CONSOLIDATED INTERIM REPORT SOLARWORLD AG AG 3. QUARTER 2004

Transcription

1 CONSOLIDATED SOLARWORLD AG AG 3. QUARTER 2004 Worldwide solar market continues to grow Again a record result in the SolarWorld Group WKN ISIN DE Expansion of capacities at all levels of the value chain

2 CORPORATE INDICATORS SolarWorld Group Comparison of quarterly results SolarWorld AG ISIN (International Securities Identification Number) DE // WKN (German Securities ID) Regulated Market/Prime Standard Comparison of quarterly Indicators Figures in t B Quarter 1. Quarter 2. Quarter 3. Quarter Quarter Quarter Sales 32,665 35,388 55,411 53,370 65, ,169 EBITDA 4,053 6,939 11,256 13,553 7,674 31,748 EBIT ,988 7,001 9,558-3,226 19,547 Consolidated net income/ loss ,474 3,559 5,307-4,959 10,340 Capital stock m m m m m m shares/ imputed shares/ imputed shares/ imputed shares/ imputed shares/ imputed shares/ imputed par value 1 u par value 1 u par value 1 u par value 1 u par value 1 u par value 1 u Investments 4.2 m u 1.4 m u 1.3 m u 12.6 m u 27.2 m u 15.3 m u Equity capital 107, , , , , ,864 Equity ratio 39 % 39 % 41 % 44 % 39 % 44 % Total assets 274, , , , , ,981 No of staff* * incl. trainees Consolidated Income Statement Comparison of Quarters Figures in t B 4. Quarter 1. Quarter 2. Quarter 3. Quarter Sales revenue 32,662 35,388 55,411 53,370 Change in inventory of 932-2,459-3,015-6,189 finished goods Other operating 4,625 1,826 2,611 1,974 income Cost of materials -24,375-18,860-32,076-23,260 Staff costs -5,010-5,697-6,981-9,330 Depreciations -3,929-3,951-4,255-3,995 Other operating -4,782-3,260-4,694-3,012 expenses Operating result 124 2,988 7,001 9,558 Net financial income -1,765-1,168-1,323-1,100 Profit before tax from ordinary income -1,641 1,820 5,678 8,458 Taxes on income 1, ,119-3,151 Group net profit/ ,474 3,559 5,307 loss

3 3 CONSOLIDATED Message to our shareholders and business associates Energy prices are exploding. In the USA the oil price broke through the 50 dollar barrier at the end of September for the first time in history. Record prices for fossil energies wherever you look: Heating oil is as much affected as coal and the trend does not even stop short of conventional electricity, either. This all-time high in energy prices reflects the increasing worry of the energy markets about fossil energy supplies getting scarcer. Already today OPEC & Co. can hardly keep up with quenching the world s thirst for oil. That pushes up prices. The energy system therefore needs to be changed, also because of its economic vulnerability. For reasons of climate protection this change is indispensable anyway. Dipl.- Ing. Frank H. Asbeck, Chairman of SolarWorld AG At the same time we are expanding our production capacities against the backdrop of a more and more intensive demand. As a result we cannot only keep up with the growth of the market. By manufacturing high volumes we also generate additional cost advantages. Unlike with conventional competitors the price trend for climate friendly energies like solar power and wind energy consistently points downwards. Electricity from these renewable and thus inexhaustible sources is getting less expensive every year. In a large number of cases electricity generated from renewable sources is not only superior in terms of its sustainability but is already economically competitive today. Innovation, technology and quality are the key elements of our corporate strategy which enables us to exert a major influence not only on the technological but also the economic development of the photovoltaic market. With energy of our employees who breathe life into this philosophy we will consistently continue along this path: for a future in which the bright gold solar energy will make the black gold of the oil superfluous. SolarWorld AG supports this development with its corporate strategy. Our group of companies establishes high quality solar products in the market that guarantee our customers a high and reliable yield of clean electricity. To this end our factories work at full steam. Yours very sincerely Dipl.-Ing. Frank H. Asbeck Chairman of the Board/ CEO of SolarWorld AG

