REC Silicon ASA

Tore Torvund - President & CEO Kurt Levens - VP, Commercial James May II - CFO

Preben Rasch-Olsen - Carnegie

[Starts in Progress] - responsible for sales and the commercial operations in REC Silicon and James May, who is our CFO. So we will, today, focus more on the market that we normally do since it has been a lot of questions about the market for polysilicon so we would like to give you some more details and Kurt will be the main contributor to give us insight in the market.

Concerning the numbers, we had revenues of $126 million in Q4 and the EBITDA came in at $38 million. I'm very, very satisfied with the operations this quarter; in fact we have never produced as much polysilicon as we did in this quarter, more than 5300 metric tons of polysilicon was produced.

The sales are somewhat lower than what we expected at around 4600 metric tons and the cash cost for our solar grade FBR production was at $10.8/kg. We continue to have a very strong sales of silicon gasses and basically, 848 metric tons, somewhat lower than what we had in Q3 but 48 metric tons above what we guided the last time we met with you.

The prices of silicon gas remains flat, I will come back to the actual numbers in our polysilicon solar grade prices, but Q4 became somewhat weaker than anticipated. Basically, for REC, we are now having issues around the trade dispute between the U.S.

and China and that affects our ASP but at the same time, there is no doubt that the PV market became weaker in Q4 and what was anticipated by most of the actors in this industry. Concerning expansions, our JV in China is progressing according to our schedule and also Rx25/26, which we discussed and we met last time, are progressing according to what we anticipate.

And compared to guidance, the $38 million EBITDA make EBITDA margin of some 30% and as you see, we are very close to what we guided we have an FBR production which is 2% above - 91 metric ton above guided numbers. The cash cost came $0.20 below guided at $10.80 and total polysilicon production, 1% above, semiconductor production, 1% above and where we - let’s say exceed the guidance and the expectations, was around silicon gas where we had 48 metric tons or about 6% higher than what we guided.

Concerning the production of - we had the record 5% of FBR in Moses Lake and that is the reason why the total number of polysilicon exceeded what we never ever have done. We have never produced 5,300 metric tons in a quarter in Moses Lake and that was basically due to very good performance in our FBR in Moses Lake.

The cash cost came in at $10.80 as I have told, it is $0.20 below guidance, it is $0.30 above what we did in Q3. That is mainly one of the issues which is behind the 30% and James will elaborate a little bit on that.

Concerning the depreciation, it is a little bit higher and the - it is also more one off issues, the SG&A too, is lower than what we normally would expect. Concerning prices of ASP, you will see basically the solid line here is what we have achieved compared to the indices out in the market place.

You will see that in Q2, we exceeded the indices, this time, we are below basically there is two reasons behind it. First of all, it is a trade dispute between China and the U.S.

affect our prices because our customers are worried that they need to pay duty when they buy from our side. It is important for me to tell that no one has yet paid duty in China but there might be still an uncertainty and we have to discount prices to convince our customers to take our product as long as that will continue.

And the second thing is that we understood that the market in Q4 would be let's say, more demanding than what the industry anticipated. We saw that the demand already in November and so we decided to let's say, discount price to get volume into China.

And that is why we basically offered a rebate to our customers due to the fact that we saw that the market is weaker. In hindsight, I think that was a very good decision and it is now official that China didn’t reach its target of 14 gigawatt and China seems to be around 10.5 gigawatt in 2014 and so they are considerably short for what was their communicated target for 2014.

And that is probably the first time that China didn’t reach their own target. Now, for 2015 they have communicated 15 gigawatt but Kurt will come back to our views on these numbers.

Basically let's say, we are part of an industry association we report how much polysilicon is shipped every month. This association consists of the ten largest polysilicon producers and all together, shipped 223,000 metric tons of polysilicon in 2014.

