consolidated interim report … · consolidated interim report solarworld ag 2. ......

WKN 510840ISIN DE0005108401

– Sales and earnings at record levels

– Establishment of US sales subsidiary

– Further expansion of production

CONSOLIDATED INTERIM REPORTSOLARWORLD AG

CONSOLIDATED INTERIM REPORTSOLARWORLD AG

2. QUARTER 2005

SolarWorld-Group – Comparison of Quarters

SolarWorld AG ISIN (International Securities Identification Number) DE0005108401//

WKN (Wertpapier-Kenn-Nummer, securities identification number) 510840

Regulated market/Prime standard

CORPORATE INDICATORS MESSAGE AT A GLANCE I . INFORMATION ON THE SHARE I I . GENERAL ECONOMIC DEVELOPMENT

Consolidated income statement – Highlights by quarter

2004Amounts stated in tB Q3 Q4 Q1 Q2

(Last year’s reference period)

2004

Highlights by quarters

Q32004

Q4 Q1 Q2(Last year’s

reference period)

First Half 2004 (Last year’s

reference period)

* key date at the end of the quarter** incl. trainees

Amounts stated in tB

2004Q2 First Half 2005

Q2

Sales 53,370 55,764 57,908 78,712 55,411 136,620 90,799

EBITDA 13,553 17,599 17,733 22,550 11,256 40,283 18,195

EBIT 9,558 13,344 13,373 18,020 7,001 31,393 9,989

Group profit 5,307 7,774 7,431 11,064 3,559 18,495 5,033

Capital stock* 5.775 Mio. 5.775 Mio. 6.350 Mio. 12.700 Mio. 5.775 Mio. 12.700 Mio. 5.775 Mio.shares/ shares/ shares/ shares/ shares/ shares/ shares/

imputed par imputed par imputed par imputed par imputed par imputed par imputed parvalue 1 u value 1 u value 1 u value 1 u value 1 u value 1 u value 1 u

Investments 12.6 m u 17.0 m u 14.7 m u 10.5 m u 1.3 m u 25.2 m u 2.7 m u

Equity capital 116,864 124,488 174,964 183,549 111,507 183,549 111,507

Equity ratio 44 % 45 % 50 % 52 % 41 % 52 % 41 %

Total assets 262,981 276,289 351,119 352,938 272,791 352,938 272,791

No. of employees** 591 616 649 684 559 684 559

2005

Sales revenues 53,370 55,764 57,908 78,712 55,411Change in inventory - 6,189 - 2,995 9,319 275 - 3,015of finished goodsOther operating 1,974 4,205 2,686 3,867 2,611incomeCost of Materials - 21,704 - 23,003 - 37,809 -44,478 - 30,591Staff costs - 9,330 - 8,825 - 8,265 -9,255 - 6,981Depreciation/ - 3,995 - 4,255 - 4,360 -4,430 - 4,255amortizationOther operating - 4,568 - 7,547 - 6,106 -6,571 - 6,179expensesOperating Result 9,558 13,344 13,373 18,020 7,001Net financial income - 1,100 - 765 - 1,400 -1,096 - 1,323Earnings before taxes on income 8,458 12,579 11,973 16,924 5,678Taxes on income - 3,151 - 4,805 - 4,542 -5,860 - 2,119Group profit 5,307 7,774 7,431 11,064 3,559

2005

Renewable energies point the way ahead. Theyhave an enormous potential both in terms ofthe economy and ecology, employment andclimate protection. Germany can be proud ofthe commitment shown to date in tapping thispotential; we are currently at the top of theworld league. This is a success story which hasto continue, not least in the interest of futuregenerations.

Many people in this country are strongly awareof the importance of non-depletable sources ofenergy. Surveys have shown time and again thatsolar power meets with broad-based approval.

In the economic arena, too, it has long since beenrealized that investments in clean energies areimportant and sustainable for economic reasons.Hence, Münchener Allianz, Germany’s largestfinancial services provider, recently announcedits intention to invest around half a billion eurosin renewable energies. This decision was promp-ted by the results of a survey conducted by thegroup’s insurance company in order to quantifythe damage caused by climate change. Accordingto that survey, the insurance sector will face asubstantial cost increase year after year. Thesurvey shows that the effects of climate changehave already turned into reality.

In addition, an expansion of sustainable energygeneration will reduce our dependency onincreasingly expensive fossil fuels supplied bycrisis regions. The economic advantage of renewable energies is reemphasized every timeprices reach a new all-time high at the interna-tional oil markets. Nuclear energy, on the otherhand, will always carry that residual risk.

The expansion of solar energy is the key busi-ness content of our group. In cooperation with

Message to shareholders and business associates

Dipl.-Ing. Frank H. Asbeck,Chairman and CEO of SolarWorld AG

III. BUSINESS DEVELOPMENT GROUP IV. SUPPLEMENTARY REPORT V. OUTLOOK VI. RISKS VII. INTERIM ACCOUNTS VIII. FINANCIAL CALENDAR

our partners, e.g. those in the banking industry,we initiate new and comprehensive invest-ments to boost the technological and economicdevelopment of the solar power sector. We canrely on our shareholders in this respect. Theyaccompany us on this path and have beenrewarded by the very good performance of ourshare in the capital market over the last twoyears. The photovoltaic market is growing steadily. In the second quarter, the output of allsolar power plants installed in Germany excee-ded the 1,000 megawatt threshold – and thusthe power output of a German medium-sizednuclear power plant.

Renewable energies are uniquely placed torepresent clean, sustainable energy generationgeared to the future. Against the backdrop ofoverwhelming popular support, every politicalparty aiming to assume power in Germany willhave to clearly explain its position in terms ofsolar power as an option for the future prior tothe elections, and will subsequently be gaugedby that yardstick. After all, reason demandsthat the internationally recognized Germanway to establish renewable energies with theirpotential for climate protection, the economyand employment will have to remain part andparcel of any reasonable federal policy in thelong run.

Sincerely yours,

Dipl.-Ing. Frank H. AsbeckChairman and CEO of SolarWorld AG

3

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At a glance: 2. quarter 2005

� Record sales and earnings – consolidated net profit for the first half of 2005 matches consoli-dated net profit for the entire fiscal year 2004: With an increase in consolidated net profit to 18.5(first half 2004: 5.0) million EUR and an increase in consolidated sales to 136.6 (first half 2004:90.8) million EUR, last year’s positive trend continued, in line with a consistent cost management.68 new jobs were created in the period under review.

� Establishment of a separate distribution subsidiary in the US – internationalization of tradingactivities: With the formation of a distribution branch in California, the group initiates the expan-sion of its international business in North America.

� Key for cost-effective raw material supplies for the future – securing the group’s expansionplans: Joint Solar Silicon GmbH & Co KG – one of the group’s four strategic raw material pillars –launches the crucial test phase with its first prototype plant for the generation of solar-grade silicon.Planned annual output by 2007: 800 tons of silicon. At the same time, the group secures its long-term procurement strategy by means of a 10-year framework agreement with silicon manufacturerWacker GmbH.

