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Hanwha SolarOne Reports Fourth Quarter and Full Year 2013 Results

March 13, 2014

SHANGHAI, March 13, 2014 /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 three months and full year ended December 31, 2013. The Company will host a conference call to discuss the results at 8:00 am Eastern Time (8:00 pm Shanghai Time) on March 13, 2014. A slide presentation with details of the results will also be available on the Company’s website prior to the call.

FOURTH QUARTER 2013 HIGHLIGHTS


                                                                                                     GAAP                              Ex-
                                                                                                                                        Provision
                                                                                                     ----                          ----------

                                       3Q13                                           4Q13                      Percentage                4Q13(2)

                                                                                            Change(1)

                                       (RMB)                                     (US$)     (RMB)   (US$)      (%)        (RMB)      (US$)
                                       ----                                       ----

    Net Revenues (Million)                                                       1,135.1    185.5  1,294.9    213.9           +14.1              -

    Shipments (MW)                                                                          317.8             352.2           +10.8              -

    ASP (/W)                                                                        4.16     0.68     4.09     0.68            -1.7              -

    Gross profit (Million)                                                          57.8      9.4    183.0     30.2          +216.6  208.9     34.5

    Gross margin (%)                                                                          5.1              14.1   +900 basis points       16.1

    Operating (loss)/profit (Million)                                             (132.7)   (21.7)   (23.7)    (3.9)          +82.1   30.8      5.1

    Operating margin (%)                                                                    -11.7              -1.8   +990 basis points        2.4

    Net (loss)/profit (Million)                                                   (460.4)   (75.2)   (21.8)    (3.6)          +95.3   32.7      5.4

    Net (loss)/profit per basic ADS                                                (5.44)   (0.89)   (0.26)   (0.04)          +95.2   0.38     0.06
    -------------------------------                                                -----    -----    -----    -----           -----   ----     ----

    1   Percentage changes are calculated based on RMB amounts to eliminate fluctuations in the exchange rate of the dollar.

    2   This column is shown to illustrate the operating performance of the Company excluding total non-cash charges of RMB54.5 million (US$9.0 million), including RMB10.3 million (US$1.7 million)
     from inventory write-down as a result of lower cost or market assessment and a regular provision for obsolescence, RMB15.6 million (US$2.6 million) from provisions for advanced payments
     associated with long-term supply contracts and RMB28.6 million (US$4.7 million) from provisions for doubtful debt of accounts receivable.

Mr. Ki-Joon HONG, Chairman and CEO of Hanwha SolarOne commented, “The final quarter of 2013 was marked by significantly improved financial results, and when excluding year-end non-cash charges and other non-GAAP accounting treatments unrelated to the operations of our business we would have recorded profitability. This financial progress was achieved through increased revenues and shipments, reductions in our manufacturing cost structure, and continued diligence in controlling operating expenses. We maintained a strong presence in Japan and increased our penetration of the fast-growing domestic market in China.” Chairman HONG noted, “We are optimistic that 2014 will prove to be a much stronger year for the Company with further shipment growth and additional reductions in our cost structure including notably better operating metrics at our internal ingot and wafer facility. We intend to establish a downstream presence in China and grow our China business by leveraging several recently established strategic partnerships. We plan to expand capacity to meet growing global demand, as well as automate existing manufacturing to reduce cost and improve product consistency and quality.”

FOURTH QUARTER 2013 RESULTS

    --  Total net revenues were RMB1,294.9 million (US$213.9 million), an
        increase of 14.1% from RMB1,135.1 million in 3Q13, and an increase of
        54.8% from RMB836.7 million in 4Q12. The increase in total net revenues
        in 4Q13 compared with 3Q13 was primarily due to greater shipments.
    --  PV module shipments, including module processing services, were 352.2
        MW, a 10.8% increase from 317.3 MW in 3Q13, and a 77.1% increase from
        198.9 MW in 4Q12.
    --  The Company recorded total non-cash charges of RMB54.5 million (US$9.0
        million), including RMB10.3 million (US$1.7 million) from an inventory
        write-down as a result of lower cost or market assessment and a regular
        provision for obsolescence, RMB15.6 million (US$2.6 million) from
        provisions for advance payments associated with long-term supply
        contracts and RMB28.6 million (US$4.7 million) from provisions for
        doubtful debt of accounts receivable.

          Module revenue by shipping destination Q4 13           Module revenue by shipping destination Q3
                                                                                   13

     Country                                           4Q13                     Country                    3Q13
     -------                                           ----                     -------                    ----

      Japan                                                  44%                 Japan                           46%

      China                                                  16%                  US                             12%

        US                                                   11%                 China                           11%

     Germany                                                  7%             South Africa                        10%

      Korea                                                   7%                Canada                            5%

      Canada                                                  5%                 Korea                            4%

      Spain                                                   2%                Germany                           4%

      Others                                                  8%                Others                            8%
      ------                                                ---                 ------                          ---

