k1 sw zb Anhang - SolarWorld · EBIT 84,829 64,484 31.6 Consolidated net profit 48,243 40,086 20.3 Balance sheet figures (in tE) as per 30.06.2007 as per 30.06.2006 Variation in %

2nd Quarter 2007Consolidated Interim Report SolarWorld AG

Strength

Income statement figures (in tE) 2nd Quarter 2007 2nd Quarter 2006 Variation in %Sales 180,757 101,342 78.4EBITDA 59,002 43,650 35.2EBIT 49,698 37,741 31.7Consolidated net profit 26,844 23,567 13.9

Income statement figures (in tE) 1st half of 2007 1st half of 2006 Variation in %Sales 313,596 184,566 69.9EBITDA 103,926 76,012 36.7EBIT 84,829 64,484 31.6Consolidated net profit 48,243 40,086 20.3

Balance sheet figures (in tE) as per 30.06.2007 as per 30.06.2006 Variation in %Total assets 1,533,518 794,635 93.0Non-current assets 405,723 280,839 44.5Current assets 1,127,795 513,796 119.5Shareholder’s equity 633,380 508,842 24.5Liabilities 900,138 285,793 215.0

Selected indicators as per 30.06.2007 as per 30.06.2006 VariationEquity ratio 41.3% 64.0% -22.7%-PointsReturn on equity 7.6% 7.9% -0.3%-PointsROCE – Return on capital employed* 6.1% 9.6% -3.5%-PointsReturn on sales 15.4% 21.7% -6.3%-PointsCash ratio** 5.8 2.9 2.9

Employee data as per 30.06.2007 as per 30.06.2006 Variation in %Number of employees 1,378 795 73.3Sales per capita (in te) 228 232 -2.0EBIT per capita (in te) 62 81 -24.1Personnel cost ratio 12,7% 12.0% 0.7%-Points

* EBIT/ total capital – current liabilities** liquid funds + other financial assets/current liabilities

Selected corporate indicators

raw materia

lwafer

cell

moduletra

de

Industrial scale silicon produc-

tion from monosilane started

on schedule.

New plant for the production

of fine grain raw materials from

recycled wafers and cells has

been commissioned.

Conclusion of additional raw

material contracts as back-up

procurement position.

INTEGRATED PRODUCTION

ISIN (International Securities Identification Number) DE0005108401//WKN (Wertpapier-Kenn-Nummer) 510840

Cutoff date Cutoff datePrime Standard/TecDAX 30.06.2007 30.06.2006Number of shares 111.72 million 55.86 millionMarket capitalization 3.8 be 2.7 beTrade volume (12 months) 9.5 be 8.7 bePosition in TecDAX based on trade volume (free float, 12 months) 1 1Position in TecDAX based on free float market capitalization 2 1Earnings per share in 1st half of the year 0.43 e 0.37 eOpening price at beginning of year 24.00 e 14.00 e*Closing price at cutoff date 30.06. 34.10 e 24.53 e*Development in per cent +42 % +75%

* adjusted to the issue of bonus shares in 2007 (1:1)

SolarWorld Stock indicators

Aug 04

SolarWorld AG +1,714%

TecDax +66%

Jul 07

SolarWorld stock compared with TecDAX

Source: Deutsche Börse AG

CellWafer

Raw materia

l

Investment project for wafer

expansion in Freiberg from so

far 500 MW to now 1,000 MW.

Increase of our nominal capacity

at the highly advanced DS 1000

wafer manufacturing facility in

Freiberg to 270 MW.

Planning and order placement

for the technical equipment to

build up our wafer production

plant in Hillsboro, USA.

Group-wide production capacity

for solar cells increased.

Planning and order placement

for the technical equipment to

build up our cell manufacturing

plant in Hillsboro, USA.

Sola

rWor

ld G

roup

´s in

dica

tors

Figures in tE 2006 2006 2007 2007 2006 Variations3nd Quarter 4nd Quarter 1st Quarter 2nd Quarter 2nd Quarter in %

Sales revenues 141,981 188,699 132,839 180,757 101,342 78.4Changes in inventories of finished products 32,332 -4,026 22,131 -37,492 -5,065 640.2Own work capitalized 0 586 503 0 4 -100.0Other operating income 68,596 20,580 11,660 12,173 4,688 159.7Cost of materials -101,979 -124,102 -86,297 -59,915 -34,455 73.9Staff costs -19,054 -16,093 -18,280 -19,556 -11,836 65.2Depreciation and amortization -21,027 -10,057 -9,793 -9,304 -5,909 57.5Other operating expenditure -23,440 -17,104 -17,632 -16,965 -11,028 53.8Operating result 77,409 38,483 35,131 49,698 37,741 31.7Net financial income -714 1,118 -56 -6,058 394 -Earnings before taxes on income 76,695 39,601 35,075 43,640 38,135 14.4Taxes on income -13,379 -12,437 -13,676 -16,796 -14,568 15.3Consolidated profit/loss 63,316 27,164 21,399 26,844 23,567 13.9

Quarterly comparison of the Consolidated Income Statements

Sales by regions as of cutoff date 31.03.2007 in million e

0 50 150 200 250 300100

98.7 18.7 45.6 2.9147.7

ROWUSAAsiaRest of EuropeGermany

ModuleTra

de

Group-wide module manufac-

turing capacities increased step

by step.

Sales in core markets Germany

and Spain significantly increased.

Successful entry into new

European target markets.

Largest off-grid project in

corporate history for the

electrification of rural regions in

China successfully completed.

INDICATORSPROFILEFOREWORD BY THE BOARD OF MANAGEMENTI.-VIII. CONSOLIDATED INTERIM

REPORT 1ST HALF OF 2007

12

4

Profil

II. MARKET AND BACKGROUND CONDITIONS

I. THE SOLARWORLD STOCK

8

6

III. BUSINESS DEVELOPMENT 2ND QUARTER 2007

11

IV. EARNINGS, FINANCIAL AND NET WORTH POSITION

13

V. SUBSTANTIAL BUSINESS WITH COMPANIES AND PERSONS CLOSE TO THE COMPANY

16

VI. SUPPLEMENTARY REPORT17

VII. RISKS/OPPORTUNITIES18

VIII. FORECAST REPORT18

IX. CONSOLIDATED INTERIM FINANCIAL STATEMENTS

22

X. ASSURANCE OF LEGAL REPRESENTATIVES

32

What distinguishes us is of lasting value!

Profile 2nd Quarter 2007. Group-wide we were able tocontinue to grow profitably compared to the previousyear. We increased our 2nd quarter sales by around 78per cent and our EBIT by some 32 per cent. For the 1sthalf of the year we could boost our sales revenues byabout 70 per cent. This reflects our capacities and salesvolumes expansion, our answer to the increased and ris-ing international demand. By way of our back-up activi-ties in the raw materials sector we are strengtheningour procurement position step by step.

The international business is increasingly becomingmore important and our international strategy is payingoff. Thus, our group-wide share of international busi-ness amounted to 53 (previous year: 39) per cent. Weagain succeeded in entering new markets. Major mile-stones on the way to our further expansion have beenset since the beginning of the year: the acquisition of anew wafer production plant in Hillsboro, USA, theexpansion of the highly advanced wafer production inFreiberg, the step by step expansion of all stages of thevalue chain. For the full year we strive to exceed ourgrowth forecast of 20 per cent.

