CONSOLIDATED SOLARWORLD AG AG FIRST QUARTER 2004 Record sales on quarterly basis Group-wide turnaround completed WKN 510840 ISIN DE0005108401 Strategy of full integration successful
CORPORATE INDICATORS SolarWorld Group Comparison of Quarters SolarWorld AG ISIN (International Securities Identification Number) DE0005108401// WKN (German Securities ID) 510840 Regulated Market/Prime Standard Comparison of Quarters 2003/2004 Indicators in t B 2003 2004 2. Quarter 3. Quarter 4. Quarter 1. Quarter 1. Q 04 vs. 4. Q 03 Sales 21,152 25,569 32,665 35,388 +2,723 EBITDA 2,091 3,656 4,053 6,939 +2,886 EBIT -1,646-867 +124 2,988 +2,864 Consolidated net income/net loss -2,452-1,440-454 +1,474 +1,928 Capital stock 5.775 m shares/ 5.775 m shares/ 5.775 m shares/ 5.775 m shares/ +/- imputed par value 1 imputed par value 1 imputed par value 1 imputed par value 1 Investments 22.7 m ** 4.0 m 4.2 m 1.4 m Equity capital 109,061 107,989 107,543 108,938 +1,395 Equity ratio 40 % 40 % 39 % 39 % +/- Total assets 276,364 276,011 274,842 277,075 +2,233 No. of employees* 486 515 525 534 +9 * incl. trainees ** 01.01.-30.06.2003 Consolidated Income Statement 2004 Comparison of Quarters 2003 2004 in t B 2. Quarter 3. Quarter 4. Quarter Sales revenue 21,152 25,569 32,662 35,388 Change in inventories 10,338 6,674 932-2,459 finished goods Other operating 2,965 1,383 4,625 1,826 income Cost of materials -23,431-20,726-24,375-18,860 Staff costs -5,122-4,807-5,010-5,697 Depreciation and -3,737-4,523-3,929-3,951 amortization Other operating -3,811-4,437-4,782-3,260 expenses Operating result -1,646-867 124 2,988 Net financial income -1,973-1,265-1,765-1,168 Earningsbefore income taxes -3,619-2,132-1,641 1,820 Taxes on income 1,167 692 1,187-346 Consolidated loss -2,452-1,440-454 1,474
3 CONSOLIDATED 1/2004 Letter to our shareholders and business associates Solar power is much in demand. Never before have so many new solar capacities been sold in Germany in the first few months of a year as in 2004. The amended law on renewable energies is making it possible. Investments in this innovative and emission-free form of energy generation have rarely been as attractive as this year. SolarWorld AG is ideally placed to follow this solar trend with its high tech solutions. Our new modules from Freiberg and Sweden have proven that they are among the technology leaders in the solar market. This equally applies to our cells and wafers. All these products will meet a strongly expanding demand in the course of the current year. Dipl.- Ing. Frank H. Asbeck, Chairman of SolarWorld AG That solar energy is en vogue in Germany is indicated to us by the fact that we get enquiries from interested people every day who want to generate solar power on their houses, their free spaces and commercial roofs thus contributing to climate protection. That is the conviction of our industry: To offer a clean technological solution in order to give people the opportunity to meet the challenges of climate change and to calculate economically at the same time. In 2004 the sales of SolarWorld products will reach record levels. In 2004 it will pay that we followed a consistent path of expansion in the past. We own significant production capacities along the entire solar value chain that put us into the enviable position of being able to further strengthen our position in the solar market. In order to secure the future of the Group in the expanding solar market we will place the finances of the company on a broader basis: We are offering the financial market a bond that offers investors the secure investment into a sound and successful company. The SolarWorld Bond will carry an attractive interest rate giving us the necessary flexibility to become more independent in financing questions and credit policy. Thus, we will be excellently prepared for the challenges of the future. Yours very sincerely Dipl.-Ing. Frank H. Asbeck Chairman of the Board/CEO of SolarWorld AG
CONSOLIDATED 1/2004 4 At a glance: First Quarter 2004 Demand for solar power technology increases by leaps and bounds: The positive feed-in conditions provided by the preliminary law on photovoltaic technology are creating a strong increase in demand. Worldwide Germany is the second largest solar market behind Japan and ahead of the USA. Group-wide turnaround completed record volume on quarterly basis: In the first quarter of 2004 the SolarWorld Group generates record sales of 35.4 million Euro an increase of 85 % over the same quarter of the previous year. Earnings before interests and taxes (EBIT) amount to 3.0 million Euro while the net result runs to 1.5 million Euro. Group strategy of full solar integration successful: The Group s internal build-up of the solar added value chain as well as the capacity increase of all solar production stages initiated in 2003 have turned out to be a successful answer to the growing national and international solar market. New logistics center SolarLog at the Freiberg production location: The shipment of all solar products of the Group domestically and abroad as well as the assembly of complete systems for national and international customers is handled at the Freiberg location. With the new logistics hall with its 5,000 square meters of space the Group now has a multiple of its previous transshipment and order picking capacities.