    --  The Company maintained a strong presence in Japan with more than 150MW
        shipped in 4Q13, representing 44% of module shipments worldwide.
        Shipments to China increased to account for 16% of total shipments,
        after accounting for 11% in 3Q13. Deliveries to the US remained stable
        for the Company at 11%. Germany, Korea and Canada once again contributed
        to our geographic mix and have become core markets for us. The Company
        shipped PV modules to 28 countries during 4Q13, as we continued to
        broaden our geographic spread. Shipments to Europe and Africa (EA)
        contributed 14% to total module shipments, Asia Pacific (AP) accounted
        for 70% and North America (NA) 16%.
    --  The average selling price ("ASP") of modules, excluding module
        processing services, decreased slightly to RMB4.09 per watt (US$0.68)
        from RMB4.16 per watt in 3Q13 and increased from RMB3.75 per watt in
        4Q12.
    --  Gross profit in 4Q13 was RMB183.0 million (US$30.2 million), compared
        with a gross profit of RMB57.8 million in 3Q13 and a gross loss of
        RMB261.8 million in 4Q12. The increase in gross profit in 4Q13 was
        primarily due to higher revenues and lower costs. Gross profit would
        have been RMB208.9 million (US$34.5 million) in 4Q13 excluding the
        non-cash charge of RMB10.3 million ($1.7 million) from inventory
        write-down and obsolescence provision and RMB15.6 million (US$2.6
        million) from provision from advanced payments.
    --  Gross margin was positive 14.1%, compared with positive 5.1% in 3Q13.
        Gross margin in 4Q12 was negative 31.3%. Gross margin would have been
        16.1% in 4Q13 excluding the aforementioned non-cash charges.
    --  The blended cost of goods sold ("COGS") per watt, excluding module
        processing services, was US$0.59, representing a 7.8% decrease from
        US$0.64 in 3Q13. 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.
    --  Operating loss of 4Q13 was RMB23.7 million (US$3.9 million), compared
        with an operating loss of RMB132.7 million in 3Q13 and an operating loss
        of RMB625.8 million in 4Q12. Operating margin improved to negative 1.8%
        from negative 11.7% in 3Q13 and negative 74.8% in 4Q12. Excluding the
        RMB28.6 million (US$4.7 million) non-cash charges in general and
        administrative expenses for provisions on doubtful debt of accounts
        receivable and RMB25.9 (US$4.3 million) in cost of revenues for
        inventory write-down and provision for advanced payments, the Company
        would have recorded an operating profit of RMB30.8 million (US$5.1
        million). Operating margin excluding non-cash charges was 2.4%.
    --  Operating expenses as a percentage of total net revenues were 16.0% in
        4Q13, compared with 16.8% in 3Q13 and 43.5% in 4Q12.
    --  Interest expense was RMB85.4 million (US$14.1million), compared with
        RMB89.3 million in 3Q13 and RMB73.9 million in 4Q12.
    --  The Company recorded a net gain of RMB43.7 million (US$7.2 million),
        which included a foreign exchange gain and a gain from the change in
        fair value of derivatives in hedging activities. The Company recorded a
        net gain of RMB40.3 million in 3Q13 and a net gain of RMB19.0 million in
        4Q12 for the foreign exchange gain and the gain/loss from change in fair
        value of derivatives in hedging activities.
    --  Gain from the change in fair value of the conversion feature of the
        Company's convertible bonds was RMB32.6 million (US$5.4 million),
        compared with a loss of RMB29.5 million in 3Q13 and a gain of RMB1.4
        million in 4Q12. The fluctuations 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.
    --  Net loss attributable to shareholders on a non-GAAP basis(1) was RMB25.4
        million (US$4.2 million), compared with a net loss attributable to
        shareholders of RMB401.6 million in 3Q13  and a net loss attributable to
        shareholders of RMB650.6 million in 4Q12.
    --  Net loss per basic ADS on a non-GAAP basis was RMB0.30 (US$0.05),
        compared with net loss per basic ADS on a non-GAAP basis of RMB4.74 in
        3Q13 and net loss per basic ADS on a non-GAAP basis of RMB7.70 in 4Q12.
    --  Net loss attributable to shareholders on a GAAP basis was RMB21.8
        million (US$3.6 million), compared with net loss attributable to
        shareholders of RMB460.4 million in 3Q13 and net loss attributable to
        shareholders of RMB670.4 million in 4Q12. Excluding the non-cash charges
        of RMB54.5 million (US$9.0 million), the Company would have achieved net
        income of RMB32.7 million (US$5.4 million).
    --  Net loss per basic ADS on a GAAP basis was RMB0.26 (US$0.04), compared
        with net loss per basic ADS of RMB5.44 in 3Q13 and net loss per basic
        ADS of RMB7.93 in 4Q12. Excluding the aforementioned non-cash charges,
        the Company would have achieved net income per basic ADS of RMB0.38
        (US$0.06).
    --  Annualized ROE on a non-GAAP basis was negative 6.3% in 4Q13, compared
        with negative 88.8% in 8Q13 and negative 97.6% in 4Q12.
    --  Annualized ROE on a GAAP basis was negative 4.6% in 4Q13, compared with
        negative 86.6% in 3Q13 and negative 87.0% in 4Q12.