4 CONSOLIDATED 4 At a glance: Third Quarter 2004 Dynamic upward trend in the market continues Group s order books full until 2005: Against the background of increasing prices for conventional energies and improved background conditions for renewable energies (EEG) the demand for solar power substantially exceeds the supply. At the end of this quarter the order books of the SolarWorld Group already reach well into the year Record result in first three quarters Annual forecast already equalled after 9 months: The after-tax profit generated by the group as of 30 September 2004 amounted to 10.3 million Euro on a YTD basis constituting an increase of 15.3 million Euro over the same period of the previous year. In the first 9 months group sales increased by 119 % to the record level of million Euro. Capacity enhancement at Swedish site SolarWorld subsidiary GPV further expands module production: Against the background of a strongly growing international demand the capacity of the largest module factory in Northern Europe, the wholly owned subsidiary Gällivare PhotoVoltaic AB/ GPV, will be increased from 24 Megawatt (MW) to 32 MW. The new capacity is to be available as of the middle of Expansion of manufacturing capacity at the Freiberg site Deutsche Solar AG celebrates topping of optimized crystallization plant: Deutsche Solar AG is extending the production hall for the crystallization process. As a result, the processes to produce solar silicon blocks, and thus the production of solar wafers, will be further optimized. SolarWorld AG probes growth markets in Asia: In July CEO Frank H. Asbeck accompanies Foreign Minister Fischer on his trip to Asia together with an economic delegation. Among the countries visited China as the world s most populous country currently has the largest growth potential for the employment of clean solar power technology. In the context of the visit of the German economic delegation Frank H. Asbeck conducts talks with representatives of Chinese solar companies. SolarWorld AG awarded "Oscar for SMEs" Recognition of its corporate policy: The initiators of this private Oscar foundation an honor bestowed since the year 1993 award this prize in an official prize giving ceremony to SolarWorld AG as recognition of an outstanding Small and Medium Sized Enterprise.

5 5 CONSOLIDATED I. Information on the SolarWorld stock High energy prices hamper the stock exchanges The development at the international and national stock markets in the third quarter was again impaired by high prices for energy, above all crude oil. All major indices at the German securities exchanges were weaker on 30 September 2004 than at the end of the second quarter. Thus, the DAX dropped by 160 points or just about 4 % to 3,893 points in the last three months (at the close of Xetra on 30 September). The Prime All Share was also about 4 % down at 1,466 points. The technology index TecDax was clearly weaker dropping by 16,4 % to 496 points. World stock has also clearly outperformed the industry as well as other companies in the area of sustainability. Thus, the Natur-Aktien-Index (NAI) which is based on criteria of sustainability and in which SolarWorld AG is listed as the only German company remained almost unchanged at 2,461 points. SolarWorld stock price development vs. the DAX and Nemax SolarWorld AG DAX Nemax Positive development of SolarWorld stock: Share price up by 24 % in third quarter 1. Jan. 04 Feb. March Apr. May June July Aug. Sept. 29. Sept. 04 The SolarWorld AG stock deviated significantly from this overall trend and powerfully confirmed the positive development in the third quarter that the stock had already been taking in the first six months of the year. At the end of the trading day on 30 September the SolarWorld stock was quoted in the Xetra at Euro. That was a plus of 23.7 % in comparison with 30 June. Since the beginning of the year the shares of SolarWorld AG have gone up in value by more than 230 % which makes them one of the most successful German securities in the year to date. With this very good performance the Solar- Capital stock/ Shareholder structure as at 30 September 2004 The capital stock of the company amounts to million Euro divided into million no-par-value bearer shares with a nominal imputed value of 1 Euro each. In the third quarter the shareholder structure has changed: As a result of the placement of the block of Bayer shares with institutional investors to increase the free flow as preparation for inclusion in the TecDax the shareholding of the CEO Dipl.-Ing. Frank H. Asbeck has gone back up to 40 %.

6 CONSOLIDATED 6 II. Background conditions Macroeconomic situation: Economic climate marked by positive restraint In the summer quarter the German economy showed a more lively development than in the previous year. The key role in this positive yet restrained economic climate was again played by exports. Impulses for the domestic economy were again not forthcoming in the third quarter. The massive discussions about the social reform had a rather dampening effect on the domestic demand. criticism was the impertinent demand of the grid operators to increase the costs for the use of the high voltage lines by up to 20 % in some cases. If the announced price hikes were to be implemented by 1 January 2005 Germany would return to its position as the most expensive electricity company for industry in Europe a doubtful honor that the country already held before liberalization in the year High energy prices are central issue The soaring of prices for conventional energies continued in the third quarter. Driven by the all-time high of crude oil prices the quotations for gasoline, heating oil and natural gas also rose significantly. In some instances the energy prices even exceeded their historical record marks. Thus, crude oil broke through the historical mark of 50 dollars at the New York NYMEX for the first time at the end of September. In Germany heating oil was also as expensive as never before in September at a price of 48 Cents per litre. The average price of OPEC oil was more than 34 dollars in midseptember as an annual mean value. In 2003 the average price was as low as dollars and in the year before only dollars. Industry situation: Strong demand for solar power products Against the background of increasing energy prices and massive discussions on the organization of the oligopolistic electricity market the demand for products to generate solar power developed very positively. The strong interest in generating clean energy from sunlight made for a record volume in the German market in some areas of which demand exceeded supply so that a number of contracts were already concluded for the following year. In addition to the segment of decentralized roof systems the market for large-scale solar power generating plants beyond one Megawatt (MW) of output has also developed dynamically. In the third quarter a number of utility companies announced in some cases dramatic price increases for electrical energy in Germany. The consequence was a national discussion on the organization of the German electricity market. What came in for particularly harsh

