SAG QB1-2011 Layout EN Layout 1 · 2015. 2. 19. · gross domestic product (GDP) increased in the...

2011R e p o r t a s o f M a r c h 3 1

2011 2010

Sales revenue in thous. € 78,918 31,276

Operating result (EBIT) in thous. € 5,129 1,639

Group period result in thous. € 2,511 908

Consolidated group period result in thous. € 2,501 1,016

2011 2010

Balance sheet total in thous. € 216,970 249,126

Equity in thous. € 54,849 52,348

Equity ratio in % 25.3 21.0

2011 2010

Cash flow from operations in thous. € 18,176 –21,408

Cash flow from investment activity in thous. € –20,487 427

Cash flow from financing activity in thous. € –4,891 16,315

Results per share

Undiluted in € 0.22 0.08

Diluted in € 0.17 0.07

Employees (average number) 189 159

Overview of Key Figures

January - March January - March


March 31 December 31

For arithmetical reasons, the tables published in this financial report may exhibit rounding differences of plus or minus one o f each respective unit

(€, % and so on).

You will also find current IR information and our financial reports, which you can download as PDF files, in the Internet at www.solarstromag.com in the

section Investor Relations.

a. Foreword by the Executive Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2

b. Consolidated Management Report of S.A.G. Solarstrom AG as of March 31, 2011 . . . . . . . . . . . . .4

b.1 Research and Development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4b.2 Performance of the Overall Economy and the Industry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4

1. Overall Economic Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4

2. Industry Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5

b.3 Key Events During the Reporting Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6b.4 Profit, Assets and Financial Situation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6

1. Profit Situation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6

2. Assets Situation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12

3. Financial Situation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13

b.5 Staff . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14b.6 Opportunities and Risks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14b.7 Key Events After the End of the Interim Reporting Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14b.8 Shares and Development of Share Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16b.9 Outlook . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18

1. Overall Economic Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18

2. Industry Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18

3. Outlook . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19

c. Interim Consolidated Financial Statements as of March 31, 2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20

c.1 Consolidated Statement of Comprehensive Income from January 1 to March 31, 2011 . . . . . . . . . . . . . . . . .20c.2 Consolidated Balance Sheet as of March 31, 2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22c.3 Consolidated Statement of Changes in Equity as of March 31, 2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24c.4 Consolidated Cash Flow Statement from January 1 to March 31, 2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25c.5 Reporting by Market Segment from January 1 to March 31, 2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26c.6 Notes to the Interim Consolidated Financial Statements as per March 31, 2011 . . . . . . . . . . . . . . . . . . . . . . . . .28c.7 Responsibility Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .36

d. Financial Calendar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .37

e. Contact / Legal Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .37

1

S.A.G. Solarstrom AG || Geschäftsbericht 2010

2 a. Foreword by the Executive Board

Dear Shareholders,

A short while ago, we were able to report that we were oncourse with our 48 MWp project in Northern Italy and that wehave, with our new transformer substation, not only put intooperation the required infrastructure for the entire project butalso connected the first 12 MWp to grid. In the same manner,we are now on course for our annual forecast of between €260and €280 million and an EBIT of between €16 and €18 mil-lion, with the results of the first quarter – sales of €78.9 mil-lion and an EBIT of €5.1 million. Despite an adverse marketenvironment, which has been characterized by reductions inthe feed-in tariffs in several European countries and a weakmarket demand in Germany, your company is continuing togrow dynamically, based on careful planning and a consistentinternational expansion strategy.

This growth is not automatically guaranteed, as we have pus-hed forward simultaneously with various different issues –including the next segment upgrade to the Prime Standard ofthe German Stock Exchange, which we want to put into effectin the next few weeks. We already comply with the obligati-ons of the Prime Standard as regards ad hoc notifications andcorporate news, as well as quarterly and annual reports in bothGerman and English. For a company of our size, this involvesa not inconsiderable amount of work, especially taking intoaccount that we also need to comply with additional documen-tation requirements in this context. We have, however, resol-ved to meet these requirements for a high level of transpa-rency. The increasing interest of even international analystsand investors proves to us that this was the right decision. Ahigh level of transparency for our investors was, incidentally,also our motivation for undergoing a company rating proce-dure when we issued our bond in November 2010. S.A.G.Solarstrom AG was assessed by Creditreform with the ratingBBB+. We made a conscious decision to be rated by Credit-reform and not by one of the three large American rating agen-cies, whose benchmark figures often only include large cor-porations. That would have been like comparing apples andpears. In our opinion, the significance of such a rating wouldhave been much more questionable than the rating of a Ger-man medium-sized company like S.A.G. Solarstrom AG by acompany such as Creditreform, who is accredited by the Ger-man Financial Supervisory Authority, has known and workedtogether with German medium-sized business for more than120 years and has an extensive history of failure data in pre-cisely this segment.

The situation in Italy, where the decision regarding the conti-nuation of the Conto Energia after May 30 was not made untilMay 5, 2011, once again showed how unclear general politi-cal conditions are capable of paralyzing a market, as we poin-ted out in the 2010 Annual Report. In Germany, on the otherhand, investors seem to be waiting for the market prices todrop further – there seems to be no other explanation for therestrained first quarter in Germany. At the same time, after thenuclear disaster in Japan and the German government’s u-turnregarding nuclear withdrawal, everything seemed gearedtowards a change in energy policy in which photovoltaicscould play an important role due to the advantages of decen-tralized implementation. Most recently, this could be seen inthe results of the state elections in Baden-Württemberg onMarch 27, 2011, in which the Alliance 90/ The Green Partyachieved the best election result in their history, with 24.2%.However, neither one nor the other has had perceptible effectson demand in Germany up to the time of reporting. It remainsto be seen whether such effects will become apparent duringthe course of the year.

We have now increased our own system portfolio, as you canread in this report, to 25.1 MWp. The new inclusions are 5.1 MWp from a system in Kamenicna, Czech Republic. Suchinvestments of course tie up capital. This can be seen from ourequity ratio and the increased requirements for external finan-cing resources. However, we consider the expansion of owninvestment holdings to be strategically important. Our ownsystems offer stable cash flow and insights on the long-termperformance of photovoltaic components. However, we do notneed to keep 100% of these systems on our own balancesheet for this purpose. The Executive Board and the Supervi-sory Board are therefore already planning to sell the majorityshare of this portfolio to a strategic partner in the mediumterm, in order both to strengthen the balance sheet as well asto grow more quickly with this strategic partner through theexpansion of the system portfolio, which would also benefitour business area Project Planning and Plant Construction. Weare therefore working on enhancing the portfolio with profi-table projects. The system portfolio will only become a highlyattractive asset for potential strategic partners once it has rea-ched a critical size.

a. Foreword by the Executive Board

3a. Foreword by the Executive Board

In this respect, such investments might appear to put pressureon our balance sheet in the short-term, but we are convincedthat we are making a lasting and economically sustainableinvestment, in the best interests of you, our shareholders. 2011 will definitely not be an easy business year, due to theregulatory changes in Europe. However, we are confident thatwe are sufficiently strongly positioned, based on our strategicapproach, to be able to continue to grow profitably, even inan increasingly competitive and difficult market.

We would be pleased if you would continue to accompany uson our journey.

Best regards

Dr. Karl Kuhlmann (CEO)

Oliver Günther (Member of the Executive Board)

Christoph Koch (Member of the Executive Board)

Executive Board of S.A.G. Solarstrom AG, left to right Christoph Koch, Dr. Karl Kuhlmann, Oliver Günther

S.A.G. Solarstrom AG || Report as of March 31, 2011

4 b. Consolidated Management Report of S.A.G. Solarstrom AG as of March 31, 2011

In the S.A.G. Group, research and development work is mainlyperformed by S.A.G. Technik GmbH, Freiburg i. Br., and meteo-control GmbH, Augsburg. S.A.G. Technik GmbH mainly focuseson such areas as fire protection, yield optimization of photo-voltaic systems and the repowering of older systems. meteo-control GmbH, on the other hand, researches in areas such asmodule efficiency factors, based on their extensive currentdata pool of 19,000 systems with a total output of 2.5 GWp,and develops hardware and software for the professionalmonitoring of photovoltaic systems and for the control of ownconsumption.