� Continuation of expansion course – new production site with self-generated efficient TCVPtechnology* for crystallization: With the commissioning of its largest ever production site at theFreiberg location, the group will expand its crystallization capacity by 40 MW to 160 MW in thecurrent fiscal year. A further significant expansion of crystallization operations will be possible ifadditional furnaces are used.

� Political presence at the Freiberg location – increase in group headcount meets with positiveresponse: Saxony state premier Georg Milbradt (CDU), Saxony state secretary for trade and industryand labour affairs Thomas Jurk (SPD) and under-secretary of state Christoph Habermann (SPD) visit-ed the SolarWorld Group’s production site. The scheduled increase in capacity and employment bythe end of 2006 underpins the group’s economic significance for Saxony as a location for industry.

� Issuance of bonus shares – doubling in capital stock to 12.7 million euros: Following the resolu-tion by the Annual General Meeting to issue bonus shares at a ratio of 1:1 by converting part of thecapital reserves, the allocation and thus the stock market quotation takes effect as of 20 June 2005.The capital market responds with a positive stock price trend.

� Leap into the top ten TecDAX companies – honoring of development by capital market: Onlysix months after initial quotation in Deutsche Börse AG’s technology index, the SolarWorld stockhas firmly established itself among the top players, representing one of the top ten companies interms of sales and market capitalization.

� Annual General Meeting resolves doubling of dividend – dividend payment continuity for thefifth year in succession: In accordance with the proposal by the Board of Management and theSupervisory Board that shareholders be granted an appropriate participation in the successful busi-ness performance, the AGM held in May resolves payment of a dividend of 0.36 EUR per no-parvalue share.

* Temperature Controlled Volume Process

CORPORATE INDICATORS MESSAGE AT A GLANCE I. INFORMATION ON THE SHARE I I . GENERAL ECONOMIC DEVELOPMENT

5

Information on the share/Annual general meetingI.

Positive market mood continues in the second quarter In the second quarter of 2005, the sentiment inthe international financial markets was verypositive. Stock markets continued to recordupward trends, showing even greater momen-tum than they did in the first quarter. This waspartly attributable to the strong increase in cor-porate profits and rising profit forecasts. How-ever, stock exchanges continued to be affectedby the record levels of crude oil prices: crudeoil prices were heading for 60 $/barrel. Withthe beginning of the summer holiday season, aworldwide increase in demand and scarce refi-nery resources, even the announcement of anincrease in OPEC output volumes did not trig-ger any significant price effect.

In the course of the second quarter, DAXexceeded the threshold of 4,600 points, risingto a new three-year high. The German stockindex of leading shares closed at 4,568 pointsas per 30 June 2005. It rose by 5.5 per cent onits level at the end of the first quarter and by7.6 per cent for the entire year. Leading Euro-pean stocks showed a similar trend.EuroStoxx50 rose to 3,182 points, up 4.1 percent on the first quarter and 7.8 per cent forthe first half of the year.

Shareholders’ interest in technology stocks rosenotably. Compared with the opening quotationof the second quarter on 1 April, TecDAX grewby 4.2 per cent to 549 points – an increase of4.9 per cent for the year as a whole. Germansecond-tier stocks grew most strongly. Hence,MDAX rose by 17.4 per cent to 6,322 points inthe first half of the year, while SDAX grew by20.9 per cent to 3,802 points.

Increasing importance of sustainability Sustainability has continued to gain in impor-tance in the financial markets. Thus, at the endof June financial services provider Allianzannounced its intention to invest 500 millioneuros in renewable energies. According to theinformation provided by the financial servicesgroup itself, this investment project is due toclimate change with its ever-increasing risks forthe insurance sector.

At the end of May 2005, the announcementmade by the federal chancellor to propose newfederal elections to be held in the autumn of2005 resulted in a temporary volatility in shareprice movements in German solar stocks; how-ever, shortly afterwards these share price move-ments came to a halt again. Investors initiallymade a critical assessment of Germany’s futureenergy policy in the event of a change of gov-ernment. However, for reasons related to cli-mate protection and resource conservation,current levels of technological developmentand the employment effect, none of the lead-ing politicians have announced that there willbe any major change in the energy policy.

SolarWorld stocks continue dynamic upward trend As in previous quarters shares from the solarindustry sector are counted among the mostsuccessful stocks in the stock exchanges. In thesecond quarter, the SolarWorld stocks contin-ued their dynamic performance, gaining 49.5per cent as against the opening price as on 1April and closing at a price of 72.50 EUR(including the share price adjustment followingthe allocation of the bonus shares at a ratio of1:1). Since the beginning of the year 2005,SolarWorld stocks have recorded a 118 per centincrease in value.


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Top ten in TecDAXOnly five months after its initial quotation inTecDAX, the SolarWorld share has establisheditself in the top league of the technology shareindex: according to the ranking of DeutscheBörse AG, SolarWorld stocks were one of thetop ten TecDAX stocks both in terms of salesand market capitalization. At the end of thequarter (as per 30 June 2005), SolarWord AGranked seventh (market capitalization) and sec-ond (trading volume).

In terms of the performance of its share, Solar-World AG has outperformed both TecDAX andthe other established stock exchange indicesseveral times over in the past twelve months.

Annual General Meeting – DividendThe Annual General Meeting (AGM) of Solar-World AG was held in Bonn on Wednesday, 25May 2005. No countermotions were submitted.

In accordance with the proposal by the Boardof Management and Supervisory Board of Solar-World AG, the Annual General Meetingresolved that a dividend of 0.36 (previous year:0.18) EUR per share be paid. The Annual Gen-eral Meeting thus confirmed the company’sconsistent dividend policy, which provides fora continuous participation of shareholders inthe company’s profits.

Development on theinternational stock markets:

relative development/percentage rate of increase

Development of the price of the SolarWorld-share – 12 monthsin comparison with DAX, TecDAX and GEX

CORPORATE INDICATORS MESSAGE AT A GLANCE I . INFORMATION ON THE SHARE I I. GENERAL ECONOMIC DEVELOPMENT

FEBJAN APR MAY 30.06.05 JUNE01.07.04 MARAUG SEP OCT NOV DEC

SolarWorld AG + 381.7 %

DAX + 12.5 %TecDAX - 5 %

GEX + 19.9 %

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In addition, the Annual General Meetingapproved the creation of a new authorized cap-ital of 2.1 million EUR by 31 December 2009.The approval of the authorized capital willserve as resolution concerning own funds,enabling the company to swiftly implement acapital measure by 2009 should a correspon-ding situation arise. The Board of Managementis not planning to implement any further capi-tal increase for the rest of the current year.

Moreover, the Annual General Meetingresolved to provide a further authorization toissue convertible bonds and/or warrants and tocreate a contingent capital of up to 6.35 mil-lion EUR.

