aleo solar Aktiengesellschaft

This is a non-binding translation of the German Offering Prospectus („Wertpapierprospekt“). Neither aleo solar AG nor any of the Managers are liable for the correctness or completeness of this translation. It does not constitute an offer to
the public to sell or the public solicitation of an offer to buy shares of aleo solar AG. For a further description of certain restrictions on offerings and sales of the shares see „The Offering – Subject Matter of the Offering“ and ‘‘Underwriting
– Selling Restrictions“.
The Offering is not being made, directly or indirectly, in or into the United States or to, or for the account of, U.S. Persons, and documents should not be distributed, forwarded or transmitted in or into such territories, or to such persons.
The Shares have not been registered under the U.S. Securities Act of 1933, as amended (the „1933 Act“), and may not be offered or sold in the U.S. or to U.S. Persons unless the Shares are registered under the 1933 Act, or an exemption
from the registration requirements of the 1933 Act is available. „United States“ or „U.S.“ is defined as the United States of America, its territories and possessions, any state of the United States and the District of Columbia.
„U.S. Persons“ is defined in Rule 902 promulgated under the 1933 Act.
Prospectus
for the public offering of
up to 2,850,400 registered no-par value ordinary shares
resulting from the capital increase against cash contributions resolved
by the extraordinary general shareholders’ meeting of 23 May 2006
and of
up to 3,265,306 registered no-par value ordinary shares
owned by the Selling Shareholders
and of
up to 917,355 registered no-par value ordinary shares
owned by the Greenshoe Shareholders to cover potential over-allotments
as well as
for admission to trading on the official market ( Amtlicher Markt) of the Frankfurt Stock
Exchange with simultaneous admission to the official market sub-segment with
further post-admission obligations (Prime Standard) of the Frankfurt Stock Exchange
10,180,000 registered no-par value ordinary shares
(existing share capital)
and of
of up to 2,850,400 registered no-par value ordinary shares
resulting from the capital increase against cash contributions resolved
by the extraordinary general shareholders’ meeting of 23 May 2006
– each with a notional share of EUR 1.00 in the share capital and conferring full
dividend rights as of 1 January 2006 –
being the shares of
aleo solar Aktiengesellschaft
with its registered office in Prenzlau
International Securities Identification Number (ISIN): DE000A0JM634
Wertpapier-Kenn-Nummer (WKN): A0JM63
Common Code: 025908597
28 June 2006
Global Coordinator and Sole Bookrunner
COMMERZBANK
CORPORATES & MARKETS
Joint Lead Manager Joint Lead Manager
COMMERZBANK
CORPORATES & MARKETS
HVB Corporates & Markets
Co-Manager
Joh. Berenberg, Gossler & Co. KG

[This page intentionally left blank]

TABLE OF CONTENTS
SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
General Information about the Company and its Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Further Important Information about the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Summary of the Offering . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Summary of Key Financial Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Summary of Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
RISK FACTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Risks Related to the Business of the aleo solar Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Risks Related to the Offering . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
GENERAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Responsibility for the Content of the Prospectus. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Subject Matter of the Prospectus. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Forward-Looking Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Note on the Sources of Market Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
List of Sources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Note on Foreign Currency and Financial Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Inspection of Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
THE OFFERING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Subject Matter of the Offering . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
General and Specific Information about the Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Price Range, Offer Period, Placement Price and Allotment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Offering Timetable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Delivery and Settlement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Allotment Criteria . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Stabilisation Measures, Over-Allotment and Greenshoe Option . . . . . . . . . . . . . . . . . . . . . . . . . 27
Lock-up Agreements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Stock Exchange Listing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Payment and Registration Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Designated Sponsor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Reasons for the Offering and Use of Issue Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
DIVIDEND POLICY AND EARNINGS PER SHARE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
CAPITALISATION AND INDEBTEDNESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
DILUTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SELECTED CONSOLIDATED FINANCIAL DATA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
MANAGEMENT‘S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
34
RESULTS OF OPERATIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Key Factors Influencing the Results of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Significant Accounting Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Notes on the Differences between HGB and IFRS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Results of operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Financial condition and assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Unaudited quarterly consolidated financial statements as at 31 March 2006 . . . . . . . . . . . . . . . 50
THE BUSINESS OF THE ALEO SOLAR GROUP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Photovoltaics – Technical Background. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Areas of Applications for Photovoltaics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Government Incentives for Photovoltaics. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Market and Competition. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Competitive Strengths . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
I

Procurement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
Products and Output . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
Distribution and Marketing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
Equity Interest in the Field of Thin-Film Technologies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
Capital Expenditure. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
Trade Marks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
Material Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
Sites, Real Estate and Plant, Property and Equipment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
Government Assistance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
Legal Disputes and Administrative Proceedings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
GENERAL INFORMATION ABOUT THE COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
Corporate History, Formation, Business Name, Registered Office, Financial Year, Duration . . . . 77
Objects of the Company. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
Shareholding Structure of aleo solar AG . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
Auditors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
INFORMATION ABOUT THE CAPITAL OF THE COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
Share Capital and Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
Development of Share Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
Authorised Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
Conditional Capital, Convertible Bonds and Employee Stock Option Programme . . . . . . . . . . . . 80
General Provisions Concerning the Liquidation of the Company . . . . . . . . . . . . . . . . . . . . . . . . . 80
General Provisions Concerning Changes to Share Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
General Provisions Concerning Subscription Rights. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
Shareholding Disclosure Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
INFORMATION ABOUT THE CORPORATE BODIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
Management Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
Supervisory Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
Particular Information Concerning the Members of the Management Board and Supervisory Board 91
Corporate Governance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
SHAREHOLDER STRUCTURE (BEFORE AND AFTER THE COMPLETION OF THE OFFERING) 94
TRANSACTIONS AND LEGAL RELATIONSHIPS WITH RELATED PARTIES . . . . . . . . . . . . . . 96
TAXATION IN THE FEDERAL REPUBLIC OF GERMANY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
Taxation of the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
Taxation of Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
UNDERWRITING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105
Subject Matter and Underwriting Arrangements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105
Greenshoe Option and Securities Lending. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105
Commissions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106
Termination. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106
Selling Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106
RECENT COURSE OF BUSINESS AND OUTLOOK. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107
FINANCIAL SECTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-1
Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-1
Consolidated financial statements for financial year 2003 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-2
Consolidated financial statements for financial year 2004 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-31
Consolidated financial statements for financial year 2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-57
Annual financial statements for 2005. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-85
Unaudited consolidated financial statements for the first quarter of 2006 . . . . . . . . . . . . . . . . . F-95
LIST OF ABBREVIATIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . G-1
II

SUMMARY
The following summary is solely intended as an introduction to this Prospectus. Because of the substantially
more detailed information contained in other sections of the Prospectus (including the Financial
Section), investors should base their investment decision on a review of the entire Prospectus.
aleo solar Aktiengesellschaft, Prenzlau, (the “Company” or “aleo solar AG” and, along with its subsidiaries,
the “aleo solar Group”) and COMMERZBANK Aktiengesellschaft, Frankfurt am Main (“Commerzbank
AG”), Bayerische Hypo- und Vereinsbank AG, Munich and Joh. Berenberg, Gossler & Co.
KG, Hamburg (along with Commerzbank AG, the “Underwriters”) assume responsibility for the content
of this summary pursuant to Section 5(2), sentence 3, no. 4 of the German Securities Prospectus
Act ( Wertpapierprospektgesetz). However, they may only be held liable for the content of the summary
if it is misleading, incorrect or contradictory when read together with other sections of the Prospectus.
In the event that an investor files claims before a court in connection with the information
contained in this Prospectus, the investor appearing as the plaintiff may be obligated to bear the cost
of procuring a translation of the Prospectus before the commencement of proceedings in accordance
with the provisions of law applying in the individual State of the European Economic Area.
General Information about the Company and its Business
Overview
aleo solar AG, which emerged from S. M. D. Solar-Manufaktur Deutschland GmbH (formerly S. M. D.
Solar-Manufaktur Deutschland GmbH & Co. KG) in May 2006 following the transformation of the legal
form of the latter, develops and manufactures high-grade solar modules based on monocrystalline and
polycrystalline cells for the German and international photovoltaic market. In Prenzlau, Brandenburg,
the Company has one of the biggest and most modern solar module production facilities in Europe,
with an output of 90 MWp. (Source: Sonne, Wind & Wärme Issue 2/2006, p. 38 et seq.) The modules
manufactured there, together with other equipment for photovoltaic plants, are sold mainly by the
Company’s wholly owned subsidiary, aleo solar Deutschland GmbH based in Oldenburg, under the
brand name aleo. Moreover, to increase production utilisation, aleo solar AG also produces OEM solar
modules.
aleo solar Deutschland GmbH distributes its products, i. e. solar modules manufactured by aleo solar
AG, solar energy systems and, possibly in the future, thin-film solar modules, under the brand name
aleo. It also distributes the modules of other manufacturers and system components. Products are
distributed mainly to specialist dealers and system installers . Up to the end of the financial year 2005,
aleo solar Deutschland GmbH sold its products primarily on the German market.
Future target markets include the European growth markets in particular. At the end of 2005, aleo
solar AG founded the production firm SOLAR MANUFAKTUR PRODUCCIÓN S. L. and the distribution
company aleo solar distribución España S. L., both with their registered offices in Barcelona, Spain.
The new plant is currently under construction. Production is to start in 2006/2007. The plant is to have
a production capacity of 10 MWp.
Apart from activities on the Spanish market, there are plans to enter the Italian market in 2006 and to
further increase exports.
Competitive Strengths
The aleo solar Group is characterised by strong growth accompanied by high profitability. In 2005, the
EBIT margin was 13.8 %. From the perspective of the Company, such profitable growth is attributable
to a number of competitive strengths:
• Experienced management: The Company is of the opinion that it possesses an experienced and
qualified management team. Unlike many other companies in the solar industry, the aleo solar
1

Group was managed from the outset by two board members with a background in economics.
Business decisions are prepared and reached solely on the basis of commercial criteria. Moreover,
the board members have an excellent network in the renewable energy sector and act in a forward-looking
way. In addition to the two board members, a strong second tier management team
was developed.
• A marriage of production and distribution: The aleo solar Group’s high profitability can also be attributed
to the fact that it sells its own products not to wholesalers, but almost exclusively to specialist
dealers and installers. Thus, the aleo solar Group covers two stages in the value chain – the manufacture
of solar modules and wholesale/solar energy systems.
• Consistent brand policy: The aleo solar Group has succeeded in establishing “aleo” as a brand for
solar modules on the German market. This consistent marketing policy is also being continued in
the current sellers’ market. The Company believes that in a market which lacks a clear brand profile,
the “aleo” brand gives it a competitive edge.
• Diversified customer base: With its specialist dealer concept, the aleo solar Group has succeeded
in developing a broad and comprehensive customer structure and all-embracing customer base in
Germany. Thanks to this, there is no dependence on just a few customers. A high degree of proximity
to end users is ensured at the same time. That aside, the aleo solar Group very deliberately
waives large orders if these might dilute profitability.
• Product quality: The aleo solar Group produces high-quality solar modules that have a good pricequality
relationship. The high quality has been confirmed by independent sources (Top grades in
Stiftung Warentest May 2006). In particular, electricity generation and product durability were rated
highly.
• Flexible production design concentrated in one location: In Prenzlau, Brandenburg, the Company
has one of the largest and most modern production facilities for solar modules in Europe. Modern
equipment and machinery permits the machine processing of monocrystalline and polycrystalline
solar cells of various thicknesses and dimensions with minimum changeover times. Machinery
configuration guarantees constant high product quality.
• Critical company size attained: With a production capacity of 90 MWp and annual revenues of
EUR 106.9 million in 2005, the aleo solar Group has attained the required critical size within the
divided group of manufacturers and suppliers of solar modules. This makes the aleo solar Group an
attractive and reliable partner for customers and suppliers alike. This also provides sustained support
for solar cell delivery.
• Organic growth: Until now, the aleo solar Group has developed organically at a constant pace,
whereby the management of the aleo solar Group has ensured an efficient cost structure. The
same criteria will be applied to future equity interests. The objective of the aleo solar Group is to
continue to achieve high growth characterized by strong earnings.
Strategy
The aleo solar Group aims to continue the growth marked by high earnings that has been attained in
recent years. The competitive strengths described above are supported and enhanced by the aleo
solar Group’s corporate strategy.
The aleo solar Group operates at two stages in the value chain – the manufacture of high-grade solar
modules and the distribution of solar modules and systems. In doing so, the Company pursues a strategy
that rests on two pillars of equal importance:
• Production competence
• Distribution and marketing competence
The Company intends to use the high competence it has developed and continually enhanced on its
home market in Germany at other production and distribution sites in other target markets, and to
transfer the know-how it has obtained to them.
2

Production competence
The production of solar modules will depend on the adequate procurement of solar cells in the future
too. To secure its supply of raw materials, the Company intends, in addition to maintaining and developing
partner-like relations with existing suppliers, to continue diversifying its supplier bases as well as
to establish strategic ties with suppliers. To this end, the Company pursues a multi-stage procurement
strategy that involves the conclusion of short-term, medium-term and long-term solar cell supply contracts.
The aim is to ensure the lasting utilisation of a major portion of production capacity through
medium and long-term contracts. The Company sees this as striking a good balance between securing
production for the manufacture of own aleo solar modules and sufficient flexibility on the procurement
side.
The Company is continually optimising production processes with the aim of keeping production costs
in a lasting manner. In essence, the process optimisation measures tend in two directions. From a
technical angle, the Company systematically exploits the product innovations of its suppliers through
close cooperation and constant exchange of information. Moreover, changes to supplier product properties
are discussed with machine manufacturers early on and implemented in machine technology.
Flexible product design and further product development is and remains the basis for this.
The Company is working continuously on measures to achieve productivity gains. In the past, the
Company has been able to increase productivity significantly by decreasing the out-of-grade ratio and
machine downtime, increasing module throughput as well as reducing changeover times. In the future
too, the Company will seek to further boost its productivity and thus scale back production costs in a
sustainable manner.
The Company believes that a balanced procurement strategy, permanent process optimisation and
productivity gains provide a stable starting position for making even more efficient use of available
production capacity in the future, and for realising economy-of-scale and learning curve effects.
The aleo solar Group is known for the quality, reliability and efficiency of its solar modules. Maintaining
and continually enhancing this high standard is the strategy of the Company. This is to be achieved
through the use of high-grade products for further processing, the quality of which is inspected continually.
Furthermore, the quality management process that accompanies the production process is
being constantly refined and improved.
Distribution and marketing competence
The Company was quick to realise the importance for the earnings capacity of the aleo solar Group of
having a system of its own for distributing the solar modules produced by the aleo solar Group. By
employing qualified customer service personnel as early as 2002, the Company was able to penetrate
the buyers’ market at that time. In the future too, the clear focus of the sales strategy on specialist
dealers and installers, who are supplied by the aleo solar Group not only with solar modules but also
the components needed to install solar energy systems, such as assembly systems and inverters, will
be consistently developed and enhanced. If the market in Germany changes once again from a seller’s
market to a buyer’s market, the Company sees itself well positioned to preserve its earnings
strength.
The Company is endeavouring to consolidate and expand its strong position on the German market.
Moreover, the Company aims to internationalise its business operations in order to further diversify its
customer base and become more independent of the German market. Within the context of such
internationalisation, the Company will concentrate mainly on Europe, with a focus on the European
growth markets of Spain and Italy initially. A production site is under construction in Spain, thanks to
which the Company hopes to establish a position as a local manufacturer on the Spanish market. This
is expected to yield positive effects for the distribution activities already commenced in Spain. The
Company aims to transfer the distribution concept that has already proved successful in Germany to
the Spanish market. It plans to already enter the Italian market in 2006 by developing its own distribut-
3

ing organisation . If it succeeds in launching the business, the Company will develop production capacity
in Italy.
The Company is monitoring incentives for photovoltaic facilities in other European countries very
closely. If the framework conditions are favourable, the Company will seek to achieve early and systematic
market entry.
The Company considers it important for customer retention to pursue a brand strategy in the field of
photovoltaic systems too, and that this will become even more important in the future. Therefore, the
Company will continue to consistently pursue and develop its brand policy. The aim is to establish
“aleo” as one of the leading brands of solar modules in Germany and European target markets.
The Company also intends to expand its product portfolio. In particular, there are plans to introduce
high-efficiency thin-film solar modules into the Company’s product range. To ensure access to highgrade
thin-film modules, it has already acquired a relevant equity interest.
Future measures will be undertaken primarily when it is likely that they will boost the aleo solar Group’s
earnings. Decisions to acquire equity interests and other fundamental strategic decisions such as
entry into a new market or into new business segments are to be made contingent on this overriding
consideration. In particular, pure revenue growth is no end in itself for the Company in this regard.
Further Important Information about the Company
Management
Board
Supervisory Board
Share Capital
(before the
Offering)
Current Auditors
Related Party
Transactions
Employees
Summary of the Offering
The Offering
4
Jakobus Smit, Heinrich Willers
Marius Eriksen, Dr. Jürgen Parisi, Jörg Friedrich Bätjer, Claus von Loeper,
Dr. Stefan Reineck, Gerold Heinen
The share capital of the company currently amounts to EUR 10,180,000. It comprises
10,180,000 registered no-par value ordinary shares with a notional share
of EUR 1.00 in the share capital. The share capital is fully paid up.
The auditors of the Company are PricewaterhouseCoopers Aktiengesellschaft
Wirtschaftsprüfungsgesellschaft, Donnerschweer Straße 90, 26123 Oldenburg.
In the past, the company has maintained various business relationships with
enterprises in which one or more members of its Management Board or Supervisory
Board held interests and in which one or more members of its Management
Board or Supervisory Board acted in the capacity of legal representative
or exercised a supervisory function.
As at 31 December, the aleo solar Group employed 227 employees (of whom
203 were employed by aleo solar AG und 24 by aleo solar Deutschland GmbH);
as at 31 December 2004, the respective figures were 179 (of whom 163 were
employed by aleo solar AG and 16 by aleo solar Deutschland GmbH) and as at
31 December 2003 aleo solar employed 107 employees (of whom 95 were
employed by aleo solar AG and 12 by aleo solar Deutschland GmbH).
The Offering consists of a public offering in the Federal Republic of Germany
and private placements in certain other jurisdictions outside the Federal Republic
of Germany and outside the United States of America

Offered Shares
Offer Period
Selling Shareholders
Globaler Coordinator,
Sole Bookrunner
and Joint
Lead Manager
Other Underwriters
Price Range and
Placement Price
The Company and the Selling Shareholders reserve the right, together with the
Global Coordinator, to increase or reduce the number of offered shares
The subject matter of the Offering relates to up to 7,033,061 registered no-par
value ordinary with a notional share of EUR 1.00 in the share capital and conferring
full dividend rights as of 1 January 2006.
Up to 2,850,400 of the offered shares derive from the capital increase against
cash contributions as resolved by the extraordinary general shareholders’ meeting
of 23 May 2006 and up to 3,265,306 of the offered shares are currently
owned by the Selling Shareholders In addition, up to a further 917,355 shares of
the Company owned by the Greenshoe Shareholders can also be allotted.
The Offering will commence on 10 July 2006 at the earliest and end on 1 3 July
2006 at the latest.
On the final day of the offer period, private investors will be able to place purchase
offers until 12 noon (CET) and institutional investors will be able to do so
until 2 pm (CET).
The Company and the Selling Shareholders reserve the right, together with the
Global Coordinator, to increase or reduce the duration of the offer period until
the final day of the offer period.
Insofar as use is made of the possibility of changing the terms of the Offering,
such change will be announced in the form of an ad-hoc disclosure and as a
supplement to this Prospectus; investors who have submitted purchase offers
will not be informed individually.
Of the up to 3,265,306 offered shares owned by the Selling Shareholders,
2, 276,703 are owned by S. M. D. Beteiligungsgesellschaft mbH, 707,000 by EPR
Bauprojekt GmbH, 190,000 by Mr. Helmut Bögershausen, 30,000 by Ms Thi
Minh Bui, 20,000 by Mr. Arthur Alber, 20,000 by Mr. Manfred Wigger and 21,603
by Mr. Detmar Dettmann (together the “Selling Shareholders”).
In the event of an over-allotment, Commerzbank AG will be lent 917,355 shares
at no charge by S. M. D. Beteiligungsgesellschaft mbH and Mr. Detmar Dettmann
(together the “Greenshoe Shareholders”). Of these shares, 907, 439 are
owned by S. M. D. Beteiligungsgesellschaft mbH and 9,916 by Mr. Detmar Dettmann
. In addition, the Greenshoe Shareholders have granted Commerzbank
A G the option of acquiring up to 917,355 shares of the Company at the placement
price. This option will expire 30 days after the commencement of trading
in the shares.
Commerzbank AG, ZTB S 2.31, Mainzer Landstr. 293, 60326 Frankfurt.
Bayerische Hypo- und Vereinsbank AG (Joint Lead Manager), Joh. Berenberg,
Gossler & Co. KG (Co-Manager)
The price range is expected to be set on 7 July 2006 and a respective supplement
will be published on the website of the Company (www.aleo-solar.de) on
10 July 2006 as well as in Frankfurter Allgemeine Zeitung on 11 July 2006 in the
form of notice of advice.
5

Delivery and
Settlement
Over-allotment/
Stabilisation
General Allotment
Criteria
Preferential
Allotment
Listing
Lock-up
Agreement/Selling
Restrictions
6
The Company and the Selling Shareholders reserve the right, together with the
Global Coordinator, to increase or reduce the upper and/or lower end of the
price range.
The placement price per offered share will be set jointly by the Company, the
Selling Shareholders and the Global Coordinator with the help of an order
book built by way of a book-building procedure. The placement price will then
be announced by way of an ad hoc disclosure communicated by means of
an electronic news system and carried on the website of the Company
(www.aleo-solar.de) as well as no earlier than on working day following that
date by means of a notice placed in the Frankfurter Allgemeine Zeitung. Should
the placement volume prove to be insufficient to satisfy all the orders placed at
the placement, the Underwriters reserve the right to reject orders or to accept
them in part only.
The offered shares are expected to be delivered on 1 8 July 2006 against payment
of the placement price.
To the extent permitted by law, over-allotments and so-called stabilisation measures
can be implemented in connection with the placement.
The Company, the Selling Shareholders and the Underwriters will comply with
the “Principles for the Allotment of Share Issues to Retail Investors” (“Grundsätze
für die Zuteilung von Aktienemissionen an Privatanleger”) issued on
7 June 2000 by the Exchange Expert Commission (Börsensachverständigenkommission)
at the German Federal Ministry of Finance (Bundesministerium
der Finanzen).
The Company intends to allot shares on a preferential basis as follows: Under
the preferential allotment, the employees and Management Board of the aleo
solar Group as well as selected business partners and friends chosen at the
sole discretion of the Company will be granted the opportunity of acquiring a
total of up to 5 % (without taking into account the shares offered under the
Greenshoe option) of the offered shares on a preferential basis and at the placement
price. In reliance on the possibility of granting preferential terms afforded
by Section 19a of the German Income Tax Act (Einkommensteuergesetz), the
Company has reduced the purchase price to be paid by employees of the aleo
solar Group for allotted shares by EUR 135 per person.
The admission of all the shares of the Company, including the new shares arising
from the capital increase against cash contributions resolved by the extraordinary
general shareholders’ meeting of the Company on 23 May 2006, to trading
on the official market ( Amtlicher Markt) will be applied for on 3 July 2006
and is expected to take place on 1 3 July 2006. Trading is expected to commence
on 1 4 July 2006.
The Company has undertaken that for a period of six months from the commencement
of trading in the shares on the Frankfurt Stock Exchange, it will
refrain from selling any shares of the Company and from executing any transactions
the economic effect of which would correspond to a sale as well as from
issuing any new shares.
The Existing Shareholders have given an undertaking to Commerzbank AG that
for a period of six months from the commencement of trading, they will refrain
from selling any shares of the Company and from executing any transactions
the economic effect of which would correspond to a sale (e. g. by means of
derivative structures) although the pledging of shares is permitted provided that

IPO Costs
Use of Placement
Proceeds
International Securities
Identification
ISIN
WKN
Common Code
the respective pledgee declares to Commerzbank AG that he will not realise his
right under the pledge within the aforementioned period of time.
With the exception of S. M. D. Beteiligungsgesellschaft mbH and Mr. Dettmann,
all the Existing Shareholders have given an undertaking to Commerzbank AG
that for a further period of six months, they will only sell shares of the Company
or execute transaction although the pledging of shares is permitted provided
that the respective pledgee declares to Commerzbank AG that he will not
realise his right under the pledge within the aforementioned period of time.
Subject to the uncertainty associated with such estimates and stemming from
numerous relevant factors that may exercise an influence but cannot be forecast
at the present time, the Company believes, assuming that all of the offered
shares are placed (including the shares owned by the Greenshoe Shareholders),
that total gross issue proceeds of between approximately EUR 105 million
and approximately EUR 148 million are attainable.
On the basis of the aforementioned figure for gross issue proceeds, the Company
estimates that the issue costs to be borne by the Company, the Selling
Shareholders and the Greenshoe Shareholders, assuming that all of the offered
shares are placed (including the shares owned by the Greenshoe Shareholders),
will amount to a total of between approximately EUR 6.9 million and
approximately EUR 8.7 million, of which (basing on Company estimates once
again) between approximately EUR 4.4 million and EUR 5.3 million will be borne
by the Company. This corresponds to total net issue proceeds of between
approximately EUR 98.1 million and approximately EUR 139.3 million as well as
net issue proceeds for the Company of between approximately EUR 38.4 million
and approximately EUR 54.5 million.
The Company intends to use the net proceeds that will accrue to it from the
Offering to finance further organic and external growth, to implement and
finance its strategic goals as well as for general business purposes. In particular,
the Company intends to use the net proceeds to achieve further international
expansion, secure the supply of solar cells, acquire companies or parts
thereof and investments as well as to effect an appropriate increase in working
capital for growing and developing the system business.
DE000A0JM634
A0JM63
025908597
7

Summary of Key Financial Data
The following consolidated financial data prepared in accordance with IFRS for the three-month periods
as at 31 March 2006 and 31 March 2005 have been taken fro m the unaudited consolidated quarterly
financial statements prepared in accordance with IFRS as at 31 March 2006. The consolidated
financial data prepared in accordance with IFRS for the financial years 2003, 2004 and 2005 have been
taken from the consolidated financial statements of the Company audited by PricewaterhouseCoopers
Aktiengesellschaft Wirtschaftsprüfungsgesellschaft.
Item 2005 2004 2003 Q I/2006 Q I/2005
8
(TEUR) (TEUR) (TEUR) (TEUR)
unaudited
(TEUR)
unaudited
Revenue . . . . . . . . . . . . . . . . . . .
Increase in inventories of
106,904 80,789 41,026 25,714 21,296
finished goods . . . . . . . . . . . . 166 229 1,391 6,758 173
Other income . . . . . . . . . . . . . . . 1,631 901 508 434 293
Cost of materials . . . . . . . . . . . . – 82,876 – 63,021 – 34,900 – 26,074 – 16,359
Personnel costs . . . . . . . . . . . . . – 4,868 – 3,481 – 2,135 – 1,483 – 984
Other expenses . . . . . . . . . . . . . – 4,442 – 3,455 – 2,652 – 1,442 – 734
EBITDA ( 1 ) . . . . . . . . . . . . . . . . . .
Scheduled depreciation/
16,515 11,962 3,238 3,907 3,685
amortisation expense . . . . . . – 1,777 – 1,322 – 505 – 471 – 338
EBIT ( 2 ) . . . . . . . . . . . . . . . . . . . . 14,738 10,640 2,733 3,436 3,347
Financial income. . . . . . . . . . . . . 30 24 5 0 5
Finance cost . . . . . . . . . . . . . . . . – 241 – 303 – 386 – 92 – 41
Earnings before taxes. . . . . . . . 14,527 10,361 2,352 3,344 3,311
Income taxes . . . . . . . . . . . . . . . – 5,192 – 3,731 – 426 – 1,270 – 1,275
Consolidated net profit . . . . . . 9,335 6,630 1,926 2,074 2,036
( 1 ) Earnings Before Interest, Tax, Depreciation and Amortization
( 2 ) Earnings Before Interest and Tax
Summary of Risk Factors
Prior to a decision to purchase shares of the Company, investors should carefully consider specific
risks. If these risks materialise, individually or together with other circumstances, they may substantially
impair the business of the aleo solar Group and may have material adverse effects on the financial
condition and results of operations of the aleo solar Group. The stock exchange price of the shares
may decline if any of these risks materialise and investors could lose all or part of the capital invested
by them. Furthermore, there may be other risks and uncertainties of which the Company is currently
unaware but which may also have material adverse effects on the financial condition and results of
operations of the aleo solar Group. The individual risks are as follows:
• The aleo solar Group depends on government incentives for renewable energy sources
• The aleo solar Group is dependent on the adequate availability of silicon on the world market
• The products distributed by the aleo solar Group may have defects
• The production of solar modules might be disrupted
• It cannot be guaranteed that the aleo solar Group will be able to achieve sufficient cost reductions
and product and process-related improvements
• The German photovoltaic market could become saturated
• A reduction in the price of conventional forms of energy could affect the demand for solar energy
systems

• Rising interest rates could have a negative impact on the demand for solar energy systems
• Excess capacity on the part of producers of solar modules could significantly increase the supply
of solar modules and lead to greater competition
• The aleo solar Group is competing against large corporate groups
• Competition could intensify because of the vertical integration of solar cell manufacturers
• The current or future interlinking of competitors and suppliers could bring considerable disadvantages
to the aleo solar Group
• There are relatively few barriers to entering the market for the production of solar modules
• There are risks associated with possible acquisitions, equity interests and joint ventures
• There are risks associated with the current and further growth of the aleo solar Group
• Under certain circumstances the Company may have to repay investment grants and premiums or
investment grants and premiums may not be disbursed in full
• The solar energy system business is exposed to seasonal fluctuations
• The aleo solar Group is dependent on a few main suppliers
• The aleo solar Group has entered into extensive and partly long-term purchase obligations in regard
to solar cell suppliers
• Advance payments under the terms of solar cell delivery contracts expose the aleo solar Group to
the risk of supplier default
• The planned expansion of foreign activities and the planned entry into new geographical markets
conceal risks
• Rapid technological change could be disadvantageous for the aleo solar Group
• The investment in Johanna Photovoltaic Technology GmbH might fail to meet expectations
• The aleo solar Company is dependent on people holding key positions
• A change in foreign currency exchange rates could bring the aleo solar Group financial disadvantages
• The aleo solar Group maintains various business relationships with related parties
• The aleo solar Group could be exposed to demands to pay tax arrears relating to previous assessment
periods
• The aleo brand and the aleo solar Group’s business could suffer if the aleo solar Group is unable to
defend its intellectual property rights against third parties or becomes involved in litigation in such
regard
• The aleo solar Group might infringe the intellectual property rights of third parties
• New legal requirements might be introduced compelling photovoltaic industry companies to convert
production processes or withdraw products
• Public trading in the Company’s shares might not develop
• A volatile stock exchange price for the shares might develop
• The selling of shares by the existing shareholders could depress the share price
• There could be a conflict of interests with the existing shareholders
9

10
RISK FACTORS
Prior to a decision to purchase shares in the Company, investors should carefully read and consider
the following specific risks and the other information contained in this prospectus. If these risks materialize,
individually or together with other circumstances, they may substantially impair the business of
the aleo solar Group and may have material adverse effects on the financial condition and results of
operations of the aleo solar Group. The description of the risks below does not purport to be exhaustive
and, thus, these risks might not constitute the only risks to which the aleo solar Group is exposed.
The order in which the individual risks were chosen to be presented does not provide an indication of
the likelihood of their materialization nor of the severity or significance of the individual risks. Furthermore,
there may be other risks and uncertainties of which the Company is currently unaware but
which may also have material adverse effects on the financial condition and results of operations of
the aleo solar Group. The stock exchange price of the shares may decline if any of these risks materialize
and investors could lose all or part of the capital invested by them. The risks , described below as
risks to which the aleo solar Group is exposed, may affect one, several or all of the aleo solar Group
companies. As the parent company of the aleo solar Group, the Company is itself also exposed to all
the risks that may affect the aleo solar Group.
Risks Related to the Business of the aleo solar Group
The aleo solar Group depends on government incentives for renewable energy sources
The business of the aleo solar Group depends on government incentives for renewable energy source ,
otherwise the generation of electricity from them would currently not always be competitive vis-à-vis
the generation of energy conventional sources because of the partly higher costs of generating electricity
in this manner.
In Germany, incentives for photovoltaics as well as other renewable energy sources are based in particular
on the German Renewable Energies Act (Gesetz für den Vorrang erneuerbarer Energien – EEG).
The EEG encourages, amongst others, the production of solar energy by requiring grid operators to
purchase the electricity generated from renewable energy sources and by setting minimum prices .
For the foreseeable future, electricity generated by photovoltaics will be competitive in relation to
other forms of electricity in Germany in the area of grid-connected systems only as a result of such
state financial support. Because, as in the past, Germany will continue to be the aleo solar Group’s
most important market for the next years, continued government incentives in Germany are vital for
the further development of the aleo solar Group’s business operations.
Based on the reports of the Federal Ministry of the Environment, the EEG foresees a possible adjustment
of feed-in tariffs and of reduction rates in line with the technological development and market
development for new facilities that become operational. There is no guarantee that higher performance
and a reduction in production costs will improve the efficiency of photovoltaics to such an
extent that this will afford compensation for the degressive tariff reduction rates already envisaged by
the EEG or for any future reduction in feed-in tariffs deriving from the aforementioned reports.
The EEG replaced the German Electricity Feeding Act (Stromeinspeisungsgesetz) in 2000. The Electricity
Feeding Act was the subject of litigation both in Germany and at the European level. For example,
the requirement to purchase electricity from renewable energy sources at a minimum price
exceeding its market price was challenged as being unconstitutional. The German Supreme Court,
however, dismissed these constitutional concerns, and in 2001 the European Court of Justice held
that the purchase requirement at minimum feed-in tariffs does not constitute prohibited state aid .
In a petition dated 28 April 2005, a constitutional complaint has been raised against the EEG. The complainants
have applied for the EEG to be declared unconstitutional for burdening private electricity
consumers with costs associated with the use of renewable forms of energy. They assert that their
basic right to private autonomy was being violated because, as electricity consumers, they were being

forced to bear the added financial burden resulting from the EEG and that this constituted a constitutionally
impermissible special levy.
Pursuant to Section 20 of the EEG, by 31 December 2007 and every four years thereafter, the Federal
Ministry of the Environment, Nature Protection and Reactor Safety, acting in consultation with the
Federal Ministry of Consumer Protection, Nutrition and Agriculture and the Federal Ministry of Economy
and Labour, must brief the Bundestag on the state of the market implementation of facilities for
the generation of power from renewable energy sources and mine gas and the costs of producing
energy in these facilities and, if necessary, propose an adjustment to the tariffs stipulated in the EEG
and the reduction rates in line with technological and market developments for facilities that become
operational after this date. The reports must also provide information on storage technologies and on
the environmental impact resulting from the usage of renewable energy sources . It cannot be excluded
that a planned revision of the regulations in 2007 will result in the abolition or reduction of the minimum
feed-in tariff for photovoltaic electricity or the introduction of a new compensation model with
effect to 1 January 2008. That a significant reduction in the minimum feed-in tariff should be sought is
a view being heard in CDU (Christian Democratic Union) circles in particular.
Similar purchase requirements at minimum prices or other government incentives also exist in other
European and non-European countries in which the aleo solar Group already operates or intends to
operate. It is also possible that government financial support for renewable energy sources in these
countries will be subject to judicial review and considered a violation of the law or reduced or discontinued
for other reasons.
In Germany, as in other countries, any legislative invalidity, repeal or negative amendment or failure to
implement planned legislation could result in a reduction in the demand for photovoltaic facilities and
consequently in a loss of demand for the products distributed by the aleo solar Group. This could jeopardize
the sale of products and thus, the continued existence of the aleo solar Group, which, in extreme
cases, could result in investors losing their entire investment. This could have material adverse effects
on the financial condition and results of operations of the Company.
The aleo solar Group is dependent on the adequate availability of silicon on the world market
Solar cells are the most important product for further processing for the silicon-based solar modules
produced and distributed by the aleo solar Group. All photovoltaic cells currently processed by the aleo
solar Group are manufactured from silicon wafers. Silicon is the base material for the production of
silicon wafers. The limited availability of silicon due to current excess demand is affecting the entire
supply chain for the photovoltaic industry and resulting in the very limited availability of solar cells.
There are few manufacturers of silicon in the world. They will require time to increase their production
capacities. Manufacturers are usually prepared to increase their capacity only if customers have committed
themselves to purchasing the resultant increased volume. Moreover, the availability of silicon
to the photovoltaic industry could be affected by an increase in demand for silicon on the part of
manufacturers of semi-conductors.
The limited availability of solar cells places limits on the production of solar modules and consequently
on the output of the aleo solar Group. As a result of the inadequate supply of solar cells, the existing
production capacity of the aleo solar Group cannot be fully utilised and the aleo solar Group’s ability to
deliver products is adversely affected. If the current silicon shortage continues or increases, these
effects could be exacerbated. In addition, an increase in the excess demand on the silicon market
could even push up the prices of solar cells sourced by the aleo solar Group. If the aleo solar Group is
unable to pass these price increases onto its customers, the profitability of the aleo solar Group could
be adversely affected. There is also a danger that certain customers will terminate their relationship
because of the high prices of solar modules and as a result, competition in relation to remaining customers
will increase.
Should any of the aforementioned risks materialize, this could have material adverse effects on the
financial condition and results of operations of the aleo solar Group.
11

The products distributed by the aleo solar Group may have defects
The products offered by the aleo solar Group may have faults. Such product defects could cause damage
to the property of the customers of the aleo solar Group or to the property of those customers’
end consumers. Although no major product defects have arisen to date, it cannot be ruled out that the
aleo solar Group might be exposed to substantial warranty claims and claims for damages in the
future. Furthermore, should product defects arise, this could also harm the reputation of the aleo solar
Group and of the aleo brand in the market in particular and thus, the market’s acceptance of the products
distributed by the aleo solar Group. Should such claims and the loss of market acceptance materialize,
this could have material adverse effects on the financial condition and results of operations of
the aleo solar Group.
The aleo solar Group guarantees to its customers in the European Union (member states at the time
of delivery) that the solar modules supplied by it will at least, based on the minimum performance
stipulated in the solar medule data sheet, perform at 90 % for 10 years from the time of the delivery
of the solar modules to their first operator and at least at 80 % for further 10 years. The aleo solar
Group intends to offer similar or even more extensive warranties also in the future. In this regard, it
cannot be ruled out that customers will bring claims against the aleo solar Group on the grounds that
the minimum performance guaranteed has not been supplied and that such claims will exceed the
provisions recognized for covering this risk. This could have material adverse effects on the financial
condition and results of operations of the aleo solar Group.
The production of solar modules might be disrupted
aleo solar Group production could be interrupted as a result of fire, defects in machinery, strikes or
other factors. The aleo solar Group could thus suffer financial disadvantages in the form of both the
resulting damage as well as lost revenues, which could have material adverse effects on the financial
condition and results of operations of the aleo solar Group.
It cannot be guaranteed that the aleo solar Group will be able to achieve sufficient cost reductions
and product and process-related improvements
The EEG provides for a continuous annual reduction of the minimum feed-in tariff for electricity produced
by photovoltaic means. It can therefore be assumed that market prices for solar modules will
tend to systematically decline over the medium to long term. No assurance can be given that the aleo
solar Group can achieve sufficient cost reductions and product and process-related improvements of
an adequate scale to compensate for such decline in price. Should cost reductions and product and
process-related improvements lag behind the price reductions for solar modules, this could have material
adverse effects on the financial condition and results of operations of the Company.
The German photovoltaic market could become saturated
Germany is the aleo solar Group’s chief market and will remain so at least in the medium term. When
a large number of potential end consumers who are receptive to the idea of renewable energy sources
already possess a photovoltaic system, this could result in the market reaching saturation point,
prompting a reduction in demand for the aleo solar Group’s products. Unless the photovoltaic industry
succeeds in finding new customer segments and unless the aleo solar Group acquires new markets
in particular, the demand for the products distributed by the aleo solar Group could fall. This could have
material adverse effects on the financial condition and results of operations of the Company.
A reduction in the price of conventional forms of energy could affect the demand for solar
energy systems
The current strong demand for photovoltaic systems can partly be explained by the fact that the prices
of conventional forms of energy has risen strongly in the past. The higher the price of energy derived
from conventional sources, the more economically attractive is alternative energy obtained from photovoltaic
systems. Conversely, a reduction in the market prices of conventional energy sources such as
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oil and gas could make alterative energy sources such as photovoltaics appear a less attractive alternative
and could lead to a fall in the demand for photovoltaic systems, causing prices to come under
substantial pressure and resulting in material adverse effects on the financial condition and results of
operations of the aleo solar Group.
Rising interest rates could have a negative impact on the demand for solar energy systems
Grid-connected photovoltaic systems are largely financed by borrowing capital. The historically low
level of interest rates and the resulting low cost of borrowing capital have had a positive impact on the
profitability of photovoltaic systems and thus contributed to an increase in the demand for solar energy
systems. By increasing the cost of borrowing capital, an increase in interest rates could reduce the
profitability of photovoltaic systems and thus reduce the demand for both photovoltaic and solar
energy systems. Rising interest rates could therefore have material adverse effects on the financial
condition and results of operations of the aleo solar Group.
Excess capacity on the part of producers of solar modules could significantly increase the
supply of solar modules and lead to greater competition
Regardless of the current bottlenecks in the supply of solar cells, the manufactures of solar modules
have, in view of robust demand, invested extensively in the expansion of their production capacity,
and the possibility of additional market capacity being developed, especially by competitors in countries
with low labour costs, cannot be ruled out. At present, the manufacturers of solar modules cannot
fully utilise their existing capacity. If the situation with respect to the supply of silicon eases, it is
possible that the existing production capacities will be fully utilised and the development of additional
production capacity will be accelerated, resulting in the excess supply of solar modules. Such oversupply
could lead to increased competition and a considerable reduction in market prices for solar modules.
This could have material adverse effects on the financial condition and results of operations of
the Company.
The aleo solar Group is competing against large corporate groups
Current and potential competitors of the Company in part include enterprises that have greater financial,
technical and personnel resources than the aleo solar Group (e. g., large international corporate
groups). Consequently, these suppliers are in a position to maintain an aggressive price policy over a
very long period of time and gain considerable market share at the expense of the aleo solar Group.
This could have material adverse effects on the financial condition and results of operations of the aleo
solar Group.
Competition could intensify because of the vertical integration of solar cell manufacturers
As a result of the vertical expansion of their share of the value chain in the photovoltaic segment, new
competitors could emerge, especially in the field of solar cells manufacturers. By having a secure
supply of solar cells, these competitors could utilise their capacity to the full and thus offer the solar
modules produced by them to the market at lower prices.
No assurance can be given that the aleo solar Group will continue to be successful in standing up to
current and possible future competition. Any impairment of the competitive position of the aleo solar
Group for the aforementioned reasons could have material adverse effects on the financial condition
and results of operations of the aleo solar Group.
The current or future interlinking of competitors and suppliers could bring considerable
disadvantages to the aleo solar Group
In some cases, there are close relationships between the aleo solar Group’s suppliers and its competitors.
Moreover, it cannot be ruled out that in the future, the aleo solar Group’s competitors will
acquire control or influence over the suppliers of the aleo solar Group by acquiring equity interests in
them. Many of the aleo solar Group’s competitors are also active in the production of solar cells.
13

