ERS: SOLON SE / 3-Monatsbericht 2011

2011Interim Reportas of March 31, 2011

2 | SOLON INTERIM REPORT 2010 > ABSCHNITTKEY DATA SOLON GROUP 2011 2010 1 Changes Jan 1 – Mar 31 Jan 1 – Mar 31 in %Revenue in € million 65.2 88.3 –26 %Foreign country revenue in € million 52.4 32.1 + 63 % in % of revenue 80.4 % 36.4 %LageberichtTotal operating performance in € million 118.0 98.7 + 20 %Gross profit in € million 14.8 22.1 –33 %EBITDA in € million –12.9 –2.2 –486 % in % of revenue n/a n/aEBIT in € million –17.0 –6.4 –166 % in % of revenue n/a n/aEBT in € million –23.5 –11.0 –114 % in % of revenue n/a n/aNet income / loss from continuing operations in € million –21.5 –8.0 –169 % in % of revenue n/a n/aNet income / loss in € million –21.5 –8.2 –162 % in % of revenue n/a n/aNumber of shares outstanding in million 17.2 12.5 + 38 %Earnings per share in € –1.25 –0.65 –92 %Cash flow from operating activities in € million –31.3 –31.0 –1 %Cash flow from investing activities in € million 5.7 –0.8 n/aCash flow from financing activities in € million 20.6 17.6 + 17 %Depreciation and amortization in € million 4.1 4.2 –2 %Personnel expenses in € million 10.0 8.2 + 22 % in % of revenue 15.3 % 9.3 %Capital expenditure in € million 1.1 2.2 –50 %Production capacity at quarter-end in MW 445 395 + 13 %Production volume generated during the reporting period in MW 51 41 + 24 % Mar 31, 2011 Dec 31, 2010Total assets in € million 673.4 667.5 +1%Working capital in € million 213.0 172.5 + 23 %Net debt in € million 402.1 369.1 +9%Equity in € million 89.8 107.8 –17 %Equity-to-assets ratio in % 13.3 % 16.1 %Number of employees 2 797 912 –13 %1 Adjustment of previous year’s values due to the sale of the Inverter division during fiscal 2010, which is shown retrospectively as a discontinued operation in accordance with IFRS 5.2 Employees excluding working student trainees and interns.

1Contents 4 Letter to Shareholders 6 Interim Management Report as of March 31, 2011 8 Business and Economic Trends10 Business Performance14 Opportunities and Risks14 Report on Post-Balance Sheet Date Events14 Forecast17 Investor Relations20 Interim Consolidated Financial Statements as of March 31, 201122 Consolidated Income Statement22 Consolidated Statement of Comprehensive Income23 Consolidated Balance Sheet24 Consolidated Cash Flow Statement25 Consolidated Statement of Changes in Equity26 Notes38 Responsibility Statement40 Financial Calendar

2 | SOLON INTERIM REPORT 2010 > ABSCHNITT QI 2011 > HIGHLIGHTSHighlightsLagebericht

3 44 Geschäfts- und Rahmenbedingungen Group revenue at € 65.2 million in weak market environment 50 Geschäftsverlauf EBIT loss of € 17.0 million, net loss of € 21.5 million 80 Kapitalmanagement Management Board completed by new COO and CSO110 Mitarbeiter 18 MW power plant contract in California130 Forschung und Entwicklung SOLON SOLraise introduced:150 Nachhaltigkeit new performance-optimized photovoltaic system180 Beschaffung190 Risiko- und Chancenmanagement200 Sonstige Angaben209 Nachtragsbericht

4 | SOLON INTERIM REPORT QI 2011 > LETTER TO SHAREHOLDERSLetter toShareholders

5Dear Shareholders, This change of the overall conditions in Italy representsPartners and Friends of SOLON, a great challenge for the industry as a whole, and also for our Company. However, the expected realign- ment of the market also offers new opportunities for SOLON. Our subsidiary in Italy makes us one of theOnce again, our industry has found itself in a very most well-established providers in the market and wedifficult environment since the beginning of the are able to point out numerous reference projects foryear, when in the first few days of 2011 a discussion the implementation of large-scale rooftop solar powerconcerning the future of solar subsidies in Germany plants. One example of this is our recently completedbegan despite the fact that the new law on feed-in 12 MW power plant on the roofs of the Interporto Padovatariffs had only come into force on January 1, 2011. logistics center. Moreover, we offer a diversified rangeFortunately, the political impasse did not last long this of specific rooftop solutions. The most recent additionstime. After a brief debate, the political players agreed to this portfolio met with an extraordinary amountto limit the future expansion of photovoltaic capacity of interest at SolarExpo in Verona and include thein Germany to 3 to 5 GW per year through additional SOLbond developed especially for light-metal roofs, thereductions of tariffs and a number of other measures. SOLraise system with an integrated power optimizer,The German solar industry also considers this range to and the SOLfixx plug & play system for flat roofs withbe reasonable and sustainable. low load-bearing capacity. Despite this rapid agreement, the industry- In the following pages we will report on awide recovery of demand expected in the spring failed first quarter that did not go according to plan for ourto materialize. Large inventories spanning the entire Company with regard to sales and earnings, and resultedvalue chain were the reason that SOLON, like many in a significant setback to the recovery that we beganother manufacturers, had to cut production, and large last year. This also had an impact on our planning forvolumes of solar modules came onto the market at rock- the year as a whole. From the present perspective, webottom prices. Far fewer solar systems were installed on cannot expect to be successful in completely makingGerman roofs than expected in the first three months up for the decline in first-quarter revenues during theof the year. Even in the current quarter, we have so far rest of the year. We therefore had to adjust our salesseen only a slight pick-up of the market. We can only and earnings targets. Nonetheless, now that clarityspeculate about the causes for this persistent sluggish finally exists in Italy, we can say that the prerequisitesdemand. Possibly the early clarification of future subsi- for sustained development in all of our core marketsdies has prompted customers to postpone their invest- continue to be present. Business in the U.S. is particu-ment decision in expectation of further price declines larly promising, as we recently were awarded anotherin advance of the next tariff reduction. Of course, the large power plant contract, reinforcing our position asrenewed debate surrounding atomic energy since the the preferred solar energy partner of U.S. utilities. WeFukushima disaster has also played a role. Against this therefore expect to see a noticeable recovery of ourbackdrop, further drastic reductions of solar subsidies business during the weeks and months to come.now appear unlikely. In Italy, which held second place among theworlds solar markets last year, it was decided in earlyMarch to abrogate the existing feed-in law which had Sincerely yours,only been in effect since the beginning of the yearwithout, however, presenting a successor regulation.This put investors and banks into a genuine state ofshock. Current projects were delayed and new businessvirtually came to a standstill. It was not until early May Stefan Säuberlichthat the Italian government agreed on a new Conto Chief Executive OfficerEnergia providing for a further significant reduction ofsubsidy rates. The largest impact will be felt by large-scale solar power plants on greenfield sites, which underthe new regulation will hardly be profitable. We there-fore expect that the market development in Italy will infuture focus more strongly on the sector of private andcommercial customers with large rooftop installations.

6 | SOLON INTERIM REPORT QI 2011 > MANAGEMENT REPORTInterim ManagementReport as ofMarch 31, 2011

7 8 Business and Economic Trends10 Business Performance14 Opportunities and Risks14 Report on Post-Balance Sheet Date Events14 Forecast17 Investor Relations