FINANCIAL POSITION

As of December 31, 2013, the Company had cash and cash equivalents of RMB1,249.5 million (US$206.4 million) and net working capital of RMB591.1 million (US$97.6 million), compared with cash and cash equivalents of RMB1,049.8 million and net working capital of RMB591.4 million as of September 30, 2013. Total short-term bank borrowings (including the current portion of long-term bank borrowings) were RMB1,339.7 million (US$221.3 million) as of December 31, 2013, compared with RMB1,266.4 million as of September 30, 2013.

As of December 31, 2013, the Company had total long-term debt of RMB3,562.1 million (US$582.5 million), which is comprised of long-term bank borrowings, long-term notes and convertible bonds. The Company’s long-term bank borrowings are to be repaid in installments until their maturities ranging from 2 to 3 years. The Company’s long-term notes are to be repaid in 3 years. Holders of the convertible bonds have the option to require the Company to redeem the notes beginning on January 15, 2015.

Net cash provided in operating activities in 4Q13 was RMB258.9 million (US$42.8 million), compared with net cash used in operating activities of RMB315.9 million in 3Q13 and net cash used in operating activities of RMB440.7 million in 4Q12. The change in operating cash flow was primarily due to the decrease in net loss.

As of December 31, 2013, accounts receivable were RMB744.7million (US$123.0 million), compared with RMB1,018.9 million as of September 30, 2013 and RMB957.0 million as of December 31, 2012. Day’s sales outstanding (“DSO”) significantly decreased to 103 days in 4Q13 from 125 days in 3Q13 and 164 days in 4Q12. As of December 31, 2013, inventories decreased to RMB752.3 million (US$124.3 million) from RMB793.1 million as of September 30, 2013 and RMB838.7 million as of December 31, 2012. Day’s inventory was 63 days in 4Q13 compared with 62 days in 3Q13 and 65 days in 4Q12.

Capital expenditures were RMB99.3 million (US$16.4 million) in 4Q13.

The Company has from time to time been buying back its convertible bonds since January 1, 2012 and may do so in the future, subject to market conditions and other factors. The Company has repurchased convertible bonds to the value of approximately $72 million out of US$172.5 million in face value as of December 31, 2013.

FULL YEAR 2013 HIGHLIGHTS

    --  Total net revenues were RMB4,725.7 million (US$780.6 million) in 2013,
        representing a 28.5% increase from RMB3,678.4 million in 2012.
    --  PV module shipments, including module processing services, reached
        1280.3 MW, representing an increase of 54.3% from 829.8 MW in 2012.
        Module processing services accounted for 8.7% of total revenues in 2013.
    --  The Company recorded total non-cash charges of RMB513.8 million (US$84.9
        million), including RMB113.2 million (US$18.7 million) from inventory
        write-down as a result of lower cost or market assessment and a regular
        provision for obsolescence, RMB344.5 million (US$56.9 million) from
        valuation allowance against deferred tax assets, RMB15.6 million (US$2.6
        million) from provisions for advance payments associated with long-term
        supply contracts, RMB28.6 million (US$4.7 million) from provisions for
        doubtful debt of accounts receivable and RMB 11.9 million (US$2.0
        million) for doubtful debt for other current assets.
    --  Gross profit in 2013 was RMB335.0 million (US$55.3 million), compared
        with a gross loss of RMB325.5 million in 2012.
    --  Gross margin was positive 7.1%, compared with negative 8.8% in 2012.
    --  Operating loss for 2013 was RMB406.7 million (US$67.2 million), compared
        with an operating loss of RMB1,180.6 million in 2012.
    --  Operating margin was negative 8.6%, compared with negative 32.1% in
        2012.
    --  Net loss attributable to shareholders on a non-GAAP basis(1) was
        RMB759.9 million (US$125.5 million), compared with net loss attributable
        to shareholders of RMB1,468.3 million in 2012.
    --  Net loss per basic ADS on a non-GAAP basis was RMB8.97 (US$1.48),
        compared with net loss per basic ADS of RMB17.39 in 2012.
    --  Net loss attributable to shareholders on a GAAP basis was RMB874.1
        million (US$144.4 million), compared with net loss attributable to
        shareholders of RMB1,562.9 million in 2012.
    --  Net loss per basic ADS on a GAAP basis was RMB10.32 (US$1.70), compared
        with net loss per basic ADS of RMB18.51 in 2012.
    --  ROE on a non-GAAP basis was negative 38.6% in 2013, compared with
        negative 47.8% in 2012.
    --  ROE on a GAAP basis was negative 37.7% in 2013, compared with negative
        44.3% in 2012.

    1 All non-GAAP numbers
     used in this press
     release exclude the
     accounting impact from
     the adoption of ASC 815-
     40, which relates to the
     accounting treatment for
     the convertible bonds.
     Please refer to the
     attached financial
     statements for the
     reconciliation between
     the GAAP and non-GAAP
     financial results.

CAPACITY STATUS

As of December 31, 2013, the Company had production capacity of 800 MW for ingot and wafer, 1.3 GW for cell and 1.5 GW for module. The Company is giving active consideration to expanding cell and module capacity to 1.5 GW and 2.0 GW beginning in 2014; however no specific decision has been reached.

