Report as of September 30

Transcription

1 2011 Report as of September 30

2 Overview of Key Figures January September January September Sales revenue in thous. 211, ,502 Operating result (EBIT) in thous. 11,718 7,524 Group period result in thous. 4,397 3,632 Consolidated group period result in thous. 4,265 3,915 September 30 December Balance sheet total in thous. 338, ,126 Equity in thous. 59,554 52,348 Equity ratio % January September January September Cash flow from operations in thous. 68,421 33,357 Cash flow from investment activity in thous. 21,280 13,546 Cash flow from financing activity in thous. 83,541 19,808 Result per share Undiluted in Diluted in Employees (average number) For arithmetical reasons, the tables published in this financial report may exhibit rounding differences of plus or minus one of each respective unit (, % etc.). You will also find current IR information and our financial reports, which you can download as PDF files, in the Internet at in the section Investor Relations.

3 a. Foreword by the Executive Board b. Consolidated Management Report as of September 30, b.1 Research and Development b.2 Performance of the Overall Economy and the Industry Overall Economic Performance Industry Performance b.3 Key Events During the Reporting Period b.4 Profits, Assets and Financial Situation Profits Situation Assets Situation Financial Situation b.5 Staff b.6 Opportunities and Risks b.7 Key Events After the End of the Interim Reporting Period b.8 Share, Bonds and Market Performance b.9 Outlook Overall Economic Performance Industry Performance Forecast c. Interim Consolidated Financial Statement as of September 30, c.1 Consolidated Statement of Comprehensive Income from January 1 to September 30, c.2 Consolidated Balance Sheet as of September 30, c.3 Consolidated Statement of Changes in Equity as of September 30, c.4 Consolidated Cash Flow Statement from January 1 to September 30, c.5 Reporting by Business Area from January 1 to September 30, c.6 Notes to the Interim Consolidated Financial Statement as of September 30, c.7 Responsibility Statement d. Financial Calendar e. Contact / Legal Information

4 a. Foreword by the Executive Board Executive Board of S.A.G. Solarstrom AG, left to right: Dr. Karl Kuhlmann, Oliver Günther, Christoph Koch Dear Shareholders, S.A.G. Solarstrom AG is growing steadily, solidly and profitably, against the trend in the photovoltaic sector. This is certainly our most important message to you, together with the results of the first nine months of We are delighted to be able to once again demonstrate the effectiveness of our reliability, even in adverse market conditions. In the first nine months of 2011, we achieved sales of 211 million and an EBIT of 11.7 million. This was not easy as you can imagine, in view of the market environment. We have the high level of flexibility and enormous commitment of our employees to thank for the fact that we were able to achieve this positive result. For example, we needed to substantially accelerate construction on our 48 MWp large-scale project due to the changed legislative framework in Italy. Completion was originally planned by the end of With completion and connection to grid at the end of August, we saved almost four months of construction time and were thus able to secure an average feed-in tariff of 25.6 Eurocents per kwh for the entire system. However, our staff also worked seven days a week around the clock at the construction site in the last few weeks before grid connection to achieve this. The component prices have considerably declined since the beginning of the year due to overcapacities. Although the S.A.G. Solarstrom Group was able to purchase more favorably priced high-quality modules as a result of more flexible supply contracts and had no significant depreciation needs on warehouse stocks, direct sales in Germany and our sales partners had to allow for much lower system prices and accept reductions in margins, due to the restrained market and high pressure from competition. Our business model, however, is based on the four pilla rs of Project Planning and Plant Construction, Partner Sales, Plant Operation and Services as well as Power Production, and on an international presence focused on Europe, so that we were not only able to compensate for these reductions through the other business areas and a country mix, but also to continue to drive growth further forward. In addition, the EBIT margin of the entire Group slightly improved to 5.5% in comparison with the previous year. In the first three quarters of 2010, it was still at 5.4%. The regulatory environment has so far also remained unpredictable in 2011, as could be seen from the changes in the feed-in tariff regulations in Italy, Spain, the Czech Republic and even in Germany. The preceding discussions also curbed the investment climate. The reduction in the feed-in tariff was 2 a. Foreword by the Executive Board

5 S.A.G. Solarstrom AG Report as of September 30, 2011 not decisive in all the discussions and regulations. Due to the reductions in component prices, we are already able, here in Germany with a relatively low level of solar irradiation compared with the rest of Europe to supply electricity from photovoltaics at the same costs as the average domestic electricity tariff of the energy provider. Reductions in the feed-in tariff are, in this respect, economically feasible through the industrial production that has developed as a result of the feed-in subsidy. But for investment decisions, reliable guide rails are required. In addition, the financing conditions also deteriorated noticeably in the last few months. In some countries, such as Spain and Italy, the project financing activities of local banks almost came to a complete standstill. On the one hand, this reflects the natural consequences of the European financial crisis, but on the other hand it also shows the result of the negative industry news. We needed to work hard at persuading the banks, but as you can see from the encouraging news regarding the conclusion of the bridging loan for the 48 MWp photovoltaic system for over 80 million we were successful. Unfortunately, our success is barely reflected in our share price. The uncertainty in the international financial market seems to be too great. This year, we have had to accept considerable price losses despite the positive corporate development, even when the stock price proved to have a better performance than shown by the Photovoltaik Global 30 and tended to follow the performance of the TecDAX. This uncertainty is also reflected in the substantial decline in the prices of the two corporate bonds, although S.A.G. Solarstrom AG is so far one of the few solar companies with a profitable growth this year. Of the second corporate bond, we have so far only been able to place around 17 million one year ago we probably would have been able to place the complete volume within a few days. However, we remain confident that the capital market will recognize the positive corporate development and high level of transparency to which we have committed, in the long-term. In the fourth quarter, the market upturn in Germany is clearly discernible. We are reckoning with a strong last quarter, after the reduction in subsidy for the feed-in tariff by 15% on January 1, 2012 in Germany is now clear. However, this presupposes that the winter does not start early and that we can thus connect all projects to grid on schedule, as planned. The market in Europe is expected to be more fragmented from Large-scale ground-mounted systems are politically undesirable, apart from those on redevelopment sites. However, as a roof-top specialist and with a Partner Sales division to be extended all over Europe, we can meet the requirements of this market situation, while at the same time drive ahead with our expansion in other countries, such as the USA. For our four business areas Project Planning and Plant Construction, Partner Sales, Plant Operation and Services as well as Power Production, Europe still offers us attractive market potential. And we want to continue to use this successfully in future. We would be very happy if you would continue to accompany us on this path. Best regards Dr. Karl Kuhlmann (CEO) Oliver Günther (Member of the Executive Board) Christoph Koch (Member of the Executive Board) a. Foreword by the Executive Board 3

6 b. Consolidated Management Report as of September 30, 2011 b. 1 Research and Development In the S.A.G. Solarstrom Group, research and development work is mainly performed at S.A.G. Technik GmbH (fire protection, yield optimization of photovoltaic systems, repowering of older systems, etc.) and meteocontrol GmbH (module efficiency factors, hardware and software for monitoring photovoltaic systems, control of own consumption, forecast models, etc.). During the first few months of 2011, S.A.G. Technik GmbH s work was particularly focused on yield-optimized planning of the 48 MWp system in Northern Italy and the dedicated transformer substation, which is one of the most modern in Italy. In Q3, the company concentrated its efforts on the network quality and stability in large-scale systems. Here, S.A.G. Technik GmbH cooperated closely with the Fraunhofer Institute for Solar Energy Systems (ISE) on the 48 MWp project that was connected to the public electricity network in Italy at the end of August. meteocontrol GmbH has one of the largest data pools for photovoltaic system performance worldwide. Currently, meteocontrol GmbH is monitoring data from around 23,000 photovoltaic systems with a total output of 3.8 GWp, which is regularly evaluated on a structured basis, in order to analyze module efficiency factors, for example. In the hardware area, meteocontrol GmbH s product portfolio was extended in the summer by the new data logger WEB log Residential for small-scale photovoltaic systems up to 10 kwp, which enables online monitoring of these systems from any end device with Internet capability. Due to the integration of the latest network management requirements, the product will go into series production in Q1 of Specific software programs ( apps ) for Apple iphone* and ipad * are also available. In the services area, meteocontrol GmbH extended its portfolio in Q3 to include thermographic images by helicopter, in order to enable precise analysis of the functional status, control of effective performance and detection of possible defects and safety-relevant deficiencies in larger-scale systems. In addition, meteocontrol GmbH will offer a rating for photovoltaic systems in the future. According to this, photovoltaic systems will be assessed according to a very comprehensive catalog of over 450 relevant criteria. The areas to be assessed range from technical planning and component selection to the appropriate form of contract, contracting companies and quality assurance under full operation conditions. The goal is a reliable and comparative qualitative assessment of photovoltaic projects for investors and banks and is aligned with the rating classifications from the area of finance. b. 2 Performance of the Overall Economy and the Industry 1. Overall Economic Performance: Distinct Weakening in Global Dynamic Growth Global economic growth continued to decelerate in the third quarter of this year. Numerous factors are responsible for this the impact on the international value-added chain following the natural and nuclear disasters in Japan in March 2011, the restraining effects of the high prices of raw materials, the measures for budget consolidation, the persistent weakness on the labor and real estate markets, as well as the tension on the international financial markets, caused in particular by the escalation of the Euro debt crisis. In the second quarter, the real gross domestic product (GDP) of the worldwide 34 leading economies rose by 1.7% compared with the previous year and thus more weakly than in the previous quarter (+2.4 %). The curb in the speed of growth was more moderate * iphone and ipad are registered trademarks of Apple Inc., USA 4 b. Consolidated Management Report as of September 30, 2011

