Zhongli Talesun Solar Financial Due Diligence Report
CLEAN ENERGY ASSOCIATES September 15, 2015
Table of Contents
LIST OF ACRONYMS ...... 4 1. TALESUN COMPANY INTRODUCTION ...... 5 1.1 Overview ...... 5 Graph A: Talesun Organizational Structure ...... 6 Chart A: Talesun Top 6 Shareholders as of 2Q 2015 ...... 7 1.2 Leadership Team ...... 8 Chart B: Executive Structure of Talesun Solar ...... 8 2. COMPANY FINANCIAL OVERVIEW ...... 11 2.1 Summary of Annual Reports ...... 11 Chart C: Talesun Solar Financial Indices (FY2014-FY2015) ...... 11 Chart D: Talesun Solar Financial Indices (2Q 2014-2Q 2015) ...... 13 Chart E: Zhongli Talesun Financial Budget (FY2015E-FY2017E) ...... 14 2.2 Accounts Receivable and Accounts Payable ...... 15 Chart F: Talesun Solar Business AR as of 2014 ...... 15 Chart G: Talesun Business Top AR as of 2Q 2015 ...... 16 Chart H: Talesun Solar Polysilicon Business AP as of 2014 ...... 16 Chart I: Talesun Solar Wafer Business AP as end of 2Q 2015 ...... 17 2.3 Profitability ...... 17 Chart J: Talesun Solar Profitability Trends (FY2012-FY2014) ...... 17 Chart K: Talesun Profitability Trends (2Q 2014-2Q 2015) ...... 18 2.4 Financing Solvency and Operating Capacity ...... 18 Chart L: Talesun Solar Bank Loans as end June 2015 ...... 19 Chart M: Solvency Ratios ...... 19 Chart N: Operating Ratios ...... 20 3. PRODUCTION AND SALES ...... 21 3.1 Production Capacity ...... 21 Chart O: Talesun Solar Cell Capacity Production and Sales (FY2012-FY1H2015E) ...... 21 Graph B: Talesun Solar Cell Capacity Production and Sales (FY2012-FY1H2015E) ...... 21 Chart P: Talesun Solar Module Capacity Production and Sales (FY2012-FY1H2015E) ...... 22 Graph C: Talesun Solar Module Capacity Production and Sales (FY2012-FY1H2015E) ...... 22 3.2 Sales Overview ...... 23 Chart Q: Talesun Solar Sales (USD) by Region (FY2013-FY2015E) ...... 23 Graph D: Talesun Solar Sales (USD) by Region (FY2013-FY2015E) ...... 23 Chart R: Talesun Solar Shipment (MW) by Region (FY2012-FY2015E) ...... 24 Graph E: Talesun Solar Shipment (MW) by Region (FY2012-FY2015) ...... 24 Chart S: Talesun Solar Sales Percentage by Region (FY2011-FY2016E) ...... 25 Graph F: Talesun Solar Sales Percentage by Region (FY2011-FY2016E) ...... 25 Chart T: Talesun Solar Downstream Projects ...... 26 Chart U: Talesun Solar Top 10 Customer (FY2012-FY2014) ...... 26
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4. WARRANTY ...... 27 4.1 Warranty Claims Terms and Procedures ...... 27 4.2 Warranty Claims Record ...... 32 Chart V: Warranty Claims (FY2012-1Q 2015) ...... 32 5. SUMMARY ...... 34 6. DISCLAIMER ...... 35
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List of Acronyms
AR – Account Receivable CAPEX – Capital Expenditure Co. – Corporation EBIT – Earnings before Interest and Taxes EBITDA – Earnings before Interest, Taxes, Depreciation and Amortization EU – European Union FY – Fiscal Year GmbH – Gesellschaft mit beschränkter Haftung GW – Gigawatt Inc. – Incorporated Ltd. – Limited MW – Megawatt N/A – Not Applicable PV – Photovoltaic Q – Quarter RMB – Chinese Renminbi ROA – Return on Assets ROE – Return on Equity ROW – Rest of the World USA – United States of America USD – US Dollar
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1. Talesun Company Introduction 1.1 Overview
Zhongli Talesun Solar (Zhongli Talesun, Talesun, or Talesun Solar) is a wholly owned subsidiary of Zhongli Sci-Tech Group, (SZ: 002309) which is a national high-tech key enterprise located in Changshu, Jiangsu. Zhongli Sci-Tech Group has been awarded “China Top 500 Private Enterprises,” “China Top 10 Independent Innovation Enterprises” and “National AAA Enterprise of Quality, Service and Credit.” Zhongli Sci-Tech Group has six (6) national high-tech companies, the main products of which are HV/LV cables, flame-retardant and fire-resistant cables series; optical fiber preform and optical fiber cables series; solar PV industrial chain series; 3D printing series and electronic information products series. Zhongli Talesun was established in 2010 with a total investment of RMB five billion (元 5 billion). With a one point five gigawatts (1.5GW) cell capacity and a two point five gigawatts (2.5GW) module capacity, Zhongli Talesun has built a fully-automated production line. As of the end of 2014, Zhongli Talesun had cumulatively invested and developed more than two gigawatts (2GW) PV power plants in the downstream PV market.
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Graph A: Talesun Organizational Structure
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Chart A: Talesun Top 6 Shareholders as of 2Q 2015 Share Volume Percentage of Total Shareholders (RMB Million) Talesun Shares Zhongli Science and Technology Group Co., 2,218.04 74.81 % Ltd.
China Development Finance Co., Ltd. 533.55 17.99 %
Agricultural Bank(Suzhou) Investment 22.87 0.77 % Management Co., Ltd. Wuxi National League Venture Capital Fund 60.98 2.06 % (Limited Partnership) Agricultural Bank Wuxi Equity Investment 91.47 3.08 % Fund (Limited Partnership) Agricultural Bank League of Nations Wuxi 38.11 1.29 % Investment Management Ltd. Total 2,965.01 100%
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1.2 Leadership Team
Chart B: Executive Structure of Talesun Solar Title Biography Mr. Baixing Wang, male, born in October 1956, Chinese nationality, college degree, Senior Economist, Communist Party member; former Assistant Director (of Changshu Wire and Cable 2nd Plant); Director (of Changshu Wire and Cable 3rd Plant); Chairman and General Manager (of Changshu Zhongli Cable Co., Ltd.); Chairman and General Manager (of Jiangsu Zhongli Cable Co., Ltd.); Chairman and General Manager (of Jiangsu Zhongli Optical Group Ltd.); Chairman and General Manager (of Zhongli Science and Technology Group Co., Mr. Baixing Wang Ltd.).He currently is Chairman of the Board (of Changshu Zhonglian Chairman of Board photoelectric New Materials Co., Ltd.); Chairman (of Changshu Zhongli /President Optoelectronics Technology Research Center Co., Ltd.); Chairman (of Shenzhen Zhongli Technology Co., Ltd.); served as Chairman (of Jiangsu Changfei Zhongli fiber optic cable Co., Ltd.); Chairman of the Board (of Jiangsu Zhongding real estate development Co., Ltd.); Chairman (of Jiangsu Zhongji Automobile New Material Technology Co., Ltd.); Chairman of the Board (of Changshu Municipal Zhongsheng Investment Management Co., Ltd.); Chairman (of Jiangsu Zhongding Advertising Media Co., Ltd.); Chairman (Zhongli Talesun Solar Co., Ltd.).
