Proactively Acquires Quality Power Plants with Dedication to Boost Profit

Financial Highlights

Hong Kong, China, 29 August 2014 - United Photovoltaics Group Limited (“United PV” or the “Company,” stock code: 00686.HK, whose largest shareholder is China Merchants New Energy Group “CMNE”), a leading solar power plant investor and operator in China, today announced its interim results for the six months ended 30 June 2014 (the “Period under Review”).

During the Period under Review, the Company recorded total revenue of approximately HK$238 million (2013: HK$157 million), representing a significant increase of 51.8% compared to the same period last year. The increase in revenue was mainly attributable to the sales of electricity by the solar power plants. Of which, the revenue from sales of electricity (including tariff adjustment) amounted to approximately HK$161 million (2013: HK$177,000) and sales of solar cells of was approximately HK$77 million (2013: HK$156 million). The profit attributable to the owners of the Company was approximately HK$392 million (2013: loss of HK$913 million). The gross profit and gross profit margin were approximately HK$48 million and 20.2% respectively (2013: gross loss of HKD17 million; gross loss margin of 11.1%). Basic profit per share was approximately HK$10.10 cents (2013: loss of HK$91.01 cents). The improvement in results was mainly attributable to 1) the increase in the sales of electricity of approximately HK$161 million; 2) the gains from revaluation of certain financial instruments which are non-cash in nature of approximately HK$741 million; 3) the one-off impairment charge of goodwill of approximately HK$1,205 million and the fair value gain on previously held interest in China Solar Power Group Limited of approximately HK$198 million recognised in 2013 interim report were no longer applicable for the Period under Review; while offsetting the impact of 4) the impairment charge on the according property, plant and equipment of approximately HK$214 million as a result of the deterioration in operating results of the solar cells. The directors do not recommend the payment of any interim dividend (2013: nil).

Proactive Investment and Operation of Solar Power Plants

During the Period under Review, investment and operation of solar power plants became the major business and main contributor to the Company. Revenue derived from the segment amounted to approximately HK$161 million (2013: HK$177,000) as a result of the increase in the sale of electricity. A segment profit of HK$674 million (2013: segment loss HK$1,012 million) was recorded, mainly because of the non-cash fair value gain on contingent consideration payables (2014: approximately HK$444 million; 2013: approximately HK$193 million).

As of 30 June 2014, the Company and its associates beneficially owned and operated 13 grid-connected solar power plants across China covering Guangdong, Fujian, Gansu, Jiangsu, Qinghai and Inner Mongolia, with an aggregate installed capacity of 467MW. Among those plants, the Company owned and operated 11 plants with an aggregate installed capacity of 443.2MW. In addition, the Company was in the process of completing the acquisition of a project company owning the solar power plant with an aggregate installed capacity of 65MW in Inner Mongolia. Upon completion of acquisition, the Company and its associates will beneficially own and operate 14 solar power plants. During the Period under Review, the 14 solar power plants performed satisfactorily and generated electricity in the volume of around 242 million KWh.

The Company is the first listed solar power company in the industry to disclose the volume of electricity generation by quarter since April 2014. Comparing to the first quarter of 2014, the Company recorded a rapid growth in the second quarter, mainly due to: 1) Qinghai plants in operation after the trial running; 2) the gradual improvement in curtailment in Gansu; 3) the strengthened operational management and electric power marketing.

Gradual Disposal of the Solar Cells Business

With its production facilities located in Fujian, the Company supplies polysilicon solar cells to customers worldwide. During the Period under Review, revenue decreased by 51% to HK$77 million (2013: HK$157 million). Segment loss was HK$253 million (2013: segment loss HK$13 million), mainly attributed to an impairment charge on property, plant and equipment of HK$214 million due to the drop in demand as a result of keen competition.

On 27 August 2014, the Company announced that it entered into a disposal agreement with Power Solar Investments Limited, to sell 70% of the entire issued share capital of a wholly-owned subsidiary specializing in this segment at a cash consideration of HK$217 million. The disposal will help enhancing the Company’s liquidity, and the Company can further sharpen its business focus on the acquisition and operation of solar power plants with more concentrated resources. The net proceeds from the disposal are intended to be applied to the capital expenditure and the general working capital for solar power plants operation.

Broadened and Diversified Financing Channels to Support Business Development

During the Period under Review, on 19 February 2014, the Company entered into a strategic cooperation agreement with the Shenzhen Branch of China Development Bank (“CDBSZ”). Under the agreement, CDBSZ will provide financing for the Company’s solar power plants with an aggregate installed capacity of approximately 1GW; On 16 April 2014, the Company entered into a strategic cooperation agreement with China Financial Leasing Company Limited (“Sinolease”), a financial leasing company pursuant to which, Sinolease intended to provide the Company with finance lease of no less than RMB10 billion, to support the Company’s acquisitions, development and construction of solar power plants in China and overseas during the time of 5 years. On 27 August 2014, a loan facility of RMB150 million was granted from Qinghai Branch of China Development Bank (“CDBQH”). In the meantime, the Company has been in the process of negotiating several long-term loans with CDBQH with aggregated principal amounts of approximately RMB1.33 billion. Furthermore, the Company has also been in the process of negotiating long-term banking facilities of approximately RMB5 billion with a renowned bank in the PRC.

Mr. Hong LI, Chief Financial Officer of United PV, said: “We are delighted to achieve the encouraging results for the first half of 2014, which has signified the devotion of the Company’s management and entire staff. The turnaround in profit also indicated our right direction of the proactive development on new business of solar power plant. In the future, we will focus on the acquisition and investment of solar power plants. Amid the era of massive development of solar energy, China’s President XI Jinping called for an ‘energy revolution’ and Premier LI Keqiang highlighted the determination to strengthen the development of clean energy, including solar power. Policies on supporting China’s solar power plant development have been announced intensively by the National Development and Reform Commission, the National Energy Administration, the China Banking Regulatory Commission, the State Administration of Taxation and other local governments since the second half of 2013. These are all beneficial to the sustainable development of the industry. With its large investment amount, long investment period and comparatively stable revenue, the solar power plant industry requires huge supports from the government and resources from financial institutions. Therefore, in the course of implementation of government solar power policies, the excellent operators, with state-owned enterprise background, market-oriented operation team, focus in operating efficiency and enhancement in economy of scale, will stand out from the market competition, reach new heights and take the lead in the solar power industry. With the supports from China Merchants Group and its subsidiaries, United PV is set to strengthen the collaboration with the large state-owned enterprises and leading corporations in the solar power industry, continue to be innovative, develop diversified financing channels, acquire quality power plant projects and enhance the operation standard, becoming the best investment objective among the listed solar power plant companies.”