7 S.A.G. Solarstrom AG Report as of September 30, 2011 in the economies of most of the emerging markets, in contrast to the industrial states. The slow pace of the economic recovery in the USA, with a GDP growth of 1.3% is primarily due to the further decline in private consumer spending and the consequences of non-deliveries as a result of the earthquake in Japan. In the Eurozone, the economic trend continued to slow down in the third quarter. In the second quarter, the GDP only expanded at a rate of 1.6% following 2.4% in the strong first quarter of the year. The high energy prices and the measures to consolidate public finances, in particular, curbed dynamic economic growth. This was exacerbated by the consequences of the natural and nuclear disasters in Japan and the decrease in global demand. The economic recovery in Spain, Italy and France continued to lose impetus. Consumer demand, in particular, declined noticeably. For the first time since the crisis year 2009, private consumption once again declined in Germany as a result of the increase in energy prices and special effects such as the uncertainty of the debt crisis. Economic growth cooled down significantly in the second quarter at 2.8% of the annual basis, compared with 5.0% in the previous quarter. Although the exports once again ensured positive impulses, the imports increased more strongly, due in part to the higher import of electricity, so that the trade balance slowed down growth of the GDP. The situation in the raw materials markets has relaxed somewhat since the summer. The announcement by the International Energy Agency (IEA) to bring 60 million barrels of oil to market, and the expectation of a global economic slowdown following the Euro crisis, which has been worsening since August, caused prices to sink further. This has not yet been reflected in the inflation trend. In the Eurozone, the rate of price increases reached 3.0% in September, following 2.7% in June. In Germany, the price increase in September of 2.6% was thus stronger than in the last three years. In June, the inflation rate was 2.3%. 2. Industry Performance: Photovoltaic Market Under Pressure The construction boom of 2010 did not continue in the first half of 2011 and the market remained far short of expectations in the first six months. In the third quarter, expectations of a significant year-end rally still have not been met, despite overall increase in business. By the end of September 2011, new systems totaling around 3.4 GWp have been installed in Germany, according to the Federal Network Agency (Bundesnetzagentur). Due to the fact that expansion was considerably less than expected at the beginning of the year, the reduction of up to 15% in the feed-in tariff was not brought forward at mid-year. The expected positive effects of an energy transition thus failed to materialize in the sales market after the nuclear disaster in Fukushima, Japan. In the third quarter, in particular, the signs of the weak German market were perceptible. Profit warnings from component manufacturers and project planners, short hours and the first insolvencies characterized the news in the industry beyond Germany. The considerable reduction in the feed-in tariff in France at March 10, 2011 and the restriction of additional construction approvals to maximum 500 MWp per year have not been visible up to now in the figures of newly installed systems in According to the French solar association SER (Syndicat des énergies renouvelables) the newly installed power at the end of June 2011 was 665 MWp (isuppli: 599 MWp). Altogether, nearly 1.7 GWp was installed in France, and the network operators have applications for a further 2.1 GWp, which has not yet been connected to grid. Many of the systems were constructed in 2011 with old approvals and are still benefiting from higher tariffs. In contrast to many other European countries, the time of approval, not the time of grid connection, is decisive for the amount of the feed-in tariff in France. With the Conto Energia IV that was approved in May, the Italian government has also heralded a very significant cut in the feed-in tariff. Monthly cuts followed from June. In addition, a register for photovoltaic systems larger than 1 MWp from August 1, 2011 was introduced with an annual upper limit for the solar subsidy. Moreover, systems with components produced in Europe are to receive a 10% higher compensation. This, however, has apparently proven to be impractical, as the trade journal PHOTON reported in its October issue. Some Asian b. Consolidated Management Report as of September 30,

8 Residential roof-top system, Freiburg i. Br., Germany, 7.38 kwp manufacturers presented Made in EU certificates. Despite this, the Italian market boomed in the first nine months. In September, the Italian energy authority GSE reported that the installed power in Italy now exceeded 10 GWp. A total of 6.5 GWp alone was installed in Italy thus became the driving force behind the global solar market in The solar markets Spain and the Czech Republic continued to be extremely weak. In Spain, the market situation was due to the difficult administrative obstacles, the general funding situation and the restriction of the maximum amount of electricity that photovoltaic systems are allowed to feed in. In the Czech Republic, the solar tax of 26% that was introduced at the start of 2011 on income from photovoltaic systems and the abolishment of the subsidy for ground-mounted systems had negative effects. to the online trading platform pvxchange, the average price of polycrystalline modules from China dropped in September to 98 Eurocents, thus below the important price level of 1 per Wp. Since the beginning of the year, the price thus dropped by 33.5%. However, even German modules cost at least 22% less than at the start of the year, at According to the German Solar Industry Association, the system prices for photovoltaic systems up to 100 kwp in Germany dropped analogously to the considerable decline in module prices in the third quarter to 2,199 per kwp. In the second quarter, the price was at 2,422 per kwp, and at the start of the year at 2,546 per kwp. The accelerated downturn in price in the third quarter is thus also clearly visible here. It was not possible to compensate the weak German market through new emerging markets such as China and the USA. High production capacities on the world market thus led to very considerable overproduction, which resulted in an enormous price decline over the course of the first nine months, with an accelerated downturn in the third quarter. According 6 b. Consolidated Management Report as of September 30, 2011

9 S.A.G. Solarstrom AG Report as of September 30, 2011 b. 3 Key Events During the Reporting Period In the first quarter, the inflow of liquidity in the amount of 41 million from the sale of photovoltaic systems in two Italian project companies at the end of 2010, as well as the conclusion of a supply contract with Canadian Solar for the purchase of 60 MWp polycrystalline modules in 2011 was decisive. In the second quarter, S.A.G. Solarstrom AG announced, on April 7, 2011 and April 13, 2011 the intended sale and, on the same days, the placement of 250,000 and 400,000 own shares respectively. On April 18, 2011, S.A.G. Solarstrom AG reported the closure of the special conversion period, announced on March 31, 2011 for their 6.25% convertible bond issued in The conversion privilege had been exercised for 3,084 partial debentures in the nominal amount of 500 each. As a result, 601,380 new shares had been issued via a capital increase from contingent capital. On April 29, 2011 S.A.G. Solarstrom AG reported the connection to grid of 12 MWp of the 48 MWp project in the region of Venice, Italy. For this 12 MWp, S.A.G. Solarstrom AG receives a feed-in tariff in the amount of 29.7 Eurocents per kwh. The corporate group also announced that an important prerequisite for the sale of the entire project at the usual market selling price at a figure in the hundreds of millions was thus fulfilled and that the sale was imminent. On May 2, 2011 S.A.G. Solarstrom AG also reported an extension to its own power plant portfolio with the 5.1 MWp system connected to grid in 2010 in Kamenicna, Czech Republic, retroactively to January 1, The total investment volume amounted to around 22 million. For every fed-in kwh, S.A.G. Solarstrom AG receives 12.4 Czech Crowns (equivalent to 50 Eurocents, as of November 7, 2011) via its project company, so that the funded system makes an interesting supplement to the portfolio, even taking into consideration the Czech solar tax of 26%. On May 30, 2011 S.A.G. Solarstrom AG s shareholders meeting decided upon a dividend of 12.5 Eurocents per share, which was paid out on September 15, Altogether, 1,503,000 was paid out for 12,022,388 shares entitled to dividends. On June 24, 2011 S.A.G. Solarstrom AG announced the issue of a further corporate bond to finance the dynamic growth of the company. The bond is furnished with a runtime of six years and an interest rate of 7.5% p.a. The issuing volume is up to 25 million. On June 30, 2011 S.A.G. Solarstrom AG reported on the conclusion of a supply contract with Trina Solar (Germany) GmbH, for the delivery of 36 MWp polycrystalline modules, which were used for the 48 MWp project in Northern Italy. Also on June 30, 2011, S.A.G. Solarstrom AG reported the financing commitment of the Deutsche Bank Group for a project bridging loan in the amount of 80 million for the 48 MWp photovoltaic project in Northern Italy. On July 7, 2011 and July 29, 2011 the S.A.G. Solarstrom Group reported the extension of the subscription period for the corporate bond announced on June 24, The end of the subscription period will be announced by the company through an ad hoc notification. Of the planned issuing volume, around 17 million had been placed by the end of September. On September 1, 2011 S.A.G. Solarstrom AG announced the completion and grid connection on schedule of the 48 MWp project in Northern Italy on August 31, An average feed-in tariff of 25.6 Eurocents was thus secured for the entire system. The system, which feeds in directly to the high-voltage network via its own transformer substation, will produce over 64 million kwh of electricity per year and thus supply more than 14,000 households. The project is the largest to date in the corporate history of S.A.G. Solarstrom AG. The sale process is expected to be concluded by the end of the year. b. Consolidated Management Report as of September 30,

10 2,169 2,112 2,398 7,524 11,718 b. 4 Profits, Assets and Financial Situation 1. Profits Situation Despite an extraordinarily difficult market environment in Germany, the results of the first nine months corroborate the total annual forecast of S.A.G. Solarstrom AG at an EBIT between 16 and 18 million. This is all the more remarkable taking into consideration the massive drop in component prices and considerably higher pressure from the competition. In particular, the S.A.G. Solarstrom Group had to generate above average sales as a result of the decline in system prices, in order to stabilize earnings. The Group was completely successful in this endeavor. EBIT rose by 55.7% from 7,524,000 in the first three quarters of 2010 to 11,718,000 in the first three quarters of The third quarter accounted for a very satisfactory EBIT of 4,779,000 (Q3 of 2010: 2,992,000). The positive result of the first nine months was mainly borne by the business area Project Planning and Plant Construction, and the Italian 48 MWp project, with its percentage of completion according to construction progress, was responsible for a large part of this. However, the business areas Power Production and Plant Operation and Services once again secured profits with their high level of performance. The result was burdened by the business area Partner Sales, in which the precarious market situation in Germany is clearly visible, as well as through considerable increases in financing expenditure in the amount of 6,512,000 (previous year s period: 3,903,000)and through the increase in other operating expenditure resulting from business expansion. Nevertheless, profitability still increased slightly in comparison with the previous year. The EBIT margin rose from 5.4% in the first nine months of 2010 to 5.5% in the first nine months of Material expenditure was 135,672,000 in the reporting period and was thus only 17.8% higher than in the first nine months of 2010 (Q1 to Q3 of 2010: 115,148,000), despite sales growth of 51.4% in comparison with the previous year. The reason for this was the change in inventory of unfinished products in the amount of 42,761,000 (Q1 to Q3 of 2010: 400,000) in this case, material expenditure had already accrued by the balance sheet key date of December 31, 2010 and the considerable decline in component prices in comparison with the previous year. The material expenditure ratio dropped accordingly from 82.5% in the first nine months of 2010 to 64.2% in the first nine months of Fig. 1: EBIT Trend, January through September in Thousand 12,000 10,000 8,000 6,000 4,000 2, , The growth in the number of employees can be seen from personnel expenditure, which increased from 8,192,000 in the first nine months of 2010 to 10,499,000 in the first nine months of On September 30, 2010, the S.A.G. Solarstrom Group employed 175 staff, and on September 30, 2011, this figure had risen to 255. The personnel expenditure ratio, however, substantiates the efficient deployment of the employees. This dropped from 5.9% in the first nine months of 2010 to 5.0% in the first nine months of b. Consolidated Management Report as of September 30, 2011