7 7 CONSOLIDATED III. Business development of the group 1. Sales and earnings development SolarWorld AG succeeded in expanding the business volumes and generating positive earnings at all levels of the value chain. The group benefited consistently from the strategic decision of the past to substantially boost production capacities. than the good result of the second quarter. In comparison with the second quarter EBIT climbed by 36.5 % to 9.6 million Euro. The quarterly sales of the group of 53.4 million Euro were at the level of the previous quarter. In comparison with the third quarter of 2003 (25.6 million Euro) this amounted to an increase of more than 100 %. Thus, the group again ended the first 9 months of fiscal year 2004 with a record result. An after-tax profit amounting to 10.3 million Euro was generated an increase of 15.3 million Euro over the same period of the previous year. The operating result before interest and tax (EBIT) reached a total of 19.6 million Euro which was by 22.8 million Euro better than in the period January through September Earnings per share for the nine-month period are 1.79 Euro (previous year: minus 0.86 Euro). Group sales grew by 119 % to the record level of million Euro (previous year: 65.8 million Euro). The Free Cash Flow (CF from ongoing business activity including the change in Working Capital minus CF from investment activity) of 33.7 million Euro (previous year: minus 22.7 million Euro) illustrates the good liquidity situation of the company. The high balance sheet profit together with the reduction of credit lines made for another increase in the very sound equity ratio to 44.4 %. The third quarter of 2004 has so far been the best three-month period in the history of the company having again exceeded the successful performance of the group in the first two quarters of the year. Thus, the quarterly profit of 5.3 million Euro was by 1.7 million Euro higher Group approves expansion plans: Growth in line with prospering solar market In order to meet the continuously growing demand for clean solar power products the group laid the foundation for further growth in the second quarter of In the course of the expansion policy to enhance its international position the SolarWorld Group will gradually double the manufacture of solar wafers at the integrated production location in Freiberg/ Saxony from currently 120 Megawatt (MW) to 240 MW by the year During the same period cell production in Freiberg will be quadrupled from 30 MW to 120 MW. The production of solar modules will be increased in Freiberg and Gällivare/Sweden together to a joint capacity of 120 MW as well (from currently 50 MW). These expansion plans pursue the dual objective of not only powerfully expanding the national and international business but also of strengthening the position of the group as a technology leader. The new factories will therefore be exclusively provided with the most advanced equipment only.

8 CONSOLIDATED 8 2. Order situation At the end of the third quarter all group companies have orders on their books that go well beyond the production of the entire year 2004 and reach into the following year Development of the corporate divisions a) Silicon Recycling proving successful Preparations for redemption system The Solar Materials division attached to the wafer company Deutsche Solar AG that has responsibility for the processing of raw materials within the group has further advanced its activities for the recycling of solar cells and modules. In this way the group was able to gain new customers and products for cell recycling. The technology of the thermal process for the decomposition of the organic parts of the modules as well as the chemical process for the recovery of wafers from the cells have by now proved so successful that preparations can be put in hand for the establishment of a voluntary collection and redemption system. For the purposes of creating such a logistics and reutilization system for damaged and discarded modules in the medium term the SolarWorld Group invited the industry to an appropriate workshop in September. The presentation of the technical processing facilities as well as the proposals for the creation of a voluntary system for the collection of potential solar scrap met with a lot of interest. In addition to the research intensive recycling activities Solar Materials is mainly involved in the processing of production waste from wafer manufacturing as well as externally purchased silicon. This processed material goes as a raw material for the generation of silicon wafers into the smelting furnaces of Deutsche Solar AG. In the third quarter the division made a significant contribution to covering the raw materials needs of wafer production in this way. b) Wafers Production going full steam ahead Sales after 9 months plus 60 % Further expansion initiated Deutsche Solar AG, one of the world s largest producers of solar silicon wafers, produced at full capacity reaching a record sales volume of 33 MW in the third quarter 2004 after having attained the full capacity of 120 MW in the previous quarter. As a result, wafer sales of Deutsche Solar AG jumped by more than 60 % to 86.6 MW in the first nine months in comparison with the same period of the previous year. To optimize the crystallization processes for wafer production the company expanded the existing production halls celebrating this step with a topping out ceremony. At the same time the SolarWorld Group initiated the expansion of the wafer capacity. Deutsche Solar AG has started the construction of a production hall to house the new crystallization furnaces. Initially, 12 furnaces will be installed in this hall which will boost the existing crystallization

