Consolidated INTERIM REPORT FIRST QUARTER 2011 Solarworld AG For your guidance

Cross reference to text passages in the Group Interim Report• p. 00 // 00 Cross reference to charts in the Group Interim Report• p. 00 // www.internetlink.com // Cross reference to Details on Sustainability Performance 2010 • p. S00 // Cross reference to financial reports of prior years • p. 00 // Solarworld 2011 • Content

Solarworld AG 03 Group Interim Report First Quarter 2011

Selected indicators first quarter 2011 Page 04 // Letter by the Chairman Page 07 // Group Interim Report first quarter 2011* Page 09 // Consolidated interim financial statements 2011* Page 31 //

* a more detailed table of contents can be found at the beginning of the main chapters Solarworld 2011 • Selected indicators First Quarter 2011

04

01 Selected indicators // in k€

Financial indicators 1st quarter 2011 1st quarter 2010 Change (%) Revenue 232,986 225,579 3.3 % Foreign quota in % of revenue 71.2 % 33.2 % 38.0 %-points EBITDA 52,276 45,036 16.1 % EBIT 26,288 25,873 1.6 % EBIT in % of revenue 11.3 % 11.5 % – 0.2 %-points Capital employed (key date)* 1,505,013 1,164,930 29.2 % ROCE** (in %) 1.7 % 2.2 % – 0.5 %-points Consolidated net income 12,477 5,278 136.4 % Consolidated net income in % of revenue 5.4 % 2.3 % 3.1 %-points Total assets 2,737,587 2,754,743 – 0.6 % Equity 939,319 890,291 5.5 % Equity ratio (in %) 34.3 % 32.3 % 2.0 %-points Return on equity (in %) 1.3 % 0.6 % 0.7 %-points Cash flow from operating activities – 139,972 28,516 n.a. Net liquidity*** – 661,248 – 388,626 70.2 % Investments in intangible assets and property, plant and equipment 46,568 49,793 – 6.5 %

Employee indicators 1st quarter 2011 1st quarter 2010 Change (%) Employee (key date) 2,651 2,053 29.1 % of which trainees (key date) 70 74 – 5.4 % Personnel costs ratio (in %) 11.6 % 10.8 % 0.8 %-points Revenue per employee (in k€) 88 110 – 20.0 % EBIT per employee (in k€) 10 13 – 21.3 %

* Intangible assets and property, plant and equipment less deferred investments subsidies plus net current assets except for current net liquidity ** EBIT/Capital employed *** Liquid funds less financial liabilities

02 Revenue by region // in m€

59.6 67.1 13.4 150.7 U.S. Germany U.S. Germany

26.3 12.0 Asia Asia

14.8 65.2 4.1 45.4 ROW Rest of ROW Rest of 2011 Europe 2010 Europe Solarworld 2011 • Selected indicators

05

03 Quarterly comparison of the Consolidated Income Statements // in k€

Q2 2010 Q3 2010 Q4 2010 Q1 2011 Q1 2010 Change (%) Revenue 382,810 337,393 358,892 232,986 225,579 3.3 % Inventory change – 34,633 14,157 132 68,055 28,778 136.5 % Own work capitalized 196 330 205 994 294 238.7 % Other operating income 23,490 19,686 35,543 30,248 22,071 37.0 % Cost of materials – 217,975 – 220,607 – 222,825 – 201,251 – 173,374 16.1 % Personnel expenses – 31,034 – 30,778 – 37,032 – 34,986 – 27,438 27.5 % Amortization and depreciation – 21,421 – 22,660 – 25,259 – 25,988 – 19,163 35.6 % Other operating expenses – 43,568 – 47,685 – 50,479 – 43,770 – 30,874 41.8 % Operating result 57,865 49,836 59,177 26,288 25,873 1.6 % Financial result – 9,370 – 18,032 – 2,648 – 9,359 – 14,080 – 33.5 % Income before taxes on income 48,495 31,804 56,529 16,929 11,793 43.6 % Taxes on income – 18,963 – 13,750 – 22,081 – 5,309 – 6,515 – 18.5 % Income after taxes from discontinued operations 857 n.a. Consolidated net income 29,532 18,054 34,448 12,477 5,278 136.4 %

04 indicators of the SolarWorld stock

Prime Standard/TecDAX 1st quarter 2011 1st quarter 2010 Number of shares 111.72 m 111.72 m Market capitalization as of March 31 1.3 b€ 1.3 b€ Average trading volume (12 months) 2.9 b€ 6.5 b€ Earnings per share 0.11 € 0.05 € Lowest price 7.04 € 9.44 € Highest price 11.50 € 16.61 € Opening price at beginning of year 7.65 € 15.20 € Closing price per March 31 11.50 € 11.25 € Share price development since beginning of year 50.3 % – 26.0 %

ISIN (International Securities Identification Number): DE0005108401 WKN (Wertpapier-Kenn-Nummer): 510840 Stock exchange abbreviation: SWV BUILD A SOLARWORLD — “We will do everything to steadily improve our high quality and to strengthen our brand.” — “We will further develop possibilities for storage and self-consumption of .” —

Dr.-Ing. E.h. Frank Asbeck CEO of SolarWorld AG Dr.-Ing. E.h. Frank Asbeck CEO of SolarWorld AG

Letter by the Chairman

Dear Customers, Shareholders, Employees and Friends of SolarWorld AG,

The reactor disaster of Chernobyl happened 25 years ago. The film “Seven years of winter”, whose premiere I had the privilege to attend in Berlin in mid-April, showed the horrific consequences of this tragedy from the point of view of a seven-year-old boy. This film will touch anyone – not just people who, like myself, have children. One should think that Chernobyl was enough of a warning. Unfortu- nately, it required the Japanese catastrophe to trigger new thinking, a change of mind and new action worldwide. If nothing is done now, one can only conclude that mankind is really horrifically stupid!

In Germany, there is by now a broad consensus on the rapid phase-out of this dangerous and super­ fluous form of energy generation. For a start, that is a good thing. Now, the question is: How quickly can we manage the phase-out? I say: We have to put an end to this energy by 2020 at the very latest. By then, renewable energies can cover clearly more than 40 percent of the German electricity demand.

We as the SolarWorld company are part of the solution. The solar manufacturers are still being maligned in the current energy debate and held responsible for rising electricity prices. Yet, the oppo- site is true. In the long run, solar power makes our energy supply less expensive. Sunshine is free of charge. Only technical costs are incurred, which, in terms of the underlying trend, will decline signifi- cantly. We are making a contribution to this – day by day in our Research and Development laborato- ries and in our production facilities in Germany, the United States and South Korea. On May 20, 2011, we will inaugurate our twelfth factory in Freiberg, a highly efficient module production site. At the same time, we are promoting the self-consumption of solar power. Already today, our products enable consumers to gain independence from the old energy supply monopolies, from and from rising prices.

That this is something more and more people want is evidenced by our success. We got off to a good start into the solar business in 2011. The development in the U.S. continues to be particularly positive. I am delighted to see how the internationalization of our group is progressing.

We are part of the solution! This is something that highly motivates me and all employees of Solar- World. It is with this vigor that we want to participate in shaping the future worldwide! That is what I am looking forward to together with you.

Sunny regards,

Dr.-Ing. E.h. Frank Asbeck CEO of SolarWorld AG

Solarworld / 2011 CONSOLIDATED INTERIM REPORT first Quarter Consolidated Interim Financial Statements

BUSINESS DEVELOPMENT FIRST QUARTER 2011 10 the SOLARWORLD STOCK 13 the MARKET

EARNINGS, FINANCE AND ASSET SITUATION 17 ea RNINGS SITUATION 19 FINANCe SITUATION 21 asset SITUATION

Material related party TRANSACTIONS

SUPPLEMENTARY REPORT 24 d isclosure of events of particular IMPORTANCE AND THEIR REPERCUSSIONS 24 o VERALL STATEMENT BY THE MANAGEMENT BOARD ON THE ECONOMIC SITUATION AT THE TIME OF THIS REPORT

REPORT ON THE FUTURE DEVELOPMENT WITH ITS MAJOR OPPORTUNITIES AND RISKS 25 o PPORTUNITIES AND RISKS 25 FORECAST REPORT 29 o VERALL STATEMENT BY THE MANAGEMENT BOARD ON THE EXPECTED DEVELOPMENT OF THE GROUP Solarworld 2011 • Consolidated Interim Financial Statements • BUSINESS DEVELOPMENT FIRST QUARTER 2011

10 BUSINESS DEVELOPMENT FIRST QUARTER 2011

THE SOLARWORLD STOCK

The natural and reactor disasters in Japan also hit the stock markets. The accumulation of horror reports since March 11, 2011 and the news about the increasing radioactive radiation in the Japanese Fukushima nuclear power station as well as the severe consequences to be expected for Japan threw the international stock markets into disarray. However, capital markets were able to stabilize some- what towards the end of the first quarter and even reported a slight plus. Thus, the DAX went up by 1 percent to 7,041 points between January 2 and March 31, 2011. The TecDAX, driven by the positive development of the solar stocks, grew by 8 percent to 862 points.