11 S.A.G. Solarstrom AG Report as of September 30, 2011 The other operating expenditure rose to a lesser extent, by 34.6% to 11,713,000 (Q1 to Q3 of 2010: 8,700,000), in proportion to the expanded business activities, which can be seen from the increase in sales by 51.4%. The other operating income in the amount of 1,913,000 (Q1 to Q3 of 2010: 1,272,000) essentially includes income from the release of value adjustments and provisions as well as income from exchange rate differences. The share of profit from joint venture companies in the amount of 1,394,000 (Q1 to Q3 of 2010: 0) also had a positive effect on EBIT. In addition to other revenue, mainly revenue from S.A.G. Intersolaire SAS, France was recognized. Up to now, this item was shown in the financial result (Q1 to Q3 2010: 192,000). However, this is now shown in the operating result, due to the business activity closely linked with the Group and the strategic significance of the joint venture companies. Depreciation increased by 32.0% to 2,126,000 (Q1 to Q3: 1,610,000). This is mostly due to the regular depreciation of the Group s own system portfolio, which was extended to a total of 25.1 MWp at the end of 2010 and in May 2011, retroactively to January 1, The high expenditure for preliminary and bridge financing for the large-scale project in Northern Italy, as well as for other projects in the area of Project Planning and Plant Construction, as part of the company s growth policy are reflected in the financial result of 5,734,000 (Q1 to Q3 of 2010: 2,064,000). The increase in the general financing situation in the financial markets and in the solar industry in particular, however, is also visible funding in particular in Southern Europe, has become considerably more expensive due to higher risk premiums. The earnings before tax (EBT) thus increased only slightly by 9.6% to 5,984,000 due to the high expenses from the financial result (Q1 to Q3 of 2010: 5,460,000). Due to the slight decrease in income tax expenditure (from 1,587,000 in Q1 to Q3 of 2011 to 1,828,000 in Q1 to Q3 of 2010) the group period result however, at 4,397,000 in the first nine months of 2011, was 21.1% higher than in the previous year s period (Q1 to Q3 of 2010: 3,632,000). The tax quota thus improved from 33% in the first nine months of 2010 to 27% in the first nine months of The undiluted result per share increased in the reporting period to 36 Eurocents (Q1 to Q3 2010: 32 Eurocents), and the diluted result increased accordingly to 31 Eurocents, taking into account outstanding convertible bonds (Q1 Q3 of 2010: 27 Eurocents). Fig. 2: Development of Earnings January September January September in thousand Change Operating result (EBIT) 11,718 7,524 4,194 Earnings before tax (EBT) 5,984 5, Group period result 4,397 3, Consolidated group period result 4,265 3, Result per share Undiluted in Diluted in b. Consolidated Management Report as of September 30,

12 b. 4 Profits, Assets and Financial Situation Project Planning and Plant Construction With an EBIT of 8,877,000 in the first nine months 2011, the business area Project Planning and Construction was able to more than triple its result in comparison with the previous year (Q1 to Q3 of 2010: 2,465,000). The business area thus contributed a good three-quarters of the Group EBIT. The predominant part was attributable to the 48 MWp project in Northern Italy, which was connected to grid at the end of August 2011 as planned. However, profitable projects in France also contributed to the good result, while the German market remained behind expectations in this segment. The EBIT margin rose in the business area, despite the difficult market situation in Germany, to a remarkable 5.1%. A considerable increase in margin was thus achieved in comparison with the previous year in the first nine months of 2010, the EBIT margin was, at 3.1%, still below the target mark of at least 5%. Partner Sales In the third quarter, the market upturn was not as strong as hoped for the German market continued to fall short of expectations. As the majority of the sales partners of the S.A.G. Solarstrom Group, which in the meantime total 84, operate in Germany, they bore the full brunt of the decline in the market and the accompanying intensive competition. Although EBIT was 2,572,000 in the first nine months of 2010, as a result of the booming market in the previous year, the business area slid into minus figures at 403,000 in the first nine months of 2011, in accumulated terms. Particularly in the third quarter, with an EBIT of 914,000 (Q3 of 2010: + 805,000), the intensive competition was perceptible many of the sales partners granted their customers considerable discounts, which went beyond the percentage decrease, in order to achieve sales at all. The EBIT margin dropped accordingly in the first nine months of 2011, accumulated to 2.0% (Q1 to Q3 of 2010: 5.7%). Although the EBIT share of the business area was still 34.2% in the first nine months of 2010, the EBIT of this business area reduced the total EBIT in the first nine months of With the rollout of Partner Sales to other European countries, better risk diversification will be possible in the future, which will enable a rapid return to the profit zone. The business area remains, however, one of the central pillars of the S.A.G. Solarstrom Group s business model, through its potential broad market coverage and the further development of sales partners into service partners. Fig. 3: Operating Result (EBIT) by Business Area in Thousand, January September ,000 8,000 6,000 4,000 1,845* 270 2,465 8,877 2,572 1,695 1,483 1,761 2, ,000 Project Planning and Plant Construction Partner Sales Plant Operation and Services Power Production * Contains one-off revenue in the amount of 1,218 T from a remission of debt of loans for systems with construction years 1999 to b. Consolidated Management Report as of September 30, 2011

13 S.A.G. Solarstrom AG Report as of September 30, 2011 Plant Operation and Services EBIT in the business area Plant Operation and Services dropped slightly in comparison with the previous year s period to 1,483,000 (Q1 to Q3 of 2010: 1,695,000). This is due in part to lower one-off revenue from the sale of hardware as a result of the weak German market, although the portion of recurring revenue from system monitoring continues to increase at a satisfactory level. In addition, the S.A.G. Solarstrom Group is investing in new markets with its service portfolio. Apart from a service branch in the USA, subsidiaries of meteocontrol have also been founded in Italy and France. Sales cooperations have been established in Israel and India. The EBIT margin declined due to the investment costs in new markets to 14.2% in the reporting period, following 15.1% in the first nine months of result of the business area. EBIT increased to 1,761,000 in comparison with 792,000 in the first nine months of 2010 and was thus responsible for a good 15% of the Group EBIT (Q1 to Q3 of 2010: 10,5%) MWp of the power plant holdings totaling 25.1 MWp are incorporated directly into the result of this business area. The revenue from the 6.8 MWp of the photovoltaic system in Stribro, Czech Republic, is shown together with other revenue in the share of profit from joint venture companies, and the remaining 4.1 MWp is entered in the balance sheet at equity or as a holding and is visible in the financial result. The EBIT margin remained stable in the first nine months at 30.8% in accumulated terms (Q1 to Q3 of 2010: 30.7%). Due to the lower amount of solar irradiation in the winter months, the EBIT margins in the first and fourth quarter as well as for the entire year are below this value. Power Production The business area Power Production was able to more than double EBIT in the first nine months of 2011 in comparison with the previous year. This was due to the considerable increase in the system portfolio, to which the last extension was the 5.1 MWp system in Kamenicna, Czech Republic. Despite the Czech solar text of 26% on income from photovoltaic systems, the project remains profitable and contributes to the positive Fig. 4: Operating Result (EBIT) by Business Area in % January September January September January September Operating result (EBIT) in thous. 11,718 7,524 2,398 of which in % Project Planning and Plant Construction Partner Sales Plant Operation and Services Power Production b. Consolidated Management Report as of September 30,

14 b. 4 Profits, Assets and Financial Situation Sales Trend The S.A.G. Solarstrom Group was able to increase its sales by 51.4% in comparison with the previous year s period, despite a difficult market environment in Germany. Sales reached 211,182,000 in the first nine months of 2011 (Q1 to Q3 of 2010: 139,502,000). At 73,234,000, sales in the third quarter of 2011 were considerably higher than sales in the second quarter of 59,030,000. The main part of this was the result of the completion of the 48 MWp project in Northern Italy at the end of August. While the business areas Project Planning and Plant Construction, as well as Power Production, were able to double their sales, and the area Plant Operation and Services remained stable despite a curbing influence by the German market, sales in the business area Partner Sales declined by more than half due to the market situation in Germany. The four-pillar business model of the S.A.G. Solarstrom Group thus proved the effectiveness of its stability, as the significant declines in one business area could be successfully offset by increases in other business areas. Fig. 5: Group Sales in % in Germany and Abroad Abroad Germany 46.2 % 53.8 % 48.0 % 52.0 % 83.5 % 16.5 % January September 2009 January September 2010 January September million 140 million 211 million Project activities focused on the 48 MWp project in Italy in the third quarter, which thus also influenced the foreign share of sales. However, a high level of project activity in France also contributed to foreign sales. The share of sales achieved abroad amounted to 83.5% in the first nine months of 2011, comp ared with only 48% in the previous year s period. Here too, it was apparent how important international expansion is to stabilizing the growth of the S.A.G. Solarstrom Group. Despite a very weak domestic market, the Group was able to further increase its sales. The sales portions of the business areas have shifted considerably, in comparison with the previous year s period. With an 83.1% share of sales in the first nine months of 2011 (Q1 to Q3 of 2010: 57.9%) the business area Project Planning and Plant Construction is currently dominant. The business area Partner Sales only contributed 9.3% to sales in the reporting period. In the first nine months of 2010, it was as high as 32.2%. The share of sales of the business area Power Production increased due to the expanded power plant portfolio, and despite a considerably stronger growth in the area Project Planning and Plant Construction from 1.9% in the first nine months of 2010 to 2.7% in the reporting period. The portion of sales in the business area Plant Operation and Services declined from 8.0% in the previous year s period to 4.9% in the first nine months of 2011, which, however, can be attributed to the stronger growth in the business areas Project Planning and Plant Construction as well as Power Production, with comparatively stable sales. 12 b. Consolidated Management Report as of September 30, 2011

15 S.A.G. Solarstrom AG Report as of September 30, 2011 Ground-mounted system Serenissima, Canaro, Italy, 48 MWp Fig. 6: Group Sales by Business Area in % Project Planning and Plant Construction Partner Sales Plant Operation and Services Power Production 7.5 % 2.4 % 8.0 % 1.9 % 4.9 % 2.7 % 9.3 % January September 2009 January September 2010 January September % 60.2 % 32.2 % 57.9 % 83.1 % 76 million 140 million 211 million b. Consolidated Management Report as of September 30,

16 5,694 11,196 10,419 1,873 2,577 5,711 22,832 44,921 19,670 46,051 80, ,382 b. 4 Profits, Assets and Financial Situation Fig. 7: Sales Trend of Business Areas in Thousand, January September , , ,000 50,000 0 Project Planning and Plant Construction Partner Sales Plant Operation and Services Power Production Project Planning and Plant Construction In the first nine months of 2011, the S.A.G. Solarstrom Group succeeded in more than doubling its sales in the business area Project Planning and Plant Construction, to 175,382,000 (Q1 to Q3 of 2010: 80,808,000). This is 83.1% of total sales. The predominant part was attributable to sales from the North Italian 48 MWp project. While more projects than planned were implemented in France primarily roof-top and roofintegrated projects the direct business in Germany remained well below expectations. As ground-mounted systems on the economic basis of feed-in tariffs will only prove profitable in individual cases, such as in redevelopment areas, due to the regulatory situation in most of the European countries, the S.A.G. Solarstrom Group has already started to fill pipelines for roof-top projects in Italy, as it has since the founding of the corporate group in Germany and the start of business activities in France. Partner Sales The business area Partner Sales has borne the full brunt of the market decline in Germany, as the majority of the 84 sales partners operate in Germany. It is anticipated that the German market will only achieve two-thirds of the volume of the year 2010, which is why the competition intensified over the course of the year. In addition, the partners also had to compensate for a more than 30% price decline in components and thus also inevitably price declines in the system prices. Sales dropped in the first nine months of 2011 to 19,670,000. The previous year s period, at 44,921,000 was heavily influenced by the booming market in Germany. Despite high discounts in the system prices and thus continued excellent profitability of photovoltaic systems for investors, the weak demand in Germany reached its climax in the third quarter of Accordingly, only 2,799,000 (Q3 of 2010: 15,119,000) was achieved in sales with the S.A.G. Solarstrom partners. Towards the end of the third quarter, the demand increased slightly, but still remained below the level of the previous year. In the share of sales, the business area lost a considerable amount of weight with 9.3% (Q1 to Q3 of 2010: 32.2%). 14 b. Consolidated Management Report as of September 30, 2011