It cannot be ruled out that as a result, the aleo solar Group’s competitors may be able to obtain solar
cells on a greater scale and on better terms than the aleo solar Group itself. In view of the limited
supply of solar cells at the present time, the availability of solar cells is a decisive competitive factor. If
solar cells are not available to the aleo solar Group in sufficient quantities or at market prices, the competitive
position of the aleo solar Group could be impaired. The factors described above could have
material adverse effects on the financial condition and results of operations of the aleo solar Group.
There are relatively few barriers to entering the market for the production of solar modules
The production processes employed by the aleo solar Group to manufacture solar modules are based
on specific know-how obtained from experience, but is not protected by any patents or other intellectual
property rights. This means that potential competitors cannot be prevented from entering the
market by means of intellectual property rights. Unlike silicon extraction as well as wafer and cell production,
solar module production is less complex and consequently, the building-up of production
capacities much less capital-intensive. This, too, may be conducive to the market entry of new competitors.
Market entry by further competitors could put pressure on the market prices of solar modules,
thus having material adverse effects on the financial condition and results of operations of the
aleo solar Group.
There are risks associated with possible acquisitions, equity interests and joint ventures
The aleo solar Group intends to continue to grow organically as well as through the possible acquisition
of companies in part or in their entirety or by participating in joint ventures. For this reason, the
risk position of the aleo solar Group may potentially be subject to considerable changes in the future.
The acquisition of companies, whether in whole or in part, or the participation in joint ventures is associated
with considerable investment outlays and risks. They include the risk of the aleo solar Group
being unable to keep or maintain and integrate the employees or business relationships of the newly
acquired company or parts of companies, or fails to realize the desired growth objectives, economies
of scale or cost savings or fails to start up production on time and on budget as well as the risk of
disagreements occurring with joint venture partners or of negative development with respect to a
strategic equity interest. The success of future acquisitions of companies, whether in whole or in part,
or of participation in joint ventures, therefore, cannot be assured.
Erroneous assessments of risks as well as any other failures associated with acquisitions, whether in
whole or in part, or with participation in joint ventures could have material adverse effects on the financial
condition and results of operations of the aleo solar Group.
There are risks associated with the current and further growth of the aleo solar Group
The aleo solar Group has grown considerably in recent years and has set itself the goal of advancing
such growth. This involved and involves expanding the personnel structure in qualitative and quantitative
terms, further developing organisational structures and creating certain technical resources. In
connection with the intended growth, this applies in particular to the areas of administration, finances,
i. e., accounting, cost accounting, planning and controlling, risk management as well as investor relations
and the further development of the risk management system. The publicity and follow-up obligations
resulting from the IPO of the aleo solar Group will also put increased demands on the finance
and accounting departments of the aleo solar Group. If the organisational and personnel structures as
well as technical resources are not adjusted to meet the aforementioned requirements or if there is a
delay in doing so, this could result in flawed development or in business-related or administrative
lapses that could cause a considerable financial burden for the aleo solar Group. The Company cannot
rule out the possibility that other important tasks will be neglected if management resources are tied
up in connection with the aforementioned areas of responsibility. This could have material adverse
effects on the business as well as financial condition and results of operations of the aleo solar
Group.
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Under certain circumstances the Company may have to repay investment grants and premiums
or investment grants and premiums may not be disbursed in full
Since 2001, the aleo solar Group’s financing requirements for the development and expansion of production
capacity have partly been satisfied through public grants and premiums in the amount of
approximately TEUR 8,530. The allocation decisions received by the Company contain conditions,
regarding the creation of jobs, for example. Failing to meet these and certain other conditions during
the commitment period, which as a rule do not end until five years after the specified investment
period, may trigger a demand for repayment of the investment grants and premiums received. It is
also possible that if the Company received assistance on the basis of its status as an SME at the time
of application, such assistance may have to be repaid if the status of the aleo solar Group subsequently
changes. Assistance already granted could also be subject to repayment if other legal requirements
were not fulfilled at the time of allocation or have been subsequently abolished, secondary
conditions were not complied with or the funds were not used in accordance with their designated
purpose. It is also possible that public grants or aid which the aleo solar Group plans to receive in the
future in connection with its business operations will not be allocated to it. Should the Company incur
repayment obligations or fail to receive planned assistance, this could have material adverse effects
on the financial condition and results of operations of the aleo solar Group.
The solar energy system business is exposed to seasonal fluctuations
The sale of solar energy systems is exposed to seasonal fluctuations, which are particularly attributable
to adverse weather conditions that prevent the installation of the systems.
The Company is seeking a listing in the Prime Standard sub-segment of the official market segment of
the Frankfurt Stock Exchange and is therefore obliged to release financial information every quarter.
Seasonal fluctuations in the aleo solar Group’s business will be reflected in these quarterly reports.
This could result in an equivalent fluctuation in the stock exchange prices of the Company’s shares.
The aleo solar Group is dependent on a few main suppliers
The aleo solar Group sources solar cells from a few main suppliers and is dependent on one very large
supplier in particular. There is no guarantee that these suppliers will fulfil their commitments punctually
and in full. Should one of these suppliers be unable or only partially able to meet its delivery obligations
for any reason (for example, insolvency or an interruption in production), especially as a result of
current excess demand, it cannot be guaranteed that the Company will be able to source solar cells in
the required volume from other suppliers at short notice or on the open market (spot market). Therefore,
the aleo solar Group is very much dependent on its main suppliers of solar cells.
Even if long-term delivery contracts are concluded, there is no guarantee that solar cells will be delivered
during the entire life of the contract. Delivery contracts permit suppliers to reduce the volume of
deliveries if they themselves cannot acquire sufficient quantities of silicon wafers. Even if the wording
of the contracts establishes a delivery obligation, this does not ensure that deliveries will be made in
the full amount, on time, or in the agreed quality.
Furthermore, it cannot be ensured that the Company will be in a position to conclude contracts with
suppliers for an adequate volume of solar cells in the future.
It is also possible that bottlenecks may occur with the supply of other materials required for solar module
production (e. g. solar glass, foils and frames).
Should such circumstances result in an inadequate supply, the aleo solar Group will be unable to
manufacture and sell the corresponding volume of solar modules. This could have material adverse
effects on the financial condition and results of operations of the aleo solar Group.
15

The aleo solar Group has entered into extensive and partly long-term purchase obligations in
regard to solar cell suppliers
Under current delivery contracts with its suppliers, the aleo solar Group is required to purchase and
render payment for the agreed delivery volumes of solar cells. On the other hand, there are no appropriate
long-term supply contracts with customers.
It cannot be ruled out that the Company will be forced to buy solar cells at prices that are above the
market prices at the time of delivery. The resultant negative costs structure could have a negative
impact on the Company’s competitiveness.
Long-term commitments to buy solar cells might one day be accompanied by a decreasing demand
for the solar modules manufactured by the aleo solar Group. In such case, the Company would have
to buy and pay for cells that it is unable to process and sell to customers.
If these risks involving sales and price changes materialize, they could have material adverse effects
on the financial condition and results of operations of the aleo solar Group.
Advance payments under the terms of solar cell delivery contracts expose the aleo solar Group
to the risk of supplier default
In connection with long-term contracts for the delivery of solar cells, the aleo solar Group makes considerable
advance payments towards the price of these cells. Under the terms of delivery contracts
concluded up to May 2006, the aleo solar Group is obliged to pay TEUR 1, 614 and approximately TUSD
7, 588, which is payable in 2006 and has already been paid in part. This practice is largely dictated by
the current limited availability of silicon, and, therefore, of solar cells as well. It could make strategic
sense for the aleo solar Group to conclude further contracts in which it commits itself to making
advance payments, but without receiving any security. If such advance payments are made, the aleo
solar Group faces the risk that cells will not be delivered at all or not to the extent agreed upon, and its
claims against the suppliers turn out to be unenforceable. In some cases, advance payments may not
be recoverable even if the solar cell deliveries that were agreed upon do not take place. This kind of
default could have material adverse effects on the financial condition and results of operations of the
aleo solar Group.
The planned expansion of foreign activities and the planned entry into new geographical
markets conceal risks
The aleo solar Group’s core business so far has been the production and distribution of solar modules
on the German market, but the aleo solar Group now intends to further internationalize its business
activities. For this purpose, aleo solar AG has established subsidiaries in Spain. These subsidiaries are
to produce and distribute solar modules in Spain. The aleo solar Company is also considering developing
its operations in other countries. This internationalisation of business involves a series of risks.
There is a danger that there will be considerable delay in the launching of production in Spain. The risks
also mainly include the prevailing general economic, legal and tax-related conditions in the individual
countries, unanticipated changes in regulatory requirements and the observance of a number of foreign
laws and regulations. In addition, there are further risks of trade restrictions and changes in customs
tariffs associated with international activities. The operation and protection of IT structures and
the establishment and maintenance of appropriate risk management and controlling structures regularly
present special challenges to cross-border business activities. A change in one or more of the
factors described above may have material adverse effects on the financial condition and results of
operations of the aleo solar Group.
Rapid technological change could be disadvantageous for the aleo solar Group
The photovoltaic market is experiencing rapid technological change and the frequent introduction of
new and improved products and services result in short product life cycles, as well as customer
requirements that are new and constantly changing.
16

A decisive factor for the success of the aleo solar Group is the timely identification of new technical
developments of importance to the market for solar modules, so as to ensure that appropriate technological
developments may be exploited for own production or that production can otherwise keep
pace with technological developments. There is a particular risk that competitors will introduce new
solar modules sooner or at cheaper prices, or may secure exclusive rights to new technologies.
Currently, the aleo solar Company only produces solar modules consisting of solar cells made of silicon.
It is possible that, for example, solar modules manufactured using various thin-film technologies
will partially or completely replace the silicon-based solar modules over the medium term or long
term.
If such processes based on thin-film technology should bring considerable cost advantages and if the
aleo solar Group should fail to adapt to such a development in good time by means of, for instance,
acquiring an interest in Johanna Photovoltaic Technology GmbH as has already occurred, and thus
benefits from the new technology to an extent that affords compensation for the resulting losses in
the field of producing solar modules based on crystalline silicon cells, this could have a material
adverse effect on its financial condition and results of operations.
Furthermore, the market for photovoltaic products is also in competition with other renewable energy
sources such as wind energy, biomass or geothermal heat, which, for technical, commercial or regulatory
reasons, might develop better than photovoltaics and establish themselves on the renewable
energy market. This could have material adverse effects on the financial condition and results of operations
of the Company.
The investment in Johanna Solar Technology GmbH might fail to meet expectations
The Company holds a 19 % equity interest in Johanna Solar Technology GmbH . Johanna Solar Technology
GmbH is a company that came into being on 18 January 2006 upon being entered in the commercial
Register but which has not started operating yet. Its production capability is being developed
at present and it is expected to start manufacturing thin-film technology on the basis of CIGSSe technology
in 2007. This company plans to manufacture thin-film solar cells using CIGSSe technology.
However, the CIGSSe technologies employed by other companies might prove superior to that of
Johanna Solar Technology GmbH. There is also the risk of significant delays in the launching of production
using this technology (as a result of, for example, financing delays, technical problems with the
design of production machinery or the development of production processes) as well as the risk of
overspending. Some market participants are already offering products manufactured on the basis of
comparable photovoltaic technologies. Others could complete making such photovoltaic technologies
ready for the market and for cost-effective production faster, thus substantially increasing the pressure
on costs. No assurance can be given that Johanna Solar Technology GmbH will succeed in establishing
profitable and competitive mass production using CIGSSe technology. Further risks stem from the
fact that the Company only holds a minority interest at the present time and can therefore only influence
the business of Johanna Solar Technology GmbH to a very limited extent. Because of the risks
referred to above, the Company’s equity interest in Johanna Solar Technology GmbH could prove to be
an erroneous investment, whether in whole or in part, resulting in a total or partial write-off of the
interest. Moreover, the strategy of holding an equity interest in Johanna Solar Technology GmbH may
mean that it will not be possible to implement the planned expansion of the business to include thinfilm
technology and that the thin-film solar modules made by Johanna Solar Technology GmbH may
not be available to the aleo solar Group for distribution or not available in the planned amount. The
materialization of one or more of the aforementioned risks could have material adverse effects on the
financial condition and results of operations of the aleo solar Group.
The aleo solar Group is dependent on people holding key positions
The success of the aleo solar Group depends on those of its management and specialist personnel
holding key positions. Many of them possess extensive experience and would be difficult to replace.
Competition over specialist personnel is intense in the photovoltaic industry. The aleo solar Group may
not succeed in attracting new qualified employees. A migration of managerial and other specialist per-
17

sonnel away from the Company to competitors might place the competitors in a position to exploit the
aleo solar Group’s know-how.
In connection with its planned growth, the aleo solar Group is faced with the task of recruiting additional
managerial personnel and additional specialist personnel in order to be able to operate successfully
on, for example, new target markets.
If the aleo solar Group loses managerial or technical specialist personnel holding key positions or fails
to attract suitable personnel in the future, this could have material adverse effects on the financial
condition and results of operations of the aleo solar Group.
A change in foreign currency exchange rates could bring the aleo solar Group financial disadvantages
The Company’s consolidated financial statements are prepared in euros. Whilst the revenues of the
aleo solar Group are generated almost exclusively in euro, the aleo solar Group has hitherto incurred
expenditures denominated in USD on a modest scale. The share of expenses invoiced in USD will
already increase in 2006 and possibly later as well. The aleo solar Group has not fully hedged itself
against the resulting exchange rate risk. Therefore, an increase in the value of the US dollar against the
euro could lead to an increase in aleo solar Group’s expenditures that would not be offset by any corresponding
increase on the income side.
As a result of the internationalisation of its business operations, it cannot be ruled out that the aleo
solar Group will be exposed to increased exchange rate risks and in relation to other currencies too.
The materialization of these risks could have material adverse effects on the financial condition and
results of operations of the aleo solar Group.
The aleo solar Group maintains various business relationships with related parties
In the past, the aleo solar Group maintained various business relationships with enterprises in which
members of its Management Board or Supervisory Board held interests at the time when the transactions
concerned were concluded or which were led by members of its Management Board or Supervisory
Board in the capacity of general manager or CEO at the time when the transactions concerned
were concluded .
It cannot be ruled out that transactions will be concluded with related parties in the future . Such transactions
could result in a conflict between the interests represented by the relevant member of Management
Board or Supervisory Board of the aleo solar Group on the one hand, and the interests of the
relevant member of the Management Board or Supervisory Board as the representative or shareholder
of the contractual party on the other hand. Such conflicts of interests could have material
adverse effects on the financial condition and results of operations of the aleo solar Group.
The aleo solar Group could be exposed to demands to pay tax arrears relating to previous
assessment periods
In 2005, an audit was performed of the Company’s financial records for the financial years 2001–2003.
Th e results of the audit have not been made available so far . It cannot be ruled out that the Company
might have to pay tax arrears as a result of it . The provisions for tax liabilities for the financial years
2004 and 2005 might prove insufficient, and future audits relating to other financial years might result
in the need to pay tax arrears. These tax risks could have material adverse effects on the financial condition
and results of operations of the aleo solar Group.
18

The aleo brand and the aleo solar Group’s business could suffer if the aleo solar Group is unable
to defend its intellectual property rights against third parties or becomes involved in litigation
in such regard
If the aleo solar Group is unable to defend its intellectual property rights to the aleo brand, this could
affect both the aleo brand and the reputation of the aleo solar Group, detract from the value of its
products in the eyes of its customers and impair its competitiveness. Moreover, asserting or defending
its intellectual property rights or the aleo brand could give rise to substantial costs and could otherwise
tie up its management resources to a high degree. The measures taken by the aleo solar Group
might not be sufficient to prevent the infringement of its intellectual property. The aleo solar Group
might not be able to detect any such unauthorised use in the first place or might not undertake any
suitable steps to enforce its intellectual property rights. This could have material adverse effects on
the financial condition and results of operations of the aleo solar Group.
The aleo solar Group might infringe the intellectual property rights of third parties
The aleo solar Group cannot, with absolute certainty, exclude the possibility that it may infringe the
intellectual property rights of third parties while carrying on its business. In addition, it cannot be fully
ruled out that third parties may be granted intellectual property rights in the future that would restrict
the aleo solar Group in the conduct of its business operations.
Furthermore, the aleo solar Group could find itself involved in litigation concerning the alleged infringing
of the industrial property rights of third parties. Such disputes could last a long time and result in
the tying up of considerable personnel and financial resources. In the event that the outcome of such
legal dispute is negative for the aleo solar Group, the aleo solar Group companies could be ordered to
pay substantial damages (in certain cases, e. g. in the event of a legal dispute in the United States, be
required to pay substantial fines). This could have material adverse effects on the financial condition
and results of operations of the Company.
New legal requirements might be introduced compelling photovoltaic industry companies to
convert production processes or withdraw products
For the time being, the photovoltaic industry is not affected, or just marginally affected, by the European
WEEE (waste of electric and electronic equipment) or RoHS (restriction of the use of certain
hazardous substances) legal requirements, in relation to the presence of lead in solder, for example.
However, it is possible that these requirements will be extended to the photovoltaic industry. In such
case, if the aleo solar Group is unable to offset the additional costs of restricting the use of hazardous
substances or of taking back waste left over from the solar modules it produces by increasing the
prices it charges its customers, this could have material adverse effects on the financial condition and
results of operations of the aleo solar Group.
Risks Related to the Offering
Public trading in the Company’s shares might not develop
Prior to the Offering, there was no public trading in the Company’s shares. No assurance can be given
that liquid trading in the shares of the Company will develop after the Offering and that the stock
exchange price will not fall below the purchase price established for the Offering. The purchase price
for the shares is to be determined by way of a book-building procedure and will not necessarily provide
any indication of the stock exchange price at which the shares will subsequently be traded on the
Frankfurt Stock Exchange or any other exchange. The Company cannot forecast to what extent investors’
interest in its shares will foster trading, nor how liquid trading could become. The stock exchange
price of the Company’s shares could become subject to greater volatility and consequently, buy and
sell orders might be executed less efficiently as a result. Under certain circumstances, investors might
not be able to sell their shares at the purchase price fixed for the Offering or at a higher stock exchange
price, or might not be able to sell them at all.
19

A volatile stock exchange price for the shares might develop
After the Offering, the stock exchange price of the Company’s shares could fluctuate considerably,
especially because of fluctuating actual or forecasted results, revised earnings outlooks, the failure to
meet analysts’ expectations, changed economic conditions in general, or other factors. The general
volatility of stock exchange prices could also exert pressure on the stock exchange price of the Company’s
shares without there being any direct connection with the aleo solar Group’s business, its
financial condition or earnings position, or its business prospects. Because the shares are growth
stocks, the Company’s shares are particularly susceptible to fluctuations
The selling of shares by the existing shareholders could depress the share price
Immediately after the Offering is closed, the existing shareholders will hold approximately 53.07 % of
the share capital (or approximately 46.03 % if the Greenshoe option is fully exercised) and of the Company
voting rights. The exist ing shareholders have given an undertaking that shares or securities that
can be converted to, exchanged for or realized as shares in the Company will not be offered for sale,
sold or become the subject of other transactions with the same economic effect as a sale for a period
of six months following the commencement of trading and – with the exception of S. M. D. Beteiligungsgesellschaft
mbH and Mr. Dettmann – for a period of a further six months may only be sold with
the written permission of Commerzbank AG. The Company cannot give any assurance that the existing
shareholders will abide by this undertaking. There is no way of telling what effect future sales of
shares might have on the stock exchange price or market price of the shares. Should the existing
shareholders sell their shares, whether in part or in their entirety and whether before or after the
expiry of the lock-up period, this could adversely affect the stock exchange price or market price. Such
sales could also make it more difficult for the Company to issue new shares in the future at a time and
at a price that it deems appropriate. No assurance can be given that the existing shareholders will not
engage in transactions involving the shares of the Company after the expiry of any lock-up period.
There could be a conflict of interest with the existing shareholders
Immediately after the Offering is closed, the existing shareholders will hold approximately 53.07 % of
the share capital (or approximately 46.03 % if the Greenshoe option is fully exercised) and of the Company
voting rights. Moreover, six existing shareholders or representatives of existing shareholders
belong to the Supervisory Board for the time being. Through their shareholdings, the existing shareholders
are in a position to exercise considerable influence on the Supervisory Board and the general
shareholders’ meeting, and thus on the decisions regarding measures submitted to the general shareholders’
meeting for voting. The interests of the existing shareholders could conflict with the interests
of other investors.
20

GENERAL INFORMATION
Responsibility for the Content of the Prospectus
aleo solar AG , COMMERZBANK Aktiengesellschaft, Bayerische Hypo- und Vereinsbank AG, München
and Joh. Berenberg, Gossler & Co. KG, Hamburg, assume responsibility for the content of this Prospectus
pursuant to Section 5(4) of the German Securities Prospectus Act (Wertpapierprospektgesetz)
and hereby declare that to their knowledge the information contained in this Prospectus is accurate
and no material facts have been omitted and that the necessary care has been exercised to ensure
that the information contained in this prospectus is accurate and that no such facts have been omitted
as are likely to alter the statements contained in this Prospectus.
Subject Matter of the Prospectus
The subject matter of this Prospectus for the purposes of the public offering of securities is a total of
up to 7,033,061 registered no-par value ordinary consisting of
• up to 2,850,400 registered no-par value ordinary shares resulting from the capital increase against
cash contributions resolved by the extraordinary general shareholders’ meeting of 23 May 2006,
and
• up to 3,265,306 registered no-par value ordinary shares owned by the Selling Shareholders, and
• up to 917,355 registered no-par value ordinary shares owned by the Greenshoe Shareholders to
cover potential over-allotments.
The subject matter of this Prospectus for the purposes of stock exchange admission is a total of up to
13,030,400 registered no-par value ordinary consisting of
• 10,180,000 registered no-par value ordinary shares (existing share capital), and
• up to 2,850,400 registered no-par value ordinary shares resulting from the capital increase against
cash contributions resolved by the extraordinary general shareholders’ meeting of 23 May 2006.
Forward-Looking Statements
This Prospectus contains certain forward-looking statements. Forward-looking statements are all
statements that do not concern historical facts and events.
The foregoing particularly applies to those statements contained in this Prospectus that relate to
future financial earnings capacity, plans and expectations concerning the business and management
of the aleo solar Group, growth and profitability as well as the economic and regulatory environment
and other factors to which the Company is exposed.
These forward-looking statements are based on current estimates and assumptions made by the
Company to the best of its knowledge. If an uncertain event should materialise or fail to materialise,
this could cause actual results, including the financial position and results of operations of the aleo
solar Group, to deviate from or be more negative than those expressly or implicitly assumed or
described in the forward-looking statements. The business of the aleo solar Group is subject to a number
of risks and uncertainties that could also result in a forward-looking statement, estimate or projection
being erroneous. That is why investors are urged to read the sections entitled “Summary of the
Prospectus,” “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and
Results of Operations,” “The Business of the aleo solar Group“, and “Information about the Recent
Course of Business and Outlook,” which include a detailed account of those factors that influence the
course of business of the ale o solar Group and the market in which it operates.
21

Given the aforementioned risks, uncertainties and assumptions, the future events referred to in this
Prospectus may fail to materialise. In addition, the forward-looking estimates and forecasts taken from
third-party studies and repeated in this Prospectus may prove to be inaccurate. Neither the Company,
its Management Board nor the Underwriters can give any assurance in respect of the future accuracy
of the views expressed in this Prospectus or for the actual materialisation of the trends that are forecast.
In addition, attention is drawn to the fact that neither the Company nor the Underwriters have
given any undertaking to update the forward-looking statements or to adjust them to future events or
developments unless required to do so by statute as in the case of the Offering or material changes to
the information contained in the Prospectus.
Note on the Sources of Market Data
This Prospectus contains a number of references to data, statistical information and third-party studies,
especially with regard to subjects such as the supply of energy, photovoltaics, the supply of silicon
and similar matters. The Company has communicated such information correctly and, to the extent
that the Company is aware and was able to infer from the information published, no facts have been
omitted such as could result in the information being presented in a false or misleading manner. Nevertheless,
investors should carefully consider this information. Market studies are frequently based on
information and assumptions that might neither be exact or appropriate and the methodology underlying
them is forward-looking and speculative by nature. Investors should take into account that the
estimates made by the Company are based on such market studies prepared by third parties. Notwithstanding
the responsibility assumed by the Company and the Underwriters for the content of the
Prospectus (see “General Information – Responsibility for the Content of the Prospectus), the Company
and the Underwriters have not verified the figures, market data and other information on which
third parties have based their studies and therefore neither guarantee nor assume responsibility for
the accuracy of the information obtained from third-party studies included in this Prospectus.
List of Sources
This Prospectus contains references to the following publicly available sources:
• Sonne, Wind und Wärme: “Die PV-Industrie rüstet auf”, February 2006, p 36 et seq.
• Sonne, Wind und Wärme: “In Zukunft nur mit Marke”, May 2005, p 48 et seq.
• Stiftung Warentest: “Mehr Licht als Schatten”, May 2006, p 66 et seq.
• Photon International: “Silicon shortage – so what”, March 2006, p 100 et seq.
• Sarasin Study: “Solarenergie 2005”, November 2005
• Sarasin Lecture: “PV Market Development and Perspectives”, SEMICON 5 April 2006
• PVPS-Report IEA-PVPS T1-14:2005: “Trends in Photovoltaic Applications – Survey report of selected
IEA countries between 1992 and 2004”, September 2005
• LBBW Study: “Branchenanalye Photovoltaik 2005 – Das industrielle Zeitalter beginnt”, April 2005
• Ernst & Young study: “Photovoltaik in Deutschland 2005”, December 2005
Definitions
The term “Eriksen Group” refers to all current shareholders of the Company with the exception of
the members of the Management Board of the Company, Mr. Walter Vick and Mr. Detmar Dettmann,
and S. M. D. Beteiligungsgesellschaft mbH.
The term “Greenshoe Shareholders” refers to S. M. D. Beteiligungsgesellschaft mbH and Mr. Detmar
Dettmann .
22

The term “Selling Shareholders” refers to S. M. D. Beteiligungsgesellschaft mbH, EPR Bauprojekt
GmbH, Mr. Helmut Bögershausen, Ms Thi Minh Bui, Mr. Arthur Alber, Mr. Manfred Wigger and
Mr. Detmar Dettmann.
The term “aleo solar Group” refers to aleo solar AG and its subsidiaries.
The term “Company” refers to aleo solar AG.
The term “Underwriters” refers to COMMERZBANK Aktiengesellschaft, Bayerische Hypo- und Vereinsbank
AG, München and Joh. Berenberg, Gossler & Co. KG, Hamburg .
For an explanation of the abbreviations and technical terms used in this Prospectus, see the sections
entitled “List of Abbreviations” and “Glossary.”
Note on Foreign Currency and Financial Information
This Prospectus contains information denoted in euros and US dollars. “EUR” is used before foreign
currency information denoted in euros and the abbreviated form “TEUR” is used for foreign currency
information referring to thousands of euros. “USD” is used before foreign currency information
denoted in US dollars and the abbreviated form “TUSD” is used for foreign currency information referring
to thousands of US dollars.
Individual figures (including percentages) presented in this Prospectus have been rounded in line with
standard business practice. In certain cases, the figures rounded in such way do not correspond
exactly to the aggregated sums shown in the tables.
Inspection of Documents
For the duration of the validity of this Prospectus, the following documents can be inspected at the
offices of aleo solar Deutschland GmbH, Osterstr. 15, 26122 Oldenburg, during normal business
hours:
(i) the Articles of Association of the Company and the by-laws for the Management Board and Supervisory
Board;
(ii) the annual financial statements (in accordance with German-GAAP (HGB)) of the Company for the
financial year as at 31 December 2005;
(iii) the consolidated financial statements (in accordance with IFRS) of the Company for the financial
years as at 31 December 2003, 31 December 2004 and 31 December 2005; and
(iv) the unaudited quarterly financial statements (in accordance with IFRS) as at 31 March 2006.
23

Subject Matter of the Offering
24
THE OFFERING
The Offering consists of a public offering in the Federal Republic of Germany and private placements
in certain other jurisdictions outside the Federal Republic of Germany and outside the United States of
America, and relates to registered no-par value ordinary shares created on the basis of the German
Joint Stock Corporation Act (Aktiengesetz – AktG) with a notional share of EUR 1.00 in the share capital
and conferring full dividend rights as of 1 January 2006. The Offering comprises up to 2,850,400
shares deriving from the capital increase against cash contributions, with the subscription rights of
existing shareholders excluded, as resolved by the extraordinary general shareholders’ meeting of
23 May 2006, up to 3,265,306 shares currently owned by the Selling Shareholders as well as up to
917,355 owned by the Greenshoe Shareholders. The shares forming the subject matter of this Offering
were created in accordance with Sections 182(1) and 186(3),(4) of the AktG as a result of the capital
increase resolved by the extraordinary general shareholders’ meeting of the Company held on 23 May
2006 as well as in connection with the transformation of S. M. D. Solar-Manufaktur Deutschland GmbH
into aleo solar Aktiengesellschaft on the basis of Sections 190, 266, 247 248 of the German Reorganisation
Act (Umwandlungsgesetz – UmwG) and Sections 1(2), 8, 10 of the AktG.
Of the up to 3,265,306 offered shares owned by the Selling Shareholders, 2, 276,703 are owned by
S. M. D. Beteiligungsgesellschaft mbH, 707,000 by EPR Bauprojekt GmbH, 190,000 by Mr. Helmut
Bögershausen, 30,000 by Ms Thi Minh Bui, 20,000 by Mr. Arthur Alber, 20,000 by Mr. Manfred Wigger
and 21,603 by Mr. Detmar Dettmann.
Of the up to 917,355 shares offered in the event of an over-allotment, 907, 439 are owned by S. M. D.
Beteiligungsgesellschaft mbH and 9,916 Mr. Detmar Dettmann .
General and Specific Information about the Shares
Form and representation of the shares
The offered shares are registered no-par value ordinary shares. The shares will be represented by one
or more global share certificates without dividend warrants and deposited with Clearstream Banking
AG, Neue Börsenstrasse 1, 60487 Frankfurt am Main, as a securities clearing and deposit bank. The
right of shareholders to receive definitive share certificates for their shares is excluded by the articles
of association.
Entitlement to dividends and voting rights
The offered shares confer full dividend rights as of 1 January 2006. Each offered share confers one
vote at the general shareholders’ meeting of the Company. Voting rights are not subject to any restrictions.
Transferability
The shares are freely transferable.
ISIN/Trading Symbol/Common Code
International Securities Identification Number (ISIN): DE000A0JM634
Trading Symbol: A0JM63
Common Code: 025908597

Price Range, Offer Period, Offer Price and Allotment
The price range within which offers to purchase the shares can be placed is expected to be published
before the commencement of the offer period in the form of a supplement to this Prospectus on the
webpage of the Company (www.aleo-solar.de) on 10 July 2006. A notice of advice concerning the
supplement is expected to appear in Frankfurter Allgemeine Zeitung on 11 July 2006. The shares will
begin to be marketed before the announcement of the price range and the commencement of the
offer period. Should, due to adjustments or for other reasons, offers to purchase the shares
– contrary to the procedure set out in the timetable of the offer – already have been submitted
prior to the commencement of the offer period the investors have the right to revoke such
offers to purchase the shares within a period of two working days upon the publication of the
formal notice.
The offer period is expected to commence on 10 July 2006 (inclusive) and ends on 1 3 July 2006 at
12 noon (CET) for private investors and at 5 pm (CET) for institutional investors. Within this period,
investors can submit purchase offers to the Underwriters. Purchase offers can be withdrawn up until
the end of the offer period. The Offering is addressed to institutional and private investors. Multiple
subscriptions are permitted.
The Company and the Selling Shareholders reserve the right, in consultation with Commerzbank AG,
to increase or reduce the number of offered shares, to reduce or increase the upper and/or lower limit
of the price range and/or to extend or shorten the offer period. In such case, any change will be
announced in the form of an ad-hoc disclosure and as a supplement to this Prospectus. Investors who
have submitted purchase offers will not be informed individually. Purchase offers already submitted
will remain valid despite such change. However, investors who have submitted purchase offers before
the publication of the supplement have the right, under the German Securities Prospectus Act (Wertpapierprospektgesetz),
to withdraw their purchase offers within two days of the publication of the
supplement. Instead of withdrawing a purchase offer, it also possible to change purchase offers submitted
before publication of the supplement within two days of the publication of the supplement or
to submit new or unlimited purchase orders.
Upon the expiry of the offer period, the purchase price will be determined by the Company, the Selling
Shareholders and, in the event of an over-allotment, the Greenshoe Shareholders as well as the Sole
Bookrunner with the help of the order book (i. e. a list of all the purchase orders received showing the
different prices at which investors would be prepared to purchase the offered shares) built during the
book-building procedure. The final decision regarding the placement price and allotment will depend
on various factors, including demand, the anticipated orientation of individual investors and the prospects
for the development of the price of the shares following the commencement of trading. Once
the placement price has been determined, the offered shares will be allotted on the basis of the offers
submitted by investors. The placement price is expected to be announced on 1 3 July 2006 by way of
an ad hoc disclosure communicated by means of an electronic news system and carried on the website
of the Company (www.aleo-solar.de) as well as no earlier than on the second working day following
that date by means of a notice placed in the Frankfurter Allgemeine Zeitung. Investors who have
placed an offer to buy shares with one of the Underwriters can obtain information about the placement
price and the number of shares allotted to them as of 1 4 July 2006 from the Underwriter. It is
expected that the allotted shares will be traded on the official market ( Amtlicher Markt) of the Frankfurt
Stock Exchange on 1 4 July 2006 for the first time. The allotted shares are expected to be delivered
in book-entry form against payment of the placement price on 14 July 2006. If, in particular, the placement
volume should prove to be insufficient to satisfy all the orders placed at the placement price, the
Underwriters reserve the right to reject orders or to accept them in part only.
25

Offering Timetable
The timetable for the Offering is expected to be as follows:
23 May 2006
29 June 2006
30 June 2006
7 July 2006
10 July 2006
11 July 2006
13 July 2006
13 July 2006
13 July 2006
13 July 2006
14 July 2006
18 July 2006
Delivery and Settlement
26
Resolution of the general shareholders‘ meeting of the Company concerning
the capital increase
Approval and publication of the prospectus on the webpage of the Company
(www.aleo-solar.de)
Publication of a notice as to where the prospectus can be obtained (Hinweisbekanntmachung)
Determination of the price range
Approval of the supplement concerning the price range and publication of the
webpage of the Company (www.aleo-solar.de) and commencement of the offer
period
Publication of a notice of advice concerning the supplement in the Frankfurter
Allgemeine Zeitung
Offer period for private investors (natural persons) ends at 12 noon (CET) and
2 pm for institutional investors (CET)
Price determination and allotment
Listing approval by the Frankfurt Stock Exchange
Publication of the placement price on the webpage of the Company (www.aleosolar.de)
Commencement of trading
Delivery of the shares in book-entry form against payment of the purchase
price
The delivery of the offered shares against payment of the purchase price and of the customary brokerage
commission will probably take place on 1 8 July 2006. The shares will be delivered to shareholders
in the form of co-owners interests in the relevant global share certificates.
At the discretion of each shareholder, shares acquired under the Offering will either be credited to a
securities deposit account maintained by a German credit institution with Clearstream Banking AG,
Frankfurt am Main, for the account of the shareholder, or to the securities deposit account of a participant
in Euroclear Bank S. A./N. V., as the Euroclear system operator, or Clearstream Banking S. A.,
Luxembourg.
Allotment Criteria
General allotment criteria
With the exception of the preferential allotment (see “Preferential allotment”), no agreements concerning
the allotment procedure have been entered into between the Company, the Selling Shareholders
and the Underwriters before the commencement of the offer period. The Company, the Sell-

ing Shareholders and the Underwriters will comply with the “Principles for the Allotment of Share
Issues to Retail Investors” (“Grundsätze für die Zuteilung von Aktienemissionen an Privatanleger”)
issued on 7 June 2000 by the Exchange Expert Commission (Börsensachverständigenkommission) at
the German Federal Ministry of Finance (Bundesministerium der Finanzen). The Company, the Selling
Shareholders and, in the event of an over-allotment, the Greenshoe Shareholders as well as Commerzbank
AG will determine the details of the allotment procedures following the end of the offer period
and the Company and the Underwriters will publish them in the manner required by the allotment
principles.
Preferential allotment
The Company intends to allot shares on a preferential basis as follows: Under the preferential allotment,
the employees and Management Board of the aleo solar Group as well as selected business
partners and friends chosen at the placement price. In reliance on the possibility of granting preferential
terms afforded by Section 19a of the German Income Tax Act (Einkommensteuergesetz), the Company
has reduced the purchase price to be paid by employees of the aleo solar Group for allotted
shares by EUR 135 per person.
Stabilisation Measures, Over-Allotment and Greenshoe Option
In connection with the placement of the offered shares, Commerzbank AG will act as stabilisation
manager and may undertake measures aimed at supporting the exchange or market price of the
shares of the Company in order to offset any pressure to sell (stabilisation measures).
The stabilisation manager is not obliged to initiate stabilisation measures. Therefore, there is no guarantee
that stabilisation measures will be initiated at all. In the event that stabilisation measures are
initiated, they can be stopped at any time without prior notification. Such measures may be taken as
of the date on which trading in the shares of the Company commences and must end no later than on
the thirtieth calendar day following such date (stabilisation period). These measures may result in an
exchange or market price of the shares of the Company that is higher than it would be without taking
such measures. In addition, the exchange or market price may temporarily reach a level that cannot be
maintained on a permanent basis. In addition to the total of up to 6,115,706 shares of the Company to
be placed, up to a further 917,355 shares of the Company owned by Greenshoe Shareholders may be
allotted in connection with possible stabilisation measures (so-called over-allotment). The shares of the
Company covering a potential over-allotment have been temporarily provided to the Commerzbank AG
by the Greenshoe Shareholders under a so-called no-charge securities lending agreement.
In this connection, the Greenshoe Shareholders have granted to Commerzbank AG the option to
acquire 917,355 shares of the Company at the placement price (less agreed commissions) (Greenshoe
Option), exercisable up to the thirtieth calendar day following the commencement of trading in the
Company’s shares. The Greenshoe Option may only be exercised to the extent of the over-allotment.
Following the end of the stabilisation period, it will be announced in the Frankfurter Allgemeine Zeitung
within one week whether or not a stabilisation measure was initiated, at which dates the first and
the last stabilisation measure was initiated as well as the price range within which stabilisation measures
were carried out for each date on which a stabilisation measure was implemented. The exercise
of the Greenshoe Option as well as the period of execution, number and type of shares involved will
also be immediately published in the manner described above following the end of the stabilisation
period.
Lock-up Agreements
The Company has undertaken that for a period of six months from the commencement of trading in
the shares on the Frankfurt Stock Exchange, it will refrain from selling any shares of the Company and
27

from executing any transactions the economic effect of which would approximate a sale as well as
from issuing any new shares.
The Existing Shareholders have given an undertaking to Commerzbank AG that for a period of six
months from the commencement of trading, they will refrain from selling any shares of the Company
and from executing any transactions the economic effect of which would correspond a sale (e. g. by
means of derivative structures), although the pledging of shares is permitted provided that the respective
pledge declares to Commerzbank AG that he will not realise his right under the pledge within the
aforementioned period of time.
With the exception of S. M. D. Beteiligungsgesellschaft mbH and Mr. Dettmann, all the Existing Shareholders
have given an undertaking to Commerzbank AG that for a further period of six months, they
will only sell shares of the Company or execute transactions the economic effect of which would correspond
a sale if Commerzbank AG approves such sale or the conclusion of such transaction, although
the pledging of shares is permitted provided that the respective pledgee declares to Commerzbank
AG that he will not realise his right under the pledge within the aforementioned period of time without
the approval of C ommerzbank AG.
Stock Exchange Listing
The admission of the entire existing share capital of the Company and of that share capital arising
from the registration of the implementation of the capital increase resolved by the extraordinary general
shareholders’ meeting of the Company on 23 May 2006 for trading on the official market ( Amtlicher
Markt) and simultaneously on the official market sub-segment of the Frankfurt Stock Exchange
with special post-admission obligations (Prime Standard) is expected to take place on 1 3 July 2006.
Trading on the Frankfurt Stock Exchange is expected to commence on 1 4 July 2006.
Payment and Registration Agent
The payment and registration agent for the shares of the company is Commerzbank AG, ZTB S 2.31,
Mainzer Landstr. 293, 60326 Frankfurt.
Designated Sponsor
Commerzbank AG will assume the function of Designated Sponsor for the shares of the Company
traded on the Frankfurt Stock Exchange. Under the Designated Sponsor agreement between Commerzbank
AG and the Company, Commerzbank AG will, inter alia, introduce limited buy and sell orders
for shares of the Company into the electronic trading system of the Frankfurt Stock Exchange during
daily trading hours. This should, in particular, bring about more liquid trading in the shares.
Reasons for the Offering and Use of Issue Proceeds
Issue proceeds and costs
Subject to the uncertainty associated with such estimate and stemming from numerous relevant factors
that may exercise an influence but cannot be foreseen at the present time, the Company believes,
assuming that all of the offered shares are placed (including the shares owned by the Greenshoe
Shareholders), that total gross issue proceeds of between approximately EUR 105 million and approximately
EUR 148 million are attainable.
On the basis of the aforementioned figure for gross issue proceeds, the Company estimates that the
issue costs to be borne by the Company, the Selling Shareholders and the Greenshoe Shareholders,
assuming that all of the offered shares are placed (including the shares owned by the Greenshoe
28

