BILLION — Interim / Quarterly Report 2020

Nov 19, 2020

23 Nov 2020

• The financial numbers hereby are based on International Financial Reporting Standards (IFRS) and audited.

• Predictive information referred to in this briefing, including operating outlook and business projections, is based on the Company's information from internal and external sources.

• The outlook for the future in this briefing is the company's view of the future so far. For these views, in the future, if there is any change or adjustment, the company is not responsible for revisiting or updating at any time.

Operating and Financial Performance

Unit: NT $ thousand	109/7/1 - 9/30	109/7/1 - 9/30	108/7/1 - 9/30	108/7/1 - 9/30	109/1/1 - 9/30	109/1/1 - 9/30	108/1/1 - 9/30	108/1/1 - 9/30
Consolidated income statement items	Amount	%	Amount	%	Amount	%	Amount	%
Operating income	243,410	100	148,726	100	626,347	100	482,513	100
Operating margin	97,864	40	50,220	34	248,066	40	168,516	35
Gains(Losses) from Operations	26,146	10	(5,610)	(4)	58,018	10	(14,977)	(3)
Non-operating income and expenses	1,929	1	(9,100)	(6)	(5,422)	(1)	1,312	-
Net Income(Loss)	30,548	12	(15,853)	(10)	47,314	8	(17,770)	(4)
EPS(dollar)	0.29		(0.17)		0.44		(0.20)

Consolidated Balance Sheet Unit: NT $ thousand 109/9/30 108/12/31 108/9/30 Balance sheet items Amount % Amount % Amount % Cash and cash equivalents 565,386 24 750,862 35 780,187 37 Notes and Accounts receivable 117,647 5 92,949 4 73,390 3 Inventories 229,767 10 172,147 8 138,454 7 Real estate, plant and equipment 544,675 23 556,899 26 541,859 26 Total assets 2,398,414 100 2,158,842 100 2,114,493 100 Current liabilities 699,548 29 383,160 18 351,668 17 Non-current liabilities 197,020 8 309,516 14 282,039 13 Total liabilities 896,568 37 692,676 32 633,707 30 Total equity 1,501,846 63 1,466,166 68 1,480,786 70 Current ratio 165.12% 319.31% 342.70% Debt ratio 37.38% 32.09% 29.97%

	Sales Comparison of Main Product Line Unit: NT $ thousand Product 109/1-9 % of Total revenue thisyear 108/1-9 % of Total revenue lastyear Increase Amount % Communication 385,164 61% 268,050 56% 117,114 44% Power 110,867 18% 88,302 18% 22,565 26% Solar Energy 130,316 21% 126,161 26% 4,155 3% Total 626,347 100% 482,513 100% 143,834 30%	Sales Comparison of Main Product Line Unit: NT $ thousand Product 109/1-9 % of Total revenue thisyear 108/1-9 % of Total revenue lastyear Increase Amount % Communication 385,164 61% 268,050 56% 117,114 44% Power 110,867 18% 88,302 18% 22,565 26% Solar Energy 130,316 21% 126,161 26% 4,155 3% Total 626,347 100% 482,513 100% 143,834 30%	Sales Comparison of Main Product Line Unit: NT $ thousand Product 109/1-9 % of Total revenue thisyear 108/1-9 % of Total revenue lastyear Increase Amount % Communication 385,164 61% 268,050 56% 117,114 44% Power 110,867 18% 88,302 18% 22,565 26% Solar Energy 130,316 21% 126,161 26% 4,155 3% Total 626,347 100% 482,513 100% 143,834 30%	Sales Comparison of Main Product Line Unit: NT $ thousand Product 109/1-9 % of Total revenue thisyear 108/1-9 % of Total revenue lastyear Increase Amount % Communication 385,164 61% 268,050 56% 117,114 44% Power 110,867 18% 88,302 18% 22,565 26% Solar Energy 130,316 21% 126,161 26% 4,155 3% Total 626,347 100% 482,513 100% 143,834 30%	Sales Comparison of Main Product Line Unit: NT $ thousand Product 109/1-9 % of Total revenue thisyear 108/1-9 % of Total revenue lastyear Increase Amount % Communication 385,164 61% 268,050 56% 117,114 44% Power 110,867 18% 88,302 18% 22,565 26% Solar Energy 130,316 21% 126,161 26% 4,155 3% Total 626,347 100% 482,513 100% 143,834 30%	Sales Comparison of Main Product Line Unit: NT $ thousand Product 109/1-9 % of Total revenue thisyear 108/1-9 % of Total revenue lastyear Increase Amount % Communication 385,164 61% 268,050 56% 117,114 44% Power 110,867 18% 88,302 18% 22,565 26% Solar Energy 130,316 21% 126,161 26% 4,155 3% Total 626,347 100% 482,513 100% 143,834 30%	Sales Comparison of Main Product Line Unit: NT $ thousand Product 109/1-9 % of Total revenue thisyear 108/1-9 % of Total revenue lastyear Increase Amount % Communication 385,164 61% 268,050 56% 117,114 44% Power 110,867 18% 88,302 18% 22,565 26% Solar Energy 130,316 21% 126,161 26% 4,155 3% Total 626,347 100% 482,513 100% 143,834 30%
						Unit: NT $ thousand
	Product	109/1-9	% of Total revenue thisyear	108/1-9	% of Total revenue lastyear	Increase
						Amount	%
	Communication	385,164	61%	268,050	56%	117,114	44%
	Power	110,867	18%	88,302	18%	22,565	26%
	Solar Energy	130,316	21%	126,161	26%	4,155	3%
	Total	626,347	100%	482,513	100%	143,834	30%