In January 2011, meteocontrol GmbH presented a new versionof the data logger WEB’log Comfort launched on the marketin 2010, in which the ease of use and analysis options, in par-ticular, had been improved. The compact control unit for pho-tovoltaic systems up to 30 kWp is equipped with software thatcombines system monitoring with an intelligent energy man-agement to optimize control of own consumption. The systemcan use it to feed the solar energy it generates itself for its ownconsumption at the most cost-effective point in time and toswitch the households appliances that use the most energyon and off automatically on a grid-bound basis. The system isnot intended only for the new installation of photovoltaic sys-tems, but can also be integrated in existing photovoltaic sys-tems and is compatible with all conventional inverters.

b. 1 Research and Development

1. Overall Economic Performance: Growth in the Eurozone Accelerated

The global economy grew in Q1 of 2011 more strongly thananticipated. According to the OECD report of April 5, 2011, thegross domestic product (GDP) increased in the leading eco-nomic nations by 3.2% compared to the previous year. Dueto the earthquake and tsunami at the beginning of March,Japan was not included in the analysis, as no reliable figurescould yet be provided regarding the short-term economicdevelopments in Japan by the beginning of April. In Q4 of2010, the gross domestic product in the leading economicnations (without Japan) increased more moderately by 2.1%.While the USA, Germany and France exhibited stable growthof over 3% in Q1, growth in Italy was only 1.1%. The driversof the overall satisfactory global economic developmentincluded positive stimuli from the job market, with decliningunemployment figures in some countries, including Germany,which boosted private consumption. Nevertheless, the unem-ployment rate was still 2 percentage points above the ratebefore the financial crisis, on average.

Chiefly as a result of significant increases in oil and foodprices, the inflation rate in the Eurozone reached the highestlevel since October 2008 at 2.6%, according to informationfrom Eurostat in March 2011, in comparison with the previ-ous month. In Germany, the inflation rate in March 2011 was2.1%, according to Destatis. Despite this, a distinct upswingwas apparent in the Eurozone in Q1. The gross domestic prod-uct increased in the three largest economies of Germany,France and Italy by 3%, boosted mainly by the German econ-omy with a strong growth of 3.7%. In Q4 of 2010, the growthin the Eurozone was only at 1.2%.

b. 2 Performance of the Overall Economy and the Industry

b. Consolidated Management Report of S.A.G. Solarstrom AG as of March 31, 2011

5b. Consolidated Management Report of S.A.G. Solarstrom AG as of March 31, 2011

2. Industry Performance: Regulatory Uncertainty Dampens the Photovoltaic Market

In Germany, the Federal Council consented on March 18,2011 to an early reduction in the feed-in tariff of up to 15%at July 1, 2011, based on a joint proposal by the Federal Envi-ronment Ministry and the German Solar Industry Association.Previous experience has shown that after such key date reg-ulations, a distinct rise in the market could be expected by thisdate. However, a considerably higher market demand result-ing from the fact that the key date has been brought forwardhas so far not been in evidence. Due to the significant rise inproduction capacities and the fully-stocked warehouses of thecomponent manufacturers, investors are expecting a consid-erable decline in prices, which has not yet occurred on thescale required to once again jolt the market. The first quarterthus remained below expectations.

In France too, the government drastically reduced the feed-intariff on March 10 and restricted further annual developmentto a maximum of 500 MWp. Systems over 100 kWp onlyreceive 12 Eurocents per kWh.

In Italy, a new bill was submitted on May 5, which also pro-poses significant reductions by June 1, 2011 and furthermonthly reductions up to the end of the year. The feed-in tar-iff is to be further reduced over the next few years, dependenton further development. In Italy, which was one of thestrongest growth markets for photovoltaics in 2010, witharound 3 GWp, massive protests were made against the law,which should have been passed on April 28, 2011.

In Spain, the maximum amount of electricity that photovoltaicsystems may feed in to the grid has been restricted by up to45%, in addition to the reductions in the feed-in tariff thatcame into force at the start of the year – de facto an additionalreduction.

Finally, in the Czech Republic, a solar tax of 26% was intro-duced which will be levied for the next three years. In additionto this tax, only roof-top systems and roof-top-integrated sys-tems have been supported since March 2011.

In France, Spain, Italy and the Czech Republic, the regulatorycutbacks and uncertainties have led to a very distinct reluc-tance to invest in Q1. After component scarcity prevailed onthe global photovoltaic market up to Q4 of 2010, the markethas once again developed into a buyer’s market as a result ofthe substantially expanded production capacities in 2010. Themodule prices declined accordingly. According to the priceindex of the pvXchange, an online spot market trading plat-form for solar modules, a crystalline photovoltaic module fromChina only cost €1.37 per watt in March 2011, but in Decem-ber buyers on the spot market had to pay €1.55. The declinein price in German modules was slighter lower. Buyers had topay €1.61 in March, dropping from €1.75 in December.According to information from the German Solar IndustryAssociation, the system price for completely installed photo-voltaic systems up to 100 kWp in Germany was €2,546 perkWp on average.



On February 8, 2011, S.A.G. Solarstrom AG reported that it wasscheduled to receive liquid funds in the amount of €41 mil-lion in Q1 from the sale of photovoltaic systems in two Italianproject companies. The photovoltaic systems in the projectcompanies were completed at the end of 2010 and soldunder the contract of December 2, 2010.

On February 18, 2011, S.A.G. Solarstrom AG reported theconclusion of a contract with the vertically integrated modulemanufacturer Canadian Solar for the purchase of polycrys-talline modules in 2011 with a total output of 60 MWp. S.A.G.Solarstrom AG is thus broadening its supplier base for high-quality modules and expanding its system partnerships withleading component manufacturers. The modules will be usedin planned projects in Germany and Italy.

On March 31, 2011 S.A.G. Solarstrom AG announced a spe-cial conversion period for the convertible bond issued in 2007for the 6.25% convertible bond 2007 / 2010 / 2012. TheExecutive Board and the Supervisory Board of S.A.G.Solarstrom AG resolved to concede the holders of the convert-ible bonds (German security identification numbers: (WKN:A0TGEV, A0Z1U6, A0SMLC, ISIN: DE000A0TGEV3,DE000A0SMLC8 and DE000A0Z1U68) a special conversionperiod from April 4, 2011 to April 15, 2011 (inclusive), accord-ing to § 4 Paragraph 3 lit. b) of the convertible bond conditions.

b. 3 Key Events During the Reporting Period

1. Profit Situation

With the result of Q1 of 2011, S.A.G. Solarstrom AG was ableto impressively prove the results of its international expansionand the resulting risk diversification. The operating result(EBIT) tripled in comparison with the same period in the pre-vious year to €5,129,000 (Q1 of 2010: €1,639,000). Thedriver of this very successful first quarter was the business areaProject Planning and Plant Construction, and in particular, the48 MWp Italian project. Once the sale had become sufficientlysubstantiated during the first few months of 2011, earningsin proportion to the construction progress could be realized.This led to a significant change in the inventory of work inprogress of –€50,665,000 (Q1 of 2010: €1,256,000). How-ever, the business areas Plant Operation and Services, as wellas Power Production, were able to considerably increase theircontribution to operating income in comparison with the pre-vious year’s period and thus contributed a very good result.

b. 4 Profit, Assets and Financial Situation

Fig. 1: EBIT Trend – January to March 2007-2011 in Thousand €

2007 2008 2009 2010

6,000

5,000

4,000

3,000

2,000

1,000

0

–1,000

–668

277

–341

1,63

9

2011

5,12

9


The other operating income in the amount of €443,000 (Q1of 2010: €189,000) essentially contains income from the dissolution of value adjustments and income from exchangerate differences.

Material expenses declined by 37% from €25,803,000 in Q1of 2010 to €16,216,000 in Q1 of 2011. As work in progresshad already been accounted in connection with the large-scaleproject in Italy in Q4 of 2010, the material expenses ratiodropped in Q1 of 2011, in relation to the total operating per-formance, to 57.4% (Q1 of 2010: 79.3%), which should notbe considered as representative for the whole year.

Personnel expenses increased due to the corporate growthand the resulting new staff appointments, compared with theprevious year, from €2,530,000 in Q1 of 2010 to €3,280,000in the reporting period. The other operating expenses alsoincreased proportionately to the expanded business from€2,217,000 to €3,504,000 in Q1 of 2011.

