Interim Report January to March

2009 Interim Report January to March

2 Table of Contents Phoenix Solar AG Interim Report January to March 2009 Table of Contents Phoenix Solar AG in Figures 3 Group Structure and Business Activities 4 Letter to our Shareholders 5 Phoenix SonnenAktie (share of Phoenix Solar AG) 6 Interim Management Report 10 Interim Consolidated Financial Statements 21 Notes to the Interim Consolidated Financial Statements 26 Affirmation by the Legally Authorised Representatives 42 Contact 43

Phoenix Solar AG Interim Report January to March 2009 Phoenix Solar AG in Figures 3 Phoenix Solar AG in Figures Reporting date / period 01/01/ 31/03/2009 01/01/ 31/03/2008 Balance sheet (1) Total assets in k 154,049 115,489 Equity in k 83,528 48,254 Equity ratio % 54.22 41.78 Return on equity % 6.70 1.31 Results Total sales revenue in k 36,743 41,584 EBIT in k 7,437 359 EBIT margin % 20.24 0.86 Result for the period in k 5,982 622 Employees (1) Employees (m/f) (2) number 219 160 Sales per capita (3) in k 179 283 Phoenix SonnenAktie (1) No-par bearer shares units 6,684,500 6,077,000 Earnings per share (basic) in 0.89 0.10 Earnings per share (diluted) in 0.89 0.10 Closing price in 34.00 35.69 Market capitalisation in k 227,273 216,888 (1) at the end of the period (2) average employee number, including part-time and temporary staff (3) full-time equivalent

4 Group Structure and Business Activities Phoenix Solar AG Interim Report January to March 2009 Group Structure and Business Activities as at 31/03/2009 Phoenix Solar AG Sulzemoos Germany 100 % 100 % 100 % 100 % 75 % 100 % Phoenix Solar Energy Investments AG Phoenix Solar S.L. Phoenix Solar S.r.l. Phoenix Solar E.P.E. Phoenix Solar Pte. Ltd. Phoenix Solar Pty Ltd Sulzemoos Germany Madrid Spain Rome Italy Athens Greece Singapore Adelaide Australia 100 % 100 % 100 % Phoenix Solar Fonds Verwaltung GmbH Sulzemoos Germany TPC Photoenergy srl Eppan a. d. W. Italy Scarlatti Srl. Eppan a. d. W. Italy General partner Phönix SonnenFonds GmbH & Co. KG B1 31.2 % Sulzemoos Germany Phoenix Solar AG is a leading international photovoltaic system integrator listed on the TecDAX. Phoenix Solar AG plans, builds and undertakes the operation of large photovoltaic plants and is a specialist wholesaler for complete power plants, solar modules and accessories.

Phoenix Solar AG Interim Report January to March 2009 Letter to our Shareholders 5 Dear Shareholders, The solar sector looks back on an extremely difficult first quarter 2009. Apart from the financial and economic crisis, which continues to cause problems for solar companies as well in respect of securing financing for their growth and projects, a hard and long winter through to the end of March hampered the expediting of projects. Sales in the sector were correspondingly low. Another burdening factor is the cap of 0.5 gigawatt peak output (GWp) in total on new photovoltaic plants introduced from 2009 onwards in Spain, which is the world s largest solar market. Around 2.4 GWp were installed in this country in 2008. This enormous slump of around 2 GWp will be difficult for the other markets in Europe and abroad to compensate, despite their growth. We therefore assume that 2009 will see virtual stagnation in the global photovoltaic market. This demand will be accompanied by a large production capacity which has been steadily ramped up in recent years. The long expected oversupply of solar modules has now become reality and is exerting pressure on prices and margins. For Phoenix Solar AG, this transition from a seller to a buyer market, among other factors, will mean that we will be in a position to offer both large and small photovoltaic systems with attractive returns. Nonetheless, the negative environment has had an impact on our performance in the first quarter. Revenues fell in a quarter-on-quarter comparison for the first time since the start of 2007, and Phoenix Solar has had to disclose its first quarterly loss in two years. Despite the re-occurrence of a weak first quarter, Phoenix Solar can also report on positive signs: the German market in 2009, for instance, is set to become the largest in the world again and, in our opinion, will experience strong growth. The fact that we have always attributed special importance to our home market and given our best support to our customers in Germany is now likely to pay off, flanked by consistent improvements in our sales network and our service. The success of these activities is already reflected in the revenues of the Components & Systems segment: despite the most adverse circumstances, this segment s revenues rose 14 percent in the first quarter of 2009 as against the previous year. Another bright spot is the level of our order book at the end of the first quarter where Phoenix Solar has set as higher level compared to the previous year. This is evidence of robust demand, above all from the German market, and shows that our growth prospects remain good. Accordingly, obtaining credit for customers of large photovoltaic power plants has improved. Whereas, in the period between January and March, revenues in the Power Plants segment fell by 50 percent in a year-on-year comparison, we now have the first financing commitments and power plant construction went ahead again at the start of April. In view of the unabated faith in photovoltaics as a future-oriented source of energy, the Board of Directors of Phoenix Solar AG looks ahead to the year 2009 and its expected difficulties with confidence. The guidance released in January which specifies a revenues target of around EUR 520 million and an EBIT of around EUR 31 million still applies. With sunny greetings, Dr. Andreas Hänel (Chief Executive Officer)