Mr. Weichang Yu, male, born in July 1952, Chinese nationality, without a Residence-abroad right, Bachelor degree, Senior Engineer; former engineer, Senior Engineer (of Wuhan Post and Telecommunications Research Institute); Secretary, Chairman (of Changfei Optical Fiber and Cable Co., Ltd.); Materials Mr. Weichang Yu Manager, Marketing Manager, Quality Assurance Manager, Marketing Director, Member of the Commercial Director; General Manager (of Jiangsu Changfei Zhongli fiber optic Board of Directors cable Co., Ltd.); Vice Chairman (Jiangsu Changfei Libya fiber cable Co., Ltd.);
General Manager (of Zhongli Science and Technology Group Co., Ltd.). He currently is a member of the Board of Directors (of Zhongli Talesun Solar Co., Ltd.).
Mr. Zhoujian Xin, born in November 1966, Chinese nationality, without a Residence-abroad right, College degree, Senior Economist, member of the Chinese Communist Party; former Director (of brick and tile planting Tang Town Mr. Zhoujian Xin /Changshu City); Party Secretary (Zhanghu Village of Tang Town /Changshu Member of the City); Assistant General Manager (of Jiangsu Zhongli Optical Group Ltd.); Board of Directors Deputy General Manager (of Zhongli Talesun Solar Co., Ltd.). He currently is a
member of the Board of Directors (both for Zhongli Talesun Solar Co., Ltd. and Zhongli Science and Technology Group Co., Ltd.).
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Title Biography Mr. Changqing Hu, male, born in December 1979, Chinese nationality, no right of abode abroad, Undergraduate degree, Intermediate Accountant; former Fixed Asset Accountant and Tax Accountant, Financial Officer, Vice President of Mr. Changqing Hu Finance, Financial Manager, and Assistant General Manager (of Zhongli Science Member of the and Technology Group Co., Ltd.). He currently is a member of the Board of Board of Directors Directors, Secretary of the Board, Chief Financial Officer (of Zhongli Science and Technology Group Co., Ltd.); Director (of Zhongli Talesun Solar Co., Ltd.).
Ms. Zeying Wang, female, born in June 1988; Working Experience: 2013.08 ~ 2014.3: China Development Finance Co., Ltd., Equity Investment Manager; Ms. Zeying Wang 2014.04 - present: CDB Capital Co., Ltd., an Equity Investment Manager Member of the Working Responsibilities: Board of Directors 1. Understanding the potential investment targets and financing needs, conduct field visits for research; for the investment industry, corporate finance and operation for analysis, report writing assessment and due diligence work; 2. To do routine work for the invested company after an investment has been made.
Ms. Chengzhi Zhong, female, born in January 1974, Chinese nationality, graduate degree, Mid-Level Accountant; Working Experience: 09-1999.10, the Agricultural Bank, the Bank for International Settlement Clerk / Market Development Commissioner; 1999.10-2005.10, Sinar Mas Paper, China headquarters, Financial Manager concurrently Subsidiary Financial Manager; Ms. Chengzhi Zhong 2005.10-2007.10, St. Mark Paper, Chief Financial Officer CFO; Member of the 2007.10-2012.05, Hanson Financial Leasing Companies, Minister of Market Board of Directors Development and Business Development Director; 2012.05-2014.05, Shanghai New Energy Co., Ltd., China Xuan, Deputy General Manager; 2014.07- present, the League of Nations CAF Wuxi Investment Management Limited; (Limited Partnership) General Manager of CAF Wuxi Equity Investment Fund Business.
Mr. Zhang Ling Jun, male, born in December 1966, Chinese nationality, with a Residence-abroad right; He graduated from Tsinghua University in Beijing in Mr. Zhang Ling Jun 1986, and in 1992 obtained a PhD in semiconductor physics, CAS. From 1993 to Chief Executive 1996, he was a Project Manager in Chinese Hi-Tech Group; from Jan.1997 to Officer May 2003, he was an Operation Manager in Shanghai Wei Xu Semiconductor Co., Ltd.; from June 2003 to July 2014 year, served as the Technology Vice President and General Manager of Suzhou Canadian Solar Power Technology
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Title Biography Co., Ltd.; in August, 2014 he came into Zhongli Talesun Solar Co., Ltd. and began serving as Chief Executive Officer.
Mr. Ni Zhi Chun, male, born in October 1977, Chinese nationality, without a Mr. Ni Zhi Chun Residence-abroad right; obtained Doctor Graduate degree; from2003 to 2015, Vice President of the served as Technology Executive in Suntech Power Co., Ltd.; from 2007to 2013, Technology served as the Director of R & D Center of CEEG (Nanjing) New Energy CO., Research & Ltd.; in June, 2012 he came into Zhongli Talesun Solar Co., Ltd. and began Development serving as the Vice President of the Technology Research & Development Department department.
Mr. Chen Jie, male, born in September 1964, Chinese nationality, without a Residence-abroad right; obtained Bachelor's degree, Intermediate Engineer; from Mr. Chen Jie 1993 to 1996, served as a manager in several foreign companies such as Siemens, Vice President of the Fujitsu, and Celestica (Suzhou) Technology Co., Ltd.; from 2006to 2010, was the Quality Control Quality Director in Trina Solar; from2010to 2011, was the Product-Quality Vice Department President in GD Solar; in Oct., 2011, he came into Zhongli Talesun Solar Co., Ltd. and began serving as the Vice President of the Quality-Control department.
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2. Company Financial Overview 2.1 Summary of Annual Reports1 The section below will analyze Talesun’s consolidated financial indices and development from FY2012 to FY2014.Also included are the previous five (5) quarter’s financial indices for the company.