Compared with the previous year’s quarter, the financial resultdeclined considerably from –€287,000 to –€1,462,000 inQ1 of 2011. The financial income of €1,062,000 (Q1 of2011: €400,000) in the same quarter of the previous yearcontained key date valuations of S.A.G. Solarstrom AG’s loanreceivables in Czech Crowns from the bridging loan grantedto Solar Stribro s.r.o. Czech Republic arising from changes in

exchange rates. The financial expenses, on the other hand,increased only slightly from €1,551,000 to €1,571,000 in Q1of 2011. Losses in the amount of €306,000 to joint venturecompanies (Q1 of 2010: profit of €184,000) can be attributedto Stribo s.r.o. In Q1, lower electricity yield than in the sum-mer months could be offset from the constant monthly depre-ciation, due to weather conditions. In addition, the income wasencumbered by the solar tax introduced by the Czech govern-ment at the end of 2010, in the amount of 26% for incomefrom photovoltaic systems. Seen in the long-term, the projectin Stribro is profitable.

The tax quota remained comparatively stable compared withthe previous year‘s quarter, at 31.5% (Q1 of 2010: 30%).However, income tax expense rose significantly as a result ofthe considerably expanded, high-yield business activities,from €444,000 in Q1 of 2010 to €1,156,000 in the report-ing period.

The consolidated period result rose by 146% to €2,501,000after the deduction of currency conversion differences (Q1 of2010: €908,000). The undiluted result per share hence rosesignificantly in the reporting period from €0.08 to €0.22,while the diluted result rose accordingly to €0.17 (Q1 of2010: €0.07), taking into account outstanding convertiblebonds.


Fig. 2: Earnings Performance in Thousand €

2011 2010 Change

Operating result (EBIT) 5,129 1,639 3,490Earnings before tax (EBT) 3,667 1,352 2,315Group period result 2,511 908 1,603Consolidated group period result 2,501 1,016 1,485

Results per shareUndiluted in € 0.22 0.08 0.14Diluted in € 0.17 0.07 0.10


Ground-mounted system, Project Serenissima, Canaro, Italy, 48 MWp

Project Planning and Plant Construction

The business area Project Planning and Plant Constructionmade the largest contribution to the operating income with anEBIT of €3,910,000. This was principally due to the 48 MWpproject under construction in the region of Venice, Italy. Basedon the sufficient substantiation of sale, earnings proportionalto the construction progress have already been realized. TheEBIT margin increased during the reporting period to 5.7% andis thus more than twice as high as in Q1 of 2010 (2.3%). Thedistinct improvement in the margin demonstrates the successof strict project controlling and cost management in the imple-mentation of large-scale projects. Further photovoltaic sys-tems were implemented in France, Spain and Germany.

Partner Sales

A very restrained first quarter in 2011 in Germany, where alarge number of the partners are located, would be responsi-ble for the considerable decline in earnings in the businessarea Partner Sales. The EBIT dropped from €926,000 in Q1of 2010 to €212,000 in the reporting period. In the previousyear, strong pull-forward effects due to the expected amend-ment to the Renewable Energy Act led to a surge in earnings.Despite the reduction in the feed-in tariff brought forward toJuly 1, 2011, a pull-forward effect did not result in Q1 of 2011in the German market. Traditionally, the first quarter in Ger-many is usually weak, due to the weather conditions. However,S.A.G. Solarstrom AG was able to achieve an EBIT margin of4.5% under difficult market conditions (previous year’s quar-ter: 5.6%).

Plant Operation and Services

The large amount of further development of photovoltaic sys-tems in 2010 also led to a high demand for services all alongthe photovoltaic value chain, from yield reports to technicaldue diligence and online monitoring of photovoltaic systems.The demand from national and international supply networkoperators for reliable solar power forecasts also increased. Thebusiness area Plant Operation and Services was thus able toalmost double its income, and grew from €445,000 in Q1 of2010 to €817,000 in the reporting period. However, the earn-ings potential of the segment is particularly evident in the EBITmargin. This increased from 13% in the previous year’s periodto 19.7% in Q1 of 2011.

Power Production

The business area Power Production was able to realize a sat-isfactory EBIT of €190,000 in the first quarter (Q1 of 2010:€13,000). In the previous year’s quarter, the 4.2 MWp systemin Rain am Lech was not yet able to deliver full performancedue to adjustment work which had been delayed due to theweather conditions. In Q1 of 2011, on the other hand, theexpansion of the Group’s own power plant portfolio com-pletely paid off. 14.2 MWp of the total power plant portfolioof 25.1 MWp flowed directly to this business area, includingthe 5.1 MWp system in Kamenicna, Czech Republic, which hadrecently been included in the system portfolio of the Group.The remaining 10.9 MWp are balanced at equity or as aninvestment and can be seen in the financial result.



Sales Performance

The S.A.G. Group was able to more than double its sales in Q1of 2011, in comparison with the previous year’s quarter. Salesincreased from €31,276,000 in Q1 of 2010 to €78,918,000in the reporting period. The portion of sales abroad changedvery distinctly to 90.4%, due to the large-scale project in Italy,compared with the same quarter of the previous year, whenthe foreign portion was only 28.7% due to pull-forward effectsin the German market.



Fig. 3: Operating Result (EBIT) by Business Area in Thousand € January - March 2009 2010 2011

Power ProductionProject Planning andPlant Construction

Partner Sales Plant Operation andServices

4,000

3,000

2,000

1,000

–1,000

0

255

3,91

0

–495

926

212

–103

445 81

7

203

13 190

54

Abroad Germany

January - March

2011January - March

2010January - March

2009

28.7% 71.3%28% 72% 90.4% 9.6%

Fig. 4: Group Sales in % in Germany and Abroad

€10 million €31 million €79 million


The business areas Project Planning and Plant Construction,Plant Operation and Services and Power Production were ableto significantly increase their sales – Project Planning andPlant Construction increased its sales six-fold, while PowerProduction doubled its sales and Plant Operation and Serv-ices increased by 21%. In contrast, this was counteracted bythe business area Partner Sales, due to a weak German mar-ket. Here, the sales revenue dropped from €16,456,000 in Q1 of 2010 to €4,730,000.

Fig. 5: Sales Performance of the Business Areas in Thousand €

The portion of sales of the business area Project Planning andPlant Construction increased correspondingly to 87.3% – inthe same quarter of the previous year, the portion of sales wasat 34.8%. The portion of sales of Partner Sales declined morestrongly than expected from 52.6% in Q1 of 2010 to only6.0% in Q1 of 2011.


2011 2010 2009

Project Planning and Plant Construction 68,903 10,887 4,428Partner Sales 4,730 16,456 3,222Plant Operation and Services 4,141 3,422 1,615Power Production 1,144 511 454Consolidated Group Sales 78,918 31,276 9,719

Project Planning and Plant Construction Partner Sales Plant Operation and Services Power Production

Fig. 6: Group Sales by Business Area in %

January - March January - March January - March

January - March

2011January - March

2010January - March

2009

11% 1.6%16.6% 4.7% 5.2% 1.5%6%

33.1% 45.6% 52.6% 87.3%34.8%

€10 million €31 million €79 million


Project Planning and Plant Construction

In the first three months, the business area Project Planningand Plant Construction achieved sales of €68,903,000 (Q1of 2010: €10,887,000). It thus increased six-fold comparedwith the previous year and contributed to 87.3% of the totalsales. The main revenue earner was the 48 MWp project inItaly. Due to the sufficient substantiation of sale, partialturnover has already been realized. In addition, the S.A.G.Group also planned and constructed further photovoltaic proj-ects in Italy, France, Spain and Germany in Q1 of 2011.

Partner Sales

A weak German market, in which the expected pull-forwardeffects did not materialize, characterized the first quarter of2011 in Germany. The 40 exclusive partners mainly operatein Germany and were all directly affected by the slump in thedomestic market, which is indicated by the distinct decline insales. Although the business area achieved sales of€16,456,000 in Q1 of 2010, sales in Q1 of 2011 shrank to€4,730,000 and thus to only a good quarter of the sales inthe previous year’s period.

Plant Operation and Services

The business area Plant Operation and Services was able toincrease its sales by 21% to €4,141,000 (Q1 of 2010:€3,422,000). A large amount of further development in Germany and other European countries in 2010 was the mainfactor for this, as it boosted the demand for services along thephotovoltaic value chain. Around 20% of the sales in this business area is recurring sales from system monitoring andmanagement.