9 9 CONSOLIDATED capacities by 40 MW. These machines constitute a new generation of furnaces that are the result of our own Research and Development activities. In the current year Deutsche Solar AG put the first prototype of this new development into operation whose performance more than met the expectations of the company. In the crystallization furnaces raw silicon is first melted and then crystallized into blocks from which in an additional production step the wafers are cut. Deutsche Solar AG celebrates 10th anniversary Open Day In the middle of September Deutsche Solar AG celebrated its 10th anniversary. With numerous guests in attendance the wafer producer held an Open Day that attracted an unanimously positive response from the many visitors. Deutsche Solar AG has thus again been able to lend expression to its feeling of solidarity with the location of Freiberg in the Free State of Saxony. c) Cells Production and sales at record level Preparations made for expansion In the third quarter Deutsche Cell GmbH manufactured solar cells from mono- and polycrystalline silicon at a high quality level. The highly advanced clean room production has in the process again provided evidence of its high level of productivity also in the third quarter. From July through September sales reached 9.8 MW as much as never before in a single quarter. In the first nine months a total of 27.5 MW left the cell manufacturing lines. In the previous year sales were at 3.5 MW at this point in time. In spite of the high internal demand within the SolarWorld AG module factories Deutsche Cell GmbH also serves its external customers in spite of the fact that not every delivery request from business partners could be met. In parallel to its continuously ongoing production the Freiberg solar cell factory made preparations for the expansion of production in the quarters ahead. Within the existing production lines capacities will be doubled from 30 MW to 60 MW. d) Modules Solar Factory GmbH production continues at high level The successful performance of the fully automatic solar module factory Solar Factory GmbH has continued in the third quarter of Thanks to the continuous optimization of the processes the Freiberg module producer sold

10 CONSOLIDATED 10 mono- and polycrystalline modules with a total output of 9 MW in the first half of the year. From January through September module sales climbed to 14.4 MW (2003: 9.4 MW). GPV further expands capacities: 32 MW from 2005 The Swedish subsidiary Gällivare PhotoVoltaic AB (GPV) has continued the expansion of its production lines. After completion of a new production hall the Swedish module producer moved the complete framing and final assembly to the new location. In the other two halls this has created space for the further expansion of production capacities. The boosting of capacities from 24 MW to 32 MW has been finally decided upon in the meantime. The required financing elements have already been secured. The new production performance will be available to the company as of the middle of the year In the third quarter module sales amounted to 2.48 MW and were below the previous quarter because of the scheduled factory vacation in the summer. In the first nine months GPV solar module sales were 7.88 MW putting them well above the sales volume of the entire year 2003 (5.5 MW). e) Trading Trading structures strengthened Position in the German market enhanced In the first nine months of the year Solar- World AG has established itself as a reliable partner in the German solar market. As a consequence of the massive market growth some competitors were not able to meet their delivery commitments. SolarWorld AG on the other hand already alerted its customers to the market situation to be expected and agreed appropriate delivery times that it now reliably adheres to. This reliability is widely acknowledged in the marketplace. In this context SolarWorld AG has further strengthened its trading structures having expanded the business with the customers of the three-tier distribution system as scheduled. The strengthening of the trading business with traditional wholesale houses, for example of the electrical industry, has proved successful. The company is convinced that the build-up of customer relations, especially with customer groups that have no special background in renewable energies, will be of particular importance in the course of the further dissemination of solar technology. In order to be able to supply its interested customers with as comprehensive a range of quality products as possible from its own production range SolarWorld AG has deliberately kept a low profile when it came to an involvement in the area of large-scale solar power plants upwards of one MW. In spite of the massive demand from the domestic market the company has also continued its foreign business maintaining its position in exports. Total sales of previous year exceeded in the whole group In the third quarter the good market demand made for a continuously positive business development. The unit sales of modules and