Chart C: Talesun Solar Financial Indices (FY2014-FY2015) Percentage Financial Indices Unit FY2012 FY2013 FY2014 Change FY2013/FY2014 Million Revenue 2,946.23 4,921.13 4,071.94 (17.26%) RMB
Cost of Million 2,228.37 3,560.63 2,911.83 (18.22%) Goods Sold RMB
Million Gross Profit 717.86 1,360.50 1,160.11 (14.73%) RMB
Management Million 159.26 236.41 306.44 29.62% Costs RMB Income Statement Million EBIT 608.46 1,088.82 819.01 (24.78%) RMB
Million Finance Costs 210.84 405.22 408.06 0.70% RMB
Million Tax Costs 62.13 108.68 55.55 (48.88%) RMB
Net Million 335.49 574.92 355.39 (38.18%) Profit/Loss RMB Cash and Million Cash 918.95 375.92 1,996.71 431.15% RMB Equivalents Account Million Assets 2,008.91 4,570.23 5,558.76 21.63% Receivable RMB Million Inventory 540.77 340.12 481.17 41.47% RMB
1Figures provided by Talesun Solar’s finance team Page 11 of 35
Percentage Financial Indices Unit FY2012 FY2013 FY2014 Change FY2013/FY2014 Current Million 4,004.25 5,781.01 8,579.85 48.41% Assets RMB Million Fixed Assets 1,927.51 2,065.18 1,932.29 (6.43%) RMB Million Total Assets 6,869.47 8,732.86 12,101.80 38.58% RMB Short Term Million 437.08 1,135.00 150.00 (86.78%) Borrowings RMB Account Million Liabilities 1,500.81 2,491.81 2,692.38 8.05% Payable RMB and Equity Million Liabilities 5,498.78 6,937.76 7,663.41 10.46% RMB Million Equity 1,370.69 1,795.11 4,438.39 147.25% RMB Net Cash Inflow from Million (531.08) 839.20 (87.94) (110.48%) Operating RMB Activities Net Cash Inflow from Million (1,123.23) (404.72) (743.23) (83.64%) Investment RMB Cash Activities Flow Net Cash
Inflow from Million 2,063.89 (804.76) 1,954.18 342.83% Financing RMB Activities Net Change in Cash and Million 486.63 107.00 1,226.88 1042.62% Cash RMB Equivalents
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Chart D: Talesun Solar Financial Indices (2Q 2014-2Q 2015) Financial Indices Unit 2Q2014 3Q 2014 4Q 2014 1Q 2015 2Q 2015 Million Revenue 700.20 907.98 2,323.78 796.49 684.18 RMB Cost of Million 539.67 641.19 1,588.01 550.70 549.87 Goods Sold RMB Million Gross Profit 160.53 266.80 735.77 245.80 134.31 RMB Manage- Million 50.67 71.74 115.75 83.22 69.92 Income ment Costs RMB Statement Million EBIT (29.47) 197.37 718.68 170.07 (5.81) RMB Finance Million 88.61 108.35 130.89 75.20 52.76 Costs RMB Million Tax Costs (41.21) 13.12 82.14 14.18 (21.29) RMB Net Million (76.88) 75.90 505.65 80.69 (37.29) Profit/Loss RMB Cash and Million Cash 1,427.28 1,321.93 1,996.71 1,701.33 1,558.01 RMB Equivalents Account Million 4,617.72 4,533.94 5,558.76 4,743.82 4,208.60 Receivable RMB Million Inventory 674.13 891.19 481.17 562.77 771.57 Assets RMB Current Million 7,321.04 7,312.16 8,579.85 7,507.00 6,898.42 Assets RMB Fixed Million 1,979.00 1,935.86 1,932.29 1,887.58 1,840.19 Assets RMB Million Total Assets 10,861.78 10,801.71 12,101.80 11,100.88 10,525.58 RMB Short Term Million 1,276.00 766.00 150.00 340.00 155.00 Borrowings RMB Account Million 2,394.66 2,170.07 2,692.38 2,442.27 2,343.74 Payable RMB Liabilities Million Liabilities 7,984.94 7,848.97 7,663.41 6,581.79 6,043.78 and RMB Equity
Million Equity 2,876.84 2,952.74 4,438.39 4,519.09 4,481.80 RMB
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Financial Indices Unit 2Q2014 3Q 2014 4Q 2014 1Q 2015 2Q 2015 Net Cash Inflow from Million (429.66) N/P (87.94) 475.39 N/P Operating RMB Activities Net Cash Inflow from Million (735.02) N/P (743.23) (173.01) N/P Investment RMB Cash Activities Flow Net Cash
Inflow from Million 1,880.04 N/P 1,954.18 (550.39) N/P Financing RMB Activities Net Change in Cash and Million 822.20 N/P 1,226.88 991.82 N/P Cash RMB Equivalents
Chart E: Zhongli Talesun Financial Budget (FY2015E-FY2017E) Financial Unit FY2015E FY2016E FY2017E Indices
Million Revenue 6,000 7,400 7,906 RMB
Cost of Goods Million 4,467 5,701 5,897 Sold RMB
Million Gross Profit 1,533 1,803 2,008 RMB
Million EBITDA 997 1,162 1,297 RMB Million CAPEX 4.10 4.10 4.10 RMB
After completing a comprehensive financial audit of Talesun Solar, CEA has come to the following overarching conclusions:
Talesun Solar’s revenues increased by sixty seven and three hundredths of one percent (67.03%) between 2012 and 2013, from RMB two point nine billion (元 2.9 billion), to RMB four point nine
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billion (元 4.9 billion). Revenues then decreased slightly to RMB four point one billion (元 4.1 billion) in 2014. Talesun’s revenues have increased from RMB zero point seven billion (元 0.7 Billion) in 2Q 2014, to RMB zero point nine billion (元 0.9 billion) in 3Q 2014, and then jump to RMB two point three billion (元 2.3 billion) in 4Q 2014, but then decreased slightly in 1Q 2015, to RMB zero point eight billion (元 0.8 billion). Revenues also decreased slightly in 2Q 2015, to RMB zero point seven billion (元 0.7 billion). According to Talesun’s next three (3) year plan, the company estimates that revenues will increase from 2015 into the future, and plans to reach revenue levels of RMB seven point nine billion (元 7.9 billion) in 2017.