Bonus shares – capital increase from corporate funds The Annual General Meeting of SolarWorld AGresolved to issue bonus shares at a ratio of 1:1.Following registration of the resolution in thecommercial register, the company’s capitalstock was doubled from 6,350,000 EUR to12,700,000 EUR by means of converting part ofthe capital reserves. As at 31 December 2004,the company’s capital reserves totaled 101.2million EUR.

The new shares were allocated to shareholdersin proportion to their interests in the previouscapital stock so that one new no-par valuebearer share was allocated for every old no-parvalue bearer share. The issuance of 6,350,000new no-par value bearer shares resulted in adoubling of shares to 12,700,000 units.

The shares were allocated to shareholders onthe basis of their holdings of deposited sharesas at the evening of Friday, 17 June 2005. Theissuance of the bonus shares was free of chargefor the shareholders. The new shares will carrydividend rights as of the beginning of the 2005fiscal year, i.e. 1 January 2005, and will be trad-ed under the same ISIN DE0005108401 orWKN 510840, respectively, as the old shares.

Since the company’s IPO in November 1999, itscapital stock has thus increased more thanfourfold.

Road shows – international investor conferencesAs before, the SolarWorld management success-fully presented SolarWorld AG and its sub-sidiaries at road shows and at one-on-onemeetings with international investors and analysts in the second quarter of 2005. Themajority of meetings held in the second quar-ter of 2005 involved investors from the NorthAmerican region.

Capital stock/shareholders’ structure as at 30 June 2005The company’s capital stock currently totals12.7 million EUR, divided into 12.7 million no-par value bearer shares with a nominalvalue of 1 EUR, following a capital increasefrom corporate funds. The new shares wereallocated to the shareholders in proportion totheir shares in the previous capital stock sothat relative interests have not changed.

Following registration of the capital increasefrom corporate funds in the commercial regis-ter in June 2005, interests broke down as fol-lows as at 30 June 2005:

Interest

Asbeck family 27.6 %

DWS Investment GmbH, 7.1 %Subsidiary ofDeutsche Bank AG*

FMR Corp.** 5.4 %

Free float 59.9 %

Total 100.00 %

* Communication by Deutsche Bank AG of 21 Feb. 2005 pursuant to sections 21 ff WpHG (German Securities Trading Act)

** Communication by FMR Corp. of 16 May 2005 pursuant to sections 21 ffWpHG (German Securities Trading Act)


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Overall economy in Germany growing morevigorously than expectedIn the first half of 2005 the German economygrew more vigorously than expected byexperts. The German Institute of EconomicResearch (Deutsches Institut für Wirtschafts-forschung = DIW) is assuming a growth in theGross Domestic Product of 0.9 per cent.According the Federal Statistical Office thegrowth rate in the first quarter amounted to1.0 per cent. The statisticians say that thisincrease is exclusively promoted by the livelyforeign trade. High exports compensated forthe persistently weak internal economy.

Consumer demand was also stifled by the highenergy prices. Crude oil and gasoline againreached new historic record levels in the sec-ond quarter of the year. According to com-ments made by the US energy authority EIAthese prices were the expression of the world-wide record demand for oil.

Electricity prices at the spot market of the Ger-man electricity exchange EEX also skyrocketedmarking new record levels in June.

Industry situation Germany – Solar power station output exceeds the 1,000 MW markAgainst the background of continuouslyincreasing prices for fossil energies and conven-tional electricity the demand for solar powergeneration in Germany again went up in thefirst half of 2005. According to the Solar PowerIndustry Association (UVS) the entire installedsolar power station output in Germany exceededthe 1,000 Megawatt (MW) mark. This meansthat all solar power plants working in Germanyalready exceed the installed output of a medi-um-sized nuclear power station of the size ofBrunsbüttel (800 MW). At the end of 2004 – sothe Federal Association of Solar Power Stations(BSi) says – the installed output was still only

794 MW of electrical power in Germany. Thus,more than 200 MW of solar power have beennewly connected to the national grid in thefirst six months of the year – more than in theentire year 2003 (153 MW).

Spain – very dynamic market thanks to attractive feed-in conditionsWhen looking at Europe it is especially thesolar market in Spain which is conspicuous byits dynamic growth. Against the backdrop of anattractive feed-in compensation the number ofinstallations is rising continuously. Since thespring of 2004 the operators of photovoltaicsystems receive a compensation that is paid forthe entire lifetime of a power plant. Financiallythe feed-in compensation depends on theannually re-calculated reference price for Span-ish power (Tarifa Media de Referencia – TMR).Plants up to an output of 100 kW receive 575per cent of the TMR for the first 25 years – in2005 that amounts to some 42 Cent per kWhof solar power. At the end of the 25 years thesystem continues with 460 per cent until theend of the plant’s lifetime. Unlike in Germanywhere the compensation is paid on the basis ofthe declining balance principle operators caneven expect annual increases of their compen-sation payments. The TMR goes up annually inline with the expected rise in electricity pricesand with it the compensation kinked to it. In2005, for example, the feed-in price is 1.7 percent above the previous year.

For the moment, industry experts say, bureau-cratic obstacles are still preventing a solarboom. The Spanish industry association Asociación de la Industria Fotovoltaica (ASIF)expects, however, that once further harmoniza-tion steps have been taken the market couldgrow to between 200 and 300 MW in one ortwo years time. In 2004 it was still 12 MW. Forthe year 2005 a total of 20 MW is forecast.

General economic developmentII.

CORPORATE INDICATORS MESSAGE AT A GLANCE I . INFORMATION ON THE SHARE II. GENERAL ECONOMIC DEVELOPMENT

9

USA – a market with high growth potentialIn conjunction with new future energy legisla-tion (Energy Bill) in the USA a distinctstrengthening of renewable energies is to beexpected. Individual renewable sources likesolar energy are to be supported as a compensa-tion for the Bush Administration’s energy poli-cy focused on fossil energy.

Numerous federal states, districts and citieshave decided to start their own climate protec-tion activities in response to the absence of aclimate protection policy pursued by the Bushgovernment. These include renewable energies.

An energy policy particularly supportive ofsolar energy is pursued in California. GovernorSchwarzenegger is going for a comprehensiveprogram of installing solar systems in this eco-nomically strong state in order to reduce thedependence on conventional electricity. A 1-million solar roofs program is in an advancedstate of political discussion. Because of its highsolar radiation values California offers excellentconditions for the use of solar technology. Peaktimes of electricity consumption – i.e. the useof air conditioning systems at the time of greatheat – coincide with the high availability of thesun as an energy source.

In the medium term it is safe to assume that ahigh volume market for the use of photovoltaictechnology will establish itself in the USA. Inthe eighties and early nineties of the last centu-ry the USA was the world’s largest market forphotovoltaic systems.

1. Sales and earnings developmentGroup profits in first half match the resultfor the entire year 2004SolarWorld AG has consistently continued theexpansion of the operating business at all levelsof the value chain in the second half of theyear.

From April through June 2005 group profitsrose by more than 200 per cent over the previ-ous year to 11.1 (second quarter 2004: 3.6) mil-lion EUR. In the first half of the year net profitsaccumulated to 18.5 (first half 2004: 5.0) mil-lion EUR.

