profi l our passion is to create maximum effi ciency along ... · impressum sonstiges...

centrotherm photovoltaics AGJohannes-Schmid-Strasse 889143 BlaubeurenGermanyPhone: +49 (0) 7344 918-0Telefax: +49 (0) 7344 [email protected]

Power. Passion. Performance.

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Profi l centrotherm photovoltaics Annual Report 2011

Turnkey production lines and

single equipment items

These systems and equipment items allow customers to

produce silicon, ingots and bricks, crystalline solar cells

and modules.

Our passion is to create maximum

effi ciency along the entire solar value

creation chain. With our technologies

and products – worldwide.and products – worldwide.

c.FIRE

The latest generation of our c.FIRE furnace wins the

iF product design award 2012.

Annual Report 2011

Impressum Sonstiges Geschäftsbericht 2011 centrotherm photovoltaics

Key Figures

centrotherm photovoltaics Geschäftsbericht 2011 Kennzahlen

in TEUR 2009 2010 2011

Revenu 509,141 624,169 698,530

Total operating performance 536,049 681,167 756,975

EBITDA 58,604 101,301 10,206

EBITDA-margin in % 1, 2 11.5 16.2 1.5

EBT 37,199 75,363 – 19,801

EBT-margin in % 1, 2 7.3 12.1 – 2.8

EBIT 40,097 74,302 – 23,756

EBT-margin in % 1, 2 7.9 11.9 – 3.4

Consolidated net income 28,544 51,141 – 15,884

Earnings per share in EUR 1.35 2.42 – 0.75

Weighted average number of shares 21,162 21,162 21,162

Total expenses R & D 28,405 42,421 47,486

Capex 34,742 21,327 66,693

ROCE in % 2 16.6 28.0 – 5.0

Operating cash flow 49,723 69,445 – 68,158

Number of employees as of the reporting date 1,131 1,448 1,928

Order intake 590,279 1,049,754 423,370

Total assets 740,254 805,649 890,738

Equity 344,442 396,356 366,085

Equity ratio in % 2 46.5 49.2 41.1

Order book 590,279 843,807 423,023

1 Margins referring to revenues.

2 Changes in percentage points.

Key figures for centrotherm photovoltaics Group

centrotherm photovoltaics Geschäftsbericht 2011 Konzernüberblick

Group overview

Revenue by products

Other revenue 4,752

Consulting & Engineering 7,310

Service & replacement parts 32,173

Turnkey production lines 97,416

in TEUR Revenue EBIT Order book

Silicon & Wafer 57,913 – 70,329 176,082

Solar Cell & Module 607,948 71,926 234,633

Thin Film Module 32,669 – 21,398 12,308

Total 698,530 – 19,801 423,023

Key figures segments

Single equipmen 556,879

Revenue by regions

Germany 32,204

ROW 12,994

Gesamt 698.530Asia 632,386

Other Europe 20,946

Total 698,530

Total 698,530

March 27, 2011Publication of the Annual Report 2011

May 10, 2012Publication of the Interim Report

as of March 31, 2012

August 9, 2012Publication of the Interim Report

as of June 30, 2012

August 14, 2012Annual General Meeting of Shareholders 2012

November 8, 2012Publication of the Interim Report

as of September 30, 2012

Publisher:centrotherm photovoltaics AG

Johannes-Schmid-Strasse 8

89143 Blaubeuren

Germany

Phone: +49 (0) 7344 918-0

Telefax: +49 (0) 7344 918-8388

E-mail: [email protected]

www.centrotherm.de

Concept and design: Scheufele Hesse Eigler

Kommunikationsagentur GmbH

Photographs:Andreas Graeter

Thomas Lorenz

Nrecaj / Bewegte Bilder

Printed by:Eberl Druck, Immenstadt

We have exercised utmost care in the preparation of this report. It contains forecasts and/or information

relating to forecasts. Forecasts are based on facts, expectations, and/or past figures. As with all forward-

looking statements, forecasts are connected with known and unknown uncertainties, which may

mean the actual result deviates significantly from the forecast. Forecasts prepared by third parties, or

data or evaluations used by third parties and mentioned in this communication, may be inappropriate,

incomplete, or falsified. We cannot assess whether information, evaluations, or forecasts made by third

parties are appropriate, complete, and not misleading. To the extent that information in this report

has been taken from third parties, or these provide the basis of our own evaluations, such use is made

known in this report. As a result of the above-mentioned circumstances, we can provide no warranty

regarding the correctness, completeness, and up-todate nature of information taken, and declared as

being taken, from third parties, as well as for forward-looking statements, irrespective of whether these

derive from third parties or ourselves.

Rounding differences may arise.

This report is also available in German. Both versions are available for download on the Internet.

Blaubeuren, March 2012

Financial calendar

Imprint

Disclaimer



Ann

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and modules.





c.FIRE



Annual Report 2011

3Power. Passion. Performance. Annual Report 2011 centrotherm photovoltaics 3

Enthusiasm for what we do, and an

awareness of the opportunities open to us,

incentivize us not only to act as an

innovation leader for the solar sector,

but also a technology and efficiency motor

for the global energy revolution.

centrotherm photovoltaics.


4 centrotherm photovoltaics Annual Report 2011 Power. Passion. Performance.

Content

423

41.1

With a total volume of

EUR 423 million we won new orders

against the trend in the sector.

In a challenging year 2011 revenue

growths 11.9% to EUR 699 million.

Continued high equity ratio of 41.1 %.

699

5Power. Passion. Performance. Annual Report 2011 centrotherm photovoltaics

Power. Passion. Performance

6 2011 Highlights

8 Letter to the shareholders

12 The Management Board of centrotherm photovoltaics AG

14 centrotherm projects worldwide

To our shareholders

28 The share

31 Supervisory Board Report

34 Corporate Management Statement and Corporate Governance Report

Group Management Report

42 2011 Highlights

43 2012 Outlook

43 Management’s overall statement on business progress and position

44 centrotherm photovoltaics Group

55 Economic environment

56 Analysis of the financial position

63 Investments

64 Unappropriated retained earnings and application of earnings of centrotherm photovoltaics AG

65 Non-financial performance indicators

73 Report on opportunities and risks

83 Significant related parties transactions

83 Remuneration

84 Report on events subsequent to the reporting date

85 Forecast report

Consolidated financial statements

90 Consolidated income statement

91 Consolidated statement of comprehensive income

92 Consolidated balance sheet

94 Statement of changes in consolidated equity

95 Consolidated cash flow statement

96 Notes to the financial statements

140 Assurance of the legal representatives

141 Independent auditor’s report

142 Glossary

146 Financial calendar | Imprint

6 centrotherm photovoltaics Annual Report 2011 To our shareholders Highlights 2011

Highlights 2011

First quarter

Successful market launch: centrotherm photovoltaics presents new cost-effi cient key equipment generation

Premiere for new “c.NITE Inline” nitride coating system and new “c.FIRE” furnace

“c.NITE Inline”, which caters for the anti-refl ective coating of solar cells, achieves higher effi ciencies, greater throughput and longer operational life.

“c.FIRE” is the new version of our established furnace, and is distinguished by compact and space-saving design. Ease of use and maintenance have also been further optimized compared with our existing furnace, in order to thereby further reduce cell manufacturers’ operating costs.

First dividend distribution planned

Thanks to the good earnings trends in the past fi nancial year, shareholders will participate in the company’s success with a dividend.

The Management and Supervisory boards propose that the Shareholders’ General Meeting to be held on August 18, 2011, approves a dividend payment of EUR 0.50 per share, plus a one-off bonus dividend of EUR 0.20 per share, for the 2010 fi nancial year.

Continuous dividend payments planned, in line with company development.

New production area in Blaubeuren, and opening of a subsidiary in the growth market of India

Production area at Blaubeuren is expanded by one third to approximately 31,000 m².

Expansion of production output to more than 100 systems per month.

Presence in Asia further strengthened with the opening of a centrotherm subsidiary in the Indian economic metropolis of Bangalore.

Second quarter

Major order won in Algeria

Consortium consisting of centrotherm photovoltaics and Kinetics Germany signs an agreement for an almost fully integrated factory in Algeria; major share of the EUR 290 million order volume placed with centrotherm photovoltaics.

The factory covers the entire solar value chain spanning ingot manufacturing, solar cell production and the solar module end-product.

unit4

7To our shareholders Annual Report 2011 centrotherm photovoltaics Highlights 2011

Expansion of the Silicon & Wafer product portfolio and “First Ingot Out”

centrotherm SiTec achieves important milestone at Chinese state company with “First Ingot Out”.

Expansion of the product portfolio to include key equipment for integrated ingot & wafer production.

Third quarter

Core Solar Cell & Module business strengthened further

On the way to 20 percent cell effi ciencies in industrial production: ISE-certifi ed solar cell with 20 percent effi ciency; based on centaurus rear side technology developed by centrotherm photovoltaics.

Bundling of Solar Cell & Modules segment’s business activities within centrotherm cell & module GmbH.

Successful bond market placing

Issuing of a registered bond and a borrower’s note loan (Schuldscheindarlehen) together totaling around EUR 100 million.

Financing of long-term corporate growth secured.

Fourth quarter

centrotherm photovoltaics wins high-end industrial design awards for key photovoltaic equipment

“c.FIRE” and “GP ISO-TEST. Waf” win iF product design awards.

iF product design award is one of the most renowned industrial design prizes, and has now been awarded annually for almost 60 years.

Polysilicon production successfully established at Chinese state company

Customer focuses on integrated solar manufacturing chain with centrotherm technology and systems, spanning polysilicon production, ingoting and solar cell manufacturing.

8 centrotherm photovoltaics Annual Report 2011 Power. Passion. Performance. Letter to the shareholders

What is it that drives us as an innovative and forward-looking company? It is our vision of

making solar electricity competitive compared with conventional energy sources. It is our

passion for a technology that confronts us daily with challenges, and which spurs us on to peak

achievements. We regard ourselves not only as an innovation-leader within the solar sector,

but also as a technology and effi ciency motor for the global energy revolution.

We pursued our business with energy and passion during a challenging 2011. 2011 was no

easy year for us. While the fi rst half of the year was still characterized by a thoroughgoing order

boom that prompted us to expand our production capacities, we were confronted by price falls

and a deteriorating market from the third quarter of 2011. Overcapacities and ruinous price

declines burdened polysilicon manufacturers, from wafers through to modules. This diffi cult

sector environment, coupled with the late-summer European debt crisis, the banking crisis

and uncertainties on fi nancial markets demanded much of our customers and us. These overall

circumstances fed through to modest new order intake for us in the third quarter. The sector

and fi nancing situation worsened in the fourth quarter, with our order situation fi nally undergoing

a further drastic deterioration. This situation was fi nally also refl ected in our business trends.

Consolidated revenue was up by 11.9 % to teur 698,530 (previous year: teur 624,169).

Operating earnings (ebit) amounted to teur – 19,801 (previous year: teur 75,363). Earnings

per share amounted to eur – 0.75 (previous year: eur 2.42). Due to ,the drastic deterioration

in market and fi nancial circumstances, the Group failed to achieve its guidance for the 2011

fi nancial year of eur 710 million of consolidated revenue, and a slightly positive ebit margin.

Letter to the shareholders

9Power. Passion. Performance. Annual Report 2011 centrotherm photovoltaics Letter to the shareholders

Management Board launches ct focus effi ciency program

We responded to the continued tensions on the market, and launched our ct focus effi ciency

program, which will run alongside cost cutting and sales initiatives that are already in place. The

program‘s declared objective is to grow profi tably and sustainably with a streamlined and effi cient

organizational structure, and a strategic focus on crystalline silicon along the photovoltaic value

chain. This program‘s fi rst step will entail a signifi cant reduction of costs, and an adjustment to

Group capacities. The company aims to achieve around eur 22 million of cost savings per year by

the end of 2013. Along with a refocusing on business entailing production systems and techno-

logies to manufacture crystalline solar cells and modules, and the production of silicon, a further

signifi cant component of our future strategy will be the expansion of the Semiconductors &

Microelectronics area. An extensive sales campaign conducted by all segments will complete the

ct focus package of measures.

Robert M. Hartung CEO

and Speaker of

the Management Board

10 centrotherm photovoltaics Annual Report 2011 Power. Passion. Performance. Letter to the shareholders

mena growth region in focus

Winning a major order in Algeria represented a sales highlight of the 2011 business year. A fully

integrated solar factory that spans ingot production through to deliverable solar modules is to be

created 30 kilometers east of Algiers. The order, which was placed by state utility group Societé

Nationale de l’Electricité et du Gaz (Sonelgaz), is one of the largest turnkey projects that we have

ever implemented. Kinetics Germany GmbH is our partner in the construction of this solar mod-

ule factory, and will be responsible for engineering, construction management, the erection of

the building, and technical building equipment. We will supply the turnkey production systems,

ranging from multi-crystalline ingot furnaces through to cell and module manufacturing plants.

The fi rst high-performance modules should be produced by 2014. These modules are primarily

intended to supply the domestic market. An interview with the project‘s director can be found on

page 18 of this annual report.

We will further bolster our sales activities in the mena region as the Middle East and North

Africa are showing ever greater interest in renewable energies. This region, which comprises an

important new growth area for us, includes many countries that are pursuing the objective of

creating their own domestic industries. The preconditions for our activities are optimal. Favorable

energy supply prices mean that they can already competitively cover energy-intensive production

steps along the photovoltaic value chain. The political will to create local jobs is supporting and

driving this strategy.

Technology as a success factor

As one of the most important pillars of our corporate success, Group research and development

plays a key role in our business. Work in our research and development teams is based on the

solar value chain: starting with metallurgical silicon, the raw material to produce polysilicon, and

moving through to polysilicon production, and on to the manufacturing of ingots and wafers.

We are working on future concepts for production systems, and on optimizing the entire process

to manufacture solar cells and modules. Our aim is to continuously reduce solar electricity

production costs. In 2011, we continued to live up to our claim to drive the photovoltaic sector‘s

development as a technology leader and pioneer. Page 24 at this annual report includes an

insight into our new centrotherm Solar Innovation Center in Constance.

11Power. Passion. Performance. Annual Report 2011 centrotherm photovoltaics Letter to the shareholders

Review of 2011 and 2012 outlook

The 2011 business year elapsed certainly counts as one of the most dynamic in centrotherm

photovoltaics‘ history. For this reason, I would especially like to thank our staff for their out-

standing commitment, also on behalf of my Management Board colleagues. Only their com-

mitment and input allowed us to respond rapidly, fl exibly and professionally to the changes in

market conditions. In addition, I would like to thank you, dear shareholders, for the confi dence

that you have invested in us.

Given the current uncertainties on markets, it is currently impossible for me to provide you

with a revenue and earnings forecast for the 2012 fi nancial year. The sector is in a consolidation

phase, and its further development depends on a large number of factors, including infl uences

from politics and the fi nancial markets, which are currently diffi cult to predict. We are endeavoring

to prepare ourselves accordingly with our ct focus effi ciency program. It is nevertheless

currently diffi cult for us to clearly gauge when positive signals from the sector will allow our

order position to recover. We are not assuming a signifi cant change to the current situation

during the fi rst half of 2012. We have positioned ourselves for the future in strategic terms with

our focus on our core competencies, a strong large-scale project business and by directing

our sales efforts towards the mena countries. We believe that photovoltaics is quite evidently

on a medium- and long-term growth path driven by rising energy demand worldwide, and

the energy policy revolution that has started. We aim to benefi t from this with a streamlined

and effi cient organization. And with Power, Passion and Performance.

Yours,

Robert M. HartungRobert M. HartungRobert M. Hartung

12 centrotherm photovoltaics Annual Report 2011 Power. Passion. Performance. The Management Board of the Centrotherm AG

The Management Board

Robert M. Hartung CEO

and speaker of the Management Board

Business strategy, group management, Silicon & Wafer business unit

Dr. Thomas Riegler CFO

Controlling, finances and accounting, investor relations, human resources,

IT, legal department, international business development

13Power. Passion. Performance. Annual Report 2011 centrotherm photovoltaics The Management Board of the Centrotherm AG

Hans Autenrieth CEO

International sales, strategic alliances, business development,

Thin Film Module business unit

Dr. Peter Fath CTO

Overall technology, research & development, group marketing,

Solar Cell & Module business unit

Dr. Dirk Stenkamp COO

Operations, engineering, materials, management,

production, quality management and service

14 centrotherm photovoltaics Annual Report 2011 Insight into the centrotherm world

Insight into the centrotherm world

China

Our customer Lu‘an is the fi rst to launch

centaurus technology in mass production,

with a potential 20 % effi ciency

Algeria

We are constructing an almost fully integrated

solar factory with 116 MWp annual output

Germany

On an area totaling 2,000 m²,

we are working on further boosting effi ciency

20

2,000

116

15Insight into the centrotherm world Annual Report 2011 centrotherm photovoltaics

INSIGHT INTO THE CENTROTHERM WORLD

Algeria

Rouiba

Germany

ConstanceChina

Changzhi

16 centrotherm photovoltaics Annual Report 2011 Insight into the centrotherm world Rouiba, Algeria

Annual production output

in megawatts peak

INSIGHT INTO THE CENTROTHERM WORLDINSIGHT INTO THE

CENTROTHERM WORLD

Algeria

Rouiba

116

17Insight into the centrotherm world Annual Report 2011 centrotherm photovoltaics Rouiba, Algeria

Rouiba, Algeria

The future is taking shape some 30 kilometers east of

Algiers: a fully integrated solar factory ranging from

ingot production through to deliverable solar modules.

Sun-drenched Algeria is embarking on its solar future with a eur 290 million project. This lucrative major order

from state utility Société Nationale de l’Electricité et du Gaz (Sonelgaz) is one of the largest turnkey projects that

centrotherm has ever realized – in this case joining forces with engineering partner Kinetics Germany GmbH.

290

Design of the Rouiba Eclairage

integrated solar factory in Algeria

EUR 290 million total order volume

18 centrotherm photovoltaics Annual Report 2011 Insight into the centrotherm world Rouiba, Algeria

What makes centrotherm so attractive as a partner for this project in Algeria, and

similar major projects such as in Qatar? TH “Firstly, our international reputation naturally

plays a quite decisive role. As a technology leader, we offer low manufacturing costs per watt

peak, and many years of experience with turnkey projects, ranging from silicon through to

solar module production. Secondly, German companies are regarded as preferred partners in

the renewable energies area, not least in view of their leading European role in photovoltaics

internationally.”

Do you anticipate that this project will prove groundbreaking for the African conti-

nent? TH “Absolutely. Although Algeria is the fi rst to recognize the energy-policy potential

of its geographical location, other neighboring Sahara states are certain to follow. With over

3,000 hours of sunshine per year, there are extraordinarily favorable preconditions here for a

broad-based entry into photovoltaics.”

Is Algeria at all prepared for such a major project in infrastructure terms?

TH “Algeria has implemented all of the legal and infrastructure preparations to realize such

a project. The country has both the statutory framework for renewable energies and a large

number of the institutions required to start the energy revolution. And Algeria is adopting

a pioneering role in North Africa with its own program for renewable energies and energy

effi ciency. The country’s plans are also extremely ambitious: up to 40 percent of energy

requirements are to be covered by alternative energy sources by 2030.”

Thomas Himmel

Project manager Algeria

Interview with Thomas Himmel

Has the solar revolution now also reached North Africa, Mr. Himmel?

I N T E R V I E W

19Insight into the centrotherm world Annual Report 2011 centrotherm photovoltaics Rouiba, Algeria

What is special about this turnkey project? TH “Well, it’s an almost fully integrated solar

module factory that covers the entire solar value chain, apart from production of the silicon

raw material – spanning ingot and wafer manufacturing, solar cell production, all the way

through to the solar module end-product. Algeria is completing the fi rst step to creating its

own photovoltaic industry here, thereby making a contribution to producing energy from

renewable energy sources. With this project, the country is embarking on a future of

alternative energy production – one that will also create around 100,000 jobs in the medium

term. The plans are very ambitious, and the approximately $120 billion volume of invest-

ments is huge. Negotiations concerning a further expansion of the project to include silicon

production are already underway.

When will production start in Algeria? Is there already a specifi c roadmap?

TH “Together with our customer Sonelgaz and our engineering partner Kinetics, our plan-

ning envisages that the fi rst high-performance modules for the domestic Algerian market

will already roll off the assembly lines by early 2014. The full production capacity of around

116 MWp per year should be achieved shortly after that.”

So, is it possible to speak of a solar revolution in North Africa? TH “Yes, that’s our fi rm

conviction.”

Algeria aims to cover up to 40 percent of its electricity

demand from renewable energies by 2030.

Multi-crystalline ingot furnace

The ingots are cut into bricks, and

fi nally wafers, using wire saws.

Turnkey solution for module

production,

where solar cells are processed into

strings.

Construction of a solar module

The interconnected solar cells are

assembled to form modules.

INSIGHT INTO THE CENTROTHERM WORLD

will already roll off the assembly lines by early 2014. The full production capacity of around

“Yes, that’s our fi rm

40

20 centrotherm photovoltaics Annual Report 2011 Insight into the centrotherm world China, Changzhi

Centrotherm‘s centaurus

technology offers 20 %

potential effi ciency

INSIGHT INTO THE CENTROTHERM WORLDINSIGHT INTO THE INSIGHT INTO THE

CENTROTHERM WORLDCENTROTHERM WORLD

China

Changzhi

20

21Insight into the centrotherm world Annual Report 2011 centrotherm photovoltaics China, Changzhi

China, Changzhi

Some 1,200 kilometers northwest of Shanghai, China reports a solar cell production effi ciency leap: effi ciency enhancement in record time thanks to the latest technology.

China, which is otherwise better known for its energy sector based on coal-fi red power plants, is increasingly focusing

on renewable energies such as photovoltaics. The state Lu‘an Group also commenced mass production of solar cells in

2010, and has set ambitious targets within the sector with a planned capacity expansion from previously 240 megawatts

to 1 gigawatt.

240

Turnkey solution for

cell production

Wafers are processed into solar cells here.

Lu‘an aims to expand its production capacities

from previously 240 MW to 1 GW.


Interview with Dr. Josef Haase

Dr. Haase, 1 gigawatt production capacity – that‘s a remarkable volume even for centrotherm?

A state company that originally came from the mining sector, and which now, as a

chemicals and energy group, ranks as one of China’s most infl uential companies.

What was special about this project? JH “Lu’an is our fi rst Chinese turnkey customers in

the solar cell area and, before the Algeria project, it was centrotherm’s fi rst major project that

spanned different segments. I believe that this integrated factory concept is remarkable in

various ways. Firstly, cell production entailing state-of-the-art technology has been commis-

sioned within a short period of time. It took less than twelve months between fi rst breaking

the ground and the point in time when the fi rst two solar cell lines became operational.

Secondly, reactors and converters to produce 3,000 tons of silicon per year have been added

to the two turnkey solar cell lines with their 60 MW capacity. We implemented the integrated

factory concept for Lu’an, making them cost leaders on the market.”

But isn’t this just the start? JH “Certainly. We’re currently in the second expansion stage,

and we are speaking specifi cally about a capacity expansion to 600 MW in the fi rst half of 2012.

We have also determined in our cooperation agreement that we will jointly expand the total

capacity to 1 gigawatt. Lu’an will benefi t in two ways – from integrated polysilicon production,

and from the economies of scale arising from the capacity expansion.”

Dr. Josef Haase

CEO of centrotherm

cell & module GmbH

China, Changzhi

I N T E R V I E W


Lu’an is a highly regarded partner for centrotherm, not only due to its enormous busi-

ness potential. Why? JH “As I already mentioned, Lu’an is our fi rst turnkey customer, and

the company also realized all of our previous technology leaps together with us. We have

cooperated closely and constantly in optimizing and further developing production pro-

cesses and systems, and as part of pilot projects. We are implementing our latest upgrades

at Lu’an, such as the selective emitter and centaurus technologies. The result is an excellent

effi ciency of up to 19.5 percent from the cells produced using these centrotherm technolo-

gies.”

In other words, “from new entrant to big sector player” could be title of your success

story in Changzhi? JH “Yes, the effi ciency enhancement under production conditions is

groundbreaking. The mass production fi gures for screenprint cells are the best that have

been achieved in the sector to date. We’re proud of this achievement.”

Record effi ciency achieved in mass

production to date by Luan in percent.

BLICK IN DIE CENTROTHERM WELT

China, Changzhi

19.5

Supervising production processes

Inspection and measuring equip-

ment ensures a high quality of

solar cells

Laser tool for selective emitter

technology

Existing production lines can also be

retrofi tted with upgrade packages.


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centrotherm Solar Innovation Center, Constance

The photovoltaic sector‘s perhaps most important research center is being created directly on the Seerhein at Constance.

With the newly built Solar Innovation Center on the Great Lakes grounds, situated directly on the Seerhein at Constance,

centrotherm photovoltaics is drawing on the capabilities of a pilot plant and customer center that are unique in the sector.

The center demonstrates technologies and manufacturing processes in an industrial production environment to guests

from around the whole world.

The centrotherm Solar Innovation Center in Constance

We are working on further boosting effi ciency

on an area of 2,000 m²

Germany, Constance

2,000


Total expenses R&D

47 Mio EUR


Germany

Constance

Germany, Constance

47


Interview with Dr. Steffen Keller

With this view of Lake Constance, are entirely new prospects opening up for the sector, Dr. Keller?

What motivated a globally active company such as centrotherm to create its new innovation

and customer center in Constance? SK „This is a clear commitment to Germany and the city

of Constance as industrial locations. The city offers an outstanding research environment: with

the University of Constance, which is a center of excellence, as well as organizations and

research institutions such as the International Solar Energy Research Center. Our outstanding

cooperation with the city of Constance, and regional science subsidies, also made it an easy

decision for us. Photovoltaics companies, institutions and local government development

programs integrate here perfectly. And historically, too, we have always had a signifi cant part

of our Groupwide research and development located here. Our international customers can

reach the SIC easily from Zürich airport.

Tell us what‘s fascinating about the centrotherm Solar Innovation Center (SIC)?

SK „Our sector is one of the most rapidly developing technology segments worldwide.

New solar cell effi ciency records are announced almost daily. But these are generally laboratory

fi gures. The SIC technical center closes the gap for centrotherm between laboratory and mass

production. With a 2,000 m² area on one level, we have an integrated collection of all process

tools for cell and module production. The paths between the laboratory and mass production are

short, since initial experiments are already conducted on production systems. Moreover, there

are also no spatial or departmental barriers between the wafer and the tested module. All of the

specialists can directly experience the other components of the puzzle, and all of the experts are

active in one location. You‘ll hardly fi nd anything comparable. These strengths not only enable

us to move more rapidly in transferring technology and processes to mass production, it also

enables us to accelerate the innovation process along our technology roadmap. In other words,

we are working on the future of photovoltaics at the heart of our Solar Innovation Center: solar

module effi ciency enhancements, and the reduction of process costs at the same time.

Dr. Steffen Keller

Head of technology development

crystalline solar cells

Germany, Constance

I N T E R V I E W


This impressive new building is striking for its external transparency. What’s the idea

behind it? SK “Yes, transparency is also a guiding principle for the SIC. The transparency is both

internal and external. In overall terms, we are concerned with the networking of all knowledge.

In the pilot plant, the results from raw wafer processing through to the fi nished module end-

product are transparent for us and our customers, since we also conduct process work together.

The architecture allows the pilot plant to be constantly visible from the customer center through

its large window areas. People walking by can also see inside. And the transparency continues

within the offi ce areas: all desks and meeting rooms are openly structured. This promotes and

underpins communication between staff. The icing on the cake in terms of the building are a

25 kW peak solar system, which stands out both optically and functionally as a transparent glass-

within-glass roof installation, and a testing area for an approximately 40 kW peak system with

connections to test individual module performance.”

Which suggests that the future of photovoltaics is taking on shape within the

centrotherm Solar Innovation Center. SK “Our R&D team is as fully convinced of this as I am!”


Germany, Constance

Our R&D roadmap targets an effi ciency enhancement

of approximately 0.5 % per annum.

0.5

Process engineer loading

a wafer carrier

Wafers are fed into the process

tube for diffusion.

28 The Sharecentrotherm photovoltaics Annual Report 2011 To our shareholders

The Share

Transparent capital market communications

We regard open and transparent dialogue in our communications with capital market participants as absolutely essential. Along with publishing quarterly and annual reports, this includes informing our investors rapidly and extensively about current corporate topics and the market environment. Our aim is to cultivate trusting, long-term relationships with all capital market participants.

Overall weak stock market year in 2011 – solar energy stocks under great pressure

Equity markets rose over the course of the first half of 2011 due to improved economic indicators and a strong first-quarter earnings season. The growing likelihood of a sovereign default in Greece, rising bond yields in Spain and Italy, and weaker economic data in Europe, the USA and China fed through to an equity market crash in the third quarter. Equity markets recovered a little by the year-end after these marked losses. Along with the consequences of the earthquake in Japan, and unrest in the Middle East, the state debt crisis in the Eurozone was the main factor weighing down on markets.

The German DAX stock index lost by around 15 percent overall in 2011. Similar trends were reported among German small and mid-caps: the MDAX index was down by 12 percent, and the SDAX by 15 percent. The TecDAX underperformed other German indices, falling by 20 percent over the course of the year, partly reflecting solar stocks’ poor performance.

Key figures relating to the centrotherm photovoltaics share

2011

Share capital in EUR 21,162,382

Number of shares 21,162,382

High in EUR 42.52

Low in EUR 8.82

Closing price* in EUR 9.90

Market capitalisation* in EUR 209,401,770

Earnings per share in EUR – 0.75

* as of December 31, 2011

This corresponded to weak business trends among many photovoltaic sector companies, and sharp price declines for solar modules. Uncertainty about future solar sector market trends also unsettled many investors, prompting them to invest outside the sector.

29The Share To our shareholders Annual Report 2011 centrotherm photovoltaics

Deutsche Börse’s renewable energies equity index, the DAX-subsector Renewable Energies Index, quoted at 148 points as of December 30, 2011, (previous year: 258 points). The German GEX medium-sized company index, which reflects price trends of owner-managed companies, closed the year at 1,196 points (previous year: 1,921 points).

Our share was strongly impacted by solar sector trends and the macroeconomic environment. Its very strong first-quarter performance was partly due to the nuclear catastrophe in Japan and Germany’s subsequent decision to exit nuclear power. The share fell significantly over the rest of the year in line with the poor market performance of the entire photovoltaic sector, closing with a 63.3 percent decline on the year as of December 31, 2011. It reached its high for the year of EUR 42.52 on March 28, 2011, and its low of EUR 8.82 on November 22, 2011. The company’s market capitalization fell year-on-year, to EUR 209 million.

centrotherm photovoltaics as a sustainable investment

As in previous years, one of the world’s leading rating agencies for sustainable investments, oekom research, appraised us with its “Prime” rating. This is the highest distinction awarded by the institution. As a consequence, the centrotherm photovoltaics share qualifies as an invest-ment with an ecological and social focus.

In addition, our share continued to be held as a Top 10 investment in several sustainability funds in 2011. An overview can be found along with other information on the following website: www.nachhaltiges-investment.org.

Shareholder structure: free float almost unchanged

The company’s issued share capital is split into 21,162,382 nil-par ordinary bearer shares, each with an arithmetic nominal value of EUR 1. The free float changed only slightly compared with the previous year. All voting rights announcements pursuant to § 21 Paragraph 1 Clause 1 of the German Securities Trading Act (WpHG) that were made by shareholders to the company and the Federal Financial Supervisory Authority (BaFin) were performed in the 2011 financial year, and were published accordingly.

0

Gesamt 000,0

Shareholder Structure as of Dezember 2011

* of which 3.04 % Deka and 5.08 % Fidelity

Members of the Management Board 0,4 %

Free float* 46,95 %

Number of shares: 21,162,382

TCH GmbH 50 %

Autenrieth Beteiligungs GmbH 2,65 %

centrotherm photovoltaics share price performance in % indices rebased

160

140

120

100

80

60

40

20

centrotherm photovoltaics DAX TecDax GEX DAXsubsector Renewable Energies

0

01/11 02/11 03/11 04/11 05/11 06/11 07/11 08/11 09/11 10/11 11/11 12/11

30 The Sharecentrotherm photovoltaics Annual Report 2011 To our shareholders

2011 Shareholders’ General Meeting

The shareholders of centrotherm photovoltaics AG approved with a clear vote the management’s corporate strategy at the ordinary Shareholders’ General Meeting held on August 18, 2011. Shareholders voted in favor of six out of seven agenda items with a large majority of the approximately 300 shareholders present. The Management and Supervisory Boards were discharged with respect to the 2010 financial year with a vote of over 97 percent.

Intensive dialogue with the capital market

We met with investors at roadshows and conferences in 2011 to discuss current trends and developments. We also held one-on-one meetings with investors at the Intersolar trade fair in Munich. We presented our company at a total of 18 conferences and roadshows in Europe and the USA.

Moreover, we also provide extensive information on our website at www.centrotherm.de, within the Investor Relations area. Quarterly and annual reports, and press releases, are published on this website, as well as our financial calendar and information on the share.

A total of 18 banks and securities houses report regularly on the centrotherm photovoltaics share. In the current uncertain market situation, almost all of the brokers’ studies arrive at neutral or positive assessments of centrotherm photovoltaics’ share.

Dividend policy

Given the modest earnings development in the financial year elapsed, the Management and Supervisory boards suggest not to pay a dividend for 2011. In line with our long-term dividend policy, the company plans to continue to distribute a dividend in the coming years, depending on business trends.

Our analysts

Bankhaus Lampe Barclays Bryan, Garnier & Co Citi Commerzbank Credit Suisse Deutsche Bank DZ Bank Close Brothers Seydler

Goldman Sachs HSBC Independent Research LBBW Macquarie Merrill Lynch Natureo Finance UBS WestLB

31

Supervisory Board Report To our shareholders Annual Report 2011 centrotherm photovoltaics

Consultation and continuous dialogue with the Management Board: exercising great care, the Supervisory Board fulfilled the responsibilities in the 2011 financial year that are incumbent upon it as the result of the law, the company‘s statutes, and procedural rules. The Management Board fulfilled its duties to provide information, and informed us regularly, promptly and extensively in both written and verbal form concerning events and actions of relevance for the company. The Supervisory Board was directly included in all decisions of fundamental importance.

Supervisory Board Report

A total of 13 Supervisory Board meetings were held in 2011. Attendance stood at 100 percent.

In my function as Supervisory Board Chairperson, I was also in regular contact with the Management Board in the periods between meetings. Above and beyond this, further project-related working meetings, separate resolutions, as well as several coordination discussions were held with the Management Board.

Prof. Dr. Brigitte Zürn

Supervisory Board Chairwoman

There were no indications of conflicts of interests appli-cable to Management and Supervisory board members, which must be notified immediately to the Supervisory Board, and about which the Shareholders’ General Meet-ing should be informed.

Significant contents of Supervisory Board meetings and resolutions

The single-entity and consolidated 2010 financial state-ments were discussed in the auditor’s presence at the meeting on March 14, 2011.

The financial statements were approved at the meeting on March 21, 2011.

The Group strategy was presented at the meeting on April 11, 2011.

The technology strategy was presented on April 19, 2011, and the status of various strategic projects was presented and discussed.

The meeting on May 5, 2011, focused on a discussion of the March 31, 2011 interim financial statements.

At the July 4, 2011 meeting, further specifics were added to the outlook included in the five-year technology roadmap, and strategic focal points were established.

Ongoing large-scale projects were discussed at the July 25, 2011 meeting.

The June 30, 2011 interim financial statements were discussed on August 3, 2011.

32 Supervisory Board Reportcentrotherm photovoltaics Annual Report 2011 To our shareholders

Preparations were made for the 2011 Ordinary Share-holders’ General Meeting at the August 16, 2011 meeting.

The current market situation and options for action, in particular, were discussed at the September 14, 2011 meeting.

The August 31, 2011 interim financial statements were discussed on November 3, 2011.

The November 30, 2011 Supervisory Board meeting focused on a discussion of further strategy in the Silicon & Wafer segment, and the 2012 budget was discussed.

The 2012 – 2014 planning was discussed at the meeting on December 22, 2011.

Formation of committees

The Supervisory Board formed no committees from among its members, since it consists of the statutory minimum number of three members.

Corporate Governance and Declaration of Conformity

Responsible corporate governance and controlling that is oriented to sustained value-creation is of the highest priority for both the Management and Supervisory Boards. This rea-son, the Supervisory Board constantly monitors compliance with the regulations of the German Corporate Governance Code, and the further development of corporate govern-ance standards. On December 6, 2011, the Management and Supervisory Boards issued a declaration of conformity pursuant to § 161 of the German Stock Corporation Act (AktG), which is permanently accessible to all shareholders on the company’s website. More information about centro-therm photovoltaics AG’s divergences from the Code can be found in the Declaration of Conformity pursuant to § 161 of the German Stock Corporation Act (AktG).

The Management Board also reports on the Supervisory Board’s behalf about corporate governance in the Corporate Governance statement on pages 34 – 39, pursuant to Figure 3.10 of the German Corporate Governance Code.

Composition of the Supervisory and Management Boards

The composition of centrotherm photovoltaics AG’s Supervisory Board complies with the requirements of § 100 Paragraph 5 of the German Stock Corporation Act (AktG). It continually monitors its independence and professional expertise. Two of the total of three members of the Super-visory Board exercise the profession of auditor and tax consultant. There were no changes to the composition of the Supervisory and Management Boards in 2011.

Management Board remuneration

The Supervisory Board annually reviews the appropriateness of Management Board remuneration. Management Board members’ contracts currently correspond to only a limited extent to the recommendation in Figure 4.2.3 Paragraph 2 of the German Corporate Governance Code, whereby the structure of Management Board members’ variable remuneration components should reflect both positive and negative developments. The Supervisory Board does not regard adaptation of these contracts as requisite, since several Management Board members already have an inter-est in the company’s sustained and positive development due to their substantial stake in the company. In addition, a divergence is made with respect to the recommendation in Figure 4.2.3 Paragraph 4 regarding the introduction of a settlement cap in employment contracts for Management Board members in the instance of the discontinuation of Management Board activity without an important reason. Further divergence is made with respect to the recommen-dation in Figure 4.2.3 Paragraph 5, which limits a commit-ment to 150 percent of the settlement cap for services aris-ing from early termination of Management Board activity following a change of control. Given the aforementioned, divergence is also made from the recommendation in Figure 4.2.4, whereby such commitments should be published individually. The implementation of these recommendations would firstly give rise to significant legal difficulties and uncertainties. Secondly, when negotiating contracts relating to the initiation, continuation, or termination of Manage-ment Board member activities, the Supervisory Board does not wish to be subject to restrictions, thereby allowing it to always achieve the best negotiating result for the company.

33Supervisory Board Report To our shareholders Annual Report 2011 centrotherm photovoltaics

Auditing of the single-entity parent company and consolidated financial statements

RBS RoeverBroennerSusat GmbH & Co. KG, Wirtschafts-prüfungsgesellschaft, Steuerberatungsgesellschaft, Berlin, audited the single-entity parent company financial state-ments and management report for the 2011 financial year that were prepared according to German Commercial Code (HGB) regulations, and the consolidated annual financial statements and Group management report for the 2011 financial year that were prepared pursuant to § 315 a of the German Commercial Code (HGB) on the basis of International Financial Reporting Standards (IFRS) as applicable in the European Union. The Supervisory Board issued the auditing mandate in line with the resolution of the Shareholders’ General Meeting of August 18, 2011. The auditor furnished an unqualified audit certificate for both the single-entity parent company annual financial statements and management report, as well as the consolidated financial statements and Group management report. The auditor participated in the Supervisory Board’s accounts meeting on March 23, 2012, which concerned itself with the single-entity parent company annual financial statements and the consolidated financial statements, and delivered its report pursuant to § 171 Paragraph 1 Clause 2 of the German Stock Corporation Act (AktG). The auditor was also available for additional questions and information during the discussion of the specifics of the financial state-ments and management reports. The auditor identified no significant weaknesses in the accounting-related internal controlling and risk management system during the audit. No circumstances arose relating to the bias of the auditor. All documents relating to the financial statements, as well as the audit reports, were presented on time to the Supervisory Board. The Supervisory Board was provided with extensive documents – partially in draft form – in order to prepare themselves, including the Group management report, consolidated financial statements and notes to the financial statements, as well as detailed assessments concerning significant individual thematic points.

Following in-depth analysis, the Supervisory Board deter-mined that there were no objections to the result of the audit conducted by the auditor, and gave its assent to this result. The Supervisory Board also approved the financial statements that had been prepared by the Management Board. As a consequence, the single-entity parent company financial statements have been approved, and released for publication. The Supervisory Board also adopted the proposal of the Management Board regarding the appro-priation of the balance sheet profit. The Supervisory Board also examined the related parties report for the 2011 financial year that was prepared by the Management Board pursuant to § 312 of the German Stock Corporation Act (AktG). The auditor also furnished the related parties report with an unqualified audit opinion.

On behalf of the entire Supervisory Board, I would like to thank all Management Board members and our staff for their work over the past year. I would like to thank our shareholders for the confidence and trust that they have invested in us.

Blaubeuren, March 23, 2012On behalf of the Supervisory Board

Prof. Dr. Brigitte ZürnSupervisory Board Chairwoman

34 Corporate Governancecentrotherm photovoltaics Annual Report 2011 To our shareholders

centrotherm photovoltaics places high priority on corporate governance as the principle for responsible corporate governance oriented towards sustained value- creation. The Management and Supervisory boards continued in the 2011 financial year to intensively engage themselves with compliance with the requirements of the German Corporate Governance Code in the version as approved on May 26, 2010.

Corporate Governance

Corporate Management Statement and Corporate Governance Report

As a listed public stock corporation, centrotherm photovoltaics AG is obligated pursuant to § 289a of the German Commer-cial Code (HGB) to issue a corporate management statement. The corporate management statement comprises the state-ment of conformity with the German Corporate Governance Code pursuant to § 161 of the German Stock Corporation Act (AktG), disclosures concerning corporate management prac-tices applied above and beyond statutory requirements, as well as a description of the working methodology of the Manage-ment and Supervisory boards. In accordance with the recom-mendation contained in Figure 3.10 of the German Corporate Governance Code, we have also integrated the corporate gov-ernance report into the corporate management statement.

With a majority corresponding to the German Act concern-ing the Disclosure of Management Board Compensation, the Shareholders’ General Meeting of July 5, 2007, passed a reso-lution not to disclose individual Management Board compen-sation for the financial year commencing on January 1, 2007, and for the four financial years following 2007. A majority of voting shareholders at the Shareholders’ General Meeting on August 18, 2011, voted not to extend this abstention from dis-closing individual management board remuneration for future financial years, including financial year 2015. For this reason, the company has decided to already disclose the compensation of individual management board members in the single-entity and consolidated financial statements for the 2011 financial year. As a consequence, the company now complies with the recommendations of the German Corporate Governance Code, and intends to comply with them in the future.

Therefore, the Supervisory and Management boards will issue an updated and unqualified Declaration of Conformity in 2012. All previously issued declarations of conformity are permanently available on the company’s website.

2011 Declaration of Conformity

The Management and Supervisory Boards of centrotherm photovoltaics AG hereby declare that, with the exception of the divergences described below, the principles of behavior recommended by the Government “German Corporate Governance Code” commission have been complied with since issuing of the last declaration of conformity in Decem-ber 2010, and will also be complied with in the future. Divergences from the German Corporate Governance Code in its current version from May 26, 2010, have been, and will be, made with regard to the following points:

Disclosure of remuneration components for individual

Management Board members, and structural content of

Management Board contracts (Figures 4.2.3 – 4.2.5):

The Act relating to the Disclosure of Management Board Remuneration (VorstOG) permits the Shareholders’ General Meeting to waive disclosure of the individual emoluments of members of the Management Board remuneration with a three-quarters majority of the voting capital when adopting resolutions. The corresponding information in accordance with §§ 285 Clause 1 Number 9 lit. a Clauses 5 to 9, 314 Paragraph 1 Number 6 lit. a. Clauses 5 to 9 of the German Commercial Code (HGB) is not disclosed in either the single-entity parent company financial statements or the consolidated financial statements for the financial year that began on January 1, 2007, and for the four subsequent financial years. A corresponding resolution was adopted at the Shareholders’ General Meeting on July 5, 2007.

Management Board members’ contracts currently corres-pond to only a limited extent to the recommendation in Figure 4.2.3 Paragraph 2, whereby the structure of variable management board members’ remuneration components should reflect both positive and negative developments. The Supervisory Board does not regard an adjustment of these contracts as requisite, since several Management

35Corporate Governance To our shareholders Annual Report 2011 centrotherm photovoltaics

Board members already have an interest in the company’s sustained and positive development due to their substantial stake in the company. A divergence is made with respect to the recommendation in Figure 4.2.3 Paragraph 4 regarding the introduction of a settlement cap in employ-ment contracts for Management Board members in the instance of the discontinuation of Management Board activity without an important reason. Further divergence is made with respect to the recommendation in Figure 4.2.3 Paragraph 5, which limits a commitment to 150 percent of the settlement cap for services arising from early termina-tion of Management Board activity following a change of control. Given the aforementioned, divergence is also made from the recommendation in Figure 4.2.4, whereby such commitments should be published individually. The imple-mentation of these recommendations would firstly give rise to significant legal difficulties and uncertainties. Secondly, when negotiating contracts relating to the initiation, con-tinuation, or termination of Management Board member activities, the Supervisory Board does not wish to be subject to restrictions, thereby allowing it to always achieve the best negotiating result for the company.

Age limits for Management and Supervisory board

members (Figures 5.1.2, 5.4.1 Paragraphs 2 and 3):

The Supervisory Board of centrotherm photovoltaics AG does not take into account a fixed age limit either with respect to the composition of the Management Board, or with respect to its own composition and election propos-als for Supervisory Board members to the Shareholders’ General Meeting, because it is convinced that abilities and knowledge on the part of a potential candidate are inde-pendent of age. A rigid age limit might mean that Manage-ment or Supervisory board members who are particularly valuable because of their experience would be required to leave centrotherm photovoltaics AG, or would not be recruited in the first instance. Furthermore, the Supervisory Board of centrotherm photovoltaics AG pays attention to diversity in the composition of the Management and Supervisory boards, and, for this reason in particular, strives for an age mixture in the Management and Supervisory boards that would not be achieved given a fixed age limit.

Supervisory Board composition (Figure 5.4.1 Paragraphs

2 and 3):

The Supervisory Board of centrotherm photovoltaics AG has set no specific targets that take into account potential conflicts of interest, a fixed age limit for, and diversity of, Supervisory Board members, and, in particular, an appro-priate participation of women. The Supervisory Board of centrotherm photovoltaics AG is of the opinion that prima-rily knowledge and abilities, as well as specialist expertise,

should form the focus when selecting Supervisory Board members. Although the Supervisory Board of centrotherm photovoltaics AG welcomes the Code’s intention of placing greater emphasis on the above-mentioned criteria in the composition of supervisory boards, it does not currently appear appropriate, however, to set specific objectives. This because, in the company’s opinion, the current composition of the Supervisory Board of centrotherm photovoltaics AG takes this requirement sufficiently into account.

Formation of committees (Figure 5.3):

The company’s Supervisory Board consists of the statutory minimum number of three members, and has therefore not formed committees from among its members.

Supervisory Board remuneration (Figure 5.4.6):

The Supervisory Board members of centrotherm photo-voltaics AG receive both fixed remuneration as well as a fee for attending meetings. Performance-related remuneration is not granted to the members of the Supervisory Board in accordance with the remuneration regulations specified in the company statutes, since such performance-related remuneration is not required in order to motivate the Supervisory Board members, nor does it promote their sense of responsibility.