Product and Industry Prevision - Communication Division

The LTE Fixed-Wireless-Broadband market was valued at USD 22.3 billion in 2019 and is expected to reach USD 81.4 billion by 2025, at a CAGR of 24.5% over the 2020～2025 period. There will be a great room for growth. The availability of high-bandwidth LTE applications is getting popular, since the coverage of LTE networks is increasing in many countries.

Significant demands for all kinds of applications, such as network access in rural area, the use of LTE as a primary or backup network (retails/ business / banking). The applications for smart bus, public safety, remote measurement and remote monitoring applications are also in highly demanded. With the opening of 5G networks, more applications will be emerging, and the rapid growth of the 5G CPE market can be expected.

LTE CPE Devices

Outdoor LTE routers, bring secure, high performance mission-critical cellular connectivity to outside locations and harsh environments. It is expected that the demand of LTE routers is continuously growing, since the speed of LTE has been increasing and more spectrum have been released. Launched indoor and outdoor LTE-A Cat.18 routers, which can support wireless networks up to 1200Mbps. The 3.5～3.65 GHz frequency band was originally used by the USA military and satellites. In order to open this frequency band for commercial uses, the FCC defined this frequency band as CBRS B48. Starting from July 23 this year, the FCC conducted an auctions of CBRS spectrum in 3,233 counties across the United States. The auction ended on 8/25, and the total auction amount reached $4.6 billion dollars. 6900 R18/R21 obtained the first FCC Part 96 CBRS certificate in the world.

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M2M Industrial Standard Devices

M2M routers with dual LTE, Wi-Fi Hotspot and anti-vibration are designed to support superior high-performance, service reliability, and secure connectivity. They can be used for smart bus, police car, fire truck, etc. M2M routers with VPN, RS-232/RS-485, and explosion-proof are specially design for remote measurement and monitoring. Such as installed in natural gas field, the M2M routers use LTE network to transmit remote measurement and monitoring information back to the central control center. MX-210NP R17AF is certified by Verizon. It is a compact WiFi router with high performance and stable LTE connection.

MX-221P has passed Verizon certification: it can support three SIM cards, and users can choose three service providers to provide uninterrupted wireless network reliability.

