Solaria Energía y Medio Ambiente

Fact and fiction in the Spanish PV Market

19 February 2009

Pedro Echeguren. Director. Head of IRTel.: +34 91 5644272 pecheguren@solariaenergia.com

Growth in the Spanish Solar MarketCapturing the Potential for Growth in Spain Supportive Regulatory Environment

Regulation RD 661/2007 (Approved 25 May 2007)PV Installed Capacity (MW)

Fixed amount to be applied to capacity installed up to 29 September 2008; growth rate indexed to CPI minus 0.25% until Dec-2012 and CPI minus 0.50% thereafter:

g ( pp y )

First 25 years After 25 years

3,800

1,938

814

750

1000

2,973

Up to 100 kW

100 kW – 10 MW

10 MW 50 MW

First 25 years

44.04 c€

41.75 c€

22 98 c€

After 25 years

35.23 c€

33.40 c€

18 38 c€

1 3 7 11 22 46144

692

0

250

500

750

2000 2001 2002 2003 2004 2005 2006 2007 2007 2007 2007

100

20072008

Attractive Radiation Conditions Regulation RD 1578/2008 (Approved 26 Sep 2008)

10 MW – 50 MW 22.98 c€ 18.38 c€Source CNE for Spain, EPIA for other countries Germany

JapanUS

Spain2000 2001 2002 2003 2004 2005 2006 2007 2007 2007 2007

Italy20072008

Spain = 1,586 kWh/m2

Applicable to licences applied after 29 September 2008. Market size: 500 MW in 2009 and 2010, 460 MW in 2011Tariffs indexed to CPI minus 0.25%, valid for 25 years

25 years

Solar Radiation

Germany = 1,014 kWh/m2

Europe= 1,197 kWh/m2

Rooftop installations <20 kW

Rooftop installations 20 kW - 2 MW

Ground based (Maximum size 10 MW)

34.00 c€

32.00 c€

32.00 c€S E C i i Ph t lt i G hi l I f ti S t PVGIS htt // j / i /

Regulation passed in September 2008 provides a supportive 3-year framework3

Source European Commission Photovoltaic Geographical Information System PVGIS http://re.jrc.ec.europa.eu/pvgis/

Fact and Fiction in the Spanish Solar MarketPV Installed Capacity in Spain (MW)

4500 Dec-08

3500

4000

D 07

Dec 082973 MW4195 MW

Market size per year2007: 547 MW2008: 2 281 MW

2500

3000Dec-07692 MW569 MW

2008: 2,281 MW (or 3,503 MW under the statistical calculation)

1500

2000 Dec-06145 MW

2009: 500 MW2010: 500 MW2011: 460 MW

500

1000(unless current scheme is superseded by the expected 2010-2020 renewables

Source: www cne es (Spanish Energy Commission)

02007 2008

Actual CNE data CNE’s Statistical calculation

plan)

Regulation passed in September 2008 modulates growth4

Source: www.cne.es (Spanish Energy Commission)

Fact and Fiction in the Spanish Solar Market

SOLAR PV per region MW YOY

Growth in installed capacity: 2008

GaliciaAsturias 0 MW

Cantabria 1 MW

Basque 16 MW

CASTILLE MANCHA 791 386%Andalusia 357 391%Castille León 354 309%Extremadura 344 476%Murcia 280 306%

Castille Leon354 MW

7 MWRioja 74 MW

Navarra 156 MW

Aragon110 MW

Catalonia158 MWFuenmayor

Murcia 280 306%Valencia 215 177%Catalonia 158 312%Navarra 156 159%Aragón 110 1213%RIOJA 74 818%

110 MW

Madrid 23 MW

Canary Is. 48 110%Regions <10 MW 85 231%

Total Spain 2,973 329%

CASTILLE MANCHA791 MW

Puertollano

Extremadura344 MW

Valencia215 MW

Balearic Is. 36 MWInstalled Production

Almadén

Andalusia357 MW

Murcia280 MW

Solaria’s factories: Puertollano, Fuenmayor and Almadén

GW TWhHydro 17 21Nuclear 8 59Coal 11 50Fuel & Gas 8 11

Canary Is. 48 MW

Ceuta & Melilla 0 MW

TOTAL SOLAR 2,973 MW

CCGT 22 96Wind 15 29Solar 3 2Other 6 37Exports ‐7

5Source: Red Eléctrica de España (www.ree.es) and CNE (www.cne.es) Jan. 2009, Statistics on sales of renewable energies