6 Phoenix SonnenAktie Phoenix Solar AG Interim Report January to March 2009 Phoenix SonnenAktie (share of Phoenix Solar AG) STOCK MARKET ENVIRONMENT The consequences of the economic and financial crisis continued to exert a great impact on Germany s economy at the start of 2009 as well. Topics such as the partial nationalisation of the Commerzbank and the emergency intervention of the German government to bail out Hypo Real Estate played a major part in influencing events on the stock exchanges, as did the attempt of Opel to disengage from General Motors or discussions about Infineon s bankruptcy. In January, the German government approved a second economic stimulus package to bolster the German economy. The European Central Bank lowered the key rate by another 50 basis points to 1.5 percent in the first quarter. SHARE PRICE PERFORMANCE In the first three months of 2009, Germany s DAX and TecDAX lost around 18 and 9 percent respectively of their value. Solar equities also declined further. Counter to these trends, the Phoenix SonnenAktie proved to be relatively robust and recorded a share price increase of more than 35 percent. Price performance in January was driven by the early release of revenues and EBIT guidance for the current financial year as well as a long-term outlook with a horizon up until 2013. The share rose by almost 26 percent in this month alone. Having trended sideways in February, it reached its lowest point for the quarter on 6 March at EUR 23.91. Share prices within the sector as a whole tumbled, a development triggered by the announcement of extremely weak preliminary annual results of a large solar company. On 5 and 6 March the share of Phoenix Solar AG lost more than 20 percent. On the following trading day, however, the share was able to make up the decline and reached its peak for the first quarter at EUR 35.18 on the 27 March. The closing price of the Phoenix SonnenAktie stood at EUR 34.00 on the reporting date. Owing to the increase in the number of shares in April 2008, market capitalisation as per 31 March 2009 posted EUR 227 million, thereby exceeding the previous year s figure of EUR 217 million. B.I.R.D. AWARD The magazine Börse Online commended Phoenix Solar AG in the TecDAX category by awarding it the B.I.R.D. (Best Investor Relations Germany) 2008 prize in the TecDAX category for its investor relations work done for private investors. In the overall assessment encompassing the DAX, MDAX, SDAX and TecDAX indices Phoenix Solar AG came sixth among a total of 160 listed companies.

Phoenix Solar AG Interim Report January to March 2009 Phoenix SonnenAktie 7 SHAREHOLDER STRUCTURE In the first quarter of 2009, the company received a number of notifications made pursuant to Sections 21 et. seq. of the German Securities Trading Act (WpHG) in which shareholders indicated that they had reached, exceeded or fallen below the statutory thresholds for reporting. The resulting shareholder structure as per 31 March 2009 was as follows: SHAREHOLDER STRUCTURE % Allianz SE 3.74 Pioneer Asset Management S.A. 3.93 JPMorgan 4.57 M.M. Warburg LuxInvest S.A. 5.16 Board of Directors & Supervisory Board 7.49 Further free fl oat 75.11 Data including share voting rights assigned pursuant to Section 22 of the German Securities Trading Act INVESTOR RELATIONS As in preceding years, the Board of Directors presented Phoenix Solar AG to investors and analysts at a series of dedicated conferences in the spring. Conferences included the 4th HSBC Small/Mid Cap SRI Conference organised by HSBC Trinkaus & Burkhardt in Frankfurt am Main, the Fourth Annual Clean Technology and Renewables Conference of the investment bank Piper Jaffray in New York and the Growth & Responsibility Conference 2009 organised by the Commerzbank in Frankfurt am Main. A number of road shows, accompanied by different brokers, took place in New York, Boston and Paris. Numerous investors and analysts took the opportunity of arranging individual meetings at company headquarters Sulzemoos, particularly in March during a special photovoltaics conference held in Munich. London s Barclays Capital published an analyst report on Phoenix Solar AG in February, which marked the start of the first individual analyst coverage for the company from the financial centre of London. KEY FINANCIAL DATA Q1 2008 2008 Q1 2009 Number of shares units 6,077,000 6,684,500 6,684,500 Market capitalisation in 216,888,130 167,981,485 227,273,000 Closing price (XETRA) in 35.69 25.13 34.00 High in 41.29 52.65 35.18 Low in 23.71 19.61 23.91 Trading volume units 4,014,810 17,341,739 2,889,440 Revenues in 131,431,665 626,681,819 84,151,198 Dividend in 0.30 (1) Earnings per share (EPS) in 0.10 3.63 (2) 0.89 (2) 3.62 (3) 0.89 (3) (1) dividend proposal (2) basic EPS (3) diluted EPS

8 Phoenix SonnenAktie Phoenix Solar AG Interim Report January to March 2009 KEY DATA Securities identifi cation number International securities identifi cation number Ticker symbol Share class Number of shares as per 31/03/2009 A0BVU9 DE000A0BVU93 PS4 No-par bearer share 6,684,500 units Share capital on 31/03/2009 6,684,500 Stock market segment Transparency standard Offi cial Market Prime Standard Indices TecDAX, ÖkoDAX, CDAX, HDAX, DAX International 100, Midcap Market, Technology All Share, Prime All Share, various DAX sub-indices Stock markets Frankfurt am Main (Prime Standard), Munich (M:access), Stuttgart, Berlin / Bremen, Dusseldorf, Hamburg, Hannover, XETRA Sector / industry sector Designated sponsor Industrial goods / Renewable energies HSBC Trinkaus & Burkhardt AG PHOENIX SONNENAKTIE (SHARE OF PHOENIX SOLAR AG) PRICE PERFORMANCE IN COMPARISON TO TECDAX 1 January to 31 March 2009 % 160 140 120 100 80 60 40 20 1 2 3 Lowest price 06/03/2009 23.91 Highest price 27/03/2009 35.18 Rate % TecDAX %