The portion of sales of the business area dropped proportion-ately from 11% in Q1 of 2010 to 5.2% in Q1 of 2011. Thedecline, however, is due solely to the distinctly stronger salesgrowth in the business Project Planning and Plant Construc-tion.

Power Production

The accumulation of the Group’s own system portfolio is visible in the sales that increased from €511,000 in Q1 of2010 to €1,144,000 in the reporting period in the businessarea Power Production. In Q1 of 2010, sales remained belowexpectations due to delays in the adjustment work on the 4.2 MWp system in Rain am Lech. The 14.2 MWp in theGroup’s own system portfolio (without the 10.9 MWp whichare balanced at equity or as an investment) could now producethe amount of electricity to be expected according to theweather conditions and realize corresponding sales.



2. Assets Situation

The consolidated total assets of S.A.G. Solarstrom AG werereduced to €216,970,000 at March 31, 2011 (December 31,2010: €249,126,000). The reason for this was the consider-able decline in the working capital (the total of inventories,trade receivables and construction contracts). It dropped from€162,357,000 at December 31, 2010 to €119,524,000 atMarch 31, 2011.

Essentially, the decrease can be attributed to the considerabledecline in trade receivables, which reduced from€67,147,000 at December 31, 2010 to €14,792,000. Alarge portion of the reduction can be attributed to the purchaseprice payments from the sale of photovoltaic systems in twoItalian project companies in Apulia.

The inventories also dropped significantly at March 31, 2011,from €87,434,000 at December 31, 2010 to €32,336,000.The largest item was the reduction in work in progress from€55,624,000 to €4,959,000, as sales and earnings wererealized according to construction progress for the 48 MWpproject in Italy. Correspondingly, the receivables from con-struction contracts increased from €7,776,000 at December31, 2010 to €72,396,000 at March 31, 2011.

The other assets also reduced only slightly from €11,507,000to €9,831,000 at March 31, 2011.

The tangible assets rose significantly. The 5.1 MWp systemconstructed at the end of 2010 and accepted in March 2011in Kamenicna, Czech Republic, was entered in the balancesheet item Plants and Machinery, which rose to €49,838,000at March 31, 2011 (December 31, 2010: €28,787,000),after the Executive Board and the Supervisory Board hadresolved to include the solar park in the Group’s own portfo-lio. The portion of noncurrent assets in the balance sheet totalthus rose to 39% at March 31, 2011 (December 31, 2010:26.2%).

The liquid funds dropped due to the high preliminary financ-ing requirements of ongoing projects at March 31, 2011 to€2,608,000 (December 31, 2010: €9,810,000) due toreporting date effects.

On the liabilities side of the balance sheet, trade payables andother liabilities dropped significantly from €81,338,000 atDecember 31, 2010 to €49,866,000 at March 31, 2011. Thisresulted primarily from the fact that the S.A.G. Group madepayments in Q1 of 2011 for component deliveries and otherproject-related payments. In addition, the noncurrent interest-bearing loans declined by €11,957,000 to €35,127,000(December 31, 2010: €47,084,000). In contrast, the noncur-rent payables increased from €62,258,000 at December 31,2010 to €70,313,000 at March 31, 2011. This is essentiallyattributable to the funding of the solar park Kamenicna. Dur-ing this process, the interest-bearing loans increased from€26,390,000 to €33,471,000 at March 31, 2011.

The consolidated period result in the amount of €2,511,000increased the accumulated net profit to €12,992,000 atMarch 31, 2011 and thus equity to €54,849,000 (December31, 2010: €52,348,000). The equity ratio improved as aresult of the reduced balance sheet total and the higher con-solidated net profit to 25.3% (December 31, 2010: 21%).



3. Financial Situation

In the first three months of 2011, the S.A.G. Group achieveda cash flow from operating activities of €18,176,000, despitea considerable change in the current payables without financ-ing loans (–€31,513,000 in the first three months of 2011to –€6,330,000 in the previous year’s period) and increasedinterest payments. This can essentially be attributed to thepayments of purchase price for photovoltaic systems fromtwo Italian project companies, which were made in Q1 of2011. In the previous year’s period, the operative cash flowwas still negative at –€21,408,000 due to the preliminaryfunding requirements of large-scale projects.

The cash flow from investment activities in the amountof –€20,487,000 (Q1 of 2010: €427,000) was substantiallyinfluenced by the investment in the 5.1 MWp photovoltaicpark Kamenicna, Czech Republic.

The S.A.G. Group paid off loans for the interim financing ofcomponent deliveries in the amount of €18,249,000 in thefirst three months. The raising of credit for the solar parkKamenicna in the amount of €13,358,000, for example, hada counterbalancing effect, so that the cash flow from financ-ing activities was –€4,891,000 in the first three months of 2011 (Q1 of 2010: €16,315,000).

Due to the high level of preliminary funding required forongoing projects, the liquid assets fell at the end of thereporting period to €2,608,000 (December 31, 2010: €9,810,000), which corresponds to a negative net changein cash and cash equivalents in the amount of –€7,202,000(Q1 of 2010: –€4,666,000).


Ground-mounted system, Project Kamenicna, Czech Republic, 5.1 MWp


Continued dynamic corporate growth and international expan-sion were reflected in the sharp increase in the average num-ber of staff in Q1 of 2011. In the first three months, 189 per-sons on average were employed in the S.A.G. Group (Q1 of2010: 159). The total number of employees rose from 185 atDecember 31, 2010 to 192 employees at March 31, 2011.

In a market characterized by a high demand for skilled staff,S.A.G. Solarstrom AG was able to gain further highly-qualifiedemployees for the corporate group.

On April 7, 2011 S.A.G. Solarstrom AG reported the intendedsale and on the same day, the non-listed placement of250,000 own shares via Youmex Invest AG, Frankfurt, to aninstitutional investor. The shares were sold at a price that didnot significantly fall below the exchange price of shares of thecompany with the same security identification number (§ 186Paragraph 3 Sentence 4 of the German Stock Corporation Act(AktG). The stock market price was taken to be the arithmeticmean of the closing prices of the S.A.G. Solarstrom share inXetra trading at the Frankfurt am Main Stock Exchange on thefive stock market trading days preceding the sale of the shares.

On April 13, 2011 S.A.G. Solarstrom AG once again reportedthe intended sale and on the same day, the non-listed place-ment of 400,000 own shares to institutional investors. Heretoo, the shares were sold at a price that did not significantlyfall below the exchange price of shares of the company withthe same security identification number (§ 186 Paragraph 3Sentence 4 of the German Stock Corporation Act (AktG).

The shares, which were sold on April 7 and April 13, 2011,were acquired under the buyback program approved at theAnnual General Meeting. The sale was intended to expand theinvestor base to institutional investors. The predominant partof the share freefloat of the company has been held by privateshareholders up to now. S.A.G. Solarstrom AG’s own portfolioof shares decreases from 1,134,858 to 484,858 no-parshares with this transaction. The released liquidity is to beused, in particular, to accelerate implementation of the 48MWp photovoltaic project in Italy.

b. 5 Staff

In the first three months of the reporting period in 2011,essentially only the changes described in this financial reportoccurred, compared with the opportunities and risks describedin the consolidated management report of 2010. The stillunclear general regulatory conditions in individual markets

currently restrict the further planning security and are imped-ing the funding of photovoltaic projects. Beyond this, theopportunities and risks described in the consolidated manage-ment report of 2010 continue to exist.

b. 6 Opportunities and Risks

b. 7 Key Events After the End of the Interim Reporting Period


On April 18, 2011 S.A.G. Solarstrom AG reported the conclu-sion of the special conversion period, announced on March31, 2011, for its 6.25% convertible bond 2007 / 2010 / 2012and the issue of 601,380 new shares from authorized capi-tal. During the special conversion period from April 4, 2011to April 15, 2011 (inclusive), the conversion rights for 3,084partial debentures in the nominal amount of €500.00 each(ISIN: DE000A0TGEV3) were exercised. The partial deben-tures were exchanged for 601,380 no-par value bearer sharesof S.A.G. Solarstrom AG with a proportionate share of theshare capital of €2.56 each. For this purpose, 601,380 newshares were issued via a capital increase from authorizedcapital. These new shares carry voting rights at the AnnualGeneral Meeting of S.A.G. Solarstrom AG on May 30, 2011 andare entitled to dividends for the current fiscal year 2011. AfterMay 30, 2011, these new shares with the German securitynumber A1KRJ9, ISIN: DE000A1KRJ92 will be transferred to theGerman security number 702 100, ISIN: DE0007021008 ofthe old shares and can be traded on the following day on thestock exchange. The total number of S.A.G. Solarstrom AGshares is thus increased accordingly to 13,108,626 no-parvalue bearer shares.