BUSINESS OUTLOOK

    --  The Company provides the following guidance based on current operating
        trends and market conditions.

For the first quarter 2014 the Company expects:

    --  Module shipments similar to the preceding quarter

For the full year 2014, the Company expects:

    --  Module shipments between 1.5-1.6GW of which about 25-30% will be for PV
        module processing services
    --  Capital expenditures of $80 million largely for maintenance and
        automation of existing manufacturing lines. The aforementioned capacity
        expansion under consideration is not included in this figure.
    --  Gross margins targeted in the range of 15-20%

CONFERENCE CALL

The Company will host a conference call to discuss the first quarter results at 8:00 AM Eastern Time (8:00 PM Shanghai Time) on March 13, 2014.

Mr. Ki-Joon HONG, Chairman and CEO; Mr. Min-Su KIM President; Mr. Jung Pyo SEO, 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:       18665194004

    International dial-in
     Number:                    +65 67239381

    China Toll Free Numbers:      8008190121

                                  4006208038

Passcode: 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:          18554525696

    International dial-in
     Number:                    +61 2 8199 0299

    China Domestic (Mandarin)
     Toll Free Numbers:              8008700206

                                     4006022065

Conference ID 3908356

Encore Dates: 13/03/2014 12:01 ET – 20/03/2014 11:59 ET

FOREIGN 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 December 31, 2013, which was RMB6.0537 to US$1.00, except for the conversion of Renminbi into U.S. dollars for 3Q13 which is based on the exchange rate of RMB6.1200 to US$1.00 as set forth in the H.10 statistical release of the Federal Reserve Board as of September 30, 2013 and the conversion of Renminbi into U.S. dollars for 4Q12 which is based on the exchange rate of RMB6.2301 to US$1.00 as set forth in the H.10 statistical release of the Federal Reserve Board as of December 31, 2012. 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 December 31, 2013 or at any other date. Percentage changes 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 had not been recorded. 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 2014 estimates for PV product shipments, average selling prices, 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 SolarOne

Hanwha SolarOne Co., Ltd. (NASDAQ: HSOL) is a vertically-integrated manufacturer of silicon ingots, wafers, PV cells and modules. Hanwha SolarOne offers high-quality, reliable products and services at competitive prices. Partnering with third-party distributors, OEM manufacturers, and systems integrators, Hanwha SolarOne serves the utility, commercial, government, and residential markets. The Company maintains a strong presence worldwide, with employees located throughout Europe, North America and Asia, and embraces environmental responsibility and sustainability, with an active role in the voluntary photovoltaic recycling program. Hanwha Group, Hanwha SolarOne’s largest shareholder, is active in solar project development and financing, and plans to produce polysilicon in the future. For more information, please visit: http://www.hanwha-solarone.com.


    Hanwha SolarOne Co., Ltd.

    CONSOLIDATED BALANCE SHEETS

    (Amounts in thousands of Renminbi ("RMB") and U.S. dollars ("US$")

                                                                       December 31         September 30         December 31         December 31

                                                                                     2012                 2013                2013                2013

                                                                        (Audited)          (Unaudited)          (Unaudited)         (Unaudited)

                                                                         RMB'000              RMB'000             RMB'000             US$'000

    ASSETS

    Current assets

    Cash and cash equivalents                                                     676,476            1,049,760           1,249,481             206,400

    Restricted cash                                                               150,462              417,724             163,948              27,082

    Derivative contracts                                                                -                5,310              26,632               4,399

    Accounts receivable - net                                                     956,969            1,018,858             744,739             123,022

    Notes receivable                                                                2,681                9,344              10,780               1,781

    Inventories - net                                                             838,727              793,100             752,291             124,270

    Advance to suppliers, net                                                     166,838              176,633             182,129              30,086

    Other current assets - net                                                    356,784              233,775             301,561              49,812

    Deferred tax assets - net                                                     150,297                    -                   -                   -

    Amount due from related parties - net                                         420,610              440,365             530,732              87,669

        Total current assets                                                    3,719,844            4,144,869           3,962,293             654,521

    Non-current assets

    Fixed assets - net                                                          4,779,873            4,560,547           4,482,656             740,482

    Intangible assets - net                                                       335,047              273,889             272,444              45,005

    Deferred tax assets - net                                                     107,304                2,946               2,946                 487

    Long-term deferred expenses                                                    25,200               13,491               9,594               1,585

    Long-term prepayments                                                         184,065              142,363             132,011              21,807

        Total non-current assets                                                5,431,489            4,993,236           4,899,651             809,366

    TOTAL ASSETS                                                                9,151,333            9,138,105           8,861,944           1,463,887

    LIABILITIES

    Current liabilities

    Derivative contracts                                                           17,311                8,307               6,513               1,076

    Short-term bank borrowings                                                  1,162,372            1,057,333           1,105,575             182,628

    Long-term bank borrowings, current portion                                    467,204              209,032             234,121              38,674

    Accounts payable                                                            1,061,723              941,668             695,530             114,893