8 | SOLON INTERIM REPORT QI 2011 > MANAGEMENT REPORT > BUSINESS AND ECONOMIC TRENDSBUSINESS AND ECONOMIC TRENDS SIGNIFICANT EVENTS IN THE FIRST QUARTER OF 2011SOLON SE was founded in 1997 in Berlin, Germany,and in 1998 became the first listed solar company in Changes to the Management BoardGermany. SOLON is active around the world in therenewable energy sector with subsidiaries in Germany, At the start of the year, Dr. Martin Detje, 49, tookItaly, France, Austria, and the USA. As of March 31, office as Chief Operating Officer of SOLON SE. Dr. Detje2011, the Group had a total of 797 employees. The has a doctorate in physics and has come to SOLONSOLON SE Group’s corporate headquarters are located from Roth & Rau AG, where he headed the unit forin Berlin, Germany. turnkey solar cell production lines as well as the SOLON is a supplier of solar systems, offering subsidiary Roth & Rau Ortner GmbH, which specializesphotovoltaic solutions for a wide variety of applications in production logistics and automated solutions forranging from solar installations for residential buildings the photovoltaics industry.to large, commercial rooftop photovoltaic systems andmulti-megawatt green-field power plants. Our business Contractsfocuses on three key fields in the solar value chain:– Development and manufacture of In February, SOLON concluded an agreement with the solar modules and solar system solutions California utility Pacific Gas & Electric (PG&E) on– Planning and construction of turnkey construction of a large-scale solar power plant with an solar power plants output of 18 MW in California. Completion of the plant– Organization and realization of complete is scheduled for October 2011. SOLON is also among solar power plant projects the group of suppliers selected for potential participa- As an international company, SOLON gener- tion in a 250 MW solar program planned by PG&E forated approximately 80 % of its consolidated revenue the coming years.outside of its home market of Germany during thereporting period. SOLON’s sales activities focus on Productsselect photovoltaic markets in Europe and NorthAmerica of sufficient size and / or having significant At the start of March, SOLON introduced a newpotential. Our primary target markets in Europe are product at the 26th symposium for photovoltaic solarGermany, Italy, and France. In Germany, the world’s energy in Bad Staffelstein: the SOLON SOLraise is amost evolved and the largest market for solar technol- system solution that utilizes an integrated performanceogy, SOLON benefits from being one of the pioneers optimizer to enable output of up to 25 % percent morein the German solar sector with an established brand than conventional installations, particularly on partiallythat enjoys strong brand recognition. In Italy, the shaded roofs.second-largest European solar market after Germany,SOLON has been represented for several years with a Investmentssubsidiary and its own production facility, both of whichhave established it as a local provider in that country At the start of February, Spectrawatt Incorporated, aas well. Outside of Europe, our business activities are U.S. manufacturer of solar cells in which SOLON holdsconcentrated on the United States. The U.S. solar an investment of 16 %, had to suspend production duetechnology market is one of the markets with the to financial difficulties. Since this occurrence wasstrongest growth prospects for the coming years. already imminent at the end of the prior year, theSOLON established a local presence in the United States investment was written off in full in the 2010 financialearly on, and has had a local subsidiary there since statements.2007. Group-wide production capacities totaled 445MW at the end of the first quarter of 2011. All in all, MarketsSOLON sold solar modules and solar systems with aninstalled capacity of 32 MW. In response to unexpectedly strong market growth in the previous year, the first quarter of 2011 saw additional cuts in solar subsidies in key markets. At the start of February, the upper house of the German parliament (Bundestag) resolved to additionally reduce feed-in tariffs for solar electricity as of July 1 of this year and to make further cuts as

9dictated by the future market trend. In France, solar with the aim of limiting additional construction andsubsidies also changed at the beginning of March. The leveling out production at a range of 3 to 5 GW pertariff, which had just been adjusted in September 2010, year, which is viewed as reasonable and sustainable.was reduced again by 20 %, and new construction of Moreover, debate in Germany on the use of atomicphotovoltaic capacity was limited to approximately 500 energy has flared up once again in view of the nuclearMW per year. The Italian government also decided in accident in Japan in mid March. As a consequence, theMarch on new regulations for solar subsidies, which are German government decided to shut down several ofscheduled to take effect on June 1 of the current year. the country’s older atomic power plants and to createAccordingly, the feed-in tariffs for solar electricity will a new energy concept that, among other things, isbe further reduced. expected to target forced development of renewable energies. This is also likely to impact the future of solar subsidies in Germany.MACROECONOMIC SITUATION ItalyGlobal economy At the start of March 2011, the Italian government decided to revise the new feed-in law that had justEven against the backdrop of political upheaval in gone into effect on January 1, 2011. The existingnorthern Africa and the natural disaster and nuclear legislation expires on May 31, 2011, and the new lawcatastrophe in Japan, the world economy continued is to take effect as of June 1, 2011. The lack of clarityto experience robust growth at the start of the year, regarding the future conditions for solar investmentsin part thanks to a return to momentum of the emerg- in Italy has resulted in a high level of uncertainty amonging economies. However, due to the serious budget market participants. This especially affected the powerdeficits in certain European countries and in the U.S., plant segment, which came to a near standstill in thethe industrial nations on the whole continue to face middle of the first quarter with respect to new business.major challenges, making the economic outlook for the Despite the decline in global production, the decreasecurrent year uncertain. Despite the weak economies in in demand in Italy, which coincided with a slow recov-the other euro zone member countries, the German ery in Germany, resulted in oversupply of solar modules.economy continued on an upward path at the start of The ensuing negative consequences impacted nega-the year. tively on a majority of companies in the photovoltaic industry along the entire scope of the supply chain.Solar technology market Details on the wording of the new (Italian) law were not announced until the beginning of May. Accordingly,Global market the feed-in tariffs for solar electricity will be reducedFollowing an unexpectedly strong performance in by as much as 35 % by year-end - depending on the2010, the global photovoltaic market cooled down type of installation. The cuts will have the greatestperceptibly in the first quarter of the new fiscal year. impact on greenfield installations with output excee-In addition to the usual weak demand in the solar ding 200 kW and roof installations exceeding 1 MW.sector during the winter quarter, announcements of For the connection of installations under constructionreductions in solar subsidies in the key markets of according to the previously applicable conditions, aGermany, Italy, and France, some of which have already transitional period until the end of August 2011 hasbeen implemented, led to uncertainty among market apparently been planned. Moreover, a limitation ofparticipants and acted to additionally curb demand for the subsidy volume and accordingly of expansion ofsolar technology. capacity was adopted until 2016 as was a bonus for installations with at least 60 % of their componentsGermany originating from European production.The German photovoltaic market experienced a veryweak start to the year. In part, this was attributable to Francethe expected seasonal effects. Another probable reason The French parliament adopted new legislation onis the change in subsidy conditions passed by the solar subsidies at the beginning of March 2011, stipu-German Bundestag at the beginning of February, to lating a maximum of 5.4 GW for total installed photo-which the market still needs to adjust. The German voltaic capacity until 2020. This limits new constructiongovernment decided to move up the additional tariff to around 500 MW per year, with the quotas differingreduction, which was originally foreseen for the end of based on the size of the installation. In addition, feed-2011 / beginning of 2012, to July 1 of the current year in tariffs were reduced by 20 %. For small installations

10 | SOLON INTERIM REPORT QI 2011 > MANAGEMENT REPORT > BUSINESS PERFORMANCEof less than 100 kW, the tariff price will depend on the sales (54 %) in the Components business. Productioncurrent market trend in this segment and is to be output rose by 24 % year-on-year, from 41 MW in theadjusted each quarter. All photovoltaic projects in prior year period to 51 MW in the first three monthsexcess of 100 kW output will have to be publicly of 2011.tendered in the future. These recent changes in the Contrary to expectations, selling prices forregulatory framework already led to a substantial photovoltaic installations fell only slightly in the firstslowdown of the power plant business in France in the three months of fiscal 2011. SOLON nonethelessfirst quarter. Market activity is now increasingly shifting generated an EBIT loss of € 17.0 million in the firsttoward building-integrated photovoltaic applications, quarter of 2011 based on weak sales (prior-year period:which still enjoy attractive subsidy rates. EBIT loss of € 6.4 million).USAA key factor for the continuing development of the INCOME STATEMENTU.S. photovoltaics market will remain with the commit-ment of major utilities, which are increasingly adding The SOLON Group earned revenues of € 65.2 millionrenewable energies to their portfolios. In contrast with in the first quarter of fiscal year 2011 (prior-year period:Germany and numerous other countries that have laws € 88.3 million).on feed-in tariffs, the U.S. does not offer solar energy Total operating performance rose by 20 % insubsidies at a national level. However, the U.S. federal the first three months to € 118.0 million compared togovernment grants subsidies of up to 30 % for solar € 98.7 million in the prior-year period. Inventories ofinvestment, a program that was just extended for an work in progress and finished goods increased by aadditional year at the end of 2010. In combination with total of € 42.7 million in the reporting period (prior-yearnumerous local subsidy programs, this offers a solid period: € 3.5 million) which is due by one third tofoundation for the development of the industry in the project business in connection with APS in the USAcurrent year. and by two thirds to lower-than-expected demand. Other operating income was € 9.9 million in the first three months of 2011 (prior-year period: € 6.8 million).IMPACT OF MARKET CONDITIONS ON THE This figure includes income from currency translationSOLON GROUP gains in the amount of € 4.3 million (prior-year period: € 5.5 million), which was compensated by an offsettingAlong with the entire photovoltaic industry, SOLON item of € 5.8 million (prior-year period: € 5.7 million)was also affected by the weak market trend in the first under other operating expenses based on the applica-quarter of 2011. Low demand in Germany acted as a tion of a natural foreign currency hedge.particular drag on the Company’s performance and The share of revenues generated outside ofresulted in lower Group revenue and earnings than had Germany amounted to 80 % throughout the Group inbeen expected at the start of the year. the first three months of 2011. The SOLON Group’s production output was 51 MW in the period under review (prior-year period: 41 MW). As demand in the first quarter fell significantly short of expectations,BUSINESS PERFORMANCE IN THE FIRST inventory levels increased.QUARTER OF 2011 Due to the higher production output and the larger share of the systems business in the first threeIn comparison to the prior year, sales were weak in the months of 2011, cost of materials rose by 35 % tofirst quarter of 2011. Revenue for the first three months € 103.1 million (prior-year period: € 76.6 million). Ofof fiscal 2011 amounted to € 65.2 million, down from this figure, € 20.9 million reflected third-party services€ 88.3 million a year earlier. This represents a revenue (prior-year period: € 10.6 million).decline of 26 % compared with the prior-year period. Gross profit declined by 33 % in the firstThe weak first-quarter revenues were due first of all to three months of 2011 to € 14.8 million compared topoor weather conditions in the initial months of the € 22.1 million in the prior-year period. The ratio of theyear and secondly, to the reduction in feed-in fees along gross profit to the sum of sales revenues and inventorywith uncertainty regarding the development of tariffs changes decreased from 24 % to 14 %.in the core markets of Germany and Italy. Since the end Personnel expenses rose by 22 % in the firstof March, however, demand has been rising slightly three months of 2011 to € 10.0 million, compared toonce again. SOLON generated the major portion of its € 8.2 million in the prior-year period. The increase was

