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InterIm report January to march

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InterIm report January to march Powered By Docstoc
					InterIm report
January to march 2012
phoenix solar ag | interim report January to march 2012                                      contents   02




contents



03 – 08            to our shareholders

                   phoenix solar at a glance                                                      03
                   Group structure                                                                04
                   letter to our shareholders                                                     05
                   phoenix solar share                                                            06


09 – 25            InterIm manaGement report

                   summary and overview                                                           10
                   1 Business activity and framework conditions                                   11
                   2 summary of business developments in the reporting period                     15
                   3 results of operations, cash flows and financial position                     18
                   4 events after the reporting date                                              23
                   5 report on opportunities and risks                                            23
                   6 Forecast report                                                              27


29 – 34            consolIdated FInancIal statements

                   consolidated income statement                                                  30
                   consolidated statement of comprehensive income                                 30
                   consolidated balance sheet                                                     31
                   consolidated statement of changes in equity                                    33
                   consolidated cash flow statement                                               34


35 – 49            selected explanatory notes

                   a.   General information                                                       36
                   B.   recognition, measurement and consolidation methods                        36
                   c.   selected notes to the consolidated income statement                       38
                   d.   selected notes to the consolidated statement of financial position        40
                   e.   seasonal factors                                                          44
                   F.   segment report                                                            44
                   G.   significant events after the interim reporting date                       47


                   affirmation by the legally authorised representatives                          49


50 – 51            Further InFormatIon

                   Financial calendar                                                             50
                   editorials and contact                                                         51
phoenix solar ag | interim report January to march 2012                                                 phoenIx solar at a Glance   03




phoenIx solar at a Glance



company profile


phoenix solar aG, which has its headquarters in sulzemoos near munich, is a leading
international photovoltaic system integrator. the Group develops, plans, builds and
operates large-scale photovoltaic plants and is a specialist wholesaler for turnkey photo-
voltaic power plants, solar modules and accessories. With sales operations throughout
the whole of Germany and subsidiaries on three continents, the company has sold solar
modules with a peak power of more than one gigawatt since it was first founded. the
shares of phoenix solar aG (IsIn de000a0BVu93) are listed on the regulated market
(prime standard) of the Frankfurt stock exchange.


Financial Figures

                                                                                 01/01/2012     01/01/2011               Change
                                                                               – 31/03/2012   – 31/03/2011


Revenues and results
revenues                                                                 k€         37,908         32,360                 17.1 %
– domestic                                                               k€         12,069          9,086                 32.8 %
– International                                                          k€         25,839         23,274                 11.0 %
overall performance                                                      k€         39,879         34,198                 16.6 %
eBIt                                                                     k€         - 1,062       - 16,939             15,877 k€
– In % of revenues (eBIt margin)                                          %           - 2.8         - 52.3         49.5 %-points
consolidated net income for the period                                   k€         - 1,225       - 12,968             11,743 k€
orders on hand                                                           k€        112,674        178,399               - 36.8 %


Balance sheet1
total assets                                                             k€        133,104        314,965               - 57.7 %
equity                                                                   k€         53,465        129,811               - 58.8 %
equity ratio                                                              %            40.2           41.2               - 2.4 %
return on equity                                                          %           - 2.2          - 9.1          6.9 %-points


Employees 1
employees 2                                                            heads           361            380                - 5.0 %
revenues per capita 3                                                    k€            108             86                 25.6 %


Phoenix Solar share 1
no-par bearer shares                                                   units      7,372,700     7,372,700                  0.0 %
closing price                                                             €            1.39         23.98               - 94.2 %
market capitalisation                                                    k€         10,248        176,797               - 94.2 %
earnings per share
– Basic                                                                   €          - 0.12         - 1.76                  1.64
– diluted                                                                 €          - 0.12         - 1.76                  1.64
1
    at the end of the period
2
    average employee number, including part-time and temporary staff
3
    Full-time equivalent
phoenix solar ag | interim report January to march 2012                                 Group structure   04




Group structure



locations and holdings as per 31/03/2011



                                                          suBsIdIarIes

                                             100 %
                                                                      Phoenix Solar SAS
                                                                        lyon, France


                                             100 %
                                                                     Phoenix Solar E.P.E.
                                                                       athen, Greece


                                             100 %                    Phoenix Solar S.r.l.
                                                                          rom, Italy


                                              75 %
                                                                    Phoenix Solar Sdn Bhd
                                                                    Kuala lumpur, malaysia


                                              70 %
                                                                     Phoenix Solar L.L.C.
                                                                       muscat, oman


                                              75 %
                                                                     Phoenix Solar Pte Ltd
                                                                          singapore
   Phoenix Solar AG
        sulzemoos,                           100 %
                                                                      Phoenix Solar S.L.
         Germany                                                        madrid, spain


                                             100 %
                                                                      Phoenix Solar Inc.
                                                                     new castle, de, usa


                                             100 %           Phoenix Solar Fonds Verwaltung GmbH
                                                                      sulzemoos, Germany


                                             100 %
                                                            Phönix SonnenFonds GmbH & Co. KG D4
                                                                     sulzemoos, Germany




                                                          other holdInGs

                                             100 %
                                                                  33 special purpose entities
                                                                         (see notes B)


                                             31.2 %
                                                            Phönix SonnenFonds GmbH & Co. KG B1
                                                                     sulzemoos, Germany
phoenix solar ag | interim report January to march 2012                              letter to our shareholders   05




letter to our shareholders




at the same time as our report on the first quarter of 2012, we informed you about the results of the
financial year 2011, which were less encouraging.

In response to the company’s development in the last year, we launched an extensive restructuring pro-
gramme geared to adjusting it to the difficult market environment and to putting phoenix solar back on
the path to success. We have meanwhile largely implemented measures to optimise our entire organisa-
tion structure, as well as cost and risk structures and processes. our deepest regret is, however, that we had
to part from many well-deserving employees and reduce the workforce in Germany by around 60 percent.

so how did the company fare in the first three months of 2012?

Germany’s photovoltaic sector is still faced with many difficulties. the amendment to the German renew-
able energies act contains huge reductions in subsidies promoting photovoltaics in Germany and trig-
gered a slew of insolvencies in the solar industry. the process of consolidation therefore holds full sway.

Bearing this in mind, we are all the more delighted to be able to present you with the first signs of the
successful restructuring process and the considerable improvement in our sales and revenues figures in
comparison to the previous quarter. phoenix solar aG has raised its sales revenues by 17 percent to eur
37.9 million. eBIt has improved from eur -16.9 million in the first quarter of 2011 to eur -1.1 million.
Inventories, which came under huge pressure from write-downs in 2011, had been further reduced to
eur 20.2 million by the end of the quarter. the internationalisation of operations is going according to
plan: the proportion of international business in revenues remains at a very high level of 68 percent.

there is more positive news to report: We signed an agreement on 10 april 2012 with Bosch solar
energy aG for the realisation of the first 25 megawatts of the Kazanlak project in Bulgaria. construction
work is in full swing.

similarly, we were able to announce another important milestone on 11 may 2012: the successful sign-
ing of a new financing package totaling eur 132 million with a term through to the end of march 2014.
With the conclusion of financing negotiations, which has necessitated a great deal of time and effort
in recent months, the way has been paved for us to be able to dedicate ourselves entirely to our opera-
tions. We anticipate consolidated revenues of between eur 210 and 240 million and an eBIt of between
eur -25 and -19 million in the financial year 2012. this result will still be substantially burdened by
special items from restructuring and refinancing. despite all impediments, we look to the future with
confidence. our goal is – and will remain – a return to profit. as early as 2013, we expect sales revenues
to grow again and eBIt to make a significant recovery.

With sunny greetings,




Dr. Andreas Hänel
(chief executive officer)
phoenix solar ag | interim report January to march 2012                                                                          phoenIx solar share          06




phoenIx solar share



stocK marKet enVIronment

europe’s financial crisis, particularly Greece’s debt restructuring, continued to dominate the interna-
tional stock markets in the first three months of 2012. Global stock indices have nonetheless displayed a
generally positive trend since the start of the year. the increase in the euro bailout package at the end of
march provided the dax with additional stimulus in the last trading days of the month. Germany’s lead-
ing index recorded its best first quarter since 1998 and emerged from trading at 6,946 points, thus gain-
ing almost 18 percent since the start of 2012. the mdax, sdax as well as the tecdax technology index
also posted double-digit growth. the euro stoxx 50 advanced by around 7 percent and the us’s dow
Jones Index climbed by around 8 percent. the Ifo Business climate Index improved again in march in
comparison with the previous month. the stable development of consumer sentiment also held steady
in the initial months of the current year. the unemployment rate fell from 6.8 percent to 6.7 percent in
march, which is its lowest level since German unification.

In contrast, selling pressure on photovoltaic equities intensified in the first months of 2012. the political
discussions about lower government subsidies and insolvencies triggered further markdowns on solar
equities. photovoltaik Global 30, the sector’s index, slumped to a new record low. the large majority of
the 30 companies listed on the index sustained falling share prices at the end of the quarter.

share prIce perFormance

the share of phoenix solar aG recorded a loss of 35.4 percent in the recent quarter and closed in xetra
trading on 30 march 2012 at eur 1.39, its lowest price in the period under review. the share price
peaked on 10 February at eur 3.53. the most important burdening factors were the German govern-
ment bill outlining drastic cuts in subsidies to promote photovoltaics, insolvencies of solar companies
and uncertainty about the financing situation of phoenix solar aG.

price performance of the phoenix solar share versus the tecdax (01/01/ – 31/03/2012)


  %
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highest price (10/02/2011): 3.53 €                                                                                             phoenix solar share
lowest price (30/03/2011): 1.39 €                                                                                              tecdax




the market capitalisation of phoenix solar aG came to eur 10.2 million on 30 march 2012 (31 december
2011: eur 15.6 million). In terms of its trading volume, the share’s daily turnover averaged 66,683 units
in the first quarter of 2012.
phoenix solar ag | interim report January to march 2012                                                                  phoenIx solar share        07




shareholder structure

In the first quarter of 2012, we received a number of notifications submitted pursuant to section 21
para. 1 of the German securities trading act (WphG) in which shareholders indicated that their hold-
ings had reached, exceeded or fallen below the statutory thresholds. the shareholder structure as per
31 march 2012, and as known to phoenix solar aG, is shown below:

shareholder structure as of 31/03/2012




                                                                  5.56 % swisscanto

                                                                  5.10 % allianz
                                                                                                                        data including share
                                                                                                                        voting rights assigned
                                                                  4.12 % executive Board and supervisory Board
                                                                                                                        pursuant to section 22
                                                                                                                        of the German securities
                                                              85.22 % Further free float                                trading act (WphG)




according to the definition of deutsche Börse aG 100 percent of the shares in phoenix solar aG are in
free float.

InVestor relatIons

the focus of capital markets communication with institutional investors, financial analysts and private
shareholders in the first three months of 2012 was on the financing negotiations with the syndicate
banks and the restructuring of phoenix solar aG.

due to ongoing negotiations on financing, we were obliged to postpone the dates for the release of the
annual report 2011 and the quarterly report 1/2012 to 15 may. the company’s Financial calendar 2012
has been posted on our website under the “Investor relations” heading.

Key data
                                                                                                     2011          Q1 2012             Q1 2011
number of shares 1                 units                                                         7,372,700        7,372,700          7,372,700
market capitalisation 1 €                                                                       15,851,305       10,248,053       176,797,346
closing price (xetra)              €                                                                  2.15             1.39               23.98
highest price                      €                                                                 26.00             3.53               26.00
lowest price                       €                                                                  2.08             1.39               21.34
                                   units                                                        14,711,365        4,333,023          3,611,987
trading volume                     €                                                           212,995,316       10,840,110        84,402,577
                                   €                                                               - 11.802          - 0.122              - 1.762
earnings per share                 €                                                               - 11.80  3
                                                                                                                     - 0.123
                                                                                                                                          - 1.763
1
    at the end of the period   2
                                   Basic earnings per share   3
                                                                  diluted earnings per share
phoenix solar ag | interim report January to march 2012                                                phoenIx solar share   08




share fact sheet
International securities Identification number (IsIn)   de000a0BVu93
securities indent. number (sec. ident. no.)             a0BVu9
symbol                                                  ps4
class of shares                                         no-par bearer shares
number of shares as per 31/03/2012                      7.372.700 units
share capital on 31/03/2012                             € 7.372.700
transparency level                                      prime standard
market segment                                          regulated market
stock exchanges                                         xetra, Frankfurt am main (prime standard), munich (m:access),
                                                        stuttgart, Berlin, düsseldorf, hamburg, hanover
sector/sub-sector                                       Industrial products & services/renewable energies
Indizes                                                 cdax, dax International mid 100, prime all share,
                                                        technology all share, diverse sector and sub-sector indices
                                                        of deutsche Börse aG, photovoltaic Global 30 Index
end of the financial year                               31 december
accounting standards                                    IFrs
commencement of stock market listing                    18/11/2004
designated sponsor                                      hsBc trinkaus & Burkhardt aG
InterIm
manaGement
report
to the InterIm FInancIal statements accordInG to IFrs
For the reportInG perIod From 1 January to 31 march 2012
oF phoenIx solar aKtIenGesellschaFt, sulzemoos




Summary and overview                                           10
1   Business activity and framework conditions                 11
2   Summary of business developments in the reporting period   15
3   Results of operations, cash flows and financial position   18
4   Events after the reporting date                            23
5   Report on opportunities and risks                          23
6   Forecast report                                            27
phoenix solar ag | interim report January to march 2012                            interim management report   10




summary and oVerVIeW

phoenix solar aG’s performance in the first quarter of 2012 was mainly influenced by the topics of restruc-
turing and financing, as well as a large-scale project in Bulgaria.

restructurInG

the implementation of the restructuring concept adopted in december 2011 has proceeded more quickly
than planned. the restructuring objectives adopted thus far have been completely achieved and even
surpassed in some cases. For example, the workforce reduction of around 120 employees was achieved
without outright layoffs. Furthermore, we have implemented various measures related to the company’s
other operating expenses and tightened our cost discipline further. taken together, these measures pro-
duced an improvement on the company’s earnings equal to about eur 3 million.

the market assumptions and plan values on which the restructuring concept of december 2011 is based
had to be revised and adjusted again after the announcement of the tentatively planned, unscheduled
changes to the German renewable energy sources act (eeG). considerable portions of this revised con-
cept, which entails further cost reductions and an additional elimination of about 50 positions at the Ger-
man parent company, are supposed to be implemented already in the second quarter.