17 S.A.G. Solarstrom AG Report as of September 30, 2011 Plant Operation and Services The slight decline in sales in the business area Plant Operation and Services of 11,196,000 in the first nine months of 2010 to 10,419,000 in the reporting period is attributable to the decline in the one-off revenue from the hardware sales for photovoltaic system monitoring. Due to the weaker German market, less data loggers were sold, but also growth in the monitoring services reported a slight downturn. Nevertheless, meteocontrol is currently monitoring 23,000 systems with a total output of 3.8 GWp at the end of the first six months, it was 22,000 systems with a total output of 3.3 GWp. The recurring revenue from system monitoring ensured stabilization of the sales in this high-margin business area, even though the share of sales declined to 4.9% (Q1 to Q3 of 2010: 8.0%). Power Production The business area Power Production was able to more than double sales in comparison with the previous year s period. Sales in the first nine months of 2011 reached 5,711,000 (Q1 to Q3 of 2010: 2,577,000). Essentially, sales growth and the sales portion of this business area, at 2.7% (Q1 to Q3 of 2010: 1.9%), can be attributed to the extension of the power plant portfolio by the 5.1 MWp system in Kamenicna, Czech Republic. 2. Assets Situation At the end of the third quarter, S.A.G. Solarstrom AG reports a significantly extended group balance sheet total. This rose from 249,126,000 at December 31, 2010 to 338,424,000 at September 30, On the assets side, this is mainly due to the considerable increase in the working capital (total of inventories and trade receivables as well as construction contracts), which increased from 162,357,000 to 236,068,000, contingent upon closing date. This is mainly attributable to the large-scale project in Northern Italy. The receivables and other assets increased, when the project was completed, to 183,231,000 on September 30, 2011 (December 31, 2010: 86,708,000). There was an opposing effect from the development of trade receivables, which reduced from 67,147,000 on December 31, 2010 to 10,800,000, due mostly to the purchase price payment for photovoltaic systems from two Italian project companies. However, the investment in the Group s own system portfolio, with the 5.1 MWp photovoltaic system in Kamenicna, Czech Republic, had an extending impact on the balance sheet. The tangible assets increased accordingly on September 30, 2011 to 50,782,000 (December 31, 2010: 30,282,000), which essentially accounts for the increase in the noncurrent assets from 65,174,000 at December 31, 2010 to 86,194,000 at September 30, The inventories reduced to 65,481,000 at September 30, 2011 (December 31, 2010: 87,434,000), despite an increase in the warehouse stocks for the implementation of projects in the fourth quarter, which is reflected in the balance sheet item of raw materials. It increased from 29,565,000 on December 31, 2010 to 52,255,000 on September 30, Nevertheless, the completion of photovoltaic systems and thus the reduction of unfinished products of 55,624,000 at December 31, 2010 to 12,863,000 had a considerably stronger effect. At the same time, the receivables from construction contracts increased significantly from 7,776,000 to 159,787,000. The predominant portion of the receivables from construction contracts concerns the 48 MWp project in Northern Italy. Here, S.A.G. Solarstrom AG is reckoning with the completion of the sales process by the end of 2011, so that the balance sheet item and thus also the consolidated balance sheet total will once again be considerably reduced at December 31, b. Consolidated Management Report as of September 30,

18 b. 4 Profits, Assets and Financial Situation Despite the investment in the Group s own power plant portfolio in the amount of approximately 22 million, the share of noncurrent assets in the balance sheet total remained almost unchanged at 25.5% (December 31, 2010: 26.2%), which, however, is mainly attributable to the increased working capital as part of the implementation of the North Italian largescale project and the associated balance sheet extension. Due to the high prefinancing requirements of project activities, liquid funds dropped on September 30, 2011 to 3,518,000 (December 31, ,810,000), but improved slightly in comparison with the key date of June 30, 2011, at which the liquid funds amounted to 2,903,000. On the liabilities side of the balance sheet, it was the company s debts that increased in particular, although, however, the short-term interest-bearing loans of 47,084,000 on December 31, 2010 reduced to 28,402,000 due to the return of granted overdrafts and reverse factoring liabilities. The noncurrent liabilities, on the other hand, increased very considerably to 162,129,000 (December 31, 2010: 62,258,000). The reason for this was the issue of the second corporate bond in June of 2011, with an interest of 7.5% and a runtime of six years, the long-term funding of the solar park Kamenicna and the project bridging loan by the Deutsche Bank Group for the large-scale project in Northern Italy. The bonds thus increased from 34,488,000 at December 31, 2010 to 51,044,000 at September 30, 2011, and the interest-bearing loans from 26,390,000 at December 31, 2010 to 109,144,000 at September 30, The accumulated net profit of 10,481,000 at December 31, 2010, reduced by the distribution of the dividend for fiscal year 2010 in the amount of 1,503,000 (previous year: 1,114,000), was increased by the group period result of 4,397,000 to 13,375,000. The Group s own shares decrea sing equity were reduced by the sale to institutional investors from 4,243,000 at December 31, 2010 to 1,812,000 at September 30, Subscribed capital increased as a result of the capital increase from contingent capital as part of the exercise of conversion privileges, from 32,019,000 to 33,563,000. In addition, the capital provisions expanded slightly from 13,779,000 to 14,248,000 due to the sale of own shares. Accordingly, equity increased at September 30, 2011 to 59,554,000 (December 31, 2010: 52,348,000). The equity ratio dropped to 17.6% at September 30, 2011 (December 31, 2010: 21%), due to the high increase in working capital, for which, in particular, the bridging loan required for the 48 MWp project was necessary. Altogether, however, the capital-intensive bridging loan of large-scale projects as well as the funding of the Group s own system portfolio should be taken into consideration here. Project financing of photovoltaic systems is usually funded via the individual project companies without direct recourse liability to S.A.G. Solarstrom AG, due to the guaranteed feedin tariffs. The current payables were covered by the current assets on the balance sheet key date of September 30, 2011 at 216% (December 31, 2010: 137%). 16 b. Consolidated Management Report as of September 30, 2011

19 S.A.G. Solarstrom AG Report as of September 30, Financial Situation The high level of prefinancing requirements for the 48 MWp large-scale project in Northern Italy, which can be seen from the significant increase in working capital in the balance sheet, resulted in a considerable negative cash flow from operating activities of the S.A.G. Solarstrom Group in the amount of 68,421,000, contingent upon closing date. A similar effect could also be observed in the previous year s period which at the time resulted from a negative cash flow in the amount of 33,357,000, primarily from prefinancing requirements of several photovoltaic systems in two Italian project companies. Although the change to assets in the first nine months of 2010 was at 55,094,000, it amounted to 74,570,000 in the first three quarters of Although the purchase price payment for the two Italian project companies mentioned, most of which was made in Q1 of 2011, had a positive effect on the change to assets, however at the same time, high receivables were accrued due to the considerably higher volume of the 48 MWp project in Northern Italy, which led to a significantly higher change in assets. The high prefinancing requirements are reflected in the increase in the interest payments, which in the first nine months of 2011 at 4,540,000 were at least twice as high as in the previous year s period at 2,711,000. The very positive earnings situation, viewed over the entire year of 2010, despite the negative cash flow from operating activities in the first three quarters of 2010 can be seen from the payment of income tax in the amount of 3,302,000 in the previous year s period it was only 349,000. A negative operative cash flow is in this respect frequently key-date related, within the business activities of the S.A.G. Solarstrom Group and in particular in the implementation of large-scale projects, and therefore scarcely significant without an overall context, in contrast to many manufacturing companies. The cash flow from investment activities in the amount of 21,280,000 (Q1 to Q3 of 2010: 13,546,000) is due predominantly to the investment in the 5.1 MWp photovoltaic systems in Kamenicna, Czech Republic. Funds released from the collateralization of the convertible bond led to a positive change of 1,440,000 (Q1 to Q3 of 2010: 1,101,000), while the granting of credits and loans to third parties led to a negative change of 270,000 (Q1 to Q3 of 2010: return flows in the amount of 13,192,000). The high financing requirements, particularly in the largescale project in Northern Italy, were visible in the cash flow from financing activities. In the first nine months of 2011 it was 83,541,000 (Q1 to Q3 of 2010: 19,808,000). In the first nine months, S.A.G. Solarstrom AG paid off loans for the bridging loan of the solar park Kamenicna, as well as loans for component deliveries in the amount of altogether 44,931,000 (Q1 to Q3 of 2010: 9,064,000). The borrowing of financial loans had a strong countereffect, including receipts from the long-term financing of the solar park Kamenicna and the bridging loan of the Deutsche Bank Group for the 48 MWp project in Northern Italy, which amounted to a total of 108,663,000 (Q1 to Q3 of 2010: 32,826,000). Funds also accrued through the issue of the second corporate bond in the amount of 16,868,000, through the sale of own shares in the amount of 2,897,000 and through the capital increase in the amount of 1,547,000 from contingent capital as part of the exercise of conversion privileges (previous year s period 0). The cash flow from financing activities was slightly reduced through the dividend payment in the amount of 1,503,000 (Q1 to Q3 2010: 1,114,000). The high prefinancing requirements, in particular of the 48 MWp large-scale project in Italy and the investment in the solar park Kamenicna led to a cash outflow in the amount of 6,160,000 (Q1 to Q3 of 2010: 3,000). The liquid funds thus dropped at the end of the reporting period to 3,518,000 (Q1 to Q3 of 2010: 7,341,000). b. Consolidated Management Report as of September 30,

20 Roof-top system, fire department, Lützenhardt, Germany, 98 kwp b. 5 Staff Qualified personnel is an important guarantor of success for the continued positive business development of the S.A.G. Solarstrom Group. S.A.G. Solarstrom AG has succeeded, with the aid of an extended, highly-qualified workforce, in efficiently supporting international growth and business expansion. The average headcount increased from 165 employees in the first nine months of 2010 to an average of 211 employees in the reporting period On the key date of September 30, 2011 altogether 255 staff were employed in the corporate group (September 30, 2010: 175), 230 in Germany and 25 abroad. 18 b. Consolidated Management Report as of September 30, 2011

21 S.A.G. Solarstrom AG Report as of September 30, 2011 b. 6 Opportunities and Risks In the first nine months of the reporting period 2011, only the changes described in this financial report essentially occurred, compared with the opportunities and risks described in the consolidated management report of The intensifying financial crisis, however, involves a higher financial and accompanying liquidity risk. The conclusion of project funding for photovoltaic projects has become more time-consuming and altogether more difficult over the past few months. b. 7 Key Events After the End of the Interim Reporting Period After the end of the interim reporting period, there were no events that had a significant impact on the earnings, assets and financial situation of the S.A.G. Solarstrom Group. b. Consolidated Management Report as of September 30,