Group sales also climbed to record levels. In the second quarter they ran to 78.7 (second quarter 2004: 55.4) million EUR – aplus of 42 per cent. From January through June the group’s sales volume increased to 136.6 (first half of 2004: 90.8) million EUR.

The group-wide expansion of the business vol-ume in conjunction with consistent cost man-agement produced an increase in the secondquarter earnings before interest, tax, deprecia-tion and amortization (EBITDA) to 22.6 (sec-ond quarter 2004: 11.3) million EUR and in thefirst half to 40.3 (first half 2004: 18.2) millionEUR. Earnings before interest and tax (EBIT)climbed from April through June to 18.0 (sec-ond quarter 2004: 7.0) million EUR and in thefirst half to 31.4 (first half 2004: 10.0) millionEUR. Consolidated earnings of the SolarWorldGroup before tax (EBT) rose in the second quar-ter 2005 to 16.9 (second quarter 2004: 5.7) mil-lion EUR and in the first half to 28.9 (first half2004: 7.5) million EUR.

Also in balance sheet terms the group againpresented itself in good shape. As one of themajor stability indicators the equity ratioreached 52 per cent as at 30 June 2005. Thereturn on equity for the first six months of

Business development of the groupIII.


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Broadly based procurement strategy – re-processing of secondary raw materialsexpanded on scheduleThe “Solar Material“ division expanded therecycling and re-processing of secondary rawmaterials from the group’s own wafer produc-tion as scheduled in the second half of theyear. The plants for the recovery of solar gradesilicon for use in the crystallization process arebeing fully utilized. The secondary raw materi-als make a notable contribution to the rawmaterials supply in wafer production.

Broadly based procurement strategy – joint venture producing the first volumesIn the joint venture Joint Solar Silicon (JSSI)the group pursues the strategy of establishing atechnologically innovative and economicallypromising procedure for raw material supply.During the period under review the first proto-type for the production of silicon from silanwas installed. The first test runs for the precipi-tation of silicon were successful and confirmedthe expectations of the group. The first quanti-ties of silicon were produced.

Broadly based procurement strategy – recycling making further headway”Solar Material” has further expanded the commercial recycling of solar silicon cells andhas solicited new orders. The chemical processof over-etching used cells at the end of whichas-good-as-new cells are generated is meetingwith increasing interest on the part of cus-tomers and works at a high level of capacityutilization.

The pilot plant for thermal recycling of spentsilicon modules has gathered further operatingexperience which suggests that a commerciallyviable use is possible in principle. The imple-mentation of a nation-wide recycling systemrequires a recovery system organized through-out the industry in order to anticipate any legislative and thus more expensive measures.In the second quarter the group submitted tothe industry a Europe-wide voluntary recoverysystem.


2005 more than doubled to 10 per cent in com-parison with the first half of 2004.

The group has further advanced the interna-tionalization of its solar business. The focus ofthe expanded foreign activities was on Spain asthe second largest market in Europe and on theUSA. In California SolarWorld AG established asubsidiary.

The cooperation with the Chinese companySuntech Power Ltd. for the production underlicense of SolarWorld modules agreed upon inthe first quarter of 2005 has also been successfulmaking a positive sales and earnings contribu-tion to the group.

2. Order situationAt all stages of manufacturing the group contin-ues to enjoy a very good order situation. Theproduction volume of the current year hasalready been sold to customers under contract.For the products of the year 2006 the group haslargely agreed contracts at the trade level. Thismakes for a very good order situation for all thecompanies within the group.

3. Development within the corporate divisions

a) SiliconBroadly based procurement strategy – newlong-term contract with Wacker-Chemie GmbHThe SolarWorld Group meets the need of sup-plying itself with raw materials by way of abroadly based procurement strategy. Thisincludes the cooperation with long-term part-ners in the raw materials industry based onlong-term supply contracts. In the period underreview the group entered into such a contractensuring future raw materials supplies. Thegroup company Deutsche Solar AG made a 10-year master agreement on the supply of solargrade silicon with the silicon manufacturerWacker-Chemie GmbH. The agreement startingin 2007 will run for a period of ten years andwill thus secure an important component of thegroup’s basic supply over the long term.

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The ”Solar Material” division also documents itsrecycling activities in more vigorous public rela-tions activities. The recycling business of thegroup has been operating under a new logo inthe corporate context since the second quarter.

b) WafersRecord volume produced and soldIn the second quarter of 2005 Deutsche SolarAG has produced a new record volume ofmono- and polycrystalline silicon wafersagainst the background of the continuingexpansion. From April through June an outputof 38 MW left the production facilities of thegroup’s wafer subsidiary. Sales were thus some33 per cent higher than in the same quarter in2004. In the first six months of 2005 unit salesclimbed by well over 36 per cent over the firsthalf of 2004 to 73 MW. Money sales in thewafer business increased by more than 50 percent to 76.6 million EUR. Deutsche Solar AGmanaged to pass higher expenditure for rawmaterials onto the market.

New crystallization plant inauguratedIn May 2005 the group inaugurated its so farlargest production facility. The productionbuilding completed at the beginning of theyear accommodates the in-house developedTCVP furnaces (Temperature Controlled Vol-ume Process) for the crystallization of solargrade silicon. The first step was the installationof twelve furnaces by which the crystallizationcapacities of Deutsche Solar AG were increasedby 40 MW to 160 MW. In the second quartersome of the furnaces were put into operation.

The capital expenditure volume for this expan-sion amounts to 24 million EUR. The new pro-duction facility offers space on two levels tosignificantly increase crystallization capacity byadding more furnaces.

Crystallization is the first step to making solarsilicon wafers. In the crystallization furnacessolar silicon is melted at high temperatures andsubsequently cooled down again. The preciselycontrolled cooling process produces crystallized

silicon blocks which in downstream productionsteps are cut into columns and wafers. The coreof the new TCVP technology developed by theSolarWorld Group is a specialized and efficientcooling of the solar silicon from a temperatureof more than 1,400 degrees Centigrade. Thenew hall (DS 202) has a usable space of 5,600square meters distributed over two productionlevels. For the new building some 860 tons ofsteel were used.

Wafer expansion at existing sites completedDeutsche Solar AG increased its capacities inexisting wafer production facilities from 120MW to 160 MW by initiating some very specificoptimization measures. In doing so it accompa-nied and indeed matched the expansion incrystallization as planned.

c) CellsProduction volume above previous yearDeutsche Cell GmbH has been able to furtherincrease the production volume of its cell fac-tory in the second quarter of 2005 over thesame period last years in spite of the ongoingexpansion phase. Unit sales from April throughJune were 8 MW below the previous year sincethe company could still sell considerable quan-tities from its inventories which it had built upin the course of 2003.

The expansion of production capacity from 30to 60 MW was continued. Since individual sup-pliers failed to adhere to agreed completiondates for the expansion of the production lineDeutsche Cell GmbH was not able to put thefull production capacity of 60 MW into servicein the period under review.