FInancInG

the adjusted restructuring concept, which was presented to the financing partners on 21 march 2012,
formed the basis for the continuing negotiations for a new financing package. the new financing pack-
age agreed on 11 may 2012 entails a total credit amount of eur 132 million, consisting of cash and
guarantee facilities. the centrepiece of the new financing plan is a syndicated loan agreement with a
term until 31 march 2014, which completely covers the financing needs determined on the basis of the
business plan and contains covenants that reflect standard market practices.

larGe-scale proJect In BulGarIa

With regard to the solar power farm in Kazanlak (Bulgaria), we searched for new solutions and partners
to reduce the loss incurred by phoenix solar in the form of write-downs and advance payments made by
the company. phoenix solar aG had ceased construction on the project at the end of financial year 2011,
primarily due to the still unsecured financing and the risks posed to the company as a result of that fact.
at the end of march, phoenix solar finally entered into an agreement for construction of half the Kazan-
lak project in Bulgaria (i.e., 25 mWp) with Bosch solar energy aG. the solar modules will be supplied
by Bosch solar energy aG. due to the resulting reversal of project rights and the minor portion of work
performed already in 2011 a significant positive, non-recurring effect on earnings in the first quarter of
2012 is generated.

compared to the first quarter of 2011, the eBIt improved by eur 15.8 million to eur -1.1 million and
the consolidated profit improved by eur 11.7 million to eur -1.2 million. the year-ago figure had been
adversely affected by substantial inventory write-downs and the figure for the first quarter of 2012 was
aided by a significantly positive non-recurring effect related to the Kazanlak project in Bulgaria.
phoenix solar ag | interim report January to march 2012                            interim management report   11




1 BusIness actIVIty and FrameWorK condItIons

1.1 Group structure, manaGement and strateGy

phoenix solar is a leading european and globally active supplier of photovoltaic systems. the par-
ent company phoenix solar aG has its headquarters in sulzemoos, near munich. corporate functions
such as corporate strategy & Business development, Global sales, marketing, Finance, personnel and
organisational development, controlling & Internal audit, procurement, logistics and engineering &
Innovation, among others, are centrally managed from this location. Besides the parent company, the
Group comprises ten subsidiaries and 24 project companies, which are fully consolidated in the consoli-
dated financial statements of phoenix solar aG.

phoenix solar develops, plans, builds and operates large photovoltaic power plants as a manufacturer-
independent photovoltaic systems vendor. the company is also a specialised wholesaler of complete
solar power systems, solar modules and accessories. By virtue of this business model, phoenix solar cov-
ers the full range of grid-connected photovoltaic system sizes, from roof-top systems with a peak output
of one kilowatt (kWp) on private homes to large-scale power plants in the double-digit megawatt range.

through its operating subsidiaries, phoenix solar aG is currently represented on three continents. In
europe, it operates in France, Italy, spain, Greece, Bulgaria, turkey and the Benelux countries, in some
cases through its own subsidiaries, aside from its home market of Germany. For six years, the company’s
activity in the growth regions of southeast asia has been performed and coordinated through a sub-
sidiary in singapore. In addition, a new subsidiary was formed in malaysia in 2010, in order to capture
a larger share of the dynamic market growth in that region. Furthermore, the Group operates in the
growing solar power markets of the Gulf region through a subsidiary formed in oman in 2009. and
the u.s. market has been served by a subsidiary in san ramon, california, since 2010. By reason of the
company’s withdrawal from the australian solar power market, the subsidiary in australia was closed in
march 2012 , in accordance with plan. this subsidiary was finally dissolved in april 2012.

the activities of phoenix solar aG are organisationally divided into the two complementary segments of
components & systems and power plants. aside from supplying individual components for photovol-
taic power plants, the components & systems segment also develops customised system solutions and
provides planning support, logistical services and other services such as training and marketing sup-
port, for example. the customers of this segment include resellers and installation companies (includ-
ing electrical installation companies), retails and wholesalers of electrical products, heating and sanita-
tion companies, roofers and solar power specialists.

In its power plants segment, phoenix solar handles the necessary planning and turnkey construction
of photovoltaic systems, including the subsequent operational management and maintenance. aside
from private individuals, the customers of phoenix solar include retail companies, industrial compa-
nies and trade companies. other targeted customers primarily include institutional investors, which are
either seeking to set up investment fund models or to hold large-scale photovoltaic plants in their own
investment portfolios.

the overriding goal of the phoenix solar Group is to increase the company’s value on a systematic and
sustainable basis. For the purpose of managing, overseeing and monitoring the company’s construc-
tion projects and sales activities, the Group employs an integrated management Information system
(mIs), which consists of the modules statement of Financial position, Income statement, cash Flow
statement and segment report. the key indicators used to manage the Group are revenues, earnings
before interest and taxes (eBIt) and the eBIt margin (ratio of eBIt to revenues).
phoenix solar ag | interim report January to march 2012                               interim management report   12




phoenix solar aG pursues the strategic objective of continuously expanding its position as an interna-
tionally leading supplier of photovoltaic systems technology, one that is not bound to specific manu-
facturers. phoenix solar strives to become more independent of government subsidies, so as to counter
the risks associated with its current dependence on such subsidies. the Group seeks to achieve this
goal primarily through cost reductions and innovations in the planning and construction of photovol-
taic systems, through the use of new technologies, selective participation in new business models and
increased internationalisation.

1.2 restructurInG and neW FInancInG

after a phase of very successful and profitable growth until the end of financial year 2010, the revenues and
earnings of phoenix solar Group declined substantially in financial year 2011, due to the radical changes
affecting the solar power industry. therefore, the executive Board adopted a comprehensive restructuring
program in the fourth quarter of 2011. In cooperation with outside consultants, the company’s entire busi-
ness model was subjected to an in-depth review, which confirmed its fundamental viability.

the restructuring concept adopted and coordinated with the banks in december 2011 entails far-reach-
ing changes in the company’s organisational structure, processes and corporate governance mechanisms,
as well as some significant adjustments to the Group’s capacities and cost structures, without altering the
Group’s fundamental strategic direction, however. the restructuring concept also involves focused measures
aimed at growth and internationalisation. Great progress has already been made in implementing many of
these measures. the restructuring objectives planned to date have been achieved or even surpassed.

the business plans on which the restructuring concept was based had to be adjusted in march 2012
because the tentative changes to the German renewable energy sources act (eeG) that were announced
in late February 2012 will have grave effects on the German photovoltaic market. the primary objective
of this updated concept, which entails substantial cost reductions, among other measures, is to find a
cost and capacity basis that reflects the drastically reduced level of revenues, while still preserving all the
capabilities required in particular to conduct business in the two operating segments of components &
systems and power plants. the cost level so achieved is meant to minimise the vulnerability of earnings to
a further decrease in revenues, while also ensuring that future increases in revenues will have a quick and
positive effect on the company’s earnings. Furthermore, the company’s structures, processes and capaci-
ties should be both highly efficient and flexible enough to take advantage of opportunities in the solar
power market, including opportunities that may arise from pursuing new business models.

the main levers of the restructuring concept are the following:

  reduce personnel expenses and other operating expenses by nearly 50 percent or about eur 30 mil-
  lion compared to 2011. only a portion (though a considerable portion) of these savings can be real-
  ised in 2012, due to restructuring expenses and the period of adjustment to the new cost level. the
  full effect of the restructuring program will come to bear in 2013.
  completely redesign structures and processes, with the goal of enhancing efficiency.
  redesign supply chain processes and supplier management to make quantities and prices more flex-
  ible.
  Improve control mechanisms in the management of subsidiaries, project management and cost man-
  agement.
  continue to pursue the Group’s internationalisation and growth strategy, with a particular focus on
  the united states and asia.
  target costing for system costs of power plant projects, with the goal of reducing costs by around
  20 percent compared to the end of 2011.
phoenix solar ag | interim report January to march 2012                            interim management report   13




a project organisation, which will be subject to close monitoring concerning the individual measures to
be implemented, will be installed to implement the restructuring program. monthly steering commit-
tee meetings will ensure that all affected parties receive comprehensive information and will be able to
take appropriate action to correct discernible variances.

the restructuring concept was also approved by the banks. It formed the basis for the negotiations con-
ducted in the last few months to procure new financing for the company. In particular, the restructuring
concept adopted on 21 march 2012 indicates a financing requirement that is completely covered by
the new financing package agreed on 11 may 2012. the total loan amount of the new financing pack-
age consisting of cash and guarantee facilities is eur 132 million. the centrepiece is a new syndicated
loan agreement for an amount of approximately eur 100 million, with a term until 31 march 2014. the
covenants stipulated in the agreement reflect standard market practices. the considerably lower loan
volume compared to the previous financing agreement essentially reflects the company’s significantly
lower revenue expectations amid the currently difficult market, which is undergoing a consolidation.

1.3 General economIc condItIons

Global economic data was extremely mixed in the first quarter of 2012. Whereas the gross domestic
product (Gdp) of the euro zone was 0.2 percent less than the corresponding figure for the first quar-
ter of last year, based on preliminary estimates, u.s. Gdp in the first quarter is estimated to have been
2.3  percent higher than the corresponding year-ago figure. thus, the economic recovery was much
more positive than had been assumed in the fourth quarter of 2011. this development can be attributed
primarily to accelerating domestic demand in February, although the unemployment rate in the united
states remained on a high level.

china’s Gdp in the first quarter is estimated to be 8.1 percent higher than the corresponding figure for
the first quarter of 2011, though roughly 0.8 percent less than the corresponding figure for the fourth
quarter of 2011. In the overall view, this was the lowest rate of expansion in the last three years. the
slowdown was caused by weakening exports and by deflationary trends in the real estate sector, which
has been booming for quite a long time.

as in the fourth quarter of 2011, the gross domestic product of the euro zone contracted in the first quar-
ter of 2012, although various key indicators improved somewhat. due to the continued drop in both
domestic and foreign demand, european industrial production declined by 0.7 percent, which repre-
sented an improvement of 1.2 percent, however, over the significantly worse development in the fourth
quarter of 2011. Furthermore, the Gdp decline of 0.2 percent was slightly better than the Gdp change
in the fourth quarter of 2011. the lingering recession in the euro zone was primarily caused by the debt
crisis, which forced european institutions to take repeated liquidity and consolidation measures.

although Gdp estimates for the first three months of 2012 are not yet available for the individual coun-
tries of the euro zone, an extremely uneven development can be assumed, based on the forecasts for the
full year 2012. Based on these estimates, continued negative economic growth is expected for Greece,
spain and Italy, as opposed to slightly positive economic growth for Germany and France.
phoenix solar ag | interim report January to march 2012                            interim management report   14




1.4. deVelopments In the photoVoltaIc sector

the photovoltaic industry experienced consistently high demand, but also persistently intense pressure
on prices and profit margins in the first quarter of 2012. according to figures provided by the market
analysts of solarbuzz, the changing and uncertain subsidy conditions in europe, above all, generated
pull-forward effects, which caused the worldwide market to reach a volume of about 6.9 gigawatts
(GWp) of peak output. compared to the fourth quarter of 2011, when demand was extremely high,
that amount reflects a decrease of 35 percent, but compared to the first quarter of 2011, it reflects a very
substantial increase of 146 percent.

Furthermore, the long-lasting trend of price erosion for photovoltaic modules continued in the first
quarter of 2012. according to data published by the industry platform pvxchange, module prices
declined by up to 10 percent in the first three months of 2012, depending on their origin and technol-
ogy. chinese tier-2 manufacturers, in particular, sold their products by means of massive price reduc-
tions, while tier-1 manufacturers hardly found it necessary to lower their prices and were even able to
raise them. Because manufacturers had scaled back their production in late 2011, it was very difficult to
satisfy demand, particularly in the european markets.

on the other hand, manufacturers of photovoltaic wafers were subject to much greater price pressure.
according to figures published by the industry analysts of Ims research, the average prices of those
products in the first quarter of 2012 were more than 70 percentage points less than they had been in
the first quarter of last year. this decline was caused most of all by massive capacity expansions in 2011,
which considerably outstripped demand. due to the low spot market prices for photovoltaic wafers,
numerous vertically integrated manufacturers cut back their production and external purchasing, which
led to a significant improvement of their cost structures.

no suitable reports are yet available on the development of manufacturers’ profit margins in the first
quarter of 2012. In view of the persistent price erosion, however, it can hardly be expected that those
profit margins, which had recently been very thin or even negative for most manufacturers, could have
improved significantly in the first quarter of 2012. considering the wide market and demand fluctua-
tions in the preceding quarters and the trend of price erosion, flexible and efficient bid management and
demand management represent tremendous challenges for photovoltaic market players in all stages of
the value chain. thus, the resulting consolidation pressure on the entire industry continued unabated in
the first quarter, again causing some companies to declare bankruptcy or be sold to other companies.
phoenix solar ag | interim report January to march 2012                              interim management report   15




2 summary oF BusIness deVelopments In the reportInG perIod

2.1 General deVelopments

PROCUREMENT MARKET
the procurement strategy of the phoenix solar Group is geared to keeping a generally balanced product
portfolio in stock, so as to offer a selected range of different module technologies. as a manufacturer-
independent systems supplier, phoenix solar only seeks to satisfy the demands of its customers by offer-
ing them the latest technologies. Because most of these products can be used by both the power plants
segment and the components & systems segment, procurement volumes can be optimised and sales
opportunities can be flexibly managed, generating synergistic benefits for both operating segments.