11TOTAL REVENUES (JANUARY 01 – MARCH 31)IN € MILLION240 195.5210180 161.6150120 118.0 90 95.6 98.7 88.3 75.1 70.2 60 65.2 30 38.3 0 2007 2008 2009 2010 1 2011 Revenues Total operating performance1 Adjustment of previous year’s values due to the sale of the Inverter division during fiscal 2010, which is shown retrospectively as a discontinued operation in accordance with IFRS 5.due on the one hand to the fact that the special effect (prior-year period: loss of € 11.0 million). The incomeresulting from SOLON employees having voluntarily tax credit amounted to € 2.0 million (prior-year period:waived their variable salary components in fiscal 2010 € 3.0 million).no longer applied. On the other hand, the number of The net loss increased in the first threeemployees in Sales and Administration increased, while months of 2011 to € 21.5 million (prior-year period:headcount in production declined, primarily in response loss of € 8.2 million).to the management buy-out of SOLON HILBER GmbH. Earnings per share (EPS) came to € –1.25 in Depreciation and amortization came to the first three months of 2011 (prior-year period:€ 4.1 million in the first three months of 2011 (prior- € –0.65).year period: € 4.2 million). Other operating expenses increased in theperiod under review, rising from € 16.2 million in the BALANCE SHEETprior-year period to € 17.7 million. Included in thisitem are expenses from currency translation losses of Total assets rose to € 673.4 million as of March 31,€ 5.8 million, other fees for third-party services of 2011 (December 31, 2010: € 667.5 million).€ 1.3 million, marketing expenses of € 1.3 million,expenses for maintenance and repair costs of € 1.2 Non-current assetsmillion, expenses directly associated with restructuringmeasures totaling € 1.1 million, expenses for lease SOLON invested € 1.1 million in intangible assets andpayments of € 0.8 million, and expenses for warranty property, plant and equipment throughout the Groupprovisions of € 0.6 million. during the reporting period (prior-year period: € 2.2 The SOLON Group recorded an EBIT loss of million). In the period under review, SOLON recognized€ 17.0 million and EBITDA loss of € 12.9 million in the grants and subsidies in the amount of € 8.0 millionfirst three months of 2011, compared to the EBIT loss primarily to be used for Group headquarters in Berlinof € 6.4 million and EBITDA loss of € 2.2 million in the Adlershof, technical equipment and machinery as wellprior-year period. as other operating and office equipment. Net financing expenses amounted to As of March 31, 2011, intangible assets were€ 6.6 million in the reporting period (prior-year period: carried at € 14.9 million and property, plant and equip-net expense of € 4.6 million). Of this, income of ment at € 125.6 million (December 31, 2010: € 15.2€ 0.1 million (prior-year period: expenses of € 0.1 million and € 137.0 million, respectively). As of themillion) was due to the financial result from investments reporting date, property, plant and equipment consistedaccounted for using the equity method while interest of land and buildings amounting to € 73.8 million,resulted in a net expense of € 6.7 million (prior-year manufacturing plant and equipment of € 41.0 million,period: net expense of € 4.5 million). other plant, operating and office equipment of Earnings before taxes (EBT) amounted to € 9.9 million, and advance payments and constructiona loss of € 23.5 million in the period under review in progress of € 0.9 million.

12 | SOLON INTERIM REPORT QI 2011 > MANAGEMENT REPORT > BUSINESS PERFORMANCEFinancial assets amounted to € 39.8 million as of Current assets rose to € 421.9 million in the periodMarch 31, 2011 (December 31, 2010: € 37.7 million). under review (December 31, 2010: € 405.9 million),Of this figure, € 24.1 million was attributable to equity due in particular to the increase in inventories.investments. Other non-current assets amounted to € 49.7 Shareholders’ equitymillion as of March 31, 2011 (December 31, 2010:€ 51.1 million), almost entirely reflecting advance Compared to December 31, 2010, the share capitalpayments on inventories. as of March 31, 2011 was unchanged at € 17.2 million. Total non-current assets declined to € 251.5 The capital reserve also remained unchanged atmillion in the period under review (December 31, 2010: € 284.1 million.€ 261.7 million). The net loss for the period in the first quarter of 2011 caused equity to drop by € 21.5 million.Current assets Overall, equity decreased from € 107.8 million as of December 31, 2010 to € 89.8 million as of March 31,The value of inventories increased to € 160.3 million 2011. The equity-to-assets ratio fell from 16.1 %as of March 31, 2011 (December 31, 2010: € 108.4 to 13.3 %.million) due to the rise in production output and unitsales falling short of plan figures. This figure includes Non-current liabilitiesraw materials and supplies totaling € 27.5 million,work in progress of € 72.1 million, finished goods of Non-current liabilities to banks decreased versus the€ 40.5 million, and advance payments on inventories prior year to € 21.9 million (December 31, 2010: € 63.4of € 20.2 million. million). The decline in liabilities resulted from the SOLON was able to reduce current trade term-based reclassification of the promissory note loanreceivables by € 22.3 million to € 148.4 million as of due in March 2012 in the amount of € 40.0 million.March 31, 2011 (December 31, 2010: € 170.7 million). Non-current liabilities from bonds and other non-A total of 57 % of the receivables resulted from current liabilities rose in the period under review toapplication of the percentage-of-completion method € 144.1 million (December 31, 2010: € 143.2 million).in the project business. Accordingly, the sum of € 85.0 This item includes in particular liabilities from themillion was recognized as receivables even though the convertible bonds issued in December 2007 in thereceivables were not due as of the reporting date under amount of € 130.3 million as well as liabilities fromthe respective contracts. The higher inventories caused financing leases of € 11.2 million.working capital to rise from € 172.5 million to € 213.0 Total non-current liabilities amounted tomillion during the first three months. € 176.8 million as of March 31, 2011 (December 31, Other receivables and other assets amounted 2010: € 216.8 million).to € 94.4 million as of March 31, 2011 (December 31,2010: € 103.6 million). Included in this item are loans Current liabilitiesgranted, current receivables from financial authorities(primarily VAT claims) and prepaid expenses. Cash Current liabilities to banks increased to € 247.7 millionand cash equivalents decreased from € 15.3 million to in the first quarter of 2011 (December 31, 2010:€ 11.6 million in the first three months. € 177.9 million). The increase in liabilities resulted inBALANCE SHEET STRUCTURE AS OF MARCH 31, 2011IN % Equity 13.3 Non-current assets 37.3 Equity and Assets Non-current liabilities Current assets Liabilities 26.3 62.7 Current liabilities 60.4

13particular from the term-based reclassification of the PERFORMANCE IN THE INDIVIDUAL SEGMENTSpromissory note loan due in March 2012 in the amountof € 40.0 million. The business operations of the SOLON Group are Trade payables were € 95.6 million on divided into the Production and Sales segments. InMarch 31, 2011 (December 31, 2010: € 106.6 million). addition, the Holding / Other segment depicts holding Other current liabilities rose from € 42.4 activities as well as other activities of the SOLON Group.million to € 52.6 million. This figure includes advancepayments received, VAT liabilities as well as liabilities Productiondue to controlling interests, associated companies andequity investments. The Production segment comprises the Group-wide At the end of the first three months of 2011, production process for manufacturing solar modulestotal current liabilities were € 406.8 million (December and is managed internally within the Group, in31, 2010: € 342.9 million). particular with respect to budget compliance. The Production segment is made up of the individualCash flow statement companies of SOLON Photovoltaik GmbH and Solon Nord GmbH as well as the production divisions ofIn the first quarter of 2011, SOLON generated a SOLON S.p.A and the SOLON Corporation. SOLONnegative cash flow from operating activities in the HILBER Technologie GmbH, which was reportedamount of € 31.3 million (prior-year period: negative under the Production segment in fiscal 2010, ceasedcash flow from operating activities of € 31.0 million). its operating activities and is reported under theThis was due primarily to the negative effect of increased Holding / Other segment since fiscal 2011.inventories of € 53.3 million and the net loss beforetaxes for the period (€ 23.5 million). The reduction in Revenue and earningsreceivables led to a positive cash effect of € 22.3 million. In the first quarter of 2011, the Production segment Net cash from investing activities amounted recorded revenue of € 57.0 million (prior year: € 73.6to € 5.7 million in the first three months of 2011 (prior- million). Revenue is generated almost exclusively fromyear period: € –0.8 million). Payments received under other Group companies.grants and subsidies amounted to € 10.3 million. Net Total operating performance rose by 14 %,cash from financing activities came to € 20.6 million increasing from € 74.3 million in 2010 to € 84.6 million.(prior-year period: € 17.6 million) and in particular The difference between the figure for revenues andreflects the impact of the increase in liabilities to banks that for total operating performance is primarilyas well as principal and interest payments. attributable to the increase in inventories of work in progress and finished solar modules of € 26.3 million as well as the amout of other operating income ofECONOMIC SITUATION OF THE COMPANY AT € 1.2 million.THE TIME OF PUBLICATION The cost of materials was up from € 60.9 million to € 73.6 million, due in particular to higherAs in prior years, demand in Germany significantly production quantities. Personnel expenses decreaseddeclined at the beginning of the year due to seasonal by 30 % to € 1.9 million (prior year: € 2.7 million).effects and the periodic reduction of feed-in tariffs EBIT generated in the first quarter of 2011compared to Q4 2010. Since the end of March, how- reached € 3.6 million (prior year: €4.0 million).ever, demand has been rising slightly once again. Weexpect additional demand in the second quarter against Additional informationthe backdrop of the further cuts in solar energy Capital expenditure for intangible assets and property,subsidies resolved at the beginning of the year, which plant and equipment totaled € 0.4 million in the Pro-will take effect on July 1, 2011. In Italy, business was duction segment in the first quarter of 2011 (prior year:characterized by strong power plant activity in the first € 0.9 million).quarter. However, the change in the schedule of solarenergy subsidies resolved in early March to take effect Salesfrom June 1, 2011 has led to uncertainty among cus-tomers. As a result, it has become much more difficult The Sales segment comprises the sales activities forto acquire new projects, and performance in Italy is solar modules, power plant systems, and projects andlikely to be weaker than expected in the course of is managed internally within the Group, in particularthis year. with regard to profitability. This segment is composed