On April 29, 2011 S.A.G. Solarstrom AG reported that the saleof the 48 MWp project in the region of Venice, Italy is imma-nent through the connection to grid of 12 MWp. S.A.G.Solarstrom AG officially connected 12 MWp of the total of 48 MWp covered by the photovoltaic project in Northern Italyto the power network on this day. A very important prerequi-site has thus been met for the sale of the overall project,which is to take place at a standard market purchase price ofseveral hundred million Euros. The 12 MWp has been con-nected to the public power grid via the ultra-modern trans-former substation built specially for this project. S.A.G.Solarstrom AG has thus secured the current valid feed-in tar-iff at €0.297 for this 12 MWp. The photovoltaic system will beconstructed on an area of 150 hectares and should be finishedby the end of August, according to the current planning sta-tus. With 48 MWp, the system will generate 64,000 MWh ofelectricity each year, and can thus supply 14,000 four-personhouseholds. To enable fast, secure grid connection of the sys-tem, S.A.G. Solarstrom AG has built a separate transformersubstation in record time, which allows the system to be con-nected directly and the electricity to be fed into the high-volt-age network.

The extendable and load management-capable substation isone of the most modern in Italy. It is planned to sell it to theItalian Terna S.P.A., who has already performed the technicalacceptance and commissioning of the substation.

On May 2, 2011 S.A.G. Solarstrom AG reported that it will beexpanding its own power plant portfolio by the 5.1 MWp sys-tem in Kamenicna, Czech Republic, retroactively to January 1,2011. The system was completed at the end of December andconnected to the public grid. This extended the power plantportfolio to 25.1 MWp. The photovoltaic system producesaround 5,200 MWh of electricity each year at the location inKamenicna, Czech Republic, thus covering the electricityrequirements of 1,000 four-person households. The fundedsystem is an interesting extension to the portfolio, even tak-ing into account the Czech solar tax of 26%. As it was con-nected before December 31, 2010, S.A.G. Solarstrom AG willreceive 12.4 Czech Crowns for each kWh fed in to the grid viaits project company (equivalent to €0.51).



The German leading index DAX was barely able to profit fromthe rising economic developments in the first three months of2011. Although it rose from 6,973 points (all values Xetra) atthe start of the year up to February 18, to its all-time high of7,426.81 points, it sank to a new significant all-time low of6,513.84 points by March 16 as a result of the natural andnuclear disasters in Japan. By the end of March, it had consid-erably recovered, but closed on March 31 at 7,041.31 points,only just 1 percentage point above the opening price in Janu-ary. The DAX did not increase again effectively until the end ofApril and closed on May 10 at 7,501.52 points.

The TecDax opened in January at 851.43 points, and by theend of March had nevertheless gained 9.3% compared withthe start of the year, with a high level of volatility. Like the DAX,the index was affected by the events in Japan and on March16 was approaching its state at the start of the year with854.83 points. The solar companies represented in the Ger-man technology index helped the TecDAX to achieve a steepupswing during the nuclear discussions after Fukushima,which peaked at a highest level of 948.67 points at the startof April, corresponding to a gain of almost 100 points withinless than three weeks. However, the index was only able toretain a part of the price gains. After a downswing up to mid-April, the TecDAX closed on May 10 at 930.36 points.

The Photovoltaik Global 30 index, which reflects the pricetrend of the 30 market-dominating international companiesin the photovoltaic sector, increased by around 14.5% to61.73 points by the end of March, also with a high level ofvolatility, but had already exceeded its high at 65.73 pointson February 18 and reached its low on March 11 at 53.94points. After a brief recovery up to the end of March however,the index fell considerably once again and could not profitfrom the nuclear discussions on a sustainable basis. The indexclosed on May 10 at 54.12 points, only a few points above itsopening rate in January.

The S.A.G. share performed relatively positively in the first threemonths and increased by 7.1% by the end of March againstthe opening price of €4.23 on January 3. In the second half ofMarch, the share did not benefit as well as expected from theboom in solar shares, but conversely has been able to retainan overall higher price level since mid-March and closed at€4.53 on May 10. The publication of the positive annualresult on March 31 with the announcement of a dividend pro-posal of 12.5 Eurocent, on the other hand, did little to influ-ence the price.

The increased awareness of the financial market was reflectedin higher daily trading sales. This rose from an average of15,807 shares in Q4 of 2010 to 17,872 shares in the Q1 of2011. In April in particular, the volume increased significantlyonce again. Four financial analysts published their currentanalyses of S.A.G. Solarstrom AG in April, in which the S.A.G.share was assessed at ”Buy“, with price targets between€5.80 and €6.50.

On April 11, 2011 S.A.G. Solarstrom AG’s corporate bond(ISIN: DE000A1E84A4) started in the Entry Standard for bondson the German stock exchange. The new SME segment of theFrankfurt Stock Exchange officially commenced trading onthis day. S.A.G. Solarstrom AG’s bond was one of the firstbonds in the new segment. The bond, which was issued inNovember 2010 with an issuing volume of €25 million waspreviously listed in the open market of the German stockexchange, since December 13, 2010. After starting at 95.4%in January, the price of the bond increased slightly by the endof March up to 96.75% and closed at 98.70% on May 10.

b. 8 Company Share and Performance of the Share Price



After the end of the reporting period, a total of 650,000 S.A.G.Solarstrom AG’s own shares were sold on April 7 and 13,2011. BBV Beratung Beteiligung Verwaltung GmbH, of whomDr. Karl Kuhlmann is the exclusive shareholder, also acquireda total of 582,270 new shares through conversion during thespecial conversion period, and made off-exchange sales ofaltogether 500,000 shares on April 1 and 19, 2011.

During the special conversion period, a total of 601,380 newshares were issued as a result of conversion rights being exer-cised. The number of shares thus rose end of April, 2011 to13,108,626. BBV Beratung Beteiligung Verwaltung GmbHremains the largest individual shareholder and currently holds9.14% of the shares, while S.A.G. Solarstrom AG holds 3.70%.The freefloat is currently 87.16%.

Fig. 7: Share Price Performance S.A.G. Solarstrom AG

%

2 3 4 5 6 7 8 9 10 11 12 2 3 4 5

150.00

140.00

130.00

120.00

110.00

100.00

90.00

80.00

70.00

60.00

50.00

December 30, 2010January 1, 2010

October 4€3.40

€5.08July 12

+30.9%

+11.5%

–25.8%

S.A.G. Solarstrom AG

Photovoltaik Global 30

TecDAX


b. 9 Outlook

1. Overall Economic Performance: Further Recovery Anticipated

The International Monetary Fund (IMF) forecast global eco-nomic growth of 4.4% in 2011 and 4.5% in 2012 in its newreport in April. According to this report, it will be the emergingmarkets in particular which will drive growth forward, with anincrease in the gross domestic product (GDP) of 6.5% in 2011and 2012. Economic growth in the industrial nations, on theother hand, is considerably lower with a forecast 2.4% in2011 and 2.6% in 2012. While the growth in the past fewmonths can partially be attributed to the measures by somenations designed to stimulate economic activity, the privatedemand for further growth is gaining increasing significance.According to the European Central Bank (ECB), inflationarypressure will increase as a result of the rising prices for oil andother raw materials. In their spring forecasts, the leading Ger-man economic research institutes do not expect the naturaland nuclear disasters in Japan to have any significant impacton the economic trends in Germany and Europe.

The Eurozone countries are expected to largely maintain theirgrowth momentum in 2011 and 2012 at a rate of 1.6% and1.8%. Economic development in the individual countries of theEurozone, however, is expected to be inconsistent. While Ger-many will function as a driving force, with a forecast growth of2.5% and 2.1% in 2011 and 2012 the economies in France,Italy and Spain will grow at a considerably weaker pace. Theleading German economic institutes indicate that a shortagein the oil supply due to increasing instability in the Arabianworld or an intensification of the European debt and confi-dence crisis would considerably impact the economy.