With respect to solar modules, phoenix solar relies on a geographically diversified supplier mix, which
includes both strong european manufacturers and asian producers (primarily from china and malay-
sia), as well as one u.s. thin-film manufacturer. With respect to components, phoenix solar works with
prestigious producers of inverters.

In view of the fact that demand in the German market was initially sluggish at the beginning of 2012,
phoenix solar decided to further intensify its efforts to sell off the photovoltaic components it still had in
stock, while also initiating the first orders of new goods. By reason of the long delivery times, particularly
for inverters and crystalline modules from china, however, phoenix solar was not able to fully exploit the
market potential in the first quarter of 2012. during this time, moreover, top priority was given to liquid-
ity-generating measures and to the rapid and consequential implementation of the restructuring plan.

SALES MARKET GERMANY
after a halting start in January, the German photovoltaic market took an extremely positive turn during
the course of the first quarter, at least in comparison with the first quarters of prior years. due to the
fact that the 15 percent subsidy cut enacted in mid-2011 took effect on 1 January 2012, the German
photovoltaic market got off to a weak start in 2012, especially compared to the strong rally at the end of
2011, although it is typically weak at this time of year. nonetheless, the demand surge that followed the
weak start mainly affected quickly available warehouse stocks, as dealers held off on new orders until
mid-march.

unfortunately, the continuing debate concerning German solar subsidies had an adverse effect on the
on-going legislative amendment process for the German renewable energy sources act (eeG). thus,
the draft law presented in march calls for a further reduction in solar power subsidies of up to 32 per-
cent, which will take effect as of 1 april. longer transitional periods are allowed for roof-top and solar
field systems. Based on the current status of discussions, moreover, photovoltaic electricity generated
by smaller roof-top systems will no longer be completely remunerated. therefore, some 10 to 20 per-
cent of all photovoltaic electricity, based on preliminary estimates, will have to be either self-consumed
or marketed. the draft law was momentarily stopped by the Bundesrat (the upper house of the German
parliament) on 11 may 2012.

SALES MARKET INTERNATIONAL
Following the fourth quarter of 2011, during which many key photovoltaic markets experienced strong
demand, the development of international photovoltaic markets was very mixed in the first three months
of the current year. Generally speaking, the fragmentation of regional markets intensified, as the propor-
tion of the global market accruing to europe diminished, and that accruing to the asian market increased.
phoenix solar ag | interim report January to march 2012                             interim management report   16




due to the less favourable subsidy conditions, which were in fact drastically less favourable in some
cases, the international markets of Italy, spain and France contracted, albeit to varying degrees. In Janu-
ary, the Italian government retroactively eliminated the remuneration for solar-field plants on arable
fields and one of the transitional periods allowed in the conto energia IV program was eliminated. also
in January, the Italian grid agency Gse announced that no register will be opened for solar-field plants in
the second half of 2012. these changes worsened the market conditions for large photovoltaic systems,
which had already been difficult as a result of financing shortfalls. on the other hand, the conditions for
smaller plants continued to be positive, due to an installation backlog. nonetheless, industry represent-
atives do not expect that the record volume of new photovoltaic installations in 2012 will be repeated in
the current year, especially considering the expectation that the new subsidy program, conto energia V,
which was debated in the first quarter, will probably involve further subsidy reductions.

In January, the spanish Finance ministry unexpectedly imposed a moratorium on subsidies for electricity
from renewable energy sources. It applies to all photovoltaic plants that were not already registered in
the plant registry. the high level of public debt was cited as the reason for this measure. nonetheless,
industry experts predict that a “net-metering” mechanism will be introduced in may, meaning that the
photovoltaic electricity fed into the grid will be netted with the electricity drawn from the grid and billed
on that basis. until this mechanism is officially announced, however, it will be extremely difficult to pre-
dict the further development of the photovoltaic market in spain.

according to an announcement of the French regulatory authority cre, the subsidy rates for newly
installed photovoltaic systems declined by 4 to 10 percent from the fourth quarter of 2011. despite
these cuts, however, the subsidy rates are still extremely attractive for photovoltaic plants with a system
size of less than 100 kilowatts (kWp) peak capacity, so that the market outlook, particularly for the seg-
ment of roof-top systems on private homes, is still quite positive.

the photovoltaic market in Greece exhibited a largely positive development, although it was held back
by financing shortfalls due to the high level of public debt.

In the united states, the commerce department announced provisional protective tariffs on solar cells
and modules produced in china. these tariffs are designed to offset the government subsidies granted
to chinese manufacturers, which the commerce department had found to be equal to 2.90 to 4.73 per-
cent. this provisional tariff appears to be accepted by the chinese manufacturers and their importers. a
final anti-dumping rule has been announced for may 2012.

In the canadian province of ontario, the provincial government announced a drastic reduction in the
grid feed-in tariffs for solar and wind power. according to early media reports, the subsidy rate for
newly installed photovoltaic plants will be lowered from the previous amount of 80.2 canadian cents to
about 55 canadian cents per kilowatt hour (kWh). Because these subsidies are still considerably higher
than in other photovoltaic markets, the canadian market is expected to continue growing even if the
announced subsidy reductions take effect. according to government figures, about 200 projects rep-
resenting a total peak output of about 2.9 GWp are currently going through the government approval
process.
phoenix solar ag | interim report January to march 2012                          interim management report   17




2.2 Important eVents In the reportInG perIod

NEW SALES DIRECTOR FOR COMPONENTS & SYSTEMS
on 4 January 2012, Jörn mortsiefer was appointed sales director of the components & systems segment
for the region of Germany, austria and switzerland. Jörn mortsiefer has worked in sales for more than
20 years, most recently at conergy deutschland Gmbh, where he was responsible for that company’s
trading business, as sales director and authorised officer vested with commercial power of attorney
under German law (prokurist).

FURTHER PROGRESS IN INTERNATIONALISATION
since 19 January 2012, phoenix solar has been engaged in an exclusive collaboration with ires enerji in
turkey, a key growth market for the solar industry. one of the leading turkish companies in the renew-
able energy sector, ires enerji develops projects and builds solar power systems as a general contractor,
among other services. under this exclusive partnership, negotiations have already been conducted con-
cerning the execution of the first joint projects.

CONSTRUCTION OF A ROOF-TOP SOLAR POWER PLANT IN SLOVENIA
on 26 January 2012, phoenix solar announced the construction of a roof-top solar power plant in naklo,
slovenia. this solar power plant, which was built in cooperation with the slovenian company Gorenjske
elektrarne, has a peak output of 800 kWp and has already been connected to the grid of the local power
utility. the company plans to continue its cooperation with Gorenjske elektrarne in the current year.

ULRICH REIDENBACH LEAVES PHOENIX SOLAR
the chief sales officer of phoenix solar aG, ulrich reidenbach, resigned from the company on 31 Janu-
ary 2012 to pursue other professional opportunities. his responsibilities have been largely assumed by
the chief executive officer dr. andreas hänel.

NEW TERMS FOR MODULE PURCHASES
In February 2012, phoenix solar renewed the cooperation agreements with one of its most important
module suppliers, for a period until 31 december 2014. under the new agreements, the purchasing
commitments that had previously been assumed by phoenix solar were revised in such a way as to make
them almost completely flexible. Furthermore, the parties agreed on a pricing mechanism that guaran-
tees competitive prices and terms for the phoenix solar Group. Because the new agreement no longer
stipulates fixed purchasing quantities at defined times, it also lowers the risk of inventory write-downs
considerably.
phoenix solar ag | interim report January to march 2012                             interim management report   18




3 results oF operatIons, cash FloWs and FInancIal posItIon

3.1 results oF operatIons

after a halting start in January, phoenix solar turned in a generally positive performance in the first
quarter of 2012. thanks in particular to the development of module sales in Germany and project rev-
enues in the international markets, the Group generated revenues of eur 37.9 million in the first quar-
ter, which was higher than the corresponding figure for the first quarter of 2011 (eur 32.4 million). In
contrast to the first quarter of last year, phoenix solar generated a positive gross operating profit (due in
part to the exceptional effect arising from the Kazanlak project), which – in combination with the lower
personnel expenses and other operating expenses – led to a considerable improvement in the Group’s
eBIt (eur -1.1 million) compared to the corresponding year-ago figure (eur -16.9 million).

3.2 analysIs oF reVenues

the Group generated revenues of eur 37.9 million in the first quarter of 2012, reflecting a 17.0 per-
cent increase over the corresponding year-ago figure (Q1/2011: eur 32.4 million). domestic revenues
accounted for 31.9 percent (Q1/2011: 28.1 percent) and international revenues accounted for 68.1 per-
cent (Q1/2011: 71.9 percent) of the Group’s total revenues. the Group’s subsidiaries (excluding inter-
national activities conducted by the parent company) contributed 42.7 percent to the Group’s total
revenues in the first quarter of 2012 (Q1/2011: 46.6 percent).

the components & systems segment generated revenues of eur 18.3 million in the first quarter of
2012 (Q1/2011: eur 17.0 million) and therefore contributed 48.3 percent (Q1/2011: 52.5 percent) of the
Group’s total revenues. the power plants segment generated revenues of eur 18.6 million (Q1/2011:
eur 15.4 million), 95.5 percent (Q1/2011: 90.9 percent) of which were generated in the Group’s inter-
national markets. the significant increase in the percentage of international revenues resulted from the
uncertainties affecting the domestic market as a result of the German federal government’s announce-
ment of its intention to amend the German renewable energy sources act (eeG) and from the signifi-
cant revenue contributions of the u.s. and French subsidiaries.

3.3 sItuatIon oF orders

as of march 31, 2012, the Group’s orders on hand amounted to eur 112.7 million (31 march 2011: eur
178.4 million), reflecting a decrease of eur 65.7 million or 36.8 percent from the corresponding year-
ago figure. orders on hand for the components & systems segment fell by eur 31.3 million to eur
11.1 million (31 march 2011: eur 42.4 million), and those for the power plants segment sank by eur
34.4 million to eur 101.6 million (31 march 2011: eur 136.0 million). the overall decrease in orders on
hand also resulted from the uncertainties affecting the German market in connection with the amend-
ment of the eeG. By contrast, international orders on hand exhibited a positive development, rising to
eur 108.1 million (31 march 2011: eur 94.9 million).

3.4 deVelopment oF Key Items In the Income statement

CHANGES IN INVENTORY
the changes in inventory in the amount of eur 2.0 million (Q1/2011: eur 1.8 million) reflect the increases
or decreases in the volume of orders in progress. as of march 31, 2012, this item contained a French project.

OTHER OPERATING INCOME
the other operating income of eur 0.5 million (Q1/2011: eur 0.5 million) was mainly composed of elec-
tricity income in the amount of eur 0.3 million.
phoenix solar ag | interim report January to march 2012                                interim management report    19




PURCHASED GOODS AND SERVICES/GROSS PROFIT
at eur 30.0 million, the cost of purchased goods and services was 20.0 percent lower than the corre-
sponding year-ago figure (Q1/2011: eur 37.5 million). due to the fact that revenues were also 17.2 per-
cent higher than the corresponding year-ago figure, the Group generated a positive gross operating profit
of eur 9.9 million in the first quarter of 2012 (Q1/2011: eur -3.3 million). this figure includes a significant,
positive non-recurring effect arising from the sale of project rights and a partial reversal of the provision
recognised for the work already performed by suppliers for the project Kazanlak (Bulgaria). a change in
procurement practices also had a positive effect on the development of the gross operating profit. It was
necessary to charge additional inventory write-downs of eur 1.8 million in the first quarter of 2011.

PERSONNEL EXPENSES
as of march 31, 2012, phoenix solar aG had a total of 352 employees (including members of the execu-
tive Board and temporary workers); of that number, 332 were permanent employees. In connection
with the on-going implementation of the restructuring concept, the Group’s workforce has been consid-
erably reduced in the last few months. consequently, the Group had 48 fewer employees at 31 march
2012 compared to the corresponding year-ago figure. accordingly, the personnel expenses of eur 6.0
million were 14.7 percent less (Q1/2011: eur 7.1 million) and the ratio of personnel expenses to revenues
fell to 15.9 percent (Q1/2011: 21.9 percent).

the workforce reduction was conducted almost exclusively in the parent company. a total of 58 employees
left phoenix solar aG in the first quarter of 2012. In the second and third quarters of this year, the workforce
will be reduced further by approximately 50 employees, in accordance with the restructuring concept.