And we manage all that on the basis of our sustainableand climate-friendly business model.

2

IV. EARNINGS, FINANCIAL AND NET WORTH POSITIONPROFILE INDICATORS LETTER BY THE CHAIRMAN I. THE SOLARWORLD STOCK



LETTER BY THE CHAIRMAN

By the middle of the year we can clearly allow ourselves to be measured against our forecast

for the year 2007: That we have been able to increase sales and earnings simultaneously is a

sign of our growth, our progressing productivity and the sound substance of our business. We

have further expanded all the stages of the value chain – from raw materials to module pro-

duction. We have succeeded in entering new international markets. Since the beginning of

the year our shareholders have been able to enjoy a value increase of their SolarWorld stock-

holding of 65 per cent until today – in early August – and a dividend increase of 44 per cent.

Our technical progress in solar power technology is a crucial factor in reaching “Grid Parity”

in the medium term. This means: In the years to come we will manage to push prices for solar

power sustainably below the level of conventional household electricity. Economically this is

a successs; ecologically it is the step into a new energy age to combat climate change.

Yet, my personal demand on a sustainable business model goes even further than that:

SolarWorld is to be the synonym for an ecologically clean, economically profitable and socially

compatible company. To this end I created the “Ethics Council” in the 2nd quarter of 2007 –

as a complement number to the “Strategic Council”. The objective is for our company value

to be measured not only in economic terms but also in ethical and moral terms. As the Chief

Executive Officer of a worldwide company I would like us to face the responsibility for a sus-

tainable and fair development also in the poorer regions of the world. Electrification plays a

crucial role in this context: It is a fundamental prerequisite for people to attain a higher standard

of living in developing countries and can therefore make a contribution to a more equitable

distribution of goods. This is why we are getting involved in projects of rural electrification

by way of off-grid solar systems. Above and beyond this it is my declared objective that the

concept of sustainability be penetrated all the way to the operational level of the company

and that our employees completely identify with the strategy and the objectives derived from

it in their day-to-day work. We will consistently pursue this approach – especially also with a

view to the future – in the spirit of integrated sustainability management.

3

VII. RISKS/OPPORTUNITIESV. BUSINESS WITH PERSONS

CLOSE TO THE COMPANY VI. SUPPLEMENTARY REPORT VIII. FORECAST REPORTIX. CONSOLIDATED INTERIM

FINANCIAL STATEMENTSX. ASSURANCE OF LEGAL

REPRESENTATIVES

At SolarWorld socially compatible also means that we take it for granted that our employees,

the performers in the company, share in our economic success. At all our locations the

SolarWorld employees directly participate in our corporate results. At the location in Germany

we are even among the pioneers in this field with our employee profit sharing scheme GOMAB

which has for many years been securing an income above the level in West Germany for our

Freiberg employees in Saxony.

We have to mend our ways to preserve creation. An important key to this is the expansion and

further development of solar energy.

And what does a glance into the future promise us? Well, it will remain exciting. That is what

I am looking forward to, together with you.

With sunny greeting,

Dipl.-Ing. Frank H. Asbeck

Chairman and CEO of SolarWorld AG

Frank H. Asbeck

Dipl.-Ing.

Chief Executive Officer/

CEO

Consolidated InterimReport1st half of 2007

6




I. THE SOLARWORLD STOCK

Stock markets at record high. In the 2nd quarter of 2007 the international stock markets

made further gains in dynamism. Against the background of a robust economy, stable forecasts

for companies and the world economy as well as high liquidity in the financial markets the

Dow Jones Industrial reached a new historic high. In spite of high interest rates the US lead

index gained more than 8 per cent in the spring quarter closing at 13,400 points on 30 June

2007.

The German stocks benefited from the very good economic data, most of them showing a

disproportionately positive development. The DAX as the index for the 30 largest German

standard securities headed for the historic high of more than 8,100 points from the year 2000

in June finally closing at more than 8,000 points, an increase of 21 per cent since the beginning

of the year.

There was a particularly vigorous demand for technology stocks. In the 1st half of the year

the German technology index TecDAX recorded an increase of 24 per cent and in the 2nd

quarter of 10 per cent to just over 930 points. The biggest contribution was made by the stocks

of the renewable energy industry that continued to gain in value against the background of

the increasing public awareness of the need for climate protection. The international NAI

(Nature Stock Index) that reflects the industry of renewable energies gained 8.7 per cent in the

quarter closing at 5,630 points.

As an answer to the increasing demands placed by investors on companies with regard to

transparency and responsibility for energy efficiency, greenhouse gas emissions and environ-

mental protection the Frankfurt Stock Exchange launched the EcoDAX as a new sustainability

index in June. It represents the ten largest German stocks by market capitalization in the field

of renewable energies one of which is the SolarWorld AG stock. All the securities in the index

are equally weighted and the composition of the index is reviewed on a quarterly basis.

7




REPRESENTATIVES

Free Float50.26 %

Frank H. Asbeck25.00 % Fidelity

Investments10.33 %

BlackRock Inc./BlackRock Holdco 1, LLC4.98 %

DWS Investment GmbH5.08 %

UBS AG4.35 %

SolarWorld stock with pronounced upward movement. The stock gained 17 per cent from

April through June and closed – after the issue of bonus shares at a ratio of 1:1 the imputed

halving of the stock price with double the number of shares – at 34.10 e•. Since the beginning

of the year the SolarWorld shares have experienced an appreciation of 42 per cent. In addition

to the generally positive industry climate the good business figures, the new sales successes as

well as the consistent expansion policy are reasons for this growth. In the TecDAX the SolarWorld

AG stock occupied the two top positions as per 30 June 2007 in terms of trading volume in the

last twelve months and in terms of free float market capitalization.

Increased dividend and bonus shares approved. The Annual General Meeting of SolarWorld

AG which took place in the Plenary Hall of the former German parliament building (Bundestag)

in Bonn on 24 May 2007 with around 1,000 shareholders in attendance approved the distribution

of a dividend for fiscal year 2006 in the seventh year in succession. In comparison with the pre-

vious year the dividend increased to 0.20 (0.13) e per share thus going up in the third year in

succession. Also for the future the Board of Management held out the prospect of continuity in

its dividend policy. Furthermore, the AGM approved the issue of bonus shares in a ratio of 1:1

that were allocated to shareholders on the basis of this resolution on 29 June 2007. As a result,

the capital stock of SolarWorld AG has doubled to 111.72 million e within the framework of the

capital increase from company funds by way of the conversion of part of the revenue reserves.

55.86 million new shares with an imputed share of 1.0 e in the capital stock were issued.•

The annual shareholders’ meeting approved all items of the agenda with almost 100 per cent.•

Shareholder structure and capital stock. After the issue of the bonus shares the capital stock

of SolarWorld AG amounts to 111.72 million e divided into 111.72 million no-par-value

bearer shares with an imputed nominal value of 1 e.

Shareholder structure•

as per 30 June 2007

Increased dividend andbonus shares approved

7

www.solarworld.de/

The SolarWorld stock compared with key stock indices – 12 months

01.07.2006 - 30.06.2007

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

NAI + 32.94%

TecDAX + 44.85%DAX + 40.78%

DJ STOXX 600 + 22.76%EuroSTOXX 50 + 23.04%

SolarWorld + 36.43%

DJ Industrial Index + 20.26%

Source: Deutsche Börse AG

8





Economy picking up. The world economy was on a course of expansion again in the 2nd

quarter according to the data of the Institute for World Economy (IfW), Kiel. According to the

Economic Report of June 2007 the economic development in the USA was able to take off again.