If we then add on those who do not report to SEMI, we estimate that to be about 47,000 metric tons, so in total, it was shipped in 2014 at 271,000 metric tons of polysilicon and that corresponds to probably between 42 and 43 gigawatts of solar panels which was then produced and installed in 2014 and that is definitely at the lower side compared to what most analysts believed for this year. There is always uncertainty but definitely due to what happened in China, the installed capacity last year was definitely lower than what was the expectation.

We do - let's say we have a lot of intelligence around what is going on in the market, so we believe that the effective capacity this first half of 2015 will be 284 while the end of the year, second half, it will be - or the capacity will be up to 321,000 metric tons, which will then increase to 380,000 metric tons by the end of 2016. Also, there is no new capacity that seems to come on line in 2017 except for the JV we have together with SNF in China.

Concerning silicon gases, it has been a very strong year for REC Silicon on the silicon gas side, basically, it is that the market growth and we will come back to it, is a strong growth in the market and definitely, we have a dominant position into the silicon gas market of between 70% and 80% of all silicon gas delivered into the merchant market is now produced in our facility in Butte in the United States. Let me then spend some minutes on the trade war.

Basically, the trade war between U.S. and China has been since 2011 and I'm not going to go through all this history here, because that will take the rest of the day, but basically, it was a panel maker with the name SolarWorld, which filed back in 2011, a complaint that the Chinese panel makers had received subsidies and sold solar panels to the U.S.

below their real costs. That is what we call, basically, SolarWorld won the Department of Commerce in the U.S.

ruled on that in October the same year and they put duty when the Chinese exported panels to the U.S. of some 20% - 26% duty on each watt for imported panels to the U.S..

The duty was an cell produced in China. What the Chinese did, they started then to produce these cells, the solar cells, which are put into the panels, in Taiwan and by doing that, they avoided to pay basically, the duty.

So you ask a manufacturer in Taiwan to make the solar cells, it went back to China, it was mounted - put it into the solar panels and then they avoided the duty. And then SolarWorld filed a second claim to try to close that loophole.

That is what we call SolarWorld 2. And the final ruling of SolarWorld 2 were basically, if you use Taiwanese cells, you got a duty and that was communicated on December 16 and the duty became 77% for panels which had cells from Taiwan with panels from China into the U.S..

That is what we call the final determination for SolarWorld 2. The surprising thing, what has happened basically was that on the last day, last year, December 31, there was a revision of SolarWorld 1.

The fact that you could use - or had to use Chinese cells and by surprise, in fact that duty just the antidumping of just 1.7% so basically what happens today is that Chinese panels into the U.S. are using SolarWorld 1 opportunities and they pay 17% for panels moving into basically - to the U.S..

This is what is going on in the U.S., in China; they decided that since there were duty on solar panels moving into the U.S., they would like to put duty on polysilicon exported from the U.S. to China and that is what we call the MOFCOM decisions and it was communicated that duty should be 57% and so every kilo of polysilicon coming from REC in the U.S., we should have paid basically 57% but there is something called processing trade and that means that if you use polysilicon in China or from the U.S.

in China, you put them into solar panels which then are exported out of China, you don’t pay the duty. So far, no one has paid any duty on polysilicon from our side when they buy from us in China because we use the processing trade and it has then been rumors that that will be closed down, so far, we have not experienced that.

So basically today there is a 17% effective on solar panels into the U.S. and we, so far, has not experienced that it has been a duty on our export into China but there is still an uncertainty and the issue is not resolved but hopefully, at least the Chinese felt that the SolarWorld 1 was a great victory and maybe they will not - we have indications that they will not be very tempted to close what we call the processed inn trade.

At the same time, we have, we also can ask for a revision for the duty of 57% and we will file them to the MOFCOM by February 19 and there is reason to believe that the 57% should be lower when we make the revision, you can do an annual revision on this and the reason why is that the new period from July, the first period was investigated, it was from July 2011 to 2012, the new period will be then January 2014 to January 2015 and since we have much lower cost during this period, but also the ASP is approximately the same, if we do the calculation, the dumping should be then much lower than the 57%. So basically, we do have a relatively optimistic view to solve this issue, but definitely, I have to be careful, it is not yet resolved but at least, it develops in the right direction.