    Notes payable                                                                 314,517              493,140             494,462              81,679

    Accrued expenses and other liabilities                                        400,537              383,625             388,747              64,216

    Customer deposits                                                              36,314               78,643              47,763               7,890

    Unrecognized tax benefit                                                      143,473              143,473             143,473              23,700

    Amount due to related parties                                                  72,045              238,262             255,033              42,128

        Total current liabilities                                               3,675,496            3,553,483           3,371,217             556,884

    Non-current liabilities

    Long-term bank borrowings                                                   2,285,106            2,520,680           2,446,076             404,063

    Long-term notes                                                                     -              614,800             609,690             100,714

    Convertible bonds                                                             368,590              477,635             470,357              77,697

    Long term payable                                                              50,000               50,000              50,000               8,259

    Deferred tax liabilities                                                       24,798               24,356              24,209               3,999

        Total non-current liabilities                                           2,728,494            3,687,471           3,600,332             594,732

    TOTAL LIABILITIES                                                           6,403,990            7,240,954           6,971,549           1,151,616

    Redeemable ordinary shares                                                         24                   24                  24                   4

    EQUITY

    Shareholders' equity

    Ordinary shares                                                                   316                  316                 321                  53

    Additional paid-in capital                                                  4,004,199            4,006,488           4,022,147             664,411

    Statutory reserves                                                            174,456              174,456             174,456              28,818

    Accumulated deficits                                                       (1,430,433)          (2,282,693)         (2,304,523)           (380,680)

    Accumulated other comprehensive loss                                           (1,219)              (1,440)             (2,030)               (335)

        Total shareholders' equity                                              2,747,319            1,897,127           1,890,371             312,267

    TOTAL EQUITY                                                                2,747,343            1,897,151           1,890,395             312,271

    TOTAL LIABILITIES, REDEEMABLE ORDINARY                                      9,151,333            9,138,105           8,861,944           1,463,887

    SHARES AND SHAREHOLDERS' EQUITY


    Hanwha SolarOne Co., Ltd.

    CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

    (Amounts in thousands of Renminbi ("RMB") and U.S. dollars ("US$"),

    except for number of shares (ADS) and per share (ADS) data

                                                                        For the three months ended   For the years ended

                                                                                December 31              September 30          December 31          December 31          December 31          December 31          December 31

                                                                                               2012                      2013                 2013                 2013                 2012                 2013                 2013

                                                                                (Unaudited)              (Unaudited)           (Unaudited)          (Unaudited)           (Audited)           (Unaudited)          (Unaudited)

                                                                                  RMB'000                  RMB'000               RMB'000              US$'000              RMB'000              RMB'000              US$'000

    Net revenues                                                                            836,663                 1,135,080            1,294,915              213,904            3,678,380            4,725,692              780,629

    Cost of revenues                                                                     (1,098,413)               (1,077,312)          (1,111,928)            (183,677)          (4,003,885)          (4,390,718)            (725,295)
                                                                                         ----------                ----------           ----------             --------           ----------           ----------             --------

    Gross profit (loss)                                                                    (261,750)                   57,768              182,987               30,227             (325,505)             334,974               55,334

    Operating expenses

    Selling expenses                                                                       (115,663)                  (73,733)             (74,101)             (12,241)            (348,568)            (325,422)             (53,756)

    General and administrative expenses                                                    (221,653)                  (91,132)            (108,420)             (17,910)            (415,707)            (324,044)             (53,529)

    Research and development expenses                                                       (26,709)                  (25,597)             (24,159)              (3,991)             (90,820)             (92,256)             (15,240)

        Total operating expenses                                                           (364,025)                 (190,462)            (206,680)             (34,142)            (855,095)            (741,722)            (122,525)
                                                                                           --------                  --------             --------              -------             --------             --------             --------

    Operating loss                                                                         (625,775)                 (132,694)             (23,693)              (3,915)          (1,180,600)            (406,748)             (67,191)

    Interest expenses                                                                       (73,927)                  (89,331)             (85,413)             (14,109)            (299,515)            (323,820)             (53,491)

    Interest income                                                                           3,237                     4,624                8,128                1,343               15,841               21,212                3,504

    Exchange gain                                                                            21,669                    27,114                8,664                1,431                8,875               43,687                7,217

    Changes in fair value of derivative contracts                                            (2,688)                   13,191               35,036                5,788                5,326               63,739               10,529

    Changes in fair value of conversion feature of                                            1,411                   (29,522)              32,557                5,378               (5,692)              (6,105)              (1,008)

    convertible bonds

    Loss on extinguishment of debt                                                                -                         -                    -                    -              (82,713)                   -                    -

    Other income                                                                              2,739                     1,142                3,530                  583                9,265                7,805                1,289

    Other expenses                                                                           (6,150)                     (810)                (649)                (107)             (18,391)             (16,194)              (2,675)
                                                                                             ------                      ----                 ----                 ----              -------              -------               ------

    Net loss before income tax                                                             (679,484)                 (206,286)             (21,840)              (3,608)          (1,547,604)            (616,424)            (101,826)

    Income tax benefit (expenses)                                                             9,074                  (254,067)                  10                    2              (15,255)            (257,666)             (42,563)