In summary of the above, Talesun Solar’s financial indices indicate that the company experienced a big increase in revenues from 2012 to 2013, before decreasing slightly in 2014. Gross profits and EBIT increased between 2012 and 32013, and then decreased again in 2014, and net profits slightly fluctuated in the past three (3) years, but the overall trend is in an upwards direction. Regarding the company’s balance sheet, the company cash and cash equivalents also slightly fluctuated in the past years, but the overall trend is also that in a rising direction.
Finally, revenue increases in 2013 were due partially to the rapidly increasing short term borrowings in that year; revenues then decreased with the loan reductions in 2014.Total debt levels increased over the past three (3) years, as did the total asset levels.
2.2 Accounts Receivable and Accounts Payable The following tables summarize Talesun Solar’s Accounts Receivable (AR) as of 2014 and 2Q 2015.
Chart F: Talesun Solar Business AR as of 2014 Customer Name Amount (RMB in Million) % of Total Jinchang Newsun Solar Power Co., Ltd. 620.27 14.66% Ningxia Talesun New energy source Co., Ltd. 541.67 12.80% Talesun Power (Hongkong) Co., Ltd. 514.74 12.17% Hainan Talesun Power Co., Ltd. 513.28 12.13% Baotou Talesun Power Co., Ltd. 278.80 6.59% Yumen Newsun Solar New energy Power Co., Ltd. 243.51 5.76% Hami Solar Power Co., Ltd. 235.67 5.57% Talesun Solar Germany GmbH 187.14 4.42% Moss Electrical Co., Ltd. 77.29 1.83% Jiayuguan Talesun Solar Power Co., Ltd. 74.35 1.76% Total Top Ten (RMB) 3,286.73 77.68% Total Amount (RMB) 4.122.93 100%
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Chart G: Talesun Business Top AR as of 2Q 2015 Customer Name Amount (RMB in Million) % of Total Jinchang Newsun Solar Power Co., Ltd. 621.46 14.95% Talesun Power (Hongkong) Co., Ltd. 583.49 14.04% Hainan Talesun Power Co., Ltd. 333.28 8.02% Hainan Yahui New energy source Power Co., Ltd. 316.39 7.61% GCL integrated Polytron Technologies Inc. 309.31 7.44% Tulufan Talesun Solar Power Co., Ltd. 303.76 7.31% Baotou Talesun Solar Power Co., Ltd. 291.13 7.00% Yumen Talesun New energy source Power Co. ,Ltd. 235.67 5.67% Ningxia Talesun New energy source Co., Ltd. 208.55 5.02% Gonghe Talesun New energy source Co., Ltd. 198.42 4.77% Total Top Ten(RMB) 3,401.46 81.84% Total Amount (RMB) 3,961.36 100%
As of 2014, Talesun Solar held total AR of approximately RMB four point twelve billion (元 4.12 billion). Of this amount, seventy eight and seventy eight hundredth of one percent (78.78%) is from companies associated with Talesun. As of 2Q 2015, Talesun Solar held total AR of approximately RMB three point ninety six billion (元 3.96 billion). Of this, sixty three and thirty three hundredth of one percent (63.33%), is from companies associated with Talesun.
The following tables summarize Talesun Solar’s Accounts Payable (AP) as of 2014 and 2Q 2015.
Chart H: Talesun Solar Polysilicon Business AP as of 2014 Amount % of Supplier Name (RMB in Million) Total AP Zhongli Science and Technology Group Inc. 84.85 6.93% Changshu Zhongli Talesun Material Co., Ltd. 84.74 6.92% Taicang GCL Solar science and Technology Co., Ltd. 50.76 4.14% Suzhou Shenteng Metal Material Co., Ltd. 49.90 4.07% Beijing Panda International Information Technology Co., Ltd. 44.87 3.66% CTIE Group Information Technology Co., Ltd. 42.37 3.46% Changzhou Almaden Inc. 25.89 2.11% Wexi Ruxing technology development Co., Ltd. 25.85 2.11% Hubei Yongheng Solar Inc. 24.56 1.98% Suzhou JOLYWood Inc. 23.28 1.90% Total Top Ten (RMB) 456.77 37.28% Total AP (RMB) 1,225.15 100.00%
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Chart I: Talesun Solar Wafer Business AP as end of 2Q 2015 Amount % of Supplier Name (RMB in Million) Total AP GCL System Integration Technology Co., Ltd. 100.36 8.32% CSLC CSSC Guangzhou Co., Ltd. 81.76 6.78% Changshu Talesun Solar Material Co., Ltd. 61.28 5.08% GCL Taicang Solar Technology Co., Ltd. 57.92 4.80% GCL Suzhou New Energy Co., Ltd. 34.57 2.87% Hainan Tax Bureau 29.26 2.43% Shenzhen Spaceflight Ouhua Technology Development Co., Ltd. 27.96 2.32% CTIE Group Information Technology Co., Ltd. 25.10 2.08% Henan Ancai Hi-Tech Inc. 24.35 2.02% Zhejiang Gerui New Material Co., Ltd. 23.83 1.98% Total Top Ten (RMB) 466.38 38.68% Total AP (RMB) 1,205.82 100%
As of 2014, Talesun Solar held total AP of approximately RMB one point twenty two billion (元 1.22 billion). Of this, forty six and forty hundredths of one percent (46.40%) is from companies associates with Talesun. As of 2Q 2015, Talesun Solar held total AP of approximately RMB one point twenty one billion (元 1.21 billion). Of this, approximately eighteen and fifty two hundredths of one percent (18.52%) is from companies associates with Talesun.
2.3 Profitability The section below will isolate and compare the net sales results and net profit results from2012 to 2014 of Talesun Solar and the previous five (5) quarters which is Talesun Solar’s wafer, cell and module businesses.