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5G CPE Devices

The 5G features high performance, low latency and high capacity. The 5G standard includes Sub-6GHz and mmWave frequency bands, which need to be supported with different access devices. Due to the higher data rate of 5G, wired and wireless LAN also need to be upgraded too. Develop 5500A, 5G Sub-6GHz indoor router, with the latest 5G solution, and supports 2.5GHz Ethernet LAN interface and Wi-Fi 6 (802.11ax) wireless LAN.

Develop 5800, 5G mmWave outdoor router, which can support both LTE and 5G wireless communication technologies (EN-DC) at the same time to provide higher-speed fixed wireless broadband (FWB) access function and meet the network speed of more applications demand.

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North America Market

Global Market

Set up a branch office in Texas, USA. Expand its market with its own brand.

Promote products to telecom channel by getting certification from major US telecom operators (AT & T / Verizon / T-Mobile / Sprint). Alliances with major LTE and 5G providers to provide quality products and services to telecom customers.

Other than North American market, we also work with distributors in Southeast Asia, Australia, South America, Middle East, South Africa and Europe, mainly to expand markets with own brand. This year, we’ve been certified by several telecommunications providers; next year we will continue to actively cooperate with the global target telecom operators.

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Product and Industry Prevision - Power & Energy Management Division

Power Supply

Cut into the supply chain of major sports equipment manufacturers.

Launch small adaptor and streetlamp power supply to meet the market demand.

Cooperate with customers to strive for domestic and foreign streetlamp bidding cases. Flexible customization to meet customer needs. Continue to develop the power supply market for industrial, automotive and medical applications.

ESS (Energy Storage System)

Established R&D team and a production factory in Yilan for ESS products.

Strive for new business opportunities in energy storage and auxiliary services of Taipower. Strive for OEM orders from major international ESS company. Launch large ESS rack products of MWh level for power companies.

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Add : No. 8, Dexing 1st Rd., Su’ao Township, Yilan County 270, Taiwan (R.O.C.)

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Plant Configuration Area A : 1,563 ㎡ ( 16,823ft² ) Area B : 1,210 ㎡ ( 13,024ft² ) Area C : 911 ㎡ ( 9,805ft² ) Area D : 1,322 ㎡ ( 14,230ft² )

Total area of factory and land are 6,600㎡(71,042ft²)

Yilanfactory will be competed in Dec 2020 and is expected to start the production in Jan 2021.

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0~3 months 4~6 months After 6 months Average 50 300 500 Monthly Stacks/month Stacks/month Stacks/month Capacity Capacity forecast on Stack (230kWh), including the manufacturing and testing of modules and stacks.

It is expected to create an output value of hundreds of millions of dollars in the future

Solar PV Division and Billion Watts (Subsidiary) Product and Market Outlook

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Liberalization of Taiwan's Electricity Industry

• The demand for green energy is continuing to increase because of the greenhouse effect and the global industrial trend. With brand owners in Taiwan joining international organizations such as RE100 and CRS, green electricity will be promoted in the future.

• At present, the selling price of certificates is TWD $1.5/ kWh, and the selling price of power + certificates is TWD $5.5/ kWh. With the annual reduction of FIT rate of Taipower, the demand for green power in the industry will continue to increase, including: the establishment of green power certificates such as T-REC, it is estimated that Taiwan's renewable energy market will continue to grow.

Energy Policy Transformation

• In addition to the contract capacity of more than 5000kW, the draft for large power users requires installation of 10% of the compulsory green power capacity. The alternative is to purchase the energy storage system and purchase the green power certificate. The construction can be completed within three years and enjoy the early bird discount.

• The 7/7 policy of the Agriculture Committee bans farmland of less than 2 hectares from making land heading changes, and farmland with more than 20-30 hectares shall be submitted to the central government for review.

• At present, the solar energy construction capacity only reaches 4.62GW, which is still far from the 20GW to be built by 2025. The government says that the energy transformation policy will not change, and the ground and roof type tenders will be issued one after another, driving the growth of supply chain.

• The land used by the domestic bureau, the land used by the industrial bureau, the symbiosis of fishing and electricity and the farming type will become the main battlefield of solar energy.