5 CONSOLIDATED 1/2004 I. Information on the stock/annual general meeting Optimism returned to the stock exchanges At the international stock markets optimism into the economic future has returned. Especially in the first two months of this year the average stock prices at the German stock markets increased significantly. In March triggered by the terrorist attacks in Madrid and the high oil price among other things there was a downward trend. The indices dropped to annual lows. Thus, the DAX at the end of the quarter (31 March) was at 3,856 points falling short of the annual closing rate of 3,965 points on 30 December 2003. The Prime Standard All Share at 1,453 points also remained below the comparative level of 30 December (1,471 points). Only the TecDax was able to generate a plus of 9.8 % to 594 points (year end: 541 points). In April the stock markets recovered again so that both the DAX and the Prime All Share were clearly above the close of last year again. SolarWorld stock with a substantial plus of 44.5 % In addition to the positive corporate development taking place against the backdrop of a buoyant market the Management Board attrib - utes the good performance of the SolarWorld stock to the continuous communication with the protagonists of the capital markets. The SolarWorld stock also developed clearly more dynamically than the Natur-Aktien- Index (NAI). The NAI in which SolarWorld AG is the only listed company from Germany improved its performance by 8.8 % to 2,280 points as per 31 March. Stock price development SolarWorld stock vs. DAX 20 SolarWorld AG 38 days average 15 12,5 10 8 DAX 7 6 5 The price development of the SolarWorld stock was very gratifying in the period under review. 1. Jan. 03 Feb. Apr. Jun. Aug. Oct. Dec. Feb. 04 Apr. 29. Apr. 04 The growth over the year end Xetra closing price on 30 December 2003 (11.0 Euro) was a plus of 44.5 %: On 31 March the securities traded in the Xetra at 15.89 Euro. The stock price development from the end of the first quarter 2003 (Xetra closing price: Euro 4.55) to the end of the first quarter 2004 (Xetra closing price: Euro 15.89) shows an upward leap of 249 % within only one year.
CONSOLIDATED 1/2004 6 Annual General Meeting/Dividend In the SolarWorld AG Annual General Meeting taking place in Bonn on 26 May 2004 the shareholders have the opportunity to represent their interests and to exercise their voting right. As a matter of principle every SolarWorld stock gives the shareholder one vote in the Annual General Meeting. For a shareholder to be allowed to attend the AGM and to exercise his voting right the stokks must be deposited until the last deposit day Wednesday, 19 May 2004 at the latest until the end of the Annual General Meeting. The items of the agenda, information on attendance conditions and on appointing someone as proxy, the annual financial statements for 2003, the report of the Supervisory Board, the Articles of Association as well as countermotions if any, can be inspected on the homepage of the company under www.solarworld.de. Capital stock/shareholder structure as at 31 March 2004 The capital stock of the company amounts to 5.775 million Euro divided into 5.775 million Euro worth of no par value bearer shares with an imputed nominal value of 1 Euro. Share in % Asbeck Family* 40.8 % Bayer AG** 6.4 % Free Float 52.8 % Total 100 % (*as at 31 march 2004/ ** as per BAYER AG notification of 8 October 2003 pursuant to 21 Sec. 1a of WpHG (German law securities trading))
7 CONSOLIDATED 1/2004 II. Background conditions Macroeconomic situation slight economic growth in the first quarter The German economic performance measured in terms of Gross Domestic Product (GDP) increased by 0.2 % in the first quarter of 2004 according to the German Institute for Economic Research (Deutsches Institut für Wirtschaftsforschung = DIW) in Berlin. This positive development was mainly driven by the continuing vigorous export activities of German industry. A revival of the domestic consumer demand was not yet observed in the first few months of 2004. At the international commodities markets the oil price quoted in US dollars reached its highest point in March since the Gulf war 13 years ago. In view of a continuously increasing oil demand and low inventories in the USA, the largest oil consumer, prices have been moving above the price band announced by OPEC of a maximum of 28 dollars per barrel. In Europe the price increase was admittedly attenuated by the strength of the Euro vis-à-vis the dollar. All the same the topic of oil prices also attracted a lot of media attention in the first quarter. Industry situation solar business at a record level While prices for traditional energies continued to rise the demand for products of solar technology for the emission-free generation of energy has been increasing by leaps and bounds in Germany. The reason for this were the new positive feed-in conditions provided by the preliminary law on the photovoltaic industry passed at the end of 2003. Concrete market figures do not exist yet for the first quarter. However, the industry associations are working on the assumption that in the first quarter of 2004 the German photovoltaic market was more than 50 % above the first quarter 2003 and even higher than the fourth quarter which is traditionally the strongest quarter of the annual solar season. Supply was hardly capable of keeping up with demand. The share of the German market in the world market has again increased in the first quarter 2004 and can be assumed to be past the 25 % mark. According to an analysis of the British information service Solarbuzz one in four solar modules were installed in Germany in the year 2003. On the price side the recovery of the Yen and the US dollar vis-à-vis the previously massively increased Euro prevented any further deterioration of the currency parities in the period under review. The strong price pressure of the year 2003 has thus not further increased which was conducive to the competitiveness of German companies vis-à-vis their competitors from the non-euro region.