11 11 CONSOLIDATED kits of SolarWorld AG amounted to more than 20 MW in the third quarter of In money terms sales reached some 75 million Euro. SolarWorld AG awarded the SME Oscar In the third quarter SolarWorld AG was awarded the Oscar for Small and Medium Sized Enterprises (SME). With this prize the private Oscar foundation active since 1993 annual honors outstanding SMEs. A total of 2,300 companies had been nominated 18 of which were able to receive a prize at the end. 6. Finance and asset situation The placement of the corporate bond floated in the second quarter proceeded very satisfactorily in the period under review. The positive response of the capital market to the new bond issue shows that SolarWorld AG has taken a sensible step towards co-financing its growth. The bearer bond (ISIN: DE000A0A3MT3) has a maturity until 2011 and carries an annual interest rate of 7 %. The partner in the issue is Westdeutsche Genossenschafts-Zentralbank eg (WGZ-Bank). 4. Research & Development (R&D) The activities in the area of Research & Development were again of great importance in the third quarter. The success of our R&D work was, for example, illustrated in the very positive performance of the newly developed crystallization process for block making a prototype of which the group has already tested and will be using commercially next year. The entire R&D expenditure at Freiberg amounted to million Euro in the third quarter. 5. Investments Other events with repercussions on the financial and asset situation of the group did not occur in the third quarter of The equity ratio on 30 September 2004 was more than 44 % underlining the comfortable equity capital situation that the group enjoys in an international comparison. In the third quarter the group was again able to increase the number of its staff substantially so that at the end of the third quarter the headcount in the group has now gone up to 591 employees. The fixed assets are fully covered by the equity capital plus the long-term financial debts. The fixed asset coverage of the group can therefore be described as above average. Investments in tangible fixed assets ran to 12.6 million Euro in the third quarter. From January through September the group made investments of 15.3 million Euro in tangible fixed assets. The group was able to reduce short-term debts significantly so that these are more than covered by current assets by a factor of 2. This means a very stable liquidity situation of the group at the due date.

12 CONSOLIDATED 12 In spite of the investments in the third quarter the group was able to continue to pay back its long-term debts thus documenting above average financial strength. 7. Procurement The expansion of the internal procurement structures continued to have positive repercussions in the third quarter. As a result, the group was able to benefit from a secure supply situation at all production levels and was not exposed to the partly significant scarcity phenomenon in the market. All components and materials that the group has to buy externally are hedged by medium to long term contracts. 8. Human Resources and Management The number of employees continued to increase in the third quarter and illustrated the expansionary character of the entire group business. From January through September the group hired 66 new staff. This means that a total of 591 people were working for SolarWorld AG and its subsidiaries. Within the last 12 months the headcount increased by 76 people to 591 employees. In the third quarter the group restructured its top management. VP Technology Dipl.-Ing. Peter Westermayr assumed the management of large scale solar plant construction on 1 September 2004 after the scheduled end of his Board appointment. The Executive Board of SolarWorld AG thus consists of Dipl.-Ing. Frank H. Asbeck (Chairman of the Board/ CEO), Dipl.-Kfm. Philipp Koecke (VP Finance/ CFO), Dipl.-Ing. Boris Klebensberger (VP Operations/ COO), Dipl.-Wirtschaftsingenieur Frank Henn (VP Sales/ CSO). 3rd Quarter 2004 (due date 30 September 2004) Same period last year 3rd Quarter 2003 (due date ) +/- 3rd Quarter 2004 vs. same period previous year Deutsche Solar AG Deutsche Cell GmbH Solar Factory GmbH GPV AB SolarWorld AG Total

13 13 CONSOLIDATED IV. Supplementary Report Foundation partner in photovoltaic research at the University of Constance SolarWorld AG has participated in the establishment and financing of a Chair for Photovoltaic Research/ Focus: Solar Cell Research at the University of Constance thus documenting on the one hand the economic and social importance of solar power technology as a trail-blazing future-oriented technology and on the other hand the great importance of education for Germany as an industrial location. With the foundation of this chair the three founding solar companies support German photovoltaic research in a non-profit way. Against the background of the very high growth rates of the solar power industry a strengthening of the research scene in Germany is of utmost importance especially to achieve a further reduction in the manufacturing costs of photovoltaic systems and in addition to strengthen its position in international competition. Over and above this the lifetime work of Prof. Dr. Ernst Bucher and the faculty of Photovoltaic Research will be continued at the University of Constance. This will make sure that highly qualified teaching in the area of renewable energies will be available to students at the University of Constance and successful application-oriented research can be continued. SolarWorld AG celebrates 5 years at stock exchange On 8 November 2004 SolarWorld AG celebrated its first five years of being quoted at the stock exchange. The IPO at the time took place in the free float of the Düsseldorf stock exchange. SolarWorld AG was the first company in this stock exchange segment to issue its stocks in line with the new conditions of the Düsseldorf free float which meant, among other things, the obligation to publish ad hoc information. After the IPO in the free float the stocks were transferred to the regulated market at the end of the year Today, the SolarWorld AG stock is listed in the Prime Standard of Deutsche Börse thus meeting the highest international transparency standards. The company takes up a unique positioning at the stock exchange today with the successful implementation of the strategy of full integration of the entire solar value chain: SolarWorld AG is the only fully integrated solar company at the capital market worldwide that is exclusively dedicated to solar energy.