Taipower Auxiliary Service Trading Platform

• The green energy policy in Taiwan is mainly divided into three parts. The first part is the construction of solar power plants, the second part is the construction of wind farms, and the third part is the construction of energy storage systems.

• The Taipower Dispatch Office said that to balance the power grid, it will build its own 130MW energy storage system and launch a 460MW auxiliary service power trading platform to assist the service market to allocate power quality due to the increasing renewable energy construction capacity year by year.

• By 2025, Taiwan still needs 590MW energy storage system and auxiliary services with 4GW capacity, and one can participate in auxiliary power trading platform through its own resources or proxy resources.

Regulated Energy Transfer Service of Renewable Energy Off-peak Electricity Consumption

• Large renewable energy adjacent substations will continue to open large-scale energy storage bidding, and at the same time, local autonomous generation and storage of electricity smart grid system.

• It is not easy for former solar contractors to cross field in ESS. They must have core technical capabilities such as power electronics and information communications. In the future, energy storage will become a new business opportunity after solar energy.

• • In addition to participating in the bidding platform by Billion Watts in the future, Billion Watts will also launch related ESS solutions and services for manufacturers interested in participating in auxiliary solutions.

SolarEdge

Inverter Distribution

By 2020, the accumulated shipment and actual installation capacity of inverters will reach 100MW, and Billion Watts has served more than 500 solar power plants in Taiwan.

The sales strategy emphasizes on key account of large power plant investors, currently there are nearly 10 investors who has fixed contribution of 10-20MW inverter shipment every year. Tenders for ground-type and public units will be launched next year, and the current order visibility has reached Q2 in 2021. It is expected that the revenue of solar inverters for the whole year of next year will grow by two figures compared with this year.

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Grouud-mounted
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Rooftop
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SolarEdge

Inverter Distribution

We have completed several ground type and floating solar power plants, launched ESCO innovation power station reform plan with leasing company. We have launched new business and profit model, and reformed nearly 6-7 old solar power plant of capacity. SolarEdge sells 1-to-4 optimizers and 100-120kW inverters. Next year, SolarEdge will launch 1-to-8 optimizers and 1,500V 300kW DC power inverters. With 20-year warranty and free single module monitoring system, SolarEdge will seize the ground type large power plant market with cost advantages.

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Floating
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Retrofitted
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Pixel View SolarEdge Energy Monitoring System

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DNP 3.0 & High Voltage SCADA
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Pixel View is a professional solar monitoring cloud system developed by the company itself. In 2021, we will further launch a new PV & Modbus Gateway 2-in1 product that conforms to the Taipower DREAMS DNP 3.0 function, and integrates of third-party high and medium voltage supply SCADA monitoring system for the use of large-scale ground type solar power plant. We are currently in the process of competing with a number of system integrators.

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AIoT Cloud System

Pixel View has more than 150MW monitoring power plants and has been adopted by four major investment companies. In addition to cooperating with Israel's Raycatch company to introduce AI solar power plant diagnosis analysis management software, we have also co-developed power generation forecasting and failure analysis, and positioning abnormal faults with domestic research units. It has become the best tool for solar asset management and successfully adopted by 5MW Taiwan power plants.

Retrofit the Monitoring of Old Power Plants Uncompetitive and low-level monitoring systems have been gradually eliminated by the current market. This year, nearly 20MW of orders were received for monitoring and reform needs. In addition to selling its own software and hardware products, Pixel View will use the self-developed smart gateway, sensor, meter and other IoT hardware coupled with its own cloud architecture system to simultaneously introduce AI power plant health diagnosis and asset management "soft services" to expand the sustainable revenue source for 20 years.

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Complete solution for multi-level industrial and commercial fields

From solar inverters to complete energy storage systems, Billion Group cooperates with major international manufacturers to provide complete solutions. Billion provides one-stop complete energy storage solution, suitable for industrial and commercial fields ranging from 75KWh to MWh, even including power transmission and distribution stations or power plants. Billion energy storage system includes battery modules (Pack), energy storage inverter (PCS), battery management system (BMS), energy management system (EMS), and containerized energy storage station.