22 b. 8 Share, Bonds and Market Performance The German leading index DAX started the year 2011 at 6, points (all values Xetra). At the start of the year, it benefited from an economic recovery, but dropped as a result of the natural and nuclear disasters in Japan to 6, points by March 16. It then recovered very quickly and rose on May 2 to the hitherto peak for the year at 7, points. In the following weeks, it continued to move at a somewhat higher level of volatility above a level of 7,000 points. The intensifying European financial crisis with ongoing discussions on the debt relief of Greece as well as emerging fears on the debt level of Italy, however, heralded a massive downturn from the end of July, which was intensified by the downgrading of the USA s credit score at the beginning of August. The stock price reached the annual low of only 5, points on September 12, The DAX closed on September 30 at 5, points, a minus of 21.1% since the start of the year. Only towards the end of October, when an agreement regarding the European bailout started to emerge, did the DAX once again achieve temporarily a level above 6,000 points. It closed on November 7 at 5, points. The TecDAX opened in January at points. Like the DAX, the index also suffered as a result of the events in Japan after a temporary increase, and sank to a level of points by March 16. The solar companies represented in the German technology index benefited from the onset of the nuclear debate, which thus leveraged the price to a steep rise within just a few weeks, to an annual high of points on April 5. The solar market, which was becoming very restrained, quarterly results from market participants with considerable drops in sales and profits as well as the additional burden brought by the macroeconomic environment of the increasing financial crisis finally dragged the TecDAX down completely after a temporary recovery at the start of July, although the index had already lost in May and June. The index closed on September 30, 2011 at points a minus of 22.17%. However, the price had still not reached the year s low. On October 4, the TecDAX closed at only points, and during the course of the day it listed even lower at only points. During the course of October, the price recovered again slightly to a level of over 650 points and closed on November 7 at points. The stock performance of the Photovoltaik Global 30 Index, which reflects the market trend of the 30 strongest international companies in the photovoltaic sector on the market, has shown most significantly since the beginning of the year how very considerably the photovoltaic sector in 2011 has come under pressure, partially due to difficult markets and overcapacities on the component market, and partially to the European financial crisis. The index started at points at the start of the year and was able to improve to points by February 21, 2011, but lost again rapidly, despite a temporary recovery as a result of the events in Japan the market apparently believed that the solar values would play a decisive part in energy transition. The index increasingly dropped from the end of March, but lost more than average as a result of the general stock market losses. At only points, the index closed on September 30 at 57.43% below the value at the start of the year. The stock price made a lateral movement during October at a low level and closed on November 7 at points. The S.A.G. share trend closely followed the development of the TecDAX in the first nine months. The share started the year at an opening rate of 4.23, but weakened slightly over the following weeks. The share benefited from the temporary boom in solar shares in the second half of March as a result of the reactor disaster in Fukushima and the resulting nuclear debate, and closed on March 15 at the year s hitherto high of During the course of the day, prices up to 5.43 were listed. As a result, the share price became very volatile and continuously susceptible to negative news in the sector and the economy. Despite good annual and quarterly results, the share followed the clear downward trend of the TecDAX. The share closed on September 30 at 3.28, a minus of 22.46% since the beginning of the year (TecDAX 22.17%). The S.A.G. share thus fared considerably better than the Photovoltaik Global 30 Index ( 57.43%) despite the stock market losses in the first nine months. The stock price achieved the year s hitherto low during the course of October 4, 2011 at 2.83, then stabilized again to a level over 3 and closed on November 7 at b. Consolidated Management Report as of September 30, 2011

23 S.A.G. Solarstrom AG Report as of September 30, 2011 The average daily trading volume of the S.A.G. share is increasing slowly but steadily. In the first quarter, a daily number of 17,872 shares were sold on average on all stock exchanges, while in the second quarter it was 19,005 shares, and in the third quarter an average of 20,420 shares. The high level of transparency of the Prime Standard and a high level of visibility of the company through its participation in conferences and roadshows as well as a continuously positive flow of news at least pay off in higher liquidity of the share. Fig. 8: Shareholder Structure S.A.G. Solarstrom AG Own Shares BBV Beteiligung, Beratung und Verwaltung GmbH Freefloat 3.7 % 9.4 % Number of Shares During the special conversion period from April 4 to 15, 2011, altogether 601,380 new shares were issued to serve exercised conversion privileges. During the conversion period after the Annual General Meeting from June 3 to 17, altogether 1,950 new shares were issued. The number of shares increased as a result of these two increases in capital from contingent capital to 13,110,576 shares % Total number of shares 13,110,576 Fig. 9: Performance of the S.A.G Share in Comparison with TecDAX and Photovoltaik Global 30 % March 15, S.A.G. Solarstrom AG TecDAX Photovoltaik Global October 6, % 19.0 % % January 3, 2011 November 7, 2011 Dividend Payment for Fiscal Year 2010 According to the decision by the Annual General Meeting on May 30, 2011 the dividend for fiscal year 2010 in the amount of 12.5 Eurocents was paid on September 15, 2011 to shareholders entitled to dividends. Own shares of S.A.G. Solarstrom AG as well as shares that have been created in fiscal year 2011 through conversion, were not entitled to dividends for fiscal year ,502, was thus paid out for 12,022,388 shares. b. Consolidated Management Report as of September 30,

24 b. 8 Share, Bonds and Market Performance Loans of S.A.G. Solarstrom AG in the Entry Standard for Corporate Bonds Since April 11, 2011 S.A.G. Solarstrom AG s five-year 6.25% corporate bond (ISIN: DE000A1E84A4) issued in November 2010 was listed with an issuing volume of 25 million in the Entry Standard for Corporate Bonds of the German Stock Market, following its previous listing since December 13, 2010 in the Open Market of the German Stock Market. The share started the year at 95% and increased up to values of 101% in June During the global price losses from August 5, the bond also lost considerably with low sales and a high level of volatility and on August 9 reached the year s hitherto low at 92%. On September 29, 2011 (no sales on September 30, 2011) the bond was listed at 95% and was thus at the same level as at the start of the year. It closed on November 7 at 93.5%. On June 27, 2011 S.A.G. Solarstrom AG announced the issue of a 7.5% corporate bond to finance further growth with an issuing volume of up to 25 million and a runtime of six years. With the revenue from the bond, the corporate group plans to accelerate its profitable growth in the installation of photovoltaic systems in Europe, to reduce project financing costs and to continue to expand its own power plant portfolio. The termination of the subscription period, which was extended on July 7 and July 29, will be announced by the company in an ad hoc notification. The corporate bond (ISIN: DE000A1K0K53) has been listed in the Entry Standard for Corporate Bonds on the German Stock Market since July 11, Altogether, around 17 million has been placed to date. The bond was likewise not unaffected by the market turbulence and was listed on September 29, 2011 (no sales on September 30, 2011) at 95.5%, October 28 even slightly less, at 90%. It closed on November 7 at 93%. The rates of both bonds thus reflect very clearly the general market uncertainty, but not the solid corporate performance of S.A.G. Solarstrom AG. b. 9 Outlook 1. Overall Economic Performance: Considerable Slow-Down in Economic Growth The forecasts for global economic growth in 2011 have been noticeably lowered since the summer. The International Monetary Fund (IMF) now expects an increase in the global gross domestic product (GDP) for 2011 of 4.0% (previously: 4.3%) and for 2012 of also 4.0% (previously 4.5%). The Monetary Fund perceives the global economic to be in a dangerous phase and thus annotated its forecasts with certain central assumptions, including the successful containment of the crisis in the periphery of the Eurozone, a finely tuned balance between support for economic recovery and medium-term budget consolidation in the USA, no escalation of the volatility in the global financial markets and a pause in expansive monetary policy. For the industrial states, the IMF has reduced its forecast for the real GDP more considerably than for the emerging markets, which are also expected to grow dynamically over the entire year and in Economic activity in the Eurozone will only grow moderately in the second half of the year, according to the expectations of the European Central Bank (ECB). The reason for this is the general slow-down in global economic growth, the losses in the share markets and the loss in business and consumer confidence as a result of the Euro crisis. The IMF has considerably reduced its forecast for economic growth in the Eurozone to 1.6% (previously 2.0%) in the current year and to 1.1% (previously 1.7%) for Economic development in France, Spain and Italy will be curbed by the anticipated strain from the Euro debt crisis on the financing costs of the state, the efforts for budget consolidation, the crisis of the banks and increasing unemployment. 22 b. Consolidated Management Report as of September 30, 2011

25 S.A.G. Solarstrom AG Report as of September 30, 2011 Roof-top system, Horb, Germany, 18 kwp The debt and public confidence crisis in the Eurozone is putting an increasingly greater strain on the German economy. The leading economic research institutes in Germany are forecasting a higher GDP growth in their fall report, as a result of the good start to the year, in comparison with their spring report, which was published in June (2.9% following 2.8% previously). But they are also anticipating that the decreasing foreign trade momentum and the more cautious domestic demand of the companies and private households, caused by the debt and public confidence crisis in the Eurozone, will slow down the dynamic economic growth over the further course of the year. For the winter half-year 2011/2012 the institutes are even reckoning with stagnation in overall economic production. From the second quarter of 2012, the economy with decreasing uncertainty in the Eurozone should pick up pace again. Nevertheless, the institutes have considerably lowered their economic forecast for 2012 due to the unfavorable international environment and the unsettledness due to the sovereign debt crisis in the Eurozone from +2.0% to +0.8%. b. Consolidated Management Report as of September 30,