Chart J: Talesun Solar Profitability Trends (FY2012-FY2014) Financial Indices FY2012 FY2013 FY2014 Audit Opinion Revenue Increased and then 2,946.23 4,921.13 4,071.94 (Million RMB) cut down Change in Revenue 285.34% 67.03% (17.26%) Decreased Gross Margin Increased and then 717.86 1,360.5 1,160.11 (Million RMB) slightly decreased Change in Gross Margin 453.65% 89.52% (14.73%) Decreased Net Profit/Loss Increased and then 355.49 574.92 355.39 (Million RMB) slightly decreased Decreased to Change in Net Profit 799.53% 71.37% (38.18%) negative
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Financial Indices FY2012 FY2013 FY2014 Audit Opinion ROA (Return on Assets) 11.73% 13.96% 7.86% Positive year by year ROE (Return on Equity) 32.08% (36.32%) (11.40%) Negative equity ROA: EBIT / Average of Year Beginning Total Assets and Year Ending Total Assets ROE: Net Profit / Average of Year Beginning Total Equity and Year Ending Total Equity
Chart K: Talesun Profitability Trends (2Q 2014-2Q 2015) Financial Indices 2Q 2014 3Q 2014 4Q 2014 1Q 2015 2Q 2015 Revenue 700.20 907.98 2,323.78 796.49 684.18 (Million RMB) Change in Revenue 400.21% 29.68% 155.93% (65.72%) (14.10%) Gross Margin 160.53 266.80 735.77 245.80 134.31 (Million RMB) Net Profit/Loss (76.88) 75.9 505.65 80.69 (37.29) (Million RMB) Change in Net (48.50%) (198.73%) 566.20% (84.04%) (146.21%) Profit/Loss
Talesun Solar’s gross margin levels were four hundred fifty three and sixty five hundredths of percent (453.65%) in 2012, and then rapidly decreased to eighty nine and fifty two hundredths of one percent (89.52%) in 2013. For the year 2014, Talesun’s gross margin was negative fourteen and seventy three hundredths of one percent (-14.73%) from 2013 levels, but was still at a high level overall.
Return on assets (ROA) was at a positive level from 2012 to 2014, and was positive seven and eighty six hundredths of one percent (7.86%) in 2014. It is expected that Talesun will continue to get positive ROA in 2015.
2.4 Financing Solvency and Operating Capacity
As of the end of June 2015, Talesun Solar held banks loans of RMB one and ninety two hundred billion (元 1.92 billion). This includes middle to long term loans, which total RMB one and eighty eight hundred billion (元 1.88 billion), and short term borrowings of RMB one hundred eighty five million (元 185 million).
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Chart L: Talesun Solar Bank Loans as end June 2015 Middle to Long Short Term Net Amount Banks Term Loans Borrowings (RMB (RMB in (RMB in Million) in Million) Million) Agricultural Bank of China 360.00 N/A 321.44 (Syndicated) China Construction Bank 250.00 N/A 223.23 (Syndicated) Bank of China 142.00 N/A 121.00 (Syndicated) Agricultural and commercial Bank 70.00 N/A 62.50 (Syndicated) Import & Export 178.00 N/A 151.21 (Syndicated) China CINDA Asset 280.00 N/A 280.00 Management Kunlun Trust 500.00 N/A 500.00 China Development 100.00 N/A 100.00 Finance Huaxia Bank N/A 50.00 20.00 Industrial and Commercial N/A 45.00 45.00 Bank of China Suzhou Chengtou N/A 90.00 90.00 Total 1,880.00 185.00 1,914.38
Chart M: Solvency Ratios FY2012 FY2013 FY2014 Audit Opinion
Flow Ratio 0.74 0.88 1.81 Increased, high level
Quick Ratio 0.64 0.83 1.71 Increased, high level Debt / Assets 80.05% 79.44% 63% Decreased, high level Ratio Time Interest Decreased, still in 2.89 2.69 2.01 Earned Ratio control Flow Ratio (CR): Current Assets / Current Liabilities This indicates the company’s ability to convert its liquid assets into cash in order to pay off debt. Quick Ratio(QR): (Current Assets – Inventory) / Current Liabilities The larger the ratio, the more liquid a company’s assets are. This does not include inventory, which
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takes longer to liquidate. CR<1 and QR < 0.5, bad funding liquidity 1.5
Chart N: Operating Ratios FY2012 FY2013 FY2014 Audit Opinion Receivables Turnover Decreased, and then 2.16 1.50 0.73 Ratio increased Inventory Turnover Increased, and then 7.50 11.17 8.46 Ratio decreased Accounts Payable 1.81 1.78 1.12 Decreased Turnover Ratio Long-term Assets to 0.70 0.85 2.25 Increased Equity Ratio Receivables Turnover Ratio: Ratios of return of receivables, calculation by Revenues / Average Account Receivables, Index: The higher, the better. Inventory Turnover Ratio: Revenues/ Average Inventory Accounts Payable Turnover Ratio: (COGS + Inventory Change)/ Average Accounts Payable Long-term Asset Equity Ratio: (Equity)/(Fixed assets + Long-term Investment)
Talesun Solar’s flow ratio was zero point seventy four (0.74), and the company’s quick ratio was zero point sixty four (0.64) in 2012. Both of these ratios increased in 2013, with the flow ratio rising to zero point eighty eight (0.88), and the quick ratio rising to zero point eighty three (0.83). For the year 2014, both the flow ratio and quick ratio increased together; the flow ratio increased to one point eighty one (1.81), and the quick ratio increased to one point seventy one(1.71).
Talesun Solar’s receivable turnover ratio was two point sixteen (2.16) in 2012 and the number decreased to one point five (1.50) in 2013, and then continued to decrease to zero point seventy three (0.73) in 2014.
Talesun Solar’s debt to assets ratio has decreased in the previous three (3) years. The number was eighty and five hundredths one percent(80.05%) at end of 2012, then decreased to seventy nine and forty four hundredths one percent (79.44%) at the end of 2013,and continued to decrease to sixty three hundredths one percent (63%) in 2014. This number is expected to continue decreasing until it reaches a stable level. Thanks to this lowering number, it is predicted that in the future, Talesun will have improving long term financial stability.
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3. Production and Sales 3.1 Production Capacity Talesun’s manufacturing bases have a total of zero point nine gigawatts (0.9GW) of cell capacity, and one point four gigawatts (1.4GW) of module capacity in 1H2015E. The company also had eight hundred megawatts (800MW) of both cell and module capacity in Thailand.