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Billion ESS Stack Advantages The first energy storage cabinet assembly plant of Billion, which is located in Suao Town, Yilan County, Taiwan, has officially completed in January 2021. The factory will launch Demand Response, Fast Response Resource (FRR) auxiliary services and Automatic Frequency Control (AFC) FM services in the future.

O&M (Operation and Maintenance) Services

Complete asset management services

Billion Watts services include: toolbox meetings, troubleshooting, module cleaning, check of the equipment (module, current transformer, junction box, structure and stents, trough (tube), ac panel, weather systems, monitoring systems, high voltage electrical equipment, etc.). Billion Watts services multiple large asset management service providers and power plant maintenance. Billion Watts will move towards a professional O&M services company for hundreds of MW power plants.

Continue to expand

service base

Billion Watts has set up engineering work bases in Taipei and Yunlin, and will complete the expansion site in Kaohsiung by the end of 2020. We have more than 12 engineering workers equipped with multiple licenses, such as mechanical and electrical, labor and safety, etc., providing professional, safe and reliable cleaning and maintenance services for power plant operation and maintenance combined with professional AI monitoring system to track results.

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Solar Power Plant Investment (Special Purpose Vehicle)

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Summary of Solar Power Plants
開廣 Billion
Jyu Yue
257.92kWp Watts
96.17kWp
55.755kWp
Chin Hsing
748.71kWp
Sheico
CGPC
51.92kWp+891.49kWp
1437.9kWp
Honmyue Fu Erl Ta
499.73kWp 67.85kWp+19.47kWp
Billion Electric
Gukeng1 7
2,958 kWp
237.5kWp
Goodweld 億鴻
295kWp
160.58kWp Billion Sun Power
11
Gukeng2 3,205 kWp
138.72kWp
Min Joint
Juh Hwa 129.21kWp Billion Watts 1
451.35kWp 56 kWp
Mony
225.97kWp
Rong
Chung Totally 6,219kWp
333.75kWp
Ho Hung
120.36kWp
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Photos of Solar Power Plants
x
C. H. (Chiayi) 749kWp R. C. (Kaohsiung) 334kWp J. H. (Tainan) 451kWp
Sheico (Yilan) 891kWp Mony (Tainan) 226kWp H.H.(Kaohsiung) 120kWp H.Y. (Changhua) 500kWp
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Category		Rapid Response Reserves	Frequency Control Reserves	Real-time Reserves		Ancillary Reserves
Purpose		Inertia reduction due to system operation	In response to tripping of electric generating sets, sudden increase of system loading, Tolerance of system supply & demand prediction	Differences in system energy capacity rising in response to tripping of electric generating sets, sudden increase of system loading, tolerance of supply & demand prediction		Accident procedure In response to loss of power due to system accidents
Reaction Time	Current	_	3 mins	30 mins		60 mins
	Future	millisecond～second	seconds～3 mins	~ 10 mins		~ 30 mins
Continuous Time	Current	_	mins	10 ~ 120 mins		Over 2 hours
	Future	3~15 mins (or more)	Over 15 mins	Over 1 hour		2~4 hours (or more)
Required Capacity		1,000 ~ 1,200MW	±1,300MW	1,000MW		1,000MW
Resources		-Fast Response Resource (FRR) -Generating Unit (Primary F.R.)	-Energy Storage System -Generating Unit (AGC)	-Energy Storage System -Demand Response -Self-use Generating Equipment -Generating Unit		-Demand Response -Self-use Generating Equipment -Generating Unit

Source: Taipower, January 2020

• The Taiwanese government plans for renewable energy production to reach 27GW by 2025, accounting for 20% of total energy output.

• Taipower plans to implement Reserve Ancillary Services by April 2021 to maintain the stability and reliability of power systems. Energy Storage Systems is the solution to achieving this goal.

• The required capacity of the two ancillary services - Frequency control reserves and Real-time reserves, is over 2,300MW.

Thank You!

Please visit www.billion.com or email to sales@billion.com for more information!