Shareholders), will amount to a total of between approximately EUR 6.9 million and approximately
EUR 8.7 million, of which (basing on Company estimates once again) between approximately EUR 4.4
million and EUR 5.3 million will be borne by the Company. This corresponds to total net issue proceeds
of between approximately EUR 98.1 million and approximately EUR 139.3 million as well as net issue
proceeds for the Company of between approximately EUR 38.4 million and approximately EUR 54.5
million.
Reasons for the Offering
The reason for the Offering is the objective of the aleo solar Group to intensify the growth it has
achieved to date with the help of the proceeds of the Offering particularly by, with the help of the proceeds
of the Offering, achieving geographical diversification in the form of further international expansion,
the securing of silicon cell procurement, the acquisition of companies or parts of companies and
equity investments as well as an appropriate increase in working capital.
Use of issue proceeds
The Company intends to use the net proceeds that will accrue to it from the Offering to finance further
internal and external growth, to implement and finance its strategic goals (see “The Business of the
aleo solar Group – Strategy”) as well as for general business purposes. In particular, the Company
intends to use the net proceeds for the following purposes:
• Geographical diversification through further international expansion
The Company has already established a production and a distribution company in Spain. Funds are
needed to expand and develop them and to penetrate the Spanish market. Funds are also needed
to expand into other European target markets.
• Securing solar cells procurement
Over the short term, the Company expects that making advance payments in connection with
securing silicon cell contracts will be a priority.
• Acquisitions of companies or parts of companies and equity investments
The Company recently acquired an equity interest in the thin-film technology field. In addition, the
Company plans to acquire further equity interests and investments in the photovoltaic field and
other areas related to solar energy. Thus, the Company is, for example, contemplating the possible
purchase of a sub-licence from Johanna Solar Technology GmbH.
• An appropriate increase in working capital for growing and developing the system business.
As the amounts that will be used for the individual measures referred to above depend on numerous
factors, the Company is not in a position to estimate what share of net issue proceeds will be used for
each of the individual measures.
Interests of persons involved in the Offering
The Selling Shareholders have an interest in the Offering in that the proceeds deriving from the shares
sold by them will accrue to them.
The Underwriters have an interest in executing the Offering because their fees will be based on the
issue proceeds that are realised.
In addition, Commerzbank AG has an interest in the Offering in that it holds 40 % of the shares of
Commerz Unternehmensbeteiligung AG, which in turn holds 16 % of the shares of S. M. D. Beteiligungsgesellschaft
mbH, which owns some of the offered shares.
29

30
DIVIDEND POLICY AND EARNINGS PER SHARE
The share of the Company’s profits received by shareholders is based on the shares they hold in the
share capital. In this regard, no restrictions or separate procedures apply to non-resident shareholders.
The articles of association of the Company provide that in the event of a capital increase, different
dividend rights can be established for new shares. The rights of shareholders to receive payment of a
dividend lapses after three years, with the three-year period commencing the close of the year in
which the relevant resolution on the appropriation of profits was adopted. Dividends which have lapsed
are retained by the Company. The resolution concerning the distribution of dividends for a given financial
year in respect of shares of the Company is adopted by the ordinary general shareholders’ meeting
of the subsequent financial year on a proposal submitted by the Management Board and the
Supervisory Board. Dividends may only be paid from the balance sheet profit recorded in the annual
financial statements of the Company prepared in accordance with the German Commercial Code
(HGB) and approved by the Management Board and the Supervisory Board. When determining the
amount available for distribution, net income must be adjusted for profit/loss carry-forwards of the
previous year and releases of or allocations to reserves. Certain reserves are required to be set up by
law and must be deducted when calculating the amount of the balance sheet profit available for distribution.
In resolving the appropriation of the balance sheet profit, the ordinary general shareholders’
meeting can allocate further sums to retained earnings or have profits carried forward.
The dividends resolved by the ordinary general shareholders’ meeting are paid out in accordance with
the rules of the respective clearing system as the shares conferring dividend rights are kept in a clearing
system. Details of dividends resolved by the ordinary general shareholders’ meeting and the paying
agents appointed by the Company are published in the electronic version of the German Federal
Gazette (Bundesanzeiger) and at least in one national newspaper designated for exchange notices by
the exchanges on which the shares of the Company have been admitted to trading.
The following table provides an overview of the earnings and dividend distributed per share of the Company
for the financial years 2003 to 2005 on a consolidated basis, whereby it should be noted that the
Company was organised in the legal form of a Kommanditgesellschaft (limited partnership) or Gesellschaft
mit beschränkter Haftung (limited liability company), respectively, in the years 2003 to 2005. The
figures presented below for dividends and numbers of shares have therefore been adjusted accordingly.
Earnings and dividend per share 2005 2004 2003
Consolidated net income in TEUR( 1 ) (audited) . . . . . . . . . . . . . 9,335 6,630 1,926
Undiluted earnings per share in EUR( 2 ) (audited) . . . . . . . . . . . 3.67 2.61 0.76
Undiluted earnings per share in EUR( 3 ) (unaudited) . . . . . . . . . 0.92 0.65 0.19
Dividend in TEUR( 4 ) (audited) . . . . . . . . . . . . . . . . . . . . . . . . . . 4,000 2,000 1,869
Dividend per share in EUR( 2 ) (unaudited) . . . . . . . . . . . . . . . . . 1.57 0.78 0.73
Dividend per share in EUR( 3 ) (unaudited) . . . . . . . . . . . . . . . . . 0.39 0.20 0.18
( 1 ) Undiluted earnings per share (inferred) are computed on the basis of the earnings for the period less minority interest in
accordance with IFRS.
( 2 ) Computed on the basis of the weighted average number of shares outstanding for the respective relevant period. As the
Company was only transformed into a joint stock corporation in financial year 2006, it has been assumed, to determine
earnings per share as at 31 December 2003, 31 December 2004 and 31 December 2005, that the capital shares of the
limited partners and atypical silent partners as at 31 December 2003, 31 December 2004 and 31 December 2005 can be
divided into no-par value shares in the share capital with an arithmetical value of one euro each. As IAS 33 states the average
weighted number of shares in circulation during the course of the financial year is to be applied in computing undiluted
earnings per share, an average 2,545,000 shares can be assumed for the aforementioned reporting periods.
( 3 ) Computed on the basis of 10,180,000 shares of the Company currently outstanding.
( 4 ) As the Company was only transformed into a stock corporation in financial year 2006, the profit distributed in accord ance
with HGB for financial years 2004 and 2005 and the profit eligible for distribution under HGB and credited to the capital
accounts of the partners for financial year 2003 is treated as a dividend.
In the future, the Company intends to retain net income for the year, in whole or in part, to secure and
expand its existing market position as well as to implement strategic goals (also see the section entitled
“The Offering – Reasons for the Offering and Use of Issue Proceeds”). When a net profit is generated,
the Company will each year review if and to what extent a dividend should be distributed and in

doing so, it will take account of its financial position, its liquidity requirements as well as the tax, legal
and other aspects of its operating environment.
31

32
CAPITALISATION AND INDEBTEDNESS
The capitalisation and indebtedness of the Company as at 31 March 2006 in accordance with
IFRS and on a consolidated basis (unaudited figures):
31 March 2006
unaudited
(TEUR)
Liquid assets( 1 ) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,428
Non-current financial liabilities( 2 ) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,294
Of which, towards credit institutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,294
Current financial liabilities( 3 ) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,955
Of which, towards credit institutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,955
Equity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,758
Of which, subscribed capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,180
Of which, capital reserve . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 208
Of which, retained profits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,345
Of which, profit/loss carried forward . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – 2,049
Of which, consolidated net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,074
Total capitalisation( 4 ) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23,007
( 1 ) Liquid assets include cash and cash equivalents.
( 2 ) The non-current debt is fully secured but not guaranteed.
( 3 ) The current debt is fully secured but not guaranteed.
( 4 ) Total financial liabilities and equity.
aleo solar AG has assumed direct and unlimited guarantees for loans granted to aleo solar GmbH,
Oldenburg, by Bremer Landesbank Kreditanstalt Oldenburg, Oldenburg, as well as Oldenburgische
Landesbank, Oldenburg. The Company is jointly liable with aleo solar GmbH for a joint overdraft facility
in the amount of TEUR 20,000.
Current financial liabilities as at 31 May 2006 rose to TEUR 19,941. There has been no significant
change in the other values shown in the above table in relation to 31 March 2006.
The Company is of the opinion that from the perspective of the present, it will be in a position to settle
all its financial obligations as they fall due for the coming twelve months.

DILUTION
The net carrying amount of the consolidated tangible assets (materielle Vermögenswerte) of the Company
as at 31 December 2005 in accordance with IFRS amounted to approximately TEUR 15,631 or
approximately EUR 1.54 per share (computed on the basis of 10,180,000 shares as a result of the
capital increase resolved by the general shareholders meeting on 3 March 2006). The net carrying
amount of the consolidated tangible assets comprises all tangible assets (corresponding to all assets
less intangible assets) less all liabilities and provisions.
A reliable forecast concerning the dilution of the following assets rights as a result of the Offering can
be made no earlier than on 7 July 2006 on the basis of the price range that is to be determined and
published in the form of a supplement. For information about the dilution of the asset rights arising
from the shares, see the section entitled “Shareholder Structure (before and after the Completion of
the Offering).”
33

34
SELECTED CONSOLIDATED FINANCIAL DATA
The following selected consolidated financial data relating to the Company and prepared in accordance
with IFRS should be read and understood in conjunction with the section of the Prospectus
entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” as
well as the Financial Section.
The consolidated financial data prepared in accordance with IFRS for the three-month periods ended
31 March 2006 and 31 March 2005 shown in this section have been taken from the consolidated
unaudited quarterly financial statements prepared in accordance with IFRS for the period ended and
as at 31 March 2006. The consolidated financial data prepared in accordance with IFRS for the financial
years 2003, 2004 and 2005 have been taken from the consolidated financial statements of the Company
audited by PricewaterhouseCoopers Aktiengesellschaft Wirtschaftsprüfungsgesellschaft.
Item 2005 2004 2003 QI /2006 QI/ 2005
(TEUR) (TEUR) (TEUR) (TEUR)
unaudited
(TEUR)
unaudited
Revenue . . . . . . . . . . . . . .
Increase in inventories of
106,904 80,789 41,026 25,714 21,296
finished goods . . . . . . . 166 229 1,391 6,758 173
Other income . . . . . . . . . . 1,631 901 508 434 293
Cost of materials . . . . . . . – 82,876 – 63,021 – 34,900 – 26,074 – 16,359
Personnel costs . . . . . . . . – 4,868 – 3,481 – 2,135 – 1,483 – 984
Other expenses . . . . . . . . – 4,442 – 3,455 – 2,652 – 1,442 – 734
EBITDA. . . . . . . . . . . . . . . 16,515 11,962 3,238 3,907 3,685
EBITDA margin in % . . . .
Scheduled depreciation/
15.4 % 14.8 % 7.9 % 15.2 % 17.3 %
amortisation expense . – 1,777 – 1,322 – 505 – 471 – 338
EBIT . . . . . . . . . . . . . . . . . 14,738 10,640 2,733 3,436 3,347
EBIT margin in % . . . . . . 13.8 % 13.2 % 6.7 % 13.4 % 15.7 %
Financial income. . . . . . . . 30 24 5 0 5
Finance cost . . . . . . . . . . . – 241 – 303 – 386 – 92 – 41
Earnings before taxes. . . 14,527 10,361 2,352 3,344 3,311
Income taxes . . . . . . . . . . – 5,192 – 3,731 – 426 – 1,270 – 1,275
Consolidated net profit . 9,335 6,630 1,926 2,074 2,036

MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following figures have been rounded in line with standard business practice. It is therefore possible
than when these amounts are aggregated they will not correspond exactly to the sum of these
amounts.
Overview
aleo solar AG develops and manufactures high-grade solar modules based on monocrystalline and
polycrystalline solar cells for the German and international photovoltaic market. The modules manufactured
there, together with other equipment for photovoltaic systems, are sold mainly by the Company’s
wholly owned subsidiary, aleo solar Deutschland GmbH based in Oldenburg, under the brand
name aleo. Moreover, to increase production utilisation, aleo solar AG also produces solar modules as
OEM (Original Equipment Manufacturer). aleo solar Deutschland GmbH distributes its products – i. e.
solar modules that it produces, third-party modules, and, in the future, thin-film solar modules as well
as the components necessary for the operation of photovoltaic systems – mainly to specialist dealers
and installers . Up to the end of the financial year 2005, aleo solar Deutschland GmbH sold its products
primarily on the German market.
For more detailed information about the business of the aleo solar Group, see the section entitled
“The Business of the aleo solar Group.”
Scope of consolidation
The following subsidiaries were consolidated in connection with the preparation of the IFRS consolidated
financial statements of the Company as at 31 December and the unaudited consolidated quarterly
financial statements as at 31 March 2006: aleo solar Deutschland GmbH (100 %), SOLAR MANU-
FAKTUR PRODUCCIÓN S. L. (100 %) and aleo solar distribución España S. L. (100 %). Including the
Company, the scope of consolidation encompasses two domestic and two foreign Group companies.
The two foreign subsidiaries were established in calendar year 2005 and were thus consolidated for
the first time during the period under review. They are expected to start operating for the first time in
2006.
In addition to the Company, only aleo solar Deutschland GmbH (100 %) was included in the scope of
consolidation for the preparation of the IFRS consolidated financial statements of the Company for the
periods ended and as at 31 December 2003 and 31 December 2004.
Key Factors Influencing the Results of Operations
The Company is of the opinion that for the period since 1 January 2003, the following factors had a
significant impact on the development of the business and results of operations of the aleo solar
Group and can be expected to continue to have a significant influence on the results of operations.
Government incentives for renewable energy sources
The generation of electricity by photovoltaic means is generally not competitive given its higher cost
in relation to conventional energy sources in the light of the current state of technology. In the Member
States of the European Union, the United States and Japan, electricity is generated by photovoltaic
means mainly because of the availability of government incentives. An important element of
government incentives in Germany is the German Renewable Energies Act (Gesetz für den Vorrang
erneuerbarer Energien – EEG), which requires grid operators to connect plants for the generation of
electricity from renewable energy sources to their grids and to purchase all the electricity generated
by such plant at long-term, guaranteed minimum tariffs. Thus, the EEG serves as the basis for the
35

growth of the photovoltaic market in Germany and thus, for the business of the aleo solar Group. In
particular, the promulgation of the EEG provisional act on 1 January 2004 and the subsequent amending
of the EEG produced considerable excess demand for photovoltaic products in 2004 that has
continued through to this day and will intensify further. Also in the aleo solar Group’s other European
target markets, the growth of photovoltaic markets depends on the extent of government incentives
(for information about the current scale of government incentives see the section entitled “The Business
of the aleo solar Group – Government Incentives for Photovoltaics).
Silicon scarcity
While demand for photovoltaic systems is very high, supply is increasingly scarce. This scarcity is due
to silicon bottlenecks prompted by insufficient production capacity on the part of the small number of
silicon producers. The limited availability of silicon has an impact on the entire photovoltaic industry
value chain: At present, demand for ingots/wafers, solar cells and solar modules significantly exceeds
supply.
Only recently have the major silicon producers invested to a greater extent in the expansion of their
production capacity. It takes about two to three years to build an additional silicon production facility
depending on the infrastructure that already exists. However, as demand is expected to continue to
grow at a high rate, the Company assumes that the availability of silicon will continue to trail demand
over a longer period of time. This situation is being further exacerbated by the fact that the solar industry
is competing with the semi-conductor industry for the silicon that is available (cf. the section entitled
“The Business of the aleo solar Group – Market and Competition”).
The scarcity of silicon means that the availability of the solar cells that the aleo solar Group needs to
produce solar modules is extremely limited and that market prices for solar cells have risen substantially.
The aleo solar Group has hitherto succeeded in partly making up for these higher expenses by
raising prices for the solar modules that it distributes. The increases in sales that are attainable are currently
restricted by the limited availability of solar cells.
Capacity expansion
The aleo solar Group increased its solar module production capacity, which amounted to 15 MWp on
1 January 2003, to 35 MWp during the course of 2004. During the course of 2005, production capacity
was further increased to 90 MWp. Production capacity of 10 MWp is to be created in Spain in 2006/2007.
This production capacity will place the aleo solar Group in the position of being able to service the rising
demand for photovoltaic products. The revenue growth being sought by the aleo solar Group is
attainable with the production capacity currently available provided that there is an adequate supply of
cells.
Investment premiums and grants
In the past, the Company in part covered its financing requirements for the development and expansion
of capacity by means of government investment premiums and grants. The investment premiums
as well as tax-free investment grants received are stated as a deferred liability and released to
income over the useful life of the assets financed with the assistance.
Seasonal fluctuations
The revenue posted by the aleo solar Group tends to be lower in the first quarter of the calendar year
than in the subsequent three quarters. These seasonal fluctuations are mainly due to the impact of
weather conditions, which prevent solar modules from being installed on roofs. The Company assumes
that its results of operations may continue to be subject to seasonal fluctuations in the future.
36

Exchange rate fluctuations
The Company’s consolidated financial statements are prepared in euros. Whilst the revenue of the
aleo solar Group is generated almost exclusively in euro, the aleo solar Group has hitherto incurred
expenditures related to materials that are denominated in USD on a modest scale. The proportion of
expenses invoiced in USD will increase in 2006. The aleo solar Group has not fully hedged itself
against the resulting exchange rate risk. Therefore, an increase in the value of the US dollar against the
euro could lead to an increase in aleo solar Group expenses that would not be offset by any corresponding
increase on the income side.
In the light of its planned international operations, the aleo solar Group may also be subject to exchange
rate risks in relation to other currencies in the future.
Influence of interest rates
Grid-connected photovoltaic systems are largely financed by borrowing. The historically low level of
interest rates and the resulting low cost of borrowing have had a positive impact on the profitability of
photovoltaic systems and thus contributed to an increase in the demand for solar modules. By increasing
the cost of borrowing, an increase in interest rates would considerably reduce the profitability of
photovoltaic systems and thus adversely affect demand (for information about the current scale of
government incentives, see the section entitled “The Business of the aleo solar Group – Government
Incentives for Photovoltaics”).
Significant Accounting Policies
In preparing its consolidated financial statements in accordance with IFRS, the Company applies certain
accounting policies that are of fundamental importance for the presentation of the financial condition
and results of operations of the aleo solar Group. The application of some of these accounting
principles entails estimates and assumptions that sometimes necessitate difficult and complex
assessments and decisions. These assessments and decisions can subsequently prove to be incorrect,
making it necessary to change the financial information concerned. Reviews are conducted as
part of monthly controlling processes to identify and correct deviations from such estimates and
assumptions early on as far as possible.
Those accounting and valuation policies that the Company considers to be important are described
below.
Basis of preparation
The consolidated financial statements of S. M. D. Solar-Manufaktur Deutschland GmbH & Co. KG as at
31 December 2003 were prepared in accordance with International Financial Reporting Standards. The
consolidated financial statements of S. M. D. Solar-Manufaktur Deutschland GmbH as at 31 December
2004 were prepared in accordance with International Financial Reporting Standards. The consolidated
financial statements of S. M. D. Solar-Manufaktur Deutschland GmbH as at 31 December 2005 were
prepared in accordance with International Financial Reporting Standards as adopted by the EU. The
annual financial statements of S. M. D. Solar-Manufaktur Deutschland GmbH as at 31 December 2005
were prepared in accordance with the provisions of German commercial law. All the aforementioned
financial statements have been audited and were provided with unqualified auditor’s reports in each
case.
The consolidated financial statements are prepared in euros and on the basis of amortised/depreciated
cost of acquisition/production.
37

Principles of consolidation
The consolidation financial statements as at 31 December 2003, 31 December 2004, 31 December
2005 and the unaudited consolidated quarterly financial statements as at 31 March 2006 were prepared
in euros, the functional currency of the Company, and in accordance with IFRS. Under IAS 27
(revised 2003) (consolidated and separate single-entity financial statements in accordance with IFRS),
the financial statements of the domestic subsidiaries included in the scope of consolidation were prepared
applying uniform accounting and valuation methods.
Subsidiaries acquired are accounted for using the purchase method. The acquisition costs correspond
to the fair value of the assets to which they are assigned, the equity instruments issued and the liabilities
arising or assumed on the date of exchange together with the costs directly attributable to acquisition.
Assets, liabilities and contingent liabilities identified in connection with a business combination
are measured at fair value upon first-time consolidation irrespective of the size of minority interests.
The excess of acquisition costs over the shares of the Group in the net assets measured at fair value
is recorded as goodwill. If the acquisition costs are lower than the net assets of the subsidiary acquired
as measured at fair value, the difference is recognised directly in the income statement.
In the case of the consolidation of liabilities, the receivables and payables for the consolidated companies
are netted.
Income included in inventories and assets arising from the supply of goods and services among
related companies within the Group are eliminated from net profit. In accordance with IAS 12 (revised
2000), deferred taxes are recognised for differences resulting from consolidation measures recognized
in profit or loss. Income and expenses arising from transactions within the Group, especially
revenue generated between Group companies, are eliminated in the income statement.
Property, plant and equipment
Items of property, plant and equipment are stated at historical cost of acquisition/production less
scheduled depreciation and, where necessary, after adjustment for any impairment.
Such cost includes expenses that are directly attributable to the acquisition.
Finance costs are not capitalised as a component of the costs of acquisition or production. Items of
plant, property and equipment begin to be depreciated within the aleo solar Group upon being used.
Investment premiums as well as tax-free investment grants received are stated as a deferred liability
and released to income over the useful life of the assets financed with the assistance.
Subsequent costs of acquisition/production are only recorded under costs of acquisition/production
when it appears likely that economic benefits will flow to the Group from them in the future and the
costs of the relevant asset can be reliably determined. All other repairs and maintenance are recognised
as an expense in the income statement for the financial year in which they are incurred.
Land is not depreciated. Items of plant, property and equipment are only depreciated applying the
straight-line method. The following economic useful lives apply across the Group for scheduled depreciation:
Buildings 33 years, installations 5–19 years, technical equipment and machinery 3–25 years,
office equipment 3–14 years.
Residual carrying amounts and economic useful lives are reviewed on each balance sheet date and
adjusted where necessary. Items of property, plant, and equipment are written down if there are indications
of impairment and if the recoverable amount is lower than amortised costs of acquisition/production.
The write-downs are reversed if the reasons for the impairment losses no longer apply.
38

Profits and losses realised on the disposal of items of property, plant and equipment are determined
as the difference between the proceeds obtained from their sale and their carrying amounts, with the
difference being recognised in income.
Inventories
Inventories are stated at the lower of cost and net realizable value. In addition to direct costs, which
are generally measured on a rolling average basis, cost of production also include material and production
overhead costs as well as production-related depreciation that can be assigned directly to the
production process. Administrative and social benefit costs are taken into account insofar as they can
be assigned to production. Inventory risks arising from lower net realizable value, time in storage,
shrinkage etc. are written down. The write-downs are reversed if the reasons that gave rise to them no
longer apply.
Deferred taxes
Deferred taxes are determined in accordance with IAS 12 (revised 2000). Tax relief and charges that
are likely to arise in the future are reported for temporary differences between the book values shown
in the consolidated financial statements and the values attributed to assets and liabilities for tax purposes.
Deferred taxes are measured applying the tax rates (and tax regulations) in force on, or which
have substantially received legislative approval, on the balance sheet date and which are expected to
apply when the deferred tax asset or liability is realised. Deferred tax assets are stated to the extent
that it is likely that a taxable profit will be available against which the temporary difference can be
applied.
Public assistance
Investment premiums as well as tax-free investment grants received are stated as a deferred liability
and released to income over the useful life of the assets financed with the assistance.
The deferred liability corresponding to the asset for which assistance has been received is recorded in
the balance sheet under non-current assets.
Provisions
Provisions are recognised for present obligations towards third parties arising from past events when
it is probable that there will be an outflow of resources and a reliable estimate can be made of the
amount of the obligations. Provisions are stated at the amount required to satisfy the obligation. Noncurrent
provisions are stated at the discounted amount required to satisfy the obligation as at the balance
sheet date. Provisions are not offset against recourse claims.
Notes on the Differences between HGB and IFRS
The following describes significant differences between the single-entity financial statements prepared
in accordance with German commercial law principles (HGB) and the consolidated financial
statements prepared in accordance with IFRS in reference to the line items of the consolidated balance
sheet and consolidated income statement. These accounting standards also differ with respect
to the scope of information contained in the Notes.
Under HGB, all items of the balance sheet and the income statement must be presented and broken
down as stipulated in Sections 266, 275 HGB. The IFRS prescribe a different structure, with the balance
sheet presented in terms of the realisability of the individual line items. Under IFRS, the current
components of non-current receivables and liabilities are disclosed as separate line items on the face
of the balance sheet. Those components that fall due within a year are treated as current.
39

In accordance with German accounting rules, low-value items (fixed asset items with an acquisition
cost that does not exceed EUR 410 net) are depreciated in full in the year of acquisition. IAS does not
make any distinction between low value items and other items of plant, property and equipment. Low
value items are also measured at acquisition cost less scheduled depreciation.
Receivables are carried at nominal value. Section 252(1) No. 4 HGB requires the disclosure of specific
and flat-rate allowances whereas IFRS only permits the recognition of allowances for specific risks.
Under IFRS, foreign currency items (e. g. foreign currency receivables and payables arising from the
supply of goods and services) are translated at the exchange rates prevailing on the balance sheet
date. The corresponding gains and losses are recognised in profit or loss. Under HGB, measurement
losses are recorded as at each balance sheet date whereas gains are only recorded when realised
(e. g. after settlement of a foreign currency liability).
IAS 12 requires the capitalisation of deferred taxes for both single-entity and consolidated financial
statements insofar as they arise from temporary differences between measurement in accordance
with IFRS and German income tax rules. By contrast, the capitalisation of deferred taxes in German
single-entity financial statements is a permitted alternative under Section 274 HGB. IAS 12 requires
the capitalisation of deferred taxes arising from tax loss carryfowards insofar as it can be assumed
with sufficient probability that such loss carryfowards can be used for tax purposes in connection with
future surpluses. Under the rules contained in the German Commercial Code, the capitalisation of
deferred taxes arising from loss carryforwards is not permitted.
In the case of the Company, the following accounting principles used in the preparation of the singleentity
financial statements under HGB and the consolidated financial statements under IFRS have
material effects on earnings that are in part significant:
In the case of warranty obligations, HGB requires the recognition of a provision for the highest possible
extent of such obligations for all financial years at nominal value. This sum is lower under IFRS,
which requires the stating of the present value of anticipated future outflows.
In the HGB single-entity financial statements of the Company, tax-free investment grants are recognised
in profit or loss in the year in which the legal entitlement to them arises. In the IFRS consolidated
financial statements, these grants are treated as deferred income and released to income over
the respective useful lives of the corresponding assets in line with depreciation.
In accordance with Section 274 HGB, no deferred tax assets are recognised for temporary differences
and tax loss carryfowards; loss carryforwards may not be stated on the balance sheet. Under IAS 12,
deferred taxes arising from temporary differences and tax loss carryforwards are recognised as assets
or liabilities in the IFRS financial statements.
Results of operations
The Company’s income statement is prepared using the total cost of production method. The total
cost of production method is a method for calculating the results of operations, in which the total
operating performance of the business is compared with total costs, organised according to cost type.
According to this method, the success of the business is measured in terms of net revenue plus
increases in inventories minus decreases in inventories minus total operating costs for the period. The
balance of increases and decreases in inventories is recorded under the item “Changes in inventories.”
40

The following table shows the items in the consolidated income statement of the Company according
to IFRS:
Item 2005 2004 2003
TEUR TEUR TEUR
Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106,904 80,789 41,026
Increase in inventories of finished goods . . . . . . . . . . . . . . . . . 166 229 1,391
Other income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,631 901 508
Cost of materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – 82,876 – 63,021 – 34,900
Personnel costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – 4,868 – 3,481 – 2,135
Other expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – 4,442 – 3,455 – 2,652
EBITDA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,515 11,962 3,238
EBITDA margin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.4 % 14.8 % 7.9 %
Scheduled depreciation/amortisation expense . . . . . . . . . . . . . – 1,777 – 1,322 – 505
EBIT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,738 10,640 2,733
EBIT margin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.8 % 13.2 % 6.7 %
Financial income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 24 5
Finance cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – 241 – 303 – 386
Earnings before taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,527 10,361 2,352
Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – 5,192 – 3,731 – 426
Consolidated net profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,335 6,630 1,926
The positive trend in the results of operations is largely attributable to the increase in demand for solar
modules resulting from the amending of the EEG during the course of the first half of 2004. In order
to be able to satisfy this demand, the production capacity of the aleo solar Group was successively
expanded.
The individual line items are discussed below:
Revenue 2005 2004 2003
TEUR TEUR TEUR
Solar modules. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101,836 79,024 41,026
OEM production . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,068 1,765 0
106,904 80,789 41,026
The increase in revenue of 96.9 % from 2003 to 2004 was mainly due to significantly higher sales of
solar modules compared with 2003; a result of the expansion of production capacity in 2004 and the
increase in demand in Germany. The volume sold during this period increased from approximately
14 MWp (2003) to approximately 28 MWp (2004). The strong rise in demand for photovoltaic systems
caused module prices to rise for the first time in 2004. Revenue generated by the production of OEM
solar modules as a proportion of total revenue amounted to 2.2 % in 2004; this area did not generate
any revenue in 2003.
The revenue posted for the years 2003 to 2005 was generated almost exclusively in Germany
In 2005, it was possible to increase revenue by 32.3 % on 2004 as a result of further increase in
demand for photovoltaic systems in Germany. In total, approximately 35 MWp of solar modules were
sold in financial year 2005. In 2005, the revenue generated by the production of OEM solar modules
as a proportion of total revenue amounted to 4.7 %.
41

Other income 2005 2004 2003
TEUR TEUR TEUR
Release to income of deferred investment grant . . . . . . . . . . . 525 407 28
Release to income of deferred investment premium. . . . . . . . 408 303 163
Release of liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 169 23 0
Exchange rate gains . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 3 14
Integration premiums BfA and BG other . . . . . . . . . . . . . . . . . 18 43 229
Proceeds from the disposal of fixed assets . . . . . . . . . . . . . . . 10 0 0
Release of specific allowances. . . . . . . . . . . . . . . . . . . . . . . . . 0 57 4
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 467 65 70
1,631 901 508
The other income of the Company is essentially characterized by the release to income of the liability
item “Deferred public assistance.” This liability item is released to income in proportion to the depreciation
charged over the useful life of the assets (production lines, production workshops and logistic
centres) for which assistance has been received. In keeping with the increase in the investment assistance
received and recognised as a liability from TEUR 3,111 as at 31 December 2003 to TEUR 4,549
as at 31 December 2004 and to TEUR 6,823 as at 31 December 2005, the release to income of this
liability item and as a result, the corresponding other income disclosed in this regard also rose.
The integration premiums reported for financial year 2003 were mainly granted to the Company in
connection with the employment of people who were previously unemployed.
The rise in the “Other” item in financial year 2005 was mainly due to the reversal of warranty provisions
in the amount of TEUR 318. This was a reflection of the fact that in the light of experience to date
(technical studies and industry comparisons) the risk of warranty claims was deemed to be lower.
Cost of materials
Procurement costs for solar cells account for by far the largest part of cost of materials for the aleo
solar Group. The purchase prices for solar cells have a significant impact on the profitability of the aleo
solar Group. Price increases for solar cells could in part be passed onto customers by increasing the
prices of the solar modules produced by the aleo solar Group.
Further important components of the cost of materials are costs related to the procurement of the
glass, frames, sockets and foils required to produce solar modules as well as the inverters, assembly
units and other equipment required for the system business. In addition, cost of materials also includes
the expenses incurred in buying third-party modules.
Cost of materials 2005 2004 2003
TEUR TEUR TEUR
Raw materials, supplies and purchased merchandise . . . . . . . 82,839 63,001 34,868
Purchased services. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 20 32
82,876 63,021 34,900
In financial year 2004, the cost of materials rose by 80.6 % in relation to financial year 2003. This
develop ment was primarily due to significantly higher procurement volume resulting from the strong
rise in total production.
In financial year 2005, the cost of materials rose by 31.5 % in relation to financial year 2004. This was
once again attributable to higher procurement volume and prices that were in part higher.
The cost of materials ratio (the ratio of cost of materials to the aggregated figure for revenue and the
increase in inventories of finished goods) fell from 82.3 % in 2003 to 77.8 % in 2004 and to 77.4 % in
2005. The change from 2003 to 2004 particularly reflects price reductions and learning curve effects.
42

In 2005, it was possible to achieve a slight improvement in the cost of materials ratio once again, as
the price increase for solar cells could be passed on and learning curve effects could continue to be
realised.
Personnel costs 2005 2004 2003
TEUR TEUR TEUR
Wages and salaries. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,106 2,924 1,779
Contribution-based pension plans . . . . . . . . . . . . . . . . . . . . . . 333 187 115
Other social insurance contributions . . . . . . . . . . . . . . . . . . . . 429 370 241
4,868 3,481 2,135
The main reason for the increase in personnel costs over the past three financial years was the increase
in personnel prompted by the expansion of capacity, with the headcount increasing from an average
86 employees during financial year 2003 to an average 137 employees in financial year 2004 and an
average 192 employees in financial year 2005. The personnel cost ratio (ratio of personnel costs to the
aggregated sum for revenue and the increase in inventories of finished goods) fell from 5.0 % (2003)
to 4.3 % (2004). This was mainly due to economy-of-scale effects arising from the above-average
increase in revenue. In 2005, the personnel cost ratio rose slightly to 4.6 %, because personnel was
required for expanding the capacity of the new production line.
Scheduled depreciation/amortisation expense 2005 2004 2003
Scheduled depreciation/amortisation of intangible assets and
TEUR TEUR TEUR
property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . 1,777 1,322 505
Most of the depreciation charges expensed in the financial years 2003 to 2005 are related to technical
equipment and machinery (production lines). The increase in depreciation/amortisation is attributable
to capital expenditure on capacity expansion (see the section entitled “The Business of the aleo solar
Group – Capital Expenditure”).
Other expenses 2005 2004 2003
TEUR TEUR TEUR
Selling expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,933 1,571 1,066
Operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,266 701 470
Administrative expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,051 809 739
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 192 374 377
4,442 3,455 2,652
Selling expenses mainly comprise costs related to the sale of goods, the recognition of warranty provisions,
advertising and representation costs as well as travel and hospitality costs. Compared with
financial year 2003, selling expenses rose by 47.4 % in financial year 2004 and thus increased at a
lesser rate than revenue. In financial year 2005, selling expenses rose by 23.0 %. The rise in selling
expenses related to the increase in revenue was in part offset by lower allocations to warranty provisions
compared with financial years 2003 and 2004.
Operating expenses largely comprises energy costs, levies, rents, insurance, repairs and maintenance
as well as vehicle costs. The increase of 49.2 % from financial year 2003 to 2004 was essentially proportionate
to the increase in total operating performance. The increase of 80.6 % in financial year 2005
in relation to 2004, which was disproportionately high compared with total operating performance,
was due to the rise in energy prices in 2005 as well as start-up costs connected with the commissioning
of the new production line and the logistics centre.
Administrative expenses comprised, inter alia, communication costs, office supplies, audit, legal and
consultancy fees, training costs and other personnel expenses, rents and the maintenance of operat-
43

ing and business equipment as well as IT and financial management costs. In 2004, administrative
expensive rose by 9.5 % compared with financial year 2003. In 2005, administrative expenses rose by
30.0 % compared with financial year 2004. This was mainly due to higher consultancy fees, especially
in connection with the setting up of the Spanish subsidiaries.
EBIT 2005 2004 2003
TEUR TEUR TEUR
EBIT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,738 10,640 2,733
EBIT margin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.8 % 13.2 % 6.7 %
In 2004, the aleo solar Group increased EBIT by 289.3 % in relation to the preceding year. This represented
a disproportionately large increase compared with the rise in revenue of 96.9 %. As a result, it
was possible to achieve a significant improvement in the EBIT margin. The main contributory factors in
this regard were efficient procurement and cost management as well as the attaining of economy-ofscale
effects along with high revenue growth.
In financial year 2005, the aleo solar Group was only able to increase EBIT by 38.5 % compared with
the preceding year. This was particularly attributable to start-up costs connected with the completion
of a new production line and a new logistics centre. Nevertheless, revenue growth of 32.3 % made it
possible to increase the EBIT margin slightly.
Financial result 2005 2004 2003
TEUR TEUR TEUR
Financial income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Finance cost
30 24 5
Interest from financial obligations . . . . . . . . . . . . . . . . . . . . – 172 – 276 – 383
Accumulation of warranty provision . . . . . . . . . . . . . . . . . . – 69 – 27 – 3
– 211 – 279 – 381
The financial result is particularly shaped by the finance cost, which, in the financial years 2003 to
2005, mainly comprised interest for investment loans, an overdraft facility and the accumulation of
warranty provisions.
The financial result improved by 26.8 % in financial year 2004 compared with financial year 2003 and
by 24.4 % in financial year 2005 compared with financial year 2004. In both years, this was particularly
attributable to reduced utilisation of the overdraft facility as a result of an improvement in cash flow
from operating activities.
Income taxes 2005 2004 2003
TEUR TEUR TEUR
Trade tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,974 1,379 152
Corporate income tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,995 2,064 5
Solidarity surcharge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 165 114 0
Investment income tax. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 0 0
Deferred taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51 174 269
5,192 3,731 426
A comparison of the income taxes for the financial years 2004 and 2003 is only meaningful to a limited
extent because of the transformation in legal form from a partnership (GmbH & Co. KG) into a corporation
(GmbH) completed in 2004 and which entailed incurring liability for corporate income tax, resulting
in an increase in the effective rate of taxation from 18.1 % in 2003 to 36.0 % in 2004. In 2003, the
corporate income tax liability applied solely to aleo solar GmbH. The assessment base for income
taxes has increased as a result of an improvement in the earnings position.
44

In financial year 2005, the income tax expense rose by 39.2 % compared with the preceding year. This
is also attributable to an improvement in the earnings position. The effective rate of taxation in financial
year 2005 was 35.7 %.
Financial condition and assets
Assets
31 Dec.
2005
31 Dec.
2004
31 Dec.
2003
TEUR TEUR TEUR
Assets
Non-current assets
Property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . 15,213 8,440 6,253
Intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52 79 110
Current assets
15,265 8,519 6,363
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,355 7,919 3,976
Trade receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,106 2,406 1,753
Current . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101 0 0
Investment grant receivables . . . . . . . . . . . . . . . . . . . . . . . . . . 1,317 1,109 191
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . 630 787 48
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 407 2,538 383
20,916 14,759 6,351
Equity and Liabilities
Non-current available finance
Own funds
36,181 23,278 12,714
Shareholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,683 8,349 1,719
Deferred income from public assistance. . . . . . . . . . . . . . .
Debt
5,198 3,516 2,373
Financial liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,462 2,501 2,324
Deferred income from public assistance. . . . . . . . . . . . . . . 1,625 1,033 738
Other provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 578 636 200
Deferred tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 266 214 40
Current and medium-term debt
25,812 16,249 7,394
Current income tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . 6,213 2,280 157
Financial liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 489 569 1,082
Trade payables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,455 2,234 1,437
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,212 1,946 2,644
10,369 7,029 5,320
36,181 23,278 12,714
In financial year 2004, the balance sheet total of the Company rose by 83.1 % on the preceding year
and in financial year 2005, by 55.4 % on the preceding year. The increase is primarily attributable to the
expansion of capacity and higher business volume.
45