14 | SOLON INTERIM REPORT QI 2011 > MANAGEMENT REPORT > FORECASTof the individual companies of SOLON Investments REPORT ON POST-BALANCE SHEETGmbH and SOLON SAS as well as the sales divisions of DATE EVENTSSOLON SE, SOLON S.p.A., and the SOLON Corporation. Changes to the Management BoardRevenue and earningsRevenue in the Sales segment decreased by 24 % in On April 1, Andreas Amelang, 50, took up the positionthe period under review from € 88.7 million to € 67.4 of Chief Sales Officer of SOLON SE. Mr. Amelang hasmillion. Revenue was generated almost exclusively from a degree in marine engineering, and after holdingexternal companies. Total operating performance positions at MTW Schiffswerft and the Aker Group wasdecreased to € 89.0 million (prior year: € 93.0 million). most recently in charge of establishing a new divisionIn addition to revenues, this figure includes other for special ship propulsion systems as Vice Presidentoperating income of € 5.2 million (prior year: € 0.8 of Voith Radial Propeller.million) and an increase in inventories of finished goodsand work in progress amounting to € 16.4 million (prior Investmentsyear: € 3.5 million). The cost of materials decreased from € 89.1 In mid April, SOLON fully divested its investments inmillion to € 88.6 million, due in particular to higher ml&s manufacturing, logistics and services GmbH &sales quantities. Personnel expenses in this segment Co. KG and ml&s manufacturing, logistics and servicesincreased to € 5.3 million (prior year: € 3.3 million). Management GmbH (ml&s), an industrial serviceEBIT loss increased from € 2.7 million to € 12.0 million provider in Greifswald, Germany. The shares werein the period under review. purchased by Hydraulik Nord GmbH, which also special- izes in industrial services. The sale constituted part ofAdditional information SOLON’s strategy to concentrate entirely on its coreIn the first quarter of 2011, capital expenditure for business in the future. SOLON will continue cooperat-intangible assets and property, plant and equipment ing with ml&s in the manufacture of solar modules atamounted to less than € 0.1 million in the Sales the Greifswald location.segment (prior year: € 0.5 million).Holding / Other FORECASTIn the Holding / Other segment, we record the holdingactivities of SOLON SE and the business activities of MACROECONOMIC SITUATIONERLASEE Liegenschaften GbR, SOLON Mobility GmbH,SOLON HILBER Technologie GmbH and Estelux s.r.l. The global economy World economic performance indicators are again pointing upwards, above all thanks to high growth ratesOPPORTUNITIES AND RISKS in the emerging economies. However, global growth momentum is likely to slow considerably during theIn the course of the first quarter of 2011, no significant current year in light of the major challenges at hand.changes occurred in either internal or external condi- High debt levels in some European countries and in thetions or influencing factors compared with the situation U.S. pose a major risk for the future economic trend.as known at the time of preparation of the 2010 Annual The United States is facing its largest budget deficitReport, which is discussed in the section of the report since World War II, and proposed spending cuts areon risk and opportunity management. For this reason, likely to act as a drag on the U.S. economy. Moreover,we ask that you refer to page 73 et seq. of the 2010 the effects of the natural disaster and nuclear catast-Annual Report of SOLON SE for information on rophe in Japan on the worldwide economy cannot yetopportunities and risks. be fully assessed. Political upheaval in the Arab region As of the date of this report (March 31, adds another element of uncertainty that entails energy2011), there was no risk to the continued existence supply risks. In 2012, the global economy is expectedof SOLON as a going concern. From a current perspec- to revive slightly. However, growth rates will probablytive, the Management Board of SOLON SE does remain below the 2010 levels. In the euro zone,not anticipate any fundamental changes in the risk economic recovery is predicted to be slow in 2011 andsituation. 2012 in view of the budget situation in many member

15states, which remains strained, and the gradual expiration investments, not least owing to the subsidy rates thatof economic stimulus programs. However, the German will remain higher than the German level despite aneconomy remained robust as the year commenced, for additional significant lowering. However, the marketwhich reason Germany is forecast to remain one of the development can be expected to shift more strongly ingrowth drivers of the euro zone economy. The sustained the future to the segment of private and commercialupswing is being driven by continued high demand for roof installations with output of up to 1 MW. SOLONGerman exports along with a rising domestic economy. sees itself as well positioned in this segment owing toNonetheless, growth is also predicted to remain below its many years of experience in the implementation of2010 levels in Germany in 2011 and 2012. large roof installations in Italy and its product range of specific roof solutions. In view of the weeks of uncer-Solar technology market tainty about the future of solar subsidies in Italy that has brought new business to an actual standstill sinceAfter an unexpectedly robust 2010, the global photo- March, particularly in the power plant segment, it mustvoltaics market is expected to cool down notably in the be assumed, however, that business performance maycurrent fiscal year, with growth not exceeding the low prove to be generally weaker in the course of this yeardouble digits in either 2011 or 2012 in the best case than was expected at the beginning of the year.scenario. Whereas in 2010 the majority of new photo-voltaic capacity was installed in Europe, particularly FranceGermany, the trend in the coming years is likely to The cuts in solar subsidies resolved on this March haveincreasingly favor the U.S. and Asia. More and more new put a noticeable damper on the prospects for develop-sales opportunities are opening up for the photovoltaics ment of the French photovoltaics market. The additionalindustry due to the emergence of new markets with a reduction in feed-in rates for solar electricity, andpotential of 500 MW per year, which should act to reduce particularly the annual limitation on new installationsthe susceptibility of the solar industry to disruption in to approximately 500 MW in total, of which only aindividual markets resulting from changing political maximum of 200 MW is foreseen for green-fieldconditions. installations, are likely to render the French market largely unattractive for the construction of large-scaleGermany power plants in the future. Instead, it can be assumedGermany is expected to hold onto its position as the that market activities will increasingly revolve aroundworld’s single largest photovoltaics market in the the building-integrated installation segment, whichcoming year as well. However, the number of new continues to benefit from high subsidy levels.installations is anticipated to decrease considerably thisyear and next year compared with the boom in 2010. USAOne of the reasons for this is the agreed additional cuts The U.S. will assume an increasingly important role asin solar subsidies. Although these cuts will lead to a sales market for solar technology in the years to come.pull-forward effects in anticipation of the changes, Market volumes are predicted to double in 2011 aloneparticularly in the second quarter, market volumes are and to still see double-digit growth in 2012. The U.S.expected to decline in full-year 2011 compared with will thus already advance to becoming one of the world’sthe prior year. Forecasts for the coming years call for largest solar markets in the current year. However,volumes leveling out at the range of 3 to 5 GW targeted uniform solar subsidies are still lacking in the U.S. atby legislators. a national level. Solar initiatives take place at the state or local level, and vary widely. For this reason,Italy market activities have thus far concentrated largely onThe Italian government has adopted further reductions California and a few other states. However, the adoptionof solar subsidies. The new regulations are to enter into of new subsidy initiatives is likely to gradually expandforce as of June 1, 2011. They will result in a further the basis for further development of the U.S. market.significant reduction of subsidy rates affecting inparticular greenfield installations with output exceed-ing 200 kW and large rooftop installations greater than OUTLOOK FOR SOLON1 MW. Furthermore, the subsidy volume is to be limiteduntil 2016, which corresponds to a de facto limitation Strategyof expansion of capacity of photovoltaic output inthis period. Despite these noticeable reductions, Italy SOLON sees itself as a solar systems provider offeringmay continue to be an attractive location for solar its customers system solutions for a variety of application