Phoenix Solar AG Interim Report January to March 2009 9

10 Interim Management Report Phoenix Solar AG Interim Report January to March 2009 Interim Management Report of Phoenix Solar Aktiengesellschaft, Sulzemoos, on the IFRS Interim Consolidated Financial Statements for the period from 1 January to 31 March 2009 1 GENER AL CONDITIONS AND MARKETS (NATIONAL AND INTERNATIONAL) As approved by German Federal Parliament in the year 2008, tariffs in Germany for feeding into the grid fell by eight percent for plants of dimensions below 100 kilowatt peak output (kwp) and by ten percent for power plants of over 100 kwp, and thus also for ground-mounted systems, as from 1 January 2009. The decrease of 25 percent in the feed-in tariff for roofmounted systems with a peak output of more than one megawatt (MWp) was clearly disproportionately high. The tariffs for solar electricity fed into the grid in Germany therefore ranges from 43.01 cent per kilowatt hour (ct/kwh) for roof-mounted systems smaller than 30 kwp up to 31.94 ct/kwh for electricity generated by ground-mounted systems. The impact of the global financial and economic crisis on the development of the German photovoltaic market filtered through in its full force in the first quarter of 2009. Whereas the financing of small and mid-sized photovoltaic systems, undertaken as in the past by German savings banks, commercial credit co-operatives (Volksbank/Raiffeisenbank) and a few banks specialising in renewable energies financing, was apparently little affected, the financing of large power plants in dimensions of more than one MWp was extremely problematic in the first quarter. The photovoltaic business in Germany is a typically seasonal business which, against the background of the lowering of feed-in tariffs at the start of the year, results in a year-end rally. Weather conditions also have a great impact on the seasonal nature of business, as winter weather in the first quarter hinders construction work on photovoltaic power plants or halts it all together. The hard, long winter of 2008/2009 exerted a great impact on installation activities and thus on the volume of sales and earnings achievable. Alongside the economic crisis and weather conditions, there was a third aspect which made for a generally difficult quarter in the solar sector: the long-expected transition from a seller to a buyer market, and the associated decline in the price of solar modules, both on the procurement and on the sales side. The price downtrend caused reticence on the part of buyer customers, as they were hoping for further price reductions.

Phoenix Solar AG Interim Report January to March 2009 Interim Management Report 11 Some of the most important photovoltaic markets in Europe are in southern Europe in particular. Whereas, in 2008, the Spanish market grew by 2.44 gigawatt peak output (GWp) to take its place as the world s largest market with a volume way above that of the German market, its importance in 2009 is set to fall significantly. A new Royal Decree which has introduced an annual cap of 500 MWp may mean that Italy could advance to become the second most important market in Europe, after Germany. Along with the Southern European markets, there are other markets which are growing in importance. These markets include, for instance, France and Belgium and other countries in Eastern Europe, headed by the Czech Republic and Bulgaria. A common denominator in these new markets is the still relative lack of experience with photovoltaic systems, above all of the banks in questions of financing and the regulatory bodies and grid operators. This causes a reluctance to buy which has been exacerbated by insecurity brought about by the financial and economic crisis. The other European markets were not even close to compensating for the weakness in the German market in the first quarter. Outside Europe there is most assuredly new stimulus identified for the photovoltaic market. The Japanese government has extended its subsidy program and China has launched its first programme to promote solar energy. Australia has planned a new set of amendments for its government-supported programme expected at mid-year, with an improvement in the status of roof-mounted systems. Canada saw the introduction of a government subsidy program in the federal-state of Ontario in the first quarter of 2009. Since the election of the new president, there are great expectations in the USA for the development of framework conditions for renewable energies. Although there are already the first local incentive programs for the building of photovoltaic systems such as, for instance, the introduction of a municipal feed-in tariff in Gainesville, Florida, there are as yet no reforms to the existing framework programmes at a national level. 2 BUSINESS PERFORMANCE 2. 1 GENERAL DEVELOPMENT Phoenix Solar was also unable to the couple from the impact of the financial and economic crisis in the first quarter of 2009. Financing problems experienced in respect of large solar parks meant that construction on only one ground-mounted power plant was begun in the first quarter. The only project to be finished in the first quarter was a roof-mounted project begun in 2008 and not completed owing to the early advent of winter. The demand for small and mid-sized photovoltaic systems, serviced by the Components & Systems trading segment, ran at a high level. This positive development is reflected in the increase in the order book as against the previous year s period. However, the winter period which lasted through to the end of March hindered delivery and therefore the realisation of revenues in this segment.