Independence and conflicts of interest relating to

Supervisory Board members (Figures 5.4.2 and 5.5.3):

The Deputy Chairman of the Supervisory Board, Rolf Hans Hartung, is the father of CEO, Robert M. Hartung. Rolf Hans Hartung holds significant interests in both the company and its associated companies. These associated companies have, and have had, various legal relationships with the centrotherm photovoltaics Group companies, as a consequence of which conflicts of interest may arise. There is currently no intention to revoke the Supervisory Board mandate of Rolf Hans Hartung, since, in the opinion of the Supervisory Board, the Supervisory Board has a sufficient number of independent members.

Shares and financial instruments held by Management

and Supervisory Board members (Figure 6.6):

Any direct and indirect shareholding on the part of the members of corporate bodies has been, and will be, published in harmony with the German Securities Trading Act and the German Securities Prospectus Act. No other publication of shares or related financial instruments held by members of the company’s corporate bodies occurs since, due to the current shareholder structure, there is no identifiable requirement to publish information beyond the extent of statutory requirements.


Management and Supervisory Board working methodology and disclosures concerning other corporate management practices

The Management and Supervisory boards work together closely and trustingly for the company’s benefit. Intensive and continuous dialogue between the two boards forms the basis for efficient corporate management. Their joint aim is to safeguard the company’s existence and to ensure that it creates sustainable value. In compliance with statutory regulations for a German public corporation, centrotherm photovoltaics operates a dual management system that is characterized by a separation in terms of personnel between the executive and supervisory bodies.

The Management Board informs the Supervisory Board regu-larly, rapidly and extensively concerning all business trend topics of relevance for the company, its financial position and results of operations, planning and the attainment of targets, its risk position and risk management. This includes a discussion of where business progress diverges from the plans and targets that have been set, and the reasons for such divergences.

Cooperation between the Management and Supervisory Boards continued in 2011 to be characterized by an open and respectful atmosphere based on mutual trust. The Man-agement Board members participated in all 13 Supervisory Board meetings during the 2011 financial year. Besides this, there was also a regular personal and telephone exchange of information between Management and Supervisory Board members.

Composition of the Management Board

There was no change to the composition of the Manage-ment Board in 2011. It is composed of the following members: Robert Michael Hartung (CEO & Speaker of the Board) Hans Autenrieth Dr. Peter Fath Dr. Dirk Stenkamp Dr. Thomas Riegler

Composition of the Supervisory Board

The Supervisory Board consists exclusively of the three shareholder representatives. It complies with the statu-tory minimum as a consequence. The Supervisory Board members are Prof. Dr. Brigitte Zürn (Chairperson), auditor and tax consultant, Rolf Hans Hartung (Deputy Chairman), businessman, and Rolf Breyer, auditor and tax consultant. No personnel changes were made to the Supervisory Board in the 2011 financial year. No former members of centrotherm photovoltaics AG’s Management Board currently belong to the Supervisory Board.

No Supervisory Board committees

The Supervisory Board did not form committees, since the number of Supervisory Board members complies with the minimum number required for an effective passing of resolutions.

Supervisory Board independence and efficiency

In its own assessment, the Supervisory Board includes a sufficient number of independent members. The Super-visory Board regularly reviews the efficiency of its activi-ties, and is continuously developing proposals for future improvements. The Chairperson of the Supervisory Board, Prof. Dr. Brigitte Zürn, is, among other positions held, Managing Director of Dr. Horn Unternehmensberatung GmbH, Ulm, which regularly renders consultancy services for centrotherm photovoltaics AG.

The Management and Supervisory boards reach their decisions exclusively in the interests of centrotherm photovoltaics AG. All legal relationships with companies in which Management or Supervisory board members hold interests were concluded on terms on which these trans-actions would have also been concluded with third parties. As a consequence, no transactions were effected in the 2011 financial year that might have given rise to conflicts of interests among Management and Supervisory board members.


Accounting and auditing

The consolidated financial statements of centrotherm photovoltaics AG have been prepared according to the International Financial Reporting Standards published by the International Accounting Standards Board (IASB). The single-entity annual financial statements of centrotherm photo-voltaics AG are based on the accounting regulations of the German Commercial Code (HGB). RBS RoeverBroennerSusat GmbH & Co. KG, Wirtschaftsprüfungsgesellschaft, Steuer-beratungsgesellschaft, Berlin, as an independent auditing company, audited the consolidated and single-entity annual financial statements.

Efficient risk management

centrotherm photovoltaics maintains an efficient risk manage ment system that identifies key risks at an early juncture, thereby enabling the Management Board to react in time to changes in circumstances, and to launch counter-measures if required. Risk management is reviewed at regular intervals, and adapted to changes in circumstances.

Details about the centrotherm photovoltaics Group risk management system can be found in the report on risks and opportunities that forms part of the management report. This contains the report on the accounting-related internal controlling and risk management system (§ 289 Paragraph 5 and § 315 Paragraph 2 Number 5 of the German Commercial Code [HGB]) required pursuant to the Accounting Law Modernization Act (BilMoG).

Transparent communications

Our capital market communications are intended to inform all target groups extensively, rapidly, and on an equal basis. Shareholders and potential investors can find information about the Group’s current trends on the Internet at any time. Our website publishes all press and unscheduled releases in both German and English. The company statutes can be downloaded from our website, as well as consolidated finan-cial statements, interim reports, and information about our compliance with the German Corporate Governance Code’s recommendations and suggestions. A financial calendar also provides information about mandatory deadlines and other dates in the 2012 financial year.

Shareholders and the Shareholders’ General Meeting

Along with the Management and Supervisory boards, the Shareholders’ General Meeting forms the company’s third management body. Shareholders of centrotherm photo-voltaics AG can exercise their rights and voting rights at the company’s Shareholders’ General Meeting. The Ordinary Shareholders’ General Meeting is held once every year. Each share grants one vote.

Shareholders can exercise their own voting rights at the Shareholders’ General Meeting, can authorize a third party to exercise their vote, or can convey instructions to the company’s proxy to vote on their behalf. The voting results will also be published on our website after the conclusion of the Shareholders’ General Meeting.

All information, reports and documents related to the Shareholders’ General Meeting will be published at an early stage at www.centrotherm.de, in the Investor Relations area. There are currently no plans to transmit a live broadcast of the Shareholders’ General Meeting, since the costs of such a broadcast would significantly exceed the related benefit, in our assessment.

Other corporate management practices

As a listed company in public view, centrotherm photo-voltaics AG is aware of its social responsibility. For this reason, centrotherm photovoltaics AG promotes a corporate culture in which open, as well as trusting and respectful cooperation prevails. At the same time, the company is managed according to the requirements of the law, its company statutes, Shareholder General Meeting resolu-tions, as well as the procedure rules for the Management and Supervisory Boards.

Above and beyond this, centrotherm photovoltaics AG does not currently employ any corporate management practices that extend beyond statutory requirements.


Securities transactions requiring mandatory notification and shares held by Management and Supervisory board members

Securities transactions requiring mandatory notification

Pursuant to § 15a of the German Securities Trading Act (WpHG), managers of centrotherm photovoltaics AG and related persons must disclose share transactions, or trans-actions in related financial instruments, if the total volume of transactions exceeds a total amount of TEUR 5 per calendar year. All securities transactions notified to centrotherm photo voltaics AG in the 2011 financial year pursuant to § 15a of the German Securities Trading Act (WpHG) are published on the company’s website at www.euroadhoc.com, and in the Investor Relations area of the company’s website at www.centrotherm.de.

Management Board shareholdingsAs of December 31, 2011, Management Board members held more than one percent of centrotherm photovoltaics shares, either directly or through their investment vehicles. Management Board members held the following direct or indirect stakes in the company:

Share-holdings

as percentage of share capital

TCH GmbH* 10,581,192 50.00

Autenrieth Beteiligungs GmbH** 560,000 2.65

Dr. Peter Fath 85,169 0.40

* Robert M. Hartung is the majority shareholder of TCH GmbH.** Hans Autenrieth is the sole shareholder and managing director of

Autenrieth Beteiligungs GmbH.

Supervisory Board shareholdingsRolf Hans Hartung holds a 15 percent stake in TCH GmbH, a company in which his son Robert M. Hartung is the majority shareholder. TCH GmbH held a total of 10,581,192 shares in centrotherm photovoltaics AG shares as of Decem-ber 31, 2011. Besides this, Supervisory Board members hold no shares in the company.

Remuneration report


The Supervisory Board determines and regularly reviews Management Board remuneration, which is performance-based, and adjusted to both the size of the company, and its commercial and financial position. The remuneration contains both fixed and variable (performance-based) components.

By way of divergence from the recommendation of the German Corporate Governance Code, the structure of the variable components is not tied to negative corporate trends. The variable remuneration components depend partly on the Group’s performance, and partly on the attain-ment of qualitative targets pursuant to a target agreement. The amounts of all variable remuneration components are limited.

The fixed components comprise an annual fixed salary, benefits in kind and company pension fund benefits. Benefits in kind include the private use of company cars and company pension fund benefits. centrotherm photovoltaics also enters into D&O insurance policies for all Management Board members. Management Board employment contracts were adjusted in 2010 to meet the new statutory require-ments, and a deductible for D&O insurance was agreed for Management Board members.

The Supervisory Board does not regard further adaptation of the current contracts with its Management Board mem-bers as requisite, since several Management Board members already have an interest in the company’s sustained and positive development due to their substantial stake in the company. In the assessment of the Supervisory Board, the remuneration components currently set out in the Manage-ment Board agreements are appropriate both in themselves and when considered overall. They do not encourage the Management Board to enter into inappropriate risks.

Since the 2011 Ordinary Shareholders’ General Meeting voted against an extension of the abstention from disclosing individual Management Board remuneration, the company has decided to already publicize individual Management Board members’ compensation in the single-entity and consolidated financial statements for the 2011 financial year.


In the reporting year, payment to Management Board members consisted of fixed remuneration components of TEUR 1,768 (comparable prior-year period: TEUR 1,229), variable components of TEUR 547 (comparable prior-year period: TEUR 453, as well as non-cash compensation of TEUR 40 (comparable prior-year period: TEUR 41). Contri-butions of TEUR 3 (comparable prior-year period: TEUR 3) were made to the company pension scheme in 2011. The Group management reports provides individualized infor-mation about Management Board compensation.

Supervisory Board remuneration

Supervisory Board remuneration is regulated by centrotherm photovoltaics AG’s company statutes. After reimbursement of expenses and VAT related to remuneration and expenses, Supervisory Board members receive payment consisting of a fixed component and fees for attending meetings. The annual fixed component amounts to TEUR 20 per member, and the fee for attending meetings amounts to TEUR 1 per meeting. The Chairperson of the Supervisory Board receives double this amount in each case, and her deputy receives one and a half times the fixed component and the attend-ance fee. centrotherm photovoltaics also enters into direc-tors & officers’ (D&O) insurance policies for all Supervisory Board members.

The Supervisory Board members drew a total of TEUR 90 by way of fixed remuneration plus compensation of expenses of TEUR 41 during the 2011 period under review. These payments are distributed as follows among the individual Supervisory Board members:

in EUR Fixed re-muneration

Expense allowance

Prof. Dr. Brigitte Zürn 40,000 18,000

Rolf Hartung 30,000 13,500

Rolf Breyer 20,000 9,000

Total 90,000 40,500

Dr. Horn Unternehmensberatung GmbH, in which Prof. Dr. Brigitte Zürn, the company’s chairperson of the Super-visory Board, is active as Managing Director, renders tax consultancy services and similar consultancy services at standard market hourly and daily rates for the centrotherm photovoltaics Group on the basis of a contract dated March 22, 2007, which was approved by both the Super-visory Board and a shareholder general meeting resolution of July 5, 2007. On the basis of this agreement, the centrotherm photovoltaics Group paid consultancy fees totaling TEUR 187 in the 2011 financial year.

40 centrotherm photovoltaics Annual Report 2011 Group Management Report


41Group Management Report Annual Report 2011 centrotherm photovoltaics Inhalt


42 2011 Highlights

43 2012 Outlook

43 Management’s overall statement on business progress and position

44 centrotherm photovoltaics Group

55 Economic environment

56 Analysis of the financial position

63 Investments

64 Unappropriated retained earnings and application of earnings of centrotherm photovoltaics AG

65 Non-financial performance indicators

73 Report on opportunities and risks

83 Significant related parties transactions

83 Remuneration

84 Report on events subsequent to the reporting date

85 Forecast report

42 centrotherm photovoltaics Annual Report 2011 Group Management Report 2011 Highlights


2011 Highlights

2011 was no easy year for us. While the fi rst half of the year was still characterized by a thoroughgoing order boom that prompted us to expand our production capacities, we were confronted by price falls and a deteriorating market from the third quarter of 2011. Overcapacities and ruinous price declines burdened polysilicon manufacturers, from wafers through to modules. This diffi cult sector environ-ment, coupled with the late-summer European debt crisis, the banking crisis and uncertainties on fi nancial markets demanded much of our customers and us. These overall circumstances severely curbed our customers’ propensity to invest and their fi nancing possibilities, which fed through to modest new order intake in the third quarter. The sector and fi nancing situation worsened in the fourth quarter, with our order situation fi nally undergoing a further drastic deterioration. Information gained during the period between the 2011 year-end balance sheet date and the time when we published these fi nancial statements also brought no improvement to market prospects. This prompted us to implement the valuation adjustments that greatly burdened earnings. For this reason, we launched our ct focus effi ciency program at the start of 2012 to run alongside our Performance Plus program, which comprises both organizational and structural capacity adjustments, cost and personnel measures, as well as a sales campaign and a strategic focus on our core competencies.

The strained market situation in the second half of the year, with its dramatic year-end downturn, was fi nally also refl ected in our business trends: although revenue was up by 11.9 % from TEUR 624,169 to TEUR 698,530, earnings before interest, tax, depreciation and amortization (EBITDA) fell from TEUR 101,301 to TEUR 10,206. Operating earnings (EBIT) amounted to TEUR 19,801 (previous year: TEUR 75,363). One-off effects of TEUR – 74,952 comprised impairment charges applied to individual large-scale projects, valuation adjustments applied to inventories, and litigation costs. EBIT was impacted by weak fourth-quarter operating earnings in line with market conditions.

Despite the diffi cult overall conditions, we also look back on successes during the past fi nancial year:

• In the fi rst quarter of 2011, we successfully introduced a new cost-effi cient generation of key equipment on the market with the launch of our “c.NITE Inline” nitride coat-ing system and our “c.FIRE” fast-fi ring furnace, which help to reduce cell manufacturers’ operating costs. The “c.NITE Inline”, which provides antirefl ective coating for solar cells, delivers higher effi ciencies, greater throughput and longer operating life. The “c.FIRE” is the new version of our established fast-fi ring furnace, and is distinguished by a compact and space-saving design, as well as optimized ease of installation and maintenance.

• The production area at the Blaubeuren site was expanded by one third to around 31,000 m² in order to process the booming order fl ow at the start of the year. This allowed us to expand our production output to more than 100 systems per month. We also further strengthened our presence in Asia with the opening of our own subsidiary in the Indian economic metropolis of Bangalore.

• In the second quarter of 2011, we won a major order for an almost fully integrated factory in Algeria: The factory covers the entire solar value chain, ranging from ingot production and solar cell manufacturing through to solar module end-products.

• Also in the second quarter, centrotherm SiTec GmbH, with its ingot squaring and brick cropping systems, expanded its range of products to include two key equipment items for integrated ingot and wafer production. Both key sys-tems deploy the latest diamond wire saw technology. This ensures highest-precision cuts accompanied by maximum productivity and optimized production costs. With “First Ingot Out”, centrotherm SiTec also achieved an important milestone at a Chinese state company.

• Increasing price declines and an increasingly diffi cult fi nancing situation characterized the general sector, and thereby indirectly our business trends in the third quarter. Large-scale projects in the Silicon & Wafer segment required revaluation.

• We are further strengthening our core Solar Cell & Mod-ule business: The Fraunhofer Institute for Solar Energy Systems ISE, Europe’s largest solar research institution and a leading inspection and certifi cation institution for the photovoltaic sector, certifi ed a solar cell with 20 % effi ciency. This very high effi ciency is based on centaurus rear side technology that we developed.

• We also bundled the business activities of the Solar Cell & Module segment in our wholly-owned subsidiary centrotherm cell & module GmbH in the third quarter as part of the consistent strategic further development of our existing Group structure. Our customers will benefi t to an even greater extent from our proximity, individual project processing, in addition to customer care that is particularly oriented to the development of solutions.

• Shareholders participated in the company’s success with the fi rst-time payment of a dividend due to the good earnings trend in the 2010 fi nancial year. Following the Shareholders’ General Meeting on August 18, 2011, a EUR 0.50 dividend and a one-off bonus dividend of EUR 0.20 per ordinary share was distributed.

43Group Management Report Annual Report 2011 centrotherm photovoltaics 2012 Outlook

• Also in the third quarter, with the issuing of a registered bond and a borrower’s note loan together totaling about EUR 100 million, we successfully placed ourselves on the bond market, thereby securing the fi nancing of the company’s long-term growth.

• The market situation suffered a further drastic deterioration in the fourth quarter, and our order position remained dif-fi cult. In the Solar Cell & Module Segment, the operating earnings were affected by the drastic order deterioration at the year end.

• In the fourth quarter of 2011, we also won the iF product design award for our key photovoltaic equipment “c.FIRE” and “GP ISO-TEST”. Along with their high-end design, both products proved persuasive to the international jury in the further criteria categories of functionality, innova-tion and environmental compatibility.

• In the fi nal quarter of 2011, we also successfully created polysilicon production facilities at a Chinese state com-pany. The customer, Shaanxi Tianhong Silicon Industrial Corporation Co. Ltd. (STSIC), focused on integrated solar manufacturing chain with centrotherm technology and systems ranging from polysilicon production through to ingot manufacturing and solar cell production.

2012 Outlook

2012 was a further year entailing very great challenges and some uncertainties. The sector is in a consolidation phase, and its further development depends on a large number of factors, including infl uences from politics and the fi nancial markets, which are currently diffi cult to predict. We are endeavoring to prepare ourselves accordingly with our ct focus effi ciency program. It is nevertheless currently diffi cult for us to clearly gauge when positive signals from the sector will allow our order position to recover. We are not assuming a signifi cant change to the current situ-ation during the fi rst half of 2012. We prefer to refrain from issuing a revenue and earnings forecast for the 2012 fi nancial year given these current uncertainties on markets, and many infl uencing factors. Our focus is now directed to our core competencies, and our sales orientation to the MENA states. In doing so, we have positioned ourselves very well for the future in strategic terms. We believe that photovoltaics is quite clearly on a medium- and long-term growth path due to rising energy demand worldwide, and the energy policy revolution that has started. We aim to benefi t from this with the ct focus effi ciency program that we have launched, and with a streamlined and effi cient organization. We are also expanding our semiconductors and microelectronics business.

Management’s overall statement on business progress and position

We experienced 2011 as a challenging year. Whereas the fi rst half of the year was still characterized by a thorough-going order boom, the sector situation deteriorated from the third quarter. Although we had already garnered more than 90 % of our expected revenue by the third quarter, the Eurozone debt crisis, uncertainties on fi nancial markets, and, in particular, the dramatic intensifi cation of the sector environ-ment of the year-end, and its consequences, hit our bottom line particularly hard. We were especially challenged to act with foresight, wisdom, and decisiveness. We were partly successful in this context, winning new orders against the trend, and continuing on our growth path. We never theless won new orders with a total volume of TEUR 423,370. With an approximately 90 % share of consolidated new order intake, the order book position in the Solar Cell & Module segment reported a very pleasing trend: renowned solar cell manufacturers, particularly from Asia, ordered single systems and upgrades to retrofi t existing production lines with the latest technology. Discussions about contracts with potential customers in the Middle East and North Africa (MENA) region also developed positively. Alongside the traditionally strong business in Asia, the Group started to further expand its already good market position in this growth region in 2011.

Consolidated revenue was up by 11.9 % to TEUR 698,530 (previous year: TEUR 624,169). It nevertheless proved impossible for us to completely decouple ourselves from the changes to the overall circumstances surround-ing us. The strained sector situation, particularly in the Asian region, was also evident in our earnings trend, with our operating earnings (EBIT) standing at TEUR – 19,801 (previous year: TEUR 75,363). Earnings per share amounted to EUR – 0.75 (previous year: EUR 2.42).

As a result of the drastic deterioration in the sector environment in the third quarter, discussions concerning deeper cuts to solar subsidies, and the failure of the market to improve during the period between the 2011 year-end balance sheet date and the time when we published these fi nancial statements, the company failed to achieve its guid-ance for the 2011 fi nancial year of consolidated revenue of €710 million accompanied by a slightly positive EBIT margin.

When the fi rst signs of the crisis and its effects on our business occurred, we responded from the third quarter with cost and sales initiatives as part of our Performance Plus program and our fl exible production system.

We could neither foresee the drastic price decline and dramatic market downturn at the year-end that was coupled with the debt and banking crisis, the political turmoil sur-rounding the energy policy U-turn, and deeper solar subsidy cuts, nor could we implement corrective measures that could offset the earnings impact in 2011.

44 centrotherm photovoltaics Annual Report 2011 Group Management Report The centrotherm photovoltaics Group

We responded in early 2012 to this intensifi cation of the market situation, and launched our ct focus effi ciency program, which will run alongside costs and sales initiatives that are already in place. The program’s declared objective is to grow profi tably and sustainably with a streamlined and effi cient organizational structure, and a strategic focus on crystalline silicon along the photovoltaic value chain. This program’s fi rst step will entail a signifi cant reduction of costs, and an adjustment to Group capacities. The company aims to achieve around EUR 22 million of cost savings per year by the end of 2013. Along with a refocusing on business entailing production systems and technologies to manufacture crystalline solar cells and modules, and the production of silicon, a further signifi cant component of our future strategy will be the expansion of the Semiconduc-tors & Microelectronics area. An extensive sales campaign conducted by all segments will complete the ct focus package of measures.

We again reported a solid balance sheet structure in the 2011 fi nancial year, with TEUR 890,738 of total assets, and a 41.1 % equity ratio. We also enjoyed a TEUR 137,634 liquidity cushion as of the December 31, 2011 balance sheet date.

The centrotherm photovoltaics Group

Group structure and business activities

centrotherm photovoltaics ranks as one of the globally leading providers of technology and equipment to the photovoltaic industry. The Group commands a broad and well-founded technological basis, as well as key equipment along the photovoltaics value chain. We equip renowned solar companies and new sector entrants with turnkey production lines and single equipment to manufacture silicon, ingots and bricks, crystalline solar cells and modules, and thin fi lm modules. The Group’s turnkey offerings also include integrated factories that are tailored to customers’ requirements, spanning silicon through to module produc-tion. We guarantee important performance parameters such as production capacity, effi ciency, and completion deadlines for our customers. We implement our strengths in new technologies and innovations in modern production systems with which we create decisive competitive advantages for our customers. centrotherm photovoltaics produces almost exclusively in Germany, although it is present through sales and service locations in the world’s relevant photovoltaic markets. The company is based in Germany, with its Group headquarters at Blaubeuren.

Business divisions and organization

The centrotherm photovoltaics Group’s operating business is divided into three divisions:

• Solar Cell & Module (including semiconductors & microelectronics)

• Silicon & Wafer

• Thin Film Module

We are organized on a decentralized basis in order to respond rapidly to the market, and to customer require-ments. Each business segment is managed independently by its own management team, while centrotherm photovoltaics AG implements strategic Group management from the Group headquarters, and is also active on an operational basis. Along with its strategic tasks, the Group headquar-ters also operates as an interface to various areas of the corporate environment, particularly the capital market and shareholders, policymakers and the broader interested public. As the parent company, centrotherm photovoltaics AG also performs central functions such as controlling, risk management and marketing.

45Group Management Report Annual Report 2011 centrotherm photovoltaics The centrotherm photovoltaics Group

Silicon & Wafer

Metallurgical silicon is the raw material to produce polysilicon, the starting material for solar cell production. Metallurgical silicon is manufactured using silica in the form of quartz, and carbon, as raw materials in a reduction furnace at temperatures of 2,000° C. Metallurgical silicon is then converted into high-purity silicon using the Siemens process, and refi ned into polysilicon that can be used for photovoltaic purposes. Polysilicon is processed into silicon blocks, so-called ingots, which are cut with wires saws initially into bricks, and subsequently into thin wafers, to be further processed into solar cells.

Along with our product package to manufacture engineered metallurgical silicon (EMS), we develop, supply and install CVD reactors, converters and vent gas recovery systems for polysilicon production. We also offer consulting, planning and engineering through to the commissioning of polysilicon factories.

With regard to wafer production, our product portfolio includes multi-crystalline ingot furnaces, as well as squaring and cropping saws based on high-speed diamond wire technology for the further processing of the ingots into wafers.

Our experienced experts guarantee comprehensive process know-how, and ensure that our customers meet the highest requirements on all silicon and wafer production steps, while complying with stringent environmental regula-tions. Our equipment is distinguished by comparatively low energy consumption and high production capacity. It guarantees high silicon purity grades, and consequently outstanding end-product quality.

Solar Cell & Module

In the Solar Cell & Module segment, we develop and sell technology production systems, as well as accessories, of the manufacturing of mono- and multi-crystalline solar cells. We also offer turnkey production lines to produce solar cells and modules, which provide our customers with performance at the upper end of the industry’s perfor-mance spectrum. Our production lines are distinguished by innovative automation, layout and manufacturing design. Experienced teams ensure that production lines enter operation rapidly, and according to agreed delivery dates. This also allows us to guarantee our customers important performance parameters such as cell effi ciency, yield and production capacity. We pursue an evolutionary approach to effi ciency enhancement in research and development. This allows us to integrate our progress as technology and equipment upgrades in already existing production lines. Selective emitter and centaurus technology formed the focus in 2011, which boosted cell effi ciency by up to one

percent. This improvement allows our customers to meet rising market and capacity requirements, and to manufac-ture long-term on the basis of state-of-the-art technology.

The Solar Cell & Module segment product range also includes the semiconductor and microelectronics area. Here we develop and produce high-tech production systems to manufacture a broad spectrum of semiconductor compo-nents. They are used for many thermally activated processes in various technologies and applications (e.g. power semi conductors, LEDs, Micro-Electro-Mechanical Systems – MEMS, sensor technology). In particular, our product range particularly comprises horizontal and vertical furnaces, as well as vacuum soldering systems.

Thin Film Module

Thin fi lm modules are frequently utilized on building facades and on large surfaces, and are distinguished by low produc-tion costs and low material consumption compared with crystalline technology. In the Thin Film Module segment, our product range includes the development and sale of turnkey production lines and individual process systems to produce CIGS thin fi lm modules (copper-indium-gallium-diselenide). Our own product range includes vacuum plasma coating and selenium systems. Our partners manu-facture further thin fi lm production components in line with our instructions, and integrate them into the production lines. A strategic product focus of our subsidiary FHR Anla-genbau GmbH is on foil coating systems for the production of fl exible solar cells, organic solar cells, and energy-effi cient OLED displays. Together with well-known industrial part-ners and research institutions, FHR has attained a globally leading technology and market position with these roll-to-roll systems. As part of ct focus, the Management Board decided to close the Thin Film Module segment at the Group’s Blaubeuren location, and to outsource some areas to Asia. This move will bundle resources, and create a unit that is closely geared to the market.


Sales markets and market position

International business continues to hold major signifi cance for our company, given our 95.4 percent export ratio (2010: 94.7 percent). Our production equipment and technology was in particular demand in the Asia region. China and Taiwan remained our main sales markets. The Asian region generated a total revenue share of 90.5 percent. Further sales markets included the domestic German market and the rest of Europe.

Our customers in the Solar Cell & Module segments include well-known international solar cell manufacturers such as Luan Group, Trina Solar, Hanwha SolarOne, Jinko Solar, and Yingli Solar. The Luan Group was also a customer in the Silicon & Wafer segment, as well as Qatar Solar Tech-nologies, Taiwan PolySilicon, Guodian Ningxia Solar, Inner Mongolia ERDOS Polysilicon Industry, and Shaanxi Tianhong Silicon Industrial. In the Thin Film area we are realizing our fi rst production line incorporating CIGS technology together with our customer Sunshine PV. Gebr. Schmid is our most important competitor in the turnkey solar cell production line area, and it is also one of our most important competitors in the area of photovoltaic single equipment items for solar cell production, along with Roth & Rau, Amtech, and Despatch. The centrotherm photovoltaics Group ranks second on the global market for solar industry production equipment when measured in terms of sales, and has reduced the gap between the company and sector leader Applied Materi-als. The company’s dominant market leadership in the PECVD systems area was maintained with a market share of approximately 50 percent. Our competitive position in the Thin Film Module area has not changed signifi cantly. Manz Automation AG is also a provider of a turnkey production line based on CICS technology. Further competitors include OC Oerlikon, Ulvac, and Roth & Rau, although they utilize a fundamentally different technology (amorphous silicon).

The further expansion of solar cell and module produc-tion capacities in China and Taiwan characterized 2011. Our production systems to manufacture crystalline solar cells, in particular, enjoyed particularly strong demand during the fi rst three quarters. Strong capacity expansion in Asia, and a very restrained end-market for solar modules, fed through to overcapacities among manufacturers, and to enormous price falls along the photovoltaic value chain over the course of the second half of the year. Solar mod-ule prices fell continuously, and were down by almost one half year-on-year by the end of 2011. Prices of individual materials along the value chain, such as polysilicon, fell by over 70 %. The solar industry fi nds itself in its most diffi cult crisis to date. Its consolidation phase is now fully underway. It is precisely in this situation, however, where it is important to invest in the latest technology and equipment in order to survive on the market, and to remain competitive. In the semiconductor sector, too, there

is detectable phenomenon whereby greater investments are made in new and high-quality production equipment and in technology development even during consolidation phases, in order to be better positioned for subsequent growth phases. Such investments will generate future sales opportunities and sales potentials for our company in 2012.

International locations

Group strategy and targets

Our corporate strategy is derived from our vision of making solar electricity competitive without subsidies against con-ventional energy sources, as well as against other renewable energies. We aim to promote both our company and the entire sector by enabling our customers to achieve one thing above all: cut production costs as measured in euros per watt peak (Wp). Solar energy is becoming more effi cient and more cost-effective as the result of our innovations. Our aim is to continue to grow further through competitive products and innovative technologies, and expand our lead on the market. To this end, we have set ourselves strategic targets:

• Expanding our technology and product portfolio

• Strengthening research and development

• International expansion

• Boosting corporate value

Europe | Deutschland: Blaubeuren (Headquarters), Abensberg, Burghausen, Dresden, Hannover, Konstanz, Ottendorf-Okrilla | Austria: Vienna |

North America | USA/Georgia: Marietta | Asia | China: Beijing, Shanghai |

India: Bangalore | Korea: Suwon | Singapur | Taiwan: Taoyuan

Europe | Deutschland: Blaubeuren (Headquarters), Abensberg, Burghausen,

BlaubeurenHeadquarters


Expanding our technology and product portfolio

We have successfully positioned ourselves along the photo-voltaic value chain from silicon, ingots and wafers, through to modules. On the most important steps of the value chain, we pursue the objective of reducing our customers’ production costs through new product developments and innovations. We aim to provide growth impulses for the photovoltaic sector with these cost-reductions, and to drive our own corporate development forward at the same time. Besides this, we also access further sales potentials and new customer groups through a broad range of services, which, along with new products, also includes upgrade packages and service offerings, for example.

Strengthening research and development

As a technology group in photovoltaic equipment con-struction, we engage in our own integrated research and development activities, which span silicon production, solar cell manufacturing, and solar modules as end-products. We have developed a technology and product roadmap for all our divisions, which serves as a set of guidelines for devel-opment work. The decisive success factors encompassed in the road map are the enhancement of effi ciencies, energy-effi ciency, and output. In 2011, we successfully launched our centaurus rear side technology on the market, and achieved further effi ciency enhancement in our customers’ industrial production processes. Our focus this year will be on developing and implementing the process transfer of new metallization technologies.

International expansion

As part of our long-term growth strategy, we aim to grow together with existing customers, acquire new customers, and further tap growth markets. We analyze new markets, and develop market entry strategies at an early juncture. We are represented with service and sales companies in the most important sales markets such as China, Taiwan, South Korea and India, in order to secure customer loyalty and market presence. These foreign companies endow us with a strong market position in East Asia, and also form the basis for expanding our service activities, a business area offering great future potential. Tapping the MENA region, where we have identifi ed strong interest in renewable energies tech-nologies, forms a further focus of our expansion strategy. We are well positioned to exploit this business potential as the result of our early market entry, and our integrated product and technology portfolio.

Boosting corporate value

We regard the sustained enhancement of our corporate value as a key target parameter. We derive our corporate value from the cost-of-capital-based ROCE management metric (return on capital employed).

Our aim is to achieve a sustained improvement in ROCE. Further details about our value management and manage-ment system can be found in the chapter by the same name on page 54. The Management Board is responsible for the centrotherm photovoltaics Group’s organization and management structure. Management Board responsibilities are in line with the functional separation of the Group areas.

Organization and management structure

The Management Board is responsible for the management of the centrotherm photovoltaics Group. Management Board responsibilities are in line with the functional separa-tion of the Group areas.

Legal structure

centrotherm photovoltaics AG, Blaubeuren/Germany, is the controlling company of the centrotherm photovoltaics Group, which comprised 14 further consolidated compa-nies as of December 31, 2011. There were no signifi cant changes to the legal structure in 2011 that have effects on the scope of consolidation. Details can be found on page 99 of the notes to the consolidated fi nancial statements. Group companies are largely responsible for their own activities within the framework of the strategic orientation, which the Management Board develops in coordination with the Supervisory Board. As the parent company, centro-therm photovoltaics AG performs central functions such as controlling, risk management and marketing.

ROCE-calculation

1 NOPAT = Net Operating Profi t After Taxes

ROCE

=

= :

NOPAT 1

Average

Capital Employed

EBIT – adjusted taxes

Equity+ Non-controlling interests

(if negative)+ Interest-bearing liabilities– Liquid funds– Securities– Financial assets– Equity interests

=


Consolidated companies

Scope of consolidation centrotherm photovoltaics AGas of December 31, 2011

in % Consolidated companies

Direct share

Indirect share

Combined share

centrotherm cell & module GmbH, Blaubeuren 100.00 0.00 100.00

centrotherm management GmbH, Blaubeuren 0.00 100.00 100.00

centrotherm management services GmbH & Co. KG, Blaubeuren 100.00 0.00 100.00

centrotherm photovoltaics Asia Pte. Ltd., Singapur 100.00 0.00 100.00

centrotherm photovoltaics technology Shanghai Co. Ltd., Shanghai, China 100.00 0.00 100.00

centrotherm SiTec GmbH, Blaubeuren 100.00 0.00 100.00

centrotherm thermal solutions GmbH & Co. KG, Blaubeuren 100.00 0.00 100.00

centrotherm thermal solutions Verwaltungs GmbH, Blaubeuren 100.00 0.00 100.00

FHR Anlagenbau GmbH, Dresden/Ottendorf-Okrilla 100.00 0.00 100.00

GP Inspect GmbH, Neuried 0.00 76.00 76.00

GP Solar GmbH, Konstanz 0.00 100.00 100.00

Michael Glatt Maschinenbau GmbH, Abensberg 0.00 100.00 100.00

Photovoltaics Asia Invest Pte. Ltd., Singapur 0.00 100.00 100.00

Sunshine PV Corp., Hsinchu Industrial Park, Taiwan 0.00 25.40 25.40

Disclosures pursuant to §§ 289 Paragraph 4 and 315 Paragraph 4 of the German Com-mercial Code (HGB) and explanatory report

Composition of subscribed capital

The subscribed capital (issued share capital) of centrotherm photovoltaics AG amounted to EUR 21,162,382 as of Decem-ber 31, 2011. As a consequence, the issued share capital did not change in the 2011 fi nancial year. The share capital is split into 21,162,382 ordinary no par bearer shares (no par shares) each with a notional amount in the share capital of EUR 1.00 per share. All shares are fully paid up. There are no differing share classes, or shares with special rights. Each share entitles to one vote at the Shareholders’ General Meeting. According to § 5 Paragraph 3 of the company statutes, shareholders are not entitled to securities their shares, to the extent that securitization is not requisite according to rules prevailing on a stock market on which the company’s shares are admitted.

Voting right or share transfer restrictions

Dr. Peter Fath has obligated himself, as a matter of principle, not to sell 156,000 of the company’s shares before the end of May 2, 2009, which he received as consideration in connec-tion with the disposal of his stake in GP Solar GmbH to the company. Dr. Peter Fath may freely dispose of 80,000 of these shares since that date. He has been able to freely dispose of the remaining 76,000 shares in steps since May 3, 2009, but only under particular preconditions generally connected with his further appointment as a Management Board member. He may freely dispose of the shares in their entirety from May 3, 2012. If Dr. Fath’s contract of appointment with the company is cancelled, or if he relinquishes his Management Board offi ce, he is obligated to transfer some of these shares back to the company. By December 31, 2011, Dr. Fath had sold a total of 80,000 of the company’s shares, for which the above-described sales restrictions had lapsed.

Management Board responsibility areas

Robert M. HartungCEO and speaker of the Management Board

Hans AutenriethCEO

Dr. Peter FathCTO

Dr. Dirk StenkampCOO

Dr. Thomas RieglerCFO

Business strategy, group management, Silicon & Wafer business unit

International sales, strategic alliances, business development, Thin Film Module business unit

Overall technology, research & development, group marketing, Solar Cell & Module business unit

Operations, engineering, materials management, production, quality

Controlling, fi nances and accounting, investor relations, human resources, IT, legal department, inter-nationalbusiness development


Capital shares exceeding 10 percent of voting rights

TCH GmbH, which is based at Blaubeuren, Germany, directly held 10,581,192 shares as of December 31, 2011 (corres ponding to 50.0 percent of the company’s share capital). Robert Michael Hartung, a member of the compa-ny’s Management Board is the majority shareholder of TCH GmbH, and Rolf Hans Hartung, a member of the company’s Supervisory Board, is a further shareholder. Both shareholders reside in Blaubeuren, Germany. The company is currently not aware of any further direct or indirect stakes in the company exceeding 10 percent of voting rights.

Shares with special rights granting controlling powers

There are no shares with special rights granting controlling powers.

Type of voting right control if employees hold shares

and do not exercise their controlling rights directly

To the extent that employees hold shares in the company, they exercise these controlling rights themselves directly from the shares they hold.

Statutory regulations and company statute provisions

relating to the nomination and recall of Management

Board members, and statute amendments

Management Board members are appointed and withdrawn from offi ce in accordance with the statutory provisions of §§ 84, 85 of the German Stock Corporation Act (AktG) as well as according to § 6 of the company’s statutes. Accord-ing to these, the Supervisory Board appoints Management Board members, and recalls them from offi ce. Management Board members are appointed for a maximum period of fi ve years, whereby re-appointments are permitted. The Super-visory Board may recall a Management Board member from offi ce if an important reason for such recall exists. Important reasons include, in particular, gross infringement of manage-ment board duties, or a withdrawal of confi dence by the Shareholders’ General Meeting. The statutory provisions of §§ 179 ff. of the German Stock Corporation Act (AktG) apply to statute amendments, as well as § 16 of the company statutes. Accordingly, a statute amendment requires a shareholder general meeting resolution passed with a simple majority of the submitted votes, and, to the extent that the law requires a capital majority besides a voting majority, a simple majority of the issued share capital represented at the passing of a resolution, to the extent that a higher majority is not required according to mandatory statutory provisions or the statutes. Pursuant to § 179 Paragraph 1 Clause 2 of the German Stock Corporation Act (AktG) in combination with § 11 of the statutes, the Supervisory Board is authorized to pass resolutions that amend statutes only to the extent that they relate to their wording.

Authorizations of the Management Board to issue or

repurchase shares

Approved capital I

Pursuant to § 4 Paragraph 3 of the statutes, the Manage-ment Board is authorized to increase the company’s issued share capital by August 17, 2016, with the assent of the Supervisory Board, once or on several occasions by a total of up to EUR 2,837,618.00 through the issue of new ordinary bearer shares in exchange for cash or non-cash capital contri butions (Approved Capital 2011/I). As a matter of principle, the new shares must be offered to shareholders for subscription (including by way of indirect subscription pursuant to § 186 Paragraph 5 Clause 1 of the German Stock Corporation Act [AktG]). With the approval of the Supervisory Board, the Management Board is also authorized to exclude the shareholders’ statutory subscription rights in the following cases:

(1) in the event of a capital increase carried out against cash contributions if the amount of the new shares does not substantially fall below the stock exchange price of already quoted shares of the same type and terms of issue within the meaning of §§ 203 Paragraphs 1 and 2, 186 Paragraph 3 Sentence 4 of the German Stock Corporation Act (AktG) at the time of fi nal determination of the issuing amount. This exclusion of subscription rights shall be limited to a maximum total of 10 percent of the company’s share capital in exis-tence when this authorization becomes effective, or, if this amount is less, when this authorization is exercised. To this limit should be added shares sold or issued during the term of this authorization in direct or corresponding application of § 186 Paragraph 3 Clause 4 of the German Stock Corpora-tion Act (AktG) under exclusion of statutory subscription rights. Also to be added are shares that are issued to service option and/or conversion rights arising from convertible or warrant debentures, or from participation rights, to the extent that these debentures or participation rights are issued during the duration of this authorization in corresponding application of § 186 Paragraph 3 Clause 4 of the German Stock Corporation Act under exclusion of subscription rights;

(2) in the case of a capital increase against non-cash capital contributions, in particular for the purchase of companies, interests in companies or parts of companies;

(3) in order to reconcile residual amounts;

(4) to grant subscription rights to bearers of conversion option rights arising from debentures to be issued by the company or an associated company; and

(5) in order to issue shares as employee shares to staff of the company or its associated companies.

The Management Board is authorized, with the approval of the Supervisory Board, to specify the further details of capital increases from approved capital.


Approved capital II

Pursuant to § 4 Paragraph 4 of the statutes, the Manage-ment Board is authorized to increase the company’s issued share capital by June 29, 2014, with the assent of the Supervisory Board, once or on several occasions by a total of up to EUR 7,743,573.00 through the issue of new ordinary bearer shares in exchange for cash or non-cash capital contributions (Approved Capital II). The new shares must be offered to the shareholders for subscription as a matter of principle. The Management Board is authorized, however, with the approval of the Supervisory Board, to exclude shareholders’ statutory subscription rights in order to reconcile residual amounts, or, in the instance of a capital increase in return for non-cash capital contribu-tions, particularly in order to acquire companies, interests in companies, or parts of companies. The Management Board is furthermore authorized, with the approval of the Supervi-sory Board, to determine the further specifi cs relating to the performance of capital increases from approved capital.

As a consequence, as of December 31, 2011, centrotherm photovoltaics AG had at its disposition total approved capital to a nominal amount of EUR 10,581,191.00, which may be issued in partial amounts with differing time limits through the issue of up to 10,581,191 ordinary bearer shares.

Authorization to issue option or convertible debentures,

as well as conditional capital

The Management Board is authorized, with the assent of the Supervisory Board, to issue until June 21, 2015, once or on several occasions, bearer or registered warrant or convertible debentures (hereinafter referred to collectively as “debentures”) in a total nominal amount of up to EUR 250,000,000.00 with a limited or unlimited term, and to grant the bearers or creditors of debentures warrant or conversion rights to subscribe for up to 2,116,238 new ordinary bearer shares of centrotherm photovoltaics AG with a proportional amount of the issued share capital of up to a total of EUR 2,116,238.00 according to the more detailed terms of the conversion or option bond terms (hereinafter referred to as “terms”). The debentures may also be issued by a domestic or foreign company in which centrotherm photovoltaics AG holds a majority of the votes and capital, either directly or indirectly (hereinafter referred to as “majority-held equity holding company”). In this instance, the Management Board is authorized to adopt the guarantee for the repayment of the debentures for the issuing company, and to grant the bearers of such debentures centrotherm photovoltaics AG shares in order to satisfy the warrant or conversion rights that have been granted with these debentures. The bearers or creditors of convertible debentures have the right to exchange their convertible debentures into new centrotherm photovoltaics

AG shares according to the more specifi c terms. The terms may also establish a conversion obligation at the end of the term, or at an earlier date. In the instance where debentures with warrants are issued, one or several warrant certifi cates are to be attached to each fractional debenture, which entitle the owner to subscribe for new centrotherm photovoltaics AG bearer shares according to the more detailed specifi cs of the warrant terms to be determined by the Management Board. The maximum warrant right term is 20 years. In the case of convertible debentures, the exchange ratio is derived by dividing a debenture’s nominal amount by the conversion price fi xed for one new centrotherm photovoltaics AG share. The exchange ratio may also be derived by dividing the issue price of a debenture below its nominal amount by the conversion price fi xed for one new centrotherm photovoltaics AG share. The terms may also stipulate that the exchange ratio is variable, and may be rounded up or down to a whole number; furthermore, an additional cash payment may be determined. It may furthermore be stipulated that residual amounts be aggregated, or settled in cash. In no instance may the proportional amount per debenture of issued share capital of the shares being drawn upon for the conversion issue or option exercise exceed the nominal amount and issue amount of the conversion or option debentures. Shareholders are in principle entitled to statutory subscrip-tion rights in the instance of the issuing of debentures. The debentures may also be offered to shareholders by way of indirect subscription rights; they will then be taken over by a bank or banking syndicate in order to be offered to shareholders for subscription. The Management Board is nevertheless authorized, with the assent of the Supervisory Board, to exclude shareholders’ subscription rights to the debentures with warrant or conversion rights to centro-therm photovoltaics AG shares, to the extent that the issue price is not signifi cantly less than the debenture’s theoretical market price calculated according to recognized fi nance-mathematical principles. The authorization to exclude subscription rights, however, shall apply only for debentures with warrant5 or subscription rights, or conversion rights to shares, to which the proportional amount of the issued share capital totaling no more than 10 percent of the issued share capital is attributable, and, specifi cally, neither at the date when this authorization becomes effective, nor at the date when this authorization is exercised. Treasury shares are included within this limitation, to the extent that they are sold during the period of this authorization under exclu-sion of subscription rights pursuant to § 186 Paragraph 3 Clause 4 of the German Stock Corporation Act (AktG). To this limitation are also added those shares that were issued during the duration of this authorization from approved capital under exclusion of subscription rights pursuant to § 186 Paragraph 3 Clause 4 of the German Stock Corporation


Act (AktG). The Management Board is also authorized, with the assent of the Supervisory Board, to exclude from share-holders’ subscription rights residual amounts that result due to the subscription ratio, and to exclude subscription rights also to the extent that it is requisite to grant subscription rights to the bearers or creditors of warrant or conversion rights, or bearers or creditors of convertible debentures furnished with conversion obligations, to the extent that they would be entitled to such subscription rights following the exercise of conversion or warrant rights, or following the satisfaction of conversion obligations. The Management Board is authorized to determine the further specifi cs of the issuing and terms of debentures, particularly interest rate, issue price, term and denomination, conversion or warrant price, and the conversion or warrant period, in agreement with the managing bodies of the centrotherm photovoltaics AG majority-held equity holding company that issues the warrant or convertible debentures. The authorization also comprises the possibility to grant dilution protection, or to perform adjustments, according to the more detailed terms in certain instances.