As scheduled, Deutsche Cell GmbH expandedits product range by converting to the 6-inchformat.

As a consequence of increased production andcontinued capacity expansion Deutsche CellGmbH significantly improved its result overthe first quarter which was characterized bystart-up costs.


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d) ModulesStart of construction of new module factoryIn the second quarter the SolarWorld Groupstarted the construction of the new module factory at its integrated production location inFreiberg. The production will have a capacity of50 MW by the end of 2006. This will boost themanufacturing potential at the Solar FactoryGmbH subsidiary to 80 MW. Like the first module factory at Freiberg the new plant willalso work on the basis of full automation. Intechnology terms it is the further developmentof the successful production line that has beenin full operation since the end of 2003. Therequired technology was developed by thegroup itself in cooperation with the plant manu-facturer.

Total module sales grow by more than 30 percent to 10.4 MW in second quarterThe SolarWorld Group continued to increaseproduction and shipments from its two modulefactories in Freiberg and Gällivare in the sec-ond quarter. In comparison with the secondquarter of 2004 unit sales of the module facto-ries went up by 33 per cent to 10.5 MW. In thefirst half of the year combined module sales ofthe group ran to 20.4 MW – a plus of morethan 40 per cent over the first half of the previ-ous year.

Capacity expansion on scheduleBoth module factories further promoted theinternal expansion of their capacities in thereporting period. Solar Factory GmbH impro-ved its production potential in the existing factory according to plan by installing newstringers. The stringers are designed to solderthe solar cells to one another. Solar FactoryGmbH produces 200 to 230 Watt modulesusing 6-inch cells.

Gällivare PhotoVoltaic AB (GPV), Sweden, hasupgraded all its machines in the second quarterto increase capacities to 32 MW and has putthis upgrade into operation. The Swedish mod-ule company is responsible within the groupfor the production of modules with 5-inch

cells. In addition, GPV also produces the prod-uct innovation of the group launched in thesecond quarter: a module with a power outputof 140 Watt that is smaller than the Solar Factory product based on 6-inch cells.

GPV strengthens market leadership in ScandinaviaThe GPV modules mainly go into the tradingbusiness of the group. The remainder is market-ed by the company itself in the Scandinavianmarket. In comparison with the first half of2004 GPV has doubled its sales in NorthernEurope in the first half of 2005. The sales vol-ume was in the region of several 100 Kilowatt.This has helped GPV strengthen its marketleadership in Scandinavia.

e) TradingBusiness volume significantly increasedSolarWorld AG has further developed the trad-ing business in the second quarter. Sales fromthe trading activities climbed in the first half of2005 by some 70 per cent in comparison withthe previous year to 78 million EUR. In themonths of April through June a continuouslyincreasing volume could be shipped to cus-tomers. The background to this reliable deliv-ery is the sound planning of the companywhich places customer satisfaction at the focusof its activities. The major guiding principle ofmanagement in this context is to create sus-tainable customer confidence by way of a for-ward-looking and, if necessary, conservativeplanning regarding product availability anddelivery dates.

Sizeable new business concluded for 2006As a result of the company’s broadly-based andsuccessful exhibition presence at the 20th European Photovoltaic Solar Energy Confer-ence and Exhibition in Barcelona in early Juneas well as the INTERSOLAR in Freiburg at theend of June SolarWorld AG has secured somesizeable new orders for the coming fiscal year2006. Also when concluding these businessesthe positive effects of the group’s reliable trading policy became obvious. Customers


13

rewarded the high level of reliability of Solar-World AG by expressing the wish to contractfor increasing volumes.

Systems business strengthened: new inverter,new module, optimized racksSolarWorld AG has further expanded the highmargin systems business. Thus, the group hasbeen offering its own inverter since the secondquarter under the brand name Sunplug®. Thissolar component which converts DC into ACcurrent is made for SolarWorld AG by the Danishcompany Powerlynx – a spin-off of the DanfossGroup, the leading European frequency inverter,in the form of an OEM cooperation. Theinverters have been precisely adjusted to thesophisticated solar equipment of the group. Inthis way SolarWorld AG can take a direct influ-ence on the most ideal technological solutionfor its all-in-one systems.

Furthermore, the construction kit business hasbeen upgraded by the optimization of theracks.

What is more, to broaden its product range thegroup has developed a new module in the com-pact class which it presented for the first timeat INTERSOLAR. The 140-Watt module built byGPV on the basis of the 6-inch cell technologyincreases the choice for installers and fitters.

In its focus on complete solar systems Solar-World AG sees a distinct competitive advantagevis-à-vis the big players in the market. Becausewith the strategy of offering everything from asingle source the company has a USP featurethat is very positively received in the market.

Continued focus on qualityIn the first half of 2005 SolarWorld AG contin-ued to underline its positioning as the qualityleader. That the group met a high level ofacceptance is shown by a market research studycommissioned by the company on the occa-sion of INTERSOLAR. The by far most impor-tant reason that respondents gave for their pur-chasing decision was quality. 95 per cent of

customers said that quality played ”a very greatrole” in their decision to buy a certain product.

Also important to customers according to thestudy was the fact that environmentally com-patible recycling of the modules is assured andno toxic pollutants are involved in the produc-tion process. The group meets the customers’demands for ecological quality by developingan industry-wide recycling concept as well asby focusing on the ”clean” raw material of silicon.

Foreign business expanded – subsidiary inUSA establishedIn the trading business SolarWorld AG consis-tently broadened its foreign activities in thesecond quarter. To prepare for the start of anoperating business in North America the salesoffice and subsidiary SolarWorld California Inc.in San Diego was founded. Two staff memberswere working in the US subsidiary on the duedate of 30 June.

In Spain our business presence was alsostrengthened. To this end the company hashired a Spanish sales expert. The businesses ini-tiated already in the first quarter of 2005 werecontinued. The company has been continuous-ly supplying construction kits and modules toSpain.

4. Research & Development – optimizing raw materials supplyThe group has consistently continued its activi-ties in the areas of Research and Development.In the innovative silicon technology Solar-World AG has taken up trial operations andsuccessfully produced the first quantities ofsolar grade silicon via the joint venture JointSolar Silicon GmbH & Co KG.

Another example of the success of the group’sown R&D is the completion of the projects todevelop extra thin wafers of 240 µm and 210µm. In the process polycrystalline wafers withthe dimensions 156 mm x 156 mm x 240 µm


14

and mono-crystalline wafers with the dimen-sions 125 mm x 125 mm x 210 µm were devel-oped. In comparison with the standard of oneyear ago the thickness of the wafers wasreduced by more than 25 per cent. In thecourse of the second half of the year both for-mats will be included in our production andwill contribute to a further reduction of the sil-icon requirements per wafer. Another researchproject to produce even thinner wafers hasbeen initiated.

All told, the group was working on a total of 14research projects in the area of pre-productionresearch along the entire production chain inthe second quarter.

Expenditure for the entire R&D area in the second quarter amounted to some one millionEUR, while investments in projects and techni-cal facilities ran to about 120,000 EUR.