    Net loss                                                                               (670,410)                 (460,353)             (21,830)              (3,606)          (1,562,859)            (874,090)            (144,389)
                                                                                           --------                  --------              -------               ------           ----------             --------             --------

                                                                                           (670,410)                 (460,353)             (21,830)              (3,606)          (1,562,859)            (874,090)            (144,389)

    Net loss attributable

    to shareholders

    Other comprehensive income (loss), net of tax

    Foreign currency translation adjustment                                                    (358)                    1,267                 (590)                 (97)              (1,219)                (811)                (134)

    Comprehensive loss atributable to                                                      (670,768)                 (459,086)             (22,420)              (3,703)          (1,564,078)            (874,901)            (144,523)

    ordinary shareholders

    Net loss per share

    Basic                                                                                     (1.59)                    (1.09)               (0.05)               (0.01)               (3.70)               (2.06)               (0.34)

    Diluted                                                                                   (1.59)                    (1.09)               (0.05)               (0.01)               (3.70)               (2.06)               (0.34)

    Shares used in computation

    Basic                                                                               422,565,284               423,373,456          425,359,422          425,359,422          422,167,505          423,675,429          423,675,429

    Diluted                                                                             422,565,284               423,373,456          425,359,422          425,359,422          422,167,505          423,675,429          423,675,429

    Net loss per ADS

    Basic                                                                                     (7.93)                    (5.44)               (0.26)               (0.04)              (18.51)              (10.32)               (1.70)

    Diluted                                                                                   (7.93)                    (5.44)               (0.26)               (0.04)              (18.51)              (10.32)               (1.70)

    ADSs used in computation

    Basic                                                                                84,513,057                84,674,691           85,071,884           85,071,884           84,433,501           84,735,086           84,735,086

    Diluted                                                                              84,513,057                84,674,691           85,071,884           85,071,884           84,433,501           84,735,086           84,735,086


    Hanwha SolarOne Co., Ltd.

    CONSOLIDATED STATEMENTS OF CASH FLOWS

    (Amounts in thousands of Renminbi ("RMB") and U.S. dollars ("US$")

                                                                                                              For the three months ended                                      For the years ended

                                                                                                                  December 31, 2012             September 30, 2013             December 31, 2013             December 31, 2013          December 31, 2012             December 31, 2013             December 31, 2013

                                                                                                                     (Unaudited)                    (Unaudited)                    (Unaudited)                  (Unaudited)                 (Audited)                    (Unaudited)                   (Unaudited)

                                                                                                                       RMB'000                        RMB'000                        RMB'000                      US$'000                    RMB'000                       RMB'000                       US$'000

    Cash flow from operating activities

                                                                                                                                      (670,410)                     (460,353)                       (21,830)                    (3,606)                   (1,562,859)                     (874,090)                   (144,389)

         Net loss

         Adjustments to reconcile net loss to net cash
              provided by (used in) operating activities:

                                                                                                                                         3,477                        (4,094)                       (23,116)                    (3,818)                       15,732                       (37,430)                     (6,183)

              Unrealised loss (gain) from derivative contracts

                                                                                                                                        18,223                        27,095                         25,279                      4,176                        88,507                        95,662                      15,802

              Amortization of convertible bonds discount

                                                                                                                                        (1,411)                       29,522                        (32,557)                    (5,378)                        5,692                         6,105                       1,008

              Changes in fair value of conversion feature of convertible bonds

                                                                                                                                             -                             -                              -                          -                        82,713                             -                           -

              Loss on extinguishment of debt

                                                                                                                                         1,364                           506                            616                        102                         8,497                         9,677                       1,599

              Loss from disposal of fixed assets

                                                                                                                                             -                             -                              -                          -                             -                          (342)                        (56)

              Gain from disposal of intangible asset

                                                                                                                                       107,232                       110,651                        110,737                     18,292                       373,155                       436,074                      72,034

              Depreciation and amortization

                                                                                                                                         4,616                         4,043                          3,956                        653                        21,577                        21,064                       3,480

              Amortization of long-term deferred expenses

                                                                                                                                       170,012                             -                         15,565                      2,571                       170,012                        15,565                       2,571

              Provision for doubtful debt of advance to suppliers

                                                                                                                                        15,960                             -                              -                          -                        15,960                             -                           -

              Provision for amount due from related party

                                                                                                                                        50,048                        11,854                              -                          -                        50,048                        11,854                       1,958

              Provision for doubtful debt for other current assets

                                                                                                                                        87,626                             -                         28,562                      4,718                        87,626                        28,562                       4,718

              Provision for doubtful debt of accounts receivable

                                                                                                                                             -                             -                              -                          -                             -                        (7,980)                     (1,318)

              Reversal of doubtful debt for amount due from related parties

                                                                                                                                        53,926                        30,772                         10,250                      1,693                       326,051                       113,236                      18,705

              Write down of inventories

                                                                                                                                         1,781                           756                            371                         61                         7,782                         2,660                         439

              Stock compensation expense

                                                                                                                                         6,788                       (14,085)                         9,599                      1,586                        25,694                        16,412                       2,711