Unlike conventional utilities, whose stocks came under considerable pressure, the renewable energies industry showed stock price increases. The moratorium on the operating life extension of German nuclear power plants combined with the emerging desire among large parts of the population for safer and cleaner energy technologies were interpreted by investors as a signal for further industry growth. With the positive atmosphere for renewable energies, solar stocks gained momentum at the end of March.

Our stock price developed in line with this general trend. At the beginning of February, the reporting of our figures for fiscal year 2010, clearly above market expectations, gave impetus to our share. As a result of the improved atmosphere for renewable energies in the middle of March, the stock price went up steeply. On the whole, our stock appreciated in the first three months of the year by 50 percent and traded on March 31, 2011 at € 11.50 (January 3, 2011: € 7.65). Thus, we outperformed the development of the two industry indices Index (SOLEX) and Photon Photovoltaic Stock Index (PPVX). Solarworld 2011 • Consolidated Interim Financial Statements • BUSINESS DEVELOPMENT FIRST QUARTER 2011

05 Development of SolarWorld stock price in comparison with DAX and TecDAX 11 Period: April 1, 2010 – March 31, 2011 // Source: Deutsche Börse, 2011

120 % 112.9 % DAX 110 % 112.7 % TecDAX 104.3 % SolarWorld 100 %

90 %

80 %

70 %

60 %

Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar

In the period under review, the capital stock of the company remained unchanged and stands at 111,720,000 no par value bearer shares with an imputed nominal value of € 1.00.

On December 31, 2010, the Federal Financial Supervisory Authority (BaFin) approved the publication of a voluntary, public take-over offer of SolarWorld AG to the shareholders of Solarparc AG. The offer was a share swap of one Solarparc share against one share certificate of SolarWorld AG. The last deadline was February 17, 2011. The offer was accepted on behalf of 3,914,116 shares. Solar- World AG can now exercise control over Solarparc AG; in other words, the company has been fully integrated in the group of consolidated companies of the SolarWorld Group. Consolidated entity and legal group structure • p. 37 //

The completion of the share swap also changes the shareholder structure of SolarWorld AG: Trea- sury stock went down to 0.83 (December 31, 2010: 4.33) percent. This is equivalent to a number of 924,607 share certificates. Thus, pursuant to § 71b AktG (German Stock Corporation Act) a total of 110,795,393 shares will be entitled to vote and receive dividends at the next Annual General Meeting on May 24, 2011. In addition, DWS Investment GmbH and UBS AG have reduced their holdings in SolarWorld AG by 2.49 (December 31, 2010: 5.31) percent and 3.00 (December 31, 2010: 3.27) per- cent respectively. Solarworld 2011 • Consolidated Interim Financial Statements • BUSINESS DEVELOPMENT FIRST QUARTER 2011

12 06 Shareholder structure as at March 31, 2011

FG D E C A // Free float 61.54 % B // Dr.-Ing. E.h. Frank Asbeck 27.80 % C // UBS AG 3.00 % B 2011 A D // DWS Investment GmbH 2.49 % E // FMR LLC (Fidelity Group) 2.23 % F // BlackRock Inc. 2.11 % G // SolarWorld AG (treasury stock) 0.83 %

In the first three months of the year 2011,capital market and general public showed a high level of interest in SolarWorld AG. Focus topics were the repercussions of the disaster in Japan on the German energy policy, the development of our international sales markets as well as self-consumption of solar power. They, too, were the dominant themes at this year’s business press’ and analysts’ conferences in Bonn on March 24, 2011, where we presented our Annual Group Report 2010. www.annual group report2010.solarworld.de//

In the first quarter, we continued our ongoing dialogue with representatives of the capital market – in individual talks with analysts, investors and shareholders as well as at road shows and conferences in Europe and the United States.

The repeatedly prize-winning financial reporting of SolarWorld AG received another international award in March 2011: The Annual Group Report 2009 reached second place (1st Runner-up) in the category “Best Integrated Report” of CR Reporting Awards 2011. The prizes are awarded annually by the organization CorporateRegister.com located in London for excellence of reporting in the area of Corporate Responsibility (CR). Solarworld 2011 • Consolidated Interim Financial Statements • BUSINESS DEVELOPMENT FIRST QUARTER 2011

THE MARKET 13

ECONOMIC ENVIRONMENT

The world economy continued to expand in the first quarter of 2011. Growth drivers were again pri- marily threshold countries. World trade is forecasted to grow by 9 percent. For the year 2011, economic institutes expect a Gross Domestic Product (GDP) of 4.3 (2010: 4.8) percent. Major risks are considered to be the further scarcity of oil supply due to the increasing unrest in the Arab region and an exacerba- tion of the European debt crisis.

The economic development in the euro area varies: Germany and some of its neighboring countries continue to grow while countries like Greece and Portugal show a shrinking economic performance. For the entire euro area, GDP is expected to increase by 1.7 (2010: 1.7) percent in 2011. In Germany, GDP should go up by 2.8 (2010: 3.6) percent. Exports and domestic demand are projected as main drivers for this development.

The U.S. economy is further recovering from the financial crisis and expanding albeit at a moderate level. In 2011, a growth rate of 3.0 (2010: 2.9) percent is forecasted.

THE WORLD ENERGY MARKET

The average oil price rose vigorously in the first quarter of 2011. The political upheavals in several Arab countries as well as the disasters in Japan drove up the oil prices. According to the German Petroleum Industry Association, the average oil price of the WTI grade amounted to US$ 102.99 per barrel in March 2011 (March 2010: US$ 81.25 per barrel).

According to the consumer portal Toptarif.de, electricity prices for private households in Germany went up by an average of 6 percent in the first quarter. Electricity prices in the U.S. rose by some 2.3 percent in 2011.

THE SOLAR POWER MARKET

In the European region, solar markets in the first quarter of 2011 were characterized by regulatory uncertainty regarding incentive schemes for solar power. To some extent, this had a negative impact on market growth. Solarworld 2011 • Consolidated Interim Financial Statements • BUSINESS DEVELOPMENT FIRST QUARTER 2011

14 At the beginning of the quarter, the Federal Ministry for Environment, Nature Conservation and Nuclear Safety and the solar industry agreed on a further reduction of feed-in compensation for . The reason for the adjustment was the rapid growth of newly installed solar power capacity in Germany in the year 2010 to 7.4 (2009: 3.8) GW. At the beginning of February, the Bundestag (Ger- man Parliament) approved the amendment to the EEG ( Sources Act): On the basis of newly installed solar power output between March and May, a projection will be made for the year 2011. If the calculated annual value exceeds 3.5 GW, feed-in tariffs for solar power plants will be cut by 3 percent effective July 1, 2011. For every additional gigawatt, feed-in tariffs will be reduced by fur- ther 3 percent. Due to seasonal effects, German demand was moderate in the first two months of the year; from March onwards the market picked up.

In , the market growth in 2010 was stronger than expected. In the year 2010, solar plants worth more than 2.3 GW were installed and connected to the grid (2009: 1.8 GW). Another 3 GW had been installed by the end of the year, but grid connection was still outstanding at the time. In the course of the first quarter they were connected step by step. As a result of the boom, the Italian government announced a fourth amendment to the law on funding solar power in Italy. Due to the uncertain legal situation, banks stopped financing solar projects for the time being. Only plants connected to the grid before May can benefit from the feed-in rates currently in force. A final decision on the next solar power incentive law had not yet been taken by the end of the period under review. Expected development of the solar power market • p . 2 6 / / While the Italian demand was still strong in January and February, it cooled down considerably from March onwards due to the uncertain legal situation.

Other European markets like France, Belgium or Greece developed well in the first quarter of 2011 albeit at a much lower level than Italy or Germany.

A different situation prevails in the United States. The U.S. market continued its growth in the first quarter of 2011. Not only California developed excellently but other states like New Jersey, Colorado and Pennsylvania made significant contributions to the solar market growth. A stable legal situation, smooth approval processes as well as a by now well established distribution channel networks are the important factors that accelerate the expansion.