Pumping ‐11Total Spain 90 279

Turn-key leadership in SpainLA RIOJA 11 MWFuenmayor (Logroño)Completed: Sept. 2008LEON 1 MW

Vill ñá (L ó )Villamañán (León)Completed: Sept. 2008 MIGUELTURRA 1.3 MW

Miguelturra (Ciudad Real)Completed: March 2008

EXTREMADURA I 11 MWVill d l S (B d j )

POZUELO 1 MWPozuelo de Calatrava (Ciudad Real)Completed: March 2008

PUERTOLLANO 1 MWPuertollano (Ciudad Real)

Villanueva de la Serena (Badajoz)Completed: Sept. 2008

Completed: March 2008

MURCIA 7 MWAlhama de Murcia (Murcia)

Completed: June 2008EXTREMADURA II 11 MWMagacela (Badajoz)Completed: Sept. 2008

T k j t M k t l d i S i ith 44 MW f T k j t l t d

Alhama de Murcia (Murcia)Completed: Sept. 2008

Turnkey projects: Market leader in Spain with over 44 MW of Turn-key projects completed

6

Export activities

Solaria expects 1/3 of 2009 revenues to be generated from export activities (Modules andSolaria expects 1/3 of 2009 revenues to be generated from export activities (Modules and Turnkey). The remaining 2/3 (domestic business) to be split 60% Modules / 40% Turnkey. 

Italy: Exports of PV Modules started in Q4 2007. Local office is well

France: Local office to be started in H2‐2009. Outlook for Module and 

Italy: Exports of PV Modules started in Q4 2007. Local office is welladvanced in the application process for obtaining Turnkey licenses

Turnkey demand could exceed market expectations for the Italian market

Morocco: Bids presented in Q1‐2009 for 4 x 40 MW off‐grid projects. Biddi ti i l d ll iti d l l tBidding consortium includes well‐positioned local partners

Chile and Brazil: Non‐grid Turnkey applications are being negotiated with local b O t it t d l ti i S i h ki t i

Expansion into new markets is to reduce dependance on the Spanishmarket and export a succesful business model

buyers. Opportunity to deploy expertise in Spanish‐speaking countries

7

market and export a succesful business model

Sector Value ChainRaw Silicon Silicon Blocks Silicon Wafers Solar Cells Solar Modules Distribution/

Installations

REC GroupMEMC

Turnkey Development

HemlockWacker

SolarWorld AG

E S l

MEMC

Schott Solar

SharpEvergreen Solar

ErSolQ-Cells

SOLARIA NOW

IsofotonSunpower

SOLARIA IN H1-2008

BP Solar

SunwaysMitsubishi Electric

Solon

Conergy

Solar-FabrikAleo Solar

Phönix Sonnenstrom

ATERSASiliken

SAG SolarstromAccionaGamesa

8

Capacity and Production Targets

2008 201120072006 2009

15025

2008

250

2011

650

20072006

Capacity (Year end, MW)PV Modules

2009

350150

40

n/m

25

6

n/m

250

--- ---

80%

y ( )

Production (MW)

Utilization Rate (%)

Cells

---

25

0

-

-

25

---

650

---

Capacity (Year end, MW)

Production (MW)

Cells

100

---

-- 80%Utilization Rate (%)

Factory sites in 2011

PV Modules: Three factories: Puertollano 250 MW + La Rioja 300 MW + Almaden 100 MW

Cells: Two factories: Puertollano 400 MW + La Rioja 250 MW

9

Solaria Tomorrow

Solaria is to maintain the leadership in installing Turnkey projects in SpainSolaria is to maintain the leadership in installing Turnkey projects in Spainand be one of the worldwide leaders in manufacturing PV modules