Then I would like to ask Kurt to take over and to explain how we see the markets and also how we try to - let's say, avoid to send too much of our polysilicon into the Chinese market as long as there is a duty in place.

First, to talk a little bit about our view on 2014 in terms of the polysilicon supply, ended up - supply wise, about as we have modeled it. Demand wise, it took a different turn towards the end of the year and demand ended up being a little bit weaker than what we thought.

Concerning this year, we expect it to be much in balance, much like 2014 and depending upon what the demand portfolio is, towards the end of the year, it could be, in fact tighter, but that, again, will be a demand driven scenario supply wise, we will talk about hearing in a moment or so. Additionally this year, one of the things that we have marked over previous years is that we have some increasing opportunity as a result of contracts that are ending for competitors and some of our existing customers, meaning there has been more opportunity opening up for us external to China, as well as some that are internal to China if we had the opportunity to go after that.

On silicon gases, it was another strong year in terms of all of our end markets for the second consecutive year, last year, that all of our end markets have grown, flat panel, IC markets and of course, the photovoltaic industry. We expect that on our some of our advanced silicon gases, we are going to see higher levels of growth.

The reason we are going to see higher levels of growth is that is due to technology adoption in the semiconductor industry. So as those - because of the function at which companies take on that technology adoption, it drives slightly higher growth during that transition period and we also see potential for further reduction in capacity that is either suboptimal or maybe just not necessarily relevant in the light of the size of the market anymore.

Considering 2014, Tore touched on this - these viewpoints are all third party viewpoints and so we just gathered them and kind of evaluated them, given the context of what we understand which is polysilicon and gases that are used and that is the way we can kind of do a sanity check on what we think demand is. And based upon the third parties, it silicon 44 to 47 gigawatt, that is total, so that includes some amount of thin film, non-silicon based technology, but based upon our observation, we think that silicon based non-thin film is most likely going to be lower than that 44 to 47 gigawatt, or there was some inventory at different parts of the system.

So that was just based upon our observation as well as discussions with customers and other market participants. You see that in - right here, in 2015, so far, there appears to be estimates that there is going to be growth, 53 to 57 gigawatt there is certainly sufficient polysilicon supply for the middle of that range and you know, you can make arguments that towards the top of that range at 57, silicon-wise, then it would be a - it might a stretch.

Concerning our view of this year as well as next year or last year as well as this year, you can see that in 2014, we are estimating 240,000 metric tons shipped in to the PV space. So this does not include and we are also not talking about excess or excessive inventory that might be existing in the system.

So at the end of the day, our estimate preliminarily is 240,000 and if you see where that kind of comes out, where we ended up the year, we have some support for our exiting levels in terms of pricing. Concerning this year, you can see that around 50 to 55 gigawatts is where we end up looking at the capacity as it is ramped.

If you get to be on this point, again, you can argue that there might be some periods of tightness that will be driven by how much inventory is in the system and individual ramp but this is our best understanding as it is now. One thing you will notice above previous presentations we have done on this matter is that we no longer - there is a certain amount of companies that exist to the right of the curve and we move those all the way up to the front because at the end of the day, those captive suppliers and some of those, what we could consider to be less than optimal suppliers continue to go in spite of what you may think of necessary, their economics are.

So to be fair, we move them up here and give them space and then for the rest of us, we are fighting for this space. In either case, I think that the story is still we don’t expect it to be ramped at over supply this year but it will be.

It will depend upon demand. Yes, we are aware as Tore said, that there is an AD/CVD dispute going on, we have obviously been very involved in trying to understand the situation and do what we can to deal with it.

We don’t control governments or political machinations and so one thing we can do is look at how we can control our market channels and our product offerings. We have been working on this for a number of years now and I just want to say that when you look at product mixed shifts, it is not always necessarily because there is no market that is addressable for us, it may be because we choose to create value such as if you look here, PV rest of the world 2014 and PV rest of the world 2015, you can see that we are shifting into PV rest of the world more this year.