5. Capital expenditureInvestments in fixed assets added up to 25.2million EUR for the entire group in the secondquarter. Thus the group invested more than 38 million EUR in the first half of the year.

6. Finances and assetsIn the second quarter of 2005 the Annual General Meeting of SolarWorld AG approved acapital increase from corporate funds. By con-verting part of the capital reserves of the company the capital stock was doubled from6,350,000 EUR to 12,700,000 EUR and thetransaction was recorded in the commercialregister on 7 June 2005. As a result of thismeasure the number of stocks of SolarWorld AGhas doubled to 12.7 million units.

The equity ratio as at 30 June 2005 improvedby 2 percentage points over the first quarter of2005 to 52 per cent.

The liquid funds consisting of securities as wellas cash and cash equivalents amounted to 62.2million EUR. Looking at the first half of theyear 2005 the capital and financial situation ofSolarWorld AG could be further strengthened.Thus, through the placement of 575,000 sharesfrom a capital increase the company could register an influx of capital to the tune of 43million EUR. The securities were sold to institu-tional investors at a stock price of 75.00 EURsubject to the exclusion of the subscriptionright.

From the placement of the bearer bond with anannual interest rate of 7 per cent and a maturityof 2 May 2011 issued in 2004 SolarWorld AGreceived proceeds of more than 7.3 millionEUR until 30 June 2005.

7. ProcurementWith its integrated structure the group hedgesagainst the possible fluctuations in the procure-ment of necessary input products. In a forward-looking manner the group has already coveredits raw material needs for wafer production. Inmodule production the procurement situationhas been put on a broader base through agree-ments with partners in the cell industry. Thetrading segment also expands its procurementchannels by way of agreements with externalpartners. The agreement with the Chinese Sun-tech Power company on the production underlicense of modules from SolarWorld inputproducts also contributed to putting the supplysituation on a sound footing. The supply of allcomponents for the construction kit businesshas also been secured by the group while thesupply of inverters has been tied more closelyto the group’s own structures through theplacement of an OEM order.


15

SolarWorld provides equipment for Ger-many’s largest tracking solar power station

Visit by Dr. Guido Westerwelle at the pro-duction location

Simultaneously with the visit by the FDP chair-man Dr. Guido Westerwelle in early August2005 at the Freiberg production location theground breaking took place for Germany’slargest tracking solar power station the techni-cal equipment for which will be supplied bythe SolarWorld Group. The core of this modern”tracking“ technology is that a solar plant ismade to track the position of the sun as aresult of which the power yield can beincreased by 30 per cent in comparison withconventional plants. The 600 Kilowatt tracking

plant will be designed in the form of anemployee participation program: Financial par-ticipation offers group employees the possibili-ty of directly profiting from the earnings of oneof the technically most advanced solar powerstations.

Share of FMR Corp. voting rights increasedfrom 5.4 to 9.96 per cent

As communicated in the information receivedon 3 August 2005 pursuant to §§ 21ff WpHG(German securities trading act) the share ofvoting rights held by FMR Corp. increased to9.96 per cent after the end of the reportingperiod. Thus, the free float now amounts tosome 55 per cent.


8. Human ResourcesThe expansion of the business activities of theSolarWorld Group again caused a large numberof new people being recruited in the secondquarter. In the first six months of 2005 thecompany gained 68 new employees. All told,684 women and men were working for the

group on 30 June 2005. In the last 12 monthsthe company has thus created 125 new jobs.

There were no personnel changes on the Man-agement and Supervisory Boards in the courseof the second quarter 2005.

As at 30 June 2004Change over

comparable due date of previous year +/-

SolarWorld AG, Bonn 51 50 +1

Deutsche Solar AG, Freiberg 459 371 +88

Deutsche Cell GmbH, Freiberg 65 59 +6

Solar Factory GmbH, Freiberg 51 36 +15

GPV, Sweden 58 43 +15

Total * 684 559 +125

As at 30 June 2005

* incl. trainees

Supplementary reportIV.

16

General background conditionsOverall economy

Moderate growth of the overall economyThe leading economic institutes are expectingsome moderate growth for the full year of 2005which like before will be supported by theexport business. A significant stimulation ofthe consumer climate continues to be doubtful.Consumer spending is also dampened in themedium term by high energy prices. Accordingto expert opinions a decline of the high pricesat the international crude oil markets is hardlyon the cards in 2005. As far as electricity andgas prices are concerned there is very little tosuggest that their price situation will relaxeither. The Institute for Economic Research(Institut für Wirtschaftsforschung = IfW) at theUniversity of Kiel expects a growth rate of 0.7per cent in the GDP in Germany for the fullyear. In the Euro region the scientists expect agrowth rate of 1.2 per cent. The most vigorousgrowth rate is still displayed by the economy inthe USA. The IfW sees the GDP there growingby 3.4 per cent for the full year.

The solar industry

Solar industry continuing expansion – sensible government policy also to beexpected in futureThe German solar industry will encounter ahigh demand in the second half of 2005 whichwill exceed the supply. For the entire year theBSi expects an increase of more than 400 MW –a record volume for the German photovoltaicmarket.

In addition it is safe to assume that the solarmarket will continue to develop positively evenafter a possible change of government after theelections. In the event of the current opposi-tion parties in the German parliament beingelected into government a market decline is

not to be expected in the short term. Leadingpoliticians of the CDU have announced in therun-up to the elections that the successful lawon renewable energies (Erneuerbare-Energien-Gesetz = EEG) will not be amended until 2007.In that year a routine review of the feed-incompensation will be due anyway according to§ 20 EEG. Unscheduled adjustments wouldinvolve considerable legislative efforts andwould in addition meet with very little agree-ment on the part of the general populationwho have always commented positively onrenewable energies in surveys and explicitlywelcome their public funding. The CDU alsopaid tribute to the positive effects that theclean energy technologies have on the creationof qualified jobs in the domestic market. Onthis issue one should be able to expect aresponsible government policy in the futureirrespective of the political majorities of theday. In the past the CDU had always supportedthe expansion of renewable energies, be it dur-ing the introduction of the first law on thefeed-in of renewable energy into the public gridin the nineties, be it the approval of the pre-liminary laws on photovoltaic energy in 2003.Some CDU-governed Federal States also pushedahead the development of solar energy in thepast. This is shown, for example, by the establishment of new solar centers in the newFederal States (Saxony, Saxony-Anhalt andThuringia). Yet, it is necessary for the CDU tomake clear before the elections how they pro-pose to design the funding of solar energy inthe event of their election victory. The popula-tion has a right to know this.

In addition to Germany other photovoltaicmarkets will also show a robust development.Experts expect, for example, that in 2005 Spainwill see a solar growth of more than 60 percent to 20 MW. In the USA a significantupswing can also be expected. However, thefactor limiting growth in all markets is the rela-tive scarcity of the raw material silicon.

Outlook on the current fiscal year – General background conditionsV.