PV factory in Puertollano reached planned capacity of 250 MW in Q1 2008. Cell

First phase of investment in new PV Module factory (Fuenmayor) 

PV factory in Puertollano reached planned capacity of 250 MW in Q1 2008. Cellmanufacturing started in September 2008, now adding new capacity

p y ( y )completed in September 2008, recently comissioned 100 MW capacity

Client profile evolves from spot to contract, thus becoming more stable and longt i t d Fi i i h i li ti li t filterm‐oriented. Financing issues have implications on client profiles

We expect more competition in our sector and are leveraging our leadership, i t t fi i l t th d f h fl t b ld l d

Entry into new markets is to reduce dependance on the Spanish marketand export a succesful business model

investments, financial strength and free cash‐flow to become a world leader

10

and export a succesful business model

Solaria Energía y Medio AmbienteSolaria Energía y Medio AmbienteBack up slides

11

Solaria Today

Solaria manufactures PV modules, Thermal pannels and develops Turnkey installations

Solaria’s factories are located in Puertollano and in Fuenmayordevelops Turnkey installations

•• La Nava II (La Nava II (PuertollanoPuertollano) 51,300 ) 51,300 sq.msq.m sitesite: : Solar Solar cellcell and PV module and PV module factoriesfactories

•• La Nava III (La Nava III (PuertollanoPuertollano: 63,700 : 63,700 sq.msq.msitesite:: UnderUnder developmentdevelopment

and in Fuenmayor 

PV M d l Th l lT k i t ll ti

sitesite: : UnderUnder developmentdevelopment•• SecundarySecundary productionproduction centers and centers and 

warehouseswarehouses in in PuertollanoPuertollano•• FuenmayorFuenmayor (La Rioja) 307,000 (La Rioja) 307,000 sq.msq.m sitesite: : 

PV module PV module factoryfactory•• Almadén:Almadén: FeasibilityFeasibility studiesstudies forfor futurefuturePV Modules Thermal pannelsTurnkey installations

Solaria began trading in the Spanish Stock M k t 19 J 2007

Key figures (€ 000s)

•• Almadén: Almadén: FeasibilityFeasibility studiesstudies forfor futurefuturePV module PV module factoryfactory

221,265SALES

2006

19,147

Market on 19 June 2007

•• FirstFirst and and onlyonly Solar PV Solar PV companycompany listedlisted onon thetheSpanishSpanish stockstock MarketMarket

y g ( )

9m 2008

186,209

2007

20,750NET PROFIT 5,642

SpanishSpanish stock stock MarketMarket•• OnlyOnly tradedtraded companycompany fromfrom Castilla La ManchaCastilla La Mancha•• MarketMarket capcap: : €€ 250 250 millmill•• Free Free floatfloat: 38.5% of shares (61.5% : 38.5% of shares (61.5% ownedowned byby

thethe company’scompany’s foundersfounders))

53,257EBITDA 8,940

30,110EBIT 8,706

48,400

71,695

71,078

33,919

52,087

0, 50NET PROFIT , p yp y ))

12

559AVG WORKFORCE 48

48,400

324

,

590

Solaria Today

9-mth 2008 Sales BreakdownDesign, manufacture and sale of PV modules to

PV Modules29%

Turnkey71%

Modulethird parties. Production capacity 250 MW / YearValue Added ServicesTechnical assistance and post sales service

Thermal

End-to-end development of solar PV power plants including engineering servicesValue Added Services

Total Sales = €221 MM

Thermal 0%

Deep knowledge of local marketExtensive project management know-how and experienceGrid Connection Point Manager status

Turnkey 2007 Sales Breakdown

Turnkey

Thermal0%Grid Connection Point Manager status

Design, manufacture, sale and installation of thermal panels and engineering process

PV Modules58%

Turnkey42%

Potential linked to construction sectorValue Added ServicesTechnology adapted to Spanish climateNO LONGER A CORE ACTIVITY