REPERCUSSIONS OF THE GENERAL CONDITIONS ON BUSINESS DEVELOPMENT

SolarWorld used the good development in the foreign markets in order to further promote its strat- egy of internationalization. Thanks to the expansion of production capacities in the United States, we were able to benefit from the strong U.S. growth and the logistic proximity of our local production. In this way, we managed to increase our sales of modules and solar kits in the first quarter of 2011. Solarworld 2011 • Consolidated Interim Financial Statements • BUSINESS DEVELOPMENT FIRST QUARTER 2011

SALES, BRAND, PRODUCTION 15

SolarWorld got off to a good start into the international solar business 2011. In the first three months, we increased our worldwide shipments by 32 percent to 185 MW over the previous year (Q1 2010: 139 MW). A substantial increase was primarily achieved in the United States – a development that is in tune with our goal of continuously increasing our foreign quota. Annual Group Report 2010/Forecast report 2011+/Future sales markets 2011+ • p. 137 et seq. //

In America, we already reached almost half the total shipments of the year 2010 in the first quarter of the year. Powerful sales arguments in this market are, on the one hand, the fact that we are the largest manufacturer with production in the U.S. and, on the other hand, the fact that we count with 35 years of experience.

In spite of the winter months and the generally deteriorating background conditions, our sales in the European markets were stable to positive. Also in the Asia-Pacific region we were able to score, for example in Australia and India where we expanded our presence by supplying a 5 MW large scale plant in the state of Gujarat.

Our start in Germany took a comparatively moderate form. The first three months of the year are generally less strong than the following quarters due to seasonal influences. Since for the year 2011 as a whole, a decline in demand is forecasted for Germany but we still want to increase our sales, we once again redoubled our sales and marketing efforts in the first quarter. In this context, we build on our reliable group of regular customers and a strong network of specialist partners as well as a high level of brand awareness. A representative survey conducted by the market research institute T.I.P. Biehl&Partner in February 2011 once again showed that SolarWorld is by far the best known solar brand in Germany. Annual Group Report 2010/Sales markets, brand and product 2010/Brand proposi- tion and investments • p. 072 et seq. //

Beyond increasing our brand awareness, we concentrate on establishing SolarWorld more firmly with wholesalers, specialist partners and final customers as a brand by communicating quality features of our products. With the new “Power controlled” test logo of TÜV Rheinland, an independent institute provides an additional guarantee that the name plate output of our solar module series Sunmodule Plus® is actually delivered. As of January 2011, the quality proposition of our brand has been thus further confirmed by an independent third party. Annual Group Report 2010/Sales markets, brand and product 2010/Products “Made by SolarWorld” • p. 077 et seq. //

Under the slogan “Electricity is now made at home,” we moved the self-consumption of solar – self- power for short – into the focus of our broadly based consumer campaign. It broke in early March and included a direct mail shot to 6.3 million households in Germany, a national poster campaign as well as online advertising. In conjunction with the well-known SolarWorld face Larry Hagman, the cam- Solarworld 2011 • Consolidated Interim Financial Statements • BUSINESS DEVELOPMENT FIRST QUARTER 2011

16 paign concentrated attention on more independence, more safety and more yield through the self-con- sumption of solar power.

Improved storage facilities for solar power are of crucial significance to the decentralized energy supply concept, which is behind the self-power campaign. This is why we are already working on new systems solutions with integrated batteries. Annual Group Report 2010/Innovation report • p. 082 et seq. // In this context, we are exploring possibilities for the exploitation of lithium as a raw material, which is used in rechargeable lithium-ion batteries. As a first step, we joined forces in March 2011 with the Frei­berg University of Mining and Technology (TUBAF) to acquire the mining rights for lithium in the Erzgebirge Mountains near the German-Czech border. The local resources there range among the ten largest lithium deposits worldwide. If the economic viability study just started turns out positive, lith- ium production will give us the opportunity to further extend the solar value chain not far from our Freiberg production site.

In the first quarter of 2011, we continued the expansion of ourproduction capacities in Freiberg. Addi­tional plants for our wafer production in the Freiberg Industrial Estate East started production on schedule. In cell production, we were again able to optimize processes, increasing the through-put on our production lines. The machines for our new module production at Solar Factory III were delivered step by step in the course of the quarter under review.

In the United States, we could substantially increase our production quantities. Capacities that came on stream at the end of the fourth quarter of 2010 were fully available to us at the beginning of 2011. In the first quarter we conducted the usual machine fine-tuning in order to achieve higher productivity levels.

An overview of our planned production capacities for the year 2011 can be found at Future develop- ment of business • p. 27 //. Solarworld 2011 • Consolidated Interim Financial Statements • EARNINGS, FINANCE AND ASSET SITUATION

EARNINGS, FINANCE 17 AND ASSET SITUATION

EARNINGS SITUATION

REVENUE AND EARNINGS DEVELOPMENT

In the first quarter of 2011 the SolarWorld Group increased its shipments of wafers and solar mod- ules by 32 percent over the first three months of the previous year to 185 (Q1 2010: 139) MW. This groupwide increase is mainly attributable to our strong performance in foreign markets, above all in the United States. The groupwide shipments foreign quota rose in Q1 2011 to 77 (Q1 2010: 49) percent.

Group revenue grew in the first quarter of 2011 by € 7.4m to € 233.0m (Q1 2010: € 225.6m). Revenue in foreign markets rose to 71.2 (Q1 2010: 33.2) percent.

Compared to the previous year, groupwide EBIT amounted to 11.3 (Q1 2010: 11.5) percent. Groupwide income from continued operations before interest and tax (EBIT) rose in the first quarter by 1.6 percent and € 0.4m respectively to € 26.3m (Q1 2010: € 25.9m).

Groupwide income from continued operations before interest, tax, depreciation and amortization (EBITDA) increased by € 7.3m over the prior year’s quarter to € 52.3m (Q1 2010: € 45.0m).

The financial result improved by € 4.7m over the prior year’s quarter to € – 9.4m (Q1 2010: € – 14.1m). A positive effect in this context was that the result from investments measured at equity went up by € 5.0m to € 3.0m (Q1 2010: € – 2.0m). Financing Analysis • p . 19 / /

Income from discontinued operations amounting to € 0.9m (Q1 2010: 0m) resulted from the solar fund Solarparc Deutschland I GmbH & Co. KG.

Consolidated net income rose in the first quarter of 2011 by € 7.2m to € 12.5m (Q1 2010: € 5.3m). Solarworld 2011 • Consolidated Interim Financial Statements • EARNINGS, FINANCE AND ASSET SITUATION

18 DEVELOPMENT OF MAJOR P&L ITEMS

Our cost of materials rate declined in comparison with the prior year’s quarter by 1.5 percent to 66.6 (Q1 2010: 68.1) percent. We achieved this by optimizing our groupwide procurement processes and by improving our use of materials in production.

New recruitments in Production and Sales in the first three months of the year led to an increase of per- sonnel expenses by € 7.6m to € 35.0m (Q1 2010: € 27.4m). The rate of personnel expenses amounted to 11.6 (Q1 2010: 10.8) percent. Human Resources • p . 2 2 / /

Depreciation increased by € 6.8m to € 26.0m (Q1 2010: € 19.2m) as a result of the scheduled continua- tion of investments into the expansion of our production capacities.

Compared to the first quarter of the previous year other operating income grew by € 8.1m to € 30.2m (Q1 2010: € 22.1m). In addition to exchange rate gains, this was attributable to the reversal of advances received as well as the positive effects of the first consolidation of Solarparc AG amounting to € 4.9m.

Other operating expenses went up by € 12.9m to € 43.8m (Q1 2010: € 30.9m). This was due to exchange rate losses offset by appropriate exchange rate gains reported under other operating income, the sig- nificant increase in production volumes and shipments and the investments into the strengthening of the brand. The expense rate in the first quarter amounted to 14.5 (Q1 2010: 12.1) percent. Solarworld 2011 • Consolidated Interim Financial Statements • EARNINGS, FINANCE AND ASSET SITUATION

FINANCe SITUATION 19

FINANCING ANALYSIS

Compared to December 31, 2010 the equity capital increased by € 16.4m to € 939.3m (December 31, 2010: € 922.9m). The equity ratio on the balance sheet date amounted to 34.3 (December 31, 2010: 35.0) percent. Financial liabilities were reduced by € 15.9m to € 1,125.7m (December 31, 2010: € 1,141.6m). 91.0 percent are classified as non-current.

Investment grants and subsidies shown in non-current liabilities amounted to € 74.1m (December 31, 2010: € 76.2m) as at the balance sheet date. These public funds for the expansion of the manufacturing capacities accrued on the liabilities side of the balance sheet will be released to income over the course of the useful lives of the subsidized investments.

The remaining non-current liabilities decreased by € 11.2m to € 204.7m (December 31, 2010: € 215.9m). The non-current portion of advances received for long-term supply agreements contained in this item amounted to € 195.7m (December 31, 2010: € 207.7m) on the balance sheet date.