In order to grant shares to holders of debentures that are issued by June 21, 2015 on the basis of an authorization of the Shareholders’ General Meeting by the company or a company in which a majority stake is held, the company’s issued share capital is conditionally increased by up to EUR 2,116,238.00 through issuing up to 2,116,238 new ordi-nary bearer shares (Conditional Capital I). The conditional capital will be utilized only to the extent that holders or creditors of debentures with conversion or warrant rights, which are issued by the centrotherm photovoltaics AG or its direct or indirect majority-held companies on the basis of the authorization resolution of the Shareholders’ General Meeting of June 22, 2010, actually utilize the conversion or warrant rights, or the holders or creditors of debentures with conversion rights, which were issued by centrotherm photovoltaics AG or its direct or indirect majority-held companies on the basis of the authorization resolution of the Shareholders’ General Meeting of June 22, 2010, satisfy their conversion obligations, and to the extent that no cash settlement occurs, or shares that already exist are deployed in order to service them. The issuing of the new shares will be performed according to the authorization resolution of the General Meeting of Shareholders on June 22, 2010, in each case at an warrant or conversion price to be deter-mined. The new shares participate in the company’s earn-ings from the start of the fi nancial year in which they come into existence as the result of the exercising of conversion or warrant rights, or through the satisfaction of conver-sion obligations. The Management Board is authorized to determine the further specifi cs relating to the performance of the conditional capital increase.

Authorization to issue share subscription rights to managers

and other important employees

The Management Board is authorized, with the assent of the Supervisory Board, to grant once or on several occa-sions subscription rights to a total of up to 1,500,000 ordinary bearer shares of centrotherm photovoltaics AG (hereinafter also referred to as the “company”) until June 21, 2015 according to the more detailed specifi cs of the fol-lowing provisions as part of the “centrotherm photovoltaics AG Stock Option Plan 2010” (hereinafter referred to as the “Stock Option Plan 2010”). To the extent that subscription rights are granted to members of the company’s Manage-ment Board, the Supervisory Board has sole decision in this respect. As part of the Stock Option Plan 2010, subscription rights to the company’s shares (“subscription rights”) may be issued to (i) centrotherm photovoltaics AG Management Board members, (ii) management members of companies associated with centrotherm photovoltaics AG (“Group companies”) and (iii) further important staff members of centrotherm photovoltaics AG and Group companies globally (the “individuals entitled to subscription rights”). The subscription rights are to be granted without consideration in return. The granting of subscription rights may nevertheless be made dependent on certain pre-requisites. The company’s Supervisory Board determines the precise group of individuals entitled to subscription rights, and the number of subscription rights that are granted to each individual, to the extent that subscription rights are granted to the company’s Management Board. Such determinations are made by the Management Board in all other cases. Each subscription right carries the entitlement to purchase one company share in return for the payment of the exercise price according to the more specifi c provi-sions of the Stock Option Plan 2010. Subscription rights may be issued within 45 days following the date when the results for the last fi nancial year are announced, or in each case within 45 days after the date when the results of the fi rst, second or third quarter of a current fi nancial year are announced, at the latest, however, as of the end of the current quarter of the allocation date. To the extent that members of the company’s Management Board are affected, the subscription rights allocation rate (“allocation date”) is determined by the Supervisory Board, otherwise by the company’s Management Board. Subscription rights run for a total of seven years following the allocation date. They may be exercised for the fi rst time following the expiry of a waiting period, and subsequently by the end of the period (“exercise period”). The waiting period must amount to at least four years from the allocation date. Subscription rights may not be exercised in the period from each quarter-end until the expiry of the fi rst stock market trading day follow-ing the publication of the corresponding quarterly results,


and not in the period between the fi nancial year-end and the expiry of the fi rst stock market trading day following the subsequent Shareholders’ General Meeting (“blocking periods”). Otherwise, the individuals entitled to subscription rights must comply with restrictions arising from general legal regulations, such as the German Securities Trading Act (WpHG), when exercising their subscription rights. Subscription rights lapse if they have not been exercised at the end of the exercise period, or could not be exercised due to certain success targets not being achieved. During the duration of the subscription rights, the plan terms may make provision for an adjustment of the exercise price and/or the performance target for instances of a capital increase with subscription rights, the issuing of conversion or option rights, a capital increase from shareholder funds, a reallocation of the company’s issued share capital (“stock split”), capital reduction, the disposal of treasury shares, a special dividend, and restructuring measures, or comparable measures. The company’s Supervisory Board determines the further specifi cs for the granting and satisfaction of subscription rights, and the further plan terms, to the extent that company Management Board members are affected, and, to the extent that other individuals entitled to subscrip-tion rights are affected, the Management Board determines such further specifi cs with the assent of the Supervisory Board. Further regulations particularly include determining the number of subscription rights of individual persons entitled to subscribe or groups of individuals entitled to subscribe, the determining of terms concerning the perfor-mance of the 2010 Stock Option Plan, the procedure for granting and exercising subscription rights including the decision whether the option is exercised to grant treasury shares to individuals entitled to subscribe instead for new shares from the Conditional Capital 2010/II to be created for this purpose, or whether a cash settlement is paid, the determination of holding periods beyond the four-year waiting period, in particular staggered holding periods for individual partial quantities of subscription rights, and the amendment of holding periods as part of statutory regula-tions in special cases, such as a change of control at the company. In addition, the plan terms may make provision whereby the company Supervisory Board, to the extent that company Management Board members are affected, and the Management Board, with the assent of the Supervisory Board, to the extent that other individuals entitled to subscription rights are affected, are entitled to determine that, for each subscription right exercised, instead of one company share being issued at the exercise price, a lower number of company shares may be issued at the lowest issuing amount pursuant to § 9 Paragraph 1 of the German Stock Corporation Act (AktG). If utilization is made of this option, each subscription right does not entitle to the

subscription of one company’s share in return for payment of the exercise price, but instead only a particular number of subscription rights to subscribe for one company share at the lowest issue amount in each case.

In order to grant shares to holders of subscription rights that are issued on the basis of the authorization of the Shareholders’ General Meeting as part of the “2010 Stock Option Plan” by June 21, 2015, the company’s issued share capital is conditionally increased by EUR 1,500,000.00 by issuing up to 1,500,000 new ordinary bearer shares. The conditional capital increase is to be performed only to the extent that holders of subscription rights that are issued as part of the “centrotherm photovoltaics AG Stock Option Plan 2010” until June 21, 2015, utilize their subscription rights to company shares, and the company does not grant cash settlement or deliver treasury shares in order to satisfy these rights. The new shares participate in the company’s earnings from the start of the fi nancial year in which they come into existence as the result of the exercise of subscrip-tion rights.

Authorization to acquire treasury shares

A resolution of the ordinary Shareholders’ General Meet-ing of centrotherm photovoltaics AG of June 22, 2010 authorized the company until June 21, 2015, pursuant to § 71 Paragraph 1 Number 8 of the German Stock Corpora-tion Act (AktG), to repurchase its own shares with an attributable proportional amount of up to 10 percent of the share capital in existence at the time of the Sharehold-ers’ General Meeting’s resolution. This authorization may be utilized either wholly or in partial amounts, once or on several occasions, by the company, its Group companies, or on its behalf, or for its account, by third parties. With the consent of the Supervisory Board, the Management Board was authorized to sell treasury shares acquired on the basis of this authorization, either wholly or in part, and either through the stock market or through an offer to sharehold-ers, if the treasury shares acquired are sold for cash at a price that is not signifi cantly less than the stock market price of the company’s shares of the same class at the time of the sale. The authorization applies, however, only to the extent that the shares sold under exclusion of subscription rights may not in total exceed 10 % of the company’s issued share capital, be it either at the time of the coming into force of this authorization or at the time of the exercise of this authorization. The maximum limit of 10 percent of the issued share capital diminishes by the proportional amount of the issued share capital attributable to those shares that were issued during the duration of this authorization as part of a capital increase excluding subscription rights pursuant to § 4 Paragraph 186 Clause 3 of the German Stock Corpo-ration Act (AktG), or that are required to service bonds with


warrants or convertible bonds issued during the duration of this authorization in corresponding application of § 4 Paragraph 186 Clause 3 of the German Stock Corporation Act (AktG) under exclusion of subscription rights.

The Management Board is also authorized, with the Supervisory Board’s assent, to utilize the company’s own shares, which were acquired on the basis of the authoriza-tion, as (part) consideration as part of corporate mergers or to acquire companies, interests in companies, parts of companies or other assets, as well as to utilize the company’s own shares, which were acquired on the basis of the authorization, to satisfy exchange or subscription rights arising from convertible or warrant debentures or stock option plans to issue subscription rights to shares to managers and other important employees of centrotherm photovoltaics AG and its Group companies. The Manage-ment Board was also authorized to partially or wholly withdraw treasury shares acquired on the basis of this or an earlier authorization with the assent of the Supervisory Board and without a further resolution by the Annual General Meeting being required. Shareholder subscription rights are excluded when the above-mentioned measures are executed. The company has made no utilization of the authorization to acquire and utilize treasury shares that was issued by the Shareholders’ General Meeting of June 22, 2010. The company held no treasury shares as of December 31, 2011.

Signifi cant company agreements subject to a change

of control following a takeover offer

The company has credit lines totaling EUR 79 million which are subject to a cancellation right for the lender in the instance that a change in the company’s shareholder rela-tionships occurs, as part of which another person acquires at least 30 percent of the company’s voting rights, or it is determined that this person holds these voting rights. This entails an allocation of voting rights according to § 30 of the German Act concerning Takeovers and the Purchase of Securities (WpÜG).

The company was also granted a credit line for total amount of EUR 55 million, which the lender may cancel if a change occurs in the company’s shareholder relation-ships as part of which another person acquires at least 30 percent of the company’s voting rights, or it is determined that this person holds these voting rights. This entails an allocation of voting rights according to § 30 of the German Act concerning Takeovers and the Purchase of Securities (WpÜG).

In addition, the company was granted a credit line for a total amount of EUR 25 million, where the lender has the right to demand the provision or strengthening of collateral by the company within an appropriate timeframe, if, in the lender’s assessment, the risk assessment of its claims has increased as the consequence of a change in shareholder or majority relationships.

The company also utilizes a long-term purpose-tied loan for an original amount of EUR 10 million. Land charges on CT PV AG property amounting to TEUR 10,000 have been registered, which serve to secure an earmarked real estate loan, TEUR 7,857.1 of which was utilized as of the balance sheet date. The lender can cancel their loan as soon as the borrower undergoes a change of control. A change of control occurs when a person or a group of persons coordi-nating in the meaning of § 22 Paragraph 2 of the German Securities Trading Act (WpHG) at any time acquires direct or indirect (in the meaning of § 22 Paragraph 1 of the German Securities Trading Act [WpHG]) control over the borrower. This does not apply if control is acquired by Hartung family members, including their heirs.

The borrower’s note loan for a total of EUR 61.5 million and the registered bond for EUR 40.0 million each contains an extraordinary cancellation rights in the instance that the loan recipient undergoes a change of control. Change of control describes the instance whereby, unless the loan providers grant prior approval, an individual or group of individuals who have coordinated their behavior, or individuals acting at the mandate of such individuals – in each case excepting permitted owners – acquire direct or indirect control over the majority of the loan recipient’s voting rights. A change of control does not occur if one or several permitted owners loses control over the loan recipi-ent without another individual, who does not form part of the group of permitted owners, at the same time acquiring control over the majority of the voting rights in the loan recipient. Permitted owners refers to Rolf Hans Hartung and his direct heirs, TCH GmbH or other legal entities that are directly or indirectly majority-owned by Rolf Hans Hartung and his heirs.

Apart from this there are no signifi cant company agree-ments subject to a change of control following a takeover offer.


Compensation agreements between the company and

Management Board members or employees for the

instance of a takeover offer

There are currently no agreements with Management Board members or employees concerning compensation payments in the instance of a change of control.

Value management and steering system

The centrotherm photovoltaics Management Board in coordination with the Supervisory Board determines Group strategy and the resultant Group objectives. These targets are monitored, steered and developed further at regular meetings together with the subsidiaries’ managing directors. We apply key fi nancial indicators such as revenue, EBITDA, EBIT, cash fl ow, liquidity, order book position, and new order fl ows to measure target attainment, and to manage the company. These indicators are reported monthly to the Management Board.

The order book position, and with it new order intake, are central management metrics for us. The order book and new order intake split according to divisions, as well as to content and type of order, are reported regularly and in detail to the Management Board. Our order book position offers a high degree of future revenue visibility due to project durations ranging from up to 12 months in the Solar Cell & Module area, to up to 24 months in the Silicon & Wafer and Integrated Factories area. We derive our budgeted revenue from the order book position and capacity planning. With return on capital employed (ROCE), we implemented a further, cost-of-capital-based manage-ment metric in 2008. It compares the operating result after (adjusted) taxes with the average capital invested in the company. ROCE provides us with information about the return on the capital employed within the company, and is consequently of great signifi cance for decisions about future investments. We do not employ a classic value management system such as the Economic Value Added concept, and we publish no additional value-oriented metrics relating to the fi nancial indicators we provide. A comparison of targeted and actual fi nancial management metrics by our Group subsidiary controlling function, including reports to the Management and Supervisory boards, ensures that developments are identifi ed at an early stage, that corresponding actions are implemented, and that corporate targets are adapted to changes in both the market and the company.

Management parameters at centrotherm photovoltaics AG

in TEUR 2011 2010 2009

Revenue 698,530 624,169 509,141

EBITDA 10,206 101,301 58,604

Operating cash fl ow – 68,158 69,445 49,723

Order book 423,023 843,807 797,401

ROCE in % – 5.0 28.0 16.6

Company-specifi c leading operating indicators

The early identifi cation of opportunities and risks is impor-tant for us in order to react promptly and fl exibly to market trends, and to actively identify and exploit potentials. For this reason, we not only observe macroeconomic indicators, but we also utilize company-specifi c leading indicators. This includes, for example, pursuing an early market entry strategy, and discussing photovoltaic potentials on a local basis, including with political decision-makers. Ongoing discussions with customers and suppliers also allow us to identify market and competitive structural trends, and to gauge the impact on our future sales and earnings posi-tions. A further individual indicator is the approval of solar subsidy programs in individual countries. Although we are not directly affected by adjustments to subsidy programs, we integrate any resultant considerations into our interna-tional expansion strategy.

55Group Management Report Annual Report 2011 centrotherm photovoltaics Economic environment

Economic environment

Macroeconomy

Gross domestic product (GDP) in selected regionsYear-on-year change in %

Region 2011 2010

World 3.8 5.1

Emerging economies 6.7 8.1

China 9.5 10.3

India 6.7 10.4

USA 1.7 3.0

Eurozone 1.5 1.8

Germany 2.9 3.7

1 = provisional fi guresSource: Institut für Weltwirtschaft Kiel

After marked global production growth in 2010, the recovery in the world’s economy faltered in 2011. The global economy was affected by the Eurozone state debt crisis and uncertainties in the fi nancial sector. Weakening factors in the fi rst half of the year included, in particular, high raw materials prices and the consequences of the earthquake in Japan, which fed through to lower macro-economic production, especially in industrial nations. After economic recovery in the third quarter, global gross domes-tic product was up by 3.8 % over the full course of 2011.

A cooling of emerging economies also occurred in 2011. The Eurozone debt crisis and uncertain economic prospects in the USA tangibly impacted exports, in par-ticular. More restrictive economic policy in some emerging nations also had negative effects on the global economy. Emerging countries’ GDP grew by 6.7 % overall.

With a 90.5 % sales share, Asia, and particularly China, was our most important sales market, as in previous years.

In China, lower exports over the course of 2011 fed through to less dynamic economic growth. Domestic demand stayed relatively stable, and GDP was up by 9.5 % year-on-year overall.

The trend in India is similar to that in China, with the worsening economy here being attributable especially to restrictive fi nancial policy and a sharp decline in invest ments. Year-on-year GDP growth of 6.7 % in 2011 represented a marked decline.

The US economy gathered momentum over the course of the year, particularly due to private consumption growth. Uncertainty on fi nancial markets and debate concerning the upper debt limit exerted a dampening effect. US GDP grew by 1.7 % year-on-year.

The Eurozone economy was strongly impacted by the worsening state debt crisis and increasingly restrictive fi nan-cial policies. This resulted in a weak domestic economy, and a dampened economic trend over the course of the year. The situation on fi nancial markets also worsened further given these circumstances. Overall Eurozone GDP growth rose by 1.5 % year-on-year.

In Germany, the previous year’s economic expansion continued until autumn 2011. Strong private consumption also drove this growth. GDP growth of 2.9 % was relatively strong compared with the rest of the Eurozone.

Since we continued to invoice almost exclusively in euros in 2011, currency exchange rates were of minor signifi cance for us.

Photovoltaic sector

The 2011 business year was characterized by growing pres-sure on the photovoltaic industry during the second half of the year. The gap widened between production capacities and global demand for photovoltaic systems. Solar module prices fell drastically, and were down by almost one half year-on-year by the end of 2011. The sharp fall in prices exerted a negative impact on the business trends and fi nancial positions of many companies in the sector, as well as their propensity to invest. The sector’s consolidation gathered momentum over the course of 2011, which was refl ected in a rising number of corporate mergers, invest-ments in companies, and takeovers. Some insolvencies were also announced at the end of the year in the USA and Europe. In addition, cooperation activities and takeovers were evident in the production equipment area.

The global photovoltaic market nevertheless beat most forecasts. After demand failed to meet expectations in the fi rst quarters of 2011, globally newly installed output stood at least 26 GW on a full-year basis, representing around 50 % year-on-year growth (Source: IMS Research)

56 centrotherm photovoltaics Annual Report 2011 Group Management Report Analysis of the fi nancial position

Germany again represented the largest market for photovoltaic installations in 2011 with installed output of 7.5 GW, of which 3 GW were installed in the last month of the year alone. Reasons for such strength include sharp decreases in system prices in combination with acceler-ated purchasing effects due to the reduction in feed-in remuneration, which came into force as of January 1, 2012.

Italy performed well ahead of leading analysts’ fore casts, and was only slightly behind Germany. Both countries together comprised more than 50 % of the global sales market.

Many other countries also contributed to the diversifi -cation of sales markets and market growth. Europe’s share of globally installed output fell from 80 % in the previous year to 70 % in 2011, for example. The USA established itself as the world’s third-largest photovoltaic market in 2011. In Asia, growth rates of 300 % and more were achieved in two highly promising markets, China and India. Japan also continued the previous year’s positive trend, and exceeded the 1 GW threshold in 2011. Other Asian markets’ growth rates were also high, averaging 50 %. The outsourcing of solar cell production to Asia continued in 2011. Sector analysts assume that almost 90 % of global crystalline cell production was based in China, Taiwan and Southeast Asia in 2011 (Source: Solarbuzz 2011).

Statutory environment

According to information available when this report was prepared, the German federal cabinet confi rmed the pro-posal to further reduce feed-in compensation in Germany in February. Solar electricity compensation rates are to be reduced by up to 30 % as of April 1, 2012 accordingly. Ministers agreed on a further monthly decline in subsidy rates for the May 1, 2012 until January 1, 2013 period.

Since Germany’s share of the global photovoltaic installation market has reduced continuously, centrotherm photovoltaics’ business trends are increasingly affected by developments in individual countries.

Analysis of the fi nancial position

Important notes and preliminary remarks

Where “centrotherm photovoltaics” is referred to below, information relates to the centrotherm photovoltaics Group and its consolidated subsidiaries. All margins and ratios relate to revenue. Consequently, compared with December 31, 2010, there were minor to the consolidation scope that have an effect on the Group’s net assets, fi nancial position and results of operations. Further information on this topic can be found in the notes to the consolidated fi nancial statements on page 99.

Order intake trends

Particularly in the second half of the year, the fi nancial year elapsed was characterized by the debt crisis in Europe, uncertainty on fi nancial markets, the diffi cult photovoltaic sector market environment, and customers’ continued reticence to invest. We were confronted by a worsening of the market, particularly from the third quarter of 2011, which fed through to modest new order intake. The sector and fi nancing situation worsened in the fourth quarter, with our order situation fi nally undergoing a further drastic deterioration. We nevertheless won new orders against this trend, with a total volume of TEUR 423,370. Order intake in the Solar Cell & Module segment was particularly gratifying with an approximately 90 % share of consolidated new order infl ow: renowned solar cell manufacturers, partic ularly from Asia, ordered single systems and upgrades to retrofi t existing production lines with the latest technology. Discussions about contracts with potential customers in the Middle East and North Africa (MENA) region also developed positively. Along-side the traditionally strong business in Asia, the Group started to further expand its already good market position in this growth region in 2011. The new order intake for the 2011 fi nancial year does not include the major order from Algeria. Since we received the advance payment after the December 31, 2011 balance sheet date, we will prospectively report the order as new order intake in the fi rst quarter of 2012.

The order book amounted to TEUR 423,023 as of December 31, 2011. Of this volume, TEUR 234,633 was attributable to the Solar Cell & Module segment, TEUR 176,082 to the Silicon & Wafer segment, and TEUR 12,308 to orders in the Thin Film Module segment.

Order book

in TEUR 30.09.2010 31.12.2010 30.03.2011 30.06.2011 30.09.2011 31.12.2011

Silicon & Wafer 309,084 277,093 259,493 243,356 175,409 176,082

Solar Cell & Module 406,627 513,774 575,475 444,939 326,571 234,633

Thin Film Module 31,975 52,940 34,803 26,952 22,086 12,308

Total 747,686 843,807 869,771 715,247 524,066 423,023

57Group Management Report Annual Report 2011 centrotherm photovoltaics Analysis of the fi nancial position

As in previous years, our PECVD systems, diffusion furnaces and fast-fi ring furnaces enjoyed particular demand. Order volumes in the thin fi lm module area were largely attributable to the order book position of our subsidiary FHR Anlagenbau GmbH, which successfully placed orders for roll-to-roll production systems on the market.

Revenue and earnings trends

• Diffi cult sector environment characterizes revenue and earnings trends

• Revenue grows 11.9 % to TEUR 698,530

• Operating earnings incur TEUR -19,801 of one-off charges

Extract from consolidated income statement

in TEUR Notes01.01. –

31.12.201101.01. –

31.12.2010

Revenue 6 698,530 624,169

Total operating performance 756,975 681,167

Earnings before interest, tax, depreciation and amortization (EBITDA) 10,206 101,301

Earnings before interest and tax (EBIT) – 19,801 75,363

Earnings before tax (EBT) – 23,756 74,302

Consolidated net income – 15,884 51,141

Earnings per share as of the reporting date in EUR 17 -0,75 2,42

Revenue and total operating performance

Our revenue was up by 11.9 %, rising from TEUR 624,169 to TEUR 698,530. Currency effects played no notable role in our 2011 revenue trends, as in previous years.

Development of order intake 2011 in TEUR

500

400

300

200

100

0

Q1 224,343 Q2 344,533 Q3 410,675 Q4 423,370

Order intake 2011 per segment

Gesamt 000,0

Thin Film Module 2.5 %

Solar Cell & Module 90.7 %

Silicon & Wafer 6.8 %

Revenue and Total operating performance 2009 – 2011 in TEUR

800

700

600

500

400

300

200

100

0

2009 2010 2011

Revenue 509,141

Total operating performance 536,049

Revenue 624,169


Revenue 698,530



Total operating performance amounted to TEUR 756,975 in 2011 (previous year: TEUR 681,167), when taking into account changes in inventories of fi nished and semi-fi nished goods, and own work capitalized. Changes in inventories of fi nished and semi-fi nished goods resulted mainly from a higher level of orders for single equipment items, whose revenue is realized according to IAS 18 due to their standardization. Revenue for these orders is no longer realized according to degree of completion, but is instead realized when the main service has been rendered, and ownership and risks have transferred to the customer.

We generated most of our revenue abroad with a 95.4 % export ratio (previous year: 94.7 %).

We generated total sales of TEUR 666,326 with our international customers (previous year: TEUR 591,138). Revenue in the Asian region was particularly strong with a 90.5 % revenue share. The second largest sales market was Germany with 4.6 %, followed by the rest of Europe region at 3.0 %.

Revenue by regions

in TEUR01.01. –

31.12.201101.01. –

31.12.2010

Germany 32,204 33,031

Other Europe 20,946 52,567

Asia 632,386 521,918

ROW 12,994 16,653

Total 698,530 624,169

Business with single equipment items for the produc-tion of crystalline, silicon-based solar cells was gratifying: the Solar Cell & Module segment won orders, and boosted revenue, counter to the general sector trend. We achieved total revenue of TEUR 556,879 with our single equipment items last year (previous year: TEUR 510,720). This volume refl ects 656 single equipment items that we shipped. Revenue of TEUR 97,416 was generated with turnkey production lines (previous year: TEUR 60,236). Six produc-tion lines were shipped, including partial deliveries. The service and spare parts business also reported a pleasing trend, with revenue climbing to TEUR 32,173 (previous year: TEUR 25,788). Consulting and engineering revenue stood at TEUR 7,310, which is below the previous year’s level (TEUR 24,629) due to the fall in revenue in the Silicon & Wafer segment. As was the case with order trends, the sales growth was predominantly volume-driven, and price effects played no notable role.

Revenue by products

in TEUR01.01. –

31.12.201101.01. –

31.12.2010

Turnkey production lines 97,416 60,236

Single items of equipment 556,879 510,720

Service and replacement parts 32,173 25,788

Consultancy & Engineering 7,310 24,629

Other revenue 4,752 2,796

Total 698,530 624,169

Costs

At TEUR 500,042 (previous year: TEUR 382,300), the materials expense was again our largest cost item in 2011. Particularly as a result of the growing realization of revenue for single equipments pursuant to IAS 18, and related stockbuilding and adjustments to large-scale projects, the materials expense ratio – relative to revenue – rose to 71.6 % (previous year: 61.2 %). Further information about purchasing and production can be found on page 66. The personnel expense increased to TEUR 104,067 (previous year: TEUR 80,254). This represents a 14.9 % personnel expense ratio (previous year: 12.9 %). Further information about the personnel expense and further staff development can be found in the “Employees” chapter on page 65. Other operating expenses increased to TEUR 174,417 (previous year: TEUR 131,366). In particular, freight and packaging expenses grew due to the higher business volumes, and a high proportion of international business. Adjustments of TEUR 21,221 were also applied to individual large-scale silicon projects as part of a loss-free valuation of current construction projects due to the worsening of the polysilicon price fall, as well as the related deterioration of our custom-ers’ fi nancial positions.

There were no signifi cant currency or infl ation impacts on cost trends.


Earnings trends

Our earnings trend in the 2011 fi nancial year was signifi -cantly characterized by the strained market trend and its resultant one-off effects, which also signifi cantly refl ected continued market weakness during the period between the 2011 year-end balance sheet date and the time when we published these fi nancial statements. Earnings before inter-est, tax, depreciation and amortization (EBITDA) fell from TEUR 101,301 in the previous year to TEUR 10,206. Depre-ciation and amortization amounted to TEUR 30,007 (previ-ous year: TEUR 25,938). This primarily contains depreciation and amortization of TEUR 9,780 arising from purchase price allocations for companies acquired in 2008 (previous year: TEUR 11,112, and amortization applied to capitalized development work amounting to TEUR 7,197 (previous year: TEUR 4,717). Operating earnings (EBIT) amounted to TEUR – 19,801 (previous year: TEUR 75,363). One-off effects of TEUR – 74,952 arose from impairment charges applied to individual large-scale projects, valuation adjustments applied to inventories, and litigation costs. The surprisingly drastic deterioration in market and fi nancial circumstances fed through to weak fourth-quarter operating earnings, which is why the Group failed to achieve its guidance for the 2011 fi nancial year of EUR 710 million of consolidated revenue, and a slightly positive EBIT margin.

The fi nancial result amounted to TEUR – 3,468, compared with TEUR – 1,061 in the previous year. Financial expenses totaled TEUR 5,837 (previous year: TEUR 2,016). The latter particularly contained interest expenses from the compounding of liabilities arising from the purchase of Sol-Mic shares, as well as interest expenses for the subsidy loan. In sum, earnings before interest and tax (EBT) amounted to TEUR – 23,756 (previous year: TEUR 74,302). Because some

Group companies reported negative tax results, no deferred tax assets were formed. As a consequence, earnings include TEUR 8,609 of tax income, compared with the previous year’s TEUR 22,423 tax expense. The tax rate was approxi-mately 30 %. Consolidated net income amounted to TEUR – 15,884 (previous year: TEUR 51,141). Given an average of 21,162,382 shares, earnings per share stood at EUR – 0.75 (previous year: EUR 2.42). As the parent company of the centrotherm photovoltaics Group, centrotherm photovolta-ics AG reports unappropriated retained earnings of TEUR 85,466 in its single-entity fi nancial statements prepared according to German commercial law (previous year: TEUR 75,142). No dividend will be paid for the 2011 fi nancial year due to the earnings trend in the past fi nancial year.

Segment trends

The business operations of the centrotherm photovoltaics Group were split into three segments in the 2011 fi nancial year. In the Silicon & Wafer segment, we offer our custom-ers technology and key equipment on a one-stop shop basis – ranging from polysilicon through to ingot manufacturing and wafers. Our product range particularly includes reactors and converters, vent gas recovery units, basic engineering, and multi-crystalline ingot furnaces. The Solar Cell & Module segment comprises technology, single equipment items and turnkey production lines for the production of crystalline solar cells and modules. The segment also includes further products and services from the semiconductor and micro-electronics area. The Thin Film Module segment comprises technology, single equipment and turnkey production lines for the production of crystalline thin fi lm modules.

Development of largest cost items in TEUR

600

500

400

300

200

100

0

2011 2010

Material expenses 500,042

Personnel expenses 104,067

Other operating expenses 174,417

Material expenses 382,300

Personnel expenses 80,254

Other operating expenses 131,366 Development EBITDA and EBIT 2009 – 2011 in TEUR

105

90

75

60

45

30

15

0

– 15

– 30

2009 2010 2011

EBITDA 58,604

EBIT37,199

EBITDA 101,301

EBIT75,363

EBITDA 10,206

EBIT– 19,801


Extract from segment table

01.01. – 31.12.2011

in TEURSilicon &

WaferSolar Cell

& ModuleThin FilmModule

centrothermGroup

Segment revenue 57,913 607,948 32,669 698,530

EBITDA – 61,846 88,527 – 16,475 10,206

EBIT – 70,329 71,926 – 21,398 – 19,801

Assets 197,540 632,877 60,321 890,738

Liabilities 162,410 337,287 24,956 524,653

Investments in intangible assets and property, plant and equipment 7,674 64,741 3,550 75,965

Amortization of intangible assets and depreciationof property, plant and equipment 8,484 16,600 4,923 30,007

Silicon & Wafer

In the Silicon & Wafer segment, further progress was made with ongoing silicon projects in Europe and Asia in 2011.Segment revenue stood at TEUR 57,913 (previous year: TEUR 201,730). EBIT amounted to TEUR– 70,329 (previous year: TEUR 21,191). This segment’s business trend was primarily affected by the tense sector situation, and the very sharp polysilicon price fall. Given the extreme worsening of the market situation, and the attendant fi nancing diffi culties for polysilicon manufacturers, the Management Board was prompted to apply adjustments to individual large-scale projects in Asia in the third quarter, which exerted a consid-erably negative impact on segment operating earnings.

We responded to the drastic changes in overall condi-tions with an extensive catalogue of measures including a targeted sales campaign, and a task force for strategic fur-ther development. Discussions about contracts with poten-tial customers in the Middle East and North Africa (MENA) region are developing positively. Alongside the traditionally strong business in Asia, the Group aims to further expand its already good market position in this growth region.

With the ingot squaring and brick cropping systems, the portfolio was expanded to include two key equipment items for integrated ingot and wafer production. The automated ingot squaring system saws the multi-crystalline ingots into bricks. The brick cropping system cuts these bricks to the precise corresponding length. Wafers are later produced from these bricks. Both key systems deploy the latest diamond wire saw technology. This ensures highest-precision cuts accompanied by maximum productivity and optimized production costs.

With “First Ingot Out”, centrotherm also achieved an important milestone at a Chinese state company. In the fi nal quarter of 2011, we successfully created polysilicon produc-tion facilities at a Chinese state company. The customer, Shaanxi Tianhong Silicon Industrial Corporation Co. Ltd. (STSIC), is focusing on integrated solar manufacturing chain with centrotherm technology and systems ranging from polysilicon production through to ingot manufacturing and solar cell production.

Solar Cell & Module

In the Solar Cell & Module segment, revenue was up from TEUR 404,476 in the previous year to TEUR 607,948 in 2011. The strained market situation, particularly in the fourth quarter of 2011, resulted in the postponement and cancellation of some projects, and necessitated a revalua-tion of inventories, which fed through to a fall in segment earnings to TEUR 71,926 (previous year: TEUR 91,576).

Leading Asian solar cell manufacturers, in particular, count on our high-effi ciency technology and systems in order to further extend their cost leadership, also in a market environment that is becoming more diffi cult. At 87.0 %, the Solar Cell & Module segment commands the largest share of Group sales.

The bundling of business operations within centrotherm cell & module GmbH also represented an important step. With effect as of January 1, 2011, centrotherm cell & mod-ule GmbH took over the operating activities of the Solar Cell & Module segment, which has operated within centrotherm photovoltaics AG to date. With this market-oriented organi-zation that is strongly geared to implementation, an excellent basis was created for further profi table growth, innovative strength, and the extension of our technology-leadership.

Thin Film Module

In the Thin Film Module segment, the company reported TEUR 32,669 of revenue (previous year: TEUR 17,963) – predominantly from the wholly-owned FHR subsidiary. EBIT amounted to TEUR – 21,398, in line with expectations (previous year: TEUR – 37,404). Along with the activities of FHR Anlagenbau, we concentrated on realizing our CIGS pilot line in Taiwan in 2011. We concluded the project in early 2012. As part of the Group-wide ct focus effi ciency program, the Management Board also decided to close the Thin-Film Module segment at the Group’s Blaubeuren location, and to outsource some areas to Asia. This move will bundle resources, and create a unit that is closely geared to the market.


Net assets

• Organic growth further increases total assets by 10.6 % to TEUR 890,738

• Continued high equity ratio of 41.1 %

Extract from consolidated cash balance sheet

in TEUR 31.12.2011 31.12.2010

Assets

Non-current assets 397,085 325,849

Current assets 493,653 479,800

Total assets 890,738 805,649

Equity and liabilities

Equity 366,085 396,356

Non-current liabilities 169,254 72,071

Current liabilities 355,399 337,222

Total equity and liabilities 890,738 805,649

A very solid balance sheet structure continued to characterize us in 2011. Total assets increased by 10.6 % to TEUR 890,738 (previous year: TEUR 805,649). On the assets side, non-current assets rose to TEUR 397,085 (previous year: TEUR 325,849).This corresponds to 44.6 % of total assets (previous year: 40.4 %). Among other items, this item included goodwill of TEUR 117,436 from the consolidation of acquired companies (previous year: TEUR 129,298). Due to the current earnings position, centrotherm SiTec GmbH will fail to achieve the performance targets that were agreed part of the acquisition in 2008, as a consequence of which the variable purchase price liability arising from the acquisition was released, and the goodwill was adjusted. Internally generated intangible assets, which particu-larly contain own work capitalized in the research and development area of TEUR 6,158, fell from TEUR 35,418 as of December 31, 2010 to TEUR 34,011 as of December 31, 2011. Other intangible assets relate mainly to assets capitalized as part of purchase price allocations. They fell to TEUR 56,870 as the result of amortization (previous year: TEUR 66,815). Signifi cant changes compared with the end of 2010 included the “at equity investments” item, which increased from TEUR 0 in the previous year to TEUR 11,296. This balance sheet item comprises the interest in our partner Sunshine PV that was consolidated using the equity method for the fi rst time as of April 1, 2011. Property, plant and equipment rose to TEUR 139,331 (previous year: TEUR 83,258), and primarily refl ects investments in the new research and development building at the Constance site,

Balance sheet total 2011 Balance sheet total 2010

Balance sheet total: 890,738 Balance sheet total: 805,649

Non-current assets 397,085

Current assets 493,653

Equity 366,085

Non-current liabilities 169,254

Current liabilities 355,399

Non-current assets 325,849

Current assets 479,800

Equity 396,356

Non-current liabilities 72,071

Current liabilities 337,222

Assets Equity and liabilities Assets Equity and liabilities


and the purchase of land and buildings by centrotherm Besitz GmbH & Co. KG in the second quarter of 2011. Cur-rent assets increased only slightly by 2.9 % to TEUR 493,653 (previous year: TEUR 479,800). Their share of total assets at 55.4 % was slightly below the previous year’s level (previous year: 59.6 % of total assets). In connection with busi-ness volume growth, inventories underwent a signifi cant increase to TEUR 202,915 (previous year: TEUR 96,238). Receivables relating to construction orders fell to TEUR 46,471 (previous year: TEUR 90,580) due to the accounting of single equipment items on the basis of IAS 18, and the worsening of the order position in the second half of the year. Trade receivables fell to TEUR 51,727 (previous year: TEUR 60,945). Other receivables increased to TEUR 54,906 (previous year: TEUR 40,622). This increase is mainly attrib-utable to a higher level of advance payments. Securities were sold with a profi t, reducing this balance sheet item from TEUR 10,183 to TEUR 0. Cash and cash equivalents fell to TEUR 137,634 (previous year: TEUR 180,602) primarily due to business volume growth, the purchase of land and buildings, the fi rst-time payment of a dividend, and nega-tive operating cash fl ow.

On the equity and liabilities side of the balance sheet, equity was down by 7.6 % to TEUR 366,085 (previous year: TEUR 396,356) due to the consolidated net loss and the dividend distribution. We continue to report a high equity ratio of 41.1 % (previous year: 49.2 %). Non-current liabili-ties were signifi cantly above the level of the previous year at TEUR 169,254, refl ecting a rise in non-current fi nancial liabilities, and amounting to 19.0 % of total assets (previous year: TEUR 72,071; 8.9 % of total assets). The non-current fi nancial liabilities item increased primarily due to the issuing of a TEUR 38,210 registered bond and four borrower’s note loans totaling TEUR 61,500. Deferred tax liabilities fell slightly to TEUR 43,973 (previous year: TEUR 49,305). Current assets increased to TEUR 355,399 (previous year: TEUR 337,222). The increase is predominantly attributable to a higher level of trade payables, liabilities related to construction orders, and other current provisions. Next liquidity stood at TEUR 137,634 as of December 31, 2011 (December 31, 2010: TEUR 191,415).

Financial position

Extract from consolidated cash fl ow statement

in TEUR Notes 2011 2010


Cash fl ow from operating activities 44 – 68,158 69,445

Cash fl ow from investing activities 45 – 82,653 – 31,048

Cash fl ow from fi nancing activities 46 105,641 8,450

Earnings-effective change in cash and cash equivalents – 45,170 46,847

Cash and cash equivalents at the end of the period 47 137,634 180,602

Financial management principles and objectives

Our fi nancial management function places a major focus on securing our liquidity and fi nancial fl exibility. This is because we safeguard our fl exibility and independence with our liquidity holdings. We focus on liquidity- and risk-oriented interest-rate management in combination with a conserva-tive investment strategy. Our approach, as a consequence, includes, among other things, broad diversifi cation in fi xed income instruments and money market funds at our house banks. We invoice almost all transactions in euros. For this reason, currency management plays a subordinate role for us. Derivative fi nancial instruments are also of minor importance for us. In the 2011 fi nancial year, centrotherm photovoltaics issued a registered bond and a borrower’s note loan to fi nance long-term corporate growth. The company also drew upon two subsidy loans.

Financing analysis

centrotherm photovoltaics commands a liquidity position of TEUR 137,634. In the instance that we should require further funds in the future, our four house banks had com-mitted themselves to provide credit lines of TEUR 387,209 as of the end of the fi nancial year, of which TEUR 25,000 would be available as cash credit lines at short notice. We reported loan liabilities in the year under review in the form of several subsidy loans totaling TEUR 27,857 (valuation as of December 31, 2011), a TEUR 40,000 registered bond, and several borrower’s note loans together totaling TEUR 61,500. An amount of TEUR 1,429 was redeemed in the year under review. We currently have no credit rating provided by external rating agencies.

63Group Management Report Annual Report 2011 centrotherm photovoltaics Investments

Liquidity and investment analysis

Cash fl ow from operating activities amounted to TEUR – 68,158 in 2011 (previous year: TEUR 69,445). This cash fl ow result primarily refl ected the loss on operating activities (EBT) and the deterioration of the order position, which fed through to an increase in inventories, future receivables relating to construction orders, and advance payments of TEUR – 82,887 (previous year: TEUR 10,069). This was offset by a strong decrease in trade receivables. Working capital underwent only a slight change to TEUR 138,255 (previous year: TEUR 142,578). Cash fl ow from investing activities increased to TEUR – 82,653 (previous year: TEUR – 31,048). The higher year-on-year fi gure is primarily due to outgoing payments of TEUR 66,693 (previous year: TEUR 21,327) for investments in property, plant and equipment. Cash outfl ows for investments in property, plant and equipment primarily comprised the purchase of land and buildings worth TEUR 14,099, investments connected with the new research and development building in Constance, and the expansion of offi ce and production areas at the Blaubeuren site. Outgoing payments for investments in intangible assets amounted to TEUR – 8,452 (previous year: TEUR – 19,325), and resulted mainly from capitalized development work. Cash fl ow from fi nancing activities amounted to TEUR 105,641 (previous year: TEUR 8,450). This includes incom-ing payments from the drawing down of two subsidy loans in an amount of TEUR 20,000, the issuing of a registered bond (TEUR 38,210), four borrower’s note loans together totaling TEUR 61,500, and the fi rst-time dividend payment of TEUR 14,814. Financial resources were down year-on-year to TEUR 137,634 as of December 31, 2011 (previous year: TEUR 180,602).

Investments

Investments totaled TEUR 75,145 in 2011 (previous year: TEUR 40,652). Investments in property, plant and equip-ment amounted to TEUR 66,693 (previous year: TEUR 21,327) and predominantly comprised the purchase of land and buildings, investments connected with the new research and development building in Constance, and the expansion of offi ce and production areas at the Blaubeuren site. Development costs of TEUR 6,158 were capital-ized. According to IFRS, capitalization is always required if, among other things, it is suffi ciently certain that the development activity will result in future cash infl ows that cover corresponding development costs above and beyond

normal costs. A further focus of these investments was on the research and development area. Research and develop-ment expenses amounted to TEUR 47,343 (previous year: TEUR 42,421). An amount of TEUR 3,038 was invested in the Silicon & Wafer segment, TEUR 31,632 was attributable to the Solar Cell & Module segment (including Semiconduc-tors & Microelectronics), and TEUR 12,764 was attributable to investments in the Thin Film Module segment. Invest-ments in other intangible assets amounted to TEUR 1,748, following TEUR 4,843 in 2010.

Research & Development expenses per segment in TEUR

Gesamt 000,0

Thin Film Module 12,764

Solar Cell & Module 31,684

Silicon & Wafer 3,038

Total 47,486

64 centrotherm photovoltaics Annual Report 2011 Group Management Report Unappropriated retained earnings and earnings of centrotherm photovoltaics AG

Unappropriated retained earnings and earnings of centrotherm photovoltaics AG

The Management and Supervisory boards propose that no dividend should be paid for 2011 because of the poor earn-ings trend in the fi nancial year elapsed. The unappropriated retained earnings of TEUR 85,465 are to be carried forward to a new account.

The balance sheet and income statement of centrotherm photovoltaics AG are presented below. Both the balance sheet and income statement were supplemented by a third column in order to make the current fi nancial year fi gures comparable with the previous year’s fi gures.

The third column presents the previous year’s pro forma fi gures as if the separation of the Solar Cell & Module sub-division had already occurred with economic effect as of January 1, 2010. Where the comparable pro forma fi gures for the income statement are concerned, it should be noted that there was still no fi nancial accounting separation in the 2010 fi nancial year between the Solar Cell & Module sub-division and the other sub-divisions of CTPV AG. For this reason, the fi gures were calculated using cost center appraisals and cost center accounts.

Consolidated balance sheet as of 31.12.2011

in TEUR 31.12.2011 31.12.2010Proforma

31.12.2010

Assets

A. Fixed assets

B. Current assets 359,429 340,3431 336,002

C. Prepayments and accrued income 819,267 726,432 575,443

D. Deferred tax assets 2,050 1,392 1,392

Total assets 7,783 530 530

1,188,529 1,068,697 913,367


A. Equity

B. Provisions 391,617 381,294 381,294

C. Liabilities 41,890 40,481 23,251

D. Accruals and deferred income 733,380 625,323 487,223

E. Deferred tax liabilities 21,642 21,599 21,599

Total equity and liabilitie 1,188,529 1,068,6967 913,367

Income statement from 01.01.2011 - 31.12.2011

in TEUR01.01.2011 –

31.12.201101.01.2010 –

31.12.2010Proforma

01.01.2010 – 31.12.2010

Revenue 36,363 519,357 4,492

Total operating performanc 23,186 599,605 186,460

Earnings before interest, tax, depreciation and amortization (EBITDA) – 43,894 23,867 – 22,805

Earnings before income and tax (EBIT) – 47,731 18,865 – 24,577

Earnings before tax (EBT) 23,474 61,888 18,531

Earnings after tax (EAT) 25,137 48,768 14,436

Unappropriated retained earnings 85,465 75,142 40,810

Average number of shares in ‘000 21,162 21,162 21,162

Earnings per share in EUR 1.19 2.30 0.68

65Group Management Report Annual Report 2011 centrotherm photovoltaics Non-fi nancial performance indicators

Non-fi nancial performance indicators

Employees

Workforce development

The number of employees was up by 33.1 % to 1,928 individuals in the 2011 fi nancial year (previous year: 1,448 employees), particularly as a consequence of the higher business volumes, and the fi rst-time consolidation of our subsidiary in Shanghai.

We have further expanded the existing foreign companies as part of our strong international business. The number of employees abroad increased correspondingly by 50.0 % to 99 individuals (previous year: 66 employees). There were 3.5 % of working days lost due to illness.

Qualifi ed and motivated employees as the result of

continuous training and further training

Qualifi ed and motivated personnel are a critical success factor in the face of international competition. For this reason, we regard continuous personnel development as a key non-fi nancial performance indicator. In turn, this has led us to promote regular participation in further training programs, and direct dialogue between managers and staff members. Our attractiveness as an employer was further enhanced with the establishment of the “centrotherm acad-emy”, and through offering an extensive further training program for technical and managerial staff. This is especially intended to identify candidates with potential from within the company at an early stage, and to prepare them on the targeted basis for future responsibilities.

Junior staff promotion

The identifi cation and cultivation of promising up-and-coming staff continued to enjoy a high priority in 2011. We provide traineeships in eight professions, and also offer internships for schoolchildren, as well as diploma work opportunities for students.

On-site management

In 2011, temporary employment remained an important tool that allows us to respond fl exibly to a photovoltaic market that is diffi cult to predict and forecast. Only the deploy-ment of temporary staff allows us to mitigate the sector’s volatility. Temporary labor makes centrotherm fl exible, but also creates permanent jobs.This prompted us to establish an on-site management offi ce in the third quarter. The on-site offi ce primarily serves as an expert contact point for temporary staff with the aim of structuring processes more effi ciently and with greater service-orientation. The on-site management’s extensive know-how ensures that temporary staff are managed optimally, that they integrate smoothly within the company, and that all other personnel service-providers are coordinated.