DEPRECIATION AND AMORTISATION
at eur 0.5 million, the depreciation and amortisation charged against intangible assets and property,
plant and equipment in the first quarter of 2012 were slightly higher than the corresponding year-ago
figure (Q1/2011: eur 0.3 million). this increase resulted primarily from the capitalisation of the erp sys-
tem, which has been in use at the parent company since 1 July 2011.

OTHER OPERATING EXPENSES
the other operating expenses of eur 4.9 million were 27.3 percent less than the corresponding year-ago fig-
ure (Q1/2011: eur 6.7 million). In accordance with the restructuring concept, moreover, the other operat-
ing expenses of the parent company were adjusted to reflect the reduced profitability of the company. legal
expenses were eur 0.6 million less, storage costs were eur 0.2 million less, freight costs were eur 0.4 mil-
lion less and expenses for freelancers and purchased services were eur 0.3 million less than the respective
year-ago figures. on the other hand, the other consulting expenses were eur 0.9 million higher than the
respective year-ago figure; eur 0.7 million of that increase resulted from the hiring of a restructuring advisor.

EARNINGS BEFORE INTEREST AND TAXES (EBIT)
the eBIt for the first quarter of 2012 amounted to eur -1.1 million (Q1/2011: eur -16.9 million). this
improvement resulted in part from the positive gross operating profit, but also in part from the reduc-
tion in personnel expenses and other operating expenses, in the amount of eur 3 million.

FINANCIAL RESULT
at eur -0.8 million, the financial result for the first three months of 2012 was 23.2 percent less than the
corresponding year-ago figure (Q1/2011: eur -0.7 million). the financial income of eur 0.04 million
(Q1/2011: eur 0.19 million) was offset by financial expenses of eur 0.9 million (Q1/2011: eur 0.9 million).

TAX RATE
the reported earnings from income tax for the first quarter of 2012 amounted to eur 0.7 million
(Q1/2011: eur -4.7 million). that corresponds to a tax rate of 35.7 percent (Q1/2011: 26.4 percent).
phoenix solar ag | interim report January to march 2012                               interim management report   20




CONSOLIDATED PROFIT/LOSS
at eur -1.2 million, the net loss for the first quarter of 2012, was eur 11.7 million or 90.7 percent less than
the corresponding year-ago figure (Q1/2011: eur -12.9 million), mainly due to the improved eBIt. Based
on 7.4 million average shares outstanding, the basic earnings per share came to eur -0.12 (Q1/2011: eur
-1.76). Because no significant diluting factors were in effect as of march 31, 2012, the diluted earnings
per share were only slightly different from the basic earnings per share.

3.5 deVelopment oF the BusIness seGments

COMPONENTS & SYSTEMS (DOMESTIC AND INTERNATIONAL)
the performance of this operating segment in the first quarter of 2012 was influenced by an unex-
pectedly strong start to the year in Germany, but also by growing uncertainties in the other european
markets. at eur 19.3 million, the first-quarter revenues of the components & systems segment were
13,5 percent higher than the corresponding year-ago figure (Q1/2011: eur 17.0 million).

the revenue increase was driven by the positive development of the German market in this segment.
after a halting start, the components & systems segment exhibited a very positive development in
Germany during the course of the first quarter of 2012, generating revenues of eur 11.3 million, which
were 46.8 percent higher than the corresponding figure for the first quarter of 2011 (Q1/2011:eur 7.7
million). the announcement that the German renewable energy sources act would be amended with
effect as of 1 april had the effect of temporarily stimulating the overall German market, mainly as a result
of pull-forward effects. despite the volume increase in the German market, the trading business was still
affected by downward pressure on prices, although the price pressure was not as intense as it had been
in the fourth quarter of 2011. Fortunately, domestic revenues surpassed the company’s expectations by
a moderate margin.

In the international markets, however, phoenix solar’s revenues declined to eur 8.0 million in the first
quarter of 2011 (Q1/2011: eur 9.3 million). the development of the various international markets was
very mixed, however. In France, Italy and especially spain, the trading business was stagnant, due to
unfavourable regulatory framework conditions and fierce competition. In these countries, the prices of
solar modules in particular came under intense pressure, even as profit margins for other system com-
ponents improved slightly, in some cases. the only country in which the company’s revenue expecta-
tions were exceeded was Greece, thanks to the favourable situation of subsidies, expiring grid feed-in
remuneration rate commitments and the relative security of investments in solar power plants.

despite the unstable market environment, the overall performance of the components & systems seg-
ment exceeded the company’s expectations in the first quarter. It should be noted that european power
plant builders are making their procurement decisions on an increasingly short-term basis, due to the
expectation of further price declines. as a result, the longer-term orders on hand and business planning
ability generally have diminished. the higher revenues generated in march resulted from the announced
adjustment of German grid feed-in remuneration rates, to a considerable degree.

the earnings of the components & systems segment were weighed down by inventory write-downs.
thanks to the revenues generated in the first quarter and the consistently positive profit margins, the
segment generated a positive gross profit, but it was not enough to cover overhead costs. thus, the com-
ponents & systems segment generated a negative eBIt of eur -3.2 million (Q1/2011: eur -7.7 million).

By reason of the uncertainties affecting the German market in particular, market demand was mainly
focused on quickly available warehouse stocks. dealers held back on new orders until mid-march. at
31  march 2012, the orders on hand of the components & systems segment only amounted to eur
11.1 million (Q1/2011: eur 23.4 million).
phoenix solar ag | interim report January to march 2012                               interim management report   21




Orders on hand                                                                         Q1/2012        Q1/2011
                                                                                           €m             €m
Orders on hand, C&S consolidated                                                           11.1           23.4
share of total orders on hand                                                             9.8 %         14.8 %
– thereof domestic                                                                          2.0           16.8
– thereof international                                                                     9.1            6.6



POWER PLANTS (DOMESTIC AND INTERNATIONAL)
the power plants segment generated revenues of eur 18,6 million in the first quarter of 2012, reflecting an
increase of 20.8 percent over the corresponding year-ago figure (Q1/2011: eur 15.4 million). as in prior
periods, the performance of this segment was heavily influenced by substantial international activity. the
revenues generated in Germany fell to eur 0.8 million (Q1/2011: eur 1.4 million), mainly as a result of the
lingering uncertainties concerning future solar power subsidies.

at eur 17.8 million, the revenues generated in the company’s international markets in the first quarter
of 2012 were 27.1 percent higher than the corresponding figure for the first quarter of 2011 (Q1/2011:
eur 14.0 million). once again, phoenix solar generated positive revenue growth in the French market,
although the company’s performance in that country was influenced by intense pressure on prices and
profit margins and high administrative expenses for tendered projects. In spain, only projects that had
already been registered were executed and other projects were discontinued in the first quarter, due to
the moratorium imposed in that country. In most other european countries, the performance of the power
plants segment was adversely affected by the financial crisis. Investors are still finding it very difficult to
obtain loans to finance photovoltaic projects.

thanks to the positive effects emanating from the reversal of project rights and provisions recognised for
the work already performed for the Kazanlak project (Bulgaria), the power plants segment generated posi-
tive earnings of eur 2.1 million in the first quarter of 2012 (Q1/2011: eur -9.2 million).

the orders on hand of the power plants segment amounted to eur 101.6 million (Q1/2011: eur 134.9 mil-
lion), 97.4 percent of which were orders in foreign countries.

Orders on hand                                                                         Q1/2012        Q1/2011
                                                                                           €m             €m
Orders on hand, PP consolidated                                                           101.6          134.9
share of total orders on hand                                                            90.2 %         85.2 %
– thereof domestic                                                                          2.6           55.0
– thereof international                                                                    99.0           79.9


3.6 FInancIal posItIon and cash FloWs

STRUCTURE OF ASSETS AND CAPITAL
as of 31 march 2012, the total assets of the phoenix solar Group amounted to eur 133.1 million, reflecting
a decrease of eur 10.8 million from the corresponding figure at year-end 2011 (31 december 2011: eur
143.9 million).
phoenix solar ag | interim report January to march 2012                           interim management report   22




noncurrent assets were nearly unchanged at eur 12.2 million (31 december 2011: eur 12.3 million). By
contrast, current assets amounted to eur 120.9 million, reflecting a decrease of eur 10.7 million from the
corresponding figure at year-end 2011 (31 december 2011: eur 131.6 million). this decrease resulted from
two developments: First, inventories declined by eur 18.2 million to eur 37.8 million (31 december 2011:
eur 55.9 million), and second, advance payments rendered rose by eur 7.5 million to eur 8.5 million
(31 december 2011: eur 1.0 million).

due to the consolidated net loss for the period, the Group’s equity amounted to eur 53.5 million, reflect-
ing a decrease of eur 1.3 million from the corresponding period at year-end 2011 (31 december 2011:
eur 54.8 million). despite this decrease, the equity ratio rose to 40.2 percent (31 december 2011: 38.1
percent), due to the lower amount of total assets.

at eur 2.5 million, noncurrent liabilities and provisions were nearly unchanged from the corresponding
figure at the end of 2011. By contrast, current liabilities and provisions declined by eur 9.4 million to
eur 77.2 million (31 december 2011: eur 86.6 million). trade payables fell by eur 10.3 million to eur
14.2 million (31 december 2011: eur 24.5 million) because the parent company paid some suppliers
in advance or shortly after delivery, in order to obtain discounts, among other reasons. other financial
liabilities amounted to eur 13.2 million, reflecting an increase of eur 9.2 million from the correspond-
ing figure at year-end 2011 (31 december 2011: eur 4.0 million), due to deferred revenues, long-term
orders and advance payments received. current non-financial liabilities were reduced especially by the
utilisation of personnel provisions (payment of target attainment bonuses and severance awards) and
by the netting of the down payment for a French project with the corresponding receivable upon com-
pletion of the project.

CASH FLOW FROM OPERATING ACTIVITIES
the cash flow from operating activities amounted to eur -0.6 million in the first quarter of 2012, as com-
pared to eur 29.8 million in the fourth quarter of 2011. the operating cash flow in the first quarter was
mainly reduced by cash outflows for the utilisation of provisions (eur -9.6 million) and advance payments
rendered (eur -7.5 million). cash inflows were generated particularly by the change in inventories (+ eur
18.3 million).

CASH FLOW FROM INVESTING ACTIVITIES
the Group’s investing activities for investments in property, plant and equipment and intangible assets
generated a cash outflow of eur 0.1 million.

CASH FLOW FROM FINANCING ACTIVITIES
the cash flow from financing activities amounted to eur 3.2 million, mainly due to cash inflows from the
eur 3.2 million increase in short-term credit facilities.
phoenix solar ag | interim report January to march 2012                            interim management report   23




4 eVents aFter the reportInG date

POSTPONEMENT OF PUBLICATION OF THE ANNUAL REPORT 2011 AND THE INTERIM FINANCIAL REPORT
FOR THE FIRST QUARTER OF 2012
on 2 april 2012, the Group informed the public in an ad-hoc announcement that the publication of
the annual report 2011 would be postponed by a few weeks. the interim financial report for the first
quarter of 2012 was also published later than planned. these delays were caused by the cuts in solar
power subsidies, which prolonged the on-going financing negotiations and therefore also the process
of preparing the annual financial statements.

CONTINUATION OF THE KAZANLAK PROJECT
on 10 april 2012, phoenix solar entered into an agreement, which already had been finalized at the
end of the quarter, with Bosch solar energy aG for the (at least partial) execution of the Kazanlak power
plant project in Bulgaria. phoenix solar aG had ceased construction on the project and recognised
appropriate provisions at the end of financial year 2011, because no investor could be found under
the circumstances at this time and due to the existential risks to the company that would have been
associated with continuing construction as a result of the fact that financing had not been secured.
the discontinuation of this project was also an element of the moratorium agreed with the banks in
december 2011. under the terms of the new agreements, Bosch solar energy aG will purchase the
project rights, and will therefore also assume responsibility for financing and marketing the projects,
in exchange for valuable consideration. under the contract, phoenix solar will build, for account of the
customer, 25 mWp of the solar power farm that was originally planned to comprise 50 mWp, in the time
until 30 June 2012, using solar modules supplied by the customer. this agreement will offset a portion
of the corresponding loss incurred by phoenix solar aG in 2011. the terms and conditions of this con-
tractual arrangement considerably reduce the original risks associated with the project, especially those
related to financing and marketing, so that phoenix solar’s risk is limited to the timely completion of the
solar power farm. Given the brief time period allowed for construction, however, there is a risk remain-
ing concerning the finalisation on time.




5 report on opportunItIes and rIsKs

as an internationally active company, the phoenix solar Group is exposed to a considerable number
of opportunities and risks. the opportunities associated with the Group’s future development are pre-
sented in the annual report 2011, along with detailed information on the risk portfolio of phoenix solar.
Based on the current status of information, no significant changes have occurred in that respect since
the annual report 2011.

5.1 polIcy on opportunItIes and rIsKs

the goal of our risk policy is to ensure the continued operation of the phoenix solar Group as a going
concern and to systematically and sustainably increase the company’s value. In accordance with these
basic principles, business decisions are always made only on the basis of a detailed analysis and assess-
ment of the associated risks. Because all business activity necessarily entails opportunities and risks,
the Group’s risk strategy covers both elements. In the areas of our core competence, therefore, we con-
sciously take on manageable, assessable risks when the income to be generated by assuming such risks
is appropriate. the Group avoids risks in all other areas, as a basic rule. above all, no decision or action
that would pose an existential risk to the phoenix solar Group may be taken.
phoenix solar ag | interim report January to march 2012                             interim management report   24




5.2 rIsK and opportunIty manaGement system

the Group’s risk and opportunity management system is designed to identify individual risks, present
them in a transparent manner and determine ways of managing them appropriately. aside from risks
that would endanger the company’s continued operation as a going concern, we also monitor those
activities, events and developments that could have a significant influence on the Group’s future busi-
ness success. the corresponding goals and procedures and the division of responsibilities within the risk
management system are documented in the risk management handbook of phoenix solar aG.