12 Interim Management Report Phoenix Solar AG Interim Report January to March 2009 In expectation of tumbling purchase prices of crystalline modules, the company had already suspended the procurement of additional volumes of this type of module which exceed existing framework agreements by the third quarter of 2008. Nonetheless, inventories had not been reduced to the desired extent by the end of the year, primarily due to financing problems in respect of large power plants and the early start to winter in November 2008. There was therefore a need for downward valuation at the end of 2008. At the end of the first quarter as well, more downward adjustments had to be made as the prices continued to fall and modules were not sold or delivered primarily due to the long winter season. These downward valuations had sustained impact on the earnings situation. The combination of numerous factors exerting a negative impact on business made the first quarter of 2009 one of the most difficult in the company s history. 2.2 EARNINGS, FINANCIAL AND NET WORTH POSITION The overall performance of the Phoenix Solar Group came to EUR 36.7 million (Q1/2008: EUR 41.6 million), which is a decline of 11.6 percent. The Components & Systems segment contributed EUR 28.5 million to total revenues (Q1/2008: EUR 25.1 million) and the Power Plant segment EUR 8.2 million (Q1/2008: EUR 16.5 million). The percentage share in total revenues was attributable as follows: 77.7 percent to the Components & Systems segment (Q1/2008: 60.3 percent) and 22.3 percent to the Power Plants segment (Q1/2008: 39.7 percent). In the period under review, the share of international business in consolidated revenues came to 5.4 percent as compared with the year-earlier figure of 16.0 percent. The foreign subsidiaries contributed 2.7 percent to total revenues in the first quarter (Q1/2008: 6.6 percent). As against the previous year s period, personnel expenses rose from EUR 2.5 million to EUR 3.7 million. This increase was directly attributable to the consistent implementation of the Group s growth strategy. The number of the Group s employees climbed to 221, which is an increase of 38.1 percent as against the previous year s quarter. In the first quarter, earnings before interest and taxes (EBIT) stood at EUR 7.4 million (Q1/2008: EUR 0.4 million). The Phoenix Solar Group s total assets advanced from EUR 115.5 million to EUR 154.0 million in a year-on-year comparison. This increase was primarily the result of items comprised under current assets, such as inventories, which climbed to EUR 108 million, up from EUR 55 million. In the reporting period, part of inventories was also a power plant project already completed with a revenue potential of around EUR 17 million which was only sold to an investor at the start of the second quarter. Owing to the business volume envisaged, first and foremost for power plant projects, and the time delay in project realisation, the volume of inventories held was significantly higher in the first quarter of 2009. The increase in inventories brought the cash flow from operating activities to EUR 38.2 million on 31 March 2009. This figure came to EUR 14.7 million in the previous year s period. The equity ratio as per the quarterly reporting date had nonetheless risen from the 2008 figure of 41.8 percent to 54.2 percent in the current year.

Phoenix Solar AG Interim Report January to March 2009 Interim Management Report 13 3 SEGMENTS 3. 1 COMPONENTS & SYSTEMS ( DOMESTIC AND INTERNATIONAL) The Components & Systems segment is still focused on Germany. In Italy, Belgium, France, Spain and Greece there are other markets for small and mid-sized photovoltaic systems. The Phoenix Solar Group is present in these markets through its regional partners. In Spain in particular, there are new prospects for this segment owing to the amendment to the Royal Decree and the relatively favourable conditions for small to mid-sized roof-mounted systems. All in all, the revenues of the Components & Systems segment climbed from the previous year s figure of EUR 25.1 million to EUR 28.5 million in the first quarter, which corresponds to a growth of 13.6 percent. In Germany, revenues soared by 33.7 percent in a year-on-year comparison. Orders on hand of the Components & Systems segment posted EUR 154.2 million as per 31 March 2009 as compared with EUR 88.0 million on 31 March 2008. Revenues from domestic business came to EUR 152.9 million, which is 101 percent higher than the previous year s level. The order book for International business stood at EUR 1.3 million on the reporting date (Q1/2008: EUR 12.2 million). 3. 2 POWER PLANTS ( DOMESTIC AND INTERNATIONAL) Other than in previous years, the Power Plants segment was exposed to a series of factors hampering business including the hard winter, the new Spanish legislation on feed-in tariffs and the impact of the global financial crisis on project financing. In comparison to the previous year s quarter, there was a significant reduction in the total capacity installed in Germany due to the long and hard winter. Along with the scheduled completion of a large roof-mounted project of 2.3 MWp, started in 2008, which, due to the weather in January and February, presented a special challenge, construction work started on another ground-mounted project in March. In addition, remaining work on and the trial operation of a number of power plants were concluded and these plants were taken into operation before the end of the year 2008. Total revenues of EUR 7.9 million were generated in Germany under these conditions (Q1/2008: EUR 14.8 million). In all other European countries where Phoenix Solar operates the banks have been most hesitant to grant financing over the period since October 2008 up until the end of the first quarter of 2009. This hesitancy caused an investment backlog, especially in Spain, Italy and Greece. Interest by investors is still great but project completion is being delayed due to unclarified issues affecting financing.

14 Interim Management Report Phoenix Solar AG Interim Report January to March 2009 There are already a number of project orders in domestic business or on the threshold of completion in the second quarter. For this reason, capacity utilisation in respect of power plant construction can be expected to have improved as against the first quarter of 2009. Overall, segment revenues stood at EUR 8.2 million in the first quarter of 2009 compared with EUR 16.5 million in the first three months of 2008, which corresponds to a decline of 50.4 percent. Orders on hand in the domestic business of the Power Plants segment came to EUR 87.7 million as per 31 March 2009, which is considerably higher than the previous year s level of EUR 29.4 million. The order book for international projects stood at EUR 6.5 million (Q1/2008: EUR 113.2 million), which is a decline of 94.3 percent. 4 GROUP COMPANIES 4. 1 PHOENIX SOLAR ENERGY INVESTMENTS AG In close cooperation with the Power Plants segment, Phoenix Solar Energy Investments AG (PSI) concentrates on the development of large-scale photovoltaic power plants and on selling them to institutional investors. The focus of PSI s activities were on Germany and southern Europe in the reporting period. General contractor agreements on projects with a volume of around eleven MWp were negotiated and concluded on behalf of the Phoenix Solar AG in Germany. New regions are being developed in order to promote the strategic expansion of business with institutional investors, most particularly southern Europe and France. The company is conducting negotiations, among other activities, in these regions with project developers, potential investors and financial institutions, also with the aim of acquiring project rights. 4.2 PHOENIX SOLAR S.L., SPAIN The year 2008 saw photovoltaic plants with an output of around 2.4 GWp installed in the Spanish market which, in 2009, will be limited to a maximum of only 500 MWp. Of this amount, 66 percent has been allocated to roof-mounted systems in respect of which the market still needs to be developed and sales structures built up. Another burdening factor is that the approval procedure has not yet been conclusively regulated. The in-depth expertise of the Spanish subsidiary s employees whose experience, also in selling roof-mounted photovoltaic systems, and good contacts in the market will ensure that the company will be able to hold its ground in a smaller market as well.