And why are we shifting more? Because we have a situation where there is potentially process and trade, as it expires, it means that we are going to have - if we were to keep the same profile, we would have more material that we are going to sell into China at a discounted tariff price.

Well, there is no need for us to do that if we don’t have to. However, in this year, the fact is that this market already started trading at a discount to this market, to the process and trade market.

So for us, value-creation wise, we make more money selling it in process and trade than accessing customers outside of China. Obviously, this year, things have changed in terms of access to that but in terms of opportunity for us, nothing is really changed and we are in discussions right now with some extended agreements with customers outside of China and we have our plan, this year, is that you can see that 83% of our volume will go into product offerings, channels that are not in any way, affected by the AD/CVD discount.

Outside of saying maybe they are affected in the fact that some of those might have differing ASP profiles and I will explain that on another page. But you can see here that this year, we are talking about, potentially, only 17% and we will still be selling into China as it is now and we will be accessing our other materials and other offerings as well as PV that is outside.

And it talked a little bit about this bifurcated market that has been brewing and the fact is that those companies that are inside of China that have process and trade, paperwork, of course, know the value of their particular commodities so to speak and their companies that compete for access to that. On top of that, you have companies that are outside of China as well, have the fact that they have companies competing for access to their demand.

And so what this has done is driven this sort of multi-tier market when it comes to ASPs, so saying what - if you look at industry and say - if the ASP is this in China, it is 2150, does that mean that it is going to be the same in Taiwan? It's not.

Does that mean that it is going to be the same in Singapore? You know, most likely not.

Does that mean that process and trade and non-process and trade are going to be the same even within China? It’s not.

So what we've done here is try to give you understanding of our observation in the market right now and that is kind of that if you were to say China market price is the benchmark, that's going to be the highest price there is. Then from there you can discount for process and trade price and then a further discount for outside China price and then inside China price, or it should say China non-process and trade, which means somebody has to sell in, we have to sell in and discount down from market price in order to give them an equivalent price, then that's obviously the least desirable situation.

Silicon gases and our silicon gas is offering - we want to point out that this year we expect to be another larger of growth and we expect for the profile for us to maintain what would be considered a rational market share for us. It's going to be a growth market.

And we don't have any plans of backing off just because there's some competitive activity. There are still plenty of opportunities for us to defend market share, as well as in some other segments grow market share.

Right now we see that mobile devices and again IC technology shifts are driving some of our other silicon gases in terms of higher growth rates than what you would find with silane. I also want to point out that we do have significant volume under secure contractual obligations.

So these are not obligations, that's not it ends up having a fairly high switching costs for either customers or competitors who want to try to supplant our position in that. And then finally, in each one of these gases, we are number one or number two and we plan to stay there.

So I think our outlook for this is fairly strong, but given our viewpoint in the industry, we feel fairly confident. So in summary yes, we do have some AD/CVD challenges, but I think we've been preparing for them and we're confident that this year we'll be able to address those in a manner that is as good as it's going to get.

I think that silicon gases, yes, there is some new capacity coming online, or I should say old capacity that was there before. However, we have not lost significant share and we don't expect to lose significant share.

We expect to defend what we can, where it makes sense. We expect some more rationalization there of smaller sub-optimal suppliers.

There are still a few left and we think that that's - really this started up capacity is going to maybe drive some of them to operate less. And then finally on the macro sense, all of our markets are forecast for the third year now to grow.

So we think that we have good tailwinds in terms of all these other segments outside of the China process and trade issue and even that, we'll have to see how that evolves. We believe that, as I stated earlier, supply and demand should be relatively balanced this year, it should look a lot like last year in terms of the supply situation and demand of course is not something that we control, but as long as demand runs in the area that we had talked about, then it should mean that we will have prices that are back up to where we were at the Q3 period last year.

Now James will talk about our financials.

Good morning. I'll be reviewing the financial performance of the company during the fourth quarter of 2014.