Insurance policies are maintained, to the extent they are available and economically tenable, to mini-
mise the financial repercussions of a potential loss. the extent and amount of such insurance policies are
reviewed on a regular basis.

5.3 sIGnIFIcant opportunItIes

the biggest opportunities for the phoenix solar Group in financial year 2012 result from the restructur-
ing measures that have been initiated. Wide-ranging cost-cutting measures and adjustments to our
capacity, combined with far-reaching changes to our operating processes, organisational structure and
governance mechanisms, will make a vitally important contribution to assuring the company’s survival
as a going concern.

the amended version of the German renewal energy sources act (eeG) will create additional opportu-
nities for new business models in the German photovoltaic market. phoenix solar aG is currently in the
process of developing such business models and will proceed to establish them in the market, if they are
deemed to be viable after careful review. We also anticipate that photovoltaic technology will become
attractive even without government subsidies in southern europe already in the near-term future, and
in Germany in the medium-term future. When that happens, the uncertainties and restrictions related to
subsidy conditions will no longer be relevant. the ensuing market environment will create opportuni-
ties for phoenix solar aG that cannot yet be fully evaluated at the present time.

We will go on systematically applying our strategy of greater internationalisation. the focus in 2012 will be
on the united states and asia, where markets like India, malaysia and thailand continue to show consider-
able growth potential. In the future, global demand will no longer be concentrated in only a few large
national markets, but will be supported by a large number of markets, including smaller new markets.
new solar power markets will emerge around the world, including in such countries as Israel, turkey and
south africa, for example. that trend will lessen the dependency on the subsidy laws of any one country.

5.4 sIGnIFIcant rIsK areas

In addition to the specific risks and opportunities described in the annual report 2011, to which express
reference is made at this point, phoenix solar is exposed to the risks and opportunities described below,
based on the current status of information.

POLITICAL AND REGULATORY FACTORS
the development of national photovoltaic markets will again be promoted or impeded in 2012 to varying
degrees by the laws and regulations in force. In the case of laws designed to create long-term economies
of scale, such as the German renewable energy sources act, every reduction in feed-in remuneration that
cannot be offset by lower procurement prices leads to lower returns on new photovoltaic plants, which
reduces the attractiveness of such plants for potential buyers. unannounced, ever more frequent and
radical changes in the legal framework decrease the stability of feed-in commitments. this could restrict
phoenix solar ag | interim report January to march 2012                              interim management report   25




further market growth or even cause markets to contract, which would endanger the continued opera-
tion of the company as a going concern. In order to mitigate the risks associated with dependencies on
individual markets, the phoenix solar Group is systematically pursuing a strategy of internationalisation.
By that means, the company is also countering the risks associated with the debates concerning the fur-
ther structuring of the feed-in arrangements – particularly under the German renewable energy sources
act – in the most important markets for phoenix solar aG at the present time: Germany, France and Italy.

MARKET, COMPETITION AND EXTERNAL FACTORS
the on-going energy-policy discussions in a number of major european markets including Italy and
Germany are leading to uncertainty on both the demand and the investor side. the incentive to invest
in photovoltaic power plants in these markets is declining accordingly. In Germany in particular, this
resulted in caution at first in 2011, followed by catch-up effects later on in the year. the persistently
evident reticence of banks in both Italy and other south european countries with regard to extending
project finance to potential investors is similarly inhibiting the expansion of business activities. resulting
delays in the execution of projects, or completely absent project completions, can therefore endanger
the achievement of growth targets in these markets.

In response to the large decline in prices in 2011, phoenix solar aG has made estimations regarding the
development of sales prices based on the information available when the annual financial statements
were drawn up and written down the existing inventories to the expected market prices. should market
developments arise in the future that are affected by other factors that were not known when the write-
downs were taken, this may make it necessary to take further write-downs with consequences for the
Group’s results of operations.

lengthier delays in the process of selling large photovoltaic plants leading to delayed cash inflows
would pose a risk to the liquidity management efforts of the phoenix solar Group. the Group counters
such risks by means of active working capital management.

RESTRUCTURING
the rapid changes in the market environment, complete with much lower prices for solar modules and
systems, will lead to considerable decreases in both revenues and earnings, even if sales volumes remain
the same. as it can be assumed that sales prices will not rise in the coming years either, this development
has been countered by optimising the business model. the executive Board has worked with outside
consultants to closely examine the business model, which resulted in its fundamental sustainability
being confirmed. the restructuring plan includes wide-ranging changes to the organisational structure,
processes, capacity and corporate governance mechanisms. nevertheless, it cannot be guaranteed that
these measures will yield the desired success within the timeframe envisaged.

CORPORATE FINANCING
as the centrepiece of the new financing package, a syndicated loan agreement as part of a total credit
amount of eur 132 million was signed on 11 may 2012. the agreement has a term until 31 march
2014. It contains covenants that reflect standard market practices. If these covenants are not met, the
syndicate would be entitled to terminate the credit lines. In this case, the company’s survival as a going
concern would be endangered.
phoenix solar ag | interim report January to march 2012                             interim management report   26




INTERNATIONAL EXPANSION RISK
the phoenix solar Group takes advantage of opportunities to establish a foothold in international mar-
kets through its worldwide network of subsidiaries, in order to reduce its dependence on Germany and
to achieve its growth goals by generating a higher proportion of its business in international markets. the
further expansion of the phoenix solar Group, including project development and the construction of
photovoltaic power plants in foreign countries in particular, entails considerably higher risks than those
associated with the Group’s business in Germany. such risks relate primarily to development expenses
and times and to the completion of photovoltaic power plants. especially in the case of increased activi-
ties in new markets, therefore, project delays and cost overruns compared to the original, deliberately
conservative plans cannot be ruled out. Given the tight deadline requirements, execution of the Kazan-
lak project in Bulgaria could run into delays, thereby endangering the guaranteed remuneration rates
as of 30 June 2012. although counter measures have been taken to counter this eventuality, the actual
occurrence of such risks could have negative repercussions on the company’s operating results.

Furthermore, an expansion of the company’s business into countries beyond the european union
entails considerably higher risks arising from legal and political aspects. Generally speaking, there is also
a risk that the potential of foreign markets could be misjudged, with the result that the company would
become involved in foreign markets with very little potential. such risks are difficult to assess and can
lead to unforeseen cost burdens.

5.5 General assessment oF the Group’s rIsK sItuatIon

In the opinion of the executive Board, the risks described above are manageable and the continued
operation of the phoenix solar Group as a going concern was not endangered as of the time when the
present report was prepared. that applies both to the individual companies and to the corporate group
as a whole. the overall risk situation has not changed significantly since the end of 2011, although it
is still not possible to reliably foresee the development of market conditions and prices. Based on the
current status of information, we do not anticipate a fundamental increase or worsening of the risk situ-
ation described in this report in the further course of financial year 2012.
phoenix solar ag | interim report January to march 2012                            interim management report   27




6 Forecast report

6.1 General marKet condItIons

most industry experts and associations are predicting continued growth for the worldwide photovoltaic
market in 2012, albeit with considerable regional differences. Whereas only very little positive impetus
can be expected in the european photovoltaic market, the asian market in particular is expected to
drive the growth of the photovoltaic industry in 2012. Given the high level of uncertainty concerning
the future development of subsidy programs in key photovoltaic markets, it is practically impossible to
offer concrete forecasts at the present time. Generally speaking, the industry will be affected by two
opposite trends in 2012. on the one hand, the support for renewable energy sources among govern-
ments and populations will remain high, for reasons of environmental and climate protection; on the
other hand, the unpredictably strong growth in practically all key markets of the last few years (such
as Germany, Italy, spain, France, the czech republic and Great Britain) in the last few years has since
been perceived by political decision-makers as a sign of over-heating. some of these countries (such as
Germany, for example) have already imposed considerable, unscheduled reductions in photovoltaic
subsidy programs.

Given the difficult market situation and the persistent supply glut, prices of modules and other system
components such as inverters can be expected to continue falling. not all market players will be able
to achieve the necessary cost reductions and the necessary improvements in efficiency and flexibility.
therefore, the consolidation of the photovoltaic industry will continue or even accelerate.

6.2 neW sales marKets

due to the expectation of a more difficult market environment in the lead market of Germany, the
company will work intensively to further advance the internationalisation of its business. In the effort to
open up new sales markets, particular emphasis will be given to the asian region and north america.

6.3 antIcIpated deVelopment oF unIt sales

In view of the continuing discussion of further subsidy reductions in various countries in the first half
of 2012, phoenix solar anticipates a slight decrease in the volume of business conducted by the com-
ponents & systems segment. Given the continued, moderate decline in module prices, moreover, the
company anticipates smaller profit margins. at the present time, however, it is extraordinarily difficult
to offer an exact forecast of the political environment for photovoltaic energy in europe over the course
of 2012. nonetheless, a growing number of smaller photovoltaic systems can be observed as a trend
throughout europe, which should guarantee a somewhat stable target market for the components &
systems segment. the stability of this market will be further supported by the growing competitiveness
of solar power, which will significantly enhance the appeal of self-consumption solutions.

We expect that conditions in the components & systems segment will continue to be difficult, due to
subsidy restrictions and further cuts in subsidised tariffs. In our estimation, solar power plant construc-
tion in Germany and europe will be subject to intensified competition and strong price pressure in the
project business. according to our business plan, this factor coupled with a business policy geared more
to risk avoidance and profit margins will lead to substantially lower revenues in the short term; and it
will not be possible to offset any significant portion of this decrease in domestic revenues through the
continued growth of international activities.
phoenix solar ag | interim report January to march 2012                            interim management report   28




6.4 antIcpated deVelopment oF reVenues and earnInGs

overall, the executive Board of phoenix solar aG still expects that the company will generate revenues
in the range of eur 210 million to eur 240 million and an eBIt in the range of eur -25 million to eur
-19 million in financial year 2012. this eBIt figure will be weighed down by a number of non-recurring
effects related to the restructuring and the new financing. the company’s earnings will also be bur-
dened by various trailing costs, including costs related to the substantially reduced personnel capaci-
ties. In 2013, the executive Board expects to generate revenues again in the range of eur 280 million to
eur 310 million and an eBIt in the range from eur -5 million to eur 0 million.

For the years 2012 and 2013, the executive Board perceives additional revenue and earnings oppor-
tunities (as in the project business, for example), which are not reflected in the business plan. By the
same token, the business plan does not incorporate various risks, particularly including unforeseeable
changes in the current legislative framework and further reductions in grid feed-in tariffs in the key mar-
kets of phoenix solar aG.

Given the known dynamism of the photovoltaic market, it is possible that future results will differ from
the current expectations of the executive Board of phoenix solar aG.




sulzemoos, 14 may 2012
phoenix solar aktiengesellschaft
the executive Board




Dr. Andreas Hänel                           Dr. Bernd Köhler
(chief executive officer)                   (chief Financial officer)




Dr. Murray Cameron
(chief operating officer)
consolIdated
FInancIal
statements
accordInG to IFrs For the perIod
From 1 January untIl 31 march 2012
oF phoenIx solar aKtIenGesellschaFt, sulzemoos




Consolidated income statement                    30
Consolidated statement of comprehensive income   30
Consolidated balance sheet                       31
Consolidated statement of changes in equity      33
Consolidated cash flow statement                 34
phoenix solar ag | interim report January to march 2012       consoliDateD Financial statements   30




consolIdated Income statement

for the period from 1 January 2012 until 31 March 2012    Notes     01/01/2012      01/01/2011
in k€                                                        C.   – 31/03/2012    – 31/03/2011


revenues                                                    (1)         37,908          32,360
change in inventory of work in process                      (2)          1,971           1,838
Overall performance                                                    39,879           34,198


other operating income                                      (4)            457             468
cost of materials                                           (3)         30,005          37,529
personnel expenses                                          (5)          6,015           7,055
depreciation and amortisation                                              506             317
other operating expenses                                    (6)          4,874           6,704
Operating result                                                       - 1,064        - 16,939


result from associated companies                                             2               0
EBIT                                                                   - 1,062        - 16,939


Financial income                                                            42             188
Financial costs                                                            885             872
Financial result                                            (7)          - 843           - 684
Consolidiated net income before income taxes (EBT)                     - 1,905        - 17,623


Income taxes                                                (8)          - 680         - 4,655
Consolidiated net income for the period                                - 1,225        - 12,968


– of which due to minority interest                                      - 372             - 25
– of which due to majority shareholders                                  - 853        - 12,943


Earnings per share
earnings per share (basic)                                  (9)          - 0.12          - 1.76
earnings per share (diluted)                                (9)          - 0.12          - 1.76




consolIdated statement oF comprehensIVe Income

for the period from 1 January 2012 until 31 March 2012    Notes     01/01/2012      01/01/2011
in k€                                                        D.   – 31/03/2012    – 31/03/2011


Consolidiated net income for the period                                - 1,225        - 12,968


transactions associated with minority interests                            632             - 19
differences from currency translation                                       -8             - 35
Income taxes recognised directly under equity                                0               0
changes in value recognised directly under equity          (15)            624             - 54