              Warranty provision / utilization

                                                                                                                                          (389)                       (5,410)                        (3,270)                      (540)                       (9,958)                      (12,875)                     (2,127)

              Warranty reversal

                                                                                                                                          (375)                      260,320                           (147)                       (24)                       22,893                       254,066                      41,969

              Deferred tax benefit (expense)

                                                                                                                                                                                                                                                                                                                             -

         Changes in operating assets and liabilities

                                                                                                                                        84,390                      (281,247)                       235,644                     38,926                        12,379                       (66,815)                    (11,037)

              Restricted cash

                                                                                                                                      (135,687)                     (137,302)                        30,559                      5,048                      (480,729)                      (26,800)                     (4,427)

              Inventories

                                                                                                                                       112,392                       124,071                        238,421                     39,385                      (450,747)                      156,998                      25,934

              Accounts and notes receivable

                                                                                                                                        57,644                        16,442                        (10,709)                    (1,769)                      152,196                        21,198                       3,502

              Advance to suppliers and long-term prepayments

                                                                                                                                             -                             -                              -                          -                        (1,484)                         (505)                        (83)

              Long-term deferred expenses

                                                                                                                                             -                             -                              -                          -                             -                             -                           -

              Intangible assets

                                                                                                                                       (62,079)                       51,656                        (61,920)                   (10,229)                      135,524                        56,560                       9,344

              Other current assets

                                                                                                                                       (14,365)                      (92,986)                       (90,367)                   (14,928)                     (195,117)                     (102,142)                    (16,873)

              Amount due from related parties

                                                                                                                                      (377,764)                      (76,459)                      (177,625)                   (29,342)                       48,150                        95,217                      15,729

              Accounts and notes payable

                                                                                                                                        32,706                         5,632                          3,327                        550                        17,347                         3,444                         569

              Accrued expenses and other liabilities

                                                                                                                                       (10,176)                       27,112                        (30,880)                    (5,101)                      (48,557)                       11,449                       1,891

              Customer deposits

                                                                                                                                        26,254                        55,624                         (1,520)                      (250)                       29,703                       103,217                      17,050

              Amount due to related parties

                                                                                                                                        (2,450)                            -                              -                          -                             -                             -                           -

              Long-term payable

    Net cash provided by (used in) operating activities                                                                               (440,667)                     (315,880)                       258,945                     42,776                    (1,052,213)                      330,041                      54,520
                                                                                                                                      --------                      --------                        -------                     ------                    ----------                       -------                      ------

    Cash flows from investing activities

                                                                                                                                       (71,423)                      (65,234)                       (99,274)                   (16,399)                     (597,978)                     (426,294)                    (70,419)

              Acquisition of fixed assets

                                                                                                                                             -                             -                             66                         11                             -                         2,563                         424

              Disposal of fixed assets

                                                                                                                                             -                             -                              -                          -                             -                        56,677                       9,362

              Disposal of land use rights

                                                                                                                                        (5,495)                       (5,520)                         5,553                        917                        63,461                         2,381                         393

              Change of restricted cash

    Net cash used in investing activities                                                                                              (76,918)                      (70,754)                       (93,655)                   (15,471)                     (534,517)                     (364,673)                    (60,240)
                                                                                                                                       -------                       -------                        -------                    -------                      --------                      --------                     -------

    Cash flows from financing activities

                                                                                                                                             -                             -                         15,293                      2,526                             -                        15,293                       2,526

              Proceeds from issuance of ordinary shares

                                                                                                                                             -                             -                              -                          -                      (299,271)                            -                           -

              Payment for repurchase of convertible bonds

                                                                                                                                        (1,225)                      (14,786)                        12,579                      2,078                        55,324                        50,948                       8,416

              Change of restricted cash

                                                                                                                                       100,627                       643,764                        387,872                     64,071                     2,661,172                     2,232,451                     368,775

              Proceeds from short-term borrowings

                                                                                                                                             -                             -                              -                          -                     1,369,370                       617,970                     102,082

              Proceeds from long-term borrowings

                                                                                                                                             -                             -                              -                          -                                                     627,450                     103,647

              Proceeds from the issuance of long-term notes

                                                                                                                                      (398,245)                     (588,809)                      (321,339)                   (53,081)                   (3,263,051)                   (2,209,477)                   (364,980)

              Payment of short term borrowings

                                                                                                                                      (111,536)                      (13,631)                       (49,515)                    (8,179)                     (212,037)                     (690,083)                   (113,994)

              Payment for long term borrowings

                                                                                                                                        (2,596)                       (6,662)                        (4,534)                      (749)                      (18,355)                      (18,771)                     (3,101)

              Arrangement fee and other related costs for long-term bank borrowings

                                                                                                                                             -                             -                              -                          -                                                      (5,577)                       (921)

              Arrangement fee and other related costs for long-term notes

                                                                                                                                          (128)                       (2,041)                        (5,925)                      (979)                       (6,501)                      (12,567)                     (2,076)