Signs of weakness in individual industrialized countries were compensated for by positive effects

in the threshold countries. In the 2nd quarter Germany again benefited from high exports and

investments as well as increasing incomes. Economic experts are expecting growth to continue

in the 2nd quarter of the year albeit at a slightly reduced level. After 0.5 per cent in the 1st

quarter GDP can be expected to go up by 0.4 per cent in the 2nd quarter according to the

economists at Commerzbank AG.

Energy prices on the rise. After a relatively slow start into the year international oil prices

have risen again substantially since March. According to the German Petroleum Industry

Association (MWV), one barrel of North Sea Brent cost 71.30 US-dollars in June 2007 which

was more than 30 per cent higher than in January. In comparison with June 2006 crude oil

prices were about 4 per cent higher. Because of refinery bottlenecks in the USA gasoline prices

rose disproportionately so that in Germany the prices for premium grade fuel hit an all-time

high of 1.39 e per liter as a monthly average in May.

After the decline in the 1st quarter electricity prices at the Leipzig energy exchange EEX grew

again in double digits in the further course of the year and were at 55 e per kilowatt hour for

base load in 2008 which brought them back to the level of the previous year. In spite of the

wholesale prices remaining unchanged over the year many utilities announced price increases,

in some cases in double digits, for household customers effective July. Observers see the elimi-

nation of the electricity price approval by the government as the reason for the price increases.

UN climate report recommends renewable energies. The Intergovernmental Panel on Climate

Change (IPCC) created by the United Nations (UN) submitted its latest report on the condition

of the world climate in the spring of 2007. The previous reported dated from the year 2001. The

report is based on the comprehensive results of a large number of internationally renowned

climate researchers and therefore constitutes the most comprehensive and up-to-date document

on climate change of our time. The third part presented in May under the title “Mitigation of

climate change” finds that greenhouse gas emissions increased by 70 per cent from 1970 to

2004. With a plus of 145 per cent the energy sector had a disproportionately high respon-

sibility for the increase in emissions. In order to limit the negative consequences of climate

change the UN climate report recommends the increased use of renewable energies in addition

to practicing energy efficiency.

USA is moving on climate protection. At the summit meeting of the heads of state and

government of the G8 Group in Germany the US President George W. Bush indicated that he

was willing to support a future climate agreement within the framework of the UN. For the first

time Bush accepted the findings of the UN Climate Council that wants to limit global warming

to a maximum of between 1.5 and 2 degrees Celsius in order to still be able to control the reper-

cussions of climate change. According to the final communiqué the USA want to “seriously

consider” to “at least halve” emissions by the year 2050. The ministers of the environment of

the G8 states are to begin negotiations about the worldwide climate agreement on the occasion

9




REPRESENTATIVES

of the UN environmental conference in Bali in December. These should be completed by 2009

if at all possible in order to replace the Kyoto Protocol of the UN that is going to run out in

2012. Developed countries, as main emitters of greenhouse gases, should already agree on a

contribution to climate protection by the end of the year 2008.

Investments in renewable energies going up. Climate change, the growing demand for energy

sources and the questions of the safe supply of energy are driving the worldwide development

of renewable energies. According to a study by the UN Environmental Program (UNEP) the

worldwide investments in renewable energies exceeded the 100 billion US-dollar mark (about

75 billion e) for the first time in 2006 which is equivalent to a growth of 20 per cent over the

previous year. The share of environmentally friendly energies in the worldwide investments in

the energy sector amounted to some 18 per cent. More and more companies and countries

came out in favor of promoting alternative energies. The sector is no longer dominated by the

industrialized countries alone. Thus, China accounts for a share of 9 per cent in the worldwide

investments in renewable energies. The investments of the threshold countries like China,

India and Brazil taken together amount to 21 per cent of the total according to the report.

Eco-power boosted by one third. The share of renewable energies in power consumption in

Germany, according to the Association of the German Electricity Industry (VDEW) went up

in the 1st half of 2007 by 34 per cent versus the previous year to 41.3 billion kWh. Thus, the

share of renewable energies in total German power generation went up from 9.7 per cent in

the year 2006 to 13.3 per cent. According to a new VDEW study this share will continue to

grow. In the future it would be primarily wind power plants in the North Sea and the Baltic

Sea as well as photovoltaic and biomass plants that would increasingly be generating power.

German solar market rallying. After a low-key 1st quarter the German solar market has

rallied noticeably. Especially at the Freiburg solar technology fair Intersolar in June 2007 a

clear improvement of the climate was discernible in the industry. The largest European trade

show for solar technology reports new records in exhibitor and visitor numbers. According

to information provided by the organizers the show was attended by 32,000 (previous year:

23,000) guests from almost 100 countries. As the Federal Association of the Solar Industry (BSW)

announced on the occasion of the exhibition some 220,000 new solar plants valued at 5 billion

e were installed in Germany in the year 2006 (same period previous year: 3.8 billion e). Sales

in international markets amounted to around 1 billion e (previous year: some 420 million e).

Solar technology as the economic driving force of the German trades. The Central Associa-

tion of German Electrical and Information Technology Trades has found that one in three of

the 78,000 SME craft businesses in Germany are working in the field of solar technology. The

solar technology share in total sales went up from 8 per cent in 2000 to 21 per cent in 2006.

European solar markets growing vigorously.• In the 2nd half of the year the photovoltaic

market in Italy was in a phase of vigorous growth. The background to the high demand was

provided by legal changes to the feed-in laws enacted in the 1st quarter. These provide for an

increase of the expansion targets from 1,000 MW to 3,000 MW by the year 2016.

In Spain the Council of Ministers approved the long-awaited amendment of the feed-in com-

pensation for renewable energies at the end of May. The government has increased the feed-in

compensation for all photovoltaic plants from 100 kW to 10 MW by 82 per cent to 41.75 Cent

Group Report 2006/ “Legal and economic factors of influence”, p. 17Group Report 2006/ “Development of our solar core markets”, p. 31

10




per kWh. Up to 100 kW the solar power stations will receive 44.0 Cent per kWh fed into the

grid. The important thing is that this ruling now eliminates the previous practice in the mar-

ket of artificially dividing large solar projects into 100 kW units in order to obtain an attrac-

tive level of compensation. The new compensation framework of the Real Decreto 661/2007

will be valid from 2008 until at least 2010. After that the Council of Ministers wants to put

the tariffs to the test again. Market observers say that the passing of this law has led to a fur-

ther revival of the market.

In France the market has continued to grow but is still in an early phase of development.

Roof-integrated solutions are more in demand in France than in many other countries. The

compensation for roof-integrated solar systems at 0.55 e per kWh are substantially higher

than those for standard solar plants (0.30 e per kWh). Another developing market is the

Greek solar market where since the middle of 2006 a new feed-in law to promote renewable

energies has been creating attractive market and export conditions.

USA passes new energy law. The US Senate has approved the “Clean Energy Act of 2007”. It

is designed to reduce dependence on foreign oil through investments in renewable energies,

new energy technologies and energy efficiency. At the same time the US Department of Energy

wants to invest 60 million US-dollar in the expansion of solar energy. The sum is to be roughly

divided 50:50 between university research and the promotion of joint photovoltaic research

projects with industry.