Overall performance                                                      - 601        - 13,022
– of which due to minority interest                                        260             - 44
– of which due to majority shareholders                                  - 861        - 12,978
phoenix solar ag | interim report January to march 2012             consoliDateD Financial statements   31




consolIdated Balance sheet
as per 31 march 2012

ASSETS                                                     Notes        31/03/2012       31/12/2011
                                                          C. & D.               k€               k€


Noncurrent assets
Intangible assets                                            (10)             4,311            4,503
Goodwill                                                                        533              533
property, plant and equipment                                                 2,990            3,197
Investments in associates                                                       397              395
other participating interests                                                   161              160
noncurrent receivables                                                          498              498
deferred tax assets                                           (8)             2,524            2,236
noncurrent other financial assets                            (13)               816              806
Total noncurrent assets                                                      12,230          12,328


Current assets
Inventories                                                  (11)            37,754           55,911
prepayments                                                                   8,540            1,033
receivables from long-term construction contracts            (12)            14,378           14,995
trade receivables                                                            33,207           31,597
current other financial assets                               (13)             7,315           10,629
current other non-financial assets                           (14)             7,452            7,631
current income tax assets                                     (8)             3,377            3,367
cash and cash equivalents                                                     8,851            6,412
Total current assets                                                       120,874          131,575




Total assets                                                               133,104          143,903
phoenix solar ag | interim report January to march 2012                consoliDateD Financial statements   32




LIABILITIES AND SHAREHOLDERS’ EQUITY                        Notes          31/03/2012       31/12/2011
                                                           C. & D.                 k€               k€


Equity
subscribed capital                                             (15)              7,373            7,373
capital reserve                                           (15), (16)            64,528           64,528
accumulated other equity                                       (15)           - 18,756         - 17,787
Share of majority shareholders in consolidated equity                           53,145          54,114
share of minority interest in consolidated equity                                  320              692
Total equity                                                                    53,465          54,806


Noncurrent liabilities and provisions
noncurrent financial liabilities                                                    18               75
noncurrent provisions                                                            2,454            2,452
deferred tax liabilities                                        (8)                 15               20
Total noncurrent liabilities and provisions                                      2,487            2,547


Current liabilities and provisions
current financial liabilities                                  (17)             27,951           24,726
liabilities from long-term construction contracts              (12)                216            1,749
trade payables                                                 (18)             14,168           24,531
other financial liabilities                                    (19)             13,242            4,038
other non-financial liabilities                                (20)             10,072           13,763
current provisions                                                               5,080            9,861
current income tax liabilities                                  (8)              6,423            7,882
Total current liabilities and provisions                                        77,152          86,550


Total liabilities and shareholders’ equity                                    133,104          143,903
phoenix solar ag | interim report January to march 2012                           consoliDateD Financial statements   33




consolIdated statement oF chanGes In eQuIty

for the period from         Notes    Subscribed       Capital      Accumu-      Share of     Share of        Total
1 January 2012 until           D.        capital      reserve   lated other     majority     minority       equity
31 March 2012                                                        equity shareholders      interest
                                                                              in consoli-  in consoli-
                                                                            dated equity dated equity
                                             k€           k€             k€           k€           k€           k€


As per 1 January 2011                     7,373       63,559       71,453       142,385            60     142,445
                             (15)
reserve for share options    (16)                         369                       369                        369
difference from currency
translation                  (15)                                     - 35          - 35            0          - 35
consolidated net income
in 2011                                                           - 12,943      - 12,943          - 25    - 12,968


As per 31 March 2011                      7,373       63,928       58,475       129,776            35     129,811


As per 1 January 2012                     7,373       64,528      - 17,787       54,114           692      54,806
                             (15)
reserve for share options    (16)                           0                          0                         0
difference from currency
translation                  (15)                                      -9            -9                         -9
change in companies to
be consolidiated                B.                                   - 107         - 107            0        - 107
consolidated net income
in 2012                                                              - 853         - 853        - 372      - 1,225


As per 31 March 2012                      7,373       64,528      - 18,756       53,145           320      53,465
phoenix solar ag | interim report January to march 2012                           consoliDateD Financial statements   34




consolIdated cash FloW statement

for the period from 1 January 2012 until 31 March 2012                      Notes       01/01/2012     01/01/2011
                                                                                      – 31/03/2012   – 31/03/2011
                                                                           C. & D.              k€             k€


consoldiated income before income taxes                                                    - 1,905        - 17,623
depreciation and amortisation                                                                 506              317
other non-cash income (-) and expenses (+)
(including result from associated companies)                                               - 1,583           5,304
profit/loss from disposal of intangible assets and equipments                                   5                5
Financial income                                                               (7)            - 42            -188
Financial costs                                                                (7)            885              872
Sub-total                                                                                  - 2,134        - 11,313


Increase/decrease in provisions
(net of discounting effects and non-cash releases)                                         - 9,558            -117
Increase/decrease in inventories                                              (11)          18,267        - 24,714
Increase/decrease in prepayments                                                           - 7,507             307
Increase/decrease in receivables from long-term construction contracts        (12)            617           13,450
Increase/decrease in trade receivables (excl. non-cash transactions)                       - 1,561          - 4,215
Increase/decrease in assets                                              (13), (14)          3,461           7,818
Increase/decrease in liabilities                                         (19), (20)        - 1,590        - 34,592
Funds generated by operating activities                                                        -5         - 53,376


Interest paid                                                                  (7)         - 1,046           - 891
Income taxes paid                                                              (8)            412            - 229
Cash flow from operating activities                                                          - 639        - 54,496


proceeds from disposal of intangible assets and equipment                                       0                4
purchase of intangible assets and equipment                                   (10)           - 114           - 598
Cash flow from investing activities                                                          - 114           - 594


payments in connection with financial liabilities                             (17)           3,168          52,021
Interest income                                                                (7)             24              169
Cash flow from financing activities                                                         3,192          52,190


changes in cash and cash equivalents                                                         2,439          - 2,900
currency-induced changes in cash and cash equivalents                                           0                0
consolidation-related changes in cash and cash equivalents                                      0                0
Net change in cash and cash equivalents                                                     2,439          - 2,900


cash and cash equivalents at the start of the period                                         6,412           9,588
cash and cash equivalents at the end of the period                                           8,851           6,688


Increase/decrease in cash and cash equivalents                                              2,439          - 2,900
selected
explanatory
notes
to the InterIm FInancIal statements accordInG to IFrs
For the reportInG perIod From 1 January to 31 march 2012
oF phoenIx solar aKtIenGesellschaFt, sulzemoos




A.   General information                                                  36
B.   Recognition, measurement and consolidation methods                   36
C.   Selected notes to the consolidated income statement                  38
D.   Selected notes to the consolidated statement of financial position   40
E.   Seasonal factors                                                     44
F.   Segment report                                                       44
G.   Significant events after the interim reporting date                  47
phoenix solar ag | interim report January to march 2012                            selected explanatory notes   36




a. General InFormatIon

as of 31 march 2012, the phoenix solar aktiengesellschaft Group (referred to hereinafter as the phoenix
Group) consisted of 43 companies with a total of 361 (py: 401) employees.

the parent company, which is also the highest-level parent company of the Group, is phoenix solar
aktiengesellschaft (referred to hereinafter as phoenix solar aG), with its head office at hirschbergstrasse
8 in 85254 sulzemoos, Germany; it is registered in the commercial register of the munich local court
under register number hrB 129117.

the business object of the parent company comprises the development, production, sales, operation
and administration of components and systems for generating energy from renewable energy sources,
and the construction and maintenance of such components and systems.

the parent company has been admitted for trading in the prime standard segment of deutsche Börse
aG, Frankfurt am main, since 27 June 2006. as one of the stock exchange segments regulated by the
european union, the prime standard is meant for companies that also aim to attract international inves-
tors. as one of the conditions for listing in the prime standard, the company must prepare its finan-
cial statements according to the standards and interpretations issued by the International accounting
standards Board (IasB), i.e., International Financial reporting standards (IFrs) and the interpretations
of the International Financial reporting Interpretations committee (IFrIc), insofar as they have been
endorsed by the european union.

on 13 march 2012, the IasB published amendments to IFrs 1 First-time adoption of International Finan-
cial reporting standards. the amendment prescribes how first-time adopters of IFrs should measure
government loans with a below-market rate of interest at the transition date. Government loans entered
into prior to the transition date may be measured in accordance with the previously applied valuation
method. thus, the valuation rules of Ias 20.10a in conjunction with Ias 39 only apply to governments
loans granted after the transition date. the amended version of IFrs 1 must be applied in financial years
that begin on or after 1 January 2013. earlier application is permitted. this amendment will have no
effect on the accounting methods of the phoenix Group.

the financial statements are to be released for publication on 14 may 2012. the executive Board will
approve the release.




B. recoGnItIon, measurement and consolIdatIon methods

In accordance with the provisions of section 37x (3) of the German securities trading act (WphG),
the quarterly financial report of the phoenix Group comprises a set of condensed interim consolidated
financial statements and an interim management report for the Group. the condensed interim consoli-
dated financial statements were prepared in accordance with the IFrs rules applicable to interim report-
ing, as they are to be applied in the european union. the interim management report for the Group was
prepared in accordance with the applicable provisions of the WphG.

the consolidated interim report as of 31 march 2012 was prepared in accordance with Ias 34. the Inter-
pretations of the International Financial reporting Interpretations committee (IFrIc) to be applied in 2012
and the earlier Interpretations of the standing Interpretations committee (sIc) were observed. all compar-
ison figures from the corresponding year-ago period were calculated on the basis of the same principles.
phoenix solar ag | interim report January to march 2012                                selected explanatory notes   37




With the exception of the methods described below, the main recognition, measurement and consoli-
dation methods are the same as those applied for the consolidated financial statements as of 31 decem-
ber 2011. thus, the interim financial statements should be read in conjunction with the published con-
solidated financial statements as of 31 december 2011.

In accordance with the principles of Ias 34 Interim Financial reporting, tax expenses have been calcu-
lated on the basis of the effective tax rate expected for the full year. tax effects arising in connection with
extraordinary items are recognised in the quarter in which the underlying transaction occurred.

In addition to phoenix solar aG as the parent company, the following companies were included in the
consolidation group as of 31 march 2012:

Subsidiaries                                                      Type of consolidation                  Equity /
                                                                                              voting rights share
phoenix solar s.l., madrid, spain                                     Full consolidation                  100 %
phoenix solar s.r.l., rome, Italy                                     Full consolidation                  100 %
phoenix solar e.p.e., athens, Greece                                  Full consolidation                  100 %
phoenix solar sas, lyon, France                                       Full consolidation                  100 %
phoenix solar Incorporated, new castle/delaware, usa                  Full consolidation                  100 %
phoenix solar pte ltd, singapore, singapore                           Full consolidation                    75 %
phoenix solar sdn Bhd, Kuala lumpur, malaysia                         Full consolidation                    75 %
phoenix solar l.l.c., muscat, oman                                    Full consolidation                    70 %
phoenix solar Fonds Verwaltung Gmbh, sulzemoos, Germany               Full consolidation                  100 %
phönix sonnenFonds Gmbh & co. KG d4, sulzemoos, Germany               Full consolidation                  100 %




Project companies                                                 Type of consolidation                  Equity /
                                                                                              voting rights share
somI Gmbh, sulzemoos, Germany                                         Full consolidation                  100 %
exploris Gmbh, sulzemoos, Germany                                     Full consolidation                  100 %
aktena solar 1 Gmbh & co.KG, sulzemoos, Germany                       Full consolidation                  100 %
aktena solar 2 Gmbh & co.KG, sulzemoos, Germany                       Full consolidation                  100 %
aktena solar 3 Gmbh & co.KG, sulzemoos, Germany                       Full consolidation                  100 %
aktena solar 4 Gmbh & co.KG¸ sulzemoos, Germany                       Full consolidation                  100 %
aktena solar 5 Gmbh & co.KG, sulzemoos, Germany                       Full consolidation                  100 %
Grundstücksgesellschaft Jocksdorf II Gmbh¸ sulzemoos, Germany         Full consolidation                  100 %
trasse und umspannwerk Jocksdorf II Gmbh & co. ohG, sulzemoos,
Germany                                                               Full consolidation                  100 %
scarlatti srl., eppan an der Weinstrasse, Italy                       Full consolidation                  100 %
horus s.r.l., ragusa, Italy                                           Full consolidation                  100 %
plaxo solar s.l., madrid, spain                                       Full consolidation                  100 %
abalia solar s.l., madrid, spain                                      Full consolidation                  100 %
hexasolar s.l., madrid, spain                                         Full consolidation                  100 %
Batisolaire 3 sas, carpiquet, France                                  Full consolidation                  100 %
sp1 d.o.o., ljubljana, slovenia                                       Full consolidation                  100 %
Fe5 s.r.l., milan, Italy                                              Full consolidation                  100 %
BcI Kazanlyk holding eood, Kazanlyk, Bulgaria                         Full consolidation                  100 %
BcI Kazanlyk 1 to 10 eood, Kazanlyk, Bulgaria                         Full consolidation                  100 %
Isla solar s.r.l., ragusa, Italy                                      Full consolidation                    51 %
energia ed ambiente s.r.l., ragusa, Italy                             Full consolidation                    51 %
energia zero emissione s.r.l., ragusa, Italy                          Full consolidation                    51 %
mas solar s.r.l., ragusa, Italy                                       Full consolidation                    51 %
phoenix solar ag | interim report January to march 2012                            selected explanatory notes   38




the French project company psFr001 sarl, strasbourg, France, was sold on 22 march 2012, follow-
ing the execution of a larger photovoltaic project in the haute-loire region of France. the sales price is
deemed to be the transferred formation capital of eur 1 thousand, plus the profit of eur 111 thousand
generated up to the deconsolidation date, and the assumption of net liabilities in connection with the
acquisition of project rights, in the amount of eur 198 thousand.

as in the prior period, the following company was included in the consolidated financial statements by
application of the equity method:

Company name                                                   Type of consolidation                 Equity /
                                                                                          voting rights share
phönix sonnenFonds Gmbh & co. KG B1,
sulzemoos, deutschland                                                     at-equity                  31.2 %


the condensed consolidated financial statements consist of a consolidated income statement plus a
consolidated statement of other comprehensive income, as well as the consolidated statement of finan-
cial position, the consolidated statement of changes in equity, the consolidated cash flow statement and
condensed notes to the consolidated financial statements.




c. selelected notes to the consolIdated Income statement

(1) reVenues

the revenues generated in the first quarter of 2012 were substantially higher, by eur 5,548 thousand,
than the corresponding figure for the first quarter of last year.