Non-current assets
Property, plant and equipment at carrying amounts developed as follows in financial years 2004 and
2005:
TEUR
As at 31 Dec. 2003/1 Jan. 2004 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,253
Additions (essential, plant expansion at Prenzlau) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,288
Reclassifications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 140
Disposals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – 9
Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – 1,232
As at 31 Dec. 2004/1 Jan. 2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,440
Additions (essential, plant expansion at Prenzlau) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,350
Reclassifications from advance payments made (other assets). . . . . . . . . . . . . . . . . . . . . 2,177
Disposals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – 28
Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – 1,726
As at 31 Dec. 2005. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,213
In financial year 2004, the additions mainly related to technical equipment and machinery (TEUR 2,236)
and in financial year 2005, mainly to technical equipment and machinery (TEUR 3,337) as well as to
land and buildings (TEUR 4,579).
Current assets
In financial years 2004, inventories rose by 99.2 % on the preceding year as a result of an increase in
the volume of business. In addition to the further rise in the volume of business, the increase of
81.3 % on the preceding year in financial year 2005 was also attributable to the fact that as a result of
the scarce supply of solar cells, the Company was compelled to maintain higher stocks of cells against
a backdrop of rising prices.
In all three financial years, trade receivables related almost exclusively to domestic customers. The rates
of increase in relation to the respective preceding years primarily resulted from higher sales volume.
The investment grant receivables relate to the tax office and result from the assistance applied for in
connection with the expansion of capacity that has been completed.
The other assets disclosed for financial year 2004 mainly resulted from advance payments for construction
in progress concerning the new production line.
Non-current available finance
Deferred income from public assistance developed as follows in financial years 2003 to 2005:
2005 2004 2003
TEUR TEUR TEUR
At 1 Jan. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,549 3,111 2,754
Recognition. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,207 2,148 548
Release. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – 933 – 710 – 191
At 31 Dec.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,823 4,549 3,111
The deferred income from public assistance in the financial years 2003 to 2005 related to investment
premiums and grants provided for the development of the Prenzlau plant and its expansion. It will be
released over the customary useful life of the corresponding assets in line with the depreciation
charges expensed for them.
Current and medium-term debt
The increase in current income tax liabilities in financial years 2003 to 2005 resulted from allocations
for corporate income tax (2005: TEUR 3,622; 2004: TEUR 1,313; 2003: TEUR 5), the solidarity sur-
46

charge (2005: TEUR 199; 2004: TEUR 72; 2003: TEUR 0) and the trade tax (2005: TEUR 199; 2004:
TEUR 72; 2003: TEUR 0) .
The other liabilities disclosed for the financial years 2004 and 2005 mainly relate to VAT liabilities of
TEUR 990 (2004: TEUR 996), advance payments received of TEUR 421 (2004: TEUR 0) and social
security liabilities of TEUR 141 (2004: TEUR 115). The other liabilities disclosed for financial year 2003
essentially related to liabilities towards shareholders in the amount of TEUR 2,315 and those were
almost completely extinguished in 2004.
Financial condition
The following table shows the cash flow statement of the Company for the financial years 2003 to
2005:
Cash flow 2005 2004 2003
I. Cash flow from operating activities
TEUR TEUR TEUR
Consolidated net profit after income taxes and interest . . . 9,335 6,630 1,926
Income taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,192 3,731 426
Scheduled depreciation/amortisation . . . . . . . . . . . . . . . . . 1,777 1,322 505
Change in non-current provisions . . . . . . . . . . . . . . . . . . . . – 127 409 185
Gains/losses on the disposal of non-current assets . . . . . . 6 9 5
Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – 30 – 24 – 5
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 241 303 386
Non-cash income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – 932 – 710 – 191
Change in trade receivables and other current assets . . . . – 1,568 – 848 – 241
Change in inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – 6,616 – 3,943 – 3,035
Change in trade payables and other current liabilities . . . . . – 513 99 1,008
= Cash flow from operating activities . . . . . . . . . . . . . . 6,765 6,978 969
Interest paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – 172 – 276 – 383
Interest received . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 24 5
Income taxes paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – 1,307 – 1,433 0
= Net cash flow from operating activities. . . . . . . . . . .
II. Cash flow from investing activities
5,316 5,293 591
Purchase of items of property, plant and equipment. . . . . .
Proceeds from the sale of items of property, plant and
– 6,353 – 5,465 – 1,157
equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 0 0
Purchase of intangible assets . . . . . . . . . . . . . . . . . . . . . . . – 31 – 59 – 70
Inflows from public assistance . . . . . . . . . . . . . . . . . . . . . . 2,999 1,306 1,492
= Net cash flow from investing activities . . . . . . . . . . .
III. Cash flow from financing activities(
– 3,354 – 4,218 265
1 )
Inflows from borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . 450 686 0
Repayment of borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . – 509 – 838 – 834
Dividend distribution to shareholders . . . . . . . . . . . . . . . . . – 2,000 0 0
= Net cash flow from financing activities . . . . . . . . . . . – 2,059 – 152 – 834
Net changes in cash and cash equivalents (I to III) . . . . . . .
Cash and cash equivalents at the beginning of the financial
– 97 923 22
year. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 727 – 196 – 218
Cash and cash equivalents at the end of the financial year 630 727 – 196
( 1 ) For the purposes of the cash flow statement, overdraft facility liabilities towards credit institutions were allocated to financial
resources.
47

In financial year 2004, cash flow from operating activities improved by 795.6 % on the preceding year.
This was mainly due to the significantly higher consolidated net profit of TEUR 6,630 for financial year
2004 compared with the preceding year as well as higher depreciation/amortisation charges and an
increase in tax liabilities.
In financial year 2005, the cash flow from operating activities increased by 0.4 % on the preceding
year. This proportionately lower increase compared with the increase in net income is due to the fact
that the effects resulting from the significantly higher net profit, the higher depreciation/amortisation
charges and the rise in tax liabilities were in part offset by an increase in working capital. Working
capital changed because in financial year 2005, the Company was forced to maintain higher stocks of
cells against a backdrop of rising prices because of solar cell scarcity of supply, trade payables were
reduced to make use of rebates and trade receivables increased at the same time.
In 2003, cash flow from investing activities increased as a result of public assistance inflows related to
investments undertaken in 2002 and of a simultaneous decrease in investing activities in 2003. In
financial year 2004, net outflows related to investing activities amounted to TEUR 4,218 and to
TEUR 3,354 in financial year 2005. These high outflows are attributable to investment in the new production
line and the logistics centre (see the section entitled “Description of the Business of the aleo
solar Group – Capital Expenditure”).
In financial year 2004, net outflows related to financing activities declined by 81.8 % on the preceding
year. This decrease essentially resulted from the taking out of loans for the partial financing of the
production line expansion in financial year 2004. In financial year 2005, net outflows increased to
TEUR 2,059. The main reason for this was the distribution of a dividend of TEUR 2,000 to the shareholders
for financial year 2004.
Capital resources
Equity 31 Dec. 2005 31 Dec. 2004 31 Dec. 2003
Balance sheet total in TEUR . . . . . . . . . . . . . . . . . . 36,181 23,278 12,714
Balance sheet equity in TEUR. . . . . . . . . . . . . . . . . 15,683 8,349 1,719
Equity ratio( 1 ) in % . . . . . . . . . . . . . . . . . . . . . . . . . 43.3 35.9 13.5
Own funds in TEUR( 2 ) . . . . . . . . . . . . . . . . . . . . . . . 20,881 11,865 4,092
Own funds ratio( 3 ) in % . . . . . . . . . . . . . . . . . . . . . 57.7 51.0 32.2
( 1 ) Equity in relation to the balance sheet total
( 2 ) Equity + 100 % of the tax-free investment grant deferred income item + 60 % of the investment premium deferred income
item
( 3 ) Own funds in relation to the balance sheet total
In financial year 2004, equity increased by 385.7 % on the preceding year and by a further 87.8 % on
the preceding year in financial year 2005. The was mainly attributable to the attaining of net income of
TEUR 6,630 for 2004 and of TEUR 9,335 for 2005 while a dividend of TEUR 2,000 was paid for financial
year 2004 in financial year 2005. No capital increases were effected in financial years 2003 to
2005.
48

Financial liabilities and credit lines
31 Dec. 2005 31 Dec. 2004 31 Dec. 2003
TEUR TEUR TEUR
Liabilities towards credit institutions from current
account overdraft facilities. . . . . . . . . . . . . . . . .
Liabilities towards credit institutions from loans
0 60 244
< 1 year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Liabilities towards credit institutions from loans
489 509 838
> 1 year to 5 years. . . . . . . . . . . . . . . . . . . . . . .
Liabilities towards credit institutions from loans
1,622 1,413 989
> 5 years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 840 1,088 1,335
2,951 3,070 3,406
The non-current liabilities towards credit institutions as at 31 December 2005 relate to annuity and
instalment loans. The carrying amounts correspond to market values. The following table shows the
loan agreements concluded by the Company, the resulting liabilities as at 31 Dec. 2005, the interest
terms applicable until redemption and the redemption date.
Lender 31 Dec. 2005 Interest rate
Redemption
date
TEUR in % p. a.
Bremer Landesbank . . . . . . . . . . . . . . . . . . . . . . . . 1,651 5.00 1 Jun. 2014
Bremer Landesbank . . . . . . . . . . . . . . . . . . . . . . . . 426 5.69 1 Aug. 2012
Oldenburgische Landesbank AG. . . . . . . . . . . . . . . 450 4.50 30 Aug. 2010
Bremer Landesbank . . . . . . . . . . . . . . . . . . . . . . . . 424
2,951
4.40 1 Apr. 2009
The aforementioned banks were granted comprehensive security in the form of mortgages over the
plant site in Prenzlau, the transfer of ownership to machinery, finished goods and other equipment by
way of security as well as the global assignment of receivables.
49

Unaudited quarterly consolidated financial statements as at 31 March 2006
Results of operations
50
Q1/2006
unaudited
Q1/2005
unaudited
Item
TEUR TEUR
Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25,714 21,296
Increase in inventories of finished goods . . . . . . . . . . . . . . . . . . . . . . . 6,758 173
Other income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 434 293
Cost of materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – 26,074 – 16,359
Personnel costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – 1,483 – 984
Other expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – 1,442 – 734
EBITDA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,907 3,685
EBITDA margin in %. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.2 % 17.3 %
Scheduled depreciation/amortisation expense . . . . . . . . . . . . . . . . . . . – 471 – 338
EBIT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,436 3,347
EBIT margin in % . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.4 % 15.7 %
Financial income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 5
Finance cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – 92 – 41
Earnings before taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,344 3,311
Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – 1,270 – 1,275
Net profit for the quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,074 2,036
Compared with the first quarter of 2005, revenue for the first quarter of 2006 rose by 20.7 % to
TEUR 25,714. As a result of the increase in inventories of finished goods to TEUR 6,578, total operating
performance (revenue plus the increase in inventories of finished goods) reached TEUR 32,472.
This yielded an increase in total operating performance of 51.3 % compared with the same quarter a
year earlier. Weather conditions in Germany were the main reason behind the very steep increase in
inventories of finished goods in the first quarter of 2006. The first quarter of 2006 was marked by prolonged
snowfalls so that it was not possible to access most roofs in the main sales area of southern
Germany. That is why the customers of the aleo solar Group (specialist dealers and installers) had to
postpone many contracts.
Revenue generated by the production of OEM solar modules as a proportion of total revenue amounted
to 11.8 % in the first quarter of 2006 compared with 1.5 % in the first quarter of 2005.
Foreign revenue amounted to TEUR 1,041 in the first quarter of 2006 compared with TEUR 225 in the
first quarter of 2005. Thus, the export ratio in the first quarter of 2006 amounted to 4.1 % (Q1/2005:
1.1 %). The revenue was essentially generated by business activities on the Spanish market in support
of market entry there.
In total, volume produced (approximately 12.9 MWp) in the first quarter of 2006 increased by 92.5 %
on the same quarter a year ago (6.7 MWp). This is attributable to the new production line that was
commissioned in September 2005.
Compared with the first quarter of 2005, the cost of materials in the first quarter of 2006 rose by
59.4 %, representing a slightly greater increase than in total operating performance.
Personnel costs in the first quarter of 2006 were up 50.7 % on the same quarter last year. This was
due to the expansion of production already described above. In addition to the hiring of new employees
for production, further persons were hired to expand second-tier management. The ratio of personnel
costs in relation to total operating performance therefore remained constant despite economyof-scale
effects.

Compared with the same quarter last year, other operating expenses rose by 96.5 % and therefore
increased in proportion to the volume produced. The cost of legal advice, advertising expenses as well
as energy costs increased to a greater extent.
In the first quarter of 2006, the scheduled depreciation/amortisation expense rose by 39.3 % in relation
to the first quarter of 2005. This was because of depreciation charged for the production line commissioned
in 2005 and for the logistics centre.
The financial result for the first quarter of 2006 fell to TEUR – 92, which was attributable to greater use
of overdraft facilities in order to make advance payments to suppliers of solar cells.
The Company’s results of operations in the first quarter of 2006 were shaped by the strong increase
in finished goods resulting from weather factors, so that at TEUR 2,074, the net profit for the quarter
was only slightly up on the first quarter of 2006.
Balance Sheet
31 Mar. 2006
unaudited
31 Mar. 2005
unaudited
Assets
Non-current assets
TEUR TEUR
Property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,040 8,212
Intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54 59
Current assets
15,094 8,271
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,495 8,742
Trade receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,428 5,715
Other current assets and advance payments made. . . . . . . . . . . . . . 5,516 4,148
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,428 1,624
31,867 20,229
Equity and liabilities
Equity
46,961 28,500
Subscribed capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,180 2,545
Capital reserve. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 208 208
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,345 0
Profit/loss carried forward . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – 2,049 5,596
Net profit for the quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,074 2,036
Non-current liabilities and deferred items
13,758 10,385
Deferred income from public assistance . . . . . . . . . . . . . . . . . . . . . . 6,552 4,699
Financial liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,294 2,357
Deferred tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 290 241
Warranty provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 625 612
Current liabilities
9,761 7,909
Financial liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,955 564
Trade payables and other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,296 6,328
Current income tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,191 3,314
23,442 10,206
46,961 28,500
Plant, property and equipment as at 31 March 2006 rose by a total of 83.1 % after scheduled depreciation
as a result of capital expenditure on the new production line and the logistics centre.
51

Inventories rose by 100.1 % on the first quarter of 2005. This is attributable to the expansion of capacity
as well as the increase in inventories of finished goods in the first quarter of 2006 on account of
weather factors.
Compared with the first quarter of 2005, trade receivables rose by 30.0 % as a result of higher revenue
in the first quarter of 2006 as well as of the reporting date, which reflected the late start of product
sales attributable to poor weather conditions.
As at 31 March 2005, the other current liabilities and advance payments made were mainly shaped by
advance payments connected with capital expenditure. As at 31 March 2006, advance payments for
deliveries of solar cells were mainly disclosed under this item. The item increased by a total of 33.0 %.
Compared with the same quarter last year, cash and cash equivalents increased by 12.1 %.
As at 31 March 2006, equity increased by 32.5 % on 31 March 2005. In accordance with the resolution
on the appropriation of profits adopted by the Company for financial year 2004, TEUR 2,300 were allocated
to retained earnings, TEUR 2,000 were distributed to the shareholders and TEUR 2,531 were
carried forward. In accordance with the resolution on the appropriation of profits adopted by aleo solar
Deutschland GmbH for 2004, TEUR 200 were allocated to retained earnings. In accordance with the
resolution on the appropriation of profits adopted by the Company for financial year 2005, TEUR 8,480
were allocated to retained earnings and TEUR 4,000 were distributed to the shareholders. Profits
were appropriated on the basis of the annual financial statements prepared in accordance with HGB
and differ from the consolidated financial statements prepared under IFRS in terms of the results for
the current and past financial years. The allocation to retained earnings in the total amount of
TEUR 10,980 has resulted in losses of TEUR 2,049 being temporarily carried forward in the unaudited
consolidated quarterly financial statements as at 31 March 2006. In accordance with Section 57c of
the German Limited Liability Company Act (GmbHG), a sum of TEUR 7,635 was converted to share
capital (capital increase from company funds). The share capital of the Company therefore increased
by TEUR 7,635 from TEUR 2,545 to TEUR 10,180. The increased was recorded in the Commercial Register
on 17 March 2006.
In the first quarter of 2006, the deferred income recognised for public assistance rose by a total of
39.4 % on the same quarter a year ago as a result of capital expenditure on the development of the
new production line and the logistics centre and related investment premiums and grants that
exceeded scheduled release to income.
As at 31 March 2006, non-current financial liabilities declined by 2.7 % in relation to 31 March 2005 as
a result of scheduled repayments.
Warranty provisions only changed by 2.1 % in relation to 31 March 2005. This was because the allocations
made on the basis of the volume of sales in financial year 2005 and in the first quarter of 2006
were partially offset by a lower assessment of the risk of claims being asserts on the basis of experience
to date (technical studies and industry comparisons).
The current financial liabilities of TEUR 6,955 as at 31 March 2006 (31 March 2005: TEUR 564) primarily
arose from the use of overdraft facilities provided by Bremer Landesbank and Oldenburgische Landesbank
AG to finance advance payments for the delivery of solar cells and increased tax advance
payments.
Compared with the same quarter last year, trade payables and other liabilities as at 31 March 2006
rose by 46.9 %, an increase that was roughly in proportion to the cost of materials.
Current tax liabilities as at 31 March 2006 rose by 117.0 %. This was mainly due to the tax liabilities
from preceding financial years and the income tax component for the first quarter of 2006.
As at 31 March 2006, the balance sheet total increased by 64.8 % in relation to 31 March 2005.
52

Introduction
THE BUSINESS OF THE ALEO SOLAR GROUP
aleo solar AG develops and manufactures high-grade solar modules based on mono- and polycrystalline
solar cells for the German and international photovoltaic markets. In Prenzlau, Brandenburg, the
Company has one of the biggest and most modern solar module production facilities in Europe, with
an output of 90 MWp. (Source: Sonne, Wind & Wärme Issue 2/2006, p. 38 et seq.) The modules
manufactured there, together with other equipment for photovoltaic facilities, are sold mainly by the
Company’s wholly owned subsidiary, aleo solar Deutschland GmbH based in Oldenburg, under the
brand name aleo. Moreover, to increase production utilisation, aleo solar AG also produces solar modules
as OEM.
aleo solar Deutschland GmbH distributes its products, i. e. solar modules manufactured by aleo solar
AG, solar energy systems and, possibly in the future, thin-film solar modules, under the brand name
aleo. It also distributes the modules of other manufacturers and system components. Products are
distributed mainly to specialist dealers and system installers . Up to the end of the financial year 2005,
aleo solar Deutschland GmbH sold its products primarily on the German market.
Future target markets include the European growth markets in particular. At the end of 2005, aleo
solar AG founded the production firm SOLAR MANUFAKTUR PRODUCCIÓN S. L. and the distribution
company aleo solar Distribución España S. L. in Spain. The new plant is currently under construction.
Production is to start in 2006/2007. The plant is to have a production capacity of 10 MWp.
Apart from activities on the Spanish market, there are plans to enter the Italian market in 2006 and to
further increase exports.
Photovoltaics – Technical Background
Photovoltaics means the use of solar energy for the generation of electricity. The basis of the supply
of photovoltaic energy is the photovoltaic cell (solar cell). When the cells are exposed to light, negatively
charged particles are released in the semi-conductor material of the solar cell (photo effect),
generating electricity (direct current). For most commercial applications, the solar cells are electrically
connected in series and encapsulated in modules, producing electrical current to power motors directly
or to charge batteries. If the DC electricity produced by solar energy is to be used to power AC electrical
devices or to be fed into the public grid, a device called an inverter is needed for the conversion of
direct current into alternating current.
To produce solar modules, solar cells are first soldered together in series of so-called “strings” and
then the strings are soldered together in a connection series. Under pressure and high temperatures,
the cells connected in this way are laminated between a glass panel and a foil. A special type of glass,
cut to specifications, is used for this purpose. The foil used consists of ethyl-vinyl-acetate (EVA). The
solar modules are then placed in an aluminium frame and furnished with a junction box. In practice,
solar modules with an output of between 150 watts and 220 watts used for commercial electricity
generation in grid-connected systems installed on roofs or open land are termed standard modules. In
addition, there are numerous special solutions with a great variety of output capacities and sizes (e. g.
to provide electricity for mobile homes, parking metres and traffic management systems).
Crystalline silicon is by far the most important material used in the production of solar cells. It is made
from quartz. For photovoltaic applications, raw silicon is processed into so-called solar silicon (Sisg). The
ingots produced from this silicon are sawn into wafers and then processed into solar cells by solar cell
manufacturers . These are subsequently joined together to form solar modules depending on the area
of application.
53

So-called monocrystalline solar cells are made using the Czochralski process, whereby molten silicon
is pulled to form ingot-like mono-crystals and then sawn into wafers.
In the case of the manufacture of polycrystalline solar cells, the molten silicon is poured into blocks
and the formation of mono-crystals does not occur. The large grain, hardened silicon is then cut into
wafers.
Although it is cheaper to manufacture polycrystalline solar cells than monocrystalline ones, the latter
tend to be more efficient.
Thin-film technologies
So-called thin-film technologies could become more important in the future because of the current
shortage of silicon. What these technologies have in common is that they do not require the production
of wafers: Layers with a thickness of just a few micrometers are applied to carrier materials such
as glass or plastic. This makes it possible to achieve considerable savings on materials. In practice the
efficiency of thin-film solar modules varies between 6 % and 10 % (Source: LBBW 2005).
Silicon-based thin-film technologies
Since the end of the 1970’s, work has been in progress on the manufacture of solar cells and modules
from amorphous silicon (“a-Si”). A-Si solar cells act like semi-conductors, which allows for very low
cell thicknesses of less than 1 μm. They are used in, for example, in device niche markets (watches
and clocks, calculators, lamps, etc.), and as flexible foils for PV façade technologies as well as roofing.
The manufacturers of a-Si solar modules include Kaneka Corp., Mitsubishi Corp., United Solar Ovonic
and Schott Solar GmbH.
In a recent process developed by CSG Solar AG, silicon is obtained from silane gas and applied to a
structured glass plate as a thin la yer of silicon of approximately 2 μm in thickness. The layer of silicon
on the glass plate is crystallised by heating and then processed to achieve structuring and conducting
properties. The advantage of this process is that less silicon is required. CSG Solar AG has stated that
it recently commenced the manufacture of products that are ready for the market.
Non-silicon-based thin-film technologies
In the case of non-silicon-based processes a distinction is made between processes involving cadmium
telluride (CdTe) and those involving copper-indium-diselenide (CIS). Solar cells have been manufactured
accordingly using the CdTe process since the end of the 1970 ies. This process can therefore
be said to be well established. The proportion of environmentally unfriendly cadmium used in this process
is the subject of critical public debate, which is one of the reasons why this technology has not
been used more extensively so far.
CIS-based technologies have been developed since the 1980’s. They are further differentiated according
to the type of manufacturing process used and the composition of the resulting semiconductor.
CIS stands for copper (Cu), indium (In) and selenium (Se). To optimize efficiency, the indium can partly
be replaced by or supplemented with gallium (Ga), and the selenium can be replaced by or supplemented
with sulphur (S). The processes are then referred to as CIGSe or CIGSSe, respectively.
From the perspective of the Company, the following are the most important CIS processes:
The CIGSe process used by Shell Solar was developed at the site in Camarillo, California. Copper,
indium and gallium are sprayed onto substrate glass, after which they are exposed to hydrogen
selenium steam and then further processed to achieve structuring and conducting properties. Shell
Solar has already been manufacturing market-ready goods on this basis for some years.
54

The CIGSe process, used by Würth Solar, was developed by the Institute of Physical Electronics at
Stuttgart University and the Centre for Solar Energy and Hydrogen Research in Stuttgart. Copper,
indium, gallium and selenium are “steamed” onto substrate glass and then processed further to
achieve structuring and conducting properties. On this basis, Würth Solar has already been producing
market-ready products for a couple of years.
Sulfurcell’s CIS process was developed at the Hahn-Meitner Institute in Berlin. Copper and indium are
sprayed onto substrate glass, then steam-heated in a special oven (diffusion oven) with hydrogen sulphide
and then processed further to achieve structuring and conducting properties. Sulfurcell has
stated that it too has recently commenced the manufacture of market-ready products.
The CIGSSe process of Photovoltaic Technology Intellectual Property Limited, licensed by Johanna
Solar Technology GmbH, was developed over a period of 12 years at the University of Johannesburg
by a research team led by Prof. Dr. Vivian Alberts. Copper, indium und gallium are sputtered onto substrate
glasses and then steamed in a diffusion oven with a mixture of hydrogen sulphide and hydrogen
selenium and then processed further to achieve structuring and conducting properties. A pilot plant is
already being operated in Johannesburg using this process, and is producing fully functional solar
modules.
Further Technologies
The Company attaches no considerable market significance to further developments in photovoltaics
(such as colour cells).
Areas of Applications for Photovoltaics
The market for photovoltaic products can be essentially divided into the following main areas of application:
• Grid-connected systems: This type of system is comprised of a connection between the photovoltaic
system and the regular power grid. The electricity produced is fed into the public power grid. In
Germany, the Renewable Energies Act (EEG) requires that grid operators purchase electricity from
renewable energy sources at guaranteed minimum prices. A distinction is made between small
systems (1 kWp to 30 kWp), mid-sized systems (31 kWp to 100 kWp) and large-scale systems (over
100 kWp). Small and mid-sized systems are usually found on residential, commercial and public
administration buildings and may be assembled on the roof or be integrated into building parts
(e. g. facades or roof coverings). Large-scale systems are very often used as capital investments.
They operate as power stations and are frequently installed on roofs and on open land in a few
cases.
• Stand alone systems: Stand-alone systems are photovoltaic systems that supply electricity independently
of and without being connected to a power grid. The electricity produced by the solar
modules is stored in batteries. Stand-alone systems are usually to be found in isolated locations or
in places where the costs of new power grid connections are uneconomical. This is frequently the
case with the electrification of households in the countryside that are situated far from a grid (socalled
SHS – Solar Home Systems) and entire rural communities (Solar Township Electrification).
Further important applications for stand-alone systems are telecommunications, water pumps,
street lighting, parking metres and weather stations.
In countries like Germany, where the statutory feed-in tariff for photovoltaic electricity exceeds the
purchase price of electricity, grid-connected systems are economically more viable and therefore constitute
the majority of the photovoltaic systems in these countries.
In addition, there are photovoltaic applications in the consumer goods field (e. g. watches and clocks
as well as pocket calculators. However, this area of application is of minor economic significance at
the present time.
55

Government Incentives for Photovoltaics
Introduction
Photovoltaics enjoy support in Germany and many other European Union countries. Most of the
various incentives are granted to the operators of photovoltaic systems. If such incentive takes the
form of an electricity feed-in law (as in the case of Germany and Spain), grid operators are required to
purchase electricity generated by photovoltaic systems and to pay certain minimum prices. In the
case of incentives that take the form of low-interest loans, those who construct and operate systems
benefit directly, because they receive the low-interest loans to finance their photovoltaic systems.
Such government incentives are of fundamental importance for the business of the Company, because
the various incentive programs for operators of these systems generate an indirect demand for the
products of the Company.
Europe
Legislation for the promotion of renewable energy sources in the Member States of the European
Union is based on numerous European regulations, especially the Directive of September 27, 2001 on
the promotion of electricity produced from renewable energy sources in the internal electricity market
(2001/77/EC), which was to be implemented by 27 October 2003, and, in the case of Germany, for
example, has been transposed into national law by means of the EEG. The aim of the directive is to
increase the share of renewable energy sources in the generation of electricity within the internal
electricity market. Goals were set for all Member States with regard to increasing the share of renewable
energy in the electricity supply. The Member States are required to take appropriate measures to
increase the consumption of electricity from renewable energy sources . The individual measures to
be taken are a matter for national law. Member States must ensure that the transmission and distribution
of electricity from renewable energy sources is warranted by transmission network operators.
Provided that the operation of the national electric power system permits doing so, such sources are
to be given priority. The costs incurred for technical adjustments such as grid connections and amplification
are to be charged on the basis of rules of general application. As a result of the implementation
of the Directive, according to information provided by the European Commission, there are now incentive
programs for photovoltaics in most Member States.
Government incentives in countries that are of particular importance for the aleo solar Group are
described below:
Germany
Photovoltaics is promoted in Germany. Such support, based in particular on the EEG, is of key significance
for the German renewable energies market and for the aleo solar Group’s business model.
The EEG provides regulatory support for renewable energy sources and for photovoltaics in particular.
One legislative objective is the further development of technologies for generating electricity from
renewable energy sources . Pursuant to Section 1(2) EEG, the percentage of renewable energy in electricity
consumption is to be increased by 2010 to at least 12.5 % and by 2020 to at least 20 %.
Support for electricity generated from renewable energy sources was first introduced by the Act on
the Feeding of Electricity from Renewable Energy Sources into the Public Grid of December 7, 1990
(Electricity Feeding Act – Stromeinspeisungsgesetz) by legally setting minimum feed-in tariffs. The
successor of the Electricity Feeding Act is the Renewable Energies Act (EEG) in the version of 29
March 2000. By amendment of 21 July 2004, the Directive of the European Union of 27 September
2001 on the promotion of electricity produced from renewable energy sources in the internal electricity
market (2001/77/EG) was transposed into German law. In essence, the amendment led to a broader
definition of the term renewable energies, a departure from any limits on the output of systems in
Germany enjoying support and an adjustment of tariffs. Originally, photovoltaic systems were only
eligible for support as long as the total output of all photovoltaic systems installed in Germany did not
56

exceed of 350 megawatts . By the Act of 23 July 2002, this amount was increased to 1,000 megawatts.
After a phase of market uncertainty in regard to the further development of the legislation, the
second amendment, called a provisional act, was issued on 22 December 2003. The provisions of this
provisional act essentially already corresponded to the regulations of the version of the EEG passed in
the amendment of 21 July 2004. The new EEG distinguishes between photovoltaic systems located
on top of buildings or noise protection walls and other systems. The level of support for the systems
first mentioned is exceeds the support under the old regulation. Limiting support to a certain installed
total output has also been discontinued.
Under the EEG, grid operators are required to connect systems producing electricity from the above
sources to their grids, to purchase all electricity offered by these systems on a priority basis and to
provide compensation for the electricity fed into the grid in accordance with the terms set forth in the
Renewable Energies Act (see below). This obligation generally applies to the grid operator technically
suited for connection whose distance to the location of the system is the shortest. The cost of connection
to the grid must be borne by the operator of the system producing the electricity. The cost of
any extensions of the power grid required for the connection must be borne, however, by the grid
operator. For photovoltaic plants that will be put into operation in 2006, the following minimum compensation
applies (in EUR per kW/h):
Output < 30 kWp < 100 kWp > 100 kWp
Building ( 1 ) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.5180 0.4928 0.4874
Facade )( 2 ) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.5680 0.5428 0.5374
Open air . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.4060
( 1 ) Systems that form a major part of a building and are installed as a roof or on a roof.
( 2 ) Systems attached to a noise barrier or to a building (but neither are part of nor form the roof of the building.
The level of the minimum feed-in tariff is based on the installation date. The minimum feed-in tariff,
which is to be paid at the same level over twenty years, is reduced by 5 % per year for the systems
newly installed in a given year and, as of 1 January 2006, by 6.5 % in the case of open-air systems.
For photovoltaic systems commissioned in 2007, the following minimum feed-in tariffs apply (in EUR
per KW/h):
Output < 30 kWp < 100 kWp > 100 kWp
Building ( 1 ) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.4921 0.4682 0.4630
Facade ( 2 ). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.5421 0.5182 0.5130
Open air . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.3796
( 1 ) Systems that form a major part of a building and are installed as a roof or on a roof.
( 2 ) Systems attached to a noise barrier or to a building (but neither are part of nor form the roof of the building)
The minimum feed-in tariffs must be paid for 20 years from commissioning. For systems that are not
attached to or atop a building built primarily for purposes other than the generation of electricity from
solar energy, the compensation requirement only applies if the site meets certain requirements regarding
the protection of the environment.
The Electricity Feeding Act was the subject of litigation both in Germany and at the European level. For
example, the requirement by the law to purchase electricity from renewable energy at a minimum
price exceeding its market price was challenged as being unconstitutional. The German Supreme
Court, however, held in its decision of October 1996 that there were no constitutional concerns against
the Electricity Feeding Act. The Act did in fact require utilities to compensate electricity fed in at the
level set by law and not just in the amount of the own costs saved, and, therefore, to subsidize operators
of alternative energy sources. However, this measure was justified for reasons of the public good.
The German Supreme Court most recently confirmed this opinion in its judgment of 11 June 2003 and
in doing so dismissed any constitutional concerns against the EEG in the version of 29 March 2000,
which essentially corresponded to the version of today. In its judgment of 13 March 2001, the European
Court of Justice held that the regulation of the minimum price set forth in the Electricity Feeding
57

Act did not constitute State aid. The European Commission thereupon dismissed a State aid proceeding
it had initiated against the Federal Republic of Germany on 22 May 2002 in regard to the EEG. In a
written petition dated 28 April 2005, a constitutional complaint was brought against the EEG. The petitioners
are seeking to have the EEG declared unconstitutional because private consumers of electricity
are being burdened with the costs associated with the use of renewable energies. They are asserting
that their fundamental right to individual autonomy is being infringed as they, as consumers of
electricity, have to bear the additional financial costs arising from the EEG and that this represents a
special levy that is unconstitutional.
In addition to the promotion of photovoltaics fixed in the EEG, there are incentives at the federal level
in the form of low-interest loans for the construction of photovoltaic systems under KfW programmes.
In the coalition agreement of 11 November 2005, the CDU, CSU and SPD agreed, among other things,
to continue the EEG in its basic form, but at the same time resolved to check the economic viability of
individual rates of compensation until 2007. The rates of compensation, reduction rates and periods of
time over which support is provided are to be adjusted to conform to the progress being made in the
development of individual renewable energy sources and new focal points are to be set, if needed.
Spain
In March 2004, the royal decree 436/2004 was passed, envisaging a reform of the system of compensation
for electricity from renewable energy sources .
Under this decree, photovoltaic plants with a capacity of less than 100 kWp will receive an annually
adjusted feed-in compensation of 575 % of the average regulated electricity tariff per kw/ h during the
first 25 years of operation and 460 % thereafter (Variant 1).
For plants that come into operation in 2006, the following minimum compensation (in EUR per kW//h)
applies, based on an average regulated electricity price of EUR 0.07659 per kw/h under Variant 1.
Output < 100 kWp > 100 kWp
First 25 years of operation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.4404 0.2298
Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.3523 0.1838
For photovoltaic plants with an output of more than 100 kWp, 300 % of the average regulated electricity
tariff will be paid during the first 25 years of operation and 240 % thereafter. This is payable during
the entire operating life of the photovoltaic plant. In the case of plants with an output of more than
100 kilowatts, an alternative variant of compensation can be chosen whereby 250 % of the market
price of electricity per kW/h is payable for the electricity generated by photovoltaics for the first
25 years, and then 200 % thereafter. In addition, a bonus of 10 % of the average regulated electricity
tariff can be paid (Variant 2).
Operators of plants with an output of more than 10 MWp as well as all plant operators that have
chosen a compensation option based on the market price (see above) are obliged to provide exact
forecasts for their electricity feed-in volume. If the forecasts are not met, fines, based on the extent to
which the forecasts are not met, are payable.
The rules regarding feed-in tariffs will be reviewed for the first time in 2006 based on progress reports
and every four years thereafter.
There are current plans to continue the above incentives only until such time as the total output of all
plants installed in Spain reaches 400 MWp.
In addition, photovoltaic plants also receive support under incentive programmes developed by the
autonomous regions of Spain.
58

Italy
In Italy, the obtaining of electricity from renewable energy sources is supported by a law of 29 December
2003. On the basis of Article 7 of this Law, the Ministry of the Economy and Finance issued a decree
on 5 August 2005 specifying the framework conditions for promoting photovoltaic plants. It was soon
modified by a new decree issued on 26 January 2006.
Under the terms of this decree, support for operators of photovoltaic plants commissioned as of
1 October 2005 includes up to three different components:
There are fixed incentive tariffs payable for all the electricity produced by all photovoltaic plants (1 to
1,000 kWp). The funds for this purpose are granted by a central government authority, the Gestore del
Sistema Elettrico – GRTN SpA. The amount of the compensation depends on the output of the plant,
and is payable during the first 20 years of a plant’s operations. The assistance for plants newly installed
in a given year declines 5 % per year, although this is adjusted to take account of the annual rate of
inflation.
In the case of small plants with an output of less than 20 kWp, the amount of solar energy produced
and consumed by the operator itself is taken into account (so-called “net-metering” process). This is
calculated by the local utility according to the current electricity tariff.
For plants with an output of 20 kWp or more, instead of using the net metering process, compensation
can be paid for any electricity produced by a photovoltaic plant which the plant does not consume
itself but feeds into the local grid. Small plant operators can choose this method of compensation
instead of net metering. The amount of the compensation depends on the amount of electricity produced
per year and is fixed each month. However, a minimum rate of compensation applies.
The following support applies to plants commissioned in 2006 (in EUR per Kw/h):
> 20 kWp <
Output < 20 kWp 50 kWp >50 kWp < 100 kWp
GRTN . . . . . . . . . . . . . . . . . . . . . . . . . 0.445 0.460 Maximal 0.490
Net Metering credit . . . . . . . . . . . . . . currently ca. 0.120 – –
Min. compensation depending on
500 < 1,000: 0.080
MWh p. a. . . . . . . . . . . . . . . . . . . .
> 1,000 > 2,000: 0.070
Each year, applications for support of plants with an output of less than 50 kWp are only granted to a
maximum total output of 60 MWp, and in the case of plants with an output of more than 50 kWp, to a
maximum total output of 25 MWp. It is currently envisaged that the incentives described above will be
continued for plants with an output of less than 50kw until the total output of all plants in Italy in this
category reaches 360 MWp. For plants with an output of 50 kWp or more, the relevant value is
140 MWp.
Market and Competition
Photovoltaic industry value chain
The silicon-based photovoltaic value added chain extends across individual processing stages, from
the extraction of silicon, via the manufacture of solar cells and modules, all the way to the installation
of photovoltaic plants.
There are both vertically integrated suppliers who cover several stages in the value chain and those
who concentrate on only a few stages in the chain. Suppliers have positioned themselves in this value
chain as follows (Source: “Solar Energy 2005” by the Bank Sarasin, dated November 2005; the Company
has added a few competitors according to own estimates):
59

• Extraction of crude silicon: Silicon is produced by a few large enterprises, mostly belonging to large
chemical groups. They supply both the semi-conductor industry and the solar industry. They deliver
silicon to the semiconductor as well as to the solar industry. The main manufacturers of highest
purity silicon for the electronics and solar industries are Wacker-Chemie AG in Germany; REC Solar
Grade Silicon LLC and Hemlock Semiconductor Corp. in the United States; and Tokuyama Corp.,
MEMC Inc. and Mitsubishi Corp. in Japan. Except for REC, which is also active in other stages of
the value chain, all the above companies concentrate solely on the first stage. The Norwegian
Elkem and Joint Solar Silicon, a joint venture of Degussa AG and SolarWorld AG, are expected to
become further major solar silicon producers as of 2007.
• Production of ingots and wafers: Even if the production of ingots and wafers involves two different
value chain stages, they are frequently produced by the same company. In 2005, manufacturers
with a significant share of the world market included Deutsche Solar AG, which belongs to Solar-
World Group; M.Setek Co. Ltd. of Japan, the Norwegian ScanWafer AS, a part of the REC Group;
and the Geman-English PV Crystalox Solar AG. Alongside ingot and wafer manufacturers that sell
their products on the market to other cell manufacturers, there are a number of companies that are
vertically integrated and primarily produce wafers for their own needs. In addition to the Sol arWorld
Group, they include BP Solar, Kyocera Corp., the REC Group, Schott Solar GmbH and ErSol AG.
Likewise, the market for the manufacture of wafers and ingots is shared between a relatively small
number of suppliers.
• Manufacture of solar cells: The market for manufacturers of solar cells is dominated by diversified
groups (including Sharp Corp., Kyocera Corp., Sanyo Corp., Mitsubishi Electric Corp. and BP Solar)
which either produce solar modules themselves or procure their production. In addition, dedicated
manufacturers such as Q-Cells AG, Motech Industries Inc., E-Ton Solar Tech. Co. Ltd., Photovoltech
N. V. or Sunways AG that concentrate on the manufacture of solar cells have also established themselves
in the market.
• Production of solar modules: The market for solar module producers has a polypolistic character.
Sharp Corp. is the world market leader in this field. Further vertically integrated groups are, for
example, BP Solar, Isofoton S. A., Kyocera Corp., Schott Solar GmbH, Photowatt International S. A.
and Solar Factory AG, which belongs to the Solarworld Group. Companies dedicated to the production
of solar modules include aleo solar AG, S olon AG, MSK Corp, Solar Fabrik AG and Solarwatt
AG, which also act as system providers to varying degrees. In addition, a large number of smaller
providers are also active on the module production market.
• Systems providers/wholesalers: This stage in the value chain performs the wholesaling function for
solar modules. In addition to modules, photovoltaic system components are also distributed. Such
components include inverters, which convert the direct current produced by the modules into alternating
current as well as systems for mounting solar energy systems on roofs and other structures.
The system provider market is mainly characterized by small and medium-sized enterprises and is
divided up among a relatively large number of providers. Significant system providers/wholesalers
on the German photovoltaic market include the aleo solar Group, Conergy AG and Phönix Sonnen-
Strom AG.
• Specialist dealers/installers : Specialist dealers purchase solar modules from the manufacturers or
system providers/wholesalers and sell them to the operators of small- and medium-sized photovoltaic
plants. In addition, the systems and their installation must be planned and executed. Such
services are also offered by installers . The market for specialist dealers and installers is mainly
characterized by small and medium-sized businesses. They include Iliotec Solar GmbH, Grammer
Solar GmbH and Sailer GmbH.
In the case of thin-film technology, the value chain is limited to the manufacture of solar modules and
to the system providers/wholsalers and specialist dealers.
• Manufacturers of solar modules: The manufacturers of solar modules on the basis of silicon-based
thin-film technologies include Kaneka Corp., Mitsubishi Corp., United Solar Ovonic, Schott Solar
GmbH and CSG Solar AG. First Solar LLC and Antec Solar Energy AG produce thin-film solar modules
using the CDTe process. The manufacturers of solar modules based on CIS technologies
include Sulfurcell, Würth Solar and Shell Solar.
60