Solar market in South Korea with powerful growth. Against the background of positive

legal framework conditions the demand in South Korea has grown substantially. Behind Japan

South Korea is the largest Asian solar market. In China and many South East Asian states the

demand for off-grid systems is growing continuously.

Potential solar market in Morocco. In June 2007 Morocco passed a law to promote renewable

energies along the lines of the German EEG law with the law coming into force on 01 July 2007.

According to the law the share of renewable energies in total electricity generation is to be

increased from 2 per cent to 20 per cent by the year 2012 in order to cut dependence on imports.

In addition, the government expects the renewable energies to bring electricity to rural areas,

to create jobs and to cut CO2 emissions in the country. In the long term the enormous wind

and solar power potentials in Morocco are to be used to export energy.

Framework conditions positive for business development. The fact that large segments

of the population have become sensitive to the need for a consistent climate protection has

positively influenced the business development of our group. The need to expand renewable

energies in general and solar energy in particular is beyond dispute and is documented by the

creation of appropriate framework conditions in different international markets. Our group has

positioned itself in the core markets accordingly. The stable increase in international demand

will secure sales of our solar products.

11




REPRESENTATIVES

III. BUSINESS DEVELOPMENT 2nd QUARTER 2007

Strategic raw materials activities

Raw materials activities expanded group-wide. In the framework of our Joint Venture with

Degussa AG – Joint Solar Silicon GmbH & Co. KG at the Rheinfelden site – the expansion of

our solar silicon plant is proceeding according to schedule. The technology employed here turns

the monosilane intermediate product produced by Degussa AG in our compound plant into

poly-crystalline solar silicon. We were able to start up the first reactor with monosilane at the

end of the 2nd quarter as scheduled which currently allows us to produce a quantity of 10

tons of silicon per month. After the ramp-up phase of industrial scale production in the year

2008 we are planning an annual production capacity of 850 tons. This process is characterized

by a clearly better energy balance than competing processes. It only needs 10 per cent of the

energy input employed so far.

The SolarMaterial division of our subsidiary Deutsche Solar AG was able to commission new plants

for the production of fine-grain raw materials from recycled wafers and cells. The availability

of suitable raw materials was thus increased. The capacity of the SolarMaterial division is thus

increased step by step as scheduled from a nominal 800 tons p.a. in 2006 to 1,200 tons p.a. in

2007. Parts of the available capacities are also offered to external customers as a recycling service.

By concluding new raw materials contracts in the course of the reporting period we have

secured the necessary input products for the planned expansion of capacities to supplement

our own silicon production which is just starting up.

Integrated production

Planned investment for wafer expansion to 1 Gigawatt in Freiberg. Against the background

of the booming export trade in the high added value external wafer business• we will double

the planned wafer production of 500 MW at the Freiberg location to 1,000 MW (1 Gigawatt)

in the medium term. For this further expansion of wafer production we have available to us a

production area in Freiberg of about 20 hectares. Up to 1,000 new jobs could be created in the

context of this expansion.

In parallel to this planned new investment the ongoing expansion of wafer production in

Freiberg has been proceeding according to schedule. In the new wafer complex DS 1000 offi-

cially opened in April of 2007 we were able to commission additional production plants in

the reporting period thus increasing capacity as planned to a nominal 270 MW by the end of

the quarter. In DS 1000 the wafer capacities are to be successively lifted to 500 MW by the end

of 2009. In this highly advanced manufacturing facility we are continuing the trend towards

wafers using less raw material and producing higher efficiency.•

Order book development

14

Research and developmentactivities

17

12




In addition to the new wafer factory we have 160 MW worth of solar cell capacities available at

the Freiberg production location as well as solar module capacities that will grow through addi-

tional investments from currently 90 MW to 120 MW by the end of the year 2007. In our GPV

module production facility at Gällivare, Sweden, the production potential in the fully continuous

operating mode could also be increased from 25 to 30 MW since the beginning of the year.

For our new Hillsboro production site in Oregon, USA, we are currently in the planning and

order placement stage for the technical equipment needed for the build-up of our cell and

wafer production facility.

Production capacity clearly enhanced. We could expand our group-wide wafer production

capacity in the first six months of the year to some 305 MW. Of this 35 MW are accounted for

by our US production. In cell production we increased our production capacity group-wide in

the first six months of the year to some 205 MW. 45 MW of this are attributable to US produc-

tion. Our group-wide module production capacity was increased to roughly 155 MW. 35 MW

of this total are part of our production in the USA.

Wafer production as a service. Deutsche Solar AG has again continuously expanded the high

added value wafer production business as a service in the 2nd quarter. Raw materials made

available by external customers who procured these for their own business purposes because

of the silicon scarcity are processed by us into wafers as a service.

Trading

Trading business expanded as planned. The foreign business rate in the module and solar

kit trading business was at 50 per cent in terms of volume as scheduled at the end of the 1st

half of 2007 (previous year as per 30 June: 25 per cent). In our main sales market in Germany

we were able to boost domestic sales of modules and solar kits by more than 20 per cent as

scheduled in the 1st half of 2007 versus the same period of the previous year. In the second

largest solar market Spain we achieved a double digit growth rate in the first half as a result of

which we are on schedule for the full year. In this market we were also able to successfully

integrate customer structures of the former solar Shell activities.

In the business in Italy the 2nd quarter of the year has so far been the strongest one for Solar-

World AG. Here, too, we were able to win over the customer structures of the former solar Shell

activities for a long-term cooperation. In the 1st half of the year we sold several Megawatts. This

means we clearly exceeded the level of the previous year with a double digit market share.

In the developing solar target markets Greece, France and Belgium we expanded our businesses

in the 2nd quarter positioning ourselves in a promising way in all three markets. Against the

background of the attractive level of compensation for roof-integrated solutions in France our

sales of the Energyroof® developed very positively.

In the USA and in Asia sales were increased in the double digit range as planned over the same

period last year. In the Asia-Pacific region the comprehensive business deals in South Korea

deserve a special mention.

13




REPRESENTATIVES

With our expanding worldwide trading activities we were additionally able to move into new

markets like Slovenia, Tunisia and the Maghrib states gaining new customers. The project

business also benefited from this internationalization. In the 2nd quarter we supplied the

technology and the engineering for major projects in Spain and South Korea.

New off-grid businesses. Our distribution network in the off-grid business has been further

expanded with distributors in Asia, South America and Africa. Additionally, we could complete

the biggest project to date for the electrification of rural regions in the 2nd quarter of the year.

For 44 villages in the Western Chinese province of Qinghai SolarWorld AG supplied 4,800 solar

modules with a power output of 80 Watt each and also provided the installation of the solar

systems. The villages were thus given access to electrical energy for the first time.

IV. EARNINGS, FINANCIAL AND NET WORTH POSITION

1. Earnings situation

1.1 Earnings and sales development

Group sales increased in the 2nd quarter versus the same period last year by 78.4 per cent to

180.8 (previous year: 101.3) million e and from January through June by 69.9 per cent to

313.6 (previous year: 184.6) million e. Our group-wide share of international business increased

in the 1st half of 2007 to 53 per cent in comparison with the previous year (39 per cent).

The sales growth in the 2nd quarter over the same quarter in the previous year is especially

supported by the doubling of the revenues in the trading segment to 140 million e. The basis

for this was the consistent expansion of the production capacities in 2006. In the 1st half of

2007 sales went up by 129 million e.