16 | SOLON INTERIM REPORT QI 2011 > MANAGEMENT REPORT > FORECASTareas, ranging from solar installations for residential Objectiveshomes to large, commercial rooftop power plant instal-lations and multi-megawatt green-field power plants. The objective of SOLON’s Management Board is toIn order to counter growing international competition, steadily continue the turnaround process initiated inSOLON relies on generating competitive advantages in the prior year in 2011 and 2012. As part of this effort,the areas of innovation, quality, and service to further the operational business will be further expanded andexpand on its position as a premium supplier. To achieve it is planned to reduce the Company’s net debt withthis, SOLON will gradually extend its product portfolio the goal of improving the currently strained balanceto include innovative system solutions for new applica- sheet situation and strengthening the Company’s equitytion fields and supplement its range of solar installation position. In this connection, we are also striving toproducts with additional components and services. replace short-term financing components with mediumFinally, SOLON will hone its market communications or long-term alternatives and consequently achieve ato focus even more strongly on conveying its compre- more balanced financing structure. Finally, thehensive quality concept and high quality standards. Company’s financial situation will be further alleviated In 2011, SOLON will continue concentrating through effective working capital management.sales activities on its core markets of Germany, Italy, The significantly weaker than expectedFrance, and the United States. In addition, business business performance in the first quarter has promptedopportunities in new markets such as the United King- SOLON management to revise its revenue and incomedom, India, and the Middle East will be investigated, planning for the current year. The Management Boardas these markets will presumably take on growing currently assumes that it will not be possible or notsignificance alongside the existing core markets in entirely possible to make up for the drop in revenuesthe coming years. In Germany, the Company plans to of the first quarter during the rest of the year. It there-continue expanding on its position as a premium fore expects that consolidated revenue for 2011 willprovider. To this end, SOLON will strengthen coopera- not surpass that of the previous year. As a consequencetion with installers and gradually add to its product of this lower revenue expectation, the income targetsoffering for this target group, such as by offering solu- were reduced accordingly.tions for the remote monitoring of small installationsand arranging loans for solar investments. Theseactivities will be carried out with the support of ourSOLAR PIONEERS partner program. SOLON will also Berlin, May 11, 2011be targeting its new products toward the industrialroof market segment to an increasing extent. In Italy,SOLON will likewise focus on the end customer segmentvia local installation partners and on the turnkeyconstruction of power plants on industrial rooftops. In Stefan Säuberlichthe U.S., business will continue to concentrate pre- Chief Executive Officerdominantly on large-scale, multi-megawatt power plantprojects in the current and coming years. Lastly, inFrance, SOLON will focus most of its future attentionon the market for building-integrated photovoltaicssolutions. Andreas Amelang SOLON is facing growing competitive Chief Sales Officerpressure at the global level. In order to hold its groundin the face of international competition while layingthe foundation for returning to the profitable growthof earlier years, in 2009 the SOLON Management Boardestablished an extensive program to restructure the Dr. Martin DetjeCompany’s processes and infrastructure and to optimize Chief Operating Officercosts in the module and power plant businesses. Someof the measures were already successfully completedin 2010, and the others will be continued in the currentyear. Once concluded, the program has the potentialto yield total annual cost savings in the double-digit Dr. Lars Podlowskimillion range. Chief Technical Officer

17INVESTOR RELATIONSGENERAL MARKET SENTIMENTThe international stock markets proved to be surpri-singly robust as the year commenced despite thedifficult global economic and political situation, whichincluded the natural disaster and nuclear catastrophein Japan, unrest in Libya, and debt crises in several EUmembers and the U.S. Most European and U.S. indiceseven made slight gains over the first quarter.Performance of SOLON stockAlthough SOLON’s shares saw substantial fluctuationin the first quarter of 2011, share performance wassignificantly more robust on the whole than in priorquarters. SOLON stock reached its quarterly low onJanuary 12 at € 2.19, and the high occurred on March15 at € 5.77. The stock closed the quarter at € 4.44,an improvement of more than 100 % over the fourthquarter of 2010 (December 31, 2010: € 2.19). Theupward price trend was accompanied by a significantincrease in share turnover, with the average number ofshares traded per day rising to 160,365 (Xetra) in thefirst quarter. SOLON’s market capitalization improvedto approximately € 76 million.INVESTOR RELATIONS ACTIVITIESAgainst the backdrop of the current debate in Germanyon atomic energy, SOLON was among the companiesbenefiting from increased interest on the part ofGerman and international investors during the firstquarter. Management Board and investor relationsrepresentatives held numerous in-person meetings withcurrent and prospective investors as well as financialanalysts to discuss the present business trend andassess the outlook in the Company’s core markets.Numerous German and Anglo-American financialinstitutes report regularly concerning the Company.

18 | SOLON INTERIM REPORT QI 2011 > INVESTOR RELATIONSKEY SHARE DATAISIN DE0007471195WKN 747 119Trading symbol SOO1Reuters ticker symbol SOOG.DEBloomberg ticker symbol SOO1:GRListing Frankfurt Regulated Market (Prime Standard)Stock exchanges Berlin, Düsseldorf, Frankfurt, Hamburg, Hanover, Munich, Stuttgart and XetraIndices Prime All Share, CDAX, Technology All ShareKEY DATA FOR SOLON STOCKFIRST QUARTER 2011Share capital in € 17,225,032.00Number of shares issued 17,225,032Quarterly high 1 in € 5.77Quarterly low in €1 2.19Quarter-end closing price1 in € 4.44Market capitalization at quarter-end in € million 76Average trading volume per day (number) 160,364Earnings per share in € -1.251 Deutsche Börse, XetraPERFORMANCE OF SOLON STOCK (12 MONTHS)IN %140120100 80 60 40 20 0 04/10 05/10 06/10 07/10 08/10 09/10 10/10 11/10 12/10 01/11 02/11 03/11 SOLON TecDAX DAX Stock performances indexed; April 1, 2010 = 100

20 | SOLON INTERIM REPORT QI 2011 > CONSOLIDATED FINANCIAL STATEMENTSInterim ConsolidatedFinancial Statementsas of March 31, 2011

2122 Consolidated Income Statement22 Consolidated Statement of Comprehensive Income23 Consolidated Balance Sheet24 Consolidated Cash Flow Statement25 Consolidated Statement of Changes in Equity26 Notes38 Responsibility Statement40 Financial Calendar

22 | SOLON INTERIM REPORT QI 2011 > CONSOLIDATED FINANCIAL STATEMENTSCONSOLIDATED INCOME STATEMENTJANUARY 1 TO MARCH 31€ ‘000 Note 2011 2010 1Revenue (2) 65,201 88,301Changes in work in progress and finished goods 42,746 3,483Own expenses capitalized 152 138Other operating income 9,888 6,781Total operating performance 117,987 98,703Cost of material (3) 103,146 76,564Gross profit 14,841 22,139Personnel expenses 10,028 8,200Depreciation, amortization and impairment 4,083 4,169Other operating expenses 17,688 16,179EBIT –16,958 –6,409Result from investments accounted for using the equity method (4) 143 –116Other investment and financial result (4) –1 –Interest income 2,245 2,053Interest expenses –8,945 –6,550Net income / loss before income taxes –23,516 –11,022Income taxes –1,976 –3,021Net income / loss from continuing operations –21,540 –8,001Net income / loss from discontinued operations (5) – –153Net income / loss –21,540 –8,154Earnings per share (total) in € (11) –1.25 –0.65Diluted earnings per share (total) in € (11) –1.25 –0.65Earnings per share from continuing operations in € (11) –1.25 –0.64Diluted earnings per share from continuing operations in € (11) –1.25 –0.64Earnings per share from discontinued operations in € (11) – –0.01Diluted earnings per share from discontinued operations in € (11) – –0.011 Adjustment of previous year’s values due to the sale of the Inverter division during fiscal 2010, which is shown retrospectively as a discontinued operation in accordance with IFRS 5. Details concerning the result from discontinued operations are shown under Note 5: Result from discontinued operations.CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOMEJANUARY 1 TO MARCH 31€ ‘000 2011 2010Net income / loss –21,540 –8,154Foreign exchange translation differences 1,237 –839Unrealized gains / losses from the fair value measurement ofavailable-for-sale securities 1,948 –272Share of other comprehensive income / loss of equity-accounted companies – 17Unrealized gains / losses from the fair value measurement of derivative hedges 294 –92 after income tax of –126 40Other comprehensive income / loss 3,479 –1,186Total comprehensive income / loss –18,061 –9,340Total comprehensive income / loss attributable to shareholders of SOLON SE –18,061 –9,340