• System providers/wholesalers and specialist dealers/specialist installers : In these sections of the
value chain, essentially the same suppliers are active or can be expected to be active in the future,
as in the case of the market for solar modules and photovoltaic plants based on crystalline solar
cells .
The difference between thin-film technologies and crystalline technology is that the value chain stages
for the production of ingots, wafers, solar cells and solar modules are integrated process, which can
result in lower production costs in the thin-film technology sector.
Crystalline
technology
Thin-film
technology
Rohsilizium raw silicon Ingots ingots wafers Wafer
raw
Rohstoffe
materials
Solar- solar
zellen cells
solar Solar-
modules module
Figure 1: Crystalline and thin-film technology value chains
Geographical markets and their development
solar Solar-
modules module
Solarsolar
energy
Systeme/
systems/
Großwholehandelsalers
Solarsolar
energy
Systeme/
systems/
Großwholehandelsalers
specialist Fachhandel
trade und Solarteure
and installers
specialist Fachhandel
trade und Solarteure
and installers
Because of the highly dynamic character of the market, the market studies currently available differ
widely in their assessments. Therefore, in order to assess the market, the Company essentially draws
on three sources, the forecasts provided by them being considered rather conservative and therefore
reliable: the Sarasin study “Solarenergie 2005” of November 2005, the Sarasin lecture “PV Market
Development and Perspectives” given at SEMICON on 5 April 2006 in Munich, and the PVPS-Report
IEA-PVPS T1-14:2005 “Trends in Photovoltaic Applications – Survey report of selected IEA countries
between 1992 and 2004.”
These studies assumed that the current worldwide output capacity of newly-installed photovoltaic
plants would increase from 529 MWp in 2003, 931 MWp in 2004 and 1,210 MWp in 2005 to 3,333 MWp
in 2010, representing an average annual increase of some 24 %. Some 1,399 MWp is expected to be
newly installed in Europe in 2010, representing a world market share of 42 %. This will make Europe
one of the most important markets for photovoltaics.
A newly-installed capacity of 1,210 MWp worldwide is assumed for 2005, of which 600 MWp (49.6 %)
are estimated to arise in Germany, 290 MWp (24 %) in Japan and 100 MWp (8.3 %) in the United
States.
Germany is considered one of the strongest growth markets. It is expected that the output of newlyinstalled
photovoltaic plants in Germany will increase from 153 MWp in 2003, 450 MWp in 2004 and
600 MWp in 2005 to 946 MWp in 2010, representing an average annual growth rate of about 18 % from
2004 to 2008. For 2009 and 2010, average annual growth rates of 5 % are expected.
Spain and Italy are also considered strong growth markets in Europe. In the case of Spain, output is
expected to grow from 7 MWp in 2003 and 10 MWp in 2004 to 250 MWp in 2010, representing an average
annual growth rate of 71 % as of 2004. It is assumed that 24 MWp of output was newly installed
in Spain in 2005, which would represent an increase of about 140 % in relation to 2004. On the relatively
young Spanish market, start-up difficulties are currently still being experienced with the practical
implementation of the very attractive government incentives (cf. the section entitled “Government
Incentives for Photovoltaics”).
61

In the case of Italy, output is expected to grow from 4 MWp in 2003 and from 5 MWp in 2004 to
88 MWp in 2010, representing an average annual growth rate of 63 % from 2004 onwards. It is assumed
that 10 MWp of output were newly installed in Italy in 2005. This would correspond to an increase in
newly-installed output of about 100 % in relation to 2004.
Excess demand in all sectors of the value chain
The worldwide demand for solar modules has grown considerably on account of the following
factors:
• A rise in world energy demand
• The finite nature of fossil fuels
• Increasing prices of oil, gas and electricity
• Energy needs on the part of emerging market countries
• Political instability in the countries where fossil fuels are extracted
• Increasing environmental awareness in the industrial nations
• Planning certainty due to stable legal framework conditions in the markets where demand is
greatest
While demand for photovoltaic plants is very high, supply is lower: This gap in supply is the result of a
shortage in the supply of solar silicon attributable to insufficient production capacities on the part of
the few producers of silicon. The limited availability of silicon has an effect on the whole value chain of
the photovoltaic industry: At present, the demand for ingots, wafers, solar cells and solar modules
significantly exceeds supply.
Only recently the major silicon producers have invested to a greater extent in the expansion of their
production capacity. It takes about two to three years to build an additional silicon production facility
depending on the infrastructure that already exists. But because demand is expected to remain very
high, the Company assumes that in the long term, the availability of silicon will stay behind demand
and that the gap in supply could be bigger than that shown in the figure below. The situation is aggravated
by the fact that the solar industry and the semi-conductor industry are competing for the silicon
(that is) available.
62

Angebot und Nachfrage Solarsilizium (MWp)
4.000
3.500
3.000
2.500
2.000
1.500
1.000
500
0
-500
-1.000
1.320
1.099
-221
1.278
1.603
-325
1.426
1.944
1.838
2.336
2.161
2.702
-518 -498 -541
3.182
3.049
-133
3.848
3.735
2004 2005 2006 2007 2008 2009 2010
Siliziumangebot Siliziumnachfrage Angebotslücke
Source: Figures as per Sarasin 2005; Company calculations
Figure 1: Silicon supply and demand
The competitive position of the aleo solar Group
At present, the aleo solar Group specialises in the manufacture of solar modules and the sale of solar
systems to specialist dealers and installers. aleo solar AG also manufactures modules as OEM. aleo
solar Deutschland GmbH also distributes the modules of other manufacturers that are not sold under
the aleo brand name.
The aleo solar Group would like to boost the system business in the future. In addition, the aleo solar
Group wants to distribute thin-film solar modules if the technology proves successful.
The world market leader in solar modules is Sharp Corp., but other major groups also have significant
market share (e. g. BP Solar, Isofoton S. A., Kyocera Corp., Schott Solar GmbH, Photowatt International
S. A. S. and Solarworld AG). The most important dedicated and non-group competitors in Germany are
Solarwatt AG as well as the public listed companies Solon AG and Solar Fabrik AG. On an international
level, such competitors include the non-listed MSK Corp., Japan, and SILIKEN S. L., Spain. In the case
of the Spanish market, the Company considers Isofoton S. A. to be its chief competitor.
According to estimates prepared by Bank Sarasin regarding the output of the plants installed worldwide
in 2005 (Source: Sarasin, Semicon Europe 5 April 2006), the volume of solar modules produced
by the aleo solar Group accounted for 2.9 % of the global market . while its share of the German
market was 5.8 %.
Based on the data supplied by Bank Sarasin once again (Source: Sarasin, Semicon Europe 5 April
2006; “Solarenergie 2005” survey by the Bank Sarasin from November 2005), the volume produced
by the aleo solar Group accounted for 2.7 % of the world market in 2004 and 2.6 % in 2003 as well as
5.5 % of the German market in 2004 and 8.8 % in 2003.
When assessing the Group’s market share, investors should bear in mind that the size of the market
is measured in terms of installed output, whilst the aleo solar Group’s share of the market is meas-
-113
63

ured in terms of volume produced. It should be borne in mind that although at present, all solar modules
produced are installed because of excess demand, the volume of solar modules produced and
installed do not necessarily overlap as of the reporting date because of stocks held by manufacturers
of solar modules.
Solar modules with a nominal output of some 253 MWp were produced in Germany in 2005. In that
year, aleo solar Group produced modules with a nominal output of some 35 MWp, representing some
14 % of the volume produced in Germany. This makes the aleo solar Group one of the three biggest
solar module manufacturers in Germany (Source: Photon International March 2006). In 2004, some
195 MWp of nominal output was produced throughout Germany, whereby the aleo solar Group, with
an output of some 25 MWp, accounted for a share of about 13 %. In 2003, the nominal output produced
in Germany was 81 MWp, whereby the aleo solar Group produced some 14 MWp accounting for
a share of about 17 %.
During the financial years 2003 to 2005, aleo solar Deutschland GmbH sold solar modules almost
exclusively to German customers, but intends to seek greater internationalisation in the future and
focus on European markets (cf. section “The Business of the aleo solar Group – Strategy”).
Competitive Strengths
The aleo solar Group is characterised by strong growth accompanied by high profitability. In 2005, the
EBIT margin was 13.8 %. From the perspective of the Company, such profitable growth is attributable
to a number of competitive strengths:
• Experienced management: The Company is of the opinion that it possesses an experienced and
qualified management team. Unlike many other companies in the solar industry, the aleo solar
Group was managed from the outset by two board members with a background in economics.
Business decisions are prepared and reached exclusively on the basis of commercial criteria. Moreover,
the board members have an excellent network of connections in the renewable energ ies
sector and act in a forward-looking way. In addition to the two board members, a strong second tier
management team was developed.
• A marriage of production and distribution: The aleo solar Group’s high profitability can also be attributed
to the fact that it does not sell its own products to wholesalers, but almost exclusively to
specialist dealers and installers. Thus, the aleo solar Group covers two stages in the value chain
– the manufacture of solar modules and wholesale/solar energy systems.
• Consistent brand policy: The aleo solar Group has succeeded in establishing aleo as a brand for
solar modules on the German market. This consistent marketing policy is also being continued in
the current sellers’ market. The Company believes that in a market which lacks a clear brand profile,
the aleo brand gives it a competitive edge.
• Diversified customer base: With its specialist dealer concept, the aleo solar Group has succeeded
in developing a diversified and comprehensive customer base in Germany. Thanks to this, there is
no dependence on just a few customers. A high degree of proximity to end users is ensured at the
same time. That aside, the aleo solar Group very deliberately waives large orders if these might
dilute profitability.
• High-quality products: The aleo solar Group produces high-quality solar modules that have a good
price- performance ratio. The high quality has been confirmed by independent sources (Top grades
in Stiftung Warentest May 2006). In particular, electricity generation and product durability were
rated highly.
• Flexible production design concentrated in one location: In Prenzlau, Brandenburg, the Company
has one of the largest and most modern production facilities for solar modules in Europe. Modern
equipment and machinery permits the machine processing of mono and polycrystalline solar cells
of various thicknesses and dimensions with minimum changeover times. Machinery configuration
warrants constant high product quality.
64

• Critical company size attained: With a production capacity of 90 MWp and annual revenues of
EUR 106.9 million in 2005, the aleo solar Group has attained the required critical size within the
fragmented group of manufacturers and suppliers of solar modules. This makes the aleo solar
Group an attractive and reliable partner for customers and suppliers alike. This also provides sustained
support for solar cell delivery.
• Organic growth: Until now, the aleo solar Group has developed organically at a constant pace,
whereby the management of the aleo solar Group has ensured an efficient cost structure. The
same criteria will be applied to future equity interests. The objective of the aleo solar Group is to
continue to achieve high growth characterized by strong earnings.
Strategy
The aleo solar Group aims to continue the growth marked by high earnings that has been attained in
recent years. The competitive strengths described above are supported and enhanced by the aleo
solar Group’s corporate strategy.
The aleo solar Group operates at two stages in the value chain – the manufacture of high-grade solar
modules and the distribution of solar modules and systems. In doing so, the Company pursues a strategy
that rests on two pillars of equal importance:
• Production competence
• Distribution and marketing competence
The Company intends to use the high competence it has developed and continually enhanced on its
home market in Germany at other production and distribution sites in other target markets, and to
transfer the know-how it has obtained to them.
Production competence
The production of solar modules will depend on the adequate procurement of solar cells in the future
too. To secure its supply of raw materials, the Company intends, in addition to maintain and develop
partner-like relations with existing suppliers, to continue diversifying its supplier bases as well as to
establish strategic ties with suppliers. To this end, the Company pursues a multi-stage procurement
strategy that involves the conclusion of short-term, medium-term and long-term solar cell supply contracts.
The aim is to ensure the lasting utilisation of a major portion of production capacity through
medium- and long-term contracts. The Company sees this as striking a good balance between securing
production for the manufacture of own aleo solar modules and sufficient flexibility on the procurement
side.
The Company is continually optimising production processes with the aim of keeping production costs
low in a lasting manner. In essence, the process optimisation measures tend in two directions. From
a technical angle, the Company systematically seizes the product innovations of its suppliers by close
cooperation and constant exchange of information. Moreover, changes to supplier product properties
are discussed with machine manufacturers early on and implemented in machine technology. Flexible
product design and further product development is and remains the basis for this.
The Company is working continuously on measures to achieve productivity gains. In the past, the
Company has been able to increase productivity significantly by decreasing the out-of-grade ratio and
machine downtime, increasing module throughput as well as reducing changeover times. In the future
too, the Company will seek to further boost its productivity and thus scale back production costs in a
sustainable manner.
The Company believes that a balanced procurement strategy, permanent process optimisation and
productivity gains provide a stable point of departure for making even more efficient use of available
production capacity in the future, and for realising economy-of-scale and learning curve effects.
65

The aleo solar Group is known for the quality, reliability and efficiency of its solar modules. Maintaining
and continually enhancing this high standard is the strategy of the Company. This is to be achieved
through the use of high-grade products for further processing, the quality of which is inspected continually.
Furthermore, the QM process that accompanies the production process is being constantly
refined and improved.
Distribution and marketing competence
The Company was quick to realise the importance for the earning capacity of the aleo solar Group of
having a system of its own for distributing the solar modules produced by the aleo solar Group. By
employing qualified customer service personnel as early as 2002, the Company was able to penetrate
the buyer’s market at that time. In the future too, the clear focus of the sales strategy on specialist
dealers and installers, who are supplied by the aleo solar Group not only with solar modules but also
with the components needed to install solar energy systems, such as assembly systems and inverters,
will be consistently developed and enhanced. If the market in Germany changes once again from
a seller’s market to a buyer’s market, the Company sees itself well positioned to preserve its earnings
strength.
The Company is endeavouring to consolidate and expand its strong position on the German market.
Moreover, the Company aims to internationalise its business operations in order to further diversify its
customer base and become more independent of the German market. Within the context of such
internationalisation, the Company will concentrate mainly on Europe, with a focus on the European
growth markets of Spain and Italy initially. A production site is under construction in Spain, thanks to
which the Company hopes to establish a position as a local manufacturer on the Spanish market. This
is expected to yield positive effects for the distribution activities already commenced in Spain. The
Company aims to transfer the distribution concept that has already proved successful in Germany to
the Spanish market. It plans to already enter the Italian market by developing its own distributing
organisation still in 2006. If it succeeds in launching the business, the Company aims at developing
production capacity in Italy.
The Company is monitoring incentives for photovoltaic facilities in other European countries very
closely. If the framework conditions are favourable, the Company will seek to achieve early and systematic
market entry.
The Company considers it important for customer retention to pursue a brand strategy in the field of
photovoltaic systems too, and that this will become even more important in the future. Therefore, the
Company will continue to consistently pursue and develop its brand policy (cf. the section entitled
“Distribution and Marketing”). The aim is to establish aleo as one of the leading brands of solar modules
in Germany and European target markets.
The Company also intends to expand its product portfolio. In particular, there are plans to introduce
high-efficiency thin-film solar modules into the Company’s product range. To ensure access to highgrade
thin-film modules, it has already acquired a relevant equity interest.
Future measures will be undertaken primarily when it is likely that they will boost the aleo solar Group’s
earnings. Decisions to acquire equity interests and other fundamental strategic decisions such as
entry into a new market or into new business segments are to be made contingent on this overriding
consideration. In particular, pure revenue growth is no end in itself for the Company in this regard.
Procurement
aleo solar Group’s procurement policy is designed to ensure the long-term supply of attractively priced,
high-grade raw materials and goods for resale.
66

As far as module production is concerned, solar cells are particularly important. In addition, various
components are needed to construct modules such as special solar glass, back foils, Tedlar foil, aluminium
frames, sockets, soldering connectors, cables and other auxiliary materials.
Apart from solar modules, the aleo solar Group also offers complete photovoltaic systems, for which
components such as inverters, assembly units and other equipment are procured.
As part of trading activities, third-party modules are procured for individual aleo partners and these
partners have given an advance undertaking to purchase them.
The procurement of thin-film modules, especially those produced by Johanna Solar Technology GmbH,
is also planned for the future.
As is customary in the industry, the aleo solar Group’s supplier base is heavily concentrated. In 2005,
the four largest suppliers (Q-Cells AG, Motech Industries Inc., E-Ton Solar Tech Co. Ltd. and Photovoltech
N. V.) accounted for about 78 % of the cost of materials. A close, partner-like relationship is
maintained with all key suppliers and this has ensured high delivery loyalty and cell supply reliability in
the past. The relationships with Q-Cells AG and Motech Industries Inc. have existed since the launch
of production by the aleo solar Group in the summer of 2002.
Because of the generally strained situation with regard to the supply of solar cells since the summer
of 2005, there has been a significant change in the structure of supply contracts for solar cells. Whereas
at the time when it launched production, the aleo solar Group generally concluded short- and mediumterm
contracts with a duration of between one and five years, the focus in the meantime is on longterm
contracts (LTCs) with a term of 10 years and more, involving considerable down payments (see
the section entitled “The Business of the aleo solar Group – Material Agreements”).
As far as the remaining materials for the construction of solar cells are concerned, the supplier base is
much looser as there are hardly any supply bottlenecks on these markets. There are several alternate
suppliers for these components.
In the case of the supplier base for components of solar energy systems, the supplier base is also
much looser. There are also several alternate suppliers for these components. Because of higher quality
requirements, especially for inverters, this is also an area where, as with the supply of cells, a
partner-like relationship is maintained with a number of well-known key suppliers.
The Company is seeking to expand its supply base in the future, especially with regard to the procurement
of solar cells. To this end, the aleo solar Group is to apply a more international approach and has
already reached an advanced stage of negotiations with a number of potential suppliers. Its special,
partner-like relationship with the key suppliers is to be maintained in doing so.
The aleo solar Group attaches great importance to the continuous high quality of the raw materials and
goods for resale that it procures. This high quality is ensured thanks to quality guidelines and regular
quality audits of suppliers.
The Company believes that the supply of solar cells required for the output planned for 2006 has
already been secured. Most of the planned volume is based on contractual undertakings that have
already been agreed upon contractually (see the section entitled “The Business of the aleo solar
Group – Material Agreements”). This Company assessment is based on the fact that in the first quarter
of 2006, more solar cells were already delivered than had been expected for planning purposes.
In the Company’s opinion, the volume of solar cells required for the output planned for 2007 has also
already been secured.
The Company believes that it has already secured most of the planned output for the years 2008 to
2010.
67

Products and Output
The aleo solar Group concentrates on the production and distribution of high-grade solar modules and
systems.
On the one hand, the aleo solar Group’s product range is geared to the industrial mass-production of
standardised solar modules. In principle, no special-format modules are produced, or only to a limited
extent. This yields significant economy-of-scale and learning curve effects.
On the other hand, the production facilities are very flexible, so that aleo solar Group is capable of
processing all cell types and formats available on the market into standard modules to the same
extent, providing the Company with greater flexibility vis-à-vis procurement markets.
These two aspects are reflected in the variety of products currently produced by the Company:
Module type Cell type
68
Cell
format
(inches)
Dimensions
(breadth x
height in m)
Sales 2005
(’000 units)
Proportion
of
sales (%)
S16 . . . . . . . . . . . . . . . poly 6+ 0.830 x 1.660 92.0 52 %
S03 . . . . . . . . . . . . . . . mono 5 0.800 x 1.600 29.2 17 %
S02 . . . . . . . . . . . . . . . poly 5 0.800 x 1.600 25.3 14 %
S12 . . . . . . . . . . . . . . . poly 6 0.800 x 1.600 11.0 6 %
S17 . . . . . . . . . . . . . . . mono 6+ 0.830 x 1.660 10.9 6 %
S13 . . . . . . . . . . . . . . . mono 6 0.800 x 1.600 3.0 2 %
Other . . . . . . . . . . . . . mono/poly 4, 5, 8 4.9 3 %
Total . . . . . . . . . . . . . .
Of which monocrystal-
176.3 100 %
line. . . . . . . . . . . . . 43.6 25 %
Of which polycristalline 132.7 75 %
Production is focussed on three types of modules that are manufactured with two very similar dimensions.
These standard formats are tailored to the needs of installers and make it easy to plan and
install solar power stations. Furthermore, module standardisation simplifies the Company’s own logistics
and those of the specialist dealers.
The high quality of aleo brand solar modules has been confirmed by independent sources. For instance,
the S 16 standard module was awarded first place by the Stiftung Warentest May 2006 (Stiftung
Warentest May 2006).
aleo solar
S 16
Kyocera
KC 170 GT-2
Shell Solar
PowerMax
Ultra 165-C
Sunways
SM 170 U
Scheuten
Solar Multisol
180 A
Schott Solar
ASE-165-
GT-FT/MC
Sharp
NU-S5E3E
Test quality grade . . 1.9 1.9 1.9 1.9 2.0 2.1 2.2
Electricity generation 1.7 1.6 1.9 1.9 2.0 2.1 1.7
Durability . . . . . . . . . 1.8 1.9 1.7 1.8 1.9 1.8 2.5
Safety . . . . . . . . . . . . 2.2 2.3 2.1 2.1 2.2 2.1 2.3
Documentation and
assembly. . . . . . . . 3.1 2.7 1.3 2.2 2.1 2.7 3.8
Solarwatt
P210-60
GET
Solarworld
SW
210 poly
Solar-
Fabrik AG
SF 125-
130 ST
Schott
Solar
ASI Opak
30-SG
Sun Technics
STM
173 F
Isofoton
I-150/12 S
BP Solar
7190-S
Würth
Solar WS
31100/75
Test quality grade . . . 2.3 2.3 2.7 2.7 2.9 3.0 3.3 3.2
Electricity generation . 2.3 2.3 2.7 2.7 2.1 3.0 3.3 2.7
Durability . . . . . . . . . . 2.0 2.0 2.0 2.8 4.0 2.9 2.9 4.0
Safety . . . . . . . . . . . . . 2.1 3.1 2.0 2.3 2.2 2.2 2.2 2.2
Documentation and
assembly. . . . . . . . . 3.3 1.9 3.3 2.4 2.1 2.2 2.5 3.5

Apart from the solar modules it manufactures itself, aleo solar Deutschland GmbH also markets the
components needed for photovoltaic systems, i. e. the inverters and other items of equipment required
to set up and operate solar energy systems. aleo solar Deutschland GmbH not only purchases the
solar modules made by aleo solar AG, but also, on a comparatively small scale (2004: 3,3 MWp; 2005:
0,7 MWp), solar modules manufactured by third parties which are not sold on under the aleo brand.
The aleo solar Group has one of Europe’s biggest and most modern solar module production facilities
at the Gewerbegebiet (industrial zone) Nord in Prenzlau. From an initial capacity (as at the end of the
year in each case) of 15 MWp in 2002/2003, output was increased to 30 MWp in 2004 and to 90 MWp
in 2005. A new production line and a new logistics centre were launched in 2005. The Gewerbegebiet
Nord site in Prenzlau site offers sufficient space for expanding production, thus ensuring that output in
Germany can be concentrated at just one site, thus eliminating the risk that efficiency will be diminished
because of decentralized production structures.
In Spain, aleo solar AG is building a production facility with a planned capacity of 10 MWp near Barcelona.
Production is expected to be launched in 2006/2007. The experience gained in operating the German
production sites is being used in planning the new production site.
In the production of solar modules, aleo solar AG can process all available cell formats. At the present
time, 6 + -inch cells (156 mm x 156 mm) are being processed above all.
The production process comprises six stages. First, crystalline silicon cells are tied together by copper
bands on automated soldering machines into so-called strings in such a way that the positive terminal
of one cell is in contact with the negative terminal of the neighbouring cell. Depending on the type of
cell and module, between 36 and 144 solar cells are joined together in this way, whereby it must be
ensured that only cells with similar capacity are strung together, in order to avoid a loss of output by
the solar module (“mismatching”).
At the lay-up station, the strings of cells are laid out on a piece of pre-washed solar glass already lined
with EVA foil . The glass in question is a special toughened, tempered, low-ferrous safety glass (ESG).
Depending on the type of module, between four and eight strings of cells are arranged side by side,
then manually soldered together and arranged in rows.
In the same process, a second layer of EVA foil and an insulating back layer are applied. In this stage
of the process, the operators can intervene manually at any time in order to remedy faults. This semiautomated
procedure permits strict and thorough quality control, resulting in a lower out-of-grade
ratio.
Next, all the parts are laminated in a laminator under precisely defined pressure and heat levels to
protect them from environmental effects. In particular, the sensitive cells are protected against damp
and ultra-violet light by the laminate.
In the next processing stage, the laminate is fitted with a stabilising aluminium frame and an electric
socket.
Finally, the modules are tested for efficiency under standardised test conditions and then classified
accordingly.
In the entire production process, only high-grade materials are used in order to ensure that the high
quality requirements in respect of utility and yield for aleo solar modules are met. State-of-the-art
automatic equipment is combined with manual processes in such a way as to ensure high flexibility
and constant quality control. This production concept allows the aleo solar Group to intervene in the
production process at any time, in order to reduce out-of-grade levels. In addition, unnecessary changeover
times are avoided and a high degree of production availability is ensured. Without undue changeover
effort, it is possible to process all usual cell formats (4˝; 5˝; 6˝; 6˝ + and 8˝) and all thicknesses
available as a result of cell thickness reduction, ensuring the excellent adapting of aleo solar output to
market requirements.
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The solar modules are processed in the first expansion stage of the production lines with machines
manufactured by well-known market leaders. The experience of the aleo solar Group is used in the
further development of production machinery and processes. In the second expansion stage and on
the basis of this cooperation, production processes were further optimised in respect of quality, production
safety and cost efficiency.
Distribution and Marketing
aleo solar Deutschland GmbH is of the opinion that by providing complete photovoltaic systems,
adhering to high standards of quality for all components and supplying a comprehensive service to its
distribution partners, it has positioned itself in the premium segment of the market.
Customer base
In distributing its products, aleo solar Deutschland GmbH concentrates on specialist dealers and
installers as customers. The specialist dealers are mostly small companies that do not belong to a
group and whose business is limited to the system installation stage of the value chain. In this regard,
aleo solar Deutschland GmbH attaches great importance to partner-like cooperation. aleo solar Deutschland
GmbH distributes its products only via selected partners in order to ensure professional installation
for end users. In selecting its specialist dealer partners, the Company considers where the dealers
are based and the range of services they offer. aleo solar Deutschland GmbH has a nationwide
network of about 200 aleo specialist dealers in Germany. There are also partners in other European
countries. In 2004, the ten largest customers accounted for 49.2 % of revenues and for 33,7 % in
2005.
aleo solar Deutschland GmbH concludes standard supply contracts with its customers and the contracts
generally run for one year. However, prices are reviewed every quarter, and any adjustments are
binding over the ensuing quarter.
Measures to boost sales
aleo solar Deutschland GmbH supports the presence of its specialist dealer partners at trade fairs by
providing exhibition fold-up walls, banners and advertising gifts; providing items for display; supporting
their advertising campaigns; and organises visits to its plants for the customers of its partners. If
desired aloe solar Deutschland GmbH also delivers solar modules directly to the customers of aloe
specialist dealers.
In addition, aleo solar Deutschland GmbH helps its specialist dealers with the planning and connecting
of photovoltaic plants if need be. The employees of the aleo solar Group also assist the specialist dealers
in the event of complaints from end customers. In this regard, defective photovoltaic systems are
inspected, installation faults rectified or, if necessary, the defective solar modules replaced.
Sales organisation
To cultivate existing and establish new customer relations, aleo solar Deutschland GmbH employs
customer service agents. aleo solar Deutschland GmbH has a sales manager for Germany and an
international sales manager. It also intends to appoint local sales managers for the Italian and Spanish
markets soon. Sales on the European target markets are controlled directly from Germany. The sales
manager for Germany reports to the Management Board, whilst the sales managers in European
countries report to the international sales manager.
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Development of distribution in Italy and Spain
The Company is planning to expand its presence in Europe (cf. the section entitled “Strategy”). The
immediate focus is on Spain and Italy in particular. Distribution was already launched in Spain at the
beginning of 2006. Apart from the relations to be newly established with Spanish specialist dealers
and installers, aleo solar Deutschland GmbH can also rely on its German partners for business in the
Spanish target market because many German specialist dealers have established branches in Spain.
On both the German and Spanish market, the Company essentially aims at supplying the specialist
dealers and installers directly in order to transfer the business concept that has proved successful in
Germany to the Spanish market.
In the case of the Italian market, the Company plans to open a sales office or establish a subsidiary,
probably in northern Italy, in autumn of 2006.
The aleo brand
The aleo solar Group believes that by consistently pursuing its brand policy, it has succeeded in establishing
aleo as premium brand for solar modules within the space of a few years. This is reflected in a
consistent market presence aimed at fostering an image of aleo brand products as being of high quality,
highly efficient, reliable and uncomplicated as a means of differentiating the brand from the competition.
To this end, a multi-stage advertising campaign in specialist periodicals was launched in 2002,
and will continue until 2006. At the same time the aleo brand was also cultivated by means of trade
fair appearances, the distribution of flyers and a web presence. The aleo solar Group’s success i n
developing the aleo brand is confirmed by, for example, a 2005 survey prepared by Ernst & Young
entitled “Photovoltaics in Germany”: “The Company is one of Germany’s leading module producers
and has also successfully established the aleo brand on the market.” In an article in the specialist
magazine Sonne, Wind & Wärme (Issue 5/2005), the author says that aleo solar Deutschland GmbH
“has made the greatest progress in establishing a brand.”
In a market that is otherwise devoid of conspicuous brand profiles, the Company considers the above
factors to be a competitive advantage from which both the Company itself and its specialist dealers
can profit. Because the establishment of a brand is a long-term process, the aleo solar Group laid the
groundwork early on. This should pay off, especially in an increasingly competing environment.
The aleo solar Group will also consistently pursue its brand policy in the future and, wherever possible,
transfer the ‘aleo’ brand to other products.
Equity Interest in the Field of Thin-Film Technologies
The Company assumes that thin-film technologies will occupy an important place in the market for
solar modules in the future. Based on an in-depth study of existing technologies and research undertakings,
the Company decided to acquire an equity interest in Johanna Solar Technology GmbH, in
order to benefit from thin-film technology, which the Company believes holds out much promise for
the future, and to reduce its dependence on the availability of silicon. In the opinion of the Company,
Johanna Solar Technology GmbH has one of the most promising thin-film technologies on the market,
because it combines a high degree of efficiency with relatively low capital expenditure per megawatt
of production capacity. After conducting an in-depth examination with the participation of external scientific
consultants and having inspected a pilot project in Johannesburg, the Company came round to
the view that the equity interest in Johanna Solar Technology GmbH holds out promise because it
would appear possible to launch serial production on the basis of CIGSSe technology in the near
future. In addition, the Company is also confident about the commercial terms of the acquisition and
that the business model of Johanna Solar Technology GmbH will succeed.
The interest in Johanna Solar Technology GmbH was acquired by an agreement of 13 April 2006, and
took the form of capital increase corresponding to 19 % of the share capital. The investment amounted
to TEUR 2,620. The relevant capital increase was entered in the commercial register kept by the Dis-
71

trict Court in Oldenburg on 25 April 2006. On 5 May 2006, the Company agreed to a further capital
increase in proportion to the shareholding hitherto held by it. The investment amounted to TEUR 943.
This second capital increase has not been entered in the commercial register yet.
Johanna Solar Technology GmbH is a company that came into being on 18 January 2006 upon being
entered in the Commercial Register but which has not started operating yet. Johanna Solar Technology
GmbH plans to engage in the further development, production and distribution of innovative thin-film
solar modules. In a first stage, thin-film solar modules manufactured using CIGSSe technology are
expected to already go into production in 2007. Johanna Solar Technology GmbH also intends to apply
the innovative technology and the know-how it has acquired as a result of further development in the
construction of further production sites.
The basis for these business activities is a thin-film process developed by Professor Vivian Alberts at
the University of Johannesburg. Johanna Solar Technology GmbH has been granted a licence for this
technology by Photovoltaic Technology Intellectual Property (Proprietary) Ltd, a spin-off of the University
of Johannesburg. Under the terms of this licence agreement, the Company has a non-exclusive
right (i) to build and operate the first production plant using CIGSSe technology, apply this technology
outside Africa, (ii) to the manufacture of solar modules, and (iii) to grant third parties the right to use
this technology. Photovoltaic Technology Intellectual Property (Proprietary) Ltd has placed itself under
an obligation to Johanna Solar Technology GmbH to grant the relevant rights (including the right to
grant the rights to third parties) only one more time until the year 2010. In addition to this Photovoltaic
Technology Intellectual Property (Proprietary) Ltd may grant use rights for Africa to a licencee from
South Africa only once for the period up to and including 2010.
Johanna Solar Technology GmbH will appear on the market with its thin-film solar modules and its
technological know-how, whilst the basic research and development under the terms of the licence
agreement will be undertaken by Photovoltaic Technology Intellectual Property (Proprietary) Ltd.
Johanna Solar Technology GmbH will pay the appropriate licence fee to Photovoltaic Technology Intellectual
Property (Proprietary) Ltd., payable in line with the progress achieved in planning and completing
the factory. In addition, royalties will also be payable and their amount will depend on the efficiency
of the thin-film modules produced as well as on the revenue generated by the sale of the modules.
On 13 April 2006, the Company signed an agreement with 3E Finanz GmbH, which currently holds
about 38 % of Johanna Solar Technology GmbH, whereby the Company will have the possibility of
requesting of 3E Finanz GmbH that its shares, which account for at least 31.1 % of all the shares in
Johanna Solar Technology GmbH, be offered up. This applies for the period from 1 January 2008 to
31 March 2009. If Johanna Solar Technology’s revenues from the sale of solar modules in 2008 are
less than TEUR 43,000, the above arrangement will be extended for one year. A condition for making
such request and acquiring the shares is that both parties agree to a price for the shares to be transferred,
whereby the fixing of a price is to be based on the principles for conducting company valuations
prepared by the Main Specialist Committee of the Institut der Wirtschaftsprüfer in Deutschland e. V.
(IDW Standard S1) and a comparison with the market valuation of a peer group of comparable listed
companies.
If, when exercising the above option, the Company still has a 19 % share in Johanna Solar Technology
GmbH, it will then hold the majority of the shares in Johanna Solar Technology GmbH. Should the
Company make use of this possibility, the remaining shareholders of Johanna Solar Technology GmbH
will be entitled to offer their shares to the Company for the same price.
Capital Expenditure
The Company invested TEUR 1,670 in financial year 2003. Most of this was spent on completing the
Prenzlau production site. Sums were also expended on the construction of the respective office building
at the site in 2003. This capital expenditure was financed with government grants, bank loans and
own funds.
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The expansion of the first production line was completed in spring 2004. The total volume of capital
expenditure for the expansion was about TEUR 2,811 and was financed with government grants, bank
loans and own funds.
In autumn 2004, work started on a second production line, which was inaugurated and went into
operation in September 2005. The total volume of capital expenditure amounted to TEUR 6,834 and
was financed with own funds and government grants. In the financial years 2005/2006, the aleo solar
Group also spent TEUR 2,076 on a new logistics centre in Prenzlau, financed with own funds, bank
loans and government grants.
In 2006/2007 a plant with an annual capacity of 10 MWp is to be built near Barcelona. The planned cost
of this investment is TEUR 3,500 and is to be financed with own funds and bank loans. The funds will
be primarily invested in technical equipment, machines and on the expansion of an existing building.
The production site is located on a plot of land with a building that SOLAR MANUFAKTUR PRODUC-
CIÓN S. L., has leased.
The most important current investment projects largely relate to Spain and will probably be financed
with own funds and bank loans.
Employees
As at 31 March 2005, the aleo solar Group employed a total of 232 people under limited and unlimited
contracts of employment. A clear majority of them (168) are engaged in production. As at 31 March
2006, the number of technical-commercial employees, including sales personnel, was 63. In the coming
years, more employees will be recruited as production utilisation expands. However, as in previous
years, this increase will be smaller in proportion to the increase in revenue. At the moment, the Company
is training industrial clerks and plans to increase the trainee ratio over the coming years. Specialist
mechanics and office staff are also expected to be trained over the next few years.
No collective wage agreements, employer/works council agreements or social compensation plans
are in operation at the present time. The Company is a member of the Berufsgenossenschaft Feinmechanik
und Elektronik (employers liability insurance association). The aleo solar Group does not
belong to any employers associations. The aleo solar Group has experienced no strikes, work stoppages
or any other disputes with employees that could affect business operations.
As at 31 December, the aleo solar Group employed 227 employees (of whom 203 were employed by
aleo solar AG und 24 by aleo solar Deutschland GmbH); as at 31 December 2004, the respective figures
were 179 (163 with aleo solar AG and 16 for aleo solar Deutschland GmbH) and on 31 December
2003 aleo solar employed 107 employees (95 were employed by aleo solar AG and 12 by aleo solar
Deutschland GmbH).
Trade Marks
The Company itself has no rights to trade marks, but its subsidiary, aleo solar Deutschland GmbH,
either has rights to the following trade marks and or such rights are pending:
National trademarks
aleo solar Deutschland GmbH has rights to three national verbal trade marks, each of them referring to
“Facilities for the Conversion of Solar Energy and Generation of Electricity, in other words Complete
Photovoltaic Plants”.
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The three trademarks are:
• aleo
• aleon
• sonne downloaden
The aleo trade mark was submitted to the German Patent and Trade Mark Office on 17 May 2002, and
on 27 August 2002 it was entered in the trade mark register for aleo solar Deutschland GmbH under
the registration number 302 25 055, file no.: 302 25 055.7/09. The “aleon” trademark was submitted
on 17 May 2002, and entered in the trade mark register under the numbers 302 25 056, file no.: 302
25 056.5/ 09 on 27 August 2002 as well. Last but not least, aleo solar Deutschland GmbH possesses a
trade mark called “sonne downloaden”, which was submitted to the German Patent and Trade Mark
Office on 5 June 2002 and on 13 August 2004 entered in the register under the number 302 27 561,
file no.: 302 27 561.4/07 for aleo solar GmbH. The opposition period for objections to the registration
of the trade marks aleo, aleon and sonne downloaden has expired, without any objections having
been raised.
European trade marks
On 17 May 2002, the ‘aleo’ trademark was submitted to the Office for Harmonisation in the Internal
Market in favour of aleo solar Deutschland GmbH and was registered on 7 October 2003 under the
number 2701514, with no objections.
WIPO trade marks
A German trade mark has been registered by aleo solar Deutschland GmbH as an international brand
for China, South Korea and the United States under the number 881858. Proceedings to protect this
trade mark will be initiated in these countries.
Material Agreements
Within the past two years, the Company concluded the following material agreements.
Solar cell supply contracts
The Company has a long-term contractual relationship with a manufacturer of solar cells (Solar Cell
Supplier 1) under the terms of which the Company receives certain types of cells with particular technical
specifications. The contracts with Solar Cell Supplier 1 satisfy most of the Company’s demand for
solar cells at the present time.
A supply contract concluded on 25 June 2005 and valid until 31 December 2010 with the possibility of
an extension, merits particular attention. On the basis of this contract, Solar Cell Supplier 1 supplies
the Company with solar cells. The contract calls for annual minimum deliveries of some 20 or 18 MWp
(plus or minus 10 %), which the Solar Cell Supplier 1 is obliged to deliver and the Company is obliged
to purchase. With regard to the annual minimum quota, the parties are to agree on how many cells are
to be delivered each month. If unexpected technical faults develop while a new product line is being
developed, Solar Cell Supplier 1 can postpone or reduce the contractual delivery volumes, but is still
under an obligation to deliver the postponed or reduced volumes to the Company. If there are problems
with the supply of wafers as a result of the supplier situation and Solar Cell Supplier 1 is unable
to deliver the agreed volume to all customers and in full, he may make a proportionate reduction in the
quantity of solar cells he is to deliver to the Company. On the other hand, the Company is entitled to
reject a reduction in delivery volume to the extent that is supplies Solar Cell Supplier 1 with wafers.
The parties agree on the price of the solar cells at six-monthly intervals on the basis of the costs of raw
materials and changes to the prices of solar cells during the preceding six months. If they fail to agree
74