In the wafer segment we were able, due to substantial capacity increases, to expand the exter-

nal business by 26 million e in the 1st half of 2007 compared to the same period the previous

year. As a result of the persistently high demand both at home and abroad our trading business

could generate a growth in sales in the 1st half of the year of 80 per cent and increased its

revenues by 99 million e to 222 million e.

The group-wide earnings before interest and tax (EBIT) increased in the 2nd quarter of 2007

by 31.7 per cent to 49.7 (previous year: 37.7) million e and in the 1st half of the year by 31.6

per cent to 84.8 (previous year: 64.5) million e. The result before interest, tax, depreciation

and amortization (EBITDA) clearly climbed in the 2nd quarter by 35.2 per cent to 59.0 (previous

year: 43.7) million e and in the 1st half of 2007 to 103.9 (previous year: 76.0) million e.

The EBIT margin in the 2nd quarter amounted to 27.5 (previous year: 37.2) per cent and in the

1st half of the year to 27.1 (previous year: 34.9) per cent.

Group profit after tax grew in the 2nd quarter by 13.9 per cent over the same period last year to

26.8 (previous year: 23.6) million e and by 20.3 per cent to 48.2 million e in the 1st half of 2007.

14




1.2 Order book development

External wafer business increased by additional orders. In the 2nd quarter we saw ourselves

confronted with an excellent group-wide order development. In the external wafer business we

have been able to conclude new orders in excess of 2.2 billion e in the 2nd quarter. Towards

the end of the quarter the total order backlog in the wafer business amounted to 5 billion e

for the period until 2018. 90 per cent of the orders have come from abroad, 43 per cent from

Asia and 40 per cent from Europe (excluding Germany). Customers in Germany account for

10 per cent of the orders and in North America for 7 per cent.

In the international trading business we have also been able to generate new orders worth a

three digit million e figure in total.•

1.3 Development of major P&L items

In the 2nd quarter the materials and consumables rate at 41.8 per cent exceeded the previous

year’s figure (35.8 per cent) due to higher raw materials costs. For the 1st half of the year the

ratio of material costs to total operating performance reached 48.9 (previous year: 41.3) per cent.

Staff costs increased in the 2nd quarter to 19.6 (previous year: 11.8) million e and accumulated

in the 1st half of the year to 37.8 (previous year: 22.6) million e. At the same time the total

number of employees increased group-wide by 73 per cent to 1,378 due to acquisitions and

new recruitments.

The scheduled increase of depreciations in the 2nd quarter to 9.3 (previous year: 5.9) million e

and to 19.1 (previous year: 11.5) million e in the 1st half of the year results from the invest-

ments into the expansion of production capacities as well as the acquisitions made in 2006.

Other operating expenses rose in the 2nd quarter to 17.0 (previous year: 11.0) million e and

in the 1st half of the year to 34.6 (previous year: 20.8) million e.

Other operating income in the 2nd quarter amounted to 12.2 (previous year: 4.7) million e

and rose in the 1st half of the year to 23.8 (previous year: 8.5) million e of which a major

share amounting to 11.8 million e is accounted for by the expense subsidies agreed upon in

conjunction with the acquisitions made in 2006.

The financial result was significantly influenced by the sizeable influx of outside capital into

SolarWorld AG and amounted in the 1st half of the year 2007 to -6.1 (previous year: 0.2)

million e.

Trading business expanded as planned

12

15




REPRESENTATIVES

2. Financial situation

2.1 Financing analysis

The equity capital at 633.4 million e is by 36.1 million e higher than at the end of 2006. The

equity ratio as per 30 June 2007 amounts to 41.3 (as per 31 December 2006: 59.5) per cent.

In the 2nd quarter of 2007 SolarWorld AG placed another note loan for a total of 130 million e

with institutional investors in Europe. Thus, in the 1st half of the year 2007 SolarWorld AG

has had an influx of around 472 million e worth of liquid funds from completed financing

measures.

The investment grants and subsidies reported under long-term debts amounted to 53.7 million e

as per the balance sheet date (as per 31 December 2006: 57.1 million e). These public funds

for the expansion of production capacities which are accrued on the liabilities side will be dis-

solved affecting net income over the period of utilization of the assets subsidized in this way.

The increase in other long-term liabilities by 41.4 million e to 116.8 (as per 31 December 2006:

75.4) million e is essentially attributable to the receipt of down-payments on the conclusion

of long-term wafer supply contracts.

2.2 Investment analysis

The investments in intangible and fixed assets in the 2nd quarter amounted to 16.4 (previous

year: 23.9) million e and in the 1st half of the year to 61.9 (previous year: 44.8) million e.

The major share is accounted for by the acquisition of the production site in Hillsboro, Oregon

(30.3 million e) and the further expansion of the wafer production in Freiberg.

Investments in at Equity valued companies amounted to 1.6 million e in the 1st half of 2007.

2.3 Liquidity analysis

Our group’s good liquidity situation was further strengthened by the financing measures

executed in late 2006 and early 2007. As per the balance sheet date the free liquidity (liquid

funds and other financial assets) amounted to 718.7 (31 December 2006: 303.2) million e.

The Cash Flow from ongoing business activities amounted to 107.0 (previous year: -68.4)

million e. Included in this amount are cash inflows amounting to 58.5 million e from the

regrouping of securities that were classified as “held for trading“.

The Cash Flow from new investments (-517.4 million e) are carried under Cash Flow from

investment activities. These new investments are short- and medium-term investments fort he

purposes of earnings-optimized liquidity management.

The positive Cash Flow from financing activities of 428.3 (previous year: 246.6) million e

results from the concluded outside capital measures.•Financing analysis

15

16




3. Asset situation

3.1 Asset structure analysis

As of the balance sheet date 30 June 2007 our group possesses a sound asset structure.

In the course of the group-wide growth and the influx of additional outside capital the balance

sheet total increased to a total of 1,533.5 (31 December 2006: 1,004.4) million e.

The increase of long-term assets to 405.7 million e is mainly attributable to the expansion

investments that consistently exceed depreciations significantly.

The short-term assets of 1,127.8 million e exceed the value as per 31 December 2006 by 485.9

million e. This increase is due to the influx of liquid funds in the course of the implemented

financing measures on the one hand and the high growth of the business volume on the other

hand.

3.2 Employees

The number of employees rose slightly in the 2nd quarter of 2007. As per 30 June 2007 the

company employed 1,378 staff worldwide which is 27 more than at the end of the 1st quarter

of 2007. Including loan workers there were 1,800 people working for the group worldwide.

Employees Employees +/-as per 30.06.2007 as per 30.06.2006 absolute

Germany 897* 731 + 166USA 394 1 + 393Rest of the World 87 63 + 24Total 1,378 795 + 583

*incl. 36 trainees

Personnel changes on the Board of Management or the Supervisory Board did not occur in

the 2nd quarter of 2007.

V. SUBSTANTIAL BUSINESS WITH COMPANIES AND PERSONS CLOSE TO THE COMPANY

For Solarparc AG a solar park with an order value of 6.6 million e was established. For the

Engineering Office Asbeck a project started in 2006 was completed. Sales revenues of 1.4 million e

were generated from this project in the 1st half of the year.