CONSOLIDATED 1/2004 8 III. Business development of the group 1. Sales and earnings development The SolarWorld Group grew substantially vis-à-vis the first quarter of 2003 but also in comparison with all other quarters of the previous year. From the raw materials to the module and the trading levels all corporate divisions significantly expanded their business activities. By way of the build-up of an integrated production system completed in fiscal year 2003 the Group was able to satisfy an enormous demand along the entire solar value chain in the period under review. The strategy of full solar integration has thus been able to devel - op an impressive effect. In the first quarter of 2004 Group sales rose by 85 % to 35.388 million Euro over the first three months of 2003 and were thus even above the level of the fourth quarter of 2003 which is traditionally the strongest selling period of the year for the photovoltaic industry. After reaching the operational turnaround in the fourth quarter of 2003 the Group contin - ued its positive earnings trend also writing black figures for the net income of the year: The net income was increased by more than 2.5 million Euro to 1.474 million Euro (first quarter 2003: minus 1.067 million Euro). The Group result before taxes amounted to 1.820 million Euro (first quarter 2003: minus 1.884 million Euro). Earnings before interests and taxes (EBIT) were also clearly positive at 2.988 million Euro (previous year: minus 0.713 million Euro). EBITDA (EBIT before depreciation and amortization) at 6.939 million Euro was a multiple of the previous year s figure (previous year: 1.927 million Euro). Having reduced the specific start-up losses in the previous fiscal year all Group subsidiaries ended the first quarter of the year with gratifyingly positive results. Deutsche Cell GmbH and Solar Factory GmbH posted results that were substantially above budget.
9 CONSOLIDATED 1/2004 2. Order situation In the period under review all Group companies reported high levels of incoming orders clearly above the same quarter of the previous year. Against the backdrop of a massively growing overall business the Group largely sold the planned annual production at all manufacturing levels thus securing the capacity utilization of the production facilities for the current year. 3. Development of divisions/segments a) Silicon Share of internal raw material processing increases continuously The "Solar Materials" division that performs the task of providing raw materials to the Group took up the operational activities of raw materials processing on the planned scale in the last fiscal year. In the period under review it was able to expand the volume of processed raw materials as planned. In com - parison with the fourth quarter of 2003 the sili - con quantities processed for wafer production went up by 40 %. Thus, some 40 % of all raw materials needed for wafer production came from the Group s own processing activities. This share will also be maintained in the subsequent quarters of 2004. All raw materials required for the solar production process have already been secured by the Group for the current year. Recycling further expanded The Group has further expanded its position as the only company in the industry involved in the recycling of used solar modules. The operating times of the pilot plant for the recycling of old and/or damaged solar cells and modules have been doubled. With this increase in plant availability the Group is in a transition from test operation to regular commercial operation to be taken up next year. In this context the division completed a high volume project for a major customer for the recycling of wafers from old solar modules. The response of this as well as of other custom - ers to the technical capabilities of this twostage recycling process of the Group promises a commercially attractive recycling business for the future. The division has also introduced a new man - agement system in addition to the exis ting quality management system in order to be able to obtain certification as a specialist waste disposal operation in the future. Solar Materials already today gears its busi - ness activities to the guidelines observed by companies certified in this way.