Phoenix Solar AG Interim Report January to March 2009 Interim Management Report 15 4. 3 PHOENIX SOLAR PTE LTD, SINGAPORE Since the decision of the Singaporean government in May 2008 to promote photovoltaic systems for individuals and industry, the planning of new buildings of all sizes has taken increasing account of photovoltaic systems. In the wake of the financial crisis, however, decision processes at banks for granting loans have slowed in Singapore as well. This caused the delay to the start of numerous projects in 2008 which were postponed to the beginning of 2009. The considerably higher level of orders in comparison to the first quarter of 2008 suggests that the prospects of growth in respect of the project capacity utilisation of this Group subsidiary are good. 4.4 PHOENIX SOLAR S.R.L., ITALY Following the renaming of the company, formerly known as RED 2002 S.r.l., as Phoenix Solar S.r.l. in January 2009, the Italian subsidiary is now present in the market under the uniform corporate name. In March 2009, a new managing director took over from the former managing directors who withdrew, as planned, for reasons of age. The new managing director has given fresh impetus to the alignment of the subsidiary sales operations. The year-earlier revenues were also not achieved in the reporting quarter owing to weather conditions and the impact of the financial crisis on lending by banks in Italy. Revenues fell 44 percent as against the previous year s quarter. 4.5 PHOENIX SOLAR E.P.E., GREECE Since the subsidiary s founding in June 2008, it has concentrated its business activities on building up sales structures and its internal organisation. In the meantime, personnel has been hired for the key functions and the company is now forging ahead with expanding its trading in components and systems. 4. 6 PHOENIX SOLAR PTY LTD, AUSTRALIA Phoenix Solar is channelling activities into building up a sales structure for components and systems. First successes were made at the start of 2009 with the supply and delivery of turn-key roof-mounted systems for houses in one kwp output class to a newly founded consumer initiative in the federal state of South Australia. A restructuring of the subsidy programme in Australia has been scheduled for mid-year 2009. Government subsidy programme will be withdrawn in favour of roof-mounted photovoltaic systems and replaced by Renewable Energy Certificates (REC s). These are freely tradable certificates which, among other purposes, are intended to serve as proof that the Australian climate protection goals have been reached. Protracted application processes for subsidies, as is currently required, will therefore no longer apply. This measure is expected to stimulate the market. A number of Australian federal states have already introduced local feed-in tariffs (South Australia, Queensland, Australian Capital Territory) or announced the introduction of similar tariffs. This legislation on feeding into the grid currently still excludes large projects. Incorporating direct subsidies by the government, there is, however, the possibility of implementing large projects on a financially viable basis.

16 Interim Management Report Phoenix Solar AG Interim Report January to March 2009 5 PROCUREMENT AND PURCHASING The growth targets of the Phoenix Solar Group determine its procurement strategy for the most part. This strategy is geared toward achieving a balanced product portfolio which covers the entire range of existing module technologies at market-oriented prices. Modules are destined for use in both the Components & Systems and in the Power Plants segments. This enables the Group to switch its sales and distribution channels rapidly. The implementation of this strategy ensures the requisite supply, accompanied by annual price reductions. To this end, contracts are signed with selected suppliers and stringent quality criteria established. The transition in the photovoltaic market from a supply to demand market, of which there were already signs in the last quarter of 2008, became reality at the start of the current year. This sea change is being fuelled by an excess availability of modules, both in thin-film and crystalline technologies. Module manufacturers are responding to this situation by considerably reducing prices but are meeting with only hesitant recovery in demand. The need for modules is currently determined more by known brands and quality suppliers which enable higher returns on projects to be achieved. The procurement activities of the Phoenix Solar Group have been increasingly exposed to the impact of the global financial crisis. At an earlier stage and before the first signs of the crisis, the procurement selection procedure was supplemented in close cooperation with risk management to include the stringent monitoring of supplier liquidity and credit standing. Concepts for reducing inventories and shortening delivery times and routes are developed and optimised on an ongoing basis together with suppliers and the Group s own sales operations. Among other aspects, the timing of sourcing modules is coordinated more closely with the dates when sales are realised. Phoenix Solar AG has laid the cornerstone for steady growth by concluding long-term agreements. Discernible risk resulting from the potential price downtrend in respect of long-term agreements is compensated through ongoing, subsequent negotiations. In such subsequent negotiations, manufacturers have as yet proven to be reliable and responsible partners. The Phoenix Solar Group has always paid special attention to securing the currency risk in procurement and its impact on buying prices. A long-term currency hedging strategy and discussions with suppliers held in good time have served to counteract potential disadvantages for the Group at an early stage.