Again I'd like to point out that the continuing operations of REC Silicon consists only of the manufacturing operations in the United States and its parent company here in Norway. This is highlighted in blue at the top of this slide.

The [inaudible] are REC Solar and REC Wafer, our results have been reclassified into discontinued operations. During the fourth quarter there's a $1m gain associated with the closure of REC Wafer that has been reclassified into discontinued operations.

[inaudible] I'd also like to point out that our fourth quarter EBITDA of $38 million is in line with the press release that we made on December 17 which is - was between $35m and $40m we estimated at that time. During the fourth quarter, revenues were about $126 million.

This has been the revenue trend that is basically unchanged for each of the last three quarters, for the fourth quarter, polysilicon revenues increased primarily due to an increase in polysilicon volumes of 18%, while prices - sorry. Like I said, revenues were $126 million during the quarter.

That's basically a revenue trend over the last three quarters that's unchanged. During the fourth quarter, polysilicon revenues increased primarily because of an 18% increase in volume, while the prices were down by about 12% and the prices were due to the discounts that Tore talked about to overcome the uncertainty because of the China trade dispute, as well as the softening demand towards the end of the fourth quarter.

Silicon gases continued to be strong at 848 metric tons, but were down substantially over the record sales during the third quarter of 952 metric tons. Overall for 2014, our revenues were $493 million, compared to 2013 revenues of $418 million on a comparable basis.

During 2013 is the reclassification for discontinued ops of REC Solar that we sold in October of last year - or 2013, excuse me. Primary driver behind this increase in revenue is an increase in average polysilicon prices by about 20% and that's - we've shown that all year long that polysilicon prices have gone up in the trend through the third quarter.

As Tore discussed, FBR cash costs came in at $10.80 per kilogram during the fourth quarter, which reflects the record polysilicon volumes that were achieved during the fourth quarter, offset slightly by the increased spending that we anticipated when we did our third quarter release and those were for plant maintenance activities, not any plant shutdowns but maintenance activities that needed to be completed at the end of the year. For the full year, FBR cash costs were at $12.10 per kilogram, compared to $12.30 per kilogram in 2013.

This decrease reflects the continued focus on maintaining a cost-effective infrastructure as well as increases in reliability and stability. As I indicated a moment ago, the company met EBITDA guidance by generating $38m in EBITDA for the fourth quarter.

This represents a decrease from the $45.5 million that we saw in the third quarter on a comparable basis. Recall that during the third quarter there was $101 million gain associated with the technology sale to the Yulin JV.

This decline in earnings is primarily due to that decrease in the polysilicon prices of about 12% that I referred to a moment ago. The price decline as well as the lower sales of silicon gases contributed to a decline in the underlying EBITDA margin by about 6% to 30%, excluding the special items from the prior quarter.

For the full year of 2014, EBITDA increased to $136 million from $63 million during 2013, with the corresponding increase in the underlying EBITDA margin from 15% in 2013 to 28% for 2014. This increase is as a direct result of the 20% increase in polysilicon prices that I referred to a moment ago.

During the quarter, cash decreased by $64 million. The main portion of this decrease was due to the $75 million contribution to the Yulin JV that we anticipated during our third quarter release.

Once again, our operation generated positive cash flows. The majority of this came from the EBITDA of $38 million, which was offset by increases in working capital, about $8 million for accounts receivable and $8 million for inventories that was offset by an increase in payables.

And then in addition, the company reports $17 million in capital spending and then $2 million in interest payments during the quarter. As a result, the company had on-hand cash balances of $96 million on December 31.

Nominal net debt - or excuse me, increased by $48 million during the quarter, which reflects primarily the decrease in cash caused by the $75 million contribution to the Yulin JV. In addition, the nominal debt decreased by about $16 million to $208 million and that was almost exclusively because of the effect of the strengthening dollar in comparison to the Norwegian kroner.

It should be noted that the company's capital position has improved substantially throughout 2014 due to the payment of an €81 million convertible bond in May and then the repayment of REC01, an NOK bond, for $196 million in September. These repayments were enabled primarily by $198 million receipt for the transfer of technology to the Yulin JV, as well as continued positive cash flows from operations.