on a new six-month price, the price for the preceding period applies. If no agreement is reached in the
following six-month period, the price is fixed by an expert.
An additional contract for the supply of solar cells concluded with Solar Cell Supplier 1 in January 2006
is of particular importance for the Company because it is based on the additional procurement of silicon
from a silicon supplier by Solar Cell Supplier 1. What particularly characterises the contract is that
Solar Cell Supplier 1 can largely pass on the delivery terms and in particular, wafer procurement prices
to the Company. The contract is valid for a fixed period of time expiring on 30 June 2016, and the Company
is to start receiving deliveries in May 2006. The minimum delivery volume of solar cells agreed
upon increases each year – plus or minus 10 % – from 2.89 MWp in 2006 to 4.5 MWp in 2007, and – due
to an of increased volume of silicon – to 11.2 MWp in 2008. From 2009 to 2015, the minimum delivery
volume is 14.9 MWp. To take account of the technological progress in the processing of wafers and
cells, the so-called conversion factor is to be used when calculating the volume of cells to be delivered
each month, reflecting the general yield per kilogram of silicon used. This can result in both positive
and negative changes in the respective annual minimum delivery volume. In addition, under this delivery
contract, Solar Cell Supplier 1 can reduce the supply of solar cells he supplies if there are bottlenecks
in the delivery of wafers, unless the Company supplies Solar Cell Supplier 1 with wafers. To
ensure the procurement of solar cells from Solar Cell Supplier 1, the Company has committed itself to
two unsecured advance payments. Both advance payments have already been taken into account in
the prices determined for solar cell deliveries during the period from 1 January 2005 to 31 December
2007. Therefore, the contracting parties assume that the advance payments will be amortised by the
delivery of solar cells over the entire term of the contract. However, there is no contractual obligation
to include the advance payments. As of 1 January 2008, the prices of the solar cells will be reviewed
each year on the basis of a contractual formula that takes into account possible changes to the market
prices of solar cells. Moreover , Solar Cell Supplier 1 may alter the prices of solar cells at his discretion
and according due attention to the concerns of the Company already before 1 January 2008, if the
production cost of solar cells increases as a result of higher prices for the wafers to be purchased by
Solar Cell Supplier 1. In both cases where prices are changed, the Company may reject the price
changes and have the prices fixed by an expert with binding effect on the contractual parties.
The Company also has a long-term contractual supply relationship with a further producer of solar cells
(Solar Cell Supplier 2) for the period from 1 January 2006 to 31 December 2015, calling for annual
deliveries of polycrystalline cells as follows: 175,000 cells a year in 2006, increasing to 820,000 a year
by 2009. These deliveries will continue until 2015 inclusively. Although a fixed price of the cells has
essentially been agreed upon, Solar Cell Supplier 2 may not only adjust the prices according to a price
index, but also according to the EUR/USD exchange rate if manufacturing costs rise by more than the
expected amount or, as of 2011, if a certain market price bracket is exceeded. In addition, the Company
has also made a considerable unsecured advance payment.
The Company also has a long-term fixed supply contract with a further producer of solar cells (Solar
Cell Supplier 3) for the period until 31 December 2015, providing for a total volume of 3.9 MWp in 2006
and 2007, or 6.4 MWp for the period 2008 to 2015. In this case too, the Company is obliged to make
advance payments. The cells are delivered at a contractually fixed price.
The supply contracts concluded to date place the Company under an obligation to make advance payments
amounting to about TEUR 1,614 and about TUSD 7,588, which are to be paid, or have already
partly been paid in 2006.
Equity interest in Johanna Solar Technology GmbH
The contractual agreements and legal transactions that apply to the Company’s equity interest in
Johanna Solar Technology GmbH also constitute material agreements for the Company (see the section
entitled: The Business of the aleo solar Group – Johanna Solar Technology GmbH).
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Sites, Real Estate and Plant, Property and Equipment
The Company operates a production site at its Prenzlau headquarters; the buildings occupy the following
three plots of land that belong to the Company:
• 15,000 sq. m, extract from the land register of the District Court of Prenzlau, Page 6164, Prenzlau
boundary, Precinct 1/Section 69, encumbered with a mortgage in favour of the Bremer Landesbank.
• 18,000 sq. m, extract from the land register of the District Court of Prenzlau, Page 6164, Prenzlau
boundary, Precinct 1/Section 102, encumbered with a mortgage in favour of the Oldenburgische
Landesbank.
• 13,543 sq. m, extract from the land and of the District Court of Prenzlau, Page 6164, Prenzlau
boundary, Precinct 1/Section 104.
Of the total assets of aleo solar amounting to TEUR 15,213 as at 31 December 2005, TEUR 8,197 was
the value of plots of land and company buildings, including external facilities. In 2005, aleo solar
Deutschland GmbH concluded a lease for commercial space in Oldenburg and comprising 573.44
sq. m. of office space. In 2005, SOLAR MANUFAKTUR PRODUCCIÓN S. L. concluded a lease for a
production site in Barcelona, Spain. The usable workshop space amounts to approximately 2,900
sq. m.
In addition, the aleo solar Group’s significant plant, property and equipment also comprise technical
plant and machinery used in the manufacturing process. As at 31 December 2005, these assets
amounted to TEUR 5,933 whilst other operating and business equipment accounted for TEUR 1,083.
Most of these assets had been pledged to lender banks as collateral.
Government Assistance
Pursuant to Section 2 of the German Investment Subsidy Act (Investitionszulagegesetz) of 1999,
between 2001 and 2004 the Company received a total of TEUR 1,947 in grants. Moreover, pursuant to
Section 2 of the Investment Subsidy Act of 2005, the Company received grants totalling TEUR 1,613
in 2004 and 2005. The Company used these funds to build and expand its Prenzlau production site.
Moreover, between calendar years 2002 and 2005 the Company received investment grants from the
Investitionsbank des Landes Brandenburg (“ILB”) in the amount of TEUR 2,704, which it also spent on
building and expanding production at the Prenzlau site.
Two applications for grants from the ILB, which are also to be used for expanding production facilities
for the manufacture of solar modules, are still pending. The Company has hitherto requested
TEUR 1,723 and TEUR 543 on this basis. The Company has not yet submitted certificates confirming
the purpose for which the funds have been requested in proceedings that are pending.
Legal Disputes and Administrative Proceedings
There are no legal disputes or administrative proceedings that were pending or were concluded over
the past 12 months or which, in the recent past, could have had, or which could have a material effect
on the financial condition or profitability of the Company and of the aleo solar Group. The Company is
not aware of any such impending disputes or proceedings at present.
Insurance
The aleo solar Group has taken out all-risks insurance that provides cover for damage resulting from
unforeseen occurrences (weather, fire, strikes, lockouts) etc. It also has manufacturer’s liability, environmental
liability, product liability and D&O insurance for a maximum sum insured of TEUR 1,000.
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GENERAL INFORMATION ABOUT THE COMPANY
Corporate History, Formation, Business Name, Registered Office, Financial Year,
Duration
The corporate history of aleo solar AG extends back to S. M. D. Solar-Manufaktur Deutschland GmbH &
Co. KG, which was founded upon the execution of a shareholders’ agreement on 31 July 2001 (entered
in the Commercial Register kept by the District Court at Neuruppin under HRA 1203) by S. M. D. Solar-
Manufaktur Deutschland Beteiligungs-GmbH (entered in the Commercial Register kept by the District
Court at Oldenburg under HRB 4822) as general partner and by Dr. Ing. Vogt Vierte Vermögensverwaltungsgesellschaft
mbH (entered in the Commercial Register kept by the District Court at Oldenburg
under HRB 4823), Mr. Jakobus Smit, Schützenhofstr. 53, 26180 Rastede, Mr. Helmut Bögershausen,
Zum Hubertus 5, 27801 Dötlingen, Mr. Klaas Wachtendorf, Terrasse 10, 26441 Jever and Mr. Guido
Brüggemann, Harry-Wilters-Ring 21, 26180 Rastede as limited partners. By way of the transformation
of its legal form (transformation resolution of 3 August 2004 contained in a deed executed before
Notary Adolf Fugger with his notarial office in Oldenburg, UR-Nr.259/2004), S. M. D. Solar-Manufaktur
Deutschland GmbH & Co. KG became S. M. D. Solar-Manufaktur Deutschland GmbH (entered in the
Commercial Register kept by the District Court at Neuruppin under HRB 7069 OPR).
aleo solar AG, for its part, was formed as a result of the legal transformation (transformation resolution
of 12 April 2006 contained in a deed executed before Notary Michael Rütze with his notarial office in
Oldenburg, UR-Nr. 160/2006) of S. M. D. Solar-Manufaktur Deutschland GmbH (entered in the Commercial
Register kept by the District Court at Neuruppin under HRB 7069 NP) and was entered in the
Commercial Register on 4 May 2006. The transformation resolution was adopted by the current shareholders
of the Company named in the section entitled “Shareholder Structure (before and after the
Completion of the Offering.”
The business name of the Company is:
“aleo solar Aktiengesellschaft”
The Company has it registered office in Prenzlau and is entered in the Commercial Register kept by
the District Court at Neuruppin under the number HRB 7522 NP. The financial year corresponds to the
calendar year. The Company has been formed in perpetuity. As a stock corporation formed under
German law, aleo solar AG is also subject to the rules of Germany stock corporation law. The business
address of the Company is: Gewerbegebiet Nord, 17291 Prenzlau, Tel.: +49 (0) 3984 8328 – 0, Fax:
+49 (0) 3984 8328 – 115.
Objects of the Company
In accordance with Article 2 of the Company’s Articles of Association, the objects of the Company
consist in the manufacture and distribution of solar modules as well as all of the products and equipment
needed to build plants that generate electricity from solar power. The Company is authorised to
conclude all transactions and take all measures that are necessary for or appear conducive to the
attainment of its objects and are appropriate for advancing them. Furthermore, the Company is entitled
to establish branch offices or subsidiaries in Germany and abroad as well as to acquire equity
interests in other enterprises and companies insofar as doing so serves its objects.
Shareholding Structure of aleo solar AG
aleo solar AG is the parent company of the aleo solar Group. It holds all the shares and voting rights of
aleo solar Deutschland GmbH, Osterstr. 15, 26122 Oldenburg, which was formed and has its registered
office in Oldenburg, Germany, as well as of SOLAR MANUFAKTUR PRODUCCIÓN S. L. Avda
disgonal, 468 5C Barcelona – 08006, and aleo solar distribución España S. L., Avda diagonal, 468 5C
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Barcelona – 08006, the two companies which were both formed in Spain and have their registered
offices in Barcelona, Spain. aleo solar AG also holds 19 % of the shares and voting rights of Johanna
Solar Technology GmbH, Rosenstrasse 41, 26122 Oldenburg, which was formed and has its registered
office in Oldenburg.
78
100% 100% 100%
aleo solar
Deutschland
GmbH
(D)
SOLAR
MANUFAKTUR
PRODUCCIÓN
S.L.
(E)
aleo solar AG
Figure 2: Shareholding structure of the aleo solar Group
Auditors
aleo solar
distribución
España
S.L.
(E)
19%
Johanna Solar
Technology
GmbH
(D)
The auditors of the Company are PricewaterhouseCoopers Aktiengesellschaft Wirtschaftsprüfungsgesellschaft,
Donnerschweer Stra sse 90, 26123 Oldenburg. PricewaterhouseCoopers Aktiengesellschaft
Wirtschaftsprüfungsgesellschaft is a member of the Chamber of Public Accountants (Wirtschaftsprüferkammer).
The auditors have audited the consolidated financial statements of S. M. D. Solar-Manufaktur Deutschland
GmbH & Co. KG prepared in accordance with IFRS as at 31 December 2003, the consolidated
financial statements of S. M. D. Solar-Manufaktur Deutschland GmbH prepared in accord ance with
IFRS as at 31 December 2004, the consolidated financial statements of S. M. D. Solar-Manufaktur
Deutschland GmbH prepared in accordance with IFRS adopted by the EU as at 31 December 2005 as
well as the single-entity annual financial statements of S. M. D. Solar-Manufaktur Deutschland GmbH
as at 31 December 2005 prepared in accordance with the provisions of German commercial law and
have issued an unqualified auditor’s report in each case.
Notices
Company notices are published in the electronic version of the German Federal Gazette (Bundesanzeiger)
unless their publication in other media is required by statute.

INFORMATION ABOUT THE CAPITAL OF THE COMPANY
Share Capital and Shares
The share capital of the Company currently comprises EUR 10,180,000 and is divided into 10,180,000
registered no-par value ordinary shares each with a notional share of EUR 1.00 in the share capital. The
share capital is fully paid up.
Development of Share Capital
The Company came into existence on 18 October 2001 as S. M. D. Solar-Manufaktur Deutschland
GmbH & Co. KG and was formed with liable equity capital totalling EUR 50,000. With an entry made
in the Commercial Register on 13 November 2002, the liable equity capital was increased by
EUR 607,500 to EUR 657,500, with an entry of 17 February 2003, it was increased by EUR 1,390,500
to EUR 2,048,000, with an entry of 10 July 2003 by EUR 243,500 to EUR 2,291,500 and finally, with
an entry of 5 July 2004, by EUR 253,500 to EUR 2,545,000.
S. M. D. Solar-Manufaktur Deutschland GmbH, with share capital of EUR 2,545,000 was created on
31 March 2005 through the transformation of S. M. D. Solar-Manufaktur Deutschland GmbH & Co. KG.
By a shareholders‘ resolution of 3 March 2006, the share capital was increased by EUR 7,635,000 to
EUR 10,180,000.
Upon being entered in the Commercial Register on 4 May 2006, the Company was transformed into a
joint stock corporation with share capital of EUR 10,180,000.
Authorised Capital
Pursuant to a resolution of the general shareholders’ meeting dated 12 April 2006, the Management
Board is authorised, subject to the approval of the Supervisory Board, to increase, on one or more
occasions, the share capital of the Company on or before 11 April 2001 by a total of up to EUR 5,090,000,
through the issuance of up to 5,090,000 new no-par value ordinary shares against cash contributions
or against contributions in kind. Only ordinary shares and/or preference shares without voting rights
may be issued. The Management Board is authorised, with the approval of the Supervisory Board, to
exclude the subscription rights of the shareholders. However, subscription rights may only be excluded
in the following cases:
– for fractional amounts;
– to issue employee shares if the exclusion of subscription rights only applies to new shares representing
an aggregate notional share in the share capital of no more than 10 %, i. e.
EUR 1,018,000;
– if the issue price of the new shares is not substantially less than the then current stock market
price of shares of the same type already listed and if the exclusion of subscription rights only
applies to new shares representing an aggregate notional share in the share capital of no more
than 10 %, i. e. EUR 1,018,000. With regarding to determining whether the 10 % limit has been
reached, the exclusion of subscription rights on the basis of other authorisations pursuant to Section
186(3), sentence 4 of the German Stock Corporation Act, are to be taken into account;
– if the new shares are issued against contributions in kind.
Further details pertaining to the rights attached to shares and the terms on which shares are to be
issued are decided by the Management Board subject to the approval of the Supervisory Board.
79

Conditional Capital, Convertible Bonds and Employee Stock Option Programme
No authorisation to issue convertible bonds has been granted and in addition, no convertible bonds
have been issued in the past. The Company has no conditional capital.
General Provisions Concerning the Liquidation of the Company
In the event of liquidation as a result of insolvency proceedings, the Company may only be dissolved
by a resolution of the general shareholders’ meeting passed by a majority of 75 % of the share capital
present at the time of the adoption of the resolution. In such case, any assets that may remain after
the settlement of all liabilities will be distributed among the shareholders in accorcance with the
respective requirements of the Stock Corporation Act. In this regard, particular attention is to be
accorded to the rules concerning the protection of creditors.
General Provisions Concerning Changes to Share Capital
Under the German Joint Stock Corporation Act, the share capital of a stock corporation can be increased
by a resolution of the general shareholders’ meeting if the resolution been approved by a majority of
at least three quarters of the share capital present at the time of adoption unless different majority
requirements are stipulated in the articles of association of the stock corporation concerned. In addition,
shareholders may also create authorised capital. The creation of authorised capital requires the
adoption of a resolution by a majority of at least three quarters of the share capital present at the time
of adoption and with such resolution then authorising the Management Board to issue shares corresponding
to a specific sum within a period of not more than five years. The nominal amount thereof
may not exceed one half of the share capital that existed at the time when the authorisation was
granted.
Furthermore, shareholders may create conditional capital for the purpose of issuing (i) shares to holders
of convertible bonds or other securities that confer subscriptions rights, (ii) shares that are to serve
as consideration in connection with a merger with another company, or (iii) shares that are to be
offered to management and employees, whereby a resolution adopted by a majority of three quarters
of the share capital present at the time of adoption is required in each case. The nominal amount of
the conditional capital created for the purpose of issuing shares to management and employees may
not exceed 10 % of the share capital that existed at the time the resolution was adopted.
A resolution reducing share capital requires a majority of three quarters of the share capital present at
the time of its adoption.
General Provisions Concerning Subscription Rights
Under the German Stock Corporation Act, every shareholder generally has subscription rights with
respect to the issuance of new shares in connection with a capital increase as well as to convertible
bonds, bonds with warrants, profit participation certificates (Genussrechte) or bonds with profit participation
rights. Subscription rights are freely transferable. The general shareholders’ meeting may
exclude shareholders’ subscription rights by means of a resolution passed with a majority of the votes
cast along with a majority of at least three quarters of the share capital represented at the time the
resolution is adopted. Such an exclusion of subscription rights requires that the Management Board to
submit a report stating the reasons why the interest of the company in excluding the subscription
rights outweighs the interest of the shareholders in being granted such subscription rights.
The exclusion of subscription rights with regard to the issuance of new shares is permissible without
special justification if (i) the company increases the share capital by way of cash contributions; (ii) the
amount of such capital increase does not exceed 10 % of the existing share capital, and (iii) the issue
price of the new shares is not substantially less than the then stock market price.
80

Shareholding Disclosure Obligations
With the admission of the shares to trading with official listing on the Frankfurt Stock Exchange, the
Company, as a publicly traded company, will become subject to the provisions of the German Securities
Trading Act (Wertpapierhandelsgesetz) concerning disclosure obligations in respect of shareholdings.
The German Securities Trading Act provides that any shareholder who, through purchase, sale or
otherwise, reaches, exceeds or falls below a 5 %, 10 %, 25 %, 50 % or 75 % threshold with regard to
voting rights in a listed company, must provide the relevant company and the Federal Financial Supervisory
Authority (BaFin) with written notice, without undue delay and in any event within seven calendar
days, stating that such person has reached, exceeded or fallen below any such threshold, the total
number of voting rights to which such person is entitled and, if applicable, the relevant basis on which
the voting rights are attributed to him. In connection with this requirement, the German Securities
Trading Act contains various rules that are intended to ensure that a shareholding is attributed to the
person who actually controls the voting rights associated with the shares. For example, shares held by
a subsidiary are allocated to the person required to file the disclosure in the same way as in the case
of shares held by a third party for the account of that person or for that of a subsidiary of that person.
If a shareholder fails to provide such notice, the shareholder will be precluded from exercising any
rights associated with his or her shares (including voting and dividend rights) until proper notice has
been given. In addition, non-compliance with the foregoing disclosure obligation may result in the
imposition of a fine.
Furthermore, pursuant to the German Securities Acquisition and Takeover Act (Wertpapiererwerbs-
und Übernahmegesetz), anyone whose voting interest reaches or exceeds 30 % of the voting shares
of a listed company must publish this fact, within seven calendar days, including the percentage of
voting rights held, in at least one supraregional newspaper designated for exchange notices or by
means of an electronically operated financial information dissemination system, and subsequently
make a mandatory public tender offer to all shareholders in the corresponding company unless an
exemption has been granted.
81

82
INFORMATION ABOUT THE CORPORATE BODIES
The corporate bodies of the Company are the Management Board (Vorstand), the Supervisory Board
(Aufsichtsrat) and the general shareholders’ meeting (Hauptversammlung). The powers vested in
these bodies are governed by the German Joint Stock Corporation Act (Aktiengesetz), the Articles of
Association (Satzung) and the respective by-laws (Geschäftsordnungen) of the Management Board
and Supervisory Board.
The Management Board is responsible for managing the Company in accordance with the laws of the
Federal Republic of Germany, the provisions of its Articles of Association and the by-laws of the Management
Board. The Management Board represents the Company in its dealings with third parties.
The Management Board is required to ensure the establishment and operation by the Company of an
appropriate risk management and internal monitoring system facilitating the timely identification of
developments that might place the continued existence of the Company at risk. Furthermore, the
Management Board is obliged to brief the Supervisory Board at least once every quarter about the
course of business, including revenue and the position of the Company and its subsidiaries in particular,
and, at the last Supervisory Board meeting of a given financial year, about its intended business
policy and other fundamental issues related to business planning as well as to present a budget for
the following financial year and to present a medium term budget planning. In addition, the Management
Board is obliged to inform the Supervisory Board in a timely fashion about any business transactions
that might be of material significance for the profitability of the Company so that the Supervisory
Board can have the opportunity of expressing its opinion before such transactions are undertaken. The
Management Board is also obliged to inform the Chairman of the Supervisory Board about important
events. An occurrence at an associated company that could have a material influence on the position
of the Company and of which the Management Board has become apprised is also considered an
important event. German law does not permit the simultaneous holding of Management Board and
Supervisory Board mandates in the case of a joint stock corporation but in exceptional cases, simultaneous
membership in the form of the secondment of a Supervisory Board member to the Management
Board is possible for a period of no more than one year. During such period, the seconded
Supervisory Board member may not serve on the Supervisory Board.
Members of the Management Board are appointed and may be removed by the Supervisory Board for
good cause. The Supervisory Board is required to supervise and advise the Management Board in its
management of the Company. Under German stock corporation law, the Supervisory Board may not
engage in management. In accordance with the Management Board by-laws, the Management Board
is, however, required to obtain the approval of the Supervisory Board for certain transactions and to
generally do so before a particular transaction or measure is carried out.
The members of the Management Board and of the Supervisory Board owe a duty of care and loyalty
to the Company. A broad spectrum of interests, especially those of the Company, its shareholders,
employees and creditors must be taken into account by members of these bodies in discharging such
duty. In addition, the Management Board must take account of the rights of shareholders with respect
to equal treatment and equal information. Management Board and Supervisory Board members are
jointly and severally liable for any breach of their duties if, as a result, the Company suffers damages.
Under current German law, a shareholder generally has no possibility of taking direct action against
members of the Management Board or Supervisory Board where such shareholder believes that the
members have violated their duties to the Company and that it has suffered damages as a result. In
general, only the Company is able to bring claims for compensatory damages against members of the
Management Board or the Supervisory Board, with the Company represented by the Management
Board in the case of claims against members of the Supervisory Board and by the Supervisory Board
in the case of claims against members of the Management Board. In accordance with a decision
issued by the Federal Supreme Court (Bundesgerichtshof), the Supervisory Board is obliged to pursue
enforceable claims for compensatory damages against the Management Board unless significant reasons
speak against pursuing such a claim for the good of the Company and these reasons outweigh
or at least balance the reasons favouring the pursuit of a claim.

If the respective body vested with the power of representation decides not to pursue a claim, claims
on the part of the Company for compensatory damages in relation to members of the Management
Board or the Supervisory Board must nonetheless be pursued under the provisions of the German Act
on Business Integrity and the Modernization of Shareholder Actions (Gesetz zur Unternehmensintegrität
und Modernisierung des Anfechtungsrechts) that came into force on 1 November 2005 should
the general shareholders’ meeting so resolve by a simple majority. Shareholders whose combined
shareholdings amount to one tenth of the share capital or the sum of € 1,000,000 of such share capital
may apply to a court for the appointment of a special representative to pursue damage claims. In
addition, shareholders whose combined shareholdings amount to one hundredth of the share capital
or the sum of € 100,000 of such share capital at the time the application is filed may in their own name
file a motion for the admission of a claim before the regional court (Landgericht) with jurisdiction for
the registered office of the Company to pursue damage claims on behalf of the Company. One condition
for the admission of such action is, inter alia, that the shareholders have unsuccessfully asked the
Company to bring an action itself, having granted it a reasonable period of time within which to do so,
and the facts warrant a strong suspicion that harm has been caused to the Company as a result of
dishonesty or a gross breach of the law or of the Articles of Association. The Company is at all times
entitled to pursue damage claims itself; if an action is taken by the Company, any pending admission
proceedings or actions initiated by the shareholders are then inadmissible.
The Company may only waive or reach a settlement with respect to such damage after three years
have elapsed since the vesting of such claims, and after the shareholders have adopted a resolution to
such effect by a simple majority at the general shareholders’ meeting, provided that no shareholder
minority whose combined shareholding amounts to at least one tenth of the share capital has raised
an objection against such resolution in the minutes of the meeting.
Under German law, individual shareholders (like any other persons) are prohibited from using their
influence on the Company to cause a member of the Management Board or Supervisory Board to act
in a manner that would be detrimental to the Company. Shareholders who have a controlling influence
may not use their influence to cause the Company to act against its interests unless the resulting
disadvantages are offset. Any person who uses his influence to cause a Management Board or Supervisory
Board member, a commercial attorney in fact (Prokurist) or a person bearing power of attorney
(Handlungsbevollmächtigter) to act in a manner causing damage to the Company or its shareholders is
obliged to compensate the Company and its shareholders for any resulting damage. In addition, Management
Board and Supervisory Board members are jointly and severally liable for breach of their
duties if, as a result, the Company suffers damages.
Management Board
The Management Board presently comprises two members. The size of the Management Board,
which most consist of at least one person under the Articles of Association, is determined by the
Supervisory Board. The Supervisory Board can designate a Management Board member chairman of
the Management Board and appoint a deputy chairmen.
Management Board members are appointed by the Supervisory Board for a maximum term of five
years. Re-appointment for an additional five years each time is permissible. The Supervisory Board
may revoke the appointment of a Management Board member prior to the expiration of his term of
office for good cause, i. e. the case of a gross breach of a fiduciary duty or if the general shareholders’
meeting adopts a no-confidence resolution in regard to a Management Board member.
The Supervisory Board has the right to issue by-laws binding on the Management Board. If the Supervisory
Board issues no by-laws binding on the Management Board, the Management Board can adopt
by-laws itself on the basis of a unanimous vote and with the approval of the Supervisory Board. In
respect of certain types of transactions conducted by the Company or dependent companies, the
Management Board by-laws must contain a catalogue of transactions requiring approval and which
may only be carried out with the approval of the Supervisory Board. In addition, the Supervisory Board
may resolve that certain other transactions also require its approval.
83

Such by-laws were passed by a resolution of the Supervisory Board dated 12 April 2006. The by-laws
specify transactions (such as investment undertakings or the contracting of loans above a certain figure
as well as the acquisition of disposal of an enterprise above a certain amount) that require the
approval of the Supervisory Board.
If only one member of the Management Board has been appointed, the Company is represented by
him in accordance with the Articles of Association. If the Management Board has several members,
as is the case at present, the Company is represented by two Management Board members acting
jointly or by one Management Board member acting jointly with a commercial attorney in fact
(Prokurist). The Supervisory Board may also grant individual members or all the members of the Management
Board power of sole representation (Einzelvertretungsbefugnis) as well as release them
from the restrictions imposed by Section 181 of the German Civil Code. The Supervisory Board made
use of this right in a resolution of 12 April 2006 and granted the members of the Management Board
the power to act alone in representing the Company and to conclude legal transactions as the representative
of a third party.
Management Board resolutions are adopted by a simple majority of votes cast unless a different
majority is required by statute, the Articles of Association or the Management Board by-laws.
The Management Board of aleo solar AG consists of Mr. Jakobus Smit and Mr. Heinrich Willers.
The divisional responsibilities of the members of the Company’s Management Board are shown in the
table below.
Name Age
84
Appointed
for the first
time on
Appointed
until Responsibility
Jakobus Smit 39 12 April 2006 11 April 2011 • marketing strategy, internationalisation,
technology
Heinrich Willers 43 12 April 2006 11 April 2011 • pro curement distribution, finance,
legal affairs, personnel, IT
Jakobus Smit
Mr. Jakobus Smit studied economics at Carl-von-Ossietzky University, Oldenburg, until 1992. From
1992 until 1995, he was assistant to the executive management of Ingenieurgemeinschaft Eriksen in
Oldenburg. From 1995 until 2006, he initially acted as commercial attorney in fact (Prokurist) and then
general manager for IFE Projekt- und Beteiligungsmanagement GmbH & Co. KG with its registered
office in Oldenburg, where he was responsible for the areas of project development, finance, marketing
and the poverseeing of investment projects in the “renewable energy” field. Mr. Smit has also
served as a Management Board member and general manager of aleo solar AG (formerly: S. M. D.
Solar-Manufaktur Deutschland GmbH) since 2001 and as general manager of aleo solar Deutschland
GmbH (previously: aleo solar GmbH) since 2002.
Mr. Smit is currently general manager of Windpark Roge GmbH with its registered office in Oldenburg,
Grundstücksgesellschaft Windpark Roge GmbH with its registered office in Oldenburg, Projektentwicklungsgesellschaft
Ovelgönner Windparks mbH with its registered office in Stade-Wiepenkathen
, Windkraftanlage Wiepenkathen GmbH as well as Windkraftanlage Tammhausen GmbH with its
registered office in Oldenburg.
Within the past five years, Mr. Smit was general manager of the following companies but no longer
holds such position: Eriksen Verwaltungs-GmbH with its registered office in Oldenburg, IFE SolarSysteme
GmbH with its registered office in Oldenburg, Dr.-Ing. Helmut Vogt und Partner GmbH with its
registered office in Oldenburg, Dr.-Ing. Helmut Vogt Beteiligungsgesellschaft GmbH with its registered
office in Oldenburg, EPR Bauprojekt GmbH with its registered office in Oldenburg, Grundstückserschließung
Windpark Gramzow GmbH, Grundstückserschließung Windpark Rollwitz mbH with its
registered office in Jürgenshagen OT Moltenow, Grundstückserschließung Windpark Malterhausen

GmbH with its registered office in Oldenburg, IfE Solarkraftwerk Beteiligungs GmbH with its registered
office in Oldenburg; SolarWindPark Vega GmbH with its registered office in Prenzlau, Windpark
Conneforde GmbH with its registered office in Oldenburg, Windpark Gramzow GmbH with its registered
office in Oldenburg, Windpark Hiddels GmbH with its registered office in Bockhorn-Ellenserdamm,
Windpark Inte GmbH with its registered office in Oldenburg, Windpark Klostermoor GmbH
with its registered office in Rhauderfehn, Windpark Krackow GmbH with its registered office in Oldenburg,
Windpark Liethe GmbH with its registered office in Oldenburg, Windpark Mittelort GmbH with
its registered office in Oldenburg, Windpark Neuenhuntorfermoor GmbH with its registered office in
Oldenburg, Windpark Steenfelde GmbH with its registered office in Westoverledingen, Windpark Täppelberg
GmbH with its registered office in Oldenburg, Windpark Wernikow GmbH with its registered
office in Oldenburg.
Heinrich Willers
In addition to obtaining a vocational qualification in banking (Bankkaufmann), Mr. Heinrich Willers studied
economics at the University of Bielefeld as well as at the Wirtschaftsakademie Blieskastel (economics
academy) and was awarded a degree in business management (WA Dipl.-Inh.). From 1992 until 2000,
he was a member of the executive management of Georg Stolle GmbH, an industrial company operating
in the foodstuffs sector. He was responsible for controlling and finance. In addition, he served as
general manager in a number of subsidiaries belonging to Georg Stolle GmbH. As general manager of
Projektentwicklungsgesellschaft lügro development GmbH, he was responsible for the business organisation
of the group as well as for the various company-related projects (hotels, homes for the elderly
and logistics centres) from 2000 until 2002. Since 2003, Mr. Willers has been general manager of aleo
solar Deutschland GmbH (formerly: aleo solar GmbH) as well as a Management Board member and
general manager of aleo solar AG (formerly: S. M. D. Solar-Manufaktur Deutschland GmbH).
Mr. Jakobus Smit and Mr. Heinrich Willers can be reached at the business address of the Company.
Compensation
For financial year 2005, the two board members (previously general managers) jointly received fixed
compensation for their managerial duties in the amount of TEUR 240 as well as bonuses totalling
TEUR 217. In addition, the Company has taken out D&O insurance (2005 premium payment of TEUR 7
for all corporate bodies), group accident insurance (2005 premium payment of TEUR 7 for all corporate
bodies) and life assurance (2005 premium payment totalling (Mr. Willers) and TEUR 1 (Mr. Smit)) for
the board members (formerly general managers) and the members of their families. Moreover, the
board members (formerly general managers) receive employer contributions to direct insurance plans
totalling TEUR 2 and are each provided with an upper mid-range car as a company car that may also be
used for private purposes(vehicle benefit in kind Mr. Smit: TEUR 10 and Mr. Willers: TEUR 2).
The service contracts concluded with effect from being appointed to the Management Board provide
that the two Management Board members are to receive compensation as follows: The fixed salary
amounts to TEUR 180 per annum and is payable for a period of 12 months in the event of illness and
3 months in the event of death. In addition, a bonus of no more than TEUR 50 per annum may be
awarded, with the level of such bonus being set at the sole discretion of the Supervisory Board and
which bonus is intended to reward particular accomplishments. In addition, performance-related compensation
corresponding to 1.67 % of annual net income computed applying DVFA principles is also
provided. A member of the Management Board is entitled to an upper range company car (projected
value of vehicle benefit in kind for financial year 2006, Mr. Smit TEUR 10 and Mr. Willers TEUR 2),
which may also be used for private purposes, and is entitled to receive a supplement of 50 % towards
medical and attendance care insurance of up to a maximum amount of 50 % of the contribution to
statutory insurance. Accident insurance and life assurance policies (projected premium payment for
financial year 2006 TEUR 5 (Mr. Willers) and TEUR 3 (Mrd. Smit) are to be taken out for Management
Board members . Upon reaching the age of 65, a Management Board member is entitled to receive a
monthly pension in an amount corresponding to 2.50 % of one twelfth of the last fixed salary drawn
by him for each year of serving on the Management Board. In the event of the death of a Management
85

Board member, a survivor pension in the amount of 60 % of the Management Board member’s pension
is to be paid to the Management Board member’s wife. The Management Board contracts include
a clause granting the members of the Management Board an extraordinary right of termination in the
event that a third party gains control of the Company within the meaning of Sections 29(2), 30 of the
German Securities Acquisition and Takeover Act. If a Management Board makes use of such extraordinary
right of termination, he is to receive compensation in an amount corresponding to the some that
– on the basis of the last performance-related and other bonuses received by him – would have been
payable to him if the contract had remained in force for the regular duration of his term of office. The
board member contracts expire on 11 April 2011. In financial year 2006 too, the Company will make
employer contributions to direct insurance (in the projected amount of TEUR 2) and premium payments
for D&O insurance in favour of the members of the Management Board (in the projected
amount of TEUR 7 for all corporate bodies)
Shareholdings and Options
The following information relates to shares held by members of the Management Board before the
completion of the Offering. The percentages provided do not take account of the capital increase
resolved by the extraordinary general shareholders’ meeting of 23 May 2006, i. e. they are based on a
figure of 10,180,000 shares.
Mr. Jakobus Smit holds a total of 102,000 shares in aleo solar AG (1.00 %) while Mr. Heinrich Willers
holds 40,000 shares (0.39 %).
In addition, Mr. Jakobus Smit and Mr. Heinrich Willers each hold 3.50 % of the shares of S. M. D.
Beteiligungsgesellschaft mbH, which currently holds 5,295,000 of the shares (52.01 %) of the
Company. S. M. D. Beteiligungsgesellschaft mbH has given an undertaking to the Management Board
members that it will exercise the voting rights resulting from its shareholding in the Company in
accord ance with the instructions of the Management Board of the Company to the extent of their
shareholdings in S. M. D. Beteiligungsgesellschaft mbH. This translates into an indirect shareholding in
the Company of 1.82 % resulting from the shares held by Mr. Heinrich Willers and Mr. Jakobus Smith
in S. M. D. Beteiligungsgesellschaft mbH.
Mr. Jakobus Smit also holds 26.00 % of EPR Bauprojekt GmbH, which holds 855,000 Aktien (8.39 %)
of the shares of the Company. This translates into an indirect shareholding in the Company of 2.18 %
resulting from the shares held by Mr. Heinrich Willers and Mr. Jakobus Smith in S. M. D. Beteiligungsgesellschaft
mbH.
After taking into account both direct and indirect shareholdings, Mr. Jakobus Smith holds 5 % of the
shares in total and Mr. Heinrich Willers 2.21 % in total.
Apart from these shareholdings, neither M. Jakobus Smit nor Mr. Heinrich Willers hold any options in
respect of shares of the Company.
Conflicts of Interest
Potential conflicts of interest involving members of the Management Board are set out in the section
“Related Party Transactions.” Should these or similar circumstances arise in the future, there may be
a conflict between the interests of the Company as represented by the Management Board members
and the interests of the Management Board members as persons holding an interest in the business
partners concerned.
Supervisory Board
The Supervisory Board comprises six members elected by the general shareholders’ meeting in
accord ance with the Articles of Association as well as Sections 95 and 96 of the German Stock Corpo-
86

ation Act. Unless the shareholders determine otherwise, Supervisory Board members are appointed
for a term of office that ends with the conclusion of the general shareholders’ meeting that will resolve
upon the ratification of acts of the Supervisory Board for the fourth financial year following the commencement
of their term of office. The financial year in which the term of office commences is not
included in calculating such period.
Any Supervisory Board member may be recalled by a resolution of the general shareholders’ meeting
passed with a three-quarters majority of the votes cast. In accordance with the Articles of Association,
any member of the Supervisory Board may resign by submitting a written declaration to such effect to
the Company as represented by the Management Board.
The general shareholders’ meeting may appoint substitute members who can become members of
the Supervisory Board in keeping with the conditions set by the general shareholders’ meeting in the
event of Supervisory Board members stepping down before the expiry of their term of office. The
term of office of the substitute member ends with the conclusion of the next general shareholders’
meeting if a successor is appointed and if not, upon the expiry of the term of office of the Supervisory
Board member who has resigned.
The Supervisory Board elects a chairman and a deputy chairman from among its members. If the
chairman or a deputy chairman retire from office prior to expiry of their respective terms of office, the
Supervisory Board is to elect a successor for the remaining term of office of the outgoing Supervisory
Board member.
By a resolution of 23 May 2006, the Supervisory Board adopted by-laws binding on it and established
a committee for management board affairs as well as an audit committee.
In accordance with the provisions of the Articles of Association and the by-laws, the Supervisory
Board achieves a quorum if a written invitation has been issued to all the Supervisory Board members
at the last address provided by them, at least three members take part in the meeting and at least one
further member has submitted a vote in writing. Supervisory Board resolutions are adopted by a simple
majority of the votes cast unless the law or the Articles of Association stipulate otherwise. In the
event of a tied vote, the Supervisory Board chairman or, if he is incapacitated, the deputy chairman,
has a casting vote. Voting is either conducted orally or in text form. In accordance with the provisions
of the Articles of Association, absent Supervisory Board members can participate in voting by having
their votes conveyed in writing by another Supervisory Board member. Resolutions may also be
adopted by letter, telephone, facsimile and e-mail without the holding of a meeting if no Supervisory
Board member objects within a reasonable time limit set by the chairman. Such resolutions are
recorded by the chairman in writing and forwarded to all the Supervisory Board members.
The names of the Supervisory Board members and the dates on which they were appointed are
shown in the table below.
Name Age
Appointed
for the first
time on
Marius Eriksen . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71 12 April 2006
Dr. Jürgen Parisi . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54 23 May 2006
Claus von Loeper . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53 12 April 2006
Dr. Stefan Reineck . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53 23 May 2006
Jörg Friedrich Bätjer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 12 April 2006
Gerold Heinen. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 23 May 2006
All the Supervisory Board members have been appointed until the closing of the general shareholders’
meeting of the Company that will resolve the ratification of acts for the first full financial year of the
joint stock corporation (2007).
87