26 b. 9 Outlook 2. Industry Performance: Further Dynamic Growth, Despite Inconsistent Markets and First Consolidations in the Industry Despite a considerably weaker European market and first consolidations in the industry, market experts are expecting global growth of installed power in double digits for 2011 and beyond. In 2011, the market will grow to 21.1 GWp newly installed power according to the EPIA and thus by a good 27% in comparison with the previous year (16.6 GWp). isuppli is anticipating 23.8 GWp in 2011 and thus a plus of 34.4% in comparison with the previous year (17.7 GWp). In Europe, however, expansion will remain comparatively stable, at up to 13.7 GWp (as forecast by the European Photovoltaic Industry Association EPIA) or 15.3 GWp (isuppli) and a market growth of 3.6 % or 9.3% (isuppli), which is due to a significant market decline in countries such as Germany and the Czech Republic. In Germany, the EPIA is anticipating expansion of between 3 and 5 GWp in 2011, depending on the scenario, while the industry analysts from isuppli are currently reckoning with 5.9 GWp. The transmission network operators in Germany anticipated 6.5 GWp in 2011 when the Renewable Energy Act levy for 2012 was published this increased only slightly from Eurocents per kwh in 2011 to Eurocents per kwh in The current expansion figures of the Federal Network Agency (Bundesnetzagentur) up to the end of September 2011 with 3.4 GWp suggest however, that it might not be quite so much as expected depending on weather conditions, there could be around an additional 2 GWp by the end of the year. In France, expansion over the entire year should amount to between 963 MWp (isuppli) and up to 1.3 GWp (EPIA), at the end of June 2011 it was already 665 MWp, according to the French solar association. In 2012, the market analysts are reckoning with 616 MWp (isuppli) or up to 800 MWp (EPIA). The expansion forecasts for Italy will be considerably exceeded. EPIA is anticipating between 3 and 5 GWp for the entire year 2011, while isuppli in their latest forecast in the Q3 Market Tracker is expecting 6.9 GWp. However, the Italy regulatory authority GSE reported expansion of 6.5 GWp in 2011 on September 8, 2011 and issued a forecast of up to 12 GWp of newly installed power by the end of the year. Due to the considerable cuts in the new Conto Energia, however, a very significant market downswing must be reckoned with in Italy 1.5 to 3 GWp is the forecast from EPIA and 2.5 GWp from the industry analysts at isuppli. In Spain, a low level of expansion is expected in 2011, with 322 MWp (isuppli) or 400 to 500 MWp (EPIA). The UK is currently at approximately the same level. In the Czech Republic, on the other hand, the market has completely collapsed. The EPIA is expecting only 100 to 200 MWp for the entire year, and isuppli estimates that not even 100 MWp will be reached. In 2011, the USA was one of the top photovoltaic countries worldwide for the first time, with a forecast of newly installed power between 1.5 and 3 GWp (EPIA) or 2.7 GWp (isuppli). However, even China is expected to exceed the gigawatt barrier in While EPIA is anticipating newly installed power of between 750 MWp and 1 GWp, isuppli is expecting 1.7 GWp. In 2012, both foresee a very dynamic growth at 2 GWp (EPIA) or 2.7 GWp (isuppli). In France, the feed-in tariff will be redefined every quarter, based on the network connection applications. An approval ceiling of 500 MWp for new systems per year will also apply. In Italy, the compensation for electricity from photovoltaic systems has been dropping since June 2011 and will continue to drop each month until the end of the year. From 2012, a reduction will be made every six months. Large ground-mounted systems over 1 MWp and up to 5 MWp will still receive compensation of 18 Eurocents if they are connected by the end of December 2011, and up to the end of December 2012 the compensation for these systems will drop to 14 Eurocents. From August, a registration obligation for systems over 1 MWp also applies, and entry in the register is the prerequisite for receiving the feed-in tariff. In Germany, the next cut in the feed-in tariff by 15% will be made at the end of the year, as announced by the Federal Network Agency (Bundesnetzagentur) on October 27, 2011 based on the newly installed power of the last 12 months (October 1, 2010 to September 30, 2011). In 2011, around 3.4 GWp had been newly installed by the end of September. The regulatory framework conditions in Spain and the Czech Republic have not changed since the last adjustments (restriction of maximum amount of electricity and introduction of solar tax respectively). 24 b. Consolidated Management Report as of September 30, 2011

27 S.A.G. Solarstrom AG Report as of September 30, 2011 In many countries, such as China, feed-in tariff models are discussed or compensation regulations discarded again very quickly after they have been introduced, as in the UK, for example. The regulatory market environment therefore remains one of the opportunities, but also one of the risk factors in the photovoltaic market. Full warehouses, high production capacities and restrained markets in Germany, Spain and the Czech Republic have accelerated the price decline in components. The price decline for crystalline modules from China was around 33.5% in September according to pvxchange, compared with the start of The trade platform is anticipating that the module prices could drop by a further 15% by the end of According to a publication on October 12, 2011 by the research institute IMSresearch, the margins of the market participants will come under considerable pressure. The margin in Q is anticipated at around 17% lower in comparison with Q4 of The component manufacturers are particularly hard hit. For them, IMSresearch forecast a loss in profits for Q4 of 70% in comparison with the previous year. In the September publication Solar Photovoltaics Competing in the Energy Sector the EPIA reported on a price learning curve. Whenever the amount of cumulatively sold power doubled, the price dropped by 20%. Due to the high decline in prices, the parity of the cost of electricity from photovoltaics (grid parity) is now possible at domestic electricity prices today in Germany. This means that new market and growth potential will be opened up in the future, regardless of feed-in tariffs, in the direct marketing of green electricity. 3. Forecast The results of the first nine months show the S.A.G. Solarstrom Group, despite an extraordinarily difficult market environment, to be on a very steady course with regard to the forecast for the whole year. Despite a considerably weaker than expected German market and the considerable price decline of over 30% in the component market, S.A.G. Solarstrom AG adheres to its forecast and is expecting sales of between 260 and 280 million for fiscal year 2011, with an EBIT of between 16 and 18 million. The forecast is based on the assumptions explained in the Annual Report for 2010, including, in particular, that project funding will be implemented as planned. According to estimates by the Executive Board, this is currently the case. In order to fully utilize the appealing year-end business in Germany, the weather conditions are also important. Snowfall and ice could delay or impede the implementation of projects. S.A.G. Solarstrom AG s Executive Board will carry out detailed planning for 2012 over the next few weeks. Due to its consistent risk diversification and risk assessment policies as part of its international expansion and four pillar business model, S.A.G. Solarstrom AG is strongly positioned, as the business figures of the first nine months also show in this difficult market environment. The Group will continue to focus on the expansion of partner sales and the development of the service and green electricity business. The S.A.G. Solarstrom Group will continue to develop further promising markets for photovoltaics outside of Europe, including the USA in 2012, although the focus of business activities will remain in Europe for the time being. b. Consolidated Management Report as of September 30,

28 c. Interim Consolidated Financial Statement as of September 30, 2011 c. 1 Consolidated Statement of Comprehensive Income from January 1 to September 30, 2011 January September January September July September July September in thousand Sales revenue 211, ,502 73,234 54,509 Share of profit from joint venture companies 1, ,394 0 Inventory changes of work in progress 42, ,244 1,211 Other operating income 1,913 1, Cost of materials 135, ,148 69,122 44,393 Personnel expenditure 10,499 8,192 3,721 2,847 Depreciation 2,126 1, Other operating expenses 11,713 8,700 3,775 2,824 Operating result (EBIT) 11,718 7,524 4,779 2,992 Share of profit from associated companies Share of profit from joint venture companies ,221 8 Financial revenues 539 1, Financial expenditure 6,512 3,903 1,939 1,330 Financial result 5,734 2,064 2,817 1,087 Earnings before tax (EBT) 5,984 5,460 1,962 1,905 Income tax expenditure 1,587 1, Group period result 4,397 3,632 1,407 1,428 Third party s share of result Group period result without third party s share 4,397 3,635 1,407 1,431 Other results Currency conversion differences Consolidated group period result 4,265 3,915 1,253 1,531 in Result per share Undiluted Diluted c. Interim Consolidated Financial Statement as of September 30, 2011

29 S.A.G. Solarstrom AG Report as of September 30, 2011 Roof-top system, agricultural building, Sölden, Germany, kwp c. Interim Consolidated Financial Statement as of September 30,

30 c. 2 Consolidated Balance Sheet as of September 30, 2011 September 30 December 31 in thousand Assets Noncurrrent assets Intangible assets Licenses, rights and software Goodwill 1,625 1,625 2,258 2,378 Tangible assets Land and buildings Plants and machinery 49,258 28,787 Other fixtures and fittings, tools and equipments ,782 30,282 Financial assets Investments 2,902 2,902 Shares in joint venture companies 11,353 9,959 Shares in associated companies 2,301 2,092 Other financial assets 11,473 12,913 28,029 27,866 Noncurrrent receivables and other assets 3,055 2,806 Deferred taxes 2,070 1,842 Current assets 86,194 65,174 Inventories Raw materials and supplies 52,255 29,565 Work in progress 12,863 55,624 Down payments made 363 2,245 65,481 87,434 Receivables and other assets Trade receivables 10,800 67,147 Receivables from construction contracts 159,787 7,776 Other assets 11,951 11,507 Income tax receivables ,231 86,708 Cash and cash equivalents 3,518 9, , , , , c. Interim Consolidated Financial Statement as of September 30, 2011

31 S.A.G. Solarstrom AG Report as of September 30, 2011 September 30 December 31 in thousand Liabilities Subscribed capital 33,563 32,019 Capital provisions 14,248 13,779 Currency differences Own shares 1,812 4,243 Accumulated net profit 13,375 10,481 Sum total of equity 59,554 52,348 Noncurrent liabilities Bonds 51,044 34,488 Interest-bearing loans 109,144 26,390 Deferred tax liabilities 1,941 1, ,129 62,258 Current liabilities Income tax liabilities 2,096 3,729 Other provisions 1,869 2,369 Interest-bearing loans 28,402 47,084 Trade payables and other payables 84,374 81, , ,520 Sum total of liabilities 278, , c. Interim Consolidated Financial Statement as of September 30,

32 c. 3 Consolidated Statement of Changes in Equity as of September 30, 2011 in thousand Capital stock Capital Currency Own shares Accumulated Total of equity Minority Total of equity provisions differences net profit without minority interests including minority Status January 1, ,433 13, ,699 5,338 48, ,877 Group period result ,635 3, ,632 Other results Currency conversion differences interests interests Consolidated group period result ,635 3, ,912 Capital increase Acquisition of own shares , , ,544 Cash dividends paid ,114 1, ,114 Changes to minority interests Status September 30, ,019 13, ,243 7,856 49, ,723 Status January 1, ,019 13, ,243 10,481 52, ,348 Group period result ,397 4, ,397 Other results Currency conversion differences Consolidated group period result ,397 4, ,265 Capital increase 1, , ,547 Acquisition / Sale of own shares , , ,897 Cash dividends paid ,503 1, ,503 Status September 30, ,563 14, ,812 13,375 59, , c. Interim Consolidated Financial Statement as of September 30, 2011

33 S.A.G. Solarstrom AG Report as of September 30, 2011 c. 4 Consolidated Cash Flow Statement from January 1 to September 30, 2011 January September January September in thousand EBIT 11,718 7,524 Depreciation 2,126 1,610 Accounting profit / loss on asset disposal 5 0 Other non-cash expenditure / earnings 1,030 3,063 Change to assets 74,570 55,094 Changes to noncurrent liabilities (without financing loans) 1,944 1,034 Changes to current liabilities (without financing loans) ,437 Interest paid 4,540 2,711 Interest received Taxes on earnings paid/received 3, Cash flow from operations 68,421 33,357 Changes to financial resources from fixed deposits 1,440 1,101 Changes to credits and loans granted for third parties ,192 Payments to noncurrent liabilities Payments from associated companies 30 0 Payments for investments to assets 22, Receipts from disposal of assets 8 0 Payments for acquisition of companies and other business units 0 25 Cash flow from investment activity 21,280 13,546 Payments from amortization of financial credits 44,931 9,064 Receipts from raising of financial credits 108,663 32,826 Payments received from the issue of a bond 16,868 0 Cash payments to the holders of the convertible bond Payments received for the sale of own shares 2,897 0 Payments for acquisition of own shares 0 2,544 Cash dividends paid 1,503 1,114 Capital increase from the issuing of new shares 1,547 0 Cash flow from financing activity 83,541 19,808 Net change of cash and cash equivalents 6,160 3 Changes to financial resource funds dependent on the exchange rate Financial resource funds at start of period 9,810 7,221 Financial resource funds at end of period 3,518 7,341 Composition of financial resources Liquid assets 3,518 7,341 Financial resource funds at end of period 3,518 7,341 c. Interim Consolidated Financial Statement as of September 30,