Chart O: Talesun Solar Cell Capacity Production and Sales (FY2012-FY1H2015E) Year FY2012 FY2013 FY2014 FY1H2015E Cell Capacity (MW) 500.00 500.00 1,000.00 900.00 Silicon (MW) 104.14 8.74 30.42 14.59 Polysilicon (MW) 354.03 388.20 750.02 450.29 Utilization 91.63% 79.39% 78.04% 25.83%
Graph B: Talesun Solar Cell Capacity Production and Sales (FY2012-FY1H2015E)
1,200.00 100.00% 90.00% 1,000.00 80.00% 70.00% 800.00 60.00% 600.00 50.00% 40.00% 400.00 30.00% 20.00% 200.00 10.00% 0.00 0.00% FY2012 FY2013 FY2014 FY1H2015E
Cell Capacity (MW) Silicon (MW) Polysilicon(MW) Utilization
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Chart P: Talesun Solar Module Capacity Production and Sales (FY2012-FY1H2015E) Year FY2012 FY2013 FY2014 FY1H2015E Module Capacity (MW) 800.00 1,000.00 1,500.00 1,400.00 Silicon (MW) 115.04 28.78 35.47 12.90 Polysilicon (MW) 399.68 471.79 734.20 439.48 Utilization 64.34% 50.06% 51.31% 16.16%
Graph C: Talesun Solar Module Capacity Production and Sales (FY2012-FY1H2015E)
1,600.00 70.00%
1,400.00 60.00% 1,200.00 50.00% 1,000.00 40.00% 800.00 30.00% 600.00 20.00% 400.00
200.00 10.00%
0.00 0.00% FY2012 FY2013 FY2014 FY1H2015E
Modele Capacity (MW) Silicon (MW) Polysilicon(MW) Utilization
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3.2 Sales Overview Sales from cell and module shipments were USD three hundred and seventy six million (US$ 376 million) in 2013, with shipments of six hundred and forty eight megawatts (648MW) in that year. Shipments increased to seven hundred and thirty one megawatts (731MW) in 2014, and Talesun Solar’s revenues from cell and module sales thus increased to USD four hundred and sixty four million (US$ 464 million) in 2014. Talesun Solar is expecting approximately one point five gigawatts (1.5GW) of solar module sales in 2015. Cell and module shipment revenues are USD one hundred and seventy six (US$ 176 million) actually in Q1 2015, and expect to catch a higher sales amount in 2015.
Chart Q: Talesun Solar Sales (USD) by Region (FY2013-FY2015E) Region(USD) FY2013 FY2014 FY2015E China 219,269,567 347,314,365 159,228,985 USA, Europe 120,323,415 78,991,065 2,345,026 Asia-Pacific 28,408,145 37,141,186 14,623,673 ROW 7,614,958 644,294 233,430 Total 375,616,086 464,090,909 176,431,114
Graph D: Talesun Solar Sales (USD) by Region (FY2013-FY2015E)
400,000,000 350,000,000 300,000,000 250,000,000 200,000,000 150,000,000 100,000,000 50,000,000 - 2013 2014 2015
China USA, Europe Asia-Pacific ROW
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Chart R: Talesun Solar Shipment (MW) by Region (FY2012-FY2015E) Region (MW) FY2012 FY2013 FY2014 FY2015E China 165.02 414.72 554.80 1,000.00 USA, Europe 272.06 174.96 116.80 335.00 Asia-Pacific 4.46 45.36 58.40 150.00 ROW 4.46 12.96 1.00 15.00 Total 446.00 648.00 731.00 1,500.00
Graph E: Talesun Solar Shipment (MW) by Region (FY2012-FY2015)
1,200.00
1,000.00
800.00
600.00
400.00
200.00
- 2012 2013 2014 2015E
China USA, Europe Asia-Pacific ROW
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Chart S: Talesun Solar Sales Percentage by Region (FY2011-FY2016E) Region % FY2011 FY2012 FY2013 FY2014 FY2015E FY2016E China 69% 37% 64% 74% 67% 60% USA, Europe 30% 61% 27% 16% 22% 28% Asia-Pacific 0% 1% 7% 8% 10% 10% ROW 1% 1% 2% 2% 1% 2%
Graph F: Talesun Solar Sales Percentage by Region (FY2011-FY2016E)
100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 2011 2012 2013 2014 2015E 2016E
China USA, Europe Asia-Pacific ROW
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Chart T: Talesun Solar Downstream Projects Investment Volume Project Location (RMB in Situation (MW) Million) Talesun Solar (Thailand) Co., Ltd. 500 450.00 Under construction Talesun Solar (Tulufan) New 60 30.00 Under construction Material Co., Ltd. Talesun Solar (Baotou) New 60 30.00 Under construction Material Co., Ltd.
Total 201.688 510.00
Chart U: Talesun Solar Top 10 Customer (FY2012-FY2014) Region Customer Watt (W) Value (USD) Germany Axitec GmbH 20,095,875 12,134,520 Spain Table Trading SL 2,852,400 1,848,355 UK Egmanton Park Ltd. 9,680,600 6,269,281 UK Flit Solar Park Ltd. 8,510,625 5,511,591 Gaultney Solar Park UK Limited 21,662,500 14,028,915 UK Moss Electrical Co. Ltd. 41,138,400 28,544,741 UK Radstone P.V. Ltd. 5,246,625 3,397,782 UK Rowles Solar Park Ltd. 10,812,500 7,002,315 UK SPRIGGS SOLAR Ltd. 12,197,350 8,342,987 Japan Nice Corporation 25,000,000 15,740,000 Romania Tecnology Com SRL 4,000,220 2,628,625 Total 161,197,095 105,449,112
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4. Warranty
4.1 Warranty Claims Terms and Procedures2 Talesun Solar’s warranty for solar modules is shown as below:
1） Limited Warranty Statement Talesun Solar Co., Ltd. (“Talesun”) warrants to the first customer installing (for its own use) (the “Buyer”) its “Talesun” brand crystalline SPV MODULES as： 1. 1. 72cell Module made with 125×125mm Monocrystalline Solar cells models consisting of TP572M- 170, TP572M-175, TP572M-180, TP572M-185, TP572M-190, TP572M-195, TP572M-200&TP572M-205 2. 96cell Module made with 125×125mm Monocrystalline Solar cells models consisting of TP596M- 230, TP596M-235, TP596M-240, TP596M-245, TP596M-250, TP596M-255, TP596M-260, TP596M-265，TP596M-270&TP596M-275 3. 48cell Module made with 156×156mm Monocrystalline Solar cells models consisting of TP648M- 170, TP648M-175, TP648M-180, TP648M-185, TP648M-190, TP648M-195, TP648M-200, TP648M-205, TP648M-210, TP648M-215& TP648M-220 4. 48cell Module made with 156×156mm Polycrystalline Solar cells models consisting of TP648M-170, TP648M-175，TP648P-180, TP648P-185, TP648P-190, TP648P-195, TP648P-200, TP648P-205, TP648P-210, TP648P-215 & TP648P-220 5. 60cell Module made with 156×156mm Monocrystalline Solar cells models consisting of TP660M- 220, TP660M-225, TP660M-230, TP660M-235, TP660M-240, TP660M-245, TP660M-250, TP660M-255,TP660M-260, TP660M-265& TP660M-270 UL1000V certified: TP660M-225, TP660M-230, TP660M-235, TP660M-240, TP660M-245, TP660M- 250, TP660M-255, TP660M-260, TP660M-265&TP660M-270 6. 60cell Module made with 156×156mm Polycrystalline Solar cells models consisting of TP660P-215, TP660P-220, TP660P-225, TP660P-230, TP660P-235, TP660P-240, TP660P-245, TP660P-250,TP660P-255, TP660P-260， TP660P-265，TP660P-270，TP660P-275 UL1000V certified: TP660P-210, TP660P-215, TP660P-220, TP660P-225, TP660P-230, TP660P-235, TP660P-240, TP660P-245, TP660P-250, TP660P-255&TP660P-260 7. 72cell Module made with 156×156mm Monocrystalline Solar cells models consisting of TP672M- 270, TP672M-275, TP672M-280,
2Warranty policies were publicly available and drawn from the company’s website and product spec sheet. Page 27 of 35