CONSOLIDATED 1/2004 10 Joint Solar Silicon plans build-up of prototypes for silicon production In the Joint Solar Silicon GmbH & Co. KG, Freiberg, a joint venture with Degussa AG the Group has consistently pursued its activities to build up its own raw materials production. The plan is to build a prototype for the production of silicon from silan by the end of the year. b) Wafer Sales up by 25 % Asia gaining in importance In the context of the strong market growth in the first quarter the international demand for silicon wafers made by Deutsche Solar AG has also increased vigorously. The wafer company of the SolarWorld Group has again been able to enter into contracts with longer durations than in the previous year. Worldwide sales of Deutsche Solar AG climbed to 25.0 MW exceeding the first quarter of 2003 by 25 %. The most important sales regions were Europe and Asia. In comparison with the whole year of 2003 the importance of the growth region of Asia to total sales of Deutsche Solar AG again increased. New process of crystallization: optimization and cost reduction Within the framework of its extensive R&D activities and in cooperation with a mechanical engineering company Deutsche Solar AG has developed a new plant and an improved process for the optimization of the crystallization of silicon. In the new process the raw silicon is carefully melted down. By precisely controlling the temperature it is possible to organize the subsequently starting crystallization of the liquid material more accurately and more quickly than in previous processes. This, in addition to a further optimization of the electrical properties of the material, also leads to a significant cost saving. In this way the energy costs can be cut by the new processes.
11 CONSOLIDATED 1/2004 c) Cells Sales of total year 2003 almost matched after 3 months earnings substantially ahead of budget Deutsche Cell GmbH further increased production in the first quarter while continuing its optimization activities. At the same time the cell subsidiary of the Group reduced a portion of its cell inventory dating from the previous year thus meeting the demand noticeably increased since the beginning of the year even more comprehensively. All in all Deutsche Cell GmbH sold cells with a total capacity of 8.8 MW in the first three months of the year thus almost matching the sales level of the entire previous year 2003 of 9 MW. Within production the share of monocrys - talline solar cells is being increased as planned. The Eco-Profit project funded by the Federal Government produced positive results in terms of saving of auxiliary materials. The life cycle analysis of cell production could thus be further improved which also had positive repercussions on costs. What is more, the project also contributed to the optimization of the quality of the high value cells. The degree of efficiency of the cells averaged 15 %. The successful optimization steps provided higher than expected earnings based on a very good sales performance. Dr. Lüdemann new General Manager The management of Deutsche Cell GmbH was expanded on 1 January 2004. Herr Dr. Ralf Lüdemann was appointed the new General Manager of the cell producer. Dr. Lüdemann had joined Deutsche Solar AG in February 2002 as head of the solar cells division and later took over the production management of the newly formed Deutsche Cell GmbH. Previously the qualified physicist had been active in international photovoltaic research. Thus, he was the coordinator for the Solar Cell Technology market area for the Fraunhofer Institute for Solar Energy Systems in Freiburg. Prior to this Dr. Lüde - mann worked on the scientific staff of the University Center for Excellence in Photo - voltaic Research and Education (UCEP) of the Georgia Institute of Technology in Atlanta/USA. Herr Dr. Lüdemann manages the business of Deutsche Cell GmbH together with Herr Dipl.-Ing. Boris Klebensberger who is at the same time on the boards of SolarWorld AG and Deutsche Solar AG.
CONSOLIDATED 1/2004 12 d) Modules Solar Factory increases production continuously After commissioning the new solar module factory Solar Factory GmbH in the fourth quarter of 2003 the company continuously increased its production to a level of 10,000 modules per month in the period under review. As a consequence of the experience gained from the operation of the fully automatic plant the Freiberg module factory in - creased the output range from 155 Watt to an average of 165 Watt per unit. Sales went up to 4.1 MW and were thus 28 % higher than in the fourth quarter of the year 2003 when they amounted to 3.2 MW. GPV cooperates with space center sales further increased In the first quarter the Swedish SolarWorld subsidiary GPV Gällivare PhotoVoltaic in the Northern Swedish town of Gällivare equipped a test balloon with solar modules within the framework of its cooperation with the Euro - pean Space Center Esrange in Kiruna/Northern Sweden with the balloon being sent into the stratosphere for test and research purposes. The balloon was able to collect comprehensive data material under extreme conditions at a height of about 32 km that will provide valuable insight into the extraterrestrial behavior of the modules. Other joint research projects have been initiated. Within the framework of its production activities GPV further optimized its existing production lines. Sales increased by 21 % over the fourth quarter 2003 to 2.4 MW. GPV sold a small part of this volume directly in Scandinavia where the company has been able to extend its market leadership. The market share in the Scandinavian market amounted to about 30 %.
13 CONSOLIDATED 1/2004 e) Trading Very good order situation The trading business of SolarWorld AG at the end of the internal value chain of the Group was characterized by a very strong demand in the period under review which in turn led to an excellent order situation for the company. As before the company has been selling both modules and complete systems to a diverse group of customers. In addition to the established wholesale trade SolarWorld AG has expanded the sales channel of the special ized solar trade. What has also grown significantly in the Ger - man solar market is the demand from farmers who have a large number of surfaces for the installation of photovoltaic power systems. The compensations guaranteed by law accord - ing to the new German law on renewable energies make such investments more attractive both in open spaces and in the context roof installations. At SolarWorld AG this led to an increase of the business with agricultural customers with significant sales having been made to agricultural producers in the North of Germany for the first time. In the first quarter SolarWorld AG also entered into a small OEM contract that provides for the production of solar modules for a customer under his own name. The foreign business continued to develop consistently. Among the major markets are Austria, Luxembourg and Spain. In addition, SolarWorld AG established its new logo in the context of its new market appearance. This has drawn a positive re - s ponse from the market place.