23CONSOLIDATED BALANCE SHEET€ ‘000 Note Mar 31, 2011 Dec 31, 2010ASSETSNon-current assets 251,537 261,669Intangible assets (6) 14,938 15,162Property, plant and equipment (6) 125,571 137,021Financial assets accounted for using the equity method (6) 402 265Miscellaneous financial assets (6) 39,360 37,478Other non-current assets 49,727 51,138Deferred tax assets 21,539 20,605Current assets 421,868 405,874Inventories (7) 160,253 108,438Trade receivables (8) 148,371 170,661Other receivables and assets 94,372 103,554Cash and cash equivalents 11,607 15,307Assets held for sale (9) 7,265 7,914Total assets 673,405 667,543SHAREHOLDERS EQUITY AND LIABILITIESShareholders equity 89,786 107,847Share capital 17,225 17,225Capital reserve 284,132 284,132Other comprehensive income 2,895 –584Accumulated profit/loss –214,466 –192,926Non-current liabilities 176,789 216,800Provisions 10,767 10,220Liabilities to banks (10) 21,908 63,421Bonds and other non-current liabilities 144,114 143,159Current liabilities 406,830 342,896Tax provisions 704 953Other provisions 10,274 15,016Liabilities to banks (10) 247,689 177,852Trade payables 95,600 106,580Other liabilities 52,563 42,377Liabilities associated with assets held for sale (9) – 118Total shareholders equity and liabilities 673,405 667,543

24 | SOLON INTERIM REPORT QI 2011 > CONSOLIDATED FINANCIAL STATEMENTSCONSOLIDATED CASH FLOW STATEMENTJANUARY 1 TO MARCH 31 2011 2010 1€ ‘000Net income / loss before income taxes –23,516 –11,022Investment result, other financial result and interest result 6,558 4,613EBIT –16,958 –6,409Amortization and impairment losses on intangible assets and depreciationand impairment losses on property, plant and equipment 4,083 4,169Impairment losses / reversals on other non-current and current assets 1,435 5,912Gain / loss from the disposal of non-current assets 19 16Income / expenses for stock option plan – –564Changes in provisions –4,019 –2,358Income taxes paid 1,514 –5,797Other non-cash income and expenses 3,424 –1,621Cash flow from operating activities before changes in net current assets –10,502 –6,652Change in inventories –53,295 –25,961Change in trade receivables 22,281 1,347Change in other receivables and assets 10,113 434Change in trade payables –10,171 –1,366Change in other liabilities 10,323 1,382Cash flow from operating activities from continuing operations –31,251 –30,816Cash flow from operating activities from discontinued operations – –135Cash flow from operating activities –31,251 –30,951Proceeds from disposals of intangible assets and property, plant and equipment 385 58Capital expenditure for intangible assets and property, plant and equipment –1,744 –2,464Change in financial assets and loans –3,332 –759Proceeds from government grants 10,306 2,254Interest received 93 125Cash flow from investing activities from continuing operations 5,708 –786Cash flow from investing activities from discontinued operations – –2Cash flow from investing activities 5,708 –788Changes in financial liabilities 28,965 23,246Interest paid –8,359 –5,810Cash flow from financing activities from continuing operations 20,606 17,436Cash flow from financing activities from discontinued operations – 116Cash flow from financing activities 20,606 17,552Net change in cash and cash equivalents –4,937 –14,187Changes in cash due to exchange rate changes 1,237 –839Cash and cash equivalents at beginning of period 15,307 60,700Cash and cash equivalents at end of period 11,607 45,6741 Adjustment of previous year’s values due to the sale of the Inverter division during fiscal 2010, which is shown retrospectively as a discontinued operation in accordance with IFRS 5. Details concerning discontinued operations are shown under Note 5: Result from discontinued operations.

25CONSOLIDATED STATEMENT OF CHANGES IN EQUITY Other comprehensive income Fair value measurement of other Fair value Share Capital financial measurement Currency Accumulated€ ‘000 capital reserve assets of hedges translation profit / loss TotalBalance onJanuary 1, 2010 12,530 269,590 1,847 –792 319 –173,128 110,366Total comprehensiveincome / loss – – –1,107 25 –876 –19,798 –21,756Capital increase 4,695 15,305 – – – – 20,000Direct costs in connectionwith the capital increaseafter deferred taxes(€ 89 thousand) – –207 – – – – –207Stock option plan – –556 – – – – –556Balance onDecember 31, 2010 17,225 284,132 740 –767 –557 –192,926 107,847Balance onJanuary 1, 2011 17,225 284,132 740 –767 –557 –192,926 107,847Total comprehensiveincome / loss – – 1,948 294 1,237 –21,540 –18,061Balance onMarch 31, 2011 17,225 284,132 2,688 –473 680 –214,466 89,786

26 | SOLON INTERIM REPORT QI 2011 > CONSOLIDATED FINANCIAL STATEMENTS > NOTESNOTES(1) GENERALEconomic status of the CompanySOLON SE, with registered offices in Berlin (Am Studio 16, 12489 Berlin), Germany, was founded in 1997.The Company went public in 1998, making it the first quoted solar power company in Germany. As theparent, SOLON SE acts as a holding company for the SOLON Group and is responsible for strategy development,project business, and financing for the SOLON Group as well as research and development and distribution forthe German production companies. SOLON’s core activity is the manufacture of solar modules of various output ratings and photovoltaicsystems for the construction of large solar power plants as well as the construction of turnkey solar power plants.SOLON’s facilities are located in Germany, Austria, Italy, France, and the U.S. The SOLON Group is one of thelargest solar module manufacturers in Europe and a leading supplier of intelligent photovoltaic solutions forlarge-scale projects.Basis of accountingThe interim consolidated financial statements of the SOLON Group for the three months ended March 31, 2011,were prepared in accordance with the International Financial Reporting Standards (IFRSs) and the interpretationsof the IFRS Interpretations Committee, valid as of the reporting date and as adopted in the European Union. The Group currency is the euro (€). Unless otherwise indicated, all amounts are stated in thousandsof euros (€ thousand); this may result in differences compared to the unrounded figures. In preparing these quarterly financial statements and calculating the comparative figures for the previ-ous year, the same consolidation principles and accounting policies were generally used as were applied to thepublished consolidated financial statements for fiscal year 2010.For a description of the consolidation principles and accounting policies, please refer to Nos. 1 and 2 in thenotes to the consolidated financial statements as published in the 2010 Annual Report. This report is availablefor download at www.solon.com. For the first time in fiscal 2011, SOLON has applied IAS 24 (revised 2009). This standard was adoptedby the European Union in July 2010 and must be applied to fiscal years beginning on or after January 1, 2011.As a result of the initial application of IAS 24 (revised 2009) in the SOLON Group, a change occurred in thecomposition of other related parties. The income statement has been prepared in accordance with the nature of expense method. Thedetermination of the tax expense for the interim reporting period is based on the best estimate of the weightedaverage annual income tax rate expected for the entire fiscal year.

27SCOPE OF CONSOLIDATIONSUBSIDIARIES INCLUDED IN SCOPE OF CONSOLIDATION AS OF MARCH 31, 2011 Subscribed Date of Shareholding capitalCompany, registered office Country formation / addition 1 % €SOLON Photovoltaik GmbH, Berlin Germany December 22, 1998 100 51,129SOLON Investments GmbH, Freiburg Germany July 1, 2003 100 25,000Solon Nord GmbH, Greifswald Germany April 23, 2004 100 1,000,000SOLON Mobility GmbH, Berlin Germany January 28, 2008 100 25,000SOLON HILBER Technologie GmbH, Steinach Austria August 19, 2005 100 100,000SOLON S. p. A., Carmignano di Brenta Italy January 1, 2006 100 16,000,000SOLON Corporation, Tucson / Arizona USA January 2, 2007 100 37,870Estelux s. r. l., Marano Vicentino Italy December 1, 2008 100 10,000SOLON SAS, Lyon France July 26, 2010 100 500,000ERLASEE Liegenschaften GbR, Berlin Germany November 12, 2003 90 35,0001 The date for formation / addition corresponds to the date of initial consolidationOther companies whose influence on the Group’s financial position, cash flows and profit or loss was immaterialwere not included in the consolidated financial statements.JOINT VENTURES AND ASSOCIATES ACCOUNTED FOR USING THE EQUITYMETHOD AS OF MARCH 31, 2011 Date of ShareholdingCompany, registered office Country formation / addition %SOL Holding AG, Köln Germany February 16, 2007 48.0Sistema Solare s. r. l., Marano Vicentino Italy February 6, 2009 50.0As of March 31, 2011 the SOLON Group held 49.4% of the shares in ml&s manufacturing, logistics and servicesGmbH & Co. KG, Greifswald, and 48.0% of the shares in ml&s manufacturing, logistics and services ManagementGmbH, Greifswald. These companies are associates of the SOLON Group, as SOLON exercises a significant influenceover them. The shares in ml&s manufacturing, logistics and services GmbH & Co. KG and ml&s manufacturing,logistics and services Management GmbH are classified as held for sale since December 31, 2010. Therefore, theshares are no longer accounted for using the equity method, but are instead measured at fair value in accordancewith the provisions of IFRS 5. The shares are shown under the item “Assets held for sale” (please refer also to Note9: Assets held for sale and liabilities associated with assets held for sale). Other companies whose influence on the Group’s financial position, cash flows, and profit or loss wasimmaterial were not accounted for using the equity method.