Phoenix Solar AG Interim Report January to March 2009 Interim Management Report 17 6 OPPORTUNITIES AND RISKS REPORT 6. 1 RISK MANAGEMENT SYSTEM The Phoenix Group has based its definition of risk on the definition under the German Accounting Standard (DRS) which sees risk as the possibility of negative future developments in the financial position of the company. In the opinion of management, risks also harbour inherent opportunities which can be turned to the advantage of the company. The risk management system of the Group serves to identify, control and manage risks which occur. Above and beyond risks to the company as a going concern, activities, events and developments are recorded by the system if they might exert a significant influence on the success of the company s business in the future. 6.2 SPECIFIC RISKS/MATERIAL OPPORTUNITIES AND RISKS Alongside the individual opportunities and risks described in detail in the Annual Report 2008, explicit reference must be made at this point that, from today s standpoint, there are the following opportunities and risks: There is also a certain risk inherent in the ongoing dependency of national photovoltaic markets on government subsidy measures for the Phoenix Solar Group as, without the requisite government subsidies for customers and investors, investments in a photovoltaic system will not deliver sufficient return, especially in view of the fact that the costs of electricity generated by conventional suppliers not producing in the field of renewable energies are still lower at present. Limitations imposed by the new Spanish Royal Decree on feed-in tariffs have reduced the market volume of this country to a considerable extent, especially for a growth-oriented company such as Phoenix Solar AG. As this applies to all competitors operating in the Spanish market in 2008, fiercer competition can be expected, especially in the German market. This gives rise to a crowding-out risk for Phoenix Solar and its competitors. In its business of wholesale trading in components and systems, the Phoenix Group is active in a market environment where barriers to market entry are considered to be relatively low. The number of competitors may therefore rise, also through foreign companies entering the market. Fierce competition, as emerges with the better availability of modules, is often accompanied by a decline in the prices which can be commanded. This may exert a considerable impact on the volume growth, sales revenue and the success of the company. The potential loss of recourse in guarantee claims asserted in the event of potential supplier insolvency may give rise to additional financial burdens for Phoenix Solar AG.

18 Interim Management Report Phoenix Solar AG Interim Report January to March 2009 At present, potential investors interested in large photovoltaic power plants are also feeling the effects of the financial crisis. While the attitude of banks to financing projects is becoming appreciably reticent, there are delays in the realisation of planned projects. Accordingly, the search for suitable investors can be expected to become more difficult and more time-consuming in the future. The company practices stringent liquidity controlling and, upon the signing of a syndicated loan with a three-year term, has secured financing for the Group in the medium term. The granting of the syndicated loan is contingent upon fulfilling covenants. If these covenants are not filled, this may result in the syndicated credit line being withdrawn. There is therefore a risk that growth envisaged may not be achieved owing to financing shortfalls. This requires the permanent monitoring of a sufficient equity ratio in order to secure the necessary preconditions for obtaining loans. On the one hand, the harbingers of a module oversupply were evident in the last quarter of 2008 and, on the other, the spreading financial crisis and module buyers growing expectancy of falling prices caused general demand to slow. If the weightings in the market shift through the ramping up of production capacities accompanied by declining demand, the result is an excess supply of modules, falling prices and excess inventories which continue to lose their value. To ensure its own supply and to stabilise prices, Phoenix Solar has used the option of signing long-term delivery agreements with module manufacturers. In times when the photovoltaic market was determined by shortfalls in modules this was an effective instrument of exploiting market and growth opportunities. With the first signs of a module oversupply long-term contracts restrict the ability to respond swiftly in the event of price slumps to ensure that prices are aligned with the market. They raise the risk of excessive stockpiling through obligations to take delivery, associated with the risk of downward valuations to inventories. The company is responding to this risk, on the one hand, through active control and management and coordination of all sales activities in both its core segments as well as, on the other hand, by conducting procurement negotiations with suppliers. In the selection of partners for this type of long-term agreement, Phoenix Solar has placed special importance on qualitative aspects as well as on the willingness to cooperate and the adjustability of terms to changing market conditions and attractive prices through price digression. More extensive currency risks caused by the spreading financial crisis, especially in the case of deliveries denominated in US dollars (USD) or Japanese yen (JPY), have always been covered by the Group by a currency hedging strategy based on the underlying and a broad product and supplier portfolio which gives it other options at short notice. Forging ahead with expansion abroad, in particular with project development and the construction of photovoltaic power plants abroad, is subject to higher risks in respect of development costs and times to completion as well as completion itself than in Germany. Particularly in the case of stepping up efforts to develop new markets, the occurrence of delays and higher costs as against the original, consciously conservative planning cannot be entirely discounted.

Phoenix Solar AG Interim Report January to March 2009 Interim Management Report 19 The implementation of a new Enterprise Resource Planning (ERP) system, adjusted to meet current and future requirements, is intended to help link up all areas and functions of the company more closely with one another and to optimise information flows and processing. At present, there is an additional workload affecting a number of process workflows owing to the setting up and maintaining of interfaces between existing data processing systems. Before sustainable synergy effects can be released from the new group-wide ERP system, however, the process of introduction will claim and bind existing resources, in addition to daily business. A general tax audit has already been announced by the financial authority responsible for midyear 2009. Along with the general entrepreneurial risks, financial risks for the Group may also arise from this audit. In addition, given a market with dynamic growth such as the photovoltaic market, the Phoenix Group is exposed to a range of different risks which are not discernible at present or which have currently been estimated low risk. 6.3 OVERALL RISK/RISK OF GOING CONCERN Taking a comprehensive view of the overall risk situation of the Group it becomes evident that the risks are restricted and manageable from today s standpoint and that they do not constitute a threat to the Group as a going concern. 7 SIGNIFIC ANT EVENTS AFTER THE REPORTING DATE Since the start of the second quarter of 2009, the financing backlog in respect of large power plants has started to ease slowly, in line with expectations. Along with the German savings banks, which embarked on financing solar parks themselves only during the course of the crisis, a number of Landesbanks and major commercial banks provided financing commitments again at the start of the second quarter. At the beginning of April, therefore, Phoenix Solar was able to start construction work on two major projects in Germany. In the meantime, the investor has submitted financing commitments for the Hasborn project, mentioned in the 2008 Annual Report. Accordingly, the project was fully invoiced in April 2009. All in all, April 2009 saw an increase in the deliveries of the Components & Systems segment which recorded revenues above those of the year earlier quarter. At the same time, selling prices appear to be stabilising, which is also likely to have a positive impact on the demand situation.