Thermal58%

Total Sales = €186 MMNO LONGER A CORE ACTIVITY

Source Solaria IFRS Financial Statements

13

Regulatory Framework

Positives:

f ff f

Licences will total 500 MW in 2009, 500 MW in 2010 and 460 MW in 2011

Flexible feed‐in tariff depending on growth rate of new installations

Supportive 3‐yr framework until 2010‐2020 renewables plan is announced

Negatives:

Licences to be awarded quarterly Q1 and Q2 auctions give priority to late

Licences to be awarded quarterly. Q1 and Q2 auctions give priority to late runners and are unlikely to generate new demand for PV modules

Licences to be awarded quarterly. Q1 and Q2 auctions give priority to late runners and are unlikely to generate new demand for PV modules

Other considerations affecting demand outlook are the financing

14

restrictions from banks and markets

Cell supplies contracted for 2008

Supply of cells is below the amounts contractedSupply of cells is below the amounts contracted

Supplier Status Q1 Q2 Q3 Q4 Total

Gintech Contact signed 9.5 12.0 15.0 13.5 50.0E Ton Contact signed 4.9 7.3 12.3 15.5 40.0Neo Solar Power Contact signed 1.5 3.0 4.5 6.0 15.0Neo Solar Power Contact signed 1.5 3.0 4.5 6.0 15.0JA Solar Contact signed 6.0 9.0 15.0 15.0 45.0Supplier 1 Spot supply 2.5 2.5 5.0Supplier 2 Spot supply 2.5 2.5 5.0Supplier 3 Spot supply 2.5 2.5 5.0Supplier 4 Spot supply 1.0 3.0 4.0Internal production Production starts Sept‐08 3.0 8.0 11.0

Cell supply contracted (MW) 21.9 31.3 58.3 68.5 180.0

Cell supply received (MW) 19.5 11.5 20.8

DelaysDelays in in cellcell suppliessupplies havehave preventedprevented reachingreaching productionproduction targetstargets15

January – September 2008 results

Sales +127% in 9m2008 vs 9m2007 

9m 2008 vs9‐mth 2008 (*) 9‐mth 2007 (*) FY‐07

9m 2008 vs9m 2007

Sales. PV Modules € 000s 172,783 80,009 132,385 116%

Sales Turnkey € 000s 157 817 22 092 77 562 614%Sales. Turnkey € 000s 157,817 22,092 77,562 614%

Sales. Thermal pannels € 000s 42 140 142 n/a

sq.m. 247 712 722

Adjustments € 000s ‐109,377 ‐4,679 ‐23,880 n/a

Total sales € 000s 221,265 97,561 186,209 127%

MW 51.8 21.7 38.3 139%

Sales Sales mixmix shows shows substantialsubstantial growthgrowth in in TurnkeyTurnkey reflectingreflecting thethe drive drive toto complete complete projectsprojects beforebefore endend of of SeptemberSeptember 20082008

(*) Unaudited figures. 9-mth 2008 consolidated data is fully comprable with parent company figures due to negligible impact of WOS“Solar Cell” division has been integrated in “PV Modules” division 16

January – September 2008 results

EBITDA+58% in 9m2008 vs 9m2007EBITDA+58% in 9m2008 vs 9m2007 

9 th 2008 (*) 9 th 2007 (*) FY 079m 2008 vs

9‐mth 2008 (*) 9‐mth 2007 (*) FY‐079m 2007

PV Modules EBITDA € 000s 29,168 18,198 26,976 60%

% sales 16.9% 22.7% 20.4%

Turnkey EBITDA € 000s 24,403 15,314 44,820 59%

% sales 15.5% 69.3% 57.8%

Thermal pannels EBITDA € 000s ‐315 129 ‐100 n/a

% sales n/r 92.1% n/r

Total EBITDA EBITDA € 000s 53,257 33,641 71,696 58%

% sales 24% 34% 39%

EBITDA EBITDA marginmargin in PV Modules in PV Modules divisiondivision stabilisedstabilised aroundaround 20% in 20% in spitespite of of raterate of of utilisationutilisation belowbelow targets. targets. LowerLower EBITDA EBITDA marginsmargins in in TurnkeyTurnkey isis cyclicalcyclical and and isis toto improveimprove in in thethe final final phasephase of of constructionconstruction (Q4 2008)(Q4 2008)