Group employees as per 30 June 2007

17




REPRESENTATIVES

VI. SUPPLEMENTARY REPORT

Energy summit confirms climate policy. At the third energy summit with Chancellor Angela

Merkel in early July the federal government reconfirmed its climate targets also against the

resistance of the established energy industry. The renewable energies industry represented among

others by SolarWorld CEO Frank Asbeck made it clear that as a result of the combination of

renewable energy technologies it would be available for the future supply of base load capacity.

In addition, the industry provided evidence of the potential to reach a share of at least 40 per

cent of total power consumption by the year 2020. After this all-party support for climate

protection and renewable energies the industry can look forward to very positive framework

conditions also in the long term.

Formation of Sunicon AG with responsibility for group-wide security of supplies. With the

objective of securing and bundling raw material supplies group-wide within the context of the

further capacity expansion we formed the wholly owned subsidiary Sunicon AG headquartered

in Freiberg at the beginning of June 2007. Under this umbrella we will bundle activities like

Joint Solar Silicon GmbH & Co. KG (JSSI), the Joint Venture Scheuten SolarWorld Solicium GmbH

as well as other processes for raw material production still under development. The SolarMaterial

division will continue to be part of Deutsche Solar AG in the future. The Board of Management

of Sunicon AG will consist of Prof. Dr. Peter Woditsch, CEO of Deutsche Solar AG, and Dr.

Armin Müller, so far responsible for group R&D at SolarWorld AG.

Research and development activities. The international research and development activities

of the group will in future be centrally bundled in another wholly owned subsidiary, namely

SolarWorld Innovations GmbH which will be responsible for the technology development

and the efficiency improvements in production along the entire value chain. The designated

Managing Director of SolarWorld Innovations is Dr. Ralf Lüdemann, Managing Director of the

SolarWorld subsidiary Deutsche Cell GmbH.

Overall statement by the Board on the economic situation at the time of reporting

Taking into consideration the earnings, financial and asset situation of the group as evidenced

in the consolidated financial statements for 2006 as well as the 1st and 2nd quarters of the

year 2007 as outlined above SolarWorld AG’s Board of Management comes to a very positive

assessment of the group’s economic situation also taking into account the business development

since the time the annual financial statements were drawn up. The profitable expansion of the

business continued consistently after the end of the reporting period.

Free Float52.76 %

Frank H. Asbeck25.00 % Fidelity

Investments9.88 %

BlackRock Inc./BlackRock Holdco 1, LLC4.98 %

DWS Investment GmbH5.08 %

UBS AG2.30 %

Shareholder structureas per 31 July 2007

18




VII. RISKS/OPPORTUNITIES

In the course of the 2nd quarter of 2007 no further changes occurred to the risks described in

detail in the 2006 Annual Report under the heading “Risk Report”.

With regard to the opportunities resulting from the development of the framework conditions

as well as the company’s internal opportunities we refer you to the 2006 Annual Report.•

VIII. FORECAST REPORT

1. Future framework conditions

Economic forecasts corrected upwards. An end to the upswing in Germany is not in sight

according to the opinions of the leading German economists. The Institute for World Economy

(IfW), Kiel, again corrected its forecast for Germany upwards in June. The experts are now

expecting a growth in GDP of 3.2 (previously: 2.8) per cent for 2007 and 2.7 (previously: 2.4)

per cent for 2008. This means that Germany will outperform European space for which a

growth of 2.9 and 2.4 per cent respectively has been predicted. The background to this positive

economic development in Germany is the rise in exports and investments by industry as well

as the increase in real terms of the disposable income that is liable to boost consumption.

This makes the German economy so robust that it will not even be jeopardized by the slight

weakening of the world economy expected to occur in the course of the year. In the view of

the experts the world economy will continue to expand in the years 2007 and 2008 by 4.8 and

4.7 per cent respectively (previous year: 5.2 per cent).

In the USA the growth in GDP weakened temporarily still reaching 2.2 per cent in 2007

(previous year: 3.0) per cent. In 2008 it is expected to go up again to 2.8 per cent. Economic

development in Asia will be very dynamic. In China the IfW is expecting constant growth

rates of at least 10 per cent and in South East Asia and in Latin America just about 5 per cent.

Energy prices high. The high economic growth worldwide will cause an accelerated growth in

the oil demand in 2007 and subsequent years. The International Energy Agency (IEA) has again

raised its demand estimate in the middle of 2007. Accordingly, the worldwide consumption of oil

will grow at a rate of 2.2 per cent annually (so far 2.0 per cent) until the year 2012. As a conse-

quence global demand will go up from 86.1 million barrel a day (bpd) in the year 2007 to 95.8 bpd.

After analysts had still expected declining oil prices for 2007 at the beginning of the year they

increased their forecasts again in the 2nd quarter. HSH Nordbank AG considers it a probability

that the historic high from August 2006 (just about 80 US dollars) will again be reached in the

current year. The institute is predicting an annual average price of at least 65 US-dollars in the

years 2007 and 2008. This corresponds to the level of the previously most expensive year of

2006. Along with petroleum the prices of all other conventional energy sources like natural

gas and coal will also remain high. In terms of fuel costs no relaxation can be expected in the

area of conventional electricity prices. In Germany the stricter supervision of transmission

Group Report 2006/“Risk report”, p. 63 and

Group Report 2006/“Opportunities”, p. 75

19




REPRESENTATIVES

charges might bring about a partial price attenuation even though according to the experience

gathered so far the utilities can be expected to use the tougher rules of emission trading as of

2008 for another round of price hikes.

Renewable energies continuing to grow. The International Energy Agency (IEA) has increased

its 2006 forecast for the future share of renewable energies in total worldwide energy supplies.

In 2030 they will have a 16 per cent share in total power consumption thus supplying double

the amount of energy that they do today. The power generation volume of 430 Terawatt hours

(TWh) from renewable energies once forecast by the IEA for the year 2020 was already reached

in 2006. However, the European Renewable Energy Council (EREC) is more optimistic than

that. It expects the future share of power from renewable energies to go up to 35 per cent.

Renewable energies “Made in Germany” in demand worldwide. The German renewable

energy industry is expecting the export volume in 2007 to increase to 8.5 (previous year: 6.0)

billion e. Until the year 2010 exports are expected to grow to 15.7 billion e and until 2020 to

80 billion e.

Solar exports rise by 50 per cent. The German solar industry association BSW expects that this

year the solar technology market growth abroad, especially in Southern Europe, will be higher

than in Germany. The foreign sales of the German solar industry will therefore increase by

50 per cent to 1.5 billion e. In the medium term the BSW expects the worldwide solar market

to grow be 20 per cent annually. The German solar industry should be capable of attaining a

growth rate of between 20 and 25 per cent. Until 2020 an increase in export revenues to 20

billion e is expected. The number of employees in the German solar industry can, according

to BSW estimates, go up from 54,000 today to 90,000 in 2012 and 200,000 by 2020.

EEG amendment in 2009. In the 2nd half of 2007 the German government is expected to

submit its proposals for the amendment of the law on renewable energies (EEG). Since the

government is interested in the healthy development of the German solar market – as it has

made clear at the third energy summit• which took place in Berlin after the end of the reporting

period – it is safe to assume that the feed-in rates will be adjusted in a way that does justice to

the economic possibilities of the solar industry. Amendments to the EEG are to come into

force effective 1 January 2009.

Germany biggest market. According to the information of the BSW Germany also remains the

biggest solar market in 2007. Experts expect the growth rate to be at the level of the previous

year. Spain will expand its position as the second largest European market. Observers think

that Spain will be able to double its volume in 2007 versus that of the previous year to 120 MW.