INVESTMENT ANALYSIS

In the first quarter of 2011 we continued the further expansion of our worldwide production capacities as planned investing a total of € 46.6m (Q1 2011: € 49.8m) in intangible assets as well as in property, plant and equipment.

The emphasis of our investment activities in first quarter 2011 was placed on the expansion of our wafer production (€ 17.2m) and the new module factory (€ 14.6m) at our German location in Freiberg, as well as on the completion of the expansion of the integrated module, cell and wafer production at the site in Hillsboro/USA (€ 10.2m). Another € 4.6m went towards the general expansion of our sites.

Furthermore, we acquired the Solarparc AG and its subsidiaries in January 2011. For details, please refer to the notes to the interim consolidated financial statements. Solarworld 2011 • Consolidated Interim Financial Statements • EARNINGS, FINANCE AND ASSET SITUATION

20 LIQUIDITY ANALYSIS

Liquid funds amounted to € 464.5m (December 31, 2010: € 613.5m) as of March 31, 2011. They include cash and cash equivalents that mainly consist of day-to-day money and fixed term deposits. In addition, there are liquid funds attributable to the solar fund Solarparc Deutsch­land I GmbH & Co. KG and reported in the assets held for sale amounting to € 6.1m. The liquid funds are reduced by short-term bank overdraft liabilities amounting to € 11.3m (December 31, 2010: € 6.9m).

Cash flow from operating activities amounted to € – 140.0m (Q1 2010: € 28.5m) and was influenced primarily by the increase of inventories and trade receivables as at the reporting date.

Cash flow from investment activities amounted to € 32.8m (Q1 2010: € – 37.9m). It was mainly influ- enced by payments for fixed asset investments amounting to € 69.0m (Q1 2010: € 2.7m) and the receipt of liquid funds in the context of the first consolidation ofSolarparc AG amounting to € 16.2m (Q1 2010: € 0m). For investments into fixed assets an amount of € 52.4m (Q1 2010: € 48.0m) was paid.

Cash flow from financing activities amounted to € – 38.3m (2010: € 488.7m). It essentially consisted of interest payments amounting to € – 32.3m (Q1 2010: € – 7.5m) as well as the payback of financial cred- its running to € – 6.5m (Q1 2010: € – 1.8m).

As far as the cash flow of the discontinued operations is concerned, please refer to our explanations on the interim consolidated financial statements. Solarworld 2011 • Consolidated Interim Financial Statements • EARNINGS, FINANCE AND ASSET SITUATION

ASSET SITUATION 21

ASSET STRUCTURE ANALYSIS

The balance sheet total of the SolarWorld Group increased by € 102.3m to € 2,737.6m (December 31, 2010: € 2,635.3m) compared to December 31, 2010.

The non-current assets went up by € 39.8m to € 1,434.9 (December 31, 2010: € 1,395.1m). In addition to expansion investments into property, plant and equipment this development is mainly due to addi- tions to intangible assets and property, plant and equipment resulting from the acquisition of Solar- parc AG. The working capital rose by € 108.4m to € 536.8m (December 31, 2010: € 428.4m). This can be ascribed to an increase in the level of receivables by € 32.4m to € 173.3m as at March 31, 2011 as well as to the level of inventories versus December 31, 2010 (€ 337.4m) ammounting to € 435.2m. The share of current pre-payments reported under inventories amounted to € 58.1m (December 31, 2010: 51.1m). Trade payables grew versus December 31, 2010 by € 17.7m to € 131.0m (December 31, 2010: € 113.3m). Current and non-current advances received amounted to a total of € 234.4m (December 31, 2010: € 247.4m) as at the balance sheet date.

The assets and liabilities of assets held for sale refer exclusively to the assets and liabilities reported in the balance sheet in relation to the solar fund Solar­parc Deutschland I GmbH & Co. KG. We refer you to our notes to the interim consolidated financial statements.

OFF-BALANCE SHEET FINANCIAL INSTRUMENTS

Off-balance sheet financial instruments have no major influence on the asset situation of the Solar- World Group.

OFF-BALANCE SHEET ASSETS

As at March 31, 2011 our group does not have any assets that are not financially visible. Solarworld 2011 • Consolidated Interim Financial Statements • EARNINGS, FINANCE AND ASSET SITUATION

22 HUMAN RESOURCES

In line with our company growth, we hired additional staff worldwide in the period under review. For the most part, our growth took place in the United States. As of March 31, 2011 we had a groupwide workforce of 2,651 employees, an increase of 12 percent over the figure on December 31, 2010.

Including our temporary staff we employed a total of 3,625 people worldwide (March 31, 2010: 2,726).

07 Group employees // as at March 31

Employees as at Employees as at Region March 31, 2011 March 31, 2010 +/- absolute Germany 1,639* 1,369** + 270 U.S. 992 668 + 324 Rest of world 20 16 + 4 Group 2,651 2,053 + 598

* incl. 70 trainees/apprentices ** incl. 74 trainees/apprentices

In the reporting period, there were neither personnel changes on the Management Board nor on the Supervisory Board of SolarWorld AG. Solarworld 2011 • Consolidated Interim Financial Statements • Material related party TRANSACTIONS

Material related party 23 TRANSACTIONS

In the first three months project services and modules deliveries in an amount of € 0.08m (Q1 2010: € 0.2m) were rendered or supplied as well as a credit note amounting to € 0.2m was issued (Q1 2010: € 0m) to Dr.-Ing. E.h. Frank Asbeck and his engineering office.

In connection with the takeover bid to the shareholders of Solarparc AG published on December 31, 2010, in January 2011, Dr.-Ing. E. h. Frank Asbeck gave his shares in Solarparc AG (3.000.001 shares) indirectly owned by Eifelstrom GmbH as well as his directly owned shares in Solarparc AG (55.000 shares) in exchange for one registered share of SolarWorld AG each. Hence, his direct and indirect interest in SolarWorld AG increased from 25.1 percent to 27.8 percent. For further details we refer to our corresponding notes on the consolidated interim financial statements.

Contributions to and withdrawals from Auermühle effected by Solar Holding Beteiligungsgesellschaft mbH amounted to € 0,5m in the first three months (Q1 2010: € 0m). Dr.-Ing. E.h. Frank Asbeck is major- ity shareholder of Solar Holding Beteiligungsgesellschaft mbH.

With an interest ratio of 93.9 percent, since January 2011, Solarparc group is no longer a related party of SolarWorld group but is fully consolidated for purposes of the consolidated financial statements of SolarWorld AG. Hence, no related party disclosures are required any more in this respect. As well, the disclosure of corresponding prior year comparative figures is not applicable any more.

In the first three months, SolarWorld AG sold or rendered goods and other services in an amount of € 0.5m (Q1 2010: € 3.7m) to joint ventures. In the first three months goods and toll manufacturing ser- vices in an amount of € 12.4m (Q1 2010: € 27.1m) were purchased from joint ventures.

In the first three months, the loan granted to SolarWorld Korea and amounting to € 13.2m as of De- cember 31, 2010 has been settled completely with operating business receivables and payables. In 2011, interest income in an amount of € 0,02m (Q1 2010: € 0.02m) has occurred in this respect.

Apart from these transactions there were no related party transactions with a material effect on the net assets, financial position and result of operations of SolarWorld Group. Solarworld 2011 • Consolidated Interim Financial Statements • SUPPLEMENTARY REPORT

24 SUPPLEMENTARY REPORT

Disclosure of events of particular IMPORTANCE AND THEIR REPERCUSSIONS

After the cut-off date March 31, 2011 no events of particular importance took place.

OVERALL STATEMENT BY THE MANAGEMENT BOARD ON THE ECONOMIC SITUATION AT THE TIME OF THIS REPORT

The economic situation of the group is rated as positive by the management of SolarWorld AG taking into consideration the earnings, finance and asset situation resulting from the 2010 annual financial statements and the first quarter 2011 figures as well as the ongoing business at the time of drawing up this report. The SolarWorld Group is continuing its course of growth successfully and profitably. Solarworld 2011 • Consolidated Interim Financial Statements • REPORT ON THE FUTURE DEVELOPMENT WITH ITS MAJOR OPPORTUNITIES AND RISKS

REPORT ON THE FUTURE DEVELOP- 25 MENT WITH ITS MAJOR OPPORTUNI- TIES AND RISKS

OPPORTUNITIES AND RISKS

There have been no major changes in the internal and external framework conditions or factors of influence in the course of the first quarter of 2011. For individual opportunities and risks, we therefore refer you to Group Annual Report 2010/Report on expected development with its major opportunities and risks • p . 10 8 / /.

At the time of this report on the first quarter of 2011, there are no discernible risks that might jeopar- dize the continued existence of the SolarWorld Group. From today’s point of view, the Management Board of SolarWorld AG expects no fundamental changes in the risk situation.