Marius Eriksen
Mr. Eriksen studied at the Staatliche Ingenieurschule für Bauwesen (state construction engineering
college) in Eckernförde and completed his studies upon taking a final state exam in 1957. After studying
at the TH Hannover (Hanover technical college), Mr. Eriksen began working on a self-employed
basis in Hanover. He founded the Ingenieurgemeinschaft Eriksen in Hanover in 1969. In 1976, he
founded the Ingenieurgemeinschaft Eriksen in Oldenburg. In 1977, he founded Dr.-Ing. Helmut Vogt
GmbH with its registere office in Oldenburg and in 1979, the enterprise that now operates under the
name IFE Projekt- und Beteiligungsmanagement GmbH & Co. KG with its registered office in Oldenburg
and which is active in project development and investment management in the field of renewable
sources of energy. Since 1994, he has been the initiator of and shareholder in well over 20 wind
and solar energy funds. At the end of 2000, he established the Eriksen-Stiftung für Menschenhilfe, of
which he is chairman. Since 2001, he has worked intensively on the planning, design, financing and
establishment of the present day aleo solar AG in Prenzlau. At the end of 2003, he was awarded the
Bundesverdienstkreuz am Bande federal decoration.
Mr. Eriksen is currently general manager of the following companies: EVG Eriksen Verwaltungs-GmbH
with its registered office in Oldenburg, EBS Eriksen- und Bögershausen Sachanlagen GmbH with its
registered office in Oldenburg, EPB Bauprojekt GmbH with its registered office in Oldenburg, IFE
Solarsysteme GmbH, Sonner GmbHSolar Systeme GmbH with its registered office in Oldenburg,
SONNER Solar-Projekte GmbH with its registered office in Oldenburg, Dr.–Ing. Helmut Vogt und Partner
GmbH with its registered office in Oldenburg, EPR Bauprojekt GmbH with its registered office in
Oldenburg, Eriksen-Grensing Beteiligungs-GmbH, Kietzstrasse with its registered office in Oldenburg,
Kietzstraße, Prenzlau Beteiligungs-GmbH, SEB GmbHwith its registered office in Oldenburg, SEB
Verwaltungsgesellschaft mbH with its registered office in Oldenburg, Hausverwaltung Gerloff GmbH,
GEG with its registered office in Prenzlau, Grundstückserschließung Windpark Rollwitz mbHGmbH
with its registered office in Jürgenshagen OT Moltenow, Grundstückserschließung Windpark Malterhausen
GmbH with its registered office in Oldenburg, Projektentwicklungsgesellschaft Ovelgönner
Windparks mbH with its registered office in Ovelgönne, Windkraftanlage Wiepenkathen GmbH with
its registered office in Stade-Wiepenkathen.
In addition, he is a partner in Kasinoplatz Oldenburg Grundstücks- GbR, Eriksen-Bögershausen GbR
and Windenergie GbR Treuhand Eriksen among others.
Within the past five years, Mr. Eriksen held but no longer holds the following positions, but no longer
holds them:
General manager of Eriksen und Partner GmbH with its registered office in Oldenburg, IfE Solarkraftwerk
Beteiligungs GmbH with its registered office in Oldenburg, SolarWindPark Vega GmbH with its
registered office in Prenzlau, Windpark Conneforde GmbH with its registered office in Oldenburg,
Windpark Gramzow GmbH with its registered office in Oldenburg, Windpark Hiddels GmbH with its
registered office in Bockhorn-Ellenserdamm, Windpark Inte GmbH with its registered office in Oldenburg,
Windpark Klostermoor GmbH with its registered office in Rhauderfehn, Windpark Krackow
GmbH with its registered office in Oldenburg, Windpark Liethe GmbH with its registered office in
Oldenburg, Windpark Mittelort GmbH with its registered office in Oldenburg, Windpark Neuenhuntorfermoor
GmbH with its registered office in Oldenburg, Windpark Steenfelde GmbH with its registered
office in Westoverledingen, Windpark Täppelberg GmbH with its registered office in Oldenburg, Windpark
Wernikow GmbH with its registered office in Oldenburg
Dr. Jürgen Parisi
Prof. Dr. Parisi studies physics at the universities of Stuttgart und Tübingen from 1972 to 1979, studying
for a doctorate in physics from 1979 to 1982. From 1984, he travelled outside Germany on numerous
occasions to engage in research with a focus on experimental solid-state physics in dimensionreduced
semi-conductors, superconductors, metal and laser systems with spatial, temporal and spectral
high-resolution methods. In 1987, Prof. Dr. Parisi qualified as a university teacher in the field of
experimental physics. From 1989 until 1990, he was a university professor in the department of phys-
88

ics at the University of Bayreuth. Since 1992, Prof. Dr. Parisi has acted a specialist adviser to the European
Union, the Deutsche Forschungsgemeinschaft, the Deutsche Bundesstiftung Umwelt, the Volkswagenstiftung
and Lower Saxony‘s Ministry of Science and Culture. Since 2001, he has been a speaker
in material sciences at Hanse-Wissenschaftskolleg (Hanse institute of advanced study) Delmenhorst,
and assistant dean of the Faculty of Mathematics and Natural Sciences at the University of Oldenburg
since 2005. Since 1996, Prof. Dr. Parisi has been a member of the scientific advisory committee of the
Historisch-Ökologischn Bildungsstätte Emsland, Papenburg, and a member of the Lower-Saxony Instituts
für Solarenergieforschung (solary energy research institute), Hameln, Emmerthal.
Claus von Loeper
Claus von Loeper holds the degree of Diplom-Kaufmann from the University of Mannheim and the
degree of Master of Business Administration (MBA) from Harvard Business School. From 1981 until
1983, he worked as a management consultant for the U. S. management consulting firm Bain & Co in
London. From 1984 until 1991, he was head of strategic planning for the tyre business of Continental
AG and then held various management positions in marketing, finally becoming deputy head of central
marketing management at Continental AG. He has been with HANNOVER Finanz GmbH, Hanover,
Hasince 1991 and became a member of its management board in 1996.
Mr. von Loeper is currently general manager of HF Fonds VI Unternehmensbeteiligungs GmbH, a
member of the advisory boards of EMAG Holding GmbH, Salach, and of MMI GmbH. Munich, as well
as a member of the Supervisory Board of Kemmer Technology AG, Schwäbisch Gmünd. He remains a
member of the management boards of Hannover Finanz GmbH and of WeHaCo Unternehmensbeteiligungs-AG,
Hanover.
Within the past five years, Mr. von Loeper held but no longer holds the following mandates: General
manager of HF W&G Beteiligungsgesellschaft mbH, Eningen, and of S. M. D. Beteiligungs GmbH,
Hanover; member of the advisory boards of VEMAG Maschinenbau GmbH, Verden, and of pitti Holding
GmbH, Wittich; member of the supervisory board of phinware AG, Düsseldorf.
Dr. Stefan Reineck
After completing the study of physics at Darmstadt and Giessen, Dr. Reineck Leybold-Heraeus held
the position of laboratory head at Leybold-Heraeus GmbH, Hanau. From 1982 until 1991, he was also
head of sales and the branch network at Leybold Technologies Inc., Endicott, CT, USA and head of the
data storage technology business unit at Leybold AG, Hanau. Dr. Reineck was general manager of KVG
Quartz Crystal Technology GmbH, Neckarbischofsheim, from 1991 until 1999. He founded RMC
Dr. Reineck Management & Consulting GmbH, Kirchardt, in 2000 with the aim of investing in young
companies and of providing them with support through active involvement (2006: six investments).
From 2002 until 2006, Dr. Reineck was chairman of the management board of STEAG HamaTech AG,
Sternefels.
Dr. Reineck is currently chairman of the supervisory boards of AttoCube Systems AG, Munich, and of
NanoScape AG, Munich, as well as “Member of the Board” at TF Instruments Inc., Monmouth Junction,
N. J., USA sowie der Phoseon Technology Inc., Hillsboro, OR, USA. Within the past five years,
Dr. Reineck held but no longer holds the following mandates: General Manager of RMC Dr. Reineck
Management & Consulting GmbH, Kirchardt; chairman of the management board of NanoScape AG,
Munich, chairman of the management board of STEAG HamaTech AG, Sternenfels, and director of
STEAG HamaTech USA Inc., Austin Tx., USA.
Jörg Friedrich Bätjer
After studying economics at the universities of Pennsylvania State (United States of America) and Kiel
(1982, degree of Diplom-Volkswirt), Mr. Bätjer gained practical experience in the field of lease and
sales finance with American computer manufacturer Hewlett-Packard. He has worked for Hannover
Finanz Gruppe since 1996. He is a commercial attorney in fact (Prokurist) und fund manager. Before
89

that, he was a sales and marketing manager in the synthetic packaging materials industry. From 1985
until 1989, he worked in business development for a major corporate group and headed projects concerning
the development and market launch of products in the fields of biotechnology, labelling, engineering
and industrial microwave applications.
Mr. Bätjer is currently a member of the supervisory boards of ECOROLL AG, Celle, and Deciso VII AG,
Hanover. In addition, he is a member of the management board of HANNOVER Finanz Immobilien AG,
Hillerse, and general manager of HFI HANNOVER Finanz Immobilien Holding GmbH & Co. KG, HAN-
NOVER Finanz-Umwelt Beteiligungsgesellschaft mbH, Hillerse, HANNOVER Finanz Vermögens-Verwaltungs-Projektgesellschaft
mbH VI, Hillerse, and Bätjer-Beteiligungs-GmbH, Hillerse.
Within the past five years, Mr. Bätjer held but no longer holds the following mandates: Member of the
administrative board GÖRIG Verpackungsmaschinen GmbH, Remshalden; member of the advisory
boards of REMUS Holding GmbH, Filderstadt, and Bleckmann GmbH, Lamprechtshausen (A), general
manager of S. M. D. Beteiligungs GmbH, Hanover.
Gerold Heinen
After completing a degree in business economic at the Hochschule für Wirtschaft und Politik in Hamburg
(college of economics and political science), Mr. Heinen worked as an auditor at Genossenschaftsverband
Weser-Ems e. V. in Oldenburg until 1994. He has been an auditor and tax advisor at
Sozietät Heinen & Renken in Oldenburg since 1994 and at Sozietät Knollenborg & Partner in Lingen
since 1995.
Mr. Heinen is also general manager of FIDUNION GmbH Wirtschaftsprüfungsgesellschaft, Berlin, and
of OBIC Revision GmbH Wirtschaftsprüfungsgesellschaft, Oldenburg.
He is also a member of the supervisory boards of Raiffeisen-Wohnungsbaugenossenschaft eG, Oldenburg,
ASTORIA Wohnungsbaugenossenschaft eG, Oldenburg, and Ecentis AG, Bremen.
Within the past five years, Mr. Heinen held but no longer holds the following mandates: General manager
of ABAKUS Revision GmbH, Oldenburg, and member of the Supervisory Board of Norddeutschen
Boden AG, Oldenburg.
All the members of the Supervisory Board can be reached at the bzusiness address of the Company.
Compensation
The general shareholders’ meeting of 12 April 2006 resolved that the members of the Supervisory
Board should receive compensation in the amount of EUR 8,000 per annum and per member for their
services, with the chairman receiving twice the amount and the deputy chairman receiving one and
one half times the amount. Furthermore, Supervisory Board members are reimbursed any expenses
that they may need to incur and any value-added tax on their compensation and expenses.
There were no contractual arrangements between the Company and the Supervisory Board members
concerning benefits that would become due to them on the expiry of their term of office.
Shareholdings and Options
Mr. Marius Eriksen holds 622,000 shares of aleo solar AG directly (6.11 % of the share capital).
In addition, Mr. Eriksen holds 70 % of the shares of Dr. Ing. Helmut Vogt & Partner GmbH, which holds
1,244,000 shares (12.22 % of the share capital) of the Company.. In addition, Dr. Ing. Helmut Vogt &
Partner GmbH holds 54 % of the shares of EPR-Bauprojekt GmbH, which, for its part, holds 855,000
90

shares (8.22 % of the share capital) of the Company. The shareholding in Dr. Ing. Helmut Vogt & Partner
GmbH translates into an indirect shareholding in the Company of 11.66 %.
Taking in account both the direct as well as indirect shareholding, Mr. Marius Eriksen has a total shareholding
of 17.77 %.
Under an agreement of 28 October 2005, Mr. Marius Eriksen and his wife, Mrs. Ursula Eriksen-Grensing,
each acquired shares with a nominal value of EUR 55,500 for a purchase price of approximately
TEUR 1,030 per share. Based on the current share capital of the Company comprising 10,180,000
shares, this corresponds to a purchase price per share of approximately EUR 4.64. It will possible to
comment on the difference in relation to the issue price no earlier than on 7 July 2006 on the basis of
the price range that is to be determined and published in the form of a supplement. In addition to paying
a purchase price in the amount of approximately TEUR 1,030, an improved purchase price has
been agreed on for the event of re-sale or an IPO.
The remaining shareholders do not hold any shares in aleo solar AG. Furthermore, no member of the
Supervisory Board holds options in respect of shares of the Company.
Conflicts of Interest
Potential conflicts of interest are set out in the section “Related Party Transactions.” Should these or
similar circumstances arise in the future, there may be a conflict between the interests of the Company
as represented by the Supervisory Board members and the interests of the Supervisory Board
members as persons holding an equity interest in or serving as board members, general managers,
supervisory board members or advisory board members at the business partners concerned.
Particular Information Concerning the Members of the Management Board and Supervisory Board
Within the past five years, no sanctions have been imposed against members of the Management
Board and the Supervisory Board in connection with breaches of domestic or foreign provisions of
criminal law and/or the law relating to capital markets. Save for the exception specified below, none of
the members of the Management Board have been involved in the past five years in any insolvency,
liquidation or similar proceedings in their capacity as management board or supervisory board members
or members of any other administrative, managerial or supervisory bodies: Mr. Jörg Friedrich
Bätjer as a member of the administrative board of GÖRIG Verpackungsmaschinen GmbH, against
which an application for the opening of insolvency proceedings was filed in May 2001. There are no
preliminary or other investigative proceedings conducted by public agencies pending against members
of the Management Board or Supervisory Board. Within the past five years, no public accusations
have been levelled at and/or sanctions imposed against members of the Management Board and
Supervisory Board by public agencies (including designated professional associations) nor have they
been disqualified by a court from acting as a member of a company’s administrative, management or
supervisory bodies or from conducting company affairs.
The members of the Management Board and Supervisory Board are not related to each other nor are
there any such relationships among members of the Supervisory Board or of the Management
Board.
The Company has not granted any loans to the members of the Management Board and Supervisory
Board and nor has it assumed any guarantees or sureties on their behalf. The members of the Management
Board and the Supervisory Board are not involved in any business that lies outside the
objects of the Company or which, in terms of form or substance, lies outside the ordinary scope of
business of the Company.
The members of the Management Board and Supervisory Board can be reached at the address of the
Company.
91

With the exception of compensation components for Management Board members specified in the
section entitled “Corporate Bodies – Compensation,” no member of the Management Board or Supervisory
Board is entitled to any benefits upon the termination of service.
General Shareholders’ Meeting
At the choice of the calling body the General shareholders’ meetings can either be held at the registered
office of the Company or in a different German city with a population of more than 50,000.
Shareholders of the Company who register in time for the general shareholders’ meeting and are
entered in the share register of the Company are entitled to participate in the general shareholders’
meeting and to exercise their voting rights. Each no-par value share confers one vote at the general
shareholders’ meeting. Voting rights may be exercised by a proxy.
To the extent not otherwise stipulated in the provisions of the Articles of Association and of law
(including non-mandatory law), general shareholders’ meeting resolutions are adopted by a simple
majority of the votes cast and, if the law also requires a majority of the share capital, a simple majority
of the share capital represented at the adoption of the resolution.
Under current German stock corporation law, certain resolutions of fundamental importance require a
majority of at least three quarters of the share capital represented at the adoption of a resolution in
addition to a majority of the votes cast. Such resolutions include the following:
• amendments to the Articles of Association;
• capital increases;
• capital reductions;
• the creation of authorised or conditional capital;
• spin-offs (with or without the dissolution of the transferor) as well as the transfer of the entire
assets of the Company;
• the conclusion of company agreements (such as domination and profit and loss transfer agreements);
• the transformation of the legal form of the Company, as well as
• the dissolution of the Company.
General shareholders’ meetings can be called by the Management Board, the Supervisory Board, or,
under certain circumstances, by shareholders whose combined shareholdings amount to at least 5 %
of the share capital. The Supervisory Board can call a general shareholders’ meeting if such is required
in the interest of the Company. The annual ordinary general shareholders’ meeting for a financial year
that has ended must be held within the first eight months of the following financial year.
Under current German joint stock corporation law, notice of the calling of a general shareholders’
meeting must appear in the electronic Federal Gazette (elektronische Version des Bundesanzeigers) at
least one month before the day of the meeting. The notice must also specify the deadline for registration
to attend the general shareholders’ meeting.
Corporate Governance
The German Corporate Governance Code (Deutsche Corporate Governance Kodex) adopted in February
2002 in the current version of 2 June 2005 contains recommendations and suggestions relating to
the management and supervision of German listed companies in respect of shareholders and the
general shareholders’ meeting, the management board and supervisory board, transparency, accounting
policies and the conduct of audits. There is no duty to comply with the recommendations or suggestions
of the Code. German joint stock corporation law only obliges the management boards and
supervisory boards of listed companies to issue an annual declaration stating which recommenda-
92

tions have not been implemented or will not be implemented. Non-compliance with suggestions contained
in the Code need not be disclosed.
Upon being listed on the stock exchange, the Company will fully comply with its obligation to issue a
declaration pursuant to Section 161 of the German Joint Stock Corporation Act during the course of
the current financial year, to publish it and to ensure that it is accessible to shareholders at all times.
The Management Board and Supervisory Board fully identify with the Code objectives of promoting
responsible and transparent management and oversight that is geared towards increasing enterprise
value in a sustainable manner. The Company therefore intends to document the fact that it largely
complies with Code recommendations in its declaration pursuant to Section 161 of the German Joint
Stock Corporation Act.
The Company does not, however, comply with the following recommendations:
• Code Item 3.8 concerning the agreeing of a deductible in connection with taking out D&O insurance
for the Management Board and Supervisory Board, as the Management Board and Supervisory
Board do not consider the agreeing of a deductible for D&O insurance to be necessary to
ensure due conduct on the part of the members of the Management Board and Supervisory
Board.
• Code Item 4.2.1 recommending that the Management Board should have a speaker or chairman,
as the Supervisory Board has hitherto not made use of its right to appoint a speaker or chairman of
the Management Board.
• Code Item 5.1.2 concerning the setting of an age limit for the Management Board, as no such age
limit is contemplated by the Articles of Association.
• Code Item 5.1.2 concerning the setting of an age limit for the Supervisory Board, as the expertise
possessed by experienced Supervisory Board members should continue to be available to the
Company.
Code Item 5.4.7 which recommends providing performance-related compensation for the Supervisory
Board, as no such performance-related compensation is contemplated by the Articles of Association.
93

94
SHAREHOLDER STRUCTURE
(BEFORE AND AFTER THE COMPLETION OF THE OFFERING)
The percentages provided in the table below have been rounded in accordance with customary business
practice. For this reason, the percentages may not total 100 % in the aggregate.
The Company believes the current shareholder structure to be as follows:
Before IPO
Name
Number
of shares in %
Arthur Alber . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80,000 0.79
Helmut Bögershausen . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 932,000 9.16
Thi Minh Bui . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80,000 0.79
Detmar Dettmann. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60,000 0.59
Dr.-Ing. Helmut Vogt & Partner GmbH . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,244,000 12.22
EPR Bauprojekt GmbH . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 855,000 8.40
Marius Eriksen . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 622,000 6.11
Sören Eriksen . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,000 0.16
Torben Eriksen . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,000 0.16
Ursula Eriksen-Grensing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 622,000 6.11
Eriksen-Stiftung für Menschenhilfe. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80,000 0.79
Sjamine Grensing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,000 0.16
Jakobus Smit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102,000 1.00
Walter Vick . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60,000 0.59
Manfred Wigger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60,000 0.59
Heinrich Willers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40,000 0.39
S. M. D. Beteiligungsgesellschaft mbH . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,295,000 52.01
Of the shares of S. M. D. Beteiligungsgesellschaft mbH, 16 % are held by Commerz Unternehmensbeteiligungs
AG, 14.5 % by Hannover Finanz GmbH, 12 % by HF Fonds IX Unternehmensbeteiligungs
GmbH, 12 % by HF Fonds VII Unternehmensbeteiligungs GmbH, 16 % by WeHaCo Unternehmensbeteiligungs
AG, 5 % by GBK Beteiligungen AG, 16 % by NORDHolding Unternehmensbeteiligungsgesellschaft
mbH, 3.5 % by Mr. Heinrich Willers and Mr. Jakobus Smit respectively and 1.5 % by Walter
Vick.
Of the shares of Dr.-Ing. Helmut Vogt & Partner GmbH, 70 % are held by Mr. Marius Eriksen, 10 % by
Mr. Helmut Bögershausen and 20 % by the Eriksen Stiftung für Menschenhilfe.
Of the shares of EPR Bauprojekt GmbH, 26 % are held by Mr. Jakobus Smit, 20 % by Mr. Helmut Bögershausen
and 54 % by Dr.-Ing. Helmut Vogt & Partner GmbH.
S. M. D. Beteiligungsgesellschaft mbH has given an undertaking to the Management Board members
that it will exercise the voting rights resulting from its shareholding in the Company in accordance with
the instructions of the Management Board of the Company to the extent of their shareholdings in
S. M. D. Beteiligungsgesellschaft mbH.
The voting rights of the shareholders of the Company listed in the table do not differ and they only
hold those voting rights conveyed by the offered shares.
Following the completion of the Offering described in this Prospectus, the holdings of all the existing
shareholders will be reduced proportionately on the basis of the ratio of shares placed to the existing

share capital. In the event of that 6,115,706 shares are placed and the Greenshoe Option is not exercised,
the shareholder structure will be as follows:
After IPO (without exercise of Greenshoe Option)
Name
Number
of shares in %
Arthur Alber . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60,000 0.46%
Helmut Bögershausen . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 742,000 5.69%
Thi Minh Bui . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50,000 0.38%
Detmar Dettmann. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38,397 0.29%
Dr.-Ing. Helmut Vogt & Partner GmbH . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,244,000 9.55%
EPR Bauprojekt GmbH . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 148,000 1.14%
Marius Eriksen . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 622,000 4.77%
Sören Eriksen . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,000 0.12%
Torben Eriksen . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,000 0.12%
Ursula Eriksen-Grensing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 622,000 4.77%
Eriksen-Stiftung für Menschenhilfe. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80,000 0.61%
Sjamine Grensing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,000 0.12%
Jakobus Smit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102,000 0.78%
Walter Vick . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60,000 0.46%
Manfred Wigger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40,000 0.23%
Heinrich Willers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40,000 0.31%
S. M. D. Beteiligungsgesellschaft mbH . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,0 18,297 23.39%
Shares placed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,115,706 46.93%
In the event of the exercise of the entire Greenshoe Option in respect of the 917,355 shares from the
holdings of the Greenshoe Shareholders, the shareholder structure will be as follows:
After IPO, with Greenshoe Option exercised in full
Name
Number of
shares in %
Arthur Alber . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60,000 0.46%
Helmut Bögershausen . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 742,000 5.69%
Thi Minh Bui . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50,000 0.31%
Detmar Dettmann. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28,481 0.22%
Dr.-Ing. Helmut Vogt & Partner GmbH . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,244,000 9.55%
EPR Bauprojekt GmbH . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 148,000 1.14%
Marius Eriksen . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 622,000 4.77%
Sören Eriksen . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,000 0.12%
Torben Eriksen . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,000 0.12%
Ursula Eriksen-Grensing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 622,000 4.77%
Eriksen-Stiftung für Menschenhilfe. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80,000 0.61%
Sjamine Grensing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,000 0.12%
Jakobus Smit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102,000 0.78%
Walter Vick . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60,000 0.46%
Manfred Wigger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40,000 0.31%
Heinrich Willers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40,000 0.31%
S. M. D. Beteiligungsgesellschaft mbH . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,110,858 16.20%
Shares placed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,033,061 53.97%
95

96
TRANSACTIONS AND LEGAL RELATIONSHIPS WITH RELATED PARTIES
For the purposes of the following description of transactions involving companies belonging to the
aleo solar Group and related parties, the following persons are considered related parties:
1. Current and former members of the Management Board or Supervisory Board.
2. Close family members of the persons listed under 1 (i. e. family members who can be assumed to
be able to influence or be influenced by members of the Management Board or Supervisory Board
in connection with transactions involving the Company).
3. Enterprises in which the persons referred to under 1. or 2. hold an equity interest, whether directly
or indirectly, or held such interest at the time when a transaction was concluded with a company
belonging to the aleo solar Group.
4. Enterprises in which the persons referred to under 1. or 2. hold a position on a corporate body of
such enterprise or held such position at the time when a transaction was concluded with a company
belonging to the aleo solar Group.
Irrespective of the foregoing definition, all transactions with related parties within the meaning of IAS
24 are set out below. Transactions that do not fall within the scope of IAS 24 are only set out insofar as
the annual volume of transactions involving companies belonging to the aleo solar Group and the
respective natural or legal persons exceed a volume of TEUR 10.
In the opinion of the Company, all the transactions described were executed at market prices.
IFE Solar Systeme GmbH
Mr. Eriksen is, and Mr. Smit was until May 2006, general manager of IFE Solar Systeme GmbH. Mr.
Smit holds a 10 % interest in IFE Solar Systeme GmbH. Through Dr. Ing. Helmut Vogt und Partner
GmbH, Mr. Eriksen and Mr. Bögershausen (former member of the Supervisory Board of aleo solar AG)
indirectly hold a 90 % interest in IFE Solar Systeme GmbH. IFE Solar Systeme GmbH designs and
builds solar power stations for third parties. During the financial years 2003 and 2004, the aleo solar
Group did not conclude any transactions with IF E Solar Systeme GmbH. In financial year 2005, the
aleo solar Group generated revenue of approximately TEUR 2,443 from transactions with IFE Solar
Systeme GmbH resulting from the sale of solar modules. In the first quarter of financial year 2006, the
aleo solar Group has hitherto generated revenue of approximately TEUR 253 from transactions with
IFE Solar Systeme GmbH. These transactions also involved the sale of solar modules.
Sonner Solar-Projekte GmbH
Mr. Smit has held 19 % of Sonner Solar-Projekte GmbH since 2002 and was a general manager of the
company until July 2004. Mr. Eriksen is the company’s general manager and, together with Mr. Bögershausen
holds an indirect interest in Sonner Solar-Projekte GmbH through Dr. Ing. Helmut Vogt und
Partner GmbH. This interest amounted to 51 % in 2003 and to 71 % from July 2004 to the present day
Sonner Solar-Projekte GmbH has been involved in the design of solar power stations. The revenue
generated by the aleo solar Group from transactions involving Sonner Solar-Projekte GmbH and all of
which related to the sale of solar power stations amounted to TEUR 764 in financial year 2003, to
TEUR 2,224 in financial 2004 and to TEUR 2,788 in financial year 2005. In financial year 2006, the aleo
solar Group has hitherto generated revenue of TEUR 4 from transactions with Sonner Solar-Projekte
GmbH as at 31 March 2006. In addition, aleo solar Group made payments of TEUR 24 to Sonner Solar-
Projekte GmbH in financial year 2003 and of TEUR 29 in financial year 2004. These payments resulted
from a personnel secondment agreement concluded between the Company and Sonner Solar-Projekte
GmbH.

Eriksen Verwaltungs GmbH
The objects of this company include inter alia the procurement of business for third parties. In 2003,
the aleo solar Group paid Eriksen Verwaltungs GmbH TEUR 46 in connection with the provision of
financial accounting personnel. At the time these transactions were concluded, Mr. Marius Eriksen
was general manager of Eriksen Verwaltungs GmbH. Shareholders of Eriksen Verwaltungs GmbH at
the time were Mr. Bögershausen, who held 10 %, and Mr. Smit, who held 10 %. Mr. Eriksen and his
wife, Mrs. Eriksen-Grensing, indirectly held a further 80 % interest in Eriksen Verwaltungs GmbH
through Eriksen-Grensing Beteiligungs-GmbH.
EPB Bauprojekt GmbH
Mr. Eriksen and Mr. Bögershausen each hold a 50 % interest in EPB Bauprojekt GmbH and are both
general managers of the company. The objects of EPB Bauprojekt GmbH consist in the general planning
of construction projects. EPB Bauprojekt GmbH provided general planning services related to the
aleo solar Group’s production site at Prenzlau, resulting in fee payments of TEUR 160 in 2004 and of
TEUR 278 in 2005.
IFE Projekt- und Beteiligungsmanagment GmbH & Co. KG
In 2003, Mrs. Eriksen-Grensing was a limited partner holding 14 %, and Mr. Eriksen was also a limited
partner and held 86 %. The general partner without a capital share was Dr. Ing. Helmut Vogt und Partner
GmbH. In 2004, Mr. Eriksen was a limited partner holding 80 % and Mrs. Eriksen-Grensing, a limited
partner too, held 20 %. In 2004, Dr. Ing. Helmut Vogt Beteiligungsgesellschaft mbH replaced the
previous general partner. In January 2005, Mr. Smit took over 26 % and Mr. Bögershausen 10 % of the
capital shares of IFE Projekt- und Beteiligungsmanagement GmbH & Co. KG (“IFE”), the objects of
which are project and investment management. Mr. Eriksen has held 44 % of the limited partner
shares since January 2005. At the same time, Mr. Smit represented IFE as the general manager of Dr.
Ing. Helmut Vogt Beteiligungsgesellschaft mbH until May 2006 and managed its business. IFE bought
solar modules from the Company with a total value of TEUR 18 in 2004 and of TEUR 129 in 2005. In
addition, IFE provided the aleo Solar Grou p’s Prenzlau production site with planning and advisory services
for the following amounts: TEUR 131 in 2003, TEUR 481 in 2004, and TEUR 75 in 2005. . In addition,
the Company concluded an agreement with IFE on 23 May 2006 concerning the rendering of
engineering services by IFE and with a total volume of approximately TEUR 70; no payments have
been made in connection with the agreement as at 31 May 2006.
Con.Form Gestalten + Planen GmbH
Mr. Eriksen holds 10 % and Mr. Bögershausen holds 36 % of the shares of Con.Form Gestalten +
Planen GmbH (“Con.Form”). The objects of Con.Form consist in architectural and planning services.
No significant revenue was generated from business with Con.Form in previous years. In the first
quarter of financial year 2006, planning services in the amount of approximately TEUR 36 were rendered
in connection with the development of the production site in Spain as at 31 May 2006.
Hausverwaltung Gerloff GmbH
Mr. Eriksen is general manager of and, together with Mrs. Eriksen-Grensing, indirectly holds 50 % of
Hausverwaltung Gerloff GmbH through Eriksen-Grensing Beteiligungs-GmbH. The objects of Hausverwaltung
Gerloff GmbH consist in property management. aleo Solar Group has not generated any
significant revenue from transactions with Hausverwaltung Gerloff GmbH in previous years. In the
first quarter of 2006, Hausverwaltung Gerloff GmbH provided caretaker services with a value of
approximately TEUR 1 4.
97

Johanna Solar Technology GmbH
On 13 April 2006, the Company completed the acquisition of an equity interest in Johanna Solar Technology
GmbH (“JST”) (see the section entitled “The Business of the aleo solar Group – Johanna Solar
Technology GmbH”). Mr. Eriksen, Mr. Bögershausen and Mr. Smit hold a 5 % in JST indirectly through
EPR-Bauprojekt GmbH. Mr. Heinen is chairman of the Supervisory Board of Raiffeisen Wohnungsbaugenossenschaft
eG, which holds interests in both Johanna Solar Technology GmbH and 3E Finanz
GmbH indirectly through ABAKUS Unternehmensberatung GmbH. The general managers of EPR Bauprojekt
GmbH are Mr. Bögershausen and Mr. Eriksen. Mr. Smit was also a general manager until May
2006.
3E Finanz GmbH
On 13 April 2006, the Company concluded an agreement enabling it to acquire the shares held by
3E Finanz GmbH in Johanna Solar Technology GmbH (see the section entitled “The Business of the
aleo solar Group – Johanna Solar Technology GmbH”). Shareholdings in 3E Finanz GmbH are held
directly by Mrs. Eriksen-Grensing, who holds 11 %, Mrs. Renate Eriksen, the daughter of Mr. Eriksen,
who holds 6.1 %μ, Mr. Helmut Bögershausen, who holds 6.6 %, as well as his sons Uwe und Henning
Bögershausen, who each hold 2.2 %. Mr. Bögershausen holds 4.4 % indirectly through Eriksen und
Partner Oldenburg GmbH. Mr. Eriksen and Mr. Bögershausen indirectly hold 3.3 % through Con.Form
Gestal ten + Planen GmbH and 6.6 % through Dr. Ing. Helmut Vogt und Partner GmbH. Mrs. Eriksen-
Grensing and Mr. Eriksen indirectly hold 22.0 % through Eriksen-Grensing Beteiligungs-GmbH.
Mrs. Silke Friesenborg-Willers
Mrs. Silke Friesenborg-Willers, the wife of Mr. Willers, bought a solar energy system from the Company
for a price of TEUR 4 in the first quarter of 2006.
98

TAXATION IN THE FEDERAL REPUBLIC OF GERMANY
This section contains a brief summary of certain important German taxation principles that are or may
become relevant in connection with the acquisition, holding or the disposal of shares. This section is
not meant to be a comprehensive or complete representation of all German tax considerations possibly
relevant for shareholders. This summary is based on German tax law applicable as of the date of
this Prospectus and on the provisions of double taxation treaties entered into between the Federal
Republic of Germany and other states. In both areas, the law may change and such changes may have
retroactive effect.
Potential purchasers of shares are therefore urged to consult their tax advisors about the tax
consequences of the purchase, holding and transfer of shares as well as the procedure for
obtaining a possible refund of German withholding tax paid (Kapitalertragsteuer). Only such
tax advisors can adequately take into account the special tax situation of the individual shareholder.
Taxation of the Company
Corporations in the Federal Republic of Germany are generally subject to German corporate income
tax at a uniform rate of 25 % on distributed and retained earnings plus a 5.5 % solidarity surcharge
(Solidaritätszuschlag) thereon (total after rounding: 26.4 %). Dividends or other shares of profits
received by a company from domestic and foreign corporations are generally exempt from corporate
income tax in the amount of 95 %. However, 5 % of such dividends are deemed to be non-deductible
business expenses for tax purposes and are therefore subject to corporate income tax (plus the solidarity
charge). The same applies to capital gains made by a company on disposals of shareholdings in
other domestic and foreign corporations.
In addition, the domestic permanent establishments of German corporations are also subject to trade
tax on their income. The level of trade tax depends on the municipality in which a company has its
permanent establishments. Generally, the trade tax amounts to between approximately 15 % and
25 % of the income subject to the trade tax depending on the trade tax local multiplier applied by a
municipality. For the registered office of the Company in Prenzlau, the multiplier was 325 % for 2003,
2004 and 2005. In Oldenburg, where aleo solar Deutschland GmbH has its registered office, the multiplier
for 2003, 2004 and 2005 was 410 %. For financial year 2005, the trade tax liability for the Group
amounted to approximately 14 % of consolidated net income for the year according to IFRS. The trade
tax is deductible as a business expense for corporate income and trade tax purposes. For trade tax
purpose, shares of profits received from domestic and foreign corporations as well as capital gains
made on the disposal of shareholdings in another corporation are generally treated in the same way as
in the case of corporate income tax. However, shares of profit are generally only exempt from taxation
in the amount of 95 % if a company held at least 10 % of the share capital (Grund- oder Stammkapital)
of the corporation making the distribution at the beginning of the relevant assessment period. If this is
not the case, the shares of profits are fully subject to trade tax. Additional limitations apply to shares
of profits deriving from foreign corporations.
With effect from 1 January 1 2004, tax loss carry-forwards that exceed the sum of EUR 1,000,000 can
only be used for corporate income tax and trade tax purposes to offset up to 60 % of taxable income.
Unused tax loss carry-forwards can be carried forward indefinitely, and subject to the 60 % limitation
referred to in the preceding sentence, may be used to offset future taxable income.
Taxation of Shareholders
In the case of the taxation of shareholders, a distinction needs to be made with respect to taxation
related to the holding of shares (taxation of dividends), the disposal of shares (taxation of capital gains)
and the gratuitous transfer of shares (inheritance and gift tax).
99

Taxation of dividends
Withholding tax
Generally, the Company must withhold at source and remit tax on the full amount of its dividend distributions
at a rate of 20 % plus a solidarity surcharge on such withholding tax levied at a rate of 5.5 %
(total: 21.1 %) for the account of the shareholders. The withholding tax is assessed on the basis of the
dividend as resolved by the general shareholders’ meeting. Generally, the tax is to be withheld irrespective
of whether and to what extent the dividend is exempt from taxation at the level of the shareholder
and whether the shareholder resides in or outside Germany.
An exemption from such withholding can be applied for in respect of dividends distributed to companies
domiciled in an EU Member State within the meaning of Article 2 of the Parent/Subsidiary directive
(Council Directive No. 90/135/EEC dated 23 July 1990) if certain other conditions are fulfilled.
In the case of distributions to shareholders who reside outside Germany and in states with which
Germany has concluded double taxation treaties and who neither hold their shares as assets of a permanent
establishment or a fixed base in Germany nor as business assets for which a permanent representative
has been appointed in Germany, the withholding tax is reduced in accordance with the
provisions of the applicable double taxation treaty. The reduction in withholding tax is granted by way
of a refund of the excess of the total amount of tax withheld (including solidarity surcharge) over the
actually applicable treaty rate (in general: 15 %). To receive this refund, a shareholder must apply to the
German Federal Tax Office (Bundeszentralamt für Steuern, An der Küppe 1, D-53225 Bonn). Refund
forms can be obtained from the Federal Tax Office (www.bzst.bmd.de) as well as German embassies
and consulates.
Shareholders resident in Germany
In the case of individual or corporate shareholders with unlimited tax liability in Germany (e. g. who
have their domicile, habitual abode, management or registered office in Germany), the tax withheld
(including solidarity surcharge) is credited against the shareholder’s individual or corporate income tax
liability or, if in excess of such liability, refunded. Individual shareholders with unlimited tax liability in
Germany holding their shares as private assets are only taxed on one half of the dividends as taxable
investment income (so-called Halbeinkünfteverfahren). This one half of dividend payments is subject
to taxation applying the progressive income tax scale plus the 5.5 % solidarity surcharge levied
thereon. Only one half of the business expenses related to such dividends are deemed deductible for
tax purposes. Certain distributions by a company that are deemed repayments of capital for tax purposes
are not taxed as dividends at the level of the shareholder but may be taxed as gains realised on
disposals. This may be the case with, for example, future company distributions from capital
reserves.
Natural person holding shares as private assets are entitled to a tax-exempt allowance for investment
income (Sparerfreibetrag) in the amount of € 1,370 (or € 2,740 for married couples filing jointly) per
calendar year. The German Government is planning to reduce the tax-exempt allowance to EUR 750
(or EUR 1,500 for married couples filing jointly) with effect from the 2007 assessment period. In addition,
a shareholder is entitled to a lump-sum deduction per calendar year for expenses related to
investment income (Werbungskostenpauschale) in the amount of € 51 (or € 102 for married couples
filing jointly), unless a higher amount of expenses can be established. Only one half of the dividends
and other investment income, reduced by the actual expenses (one half in the case of dividends)
related to the investment income or by the lump-sum deduction exceeding the tax-exempt allowance
are therefore subject to taxation. If shares are held as business assets, the taxation depends on
whether the shareholder is a corporation, individual or partnership (co-partnership).
(i) Dividends distributed to corporations resident in Germany – subject to certain exceptions that
apply to companies operating in the financial and insurance sectors – are generally exempt from
corporate income tax in the amount of 95 % and from the solidarity surcharge. However, a flat rate
5 % of such tax-exempt dividends are deemed to be non-deductible business expenses for tax
100

purposes and are therefore subject to corporate income tax (plus the solidarity charge). Business
expenses actually incurred as a direct result of the dividend payments are tax deductible. There is
no applicable minimum shareholding threshold or minimum holding period. However, after deduction
of related business expenses, the dividends are subject to trade tax in their full amount unless
the corporation held at least 10 % of the share capital of the company at the beginning of the relevant
assessment period. In such case, only 5 % of the dividends are subject to trade tax.
(ii) If the shares are held as the business assets of an individual entrepreneur, one half of the dividends
are including in determining income for income tax purposes. Only one half of the business
expenses incurred in connection with the dividends are tax deductible. The dividends are subject to
trade tax in their full amount if the relevant shares can be allocated to the domestic permanent
establishment of an enterprise unless the taxpayer held at least 10 % of the share capital of the
company at the beginning of the relevant assessment period. Generally, the trade tax is credited
against the personal income tax liability of the shareholder under a flat-rate imputation system.
(iii) If the shareholder is a partnership, the personal or corporate income tax is only collected at the
level of the partner. The taxation to which a partner is subject depends on whether the partner is a
corporation or a natural person: If the partner is a corporation, 95 % of any dividend payments is
generally exempt from corporate income tax (see (i) above). If the partner is a natural person, one
half of the dividend payments are subject to income tax plus the solidarity surcharge (see (ii) above).
At the level of a partnership subject to trade tax, dividend payments are generally fully subject to
trade tax irrespective of whether the partners are natural persons or corporations. However, if the
partners are natural persons, the trade tax incurred at the level of the partnership is credited against
the personal income tax liability of the partners under a flat-rate imputation system. If the partners
are corporations and held at least 10 % of the share capital of the company at the beginning of the
relevant assessment period, only 5 % of the dividend payments are subject to trade tax. Insofar as
the partners are natural persons, the dividend payments are not subject to trade tax.
Shareholders resident outside Germany
Shareholders with limited tax liability in Germany (natural persons and corporations) who hold their
shares as the business assets of a permanent establishment or a fixed base in Germany, or as business
assets for which a permanent representative has been appointed in Germany, the tax withheld
and remitted (including solidarity surcharge) is credited against the shareholder’s personal or corporate
income tax liability or, if in excess of such liability, refunded. In all other cases, any German tax liability
is extinguished by the tax withheld. Except in such cases where double taxation treaties are applicable,
as in the case of the double taxation treaty between the Federal Republic of Germany and the
United States of America , or the distribution of dividends is to companies resident in an EU Member
State within the meaning of Article 2 of the Parent/Subsidiary directive (Council Directive No. 90/135/
EEC dated July 23, 1990), no (partial) refund is generally available. If the shareholder is a natural person
and the shares are held as part as the business assets of a German permanent establishment or fixed
base in Germany or as part of business assets for which a permanent representative has been
appointed in Germany, one half of the dividends are subject to German income tax plus the solidarity
surcharge. If the shares are held as the assets of a domestic permanent establishment of a trade
enterprise, the dividends, after deduction of related business expenses, are generally subject to trade
tax in their full amount unless the taxpayer held at least 10 % of the share capital of the company at
the beginning of the relevant assessment period. The trade tax is generally credited against the personal
income tax liability of the shareholder under a flat-rate imputation system. Dividends distributed
to corporations resident outside Germany with limited tax liability in Germany – subject to certain
exceptions that apply to companies operating in the financial services and insurance sectors – are
generally exempt from corporate income tax in the amount of 95 % and from the solidarity surcharge.
However, a flat rate 5 % of such tax-exempt dividends are deemed to be non-deductible business
expenses for tax purposes and are therefore subject to corporate income tax (plus the solidarity
charge). If the shares are held as part of the business assets of a domestic permanent establishment,
the dividends, after deduction of related business expenses, are generally subject to trade tax in their
full amount unless the corporation held at least 10 % of the share capital of the company at the begin-
101