2. Industry Performance: Impact on Growth Forecasts in the Industry by Regulatory Changes Expected

Market experts are again anticipating double-digit worldwidegrowth in the industry in 2011 and beyond, as described inthe 2010 Annual Report. Further development of between 5.0GWp (European Photovoltaic Industry Association EPIA) and9.4 GWp (industry analysts iSuppli) is expected in Germany in2011, with between 550 MWp (iSuppli) and 1,250 MWp(EPIA) in France, between 3.9 GWp (iSuppli) and 5 GWp (EPIA)in Italy, between 345 MWp (iSuppli) and 500 MWp in Spainand between 200 MWp (EPIA) and 350 MWp (iSuppli) in theCzech Republic. In the US, industry experts are anticipating fur-ther development of 3 GWp.

The forecast further development is, however, dependent onthe regulatory environment in the individual countries to alarge extent. It is likely that the reductions in Germany, Italy,France, the Czech Republic and Spain, some of which havealready been made and some of which have been announced,will have a considerably dampening impact on further growth.In most countries, ground-mounted plants are heaviestaffected by the reductions. The unpredictability of the currentphotovoltaic market is made particularly clear by the devel-opment in Germany. Although a few weeks ago a very strongmarket was expected in the first half-year and thus of coursealso in Q1, due to the fact that the key date for the feed-in tar-iff reduction had been brought-forward, no pull-forward effectshave yet been evident. In contrast, the German market hasremained very restrained up to now – regardless of the polit-ical discussions that are tending towards a change in energypolitics in the aftermath of the nuclear disaster in Fukushima.

A new law was passed in Italy on May 5, which stipulates con-siderable reductions in the feed-in tariffs from June 1, 2011.Delays in legislation substantially complicated the planningof photovoltaic projects in Italy and paralyzed the market fornew photovoltaic systems in the last few weeks accordingly.



However, due to the expanded production capacities, partic-ularly in the Asian countries, a further decline in the compo-nent prices of up to 20% can be expected in 2011. This in turnopens up completely new growth potential for the direct mar-keting of green electricity, independent of feed-in tariffs,through the achievement of the grid parity of electricity fromphotovoltaics at household electricity prices in some coun-tries. The growth prospects for photovoltaics thus remain pos-itive in the long-term, despite a considerable deceleration inEurope due to the regulatory changes that have been made.

3. Outlook

The positive result of Q1 2011 confirms the S.A.G. Group’sforecast of achieving sales of between €260 and €280 mil-lion and an EBIT of between €16 and €18 million in 2011.Despite uncertainties regarding the new feed-in tariff regula-tions in Italy, the Executive Board is still confident that thesesales and profit goals can be achieved, as they are anticipat-ing many of the regulatory changes in Europe and taking theminto consideration in planning. In addition, internationalexpansion pays off and minimizes the regulatory risks in cer-tain countries. Any declines in sales in individual countriescould thus be compensated during the course of the year byother European markets and promising new markets outsideof Europe, so that the Group’s growth trend could be contin-ued as planned. In addition, the S.A.G. Group, as a roof-topspecialist, has an outstanding competitive position in thechanging European markets, which are increasingly favoringroof-top systems. The expansion of the service business isopening additional opportunities all along the photovoltaicvalue chain.

The forecast is based on the premise explained in detail in the2010 Annual Report, which in particular assumes that finan-cial resources will continue to be available for further expan-sion and the implementation of major projects. The ExecutiveBoard anticipates that the required financial resources will beavailable to achieve the sales and profit goals for 2011, as willthe required qualified specialist staff. S.A.G. Solarstrom AG isthus planning to continue its profitable and sustainable growthcourse in 2011, even though the pace of growth might weakenslightly due to market conditions.

20 c. Interim Consolidated Financial Statements as of March 31, 2011

c. 1 Consolidated Statement of Comprehensive Income from January 1 to March 31, 2011

c. Interim Consolidated Financial Statements as of March 31, 2011

in thous. € 2011 2010

Sales revenue 78,918 31,276Inventory changes of work in progress –50,665 1,256Other operating income 443 189Cost of materials –16,216 –25,803Wage costs –3,280 –2,530Depreciation –567 –532Other operating expenses –3,504 –2,217

Operating result (EBIT) 5,129 1,639

Share of profit from associated companies 15 18Share of loss/profit from joint venture companies –306 184Financial revenues 400 1,062Financial expenditure –1,571 –1,551Financial result –1,462 –287

Earnings before tax (EBT) 3,667 1,352Income tax expenditure –1,156 –444Group period result 2,511 908Other resultsCurrency conversion differences –10 108Consolidated group period result 2,501 1,016

in €

Results per shareUndiluted 0.22 0.08Diluted 0.17 0.07


21c. Interim Consolidated Financial Statements as of March 31, 2011


Residential roof-top system, Schorndorf, Deutschland, 9,1 kWp


c. 2 Consolidated Balance Sheet as of March 31, 2011

in thous. € 2011 2010

Assets

Noncurrrent assetsIntangible assets

Licenses, rights and software 711 753Goodwill 1,625 1,625

2,336 2,378Tangible assets

Land and buildings 565 567Plants and machinery 49,838 28,787Other fixtures and fittings, tools and equipments 898 928

51,301 30,282Financial assets

Investments 2,902 2,902Shares in joint venture companies 9,652 9,959Shares in associated companies 2,107 2,092Other financial assets 11,738 12,913

26,399 27,866Noncurrrent receivables and other assets 2,923 2,806

Deferred taxes 1,842 1,84284,801 65,174

Current assetsInventories

Raw materials and supplies 24,543 29,565Work in progress 4,959 55,624Down payments made 2,834 2,245

32,336 87,434Receivables and other assets

Trade receivables 14,792 67,147Receivables from construction contracts 72,396 7,776Other assets 9,831 11,507Income tax receivables 206 278

97,225 86,708Cash and cash equivalents 2,608 9,810

132,169 183,952

216,970 249,126

December 31March 31



December 31March 31

in thous. € 2011 2010

Liabilities

Capital stock 32,019 32,019Capital provisions 13,779 13,779Currency differences 302 312Own shares –4,243 –4,243Accumulated net profit 12,992 10,481

Sum total of equity 54,849 52,348

Noncurrent liabilitiesBonds 35,001 34,488Interest-bearing loans 33,471 26,390Deferred tax liabilities 1,841 1,380

70,313 62,258

Current liabilitiesIncome Tax Liabilities 4,446 3,729Other Provisions 2,369 2,369Interest-bearing loans 35,127 47,084Trade payables and other payables 49,866 81,338

91,808 134,520Sum total of liabilities 162,121 196,778

216,970 249,126


c. 3 Consolidated Statement of Changes in Equity as of March 31, 2011

Capital stock Capital Currency Own shares Accumulated Total

in thous. € provisions differences net profit of equity

Status January 1, 2010 31,433 13,779 26 –1,699 5,338 48,877Group period result 0 0 0 0 908 908

Other resultsCurrency conversion differences 0 0 108 0 0 108

Consolidated group period result 0 0 108 0 908 1,016Capital increase 0 0 0 0 0 0Acquisition of own shares 0 0 0 –1,104 0 –1,104Cash dividends paid 0 0 0 0 0 0Status March 31, 2010 31,433 13,779 134 –2,803 6,246 48,789

Status January 1, 2011 32,019 13,779 312 –4,243 10,481 52,348Group period result 0 0 0 0 2,511 2,511

Other resultsCurrency conversion differences 0 0 –10 0 0 –10

Consolidated group period result 0 0 –10 0 2,511 2,501Capital increase 0 0 0 0 0 0Acquisition of own shares 0 0 0 0 0 0Cash dividends paid 0 0 0 0 0 0Status March 31, 2011 32,019 13,779 302 –4,243 12,992 54,849



in thous. € 2011 2010

EBIT 5,129 1,639 Depreciation 567 532 Other non-cash charges/earnings 298 –1,058 Change to assets 44,709 –15,697 Changes to noncurrent liabilities (without financing loans) 512 143 Changes to current liabilities (without financing loans) –31,513 –6,330 Interest paid –1,298 –733 Interest received 6 109 Taxes on earnings paid/received –234 –13 Cash flow from operations 18,176 –21,408 Changes to financial assets from secured fixed deposits 1,174 173 Changes to for credits and loans granted for third parties –117 473 Payments for investments to tangible assets –21,544 –219 Cash flow from investment activity –20,487 427 Payments from amortization of financial credits –18,249 –285 Receipts from raising of financial credits 13,358 17,704 Payments for acquisition of own shares 0 –1,104 Cash flow from financing activity –4,891 16,315 Net change of cash and cash equivalents –7,202 –4,666 Changes to financial resource funds dependent on the exchange rate 0 39 Financial resource funds at start of period 9,810 7,221 Financial resource funds at end of period 2,608 2,594