              Arrangement fee and other related costs for short-term bank borrowings

    Net cash provided by (used in) financing activities                                                                               (413,103)                       17,835                         34,431                      5,687                       286,651                       607,637                     100,374
                                                                                                                                      --------                        ------                         ------                      -----                       -------                       -------                     -------

    Net increase (decrease) in cash and cash equivalents                                                                              (930,688)                     (368,799)                       199,721                     32,992                    (1,300,079)                      573,005                      94,654

    Cash and cash equivalents at the beginning of period                                                                             1,607,164                     1,418,559                      1,049,760                    173,408                     1,976,555                       676,476                     111,746

    Cash and cash equivalents at the end of period                                                                                     676,476                     1,049,760                      1,249,481                    206,400                       676,476                     1,249,481                     206,400
                                                                                                                                       =======                     =========                      =========                    =======                       =======                     =========                     =======

    Supplemental disclosure of cash flow information:

                                                                                                                                        26,421                        56,441                         33,643                      5,557                       164,536                       166,516                      27,506

         Interest paid

                                                                                                                                           549                       (24,817)                        (2,681)                      (443)                       47,212                       (45,864)                     (7,576)

         Income tax paid (refunded)

                                                                                                                                           790                         9,097                         11,920                      1,969                        21,059                        26,309                       4,346

         Realized gain (loss) from derivative contracts

    Supplemental schedule of non-cash activities:

                                                                                                                                        30,816                       (50,439)                       (67,191)                   (11,099)                     (159,459)                     (281,465)                    (46,495)

         Acquisition of fixed assets included in accounts payable, accrued

         expenses and other liabilities


                                                   For the three months ended           For the years ended

                                                       December 31, 2012                 September 30, 2013                       December 31, 2013                December 31, 2013             December 31, 2012             December 31, 2013              December 31, 2013

                                                         (RMB million)                     (RMB million)                            (RMB million)                    (US$ milllion)                (RMB million)                 (RMB million)                  (US$ milllion)

    Non-GAAP net loss                                                           (650.6)                         (401.6)                                     (25.4)                         (4.2)                     (1,468.3)                        (759.9)                       (125.5)

    Fair value changes of the conversion features                                  1.4                           (29.5)                                      32.6                           5.4                          (5.7)                          (6.1)                         (1.0)

    of the Convertible bonds

    Accretion of interest of the Convertible bonds                               (21.2)                          (29.3)                                     (29.0)                         (4.8)                        (88.9)                        (108.1)                        (17.9)

    GAAP net loss                                                               (670.4)                         (460.4)                                     (21.8)                         (3.6)                     (1,562.9)                        (874.1)                       (144.4)
                                                                                ------                          ------                                      -----                          ----                      --------                         ------                        ------

                                                   For the three months ended           For the years ended

                                                       December 31, 2012                 September 30, 2013                       December 31, 2013                December 31, 2013             December 31, 2012             December 31, 2013              December 31, 2013

                                                             (RMB)                             (RMB)                                    (RMB)                            (US$)                         (RMB)                         (RMB)                          (US$)

    Non GAAP net loss per ADS - Basic                                            (7.70)                          (4.74)                                     (0.30)                        (0.05)                       (17.39)                         (8.97)                        (1.48)

    Fair value changes of the conversion features                                 0.02                           (0.35)                                      0.38                          0.07                         (0.07)                         (0.07)                        (0.01)

    of the Convertible bonds

    Accretion of interest of the Convertible bonds                               (0.25)                          (0.35)                                     (0.34)                        (0.06)                        (1.05)                         (1.28)                        (0.21)

    GAAP net loss contributed to shareholders                                    (7.93)                          (5.44)                                     (0.26)                        (0.04)                       (18.51)                        (10.32)                        (1.70)

    per ADS - Basic

    ADS (Basic)                                                             84,513,057                      84,674,691                                 85,071,884                    85,071,884                    84,433,501                     84,735,086                    84,735,086

                                                     For three months ended                                             Annualized for the three months ended                                      For the twelve                For the twelve

                                                                                                                                                                                                    months ended                  months ended

                                                       December 31, 2012                 September 30, 2013                       December 31, 2013                                              December 31, 2012             September 30, 2013             December 31, 2013             December 31, 2012         December 31, 2013

    Non-GAAP Return on Equity                                                   -24.41%                         -22.21%                                     -1.58%                                                     -97.64%                        -88.84%                        -6.32%                   -47.80%                   -38.59%

    Fair value changes of the conversion features                                 3.35%                           1.94%                                      1.96%                                                      13.40%                          7.76%                         7.84%                     5.99%                     5.55%

    of the Convertible bonds

    Accretion of interest of the Convertible bonds                               -0.69%                          -1.38%                                     -1.53%                                                      -2.76%                         -5.52%                        -6.12%                    -2.52%                    -4.66%

    GAAP Return on equity                                                       -21.75%                         -21.65%                                     -1.15%                                                     -87.00%                        -86.60%                        -4.60%                   -44.33%                   -37.70%
                                                                                ------                          ------                                      -----                                                      ------                         ------                         -----                    ------                    ------

SOURCE Hanwha SolarOne Co., Ltd.


Source: PR Newswire



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