This improvement can be demonstrated by the decrease of about $265 million during the year and the company's nominal net debt. Continued positive cash flows during future periods are expected to sustain the company's strong liquidity position.

There are no debt maturities in 2015. In fact, the next debt maturity will be in 2015, with the indemnification loan expected to be settled early that year and then REC02 for NOK235 million expected to be repaid in May.

That concludes my portion of the presentation and Tore will now discuss the company's expansion opportunities.

Thank you, James. And just a short update on the expansion, the Yulin JV which is 20,000 - or 19,000 metric ton polysilicon plant in the province of Shaanxi in China, is progressing according to plan.

We made, as James said, our contribution of $75 million in Q4. The next installment will be done in 2016, August 2016, that's only $15 million and then the last one, $154 million, will be done when we see that the operation has started in 2017.

Basically now we are doing the detailed engineering with Fluor in Shanghai and we have also started the recruitment of our Chinese operators. And those will now be moved to the U.S.

for training for approximately 12 months. And then they will then start to do decommissioning of the plant when we - in the second half of 2016.

Concerning the investment in our new upgraded FBR in Moses Lake, what we call Reactor 25 and 26, are, let's say, are progressing according to plan and there is nothing new to tell here. Basically production will start in the second half of 2016, both the silane plant and the FBR-B plant.

Concerning the comparable numbers of 2014 compared to what we guided, basically nothing particular changed. Overall the total CapEx expenditure during 2014 was $38 million.

$22 million on maintenance, we guided $25 million, we used $22 million. And expansion was $14 million in capital.

Concerning the guidance for both 2015 and Q1, we expect that we are going to make 16,300 metric ton of FBR production. The average cost will be $12.50 compared to $12.10 in 2014.

The main reason for this is that the MDS, the silicon we use in our - to make our polysilicon, has increased in price in the global markets. So we will have some kind of more expensive raw material in our process.

Silicon gas sales will then increase from $3400 to $3700 in 2015. Semiconductor production, $1300, total polysilicon production $19,300 and we will spend then $25 million in maintenance and $60 million in CapEx and that's mainly our Reactor 25, 26 in Moses Lake.

But there is also some silicon gas expansions included in this number $60 million in expansion. So that's the presentation for today and then be happy to take some questions if you have some questions.

Preben Rasch-Olsen, Carnegie. Just one question on the supply-demand balance.

2015 is one thing, but if you look into 2016 and if you really want to trust these guys that are predicting demand, I guess you have better overview of what will come off polysilicon. But then it looks like you will have a huge oversupply in 2016.

So, any comments on that would be appreciated. And also on the silane gas market, it seems to me that we should expect the pressure on the silane gas going into 2015 with the competitors ramping up and you want to keep your market share?

Would you like to comment on those, Kurt? But then you have to give - I can start up with the - give the mic.

Okay, you can - Kurt.

Concerning the first issue around polysilicon potential oversupply, when you look out in 2016, that of course includes the ramp of some assets which I think it's just going to depend upon what happens at that time. If we've included, we've taken companies at their word, so we include them in there.

However, rationally speaking, we think that if demand wasn't going to actualize at higher levels than in the past, companies have opted not to bring that on. That's not to say that that's an indicator that that's what they'll do in the future, but that would be our assumption.

Concerning on silicon gases, yes, I think we would expect pricing to be a little bit stable from our perspective. Yes, they will come under some pressure, but I think that given where we are at now with our pricing, I think really what this means for us is that we were on a regime of looking at potentially being able to increase value creation, increase ASPs and maybe this means a period where we're not doing that but rather we're holding pricing.

Just by doing that, we should be able to be defensive.

Any other questions? Okay.

I'll read a couple of questions from the web. How much polysilicon do you have on stock at yearend?

How is this expected to change in the first quarter?