Composition of financial resourcesLiquid assets 2,608 2,594 Financial resource funds at end of period 2,608 2,594

c. 4 Consolidated Cash Flow Statement from January 1 to March 31, 2011



Roof-top system, Fairground Freiburg, Freiburg i. Br., Germany, 441 kWp

c. 5 Reporting by Market Segment from January 1 to March 31, 2011

in thous. € 2011 2010 2011 2010 Sales revenue (external customers) 68,903 10,887 4,730 16,456Sales with other segments 0 0 0 0Total of sales revenue 68,903 10,887 4,730 16,456Total operating performance 18,115 12,281 4,730 16,472Operating result (EBIT) 3,910 255 212 926

Project Planning andPlant Construction

January - March January - March January - March January - March

Partner Sales



2011 2010 2011 2010 2011 2010 2011 20104,141 3,422 1,144 511 0 0 78,918 31,276

223 211 0 0 –223 –211 0 04,364 3,633 1,144 511 –223 –211 78,918 31,2764,264 3,439 1,144 529 0 0 28,253 32,721

817 445 190 13 0 0 5,129 1,639

Power ProductionJanuary - March January - March January - March January - March January - March January - March January - March January - March

Plant Operation and Services Consolidation/Transition Group


1. General Information

Information on the Company

The purpose of S.A.G. Solarstrom AG and its subsidiaries is theplanning, the production and financing, the acquisition, theoperation and the marketing of plants and plant parts as wellas the production and sale of energy, and further the trade withgoods, licenses and other rights including the provision ofservices, all in the area of solar energies.

S.A.G. Solarstrom AG, with headquarters in Sasbacher Straße5, 79111 Freiburg i. Br., is a corporation founded in Germany,whose shares, in addition to being listed in the M:Access seg-ment of the Munich Stock Exchange, have been included intrading of the General Standard of the Frankfurt StockExchange since July 9, 2010. The company is entered in theCommercial Register of the District Court of Freiburg i. Br.(Germany) under the number HRB 5646.

Basic Principles for Compilation

The consolidated interim financial statements at March 31,2011 was drawn up according to IAS 34 (Interim FinancialReporting) and was not subject to either an audit nor a reviewaccording to § 317 of the German Commercial Code (HGB).The consolidated interim financial statements does not con-tain all the information and data required for a consolidatedfinancial statements and must therefore be read in conjunc-tion with the consolidated financial statements of December31, 2010.

Essential Accounting and Valuation Principles

The consolidated interim financial statements is based on thesame accounting and valuation principles, as well as the samecalculation principles, as the consolidated financial state-ments of December 31, 2010. The interim financial statementsof the companies involved are based on uniform accountingand valuation principles. A detailed explanation of theaccounting and valuation principles applied is published in theNotes to the Consolidated Financial Statements of December31, 2010.

The standards and interpretations applied for the first time on January 1, 2011, did not have any impact on the account-ing methods and the presentation of the Group’s profit, finan-cial and assets situation.

Seasonal Influences on Business Activities

Explanatory notes on the effects of seasonal and cyclical influ-encing factors on the business activities are contained in Sec-tion b.2 – Performance of the Overall Economy and the Indus-try – of the Management Report.

Changes to the Consolidation Base

In the interim report of March 31, 2011, eight domestic andtwenty-two foreign subsidiaries are included, in addition to theparent company. Subsidiaries are fully consolidated from thetime of acquisition, the time at which the group obtains con-trol. Control is usually understood when the group is entitledto more than 50% of the voting rights. Inclusion in the con-solidated financial statements is terminated once the parentcompany no longer has control.

At March 31, 2011 no changes have been made in the con-solidation base since December 31, 2010.

Use of Estimates

The compilation of the Group’s interim consolidated financialstatements requires assumptions and estimates by manage-ment that could affect the application of accounting stan-dards in the Group, as well as the reported amount of assetsand liabilities, the income and expenses, and the contingentliabilities.

The estimates and underlying assumptions are reviewed onan ongoing basis by the management of the company.Although the estimates, based on the current events andactions, are made according to the best knowledge of man-agement, the actual amounts can deviate from the estimates.

c. 6 Notes to the Interim Consolidated Financial Statements as per March 31, 2011


Currency Conversion

The interim consolidated financial statements is drawn up inEuros, the functional and the presentation currency of the com-pany. Each company within the Group defines its own func-tional currency. The items contained in the closing of therespective company are valuated using this functional cur-rency.

The exchange rates of the essential currencies not repre-sented in the European Monetary Union, on which currencyconversion is based, have changed in relation to one Euro asfollows:

Decline in Value (Goodwill)

The intrinsic value of the goodwill is examined once a year. Acheck also takes place if the circumstances indicate that thevalue could have declined. The group’s tests for intrinsic valueof the goodwill are based on the calculations of the fair valueusing the discounted cash flow method. The basic assump-tions for determining the achievable amount for the variouscash generating units were explained in the consolidatedfinancial statements of December 31, 2010.


Foreign currency per €1 Swiss Francs Czech Crowns US Dollars

Period-end exchange rateMarch 31, 2011 1.2994 24.5538 1.4099December 31, 2010 1.2468 25.2947 No data*

Average exchange rate January - March 2011 1.2871 24.4124 1.3670January - March 2010 1.4642 25.9240 No data**The information on the US Dollar for the previous year has been omitted, as no balances were converted in this currency in the previous year.


2. Explanation of Individual Consolidated Financial Statements Items

Plants and machinery

The increase in Plants and Machinery at March 31, 2011,essentially resulted from the capitalization of a photovoltaicsystem in the Solarpark Kamenicna s.r.o., Kamenicna, CzechRepublic.

Work in Progress / Receivables from Construction

Contracts

The changes can be essentially attributed to the partial imple-mentation of the 48 MWp project in Italy.

The construction contracts entered at the balance sheet dateessentially refer to receivables from the solar parks in Italy andSpain.

Current construction contracts on the balance sheet date:

Entered and contained in the closing as due amounts:

Sales from noncurrent construction contracts amount to€68,390,000 (December 31, 2010: €19,076,000).

Trade Receivables

The decline in Trade Receivables at March 31, 2011 is essen-tially attributable to the receipt of payment from the sale ofphotovoltaic systems in two project companies in Apulia, Italy.

Own Shares

The ordinary shares bought back by the company are shownin the balance sheet under the item Own Shares and deductedfrom equity on the face of the balance sheet.

The stocks of own shares shown in the Notes on the Consoli-dated Accounts at December 31, 2010 remain unchanged. Notransactions were performed in the first quarter of 2011.

Convertible Bond

The runtime, which was fixed until July 29, 2010, of the 6.85%convertible bond issued on July 30, 2007 in the total nomi-nal amount of €10,000,000.00 was extended by two yearsup to July 29, 2012 in accordance with an offer by the Execu-tive Board and the Supervisory Board made on April 1, 2010.The runtime of the convertible bond has annual conversionperiods. In the event of an extension, the interest rate is 6.25%from July 30, 2010 (6.85% up to July 29, 2010). All other con-vertible bond conditions remain unaffected.

After the offer of extension, the convertible bond holderscould either have the convertible bond paid out on the origi-nal due date, use the conversion period for complete conver-sion or extend the runtime of the convertible bond.

The situation described in the Group Notes of December 31,2010 remains unchanged. No transactions were performed inthe first quarter of 2011.