Employees by function as of December 31, 2011

Gesamt 000,0

Technology & Research 649

Production 552

Sales 238

Administration 484

Management Board 5

Total 1,928

Development of employees 2009 – 2011

2,000

1,800

1,600

1,400

1,200

1,000

800

600

400

200

0

2009 2010 2011

male 943 female 188

male 1,139 female 309

male 1,500 female 428

total1,131

total1,448

total1,928

66 centrotherm photovoltaics Annual Report 2011 Group Management Report Non-fi nancial performance indicators

Employee health scheme and sport

The employee health management function at centrotherm aims to continuously optimize staff working conditions and health behavior.

As regular health protection measures, free fl u injections and further health checks were again offered in 2011. A regular, free health check by a company doctor also forms a fi xed part of our employee health scheme. Our employees can also avail themselves of reduced rates at many fi tness studios.

We strengthen our employees’ health and team spirit through the promotion of sports activities. With 47 runners in 2011, signifi cantly more staff members participated for centrotherm in the Einstein marathon in Ulm than in the previous year. Fielding two teams we also took part in the annual Dragon Boat Race hosted by the Ulm Rowing Club.

Procurement and production

Purchasing in a highly volatile market

In the purchasing area, too, we also positioned ourselves fl exibly towards developments in the solar sector, in order to operate successfully in a highly volatile market. We covered our very high materials requirements in the fi rst half of 2011 through the consistent and structured outsourcing of additional value creation components to our high-performing suppliers. This approach was based on close partnership, intensive coordination, and master agreements. The importance of close partnerships with our suppliers was proved very impressively and successfully again when our material requirements fell sharply in the second half of 2011 due to the change in the market situation.

Materials management will continue to secure centro-therm photovoltaics’ future competitiveness with respect to technology, quality, supplier loyalty and costs. Our most important existing suppliers were included in joint optimiza-tion projects over the whole course of 2011 to this end. The resultant positive effects emerged already in 2011, and we anticipate further improvements in 2012.

Along with collaboration with established suppliers, we also identifi ed an appropriate scope of new and very high-performing suppliers, which we activated to secure our competitiveness. We also further reduced our dependencies as an additional effect towards our targeted improvement in competitiveness.

Our supplier development team utilized a structured process to manage all established and new suppliers so that the necessary high purchasing quality was always secured.

Flexible production concept

Along with the successfully completed expansion of pro-duction area in the fi rst quarter of 2011, we also further optimized production processes at our Blaubeuren site. We further reduced leadtimes for our individual equipment items through the introduction of fl ow production, thereby enhancing manufacturing output. More than 60 systems were shipped per month on average over the entire year, as a consequence.

We were well prepared last year to confront the solar sector’s sharply volatile market environment with our fl ex-ible production concept, although it failed to fully offset the dramatic market downturn at the year-end. The deployment of temporary labor and the utilization of fl exitime enabled us to ship more than 100 systems per month at peak times, and to adjust our capacities to the much weaker market environ-ment in the second half of 2011. We also implemented production of our ingot furnaces in Blaubeuren in the second half of the year. This fed through to both signifi cant cost benefi ts and higher production utilization.

Procurement volume according to parts groups

Gesamt 000,0 Electrical/Electronic Components and

Assemblies 12.2 %

Raw material 2.3 %

Pumps 3.7 %

Mechanical Components & Assemblies

27.9 %

Equipment 12.6 %

Gas parts / Vacuum 5.2 %

Consulting 5.9 %

Remaining / Miscellaneous 14.6 %

Semi-fi nishedproducts 4.1 %

Quartz, silicon parts 11.5 %


Sales and marketing

International business continues to dominate

The sales structures of the centrotherm photovoltaics Group are clearly oriented to its dominant foreign business, with an approximately 95 % export share. We are locally repre-sented on all relevant markets with a network consisting of service and sales companies, which allows us to be close to current market activities at all times. This provides greater proximity to our customers, personal consulting, and rapid response and delivery times. We not only achieve a high degree of customer satisfaction with these comprehensive service offerings, but we are also well positioned to con-tinuously tap new markets and customers. For example, we strengthened our sales activities in the MENA region last year, where we have identifi ed that many countries have a strong interest in establishing their own photovoltaic industries. Our customer base comprises large premium manufacturers, large companies from outside the sector, and smaller new entrants to the photovoltaic industry.

We are able to respond rapidly and effi ciently to our customers’ requirements through our fl exible sales struc-tures, and actively identify and exploit new business poten-tials. Our sales function is managed on a centralized basis, and supplemented by local service and sales companies in the growth markets that are relevant to us. We booked new orders worth TEUR 423,370 in 2011, whereby initially only a portion of the total volume of all signed orders is recognized as new order intake in line with our conservative orderbook policy. We incurred total sales commissions and travel costs of TEUR 26,544 in 2011.

We focused our marketing and communications activities on the centrotherm brand in 2011, and on our innovative technologies and products. Our participation at trade fairs and conferences comprises an important marketing instrument that allows us to present our range of products and services to a broad specialist public, and to enter into direct dialogue with potential customers. We were represented at a total of 18 trade fairs and exhibitions both in Germany and abroad in 2011, ten of which were trade fairs in Asia alone. We also presented and exhibited on new markets such as Brazil and the MENA states. The most important trade fairs in 2011 included the Fifth International Solar Industry and Photovoltaic Exhibition & Conference in Shanghai (SNEC), where we successfully introduced new products and product updates to boost effi ciency along the solar value chain. Specialist visitors to

this fair were also able to explore the centrotherm world for the fi rst time by iPad, and experience the latest product innovations. The centrotherm app for iPad and iPhone has since become an important digital marketing and sales medium that we regularly update for trade fairs. We spent a total of TEUR 1,780 on trade fairs and conference activities in the year under review (previous year: TEUR 1,229).

A further focus was on the development of a new concept for advertising in international specialist magazines. This concept is directed at potential customers from the Silicon & Wafer, and Solar Cell & Module areas, as well as new sector entrants. In 2011, we won two iF product design awards, one of the most renowned industrial design prizes, for the new product design of our c.FIRE fast-fi ring furnace, which is already established on the market, and for the wafer testing equipment produced by our subsidiary GP Solar. These products provide good examples of how cost optimization and functional design need not be exclusive.

We also offer specialist information about our technolo-gies, products and turnkey solutions through the Internet, in print media, or in fi lms and animations. This broadly based marketing mix allows us to not only inform potential customers about our company and products, but also to strengthen the centrotherm brand both nationally and inter-nationally. Our marketing expenditure (excluding investor relations and public relations activities) amounted to TEUR 3,098 (previous year: TEUR 2,313).

Marketing expenditure in TEUR

3,000

2,500

2,000

1,500

1,000

500

0

2011 2010

fairs and exhibitions:1,780

fairs and exhibitions:1,229

Total3,098

Total2,313


Research and development

Integrated research and development from polysilicon

to modules

Research and development work within the centrotherm photovoltaics Group enjoys a particular priority as one of the important pillars of our corporate success. Work in our research and development teams is based on the solar value chain spanning the production of metallurgical silicon and polysilicon through to solar modules. We are working on future concepts for production systems, and on optimizing the entire process to manufacture solar cells and modules. Our aim is to consistently enhance the performance of solar modules as end-products, to continuously reduce solar electricity production costs, and to improve our systems’ effi ciency. In 2011, we continued to live up to our claim to drive the photovoltaic sector’s development as a technology leader and pioneer.

With the creation of our own “crystalline solar module” research and development group, which we started in 2011, we have created the basis for joint and coordinated technology developments spanning polysilicon and solar modules. We strengthened our “integrated factory” research and development activities last year to accompany these activities. This approach allowed us to identify synergy effects at the interlinking points of the value chain. From these we have already derived measures that structure manufacturing processes more effectively and cost-effi ciently.

Research and development investments remain at a

high level

We spent a total of TEUR 47,486 on research and develop-ment in 2011 (previous year: TEUR 42,421), with our invest-ment ratio remaining unchanged year-on-year at 6.8 % of revenue. A total of TEUR 6,158 was capitalized as intangible development work. The distribution of the research and development budget was as follows: 6.4 % for the Silicon & Wafer Segment, 66.7 % for the Solar Cell & Module segment – including Semiconductors and Microelectronics – and 26.9 % for the Thin Film Module segment. Our tech-nology and research team comprised a total of 649 staff as of December 31, 2011 (previously: 552). As in previous years, most of these members of staff are process engineers and physicists who deploy their many years of expertise in the areas of physics, chemistry, photovoltaics and mechani-cal engineering across the Group.

Research cooperation ventures with renowned research

and business partners

In the solar cell development area, we continue our cooperation of many years’ standing with the International Solar Energy Research Center (ISC) in Constance. We also successfully launched the “Future Fab” subsidy project in July 2011, which is backed by the German Federal Ministry for the Environment, Nature Conservation and Nuclear Safety (BMU) and the German Federal Ministry of Education and Research (BMBF). Within an association consisting of eight partners from the industrial and research areas, this “Photovoltaic Innovation Alliance” is concerned with new cell technologies for integration into existing production sites.

We took a further step towards the further develop-ment of our thin fi lm technology with the start of the “NeuMas” cooperation project. The German Federal Ministry of Education and Research (BMBF) is supporting this research and development cooperation venture, which is aimed at developing cadmium-free buffer materials for solar absorbers. We launched a further cooperation project last year with the Competence Center for Thin Film and Nanotechnology for Photovoltaics Berlin (PVcomB). Process technology to manufacture thin fi lm modules is to be fur-ther developed jointly with PVcomB as an industrial partner. Above and beyond our research cooperation ventures, we also issue development orders to industrial partners.

Solar Cell & Module

Development goals reached

In 2011, we once again attained – or even exceeded – our R&D roadmap targets in the Solar Cell & Module segment. Research and development registered outstanding results over the last year. We boosted mono-crystalline solar cell effi ciency to 19.6 % based on our centaurus technology. Effi ciencies were thereby further improved by approximately 0.5 % in absolute terms in parallel to product launch in 2011. This centaurus process technology is currently encountering brisk interest in the current market situation since higher cell effi ciencies create signifi cant selling advantages for our customers.

Production of centaurus solar cells commenced at our pilot customer in the fi rst quarter of 2012. A cell effi ciency of 19.5 % was already achieved in a production environment in this case. One customer has already confi rmed 273.8 watt peak output for a 60-cell solar module manu factured with a standard production process. Further upgrades and process transfers to customers are being prepared.


We will retain our existing roadmap target of an approximately 0.5 % per annum effi ciency enhancement. The focus in this context will be on further optimizing and developing our selective emitter and centaurus technolo-gies, and the implementation of additional high-effi ciency cell concepts. Among other achievements, we reached 20.0 % peak effi ciency values based on our centaurus technology in the laboratory through transferring partial results from our metallization technology. Along with effi -ciency enhancement, fi nal module output is gaining great importance for our customers. Our integrated R&D work also enables us to sustainably address widespread problems such as encapsulation losses.

Opening of the “Solar Innovation Center”

We opened our “Solar Innovation Center” (SIC) in Con-stance in December, which combines a pilot plant and customer center. The pilot line for integrated cell and module research comprises key equipment each individual process step, as well as testing and analysis equipment. This allows us to perform a broad range of accelerated age-ing tests to confi rm the reliability of modules utilizing our technology. We are also working on developing our own module designs and concepts as a component of turnkey packages.

The SIC is designed as a cooperative platform that allows us to conduct joint development work with custom-ers and partners. Particularly in 2012, the SIC played a signifi cant role in our efforts to permanently accelerate innovation cycles. It considerably shortens the time and technology distance between “laboratory result” and “mass production”, both for us and for our customers. It also allows us to provide our customers with active support for their queries, whether they are turnkey module customers, or solar cell technology clients.

Continuous development of our single equipment items

In the year 2011 we continued to successfully further develop our systems, and launch them on the markets. We con-cluded several turnkey lines with selective emitter technol-ogy for mono- and multi-crystalline cells, and transferred them to operating areas. We also proved the economic effi ciency of selective emitter technology in solar cell and module production. Moreover, it was proved in module tests at two independent module manufacturers in Asia and Europe that there are no signifi cant differences in the encapsulation losses between solar cells with homogeneous and selective emitters.

Following “c.LAS”, a laser process system for laser diffusion that is deployed in selective emitter technology, we successfully launched the second laser system last year, the “c.LAS centaurus” to open dielectrically passivated solar cell rear sides.

The distinction of our “c.FIRE” fast-fi ring furnace with the 2012 iF product design award represented a further success for centrotherm photovoltaics AG. Along with their high-end design, “c.FIRE” proved persuasive to the interna-tional jury in further criteria categories such as functionality, innovation and environmental compatibility. A Taiwanese customer was also convinced of the attributes of “c.FIRE”. The systems were installed within a few weeks, readied for operation, and passed the site acceptance test (SAT).

The “c.FIRE”, where the front and rear contacts are sintered into wafers at high temperatures, is the latest generation of our established fast-fi ring furnace, and is distinguished by compact and space-saving design. Along with this footprint, ease of installation and maintenance was further optimized compared with the existing furnace in order to further reduce operating costs for cell manu-facturers. Volatile organic compounds (VOCs) that arise during the burning process were also taken into account: VOC treatment was fully integrated into the restructured housing, thereby enabling solvents that are emitted to be fed back on a reliable and energy-effi cient basis.

A Chinese customer also issued the site acceptance test approval for the new c.NITE Inline product. This customer ordered several systems, which were installed and transferred to production. The c.NITE combines the tried and tested PECVD technology that is based on graphite boats with a highly effi cient inline deposition system. The deposition technology of the c.NITE Inline results in outstanding cell effi ciencies, which typically lie 0.2 % above other systems offered on the market.

Our wholly-owned subsidiary GP Solar launched several systems to inspect wafers and solar cells in 2011. These measuring devices are critical to achieve the highest solar cell effi ciencies. An in-house development in the camera optics area, the “GP Solar Inspect CHROME”, deploys spec-tral analysis for the optimized fault detection of wafers, cells and modules, and thereby the highest level of measuring precision for innovative processes such as selective emitters or rear side contacts. This new software development simplifi es the preparation of new formulas, ensures the individual fi ne-tuning of pressure equipment, and enables the live defect analysis of up to 600 samples while rendering the smallest process problems visible. GP Solar has also developed new additives to texture mono-crystalline silicon wafers, which enable processing at higher temperatures, and thereby reduced process times.


Silicon & Wafer

Successful launch of 24-pair technology

Research and development activities in 2011 were charac-terized by the 24-pair technology for reactors that produce silicon using the Siemens process. This development was refl ected in the successful commissioning of the fi rst reac-tors in the fourth quarter. These reactors were installed and tested within just a few months. The reactor was opened after the fi rst production cycle in December, and the fi rst poly-crystalline silicon was produced. Along with signifi cantly enhanced capacity, this successor to the 18-pair reactor also offers the option of heat recovery. This further reduces the energy required in polysilicon production.

As part of commissioning, our newly developed medium-voltage ignition (MVI) was also successfully launched on the markets. Medium-voltage ignition replaces outdated pre-heaters, which heat silicon rods in the reactor until operation with the reactor’s own electricity supply can commence. The newly developed product enables a sig-nifi cantly more rapid start process, and is also considerably easier and more secure to use.

The development of a hydrogen chloride recycling system in 2011 represented a major step towards closed cycles. Hydrogen chloride is an important raw material to produce trichlorosilane, the starting product for polysilicon manufacturing. The 98 % recovery rate that this system enables makes a considerable contribution to reducing production costs, and signifi cantly minimizes process waste.

Development activities in 2012 were oriented to the further minimization of energy consumption, in order to further boost our products’ attractiveness.

Product development in the ingot & wafer area

Following the successful market launch of the second gen-eration of our ingot furnaces in 2011, we are now working on implementing further-reaching new concepts, which are aimed particularly at the factors of ingot quality, and thereby the effi ciency of the end-product, as well as a further reduc-tion of operating costs.

A further focus of R&D was on producing “mono-like” ingots that exhibit signifi cantly fewer defects, similarly to mono-crystalline technology. The development of this “mono-like” process continues to run to schedule. Processes are currently being adjusted to the cells’ requirements, in order to ensure that the cells are continuously highly effi cient.

In the diamond wire saw area, the adjustment of larger generation-6 ingots has been concluded, and already tested. The fi rst fully automated cropping saw for mono-ingots has already been shipped to a major European customer. We have already received orders for the new system, which we will deliver in 2013.

Thin Film Module

In the thin fi lm technology area, we successfully boosted the effi ciency of our CIGS technology in 2011. At our pilot line in Blaubeuren, we achieved 12.4 % effi ciency on a 300 x 300 mm module area using “Rapid Thermal Process-ing” (RTP). In RTP, the CIGS absorber is formed in a rapid thermal process. At cell level, the top effi ciency is 15.7 % with a voltage of up to 665 mV.

We also achieved further good progress at our partner Sunshine PV in Taiwan. After concluding development of the second-generation selenium coating system, it was successfully integrated into the production line in situ. With this equipment, the effi ciency in a production environment is already at 11.5 % on a module area of 1,400 x 1,100 mm² after a short start-up time. Certifi cation was passed success-fully for this module with TÜV SÜD, and certifi cation accord-ing to prevailing IEC standards was issued in February 2012.

We are currently working on further raising effi ciency, and on optimizing the line under mass production condi-tions. The aim is to increase the modules’ effi ciency to more than 12 % in production. Implementing a new sulfur process also allows us to anticipate a further effi ciency boost through targeted optimization of the band gap on the CIGS surface.

Our GP Solar subsidiary develops fully integrated systems in the Thin Film Module segment that serve to monitor process and quality. With the “GP TF-SENSE” system for the 100 % inspection of thin fi lm modules, each individual substrate can be measured by an advanced ran-dom sampling procedure without disturbing the production cycle. The integrated Fischerscope® XRF sensor is optimized for continuous material analysis and ensures a customized detection of CIGS layers.


Sustainability

The principle of sustainability is fi rmly anchored within centrotherm photovoltaics’ strategy. We regard these considerations as a pre-requisite to successfully structure the future of centrotherm photovoltaics, and that of our customers, stakeholders and employees. All our activities are oriented to securing ecologically, economically and socially sustainable development. We offer environmentally compatible products and solutions that improve our own energy equation, and those of our customers. We also consciously take environmental aspects into account when selecting our technologies. For this reason, we concentrate on cadmium-free technology in the thin fi lm module area, for example, and we constructed an extension that was sparing on space when we expanded our operating prem-ises in Blaubeuren, in order to thereby protect nature. In our daily business, sustainable and responsible activity plays a major role, whether in the reduction of the CO

² greenhouse

gas through technical innovations or process sequences, in the selection of, and cooperation with, business partners, or in our strong commitment to employees’ social concerns. Further information about how we support our employees can be found in the “Employees” chapter on page 65. We bundle our sustainability activities within an over-arching sustainability concept:

Sustainability concept

Environmental protection

Energy effi ciency Technological development with a focus on energy-effi ciency, and utilization of opportunities to reduce CO

²

Ecological production Process optimization under the technological aspects of space-saving, and the effi cient utilization and expansion of production areas

Social responsibility

Staff development training and further development in focus

Occupational health and safety Promoting occupational safety

Sponsoring Sponsoring of sports and culture

Business

Business partners Reliable and trusting cooperation with business partners

Investors Enhancing corporate value, and continuous and open communi-cation

Environmental protection

As a photovoltaic industry company, we make a key contribu-tion to the further development of solar energy generation. With our products and technologies, we already enable our customers to implement a particularly environmentally-compatible silicon and solar cell production, starting from sparing energy consumption all the way through to the recycling of process gases. We pay attention to ecological aspects in production, and we focus on the effi cient utiliza-tion and expansion of our production areas. Production area per system produced comprises a meaningful indicator for us. We signifi cantly improved this in 2011, with 31 m² per system produced (previous year: 45 m²), despite the production area expansion.

Cutting CO² emissions also forms an important compo-

nent of our sustainability concept. CO² emissions totaled

1,658 tonnes in 2011 (previous year: 1,599 tonnes), whereby the increase in CO

² emissions was much less than the major

growth in production and transportation volumes compared with the previous year. CO

² emission trends are affected to a

great extent by our transportation volumes. The fi xed portion within emissions primarily comprises the lighting and heating of buildings. We have adopted a pioneering role in energy effi ciency improvement: last year, we covered more of our electricity requirements for our buildings and workshops from renewable energy sources. To this end, we make recourse to solar modules, and a gas-driven combined heat and power plant, to heat our buildings. We commissioned a modern combined bio-heat-and-power plant in the second half of 2011, which is operated with biogas provided by farmers from the region. The plan is to generate up to 400 kW of electricity and 430 kW of heating per hour from the power plant. We are currently planning to boost heat output by a further 50 kW.

Water is mainly used for employee hygiene, and for cooling in production, at the centrotherm photovoltaics Group. Water consumption at the central Blaubeuren production site amounted to 20,692 m³ in 2011. The marked year-on-year increase is due to the purchase of land and buildings in 2011.

Waste volumes amounted to 913 tonnes, 20.6 % of which was attributable to paper and cardboard. Wood and metal each comprised around 56 %. We recycled 333 tonnes of the total waste volume. There were no emissions of hazardous waste and toxic substances in 2011.

We utilize non-toxic elements such as nitrogen for our continuous furnaces and argon to test our reactors in the Silicon & Wafer segment, which we conduct in the pilot plant, for example.


Social responsibility

For us, social responsibility means that our employees work in a safe working environment. In the occupational safety area, we introduced a standard procedure to gauge workplace hazards, and a new accident reporting system to systematically process and assess accidents. We also intro-duced an information fl yer for visitors to our Blaubeuren site for our guests’ service and safety. We also approved general safety regulations for turnkey construction sites, and purchased a new pickling system to improve occupa-tional safety and environmental protection when pickling stainless steel parts. We ensure regular discussion about current occupational safety topics through the founding of a committee consisting of safety offi cers. New employees also receive safety instructions as part of regular induction meetings. The number of occupational accidents underwent no signifi cant year-on-year change, and remained at a very low level of 1.3 % (number of occupational accidents rela-tive to total workforce).

We have also been committed to the culture and sports sponsoring areas for several years. Here, we provide fi nancial support, particularly to regional youth sports groups. At the cultural level, we are involved in the promotion and active structuring of culture in Blaubeuren. Every year, we are among the sponsors of the summer shows in Blaubeuren, which bring together culture, music and comedy at the “Blautopf”. Together with the city of Ulm and the Chamber of Industry and Commerce, centrotherm photovoltaics has also donated ten photo-voltaic experimentation sets to junior high schools in the region. These sets allow schoolchildren to fi nd out how photovoltaic systems are used to generate electricity, and to thereby gain practical insights into the opportunities and limits of solar energy.

Business

Our business activities pursue the principle of responsible activity with respect to future generations. As a provider of technology and equipment to the photovoltaic industry, we make an important contribution to further developing the sector, and are making solar electricity competitive (without subsidies) compared with conventional and other renewable energy sources. The products and solutions of centrotherm photovoltaics support efforts to establish energy supplies that are as CO

² neutral as possible. We

must be commercially successful in order to act responsibly. Close cooperation with our customers and suppliers results in economically effi cient working methods. With our energy-effi cient products, we enable our customers to manufacture on an environmentally compatible basis. We continue to invest in research and development in order to ensure that we further improve our products and processes in the future. We engage in an open dialogue with our investors in order to enable our shareholders to enjoy a transparent insight into our company. Annual sustainability rankings show that we are an attractive investment in terms of sustainability. centrotherm photovoltaics was again one of the leading sector companies in the oekom Corporate Ratings in 2011, and was distinguished with the highest “Prime” investment status by sustainability rating agency oekom research. Our share was once again held as one of the Top 10 investments in several sustainability funds.

73Group Management Report Annual Report 2011 centrotherm photovoltaics Report on opportunities and risks

Report on opportunities and risks

The centrotherm photovoltaics Group’s strengths include the development of new technologies and innovations, and their implementation in modern production systems and effi cient processes. Our technological expertise, innovative strength, and continuous further development of our product and service range allows us to signifi cantly contribute towards making energy generation from photovoltaic systems increasingly economically viable. We ensure our company’s high degree of innovative ability and constant progress through the consistent exploitation of available opportunities, without thereby overlooking related risks. Consequently, we accord central importance to risk policy and systematic risk management. Effi cient risk management depends on treating risk management not as an isolated process, but rather as an integral component of all our company’s core processes. This has prompted us to establish a risk management system that regularly records and measures both current and potential risks. Its results are communicated to the Management and Supervisory boards, and allow countermeasures to be launched at an early juncture.

Opportunities and risk management system

Objectives

The identifi cation and conscious management of oppor-tunities and risks makes key contributions to a company’s success, and can generate a decisive critical advantage. The management of opportunities and risks should enable us to identify potential strategic and operating risks at an early stage, and to assess, control and manage them. Prompt communication and early identifi cation of poten-tial risk matters enhances a company’s speed of response. Systematic risk management is also intended to strengthen a company’s risk-awareness. It is aimed at making employees more aware of risks, thereby fostering risk-conscious and autonomous self-regulation. This helps to create a positive risk and controlling culture within the company.

Risk management process

The risk management process consists of four key process steps:

• Determining risk strategy

• Risk identifi cation

• Risk assessment

• Risk steering

Determining risk strategy

In coordination with the Supervisory Board, the centrotherm photovoltaics Management Board has determined the com-pany’s risk strategy within the context of corporate strategy, and reviews it at regular intervals. Our aim is to constantly improve products and services, as well as to develop new ones. We also aim to strengthen research and development, and expand our production capacities as well as our inter-national presence. The management of opportunities and risks is intended to support us in attaining these corporate objectives.

Risk identifi cation

Cross-Group risk categories and areas, as well as reporting offi cers (risk offi cers), are defi ned in order to ensure that risks are reported as comprehensively as possible. These categories are as follows:

• Environment and sector risks

• Corporate strategy risks

• Commercial performance risks

• Personnel risks

• Information technology risks

• Financial risks

• Other risks

Risk offi cers must report risks at least every quarter using a risk reporting questionnaire. Along with consulting the central risk manager, risk offi cers can also make recourse to a risk handbook.

74 centrotherm photovoltaics Annual Report 2011 Group Management Report Report on opportunities and risks

Risk assessment

Risk offi cers measure risks in the risk reporting questionnaires using an expected value derived from multiplying a potential annual damage value by a potential event risk. Using this expected value, the risk is categorized into one of fi ve risk classes (insignifi cant, low, medium, high, through to going-concern risk).

Risk steering

We understand risk steering as comprising all measures that have a positive impact on the company’s risk position. The fi rst way to achieve this is through reducing either the potential damage value, or the event risk. Divisional risk managers determine risk reduction measures, stating timeframe and implementation costs in the relevant ques-tionnaire. The risk manager uses the divisional risk offi cers’ risk questionnaires to produce quarterly summaries in the

form of a risk list. The fi xed risk categories are applied in order to produce a breakdown. The results are also prepared graphically in risk portfolios, both preceding and following measures, before being presented to the Management and Supervisory boards for assessment of the current risk position. Depending on risk class and the cost of related measures, decisions concerning the execution of potential countermeasures are then made either by the Management Board, or by risk offi cers in coordination with the Manage-ment Board. The implementation of measures is followed up as part of risk reporting. General Group-internal risk steering measures include reporting, measuring, controlling, and steering, using an internal reporting system, as well as the limitation of potential claims and liability risks through the conclusion of corresponding insurance cover. This allows us to make the fi nancial effects calculable. The functioning of the risk management process forms a component of regular reviews by the Supervisory Board and our auditors.

External controlling bodie Principles of proper corporate management

Operating insurance

Supervisory Board

Auditing fi rm

German Stock Corporation Act German Corporate Governance Code

Risk management system

Risk management process Risik management instruments

Risiko handbook

Risik reporting form

Risik list

Risik portfolio

Risik archive

1. Risk strategy(Management Board)

4. Risk steering(Risk responsible person + Management Board)

Risikmonitoring / Risikdocumentation / Risikcommunication (Risik manager)

2. Risk identifi cation( Risk responsible person )

3. Risk assessment ( Risk responsible person )

75Group Management Report Annual Report 2011 centrotherm photovoltaics Opportunities

Key characteristics of our internal controlling and risk management system with respect to the accounting process

centrotherm photovoltaics operates a clear company, organizational, and controlling structure. Planning, reporting and controlling processes are coordinated across the Group. These ensure that infl uence and risk factors relevant to the company’s net assets, fi nancial position and results of opera-tions, as well as potential going-concern risks, are analyzed and managed comprehensively. In turn, this ensures that accountancy-related matters and their appropriate transfer to individual accountancy tools are appropriately reported, compared and assessed. Key structures, processes and controls that are of signifi cance for Group accounting and consolidation are listed below:

• The preparation of the consolidated fi nancial statements follows a clearly structured and scheduled process. This process is centrally determined after prior coordination with the companies included in the consolidated fi nancial statements.

• Functions are clearly allocated within all accounting process areas.

• An adequate internal set of internal guidelines has been set up, and is adjusted and expanded as required. Regular targeted further training measures ensure that all partici-pants in the accounting process correspond to qualitative requirements, and achieve a collective understanding of Group-standard accounting and measurement regulations.

• Financial accounting performed at the German companies that are included in the consolidated fi nancial statements is based on the regulations of the German Commercial Code (HGB). In doing so, most of the companies’ accounting departments make recourse to a standardized IT system, and use the Group standard accounting system. Monthly fi nancial statements are transferred to International Financial Reporting Standards (IFRS). The central accounting area prepares the consolidated fi nancial statements through consolidating the legal entities.

• The Group central accounting function regularly audits the individual companies’ data included in the consolidated fi nancial statements with respect to completeness and cor-rectness using random checks and plausibility assessments. Both automated and manual control procedures are employed for such audits. A risk controlling offi cer is also allocated to each segment level to monitor the controlling and risk management process at segment level, and to assess data for plausibility.

Opportunities

Opportunities management system

The term opportunity refers to a positive deviation from an expected outcome. Opportunities and risks are complemen-tary facets of the same set of circumstances. Particularly in entrepreneurial activities, opportunities and risks are closely intertwined. Opportunities and risks are monitored separately at centrotherm photovoltaics. We derive our opportunities management system from the strategies and objectives of the overall Group. We conduct extensive analyses of the market, our competitors, and the cost situation, and we look at potential market scenarios and overall political circum-stances. The results provide the basis for the identifi cation and analysis of strategic and operational opportunities. The Management Board and divisional managers use this as the basis for implementing opportunity potentials.

The general sector trend also generates opportunities for centrotherm photovoltaics. Continued cost pressure is forcing solar cell and silicon manufacturers to invest in technologies and production systems in order to remain competitive, and to expand their market shares. This pro-vides an opportunity for us to win replacement investment orders. We have reached a very good market position, particularly in Asia, and we expect that it will be primarily renowned solar cell manufacturers who make renewed investments as the photovoltaic market moves ahead. We also identify sector and corporate strategy opportuni-ties in the MENA states (Middle East and North Africa). The Middle East and North Africa are witnessing growing interest in renewable energy sources, with the aim of creating domestic industries. The MENA countries possess favorable energy supplies, allowing them to competitively cover the energy-intensive production steps along the photovoltaic value chain: starting with metallurgical sili-con, the raw material to produce polysilicon, and moving through to polysilicon production, and the manufacturing of ingots and wafers. The political will to create local jobs is supporting and driving this strategy. With its range of products and services, centrotherm photovoltaics is optimally positioned to benefi t from future investments in the MENA region. For this reason, we have considerably strengthened our sales activities in this growth region in 2011

76 centrotherm photovoltaics Annual Report 2011 Group Management Report Risks

Risks

Macroeconomic risks

In the recovery phase following the 2008/2009 fi nancial and economic crisis, a strong economic upturn continued to be registered worldwide until mid-2011. This recovery followed on as a catch-up process after the recession and the 2009 crisis year, although it weakened towards the end of 2011. The economy is gauged to have grown by 3.8 % over the full 2011 year, according to information provided by the Kiel Institute for the World Economy (IfW). Global growth of 3.4 % is anticipated for 2012, and even a –0.1 % downturn for the Eurozone.

Risks had increased by autumn 2011, and the global economy was unsettled by the state debt and banking crisis. Weak economic growth and the US debt situation also contributed to uncertainty. Although the nuclear catastrophe in Fukushima and the Gulf of Mexico oil catastrophe have reignited debate about the composition of future energy concepts, and Germany has decided to make a fi nal exit from atomic energy by 2022, general economic uncertainty in some countries could exert a negative impact on investments and fi nancing in the renewable energies area. In order to counter negative effects on centrotherm photovoltaics AG’s business trends, we are driving ahead with expanding our global presence in order to tap new markets and customers. We are making major investments in research and develop-ment in order to maintain our technology leadership, and ensure continuous product development.

Sector risks

Greater consolidation activity

The sector is currently facing greater consolidation activity. This activity arises from the growing discrepancy bet-ween demand for PV systems and a disproportionate increase in production capacities, related price falls, and greater pressure on existing margins. The risk exists that producers will be forced out of the market due to faster consolidation, and could be lost as potential customers. At the same time, market and cost leaders are exploiting current developments in order to expand their positions. Our continuous further development of technologies and products aims to boost end-products’ effi ciency levels for both existing and new custo mers, and to thereby ensure sustainable competitiveness.

Uncertainty about state solar subsidies

Photovoltaics is currently in a transition phase between subsidized and unsubsidized markets. The fi rst subsidy-free photovoltaics projects are already offering an economic alternative to conventional electricity generation methods in some areas, such as in the case of network-independent systems in remote areas. At the same time, photovoltaics still depends to a high degree on state support. Governments are frequently reviewing subsidy levels, and adjusting them to market conditions. The risk exists that respective govern-ments’ subsidy plans feed through to temporary market falls.

For this reason, we are continuously pushing ahead with the further development of our products and techno-logies. Our aim is to drive photovoltaics further ahead through cost reductions (euro/kWh) on its way to competi-tiveness compared with conventional energy sources, and to constantly reduce dependency on subsidized incentives.

Risk of greater competition

Annual increases in installation fi gures, and the attendant growing demand for photovoltaic products, have also fed through in some instances to new, Asian companies enter-ing the plant engineering market. The risk exists that such companies attempt to gain market shares with aggressive price policies, and that we will be confronted by more intense competition. Consolidation activities are also evident in the production equipment area, such as with the partial takeover of Roth & Rau AG by Meyer Burger Technology AG. It is still open as to whether and to what extent these activi-ties will impact competitive intensity. We are closely moni-toring potential competitive developments, and countering such risks with our technology and innovation leadership, and the expertise that we have accumulated over decades.

Risk from restricted lending

In a current business climate survey conducted by the German Engineering Federation (VDMA), 90 % of companies reported a year-on-year order book deterioration at the end of 2011. These companies expect to report 8 % revenue growth for the full 2011 year. They anticipate an approxi-mately 8 % revenue decline in 2012, according to the survey. An economically diffi cult market environment in Germany or abroad could also lead to our customers encountering fi nancing shortfalls for planned projects. Investments could need to be postponed or even cancelled in their entirety due to a funding shortage. For this reason, we regularly review our customers, the status of projects, as well as our order book position.

77Group Management Report Annual Report 2011 centrotherm photovoltaics Risks

Corporate strategy risks

Photovoltaics’ strong growth in the past has led to greater dependency on this market; most of Group revenue in this sector is generated in Asia. Demand in the renewable energy sector is characterized by sharp fl uctuations, which generates considerable market risk.

In order to counter this market risk, centrotherm has diversifi ed away from machine building towards construct-ing large plants, which reduces the fl uctuation risk in the PV sector. The Semiconductors & Microelectronics area is also to be expanded further. Diversifi cation into new areas of activity entails the usual diversifi cation risk. Acquiring standard sector know-how is critical. We are addressing this challenge by hiring experienced engineers from the large-scale plant engineering area. The country risk that is entailed in international projects is covered further below. Handling large-scale engineering projects also generates cash fl ow risk when pre-fi nancing projects, and also with respect to liability claims. Such risks are signifi cantly greater than those entailed in machine building. We counter these risks through structur-ing contracts to ensure early cash infl ows (advance payments from customers), and through limiting liability levels.

The acquisition of new companies and the related expansion of our product portfolio carries with it the risk of failed investments should the related expected synergy effects fail to be realized, or only to an insignifi cant extent.

Rapid technological progress can lead to research and development risks. Firstly, the risk exists that we develop products and processes for which there is no demand on the market. Secondly, we may be unable to keep pace with the rapid rate of change. We counter this risk through recruiting experienced technologists, and the related expansion of our research and development laboratories in Constance and Blaubeuren, as well as through our coop-eration ventures with universities, higher education institu-tions and renowned research institutes. As part of portfolio management, we also subject our product development programs to rigorous evaluation procedures that constantly review compliance with strategic and fi nancial values.

Our strong international presence requires that we adhere to relevant legal and economic conditions. This may give rise to risks in connection with the non-compliance with prevailing regulations. We counter these risks through the expansion of our subsidiary controlling function, the appointment of further experts in this area, and professional support provided by external specialists.

Political, economic or legal risks are also conceivable when selecting new international locations. To this extent, these are investigated in detail in advance.

The Management Board has responded to the continued tensions on the market, and has launched its ct focus effi ciency program, which will run alongside costs and sales initiatives that are already in place. The program’s declared objective is to grow profi tably and sustainably with a streamlined and effi cient organizational structure, and a strategic focus on crystalline silicon along the photovoltaic value chain. This program’s fi rst step will entail a signifi cant reduction of costs, and an adjustment to Group personnel capacities. The company aims to achieve around EUR 22 million of cost savings per year by the end of 2013. Along with a refocusing on business entailing production systems and technologies to manufacture crystalline solar cells and modules, and the production of high-purity silicon, the expansion of the Semiconductors & Microelectronics area will comprise a further signifi cant component of the program. As part of ct focus, the Management Board also decided to close the Thin Film Module segment at the Group’s Blaubeuren location, and to outsource some areas to Asia. This move will bundle resources, and create a unit that is closely geared to the market. An extensive sales campaign conducted by all segments will complete the ct focus package of measures. The risk exists that these measures are implemented later than planned, thereby delaying the refocusing.

Commercial performance risks

Procurement

Along with components, centrotherm also purchased com-plete sub-assemblies from its suppliers in 2011. The com-pany concluded master agreements and letters of intent with suppliers, which not only secured supplier loyalty, but also protected centrotherm’s’ know-how.

In order to realize both large-scale projects and turnkey factory systems, our equipment procurement function also purchased complete systems that have not formed part of centrotherm photovoltaics’ product portfolio to date.

If the order position were to worsen, the agreed contracts could give rise to delivery receivables and defaults on payments to suppliers.

The company aims to avert such risk through regular dialogue and fl exibly structured agreements that depend on market developments.


The supplier development team at centrotherm photovoltaics suitably manages the challenges arising from awarding sub-assembly production to third parties. The audits and supplier appraisals conducted by centrotherm photovoltaics have helped to stabilize the supplier situation.

The risks pertaining to fi nancial weakness among suppliers can be categorized as low given the higher order volumes. There was no risk of insolvency among the suppliers supported by the supplier development team. The purchasing function at centrotherm photovoltaics paid increasing atten-tion to ensuring that suppliers avoided undue dependence on centrotherm photovoltaics for revenue so that market fl uctuations can be offset by orders from other sectors.

centrotherm photovoltaics consistently pursued the expansion of its range of second- and third-tier suppliers in order to continue to be in a position to make deliveries if one of the Group’s suppliers were to be lost.

Shipments

On the shipments side too, a deterioration in the economic situation may give rise to risks for centrotherm photovoltaics in individual business areas.

Solar Cell & Module segment

Due to the production capacities already installed on the market, the risks on the sales side range from the postponement of supply deadlines through to contract cancellations, with a resultant inventory risk pertaining to systems and equipment that have already been produced or ordered. The company counters such risk through continuous customer management, and the utilization of hedging and collateralization instruments such as prepay-ments and bank security.

Quality risks in the fi eld deriving from either suppliers or our own development activity could require our own service function or our suppliers to conduct extra work with the consequence of unplanned additional costs, delays to cash infl ows, or potential customer complaints.

Due to the rapidly changing environment on the photovoltaic market, the risk exists that new products are launched late on the market so that new developments can no longer be placed with the budgeted economic returns. We counter such risk with effective R&D project management and milestone monitoring.

Since different technologies are offered on the market, the fast general rate of photovoltaic innovation could create disruptive technologies that our own product and technology spectrum fails to address, or addresses only partly. The conse-quences could include a loss of sales and falling margins.

Silicon & Wafer segment

The economically diffi cult market environment in the third and fourth quarters of 2011 had a considerable effect on our customers in the photovoltaic sector and their fi nanc-ing positions. Given these circumstances, the Management Board and management team was prompted to apply adjustments to individual ongoing large-scale projects for the third quarter. The company has responded to the changes in overall conditions with an extensive catalogue of measures including a targeted sales campaign, an expan-sion of the “Performance Plus” cost-effi ciency program, and a task force for strategic further development.

Apart from the familiar risks arising from regular corporate activity, the company is also exposed to to the following risks, in particular:

• customers’ payment diffi culties and fi nancing problems (risk of delayed payment/liquidity risks, risk of discontinued projects)

• the launch of new products (installation of development projects that have never been implemented before, changes to the market environment, delays to customer orders due to development delays)

• projects delayed by customers

• additional costs from “lessons learned” on ongoing projects (additional costs due to: optimization and follow-up construction of individual components, costs to exchange components to satisfy contractually guaranteed parameters). These risks are generally covered by generous initial calcula-tions.

• non-satisfaction of contractually guaranteed product specifi cations (risk of delay in completing projects, and adherence with residual payments, environmental risks)

• suppliers’ receivables for acceptance of contract com-ponents

Such risk monitoring, which is already in place, also provided the basis for the aforementioned adjustments to large-scale projects.

An improved organization and more transparent information systematically identifi es and appraises typical large-scale plant engineering risks, and launches the requisite risk-limiting countermeasures.


Thin Film Module segment

Process technology optimization and further systems were applied to our Taiwanese partner’s CIGS thin fi lm production line in 2011. Second-generation selenization systems were integrated into the line, for example. We increased our interest in Sunshine PV Corporation from 14.4 % to 25.4 % in March 2011, as planned, which enables us to work effectively and closely together to pool experience in real mass production conditions.

The production line was commissioned at the end of 2011, and the TÜV Süd inspection company certifi ed the modules. We concluded the project in early 2012. All related personnel costs that are still anticipated were taken into account in the loss-free order valuation of the project.

As part of the Group-wide ct focus effi ciency program, the Management Board decided to close the Thin Film Module segment at the Group’s Blaubeuren location, and to outsource some areas to Asia. This move will bundle resources, and create a unit that is closely geared to the market.

Large-scale project for CEEG Algeria

State-owned Algerian utility group Société Nationale de l’Electricité et du Gaz (Sonelgaz) and a consortium consist-ing of centrotherm photovoltaics AG and Kinetics Germany GmbH signed an agreement on April 25, 2011. This project entails an almost fully integrated solar module factory to produce photovoltaic modules from polysilicon. The project is in the preplanning stage, and is being coordinated with the customer. Provisional acceptance is scheduled to occur after 38 months.

centrotherm is thereby accessing this attractive market with fi nancially strong customers. Follow-up projects are anticipated due to the Algerian energy ministry’s planned investment program.

The consortium partners are jointly and severally liable to the customer for the fulfi llment of the contract. The agreement includes contractual penalties for deadline and contract satisfaction that are typical of plant engineering.

As far as the scope of services is concerned, interfaces to the customer are in place for overall project management, construction implementation, and assembly work.

A project management team was established to steer the project. Risk provisions were included as part of the project calculation.

Personnel risks

centrotherm requires qualifi ed technical and management staff to achieve its objectives. Recruiting and retaining such staff represents a constant challenge for the com-pany given intense competition. There is also an increasing lack of qualifi ed personnel in Germany, particularly with technical and scientifi c qualifi cations. Risks also exist that it proves impossible to fi ll key positions in line with future requirements, in particular. This necessitates in-house qualifi cation activities, and the company’s permanent orientation to the labor and applicants market. We are pushing further ahead with cooperative ventures that already exist with local universities, colleges and secondary schools. We are also utilizing trainee programs to create attractive graduate recruitment options.

Demographic trends are also lending greater urgency to this entire topic. The fi rst applicant groups are now emerging that not only show a decline in quality and specialist qualifi -cations, but where the numbers of applicants are also falling.

The lack of specialists in Germany will also feed through to a corresponding increase in wage and salary costs, presenting HR management with new challenges.

Photovoltaic market trends, which are diffi cult to predict, comprise a further risk. Only the deployment of temporary staff allows us to mitigate the sector’s volatility. Temporary employment comprised an important tool in 2011 that allowed us to respond fl exibly to a photovoltaic market that is diffi cult to predict and forecast. This prompted us to establish an on-site management offi ce in the third quarter. The on-site offi ce primarily serves as an expert contact point for temporary staff with the aim of structuring processes more effi ciently and with greater service-orientation. The on-site management’s extensive know-how ensures that temporary staff are managed optimally, that they integrate smoothly within the company, and that all other personnel service-providers are coordinated.

The risk exists that top performers leave the company due to the reorganization and adjustment to personnel capacities entailed in the ct focus effi ciency program. We are addressing this risk with one-on-one discussions, and continuous information about centrotherm photovoltaics’ current and future corporate development.


Information technology risks

The reliability and security of information technology to support our business processes, as well as internal and external communication, are of great signifi cance. Despite all technical precautions, any serious disruption to systems may result in data loss and/or interruption to business and communication processes. In the past, centrotherm has instituted and launched many measures to minimize and avoid disruptions, including:

• Creation of two redundant computing centers in 2009/2010

• Introduction of structured IT service management processes based on the ITIL best practice model (including incident and change management)

• Introduction of a 24-hour emergency call service

• Automated monitoring of important IT systems

The IT area also forms part of the ISO 9001:2008 centrotherm quality management system. Regular external and internal audits are conducted accordingly.

IT systems are constantly adjusted to the respective current requirements, and are based on superior standards that are normal on the market.

We are constantly improving our security mechanisms to protect against unauthorized data access and data mani-pulation. Data security forms a central objective of our IT organization.

Financial risks

As a globally operating group, centrotherm is exposed to credit and liquidity risks, as well as interest-rate, currency and raw materials risks as part of its normal business operations. Such risks may exert a considerable impact on our net assets, fi nancial position and results of operations.

Financial risk management aims to identify and measure fi nancial risks emanating from the operating business, and to manage them through the development and implementa-tion of strategies. Where possible, centrotherm deploys corresponding fi nancial instruments to compensate risk. With this approach, centrotherm aims to ensure that suffi cient scope for fi nancial maneuver is available at all times for further corporate development, and for the satisfaction of all contractual obligations.

Our Group Treasury guidelines set out regulations for the type and scope of derivative instrument deployment.

Please refer to section 45 in the notes to the consoli-dated fi nancial statements for remarks concerning the fi nancial instruments deployed, and the related risks.

Credit risk

Credit risk, also referred to as the risk of receivables default, exists when a contractual partner’s liquidity position may give rise to the risk of a partial or complete default on contractually agreed payments or services. In order to avoid receivables default, we examine our business partners’ credit ratings before entering into contracts through the presen-tation of corresponding certifi cation. As a further measure against receivables default, we also agree corresponding payment terms with our customers, such as according to degree of project completion, and by way of letters of credit. Our receivables management function is responsible for monitoring open positions, as well as for conducting regular meetings together with relevant sales staff in order to monitor positions, and to agree measures to collect receivables.

Default risk on cash investments is reduced by distri-buting the investments among different fi nancial service-providers. Their credit ratings are monitored regularly.