By reason of the fact that the demand environment was extremely subdued, the components & sys-
tems segment generated revenues of only eur 19,322 thousand in the first quarter of 2012.

compared to the year-ago period, the power plants segment performed somewhat better in the first
quarter of 2012, in line with the general economic conditions, and thus it contributed a larger share of
total revenues, in the amount of eur 18,586 thousand.

the revenues and their breakdown by operating segments and regions are presented in the segment
report of the present explanatory notes to the consolidated financial statements (see section F.)

(2) Increase or decrease In WorK In proGress

this item presents the increase or decrease in inventories related to work in progress, for those projects
that are not to be classified as customer-specific contract construction according to Ias 11. the recogni-
tion of such projects in the first quarter of financial year 2012 increased work in progress by eur 1,971
thousand (py: eur 1,838 thousand).

(3) purchased Goods and serVIces

the purchased goods and services were eur 7,524 thousand less than the corresponding year-ago fig-
ure. although the ratio of purchased goods and services to total revenues developed in accordance with
the revenue performance in the first quarter of 2012, the amount of purchased goods and services was
influenced by a non-recurring effect arising from the legal and economic policy conditions in Bulgaria,
phoenix solar ag | interim report January to march 2012                          selected explanatory notes   39




so that it was necessary to reverse the necessary write-downs of capital expenditures and start-up costs
in this region that had been charged as of 31 december 2011, in the amount of eur 3,950 thousand.
this item also contained necessary value adjustments to the carrying amount of inventories, in the
amount of eur 1,832 thousand (py: eur 6,086 thousand).

(4) other operatInG Income

the other operating income consisted mainly of insurance compensation payments in the amount
of eur 78 thousand; (py: eur 0 thousand), income from in-kind remuneration in the amount of eur
51 thousand (py: eur 51 thousand), and power grid feed-in remuneration attributable to the phoenix
Group in connection with project-related pilot operations or receivable in connection with the com-
pany’s own operations, in the amount of eur 297 thousand (py: eur 75 thousand).

(5) personnel expenses

For the first time in the company’s history, the personnel expenses of eur 6,015 thousand (py: eur 7,055
thousand) were less than the corresponding figure for the preceding quarter. this reduction resulted
mainly from the restructuring measures, including workforce reductions, among other measures, that
were initiated and successfully implemented in the final quarter of last year.

since 1 July 2008, the company has offered all its employees a defined contribution pension plan based
on salary deferral. the company makes matching payments on the contributions of the participating
employees in accordance with the regulations of tax law and social security law. In this connection,
expenses of eur 14 thousand (py: eur 13 thousand) were recognised in the reporting period.

(6) other operatInG expenses

the other operating expenses consisted mainly of company-specific expenses for restructuring meas-
ures, as well as outbound freight, storage costs, selling expenses, legal expenses and consulting
expenses. the decrease of about 20 percent from the corresponding year-ago figure reflects the first
positive results of the measures initiated in connection with the restructuring plan.

(7) FInancIal result

the financial result of eur -842 thousand (py: eur -684 thousand) resulted mainly from new draw-
downs under credit facilities and from the market measurement of interest rate hedging transactions, in
the amount of eur 0 thousand (py: eur -120 thousand).

(8) Income taxes

deferred tax assets and liabilities in the amount of eur 45 thousand and eur 1,465 thousand, respec-
tively (py: eur 85 thousand and eur 2,914 thousand, respectively) were recognised in respect of the
differences between the carrying amounts of assets and liabilities according to IFrs and their tax bases.
In addition, deferred tax assets of eur 1,395 thousand (py: eur 4,898 thousand) were recognised in
respect of temporary differences that are expected to reverse in the future; no deferred tax assets have
yet been recognized in respect of tax losses amounting to eur 15,647 thousand (py: 0 thousand), which
are based on taxable individual profits to be generated in the years 2012 to 2014, because the Group
is currently undergoing a strategic reorganisation and the business plans were being revised as of the
reporting date. the management currently anticipates that such deferred tax assets will be recog-
nised within the fourth quarter of 2011. as of the reporting date, deferred taxes in the amount of eur
phoenix solar ag | interim report January to march 2012                             selected explanatory notes   40




1,451 thousand (py: eur 2,911 thousand) were presented on a net basis. after consolidation measures,
deferred tax assets of eur 2,524 thousand (py: eur 3,573 thousand) and deferred tax liabilities of eur 14
thousand (py: eur 102 thousand) were recognised as of the reporting date.

as in the prior year, no deferred taxes were recognised in respect of outside basis differences in the finan-
cial year to date because most of the subsidiaries did not possess distributable net assets as of the report-
ing date or the funds were meant to serve as internal financing of the respective subsidiaries; outside basis
differences in the amount of 956 thousand (py: 3,241 thousand) were calculated as of 31 march 2012.

(9) earnInGs per share

Because stock options have been issued, the diluted number of shares must also be determined. the
calculation as of the reporting date is presented in the table below:

Diluted number of shares                                                          31/03/2012      31/03/2011
undiluted number of shares                                                          7,372,700       7,372,700
number of diluting options                                                                  0               0
Diluted number of shares                                                            7,372,700      7,372,700


In accordance with Ias 33.66, the diluted and basic earnings per share are presented below the line item
of consolidated profit or loss for the period.




d. selected notes to the consolIdated statement
    oF FInancIal posItIon

(10) IntanGIBle assets

the total intangible assets were eur 192 thousand less than the corresponding year-ago figure. this
decrease resulted entirely from the amortisation of intangible assets.

(11) InVentorIes

the inventories consisted mainly of trading stock (especially solar modules and inverters). such items
are recognised as assets within inventories only after the goods have been shipped by the supplier and
the risk of ownership has passed to phoenix solar aG. as of 31 march 2012, goods in transit were capi-
talised as trading stock in the amount of eur 104 thousand (py: eur 0 thousand).

the total amount presented as trading stock included value adjustments of eur 22,246, including eur
1,832 thousand in value adjustments that were recognised as expenses in the reporting period. the
original acquisition cost of the inventories against which value adjustments were charged was eur
46,098 thousand.

(12) receIVaBles and payaBles under constructIon contracts

receivables under construction contracts are generally defined as customer orders that have not been
completely fulfilled. In accordance with Ias 11, the percentage-of-completion method is used to account
for construction contracts, provided that certain conditions are met. under this method, contract reve-
nues and profits are recognised in the income statement in proportion to the stage of completion in the
phoenix solar ag | interim report January to march 2012                            selected explanatory notes   41




periods in which the work is performed. thus, revenues under construction contracts are recognised in
proportion to the profits realised on the basis of the stage of completion. they are recognised in propor-
tion to the ratio of the internal and external costs incurred at the reporting date to the total estimated
costs of each contract (cost-to-cost method).

In cases in which contract revenue cannot be estimated reliably (as in the case of advance expendi-
tures in respect of anticipated contracts that have not yet been finalised, for example), revenues are
recognised in the amount of costs incurred to the extent it can be expected that they will be covered
by contract revenues (zero-profit method). they are presented as receivables or payables under long-
term construction contracts. In cases when the accumulated work performed (contract costs incurred
and profits recognised) exceeds the amount of down payments received, the corresponding amount is
recognised as an asset. anticipated contract losses are recognised in full; in determining such losses, due
consideration is given to discernible risks.

as of the reporting date, gross receivables under long-term construction contracts were recognised in the
amount of eur 102,423 thousand (py: eur 99,436 thousand). these receivables related predominantly
to projects in europe outside of Germany.. For the period from 1 January to 31 march 2012, contract rev-
enues were recognised in the amount of eur 16,534 thousand (py: eur 90,424 thousand), contract costs
in the amount of eur 16,904 thousand (py: eur 81,809 thousand) and losses in the amount of eur 370
thousand (py: eur 8,615 thousand). the result included income from foreign currency effects of eur 5
thousand (py: eur 142 thousand). losses in the amount of eur 334 thousand (py: eur 1,060 thousand)
were recognised as expenses for contracts that are expected to be completed with a negative margin.

down payments of eur 77,667 thousand (py: eur 84,045 thousand) were collected on account of con-
tracts and other down payments of eur 6,892 thousand (py: eur 3,205 thousand) were outstanding.
commitments under long-term construction contracts were recognised in the amount of eur 215 thou-
sand (py: eur 1,084 thousand) to account for down payments collected that exceeded the correspond-
ing project stage of completion.

Including requested and recognisable down-payments and partial invoices, the total presented amount
of eur 14,378 thousand (py: eur 14,995 thousand) breaks down as follows:

Carrying amounts                                                                 31/03/2012      31/12/2012
                                                                                         k€              k€
receivables under long-term construction contracts, including partial invoices
adequate for the stage of completion                                                  10,143          13,109
plus requested, recognisable partial invoices                                          4,235           1,886
Amount presented in the Statement of Financial Position                               14,378         14,995


Borrowing costs of eur 184 thousand (py: eur 2,001 thousand) were recognised as project costs in con-
nection with long-term construction contracts; an interest rate of 3.9 to 4.7 percent was applied as the
borrowing cost rate (py: 2.6 to 3.5 percent).

as of 31 march 2012, the total order book for the Group amounted to eur 112.7 million (py: eur 178.4
million).

(13) other FInancIal assets

the other current financial assets were mainly divided among advance payments rendered, accrued
revenues and other prepaid expenses.
phoenix solar ag | interim report January to march 2012                              selected explanatory notes   42




(14) other non-FInancIal assets

In connection with the increased inventories, the Group has accumulated larger amounts of sales tax
refund claims totalling eur 7,452 thousand (py: eur 7,631 thousand). In the periodic tax return filings,
these refund claims are set off against the sales tax liabilities incurred in the ordinary course of business.

(15) eQuIty

For information on changes in equity, please refer to the statement of changes in equity.

as of 31 march 2012, the company’s share capital was unchanged at eur 7,372.7 thousand. It is divided
into 7,372,700 (previous year: 7,372,700) no-par bearer shares (common shares), and was fully paid in
as of the reporting date for the consolidated financial statements.

the currency translation reserve is the only component of equity resulting from transactions and
changes in measured value that are to be recognised directly in equity.

the change in companies to be consolidated financial statements.leading to the reduction in accumu-
lated other equity came from deconsolidation of the project company psFr001.

(16) stocK optIon plan

the annual general meeting of 7 July 2006 adopted a stock option plan for members of the executive
Board, members of the management of the Group companies and selected executives and other key per-
sonnel of the company. to that end, a conditional capital of eur 553 thousand was created. By virtue
of this authorisation, the executive Board of phoenix solar aG established a stock option plan on 10 sep-
tember 2007 (“sop 2006” as an abbreviation for stock option plan 2006), under which, as of the report-
ing date, a total of 340,350 stock options of phoenix solar aG were granted in five tranches to members
of the executive Board, members of the management of the Group companies and other key personnel.
as of the reporting date, 98,450 stock options had expired due to resignations and 18,000 had been
exercised. as of the reporting date, therefore, there remained 223,900 stock options, which can be exer-
cised only if the beneficiary is employed by the company or a Group company and the employment
relationship has not been terminated by either party with valid effect at the time of exercising the stock
options. the stock option plan was discontinued by resolution of the annual general meeting in 2011.

For tranche I, the average weighted share price upon the exercise of the stock options at that time in
2011 was eur 38.61.

Because the expenses are distributed over the period from the grant date to the expiration of the vesting
period, expenses of eur 0 thousand (py: eur 369 thousand) were recognised as share-based compensa-
tion in the first quarter of financial year 2012.

(17) current FInancIal lIaBIlItIes

In consideration of the non-project-related supply agreements for solar modules, inventories are
financed partially by means of drawdowns from the available credit facilities extended by the bank syn-
dicate. Furthermore, the credit facilities extended by the bank syndicate serve to finance working capi-
tal, meaning that the funds are used for the temporary financing of start-up costs in the power plants
business. as a general rule, these credit facilities are to be drawn down only on a short-term basis. the
interest rates range from 3.9 to 4.7 percent p.a. (py: 2.6 to 3.5 percent p.a.).
phoenix solar ag | interim report January to march 2012                           selected explanatory notes   43




(18) trade payaBles

trade payables are measured at the repayment amount. due to the short-term payment terms of these
liabilities, this amount is equivalent to their fair value.

all trade payables are due in one year or less.