14 CONSOLIDATED 14 V. Outlook on the current fiscal year framework conditions Economy continuing to pick up In the fourth quarter the economy can be expected to pick up further. The German economic research institutes expect the GDP growth rates in the entire Euro area to be in the region of 1.9 % in 2004 and The weak consumption development could again be dampened by the high energy prices. The impulses again expected to come from exports will probably more than compensate for this. Energy prices will remain high In the fourth quarter there is again very little to suggest that the high prices for conventional energy will drop significantly. The International Energy Agency (IEA) expects the worldwide oil demand to reach the new record mark of 82 million barrels a day. In 2005 the IEA expects another growth phase in oil consumption. As far as electricity prices in Germany are concerned a decline in the price rally is becoming more likely with the new regulatory authority beginning its work. expected to be in the 250 MW range. Industry sales will for the first time be upwards of 1 billion Euro. In 2004 Germany will be able to show the highest growth rate worldwide. VI. Outlook on the current fiscal year situation of the company Production at a high level Expansion on schedule In the final quarter of the year 2004 the SolarWorld Group will again produce at a high level and rapidly place its high quality products in the market. The order situation for both this and the following quarters looks very positive. For the future a renewed expansion of the sales quantities can be expected. This is why the group has been tackling further expansion projects at all production levels. National solar market about to double in 2004 According to the estimate of the national industry organizations the solar power output newly added to the grid in Germany will roughly double in comparison with the previous year The total market can be a) Silicon In addition to the processing of silicon as a raw material for wafer production the further development of the recycling of solar modules and cells will be the focus of the future activities of the Solar Materials division. The work for the establishment of a voluntary collection and redemption system is being continued in a target-oriented fashion.

15 15 CONSOLIDATED b) Wafers In the fourth quarter Deutsche Solar AG will keep up the high pace in wafer production. At the same time the construction of the new building housing the crystallization facilities will be pushed ahead. As of 2005 the new furnaces will be commissioned successively with a total capacity of 40 MW. c) Cells Deutsche Cell GmbH will continue its clean room production of high quality solar cells in the fourth quarter. In the process it will be able to maintain its position among the top ten cell manufacturers worldwide. At the same time it will take the first steps towards doubling its capacities on the existing lines from 30 MW to 60 MW. The complete capacity will be available to the solar cell subsidiary of SolarWorld AG in the second quarter of The extra quantities will probably be available to the market in the second half of the year the company s business policy especially at times of high demand. This is why it will put its customer relationships on an even broader basis. Outlook on sales and earnings Continuation of the successful business development until end-of-year 2004 Record result is target The positive business development of the first three quarters will also continue in the fourth quarter of 2004 against the background of the consistently high demand for solar technology. The group expects an after-tax result in the region of a double digit amount in millions. Group sales will exceed the 180 million Euro mark thus exceeding the previous year s figure (98.5 million Euro) by more than 80 %. d) Modules Both module factories will continue to produce high quality modules at a consistently high level also in the last quarter of In the process both the Solar Factory GmbH at Freiberg and the Swedish GPV AB will further optimize and fine-tune their production lines. GPV will make preparations to install the new capacities in e) Trading SolarWorld AG will further strengthen its position as a reliable supplier of sophisticated solar power products in the market. Intensive customer care is an important element of VII. Risks of future development In the course of the third quarter of 2004 no further changes worth mentioning took place in the risks as described under Risk Report in the 2003 Annual Report.