Liquidity risk

Liquidity risk comprises the risk whereby the Group might be unable to fulfi ll fi nancial obligations such as the redemption of fi nance debt, or ongoing capital requirements arising from its operating activities.

Future liquidity requirements are calculated by using a Group-wide rolling liquidity budget that is regularly updated. In this manner, centrotherm ensures that all planned payment obligations across Group can be satisfi ed on the relevant due date. Close co-operation with several renowned German banks ensures that corresponding resources can be tapped at short notice given a future fi nancing requirement. centrotherm had access to commitments for cash and guarantee credit lines of TEUR 387,209 as of December 31, 2011. centrotherm has access to its current liquidity position across the Group at all times. If these credit lines were to be reduced or cancelled in the future, this could affect the Group’s liquidity position, and consequently exert a considerably negative impact on its net assets, fi nancial position and results of operations.


In order to refresh its liquidity position, centrotherm issued a registered bond in 2011 with a 2026 maturity, and a borrower’s note loan split into several tranches (maturities until 2016 and 2018 respectively). These bond issues generated TEUR 99,710 of total liquidity infl ow. All of these bonds are to be redeemed at maturity. If these bonds required refi nancing at maturity, such refi nancing might occur only on worse terms, thereby comprising a correspond-ing risk to future cash fl ows. Normal market covenants have been agreed for the registered bond and the borrower’s note loan, which require compliance with certain key fi nancial fi gures. If these covenants are not complied with as part of the annual review, this could have a signifi cantly negative impact on our net assets, fi nancial position and results of operations.

Interest-rate risk

Interest-rate risk refers to asset risks arising from changes in market interest rates. These may occur in the form of net interest risks and/or present value risks. Short-term assets in the securities and cash areas are currently invested at variable interest rates, and are consequently fully exposed to interest-rate risk. This is offset by their being available at any time, a factor to which we lend greater priority than the possibility to generate higher interest income.

Some long-term bank borrowings carry fi xed-rate agreements for their entire term. There is no interest-rate risk for these liabilities as a consequence. Present value risk is negligible since loans are recognized at cost in the balance sheet. Two interest-rate swap transactions were entered into over the course of 2011 to hedge interest-rate risks relating to the variable-rate liabilities. These transactions swap the original variable interest payments into fi xed interest payments.

The refi nancing of the fi nancial liabilities presented in the liquidity risk section could lead to a signifi cant increase in fi nancing costs in the future.

Foreign currency risk

Uncertainty about the future trends of a company’s currency positions, and potential changes to corresponding exchange rates, is referred to as foreign currency risk. A distinction between the sub-risks of transaction risk, operational risk and translation risk should be made in this context.

There is currently no need for action in the transaction risk area, since we can still conclude purchasing and sales contracts almost exclusively in euros. If required, we will correspondingly hedge resultant foreign currency risks on a case-by-case basis as they arise.

We also regularly analyze and report on operational risks and translation risks. We will also hedge these risks accordingly if required.

Commodity risk

High energy and raw materials price volatility is requiring the identifi cation of risks arising from price fl uctuations above and beyond the entire value chain. First, these risks must be made measurable, and, second, they must be integrated into corporate planning and steering.

We constantly conduct extensive analyses of raw materials price trends and their effects on our value chain, which allows us to respond rapidly if required. From our perspective, however, there has been no requirement for hedging in the past.

Legal risks

Changes to the political and regulatory environment in countries where we are present, such as import and export controls, customs regulations or other trade obstacles, as well as price and currency controls, could negatively impact our business on various national markets, negatively impact our revenues and profi tability, and make it diffi cult for us to repatriate earnings. Uncertainties surrounding the legal systems in many countries can also sharply restrict our ability to enforce our claims and rights. As a company that operates internationally, we conduct business activities with customers in countries that are subject to export control regulations, embargoes, sanctions or other forms of trade restrictions that are imposed by the USA, the European Union, or other countries or organizations. We could be exposed to penalties, sanctions or reputational damage as a consequence.


Revenue generated in emerging economies already makes a considerable contribution to our total revenue. We assume that that this will continue to be the case due to the development of our business, and growing demand for our products and solutions from such countries and regions. Asian markets and the MENA region, in particu-lar, are of great importance for our long-term growth strategy. Business activities in emerging economies entail various risks such as unrest, political and economic instability, cultural differences – such as business practices and working conditions – GDP volatility, the potential nationalization of private assets, uncertainties surrounding legal systems, and the imposition of currency restric-tions. Our growth strategy in emerging economies could also be hampered by state support for local industry. In particular, our considerable business activities in China and the MENA region are subject to legal systems and legal conditions that are still in the development stage, and which are subject to manifold changes. Areas of the centrotherm Group that generate their revenue with large-scale projects could be negatively impacted if future demand, prices and GDP on markets where they operate fail to develop as positively as expected. The occurrence of these or similar risks arising from our international busi-ness activities could exert a considerable negative impact on our business position, net assets, fi nancial position and results of operations.

Future investigations relating to allegations of corrup-tion, and allegations concerning other infringements of the law, could have signifi cant disadvantageous effects on the development of future business transactions, the company’s net assets, fi nancial position and results of operations, the company’s share price, and our reputation.

Risks from litigation and regulatory procedures in which we are currently involved, or which might occur in the future, exist for the centrotherm photovoltaics Group. We are involved in litigation and/or similar proceedings, and are subject to regulatory investigations and procedures due to the occurrence of typical corporate and project risks such as, in particular, the non-contractual delivery of goods or services, product liability, product defects, quality problems, the infringement of intellectual property, infringements against environmental and/or occupational health and safety law regulations, non-compliance with tax regulations, and/or alleged or presumed infringements of prevailing law. The risk of litigation existed with one Asian customer at the time when this report was being prepared.

It cannot be excluded that the results of such litigation and procedures entail considerable damage to our business, reputation or brand. The centrotherm Group forms provi-sions for obligations arising from litigation and proceedings in line with the likelihood and level of utilization, to the extent that this can be determined suffi ciently precisely. Following the conclusion of the respective litigation proceedings, it might nevertheless be established that our provisions prove insuffi cient to cover the resultant losses or expenses. We might also be required to bear lawyers’ fees and other legal defense costs to a considerable extent, despite having won the main action in such litigation and proceedings.

Each of these risks could exert considerable disadvanta-geous effects on our business position, net assets, fi nancial position and results of operations.

Other risks

Staff members, customers or suppliers gain an insight into technical details and specifi cations when manufacturing and selling our products. We generally conclude confi den-tiality agreements with all participants in order to prevent theft of our know-how.

In the systems we manufacture, hazardous substances such as selenium or trichlorosilane are partly used for pro-duction. Our systems incorporate high safety standards to prevent accidents and related injuries. The TÜV inspection group also approves our systems. We provide our customers with corresponding system operation handbooks, including explanations about potential hazards from input materials. We regularly provide our staff with extensive training in the handling of hazardous substances and related risks. We also employ a safety offi cer.

We generally conclude insurance cover against the effects of liability risks or loss claims on the company’s net assets, fi nancing position and results of operations.

83Group Management Report Annual Report 2011 centrotherm photovoltaics Remuneration

General statement concerning the risk position

The assessment of all risks to which the centrotherm photo-voltaics Group is exposed shows that it is predominantly risks arising from future macroeconomic trends, and particularly trends in the solar sector, both in Germany and abroad, that have immense signifi cance for the company’s future existence.

The solar sector has been confronted with greater consolidation activity since the start of the fi nal quarter of 2011. The risk exists that producers will be forced out of the market due to faster consolidation, and could be lost as potential customers. If this market trend were to persist for an extended time, it could feed through to a marked decline in new orders, thereby exerting a considerable impact on the company’s further development.

As a company that operates internationally, centrotherm photovoltaics regards itself as exposed to the political risks in the countries in which we operate. The process of restructuring political regimes has not yet been concluded, particularly in the Arab region. It can also not be excluded that such political restructuring processes spill over to other countries. It is extremely diffi cult to predict the resultant risks, which is why they are of great importance for the company’s further development.

Taking into account event probabilities and potential fi nancial effects, centrotherm photovoltaics identifi ed no going-concern risks at any time during the fi nancial year elapsed. In addition, when taking into account current business trends and the information available to us today, no individual or aggregated risks were currently identifi able that might jeopardize the company’s continued existence.

There are currently no external ratings by rating agencies for either centrotherm photovoltaics AG or its subsidiaries.

We are confi dent that our market position, technology leadership, motivated staff, and our established processes create the basis for us to exploit opportunities as they arise, and to successfully counter potential risks.

Signifi cant related parties transactions

Signifi cant transactions occurred between centrotherm photovoltaics AG and related companies during the reporting period. A list is presented in the notes to the consolidated fi nancial statements on page 135 f.

Remuneration


The Supervisory Board determines and regularly reviews Management Board remuneration, which is performance-based, and adjusted to both the size of the company, and its commercial and fi nancial position. The remuneration contains both fi xed and variable (performance-based) components.

By way of divergence from the recommendation of the German Corporate Governance Code, the structure of the variable components is not tied to negative corporate trends. The variable remuneration components depend partly on the Group’s performance, and partly on the attainment of quali-tative targets pursuant to a target agreement. The amounts of all variable remuneration components are limited.

The fi xed components comprise an annual fi xed salary, benefi ts in kind and company pension fund benefi ts. Benefi ts in kind include the private use of company cars and company pension fund benefi ts. centrotherm photovoltaics also enters into D&O insurance policies for all Management Board members. Management Board employment contracts were adjusted in 2010 to meet the new statutory require-ments, and a deductible for D&O insurance was agreed for Management Board members.

The Supervisory Board does not regard further adapta-tion of the current contracts with its Management Board members as requisite, since several Management Board members already have an interest in the company’s sustained and positive development due to their substantial stake in the company. In the assessment of the Supervisory Board, the remuneration components currently set out in the Manage-ment Board agreements are appropriate both in themselves and when considered overall. They do not encourage the Management Board to enter into inappropriate risks.

Since the 2011 Ordinary Shareholders’ General Meeting voted against an extension of the abstention from disclosing individual Management Board remuneration, the company has decided to already publicize individual Management Board members’ compensation in the single-entity and consolidated fi nancial statements for the 2011 fi nancial year.

84 centrotherm photovoltaics Annual Report 2011 Group Management Report Report on events subsequent to the reporting date

In the reporting year, payment to Management Board members consisted of fi xed remuneration components of TEUR 1,768 (comparable prior-year period: TEUR 1,229), variable components of TEUR 547 (comparable prior-year period: TEUR 453, as well as non-cash compensation of TEUR 40 (comparable prior-year period: TEUR 41). Contributions of TEUR 3 (comparable prior-year period: TEUR 3) were made to the company pension scheme in 2011.

Individualized presentation of Management Board compensation

in EURFixed

remuneration Variable Total

Robert Hartung 351,004 80,000 431,004

Hans Autenrieth 351,323 80,000 431,323

Dr. Peter Fath 351,004 137,000 488,004

Dr. Dirk Stenkamp 364,681 117,500 482,181

Dr. Thomas Riegler 350,338 132,500 482,838

Total 1,768,350 547,000 2,315,350

Supervisory Board remuneration

Supervisory Board remuneration is regulated by centrotherm photovoltaics AG’s company statutes. After reimbursement of expenses and VAT related to remuneration and expenses, Supervisory Board members receive payment consisting of a fi xed component and fees for attending meetings. The annual fi xed component amounts to TEUR 20 per member, and the fee for attending meetings amounts to TEUR 1 per meeting. The Chairperson of the Supervisory Board receives double this amount in each case, and her deputy receives one and a half times the fi xed component and the attendance fee. centrotherm photovoltaics also enters into directors & offi cers’ (D&O) insurance policies for all Supervi-sory Board members.

The Supervisory Board members drew a total of TEUR 90by way of fi xed remuneration plus compensation of expenses of TEUR 41 during the 2011 period under review. These payments are distributed as follows among the individual Supervisory Board members:

in EUR Fixedremuneration

Expense allowance

Prof. Dr. Brigitte Zürn 40,000 18,000

Rolf Hartung 30,000 12,500

Rolf Breyer 20,000 9,000

Total 90,000 40,500

Dr. Horn Unternehmensberatung GmbH, in which Prof. Brigitte Zurn, the company’s chairperson of the Supervisory Board, is active as Managing Director, renders tax consultancy services and similar consultancy services at standard market hourly and daily rates for the centrotherm photovoltaics Group on the basis of a contract dated March 22, 2007, which was approved by both the Supervisory Board and a shareholder general meeting resolution of July 5, 2007. On the basis of this agreement, the centrotherm photovoltaics Group paid consultancy fees totaling TEUR 187 in the 2011 fi nancial year.

Report on events subsequent to the reporting date

There following key events occurred following the reporting date:

The Management Board has responded to the very strained market situation, and a higher level of consolidation activities and insolvencies among solar manufacturers, and has launched its ct focus effi ciency program, which will run alongside costs and sales initiatives that are already in place. The program’s declared objective is to grow profi tably and sustainably with a streamlined and effi cient organizational structure, and a strategic focus on crystalline silicon along the photovoltaic value chain. This program’s fi rst step will entail a signifi cant reduction of costs, and an adjustment to Group personnel capacities. The company aims to achieve around EUR 22 million of cost savings per year by the end of 2013. Around 400 jobs are to be cut by mid-2012 from the 1,928 Group staff employed worldwide as of December 31, 2011. Along with a refocusing on business entailing production systems and technologies to manufacture crystalline solar cells and modules, and the production of high-purity silicon, a further signifi cant component of the program will be the expansion of the Semiconductors & Microelectronics area. As part of ct focus, the Management Board also decided to close the Thin Film Module segment at the Group’s Blaubeuren location, and to outsource some areas to Asia. This move will bundle resources, and create a unit that is closely geared to the market. An extensive sales campaign conducted by all segments will complete the ct focus package of measures.

Along with the formation of provisions for ct focus, the measures that were decided upon in the fi rst quarter of 2012 necessitated that impairment charges be applied to internally generated intangible assets in the Thin Film Module segment.

Besides this, no further events occurred after the balance sheet date that are of key signifi cance for the centrotherm photovoltaics Group, and which could lead to a different assessment of business progress.

85Group Management Report Annual Report 2011 centrotherm photovoltaics Forecast report

Forecast report

The economic environment

Macroeconomy

GDP growth forecasts for selected economic regionsYear-on-year changes in percent

Region 2012 2013

World 3.4 4.0

Industrial countries 1.2 1.8

USA 1.9 2.2

Eurozone – 0.1 1.2

Germany 0.5 1.7

Emerging markets 6.0 6.5

Source: IfW Kiel Institute for the World Economy

At the start of 2012, the global economy was impacted by the Eurozone state debt crisis, uncertainties concerning the condition of the fi nancial sector, and surprisingly strong growth in emerging economies, which made a signifi cant contribution to global macroeconomic recovery following the crisis. There is considerable risk that the Eurozone crisis spirals out of control, further Eurozone countries approach insolvency, or that the overall fi nancial system goes into a tailspin.

The IfW Kiel Institute for the World Economy anticipates that advanced economies will register very weak growth in the 2011/12 winter half-year given these conditions, and that they will subsequently gather momentum only slowly. Overall, the IfW expects that these countries’ GDP will grow by a very moderate 1.2 % in 2012.

In the USA, private household debt reduction and an oversupply of existing residential real estate continues to hamper economic expansion. GDP is anticipated to grow by 1.9 % in 2012. The IfW expects the Eurozone debt crisis to ease slightly over the course of the year, and the economy to recover somewhat from the spring. A decline of -0.1 % and a slight fall in production is nevertheless anticipated for the Eurozone on a full-year basis. Contrary to the Eurozone trend, German GDP is forecast to grow by 0.5 % in 2012, according to estimates produced by the IfW.

Weak demand in industrial nations will additionally burden emerging economies. Economic policy is neverthe-less becoming increasingly expansive, so that GDP growth should remain strong at an estimated 6.0 %. The IfW fore-casts that global production will be up by 3.4 % in 2012.

Sector trends

2012 is beset with great uncertainties as a result of political discussions about solar subsidies in various countries. On the basis of our own estimates, we are assuming a slight increase in newly installed photovoltaic output globally for 2012. Although Europe will remain the largest sales market this year, Asia and America, in particular, will expand their share of the global market.

Following the record 2011 year, the discussion that has started in Germany about future subsidies could mean that feed-in compensation is not adjusted next July, as planned, but earlier, and in a modifi ed form. Drastic cuts could feed through to a sharp market downturn in the fi rst half of the year, and also to the accelerated purchasing of solar projects, which could contribute to greater uncertainty about market trends during the fi rst half-year. The revisions that are approved will have a signifi cant impact on growth in the second half of the year in Germany. Sharp reductions could feed through to a drastic year-on-year decline in installed photovoltaic output.

Having ranked as the world’s second-largest market in 2011, a year-on-year decline in newly installed output is anticipated in Italy in 2012. The planned subsidy volume for 2012 was already reached in the major systems segment, thereby eliminating compensation for new solar electricity systems in the second half of the year. The segment for small private roof systems and commercial roof systems up to 1 MW will gain importance this year.

An existing project pipeline in the USA prompts us to anticipate further market growth in 2012 in the installation of large systems, including systems that received payments from an investment incentive program that expired last year, and which are not to be implemented until this year. Lower systems prices and new fi nancing possibilities are stimulating growth in the roof-mounted systems segment.

Asia reports positive growth, and new photovoltaic markets are opening up in the region. Growth on Asia’s three largest markets form a particular highlight this year: China, Japan and India.

86 centrotherm photovoltaics Annual Report 2011 Group Management Report Forecast report

The Chinese market will gain even greater global sig-nifi cance in 2012, having already featured as Asia’s largest market in 2011. The Chinese government is actively driving the expansion of photovoltaics on its own market, including through introducing feed-in compensation in 2011. For this reason, we expect China to make a growing contribution to global photovoltaic installation in 2012.

In Japan, once the world’s largest photovoltaic market, preparations were made to expand photovoltaics following the atomic catastrophe in Fukushima. Among other factors, feed-in remuneration is anticipated to come into force in July 2012, which is expected to form a further growth-driver.

In India, which is characterized by growing energy demand and low electrifi cation rates in rural areas, the government is planning to drastically raise its photovoltaic system installation targets, which it is pursuing as part of its national program, the so-called “National Solar Mission”. As a consequence, we forecast further growth in photovoltaic installations in India in 2012.

We assume that the photovoltaic sector will continue to report a positive trend into the medium term. This will be partly driven by the endeavors of a rising number of countries to raise the share of total electricity generation delivered by photovoltaic electricity. Diversifi cation of markets is also evident: the number of countries that make a relevant contribution to the global PV installation market is rising, which in turn is reducing dependency on individual countries and political decisions. We anticipate a extremely positive medium-term trends particularly in regions with high levels of solar irradiation such as Africa, South America and the Middle East.

Business and organization, earnings, fi nancial position,

investments, opportunities, overall statement

Business and organization

Our aim is to further secure our position as one of the world’s leading providers of technology and equipment for the photovoltaic industry. We will further expand our technology leadership through targeted research and devel-opment investments, thereby strengthening our market position. Solar energy is becoming ever more effi cient and more cost-effective as the result of our innovations.

Along with a refocusing on business entailing produc-tion systems and technologies to manufacture crystalline solar cells and modules, and the production of silicon, a further signifi cant component of our future strategy will be the expansion of the Semiconductors & Microelectronics area. This area will include the further development of new production technologies and processes, and an ongoing improvement of existing technologies and production systems. As part of the internal reorganization, process

adjustments and more streamlined management structures within individual Group companies will allow synergies to be tapped, and the entire organization to be optimized. The refocusing entails centrotherm photovoltaics’ future activities being concentrated on the traditionally stronger business of Solar Cell & Module, including Semiconductors and Microelectronics, as well as Silicon & Wafer.

We will further bolster our sales activities in order to expand in growth regions. These measures include the cross-segment management of key customers and core markets, a strategic evaluation of current and future customer requirements, a strengthening of customer loyalty activities, and the further tapping of certain customer segments such as state companies and major industrial conglomerates. We considerably bolstered sales activities in the MENA region (Middle East and North Africa) in 2011. Along with the traditionally strong Asian business, centrotherm photovoltaics’ already good market position is to be further expanded in this growth region in the future. The Middle East and North Africa are witnessing growing interest in renewable energy sources, with the aim of creat-ing domestic industries. We have oriented our organization accordingly.

Earnings

The continued diffi cult sector situation as well as greater consolidation will exert a signifi cant impact on our profi t-ability. As a consequence, around EUR 22 million is to be saved annually until the end of 2013 as part of the ct focus Group-wide effi ciency program. Along with a refocusing on business entailing production systems and technologies to manufacture crystalline solar cells and modules, and the production of silicon, a further signifi cant component of our activities during the 2012 fi nancial year and beyond will be the expansion of our Semiconductors & Microelectron-ics area. Our objective is to again grow profi tably in the medium term as a result of these measures.

It has been proposed that a dividend should not be paid for the 2011 fi nancial year due to the current earnings situation.

Financial position

We concluded the 2011 fi nancial year with TEUR 137,364 of liquidity. We also have access to commitments for cash and guarantee credit lines of TEUR 387,209.

87Group Management Report Annual Report 2011 centrotherm photovoltaics Forecast report

Investments

The continuous further development of technologies and processes along the photovoltaic value chain forms an important component of our corporate strategy. This is the only way in which we can offer highly effi cient solutions that deliver critical competitive advantages to our customers. A large proportion of our investments fl ows into research and development in order to be able to continue to achieve this, and to maintain our market position.

Most of our research investments fl ow into our Solar Cell & Module segment including Semiconductors and Microelectronics. A particular focus in this context is our existing technology roadmap target entailing an approximately 0.5 % per annum effi ciency enhancement. In the area of tangible fi xed asset investments, no major investments are planned for 2012 following the conclusion of the expansion of production capacities in Blaubeuren, and the completion of the centrotherm Solar Innovation Center in Constance last year.

Opportunities

Since resources such as oil, gas, coal and uranium are fi nite, an increasing number of countries have set themselves the goal of boosting their share of renewable energy generation relative to total electricity production. We aim to support and further drive this energy revolution with our technologies and products. We regard ourselves not only as an innovation-leader in the solar sector, but also as a technology and effi ciency motor for the global energy revolution.

The general sector trend generates opportunities whereby continued cost pressure is forcing solar cell and silicon manufacturers to invest in technologies and produc-tion systems in order to remain competitive, and expand their market shares. This provides an opportunity for us to win replacement investment orders. We have reached a very good market position, particularly in Asia, and we expect that it will be primarily renowned solar cell manufacturers who make renewed investments as the photovoltaic market moves ahead.

A further opportunity arises inasmuch as many countries such as MENA region states are setting themselves the objective of creating their own domestic industries that focus on photovoltaics. The preconditions for this are optimal. Favorable energy supply prices mean that they can already competitively cover energy-intensive production steps along the photovoltaic value chain. The political will to create local jobs is supporting and driving this strategy. For this reason, Asian and Arab countries, and South America, will continue to number among our future markets.

Overall statement

We will be confronted by challenges again in 2012. The sector is in a consolidation phase, and its further develop-ment depends on a large number of factors, including infl uences from politics and the fi nancial market, which are currently diffi cult to predict. We have prepared accordingly with our ct focus effi ciency program. It is currently diffi cult for us to clearly gauge when positive signals from the sector will allow our order position to recover. We are not assum-ing a signifi cant change to the current situation in the fi rst half of 2012.

We also regard continued cost pressure in the photo-voltaic sector as an opportunity for two reasons. First, our customers, manufacturers of solar cells and modules, and polysilicon, are focusing on highly-effi cient technolo-gies and production systems that lend them competitive advantages. Second, photovoltaics is quite clearly on a medium- to long-term growth path due to rising energy demand worldwide, and the energy policy revolution that has started.

We prefer to refrain from issuing a revenue and earn-ings forecast for the 2012 fi nancial year given the current uncertainties on markets, and exogenous factors that we cannot infl uence. Our focus is now directed to our core competencies, our strong large-scale project business, and our sales orientation to the MENA states.

88


centrotherm photovoltaics Geschäftsbericht 2011 Consolidated financial statements

89Annual Report 2011 centrotherm photovoltaics


90 Consolidated income statement

91 Consolidated statement of comprehensive income

92 Consolidated balance sheet

94 Statement of changes in consolidated equity

95 Consolidated cash flow statement

96 Notes to the financial statements

140 Assurance of the legal representatives

141 Independent auditor’s report

142 Glossary

146 Financial calendar | Imprint

90 centrotherm photovoltaics Annual Report 2011 Consolidated fi nancial statements Consolidated income statement

Consolidated income statement

Consolidated income statement


31.12.201101.01. –

31.12.2010

Sales revenue 6 698,530 624,169

Change in inventory of fi nished goods and work-in-progress 7 47,150 38,557

Capitalized services rendered to own account 8 11,295 18,441

Total operating performance 756,975 681,167

Other operating income 9 31,757 14,054

Cost of materials 10 – 500,042 – 382,300

Personnel expenses 11 – 104,067 – 80,254

Other operating expenses 12 – 174,417 – 131,366

Earnings before interest, tax, depreciation and amortization (EBITDA) 10,206 101,301

Amortization and depreciation 13 – 30,007 – 25,938

Earnings before interest and tax (EBIT) – 19,801 75,363

Loss from investments accounted for using the equity method – 487 0

Financial income 2,369 955

Financial expenses – 5,837 – 2,016

Financial result 14 – 3,468 – 1,061


Taxes on income 15 8,609 – 22,423

Net income (EAT) – 15,147 51,879

Earnings attributable to non-controlling interests 16 – 737 – 738


Weighted average number of shares in '000 21,162 21,162

Earnings per share as of the reporting date in EUR 17 – 0.75 2.42

91Consolidated fi nancial statements Annual Report 2011 centrotherm photovoltaics Consolidated statement of comprehensive income

Consolidated statement of comprehensive income

Consolidated statement of comprehensive income


31.12.201101.01. –

31.12.2010

Net income (EAT) – 15,147 51,879

Revaluation of securities

Gain arising in the current period 41 104

Less earnings-effective reclassifi cation to income statement 14 – 763 – 34

Deferred tax on revaluation of securities 110 – 12

Difference from currency conversion 901 – 23

Cash fl ow hedge 34 – 565 0

Deffered tax on cash fl ow hedge 15 170 0

Earnings recognized directly in equity – 106 35

Comprehensive net income – 15,253 51,914

of which attributable to non-controlling interests 737 738

of which attributable to CTPV AG – 15,990 51,176

92 centrotherm photovoltaics Annual Report 2011 Consolidated fi nancial statements Consolidated balance sheet

Consolidated balance sheet

Assets

in TEUR Notes 31.12.2011 31.12.2010

Non-current assets

Intangible assets 18

Goodwill 117,436 129,298

Internally created intangible assets 34,011 35,418

Other intangible assets 56,870 66,815

Property, plant and equipment 19 139,331 83,258

Investments 20 5,834 7,096

Investments accounted for using the equity method 21 11,296 0

Non-current receivables from taxes on income 22 80 94

Other non-current assets 23 773 681

Deferred tax 15 31,454 3,189

Total 397,085 325,849

Current assets

Inventories 24 202,915 96,238

Receivables relating to construction orders 25 46,471 90,580

Trade receivables 26 51,727 60,945

Other receivables

Receivables due from equity interests 27 1,188 1,027

Receivables due from related companies and persons 28 1,344 1,506

Advance payments made 29 28,858 8,217

Current receivables from taxes on income 30 6,368 11,668

Other current assets 31 17,148 18,204

Securities 32 0 10,813

Cash and cash equivalents 33 137,634 180,602

Total 493,653 479,800

Total assets 890,738 805,649

93Consolidated fi nancial statements Annual Report 2011 centrotherm photovoltaics Consolidated balance sheet


in TEUR Notes 31.12.2011 31.12.2010

Equity 34

Equity attributable to parent company shareholders

Subscribed capital 21,162 21,162

Capital reserve 245,003 245,003

Revaluation reserve 0 612

Cash fl ow hedge reserve – 395 0

Retained earnings 114,541 77,313


Non-controlling interests 1,658 1,125

Total 366,085 396,356

Non-current liabilities

Provisions for pensions and similar obligations 35 192 210

Non-current fi nance debt 36 123,427 21,298

Other non-current liabilities 37 1,662 1,258

Deferred tax 15 43,973 49,305

Total 169,254 72,071

Current liabilities

Provisions for taxes 38 8,964 15,481

Other current provisions 39 37,212 22,775

Current fi nance debt 36 7,980 8,929

Liabilities arising from construction contracts 40 48,594 42,594

Trade payables 41 81,653 54,648

Advance payments received 42 138,452 167,227

Liabilities to equity interests 5 558

Liabilities to related companies and persons 43 858 1,318

Other current liabilities 44 31,681 23,692

Total 355,399 337,222

Total equity and liabilities 890,738 805,649

94 centrotherm photovoltaics Annual Report 2011 Consolidated fi nancial statements Statement of changes in consolidated equity

Statement of changes in consolidated equity

in TEUR Notes

Sub-scribed capital

Capital reserve

Revalution reserve

Cash fl ow hedge

reserveRetainedearnings

Consoli-dated

net income

Total Non-control-ling interests

Consoli-datedequity

from January 1, 2010 – December 31, 2010 34

As of January 1, 2010 21,162 245,003 554 0 48,792 28,544 344,055 387 344,442

Transfer to retained earnings 0 0 0 0 28,544 – 28,544 0 0 0

Currency conversion 0 0 0 0 – 23 0 – 23 0 – 23

Revaluation of securities 0 0 58 0 0 0 58 0 58

Net income (EAT) 0 0 0 0 0 51,141 51,141 738 51,879

As of December 31, 2010 21,162 245,003 612 0 77,313 51,141 395,231 1,125 396,356

from January 1, 2011 – December 31, 2011 34

As of January 1, 2011 21,162 245,003 612 0 77,313 51,141 395,231 1,125 396,356

Transfer to retained earnings 0 0 0 0 51,141 – 51,141 0 0 0

Cash fl ow hedge 0 0 0 – 565 0 0 – 565 0 – 565

Deffered tax on cash fl ow hedge 0 0 0 170 0 0 170 0 170

Currency conversion 0 0 0 0 901 0 901 0 901

Revaluation of securities 0 0 – 612 0 0 0 – 612 0 – 612

Dividends 33 0 0 0 0 – 14,814 0 – 14,814 0 – 14,814

Payments to share holders with non-controlling interests 0 0 0 0 0 0 0 – 204 – 204

Net income (EAT) 0 0 0 0 0 – 15,884 – 15,884 737 – 15,147

As of December 31, 2011 21,162 245,003 0 – 395 114,541 – 15,884 364,427 1,658 366,085

Statement of changes in consolidated equity

95Consolidated fi nancial statements Annual Report 2011 centrotherm photovoltaics Consolidated cash fl ow statement

Consolidated cash fl ow statement

Consolidated cash fl ow statement

in TEUR Notes01.01 –

31.12.201101.01 –

31.12.2010


+ Depreciation of non-current assets 30,007 25,938

+ Losses from disposals of fi xed assets 261 9

+ Losses from disposals of intangible assets 236 0

–/+Increase/decrease in inventories, future receivables relating to construction orders and advance payments made – 82,887 10,069

+/– Decrease/increase in trade receivables 10,083 – 43,232

+Decrease in other assets not allocated to investing or fi nancing activities 3,006 11,410

+ Increase in other current provisions 14,437 15,486

+ Increase in trade payables 25,856 14,145

–Decrease in advance payments received and liabilities arising from construction contracts – 24,279 – 20,492

+/–Increase/decrease in other liabilities not allocatedto investing or fi nancing activities 5,875 – 6,438

– Income tax payments – 26,259 – 11,586

– Other non-cash expenses – 738 – 166

= Cash fl ow from operating activities 46 – 68,158 69,445

+ Payments received from disposals of fi xed assets 146 122

+ Payments received from disposals of intangible assets 5 0

– Outgoing payments for investments in fi xed assets – 66,693 – 21,327

– Outgoing payments for investments in intangible assets – 8,452 – 19,325

–Outgoing payments for the acquisition of consolidated subsidiary companies – 7,500 – 7,600

–Outgoing payments for investments in fi nancial assets and At-Equity-Investments – 11,013 – 6,630

+ Incoming payments arising from the sale of securities 10,854 23,712

= Cash fl ow from investing activities 47 – 82,653 – 31,048

+ Payments received from the incurrence of fi nancial liabilities 122,483 10,000

– Payments for the redemption of fi nancial liabilities – 1,824 – 714

– Dividends paid – 14,814 0

– Outgoing payments to shareholders with non-controlling interests – 204 0

– Outgoing payments to former CTMS shareholders 0 – 836

= Cash fl ow from fi nancing activities 48 105,641 8,450

= Net change in cash and cash equivalents – 45,170 46,847

+ Change in cash and cash equivalents due to scope of consolidation 2,202 0

+ Cash and cash equivalents at the start of the period 180,602 133,755

= Cash and cash equivalents at the end of the period 49 137,634 180,602

96 centrotherm photovoltaics Annual Report 2011 Consolidated fi nancial statements Notes to the fi nancial statements

1. General information

centrotherm photovoltaics AG (hereinafter referred to in brief as „CTPV AG“), a joint stock corporation according to German law, was founded on December 28, 2005 and notarized by Dr. Ulrich Kromer, Ulm/Danube.

CTPV AG has its headquarters in Blaubeuren, Germany, and is entered in the commercial register of Ulm/Danube under HRB 720013. The company‘s shares are traded under stock exchange abbreviation CTN and ISIN DE000A0JMMN2 on the regulated market of the Frankfurt Stock Exchange, and are admitted to the Prime Standard of Deutsche Börse AG.

The majority shareholder and parent company in terms of IAS 27 is TCH GmbH, which is based at Blaubeuren, Germany.

centrotherm photovoltaics Group is an internationally leading provider of technology and services for the produc-tion of solar silicon and solar cells. The broad product spectrum comprises key equipment and turnkey production lines for crystalline and thin-fi lm solar cells. The product range is supplemented by reactors, converters, and waste gas puri fi cation plants for the manufacturing of solar silicon. The focus of the business operations is currently in Asia. The international customer base includes well-known companies from the solar sector.

The consolidated and parent company fi nancial state-ments, as well as the Group management report and the management report of CTPV AG for the 2011 fi nancial year have been submitted to the electronic Federal Gazette, where they have been published.

2. Application of International Financial Reporting Standards (IFRS)

The consolidated fi nancial statements of CTPV AG as of December 31, 2011 have been prepared according to the International Financial Reporting Standards and their interpretations published by the International Accounting Standards Board (IASB). CTPV AG has applied all IFRS in the preparation of the consolidated fi nancial statements mandatory as of the December 31, 2011 reporting date.

Pursuant to § 315a of the German Commercial Code (HGB), these consolidated fi nancial statements are in harmony with Article 4 of the Regulation (EEC) Number 1606/2002 of the European Parliament and Council of July 19, 2002 concerning the application of the International Financial Reporting Standards (IFRS) of the International Accounting Standards Board (IASB). They have been supple-mented by certain disclosures, as well as the management report in connection with § 315a of the German Commercial Code (HGB).

The IASB has approved a number of amendments to existing standards and interpretations, and has approved one new interpretation, which have required mandatory application since January 1, 2011. The following standards amendments to standards, as well as interpretations and modifi cations to these interpretations, have no signifi cant effect on the centrotherm photovoltaics Group, however:

• IAS 24 (revised) Related Party Disclosures was reviewed with respect to the defi nition of related parties. An exemption was also introduced for state-controlled companies, which were exempted from the requirement to publish transactions with other state-controlled companies.

• IAS 32 (revised) Financial Instruments: Presentation: The amendments relate to the classifi cation of foreign-currency rights issues as either equity instruments or fi nancial liabilities. IAS 32 was amended so that rights and options to acquire equity instruments are now treated as equity instruments irrespective of their currency.

• IFRS 1 (revised) First-time Adoption of International Financial Reporting Standards: This amendment to IFRS 1 provides a relief to fi rst-time adopters of IFRS whereby, in connection with improved disclosures on fi nancial instru-ments pursuant to IFRS 7, the requirement to provide comparative prior-year fi gures in the year of fi rst-time adoption no longer exists.

Improvements to International Financial Reporting Standards (2010): Various amendments particularly to IFRS 1, IFRS 7, IAS 1, IAS 34, IFRIC 13.

• IFRIC 14 (revised) IAS 19 – The Limit on a Defi ned Benefi t Asset, Minimum Funding Requirements and their Interaction: IFRIC 14 relates to pension schemes for which minimum funding requirements exist. The amendments now allow an asset to be recognized in the form of a prepaid minimum funding payment.

• IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments: IFRIC 19 provides regulations for the accounting treatment where equity instruments are issued to satisfy fi nancial liabilities. In particular, the equity instrument is measured at fair value pursuant to IFRIC 19, and any difference between the carrying amount of the extinguished fi nancial liability and the consideration is recognized in profi t or loss.

Notes to the fi nancial statements

97Consolidated fi nancial statements Annual Report 2011 centrotherm photovoltaics Notes to the fi nancial statements

Besides this, the following standards had been pub-lished at the time of the approval of these fi nancial state-ments for publication. However, their application is not yet mandatory in the current reporting year, or they have not yet been adopted by the European Commission, and they have not found early application:

• IAS 1 (revised) Presentation of Financial Statements (Pres-entation of Items of Other Comprehensive Income): Covers the presentation of items of other comprehensive income. The amendments require that these items be split into two categories depending on whether the items are reclassifi ed to the income statement at a later date, or whether this is not the case. The amended standard is applicable for fi nancial years commencing on or after July 1, 2012.

• IAS 19 (revised) Employee Benefi ts: The amendments primarily relate to the abolition of the option to report actuarial gains and losses. These are to be reported in other comprehensive income in the future. Amendments were also made to the recognition of expected plan returns, and additional disclosure requirements. The amendments to IAS 19 must be applied to fi nancial years commencing on or after January 1, 2013.

• IAS 28 (revised) Investments in Associates and Joint Ven-tures Investments: With the approval of IFRS 11 and IFRS 1, IAS 28 was retitled “Investments in Associates and Joint Ventures“, and the scope of regulations that was previously restricted to associated companies was expanded to apply the equity method to joint ventures. This amendment is applicable for the fi nancial years commencing on or after January 1, 2013.

• IAS 32 (revised) Offsetting Financial Assets and Financial Liabilities, and IFRS 7 (revised) Disclosures – Offsetting Financial Assets and Financial Liabilities: These revisions to IAS 32 and IFRS 7 cover the preconditions for netting fi nancial assets and liabilities, and related disclosures. These amendments to IAS 32 and IFRS 7 are to be applied for the fi rst time for fi nancial years commencing on or after January 1, 2014 and January 1, 2013 respectively.

• IFRS 9 Financial Instruments (replacement of IAS 39): Replaces the previous regulations of IAS 39 relating to the classifi cation measurement of fi nancial assets and fi nancial liabilities. IFRS 9 should be applied for fi nancial years commencing on or after January 1, 2015.

• IFRS 10 Consolidated Financial Statements: IFRS 10 replaces the regulations of IAS 27 and the previous SIC-12 concerning consolidation. IFRS 10 sets out a standard control concept that is applicable to all companies, includ-ing special-purpose entities. Compared with the previous legal position, the amendments introduced with IFRS 10 require considerable discretionary decisions on the part of management regarding which Group companies are controlled, and whether these are to be included by way of full consolidation. IFRS 10 is applicable for the fi rst time for fi nancial years commencing on or after January 1, 2013.

• IFRS 11 Joint Arrangements: Replaces the previous regula-tions of IAS 31 and SIC-13 relating to the accounting treatment of joint ventures. With IFRS 11, particularly the existing option to apply proportional consolidation for joint ventures is discontinued. Such companies are to be included in the consolidated fi nancial statements solely according to the equity method in the future. This standard is applicable for the fi nancial years commencing on or after January 1, 2013.

• IFRS 12 Disclosure of Interests in Other Entities: This standard provides uniform disclosure requirements for the group accounting area, and consolidated disclosures for subsidiaries that were previously regulated under IAS 27, disclosures for joint ventures and associates that were previously covered under IAS 31 and IAS 28, and for structured entities. New disclosure requirements have also been formulated. This standard is applicable for the fi nancial years commencing on or after January 1, 2013.

• IFRS 13 Fair Value Measurement: Defi nes standard guidelines to measure fair value. The standard also includes extensive requirements for fair value measurement disclo-sures in the notes to the fi nancial statements. This standard is applicable for the fi nancial years commencing on or after January 1, 2013.

The centrotherm photovoltaics Group is currently exam-ining what effects the fi rst-time application of this standards will have on the Group‘s asset, liability, and earnings position.

98 centrotherm photovoltaics Annual Report 2011 Consolidated fi nancial statements

The following standards, amendeds on standards and interpretations will prospectively have no signifi cant effects on the consolidated fi nancial statements of centrotherm photovoltaics:

• IAS 12 (revised) Income Taxes: Recovery of Underlying Assets

• IAS 27 (revised) Separate Financial Statements

• IFRS 1 Amendment Removal of Fixed Dates for First-time Adopters

• IFRS 7 (revised) Financial Instruments: Disclosures – Transfers of Financial Assets

• IFRIC 20 Stripping Costs in the Production Phase of a Surface Mine

3. Scope of consolidation

Besides CTPV AG, all companies are included in the consoli-dated fi nancial statements where CTPV AG enjoys the direct or indirect ability to determine their fi nancial and business policies. Inclusion occurs at the time when control becomes possible, it ends when control is no longer possible.

The following changes have occurred to the scope of consolidation compared with December 31, 2010:

The company centrotherm photovoltaics technology Shanghai Co. Ltd., Shanghai, China, which has not been included in the consolidated fi nancial statements to date, was included in the scope of consolidation as of January 1, 2011 due to its growing impact on the net assets, fi nancial position and results of operations. The effect on the fi rst consolidated fi nancial statements is of minor importance. The company‘s initial consolidation resulted in a negative difference of TEUR 340. Following a further critical review, this negative differential amount was recognized in the income statement among other operating income.

The CIGS thin fi lm solar module manufacturer Sunshine PV Corp., Hsinchu Industrial Park, Taiwan, which had not previously been included in the consolidated fi nancial statements, and in which the centrotherm photovoltaics Group holds a 25.4 % interest, was included in the scope of consolidation as of April 1, 2011 applying the equity method. The company was included in the scope of consoli-dation after the acquisition was approved by the Taiwanese authorities.

The Group‘s shares in the assets and liabilities, and in the revenues and earnings, of Sunshine PV. Corp. are as follows:

in TEUR 31.12.2011 01.04.2011

Non-current assets 12,799 11,657

Current assets 1,244 2,411

Non-current liabilities 2,688 4,478

Current liabilities 3,235 1,420

01.04.2011 – 31.12.2011

Sales revenue 0

Net profi t after tax – 487

The company alpha Verwaltungs GmbH was founded with a notary agreement dated May 17, 2011. The found-ing of this company was entered in the commercial register on July 27, 2011. With a shareholder resolution dated August 17, 2011, alpha Verwaltungs GmbH was renamed as centrotherm cell & module GmbH (c & m GmbH). CTPV AG is the sole shareholder of c & m GmbH. On August 29, 2011, CTPV AG and c & m GmbH concluded a spin-off and transfer agreement as part of which CTPV AG obligated itself to transfer all of the assets and liabilities, contractual rela-tionships, and rights and obligations attributable to its partial operations for the Solar Cell & Module segment by way of singular succession to c & m GmbH and by way of a capital increase against non-cash capital contributions. The transfer also comprises all of the shares that CTPV AG holds in GP Solar GmbH. The transfer occurred with economic effect as of January 1, 2011. The restructuring has no direct impact on the consolidated fi nancial statements of CTPV AG.


99Consolidated fi nancial statements Annual Report 2011 centrotherm photovoltaics

The following list shows CTPV AG‘s direct or indirect interest in the voting rights of companies consolidated as of December 31, 2011:

CTPV AG’s proportion of voting rights in consolidated companies as of December 31, 2011

in % Consolidated companies

Directshare

Indirect share

Combinedshare

centrotherm cell & module GmbH, Blaubeuren 100.00 0.00 100.00

centrotherm management GmbH, Blaubeuren 0.00 100.00 100.00

centrotherm management services GmbH & Co. KG, Blaubeuren 100.00 0.00 100.00

centrotherm photovoltaics Asia Pte. Ltd., Singapore 100.00 0.00 100.00

centrotherm photovoltaics technology Shanghai Co. Ltd.,Shanghai, China 100.00 0.00 100.00

centrotherm SiTec GmbH, Blaubeuren 100.00 0.00 100.00

centrotherm thermal solutions GmbH & Co. KG, Blaubeuren 100.00 0.00 100.00

centrotherm thermal solutions Verwaltungs GmbH, Blaubeuren 100.00 0.00 100.00

FHR Anlagenbau GmbH, Dresden/Ottendorf-Okrilla 100.00 0.00 100. 00

GP Inspect GmbH, Neuried 0.00 76.00 76.00

GP Solar GmbH, Constance 0.00 100.00 100.00

Michael Glatt Maschinenbau GmbH, Abensberg 0.00 100.00 100.00

Photovoltaics Asia Invest Pte. Ltd., Singapore 0.00 100.00 100.00

Sunshine PV Corp., Hsinchu Industrial Park, Taiwan 0.00 25.40 25.40

Along with CTPV AG, ten domestic and three foreign subsidiaries where CTPV AG directly or indirectly holds the majority of the voting rights are included in the consolidated fi nancial statements as of December 31, 2011, as well as one associated company.

For centrotherm thermal solutions GmbH & Co. KG and centrotherm management services GmbH & Co. KG, included in the consolidated fi nancial statements, the waiver provision of § 264b (German Commercial Code) was utilized concerning the preparation of a management report as well as the audit and publication of fi nancial statements.

There were the following changes to non-consolidated companies and participating interests compared with December 31, 2010:

The interest in Vaayuu Energy Systems GmbH, Berlin, was increased from 21.88 % to 50 % on April 5, 2011. Vaayuu Energy Systems GmbH was also renamed Changers GmbH as the result of a shareholder resolution of May 26, 2011. The TEUR 2,150 carrying amount of the interest in Changers GmbH was fully written down as of December 31, 2011.

The company centrotherm Power Solutions GmbH, Vienna, Austria, was founded on May 17, 2011. Among other activities, the purpose of the company are engineer-ing services, to exercise the business of mechatronics technicians, to render services in automatic data processing and information technology, and the rental and leasing of merchandise. With an agreement dated November 11, 2011, CTPV AG assigned its interest in centrotherm Power Solutions GmbH, Vienna, Austria, to centrotherm Holding GmbH, Vienna, Austria, in line with its original capital contribution of TEUR 35.

The company centrotherm Solar Innovations GmbH, Wels, Austria, was founded on May 24, 2011.

The company centrotherm Solar Innovations GmbH & Co. KG, Wels, Austria, was founded on June 7, 2011. The company centrotherm Solar Innovations GmbH & Co. KG is primarily responsible for research and development in the areas of production lines and single equipment, compo-nents and raw materials, which are required or appropriate to create and operate production lines to manufacture products and source materials in the photovoltaics area, or other innovative environmental technologies. A further purpose of the company is to issue licenses to Group companies as well as third parties on both the basis of its own patents and project processing.