34 Roof-top system, agricultural building, Vouillers, France, 157 kwp c. 5 Reporting by Business Area from January 1 to September 30, 2011 in thousand Project Planning and Plant Construction January September 2011 January September 2010 Partner Sales January September 2011 January September 2010 Sales revenue (external customers) 175,382 80,808 19,670 44,921 Sales with other segments ,401 Total of sales revenue 175,382 80,840 19,670 50,322 Overall performance 133,970 82,237 19,670 44,971 Operating result (EBIT) 8,877 2, , c. Interim Consolidated Financial Statement as of September 30, 2011

35 S.A.G. Solarstrom AG Report as of September 30, 2011 Plant Operation and Services Power Production Consolidation / Transition Group January September January September January September January September January September January September January September January September ,419 11,196 5,711 2, , , , ,030 11,931 5,711 2, , , ,502 10,464 11,327 5,711 2, , ,174 1,483 1,695 1, ,718 7,524 c. Interim Consolidated Financial Statement as of September 30,

36 c. 6 Notes to the Interim Consolidated Financial Statement as of September 30, General Information Information on the Company The purpose of S.A.G. Solarstrom AG and its subsidiaries is the planning, the production and financing, the acquisition, the operation and the sale of systems and system parts as well as the production and sale of energy, and further the trade with goods, licenses and other rights including the provision of services, all in the area of solar energies. S.A.G. Solarstrom AG, with headquarters in Sasbacher Strasse 5, Freiburg i. Br., Germany, is a stock corporation founded in Germany, whose shares have been included in trading in the Prime Standard of the Frankfurt Stock Exchange since May 27, 2011, in addition to the listing in the M:Access segment of the Munich Stock Exchange. The company is registered in the Commercial Register of the District Court of Freiburg i. Br. (Germany) under the number HRB Basic Principles for Compilation The consolidated interim financial statement at September 30, 2011 was drawn up according to IAS 34 (Interim Financial Reporting) and was not subject to either an audit nor a review according to 317 of the German Commercial Code (HGB). The consolidated interim financial statement does not contain all the information and data required for a consolidated financial statement and must therefore be read in conjunction with the consolidated financial statement of December 31, Essential Accounting and Valuation Principles The consolidated interim financial statement is based on the same accounting and valuation principles, as well as the same calculation principles with the exception of the change mentioned in Section 2. Explanation of Individual Consolidated Financial Statements Items Share of Profit from Joint Venture Companies, as the consolidated financial statement of December 31, The interim financial statements of the companies involved are based on uniform accounting and valuation principles. A detailed explanation of the accounting and valuation principles applied is published in the Notes to the Consolidated Financial Statement of December 31, The standards and interpretations applied for the first time on January 1, 2011, did not have any impact on the accounting methods and the presentation of the Group s profit, financial and assets situation. Seasonal Influences on Business Activities Explanatory notes on the effects of seasonal and cyclical influencing factors on the business activities are contained in Section b.2 Performance of the Overall Economy and the Industry of the Management Report. 34 c. Interim Consolidated Financial Statement as of September 30, 2011

37 S.A.G. Solarstrom AG Report as of September 30, 2011 Changes to the Consolidation Base In the interim report of September 30, 2011, 19 domestic and 24 foreign subsidiaries are included, in addition to the parent company. Subsidiaries are fully consolidated from the time of acquisition or the time at which the group obtains control. Control is usually understood when the group is entitled to more than 50% of the voting rights. Inclusion in the consolidated financial statement is terminated once the parent company no longer has control. Since the beginning of 2011, the following newly founded companies, which are wholly owned by S.A.G. Solarstrom AG, have been included in the consolidation: Company City Country Capital at Foundation S.A.G. Solarstrom Komplementär GmbH Freiburg i. Br. Germany Share capital 25,000 Orosolar Zwei GmbH & Co. KG (formerly Solarpark Bocholt GmbH & Co. KG) Freiburg i. Br. Germany Limited liability capital 1 Solarpark Born GmbH & Co. KG Freiburg i. Br. Germany Limited liability capital 1 Solarpark Dortmund GmbH & Co. KG Freiburg i. Br. Germany Limited liability capital 1 Solarpark Greven GmbH & Co. KG Freiburg i. Br. Germany Limited liability capital 1 Solarpark Muldenstein GmbH & Co. KG Freiburg i. Br. Germany Limited liability capital 1 Solarpark Rövershagen GmbH & Co. KG Freiburg i. Br. Germany Limited liability capital 1 Solarpark Giengen GmbH & Co. KG (formerly Solarpark Vorpommern GmbH & Co. KG) Freiburg i. Br. Germany Limited liability capital 1 Solarpark Worms GmbH & Co. KG Freiburg i. Br. Germany Limited liability capital 1 Casino Eins GmbH & Co. KG Freiburg i. Br. Germany Limited liability capital 1 Casino Zwei GmbH & Co. KG Freiburg i. Br. Germany Limited liability capital 1 meteocontrol Italia s.r.l. Milan Italy Share capital 10,000 Meteocontrol France SAS Saint Priest France Capital stock 37,000 Use of Estimates The compilation of the Group s interim consolidated financial statement requires assumptions and estimates by management that could affect the application of accounting standards in the Group, as well as the reported amount of assets and liabilities, the income and expenses, and the contingent liabilities. The estimates and underlying assumptions are reviewed on an ongoing basis by the management of the company. Al though the estimates, based on the current events and actions, are made according to the best knowledge of management, the actual amounts can deviate from the estimates. c. Interim Consolidated Financial Statement as of September 30,

38 c. 6 Notes to the Interim Consolidated Financial Statement as of September 30, 2011 Currency Conversion The interim consolidated financial statement is drawn up in Euros, the functional and the presentation currency of the company. Each company within the Group defines its own functional currency. The items contained in the closing of the respective company are valuated using this functional currency. The exchange rates of the essential currencies not represented in the European Monetary Union, on which currency conversion is based, have changed in relation to one Euro as follows: Foreign currency per 1 Swiss Francs Czech Crowns US Dollars Key date exchange rate September 30, December 31, No data * Average exchange rate January September January September No data * * The information on the US Dollar for the previous year has been omitted, as no balances were converted in this currency in the previous year. Decline in Value (Goodwill) The intrinsic value of the goodwill is examined once a year. A check also takes place if the circumstances indicate that the value could have declined. The group s tests for intrinsic value of the goodwill are based on the calculations of the fair value using the discounted cash flow method. The basic assumptions for determining the achievable amount for the various cash generating units were explained in the consolidated financial statement of December 31, c. Interim Consolidated Financial Statement as of September 30, 2011

39 S.A.G. Solarstrom AG Report as of September 30, 2011 Roof-top system, agricultural building, Marcolès, France, kwp c. Interim Consolidated Financial Statement as of September 30,

40 c. 6 Notes to the Interim Consolidated Financial Statement as of September 30, Explanation of Individual Consolidated Financial Statement Items Share of Profit from Joint Venture Companies The share of profit from joint ventures companies was shown in the operating result (EBIT), not in the financial result, as was the case in the consolidated financial statement of December 31, 2010 and the interim reports in This change is due to the business activities, which are closely linked with the Group, and the strategic significance of the joint venture companies. By showing the share of profit in the operating result, a more precise view of the actual circumstances of the Group can be communicated. Plants and Machinery The increase in Plants and Machinery at September 30, 2011, essentially resulted from the capitalization of a photovoltaic system in the Solarpark Kamenicna s.r.o., Kamenicna, Czech Republic. Raw Materials and Supplies The increase in the Raw Materials and Supplies resulted from the increased warehouse stocks for implementation of the projects and Partner Sales in the fourth quarter. Work in Progress / Receivables from Construction Contracts The changes can be essentially attributed to the implementation of the 48 MWp project in Italy. The construction contracts entered at the balance sheet date refer to receivables from solar parks in Italy. Current construction contracts on the balance sheet date: September 30 December 31 in thousand Costs accrued up to balance sheet date, plus entered profits 166,288 19,076 Less: entered losses 0 0 Less: partial settlements 6,501 11,300 Total 159,787 7,776 Entered and contained in the closing as due amounts: September 30 December 31 in thousand From customers from construction contracts 159,787 7,776 To customers from construction contracts 0 0 Total 159,787 7,776 Sales from noncurrent construction contracts amount to 159,006,000 (December 31, 2010: 19,076,000). Trade Receivables The decline in Trade Receivables at September 30, 2011 is essentially attributable to the receipt of payment from the sale of photovoltaic systems in two project companies in Apulia, Italy. Own Shares The repurchases of bearer shares by the company are shown in the balance sheet under the item Own Shares and are deducted from equity. The stock of shares in circulation on September 30, 2011 has developed as follows: Number of shares in circulation on December 31, ,372,388 Own shares sold in fiscal year ,000 Capital increase in shares * 603,330 Number of shares in circulation on September 30, ,625,718 * The capital increase was performed when the conversion rights were exercised by the bondholders. The stock of own shares on September 30, 2011 has developed as follows: Status of number of shares on December 31, ,134,858 Retirements due to sale of own shares 650,000 Status of number of shares on September 30, , c. Interim Consolidated Financial Statement as of September 30, 2011