28 | SOLON INTERIM REPORT QI 2011 > CONSOLIDATED FINANCIAL STATEMENTS > NOTES TO THE INCOME STATEMENTSNOTES TO THE INCOME STATEMENT(2) REVENUERevenues of the SOLON Group amounted to €65,201 thousand (prior-year period: €88,301 thousand), themajority of which was generated from the sale of solar modules and planning of system products and compo-nents for solar power plants. Of this amount, € 25,480 thousand (prior-year period: €16,435 thousand) was attributed to revenuesfrom construction contracts resulting from the SOLON Group’s involvement in power plant projects. Theserevenues are calculated using the percentage-of-completion method as set out in IAS 11. The state of completionof a contract is determined by the proportion of contract costs incurred to the estimated total contract costs(cost-to-cost method). Total contract costs amounted to € 25,952 thousand as of the reporting date (prior-yearperiod: €16,299 thousand). Revenues from construction contracts are calculated by multiplying the amount ofrevenue agreed in the contract by the percentage of completion of the contract. For a detailed breakdown of revenues according to the segments Production and Sales, please seeNote 12: Segment reporting.(3) COST OF MATERIAL 2011 2010 1€ ‘000 Jan 1 – Mar 31 Jan 1 – Mar 31Expenses for raw materials, supplies and merchandise 82,267 65,952Expenses for services purchased 20,879 10,612Cost of material 103,146 76,5641 Adjustment of previous year’s values due to the sale of the Inverter division during fiscal 2010, which is shown retrospectively as a discontinued operation in accordance with IFRS 5.(4) INVESTMENT RESULTThe investment result comprises the associates and joint ventures accounted for using the equity method andthe other investment result: 2011 2010€ ‘000 Jan 1 – Mar 31 Jan 1 – Mar 31Result from investments accounted for using the equity method 143 –116Other investment result –1 –Investment result 142 –116

29(5) RESULT FROM DISCONTINUED OPERATIONSOn December 14, 2010, SOLON SE sold its 100% share in its Swiss subsidiary Solon Inverters AG to DeltaEnergy Systems (Germany) GmbH, a company in the Taiwanese Delta Electronics Group, thereby discontinuingits “inverter” division. The change of ownership took immediate effect. Solon Inverters AG was assigned to theHolding / Other segment. The “inverter” division was retrospectively classified as a discontinued operation in accordance withIFRS 5, and as a result, the comparative figures for the income statement and the cash flow statement have beenadjusted, as well as the corresponding disclosures in the notes for fiscal 2010. The result from discontinued operations is broken down as follows, for which a portion of the businessactivities took place within the Group: 2011 2010€ ‘000 Jan 1 – Mar 31 Jan 1 – Mar 31Revenue – 458Changes in work in progress and finished goods – –12Other operating income – 1Cost of material – 422Gross profit – 25Personnel expenses – 295Depreciation and amortization – 19Other operating expenses – –101EBIT – –188Interest expenses – –1Net income / loss before income taxes – –189Income taxes – –36Result from discontinued operations – –153Cash flows from discontinued operations are broken down as follows: 2011 2010€ ‘000 Jan 1 – Mar 31 Jan 1 – Mar 31Cash flow from operating activities – –135Cash flow from investing activities – –2Cash flow from financing activities – 116Net change in cash and cash equivalents – –21

30 | SOLON INTERIM REPORT QI 2011 > CONSOLIDATED FINANCIAL STATEMENTS > NOTES TO THE BALANCE SHEETNOTES TO THE BALANCE SHEET(6) CHANGE IN SELECTED NON-CURRENT ASSETSNON-CURRENT ASSETS Intangible Property, plant Financial€ ‘000 assets and equipment assets TotalNet carrying amount as of January 1, 2010 15,925 150,480 100,129 266,534Additions 1,252 9,493 7,258 18,003Government grants 348 –5,630 – –5,282Depreciation, amortization and impairment –1,942 –16,161 –6,988 –25,091Other –421 –1,161 –62,656 –64,238Net carrying amount as of December 31,2010 respectively January 1, 2011 15,162 137,021 37,743 189,926Additions 153 964 35 1,152Government grants – –7,981 – –7,981Depreciation, amortization and impairment –375 –3,708 – –4,083Other –2 –725 1,984 1,257Net carrying amount as of March 31, 2011 14,938 125,571 39,762 180,271 37.743During the first quarter of 2011, SOLON recognized grants and subsidies in the amount of € 7,981 thousandprimarily to be used for the Group headquarters in Berlin Adlershof, technical equipment and machinery as wellas other operating and office equipment. Additions to property, plant and equipment in fiscal year 2010 include additions of € 2,026 thousandresulting from a reclassification of property, plant and equipment held for sale from “assets held for sale” to“property, plant and equipment” on the balance sheet. Other changes to property, plant and equipment of € –24thousand in fiscal year 2010 also relate to this reclassification. Other changes in financial assets include a reclassification in the amount of €54,456 thousand fromnon-current to current bonds.(7) INVENTORIES€ ‘000 Mar 31, 2011 Dec 31, 2010Raw materials and supplies 27,457 27,889Work in progress 72,112 52,952Finished goods and merchandise 40,531 8,822Advance payments on inventories 20,153 18,775Inventories 160,253 108,438

31(8) TRADE RECEIVABLES€ ‘000 Mar 31, 2011 Dec 31, 2010Trade receivables, gross 71,266 74,551 General valuation allowances –119 –130 Specific valuation allowances –7,806 –7,809Receivables from construction contracts 85,030 104,049Trade receivables, net 148,371 170,661(9) ASSETS HELD FOR SALE AND LIABILITIES ASSOCIATED WITH ASSETS HELD FOR SALEAs of March 31, 2011, the item “Assets held for sale” comprises the shares in ml&s manufacturing, logistics andservices Management GmbH, as well as the shares in ml&s manufacturing, logistics and services GmbH & Co. KG. The management of SOLON decided to sell these shares in fiscal 2010. ml&s manufacturing, logisticsand services Management GmbH and ml&s manufacturing, logistics and services GmbH & Co. KG are associatesof the SOLON Group. As of March 31, 2011, the shares are shown at their fair value in the amount of €7,265 thousand,under Assets held for sale. These shares are allocated to the Holding / Other segment. The shares were sold in April 2011 subsequent to the closing date. For further details, please refer toNote 15, Significant Events after the Balance Sheet Date. The management buy-out of SOLON HILBER Technologie GmbH was completed as planned onJanuary 1, 2011. All assets and associated liabilities that were classified as held for sale as of December 31, 2010as a result of the management buy-out, were sold to HILBER SOLAR GmbH in January 2011.(10) LIABILITIES TO BANKS€ ‘000 Mar 31, 2011 Dec 31, 2010Non-current liabilities to banks 21,908 63,421 Maturing in 1 to 5 years 17,680 58,026 Maturing in more than 5 years 4,228 5,395Current liabilities to banks 247,689 177,852Liabilities to banks 269,597 241,273

32 | SOLON INTERIM REPORT QI 2011 > CONSOLIDATED FINANCIAL STATEMENTS > OTHER INFORMATIONOTHER INFORMATION(11) EARNINGS PER SHARENet income forms the basis for calculating earnings per share. The average number of shares is computed fromthe weighted average number of shares for the reporting period. Neither the options not yet exercised nor the convertible bonds resulted in a reduction of earningsper share in the reporting period 2010 or in the reporting period 2011. Accordingly, there was no dilution ofearnings per share in accordance with IAS 33, and diluted earnings per share are equal to basic earnings per share.The following table presents the calculation of the earnings per share: 2011 2010€ ‘000 Jan 1 – Mar 31 Jan 1 – Mar 31Net income in € ‘000 –21,540 –8,154Average number of shares outstanding in thousands 17,225 12,530Basic earnings per share in € –1.25 –0.65Diluted earnings per share in € –1.25 –0.65The earnings per share are broken down as follows over the result from continuing operations and the resultfrom discontinued operations: 2011 2010€ ‘000 Jan 1 – Mar 31 Jan 1 – Mar 31Net income from continuing operations in € ‘000 –21,540 –8,001Net income from discontinued operations in € ‘000 – –153Average number of outstanding shares in thousands 17,225 12,530Basic earnings per share from continuing operations in € –1.25 –0.64Basic earnings per share from discontinued operations in € – –0.01Diluted earnings per share from continuing operations in € –1.25 –0.64Diluted earnings per share from discontinued operations in € – –0.01

33(12) SEGMENT REPORTINGSOLON’s business activities are broken down separately in its internal reporting, into the segments Productionand Sales. The Production segment comprises the Group-wide production process for the manufacture of solarmodules and is controlled within the Group in particular with regard to budget compliance. The Sales segmentcomprises the sales activity of solar modules, power plant systems, and projects and is controlled within theGroup in particular with regard to profitability. Furthermore, the position “Holding / Other” comprises theholding activities of SOLON SE and the activities of ERLASEE Liegenschaften GbR, SOLON Mobility GmbH,SOLAR HILBER Technologie GmbH and Estelux s.r.l. SOLON HILBER Technologie GmbH was part of the Produc-tion segment in fiscal 2010. Following the cessation of its operacting activities, the company is reported underthe Holding / Other segment since fiscal year 2011. As the reconciliation with the Group figures contains only the intersegment elimination and theunallocated assets, no separate presentation of the reconciliation account is made. Segment information is based on essentially the same accounting policies as those applied in theconsolidated financial statements. Transactions between the segments are eliminated in the consolidation. Thebusiness relationship between the segments of the SOLON Group is based on prices that were determined usingthe cost-plus method.