The company centrotherm Holding GmbH, Vienna, Austria, was founded on June 14, 2011. The purpose of this company is to acquire hold and manage participating interests in other companies, and to render Group services as well as the provision of consulting services for, and the development and sale of, technologies for photovoltaic sys-tems and plant in the area of renewable energies and energy supply, design, equipment and process technology, as well as the integration of equipment and process technology into an overall system relating to photovoltaic systems, renew-able energies or innovative environmental technologies. A further purpose of the company is the provision of consult-ing services, planning, design, development, purchase, mediation, and sales and trading relating to production lines and single equipment items to manufacture products and source materials in the area of renewable energies or inno-vative environmental technologies. In addition, a purpose of the company is the development, creation, engineering and servicing of, and for, industrial plant and equipment.



The company centrotherm photovoltaics Solutions (Suzhou) Co., Ltd., Suzhou, China, was formed on July 21, 2011. The company‘s main purpose is to purchase, pro-duce and assemble wet benches in the photovoltaic area.

In addition to the above-listed companies, there are also non-consolidated Group companies, in which the following shareholdings are held:

CTPV AG’s proportion of voting rights in non-consolidated companies as of December 31, 2011

in % Non-consolidated companies

Directshare

Indirect share

Combinedshare

centrotherm Holding GmbH, Vienna, Austria 0.00 100.00 100.00

centrotherm photovoltaics India Pte. Ltd., Bangalore, India 0.00 99.00 99.00

centrotherm photovoltaics Italia S.r.l., Treviso, Italy 100.00 0.00 100.00

centrotherm photovoltaics Korea Ltd., Suwon, Korea 100.00 0.00 100.00

centrotherm photovoltaics Solutions (Suzhou) Co., Ltd., Suzhou, China 0.00 100.00 100.00

centrotherm photovoltaics USA Inc., Marietta, USA 100.00 0.00 100.00

centrotherm Power Solutions GmbH, Vienna, Austria 0.00 100.00 100.00

centrotherm Solar Innovations GmbH, Wels, Austria 100.00 0.00 100.00

centrotherm Solar Innovations GmbH & Co. KG, Wels, Austria 100.00 0.00 100.00

Changers GmbH, Berlin (former: Vaayuu Energy Systems GmbH) 50.00 0.00 50.00

cruSible GmbH, Berching 0.00 30.00 30.00

SiTec SPV GmbH, Munich 0.00 100.00 100.00

SolMic GmbH, Burghausen 0.00 100.00 100.00

TOV photovoltaics industries Ukraine, Zaporozhye, Ukraine 100.00 0.00 100.00

The non-consolidated companies relate to subsidiar-ies and interests in companies that strengthen sales and service activities in the relevant regions. We decided not to include the above-listed companies in the consolidated fi nancial statements as of December 31, 2011 due to the insignifi cance of their impact on the company‘s net assets, fi nancing position and results of operations, both individu-ally and taken together.

4. Basis of preparation of the consolidated fi nancial statements

These consolidated fi nancial statements have been prepared in euros. All amounts are presented in thousands of euros (TEUR) unless otherwise stated.

The reporting dates of the single-entity fi nancial state-ments of companies included in the consolidated fi nancial statements are identical with the reporting date of the consolidated fi nancial statements (December 31, 2011). The single-entity fi nancial statements of CTPV AG, and of the foreign and domestic subsidiaries, have been prepared according to standard accounting and valuation principles.

The income statement has been prepared according to the total cost accounting method. Various items in both the income statement and the balance sheet have been summarized in order to provide greater clarity. These items are reported and commented on separately in the notes to the fi nancial statements.

The balance sheet is categorized according to maturity. Assets and liabilities are reported as current if they fall due within one year, or within one business cycle. Assets and liabilities are correspondingly reported as non-current if they remain for longer than one year within the Group, or for longer than one business cycle. Trade accounts payable and receivable, accounts payable and receivable arising from construction orders, and inventories, are always reported as current items. Deferred tax assets and liabilities are always reported as non-current.

In order to improve transparency, and by contrast with previous years‘ reports, expenses in an amount of TEUR 2,933 (previous-year comparable period: TEUR 3,689) for materials and procured services forming part of research and development costs were reported in the materials expense item. In the previous year, these were reported among other operating expenses under the research and development item.

The consolidated fi nancial statements apply the histori-cal cost principle, with the exception of certain items such as fi nancial assets held for disposal and derivative fi nancial instruments, which are reported at fair value. The annual fi nancial statements of companies included in the consoli-dated fi nancial statements are based on uniform accounting principles. Valuations based on fi scal regulations are not included in the consolidated fi nancial statements.

Non-controlling interests are reported as a component of equity, and not as a separate item between equity and liabilities.



4.1 Methods of consolidation

Corporate mergers from January 1, 2010 will be accounted for using the purchase method pursuant to IFRS 3 (2008). In this context, cost is derived from the sum of the consider-ation transferred, measured at fair value as of the acquisition date, and the non-controlling interests’ consideration in the acquired company. Non-controlling interests may be measured either at fair value (full goodwill method) or at the proportional fair value of the identifi able net assets. Ancillary acquisition costs are expensed as of the date when they arise. Costs are offset with acquired identifi able assets and acquired liabilities. Assets, liabilities, and contingent liabilities are recognized at fair value in this context. Remaining differential asset amounts are entered in the balance sheet as goodwill. Following a critical review, negative differential amounts are recognized in the income statement among other operating income. Any undisclosed reserves or liabili-ties are carried forward in proportion to the related assets and liabilities during subsequent consolidation.

In step acquisitions, shares already held in the acquired company are remeasured at fair value as of the acquisition date. Resultant gains or losses are recognized through profi t or loss.

Agreed conditional purchase price components are reported as liabilities at the fair value prevailing as of the acquisition date. Adjustments to conditional purchase price components are reported through profi t or loss.

The following divergent measurement principles applied to corporate mergers before January 1, 2010:

Transaction costs that were directly attributable to the corporate acquisition represented a portion of acquisition costs. Non-controlling interests were measured at the proportional fair value of the identifi able net assets of the acquired company. Conditional purchase price components were reported only if there was a current obligation on the part of the company, if an outfl ow of resources entailing economic benefi t was likely to satisfy the obligation, and its fair value could be measured reliably. Subsequent adjust-ments to conditional purchase price components were reported as part of goodwill.

Intra-group earnings and losses, revenues, expenses and income, as well as receivables and liabilities between consolidated companies, are eliminated.

Group-internal supplies and services are performed on the basis of both market prices and transfer prices calculated by applying the arm’s length principle of dealing.

Income tax effects are taken into account in the process of consolidation, and deferred tax is recognized.

The consolidated fi nancial statements contain the companies where CTPV AG either directly or indirectly controls the majority of voting rights (subsidiaries), to the extent that their effects on the net assets, fi nancing and results of operations is not of subordinate importance. Inclusion in the scope of consolidation starts at the date when the possibility of control exists. It ends when the possibility of control ceases to exist. Joint Ventures will be accounted for using the equity method.

Due to the successful conditional process by the Taiwanese authorities of the purchase of the 25.4 % interest in Sunshine PV Corp., this associate company was accounted for using the equity method for the fi rst time. The initial measurement corresponds to purchase cost. Subsequent measurements will adjust the carrying amount to refl ect the proportional changes in the equity of the associated company.



4.2 Currency conversion

The euro is the functional currency of CTPV AG, and of its German subsidiaries, as well as being the reporting currency of the Group. The annual fi nancial statements of the foreign subsidiaries included in the consolidated fi nancial statements, and of the interest in Sunshine PV Corp., were not prepared in euros. The annual fi nancial statements of the foreign companies included in the consolidated fi nancial statements are translated into the Group currency (euro) on the balance sheet date according to the functional currency concept. The fi nancial statements are converted using the modifi ed reporting date rate method whereby balance sheet items except equity are reported at the rate prevailing on the balance sheet date, and income statement items are con-verted at the average rate for the reporting period. Equity is converted using historic rates. Conversion differences arising from the currency translation are reported in equity with no impact on income.

Foreign currency receivables and liabilities are con-verted using exchange rates prevailing on the date of the trans action. Foreign currency receivables and liabilities are converted on each reporting date using the relevant report-ing date rate.

Foreign currency holdings are measured using the daily rate prevailing on the reporting date.

There were no forward transactions for the purposes of currency hedging as of December 31, 2011.

The exchange rates of currencies important to the centrotherm photovoltaics Group changed as follows:

Exchange rates to the euro

Reporting date rate Average rate

31.12.2011 31.12.201001.01. –

31.12.201101.01. –

31.12.2010

Chinese Renminbi (CNY) 0.12 0.11 0.11 0.11

Singapore Dollar (SGD) 0.59 0.58 0.57 0.56

Taiwan Dollar (TWD) 0.03 0.03 0.02 0.02

US Dollar (USD) 0.77 0.75 0.72 0.76

4.3 Key accounting principles

Earnings realizationRevenue is reported if it is probable that economic benefi ts will accrue to the Group, and the level of revenue can be determined reliably, independently of the payment date. Revenue is measured at the fair value of the consideration received, or of the consideration demanded, while taking into account contractually determined payment terms, whereby taxes and other deductibles are not included. The Group has analyzed its business relationships in order to determine whether it acts as a contractor or mediator. The Group has arrived at the conclusion that it acts as a contractor in all its revenue transactions. Revenue realization also pre supposes the satisfaction of the following recognition criteria.

Revenue from the sale of turnkey systems is realized with the rendering of the contractually determined performance parameters following fi nal customer acceptance.

In the case of revenue from the sale of single equipment items, revenue is realized when the principal service has been rendered, and ownership or risks have been transferred to the customer. As part of product standardization, the single equipment orders relate increasingly less to construction contracts in the meaning of IAS 11, but rather to inventories in the meaning of IAS 2. For this reason, the revenue from these orders will be realized according to IAS 18 from the 2011 reporting year.

Revenue from engineering services is realized according to fi xed milestones that are contractually specifi ed.

Sales revenues are reported minus discounts, price rebates, customer bonuses, and deductions.

Construction contracts regulated by IAS 11 are reported according to either the percentage of completion method or the zero profi t method. If the result from the construction contract can be estimated reliably, income and costs are reported using the percentage of completion method as of the reporting date. This is calculated by comparing contract costs incurred as of the reporting date with estimated total contract costs. When the outcome of a contract cannot be estimated reliably, but the contract overall is expected to be profi table, revenue is recognized to the extent of recover-able expenses. This is described as the „zero profi t method“. Contract costs are expensed in the period in which they arise. Construction contracts are reported among receivables and liabilities related to construction contracts.



Where, in individual cases, cumulative considerations (contract costs incurred and reported profi ts) exceed advance payment received for a specifi c contract, the construction contracts are reported on the asset side of the balance sheet among receivables relating from construction orders. A negative balance remaining after deducting prepayments is reported among liabilities arising from construction contracts. Advances received where no services have been rendered are reported on an un-netted basis as prepayments received.

Anticipated losses on orders are calculated during the entire production period while taking into account identifi -able risks, and are immediately fully included in the contract profi t or loss, and adjusted to refl ect impairments and obligations carried as liabilities.

Research and development costs The centrotherm photovoltaics Group invests a portion of its fi nancial resources in research and development. This is required in order to ensure the continued existence of the centrotherm photovoltaics Group in markets with a high degree of research and development intensity.

For accounting purposes, research expenses are defi ned as costs in connection with current or planned research intended to establish new scientifi c or technical knowledge and insights. Development expenses are defi ned as costs in connection with the application of research results or spe-cialist knowledge in production, production processes, and services or goods before the start of commercial production or application. All research costs are expensed. According to IAS 38 (Intangible Assets), research costs may not be capitalized, and development costs may only be capitalized given certain precisely defi ned preconditions. According to the standard, capitalization is required if is suffi ciently certain that the development activity will result in future cash infl ows that cover corresponding development costs above and beyond normal costs.

The following are reported as research and develop-ment costs: in particular, specifi c and overhead cost portions of personnel and materials costs for own or third party application-technical, engineering-technical, and other departments if they have rendered corresponding services, costs related to testing equipment and pilot plants (including rental expenses for buildings, and, if required, scheduled depreciation of buildings and parts of buildings used for research and development), ongoing costs for the utilization of third-party patents for research and develop-ment purposes. In addition, research and development costs also include fees for the registration and approval of own patents for research and development purposes, and other taxes attributable to research facilities.

Intangible assets Intangible assets include goodwill, capitalized development costs, and purchased patents, software, licenses, and similar rights of limited useful life. This item also contains intangible assets that are identifi ed and separable as part of purchase price allocation. These include acquired know-how and customer relationships.

Goodwill arising from equity consolidation is not subject to scheduled amortization. In accordance with IFRS 3 (Business Combinations), goodwill and intangible assets of indefi nite useful life, and intangible assets that cannot yet be used, are reviewed annually for potential impairment. An impairment should be reported if the recoverable amount of the asset is less than its carrying amount. If the asset forms part of a cash-generating unit, the impairment review is performed on the basis of the cash-generating unit (referred to in brief as „CGU“). If events or indications suggest that impairment may have occurred, further impairment tests are performed.

At centrotherm photovoltaics group, cash-generating units are generally its individual companies. The value in use is calculated using the discounted cash fl ow method. A three-phase measurement model is utilized for this purpose. Estimated cash fl ows are based on estimated cash fl ows until 2014 on the basis of current CGU budgets for the next three years, and refl ect management estimates for the relevant CGU. Annual cash fl ow growth of 5 % per annum is assumed for the years 2015 to 2019. An annual growth rate of 1 % per annum is imputed from 2020. The growth rates are derived from sector estimates and external studies, less a risk discount. The capitalization rate amounts to 7.3 %.

Due to the current earnings position, SiTec GmbH were fail to achieved the performance targets that were agreed as a component of the purchase price forming part of the acquisition in 2008, as a consequence of which the variable purchase price liability arising from the acquisition of the SolMic shares was released in an amount of TEUR 14,500. The purchase price component of TEUR 11,862 that it con-tained was offset with goodwill pursuant to IFRS 3 (2004). The goodwill of SiTec GmbH amounts to TEUR 15,632 after this offsetting.



The carrying amount of the goodwill of the CGUs are as follows:

Goodwill

in TEUR

Carrying amount

31.12.2011

centrotherm SiTec GmbH, Blaubeuren 15,632

centrotherm thermal solutions GmbH & Co. KG, Blaubeuren 89,296

FHR Anlagenbau GmbH, Dresden/Ottendorf-Okrilla 8,200

GP Solar GmbH, Constance 3,853

Michael Glatt Maschinenbau GmbH, Abensberg 455

Total 117,436

Development costs are capitalized as intangible assets if the capitalization criteria for internally created intangible assets defi ned in IAS 38 have been satisfi ed. Capitalized develop-ment costs are measured at production cost. Production costs comprise all costs incurred from the time when the intangible asset at fi rst satisfi es the recognition criteria, and which can be directly attributed to the creation, production, and preparation of the asset for its intended use. Develop-ment costs are capitalized until the time when the internally created intangible asset is ready for operational use for its intended purpose. Straight-line amortization is applied to capitalized development costs over their respective useful life of between three and fi ve years from the time when they become ready for operational use, to the extent that no impairment charges are required.

Purchased intangible assets are recognized at cost. In subsequent periods, intangible assets are subject to sched-uled amortization over their useful lives. With the exception of goodwill and intangible assets of indefi nite useful life, intangible assets are amortized on a straight-line basis over a period of three to fi ve years, as long as no requirement arises for an extraordinary write-down. Intangible assets related to purchase price allocations are amortized over a period of ten to twenty years. All capitalized development costs and other intangible assets exhibit fi nite useful lives.

Property, plant and equipmentProperty, plant, and equipment is reported at cost less scheduled depreciation based on useful life, and, if required, impairment charges.

Purchase costs are composed of the purchase price, incidental purchase costs, and subsequent purchase costs, minus any reductions to purchase price received. Besides specifi c costs, production costs include appropriate portions of essential fi xed and variable materials and production over-head costs, to the extent that they are incurred in connec-tion with the production process. They also include costs for the operation‘s social facilities and the company‘s voluntary social benefi ts, to the extent that they are allocated to the production area. Administrative costs are also included if they are attributable to the production area. Costs contain no borrowing costs.

The depreciation of property, plant, and equipment uses the straight-line method as long as there is no requirement for utilization-related depreciation on the basis of actual use. Extraordinary write-downs are applied if the asset‘s recoverable amount has fallen below its carrying amount. The recoverable amount is in all cases calculated as the higher of fair value less costs to sell and the present value of cash fl ow expected from the asset (value in use).

If property, plant and equipment is sold, decommissioned, or scrapped, the gain or loss arising from the difference between net disposal proceeds and residual carrying amount is reported among other operating income or expenses.

Scheduled depreciation is based on the following Group-standard useful lives:

Category of property, plant and equipment

Useful life in years

Buildings 2 to 55

Outside facilities 2 to 25

Leasehold improvements 2 to 14

Technical plant 3 to 21

Passenger vehicles 3 to 6

Offi ce equipment 3 to 13

Other operating and business equipment 2 to 18



Financial assetsFinancial assets include shares in non-consolidated subsidiar-ies and interests in companies, classifi ed as available-for-sale pursuant to IAS 39. They are subsequently measured at fair value to the extent that fair value can be determined reliably (please refer to explanation of the securities). Such shares are recognized at cost where fair value cannot be calculated reliably. If, when recognizing at cost, there is an objective indication that an available-for-sale asset is impaired (corresponding to IAS 39.59, for example), the impairment amount (difference between the carrying amount and the present value of estimated future cash fl ows) is booked through the consolidated income statement. Subsequent impairment reversals are possible.

LeasesLeases are classifi ed as fi nance leases as per IAS 17 if the lease agreement essentially transfers opportunities and risks connected with the property to the lessee. Assets held as part of a fi nance lease are reported at the time of acquisition at their fair value at the start of the lease, or the present value of the minimum lease payments, which-ever is lower. These assets are depreciated on a straight-line basis over their useful life as part of subsequent measurement.

If, by contrast, the opportunities and risks connected with the ownership of the asset essentially remain with the lessor, the lease is classifi ed as an operating lease. Lease installments from operating leases are expensed through the income statement on a straight-line basis over the duration of the lease, unless another systematic basis better corresponds to the progression of utilization for the lessee.

As of the reporting date, centrotherm photovoltaics Group primarily reported operating leases, as well as one fi nance lease. In the case of the operating leases, the Group companies act as lessees, and in the case of the fi nancing lease, as a lessor.

Impairment of assetsA review is performed on every reporting date to establish whether there are indications that assets have been impaired in the meaning of IAS 36 (Impairment of Assets). If such indications exist, or if an annual impairment test is required, the recoverable amount of the asset is calculated. An annual impairment test is required for goodwill and intangible assets of undetermined useful life, or intangible assets that cannot yet be utilized.

An impairment exists if the carrying amount of an asset, or of a cash-generating unit, exceeds the recoverable amount. The impairment should be booked through the profi t and loss.

The recoverable amount is the higher of either the net realizable value or value in use. Value in use is the present value of future cash fl ows expected from the continued use of an asset, and from its disposal at the end of the period of use. If no cash fl ows can be directly attributed to an asset, the recoverable amount of the cash generating unit to which the asset belongs is calculated.

If the assumptions relating to the recoverable amount change, the valuation losses arising from the impairment are neutralized by way of a reversal with the exception of goodwill. Reversals are performed up to the carrying amount that would have resulted if the asset had been subject to scheduled depreciation without impairment.

InventoriesIn accordance with IAS 2 (Inventories), inventories include those assets held for sale as part of normal business (fi nished goods and products), assets in the process of being manu-factured for sale (semifi nished goods and services), or assets consumed as part of manufacturing or the rendering of services (raw materials and supplies).

Inventories are measured at the lower of cost or net disposal value, in other words, the sales proceeds achievable in the normal course of business minus estimated production and sales costs. The cost of raw materials and supplies is calculated using the average method.

Purchase costs include all costs incurred to deliver inventories to their current location, and in their current condition. Besides specifi c costs, production costs include appropriate portions of essential fi xed and variable materials and production overhead costs, to the extent that they are incurred in connection with the production process. They also include costs for the operation‘s social facilities and the company‘s voluntary social benefi ts, to the extent that they are allocated to the production area. Administrative costs are also included if they are attributable to the production area. Costs contain no borrowing costs.



Receivables and other assetsWith the exception of derivative fi nancial instruments, receivables and other assets are recognized at amortized cost. Default risks must be recognized as impairments, and to an appropriate level. Assessing the requirement for specifi c valuation adjustments depends on the age structure of the receivables, as well as customer-specifi c information about credit and default risks. A lump-sum valuation adjust-ment for receivables is suffi cient to refl ect general credit risk.

Other assets contain loans, which are measured at amortized cost. Loans bearing a market rate of interest are reported at nominal value. Non-interest-bearing and low-interest-bearing loans are discounted using a rate of interest appropriate to their risk.

SecuritiesSecurities relate to securities classifi ed as available for sale as per IAS 39. Initial valuation is performed on the delivery date using transaction costs directly related to the acquisition of the security. To the extent that they did not comprise long-term impairment, subsequent fl uctuations in value arising from mark-to-market are reported in the revaluation reserve in equity with no impact on income, and taking into account deferred tax. If securities classifi ed as held for sale are sold, or if there is a permanent impair-ment to the securities as the balance sheet date pursuant to the objective indications contained in IAS 39.59, or if there is a signifi cant and longer-lasting reduction in fair value, value fl uctuations that have been reported until this date in the revaluation reserve are reported in the income statement. Besides this, distributions from securities occurring after they have been acquired are recognized in the income statement. Securities amount to TEUR 0 as of December 31, 2011. The entire securities position was sold during the reporting period.

Cash and cash equivalentsCash and cash equivalents include cash holdings, bank accounts in credit, and time deposit investments with a residual term on acquisition of up to three months. They are measured at their nominal amounts.

ProvisionsProvisions are formed for obligations to third parties resulting from past events that will probably result in an economic burden, and which extent can be reliably determined.

Provisions are measured according to IAS 37 (Provisions, Contingent Liabilities and Contingent Assets) using the best possible estimate of expenses required to satisfy the obliga-tion as of the reporting date. If cash outfl ows for obligations are not anticipated to occur until after one year, provisions are measured using the present value of prospective cash outfl ows. Reimbursements by third parties are capitalized separately from provisions if their realization is likely.

If a reduction to the scope of an obligation results from a change to an assessment, the provision is released pro-portionately, and the income is reported in other operating income.

Please refer to note 35 concerning the company pension scheme and pension provisions.

Liabilities With the exception of derivative fi nancial instruments, liabilities are recognized at amortized cost. This means that current liabilities are recognized at their repayment or satis-faction amounts. Non-current liabilities and fi nance debt are measured at amortized cost using the effective interest-rate method.

TaxIncome tax includes all taxes levied on the taxable earnings of Group companies.

Deferred tax is calculated according to IAS 12 (Income Taxes). Deferred tax is calculated for all temporary differences between the valuations of assets and liabilities in the IFRS balance sheet and the tax balance sheet, as well as from con-solidation processes, and, to the extent permissible, netted against each other. Taxes are generally reported through the income statement except when the related business trans-action, and the resultant assets and liabilities, are reported directly in equity.



Deferred tax arising from loss carryforwards is capitalized in the consolidated fi nancial statements if realization appears suffi ciently likely on the basis of a fi ve-year planning horizon.

The calculation is based on the expected tax rate in Ger-many at the time of realization. This is based on the statutory rate prevailing on the reporting date, or the rate that has been statutorily approved for application in the future.

Derivative fi nancial instrumentsWithin the centrotherm photovoltaics Group, fi nancial instruments such as forward currency transactions and interest-rate swaps, which do not form part of hedging relationships, are categorized as held for trading pursuant to IAS 39. Derivative fi nancial instruments are consequently measured at fair value. Changes in fair value are booked through the income statement. In the case of derivative fi nancial instruments that are classifi ed as hedging instru-ments, reporting fair value changes depends on whether the derivative fi nancial instrument is deployed to hedge balance sheet assets and liabilities (fair value hedge), or to hedge risks pertaining to fl uctuating cash fl ows (cash fl ow hedge).

When entering into the transaction, the Group docu-ments the hedging relationship between the hedging instrument and the underlying transaction, the objective of the risk management, and the underlying strategy. Both of the start of the hedging relationship and during it, docu-mentation also appraises whether the derivatives deployed in the hedge prove highly effective in compensating for the changes to the fair value or the cash fl ows of the underly-ing transactions. Changes to the fair values of derivatives that were allocated to hedge fair value are reported in the income statement together with the fair value changes of the hedged assets and liabilities that are attributed to the hedged risk. If the preconditions for a hedging relationship are no longer satisfi ed, and the previously designated underlying transaction is measured using the effective interest method, the outstanding carrying amount adjust-ment to the underlying transaction should be performed over its residual duration. This set of consolidated fi nancial statements includes no hedging transactions to hedge the fair values of assets and liabilities (fair value hedges). The effective part of the changes to the fair values of derivatives that are designated as cash fl ow hedges is reported in equity. The ineffective portion of such value changes is reported through profi t or loss, by contrast. Amounts that are deferred or accrued in equity are rebooked through the income statement, and reported as income or expense in the period in which the hedged transaction becomes earnings-effective. If a hedging transaction expires, is dis-

posed of, or no longer satisfi es hedge accounting criteria, the gains and losses that have accumulated until that point within equity remain within equity, and are not reported through the income statement until the future transaction that was originally hedged occurs.

Please see note 45 Additional disclosures concerning fi nancial instruments.

Government grantsGovernment grants are only reported if there is appropriate certainty that the company will satisfy the related conditions, and that the grants will be awarded. As far as the accounting treatment of grants is concerned, IAS 20 stipulates that a dif-ferentiation should be made between non-monetary grants, grants for assets, and profi t-related grants.

In the year under review, the centrotherm photovoltaics Group received profi t-related allowances in the form of expenses subsidies, and grants for assets in the form of investment grants and subsidies.

Expense-related subsidies are booked through the income statement in the period in which they are received, and corresponding to the expenses they are intended to offset. They are reported in the income statement as other operating income. If subsidies are awarded for expenses not incurred until subsequent periods, they are reported as deferred income, and released pro rata temporis.

Allowances for assets are deducted from cost or deferred income on the liability side of the balance sheet. Investment subsidies in the centrotherm photovoltaics Group are deducted from cost in the balance sheet. An accrual or deferred income item is formed for investment grants on the liability side of the balance sheet, which is released over time.

Estimates and discretionary decisionsThe consolidated fi nancial statements entail making assumptions and estimates to a certain extent that have effects on the level and reporting of assets and liabilities in the balance sheet, income and expenses, and contingent liabilities. Estimates are based on experiential values and other assumptions regarded as appropriate in the given circumstances.

Actual outcomes may diverge from estimates. Estimates and assumptions are constantly reviewed.



Accounting methods are regarded as signifi cant that have a major impact on the presentation of the net assets, fi nancial position and results of operations, as well as the cash fl ows of the centrotherm photovoltaics Group, and which require an assessment of matters that are by their nature uncertain, which may change in subsequent reporting periods, and which results are consequently diffi cult to gauge.

The following section explains the main application areas for assumption and estimates that have a signifi cant impact on the net assets, fi nancial position and results of operations of the centrotherm photovoltaics Group.

Earnings realization for order completionEarnings realization for construction orders regulated by IAS 11 is generally according to the percentage of comple-tion method, whereby revenue and costs are reported in line with the progress of completion as of the balance sheet date. This method requires that completion progress is estimated reliably. Completion progress is calculated by comparing contract costs incurred as of the reporting date with estimated total contract costs.

Trade and other receivablesCalculating impairments to doubtful receivables depends on term structure, as well as estimates and assessments of individual receivables through customer-specifi c credit and default risk.

ImpairmentsThe centrotherm photovoltaics Group conducts goodwill impairment tests at least once every year. An impair-ment exists if the carrying amount of an asset, or of a cash-generating unit, exceeds its recoverable amount. Determining a CGU‘s recoverable amount, which is allocated goodwill, is connected with management estimates. The recoverable amount is the higher of either the net realizable value or value in use. The Group calculates value in use using the discounted cash fl ow procedure. A three-phase measure ment model is utilized for this purpose. Estimated cash fl ows are based on estimated cash fl ows until 2014 on the basis of current CGU budgets for the next three years, and refl ect management estimates for the relevant CGU.

Annual cash fl ow growth of 5 % per annum is assumed for the years 2015 to 2019. An annual growth rate of 1 % per annum is imputed from 2020. The growth rates are derived from sector estimates and external studies, less a risk discount. The capitalization rate amounts to 7.3 %.

The most important assumptions on which the value in use calculations are based included estimated growth rates, and weighted average costs of capital.

ProvisionsProvisions are measured according to IAS 37 (Provisions, Contingent Liabilities and Contingent Assets) using the best possible estimate of expenses required to satisfy the obliga-tion as of the reporting date.

In order to enhance the meaningfulness of estimates, the effects of changes in parameters on reported provisions are assessed for selected key types of provision, which could be of particular signifi cance for the Group‘s asset, liability, and earnings positions.

Development costsDevelopment costs are capitalized if IAS 38.57 preconditions have been cumulatively satisfi ed. The fi rst-time capitalization of costs requires estimates provided by the technology area and management. In particular, this entails an examination of the technical viability and future economic benefi t of the development project.

Further information about assumptions and estimates can be found in the remarks concerning accounting methods, as well as in individual items of the fi nancial statements.

4.4 Cash fl ow statement

The cash fl ow statement shows how the cash and cash equivalents position of the centrotherm photovoltaics Group has changed as a result of cash infl ows and outfl ows during the reporting year. In accordance with IAS 7 (Cash Flow Statements), a differentiation is made between cash fl ows from operating activities, investment activities, and fi nancing activities. The liquidity position reported in the cash fl ow statement comprises cash holdings, checks, bank accounts, and short-term time deposit investments.



5. Notes to the segmental reporting

The Group‘s activities are concentrated on the following business segments:

The Silicon & Wafer segment comprises the planning, design, sale and creation of systems to manufacture silicon, and its related process steps.

The Solar Cell & Module segment primarily comprises the planning, design, distribution, and creation of customized and turnkey production lines and single equipment to manu-facture mono-crystalline and multi-crystalline solar cells. Our semiconductor-related product range is also included in the Solar Cell & Module segment. Here we develop and produce high-tech production systems to manufacture a broad spectrum of semiconductor components.

The Thin Film segment primarily comprises the planning, design, distribution, and creation of customized and turn-key production lines and single equipment to manufacture thin fi lm modules.

According to the requirements of IFRS 8 (Operating Segments), individual annual fi nancial statement data must be presented according to business segments. Business areas where separate fi nancial information is available for internal management, and which in turn is reported regu-larly to the highest management level for resource alloca-tion and evaluation of profi tability, are regarded as business segments. The Silicon & Wafer, Solar Cell & Module and Thin Film Module segments are presented under segmental reporting in line with this defi nition.

Transactions between individual segments are of minor importance.

Segmental data were calculated in accordance with the reporting and measurement methods used to prepare the consolidated fi nancial statements, and are as follows:

Segment reporting 2011 from 01.01. – 31.12.2011

in TEURSilicon &

WaferSolar Cell &

ModuleThin FilmModule

centrothermGroup

Third party revenue 57,913 607,948 32,669 698,530

Revenue with other segments 0 0 0 0

Segment revenue 57,913 607,948 32,669 698,530

EBITDA – 61,846 88,527 – 16,475 10,206

EBITDA as % of revenue – 106.8 14.6 – 50.4 1.5

EBIT – 70,329 71,926 – 21,398 – 19,801

EBIT as % of revenue – 121.4 11.8 – 65.5 – 2.8

Assets 197,540 632,877 60,321 890,738

of which goodwill 16,087 93,149 8,200 117,436

of which intangible assets and property, plant and equipment 39,829 165,915 24,468 230,212

Liabilities 162,410 337,287 24,956 524,653


Amortization of intangible assets and depreciation of property, plant and equipment 8,484 16,600 4,923 30,007

of which from purchase price allocations 3,716 5,376 1,183 10,275

Segment earnings in the Silicon & Wafer segment were particularly affected by adjustments to individual large-scale projects for the 2011 fi nancial year. Adjustments of TEUR 21,221 (comparable prior-year period: TEUR 831) were applied as part of a loss-free valuation to current construction projects due to the worsening of the fi nancial position, and the fall in the price of polysilicon. Impairment charges of TEUR 1,005 were also applied to work in progress (comparable prior-year period: TEUR 0), and to raw materials and supplies in an amount of TEUR 5,738 (comparable prior-year period: TEUR 0). A provision of TEUR 2,055 was

formed for anticipated losses. The segment result was also burdened by litigation expenses connected with satisfying obligations based on master agreements.

No impairments were applied to prepayments rendered for inventories in the Silicon & Wafer segment in the year under review (comparable prior-year period: TEUR 1,189).

Impairments to inventories due to marketability and inventory range devaluations were applied in an amount of TEUR 1,861 (comparable prior-year period: TEUR 853) in the Silicon & Wafer segment.



Due to the current earnings position, SiTec GmbH were fail to achieve the performance targets that were agreed as a component of the purchase price forming part of the acquisition in 2008, as a consequence of which the variable purchase price liability arising from the acquisition of the SolMic shares was released in an amount of TEUR 14,500. The purchase price component of TEUR 11,862 that it con-tained was offset with goodwill pursuant to IFRS 3 (2004). The goodwill of SiTec GmbH amounts to TEUR 15,632 after this offsetting.

In the Solar Cell & Module division, the strained market situation, particularly in the fourth quarter of 2011, fed through to delays and cancellations of individual projects, necessitating that inventories be revalued. Impairment charges applied to fi nished and semi-fi nished goods amounted to TEUR 11,219.

The Solar Cell & Module segment also includes impair-ment charges of TEUR 302 applied to other intangible assets (comparable prior-year period: TEUR 0). No impairment charges to internally created intangible assets were applied in the year under review (comparable prior-year period: TEUR 976).

Impairments to inventories due to marketability and inventory range devaluations were applied in an amount of TEUR 3,416 (comparable prior-year period: TEUR 2,989) in the Solar Cell & Module segment.

There were no reversals of impairment charges in the Solar Cell & Module segment in the year under review (comparable prior-year period: TEUR 600).

As expected, EBIT in the Thin Film Module segment stood at TEUR – 21,398 (comparable prior-year period: TEUR – 37,404). Along with the activities of FHR Anlagen-bau, we concentrated on realizing our CIGS pilot line in Taiwan in 2011. We concluded the project in early 2012. As part of the Group-wide ct focus effi ciency program, the Management Board decided to close the Thin Film Module segment at the Group‘s Blaubeuren location, and to out-source some areas to Asia. This move will bundle resources, and create a unit that is closely geared to the market.

In the Thin Film Module segment, impairment charges of TEUR 1,356 were applied to receivables relating to construction orders (comparable prior-year period: TEUR 4,484). Impairment charges of TEUR 79 were also applied to property, plant and equipment (comparable prior-year period: TEUR 0), and of TEUR 0 to intangible assets (comparable prior-year period: TEUR 638).

The Thin Film Module segment also includes the interest in the associated company Sunshine PV Corp., Hsinchu Indus-trial Park, Taiwan, included according to the equity method in an amount of TEUR 11,296 (December 31, 2010: TEUR 0).

The following table shows the fi gures for the previous year:

Segment reporting 2010 from 01.01. – 31.12.2010

in TEURSilicon &

WaferSolar Cell &

ModuleThin FilmModule

centrothermGroup

Third party revenue 201,730 404,476 17,963 624,169

Revenue with other segments 0 0 0 0

Segment revenue 201,730 404,476 17,963 624,169

EBITDA 29,805 103,976 – 32,480 101,301

EBITDA as % of revenue 14.8 25.7 – 180.8 16.2

EBIT 21,191 91,576 – 37,404 75,363

EBIT as % of revenue 10.5 22.6 – 208.2 12.1

Assets 198,168 554,617 52,864 805,649

of which goodwill 27,949 93,149 8,200 129,298

of which intangible assets and property,plant and equipment 40,725 121,015 23,751 185,491

Liabilities 241,388 140,319 27,586 409,293


Amortization of intangible assets and depreciation of property, plant and equipment 8,615 15,253 2,070 25,938

of which from purchase price allocations 5,048 5,376 1,183 11,607



Revenue and non-current assets by region for the 2011 and 2010 fi nancial years are as follows according to IFRS 8.33:

Revenue and non-current assets

In TEUR Germany Other Europe Asia Other Total

Revenue 2010 33,031 52,567 521,918 16,653 624,169

Non-current assets 2010 315,429 0 135 0 315,564

Revenue 2011 32,204 20,946 632,386 12,994 698,530

Non-current assets 2011 347,790 0 711 0 348,501

The regional distribution of revenue refl ects the custom-ers‘ countries of origin. Non-current assets are composed of intangible assets, property, plant and equipment, non-current income tax receivables, and other non-current assets.

Revenues by products are as follows:

Revenue by products

in TEUR01.01. –

31.12.201101.01. –

31.12.2010

Turnkey production lines 97,416 60,236

Single items of equipment 556,879 510,720

Service and replacement parts 32,173 25,788

Consulting & Engineering 7,310 24,629

Other revenue 4,752 2,796

Total 698,530 624,169


112 centrotherm photovoltaics Annual Report 2011 Consolidated fi nancial statements Notes to the consolidated income statement

Notes to the consolidated income statement

Expenses are presented according to the total cost accounting method in the consolidated income statement.

6. Sales revenue

Revenue amounted to TEUR 698,530 in 2011 (comparable prior-year period: TEUR 624,169), TEUR 1,957 of which was attributable to related companies (comparable prior-year period: TEUR 3,417) and TEUR 1,457 of which was attribut-able to non-consolidated subsidiaries. Order income pursuant to IAS 11.39 (a) amounted to TEUR 271,114 in the year under review (comparable prior-year period: TEUR 585,122). Of this amount, TEUR 420,540 (comparable prior-year period: TEUR 28,585) is attributable to revenue from the sale of goods. Revenue from the rendering of services amounted to TEUR 6,876 (comparable prior-year period: TEUR 10,462).

7. Change in inventory of fi nished goods and work-in-progress

The change in the inventory of fi nished and semi-fi nished goods and services in an amount of TEUR 47,150 (com-parable period of previous year: TEUR 38,557) includes impairment charges of TEUR 3,922 applied to semi-fi nished goods and work in progress (comparable period of previous year: TEUR 0) and TEUR 8,302 applied to fi nished goods and products (comparable period of previous year: TEUR 0).

8. Capitalized services rendered to own account

Own work capitalized of TEUR 11,295 (comparable prior-year period: TEUR 18,441) mainly relates to own work capitalized in connection with development projects and capitalized prototypes of property, plant and equipment.

9. Other operating incomeOther operating income in the 2011 fi nancial year is composed as follows:

Other operating income

in TEUR01.01. –

31.12.201101.01. –

31.12.2010

Income from damage compensation claim 7,314 0

Income from release of provisions 4,837 7,042

Income from release of specifi c and general impairments 4,249 1,812

Income from the utilization of impairments 4,034 0

Further-debited management services 727 1,428

Income from foreign exchange 665 889

Monetary benefi t 540 478

Income from litigation 0 575

Income from grants 524 614

Other operating income 8,867 1,216

Total 31,757 14,054

Other operating income also particularly includes income from the release of a liability in an amount of TEUR 2,638 (comparable prior-year period: TEUR 0), and inventory sales of TEUR 2,620 (comparable prior-year period: TEUR 0). This item also includes a large number of smaller individual items.

Other operating income includes payments to related parties amounting to TEUR 727 (comparable prior-year period: TEUR 1,236).

10. Cost of materials

The materials expense for the 2011 fi nancial year of TEUR 500,042 (comparable prior-year period: TEUR 382,300) is composed as follows:

Cost of materials

in TEUR01.01. –

31.12.201101.01. –

31.12.2010

Expenses for raw materials and supplies, and for procured goods 462,576 332,866

Expenses for procured services 37,466 49,434

Total 500,042 382,300

Expenses for raw materials and supplies include TEUR 5,738 of impairment charges (comparable prior-year period: TEUR 0).

This item also includes impairment charges of TEUR 5,277 applied due to marketability and inventory range (comparable prior-year period: TEUR 3,842).

113Consolidated fi nancial statements Annual Report 2011 centrotherm photovoltaics Notes to the consolidated income statement

No impairment losses were reversed in the 2011 reporting year (comparable prior-year period: TEUR 600).

Of the expenses for raw materials and supplies, procured goods, and services procured, TEUR 13,762 (comparable prior-year period: TEUR 11,438) was attributable to related companies, and TEUR 2,258 was attributable to non-consol-idated subsidiaries.

In order to improve transparency, and by contrast with previous year‘s reports, expenses in an amount of TEUR 2,933 (previous-year comparable period: TEUR 3,689) for materials and procured services forming part of research and develop-ment costs were reported in the materials expense item. In the previous year, these were reported among other operat-ing expenses under the research and development item.

11. Personnel expenses

Personnel expense amounted to TEUR 104,067 in the 2011 fi nancial year (comparable prior-year period: TEUR 80,254). The following table provides a breakdown of the personal expense:

Personnel expense

in TEUR01.01. –

31.12.201101.01. –

31.12.2010

Wages and salaries 88,425 68,830

Social contributions and expenses for pensions and benefi ts 15,002 11,040

of which for pension 471 339

Other personnel expenses 640 384

Total 104,067 80,254

Please refer to note 35 concerning pensions.The number of employees, and its year-on-year com-

parison, is as follows:

Number of Employees

Average Reporting date

01.01. –31.12.2011

01.01. –31.12.2010 31.12.2011 31.12.2010

Management Board 5 5 5 5

Administration 459 298 484 367

Sales 228 93 238 114

Production 531 365 552 410

Technology and research 625 543 649 552

Total 1,848 1,304 1,928 1,448

The average number of employees of the company Sunshine PV Corp., Hsinchu Industrial Park, Taiwan, which is included according to the equity method, amounted to 138 employees for the April 1, 2011 until December 31, 2011 period.

12. Other operating expenses

Other operating expenses of TEUR 174,417 (comparable prior-year period: TEUR 131,366) are composed as follows:

Other operating expenses

in TEUR01.01. –

31.12.201101.01. –

31.12.2010

Write-downs to trade receivables and re-ceivables relating to construction orders 27,466 8,337

Freight and packaging 25,640 14,963

Third-party services 17,525 6,524

Legal and general consultancy 14,603 6,882

Travel expenses 14,443 11,141

Sales commissions 12,101 32,821

Litigation costs and contractual penalties 9,471 8,786

Temporary help 7,503 5,127

Premises expenses 4,759 3,894

Employee benefi t costs 3,498 2,540

Bank charges 3,480 2,458

Advertising costs 3,098 2,313

Expenses for anticipated loss-making transactions 2,885 0

Insurance and contributions 2,544 2,395

Increase in obligation for services yet to be rendered 2,480 2,804

Guarantee 2,253 1,541

Telephone and communication 2,130 1,801

Passenger vehicle costs 1,707 1,204

Foreign-exchange losses 1,088 859

Write-downs to other assets 965 1,189

Asset disposals 716 21

Other services 251 2,448

Write-downs to inventories 209 342

Management services 127 3,920

Miscellaneous 13,475 7,056

Total 174,417 131,366

Other operating expenses include services with a value of TEUR 1,078 (comparable prior-year period: TEUR 5,623) that were sourced from related companies and from non-consolidated subsidiaries in an amount of TEUR 4,272.

In order to improve transparency, and by contrast with previous year‘s reports, expenses in an amount of TEUR 2,933 (previous-year comparable period: TEUR 3,689) for materials and procured services forming part of research and develop-ment costs were reported in the materials expense item. In the previous year, these were reported among other operat-ing expenses under the research and development item.

114 centrotherm photovoltaics Annual Report 2011 Consolidated fi nancial statements Notes to the consolidated income statement

Impairment charges applied to receivables and construc-tion orders are particularly due to adjustments to order income in the Silicon & Wafer segment, and an increase in budget costs for individual projects.

Miscellaneous operating expenses of TEUR 13,475 include TEUR 1,669 of software maintenance expenses (com-parable prior-year period: TEUR 839), and TEUR 3,035 of obligations connected with foreign operations (comparable prior-year period: TEUR 0).

13. Amortization and depreciation

Total amortization of intangible assets in the 2011 fi nancial year amounted to TEUR 19,563 (comparable prior-year period: TEUR 17,767), of which TEUR 9,780 (comparable prior-year period: TEUR 11,112) related to amortization arising from the purchase price allocation of companies acquired in 2008. This item also contains impairments to other intangible assets of TEUR 302 (comparable prior-year period: TEUR 0). No impairment charges to internally created intangible assets were applied in the 2011 fi nancial year (comparable prior-year period: TEUR 1,614).

Depreciation totaling TEUR 10,444 (comparable prior-year period: TEUR 8,171) was applied to property, plant and equipment. Of this amount, TEUR 495 was attributable to purchase price allocations (comparable prior-year period: TEUR 495), and TEUR 79 (comparable prior-year period: TEUR 139) was attributable to extraordinary write-downs.

14. Financial result

The net fi nancial result is composed as follows:

Financial result

in TEUR01.01. –

31.12.201101.01. –

31.12.2010

Financial income 2,369 955

Financial expenses – 5,837 – 2,016

Financial result – 3,468 – 1,061

Interest income contained in fi nancial income amounted to TEUR 1,617 in 2011 (comparable prior-year period: TEUR 921). The disposal of securities generated gains of TEUR 752 (comparable prior-year period: TEUR 34). Of the fi nancial income, TEUR 26 (comparable prior-year period: TEUR 0) is attributable to related companies and parties.

The fi nancial expenses primarily relate to TEUR 2,150 of impairment charges applied to the carrying amount of the interest in Changers GmbH as well as interest compounding of liabilities arising from the purchase of SolMic shares of TEUR 1,059 (comparable prior-year period: TEUR 1,249).

The 2011 fi nancial year included no fi nancial expenses paid to related parties (comparable prior-year period: TEUR 3).

15. Taxes on income

The following section contains a presentation of deferred tax items. The following deferred tax items entered in the balance sheet relate to recognition and measurement differences for individual balance sheet items:

Deferred tax items

in TEUR 31.12.2011 31.12.2010

Deferred tax liabilities

Intangible assets 25,136 28,485

Property, plant and equipment 837 983

Production orders 15,676 17,686

Securities 0 110

Other assets 0 25

Provisions and liabilities 932 927

Balancing items 1,392 1,089

Total 43,973 49,305

Deferred tax assets

Inventories 622 423

Receivables 61 0

Other liabilities 895 83

Tax losses carry forward 28,411 1,594

Financial instruments 73 0

Balancing items 1,392 1,089

Total 31,454 3,189

Corporation tax plus the solidarity surcharge amounts to 15.83 %. Trade tax amounts to approximately 14.0 %, which results in a total tax rate in Germany of approximately 30.0 %. This was used for the accrual and deferral of tax in the consolidated fi nancial statements.

115Consolidated fi nancial statements Annual Report 2011 centrotherm photovoltaics Notes to the consolidated income statement

The taxes on income are as follows:

Taxes on income

in TEUR01.01. –

31.12.201101.01. –

31.12.2010

Deferred tax – 33,316 – 666

Actual income tax 24,707 23,089

Total – 8,609 22,423

As of December 31, 2011, the Group companies report tax loss carryforwards, for which deferred tax assets of EUR 28.4 million were formed (December 31, 2010: EUR 1.6 million). Of this amount, EUR 11.9 million was covered by countervailing effects (deferred tax liabilities) within the same fi scal group.