(*) Unaudited figures. 9-mth 2008 consolidated data is fully comprable with parent company figures due to negligible impact of WOS“Solar Cell” division has been integrated in “PV Modules” division 17

January – September 2008 results

Net profit: +48% 9m2008 vs 9m2007

9m 2008 vs9‐mth 2008 (*) 9‐mth 2007 (*) FY‐2007

9m 2008 vs9m 2007

€ 000s PV Th T/Key Adjust Total PV Th T/Key Adjust Total PV Th T/Key Adjust Total Total

Net sales 172,783 42 157,817 ‐109,377 221,265 80,009 140 22,092 ‐4,679 97,561 132,385 142 77,562 ‐23,880 186,209 127%Other income 84 0 0 84 48 10 0 58 200 19 0 219 45%COGS 143 699 357 24 036 168 092 61 859 21 2 099 63 979 105 609 261 8 862 114 732 163%COGS ‐143,699 ‐357 ‐24,036 ‐168,092 ‐61,859 ‐21 ‐2,099 ‐63,979 ‐105,609 ‐261 ‐8,862 ‐114,732 163%Adjustments ‐109,377 ‐4,679 ‐23,880EBITDA 29,168 ‐315 24,403 53,257 18,198 129 15,314 33,641 26,976 ‐100 44,820 71,695 58%

Depreciation ‐1,064 ‐5 ‐100 ‐1,169 ‐305 ‐42 ‐12 ‐359 ‐563 ‐54 0 ‐617 226%EBIT 28,104 ‐320 24,303 52,087 17,893 87 15,302 33,282 26,413 ‐154 44,820 71,078 57%

FINANCIAL RESULT ‐3,678 752 474 ‐589%ORDINARY PROFIT 48,410 34,034 71,552 42%Non‐recurrent items 0 0 0Pre‐tax profit 48,410 34,034 71,552 42%Taxes ‐14,491 ‐11,062 ‐23,151 31%NET PROFIT 33,919 22,972 48,400 48%

FinancialFinancial datadata underunder IRFSIRFS

, , ,

PV: Photovoltaic Modules. Th: Thermal pannels. T/Key: Turnkey projects. Adjust: Internal sales between divisions

(*) Unaudited figures. 9-mth 2008 consolidated data is fully comprable with parent company figures due to negligible impact of WOS“Solar Cell” division has been integrated in “PV Modules” division

FinancialFinancial data data underunder IRFSIRFS

18

January – September 2008 results€ 000s Sep 08 (*) Jun 08 (*) Mar 08 (*) Dec 07 Sep 07 (*) Jun 07 (*)

Fixed assets:‐ Net tangible fixed assets 66,925 64,971 55,972 32,743 22,311 16,559‐ Intangibles 260 246 21 17 18 19‐ Financial investments 94 34 34 34 33 24Deferred expenses 3,854 7,869 7,201 5,689 3,264 35Current assets:‐ Stocks 50 320 21 512 16 750 34 786 27 667 23 974 Stocks 50,320 21,512 16,750 34,786 27,667 23,974‐ Debtors 247,986 174,248 139,976 178,002 88,238 36,013‐ Other 1,813 957 1,224 550 165 320‐ Cash 71,710 179,108 201,554 153,163 179,250 218,803

TOTAL ASSETS 442 962 448 945 422 732 404 984 320 946 295 747TOTAL ASSETS 442,962 448,945 422,732 404,984 320,946 295,747

Shareholder's funds 290,350 275,090 265,669 261,196 240,818 223,877Deferred income 4,852 4,866 5,158 4,870 5,530 4,928Deferred taxes 1,679 1,187 1,093 1,171 87 240Long term debt 30,409 30,765 31,051 14,581 15,181 15,173Current liabilities:‐ Short term debt 59,389 61,117 46,701 43,916 17,942 21,811‐ Creditors 44,414 37,670 33,589 55,895 30,188 22,725‐ Other 11,868 38,250 39,471 23,355 11,200 6,993

FinancialFinancial data data underunder IRFSIRFS(*) Unaudited figures.