In Italy a tripling of the market is expected, according to the European Photovoltaic Industry

Association (EPIA). For France the environmental and energy agency Adème expects a doubling

of the market in 2007 after 14.1 MW in 2006. Roof-integrated systems will be able to benefit

disproportionately due to the attractive levels of compensation. Strong growth is also to be

expected in the second largest Asian market South Korea. Observers consider it possible for the

market to grow by a multiple to 25 MW in the year 2007.

USA with large renewable potential. The American Council for Renewable Energies (ACORE)

sees a potential for the expansion of renewable energies in the USA of 635 Gigawatt (GW) by

the year 2025. A study puts the possible wind power output at around 248 GW, solar power at

164 GW and biomass and biofuels at 100 GW.

Energy summit confirms climate policy

17

20




2. Future business development

Wafer capacities growing continuously. The capacity expansion in the new DS 1000 wafer

production in Freiberg to 500 MW will be successively implemented as scheduled until the

end of 2009. As far as the further expansion to 1 Gigawatt at the Freiberg location is concerned

we are currently entering the planning phase. We back the group-wide capacity growth with

the further development of the different procurement options.• In Sunicon AG we will in

future bundle the group-wide activities to secure silicon supplies.•

Expansion of production in the USA. For the technical equipment in our new wafer and cell

production including crystallization in Hillsboro we will be placing the orders in the 3rd quarter

of the year. We are expecting installation of the equipment from 2008 and the first products

from the production process in the 2nd half of 2008. At the same time the module capacities

at the Camarillo site will be enhanced to 100 MW. Until the start of the new production at

Hillsboro we will continue to manufacture crystals, wafers and cells at the Vancouver and

Camarillo sites.

Strong trading growth. In our core market Germany we expect in fiscal year 2007 a sales

increase of between 15 and 20 per cent over the previous year.

In Spain we are expecting sales to go up by more than 50 per cent. In Italy we are seeing a

multiplication of our business and a double digit market share. In Belgium, France and Greece

we will successfully position ourselves for future growth in the year 2007 as planned.

In the USA and in Asia we are expecting a business expansion by 20 per cent over the previous

year in both cases.

In the context of the off-grid business we will start in the 2nd half of the year to implement

the new China program for the electrification of 44 villages. For the full year 2007 we are

planning to reach a share of foreign business of around 50 (previous year: 34) per cent.

3. Expected sales and earnings development

After the successful 1st half of the year 2007 we confirm our sales forecast of 620 million e

for the full year of 2007. We strive to exceed the growth forecast of 20 per cent. Also on the

basis of the adjusted earnings figures for 2006 (EBIT: 118 million e) SolarWorld AG expects a

growth of the operating result of at least 20 per cent.

Taking into consideration all subsidies we are assuming that the result of the newly acquired

companies in the full year will be a balanced one. We are expecting to break even in the 2nd

half of the year 2007.

Raw materials activitiesexpanded group-wide

11Supplementary Report

17

4. Alignment of the SolarWorld Group in Fiscal Year 2007 – Overall statement of the Board of Management

The focus of our business in 2007 continues to be the rapid expansion along the entire solar

value chain with the emphasis on the wafer business. On the basis of our profitable business

development and the positive assessment of the future development of the worldwide solar

market we decided in the 2nd quarter of 2007 to expand our investment activities. As a result

we increased our expansion targets in the USA and in Freiberg to 1.5 Gigawatt.

21




REPRESENTATIVES

Consolidated interimfinancial statements1st half of 2007

24




IX. CONSOLIDATED INTERIM FINANCIAL STATEMENTS OF THE SOLARWORLD GROUP

01.01.-30.06.2007 previous yeartE tE

1. Sales revenues 313,596 184,5662. Change in inventoy of finished goods -15,361 4,2403. Own work capitalized 503 44. Other operating income 23,833 8,5305. Cost of material -146,212 -77,9276. Staff costs -37,836 -22,6397. Depreciation and amortization -19,097 -11,5288. Other operating expenses -34,597 -20,7629. Operating result 84,829 64,48410.Result of shares valued at equity -985 -61211. Interest revenues 11,241 4,41512. Interest expenses -16,370 -3,61813. Earnings before taxes on income 78,715 64,66914. Income taxes -30,472 -24,58315. Consolidated net profit 48,243 40,086

16.Earnings per sharea) Consolidated net profit (in tz) 48,243 40,086b) Weighted average of shares

in circulation (in 1,000) 111,720 107,718c) Earnings per share (in A) 0.43 0.37

Consolidated Income Statement for the 1st half of 2007

25




REPRESENTATIVES


1. Sales revenues 180,757 101,3422. Change in inventory of finished goods -37,492 -5,0653. Own work capitalized 0 44. Other operating income 12,173 4,6885. Cost of material -59,915 -34,4556. Staff costs -19,556 -11,8367. Depreciation and amortization -9,304 -5,9098. Other operating expenses -16,965 -11,0289. Operating result 49,698 37,74110.Result of shares valued at equity -541 -34111. Interest revenues 4,339 2,69412. Interest expenses -9,856 -1,95913. Earnings before taxes on income 43,640 38,13514. Income taxes -16,796 -14,56815. Consolidated net profit 26,844 23,567

16.Earnings per sharea) Consolidated net profit (in tz) 26,844 23,567b) Wheighted average of shares

in circulation (in 1,000) 111,720 111,665c) Earnings per share (in A) 0.24 0.21

Consolidated Income Statement for the 2nd quarter of 2007

26




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27




REPRESENTATIVES

in tE Subscribed Capital Other reserve Accumulated Totalcapital reserve Translation IAS 39 profit

reserve reserve

Balance as at 31.12.2005 12,700 136,792 -286 0 67,850 217,056Capital increase 43,160 215,557 258,717Differences from currency translation -1,643 -1,643Group profit for the year 130,566 130,566Dividends paid -6,983 -6,983Other equity capital changes -392 -392Balance as at 31.12.2006 55,860 352,349 -1,929 -392 191,433 597,321Capital increase 55,860 -55,860 0Differences from currencytranslation -2,257 -2,257Group profit for the year 48,243 48,243Dividends paid -11,172 -11,172Other equity capital changes 1,245 1,245Balance as at 30.06.2007 111,720 296,489 -4,186 853 228,504 633,380

Statement of changes in equity for the 1st half of 2007

28





Net profit before taxes 78,715 64,669+ Depreciation and amortization 19,097 11,528-/+ Net interest income 5,149 -450+ Loss from at-equity measurement 985 612+/- Loss/gain from disposal of non-current assets 339 35- Reversal of accrued investment grants -3,831 -3,319= Cash flow from operating result 100,454 73,075-/+ Increase/decrease in inventories -27,399 -54,703-/+ Increase/decrease in other net assets 67,517 -75,747= Cash flow from operating activities 140,572 -57,375+ Interest received 7,317 3,153- Income tax paid -40,870 -14,158= Cash flow from current business activities 107,019 -68,380- Cash outflow for investments in non-current assets -68,916 -39,703+ Cash inflow from investment grants 407 13+ Cash inflow from sale of non-current assets 387 26+/- Cash in-/outflow from investments in securities -517,427 0= Cash flow from investing activities -585,549 -39,664+ Proceeds from non-current borrowings 485,224 29,763- Redemption of non-current borrowings -37,568 -6,893- Interest paid -8,187 -2,606+ Proceeds from additions to equity 0 233,355- Disbursements due to dividends paid -11,172 -6,983= Cash flow from financing activities 428,297 246,636+/- Net change in cash and cash equivalents -50,233 138,592+/- Exchange rate effects on cash and cash equivalents -246 -183+ Cash and cash equivalents at beginning of period 194,253 95,897= Cash and cash equivalents at end of period 143,774 234,306

Cash flow statement for the 1st half of 2007

29




REPRESENTATIVES

Notes to the consolidated interim financial statements

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 19 July 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 30 June 2007

have accordingly also been prepared in accordance with IAS 34. These consolidated interim

financial statements have not been subjected to inspection by an auditor.