As a general comment, one of the reason why we were not able to sell more polysilicon in Q4 is that basically there is now very difficult to ship out of the U.S. because there is slowdown in the handling of goods in and out of ports in the West Coast of the U.S.

So basically we didn't have polysilicon available in China due to this almost strike we have among people working in the harbors in the West Coast. James, how much do we have in inventory?

I think we increased by some 300 metric ton?

About 300 metric tons--

Compared to what we had in Q4. We expect that we will be able to sell everything in 2015.

You continue to build inventory in the fourth quarter. With production volumes expected to grow in 2015, it seems like you have record poly availability.

Do you expect this will translate into actual sales volume in 2015? And how confident are you that only 17% of your sales volume will be affected by Chinese tariffs?

Yes. The answer to the first one, we expect that we are going to come back to a normal inventory level by the end of 2015.

So we have now outlined a strategy that we would like to basically supply polysilicon mainly outside China. It is because of the uncertainty on the duty.

Definitely I also try to explain that this duty has not yet been affected and hopefully we are in a good communication with our Chinese MOFCOM and hopefully it will not be effective. But there is one other reason why we would like to increase our customer base outside China.

And that is because in 2017 we will have 19,000 metric ton of polysilicon produced in China. And this production should mainly be used for our customers in China.

So we need to develop customer base outside China just to prepare for the JV production, which then will be coming up in 2017. So we have an interest ourselves to try to develop now more closer relationships with the customers outside China.

I think it's also important to underlying what Kurt said, that it is only PV grade and solar grade polysilicon which is affected. All our Siemens production in Butte, all our gases, is not affected by the duty.

It's only the PV part of the company. So, basically what we would make out of Butte, which is mainly our semiconductor industry, is not affected, not even in China.

So we can move what we call electronic grade Siemens into China without any duty even with today's rules there.

Any questions from the audience here before I continue from the web? No?

Okay. What is the EBITDA guidance range for 2015?

So we give guidance on volume but not on the EBITDA.

How comfortable are you that you will be able to reach your 2015 product sales strategy?

We are as confident as we can be. Definitely we are working in a global market.

There is no doubt that we have the lowest cost in the industry. But as was pointed out, if the demand declined for our products, it will be definitely soft prices for our product.

We believe that if there will be an install capacity of 52 to 55, it will be in fact a limited supply and polysilicon will basically be in short for being able to install more than 52 to 55 gigawatt this year. But definitely we are very dependent upon the overall demand for solar panels on a global basis.

Can you give us more color on the increase in guidance in variable costs for polysilicon for 2015 to $12.5 a kilo and whether this will impact all polysilicon production and not just FBR-based production?

The answer to the second question is yes, because we use something called the MDS which is - so basically our business is that we buy 98% pure polysilicon - or silicon and we'll refine it, so it's 99-point [inaudible] pure silicon. So we just take out 2%.

The 98% pure silicon has increased in price, basically because this silicon is used for the aluminum industry, it's used for the steel industry and it's used to make silicon for PCs and for solar panels. The aluminum, as you know, is much better today.

Steel is also having a demand. So on a global basis, the price of MDS has increased and that's the reason why we have an increase from $12.20 to $12.50 for FBR.

So it's not that we spend more money, but it is that our materials we use in our process are more expensive.

What percentage discount do you expect for the poly price in the non-China market?

I think basically what Kurt showed is the model that if you have, let's say, if the duty happens, the price of polysilicon will increase in China which is bad for definitely those who make solar panels in China. That's one reason why basically they should not use the duty, because China today needs to import more than 50% of the polysilicon they need for the panel production.

The price for the discount in process and trade will be, let's say discount is limited. Definitely if we have to sell with 57% duty, basically you have to discount 57% over the price to be competitive with the China price.

But exactly where we are, we are not disclosing that number, what will be our assumptions. We have some assumptions.

But that will be, let's say, we are in the spot markets, so that will be each, let's say [inaudible] where we are going to be on that scale here.

That seems to be the final question from the web. No further questions from the audience?

Okay. Thank you very much for coming.