Ot e ,868 38, 50 39, 3,355 , 00 6,993

TOTAL LIABILITIES & NET WORTH 442,962 448,945 422,732 404,984 320,946 295,747

( ) g9-mth 2008 consolidated data is fully comprable with parent company figures due to negligible impact of WOS“Solar Cell” division has been integrated in “PV Modules” division

19

January – September 2008 results€ 000s 6‐mth to Jun 08 (*) 12‐mth to Dec 07 6‐mth to Jun 07 (*)

Cash generated from operations 36,989 ‐67,257 ‐5,053Interest paid ‐6,510 ‐2,905 ‐571Income tax paid ‐4 233 ‐9 800 ‐55Income tax paid ‐4,233 ‐9,800 ‐55NET CASH FROM OPERATIONS 26,246 ‐79,962 ‐5,679

Acquisition fixed assets ‐32,806 ‐26,060 ‐9,543Disposal fixed assets 0 77 186Acquisition intangibles ‐276 ‐12 0Deposits constituted ‐19 ‐522 ‐109Deposits liquidated 508 600 600Repayments on loans 0 591 0Interest received 3,474 4,378 89NET CASH FROM INVESTMENT ACTIVITIES ‐29,119 ‐20,947 ‐8,777

Income shares issued 0 210,240 211,410Dividends paid 0 ‐2,410 ‐2,410Own stock held ‐8,366 0 0Proceeds banking debt 33,657 34,292 20,066Repayments banking debt 315 739 35Repayments banking debt ‐315 ‐739 ‐35Net income from current accounts 0 8,500 0Subsidies received 3,864 0 0Financial leases repaid ‐22 ‐38 0NET CASH FROM FINANCING ACTIVITIES 28,818 249,845 229,031

FinancialFinancial datadata underunder IRFSIRFS

Net increase in cash 25,945 148,935 214,575Cash at BOP 153,163 4,228 4,228Cash at EOP 179,108 153,163 218,803

FinancialFinancial data data underunder IRFSIRFS(*) Unaudited figures.

H1 2008 consolidated data is fully comprable with parent company figures due to negligible impact of WOS20

Puertollano factoryL N III

Office block Solar cell factory

La Nava III Greenfield

Solaria

Puertollano

Turnkey plant (1 MW) Warehouse

PuertollanoPV Module factories

21

Solaria is located in La Nava II Industrial site, 2 Km from Puertollano

Fuenmayor factoryFactory site

SolariaFuenmayor

Solaria

Fuenmayor

22

Solaria is located in the outskirts of Fuenmayor, 12 Km from Logroño

Disclaimer

This presentation does not constitute or form part of any offer for sale or solicitation of any offer to by any securities nor shall it or any part of itform the basis or be relied on in connection with any contract or commitment to purchase shares.

The information contained in this document has been provided by Solaria Energía y Medio Ambiente, S.A.

Thi t ti i l d f d l ki t t t All t t t th th t t t f hi t i l f t i l d d i thi t tiThis presentation includes forward-looking statements. All statements other than statements of historical facts included in this presentation,including, without limitation, those regarding our financial position, business strategy, management plans and objectives for future operations areforward-looking statements. These forward-looking statements involve known and unknown risks, uncertainties and other factors, which maycause our actual results, performance or achievements, or industry results, to be materially different from those expressed or implied by theseforward-looking statements. These forward-looking statements are based on numerous assumptions regarding our present and future business

fstrategies and the environment in which we expect to operate in the future.

Forward-looking statements speak only as of the date of this presentation and we expressly disclaim any obligation or undertaking to release anyupdate of or revisions to any forward-looking statements in this presentation, for any change in our expectations, or any change in events,conditions or circumstances on which these forward-looking statements are based or otherwise.co d t o s o c cu sta ces o c t ese o a d oo g state e ts a e based o ot e se

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