The reconciliation between the expected and the actual tax expense is as follows:

Taxes on income

in TEUR 2011 2010

Pre-tax annual net income – 23,756 74,302

Expected income tax expense (30 %) – 7,127 22,291

Tax not relating on the period 225 644

Tax reduction due to gains for which no deferred tax was formed 909 398

Increased tax due to non-tax-deductible expenses – 84 0

Effects on equity earnings from differing tax rates – 136 8

Differing tax rates within the Group and other tax effects – 2,396 – 918

Total – 8,609 22,423

Deferred tax carried directly to equity arising from the market valuation of fi nancial instruments amounted to TEUR 170.

16. Earnings attributable to non-controlling interests

The share of earnings attributable to non-controlling interests amounted to TEUR 737 (comparable prior-year period: TEUR 738).

17. Earnings per share

In accordance with IAS 33 (Earnings per Share), earnings per share are calculated by dividing consolidated net earnings by the weighted average number of shares.

There were no measures that resulted in dilution effects.Earnings per share are calculated as follows for the

reporting period and the comparable period of the previous year:

Earnings per share

in TEUR01.01. –

31.12.201101.01. –

31.12.2010

Consolidated earnings – 15,883,842 51,140,958

Weighted average number of shares 21,162,382 21,162,382

Earnings per share – 0.75 2.42

116 centrotherm photovoltaics Annual Report 2011 Consolidated fi nancial statements Notes to the consolidated balance sheet

Notes to the consolidated balance sheet

18. Intangible assets

Intangible assets refl ect mainly goodwill relating to the com-panies centrotherm thermal solutions GmbH & Co. KG (TEUR 89,296), GP Solar GmbH (TEUR 3,853), FHR Anlagenbau GmbH (TEUR 8,200), Michael Glatt Maschinenbau GmbH (TEUR 455) and centrotherm SiTec GmbH (TEUR 15,632) as well as capitalized development costs (TEUR 34,011).

Under this item, the other intangible assets also include assets (particularly technologies and customer relation-ships) arising from purchase price allocations performed in 2008 (TEUR 53,249). Other intangible assets also include software patents of limited useful life.

The goodwill of SiTec GmbH was reduced in an amount of TEUR 11,862 as a consequence of the extinguishing of the contingent purchase price liability arising from the acquisition of SolMic shares, pursuant to IFRS 3 (2004).

Development of intangible assets

in TEUR Goodwill

Internally generated

intangible assets

Other intangible

assets Total

Cost

01.01.2010 129,298 24,810 101,546 255,654

Additions from changes in the scope of consolidation 0 0 1,152 1,152

Investments 2010 0 15,766 3,691 19,457

Transfers 2010 0 0 300 300

Disposals 2010 0 – 1,682 – 115 – 1,797

31.12.2010 129,298 38,894 106,574 274,766

Investments 2011 0 6,158 1,748 7,906

Transfers 2011 0 0 858 858

Disposals 2011 – 11,862 – 437 – 553 – 12,852

31.12.2011 117,436 44,615 108,627 270,678

Amortization

01.01.2010 0 441 26,176 26,617

Additions from changes in the scope of consolidation 0 0 626 626

Transfers 2010 0 4,717 13,050 17,767

Additions 2010 0 0 – 1 – 1

Disposals 2010 0 – 1,682 – 92 – 1,774

31.12.2010 0 3,476 39,759 43,235

Additions 2011 0 7,197 12,366 19,563

Transfers 2011 0 0 3 3

Disposals 2011 0 – 69 – 371 – 440

31.12.2011 0 10,604 51,757 62,361

Carrying amounts

31.12.2010 129,298 35,418 66,815 231,531

31.12.2011 117,436 34,011 56,870 208,317

117Consolidated fi nancial statements Annual Report 2011 centrotherm photovoltaics Notes to the consolidated balance sheet

19. Property, plant and equipment

Property, plant and equipment reported the following changes:

Changes in property, plant and equipment

in TEURLand andbuildings

Technicalplant

Operating and offi ceequipment

Plant under construction Total

Cost

01.01.2010 40,326 21,168 13,555 5,363 80,412

Additions from changes in the scope of consolidation 150 34 2,022 2,105 4,311

Investments 2010 4,407 1,587 4,552 9,024 19,570

Transfers 2010 3,227 3,445 2,630 – 9,602 – 300

Disposals 2010 – 15 – 2,670 – 580 – 15 – 3,280

31.12.2010 48,095 23,564 22,179 6,875 100,713

Additions from changes in the scope of consolidation 106 0 267 0 373

Investments 2011 8,488 4,368 7,096 47,734 67,686

Transfers 2011 34,197 5,787 85 – 40,927 – 858

Disposals 2011 – 30 – 254 – 1,008 – 149 – 1,441

31.12.2011 90,856 33,465 28,619 13,533 166,473

Depreciation

01.01.2010 1,085 4,485 3,030 509 9,109

Additions from changes in the scope of consolidation 54 11 996 0 1,061

Additions 2010 1,324 3,195 3,652 0 8,171

Transfers 2010 0 9 – 8 0 1

Disposals 2010 – 6 – 410 – 471 0 – 887

31.12.2010 2,457 7,290 7,199 509 17,455

Additions from changes in the scope of consolidation 48 0 33 0 81

Additions 2011 2,003 3,859 4,582 0 10,444

Transfers 2011 0 0 – 3 0 – 3

Disposals 2011 – 17 – 21 – 797 0 – 835

31.12.2011 4,491 11,128 11,014 509 27,142

Carrying amounts

31.12.2010 45,638 16,274 14,980 6,366 83,258

31.12.2011 86,365 22,337 17,605 13,024 139,331

The additions to property, plant and equipment primarily to the purchase of land (TEUR 2,135) and build-ings (TEUR 11,964) from a related company, investment in land and buildings (TEUR 14,412) connected with the new construction for research and development at a subsidiary as well as TEUR 5,518 of investments due to the construction of a packaging, warehousing and dispatch hall.

Due to the expansion of production areas of the Blaubeuren site, a general contractor agreement for TEUR 4,700 was concluded in May 2011, TEUR 4,643 of which

has already been invoiced. The residual obligation conse-quently amounts to TEUR 57 as of December 31, 2011.

FHR land included in property, plant and equipment is encumbered with land charges. The land charges of TEUR 2,582 serve to collateralize the company‘s guarantee and cash credit lines. Land charges of TEUR 30,000 relating to land of CTPV AG and centrotherm cell & module GmbH is also reported, which serve to collateralize three specifi c-purpose real estate loans. The loans were fully drawn down in 2010 and 2011.


20. Investments

Financial assets of TEUR 5,834 relate exclusively to the carry-ing amounts of non-consolidated subsidiaries and interests in companies (December 31, 2010: TEUR 7,096). These are composed as follows.

Investments

in TEUR 31.12.2011 31.12.2010

centrotherm photovoltaics India Pte. Ltd., Bangalore, India 8 8

centrotherm photovoltaics Italia S.r.l., Treviso, Italy 160 160

centrotherm photovoltaics Korea Ltd., Suwon, Korea 29 29

centrotherm photovoltaics technology Shanghai Co. Ltd., Shanghai, China 0 1,100

centrotherm photovoltaics USA Inc., Marietta, USA 1 1

centrotherm Solar Innovations GmbH, Wels, Austria 35 0

centrotherm Solar Innovations GmbH & Co. KG, Wels, Austria 5,535 0

Changers GmbH, Berlin (former: Vaayuu Energy Systems GmbH) 0 307

cruSible GmbH, Berching 9 9

SiTec SPV GmbH, Munich 25 25

SOLMIC GmbH, Burghausen 25 25

Sunshine PV Corp., Hsinchu Industrial Park, Taiwan 0 5,425

TOV photovoltaics industries Ukraine, Zaporozhye, Ukraine 7 7

Total 5,834 7,096

The interest (December 31, 2011: 25.4 %) in Sunshine PV Corp., Hsinchu Industrial Park, Taiwan, in an amount of TEUR 11,296 (December 31, 2010: TEUR 5,425, 14.4 %) was recognized in the balance sheet as of April 1, 2011 applying the equity method, and was reclassifi ed to the “Investments accounted for using the equity method” item.

The carrying amount of the interest in the subsidiary centrotherm photovoltaics technology Shanghai Co. Ltd., Shanghai, China, is reported at TEUR 1,100. The company was consolidated for the fi rst time as of January 1, 2011.

The TEUR 2,150 carrying amount of the interest in Changers GmbH Berlin (formerly: Vaayuu Energy Systems GmbH) was fully written down as of December 31, 2011.

With an agreement dated November 11, 2011, CTPV AG assigned its shares in centrotherm Power Solutions GmbH, Vienna, Austria, to centrotherm Holding GmbH, Wels, Aus-tria, in line with its original capital contribution of TEUR 35.

21. Investments accounted for using the equity method

Investments accounted for using the equity method amounted to TEUR 11,296 as of December 31, 2011 (December 31, 2010: TEUR 0). This relates to the interest in Sunshine PV Corp., Hsinchu Industrial Park, Taiwan, which was accounted for applying the equity method for the fi rst time as of April 1, 2011.

The carrying amount of the interest in Sunshine PV Corp. changed as follows

in TEUR 01.04.-31.12.2011

Carrying amount 01.04.2011 11,175

Annual profi t or loss – 487

Currency difference 608

Carrying amount 31.12.2011 11,296

22. Non-current receivables from taxes on income

With the coming into force of the Act concerning Fiscal Accompanying Measures to the Introduction of European Companies and the Modifi cation of Further Fiscal Regulations (SEStEG) on December 13, 2006, a legally unconditional claim to the reimbursements of corporation tax credits from the period of the fi scal imputation system has arisen for the fi rst time since the end of December 31, 2006 (§ 37 of the Corporation Tax Act [KStG], new version). The credit is being paid out in ten equal annual installments since 2008. The present value of the corporation tax credit totaled TEUR 98 (December 31, 2010: TEUR 112) as of the balance sheet date, of which TEUR 80 (December 31, 2010: TEUR 94) was non-current.



23. Other non-current assetsOther non-current assets relate mainly to the non-current portion of receivables arising from the leasing of machines (fi nance leases) due from a related company, and amounting to TEUR 684 (December 31, 2010: TEUR 537). The current portion of the receivable arising from the hire purchase of TEUR 129 (December 31, 2010: 95 TEUR) is reported among current assets under the „Receivables due from related com-panies and persons“ (please refer to note 28). The unrealized fi nancial income in an amount of TEUR 165 (December 31, 2010: TEUR 139) is reported under other non-current liabili-ties (TEUR 138, December 31, 2010: TEUR 118) and other current liabilities (TEUR 27, December 31, 2010: TEUR 21).

The following table presents a reconciliation of the gross investment with the present value of the future minimum lease installments:

Reconciliation of gross investment with present value of future minimum lease installments

in TEUR 31.12.2011 31.12.2010

Gross investment value 813 632

less unrealized fi nancial income – 165 – 139

Net investment value/present value of the minimum lease installments 648 493

The gross investment in fi nance leases, and the present value of the future minimum lease installments are due as follows:

Residual terms of gross investment and present valueof future minimum lease installments

in TEUR 31.12.2011 31.12.2010

Residual term of gross investment

Up to one year 129 95

Longer than one year and up to fi ve years 512 381

Longer than fi ve years 172 156

Residual term of present value of future minimum lease installments

Up to one year 103 74

Longer than one year and up to fi ve years 407 298

Longer than fi ve years 138 121

The fi nance lease investments derived primarily from leasing business with technical systems and machinery.

The gross investment in a lease comprises the sum of minimum lease installments and the guaranteed residual values to which the lessor is entitled. Minimum lease install-ments comprise the payments which the lessee is required to pay during the lease term, or the payments which the lessee can be called upon to pay.

The net investment value comprises the gross investment in a lease that is discounted applying the interest rate that underlies the lease.

Unrealized fi nancial income comprises the difference between the lessor‘s gross investment and the net invest-ment arising from the lease.

Besides this, other non-current assets relate to a portion of two loans (TEUR 89) falling due after December 31, 2011. The loans granted to International Solar Energy Research Center Konstanz e. V. The loans have a residual term until May 15, 2013 and September 01, 2017. The portion of the loan receivable due within the coming reporting year is reported among other current assets (please refer to note 31).

24. Inventories

The reported inventory is composed as follows:

Inventories

in TEUR 31.12.2011 31.12.2010

Raw materials and supplies 108,026 48,499

Semi-fi nished goods and services 77,356 24,865

Finished goods/products 17,533 22,874

Total 202,915 96,238

The carrying amounts of the impaired assets, which are recognized at fair value minus costs to sell, was TEUR 63,680 (previous year: TEUR 4,390). Impairments of inventories to their lower net realizable value expensed in the year under review amounted to TEUR 17,962 (comparable prior-year period: TEUR 0).This item in the year under review also includes impairment charges of TEUR 5,277 applied due to marketability and inventory range (comparable prior-year period: TEUR 3,842).



25. Receivables relating to construction orders

Receivables from construction contracts amounted to a total of TEUR 561,611 gross, before offsetting with prepayments received (December 31, 2010: TEUR 516,069). This includes impairment charges that are primarily due to adjustments applied to agreed income from large-scale projects and cost excess items totaling TEUR 26,929 (December 31, 2010: TEUR 10,250). Impairments expensed in the year under review amounted to TEUR 22,577 (comparable prior-year period: TEUR 5,315).

No impairment losses were reversed in the 2011 reporting year (comparable prior-year period: TEUR 600).

Collateral retentions received from customers for con-struction orders amounted to TEUR 8,224 as of December 31, 2011 (December 31, 2010 TEUR 3,525).

In the item receivables relating to construction orders, accrued contract costs factoring in income are offset against any respective advances received where this resulted in a positive balance. The following list contains receivables relating to construction orders before and after netting with prepayments received:

Receivables relating to construction orders

in TEUR 31.12.2011 31.12.2010

Receivables relating to construction orders (gross) 192,664 351,546

Offset with advance payments received – 146,193 – 260,966

Total 46,471 90,580

If the offsetting of contract costs including related earn-ings contributions results in a negative balance including the advance payments received, the net amounts are reported among liabilities arising from construction contracts (please also refer to note 40).

26. Trade receivables

Trade receivables

in TEUR 31.12.2011 31.12.2010

Trade receivables (gross) 57,656 65,503

Specifi c adjustments – 5,465 – 3,969

General adjustments – 464 -589

Total 51,727 60,945

Lump-sum specifi c valuation adjustments were applied in 2011 depending on the term structure of the receivables, as well as information about customer-specifi c credit and default risk. Valuation adjustments were applied on a stag-gered percentage rate basis to trade receivables that were older than four months, but less than ten months overdue. Full valuation adjustments were applied to trade receivables older than ten months. Where better information was available, the valuation adjustment was calculated on the basis of estimates generated on a specifi c case basis. A 1 % lump-sum impairment was formed to take general credit risk into account.

All trade receivables are due within one year.There are no standard payment targets defi ned within the

centrotherm photovoltaics Group due to the particularities of contractual regulations involved in construction contracts.

As of the balance sheet date, there were receivables beyond their agreed payment targets, but for which no valuation losses had been formed. The term structure of trade receivables as of December 31, 2011 is as follows:

Term structure of trade receivables

in EUR TotalNeither overdue

nor impaired

Overdue but not impaired

01 to 30 days

31 to 60 days

61 to 90 days

More than 90 days

31.12.2011 52,191 9,696 18,632 4,029 5,407 14,427

31.12.2010 61,534 21,858 15,995 8,093 5,303 10,285



As of December 31, 2011, there were no indications that defaults had occurred to trade receivables that were neither overdue nor subject to specifi c valuation adjust-ments.

The following table shows the changes in the specifi c and general adjustments applied to trade receivables:

Changes in valuation allowances to receivables

in TEURSpecifi c

adjustmentsGeneral

adjustments Total

As of January 1, 2010 3,219 130 3,349

Adjustments reported during the reporting period 2,221 459 2,680

Payments received and write-ups applied to receivables originally written off – 1,471 0 – 1,471

As of December 31, 2010/ as of January 1, 2011 3,969 589 4,558

Adjustments reported dur-ing the reporting period 1,607 – 125 1,482

Payments received and write-ups applied to receivables originally written off – 111 0 – 111

As of December 31, 2011 5,465 464 5,929

Receivables/credits of TEUR 10 were derecognized in 2011 (previous year: TEUR 0).

27. Receivables due from equity interests

Receivables due from equity interests as of December 31, 2011 of TEUR 1,188 (December 31, 2010: TEUR 1,027) relate exclusively to receivables due from subsidiaries not included in the scope of consolidation. These mainly relate to loans granted and other receivables arising from clearing transactions with these companies. Receivables due from equity interests have a residual term of up to one year.

28. Receivables due from related companies and persons

The following provides a list of receivables due from centro-therm Group companies that do not belong to the Group:

Receivables due from related companies

in TEUR 31.12.2011 31.12.2010

centrotherm Sud Europe SAS, France 1,146 1,275

centrotherm Elektrische Anlagen GmbH & Co. KG 131 111

centrotherm clean solutions GmbH & Co. KG 51 118

Other 16 2

Total 1,344 1,506

Receivables due from centrotherm Sud Europe SAS, France, amounting to TEUR 1,146 primarily contain trade receivables.

Receivables due from centrotherm Elektrische Anlagen GmbH & Co. KG relate essentially to the current portion of receivables arising from machine leasing (fi nance leasing) in an amount of TEUR 129 (December 31, 2010: TEUR 95).

Receivables due from related parties have a residual term of up to one year.

29. Advance payments made

Advance payments made of TEUR 28,858 as of Decem-ber 31, 2011 (December 31, 2010: TEUR 8,217) have a residual maturity of up to one year. This item contains advance payments made to related companies of TEUR 0 (December 31, 2010: TEUR 56) and TEUR 562 of advance payments rendered to non-consolidated subsidiaries (December 31, 2010: TEUR 0). The advance payments made were primarily rendered for inventories.

30. Current receivables from taxes on income

Income tax receivables amounted to TEUR 6,368 as of December 31, 2011 (December 31, 2010: TEUR 11,668). These receivables are due within one year.



31. Other current assets

Other current assets consist of the following items as of December 31, 2011, all with a residual maturity of up to one year:

Other current assets

in TEUR 31.12.2011 31.12.2010

VAT receivables 11,352 14,391

Credit accounts in debit 2,544 343

Accruals item 1,522 1,092

Receivables due from staff 208 185

Foreign tax receivables 149 1,330

Receivables related to subsidies 147 101

Receivables related to loan 55 53

Other 1,171 709

Total 17,148 18,204

32. Securities

Securities amount to TEUR 0 (December 31, 2010: TEUR 10,813). The entire securities position was sold during the reporting period. Gains realized from the sale of securities in the 2011 fi nancial year amounted to TEUR 612 when taking into account deferred tax. The earnings-effective reclassi-fi cation to the income statement amounted to TEUR 763.

33. Cash and cash equivalents

Cash and cash equivalents

in TEUR 31.12.2011 31.12.2010

Cash and currency holdings 25 46

Bank deposits 34,949 37,274

Short-term investments 102,660 143,282

Total 137,634 180,602

34. Equity

The individual components of equity in the January 1 to December 31, 2011 reporting period, and their changes, are presented in the statement of changes in equity.

Subscribed capital

The subscribed capital of CTPV AG amounts to TEUR 21,162 as of December 31, 2011 (December 31, 2010: TEUR 21,162). The subscribed capital is split into 21,162,382 (December 31, 2010: 21,162,382) nil-par value ordinary shares, and is fully paid up.

Approved capital

With the approval of the Supervisory Board the Manage-ment Board is authorized to increase the share capital of the company on one or more occasions by August 17, 2016 up to a total of EUR 2,837,618 (in words: two million eight hundred thirty seven thousand six hundred eighteen euros) through the issue of new ordinary bearer shares in exchange for cash or non-cash capital contributions (Approved Capital 2011/I). As a matter of principle, the new shares must be offered to shareholders for subscription (including by way of indirect subscription pursuant to § 186 Paragraph 5 Clause 1 of the German Stock Corporation Act [AktG]).

With the approval of the Supervisory Board the Manage-ment Board is also authorized to exclude the statutory subscription right of the shareholders in the following cases:

1. in the event of a capital increase carried out against cash contributions if the amount of the new shares does not substantially fall below the stock exchange price of already quoted shares of the same type and terms of issue within the meaning of Sections 203 Paragraphs 1 and 2, 186 Paragraph 3 Sentence 4 of the German Stock Corporation Act (AktG) at the time of fi nal determination of the issuing amount. This exclusion of subscription rights shall be limited to a maximum total of 10 % of the company‘s share capital in existence when this authorization becomes effective, or, if this amount is less, when this authorization is exercised. To this limit should be added shares sold or issued during the term of this authorization in direct or corresponding application of Section 186 Paragraph 3 Clause 4 of the German Stock Corporation Act (AktG) under exclusion of statutory subscription rights. Also to be added are shares that are issued to service option and/or conversion rights arising from convertible or warrant debentures, or from par-ticipation rights, to the extent that these debentures or participation rights are issued during the duration of this authorization in corresponding application of Section 186 Paragraph 3 Clause 4 of the German Stock Corporation Act (AktG) under exclusion of subscription rights;



2. in the case of a capital increase in return for a non-cash capital contribution, in particular for the purchase of companies, interests in companies or parts of companies;

3. in order to reconcile residual amounts;

4. to grant subscription rights to bearers of conversion and option rights arising from debentures to be issued by the company or an associated company; and

5. in order to issue shares as employee shares to staff of the company or its associated companies.

The Management Board is authorized, with the approval of the Supervisory Board, to specify the further details of capital increases from approved capital.

The Management Board is authorized to increase the company‘s share capital with the approval of the Supervi-sory Board once or on several occasions until June 29, 2014 by a total of up to EUR 7,743,573 (in words: seven million seven hundred and forty-three thousand fi ve hundred and seventy-three euros) through the issue of new ordinary bearer shares in exchange for cash or payment-in-kind (Approved Capital II).

As a matter of principle, the new shares must be offered to shareholders for subscription (also by way of indirect subscription pursuant to §186 Paragraph 5 Clause 1 of the German Stock Corporation Act [AktG]). The Manage-ment Board is authorized, however, with the approval of the Supervisory Board, to exclude shareholders‘ statutory subscription rights in order to reconcile residual amounts, or, in the instance of a capital increase in return for payment-in-kind, particularly for the acquisition companies, stakes in companies, or parts of companies.

The Management Board is furthermore authorized, with the approval of the Supervisory Board, to determine the further specifi cities of the performance of capital increases from approved capital.

Conditional capital

The issued share capital of CTPV AG is conditionally increased by up to EUR 2,116,238.00, divided into up to 2,116,238 new ordinary bearer shares (Conditional Capital 2010/I).

With an entry in the commercial register of August 4, 2010, the issued share capital of CTPV AG is conditionally increased by an additional amount of up to EUR 1,500,000, split into up to 1,500,000 new ordinary bearer shares (Conditional Capital 2010/II).

Capital reserve

Capital reserve comprises mainly premiums from the capital increase performed as part of the fl otation.

Revaluation reserve

The revaluation reserve reports changes in securities held for sale, and takes deferred tax into account. The entire securities position was sold in the 2011 fi nancial year. The revaluation reserve stood at TEUR 0 as of December 31, 2011 (Decem-ber 31, 2010: TEUR 612).

Cash fl ow hedge reserve

The cash fl ow hedge reserve includes the fair value of interest-rate swaps recognized in the balance sheet, less deferred tax. Please see note 45 Additional disclosures concerning fi nancial instruments.

Retained earnings

The retained earnings contain currency translation reserves of TEUR 857 (December 31, 2010: TEUR – 44). The distribu-tion of a dividend of € 0.50 per dividend-entitled ordinary share, and the payment of a one-off bonus dividend of € 0.20, was approved at the Shareholders’ General Meeting on August 18, 2011. As a consequence, the total dividend paid in August 2011 amounted to TEUR 14,814.

Appropriation of earnings

According to the German Stock Corporation Act (AktG), the distributable dividend is measured against other unap-propriated retained earnings, as reported in the annual fi nancial statements of CTPV AG, which in turn are prepared according to the regulations of the German Commercial Code (HGB). CTPV AG has reported retained earnings of TEUR 75,142 for the 2010 fi nancial year. Dividend of TEUR 14,814 has paid for the 2010 fi nancial year. The remaining 2010 unappropriated retained earnings of CTPV AG of TEUR 60,328 were carried forward to a new account.

CTPV AG reports net income of TEUR 25,137 for the 2011 fi nancial year in its single-entity fi nancial statements prepared according to German commercial law. The Manage ment and Supervisory Boards propose that the Shareholders’ General Meeting carry the net income 2011 forward to a new account.

Non-controlling interests

The non-controlling interest item refl ects the share of owner-ship by third parties in Group companies. The statement of changes in consolidated equity presents the changes in non-controlling interests in the January 1 to December 31, 2010 and January 1 to December 31, 2011 reporting periods.



35. Provisions for pensions and similar obligations

The Group‘s pension scheme is conducted mainly on the basis of defi ned contributions. In the case of the defi ned contribution plans, the company voluntarily pays contribu-tions to private pension insurance companies. Once the payments have been made, the company generally no longer has any further benefi t obligations. Current contribu-tion payments are expensed in the relevant year among the personnel expense, and consequently included in operating earnings.

There are defi ned benefi t commitments for two former employees. Pension provisions for defi ned benefi t commit ments were calculated according to the projected unit credit method, pursuant to IAS 19. An average 4.8 % market interest rate and a 2.0 % pension trend were used to calculate the pension provision. Reinsurance cover was concluded for existing pension obligations in order to hedge employer‘s pension commitments (asset value as of December 31, 2011: TEUR 334) (December 31, 2010: TEUR 346). The pension provision was offset with its asset value in 2011. The defi ned benefi t obligation as of December 31, 2011 amounted to TEUR 472 (December 31, 2010: TEUR 495) and is identical to the net obligation. Pension payments of TEUR 43 were paid for 2011. Payments to the same level are expected for the 2012 fi nancial year. The reinsurance reimburse ment amounted to TEUR 33 in the year under review. Actuarial gains and losses (gains of TEUR 9 in 2011; losses of TEUR 18 in 2010) are reported in their entirety through profi t or loss in the year in which they arise. Interest expenses amounted to TEUR 22 in the year under review.

Pension expenses totaled TEUR 471 in 2011 (comparable prior-year period: TEUR 339). Of this amount, TEUR 7 was attributable to defi ned benefi t commitments (comparable prior-year period: TEUR 7), and TEUR 464 to defi ned contri-bution plans (comparable prior-year period: TEUR 332).

36. Finance debt

Non-current fi nancial liabilities amounted to TEUR 123,427 as of December 31, 2011 (December 31, 2010: TEUR 21,298). These currently comprise four borrower‘s note loans and one registered bond. The borrower‘s note loans together totaling TEUR 61,500 were issued on October 6, 2011. Two loans together totaling TEUR 26,500 carry fi xed interest rates of 3.25 % and 3.728 % per annum respectively, and have fi nal maturities of September 28, 2016 and

September 28, 2018 respectively. The coupons are to be paid annually from September 28, 2012. The two remaining borrower‘s note loans together totaling TEUR 35,000 carry 6-month Euribor interest plus credit spreads of 1.4 % and 1.6 % respectively, with coupons being paid semi-annually from March 28, 2012. The bonds mature on September 28, 2016 and September 28, 2018 respectively. Interest-rate swap contracts were concluded for the variable coupon loans in order to hedge interest-rate risks. The maturities of the interest-rate swaps are congruent with the maturities of the hedged bonds. The market value of the interest-rate swaps amounted to TEUR – 565 as of December 31, 2011, and is reported directly in equity in the cash fl ow hedge reserve taking into account TEUR 170 of resultant deferred tax. Cumulative interest is applied to the borrower‘s note loans using the effective interest method. The cumulative interest expense of TEUR 11 was recognized within the fi nancial result. The carrying amount of the borrower‘s note loans stood at TEUR 61,257 as of December 31, 2011.

The fi nance debt item also includes a registered bond issued on August 10, 2011, with a total nominal amount of TEUR 40,000. The nominal amount of one registered bond is TEUR 500. The registered bond was issued in an amount of TEUR 38,210. The coupon rate is 5.125 % per annum. The coupons are to be paid annually from August 10, 2012. The registered bond matures on August 10, 2026 with a nominal amount of TEUR 40,000. The difference between the issue amount and the repayment amount is refl ected using the effective interest method. The cumulative inter-est expense amounted to TEUR 31 in the 2011 fi nancial year, and was reported in the fi nancial result. The carrying amount stands at TEUR 38,241 as of December 31, 2011.

In addition the fi nance debt contains a specifi c-purpose real estate loan of TEUR 7,857 drawn down in the 2010 fi nancial year (December 31, 2010: TEUR 9,286), and two new subsidy specifi c-purpose real estate loans with a total volume of TEUR 20,000 (December 31, 2010: TEUR 0). The three loans are encumbered with land charges of TEUR 10,000 each. Scheduled redemptions in an amount of TEUR 1,429 were performed in 2011. The last redemption installment on the loans is due on March 31, 2019. The non-current portion of the loans amounts to TEUR 23,929 (December 31, 2010: TEUR 7.857), and is reported among non-current fi nancial liabilities, TEUR 6,785 of which has a residual term of more than fi ve years. The residual amount of TEUR 3,928 is recognized under the current fi nancial liabilities item.



Current fi nance debt also includes three money market loans totaling TEUR 2,750. The loans‘ fi nal redemption pay-ment is due on October 31, 2012.

The following table shows the composition of non-current and current fi nance debt as of December 31, 2011:

Finance debt

in TEUR 31.12.2011 31.12.2010

Borrower's note loan 61,257 0

Registered bond 38,241 0

Special-purpose real estate loans 27,857 9,286

Money market loans 2,750 0

Interest liabilities (deferred) 1,302 0

Liabilities arising from payments of the purchase for SolMic 0 20,941

Total 131,407 30,227

Short-dated 7,980 8,929

Long-dated 123,427 21,298

37. Other non-current liabilities

Other non-current liabilities amounted to TEUR 1,662 as of the balance sheet date (December 31, 2010: TEUR 1,258). This item primarily comprises public-sector subsidies of TEUR 878 (December 31, 2010: TEUR 980) and the TEUR 565 market value of interest-rate swaps (December 31, 2010: TEUR 0).

38. Provisions for taxes

Tax provisions amounted to TEUR 8,964 as of December 31, 2011 (December 31, 2010: TEUR 15,481). These comprise mainly income tax liabilities that have been incurred but not yet paid.

39. Other current provisions

Other current provisions amounted to TEUR 37,212 as of December 31, 2011 (December 31, 2010: TEUR 22,775). These provisions relate primarily to follow-up costs of TEUR 13,348 for orders that have been delivered (December 31, 2010: TEUR 7,776), guarantee provisions of TEUR 17,781 (December 31, 2010: TEUR 8,038), provisions for litigation costs of TEUR 3,198 (December 31, 2010: TEUR 6,919), and provisions for pending losses of TEUR 2,885 (December 31, 2010: TEUR 42). The provisions for pending losses arise particularly from already anticipated project losses. Provisions for litigation costs were formed mainly for litigation. The guarantee provision was generally calculated by applying a rate of between 0.25 % and 3.5 % to the guarantee-related revenues over the guarantee timeframe.

Other current provisions

in TEURFollow up

costs GuaranteeLitigation

costs Pending losses Total

As of January 1, 2010 2,547 3,853 658 231 7,289

Utilization/release 2010 – 374 – 1,267 – 606 – 227 – 2,474

Addition 2010 5,603 5,452 6,867 38 17,960

As of December 31, 2010/as of January 1, 2011

7,776 8,038 6,919 42 22,775

Utilization/release 2011 – 2,293 – 1,217 – 6,884 – 42 – 10,436

Addition 2011 7,865 10,960 3,163 2,885 24,873

As of December 31, 2011 13,348 17,781 3,198 2,885 37,212



40. Liabilities arising from construction contracts

Liabilities arising from construction contracts include gross amounts due from customers for contract work and corresponding advance payments creating a credit balance. As of December 31, 2011 there were liabilities arising from construction contracts outstanding of TEUR 48,594 (Decem-ber 31, 2010: TEUR 42,594):

Liabilities arising from construction contracts

in TEUR 31.12.2011 31.12.2010

Receivables relating to construction orders (gross) 368,947 164,523

Offset with advance payments received – 417,541 – 207,117

Total 48,594 42,594

Please refer to note 25 concerning receivables relating to construction orders.

41. Trade payables

The total amount of trade payables of TEUR 81,653 is due within one year (December 31, 2010: TEUR 54,648). The trade payables are non-interest-bearing, and are generally due between 30 and 60 days.

42. Advance payments received

Prepayments received amounting to TEUR 138,452 (Decem-ber 31, 2010: TEUR 167,227) relate to advances received that are independent of the output of goods and services. There is consequently no netting with the asset or liability balance arising from construction orders.

43. Liabilities to related companies and persons

The following provides a list of payables due to centrotherm Group companies that do not belong to the Group:

Liabilities to related companies and parties

in TEUR 31.12.2011 31.12.2010

centrotherm Elektrische Anlagen GmbH & Co. KG 766 1,209

Other 92 109

Total 858 1,318

Liabilities to related parties have a residual term of up to one year, and primarily relate to supply and service relationships.

44. Other current liabilities

Other current liabilities are composed as follows:

Other current liabilities

in TEUR 31.12.2011 31.12.2010

Obligations arising from commissions 14,323 9,217

Personnel liabilities 11,400 11,137

VAT liabilities 1,607 1,334

Insurance premiums outstanding 494 436

Travel and entertainment expenses 364 313

Deferred income 27 21

Credit accounts in debit 12 539

Other 3,454 695

Total 31,681 23,692

Personnel liabilities mainly contain vacation claims and overtime hours.

45. Additional disclosures concerning fi nancial instruments

The following tables present the carrying amounts of individual fi nancial assets and liabilities for the various measurement categories as per IAS 39. The tables also show their allocation to corresponding balance sheet items. Since non-fi nancial assets and liabilities are also included among other assets and other liabilities, the tables also include a column for non-fi nancial assets and liabilities in order to present a corresponding reconciliation. The carrying amounts of the fi nancial assets and liabilities reported in the balance sheet as of December 31, 2011 basically harmonize with their fair values.

Available-for-sale fi nancial assets of TEUR 5,834 (Decem-ber 31, 2010: TEUR 7,096) include shares in partnerships and incorporated fi rms. These interests are measured at amortized cost since no prices are quoted for them on active markets, as a consequence of which fair value cannot be determined reliably.



The fair values of unlisted bonds and bank loans are cal-culated using discounted cash fl ows. Future cash fl ows are derived using interest rates currently applicable for debt on comparable conditions, credit risk and residual terms, using the yield curve published by the European Central Bank on December 31, 2011. The credit spread for the recently issued loans is assumed to be analogous to the credit risk applicable when the liabilities were issued. The credit spread for liabilities that have existed for longer was adjusted to the level of the most recently agreed credit spreads for the same fi nancial instruments. Please refer to the tables on the following pages.

In the 2011 fi nancial year, the centrotherm photovolta-ics Group entered into two interest-rate swap contracts to hedge interest-rate risks (cash fl ow hedge). Both the interest-rate swaps are cash fl ow hedges that are deployed to hedge against the risk of fl uctuating cash fl ows. IAS 39.88 hedge accounting preconditions have been satisfi ed. The interest-rate swaps are measured at fair value. Changes to the effective portion of the fair value are carried directly to the cash fl ow hedge reserve in equity after taking into account deferred tax. The amounts reported in equity are transferred to the income statement in the period in which the hedged expected cash fl ows impact profi t or loss. Unrealized losses (pre-tax) amounted to TEUR 565 as of December 31, 2011. The interest payments on the interest-rate swaps designated as hedging instruments, and the EURIBOR-based interest payments on the borrower’s note loan designated as an underlying transaction, have congruent maturities. These

interest payments are due in March and September of each fi nancial year over the duration of the hedging relationship. The amount accumulated in the cash fl ow hedge is released pro rata through profi t or loss over the period in which the interest payments for the underlying transactions are reported through profi t or loss.

The fair values of non-derivative fi nancial assets and liabilities reported in the balance sheet as of December 31, 2011, respectively 2010, and which are traded on active markets, are determined by the market price quoted on the balance sheet date, or the publicly quoted price. Present value measurements are applied if such market prices are unavailable. Interest-rate swaps are measured applying the present value method. The discounting rates are derived from public quotations.

The following table shows the hierarchical levels of fi nancial assets and liabilities measured at fair value. These levels are defi ned as follows:

• Level 1: Prices listed on active markets (unadjusted) for identical assets and liabilities.

• Level 2: Measurement performed on the basis of valu-ation models whose input parameters can be observed either directly or indirectly on the market.

• Level 3: Measurement performed on the basis of valu-ation models whose input parameters are not based exclusively on observable market data.

Financial assets and liabilities measured at fair value

in TEUR Level 1 Level 2 Level 3 Total

Available for sale fi nancial assets31.12.2011 0 0 0 0

31.12.2010 10,813 0 0 10,813

Derivates in hedging relationship31.12.2011 0 – 565 0 – 565

31.12.2010 0 0 0 0

Financial instruments

128 centrotherm photovoltaics Annual Report 2011 Consolidated fi nancial statements Financial instruments

Financial instruments 2011

in TEUR

Measurement category as

defi ned in IAS 39

Carrying amount

31.12.2011 Measurement acc. to IAS 39

Derivates in hedging

relationshipMeasurementacc. to IAS 17

Fair Value 31.12.2011

Non-fi nancialassets/liabilities

Amortized cost

Fair Value recognised

in equity

Assets

Investments AfS 5,834 5,834 5,834

Other non-current fi nancial assets (Leasing) 684 684 684

Other non-current fi nancial assets LaR 89 89 89

Receivables relating to production orders 46,471 46,471

Trade receivables LaR 51,727 51,727 51,727

Receivables due from equity interests LaR 1,188 1,188 1,188

Receivables due from related companies and persons (excluding fi nance lease) LaR 1,215 1,215 1,215

Finance Lease 129 129 129

Other current fi nancial assets LaR 3,842 3,842 3,842

Other current non-fi nancial assets

Non-fi nancial 13,306 13,306

Cash and cash equivalents LaR 137,634 137,634 137,634

Liabilities

Finance debt FLAC 131,407 131,407 133,955

Interest rate swap 565 565 565

Other non-current fi nancial liabilities FLAC 80 80 80

Other non-current non-fi nancial liabilites


Liabilities arising form construction contracts 48,594 48,594

Trade payables FLAC 81,653 81,653 81,653

Liabilities to equity interests FLAC 5 5 5

Liabilities to related companies and persons FLAC 858 858 858

Other current fi nancial liabilities FLAC 15,095 15,095 15,095

Other current non-fi nancial liabilities


of which aggregated according to IAS 39 measurement categories

Loans and Receivables (LaR) 195,695 195,695 195,695

Available for Sale (AfS) 5,834 5,834 5,834

Financial Liabilities Carried at Amortised Cost (FLAC) 229,098 229,098 231,646


129Consolidated fi nancial statements Annual Report 2011 centrotherm photovoltaics Financial instruments

Financial instruments 2010

in TEUR

Measurement category as

defi ned in IAS 39

Carrying amount

31.12.2010 Measurement acc. to IAS 39

Derivates in hedging

relationshipMeasurementacc. to IAS 17

Fair Value 31.12.2010

Non-fi nancialassets/liabilities

Amortized cost

Fair Value recognised

in equity

Assets

Investments AfS 7,096 7,096 7,096

Other non-current fi nancial assets (Leasing) 537 537 537

Other non-current fi nancial assets LaR 144 144 144

Receivables relating to production orders 90,580 90,580

Trade receivables LaR 60,945 60,945 60,945

Receivables due from equity interests LaR 1,027 1,027 1,027

Receivables due from related companies and persons (excluding fi nance lease) LaR 1,411 1,411 1,411

Finance Lease 95 95 95

Other current fi nancial assets LaR 941 941 941

Other current non-fi nancial assets


Securities AfS 10,813 10,813 10,813

Cash and cash equivalents LaR 180,602 180,602 180,602

Liabilities

Finance debt FLAC 30,227 30,227 30,227

Other non-current fi nancial liabilities FLAC 160 160 160

Other non-current non-fi nancial liabilites


Liabilities arising form construction contracts 42,594 42,594

Trade payables FLAC 54,648 54,648 54,648

Liabilities to equity interests FLAC 558 558 558

Liabilities to related companies and persons FLAC 1,318 1,318 1,318

Other current fi nancial liabilities FLAC 10,489 10,489 10,489

Other current non-fi nancial liabilities


of which aggregated according to IAS 39 measurement categories

Loans and Receivables (LaR) 245,070 245,070 245,070

Available for Sale (AfS) 17,909 7,096 10,813 17,909

Financial Liabilities Carried at Amortised Cost (FLAC) 97,400 97,400 97,400


Expenses, income, losses and gains from fi nancial instru-ments are allocated to the individual IAS 39 measurement categories as follows:

Expenses, income, losses and gains from fi nancial instruments

in TEURArising from

interest/dividends ImpairmentsImpairment

reversalsArising

from sale

2011

Loans and receivables(including cash and cash equivalents)

1,497 – 5,977 4,915 0

Assets in the available for sale category 0 – 2,150 0 752

Liabilities carried at amortized cost – 468 0 0 0

2010

Loans and receivables(including cash and cash equivalents)

154 – 3,881 2,701 0

Assets in the available for sale category 0 0 0 34

Liabilities carried at amortized cost – 1,249 0 0 0

Gains realized from the sale of securities in the 2011 fi nancial year amounted to TEUR 612 when taking into account deferred tax. The earnings-effective reclassifi cation to the income statement amounted to TEUR 763 (com-parable prior-year period: TEUR 34).



Notes to the cash fl ow statement

46. Cash fl ow from operating activities

Cash fl ow from operating activities is indirectly derived from pre-tax earnings and earnings attributable to non-controlling interest. As part of the indirect calculation, changes in balance sheet items taken into account as part of operating activities are adjusted to refl ect changes in the scope of con-solidation. Cash fl ow from operating activities amounted to TEUR – 68,158 (comparable prior-year period: TEUR 69,445).

Cash fl ow from operating activities includes interest paid of TEUR 490 (comparable prior-year period: TEUR 663), and interest received of TEUR 1,907 (comparable prior-year period: TEUR 856).

47. Cash fl ow from investing activities

An amount of TEUR 93,658 (comparable prior-year period: TEUR 54,882) was spent on the purchase and manufacture of property, plant and equipment, intangible assets, as well as investments in consolidated companies and fi nancial investments, in 2011. The cash infl ow from disposals of short-term securities amounted to TEUR 10,854 (compa-rable prior-year period: TEUR 23,712).

48. Cash fl ow from fi nancing activities

Cash fl ow from fi nancing activities of TEUR 105,641 (comparable prior-year period: TEUR 8,450) is primarily composed of the drawing down of two specifi c-purpose real estate loans (TEUR 20,000), a registered bond (TEUR 38,210), and the issuing of four borrower’s note loans (TEUR 61,500). Dividends of TEUR 14,814 were also paid.

49. Cash and cash equivalents at the end of the period

Financial resources in 2011 comprised exclusively cash and cash equivalents reported in the consolidated balance sheet amounting to TEUR 137,634 (December 31, 2010: TEUR 180,602). These comprise checks, cash in hand, bank accounts in credit, and short-term time deposits.

Other notes

50. Reporting of the risk management

Management of fi nancial risks

The centrotherm photovoltaics Group is exposed to various fi nancial risks. These risks are monitored and minimized in a targeted manner by the risk management system. Financial instruments may not be used for speculative purposes. The following section considers individual risk, as well as risk management. Further information about the management of fi nancial risks can be found in the risk report in the management report.

Currency risk

Currency risks arise where receivables, liabilities, debt, cash and cash equivalents, and planned transactions are denomi-nated, or will be denominated, in a currency that is not the company’s local currency. There is currently no need to take related action within the Group since customer orders are invoiced predominantly in euros. If required, we will corres pondingly hedge foreign currency risks as they arise. As of the December 31, 2011 balance sheet date, there were no signifi cant customer orders denominated in another currency, and, as a consequence, no forward currency transactions.

As of the balance sheet date, there were foreign currency receivables amounting to TEUR 105 (December 31, 2010: TEUR 144), and foreign currency liabilities of TEUR 110 (December 31, 2010: TEUR 37). Since the impact of foreign currency risks arising from these amounts is relatively insignifi -cant, we have refrained from presenting a sensitivity analysis.

Liquidity risk

Liquidity risk comprises the risk whereby the Group might be unable to fulfi ll fi nancial obligations such as the redemption of fi nance debt, or ongoing capital requirements arising from its operating activities.

Future liquidity requirements are calculated by using a Group-wide rolling liquidity budget that is regularly updated. In this manner, centrotherm ensures that all planned payment obligations across Group can be satisfi ed on the relevant due date. Close cooperation with several renowned German banks ensures that corresponding resources can be tapped at short notice given a future fi nancing requirement. centrotherm had access to commitments for cash and guarantee credit lines of TEUR 366,910 as of December 31, 2011. centrotherm has access to its current liquidity position across the Group at all times. If these credit lines were to be reduced or cancelled in the future, this could affect the Group’s liquidity position, and consequently exert a considerably negative impact on its net assets, fi nancial position and results of operations.

Notes to the cash fl ow statement


In order to refresh its liquidity position, centrotherm issued a registered bond in 2011 with a 2026 maturity, and a borrower’s note loan split into several tranches (maturities until 2016 and 2018 respectively). These bond issues gener-ated TEUR 99,710 of total liquidity infl ow. All these bonds are to be redeemed at maturity. If these bonds required refi nancing at maturity, such refi nancing might occur only on worse terms, thereby comprising a corresponding risk to future cash fl ows. Normal market covenants have been

agreed for the registered bond and the borrower’s note loan, which require compliance with certain key fi nancial fi gures. If these covenants are not complied with as part of the annual review, this could have a signifi cantly negative impact on our net assets, fi nancial position and results of operations.

The undiscounted cash fl ows of the Group’s fi nancial liabilities have the following due date as presented in the table below:

Undiscounted cash fl ows as of December 31, 2011

in TEUR1 to

3 months4 to

12 months1 to

5 yearsMore than

5 years Total

Borrower's note loan 531 1,432 61,518 8,582 72,063

related derivative fi nancial instrument 46 121 615 – 9 773

Registered bond 0 2,050 8,200 60,500 70,750

Specifi c-purpose real estate loan 972 3,939 19,496 7,061 31,468

Money market loans 19 2,795 0 0 2,814

Other non-current fi nancial liabilities 0 0 80 0 80

Trade receivables 81,653 0 0 0 81,653

Liabilities to equity interests 5 0 0 0 5

Liabilities to related companies and persons 858 0 0 0 858

Other current fi nancial liabilities 772 14,323 0 0 15,095

Total 84,856 24,660 89,909 76,134 275,559

Undiscounted cash fl ows as of December 31, 2010

in TEUR1 to

3 months4 to

12 months1 to

5 yearsMore than

5 years Total

Specifi c-purpose real estate loan 447 1,319 6,152 2,215 10,493

Liabilities arising from payments of the purchase for SolMic 0 7,500 14,500 0 22,000

Other non-current fi nancial liabilities 0 0 160 0 160

Trade receivables 54,648 0 0 0 54,648

Liabilities to equity interests 558 0 0 0 558

Liabilities to related companies and persons 1,318 0 0 0 1,318

Other current fi nancial liabilities 1,272 9,217 0 0 10,489

Total 58,243 18,036 21,172 2,215 99,666

Other notes


Interest-rate risk

Short-term assets in the securities and cash areas are currently invested at variable interest rates, and are consequently fully exposed to interest-rate risk. This is offset by their being avail-able at any time, a factor to which we lend greater priority than the possibility to generate higher interest income.