TP672M-285, TP672M-290, TP672M-295, TP672M-300, TP672M-305,TP672M-310 , TP672M-315, TP672M-320&TP672M-325 UL1000V certified: TP672M-275, TP672M-280, TP672M-285, TP672M-290, TP672M-295, TP672M- 300, TP672M-305,TP672M-310, TP672M-315, TP672M-320&TP672M-325 8. 72cell Module made with 156×156mm Polycrystalline Solar cells models consisting of TP672P-260, TP672P-265, TP672P-270, TP672P-275,TP672P-280,TP672P-285,TP672P-290,TP672P-295,TP672P-300,TP672P-305,TP672P- 310,TP672P-315,TP672P-320, TP672P-325&TP672P-330 UL1000V certified: TP672P-260, TP672P-265, TP672P-270, TP672P-275, TP672P-280, TP672P-285, TP672P-290, TP672P-295, TP672P-300, TP672P-305&TP672P-310 (the product), when shipped in its original container, will be free from defecve workmanship and materials under normal applica on, installa on, use and service condions, and agrees that it will, at its op on, either repair the defect or replace the defecve Product or part thereof with a new or remanufactured equivalent at no charge to the purchaser for parts or labor for the period(s) set forth below. This warranty does not apply to any appearance items of the Product nor to the addional excluded item(s) set forth below nor to any Product the exterior of which has been damaged or defaced, which has been subjected to misuse, abuse, abnormal service or handling, or which has been altered or modified in design or construc on. In order to enforce the rights under this limited warranty, the purchaser should follow the steps set forth below and provide proof of purchase to Talesun. The limited warranty described herein is in addi on to whatever implied warranes may be granted to purchasers by law. All impliedwarranes including the warran of merchantability and fitness for use are limited to the period(s) from the date of delivery set forth below. Neither the sales personnel of Talesun nor any other person is authorized to make any warran other than those described herein, or to extend the dura on of any warran s beyond the me period described below on behalf of Talesun. The warran described herein shall be sole and exclusive warran granted by Talesun and shall be the sole and exclusive remedy available to the purchaser. Correc on of defects, in the manner and for the period of me described herein, shall constute complete fulfillment of all liabilies and responsibilies of Talesun to the purchaser with respect to the Product and shall cons tute full sasfac on of all claims, whether based on contract, negligence, and strict liability otherwise. In no event shall Talesun be liable, or in any way responsible, for any damages or defects in the Product which were caused by repairs or empted repairs performed by anyone other than Talesun or authorized service providers. Nor shall Talesun be liable or in any way responsible for any incidental or consequen al economic or property damage. Talesun´s aggregate liability, if any, in damages or otherwise, shall not exceed the invoice value as paid by the purchaser, for the single unit of SPV MODULE.
2）10 Year Limited Product Warranty Page 1 of 3 Talesun warrants for the Product(s) for a period of 10 years commencing on the Warranty Start Date ， Product(s) shall be free from defects in materials and workmanship that have an effect on module functionality under normal application, installation, use and service conditions as specified in Talesun’s standard product technical specification.
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Talesun guarantees that the Product(s) will maintain the mechanical integrity and stability in accordance with approved operation methods described in its installation instructions; the glass of a module will maintain its integrity provided there are no indications of localized impacts or external forces; and that the cable and connector plug of a module will remain safe and operational provided modules are professionally installed. Any damages caused by abrasion, improper installation or animals are exempt from this warranty. Claims under the warranty can only be accepted if the Buyer can provide proof that the malfunctioning or non-conformity of the Product(s) results exclusively from defects in materials and/or workmanship under normal application, installation, use and service conditions specified in Talesun’s standard product specification. Any color change on module or any other changes on module appearance do not represent defects, insofar as the change in appearance does not stem from defects in material and/or workmanship, and does not cause degradation of functionality of the module.If the Product(s) fails to conform to this warranty, Talesun will, at its option, either repair or replace the defective Product(s), or refund as per the market price of the Product(s) at the time of the claim submission, or provide an appropriate residual market value of the Product(s) at the time of the claim submission as compensation.
3）25 Year Limited Performance Warranty Talesun guarantees that for a period of twenty-five years the module will maintain a performance as set forth below: Monocrystalline Solar Cell Modules: a) During the first year, Talesun guarantees the nominal power output of the Product will be no less than 97% of the labeled power output. b) From year 2 to year 24, the nominal power decline will be no more than 0.7%; by the end of year 25, the nominal power output will be no less than 80% of the labeled power output. Polycrystalline Solar Cell Modules: a) During the first year, Talesun guarantees the nominal power output of the Product will be no less than 97.5% of the labeled power output. b) From year 2 to year 24, the nominal power decline will be no more than 0.7%; by the end of year 25, the nominal power output will be no less than 80.7% of the labeled power output. The actual power output of the Product shall be determined for verification using Standard Testing Conditions only. The actual power output measurement is either carried out by a Talesun facility or by a Talesun recognized 3rd party testing institute. Testing equipment tolerances will be applied to all actual power output measurements. In the event, power falls below the appropriate warranted amount, Talesun will replace, repair, or provide additional Product(s) to compensate for the loss, or will provide a refund prorated to the amount of power loss below the warranty.
4）Warranty Effective Date The warranty effective date shall be defined as the date of sale with the certifiable invoice (SALES DATE) to the Buyer or 90 (ninety) days after the delivery by Talesun, whichever date is earlier.