41 S.A.G. Solarstrom AG Report as of September 30, 2011 The average price of each share acquired was The shares were sold at a price that did not substantially fall below the stock price of shares of the company with equal rights at the time of sale ( 186 Paragraph 3, Sentence 4 of the German Stock Corporation Act (AktG)). The respective stock market price is taken to be the arithmetic mean of the closing prices of the S.A.G. Solarstrom share in Xetra trading at the Frankfurt am Main Stock Exchange on the five trading days preceding the sale of the shares. The sales revenue per share from these sales was 4.46 on average. The extra earnings from these transactions in the amount of 466,000 are shown in the capital provisions. Bonds The runtime, which was fixed until July 29, 2010, of the 6.85% convertible bond issued on July 30, 2007 in the total nominal amount of 10,000,000 was extended by two years up to July 29, 2012 in accordance with an offer by the Executive Board and the Supervisory Board made on April 1, The runtime of the convertible bond has annual conversion periods. In the event of an extension, the interest rate is 6.25% from July 30, 2010 (6.85% up to July 29, 2010). All other convertible bond conditions remain unaffected. According to the offer of extension, the convertible bond holders could either have the convertible bond paid out on the original due date, use the conversion period for complete conversion or extend the runtime of the convertible bond. Total nominal amount at January 1, ,090, Conversion into shares of S.A.G. Solarstrom AG (Special conversion period April 4 15, 2011) * 1,542, Conversion into shares of S.A.G. Solarstrom AG (June 3 17, 2011) * 5, Total nominal amount at September 30, ,543, * A capital increase was performed for the conversion into shares of S.A.G. Solarstrom AG and 603,330 new no-par bearer shares were issued. The bond is collateralized at September 30, 2011 in the full amount of the amount repayable of 7,544,000 (December 31, 2010: 9,091,000) through the pledging of fixed-term deposits in favor of the paying agent. S.A.G. Solarstrom AG issued a bond in 2010, with a subscription period from November 25 to December 1, Altogether, a volume of 25,000,000 was underwritten. The runtime is five years from December 15, 2010 to December 14, 2015, the redemption price is 100%. The interest rate for the bond is at 6.25% and the interest will be paid out once a year on December 14 of a year. In the fiscal year, S.A.G. Solarstrom AG issued a second bond with an issuing volume of up to 25,000,000. The subscription period started on June 30, The end of the subscription period, which was extended to July 7 and July 29, will be announced by the company in an ad hoc notification. By September 30, 2011 a volume of 16,868,000 had been placed. The runtime is six years from July 11, 2011 to July 10, 2017, the redemption price is 100%. The interest rate of the bond is 7.50% and the interest payment is paid annually at July 10 of each year. Interest-Bearing Loans The increase in long-term interest-bearing loans is predominantly due to the long-term funding of the Solarpark Kamenicna, as well as the bridging loan of the Deutsche Bank Group for the 48 MWp project in Northern Italy. c. Interim Consolidated Financial Statement as of September 30,

42 Roof-top system, commercial building, Biengen, Germany, 217 kwp c. 6 Notes to the Interim Consolidated Financial Statement as of September 30, Dividends Paid September 30 September 30 in thousand Dividend agreed and issued to bearer shares in the reporting year Final dividend for 2010: (Final dividend for 2009: 0.10) 1,503 1, c. Interim Consolidated Financial Statement as of September 30, 2011

43 S.A.G. Solarstrom AG Report as of September 30, Result per Share In the calculation of the undiluted result for each share, the result to be assigned to the holders of bearer shares of the parent company will be divided by the weighted average number of bearer shares in circulation during the year. In the calculation of the diluted result for each share, the result to be assigned to the holders of bearer shares of the parent company will be divided by the weighted average number of bearer shares in circulation during the year plus the weighted average number of bearer shares that would be issued after the conversion of all potential bearer shares with dilution effects in bearer shares. c. Interim Consolidated Financial Statement as of September 30,

44 c. 6 Notes to the Interim Consolidated Financial Statement as of September 30, 2011 Undiluted Result per Share The undiluted result per share is calculated by creating the quotient from the group period result to which the investors are entitled and the average number of issued shares during the fiscal year with the exception of own shares that the company itself holds. January September January September July September July September Group period result attributable to the investors (in thousand ) 4,397 3,635 1,407 1,431 Average number of shares issued (in thousands) 12,154 11,400 12,626 11,326 Undiluted result per share in Diluted Result per Share The diluted result per share is derived by increasing the average number of shares in circulation by all the conversion privileges. It is assumed that the convertible bonds will be exchanged for shares and that the net profit will be adjusted by the interest payable and the tax effect. January September January September July September July September in thousand Group period result attributable to the investors 4,397 3,635 1,407 1,431 Interest expenditure of convertible bond (adjusted for tax effect) Group period result to determine the diluted result per share 4,663 3,981 1,489 1,536 in thousands Average weighted number of issued shares 12,154 11,400 12,626 11,326 Adjustments for: Assumed conversion of convertible bonds 2,942 3,545 2,942 3,545 Average weighted number of shares for the diluted 15,096 14,945 15,568 14,871 result per share Diluted result per share in c. Interim Consolidated Financial Statement as of September 30, 2011

45 S.A.G. Solarstrom AG Report as of September 30, 2011 Number of Shares The number of shares in circulation developed as follows: January September January September Number of shares on January 1 * 11,372,388 11,741,441 Acquisition of own shares 0 597,658 Sale of own shares 650,000 0 Capital increase in number of shares 603, ,605 Number of shares on September 30 12,625,718 11,372,388 Weighted average number of bearer shares 12,154,197 11,399,859 Result attributable to the shareholders of the parent company (in thous. ) 4,397 3,635 * This amount takes into account the retirement of 7,735 shares that were used for the conversion of convertible bonds received with effect of August 6, Changes to Contingent Liabilities and Other Contingent Obligations Guarantees As of September 30, 2011 guarantees from banks and insurance companies existed in the total amount of 10,189,000 (December 31, 2010: 10,965,000), and were essentially taken over during the execution of the contract and the warranty. This could result in rights of recourse of the respective guarantor in the event of a claim. Other Contingent Liabilities In addition to the liability situation declared on December 31, 2010, the following change has been made: S.A.G. Solarstrom Komplementär GmbH, Freiburg i. Br., is the personally liable partner of the following active companies: Orosolar Zwei GmbH & Co. KG (formerly Solarpark Bocholt GmbH & Co. KG), Freiburg i. Br. Solarpark Born GmbH & Co. KG, Freiburg i. Br. Solarpark Dortmund GmbH & Co. KG, Freiburg i. Br. Solarpark Greven GmbH & Co. KG, Freiburg i. Br. Solarpark Muldenstein GmbH & Co. KG, Freiburg i. Br. Solarpark Rövershagen GmbH & Co. KG, Freiburg i. Br. Solarpark Giengen GmbH & Co. KG (formerly Solarpark Vorpommern GmbH & Co. KG), Freiburg i. Br. Solarpark Worms GmbH & Co. KG, Freiburg i. Br. Casino Eins GmbH & Co. KG, Freiburg i. Br. Casino Zwei GmbH & Co. KG, Freiburg i. Br. Rental and Leasing Contracts The rental and leasing contracts listed in the Notes on the Consolidated Financial Statement of December 31, 2010 have not been subject to any significant changes as of September 30, c. Interim Consolidated Financial Statement as of September 30,

46 c. 6 Notes to the Interim Consolidated Financial Statement as of September 30, Business Transactions with Related Companies and Parties Related Parties Under the capital increased performed in 2007, the BBV Beteiligung Beratung Verwaltung GmbH (in brief: BBV) took over all available 1,115,986 no-par bearer shares. This corresponded to a share of 9.5%. In addition, the BBV also took over 8,856, of the convertible bond with a total amount of 10,000, The convertible bond produced interest payable to the BBV in the amount of 371,000 in 2011 (Q1 to Q3 of 2010: 444,000). In the first half of 2011, the BBV exercised its conversion rights during the special conversion period of the bond and converted 2,986 partial debentures into shares of the company. Taking into consideration further share purchases and sales in the reporting period, the BBV holds around 9.4% of the S.A.G. Solarstrom AG shares at September 30, Associated Companies The following business was performed with associated companies: September 30 September 30 in thousand Sales to associated companies Goods 0 0 Services Open items from the purchase/sale of goods and services with associated companies Receivables 0 1 Loans to associated companies Start of year 0 0 Loans granted in the current year 0 0 Loans repaid in the current year 0 0 End of period 0 0 Interest charged 0 0 The business with associated companies refers to the relationship with the company Solarstrompark Gut Erlasee GmbH & Co. KG. In the reporting period, services from group companies in the form of service and maintenance contracts and insurances in the amount of 90,000 (Q1 to Q3 of 2010: 77,000) were invoiced. 44 c. Interim Consolidated Financial Statement as of September 30, 2011

47 S.A.G. Solarstrom AG Report as of September 30, 2011 Joint Ventures The following business was performed with joint ventures: September 30 September 30 in thousand Sales to joint ventures Goods 8,763 3,890 Services Open items from the purchase/sale of goods and services with joint ventures Receivables 1,816 0 Loans to joint ventures Start of year 3,232 22,957 Loans granted in the current year 101 5,350 Loans repaid in the current year 0 25,430 End of period 3,333 2,877 Interest charged Staff In the first nine months of 2011, 211 people on average were employed (Q1 to Q3 2010: 165). This increase, compared with December 31, 2010, when 185 people were employed, can essentially be attributed to a buildup in the number of staff as part of the company s expansion policy. 8. Significant Events in the Reporting Period Details on significant events in the interim reporting period up to September 30, 2011 are contained in Section b.3 Key Events During the Reporting Period in the Management Report. 9. Significant Events After the Reporting Period After the end of the interim reporting period, there were no events that had a significant impact on the earnings, assets and financial situation of the S.A.G. Solarstrom Group. The business with joint ventures refers to the relationship with Solar Stribro s.r.o., Czech Republic and S.A.G. Intersolaire SAS, France. c. Interim Consolidated Financial Statement as of September 30,

48 Transformer substation of the ground-mounted system Serenissima, Canaro, Italy, 48 MWp c. 7 Responsibility Statement To the best of our knowledge, and in accordance with the applicable reporting principles for interim reporting, the interim consolidated financial statement gives a true and fair view of the profit or loss, assets, liabilities and financial position of the Group, and the interim consolidated management report includes a fair review of the development and performance of the business and the position of the Group, together with a description of the main opportunities and risks with the expected development of the Group during the remaining fiscal year. Freiburg i. Br., November 7, 2011 Dr. Karl Kuhlmann (CEO) Oliver Günther (Member of the Executive Board) Christoph Koch (Member of the Executive Board) 46 c. Interim Consolidated Financial Statement as of September 30, 2011

49 S.A.G. Solarstrom AG Report as of September 30,2011 c. Interim Consolidated Financial Statement as of September 30,

50 d. Financial Calendar Dates 2011 November 21-23, 2011: Equity Conference, Frankfurt The latest financial dates will be published on the website of S.A.G. Solarstrom AG in the section Investor Relations / Financial Calendar. e. Contact / Legal Information Investor Relations / Public Relations S.A.G. Solarstrom AG Sasbacher Straße Freiburg i. Br. Germany Tel (0) 7 61 / Fax + 49 (0) 7 61 / ir@solarstromag.com pr@solarstromag.com DQS-certified management systems for ISO 9001 and ISO Certified according to the audit for Work/ Life Balance by Gemeinnützige Hertie-Stiftung Published by S.A.G. Solarstrom AG Sasbacher Straße Freiburg i. Br. Germany Editor BSK Becker+Schreiner Kommunikation GmbH, Willich, Germany Design, Layout, Typesetting and Photographic Editing JUNG:Kommunikation GmbH, Stuttgart, Germany Photographs EBV-Studio Mathias Kern, Freiburg i. Br., Germany Graphikbuero GEBHARD UHL, Freiburg i. Br., Germany S.A.G. Solarstrom AG, Freiburg i. Br., Germany 48 d. Financial Calendar e. Contact / Legal Information In the event of any discrepancies between the English and the German version of this report, the German version shall be the valid one.

51 S.A.G. Solarstrom AG Report as of September 30, 2011 Assembly technician of S.A.G. Solarstrom AG 49