20 Interim Management Report Phoenix Solar AG Interim Report January to March 2009 8 GUIDANCE The guidance provided in the 2008 Annual Report still applies. Based on performance to date and expectations of developments in the market, in Germany in particular, the Board of Directors stands by its guidance for 2009, released in January, which estimates consolidated revenues at around EUR 520 million and EBIT at around EUR 31 million. Given the momentum in the photovoltaic market, as viewed by the Board of Directors, it is possible that future results may diverge from today s expectations. Sulzemoos, 14 May 2009 Phoenix Solar Aktiengesellschaft The Board of Directors Dr. Andreas Hänel (Chief Executive Officer) Sabine Kauper (Chief Financial Officer) Dr. Murray Cameron Manfred Bächler Ulrich Reidenbach (Chief Operating Officer) (Chief Technology Officer) (Chief Sales Officer)

Phoenix Solar AG Interim Report January to March 2009 Interim Consolidated Financial Statements 21 CONSOLIDATED INCOME STATEMENT for the period from 1 Januar y 20 09 until 31 March 20 09 in k Notes C. 01/01/ 31/03/2009 01/01/ 31/03/2008 Revenues (1) 36,778 41,223 Increase / decrease in the level of contracts in process 35 361 Overall performance 36,743 41,584 Other operating income 309 341 Cost of materials (2) 36,160 36,752 Personnel expenses (3) 3,717 2,479 Depreciation and amortisation 132 83 Other operating expenses (4) 4,479 2,253 Operating result 7,436 358 Result from associated companies 1 1 EBIT 7,437 359 Financial income 25 703 Finance costs 718 142 Financial result (5) 693 561 Consolidated net income before income taxes (EBT) 8,130 920 Income taxes (6) 2,148 332 Consolidated net income for the period 5,982 588 of which due to minority interest 0 34 of which due to majority shareholders 5,982 622 Earnings per share Earnings per share (basic) (7) 0.89 0.10 Earnings per share (diluted) (7) 0.89 0.10 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME for the period from 1 Januar y 20 09 until 31 March 20 09 in k 01/01/ 31/03/2009 01/01/ 31/03/2008 Consolidated net income for the period 5,982 588 of which due to minority interest 0 34 of which due to majority shareholders 5,982 622 Changes in value recognised directly under equity 16 2 Differences from currency translation of which due to minority interest 4 0 of which due to majority shareholders 12 2 Income taxes recognised directly under equity 0 0 Overall performance 5,998 586 of which due to minority interest 4 34 of which due to majority shareholders 5,994 620

22 Interim Consolidated Financial Statements Phoenix Solar AG Interim Report January to March 2009 CONSOLIDATED BAL ANCE SHEET as at 31 March 20 09 ASSETS in k Notes D. 31/03/2009 31/12/2008 Non-current assets Intangible assets 531 547 Goodwill 535 533 Property, plant and equipment 1,973 1,651 Investments in associated companies 435 436 Other participating interests 160 160 Non-current receivables 822 490 Deferred tax assets (6) 1,640 99 Other fi nancial assets 1,329 1,417 Total non-current assets 7,425 5,333 Current assets Inventories (8) 108,019 75,975 Prepayments 3,009 1,444 Receivables from long-term construction contracts (9) 4,082 735 Trade receivables 12,505 24,849 Other fi nancial assets 1,931 2,514 Other non-fi nancial assets (10) 12,044 9,368 Actual tax claims 497 10 Cash and cash equivalents 4,537 7,535 Total current assets 146,624 122,430 Total assets 154,049 127,763

Phoenix Solar AG Interim Report January to March 2009 Interim Consolidated Financial Statements 23 LIABILITIES AND SHAREHOLDERS' EQUITY in k Notes D. 31/03/2009 31/12/2008 Equity Subscribed capital (11) 6,685 6,685 Capital reserve (12) 40,650 40,433 Accumulated other equity (11) 36,197 42,191 Share of majority shareholders in consolidated equity 83,532 89,309 Share of minority interest in consolidated equity 4 2 Total equity 83,528 89,311 Non-current liabilities and provisions Non-current fi nancial liabilities 29 0 Non-current provisions 1,795 1,773 Deferred tax liabilities (6) 120 534 Total non-current liabilities and provisions 1,944 2,307 Current liabilities and provisions Current fi nancial liabilities (13) 35,665 53 Liabilities from long-term construction contracts (9) 0 0 Trade payables (14) 18,220 14,644 Other fi nancial liabilities (15) 3,698 4,793 Other non-fi nancial liabilities (16) 1,237 4,538 Current provisions 797 1,217 Actual tax liabilities (6) 8,960 10,900 Total current liabilities and provisions 68,577 36,145 Total liabilities and shareholders equity 154,049 127,763