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5）Additional Item(s) Excluded from Warranty Coverage: Warranty coverage does not apply when: a) The Product is improperly installed or abused or misused; b) The Product is installed in a mobile or marine environment, subjected to improper voltage or power surges or abnormal environmentalcondions (such as acid rain or other pollu on);c) The components in the construc on based on which the module is mounted are defecve; c) The components in the construc on based on which the module is mounted are defecve; d) External corrosion, mold discolora on or the like occurs; e) Defects caused by the Product being subjected to any of the following: extreme thermal or environmental condions or rapid changes in such condions, corrosion, oxida on, unauthorized modificaons or connecons, unauthorized opening or repair, repair by use of unauthorized spare parts, accident, force of nature (such as lightning strike), influence from chemical product or other acts beyond Talesun reasonable control (including but not limited to damage by fire, flood, etc.); f) Death or injury to personsresulng from any cause other than negligence of Talesun, its employees or representaves; g) Incidental, consequen al or special damages such as loss of use, loss of profits, revenues, business, goodwill, damage to reputa on or expensed payable to a third party. h) Module failed, such as pid (potential induced degradation) and snail trail, which worse system design, worse installation and worse system components mismatch induced.
6）Various The repair or replacement of the SPV MODULES or the supply of addional SPV MODULES does not cause the beginning of new warranty terms, nor shall the original terms of this “Limited Warranty for SPV Module” be extended. Any replaced SPV MODULES shall become the property of Talesun made for their disposal. Talesun has the right to deliver another type (different in size, color, shape and/or power) in case Talesundisconnue producing the replaced SPV MODULES at the me of the claim. Page 2 of 3
7）Force Majeure Talesun shall not be responsible or liable in any way to the purchaser or any third-party arising from any nonperformance or delay in performance of any terms and condions of sale, including this “Limited Warranty for SPV Module” , due to acts God, war, riots, strikes, unavailability of suitable and sufficient labor, material, or capacity or technical or yield failures and any unforeseen event beyond its control, including, without limitaons, any technological or physical event or condi on which is not reasonably known or understood at the me of the sale of the SPV MODULES or the claim.
8）What to do to claim warranty If the purchaser feels a jus fied claim covered by this “Limited Warranty for SPV Module”, an immediate no fica on directly to Talesun at the address shown below shall be filed. Together with the no fica on, the purchaser should enclose the evidence of the claim with the corresponding serial number of the SPV MODULE(s) and the invoice on which the SPV MODULES have been purchased.
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Be sure to have Proof of Purchase available such as the receipt. The return of any Products will not be accepted unless prior written authorization has been given by Talesun. If the Buyer ship the Product, be sure it is insured and packaged securely, Talesun will not be responsible for any transportation charge, customs clearance or any other costs for return of the Product(s), or for reshipment of any repaired or replaced Product(s), or costs related to installation, removal or reinstallation of the Product(s). In case of any discrepancy in a warranty-claim, a first-class internaonal test-ins tute such as TUV Rheinland in Cologne, Germany or Arizona State University, USA shall be involved to judge the claim finally. The final explana on right shall be borne by Talesun. Warranty claims will not be honored if the type or serial number of the SPV MODULES have been altered, removed or made illegible.
9）Severability If a part, provision or clause of this “Limited Warranty for SPV Module”, or the applica on thereof to any person or circumstance, is held invalid, void or unenforceable, such holding shall not affect and shall leave all other parts, provisions, clauses or applicaons of this “Limited Warranty for SPV Module”, and to this end such other parts, provisions, clauses or applicaons of this “Limited Warranty for SPV Module” shall be treated as severable. Page 3 of 3 Control No.: TS-AT-123 Revision: A6 Issue Date: Jue. 2015
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4.2 Warranty Claims Record3 The following table lists the past customer claims recorded by Talesun Solar.
Chart V: Warranty Claims (FY2012-1Q 2015)
Claim Feedback Module Problem Corrective Client Country Pieces Result Suggestion Progress ID Date Type Type Action
CR Appearance Replace Strengthen ReisSolar Germany 2012/10/12 TP572M 5 Replacement OK 1210001 problem for customer Staff management CR Buyer P660M- Replace Increase EU 2013/3/6 Siliconpotting 1 Replacement OK 1303002 World 250- for customer Curing time B.V. Appearance CR Germany Explain to Actensys 2013/4/18 TP660 problem 2 Replacement ELok OK 1304003 Bavaria customer
CR Appearance Explain to Enalco Italy 2013/6/12 TP660P 1 Replacement Powerok OK 1306004 problem customer To inform the CR Replace supplier to improve JKBEnergy USA 2014/3/14 672P Glass breakage 1 Replacement OK 1403005 for customer and strengthen the supervision.
CR Appearance G3 JAPAN 2014/12/29 672P 1 N/A N/A N/A OK 1412006 problem
3As per the manufacturer Page 32 of 35
CR Replace for Supplier Gtree JAPAN 2015/24/5 TP672P Glass breakage 1 Replacement OK 1505007 customer improvement
Replace for Strengthen staff CR Nice JAPAN 2015/5/11 TP660P VOCis too low 1 Replacement OK customer management 1505008
Strengthen the
NihhonEco Jbbox Replace for workshop CR JAPAN 2015/6/30 TP660P 1 Replacement OK Solar displacement customer temperature and 1506009 humidity control
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5. Summary The CEA Financial Manager Lucia Zhu visited the Talesun Solar factory in Changshu, Jiangsu, China on September 15, 2015. During the financial audit, the CEA auditors met a number of employees at Talesun Solar, including members of the finance, sales, marketing, production, after service and human resource departments. The CEA auditing team was able to collect documents from the factory to evaluate the company’s financial and operating health. Among the detailing material were key financial statements, management biographies, production and sales figures, bank loan information, insurance policies and previous customer claims records. Furthermore, the CEA financial audit team conducted further research and collected information from other channels in order to properly assess the financial risk of the company. In summary, CEA concluded that although Talesun Solar has faced a higher level of debt to assets ratio in the past, the company will continue to stay in operation and has a very low probability of falling into bankruptcy over the next twelve (12) months. Reasons that led to this conclusion are the increasing revenues, increasing gross profit and EBIT levels, stable net profits, the increasing cash and cash equivalents, and finally the strong support from banks in the form of loans.
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6. Disclaimer The information in this document is confidential and may be legally privileged. The report is provided by Clean Energy Associates Limited and is intended solely for the use of Solar Insurance & Finance, and other related parties who may need to refer to this financial analysis. Access to this document by another entity is strictly unauthorized. If you are not the intended recipient, please advise us immediately and delete this document. No representation, warranty or undertaking, express or implied, is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of the information or the opinions contained herein. Neither CEA nor any of its affiliates, advisors or representatives will be liable (in negligence or otherwise) for any loss howsoever arising from any use of this document.
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