(19) other FInancIal lIaBIlItIes

the phoenix solar Group is exposed to interest rate risks in connection with the financing of working
capital. the company has not entered into interest rate hedging transactions to hedge the resulting
cash flow risk. the change in this item from the corresponding year-ago figure resulted mainly from the
recognition of deferred income items in respect of project revenues that are subject to conditions and
advance payments received from customers.

(20) other non-FInancIal lIaBIlItIes

due to the growing internationalisation of the company’s business, sales tax liabilities have been
incurred in european countries to a greater extent than before. the sales tax liabilities of the preceding
financial year were settled. otherwise, this item comprises social security withholding amounts to be
transferred, as well as mostly short-term other liabilities due to employees.

(21) contInGent lIaBIlItIes and other FInancIal commItments

there were no contingent assets or contingent liabilities as of 31 march 2012 (and also none as of the
year-ago reporting date).

as of 31 march 2012, firm orders for purchased materials amounted to eur 38,246 thousand (py: eur
48,299 thousand).

under master agreements with manufacturers of photovoltaic modules, purchase obligations arise until
2014 for material purchases for the Group. there are obligations with one solar panel supplier for a total
contract amount of 160 mW. this purchase commitment depends on volume and market conditions
plus minimum order quantities in 2012 in the amount of 10 mW, for 2013 in the amount of 25 mW
and for 2014 agreed in principle on the remaining volume, i.e. the difference between the minimum
order quantities and the total volume. to meet market conditions a pricing scheme is used that opens
phoenix solar Group the possibility of releasing quantities by placing demands at arm’s length condi-
tions. should the module manufacturer reject the call, phoenix solar Group is allowed to set off the
amounts on the outstanding request contingent of the master agreement.

the Group is subject to financial commitments in the total amount of eur 5,880 thousand (py: eur
7,122 thousand) under various rental and leasing agreements. of that total, an amount of eur 1,297
thousand (py: eur 1,592 thousand) is due in less than one year, eur 2,432 thousand (py: eur 2,872
thousand) is due in one to five years and eur 2,151 thousand (py: eur 2,658 thousand) is due in more
than five years.
phoenix solar ag | interim report January to march 2012                           selected explanatory notes   44




e. seasonal Factors

the business of companies operating in the photovoltaic sector is subject to strong seasonal fluctua-
tions. as a general tendency, the results of the last two quarters are higher than those of the first two
quarters of a given financial year. as a result of the growing internationalisation of the company’s busi-
ness, which allows for a global scope of action, seasonal restrictions are becoming less relevant to the
company’s business, depending on the distribution of profits earned.

regional weather conditions and national legislative initiatives related to renewable energies, along
with the specific implementation of those initiatives in the form of remuneration rates for power grid
feeds and graduated rate decreases or production limits, for example, exerted a greater influence on the
ordinary business operations of the company.




F. seGment report

the Group executive Board is the responsible governing body that makes decisions about the allocation
of resources to the operating segments of the phoenix Group and assesses their performance. In accord-
ance with the principles of the management approach, the management Information system (mIs) of
the Group executive Board forms the basis for identifying the relevant operating segments. the mIs is
based on the recognition and measurement regulations of the IasB, both originally and with respect to
the data of the operating performance parameters of each operating segment. the relevant managerial
indicators for each operating segment include revenues and earnings before interest and income tax,
adjusted for income or expenses from associated companies (segment profit or loss).

the Group is managed via the two operating segments power plants and components & systems. the
principal activities are sub-divided as follows:

  power plants: planning, distribution, construction and maintenance of photovoltaic plants
  components & systems: distribution of trading stock

the operating profit or loss is segmented on the basis of cost accounting reports. the revenues of the
power plants segment are based exclusively on project-related work, so that they also include the cor-
responding pro-rated profits recognised as of the reporting date.

the breakdown of the other indicators to be segmented by principal activities is conducted with regard
to the power plants and components & systems segments through the application of an allocation key
that is generally derived on a uniform basis from revenues or total operating performance. Whenever a
cost allocation based on the specific cost of goods sold is required, a key is applied on the basis of the
materials and work used in the cost of goods sold.

the segment information for these operating segments is presented below:
phoenix solar ag | interim report January to march 2012                              selected explanatory notes   45




For the period from 1 January 2012                Power Plants Components    Other      Consoli-        Group
to 31 March 2012 according to IFRS:                              & Systems               dation
                                                           k€           k€     k€            k€             k€


Segment profit or loss statement
external revenues                                      18,586       19,322      0              0        37,908
Inter-segment revenues                                      0           0       0              0             0
Segment revenues                                       18,586      19,322       0              0       37,908


segment profit or loss                                  2,124      - 3,174    - 14             0       - 1,064
Income from associated companies                            2           0       0              0             2


eBIt                                                                                                   - 1,062
Financial result                                                                                          -843


consolidated profit or loss before tax                                                                 - 1,905
Income tax expenses                                                                                        680


Profit or loss before non-controlling interests                                                        - 1,225
share of profit or loss attributable to non-
controlling interests                                                                                     -372
consolidated profit or loss after taxes                                                                   -853



Other information
capital expenditures                                       59          55       0              0           114
depreciation and amortisation                             261         245       0              0           506
non-cash expenses                                       2,070        2,001      0              0         4,071
non-cash income                                         5,296         356       0              0         5,652



Assets
segment assets                                         59,966       56,366      0              0       116,332
shares in associated companies                            397           0       0              0           397
non-assigned assets                                                                                     16,374


Consolidated assets                                                                                   133,103
phoenix solar ag | interim report January to march 2012                              selected explanatory notes   46




For the period from 1 January 2012                Power Plants Components    Other      Consoli-        Group
to 31 March 2011 according to IFRS:                              & Systems               dation
                                                           k€           k€     k€            k€             k€


Segment profit or loss statement
external revenues                                      15,345       17,015      0              0        32,260
Inter-segment revenues                                      0           0       0              0             0
Segment revenues                                       15,345      17,015       0              0       32,260


segment profit or loss                                 - 9,188     - 7,751    - 15          - 45      - 16,939
Income from associated companies                            0           0       0              0             0


eBIt                                                                                                  - 16,939
Financial result                                                                                          -684


consolidated profit or loss before tax                                                                - 17,623
Income tax expenses                                                                                    - 4,655


Profit or loss before non-controlling interests                                                       - 12,968
share of profit or loss attributable to non-
controlling interests                                                                                       25
consolidated profit or loss after taxes                                                               - 12,943



Other information
capital expenditures                                      300         298       0              0           598
depreciation and amortisation                             159         158       0              0           317
non-cash expenses                                       2,666        3,168      0              0         5,834
non-cash income                                            59         471       0              0           530



Assets
segment assets                                        147,117      145,671      0              0       292,788
shares in associated companies                            418           0       0              0           418
non-assigned assets                                                                                     21,759


Consolidated assets                                                                                   314,965
phoenix solar ag | interim report January to march 2012                            selected explanatory notes   47




the revenues of the Group were divided among the following regions:

Revenues by region                                                                      2012            2011
                                                                                          k€              k€
Germany                                                                               12,069           9.086
eu excluding Germany                                                                  17,883          22.488
other                                                                                  7,956             826
Total                                                                                 37,908         32.360




the non-current assets were divided among the regions as follows:

Non-current assets by region                                                      31.03.2012     31.03.2011
                                                                                          k€             k€
Germany                                                                                8,717           8.073
eu excluding Germany                                                                     311             523
other                                                                                     99             119
Total                                                                                  9,127           8.715




G. sIGnIFIcant eVents aFter the InterIm reportInG date

AD-HOC ANNOUNCEMENT: PHOENIX SOLAR AG – FINANCING NEGOTIATIONS DELAYED BY CUTS IN
SOLAR POWER SUBSIDIES – MORATORIUM AGREEMENTS HAVE BEEN EXTENDED
due to massive reductions in solar power subsidies in certain key markets of phoenix solar aG, it was
necessary to revise the restructuring plan presented to the financing banks in december 2011, which also
contained a business plan for the next few years. as a result, the financing negotiations conducted by
phoenix solar aG (IsIn de000a0BVu93, prime standard segment of the Frankfurt stock exchange) have
been delayed. the moratorium agreements adopted with the syndicate banks, as well as other bilateral
lenders, guarantors and trade credit insurers, were extended at the end of march, in order to continue
the financing negotiations on the basis of the revised restructuring plan. For that reason, the publication
of the annual report 2011, which had been planned for 25 april 2012, was postponed for a few weeks.
Furthermore, the publication of the quarterly report for the first quarter of 2012, which had been planned
for 10 may 2012, has been postponed to a later, as yet unknown date.

CONTINUATION OF THE KAZANLAK PROJECT
on 10 april 2012, phoenix solar signed an agreement with a major German company and manufac-
turer of solar modules for the (at least partial) execution of the Kazanlak project in Bulgaria. Because no
investor could be found for this solar power farm in 2011, phoenix solar aG discontinued the project
and charged appropriate impairment losses as of year-end 2011. under the provisions of the contract
that has since been signed, phoenix solar will assume no responsibility for the sale of the property, but
will instead build, for account of the customer, a part of the solar farm that had originally been planned
to comprise an output of 50 mWp, and the customer’s solar modules will be used for that purpose.
phoenix solar ag | interim report January to march 2012                          selected explanatory notes   48




construction will be performed on the basis of bridge financing extended by the customer, based on
interim progress milestones. the customer will also acquire a portion of the project rights for an appro-
priate fee. thus, this contract will compensate a portion of the loss recognized by phoenix solar aG in
2011. Furthermore, the current plan is fundamentally different from the originally planned concept for
commercializing the project, which will also reduce the execution risks for phoenix solar considerably.



Beyond those mentioned above, no further important events have occurred after the reporting date.




sulzemoos, 14 may 2011
phoenix solar aktiengesellschaft
the executive Board




Dr. Andreas Hänel                           Dr. Bernd Köhler
(chief executive officer)                   (chief Financial officer)




Dr. Murray Cameron
(chief operating officer)
phoenIx solar aG | InterIm report January to march 2012         aFFIrmatIon By the leGally authorIsed representatIVes   49




aFFIrmatIon By the leGally
authorIsed representatIVes


to the best of our knowledge, we hereby affirm that, pursuant to the generally accepted accounting
principles for interim reporting, the interim consolidated financial statements give a true and fair view
of the assets, financial position and the results of operations of the phoenix Group, and that the interim
management report gives a true and fair reflection of the development of the phoenix Group’s business,
including its performance and situation, as well as describing the material opportunities and risks inher-
ent in the prospective development of the Group during the remainder of the fiscal year.



sulzemoos, 14 may 2012
phoenix solar aktiengesellschaft
the executive Board




Dr. Andreas Hänel                           Dr. Bernd Köhler
(chief executive officer)                   (chief Financial officer)




Dr. Murray Cameron
(chief operating officer)
phoenix solar ag | interim report January to march 2012                                  FInancIal calendar   50




FInancIal calendar




15/05/2012 Q1 report/Interim Figures as per 31/03/2012

21/06/2012 ordinary annual General meeting of shareholders 2012

09/08/2012 Q2 report/Interim Figures as per 30/06/2012

08/11/2012 Q3 report/Interim Figures as per 30/09/2012




the updated financial calendar can be viewed on the phoenix solar aG website under
www.phoenixsolar-group.com/en/investor-relations/financial-calendar




this report is also available in German. Both versions are available for download on the Internet.
this is an english translation of the German original. only the German version is binding.
phoenix solar ag | interim report January to march 2012                               edItorIals and contact   51




edItorIals and contact



puBlIsher

phoenix solar aG
hirschbergstrasse 8
d-85254 sulzemoos

www.phoenixsolar.com



InVestor relatIons

Jutta stolp                                     simon Barber
tel. +49 (0)8135 938 -315                       tel. +49 (0)8135 938 -314
Fax +49 (0)8135 938 -399                        Fax +49 (0)8135 938 -399
email j.stolp@phoenixsolar.de                   email s.barber@phoenixsolar.de



concept and desIGn

red, munich/ Krailling, Germany




ForWard-looKInG statements

this report contains forward-looking statements on future developments which are based on man-
agement’s current assessments. Words such as “anticipate”, “assume”, “believe”, “estimate”, “expect”,
“intend”, “can/could”, “plan”, “project”, “forecast”, “should”, and similar terms are indicative of such
forward-looking statements. such statements are subject to certain risks and uncertainties which are
mainly outside the sphere of influence of phoenix solar aG, but which have an impact on the busi-
ness activities, the success, the business strategy and the results. these risks and factors of uncertainty
include, for instance, climatic change, changes in the state subsidisation of photovoltaics, the introduc-
tion of competitor products or technologies of other companies, the dependency on suppliers and the
price development of solar modules, the development of the planned internationalisation of business
activities, fierce competition as well as rapid technological change in the photovoltaic market. If one of
these or other factors of uncertainty or risks should occur, or if the assumptions underlying the state-
ments should prove incorrect, the actual results may diverge substantially from the results in these state-
ments or implicit indications. phoenix solar aG does not have the intention nor will it undertake any
obligation to realise forward-looking statements on an ongoing basis or at a later point in time as this is
entirely dependent on circumstances prevailing on the day of their release.
making energy together




Phoenix Solar AG
hirschbergstrasse 8
85254 sulzemoos, Germany
phone +49 (0)8135 938-000
Fax    +49 (0)8135 938-099
email contact@phoenixsolar.de

www.phoenixsolar.com

				
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