2. Accounting and valuation methods

In preparing the interim financial statements and establishing the comparative figures for the

previous year the same consolidation principles and accounting and valuation methods as in

the 2006 consolidated financial statements have been in principle applied. A detailed descrip-

tion of these methods has been published in the Notes to the 2006 Annual Report which can

be reviewed in and downloaded from the Internet under www.solarworld.de.

Deviating from these accounting methods and due to the first time application of IFRS 7 the

net gains and losses respectively from other financial assets were carried in the financial result.

Besides the interest income net gains and losses contain gains and losses from the valuation

as well as the sale of financial instruments.

In determining the earnings per share in the same quarter of the previous year the number of

shares in circulation was reconciled with the numbers published in the interim report of the

previous year because in the May 2006 Annual General Meeting (AGM) three bonus shares

were granted and in the May 2007 AGM one bonus share was granted.

3. Group of consolidated companies

In comparison with the last annual financial statements the group of consolidated companies

has been increased by the addition of the newly formed company SolarWorld Properties Inc.,

Hillsboro, USA. Thus, the group of consolidated companies essentially consists of the following

subsidiaries:

> Deutsche Cell GmbH, Freiberg/Saxony

> Deutsche Solar AG, Freiberg/Saxony

> Go!Sun GmbH & Co. KG, Bonn

> Gällivare PhotoVoltaic AB, Gällivare/Sweden

> Solar Factory GmbH, Freiberg/Saxony

> SolarWorld Africa (Pty.) Ltd. (formerly SunGrid (Pty.) Ltd.), Johannesburg/South Africa

> SolarWorld Asia Pacific PTE Ltd., Singapore/Singapore

> SolarWorld California Inc., San Diego/USA

> SolarWorld Ibérica S.L., Madrid/Spain

> SolarWorld Industries America LLC, Camarillo/USA

> SolarWorld Industries America LP, Camarillo/USA

> SolarWorld Industries America Services Inc., Camarillo/USA

> SolarWorld Industries Deutschland GmbH, Munich

> SolarWorld Industries Schalke GmbH, Gelsenkirchen

> SolarWorld Properties Inc., Hillsboro/USA

30




Directly or indirectly SolarWorld AG holds a 100 per cent stake in all these companies.

4. Other financial assets and debts

The other financial assets include financial instruments of the categories “Receivables”

(e 25,000,000; previous year: e 0), “held for trading” (Trading) (e 42,086,000; previous year:

e 97,957) and financial assets designated as “at fair value through profit and loss” (FVTPL)

(e 491,162; previous year: e 0).

The interest income disclosed in the Profit & Loss Statement includes the net gains and losses

from financial instruments of the categories Trading (e 2,399,000; previous year: e 302,000)

and FVTPL (e -679,000; previous year: e 0). Besides the interest income net gains and losses

contain gains and losses from the valuation as well as the sale of financial instruments.

The financial instruments measured at amortized costs (“Receivables“) account for interest

income amounting to e 104,000 (previous year: e 0).

Interest paid exclusively contains interest expenditure from liabilities that were not measured

at fair value.

5. Post-end-of-quarter events of particular importance

On 6 July 2007 the “Bundesrat” (upper chamber of the German parliament) passed the Com-

pany Tax Reform Act 2008 as a result of which the overall tax burden for German companies

can be expected to be lower in the future. For the calculation of deferred taxes in the consoli-

dated annual financial statement the deferred tax claims and liabilities have to be valued on

the basis of the lower tax rates provided in the law. However, since the law was not passed

until after the cut-off date for the 1st half financial statements the tax effects resulting from

this can only be reflected in the financial statements for the 3rd quarter of 2007. According to

our current calculation the re-evaluation will probably lead to an impact on the result of

round about 2 million e.

31




REPRESENTATIVES

in million E

Wafer Cell Module Trade Eliminations ConsolidatedSalesExternal sales 80 7 5 222Inter-segment sales 121 129 153 -403Total sales 201 136 158 222 -403 314

EarningsSegment earnings 37 19 13 13 4 86Unallocated income 0Unallocated expenses -1Earnings before interest and tax (EBIT) 85

Interest paid -17Interest received 11Income taxes -31Net profit for the period 48

in millionE

Wafer Cell Module Trade Eliminations ConsolidatedSalesExternal sales 54 5 3 123Inter-segment sales 49 52 68 0 -169Total sales 103 57 71 123 -169 185

EarningsSegment earnings 40 12 5 16 -7 66Unallocated income 0Unallocated expenses -1Earnings before interest and tax (EBIT) 65

Interest paid -4Interest received 4Income taxes -24Net profit for the period 41

Information on business segments from 01.01.2006 to 30.06.2006

Information on business segments from 01.01.2007 to 30.06.2007

32




X. ASSURANCE OF LEGAL REPRESENTATIVES

According to the best of our knowledge we give our assurance that the applied principles of

adequate and orderly group interim reporting in the SolarWorld AG interim financial state-

ments give a true and fair view of the asset, finance and earnings situation of the group and

that the group interim management report adequately describes the business development

including the business results and the situation of the SolarWorld Group in such a way that a

true and fair view is given of the actual conditions as well as the major opportunities and risks

of the expected development of the group in the remaining course of the fiscal year.

Bonn, 9. August 2007

Dipl.-Ing. Dipl.-Kfm. tech.

Frank H. Asbeck Philipp Koecke

(CEO) (CPO)

Dipl.-Ing. Dipl.-Wirtschaftsing.

Boris Klebensberger Frank Henn

(COO) (CSO)

Financial Calendar 2007

14 August 2007 Consolidated Interim Report SolarWorld AG Q2 2007Analysts´conference call; 3 p.m.Printed version: 21 August 2007

14 November 2007 Consolidated Interim Report SolarWorld AG Q3 2007Analysts´conference call; 3 p.m.Printed version: 21 November 2007

The full version of this consolidated Interim report 2nd Quarter 2007 is also available in German.Both documents can be downloaded as a pdf file from the Internet at www.solarworld.de.These documents may be also ordered from

SolarWorld AG, Investor Relations DepartmentKurt-Schumacher-Str. 12-14, 53113 Bonn, Germany

Tel.: +49-228-55920-470Fax: +49-228-55920-9470E-mail: [email protected]

SolarWorld AGKurt-Schumacher-Str. 12-1453113 BonnGermany

Tel.: +49-228-55920-0, Fax: [email protected]

SolarWorld. And EveryDay is a SunDay. www.solarworld.de

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k1 sw zb Anhang - SolarWorld · EBIT 84,829 64,484 31.6 Consolidated net profit 48,243 40,086 20.3 Balance sheet figures (in tE) as per 30.06.2007 as per 30.06.2006 Variation in %