CONSOLIDATED 1/2004 14 f) Group-wide activities New logistics center SolarLog opened In the first quarter 2004 the Group commissioned its new logistics center SolarLog at Freiberg. This means that as of the current year all solar products of the Group can be shipped by scheduled services from Freiberg to national and international customers. In SolarLog complete systems are also assembled according to customer wishes. All in all, the Group now has a multiple of its previous transshipment and order picking capacities with the new logistics hall and its 5,000 square meters of space. The organization will be handled by Deutsche Solar AG as a service provider for the Group. Other activities of the solar technology group also include the further development of a process for the cost-effective production of silicon by the SolarWorld participation in the joint venture Joint Solar Silicon GmbH & Co. KG, Freiberg. The R&D expenditure at Freiberg amounted to 900,000 Euro in the first quarter of 2004. 5. Investments The investment volume in fixed assets amoun t- ed to 1.419 million Euro in the first quarter of 2004. 4. Research & Development SolarWorld AG and its subsidiaries continued all ongoing R&D projects in the first three months of 2004. Within the framework of wafer production Deutsche Solar AG used findings from its R&D work for the development and application of a new kiln for the melting down and subsequent crystallization of silicon together with a partner company. In conjunction with the investigation of module properties under extreme conditions the Swedish subsidiary GPV AB intensified its cooperation with the European Space Center Esrange in Kiruna. In this context the partners released a probe equipped with modules into the stratosphere for research purposes. 6. Finance and asset situation Events with repercussions on the finance and asset situation of the group did not materialize in the first quarter of 2004. The equity ratio as at 31 March 2004 amount - ed to 39 % which underlines the fact that the equity situation of the group is comfortable by international standards. In the first quarter the group was again able to increase the number of staff significantly, the headcount going up from 525 by the end of the year 2003 to 534 at the end of the first quarter of 2004. Fixed assets are fully covered by the equity capital plus noncurrent borrowings. Thus, the equity-to-fixed-assets ratio of the group can be described as being above average.
15 CONSOLIDATED 1/2004 The current debts of the group are more than covered by the current assets. This suggests a stable liquidity situation at the due date. 7. Procurement As a result of the internal procurement structure further expanded in the course of the year 2003 the Group was able to comprehensively secure the supply to its solar production in the period under review without being dependent upon any external procurement. This relates to wafers being supplied to the cell production, the large-scale supply to module production as well as the procurement for the trading business. The inventory built up by the cell factory in 2003 will additionally benefit the module production against the backdrop of the growing market demand in the current fiscal year. The Group has secured the supply of raw materials for wafer production for the entire year as much as the procurement of components for the assembly of complete solar systems. 8. Personnel The number of employees increased by an additional 9 staff to 534 people in comparison with the end of the 2003 fiscal year. This was a rise of 85 employees over the number of staff in the first quarter of 2003. Comparison with 1. Quarter 2003 +/- vs. previous year Deutsche Solar AG 359 314 +45 Deutsche Cell GmbH 59 51 +8 SolarFactory GmbH 28 8 +20 GPV AB 36 31 +5 SolarWorld AG 52 45 +7 Total 534 449 +85 Personnel changes on the Management Board or the Supervisory Board did not occur in the first quarter of 2004.
CONSOLIDATED 1/2004 16 IV. Supplementary report SolarWorld AG floats corporate bond of up to 25 million Euro To back up the continued group-wide growth SolarWorld AG floated a corporate bond with a total volume of up to 25 million Euro after the end of the period under review. This serves the company to extend its financing leeway. The bonds offered by SolarWorld AG will carry an annual interest rate of 7 %. These fixed interest securities (ISIN: DE000A0A3MT3) have a maturity until 2011. The start of the issue was 2 May 2004. The partner is West - deutsche Genossenschafts-Zentralbank eg (WGZ-Bank). With the bond SolarWorld AG offers investors an investment with an above average interest rate. The proceeds of the bond will lead to a broadening of the capital base of the Group thus making the company more independent in terms of its financing and credit policy. SolarWorld AG: Frank Henn new VP Sales The Supervisory Board of the company appoin ted Herr Dipl.-Wirtschafts-Ingenieur Frank Henn VP Sales with effect from 01 June 2004 thus expanding the top management body of SolarWorld AG to five persons. Since 01 September 2003 Herr Henn has been head of sales and in this capacity responsible for the Solar Technology House. Previously he was with General Electric for five years in the Power Controls Division where his last position was that of sales manager electrical wholesale trade Central Europe. Before that the qualified engineer gathered extensive sales experience while working as product manager for Stiebel Eltron for six years.