16 CONSOLIDATED 16 VIII. Consolidated Interim Report of the SolarWorld AG Consolidated income statement for the Quarters / t E t E 1. Sales revenue 144,169 65, Change in inventory of finished goods -11,663 25, Other operating income 6,411 5, Cost of materials -74,195-63, Staff costs -22,008-13, Depreciation and amortization -12,201-10, Other operating expenses -10,966-11,869 Operating result 19,547-3, Net financial income -3,591-4,409 Profit before tax from ordinary activities 15,956-7, Taxes on income -5,616 2, Group profit/loss 10,340-4, Group net loss/profit 10,340-4,959 Earnings per share a) Net profit 10,340-4,959 b) Weighted average number of shares in circulation (in 1,000) 5,775 5,775 c) Earnings per share (in e)

17 17 CONSOLIDATED Consolidated income statement for the Third Quarter 2004/ t E t E 1. Sales revenue 53,370 25, Change in inventory of finished goods -6,189 6, Other operating income 1,974 1, Cost of materials -23,260-20, Staff costs -9,330-4, Depreciation and amortization -3,995-4, Other operating expenses -3,012-4,437 Operating result 9, Net financial income -1,100-1,265 Profit before tax from ordinary activities 8,458-2, Taxes on income -3, Group profit/loss 5,307-1, Group net loss/profit 5,307-1,440 Earnings per share a) Net profit 5,307-1,440 b) Weighted average number of shares in circulation (in 1,000) 5,775 5,775 c) Earnings per share (in e)

18 ASSETS t E t E A. Noncurrent Assets 168, ,857 I. Intangible assets 34,832 35,263 II. Property, plant and equipment 133, ,466 III. Financial assets B. Current Assets 87, ,610 I. Inventories 41,468 57,289 II. Trade accounts receivable 24,656 18,615 III. Tax receivables 788 1,986 IV. Other receivables and assets 1,509 2,079 V. Marketable securities 0 11 VI. Cash and cash equivalents 18,340 20,130 VII. Prepaid expenses LIABILITIES t E t E A. Shareholders Equity 116, ,543 I. Subscribed capital 5,775 5,775 II. Capital reserved 100, ,592 III. Translation reserve IV. Accumulated profit 10,379 1,079 B. Noncurrent Liabilities 78,936 85,004 I. Noncurrent borrowings 45,678 51,263 II. Other noncurrent liabilities 33,225 33,552 III. Provisions for pensions 0 39 IV. Other noncurrent provisions C. Current Liabilities 58,018 73,266 I. Shortterm borrowings 26,456 52,214 II. Trade accounts payable 8,588 5,858 III. Tax payables 3, IV. Current provisions 7,670 2,425 V. Deferred income VI. Other current liabilities 11,523 11,761 Consolidated Balance Sheet as of 30 September 2004 CONSOLIDATED C. Deferred Taxes 6,511 8,375 D. Deferred Taxes 9,163 9, , , , ,842 18

19 19 CONSOLIDATED Consolidated cash flow statement for the Third Quarter of t E t E Net profit before taxes 15,956-7,634 + Depreciation and amortization 12,152 10,900 + Net interest income 3,058 3,958 + Result from at equity valuation /- Loss/income on disposal of nuncurrent assets Proceeds from investment grants 3,964 14,525 - Release of special items for investment grants -3,482-2,524 = Subtotal 32,191 19,676 -/+ Increase/decrease in inventories 15,821-16,155 -/+ Increase/decrease in other Net Working Capital 574-3,566 = Cashflow generated from operations 48, Taxes reimbursed/paid = Cashflow from operating activities 49, Cash outflow for investments in noncurrent assets -15,892-27,236 - Cash outflow for the purchase of shares Financial fonds WindWelt AG at beginning of period Proceeds from the divestment of other assets = Cashflow from investment activity -15,762-27,236 +/- Borrowings/repayments of financial credits -22,964 41,099 - Interest paid -2,840-2,531 + Proceeds from addition to equity Disbursements due to dividend distributions -1,040-1,044 = Cashflow from financing activity -26,844 37,524 - Net change in cash and cash equivalents 6,847 10,193 - Effects of exchange rate movements Cash and cash equivalents at beginning of period 11,324-9,474 = Cash and cash equivalents at end of period 18,

20 CONSOLIDATED 20 Consolidated statement of changes in noncurrent assets (in x thousand) Subscribed Capital Translation Accumulated Total capital reserve reserve results Balance as at , , , ,989 Changes in consolidation and other adjustments 3,977 3,977 Differences from currency translation Group loss for the year -4,959-4,959 Dividends paid -1,039-1,039 Balance as at , , , ,989 Balance as at , , , ,543 Differences from currency translation Group profit for the year 10,340 10,340 Dividends paid -1,040-1,040 Balance as at , , , ,864