FORECAST REPORT

EXPECTED MACROECONOMIC ENVIRONMENT

In the course of the first quarter, prospects for theworld economy in the year 2011 improved. Produc- tion and trade bounced back internationally. The economic institutes corrected their growth forecasts for the world economy upwards: While estimates in December were still 3.6 percent, experts are now projecting a GDP increase by 4.3 percent. Yet, consolidation measures and a restrictive monetary policy can still lead to a situation where the dynamism of the world economy will lose momentum in the course of the year. The rise in oil prices may also have negative repercussions. Solarworld 2011 • Consolidated Interim Financial Statements • REPORT ON THE FUTURE DEVELOPMENT WITH ITS MAJOR OPPORTUNITIES AND RISKS

26 In SolarWorld’s production and sales regions, the Institute for the World Economy (IfW) forecasts an increase in production and private consumption. A higher willingness to invest could have a positive impact on our business.

08 Expected economic development in the major SolarWorld sales markets // in percent Source: Institute for the World Economy (IfW), 2011

2011e 2012e Germany 2.8 2.0 U.S. 3.0 2.8 Euro area 1.7 1.6 World 4.3 3.9

EXPECTED DEVELOPMENT OF THE WORLD ENERGY MARKET

According to the Energy Information Administration (EIA), the strong growth of the world economy will lead to a further rise in oil demand. Scarcity of oil supply due to political unrests in some OPEC countries might cause additional oil price hikes. The EIA upped its forecast by 13 percent over its fore- cast of January 2011. It is currently expecting an average oil price (WTI) of around US$ 106 per barrel.

In Germany, energy utilities are threatening a further climb of electricity prices, which they justify with the increased wholesale price due to the nuclear moratorium. However, in the past utilities never passed price cuts in the wholesale trade on to final customers. In the United States, electricity prices can be expected to remain stable in 2011 according to information from the EIA.

EXPECTED DEVELOPMENT OF THE SOLAR POWER MARKET

For the year 2011, slight growth of the international solar market is expected, though some market analysts also foresee stagnation. For the year 2011, experts worldwide predict a newly installed output capacity of between 15 GW and 20 GW.

In Germany, a decline of the solar market is forecasted even though it can be expected to remain the largest market for solar products worldwide. Bank Sarasin expects new solar plants with an output capacity of 5.5 (2010: 7.4) GW. According to the EEG amendment, a further reduction of the feed-in tariff may come into force in Germany effective July 1. The solar power market • p . 13 / / SolarWorld currently expects the tariffs to be cut by 6 percent. A slight pull-forward effect may occur in the mar- ket so that demand for solar plants can be expected to pick up in the second quarter. Solarworld 2011 • Consolidated Interim Financial Statements • REPORT ON THE FUTURE DEVELOPMENT WITH ITS MAJOR OPPORTUNITIES AND RISKS

At the time of writing this report, the legal situation concerning the continued funding of solar power 27 in Italy had not been finally settled. The current draft legislation provides for monthly tariff cuts start- ing in June 2011 as well as quotas defined ahead of time for large scale plants in the years 2011 and 2012. From 2013, a growth corridor according to the German model as well as a limitation of the fund- ing up to and including the year 2016 are to be introduced.

Above all, the market for small solar roof systems should develop well in Europe after 2011. The cur- rent compensation laws in countries like France, Spain, Belgium and Great Britain are strongly geared to the funding of such systems. The European business with large-scale solar projects, on the other hand, is expected not to grow vigorously according to experts.

For the United States, a doubling of the market to 2 (2010: 1) GW is expected. Significant improvement of financing conditions has led to a higher willingness to invest in solar systems. Unlike in Europe, a strong increase in the free-field market is expected here because in many states utilities are obliged to show a minimum share of solar power in their portfolio (Renewable Portfolio Standards). In addition, the tax breaks for the realization of large-scale projects are extremely attractive.

FUTURE DEVELOPMENT OF BUSINESS

In the further course of 2011, we will intensify our worldwide quality and marketing endeavors. Due to the tariff reduction to be expected on July 1, 2011, we are working on the assumption that the sec- ond quarter will be a good one in Germany.

We want to achieve our growth targets in the United States both by selling more solar kits and by expanding the business of large-scale plants. At the same time, we will be continuing our measures to increase our U.S.-wide brand awareness in the strong solar states. Of central importance in this con- text is to nurture and expand our U.S. specialist partner networks “Authorized Installer Program” and “Sunkits® Installer Program.”

Our market position will be further strengthened by new production facilities and expanded capacities. On May 20, 2011, we will inaugurate our module production Solar Factory III at the German Freiberg location. In August 2011, we will complete the second expansion stage of our wafer production at the site Industrial Estate East, Freiberg/Germany. Solarworld 2011 • Consolidated Interim Financial Statements • REPORT ON THE FUTURE DEVELOPMENT WITH ITS MAJOR OPPORTUNITIES AND RISKS

28 09 Groupwide nominal capacities // Expansion 2011+ (in MW)

Wafer Cell Module

Germany 750 1,000 275 300 170 600 U.S. 250 250 500 500 500 500 Joint venture South Korea 270 300

Group 1,000 1,250 775 800 940 1,400

EXPECTED REVENUE AND EARNINGS DEVELOPMENT

The SolarWorld Group will maintain its speed of growth in 2011 and 2012 and will expand produc- tion at the same time. We are planning to increase the sales volumes by more than 30 percent in fiscal year 2011. Provided that the background conditions are stable, we expect the previous year’s revenue level of € 1.3 billion to be exceeded. For 2012, we strive to increase revenue and results. In this con- text, it is crucial to know at what level the increased market price pressure on the cost side can be com- pensated for by efficiency increases, economies of scale, full production capacity utilization and pro- curement cost reductions. Within the next two years we want to further boost our foreign share up to 75 per­cent. The largest sales market will be the United States. In Europe, Asia, and Africa, we are also expecting further business growth.

EXPECTED FINANCE SITUATION

FUTURE DIVIDEND AND DISTRIBUTION

On the basis of the sound earnings development, the Management Board and the Supervisory Board will propose to the Annual General Meeting on May 24, 2011 the distribution of a dividend of 19 (for fiscal year 2009: 16) eurocents per share.

Provided that the distribution of the dividend is approved, the remaining balance sheet profit of SolarWorld AG amounting to € 109.1m will be allocated to revenue reserves. The equity capital base of the SolarWorld Group will be strengthened in this way.

SolarWorld AG wants to maintain dividend continuity in the future. Solarworld 2011 • Consolidated Interim Financial Statements • REPORT ON THE FUTURE DEVELOPMENT WITH ITS MAJOR OPPORTUNITIES AND RISKS

PLANNED FINANCING MEASURES 29

Against the backdrop of our finance situation Financing analysis • p . 19 / / as at March 31, 2011, we are working on the assumption that we will have the funds required to realize our medium-term expansion plans. At present, no major financing measures on a significant scale are being planned.

PLANNED INVESTMENTS

In the next two fiscal years, the SolarWorld Group will continue to pursue its course of growth con- sistently as planned and, above all, invest in the expansion of production capacities and sales and dis- tribution structures. The expansion of our wafer and module capacities in Germany will be given prio­ rity in 2011. Future development of business • p. 27 //

EXPECTED DEVELOPMENT OF LIQUIDITY

As at March 31, 2011, the liquid funds amounted to € 464.5 million (December 31, 2010: € 613.5m). The expected development of liquidity in fiscal year 2011 will depend especially on the earnings devel- opment, the Working Capital and the investments. From today’s point of view, we are taking for granted that the planned investments for 2011 can essentially be financed from the operating cash flow.

OVERALL STATEMENT BY THE MANAGEMENT BOARD ON THE EXPECTED DEVELOPMENT OF THE GROUP

In 2011, our strategic focus will be on the expansion of the growing U.S. market. In the course of the fiscal year, this market will develop into our largest sales region, followed by Europe. At the same time, we will be tapping into the growth markets of Asia and Africa. Increasing brand and product awareness in the young solar markets in Europe and the United States will, however, continue to be a priority. The objective is to reach the relevant target groups and to develop our position as a quality provider under the umbrella of a strong brand. We will invest in all stages of the solar value chain realizing groupwide economies of scale and efficiency potentials as we go along. This way, we put down the rails towards long-term growth in the world market.