17 CONSOLIDATED 1/2004 V. Outlook on the current fiscal year background conditions Economy continuing to recover After a stagnating overall year 2003 the economic experts are expecting the GDP to grow by some 1.5 % in Germany. In addition to an increase in exports the domestic economy should also show more buoyancy than of late. The oil price is expected to be substantially higher than in previous years. A number of analysts consider a lasting level upwards of 30 Euro per barrel to be within the realm of possibility. Higher prices for conventional energies can be expected to have a positive effect on the demand for renewable energies. Solar market heading for record year The German photovoltaic market is heading for new record levels in 2004. The Association of the Solar Industry (Unternehmensverband Solarwirtschaft = UVS) thinks that a market growth of 50 % to some 190 MW is possible. A major contribution to this growth will also be made by large scale solar installations. Industry sales measured in terms of final customer business will also grow substantially. The UVS sees the business grow by 25 % to 1 billion Euro. Worldwide the market will also grow significantly even though not with the same dynamism as in Germany. Thus, the share of the German solar market in the world market will clearly grow in 2004. It is to be expected that a number of manufacturers worldwide will further enhance their capacities quite vigorously. Among the regions that, in addition to Europe, can be expected to add significant new cell capacities are Japan, China and South East Asia.
CONSOLIDATED 1/2004 18 VI. Outlook on the current fiscal year situation of the company Integrated production to be expanded In the current year the Group will further strengthen its production capacities. An expansion of the cell and module capacities as well as an increase of the wafer production base are being planned. These decisions reflect the growth strategy of the Group to secure and enhance its position in a vigorously growing solar market. a) Silicon On the raw materials side the Solar Materials division will continue its successful activities of reprocessing silicon for wafer production. The solar recycling process will be further optimized and entry into the phase of commercial recycling will be prepared for the year 2005. b) Wafers In wafer production the optimization and the development of new technologies are going ahead. In addition, Deutsche Solar AG is planning the further expansion of existing capacities. In doing so Europe s leading wafer manufacturer is taking account of the growing demand from external customers and from the Group. The beginning of expansion measures for initially 30 MW is to be expected by the end of the fiscal year. For the full year Deutsche Solar AG expects production to run to about 100 MW.
19 CONSOLIDATED 1/2004 c) Cells Cell production will further optimize the manufacturing process and continuously reduce inventories of finished materials in line with the market demand. The existing line can be increased in its manufacturing capacity to more than 50 MW by way of optimization steps and partial expansion. The measures involved in this have been announced for the end of the fiscal year. d) Modules After reaching the planned production vol - ume in the first quarter Solar Factory GmbH will continue to manufacture solar modules at a high level in the course of the further devel - opment of its fully automatic production. The Swedish module producer GPV will fur - ther optimize his existing production lines. In addition, GPV will also continue and intensify the research alliance with the European Space Center Esrange. All in all, the Group expects a module production of 27 MW. e) Trading The trade with modules and construction kits will continue its dynamic development in the following quarters. Already existing contracts for a comprehensive production volume of the Group are a secure basis for the 2004 trad - ing business. The total trading volume will therefore be well above the previous year. Group sales to reach record level earnings in single digit million Euro amount expected Against the background of the growing demand especially in the home market the Group expects a double digit growth in sales. For the full year the Management Board is expecting consolidated earnings in the range of a single digit million Euro amount. VII. Risk of future development In the course of the first quarter 2004 no further changes worth mentioning occurred in the risks described extensively under Risk Report in the Group s Annual Report for fiscal year 2003.