34 | SOLON INTERIM REPORT QI 2011 > CONSOLIDATED FINANCIAL STATEMENTS > OTHER INFORMATIONThe segment report for the reporting and comparison period is presented as follows:SEGMENT REPORTING Total Production Sales Reportable segments 2011 2010 2 2011 2010 2 2011 2010 2€ ‘000 Jan 1 – Mar 31 Jan 1 – Mar 31 Jan 1 – Mar 31 Jan 1 – Mar 31 Jan 1 – Mar 31 Jan 1 – Mar 31Segment revenue 56,994 73,602 67,412 88,686 124,406 162,288 thereof revenue with Group companies 56,993 73,567 2,362 484 59,355 74,051 thereof revenue from third parties 1 35 65,050 88,202 65,051 88,237Changes in work in progress andfinished goods 26,334 6 16,414 3,470 42,748 3,476Own expenses capitalized 56 34 – 30 56 64Other operating income 1,233 620 5,165 823 6,398 1,443Total operating performance 84,617 74,262 88,991 93,009 173,608 167,271Cost of material 73,642 60,932 88,593 89,145 162,235 150,077Gross profit 10,975 13,330 398 3,864 11,373 17,194Personnel expenses 1,871 2,690 5,318 3,279 7,189 5,969Depreciation, amortizationand impairment 1,720 2,256 726 411 2,446 2,667Other operating expenses 3,822 4,395 6,351 2,840 10,173 7,235EBIT 3,562 3,989 –11,997 –2,666 –8,435 1,323Result from investments accountedfor using the equity method – – – – – –Other investment, financialand interest result – – – – – –Net income / loss before incometaxes 3,562 3,989 –11,997 –2,666 –8,435 1,323Capital expendituresfor non-current assets 435 919 34 498 469 1,417Significant non-cash items 1 Results from reversal of provisions – – 4,024 – 4,024 – Valuation allowances on current assets 40 20 358 1,776 398 1,7961 Significant non-cash items other than changes in work in progress and finished goods, own expenses capitalized, depreciation and amortization on intangible and fixed assets2 Adjustment of previous year’s values due to the sale of the Inverter division during fiscal 2010, which is shown retrospectively as a discontinued operation in accordance with IFRS 5.

35 Reconciliation Holding / Other Amounts not allocated Consolidation Group 2011 2010 2 2011 2010 2 2011 2010 2 2011 2010 2Jan 1 – Mar 31 Jan 1 – Mar 31 Jan 1 – Mar 31 Jan 1 – Mar 31 Jan 1 – Mar 31 Jan 1 – Mar 31 Jan 1 – Mar 31 Jan 1 – Mar 31 154 66 – – –59,359 –74,053 65,201 88,301 4 2 – – –59,359 –74,053 – – 150 64 – – – – 65,201 88,301 –2 7 – – – – 42,746 3,483 96 74 – – – – 152 138 6,128 6,137 – – –2,638 –799 9,888 6,781 6,376 6,284 – – –61,997 –74,852 117,987 98,703 144 242 – – –59,233 –73,755 103,146 76,564 6,232 6,042 – – –2,764 –1,097 14,841 22,139 2,839 2,231 – – – – 10,028 8,200 1,639 1,504 – – –2 –2 4,083 4,169 10,291 10,046 – – –2,776 –1,102 17,688 16,179 –8,537 –7,739 – – 14 7 –16,958 –6,409 – – – – 143 –116 143 –116 – – –6,701 –4,497 – – –6,701 –4,497 –8,537 –7,739 –6,701 –4,497 157 –109 –23,516 –11,022 1,427 2,499 – – –779 –94 1,117 3,822 – 8 – – – – 4,024 8 – 18 – – – – 398 1,814

36 | SOLON INTERIM REPORT QI 2011 > CONSOLIDATED FINANCIAL STATEMENTS > OTHER INFORMATION(13) EMPLOYEE PROFIT SHARING PLANBetween 2001 and 2008, the SOLON Group regularly issued stock options to promote long-term loyalty amongemployees and officers of the Company and thus enable them to participate in the Company’s increase in value.Employees were granted options to purchase SOLON stock with a maximum maturity of 10 years. As of thebalance sheet date, all outstanding stock options had been vested.The following table shows the tranches that have not yet been exercised:SHARE-BASED PAYMENTTranche 3 4 5 6 7 8Date of issue Dec 30, Feb 24, Jan 18, Apr 07, Dec 12, Apr 01, 2004 2005 2006 2006 2006 2008Stock options issued 252,000 156,000 225,000 144,000 147,000 306,000Options not yet exercised atthe start of the reporting period 84,000 52,000 219,000 144,000 139,500 14,000Options issued duringthe reporting period – – – – – –Options forfeited duringthe reporting period – – – – – –Options expired duringthe reporting period – – – – – –Options exercised duringthe reporting period – – – – – –Options returned duringthe reporting period – – – – – –Options not yet exercised atthe end of the reporting period 84,000 52,000 219,000 144,000 139,500 14,000Vested options not yet exercisedas of March 31, 2011 84,000 52,000 219,000 144,000 139,500 14,000The stock option plan resulted in the following expenses for the SOLON Group as of the reporting date forequity-settled share-based payment transactions:€ ‘000 Mar 31, 2011 Mar 31, 2010Total expense from equity-based payment transactions 13,330 13,322Expense in the period from equity-based payment transactions – –564For more information on the stock option plan, please refer to the 2010 Annual Report.

37(14) RELATED PARTY TRANSACTIONSTransaction volumes of the SOLON Group with related parties were as follows:€ ‘000 Income Expenses Receivables LiabilitiesJanuary 1 to March 31, 2011Controlling companies and their subsidies 606 1,921 29,237 7,132Joint ventures 13 – 5,709 6,577Associates 24 3,217 474 2,819Other related parties 1,155 3,794 60,891 4,342January 1 to March 31, 2010Controlling companies and their subsidies 1,573 3,501 25,533 1,503Joint ventures 463 3,336 20,009 1,508Associates 165 4,692 6,639 1,488Other related parties 5,229 701 40,033 1,345SOLON conducts business with the Mithril group, which due to a majority in situ at the annual shareholdermeeting exercises a controlling influence on the SOLON Group. Business involves primarly supply of cells, useof services and the granting of loans.(15) SIGNIFICANT EVENTS AFTER THE BALANCE SHEET DATESOLON divests its share in ml&sIn April 2011, SOLON sold its shares in its associates ml&s manufacturing, logistics and services GmbH & Co. KGand ml&s manufacturing, logistics and services Management GmbH (ml&s). The shares were taken over byHydraulik Nord GmbH, Parchim, Germany. Like ml&s, the new owner of the shares is specialized in providingindustrial services. The proceeds of the sale will only be available to SOLON after the completion of comprehensivefinancial restructuring. The parties have agreed not to disclose any further details concerning the transaction. Since 2004, SOLON has collaborated with ml&s on the manufacture of solar modules. In 2008, thesolar technology company took over shares in ml&s and most recently held a 49.4 % and 48.0 % share in bothcompanies, respectively. As of March 31, 2011, the shares are shown under the item Assets held for sale. The sale of the shares is part of SOLON’s corporate strategy to concentrate more strongly on its corebusiness. However, the Greifswald site will also play an important role in the Company’s production strategy inthe future.(16) REVIEW BY THE GROUP AUDITORThe interim financial statements as of March 31, 2011 and March 31, 2010 were not reviewed by the auditor.

38 | SOLON INTERIM REPORT QI 2011 > RESPONSIBILITY STATEMENTRESPONSIBILITY STATEMENTTo the best of our knowledge, and in accordance with the applicable reporting principles for interim financialreporting, the interim consolidated financial statements give a true and fair view of the assets, liabilities, financialposition, profit or loss of the Group, and the interim management report of the Group includes a fair review ofthe development and performance of the business and the position of the Group, together with a description ofthe principal opportunities and risks associated with the expected development of the Group for the remainingmonths of the financial year.Berlin, May 11, 2011Stefan Säuberlich Andreas AmelangChief Executive Officer Chief Sales OfficerDr. Martin Detje Dr. Lars PodlowskiChief Operating Officer Chief Technical Officer

40 | SOLON INTERIM REPORT QI 2011 > FINANCIAL CALENDARFinancial Calendar

41 June 16, 2011 Annual Shareholders’ Meeting, Berlin August 12, 2011 Publication of interim report as of June 30, 2011 November 11, 2011 Publication of interim report as of September 30, 2011 November 2011 Annual analysts’ meeting, BerlinImprintPublished/Editing and layout:SOLON SEInvestor Relations:Therese RaatzPhone +49 30 81879-9305Fax +49 30 81879-9999E-Mail investor@solon.comDate of publication:May 12, 2011

SOLON SEAm Studio 1612489 Berlin • GermanyPhone +49 30 81879-0Fax +49 30 81879-9999Internet www.solon.com

ERS: SOLON SE / 3-Monatsbericht 2011

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ERS: SOLON SE / 3-Monatsbericht 2011 Document Transcript