Solarworld / 2011 CONSOLIDATED INTERIM REPORT first Quarter Consolidated Interim Financial Statements

32 i ncome Statement 33 s tatement of Comprehensive Income 34 b alance Sheet 35 s tatement of Changes in Equity 36 Consolidated Cash flow Statement

37 notes ON THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS

46 Consolidated Segment Reporting Solarworld 2011 • Consolidated Interim Financial Statements First Quarter

32 10 Income Statement for the First quarter 2011 // in k€

1st quarter 2011 1st quarter 2010 1. Revenue 232,986 225,579 2. Change in inventories of finished goods and work in progress 68,055 28,778 3. Own work capitalized 994 294 4. Other operating income 30,248 22,071 5. Cost of materials – 201,251 – 173,374 6. Personnel expenses – 34,986 – 27,438 7. Amortization and depreciation – 25,988 – 19,163 8. Other operating expenses – 43,770 – 30,874 9. Operating result 26,288 25,873 10. Financial result – 9,359 – 14,080 11. Income before taxes on income 16,929 11,793 12. Taxes on income – 5,309 – 6,515 13. Income from continued operations 11,620 5,278 14. Income after taxes from discontinued operations 857 0 15. Consolidated net income 12,477 5,278 Attributable to: - Shareholders of SolarWorld AG 12,489 5,278 - Non-controlling interests – 12 0 16. Earnings per share a) Weighted average number of shares outstanding (in 1,000) 110,056 111,720 b) Income from continued operations 0.11 0.05 c) Income from discontinued operations 0.00 0.00 d) Consolidated net income (in €) 0.11 0.05 Solarworld 2011 • Consolidated Interim Financial Statements First Quarter

11 Statement of Comprehensive Income for the First quarter 2011 // in k€ 33

1st quarter 2011 1st quarter 2010 Consolidated net income 12,477 5,278 Other comprehensive income Net result from cash flow hedges 4,372 – 980 Currency translation of foreign operations – 28,983 24,710 Income tax relating to components of other comprehensive income 1,815 – 4,179 Other comprehensive income for the period, net of tax – 22,796 19,551 Total comprehensive income for the period – 10,319 24,829 Attributable to: - Shareholders of SolarWorld AG – 10,307 24,829 - Non-controlling interests – 12 0 Solarworld 2011 • Consolidated Interim Financial Statements First Quarter

34 12 Balance Sheet as of March 31, 2011 // in k€

ASSETS 31.03.2011 31.12.2010 A • Noncurrent assets 1,434,935 1,395,086 I. Intangible assets 53,248 39,607 II. Property, plant and equipment 999,483 951,856 III. Investment property 20,885 20,994 IV. Investments measured at equity 60,551 65,481 V. Other financial assets 996 1,165 VI. Other noncurrent assets 293,714 310,788 VII. Deferred tax assets 6,058 5,195 B • Current assets 1,206,087 1,240,246 I. Inventories 435,162 337,370 II. Trade receivables 173,253 140,883 III. Current income tax assets 1,813 428 IV. Other receivables and assets 64,092 48,956 V. Other financial assets 67,268 99,136 VI. Liquid funds 464,499 613,473 C • Assets held for sale 96,565 0 2,737,587 2,635,332

EQUITY AND LIABILITIES 31.03.2011 31.12.2010 A • Equity 939,319 922,879 I. Equity attributable to shareholders of SolarWorld AG 937,809 922,879 1. Subscribed capital 110,795 106,881 2. Capital reserve 296,562 296,489 3. Other reserves – 4,729 18,067 4. Accumulated profits 535,181 501,442 II. Non-controlling interests 1,510 0 B • Noncurrent liabilities 1,364,745 1,366,757 I. Noncurrent financial liabilities 1,024,081 1,011,855 II. Accrued investment grants 74,139 76,219 III. Noncurrent provisions 27,010 25,418 IV. Other noncurrent liabilities 204,738 215,917 V. Deferred tax liabilities 34,777 37,348 C • Current liabilities 329,756 345,696 I. Current financial liabilities 101,666 129,776 II. Trade payables 130,989 113,270 III. Income tax liabilities 8,117 13,797 IV. Current provisions 7,991 8,784 V. Other current liabilities 80,993 80,069 D • Liabilities of assets held for sale 103,767 0 2,737,587 2,635,332 Solarworld 2011 • Consolidated Interim Financial Statements First Quarter

13 Statement of Changes in Equity as of March 31, 2011 // in k€ 35

Other reserves Reserve from hedging Accu- Non-con- Subscribed Capital Exchange of cash mulated trolling Capital reserve reserve flows profits interests Total As per Dec. 31, 2009 111,720 296,489 – 12,366 849 468,770 0 865,462 Total comprehensive income 1st quarter 2010 20,239 – 688 5,278 24,829 As per March 31, 2010 111,720 296,489 7,873 161 474,048 0 890,291 Dividend distribution – 17,649 – 17,649 Purchase of treasury shares – 4,839 – 36,991 – 41,830 Total comprehensive income 2nd – 4th quarter 2010 3,587 6,446 82,034 92,067 As per Dec. 31, 2010 106,881 296,489 11,460 6,607 501,442 0 922,879 Exchange of treasury shares for shares of Solarparc AG 3,914 73 24,818 28,805 Non-controlling interests from first-time consoli- dation 5,360 5,360 Increase in majority interest in Solarparc AG (transactions between shareholders) – 3,568 – 3,838 – 7,406 Total comprehensive income 1st quarter 2011 – 25,866 3,070 12,489 – 12 – 10,319 As per March 31, 2011 110,795 296,562 – 14,406 9,677 535,181 1,510 939,319 Solarworld 2011 • Consolidated Interim Financial Statements First Quarter

36 14 Consolidated Cash flow Statement First Quarter 2011 // in k€

1st quarter 2011 1st quarter 2010 Income before tax 17,753 11,793 + Amortization and depreciation 25,988 19,163 + Financial result 9,359 14,081 + Loss from disposal of assets 2 79 – Reversal of accrued investment grants – 2,851 – 2,808 – Other material non-cash income – 17,004 – 7,802 = Cash flow from operating result 33,247 34,506 + Changes in pre-payments and customer advances 9,408 2,529 – Increase of inventories (excl. pre-payments) – 90,686 – 32,948 –/+ Increase/decrease of trade receivables – 26,433 50,706 + Increase of trade liabilities 1,140 9,971 – Changes in other net assets – 48,756 – 28,378 = Cash flow from operating result and changes in net assets – 122,080 36,386 + Interest received 633 512 – Taxes on income paid (balance) – 18,525 – 8,382 = Cash flow from operating activities – 139,972 28,516 – Cash outflow for asset investments – 52,373 – 48,046 + Cash inflow from the disposal of assets 3 7,469 + Cash inflow from financial investments 68,970 2,700 + Cash inflow from the acquisition of consolidated entities 16,184 0 = Cash flow from investing activities 32,784 – 37,877 + Cash inflow from borrowings 0 498,044 – Cash outflow for redemption of borrowings – 6,536 – 1,839 – Interest paid – 32,285 – 7,500 + Payments of external shareholders 543 0 = Cash flow from financing activities – 38,278 488,705 –/+ Net changes in cash and cash equivalents – 145,466 479,344 –/+ Currency and consolidation-related changes of cash and cash equivalents – 1,771 3,581 + Cash and cash equivalents at the beginning of the period 606,554 428,089 = Cash and cash equivalents at the end of the period 459,317 911,014 Solarworld 2011 • Consolidated Interim Financial Statements First Quarter • NOTES

NOTES ON THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS 37

1. Accounting according to International Financial Reporting Standards (IFRS)

Pursuant to Article 4 of Regulation (EC) No. 1606/2002 of the European Parliament and of the Council of July 19, 2002 on the application of international accounting standards SolarWorld AG is obliged to apply the international accounting standards adopted in accordance with Articles 2, 3 and 6 of said Regulation. These interim financial statements as per March 31, 2011 have accordingly also been pre- pared in accordance with IAS 34. These condensed consolidated interim financial statements have not been subject to a review or audit by an auditor.

2. Accounting and valuation methods

In preparing the interim financial statements and establishing the comparative figures for the previ- ous year basically the same consolidation principles and accounting and valuation methods as in the 2010 consolidated financial statements have been applied. A detailed description of these methods has been published in the notes to the 2010 annual report which can be reviewed and downloaded from the Internet under www.solarworld.de.

Estimations and assumptions

In connection with the preparation of the group interim financial statements management has to apply estimations and make assumptions. These affect the amounts recognized for assets, liabilities and con- tingent liabilities as of balance sheet date as well as the amounts recognized for revenues and expenses for the period then ended. Actual amounts may deviate from these estimations.

Income taxes

The income tax expense of the interim consolidated financial statements is mainly calculated on the basis of the actual tax rates of the respective group companies considering the effects of material tax neutral revenues and expenses. As of March 31, 2011, for the US subsidiaries, deferred taxes on tax loss carry forwards have not been capitalized.