24 Interim Consolidated Financial Statements Phoenix Solar AG Interim Report January to March 2009 CONSOLIDATED STATEMENT OF CHANGES IN EQUIT Y for the period from 1 Januar y 20 09 until 31 March 20 09 in k Notes C. & D. Subscribed capital Capital reserve Accumulated other equity Share of majority shareholders in consolidated equity Share of minority interest in consolidated equity As per 1 January 2008 6,077 20,309 20,856 47,242 84 47,326 Total capital First-time consolidation of Phoenix Solar S.r.l., Rome 0 0 0 0 302 302 Reserve for share options (12) 0 41 0 41 0 41 Differences from currency translation (11) 0 0 2 2 1 3 Consolidated net income in 2008 0 0 622 622 34 588 As per 31 March 2008 6,077 20,350 21,476 47,903 351 48,254 As per 1 January 2009 6,685 40,433 42,191 89,309 2 89,311 Purchase of remaining shares in project company Scarlatti Srl., Italy 0 0 0 0 2 2 Reserve for share options (12) 0 217 0 217 0 217 Difference from currency translation (11) 0 0 12 12 4 16 Consolidated net income in 2009 0 0 5,982 5,982 0 5,982 As per 31 March 2009 6,685 40,650 36,197 83,532 4 83,528

Phoenix Solar AG Interim Report January to March 2009 Interim Consolidated Financial Statements 25 CONSOLIDATED CASH FLOW STATEMENT for the period from 1 Januar y 20 09 until 31 March 20 09 in k Notes C.& D. 01/01/ 31/03/2009 01/01/ 31/03/2008 Net income before taxes 8,130 920 Depreciation and amortisation 132 83 Other non-cash income ( ) and expenses (+) (incl. result from associated companies) 2,062 56 Financial income (5) 25 703 Finance costs (5) 718 143 Sub-total 5.243 387 Increase / decrease in provisions (net of discounting effects and non-cash releases) 403 1,214 Increase / decrease in inventories (8) 34,258 29,825 Increase / decrease in prepayments 1,566 6,276 Increase / decrease in receivables from long-term construction contracts (9) 3,347 634 Increase / decrease in trade receivables (excl. non-cash transactions) 12,439 7,600 Increase / decrease in assets (10) 2,338 3,305 Increase / decrease in liabilities (14) (15) 720 16,572 Funds generated by operating activities 35.436 14,267 Interest paid (5) 406 93 Income taxes paid (6) 2,317 362 Cash flow from operating activities 38,159 14,722 Purchase of intangible assets and property, plant and equipment 504 94 Cash flow from investing activities 504 94 Payments in connection with fi nancial liabilities (13) 35,640 19,373 Interest income (5) 25 0 Cash flow from financing activities 35,665 19,373 Changes in cash and cash equivalents 2,998 4,557 Currency-induced changes in cash and cash equivalents 0 5 Consolidation-related changes in cash and cash equivalents 0 3 Net changes in cash and cash equivalents 2,998 4,555 Cash and cash equivalents at the start of the period 7,535 14,000 Cash and cash equivalents at the end of the period 4,537 18,555 Increase / decrease in cash and cash equivalents 2,998 4,555

26 Notes to the Interim Consolidated Financial Statements Phoenix Solar AG Interim Report January to March 2009 Notes to the Interim Consolidated Financial Statements of Phoenix Solar Aktiengesellschaft, Sulzemoos, to the IFRS Interim Consolidated Financial Statements for the period from 1 January to 31 March 2009 A. GENER AL As per 31 March 2009, the Group of Phoenix Solar Aktiengesellschaft (hereinafter also called Phoenix Group) was made up of ten companies with 221 employees (Q1/2008: 160). The parent company of the Group is Phoenix Solar Aktiengesellschaft (hereinafter called Phoenix Solar AG) with its principal place of business in Hirschbergstraße 8, 85254 Sulzemoos, Germany; the company is registered with the District Court of Munich under the number HRB 129117. The business purpose of the parent company is the development, production, sale and distribution, alongside the operation and management of components and systems for generating energy from renewable energy sources, as well as the assembly and maintenance of these systems. The parent company has belonged to the German TecDAX since 25 March 2008. The TecDAX is part of the Prime Standard segment of Deutsche Börse AG and comprises 30 of the 35 largest technology companies below the DAX measured by market capitalisation and order book turnover. The International Accounting Standards Board (IASB) revised the International Financial Reporting Standard (IFRS) and published it on 5 March 2009, with mandatory application for the annual periods starting on 1 January 2009 or thereafter. Amendments to IFRS 7 Financial Instruments: Disclosures : The amendments bear the title Improving Disclosures about Financial Instruments Amendments to IFRS 7 and also include more minor amendments to IFRS 4. The amendments to IFRS 7 pertain to disclosures on the calculation of fair values and liquidity risk. Specifications on the disclosure of fair value calculation entail the preparation of a spreadsheet breakdown for each class of financial instruments based on the known, three-level fair value hierarchy, and require that the scope of reportable information be extended. Furthermore, disclosures on liquidity risk are clarified and extended. To this end, maturities must be disclosed separately divided up into non-derivative and derivative financial liabilities, and the associated qualitative disclosures on the management of liquidity risk have been amended. In the first year of applying the standard, a company is not required to deliver comparative information. Earlier application is permitted. For the purpose of the applicability of this