21 21 CONSOLIDATED Notes to the consolidated interim statement 1. Reporting in accordance with International Financial Reporting Standards (IFRS) SolarWorld AG has made use of the exemption option specified in Art. 292a HGB and prepared Group Annual Financial Statements in keeping with the IFRS issued by the International Accounting Standards Board (IASB) and their interpretations by the Standing Interpretations Committee (SIC). This Interim Report was therefore also prepared in accordance with IAS 34. The present Group Interim Financial Statements have not been submitted to examination by auditors. 2. Balance Sheet Preparation and Valuation Methods In principle the same consolidation principles and balance sheet preparation and valuation methods were used for preparation of the Interim Statements and determination of the data for comparison with the previous year as were used in the Group Financial Statements A detailed description of these methods is published in the Notes to the Annual Report This is also available on the website 3. Companies included in Consolidated Results The Group Interim Financial Statements comprise Solar- World AG and the following affiliated companies: Gällivare PhotoVoltaic AB, Gällivare, Sweden, Deutsche Solar AG, Freiberg/ Saxony, Solar Factory GmbH, Freiberg/ Saxony, Deutsche Cell GmbH, Freiberg/ Saxony. The shares held by SolarWorld AG at the reference date were in each case 100 % (in 2003 likewise 100 %). 4. Events of Special Importance There have been no events of special importance since 30 September The Interim Report to 31 March 2004 also used for the first time the balance sheet standards adopted by the IASB in March 2004 (IFRS 3 Business Combinations ) and the revised versions of IAS 36 Impairment of Assets and 38 Intangible Assets. As a result, scheduled depreciation of goodwill has no longer been applied since then. In the 3rd Quarter 2004 there were no indicators suggesting a value reduction in goodwill. Scheduled depreciation of goodwill would have been 472,000,000 euro in Q

22 CONSOLIDATED 22 Consolidated segment reporting for the Quarters (in million Euro) Wafers Cells Modules Trading Eliminated Consolidated Sales External sales Intersegment sales Total sales Result Segment result Unallocated income 0 Unallocated expenses -1 Operating result (EBIT) 20 Interest paid -4 Interest received 0 Income taxes -6 Net profit for the period 10 Consolidated segment reporting for the Quarters (in million Euro) Wafers Cells Modules Trading Eliminated Consolidated Sales External sales Intersegment sales Total sales Ergebnis Segment result Unallocated income 0 Unallocated expenses -1 Operating result (EBIT) -3 Interest paid -5 Interest received 1 Income taxes 2 Net profit for the period -5

23 IX. Financial Calendar April 2004 Annual Business Press Conference 2003/ 11:00 hrs; Presseclub Bonn 02 April 2004 Analysts Conference Accounts 2003/ 15:00 hrs; Presseclub Bonn Annual Report 2003 on SolarWorld-homepage 20 April 2004 Annual Report 2003 as printed version The Annual Report 2003 can be downloaded from the homepage under as a pdf file or ordered directly from the company SolarWorld AG/Department Investor Relations. 14 May 2004 Consolidated Interim Report SolarWorld AG First Quarter 2004 on SolarWorld homepage 24 May 2004 Consolidated Interim Report SolarWorld AG First Quarter 2004 ( ) as printed version 26 May 2004 Annual General Meeting/ 11:00 hrs; Beethovenhalle, Bonn/Resolution on dividends 14 August 2004 Consolidated Interim Report SolarWorld AG Second Quarter 2004 on SolarWorld-homepage 24 August 2004 Consolidated Interim Report SolarWorld AG Second Quarter 2004 ( ) as printed version 14 November 2004 Consolidated Interim Report SolarWorld AG Third Quarter 2004 on SolarWorld-homepage 25 November 2004 Consolidated Interim Report SolarWorld AG Third Quarter 2004 ( ) as printed version Published by: SolarWorld AG, Kurt-Schumacher-Straße 12-14, Bonn/Germany Contact: Department Investor Relations, Tel.: Internet: (Stocks) placement@solarworld.de (Bonds) anleihe@solarworld.de (Products) service@solarworld.de The full version of this consolidated interim report for the third quarter as of 30 September 2004 is also available in German. Both documents can be downloaded from the Internet under as pdf files. They can also be ordered directly from SolarWorld AG, Investor Relations Department, Kurt-Schumacher-Straße 12-14, Bonn, Tel ; Fax: or via placement@solarworld.de.

24 CONSOLIDATED 3. QUARTER 2004 SolarWorld AG Kurt-Schumacher-Straße 12-14,D Bonn Tel.: , Fax: Gestaltung: Kreativ Konzept, Bonn [