3. Group of Consolidated Companies

The group of consolidated companies consists of the following subsidiaries and has been increased significantly by the acquisition of Solarparc AG and its subsidiaries. SolarWorld 2011 Group Structure

15 Solar World Group as of March 31, 2011

SolarWorld AG 100 % Deutsche Solar GmbH (formerly: Deutsche Solar AG) // Freiberg, Germany // Bonn, Germany 100 % Go!Sun GmbH & Co. KG // Bonn, Germany

100 % Solarparc Verwaltungs GmbH // Bonn, Germany

100 % Solarparc Ziegelscheune GmbH & Co. KG // Bonn, Germany

100 % Deutsche Cell GmbH // Freiberg, Germany

100 % Solar Factory GmbH // Freiberg, Germany

100 % Sunicon GmbH (formerly: Sunicon AG) // Freiberg, Germany

100 % SolarWorld Innovations GmbH // Freiberg, Germany

100 % SolarWorld Solicium GmbH // Freiberg, Germany

100 % SolarWorld Industries America Inc. // Hillsboro, U.S.

100 % SolarWorld Industries Deutschland GmbH // Bonn, Germany

1 % 99 % SolarWorld Industries America LP // Camarillo, U.S.

21.26 % 78.74 % SolarWorld Industries Services LLC // Camarillo, U.S.

100 % SolarWorld Americas LLC // Camarillo, U.S.

100 % SolarWorld Power Projects Inc. // Camarillo, U.S.

100 % SolarWorld Industries Americas LLC // Camarillo, U.S.

100 % SolarWorld Asia Pacific PTE Ltd. // Singapore, Singapore

100 % SolarWorld Ibérica S.L. // Madrid, Spain

100 % SolarWorld France SAS // Grenoble, France

100 % SolarWorld Africa (Pty.) Ltd. // Cape Town, South Africa

93.9 % Solarparc AG // Bonn, Germany*

49 % SolarWorld AG & Solar Holding GmbH in GbR Auermühle // Bonn, Germany

49 % JSSi GmbH // Freiberg, Germany**

50 % SolarWorld Korea Ltd. // Seoul, South Korea**

50 % SolarPark M.E. Ltd. // Seoul, South Korea**

29 % Qatar Solar Technologies Q.S.C. // Doha, Qatar**

* Structure of the subgroup p. 39 ** Consolidated at equity SolarWorld 2011 Group Structure

16 Solarpar c sub-Group as of March 31, 2011

Solarparc AG 100 % Solarparc No. 1 GmbH // Bonn, Germany // Bonn, Germany

100 % Solarparc No. 2 GmbH // Bonn, Germany

100 % Solarparc No. 3 GmbH // Bonn, Germany

100 % Solarparc No. 4 GmbH // Bonn, Germany

100 % Solarparc No. 5 GmbH // Bonn, Germany

100 % Solarparc No. 6 GmbH // Bonn, Germany

100 % Solarparc No. 7 GmbH // Bonn, Germany

100 % Solarparc No. 8 GmbH // Bonn, Germany

100 % Solarparc No. 9 GmbH // Bonn, Germany

100 % Solarparc No. 10 GmbH // Bonn, Germany

100 % Solarparc No. 11 GmbH // Bonn, Germany

100 % Solarparc No. 12 GmbH // Bonn, Germany

100 % Solarparc No. 13 GmbH // Bonn, Germany

100 % Solarparc No. 14 GmbH // Bonn, Germany

100 % Solarparc No. 15 GmbH // Bonn, Germany

100 % Solarparc No. 16 GmbH // Bonn, Germany

100 % Solarparc No. 17 GmbH // Bonn, Germany

100 % Solarparc Donau I GmbH // Bonn, Germany

100 % Solarparc Donau II GmbH // Bonn, Germany

100 % Solarparc Bayern I GmbH // Bonn, Germany

100 % Solarparc Go!Sun Verwaltungs GmbH // Bonn, Germany

100 % Solarparc Deutschland I GmbH // Bonn, Germany

100 % Windparc Rheinland GmbH // Bonn, Germany

100 % Solarparc Mengkofen GmbH // Bonn, Germany

0 % Solarparc Deutschland I GmbH & Co. KG // Bonn, Germany*

100 % Solarparc GbR, Bonn // Bonn, Germany

50 % Kalkar-Wissel GbR // Bonn, Germany**

proVento Ravelsberg I Windkraftanlagenbetriebsgesellschaft bürgerlichen Rechts, proVento Ravels- 50 % berg II Windkraftanlagenbetriebsgesellschaft bürgerlichen Rechts, Vernet GmbH & Co. Mechernich 1 KG, WKR Windkraft GmbH, Solarparc AG in Gesellschaft bürgerlichen Rechts, Kall // Bonn, Germany**

47 % Infrastruktur Windkraft Wanlo GbR // Bonn, Germany**

* Consolidated according to SIC 12 ** Consolidated at equity Solarworld 2011 • Consolidated Interim Financial Statements First Quarter • NOTES

40 Acquisition of Solarparc AG

On November 15, 2010, SolarWorld AG decided to offer the shareholders of Solarparc AG to acquire registered shares of Solarparc AG by way of a voluntary public takeover bid by granting one registered share of SolarWorld AG in exchange for each Solarparc AG share. The respective tender document as authorized by the Federal Financial Supervisory Authority (BaFin) was published on December 31, 2010.

In total 3,914,116 shares were handed in for exchange until the expiration of the acceptance term on Feb- ruary 17, 2011. Thereafter, further 11.550 shares of Solarparc AG were acquired at acquisition costs of k€ 101 at the stock exchange. Taking into account the 1,708,334 Solarparc AG shares already in pos- session of SolarWorld AG as of December 31, 2010, SolarWorld AG’s voting rights in Solarparc AG amount to 93.9 percent as of March 31, 2011. January 12, 2011 is deemed to be the date of change of control and, thus, first-time consolidation date as at this date more than 50 percent of the Solarparc AG shares could be attributed to SolarWorld AG for the first time.

Solarparc AG is the parent company of Solarparc group and responsible for both strategy and opera- tions. Solarparc AG plans, constructs, operates and sells renewable energy power plants and so far divided its operations into two strategic business units: power generation and industrial plants. Through management and the operation of the group-owned renewable energy power plants, the sus- tainably generated power is fed into the network for consideration in accordance with the Renewable Energy Act. In addition, Solarparc AG assumes technical and commercial management of renewable energy plants as a service for its customers. Major renewable energy plants are sold to institutional and private investors either individually or bundled as a fund project. In general, the power plants originate form Solarparc AG’s own planning.

With the takeover of Solarparc AG its expertise will be fully integrated into SolarWorld group. Thereby, the strengths of Solarparc AG in connection with project planning and management of major energy plants can be used by SolarWorld AG.

The initial accounting for the business combination is still incomplete at the time of the publication of these interim financial statements especially with respect to the purchase price allocation. This is due to the amount of necessary data the determination of which has already been started, however, could not be finalized for reasons of time. Thus, SolarWorld AG makes use of the facilitation according to IFRS 3.45. This mainly concerns the measurement of the net assets at fair value, the measurement of the non-controlling interests in this connection as well as the residual goodwill still to be allocated and the amount to be recorded in accumulated profits.

Material transactions which would have to be disclosed separately from the business combination according to IFRS 3.51 have not happened. Solarworld 2011 • Consolidated Interim Financial Statements First Quarter • NOTES

The accounting for the business combination basically occurs by taking into account the rules and 41 regulations of IAS 27 and IFRS 3 with regard to a business combination achieved in stages. Conse- quently, the acquisition of Solarparc AG has been broken down into three stages and accounted for accordingly.

The determination of the fair values of the shares in Solarparc AG gained by way of share exchange occurred on the basis of the respective share prices of the SolarWorld AG share at the dates on which SolarWorld AG has gained knowledge of the fact, that the shareholders of Solarparc AG have irrevo- cably accepted the exchange offer.

1) Increase of non-controlling interests Until obtaining control, 2,689 shares of Solarparc AG have been acquired by way of granting the equivalent number of SolarWorld AG shares. Thereby, the investment of SolarWorld AG in Solarparc AG increased from 28.47 percent up to 28.52 percent. The amount of the investment measured at equity until this date has been increased by k€ 20 which is the fair value of the exchanged treasury shares.

2) Obtaining control/acquisition date On January 12, 2011, SolarWorld AG obtained 3,000,001 shares of Solarparc AG by way of share swap and thus increased its investment from 28.52 percent to 78.52 percent. The fair value of the exchanged treasury shares amounted to k€ 21,480.