17

The company

Consistent continuation of the group-widecourse of expansionSolarWorld AG will again continue its course ofexpansion in all parts of the value chain in thesecond quarter. The group will thus have newcapacities operationally available in the secondhalf. In addition, the company will initiate further expansion projects. Due to its integra-tion along the entire value chain the companyis in a position to clearly outperform the over-all market in terms of growth. The foreign busi-ness will also pick up speed in the second halfof the year.

a) SiliconThe question of raw materials supply will againbe at the focus in the second half of 2005. Theexpansion of re-processing and internal recy-cling is due in order to accompany the growthof Deutsche Solar AG. The topic of ”Recyclingin the Solar Industry” will also be consistentlypursued by the ”Solar Material” division. Theobject is the establishment of an efficient col-lection and re-utilization system for the entireindustry so that an environmentally compati-ble solution can be offered to deal with theexpected volume of solar recycling material.

For the technological further development ofthe process of precipitating silicon from silanthe first pilot reactor will go into service in thethird quarter – another step towards buildingup an independent silicon production.

b) WafersDeutsche Solar AG will further push ahead sili-con wafer production. In the process the com-pany will be able to make full use for the firsttime of the new capacities in crystallizationand in the existing wafer factory. Productionand sales will therefore continue to go up. Forthe full year the wafer subsidiary expects a total

annual production volume of 150 MW – a plusof 25 per cent over 2004. With the start of con-struction of the second wafer factory DeutscheSolar AG will initiate the next growth phase inthe second half of the year.

c) CellsDeutsche Cell will complete the expansion ofcapacity to 60 MW in the second half of theyear and will subsequently be able to increasethe manufacturing volume of its high qualitysolar cells significantly fully utilizing its pro-duction potential. The operating result of thecell subsidiary will increase substantiallyagainst this background. The plans for the fur-ther expansion of capacities of the solar cellproducer will be continued as scheduled.

d) ModulesSolar Factory GmbH will probably complete thebuilding for its second module factory in thesecond half of 2005. Until the end of 2006 newproduction capacities of 50 MW will be createdthere. Existing production will also be opti-mized and expanded. A new laminator willcontribute to further increasing capacities.

At the Swedish subsidiary Gällivare PhotoVoltaicAB (GPV) the new capacities will be available inthe second half of 2005. The module subsidiaryexpects a production increase of 50 per centover 2004.

e) TradingThe trading business will continue to developvery dynamically in the second half of the year.The volumes expected in 2005 have been com-pletely contracted for and will be shipped tocustomers just in time. The company will con-tinue the dialog with customers for new busi-nesses in 2006.

The foreign business will also continue to grow.The second half of the year will see both theestablishment of the new Spanish subsidiary


Risks of future developmentsVI.

In the course of the second quarter of 2005 nosignificant changes occurred in the risksdescribed in detail in the 2004 Annual Reportunder the heading ”Risk Report”.

18

and the start of the operational business in theUSA.

All in all, sales will clearly exceed the level ofthe previous year. SolarWorld AG will thusagain be able to grow more vigorously than themarket.

Outlook on the current fiscal yearCorporate situation

Corporate situation – Outlook 2005: forecast sure to be reachedAgainst the background of achievements so farthe Management Board of SolarWorld AGshows every confidence of easily attaining theforecast for the full year. In comparison the Fis-cal Year 2004 sales and earnings will each beincreased by 40 per cent. Group sales will thusgo up to more than 280 million EUR and netprofits to more than 25 million EUR. Thismeans, the group will clearly outperform theoverall market.


Consolidated Interim Report of the SolarWorld AGVII.

Consolidated income statement for he First Half 2005

1.1.-30.6.2005 1.1.-30.6.2004t E t E

1. Sales revenue 136,620 90,799 2. Change in inventory of finished goods 9,594 -5,4743. Other operating income 6,553 4,4374. Cost of materials -82,287 -48,2985. Staff costs -17,520 -12,6786. Depreciation and amortization -8,890 -8,2067. Other operating expenses -12,677 -10,591

Operating result 31,393 9,989

8. Net financial income -2,496 -2,491Profit before tax from ordinary activities 28,897 7,498

9. Taxes on income -10,402 -2,465

10. Group net profit 18,495 5,033

Earnings per share

a) Net profit (in t i) 18,495 5,033

b) Weighted average number of sharesin circulation (in 1,000) 7,355 5,775

c) Earnings per share (in e) 2.51 0.87

19



2020

Consolidated income statement for 2. Quarter

1.4.-30.6.2005 1.4.-30.6.2004t E t E

1. Sales revenue 78,712 55,411 2. Change in inventory of finished goods 275 -3,0153. Other operating income 3,867 2,6114. Cost of materials -44,478 -30,5915. Staff costs -9,255 -6,9816. Depreciation and amortization -4,530 -4,2557. Other operating expenses -6,571 -6,179

Operating result 18,020 7,001

8. Net financial income -1,096 -1,323Profit before tax from ordinary activities 16,924 5,678

9. Taxes on income -5,860 -2,119

10. Group net profit 11,064 3,559

Earnings per share

a) Net profit (in t i) 11,064 3,559

b) Weighted average number of sharesin circulation (in 1,000) 8,819 5,775

c) Earnings per share (in e) 1.25 0.62

21

Consolidated balance sheetas of 30June 2005

III.BUSIN

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VI.RISKS VII.INTERIM

ACCOU

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VIII.FINAN

CIAL CALENDAR

ASSETS 30.06.2005 31.12.2004tE tE

A. Noncurrent assets 200,399 184,955

I. Intangible assets 34,817 34,845II. Property, plant and equipment 162,112 145,786III. Financial assets carried at equity 1,799 607IV. Deferred taxes 1,671 3,717

B. Current assets 152,539 91,334

I. Inventories 60,726 46,746II. Trade accounts receivable 25,192 12,957III. Tax receivables 661 505IV. Other receivables and assets 3,307 3,600V. Marketable securities 5,219 0VI. Liquid funds 56,996 27,036VII. Prepaid expenses 438 490

352,938 276,289

LIABILITIES 30.06.2005 31.12.2004tE tE

A. Shareholders´ Equity 183,549 124,488

I. Subscribed capital 12,700 5,775II. Capital reserve 136,792 100,592III. Translation reserve -306 -33IV. Accumulated profit 34,363 18,154

B. Noncurrent liabilities 96,546 83,285

I. Noncurrent borrowings 37,637 41,737II. Investment grants charged to

subsequent accounting year 47,385 33,725III. Other noncurrent liabilities 4,650 0IV. Other noncurrent provisions 0 200V. Deferred taxes 6,874 7,623

C. Current liabilities 72,843 68,516

I. Shortterm borrowings 31,791 25,326II. Trade accounts payable 13,819 14,289III. Tax payables 7,824 8,148IV. Current provisions 7,780 11,634V. Deferred income 91 202VI. Other current liabilities 11,538 8,917

352,938 276,289

22

1.1.-30.6.2005 1.1.-30.6.2004t E t E

Net profit before taxes 28,897 7,498+ Depreciation and amortization 8,890 8,060+ Net interest income 2,218 2,332+ Result from valuation at equity 278 159