The bond is secured up to March 31, 2011 in the full amountof the redemption amount €9,091,000 (March 31, 2010:€9,973,000) by pledging of bank deposits in favor of the paying agent.


in thous. € 2011 2010

Costs accrued up to balance sheet date, plus entered profits 87,466 19,076

Less: entered losses 0 0Less: partial settlements 15,070 11,300

Total 72,396 7,776


in thous. € 2011 2010

From customers from construction contracts 72,396 7,776To customers from construction contracts 0 0Total 72,396 7,776




In the fiscal year, S.A.G. Solarstrom AG issued a bond with asubscription period from November 25 to December 1, 2010.A total volume of €25.000,000 has been applied for to date.The term is five years, from December 15, 2010 until Decem-ber 14, 2015, and has a redemption price of 100%. The inte-rest rate of the bond is 6.25% and the interest will be paidonce a year on December 14 of each year.

Residential roof-top system, Burgthann, Germany, 18 kWp


3. Result per Share

In the calculation of the undiluted result for each share, theresult to be assigned to the holders of bearer shares of the par-ent company will be divided by the weighted average numberof ordinary shares in circulation during the year.

In the calculation of the diluted result for each share, theresult to be assigned to the holders of ordinary shares of theparent company will be divided by the weighted average num-ber of ordinary shares in circulation during the year plus theweighted average number of ordinary shares that would beissued after the conversion of all potential ordinary shares withdilution effects in ordinary shares.

Undiluted Result per Share

The undiluted result per share is calculated by creating thequotient from the group period result to which the investorsare entitled and the average number of issued shares duringthe fiscal year – with the exception of own shares that the com-pany itself holds.

Diluted Result per Share

The diluted result per share is derived by increasing the aver-age number of shares in circulation by all the conversion priv-ileges. It is assumed that the convertible bonds will beexchanged for shares and that the net profit will be adjustedby the interest payable and the tax effect.


2011 2010

Group period result falling to investors (in thous. €) 2,511 908Average number of issued shares (in thousands) 11,372 11,561Undiluted result per share in € 0.22 0.08


in thous. € 2011 2010

Group period result falling to investors 2,511 908Interest payable for convertible bond (adjusted by tax effect) 98 120Group period result for determining the diluted result per share 2,609 1,028

in thousands 2011 2010

Average weighted number of issued shares 11,372 11,561Adjustments for:Assumed conversion of convertible bonds 3,545 3,889Average weighted number of shares for the diluted result per share 14,917 15,450Diluted result per share in € 0.17 0.07





Number of Shares

The number of shares in circulation developed as follows:4. Changes to Contingent Liabilities

and Other Financial Obligations

Securities

As of March 31, 2011, securities from banks and insurancecompanies in the total amount of €11,070,000 existed(December 31, 2010: €10,965,000), and were essentiallytaken over during the execution of the contract and the war-ranty. This could result in rights of recourse of the respectiveguarantor in the event of a claim.

Other Contingent Liabilities

The liability situation described in the Group Notes of Decem-ber 31, 2010 remains unchanged.

Rental and Leasing Contracts

The rental and leasing agreements listed in the Notes on theConsolidated Financial Statements at December 31, 2010 didnot undergo any significant changes up to March 31, 2011.

2011 2010

Number of shares on January 1, in pieces* 11,372,388 11,741,441Acquisition of own shares 0 –270,443Number of shares on March 31,in pieces 11,372,388 11,470,998Weighted average number of ordinary shares, in pieces 11,372,388 11,561,472Result apportionable to shareholders of parent company (in thous. €) 2,511 908

*This amount takes into account the retirement of 7,735 shares that were used forthe conversion of convertible bonds received with effect of August 6, 2009.




5. Business Transactions with Related Companies and Parties

Related Parties

Under the capital increased performed in 2007, the BBVBeteiligung Beratung Verwaltung GmbH (in brief: BBV) tookover all available 1,115,986 no-par bearer shares. This cor-responded to a share of 9.5%. In addition, the BBV also tookover €8,856,500.00 of the convertible bond with a totalamount of €10,000.000.00. The convertible bond producedinterest payable to the BBV in the amount of €138,000 in thefirst quarter of 2011 (Q1 of 2010: €151,000).

Associated Companies

The following business was performed with associated com-panies:

The business with associated companies refers to the relation-ship with the company Solarstrompark Gut Erlasee GmbH &Co. KG. In the year under review, services from group compa-nies in the form of service and maintenance contracts andinsurances in the amount of €19,000 (Q1 of 2010: €19,000)were invoiced.

in thous. € 2011 2010

Sales to associated companies

- Goods 0 0- Services 19 19

Open items from the purchase/sale of goods and services to associated companies

- Receivables 19 –32

Loans to associated companiesStart of year 0 0Loans granted in the current year 0 0Loans amortized in the current year 0 0End of the period 0 0Calculated interest 0 0

March 31 March 31


Joint Ventures

The following business was performed with joint ventures:

The business with joint ventures refers to the relationshipwith Solar Stribro s.r.o., Czech Republic and S.A.G. IntersolaireSAS, France.

6. Staff

In the first three months of 2011, 189 people on average wereemployed (1st half-year of 2010: 159). This increase com-pared with December 31, 2010, when 185 people wereemployed, can essentially be attributed to a buildup in thenumber of staff as part of the company’s expansion policy.

7. Significant Events in the Reporting Period

Details on significant events in the interim reporting period upto March 31, 2011 are contained in Section b.3 – Key Eventsduring the Reporting Period – in the Management Report.

8. Significant Events After the Reporting Period

Details on significant events after the end of the interim report-ing period up to May 10, 2011, are contained in Section b.7– Key Events After the End of the Interim Reporting Period –in the Management Report.


in thous. € 2011 2010

Sales to joint venture companies

- Goods 192 0- Services 27 5,292

Open items from the purchase/sale of goods and services to joint venture companies

- Receivables 1,379 6,522

Loans to joint venture companies Start of year 3,232 22,957Loans granted in thecurrent year 27 77Loans amortized in the current year 0 549End of the period 3,259 22,485Calculated interest 44 335

March 31 March 31


To the best of our knowledge, and in accordance with theapplicable reporting principles for interim reporting, theinterim consolidated financial statements give a true and fairview of the profit or loss, assets, liabilities and financial posi-tion of the Group, and that the interim consolidated manage-ment report includes a fair review of the development and per-formance of the business and the position of the Group,together with a description of the main opportunities andrisks with the expected development of the Group during theremaining fiscal year.

Freiburg i. Br., May 10, 2011

Dr. Karl Kuhlmann (CEO)

Oliver Günther (Member of the Executive Board)

Christoph Koch (Member of the Executive Board)

c. 7 Responsibility Statement

37d. Financial Calendar | e. Contact / Disclaimer

Dates 2011

May 30, 2011: General Shareholder‘s Meeting, Freiburg Trade Fair

August 11, 2011: Half-year Report for 2011

August 29-31, 2011: DVFA Small Cap Conference, Frankfurt

October 6, 2011: Analyst Conference, Stock Exchange Munich, Frankfurt

November 10, 2011: Interim Report on the 3rd Quarter of 2011

November 21-23, 2011: Equity Conference, Frankfurt

The latest financial dates will be published on the website of S.A.G. Solarstrom AG under the area Investor Relations / Financial Calendar.


Investor Relations / Public Relations

S.A.G. Solarstrom AG

Sasbacher Straße 5 · 79111 Freiburg i. Br. · GermanyTel. + 49 (0) 7 61 / 47 70 - 3 11Fax + 49 (0) 7 61 / 47 70 - 44 1 [email protected]@solarstromag.com

Published by

S.A.G. Solarstrom AGSasbacher Straße 579111 Freiburg i. Br.Germany

Editor

BSK Becker+Schreiner Kommunikation GmbH, Willich

Design, Layout, Typesetting and Photographic Editing

Graphikbuero GEBHARD|UHL, Freiburg i. Br.

Photographs

Andreas MaderEBV-Studio – Mathias Kern, Freiburg i. Br.Graphikbuero GEBHARD|UHL, Freiburg i. Br.S.A.G. Solarstrom AG, Freiburg i. Br.

In the event of any discrepancies between the English and the German version ofthis report, the German version shall be the valid one.

DQS-certified management systems for

ISO 9001 and ISO 14001

Certified according to the audit for

Work/Life Balance by the

Gemeinnutzigen Hertie-Stiftung

d. Financial Calendar

e. Contact / Legal Information

S.A.G. Solarstrom AG · Sasbacher Straße 5 · 79111 Freiburg i. Br. · GermanyTel. + 49 (0) 7 61 / 47 70 - 0 · Fax + 49 (0) 7 61 / 47 70 - 4 40www.solarstromag.com · [email protected]

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