Furthermore, according to IRFS 3.42 an exchange of the shares already in possession of SolarWorld AG has been assumed at fair value (k€ 12,251) at the acquisition date. Since the book value amounted to k€ 7,336 a gain in amount of k€ 4,915 has been recognized and disclosed in other operating income. Solarworld 2011 • Consolidated Interim Financial Statements First Quarter • NOTES

42 The preliminary determination of goodwill in amount of k€ 14,142 on the basis of the book value of the net assets at acquisition date is presented in the following table:

in k€ Fixed assets 134,475 Other long-term assets 4,549 Current assets 23,924 - Receivables and other assets 7,639 - Liquid funds 16,285 Total assets 162,948 Total liabilities – 137,999 Identifiable net assets at book value 24,949 Less non-controlling interests (21.48 percent) – 5,360 Identifiable net assets at book value under consideration of non-controlling interests 19,589 Consideration transferred 33,731 - Value of the treasury shares exchanged on January 12, 2011 (3.000.001 pieces) 21,480 - Exchange of former non-controlling interests at fair value (1.711.023 pieces) 12,251 Preliminary goodwill 14,142

The option to measure the non-controlling interests at fair value (IFRS 3.19) is not applied. Instead, the non-controlling interests are measured at their proportionate share of the Solarparc AG’s identifiable net assets measured at fair value so that hidden reserves are released with regard to the identifiable assets but a goodwill from non-controlling interests is not recognized. In the calculation above, non- controlling interests are preliminarily recognized at their proportionate share of the book value of the net assets.

3) Acquisition of further shares The further increase of the investment in Solarparc AG by 922,976 shares in total until March 31, 2011 has been accounted for according to IAS 27.30 as a transaction between owners. The 911,426 shares obtained by way of share swap have been measured at their fair value in amount of k€ 7,305. In the course of a transaction with owners in their capacity as owners additional purchases only affect the distribution of the residual claims of the owners. The recognition of assets and liabilities in the bal- ance sheet consequently remains unchanged. However, in between equity, a value shift between con- trolling and non-controlling interests takes place. Accordingly, resulting from this transaction, a reduction of non-controlling interests in amount of k€ 3,838 as well as a simultaneous reduction of accumulated profits by k€ 3,568 has been recorded.

Since the entity has been integrated in the group, it did contribute revenue in amount of k€ 4,453 as well as a result for the period in amount of k€ – 202 to the group. Thereof, revenue in amount of k€ 2,030 as well as a share in the result of the period in amount of k€ 857 has to be attributed to discon- tinued operations. Had the business combination taken place at the beginning of the year, only imma- terial changes to these amounts had resulted. Thus, for reasons of practicability and efficiency, we did not determine the disclosures in accordance with IFRS 3.B64 (q) (ii). Solarworld 2011 • Consolidated Interim Financial Statements First Quarter • NOTES

The business combination resulted in an actual cash inflow of k€ 15,934, which is determined as 43 follows:

in k€ Outflow of liquid funds – 101 Preliminary transaction costs of acquisition (included in cash flow from operating activitites) – 250 Liquid funds taken over 16,285 Actual cash inflow 15,934

The preliminary transaction costs were included in other operating expenses.

For purposes of the segment reporting the Solarparc subgroup has been classified into the operating segment “Trade”.

4. Others

Disclosures in connection with the application of IFRS 5

The disclosures to IFRS 5 for discontinued operations only refer to the solar fund Solarparc Deutschland I GmbH & Co. KG acquired together with Solarparc AG which has been fully consoli- dated until December 31, 2010, in the Solarparc group according to the rules of SIC 12. It is the inten- tion of SolarWorld AG to market all shares in the solar fund externally. As of March 31, 2011, Solar- World AG fully consoli­dates the solar fund, basically also according to the rules of SIC 12. However, for purposes of the disclosures according to IFRS 5 the entries in connection with the elimination of intragroup receivables and payables as well as income and expenses are reversed.

The income after taxes from discontinued operations disclosed in the profit and loss statement con- sists of the following:

in k€ Revenue 2,030 Other income 283 Other expenses – 1,489 Result before taxes 824 Attributable income tax 33 Income after taxes from discontinued operations 857 Solarworld 2011 • Consolidated Interim Financial Statements First Quarter • NOTES

44 The assets held for sale as well as the liabilities of assets held for sale disclosed in the balance sheet completely refer to the assets and liabilities recognized in connection with the solar fund. They consist of the following:

in k€ Fixed assets 84,574 Deferred tax assets 4,181 Trade receivables 1,483 Other short-term assets 240 Liquid funds 6,087 Assets held for sale 96,565

in k€ External financial liabilities 81,702 Financial liabilities due to Solarparc AG 20,371 Deferred tax liabilities 1,361 Other liabilities 333 Liabilities of assets held for sale 103,767

The cash flow statement contains the following cash flows from discontinued operations:

in k€ Cashflow from operating activities 288 Cashflow from investment activities 0 Cashflow from financing activities – 625 Net changes in cash and cash equivalents – 337

Contingent Liabilities

As of March 31, 2011, there are no significant changes of contingent liabilities compared to December 31, 2010. Solarworld 2011 • Consolidated Interim Financial Statements First Quarter • NOTES

Treasury Shares 45

On December 31, 2010, SolarWorld AG was in possession of 4,838,723 treasury shares in total. Thereof, until February 17, 2011, 3,914,116 shares have been exchanged against shares of Solarparc AG, so that only 924,607 treasury shares are still in possession of SolarWorld AG as of March 31, 2011. Based on the respective share prices on the exchange dates, accumulated profits have been increased by k€ 24,818 and additional paid-in-capital has been increased by k€ 73. The total exchange value of the treasury shares amounted to k€ 28,805.

Composition of Cash and Cash Equivalents

As of March 31, 2011, cash and cash equivalents consist of liquid funds in amount of k€ 470,586 (thereof k€ 6,087 from discontinued operations) (March 31, 2010: k€ 911,014), which are reduced by a bank overdraft in amount of k€ 11,269 (March 31, 2010: k€ 0).

5. Material Events Subsequent to the End of the Interim Period

After March 31, 2011, there have been no events of particular importance. Solarworld 2011 • Consolidated Interim Financial Statements First Quarter • NOTES

46 17 Consolidated Segment Reporting January 1 – March 31, 2011 // in m€

Production Production Germany USA Trade Other Elimination Consolidated Revenue External revenue 99 3 161 0 – 30 Intersegment revenue 88 123 1 2 – 214 Total revenue 187 126 162 2 – 244 233

Result Operating result (EBIT) 40 – 7 – 8 – 2 3 26 Financial result – 9 Income before taxes on income 17 Taxes on income – 5 Income from continued operations 12 Income after taxes from discontinued operations 1 Consolidated net income 13

18 Consolidated Segment Reporting January 1 – March 31, 2010 // in m€

Production Production Germany USA Trade Other Elimination Consolidated Revenue External revenue 66 5 183 0 – 28 Intersegment revenue 75 53 0 2 – 130 Total revenue 141 58 183 2 – 158 226

Result Operating result (EBIT) 23 – 5 3 – 1 6 26 Financial result – 14 Income before taxes on income 12 Taxes on income – 7 Consolidated net income 5 Solarworld 2011 • Financial and Event Calendar 2011

ial and Financ Event Calendar 2011 47

Publication of consolidated interim report 1st quarter 2011 Analysts’ conference call May 12, 2011 www.solarworld.de/financial-reports

eeting, Bonn (Germany) Annual General M May 24, 2011 www.solarworld.de/hv2011

Dividend payment* for fiscal year 2010 May 25, 2011 

unich (Germany) June 8 – 10, 2011 Intersolar Europe, M www.intersolar.de

July 12 – 14, 2011 Intersolar N orth America, S an Francisco (U. S.) www.intersolar.us

August 11, 2011 Publication of consolidated interim report 1st half 2011 Analysts’ conference call www.solarworld.de/financial-reports

September 5 – 8, 2011  PV SEC, Hamburg (Germany) www.photovoltaic-conference.com/exhibition.html

Oc tober 18 – 20, 2011  SolarPower, Dallas (U. www.solarpowerinternational.comS.)

No vember 14, 2011  Publication of consolidated interim report 3rd quarter 2011 Analysts’ conference call www.solarworld.de/financial-reports

* pending on approval by Annual General Meeting THE Consolidated Interim REPORT IS ALSO AVAILABLE IN GERMAN. ONLINE VERSIONS IN GERMAN AND ENGLISH CAN BE FOUND ON OUR HOMEPAGE AT Interimreport1-2011.SOLARWORLD.DE. ON THE WEB, YOU HAVE ACCESS TO A BARRIER-FREE PDF-FILE OF OUR REPORT.

CONTACT OUR TEAM:

SolarWorld AG Investor Relations/Corporate Communication Martin-Luther-King-Str. 24 53175 Bonn, Germany www.solarworld.com [email protected]

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