CONSOLIDATED 1/2004 20 VIII. Consolidated Interim Report of the SolarWorld AG Consolidated income statement for the 1. 1.-31.3. 2004 T E 1. 1.-31.3. 2003 T E 1. Sales revenue 35,388 19,094 2. Change in inventory of finished goods -2,459 8,254 3. Own work capitalized 0 0 4. Other operating income 1,826 1,359 5. Cost of materials -18,860-19,460 6. Staff costs -5,697-3,699 7. Depreciation and amortization -3,951-2,640 8. Other operating expenses -3,260-3,621 Operating result 2,988-713 9. Net financial income -1,168-1,171 Profit before tax from ordinary activities 1,820-1,884 10. Taxes on income -346 817 11. Group loss/profit 1,474-1,067 12. Minority interests 0 0 13. Group net loss/profit 1,474-1,067 Earnings per share a) Net loss/profit (in e thous.) 1,474-1,067 b) Weighted average number of shares in circulation (in 1,000) 5,775 5,775 c) Earnings per share (in e) 0.26-0.18
21 CONSOLIDATED 1/2004 Consolidated Balance Sheet as of 31 March 2004 ASSETS 31.03.2004 31.12.2003 T E T E A. Noncurrent Assets 163,422 165,857 I. Intangible assets 35,140 35,263 II. Property, plant and equipment 128,088 130,466 III. Financial assets 194 128 B. Current Assets 105,065 100,610 I. Inventories 54,992 57,289 II. Trade accounts receivable 26,005 18,615 III. Tax receivables 281 1,986 IV. Other receivables and assets 1,214 2,079 V. Marketable securities 7 11 VI. Cash and cash equivalents 21,974 20,130 VII. Prepaid expenses 592 500 C. Deferred Taxes 8,588 8,375 277,075 274,842 LIABILITIES 31.03.2004 31.12.2003 T E T E A. Shareholders Equity 108,938 107,543 I. Subscribed capital 5,775 5,775 II. Capital reserved 100,592 100,592 III. Translation reserve 18 97 IV. Accumulated profit 2,553 1,079 B. Noncurrent Liabilities 79,289 85,004 I. Noncurrent borrowings 46,757 51,263 II. Other noncurrent liabilities 32,305 33,552 III. Provisions for pensions 77 39 IV. Other noncurrent provisions 150 150 C. Current Liabilities 79,978 73,266 I. Shortterm borrowings 57,236 52,214 II. Trade accounts payable 8,511 5,858 III. Tax payables 1,538 452 IV. Current provisions 2,515 2,425 V. Deferred income 187 556 VI. Other current liabilities 9,851 11,761 D. Deferred Taxes 9,020 9,029 277,075 274,842
CONSOLIDATED 1/2004 22 Consolidated cash flow statement for the First Quarter of 2004 1. 1.-31.3. 2004 T E 1. 1.-31.3. 2003 T E Net profit before taxes 1,820-1,884 + Depreciation and amortization 3,950 2,639 + Net interest income 1,112 1,071 + Result from at equity valuation 57 100 +/- Loss/income on disposal of nuncurrent assets 0 0 + Proceeds from investment grants 0 7,062 - Release of special items for investment grants -1,108-329 = Subtotal 5,831 8,659 -/+ Increase/decrease in inventories 2,297-3,016 -/+ Increase/decrease in other Net Working Capital -6,426 10,932 = Cashflow generated from operations 1,702 16,576 +/- Taxes reimbursed/paid 1,668-1,526 = Cashflow from operating activities 3,370 15,050 - Cash outflow for investments in noncurrent assets -1,542-17,751 + Proceeds from removal of WindWelt AG from consolidation 0 0 - Cash outflow for the purchase of shares 0 0 - Cash and cash equivalents WindWelt AG at start of period 0 0 + Proceeds from the divestment of other assets 62 0 = Cashflow from investment activity -1,480-17,751 + Borrowings/repayments of financial credits -4,740 1,260 - Interest paid -545-1,158 + Proceeds from addition to equity 0 0 - Disbursements due to dividend distributions 0 0 = Cashflow from financing activity -5,285 102 - Net change in cash and cash equivalents -3,395-2,599 - Effects of exchange rate movements -7-4 + Cash and cash equivalents at beginning of period 11,324 639 = Cash and cash equivalents at end of period 7,922-1,964
23 CONSOLIDATED 1/2004 Consolidated statement of changes in noncurrent assets (in x thousand) Subscribed Capital Translation Accumulated Total capital reserve reserve results Balance as at 31.12.2002 5,775 100,592 68 3,554 109,989 Changes in consolidation and other adjustments 3,977 3,977 Differences from currency translation -2-2 Group loss for the year -1,067-1,067 Dividends paid 0 0 Balance as at 31.03.2003 5,775 100,592 66 6,464 112,897 Balance as at 31.12.2003 5,775 100,592 97 1,079 107,543 Differences from currency translation -79-79 Group profit for the year 1,474 1,474 Dividends paid 0 0 Balance as at 31.03.2004 5,775 100,592 18 2,553 108,938
CONSOLIDATED 1/2004 24 Notes to the consolidated interim statement 1. Reporting according to the International Financial Reporting Standards (IFRS) SolarWorld AG has made use of the exemption under 292a HGB (Commercial Code) to draw up consolidated annual financial statements in line with the IFRS issues by the International Accounting Standards Board (IASB) and their interpretations by the Standing Interpretations Committee (SIC). Accordingly, this interim report as of 31 March 2004 was also prepared in line with IAS 34. This present consolidated interim report has not been subject to an audit. 2. Accounting, consolidation and valuation methods In drawing up this interim report and determining the comparative figures for the previous year fundamentally the same consolidation principles as well as ac - counting and valuation methods were used as in the consolidated annual financial statements for 2003. A de - tailed description of these methods is published in the Notes to the Annual Report 2003. This can also be downloaded from the Internet under www.solarworld.de. 3. Group of consolidated companies SolarWorld AG and the following companies are included in this interim report as being consolidated companies: - Gällivare PhotoVoltaic AB, Gällivare, Sweden - Deutsche Solar AG, Freiberg/Saxony - Solar Factory GmbH Freiberg/Saxony - Deutsche Cell GmbH, Freiberg/Saxony On the reporting date the SolarWorld AG shareholding amounted to 100 % (previous year: 100 % in each case). 4. Important events after the end of the reporting period There were no events of any special importance after 31 March 2004. In the present interim statement the accounting stand ard IFRS 3 Business Combinations approved by the IASB in March 2004, as well as the revised versions of IAS 36 Impairment of Assets and 38 Intangible Assets were applied for the first time. As a result of this, the scheduled depreciations on assets and goodwill will no longer be made as of the current period under review. In the first quarter of 2004 there were no indications suggesting any reduction in value of assets or goodwill. The scheduled depreciation on goodwill would have amounted to 472,000 Euro in the first quarter of 2004.