+/- Loss/income on disposal of nuncurrent assets 5 0+ Proceeds from investment grants 16,591 3,965- Release of special items for investment grants -2,915 -2,263

= Subtotal 53,964 19,751

-/+ Increase/decrease in inventories -13,980 11,252-/+ Increase/decrease in other Net Working Capital -14,490 -6,129

= Cashflow generated from operations 25,494 24,874

+/- Taxes reimbursed/paid -10,272 2,508

= Cashflow from operating activities 15,222 27,382

- Cash outflow for investments in noncurrent assets -25,238 -3,267+ Proceeds from the divestment of noncurrent assets 29 62

= Cashflow from investment activities -25,209 -3,205

+/- Borrowing/repayments of financial credits -6,531 -12,319- Interest paid -2,466 -1,497+ Proceeds from addition to equity 43,125 0- Disbursements due to dividends distributions -2,286 -1,040

= Cashflow from financing activities 31,842 -14,856

Net change in cash and cash equivalents 21,855 9,321+/- Effects of exchange rate movements 3 -7+ Cash and cash equivalents at start of period 26,902 11,324

= Cash and cash equivalents at end of period 48,760 20,638

Consolidated cash flow statement for the First Half 2005


23

Consolidated statement of changes in noncurrent assets (in t x )

Subscribed Capital Translation Accumulated Totalcapital reserve reserve results

Balance as at 31.12.2003 5,775 100,592 97 1,079 107,543Differences fromcurrency translation -29 -29Group profit 5,033 5,033Dividends paid -1,040 -1,040

Balance as at 30.06.2004 5,775 100,592 68 5,072 111,507

Balance as at 31.12.2004 5,775 100,592 -33 18,154 124,488

Issue of subscribed capital 6,925 6,925

Agio 36,200 36,200

Differences fromcurrency translation -273 -273Group profit 18,495 18,495Dividends paid -2,286 -2,286

Balance as at 30.06.2005 12,700 136,792 -306 34,363 183,549


24

Notes to the consolidated interim statement

1. Reporting in line with the InternationalFinancial Reporting Standards (IFRS)According to Article 4 of Regulation (EU) No.1606/2002 of the European Parliament and theCouncil of 19 July 2002 relating to the applica-tion of international accounting standardsSolarWorld AG is required to apply the interna-tional accounting standards adopted pursuantto Articles 2, 3 and 6 of the above-mentionedregulation. Accordingly, this interim report forthe period ending 30 June 2005 was prepared inline with IAS 34. The present consolidatedinterim accounts have not been subjected to anaudit.

2. Accounting, valuation and reporting methodsIn drawing up the interim accounts and prepar-ing the comparative figures for the previousyear the same consolidation principles as wellas accounting and valuation methods as usedfor the 2004 consolidated accounts wereemployed as a matter of principle. A detaileddescription of these methods is contained inthe annex to the 2004 Annual Report. This canalso be downloaded from the Internet underwww.solarworld.de.

For the first time the sales revenues amountingto 1,532,000 EUR include sales based on theapplication of the Percentage of Completionmethod in line with IAS 11. By the same tokenthe trade receivables carried include such receiv-ables as were determined by the use of the samemethod. A partial profit of 190,000 was real-ized.

The previous year’s method of reporting otheroperating expenditure and material expenseswas adjusted to the form of reporting adoptedin the consolidated accounts for Fiscal Year2004.

3. Group of consolidated companiesIn addition to SolarWorld AG this consolidatedinterim report covers the following subsidiaries:

• Gällivare PhotoVoltaic AB, Gällivare, Sweden,

• Deutsche Solar AG, Freiberg/ Saxony

• Solar Factory GmbH, Freiberg/ Saxony

• Deutsche Cell GmbH, Freiberg/ Saxony

• SolarWorld California Inc, San Diego/USA (CA)

The stake held by SolarWorld AG in each caseamounted to 100 % (previous year: 100 %) onthe due date.

4. Important post reporting period developmentsThere were no developments of special impor-tance after 30 June 2005.


25

Information on business segments for the First Half 2005(all amounts stated in million euros)

Wafer Cell Module Trade Eliminations Consolidated

SalesExternal sales 57 0 1 79Intersegment sales 20 21 51 0 -92Total sales 77 21 52 79 -92 137

ResultSegment result 22 0 3 7 32Unallocated income 0Unallocated expenses -1Earnings before interest a. tax (EBIT) 31

Interest paid -3Interest received 1Income taxes -11Net profit for the period 18

Information on business segments for the First Half 2005(all amounts stated in million euros)

Wafer Cell Module Trade Eliminations Consolidated

SalesExternal sales 37 6 1 47Intersegment sales 14 24 37 0 -75Total sales 51 30 38 47 -75 91

ResultSegment result 4 4 2 1 11Unallocated income 0Unallocated expenses -1Earnings before interest a. tax (EBIT) 10

Interest paid -3Interest received 0Income taxes -2Net profit for the period 5



26

12. August 2005 Consolidated Interim Report SolarWorld AG 2nd Quarter 2005on SolarWorld Homepage

22. August 2005 Consolidated Interim Report SolarWorld AG 2nd Quarter 2005(01.01. - 30.06.05) as print version

14. November 2005 Consolidated Interim Report SolarWorld AG 3rd Quarter 2005on SolarWorld Homepage

24. November 2005 Consolidated Interim Report SolarWorld AG 3rd Quarter 2005(01.01. - 30.09.05) as print version

Financial calendar 2005 – april to decemberVIII.

The 2004 Annual Report was published on 17 March 2005. On the occasion of the publication of the annual financial state-ments the annual business press conference and the analysts´conference took place in Bonn.

On 13 May 2005 the consolidated interim report of SolarWorld AG for the first quarter of 2005 was published.

The Annual General Meeting of SolarWorld AG took place on 25 May 2005 at the International Congress Center Bundeshaus,”Wasserwerk” in Bonn.

The Annual Report as well as the quarterly reports can be downloaded as pdf files from the Internet under www.solarworld.deor ordered directly from the company´s Investor Relations Department.


Published by: SolarWorld AG, Kurt-Schumacher-Straße 12-14, 53113 Bonn/ GermanyContact: Investor Relations Department tel.: +49-228-55920-470Internet: www.solarworld.deE-mail: (Stocks) [email protected]

(Products) [email protected]

The full version of the present consolidated interim report for the 2. Quarter of 2005 ending on 30 June 2005 is also availablein German. Both documents can be downloaded from the Internet under www.solarworld.de as pdf files or ordered directlyfrom SolarWorld AG, Investor Relations Department, Kurt-Schumacher-Straße 12-14, 53113 Bonn, tel. +49-228-55920-470;fax: +49-228-55920-8814 or via e-mail under: [email protected].

SolarWorld AGKurt-Schumacher-Straße 12-14, D-53113 BonnTel.: +49-228-55920-0, Fax: [email protected]

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