incentive reductions

  • Asia Pacific region continued to grow and accounted for 22% of total shipments

  • US growth regained momentum to 13% of total shipments


Third quarter 2012 review and update

Cost Structure

  • Notes:

  • 1Excluding module processing business and non-cash provisions totaling $0.45 in 4Q11

  • On Non-GAAP basis which excludes the impact related to the convertible bond fair value adjustment

  • 4Q11 operating expenses includes $8.5 million provision for advanced payment associated with long-term supply contract ; 2Q11 operating expenses includes $5 million for management severance.


Third quarter 2012 review and update

Balance Sheet

  • Total Cash of US $256 million

  • Net debt to equity of 89.3%

  • Notes:

  • Excludes restricted cash.

  • All non-GAAP numbers exclude the accounting impact from the adoption of ASC 815-40, which relates to the accounting treatment for the convertible bonds. Non-GAAP financial results for prior quarters have been adjusted for comparability with the current quarter.


Third quarter 2012 review and update

Recent Milestones

  • New president and chief technology officer appointed

  • QoQ shipment growth

  • Continued Non-Poly processing cost reduction

  • Shipments to China and US gaining momentum

  • Synergies with Hanwha Q.CELLS begin


Third quarter 2012 review and update

Signs of Industry Rationalization

  • A number of company failures reduce manufacturing capacity

  • Chinese banks tightening credit standards squeezing out marginal players

  • Signs that leading competitors will take a more rational approach to pricing and sacrifice volume for profitability

  • Momentum developing in important new growth markets, particularly China and Japan


Third quarter 2012 review and update

  • Q.CELLS Acquisition Provides Synergies

  • Enhanced scale with combined capacity of 2.3GW

  • Strong brand, high quality products and excellent technology

  • Potential to price at a premium

  • Improved leverage with suppliers

  • Expertise in downstream activities and an important source of cells in the face of duties in the US and maybe Europe


Third quarter 2012 review and update

  • Three Paths to Growth

  • Volume Based Growth

  • Targeting the utility industry for higher sales volume

  • Economies of scale leading to better bargaining power & cost competitiveness

  • Value Based Growth

  • Traditional PV products are quickly becoming low-cost commodities. We will achieve growth by selling higher value products to residential and commercial markets with a strong brand.

  • Downstream Growth

  • Create value downstream by bundling balance of system components, reach customers through a variety of channels and expand our project development, EPC and O&M business.


Third quarter 2012 review and update

  • R&D for high quality/high performance

Anti PID

New Product launching

Extreme Environment

Description

Development Item

  • New product (E-Star plus) will be launched in 2013

  • - Light weight, high endurance, maximized efficiency

  • - Cost competitiveness via increased power output per module

  • Anti PID product will be launched in 2013

  • - Completed TUV certificate

  • - Develop optimized BOM for Anti PID module for long-term reliability

  • Anti-salt module: Sales of modules suitable for sea shore started

  • - Supplied to Japan. Total of 80MW will be supplied to Marubeni project

  • Desert module: Under development for Middle East market

Higher Efficiency

  • High efficiency wafer (Better wafer) development

  • Increase module output by wafer sorting improvement


Third quarter 2012 review and update

  • New Market Potential

China Market

Japan Market

  • Market could reach 8GW in 2013

  • HSOL sets conservative shipment target of 150MW in 2013

  • Estimated market size of over 3GW in 2013

  • HSOL estimates shipments at 100MW+ in 2013

  • Signed 155MW deal for 1H 2013 delivery

  • The company’s and South Africa’s largest solar deal to date

South Africa Market

USA Market

  • Estimated market size of 4GW in 2013

  • 2013 HSOL estimated shipments can more than triple to 250MW or higher.


Third quarter 2012 review and update

Market Guidance

FY

2012

Shipments

825~850MW

Non-poly Processing Cost by yr.-end

<$0.50W

$100 million

Capital Expenditure


Third quarter 2012 review and update

Thank You


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