25 CONSOLIDATED 1/2004 Consolidated segment reporting for the First Quarter 2004 (in million Euro) Sales Wafers Cells Modules Trading Eliminated Consolidated External sales 16 3 0 16 Intersegment sales 7 12 17 0-36 Total sales 23 15 17 16-36 35 Result Segment result 1 1 1 0 3 Unallocated income 0 Unallocated expenses 0 Operating result (EBIT) 3 Interest paid -1 Interest received 0 Income taxes 0 Net profit for the period 2 Consolidated segment reporting for the First Quarter 2003 (in million Euro) Sales Wafers Cells Modules Trading Eliminated Consolidated External sales 16 0 0 3 Intersegment sales 5 1 7 0-13 Total sales 21 1 7 3-13 19 Result Segment result 1-1 0-1 -1 Unallocated income 0 Unallocated expenses 0 Operating result (EBIT) -1 Interest paid -1 Interest received 0 Income taxes 1 Net profit for the period -1
CONSOLIDATED 1/2004 26 IX. Financial Calendar 2004 02. April 2004 Annual Business Press Conference 2003/ 11:00 a.m.; Presseclub Bonn 02. April 2004 Analysts Conference on Financial Statements 2003/ 3:00 p.m.; Presseclub Bonn Publication of the Annual Report 2003 on SolarWorld-homepage 20. April 2004 Publication of the printed version of the Annual Report 2003 The Annual Report 2003 can be downloaded as a pdf file from the homepage under www.solarworld de or directly ordered from the company SolarWorld AG/ Department Investor Relations. 14. May 2004 Publication of the Quarterly Report Q 1 2004 on SolarWorld-homepage 24. May 2004 Publication of the printed version of the Quarterly Report Q 1 2004 (01.01.- 31.03.04) 26. May 2004 Annual General Meeting/ 11:00 a.m.; Beethovenhalle, Bonn 14. August 2004 Publication of the Quarterly Report Q 2 2004 on SolarWorld-homepage 24. August 2004 Publication of the printed version of the Quarterly Report Q 2 2004 (01.01.- 30.06.04) 14. November 2004 Publication of the Quarterly Report Q 3 2004 on SolarWorld-homepage 25. November 2004 Publication of the printed version of the Quarterly Report Q 3 2004 (01.01.- 30.09.04)
Published by: SolarWorld AG, Kurt-Schumacher-Straße 12-14, 53113 Bonn/Germany Contact: Department Investor Relations, Tel.: +49-228-55920-471/- 474 Internet: www.solarworld.de e-mail: (Stocks) placement@solarworld.de (Bond) anleihe@solarworld.de (Products) service@solarworld.de The full version of the present Group Interim Report First Quarter ending 31 March 2004 is also available in German. Both documents can be downloaded as pdf files from the Internet under www.solarworld.de or ordered directly from SolarWorld AG, Department Investor Relations, Kurt-Schumacher-Straße 12-14, 53113 Bonn, Tel. +49-228-55920-470; Fax: +49-228-55920-8814 or via e-mail: placement@solarworld.de.
SolarWorld AG Kurt-Schumacher-Straße 12-14, D-53113 Bonn Tel.: +49-228-55920-0, Fax: -99 placement@solarworld.de www.solarworld.de CONSOLIDATED FIRST QUARTER 2004