Bank borrowings within the centrotherm photovolta-ics Group as of the balance sheet date have largely been concluded with fi xed interest agreements over their entire terms. To this extent, changes to market interest-rate levels have no effects on pre-tax earnings and equity. Present value risk is negligible since loans are recognized at cost in the balance sheet. Two interest-rate swap transactions were entered into over the course of 2011 to hedge interest-rate risks relating to the variable-rate liabilities. These transac-tions swap the original variable interest payments into fi xed interest payments. If the market interest rate were to increase by 50 basis points, the cash fl ow hedge reserve recognized in equity would increase by TEUR 199. If the market interest-rate were to fall by 50 basis points, the cash fl ow hedge reserve recognized in equity would decrease by TEUR 764 excluding tax. The interest-induced movements on the variable-rate borrowers’s note loans and offset by the variable interest claims on the swaps. To this extent, the hedge results is no signifi cant profi t and loss effects for the sensitivity analyses.

The refi nancing of the fi nancial liabilities presented in the liquidity risk section could lead to a signifi cant increase in fi nancing costs in the future.

Commodity risk

The centrotherm photovoltaics Group requires various metals, in particular, copper, iron and platinum, as well as raw materials such as quartz, silicon and energy, for its production processes. Risks arise particularly from the high volatility of energy and raw materials prices. Changes in prices may have a considerable impact on the company’s cash fl ow and earnings. In order to minimize risks, we constantly conduct extensive analyses of raw materials price trends and their effects on our value chain, which allows us to respond rapidly. From our perspective, however, there has been no requirement for hedging in the past.

Credit risk

A credit risk for the centrotherm photovoltaics Group exists to the extent that the value of assets could be diminished if transaction partners for fi nancial instruments fail to satisfy their obligations. This risk is refl ected through careful credit-checking, commercial letters of credit, customer prepayment agreements, and prepayment guarantees by suppliers’ banks. There is also a stringent receivables manage ment

system that monitors the prompt payment of our customer receivables. Positions are monitored at regular meetings with the responsible persons of the sales division. For fi nancial assets, the theoretical maximum default risk corresponds to their carrying amounts. These amounted to TEUR 58,061 as of December 31, 2011.

Default risk on cash investments is reduced by distributing the investments among different fi nancial service-providers. Their credit ratings are reviewed regularly.

Legal risks

Changes to the political and regulatory environment in countries where we are present, such as import and export controls, customs terms or other trade obstacles, as well as price and currency restrictions, could negatively impact our business on various national markets, negatively impact revenues and profi tability, and make it diffi cult to repatriate earnings. Uncertainties surrounding the legal systems in many countries can also sharply restrict our ability to enforce our claims and rights. As a company that operates internationally, we conduct business activities with customers in countries that are subject to export control regulations, embargoes, sanctions or other forms of trade restrictions that are imposed by the USA, the European Union, or other countries or organizations. We could be exposed to penalties, sanctions or reputational damage as a consequence.

Revenue generated in emerging economies already makes a considerable contribution to our total revenue. We assume that this will continue to be the case due to the development of our business, and growing demand for our products and solutions from such countries and regions. Asian markets and the MENA region, in particular, are of great importance for our long-term growth strategy. Business activities in emerging economies entail various risks such as unrest, political and economic instability, cultural differences – such as business practices and work-ing conditions – GDP volatility, the potential nationalization of private assets, uncertainties surrounding legal systems, and the imposition of currency restrictions. Our growth strategy in emerging economies could also be hampered by state support for local industry. In particular, our con-siderable business activities in China and the MENA region are subject to legal systems and legal conditions that are still in the development stage, and which are subject to manifold changes. Areas of the centrotherm Group which generate their revenue with large-scale projects could be negatively impacted if future demand, prices and GDP on markets where they operate fail to develop as positively as expected. The occurrence of these or similar risks arising from our international business activities could exert a considerable negative impact on our business position, net assets, fi nancial position and results of operations.

Other notes


Future investigations relating to allegations of corrup-tion, and allegations concerning other infringements of the law, could have signifi cant disadvantageous effects on the development of future business transactions, the company’s net assets, fi nancial position and results of operations, the company’s share price, and our reputation.

Risks from litigation and regulatory procedures in which we are currently involved, or which might occur in the future, exist for the centrotherm photovoltaics Group. We are involved in litigation and/or similar proceedings, and are subject to regulatory investigations and procedures due to the occurrence of typical corporate and project risks such as, in particular, the non-contractual delivery of goods or services, product liability, product defects, quality problems, the infringement of intellectual property, infringements against environmental and/or occupational health and safety law regulations, non-compliance with tax regulations, and/or alleged or presumed infringements of prevailing law.

It cannot be excluded that the results of such litigation and procedures entail considerable damage to our business, reputation or brand. The centrotherm Group forms provi-sions for obligations arising from litigation and proceedings in line with the likelihood and level of utilization, to the extent that this can be determined suffi ciently precisely. Fol-lowing the conclusion of the respective litigation proceed-ings, it might nevertheless be established that our provisions prove insuffi cient to cover the resultant losses or expenses. We might also be required to bear lawyers’ fees and other legal defense costs to a considerable extent, despite having won the main action in such litigation and proceedings.

Each of these risks could exert considerable dis-advantageous effects on our business position, net assets, fi nancial position and results of operations.

Please refer to the risk report in the management report concerning further risks arising from individual segments.

51. Capital management disclosures

The main objective of the Group’s capital management is to ensure that the Group continues to enjoy suffi cient liquidity backing, and that the Group’s fi nancial asset base is preserved. Normal market covenants were agreed for the registered bond and the borrower’s note loan that were issued in 2011, which require compliance with certain key fi nancial fi gures. The Group aims to comply with the agreed covenants.

Gearing is an important capital management ratio. It measures the ratio of net fi nancial debt to the Group’s equity in the consolidated balance sheet. Net debt is a key quantity for investors, analysts, and banks. This fi gure is not a component of International Financial Reporting Standards (IFRS), and may differ from that of other companies in terms of defi nition and calculation.

Capital management at centrotherm photovoltaics Group concentrates on investing liquid funds so as to optimize inter-est return, reduce risk, and ensure short-term availability.

Capital management

in TEUR 31.12.2011 31.12.2010

Non-current interest-bearing fi nance debt 123,427 7,857

Current interest-bearing fi nance debt 7,980 1,429

Liquid securities 0 10,813

Cash and cash equivalents 137,634 180,602

Net interest-bearing debt – 6,227 – 182,129

Subscribed capital 21,162 21,162

Capital reserves 245,003 245,003

Retained earnings 114,541 77,313

Cash fl ow hedge reserve – 395 0

Revaluation reserve 0 612


Non-controlling interests 1,658 1,125

Equity 366,085 396,356

Gearing – 0.02 – 0.46

Other notes


52. Contingent liabilities and other fi nancial obligations

Other fi nancial obligations arise primarily from lease, rental and service agreements. The company primarily entered into rental agreements for offi ce buildings, car leases, IT maintenance and IT services. There are no rental extension or purchase options.

A general contractor agreement for TEUR 4,700 was concluded in connection with the expansion of production area of the Blaubeuren site in May 2011. Of this amount, TEUR 4,643 has already been invoiced. The residual obligation consequently amounts to TEUR 57 as of December 31, 2011.

As a result of irrevocable operating lease obligations, the future minimum lease payments are due as follows:

Rent and lease payments and payments for service agreements

in TEUR 31.12.2011 31.12.2010

Up to one year 2,968 3,523

Longer than one year and up to fi ve years 2,183 5,848

Longer than fi ve years 460 1,234

Rental payments of TEUR 3,047 were rendered in 2011 due to operating lease obligations (comparable prior-year period: TEUR 2,743).

As a result of customer orders received, there were obligations arising from orders given to suppliers amounting to TEUR 121,600 as of December 31, 2011 (December 31, 2010: TEUR 538,239).

The corresponding payments of TEUR 121,600 are due in 2012 (previous year: TEUR 537,832).

53. Auditor‘s fee

The fee rendered for the services of the auditor of the consolidated fi nancial statements, RBS RÖVERBRÖNNERSUSAT GmbH & Co. KG, Wirtschaftsprüfungsgesellschaft, Berlin, was expensed in the reporting year, and is split as follows:

Auditor’s fees

in TEUR 31.12.2011 31.12.2010

Audits 465 391

of which for previous year 37 39

Certifi cation and valuation services 153 122

Other services 88 124

54. Guarantees

As of December 31, 2011, there were guarantees of TEUR 149,745 (December 31, 2010: TEUR 128,197).

55. Related parties

Materials, inventories, and services are procured from numerous business partners as part of the operating busi-ness. These include companies in which CTPV AG holds shares, as well as companies connected with members of the management and supervisory boards of CTPV AG.

The following key transactions occurred between the centrotherm photovoltaics Group and these related parties during the reporting period:

• centrotherm Elektrische Anlagen GmbH & Co. KG, Blaubeuren, and centrotherm clean solutions GmbH & Co. KG, Blaubeuren, deliver for the centrotherm group equip-ment and parts of equipment. These services entailed a volume of TEUR 707 in 2011.

• In 2011, centrotherm Elektrische Anlagen GmbH & Co. KG, Blaubeuren, and centrotherm clean solutions GmbH & Co. KG, Blaubeuren, had primarily performed services as part of construction contracts for Group companies totaling TEUR 12,697.

• Three hire purchase agreements were signed between centrotherm thermal solutions GmbH & Co. KG and centrotherm Elektrische Anlagen GmbH & Co. KG, Blaubeuren, on October 31, 2008 with effect as of January 1, 2009. As part of these hire purchase agree-ments, centrotherm thermal solutions GmbH & Co. KG sold machines with a value of TEUR 642 to centrotherm Elektrische Anlagen GmbH & Co. KG. The hire purchase agreements have a duration of between 8 and 10 years,

Other notes


and the hire purchase installments carry an interest rate of 6 % per annum. centrotherm Elektrische Anlagen GmbH & Co. KG had rendered total hire purchase installments of TEUR 95 in 2011.

• In addition, three lease-purchase agreements were con-cluded between centrotherm thermal solutions GmbH & Co. KG, Blaubeuren, and centrotherm Elektrische Anlagen GmbH & Co. KG, Blaubeuren, on October 1, 2010 and March 1, 2011 with effect from January 1, 2011 and April 1, 2011 respectively. As part of these lease-purchase agreements, centrotherm thermal solutions GmbH & Co. KG sold machines worth TEUR 254 to centrotherm Elektrische Anlagen GmbH & Co. KG. The lease-purchase agreements have a duration of between 8 and 10 years, and the lease-purchase installments carry an interest rate of 6 % per annum. centrotherm Elektrische Anlagen GmbH & Co. KG rendered total lease-purchase installments of TEUR 30 in 2011.

• On April 7, 2011, centrotherm photovoltaics AG acquired land and buildings with a value of TEUR 14,099 from Revo Besitz GmbH & Co. KG (former: centrotherm Besitz GmbH & Co. KG), Blaubeuren.

• There are rental agreements between Revo Besitz GmbH & Co. KG, Blaubeuren, and centrotherm photovoltaics AG, Blaubeuren, as well as certain subsidiaries with an indefi nite term for rented premises concluded. Total rent of TEUR 368 was rendered in 2011.

• There are rental agreements between centrotherm photovoltaics AG, Blaubeuren, and centrotherm Elektrische Anlagen GmbH & Co. KG, Blaubeuren, as well as centrotherm clean solutions GmbH & Co. KG, Blaubeuren, with an indefi nite term. Rental payments of TEUR 306 were paid to the centrotherm photovoltaics AG in 2011.

• In the 2011 fi nancial year, the company generated revenue from service and supply of replacement parts of TEUR 1,934 primarily with centrotherm Sud Europe SAS, France, centrotherm clean solutions GmbH & Co. KG, Blaubeuren, and centrotherm Elektrische Anlagen GmbH & Co. KG, Blaubeuren.

• The company concluded licensing and demarcation agreements with certain sister companies whereby the centrotherm photovoltaics Group companies are permitted to use the brands and corporate identifi ers of „centrotherm photovoltaics“ on an unlimited and unremunerated basis.

• Dr. Horn Unternehmensberatung GmbH, in which one Supervisory Board member holds an interest, rendered consulting and tax declaration services in an amount of TEUR 187 (comparable prior-year period: TEUR 54).

All transactions were performed, and are performed, on normal market terms. The centrotherm photovoltaics Group participated in no key transactions for these related companies and parties that were unusual in terms of type or nature, and it shall continue to pursue this policy in the future.

56. Total management and supervisory board remuneration, including advances and loans

In the reporting year, payment to Management Board members consisted of fi xed remuneration components of TEUR 1,768 (comparable prior-year period: TEUR 1,229), variable components of TEUR 547 (comparable prior-year period: TEUR 453, as well as non-cash compensation of TEUR 40 (comparable prior-year period: TEUR 41). Contri-butions of TEUR 3 (comparable prior-year period: TEUR 3) were made to the company pension scheme in 2011. The Group management reports provides individualized infor-mation about Management Board compensation.

The Supervisory Board is entitled to fi xed remuneration of TEUR 90 for the reporting year (comparable prior-year period: TEUR 90), plus payments for board meetings total-ing TEUR 41 (comparable prior-year period: TEUR 41).

No payments were rendered to form a Management Board members in the year under review (comparable prior-year period: TEUR 396).

As of December 31, 2011, there were no loans to members of the Management Board and to members of the Supervisory Board.

57. Declaration pursuant to § 161 of the German Stock Corporation Act (AktG) relating to the German Corporate Governance Code

The Management Board and Supervisory Board of CTPV AG issued the prescribed declaration relating to the German Corporate Governance Code pursuant to § 161 of the German Stock Corporation Act (AktG) in December 2011, and it was made available to shareholders on the website of CTPV AG (www.centrotherm.de).

Other notes


58. Events following the reporting date

There following key events occurred following the reporting date:

The Management Board has responded to the strained market situation, and has launched its ct focus effi ciency program, which will run alongside costs and sales initiatives that are already in place. The program’s declared objective is to grow profi tably and sustainably with a streamlined and effi cient organizational structure, and a strategic focus on crystalline silicon along the photovoltaic value chain. This program’s fi rst step will entail a signifi cant reduction of costs, and an adjustment to Group personnel capacities. The company aims to achieve around EUR 22 million of cost savings per year by the end of 2013. Around 400 jobs are to be cut by mid-2012 from the 1,928 Group staff employed worldwide as of December 31, 2011. Along with a refocusing on business entailing production systems and technologies to manufacture crystalline solar cells and modules, and the production of high-purity silicon, a further signifi cant component of the program will be the expan-sion of the Semiconductors & Microelectronics area. As part of ct focus, the Management Board also decided to close the Thin Film Module segment at the Group’s Blaubeuren location, and to outsource some areas to Asia. This move will bundle resources, and create a unit that is closely geared to the market. An extensive sales campaign conducted by all segments will complete the ct focus package of measures.

Along with the formation of provisions for ct focus, the measures that were decided upon in the fi rst quarter of 2012 necessitated that impairment charges be applied to internally generated intangible assets in the Thin Film Module segment in an amount of about 6,500 TEUR.

Besides this, no further events occurred after the balance sheet date that are of key signifi cance for centrotherm photovoltaics Group, and which could lead to a different assessment of business progress.

59. Approval for publication

On March 26, 2012, the Management Board of CTPV AG approved the consolidated fi nancial statements for forward-ing to the Supervisory Board of the company. The Supervisory Board has the task of examining the consolidated fi nancial statements, and of declaring whether it approves them.

60. Notes to the consolidated fi nancial statements relating to § 26 of the German Securities Trading Act (WpHG) as at December 31, 2011

In accordance with § 160 Paragraph 1 Number 8 of the German Stock Corporation Act (AktG), the following announcements that have been forwarded to the company are reproduced concerning shareholders in the company requiring mandatory reporting pursuant to § 21 Paragraph 1, Paragraph 1a of the German Securities Trading Act (WpHG), to the extent that the shareholding requiring mandatory reporting continues to exist as of the balance sheet date. It should be noted in this respect that all such communications relate to the reporting date mentioned in the announcement may have changed as of the balance sheet date without a renewed announcement pursuant to § 21 Paragraph 1 of the German Securities Trading Act (WpHG) being required if no relevant announcement threshold has been breached. Further modifi cations to shareholdings requiring mandatory reporting may also have occurred following the balance sheet date that are not included in the announcements reproduced below. As a consequence, the disclosures presented below may diverge from the more up-to-date disclosures in the Group Management Report of centrotherm photovoltaics AG of this annual report relating to direct or indirect shareholdings, which are either known or unknown to the company, and which exceed 10 % of the voting rights.

Voting right notifi cation by Fidelity Advisior Series I, Boston, Massachusetts, USA, of November 7, 2011Fidelity Advisor Series I, Boston, Massachusetts, USA, communicated the following to us on November 7, 2011 pursuant to § 21 Paragrap 1 of the German Securities Trad-ing Act (WpHG):

On 7 November 2011 Fidelity Advisor Series I crossed above the threshold of 5 % of voting rights in centrotherm photovoltaics AG, Johannes-Schmid-Straße 8, 89143 Blaubeuren, Germany. On that date, Fidelity Advisor Series I held 5.08 % of the voting rights in centrotherm photovoltaics AG, arising from 1,076,009 voting rights.

Voting right notifi cation by Fidelity Management & Research Company, Boston, Massachusetts, USA, of November 4, 2011Fidelity Management & Research Company, Boston, Massachusetts, USA, communicated the following to us on November 4, 2011 pursuant to § 21 Paragraph 1 of the German Securities Trading Act (WpHG):

On November 4, 2011 the voting rights held by Fidelity Management & Research Company crossed above the threshold of 5 % of the voting rights in centrotherm photo-voltaics AG, Johannes-Schmid-Straße 8, 89143 Blaubeuren, Germany. On that date, Fidelity Management & Research

Other notes


Company held 5.01 % of the voting rights in centrotherm photovoltaics AG, arising from 1,059,714 voting rights.

All voting rights in centrotherm photovoltaics AG were attributed to Fidelity Management & Research Company pursuant to § 21 Paragraph 1 Clause 1 Number 6 of the German Securities Trading Act (WpHG). The voting rights were attributed to Fidelity Management & Research Company inter alia from Fidelity Advisor Series I, being a shareholder holding 3 % or more of the voting rights in centrotherm photovoltaics AG.

Voting right notifi cation by FMR LLC, Boston, Massachusetts, USA, of November 4, 2011FMR LLC, Boston, Massachusetts, USA, communicated the following to us on November 4, 2011 pursuant to § 21 Paragraph 1 of the German Securities Trading Act (WpHG):

On November 4, 2011 the voting rights held by FMR LLC crossed above the threshold of 5 % of the voting rights in centrotherm photovoltaics AG, Johannes-Schmid-Strasse 8, 89143 Blaubeuren, Germany. On that date, FMR LLC held 5.02 % of the voting rights in centrotherm photovoltaics AG, arising from 1,063,192 voting rights.

All voting rights in centrotherm photovoltaics AG were attributed to FMR LLC pursuant to § 22 Paragraph 1 Clause 1 Number 6 in connection with Clause 2 of the German Securi-ties Trading Act (WpHG). The voting rights were attributed to FMR LLC inter alia from Fidelity Advisor Series I, being a shareholder holding 3 % or more of the voting rights in centrotherm photovoltaics AG.

Voting right notifi cation by Robert Michael Hartung, Germany, of January 7, 2011

On January 7, 2011, Mr. Robert Michael Hartung, Germany, notifi ed us pursuant to § 21 Paragraph 1 in com-bination with § 22 Paragraph 1 Clause 1 Number 1 of the German Securities Trading Act (WpHG) that the voting right share attributed to Mr. Robert Michael Hartung in centro-therm photovoltaics AG, Blaubeuren, Germany, exceeded the thresholds of 3 %, 5 %, 10 %, 15 %, 20 %, 25 %, 30 % and 50 % on December 28, 2010.

Pursuant to § 27a Paragraph 1, 3 of the German Securi-ties Trading Act (WpHG), Robert Michael Hartung notifi ed us with respect to the objectives pursued with the purchase of the allocated voting rights:

1. that the investment serves to implement strategic objec-tives,

2. that Robert Michael Hartung does not intend to acquire, or to otherwise obtain, further voting rights within the next 12 months,

3. that Mr. Robert Michael Hartung, in line with his invest-ment interest, is generally endeavoring to exert infl uence on the appointments to the administrative, management

and supervisory bodies of centrotherm photovoltaics AG, but does not intend to modify their current composition, and

4. that Robert Michael Hartung is not endeavoring to imple-ment a signifi cant modifi cation to the capital structure of centrotherm photovoltaics AG.

With regard to the origin of the funds utilized to acquire the voting rights, Mr. Robert Michael Hartung informed us pursuant to § 27a Paragraph 1 Clause 4 of the German Securities Trading Act (WpHG) that neither debt nor equity funding was utilized for the purchase, since the purchase was performed by way of anticipated inheritance.

Voting right notifi cation by Robert Michael Hartung, Germany, of January 7, 2011On January 7, 2011, Mr. Robert Michael Hartung, notifi ed us pursuant to § 21 Paragraph 1 of the German Securities Trading Act (WpHG) that the voting right share of Mr. Robert Michael Hartung, Germany, in centrotherm photovoltaics AG, Johannes-Schmid-Strasse 8, 89143 Blaubeuren, exceeded the thresholds of 3 %, 5 %, 10 %, 15 %, 20 %, 25 %, 30 % and 50 % on December 28, 2010, and amounted to 50.000005 % as of this date (10,581,192 voting rights).

These 50.000005 % (10,581,192 voting rights) are attributed to Mr. Robert Michael Hartung pursuant to § 22 Paragraph 1 Clause 1 Number 1 of the German Securities Trading Act (WpHG). Voting rights attributed to Mr. Robert Michael Hartung are held through the following company that he controls, whose voting right share in centrotherm photovoltaics AG amounts to 3 % or more: TCH GmbH.

Voting right notifi cation by Rolf Hans Michael Hartung, Germany, of January 7, 2011On January 7, 2011, Mr. Rolf Hans Hartung, notifi ed us pursuant to § 21 Paragraph 1 of the German Securities Trading Act (WpHG) that the voting right share of Mr. Rolf Hans Hartung, Germany, in centrotherm photovoltaics AG, Johannes-Schmid-Straße 8, 89143 Blaubeuren, had fallen below the thresholds of 50 %, 30 %, 25 %, 20 %, 15 %, 10 %, 5 % and 3 % on December 28, 2010, and amounted to 0.00 % as of this date (0 voting rights).

Voting right notifi cation by Autenrieth Beteiligungs GmbH of September 24, 2010 Mr. Hans Autenrieth, acting on his own behalf and in individual power of representation as Managing Director of Autenrieth Beteiligungs GmbH, communicated the following to us on September 24, 2010 pursuant to § 21 Paragraph 1 of the German Securities Trading Act (WpHG):

1. The voting right share of Autenrieth Beteiligungs GmbH, 89143 Blaubeuren, Germany, in centrotherm photovoltaics AG, fell to 2.65 % on September 24, 2010 (corresponds to

Other notes


560,000 voting rights), and has thereby fallen below the 5 % and 3 % thresholds. Autenrieth Beteiligungs GmbH directly held 2.65 % of the voting rights as of this date (corresponds to 560,000 voting rights) in centrotherm photovoltaics AG.

2. The voting right share of Mr. Hans Autenrieth, Blaubeuren, Germany, in centrotherm photovoltaics AG fell to 2.65 % on September 24, 2010 (corresponds to 560,000 voting rights), and has thereby fallen below the 5 % and 3 % thresholds. As of this date, Mr. Hans Autenrieth did not directly hold any voting rights in centrotherm photovoltaics AG. Nevertheless, pursuant to § 22 Paragraph 1 Clause 1 Number 1 of the German Securities Trading Act (WpHG), 2.65 % of the voting rights (corresponds to 560,000 voting rights) of the Autenrieth Beteiligungs GmbH subsidiary that he controls were attributed to him.

Voting right notifi cation by Deka Investment GmbH of September 16, 2008Deka Investment GmbH, Frankfurt am Main, Germany, com-municated to us on September 16, 2008 pursuant to § 21 Paragraph 1 of the German Securities Trading Act (WpHG) that its voting right share in centrotherm photovoltaics AG, Blaubeuren, Germany, exceeded the 3 % threshold on September 2008. The voting right share of Deka Investment GmbH amounted to 3.04 % of all voting rights in centro-therm photovoltaics AG as of this date, and to 3.04 % of all centrotherm photovoltaics AG ordinary shares furnished with voting rights (voting rights arising from 487,000 ordinary shares). Of this amount, 0.05 % of the voting rights (voting rights arising from 7,800 ordinary shares) are attributable to Deka Investment GmbH pursuant to § 22 Paragraph 1 Clause 1 Number 6 of the German Securities Trading Act (WpHG).

Voting right notifi cation by Hartung Beteiligungs GmbH (now: TCH) of October 18, 2007 Rolf Hans Hartung, acting in individual power of repre-sentation as Managing Director of Hartungs Beteiligungs GmbH, communicated the following to us on October 16, 2007 pursuant to § 21 Paragraph 1 Clause 1 of the German Securities Trading Act (WpHG):

Initial announcements pursuant to § 21 Paragraph 1a

of the German Securities Trading Act (WpHG)

1. The voting right share of Hartung Beteiligungs GmbH, Blaubeuren, in centrotherm photovoltaics AG amounted to 59.61 % (corresponds to 9,537,901 voting rights) as of the date of the fi rst-time admission of the shares of centrotherm photovoltaics AG to trading in an organized market on October 11, 2007. Of this amount, Hartung Beteiligungs GmbH directly held 52.86 % of the voting rights (corresponds to 8,457,901 voting rights) in

centrotherm photovoltaics AG. Furthermore, 6.75 % of the voting rights (correspond to 1,080,000 voting rights) in centrotherm photovoltaics AG were attributed to Hartung Beteiligungs GmbH pursuant to § 22 Paragraph 1 Clause 1 Number 2 of the German Securities Trading Act (WpHG). The allocation was performed on the basis of a trust agreement whereby Hartung Beteiligungs GmbH bears the economic risk arising from these shares, which are held by Citigroup Global Markets Limited.

2. The voting right share of Rolf Hans Hartung Beteiligungs GmbH, Blaubeuren, in centrotherm photovoltaics AG amounted to 59.88 % (corresponds to 9,581,370 voting rights) as of the date of the fi rst-time admission of the shares of centrotherm photovoltaics AG to trading in an organized market on October 11, 2007. Of this amount, Rolf Hans Hartung directly holds 0.27 % of the voting rights (corresponds to 43,469 voting rights) in centrotherm photovoltaics AG. Furthermore, pursuant to § 22 Para-graph 1 Clause 1 Number 1 of the German Securities Trad-ing Act (WpHG), 52.86 % of the voting rights (corresponds to 8,457,901 voting rights) of the Hartung Beteiligungs GmbH subsidiary that he controls were attributed to him, as well as, pursuant to § 22 Paragraph 1 Clause 1 Number 2 in combination with Clause 2 of the German Securities Trading Act (WpHG), 6.75 % of the voting rights (corresponds to 1,080,000 voting rights) arising from the shares held by Citigroup Global Markets Limited.

61. Corporate bodies

The following members of the Management Board

held offi ce during 2011:

• Robert M. Hartung, Business Executive/Engineer, CEO (Speaker of the Management Board),

• Hans Autenrieth, Business Executive, CEO,

• Dr. Peter Fath, Physicist, CTO,

• Dr. Dirk Stenkamp, Physicist, COO,

• Dr. Thomas Riegler, Business Executive, CFO.

The following Supervisory Board members

held offi ce during 2011:

• Prof. Dr. Brigitte Zürn, Auditor/Tax consultant (Chairperson),

• Rolf Hans Hartung, Engineer (Deputy Chairman),

• Rolf Breyer, Auditor/Tax consultant.

Other notes


Assurance of the legal representatives

To the best of our knowledge, and in accordance with the applicable reporting principles, the consolidated fi nancial statements provide a true and fair view of the assets, liabilities, fi nancial position, and profi t or loss of the Group, and the Group management report includes a fair review of the development and performance of the business and the position of the Group, together with the description of the principal opportunities and risks associated with the expected development of the Group.

Blaubeuren, March 2012centrotherm photovoltaics AGThe Management Board

Robert M. Hartung Hans Autenrieth Dr. Peter Fath Dr. Dirk Stenkamp Dr. Thomas Riegler

Assurance of the legal representatives

141Consolidated fi nancial statements Annual Report 2011 centrotherm photovoltaics Assurance of the legal representatives

Independent auditor’s report

We have audited the consolidated Ðnancial statements prepared by centrotherm photovoltaics AG comprising the statement of income, the consolidated statement of comprehensive income, the balance sheet, the statement of changes in equity, the statement of changes in cash Ðow and the notes to the consolidated Ðnancial statements, together with the Group management report for the Ðnan-cial year from January 1, 2011 to December 31, 2011. The preparation of the consolidated Ðnancial statements and the Group management report in accordance with IFRS, as adopted by the EU, and the additional requirements of German commercial law pursuant to § 315a Paragraph 1 of the German Commercial Code (HGB) are the responsibility of the legal representatives of the company. Our responsi-bility is to express an opinion on the consolidated Ðnancial state-ments and on the Group management report based on our audit. We conducted our audit of the consolidated Ðnancial statements in accordance with § 317 of the German Commercial Code (HGB) and German generally accepted standards for the audit of Ðnancial statements as promul-gated by the Institut der Wirtschaftsprüfer (IDW). These standards require that we plan and perform the audit such that misstatements materially affecting the presentation of the net assets, Ðnancial position, and results of operations in the consolidated Ðnancial statements in accordance with the applicable Ðnancial reporting framework, and in the Group management report, are detected with reason-able assur-ance. Knowledge of the business activities and the economic and legal environment of the Group, and expectations as to possible misstatements, are taken into account in the determination of audit procedures. The effectiveness of the accounting-related internal control system and the evidence

supporting the disclosures in the consolidated Ðnancial statements and the group manage-ment report are examined primarily on a test basis within the framework of the audit.The audit includes assessing the annual Ðnancial state-ments of those entities included in consolidation, the determination of entities to be included in consolidation, the accounting and consolidation principles used, and signiÐcant estimates made by the legal representatives, as well as evaluating the overall presentation of the con-solidated Ðnancial statements and Group management reports. We believe that our audit provides a reasonable basis for our opinion.

Our audit has not led to any reservations.In our opinion, based on the Ðndings of our audit, the consolidated Ðnancial statements comply with IFRS, as adopted by the EU, the additional requirements of German commercial law pursuant to § 315a Paragraph 1 of the German Commercial Code (HGB) and full IFRS, and provide a true and fair view of the net assets, Ðnancial position, and results of opera-tions of the Group in accordance with these requirements. The Group management report is consistent with the consolidated Ðnancial statements and as a whole provides a suitable view of the Group‘s position, and appropriately presents the opportunities and risks of future development..

Berlin, March,23 2012RBS RoeverBroennerSusat GmbH & Co. KG WirtschaftsprüfungsgesellschaftSteuerberatungsgesellschaft

Helmut Schuhmann Udo HeckelerIndependent Auditor Independent Auditor

142 Glossarycentrotherm photovoltaics Annual Report 2011 Others

AktGGerman Stock Corporation Act

BaFinGerman Federal Financial Supervisory Authority

CapexCapex is an abbreviation of “capital expenditure”.

This relates to a company’s investment expendi-

ture in long-term items of fixed assets such as

new machinery, plant and production buildings.

Cash flowThe net inflow of cash and cash equivalents

generated from sales activity and other ongoing

activities during a given period.

ComplianceCompliance relates to actions in harmony with

prevailing rules of behaviour, laws and guidelines.

CoverageCoverage of a listed stock corporation with

studies and research produced by banks and

financial analysts.

CTNStock exchange abbreviation for the centrotherm

photovoltaics share.

DAXGerman stock market index. It reflects the

changes in share prices for the 30 largest German

shares in terms of size and turnover.

DAX subsector Renewable Energies IndexThe DAXsubsector Renewable Energies Index

comprises companies that operate in the sector

that develops plant for alternative and/or renew-

able energy sources (solar technology, wind power

plants etc).

DCG Code | German CorporateGovernance CodeA set of rules developed by a government

commission of the Federal Republic of Germany

primarily that contains recommendations for

good corporate governance, in other words,

ethical behaviour on the part of corporate

management and organisations.

EBIT | Earnings before Interest and TaxOperating earnings. Key corporate figure

corresponds to profit from ordinary business

activities after depreciation and amortisation, and

before interest and tax.

EBITDA | Earnings Before Interest, Tax,Depreciation and AmortizationEBITDA is a key corporate indicator that reflects

the company’s profitability independently of its

capital structure or propensity to invest.

GEXIndex for owner-managed, mediumsized

companies in the Prime Standard.

HGBGerman Commercial Code

HRBCommercial register, Department B (corporations)

IASInternational Accounting Standards

IASBInternational Accounting Standards Board

IFRS | International Financial Reporting StandardsTerm given to all accounting standards published

by the International Accounting Standards

Committee. Also applied to accounting standards

newly approved by the International Accounting

Standards Board (IASB) since 2003. Standards

approved until 2002 are still published under

the designation of International Accounting

Standards (IAS). Existing IAS are only renamed

IFRS if the related standards undergo fundamental

amendments.

IPOAbbreviation for “Initial Public Offering”; initial

public offering of a company’s securities in the

form of a flotation.

ISINAbbreviation for “International Security

Identification Number”. The ISIN serves to clearly

identify securities on an international basis and is

issued by the relevant national authority.

KanbanA production process control and management

method that is oriented exclusively to the

requirements of a processing location within the

production process.

Lock-up periodPeriod during which a company’s previous

shareholders are not permitted to sell their shares

following a share issue.

Order backlogThe company allocates an order to its order

book as soon as the related agreement has been

signed by both parties and the realization of the

agreement is sufficiently likely in the assessment

of the company’s Management Board. This

usually requires the rendering of a significant

prepayment and/or the opening of a commercial

letter of credit by the contractual partner.

Prime StandardThe Prime Standard is a stock exchange segment

for listing shares on the Frankfurt Securities

Exchange. Issuers in the Prime Standard must

satisfy international transparency requirements

going above and beyond the level of the General

Standard. The Prime Standard particularly

comprises companies that wish to reach not only

national but also international investors.

Purchase price allocationPurchase price allocation refers to the process

in which the costs of acquiring a company are

allocated to the individually acquired assets and

liabilities, which are measured at fair value.

ROCE | Return on Capital EmployedA measure of profitability widely used in Anglo-

Saxon countries. It compares NOPAT with the

average capital invested in the company.

SARPStock Appreciation Rights Program, stock option

program: share-based remuneration system to

enable the Group’s Management Board and

managers to participate economically in the share

capital of centrotherm photovoltaics AG.

TecDAXIndex that reflects the share price development

of the 30 largest technology stocks in the Prime

Standard below DAX shares.

Glossary

Financial Glossary

143Glossary Others Annual Report 2011 centrotherm photovoltaics

Total outputKey operating figure derived from sales for a

given period, the net balance of changes to

stock, and own work capitalised.

WKNGerman abbreviation for Wertpapier-Kenn-

nummer (securities identification number). The

WKN is a six-figure alphanumeric code to enable

a security to be identified clearly. It is issued by

the Institut für die Ausgabe und Verwaltung

von Wertpapieren in Deutschland (Institute for

the Issuance and Administration of Securities in

Germany).

WpHGGerman Securities Trading Act

WpPG

German Securities Prospectus Act

centaurus technologyOur centaurus technology is based on rear-side

passivation through a dielectric layer and a local

aluminum back-surface field (Al-LBSF). This

improved cell structure results in a significant

reduction in recombination losses on the cell

rear side and leads to higher efficiency of the

solar cell.

CIGSCopper Indium Gallium Diselenide

CVD reactorReactor for the conversion of trichlorosilane into

polysilicon using the Siemens method.

Degree of efficiencyRatio between electrical output and solar input.

Drying furnaceFor drying the metal contacts on the wafers

centrotherm photovoltaics supplies drying

furnaces, that are designed for high volume solar

cell production.

EEGEneuerbare-Energien-Gesetz ; legislation

defining the precedence of renewable energies

in Germany.

EEG AmendmentNew version of the German Renewable Energies

Act (EEG), which, among other things, envisages

continued support for solar electricity until 2014.

EUR per WpRatio of production costs (in EUR) per cell yield at

normal condition in “watt peak” (Wp).

Fast firing furnaceWhen all printed contact materials are dried in

the drying furnace, they are thermally fired (i.e.

“sintered”) in the fast firing furnace to ensure

good electrical contact with the silicon.

First Cell outCommissioning and ramp-up of a solar cell

production line and the production of the first

solar cells.

First Silicon OutCommissioning and ramp-up of first polysilicon

equipment and the first production of polysilicon

in a company’s own CVD reactors.

FlexLine Pluscentrotherm photovoltaics’ turnkey production

line for the manufacture of crystalline solar cells

based on the selective emitter technology.

Grid parityGrid parity refers to the point in time when

electricity from a photovoltaic plant can be

offered at the same price to end-customers as

conventional electricity.

GWpGigawatt-peak

IngotThe term ingot denotes a block made of

mono-crystalline or poly-crystalline silicon

wafer production in the semiconductor and

photovoltaic industry. Mono-crystalline ingots are

drawn from a single crystal and always have a

round, column-type shape. The silicon is melted

and subsequently cast to produce poly-crystalline

ingots. Since the purity of mono-crystalline

silicon is always higher than poly-crystalline

silicon, it is primarily used as a feedstock in the

semiconductor industry, whereas poly-crystalline

silicon find use in the solar industry.

ConverterConverts silicon tetrachloride into trichlorosilane,

which can be used to produce polysilicon.

Crystalline solar cellsSolar cells based on crystalline silicon.

Multi-crystalline ingot furnaceFurnace for the production of multi-crystalline

ingots.

MWpMegawatt-peak

PECVDAbbreviation for “Plasma Enhanced Chemical

Vapour Deposition”, also known as “Plasma

Assisted Chemical Vapour Deposition”. The

term denotes a special form of chemical vapour

deposition (CVD) that involves the deposition of

thin layers by means of chemical reaction. The

process is supported by means of a plasma. A

high energy electrical field is applied between the

substrate to be coated and a counterelectrode

to ignite a plasma. The plasma breaks down

the chemical bonding of the reaction gas into

its radicals, which migrate to the substrate to

form the chemical deposition. The process

enables a high deposition rate at low deposition

temperature.

Technology Glossary

144 Glossarycentrotherm photovoltaics Annual Report 2011 Others

Phosphor diffusionPhosphor diffusion refers to equalisation of

concentration differences up to virtually complete

blending as a result of the movement of phosphor

atoms. This particle displacement is triggered

based on particle energy and on temperature.

Photovoltaic | PVPhotovoltaic refers to the direct transformation

of radiation energy, principally solar energy,

into electrical energy. The name consists of the

components “photos”, the Greek word for “light”,

and “volta”, which is derived from Alessandro

Volta, a pioneer of electrotechnology.

Photovoltaic modulePhotovoltaic modules are used individually or

in groups to generate electricity in photovoltaic

plants by directly converting sunlight into electrical

energy. Their most important components are a

number of serially and parallel connected solar

cells.

PolysiliconPlease refer to silicon

PVD processThe PVD process, in other words, the process

of physical vapour deposition, refers to a group

of coating processes, or thin film technologies,

where the layer is formed directly by condensation

of a material vapour of the output material.

SemiconductorSolid body whose electrical conductivity undergoes

major modification as a result of the targeted

introduction of impurities (semiconductor doping).

This allows the manufacturing of electronic

components such as diodes, transistors, as well as

solar cells.

Selective emitter technologyIn order to create the selective emitter, a diffusion

inhibitive masking layer is deposited on the

wafer substrate before phosphorous diffusion,

and is then removed locally in the area of the

subsequent contact grid by laser ablation. The

phosphorous diffusion is performed once the laser

damage has been removed using a wet chemical

process. This results in a lower phosphorous

doping within the masking layer area than in the

subsequent contact grid area. Thus contact and

recombination losses can be optimized independ-

ently which leads to higher cell efficiency.

Siemens methodProcess to manufacture high-purity silicon for the

semiconductor or solar industry. It involves initially

converting metallurgical silicon into trichlorosilane

using gaseous hydrogen chloride. Following

several distillation steps, the thrichlorosilane is

broken down thermally into silicon and chlorous

gases through the addition of hydrogen in a

so-called “CVD reactor”. The silicon is deposited

on high-purity silicon rods that are introduced.

SiliconDerived from the Latin word “silex”, which means

“flint”. Silicon is a semimetal that is prevalent in

large volumes around the world. The crude silicon

must be further purified into solar silicon for the

production of solar cells, however.

Silicon, amorphousNon-crystalline form of the silicon semiconductor.

Can be used as semiconductor material for thin

film solar cells through the addition of hydrogen

(a-Si:H hydrogenated amorphous silicon).

SinteringThe metallic pastes are sintered for the production

of solar cells. This process evaporates all organic

materials from the metal pastes.

SputterHigh-vacuum-based coating technology for the

production of thin film solar modules.

Thin Film ModuleDivision concerned with the manufacturing of

thin film solar modules. Thin film cells differ from

traditional solar cells (crystalline solar cells based

on silicon wafers) mainly with respect to their

production processes and the layer thickness of

materials used. Centrotherm photovoltaics uses

thin film technology based on copper indium

gallium diselenide.

ThroughputProduced volume per time unit; solar cell hours,

for example.

TurnkeyReady to use

Vent gas recoveryChemical process where the gas mixture arising

from silicon production is separated into its

individual components before being reintroduced

into the production process. This gas recovery

allows a significant reduction in energy costs and

simultaneously makes an important contribution

to environmental protection.

WaferThe term wafer used in the semiconductor

industry, the photovoltaic industry and in

micromechanical engineering denotes a thin

circular or square disc made of mono-crystalline

or poly-crystalline silicon on which electronic or

micro-mechanical components are bonded in

various technical processes.

Wp | Watt peakUnit for the standardised power (rated power)

of solar cells or modules. The value is derived

from standard test conditions (25° C module

temperature, at 1 kW/m² radiation strength),

which do not directly correspond to general

everyday usage.

YieldRatio between product output and input material,

example, the number of manufactured solar cells

measured against the number of input wafers.

Technology Glossary

145Abbreviation of names Others Annual Report 2011 centrotherm photovoltaics

CTB-KGcentrotherm Besitz GmbH & Co. KG

CTMScentrotherm management services

GmbH & Co. KG

CTPVcentrotherm photovoltaics Group

CTPV AGcentrotherm photovoltaics AG

CTPV Asiacentrotherm photovoltaics Asia Pte. Ltd.

CTPVTcentrotherm photovoltaics technology GmbH

CTSiTeccentrotherm SiTec GmbH

CTTS KGcentrotherm thermal solutions GmbH & Co. KG

centrotherm-PV Groupcentrotherm photovoltaics AG and its Group

subsidiaries.

EPIAEuropean Photovoltaic Industry Association

FHRFHR Anlagenbau GmbH subsidiary

IDWInstitut der Wirtschaftsprüfer

(German Institute of Auditors)

IFWInstitut für Weltwirtschaft, Kiel

(Kiel Institute for the World Economy)

ISCInternational Solar Energy Research Center,

Constance

ISEFraunhofer-Institut für Solare Energiesysteme,

Freiburg (Fraunhofer Institute for Solar Energy

Systems ISE)

SICSolar Innovation Center, Constance

Abbreviation of names

Impressum Sonstiges Geschäftsbericht 2011 centrotherm photovoltaics

Key Figures

centrotherm photovoltaics Geschäftsbericht 2011 Kennzahlen

in TEUR 2009 2010 2011

Revenu 509,141 624,169 698,530

Total operating performance 536,049 681,167 756,975

EBITDA 58,604 101,301 10,206

EBITDA-margin in % 1, 2 11.5 16.2 1.5

EBT 37,199 75,363 – 19,801

EBT-margin in % 1, 2 7.3 12.1 – 2.8

EBIT 40,097 74,302 – 23,756

EBT-margin in % 1, 2 7.9 11.9 – 3.4

Consolidated net income 28,544 51,141 – 15,884

Earnings per share in EUR 1.35 2.42 – 0.75

Weighted average number of shares 21,162 21,162 21,162

Total expenses R & D 28,405 42,421 47,486

Capex 34,742 21,327 66,693

ROCE in % 2 16.6 28.0 – 5.0

Operating cash flow 49,723 69,445 – 68,158

Number of employees as of the reporting date 1,131 1,448 1,928

Order intake 590,279 1,049,754 423,370

Total assets 740,254 805,649 890,738

Equity 344,442 396,356 366,085

Equity ratio in % 2 46.5 49.2 41.1

Order book 590,279 843,807 423,023

1 Margins referring to revenues.

2 Changes in percentage points.

Key figures for centrotherm photovoltaics Group

centrotherm photovoltaics Geschäftsbericht 2011 Konzernüberblick

Group overview

Revenue by products

Other revenue 4,752

Consulting & Engineering 7,310

Service & replacement parts 32,173

Turnkey production lines 97,416

in TEUR Revenue EBIT Order book

Silicon & Wafer 57,913 – 70,329 176,082

Solar Cell & Module 607,948 71,926 234,633

Thin Film Module 32,669 – 21,398 12,308

Total 698,530 – 19,801 423,023

Key figures segments

Single equipmen 556,879

Revenue by regions

Germany 32,204

ROW 12,994

Gesamt 698.530Asia 632,386

Other Europe 20,946

Total 698,530

Total 698,530

March 27, 2012Publication of the Annual Report 2011

May 10, 2012Publication of the Interim Report

as of March 31, 2012

August 9, 2012Publication of the Interim Report

as of June 30, 2012

August 14, 2012Annual General Meeting of Shareholders 2012

November 8, 2012Publication of the Interim Report

as of September 30, 2012

Publisher:centrotherm photovoltaics AG

Johannes-Schmid-Strasse 8

89143 Blaubeuren

Germany

Phone: +49 (0) 7344 918-0

Telefax: +49 (0) 7344 918-8388

E-mail: [email protected]

www.centrotherm.de

Concept and design: Scheufele Hesse Eigler

Kommunikationsagentur GmbH

Photographs:Andreas Graeter

Thomas Lorenz

Nrecaj / Bewegte Bilder

Printed by:Eberl Druck, Immenstadt

We have exercised utmost care in the preparation of this report. It contains forecasts and/or information

relating to forecasts. Forecasts are based on facts, expectations, and/or past figures. As with all forward-

looking statements, forecasts are connected with known and unknown uncertainties, which may

mean the actual result deviates significantly from the forecast. Forecasts prepared by third parties, or

data or evaluations used by third parties and mentioned in this communication, may be inappropriate,

incomplete, or falsified. We cannot assess whether information, evaluations, or forecasts made by third

parties are appropriate, complete, and not misleading. To the extent that information in this report

has been taken from third parties, or these provide the basis of our own evaluations, such use is made

known in this report. As a result of the above-mentioned circumstances, we can provide no warranty

regarding the correctness, completeness, and up-todate nature of information taken, and declared as

being taken, from third parties, as well as for forward-looking statements, irrespective of whether these

derive from third parties or ourselves.

Rounding differences may arise.

This report is also available in German. Both versions are available for download on the Internet.

Blaubeuren, March 2012

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