ning of the relevant assessment period. In such case, only 5 % of the dividends are subject to trade
tax.
Taxation of capital gains
Shareholders resident in Germany
Generally, capital gains realised on the disposal of shares held as private assets of a natural person
with unlimited tax liability in Germany are subject to German personal income tax at the applicable
rate plus the solidarity surcharge levied at a rate of 5.5 % thereon if the disposal takes place within one
year of the acquisition of the shares. In the case of shares entrusted to a custodian for collective safekeeping
in accordance with Section 5 of the German Securities Deposit Act (Depotgesetz), it is
assumed that the shares acquired first will be disposed of first. Generally, half of the capital gains
realised form the assessment base. If the shareholder’s aggregate amount of private capital gains for
the calendar year amount to less than € 512, such capital gains are not subject to taxation. A loss on
disposals can only be offset against private capital gains realised in the same calendar year or, if this is
not possible because of the absence of appropriate gains, deducted from positive capital gains realised
in the preceding year or in subsequent years provided that certain conditions are fulfilled. The German
Government plans to tax capital gains at a flat rate of 20 % as of 2007. The one-year speculative trading
period is to be abolished.
Upon the expiration of a one-year period too, gains realised on the disposal of shares held as the private
assets of a natural person with unlimited tax liability in Germany are generally subject to taxation
in respect of one half of the amount of the gains in accordance at the rate of taxation applicable to the
natural person or, in the event of a gratuitous transfer, the transferor, or if the shares have been transferred
gratuitously several times in succession, a transferor who has held at any time during the five
years preceding the disposal, directly or indirectly, at least 1 % of the share capital of the company.
Generally, only one half of losses and business expenses related to the disposal are deemed tax
deductible.
If shares are held as business assets, the taxation depends on whether the shareholder is a corporation,
individual or partnership (co-partnership).
(i) If the taxpayer is subject to corporate income tax, 95 % of any capital gain – subject to certain
exceptions that apply to companies operating in the financial and insurance sectors – is generally
exempt from corporate income tax, including the solidarity surcharge, and from the trade tax irrespective
of the size of the shareholding and period of time over which it has been held. However,
5 % of any capital gain is deemed to be a non-deductible business expense and therefore is subject
to corporate income tax (including the solidarity surcharge) and trade tax. On the other hand,
there are no restrictions on the deductibility of business expenses actually incurred in connection
with the shares as a result of the fact that they are related to tax-free receipts. Losses incurred in
connection with the disposal of shares are not tax deductible.
(ii) Gains realised on the disposal of shares held as business assets by an individual entrepreneur with
unlimited tax liability in Germany are subject to corporate income tax and solidarity surcharge in
Germany irrespective of whether the disposal took place within one year of acquisition or whether
the vendor or, in case of a gratuitous transfer, the transferor, held a share of at least 1 % of the
share capital of the company and, if the shares can be attributed to the domestic permanent establishment
of a enterprise, to trade tax, too. One half of the gain forms the assessment base in the
event of the disposal of shares. Only one half of losses and business expenses related to the disposal
are recognised to the extent that they are deductible. Generally, the trade tax is credited
against the personal income tax liability of the shareholder under a flat-rate imputation system. The
special rules that apply to banks, financial services institutions, financial enterprises, life and healthinsurance
companies and pension funds are described below.
(iii) If the shareholder is a partnership, the personal or corporate income tax is only collected at the
level of the respective partner. The applicable form of taxation depends on whether the partner is a
corporation or a natural person: If the partner is a corporation, 95 % of any capital gain is generally
102

exempt from corporate income tax (see (i) above). If the partner is a natural person, one half of the
capital gain is subject to income tax plus the solidarity surcharge (see (ii) above). In addition, if the
shares giving rise to the capital gain can be attributed to the domestic permanent establishment of
a trade enterprise belonging to the partnership, the capital gain is subject to trade tax at the level
of the partnership, with one half of such gain being taxable if the partners are natural persons and
5 % being taxable if the partners are corporations. If the partners are natural persons, the trade tax
incurred at the level of the partnership is credited against the personal income tax liability of the
partner under a flat-rate imputation system.
Shareholders resident outside Germany
If the shares are sold by a natural person who is resident outside Germany, has limited tax liability in
Germany and holds (i) the shares as the business assets of a permanent establishment or a fixed base
in Germany or as business assets for which a permanent representative has been appointed in Germany,
or (ii) who himself, or in the event of a gratuitous transfer, the transferor of the shares, held at
any time during the five years preceding the disposal, directly or indirectly, at least 1 % of the share
capital of the company, one half of the capital gains are subject to German income tax plus the solidarity
surcharge of 5.5 %, and, if the shares can be attributed to the German permanent establishment of
a trade enterprise, to trade tax, too. However, most double taxation treaties, except for the case
referred to under (i), provide for unlimited exemption from German taxation. Capital gains realised by
corporations resident outside Germany with limited tax liability in Germany – subject to certain exceptions
that apply to companies operating in the financial services and insurance sectors – are generally
exempt from corporate income tax and trade tax in respect of 95 % of such gains. However, a flat rate
5 % of such tax-exempt dividends are deemed to be non-deductible business expenses for tax purposes
and are therefore subject to corporate income tax (plus the solidarity charge and, if applicable,
trade tax). Losses and other reductions in gains incurred in connection with the shares disposed of are
not deductible for tax purposes.
Special Rules for Financial and Insurance Sector Enterprises
To the extent that banks and financial service institutions hold or sell shares that are, pursuant to Section
1(12) of the German Banking Act (Kreditwesengesetz), attributable to the trading book (Handelsbuch),
neither the so-called half-income system (Halbeinkünfteverfahren) nor the 95 % tax exemption
from corporate income tax and, if applicable, trade tax applies to dividends received or to capital gains
realised. The same applies to shares that were acquired by financial enterprises within the meaning of
the German Banking Act in order to realise own-account short-term trading gains (kurzfristige Eigenhandelserfolge).
This also applies to banks, financial services institutions and financial enterprises with
their seat in another Member State of the European Community or another Member State of the
European Economic Area Treaty.
The 95 % exemption from corporate income tax and, if applicable, trade tax does not extend to dividends
received or to capital gains/losses realised on the disposal of shares that are attributable to the
capital investments (Kapitalanlagen) of life and health insurance companies. The same applies to pension
funds.
Inheritance and Gift Tax
The transfer of shares to other persons by way of gift or inheritance is generally subject to German
inheritance and gift tax only if
(i) the testator, donor, heir, donee or any other beneficiary has his place of residence or habitual abode
in Germany at the time of the transfer, or, as German citizen, has for no more than five years on a
continuous basis lived outside Germany without possessing a residence in Germany, or if
(ii) the shares of the testator or donor were held as business assets for a permanent establishment or
for which a permanent representative had been appointed in Germany, or
103

(iii) the testator or donor, either alone or with other closely related persons, held at the time of the
inheritance or donation, directly or indirectly at least 10 % of the share capital of the company.
The few presently applicable inheritance and gift taxation treaties to which Germany is a party generally
provide that German inheritance or gift tax is only levied in case (i) and, with certain restrictions, in
case (ii).
Special regulations apply to certain German expatriates and to former German citizens.
Other Taxes
No German stock exchange transfer tax, value-added tax, stamp duty or other similar tax is levied on
the acquisition, sale or other disposal of shares. Under certain circumstances, however, an entrepreneur
may elect to have value-tax levied on a transaction that is other otherwise exempt from taxation.
Net wealth tax (Vermögensteuer) is not levied in Germany at present.
104

UNDERWRITING
Subject Matter and Underwriting Arrangements
Following the approval of this Prospectus, the Company and the Underwriters are expected to conclude
an underwriting agreement concerning the Offering and the sale of the offered shares under the
Offering.Differences between the underwriting agreement actually concluded and the following
description will be published in the form of a supplement in accordance with Section 16 of the German
Securities Sales Prospectus Act (WpPG) in the event of the occurrence of an important new circumstance
or a material misstatement that could influence how the offered shares are appraised.
The following table shows the maximum number of offered shares to be underwritten by Commerzbank
AG, ZTB S 2.31, Mainzer Landstrasse 293, 60326 Frankfurt, Bayerische Hypo- und Vereinsbank
AG, Arabellastrasse 12, 81925 Munich and der Joh. Berenberg, Gossler & Co. KG, Neuer Jungfernstieg
20, 20354 Hamburg in connection with the Offering.
Underwriter
Maximum
number of
underwritten
shares
Commerzbank AG. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,280,993
Bayerische Hypo- und Vereinsbank AG . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,446,283
Joh. Berenberg, Gossler & Co. KG . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 305,785
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,033,061
In the underwriting agreement, the Underwriters will undertake to subscribe the new shares at the
lowest issue price and to underwrite them subject to the condition that the new shares will be offered
to investors at the placement price under the Offering. The Underwriters will remit the difference
between the placement price of the new shares and the issue price (less agreed commissions) to the
Company at the time of the delivery of the new shares.
Greenshoe Option and Securities Lending
To cover possible over-allotments and to cover the related securities lending arrangement described
below, Commerzbank AG has been granted an option by the Greenshoe Shareholders to acquire up to
a further 917,355 additional existing shares of the Company, i. e. up to 15 % of the total number of
offered shares outside a possible over-allotment against payment of the placement price; the shares
for this Greenshoe Option derive from the holdings of the Selling Shareholders. The Greenshoe Option
may only exercised if the Underwriters allot more than the total number of shares that they are obliged
to underwrite under the underwriting agreement. Commerzbank AG may exercise the Greenshoe
Option from the commencement of trading for maximum period of 30 days following the date on
which trading commences. The Greenshoe Option may only be exercised to the extent of the overallotment.
Commerzbank AG will conclude a no-charge securities lending agreement with the Greenshoe Shareholders
that will give Commerzbank AG the right to “borrow” shares up to the amount of the Greenshoe
Option described above. The securities lending agreement will expire no later than 30 days following
the commencement of trading. The “borrowed” shares or shares of the same class must be
returned or provided no later than two business days after expiry of the securities lending agreement.
All borrowed shares may only be used to satisfy delivery obligations with respect to over-allotments
until the over-allotments are either covered through the exercise of the Greenshoe Option or through
purchases on the stock market.
105

Commissions
The total commission payable to the Underwriters by the Company for the underwriting of the shares
and other activities connected with the IPO of the shares of the Company will be based on the volume
of the issue, i. e. the number of shares actually sold from the capital increase resolved by the general
shareholders’ meeting of the Company on 23 May 2006 multiplied by the placement price. On the
basis of Company estimates concerning total issue proceeds and assuming that all of the offered
shares are placed (including the shares owned by the Greenshoe Shareholders), the total amount of
bank commissions will amount to between a maximum of approximately EUR 4.39 million and a
maximum of approximately EUR 6.15 million.
Termination
The underwriting agreement provides that Commerzbank may terminate the underwriting agreement
under certain circumstances, with such termination effective in relation to all the Underwriters, and
repudiate the obligations concerning the underwriting of the offered shares contained therein. These
circumstances include but are not limited to the following:
• a material adverse change actually occurs, or is likely to occur, in the financial condition, results of
operations and legal position of the Company, or the business of the Company is adversely
affected,
• trading is entirely or partially suspended on the Frankfurt, London and New York stock exchanges or
one of these three stock exchanges, or
• a material adverse change occurs in the international financial, political, industrial, economic or
legal environment, or in capital market conditions or foreign currency exchange rates, or there is a
significant outbreak or intensification of warfare or of acts of terrorism,
insofar as the aforementioned circumstances are deemed, at the sole discretion of Commerzbank, to
place the successful completion of the Offering at risk.
If the underwriting agreement is terminated, and such termination can take place until the day of settlement
with the Company (probably one bank business day following admission to trading), the Offering
will not take place, allotments to shareholders already effected will become void, and investors will
not be entitled to claim delivery of the offered shares. Claims for subscription fees already paid and
other costs incurred by investors in connection with the subscription are subject to the legal relationship
between the investor and the institution where the investor placed its purchase offer. Should
investors have already sold shares of the Company before receiving delivery of them in book-entry
form and they are unable to fulfil their delivery obligation under the relevant purchase agreement following
termination of the underwriting by agreement Commerzbank and with effect for all the Underwriters,
the legal consequences arising for them shall solely concern the relationship between the
investor and the buyer.
In the underwriting agreement, the Company will undertake to indemnify the Underwriters against
certain liabilities in connection with the Offering.
Selling Restrictions
In the underwriting agreement, each of the Underwriters will warrant that in connection with the
Offering and the sale of the offered shares in Germany, they will not undertake any measures in any
other jurisdiction such as could be deemed to constitute a public offering of shares in the given jurisdiction.
In the underwriting agreement, each of the Underwriters will give an undertaking that they will only
offer the offered shares to certain persons under off-shore transactions on the basis of Regulation S of
106

the U. S. Securities Act of 1933 (the “1933 Act”) and will not engage in any directed selling efforts
within the meaning of Regulation S.
Each Underwriter and the Company acknowledge that the Shares have not been and will not be registered
under the 1933 Act and may not be offered or sold within the United States or to, or for the
account or benefit of, U. S. Persons, except pursuant to an exemption from, or in a transaction not
subject to, the registration requirements of the 1933 Act. Each Underwriter and the Company, severally
and not jointly, represents that:
(i) it has not offered or sold, and will not offer or sell, any Shares except to non-U. S. Persons outside
the United States in accordance with Regulation S;
(ii) neither it nor any person acting on its behalf has made or will make offers or sales of the Shares in
the United States by means of any form of general solicitation or general advertising (within the
meaning of Regulation D) in the United States;
(iii) neither it, nor any of its Affiliates nor any person acting on its or their behalf has engaged or will
engage in any directed selling efforts (within the meaning of Regulation S) with respect to the
Shares;
(iv) it has not entered and will not enter into any contractual arrangement with any distributor (within
the meaning of Regulation S) with respect to the distribution of the Shares, except with its Affiliates;
(v) it and its Affiliates have complied and will comply with the offering restrictions requirement of
Regulation S; and
(vi) at or prior to the confirmation of sale of Shares, it shall have sent to each distributor, dealer or person
receiving a selling concession, fee or other remuneration that purchases Shares from it during
the distribution compliance period (within the meaning of Regulation S) a confirmation or notice to
substantially the following effect:
“The Securities covered hereby have not been registered under the U. S. Securities Act of 1933 (the
“Act”) and may not be offered or sold within the United States or to, or for the account or benefit of,
U. S. Persons (i) as part of their distribution at any time or (ii) otherwise until 40 days after the later of
the commencement of the offering and the date of closing of the offering, except in either case in
accordance with Regulation S or Rule 144A under the Act. Terms used in this paragraph have the
meanings given to them by Regulation S.“
Each of Underwriters and the Company will with regard to the United Kingdom, severally and not
jointly, undertake that it will:
(i) not offer any of the Shares to the public in the United Kingdom for the purposes of section 85(1) of
the Financial Services and Markets Act 2000 (as that Act is in force at the date of this agreement)
(”FSMA“) (as “offer to the public” is defined in section 102B FSMA);
(ii) only offer Shares to persons in the United Kingdom who are qualified investors (as defined in section
86(7) FSMA) acting either as principal or as agent for another person who is not a qualified
investor on terms that enable the qualifying investor to make decisions concerning the acceptance
of offers of transferable securities on the client‘s behalf without reference to the client;
(iii) only communicate any invitation or inducement to engage in investment activity (within the meaning
of section 21 FSMA) relating to the Shares to persons who fall within Article 19(5) (Investment
professionals) and/or Article 49(2)(a) to (d) (High net worth companies etc.) of the Financial Services
and Markets Act 2000 (Financial Promotion) Order 2005 or otherwise in circumstances in
which the communication of such an invitation or inducement would not cause the Company to
contravene section 21 FSMA; and
(iv) have complied and will comply with all applicable provisions of the FSMA with respect to anything
done in connection with the IPO in, from or otherwise involving the United Kingdom.
107

108
RECENT COURSE OF BUSINESS AND OUTLOOK
The Company assumes that in 2006 and at the beginning of 2007, the photovoltaics field will see continued
market growth along with excess demand that will remain robust. However, the pace of growth
will continue to be checked by solar silicon bottlenecks. The scarcity of raw materials in the past was
accompanied by a strong increase in solar cell procurement prices. However, the Company believes
that the rate at which prices will rise during the course of 2006 and at the beginning of 2007 will be
more moderate than in previous years. The Company assumes that as in the past, it will be possible to
largely pass on these procurement price increases to customers.
The Company assumes that having secured supplies of solar cells, it will be able to fulfil its 2006 production
plans. Regarding the course of 2006 to date, the Company is fully on target with respect to
production volume. OEM orders are being accepted and processed on a supplementary basis. At the
same time, the Company expects to launch the distribution of thin-film solar modules during the
course of 2007.
Given that demand has been strong to date, the Company assumes that compared with the preceding
year, it will be able to increase 2006 sales to a significantly greater extent than the growth of 18 %
expected on the German solar module market (Source: Sarasin 2005). The Company is planning to
achieve marked increases in both the system business and in exports. During the course of 2006 to
date, the Company has been able to successfully implement this undertaking. The Company equally
assumes that it will retain its earnings capacity.
Earnings for financial year 2006 will be depressed by the extraordinary expenses associated with the
IPO, whereby the share of costs attributable to the new shares that are to be sold under the Offering,
reduced by the related income tax benefits, will be taken directly to equity without recognition in
income.
In the light of its existing delivery contracts and its partner-like relationships with suppliers of solar
cells, the Company assumes that it will be able to achieve production and revenue growth that will
exceed the growth of the market over the coming years, too.
Since 31 March 2006, the following material change has occurred in the financial condition of the
Company: Current financial liabilities, which amounted to TEUR 6,955 as at 31 March 2006, have risen
to approximately TEUR 19,941 as at 31 May 2006. This is mainly attributable to the greater utilisation
of the overdraft facilities made available by Bremer Landesbank and Oldenburgischen Landesbank AG.
This higher utilisation was related to the payment of trade tax arrears and the adjustment of trade tax
advance payments. In addition, the 19 % equity investment in Johanna Solar Technology GmbH was
acquired against payments totalling TEUR 3,563 and various advance payments were made in connection
with the procurement of solar cells.

Overview
FINANCIAL SECTION
Audited consolidated financial statements of S. M. D. Solar-Manufaktur Deutschland GmbH &
Co. KG for the period from 1 January 2003 to 31 December 2003 prepared in accordance
with IFRS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-2
Consolidated balance sheet 2003 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-3
Consolidated income statement 2003 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-4
Consolidated cash flow statement 2003. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-5
Consolidated statement of changes in equity of changes in equity 2003. . . . . . . . . . . . . . F-6
Notes 2003 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-7
Auditors’ Report. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-29
Audited consolidated financial statements of S. M. D. Solar-Manufaktur Deutschland GmbH
for the period from 1 January 2004 to 31 December 2004 prepared in accordance with
IFRS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-31
Consolidated balance sheet 2004 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-32
Consolidated income statement 2004 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-33
Consolidated cash flow statement 2004. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-34
Consolidated statement of changes in equity of changes in equity 2004. . . . . . . . . . . . . . F-35
Notes 2004 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-36
Auditors’ Report. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-56
Audited consolidated financial statements of S. M. D. Solar-Manufaktur Deutschland GmbH
for the period from 1 January 2005 to 31 December 2005 prepared in accordance with
IFRS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-57
Consolidated balance sheet 2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-58
Consolidated income statement 2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-59
Consolidated cash flow statement 2005. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-60
Consolidated statement of changes in equity 2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-61
Notes 2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-62
Auditors’ Report. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-84
Audited annual financial statements of S. M. D. Solar-Manufaktur Deutschland GmbH for the
period from 1 January 2005 to 31 December 2005 prepared in accordance with HGB . . . F-85
Balance sheet 2005. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-86
Income statement 2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-88
Notes 2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-89
Auditors’ Report. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-94
Unaudited consolidated quarterly financial statements of S. M. D. Solar-Manufaktur
Deutschland GmbH for the period from 1 January 2006 to 31 March 2006 prepared in
accordance with IFRS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-95
Consolidated balance sheet Q1/2006 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-96
Consolidated income statement Q1/2006. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-97
Consolidated cash flows statement Q1/2006 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-98
Consolidated statement of changes in equity Q1/2006 . . . . . . . . . . . . . . . . . . . . . . . . . . . F-99
Notes 31 March 2006 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-100
F-1

F-2
Consolidated financial statements for financial year 2003
(1 January 2003 to 31 December 2003)
of S.M.D. Solar-Manufaktur Deutschland GmbH & Co. KG,
Prenzlau, according to IFRS

Consolidated balance sheet of S. M. D. Solar-Manufaktur Deutschland GmbH & Co. KG,
Prenzlau, as at 31 December 2003
Note 31.12.2003 31.12.2002
TEUR TEUR
A. Non-current assets . . . . . . . . . . . . . . . . . . . . . . .
I. Property, plant and equipment . . . . . . . . . . . . . 1 6,253 5,088
II. Intangible assets . . . . . . . . . . . . . . . . . . . . . . . 1 110 116
III. • . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 0 231
B. Current assets . . . . . . . . . . . . . . . . . . . . . . . . . . .
6,363 5,435
I. Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 3,976 941
II. Trade receivables . . . . . . . . . . . . . . . . . . . . . . .
III. Other current assets and advance payments
3 1,753 1,612
made . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 574 1,861
IV. Cash and cash equivalents . . . . . . . . . . . . . . . . 5 48 782
6,351 5,196
12,714 10,631
Equity and liabilities Note 31.12.2003 31.12.2002
A. Equity
TEUR TEUR
I. Capital shares. . . . . . . . . . . . . . . . . . . . . . . . . . 6 2,545 2,545
II. Capital reserve . . . . . . . . . . . . . . . . . . . . . . . . . 7 208 0
III. Loss carried forward. . . . . . . . . . . . . . . . . . . . . – 884 – 178
IV. Consolidated net profit/loss . . . . . . . . . . . . . . . 1,926 – 1,564
Appropriation of profit . . . . . . . . . . . . . . . . . . . – 2,076 0
B. Non-current liabilities and deferred income
1,719 803
I. Deferred income from public assistance . . . . . 8 3,111 2,754
II. Financial liabilities. . . . . . . . . . . . . . . . . . . . . . . 9 2,324 2,646
III. Deferred tax liabilities. . . . . . . . . . . . . . . . . . . . 10 40 2
IV. Warranty provision . . . . . . . . . . . . . . . . . . . . . . 11 200 12
C. Current liabilities . . . . . . . . . . . . . . . . . . . . . . . . .
5,675 5,414
I. Financial liabilities. . . . . . . . . . . . . . . . . . . . . . . 9 1,082 2,350
II. Trade payables and other liabilities . . . . . . . . . . 12 4,081 2,064
III. Current income tax liabilities . . . . . . . . . . . . . . 13 157 0
5,320 4,414
12,714 10,631
F-3

CONSOLIDATED INCOME STATEMENT for the period from 1 January 2003 to 31 December 2003
S. M. D. Solar-Manufaktur Deutschland GmbH & Co. KG, Prenzlau
Note 2003 2002
TEUR TEUR
1. Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 41,026 4,626
2. Increase in inventories of finished goods . . . . . . . . . . . . . . 15 1,391 621
3. Other income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 508 246
4. Cost of materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 – 34,900 – 4,825
5. Personnel costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 – 2,135 – 752
6. Other expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 – 2,652 – 1,220
7. EBITDA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,238 – 1,304
8. Scheduled depreciation/amortisation expense. . . . . . . . . . 20 – 505 – 256
9. EBIT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,733 – 1,560
10. Financial income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 5 8
11. Finance cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 – 386 – 216
12. Earnings before taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,352 – 1,768
13. Income taxes (on previous year’s income) . . . . . . . . . . . . . 22 – 426 204
14. Consolidated net profit/loss for the year. . . . . . . . . . . .
15. Earnings per share based on consolidated net profit/loss
1,926 – 1,564
for the year (in € per share) Undiluted earnings per share . 23 0.76 – 0.61
F-4

CONSOLIDATED CASH FLOW STATEMENT for financial year 2003
S. M. D. Solar-Manufaktur Deutschland GmbH & Co. KG, Prenzlau
Note 2003 2002
TEUR TEUR
I. Cash flow from operating activities
Consolidated net profit/loss for the year after income taxes
and interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,926 – 1,564
Income taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 426 – 204
Scheduled depreciation/amortisation expense . . . . . . . . . . . . . 20 505 256
Change in non-current provisions . . . . . . . . . . . . . . . . . . . . . . . 11 185 12
Gains/losses on the disposal of non-current assets . . . . . . . . . 1 5 0
Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 – 5 – 8
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 386 216
Non-cash income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – 191 – 76
Change in trade receivables and other current assets . . . . . . . – 241 – 373
Change in inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 – 3,035 – 941
Change in trade payables and other current liabilities . . . . . . . . 1,008 1,422
= Cash flow from operating activities . . . . . . . . . . . . . . . . . 969 – 1,260
Interest paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – 383 – 208
Interest received . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 0
Income taxes paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 0
= Net cash flow from operating activities. . . . . . . . . . . . . .
II. Cash flow from investing activities
591 – 1,468
Purchase of items of property, plant and equipment. . . . . . . . . 1 – 1,157 – 5,238
Purchase of intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . 1 – 70 – 141
Inflows from public assistance . . . . . . . . . . . . . . . . . . . . . . . . . 1,492 1,620
= Net cash flow from investing activities . . . . . . . . . . . . . .
III. Cash flow from financing activities(
265 – 3,759
1 )
Inflows from borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 3,996
Repayment of borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – 834 0
= Net cash flow from financing activities . . . . . . . . . . . . . . – 834 3,996
Net changes in cash and cash equivalents (I to III) . . . . . . .
Cash and cash equivalents at the beginning of the financial
22 – 1,231
year. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – 218 1,013
Cash and cash equivalents at the beginning of the
financial year. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 – 196 – 218
( 1 ) For the purposes of the cash flow statement, overdraft facility liabilities towards credit institutions were allocated to financial
resources.
F-5

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY 2003
S. M. D. Solar-Manufaktur Deutschland GmbH & Co. KG, Prenzlau
F-6
Equity attributable to the shareholders of the parent company
Subscribed
capital
Capital
reserve
Retained
earnings
Profit/
loss
carried
forward
Consolidated
net
profit/
loss for
the year Equity
Note 6 7
TEUR TEUR TEUR TEUR TEUR TEUR
Balance as at 1 Jan. 2002. . . .
Consolidated net loss for the
2,545 0 0 – 178 0 2,367
year . . . . . . . . . . . . . . . . . . . 0 0 0 0 – 1,564 – 1,564
Balance as at 31 Dec. 2002. . . 2,545 0 0 – 178 – 1,564 803
Balance as at 1 Jan. 2003. . . . 2,545 0 0 – 178 – 1,564 803
Reclassification. . . . . . . . . . . . .
Consolidated net profit for the
0 0 0 – 1,564 1,564 0
year . . . . . . . . . . . . . . . . . . .
Appropriation of profit/
Allocation to retained
0 0 0 0 1,926 1,926
earnings. . . . . . . . . . . . . . . . 0 0 208 858 – 2,076 – 1,010
Balance as at 31 Dec. 2003. . . 2,545 0 208 – 884 – 150 1,719

Notes 2003
Basis of Preparation
As at 31 December 2003, S. M. D. Solar-Manufaktur Deutschland GmbH & Co. KG, Prenzlau, as a partnership
with its registered office in the Federal Republic of Germany, voluntarily applied International
Financial Reporting Standards (IFRS) and the interpretations of the International Financial Reporting
Interpretations Committee (IFRIC) for the first time in preparing its financial statements, which were
consolidated to include its subsidiary. With the exception of IAS 32 (revised 2003) and IAS 8 (revised
2003), all the binding pronouncements of the International Accounting Standards Board (IASB) in force
on 31 December 2005 were complied with, resulting in the presentation of a true and fair view of the
net assets, financial position and results of operations of the S. M. D.
A consolidated balance sheet and consolidated income statement for S. M. D. Solar-Manufaktur
Deutschland GmbH & Co. KG were prepared in accordance with German commercial law rules for the
last time as at and for the period ended 31 December 2002. Appropriate adjustments were made to
conform to IFRS rules in respect of any differences between accounting policies and consolidation
methods under HGB and IFRS. This applies to both reporting periods and comparative information for
previous periods.
The reconciliation and explanatory comments on the effects of the changeover to IFRS on consolidated
equity and consolidated profit/loss required by IFRS 1 (revised 2005) are set out in Note 24.
The consolidated financial statements were prepared in euros, the functional currency of S. M. D.
Solar-Manufaktur Deutschland GmbH & Co. KG. All amounts are shown in thousands of euros (TEUR).
The consolidated financial statements are based on historical cost and have been prepared applying
the following consolidation procedures and accounting policies. The income statement has been prepared
using the total cost of production method.
For the purpose of achieving greater clarity and meaning, individual items of the income statement
and the balance sheet have been aggregated. These items are disclosed separately in the Notes and
explanatory comments provided. The preparation of consolidated financial statements in accordance
with IFRS requires estimates. In addition, the application of company-wide accounting methods
requires assessments to be made by management. Areas where there is greater room of manoeuvre
with regard to assessments and the related assumptions and estimates for which are of material significance
for the consolidated financial statements are set out in the comments on “Assumptions and
Estimates.”
In addition, EBITDA and EBIT are shown separately in the income statement for the purpose of better
presentation and clarity. The term EBITDA (Earnings before Interest, Taxes, Depreciation and Amortisation)
refers to the profit for the year before interest, taxes, depreciation and amortisation as well as
impairment.
The term EBIT (Earnings before Interest and Taxes), by contrast, refers to the profit for the year before
the interest expense and income taxes.
Scope of Consolidation
S. M. D. Solar-Manufaktur Deutschland GmbH & Co. KG with its registered office in Prenzlau (Gewerbegebiet
Nord, 17291 Prenzlau, Deutschland) develops and produces high-grade solar modules for the
German and international photovoltaic market. The modules produced at Prenzlau are essentially distributed
through the wholly owned subsidiary aleo solar GmbH with its registered office in Oldenburg
under the aleo brand name. In addition to S. M. D. Solar-Manufaktur Deutschland GmbH & Co. KG the
subsidiaries consolidated are essentially those in which S. M. D. Solar-Manufaktur Deutschland GmbH
& Co. KG holds a majority of voting rights, whether directly or indirectly, i. e. they are companies in
which, in accordance with IAS 27 (revised 2003), the Group has control over financial and operating
F-7

policies and this usually entails holding more than 50 % of the voting rights. In addition to S. M. D.
Solar-Manufaktur Deutschland GmbH & Co. KG, the scope of consolidation includes one domestic
Group company.
The following subsidiary was included in the scope of consolidation:
Name
F-8
Shareholding
Equity
% EUR
Net profit
2003
aleo solar GmbH, Oldenburg . . . . . . . . . . . . . . . . . . . 100 300,000.00 25,856.79
Consolidation Policies
Subsidiaries acquired are accounted for using the purchase method. The acquisition costs correspond
to the fair value of the assets to which they are assigned, the equity instruments issued and the liabilities
arising or assumed on the date of exchange together with the costs directly attributable to acquisition.
Assets, liabilities and contingent liabilities identified in connection with a business combination
are measured at fair value upon first-time consolidation irrespective of the size of minority interests.
The excess of acquisition costs over the shares of the Group in the net assets measured at fair value
is recorded as goodwill. If the acquisition costs are lower than the net assets of the subsidiary acquired
as measured at fair value, the difference is recognised directly in the income statement.
Under IAS 27 (revised 2003) (consolidated and separate single-entity financial statements in accordance
with IFRS), the financial statements of the domestic subsidiaries included in the scope of consolidation
were prepared applying uniform accounting and valuation methods.
Income included in inventories and assets arising from the supply of goods and services among
related companies within the Group are eliminated from net profit. In accordance with IAS 12 (revised
2000), deferred taxes are recognised for differences resulting from consolidation measures recognized
in profit or loss. Income and expenses arising from transactions within the Group, especially
revenue generated between Group companies, is eliminated in the income statement.
Segment Reporting
A business segment is a group of assets and operating activities engaged in providing products or
services and that is subject to risks and returns that differ from other business segments. A geographical
segment provides products or services within a particular economic environment and that is subject
to risks and returns that differ from those in other economic environments.
The S. M. D. Group intends to make use of the capital market in the near future. Under IAS 14.9, the
Company is therefore obliged to provide segment reporting.
However, as the S. M. D. Group is a single product company engaged solely in the production of solar
modules and generates by far the greatest part of its revenue in the Federal Republic of Germany, the
reporting of information on segments is considered redundant.
Accounting Policies
Intangible Assets
In accordance with IAS 38.4 (revised 2004), software licences acquired are capitalised at acquisition
cost plus the costs of making them usable. They are amortised applying the straight-line method over
an estimated useful life of three years.

In accordance with IAS 38 (revised 2004), research and development costs are reported as a current
expense when they arise unless the requirements for capitalisation are satisfied. Costs that are
incurred directly in connection with generating identifiable individual intangible assets (software
products, development projects) that the Group can dispose of are disclosed under intangible assets
insofar as it is likely that economic benefits will accrue to the Company from them over a period of
more than one year and such benefits will exceed the costs incurred. Costs that can be allocated
directly include personnel costs for the employees engaged in development as well as other costs
that can be allocated directly to software development.
The S. M. D. Group does not make use of the allowed alternative treatment of capitalising interest on
borrowing for eligible assets.
Assets subject to scheduled amortisation are tested for impairment if appropriate events or changes
in circumstances indicate that the carrying amount of an asset may no longer be recoverable. An
impairment loss is recognised in an amount corresponding to the excess of the carrying amount over
the recoverable amount. The recoverable amount is the higher of the asset’s fair value less selling
costs and its value in use.
Property, Plant and Equipment
Items of property, plant and equipment are stated at historical cost less scheduled depreciation and,
where necessary, after adjustment for any impairment. Such cost includes expenses that are directly
attributable to the acquisition. Finance costs are not capitalised as a component of cost. The S. M. D.
Group always begins to depreciate an item of property, plant and equipment when the asset is ready
for use.
Investment premiums received as well as tax-free investment grants are recorded as deferred income
from public assistance and released to income over the useful life of the non-current asset for which
the support has been provided.
Subsequent costs of acquisition/production are only recorded under costs of acquisition/production
when it appears likely that economic benefits will flow to the Group from them in the future and the
costs of the relevant asset can be reliably determined. All other repairs and maintenance are recognised
as an expense in the income statement for the financial year in which they are incurred.
Land is not depreciated. Items of plant, property and equipment are only depreciated applying the
straight-line method. The following useful lives apply across the Group for scheduled depreciation:
Buildings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 years
Installations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 to 19 years
Technical equipment and machinery. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 to 25 years
Office equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 to 14 years
Residual carrying amounts and economic useful lives are reviewed on each balance sheet date and
adjusted where necessary. Items of property, plant, and equipment are written down if there are indications
of impairment and if the recoverable amount is lower than amortised cost. The write-downs
are reversed if the reasons for the impairment losses no longer apply.
Profits and losses realised on the disposal of items of property, plant and equipment are determined
as the difference between the proceeds obtained from a sale and the carrying amounts, with the difference
being recognised in income.
F-9

Financial Assets
Financial assets are generally dividend into the following categories:
• financial assets at fair value through profit or loss;
• loans and receivables;
• financial assets held to maturity;
• financial assets available for sale.
The classification depends on the purpose for which the financial assets have been acquired. Management
determines the classification of financial assets upon initial recognition and reviews the classification
on each balance sheet date.
Financial assets at fair value through profit or loss
This category has two sub-categories: Financial assets that have been classified as held for trading
from the inception and those that have from inception been classified as “fair value through profit or
loss.” A financial asset is placed in this category if was principally acquired with it intention of selling it
over the short term or that has been decided by management. Derivatives are also classified as held
for trading unless they should be classified as hedges. Assets that fall into this category are reported
as current assets if they are held for trading or will be realised within 12 months of the balance sheet
date. The S. M. D. Group does not place any financial instruments in this category at the present time.
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed and determinable payments and
which are not quoted on an active market. They are created when the Group provides money, goods
or services directly to a debtor without the intention of trading in the receivables. They are included
under current assets with the exception of those that will not fall due until 12 months after the balance
sheet date. The latter are disclosed as non-current assets. Receivables are carried on the balance
sheet under trade receivables and other current assets.
Held-to-maturity financial assets
Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments
and fixed maturities that the management of the Group intends to and is able to hold until maturity.
The S. M. D. Group does not place any financial instruments in this category at the present time.
Available-for-sale financial assets
Available-for-sale financial assets are non-derivative financial assets that should either be placed in this
category or none of the other categories. – They are included under non-current assets insofar as management
does not intend to sell them within 12 months of the balance sheet date. – The S. M. D.
Group does not place any financial instruments in this category at the present time. All purchases and
sales of financial assets are recognised on their trading date, i. e. the date on which the Group gives
an undertaking to sell or purchase the assets.
Initial recognition of financial assets that do not fall into the “fair value through profit or loss” category
is at fair value less transaction costs. They are derecognised when the rights to payments from the
investment expire or are transferred and the company has transferred substantially all the risks and
rewards of ownership.
F-10

Loans and receivables are carried at amortised cost applying the effective interest rate method. If their
collection is doubtful, the receivables are carried at the lower recoverable amount (present value of
expected future cash flows). In addition to the required specific allowance, the impairment loss risk for
groups of receivables that do not differ from credit risks is also considered (general itemised allowance
in accordance with IAS 39). In determining the receivables at risk, receivables covered by credit
insurance and value-added tax are removed.
On each balance sheet date, a review is conducted to determine whether there are any objective circumstances
indicating that a particular financial asset or group of financial assets has become
impaired.
Financial Risk Factors
The S. M. D. Group is exposed to various financial risks through its business:
• Foreign currency risk
• Credit risk
• Interest rate risk
In terms of sales, the focus of the S. M. D. Group is on the eurozone. No business is transacted with
customers in countries with high inflation. Foreign currency risks on the procurement side can also be
deemed slight. Deliveries of materials and supplies mainly originate in the eurozone and in Asia.
Invoices are issued in euros and, to a very modest extent, in US dollars. The Group does not employ
any hedging instruments.
Credit risk
Credit reports or historical data relating to existing business relationships are used to avoid the risk of
default. When risks become identifiable, appropriate allowances are recognised for receivables. In
addition, about 70 % of the risk of default is covered by trade credit insurance.
Liquid assets are held with major banks. There is no significant risk of default.
Interest rate risk
The Group holds no interest-bearing assets, with the result that Group profit and cash flow from operating
activities are almost entirely unaffected by changes in market interest rates.
No financial instruments are used to hedge interest rates. Fixed interest rate terms apply to long-term
loans, which are subject to a fair value risk. Short-term overdraft facilities are not used throughout the
year, so that possible increases in interest rates do not pose a significant risk for the Company. The
risk of a change in interest rates does not impact on the balance sheet, as financial liabilities are carried
at amortised cost.
Leases
Leases under which a substantial part of the risks and rewards incident to ownership of the leased
asset remain with the lessor are classified as operating leases. The payments made in connection
with an operating lease are recognised as an expense in the income statement on a straight-line basis
over the duration of the lease term.
The S. M. D. Group is not a party to any finance lease at the present time.
F-11

Inventories
Inventories are stated at the lower of cost and net realisable value. In addition to direct costs, which
are generally measured on a rolling average basis, cost of production also include material and production
overhead costs as well as production-related depreciation that can be assigned directly to the
production process. Administrative and social benefit costs are taken into account insofar as they can
be assigned to production. Inventory risks arising from lower net realisable value, time in storage,
shrinkage etc. are written down. The write-downs are reversed if the reasons that gave rise to them no
longer apply.
Cash and Cash Equivalents
Cash and cash equivalents cover cash and demand deposits.
Equity
In accordance with IAS 32.20 (revised 1998), capital shares that entail a contractual or statutory repayment
obligation are to be disclosed as debt. SIC 5.6 rectifies this situation for the S. M. D. Group. It
states that a financial instrument is to be reported as equity if, at the time of issuance, the likelihood
of an outflow of liquid assets or another financial asset is remote, so that the possibility of a resulting
diminution of assets is insignificant. Consequently, a liability only arises when the SMD Group receives
an appropriate notice from a partner evidencing his intention of obtaining repayment. In the absence
of such repayment requests, there is nothing to prevent the capital shares of the limited partner and
general partner from being disclosed as equity.
Deferred Taxes
Deferred taxes are determined in accordance with IAS 12 (revised 2000). Tax relief and charges that
are likely to arise in the future are reported for temporary differences between the carrying amounts
shown in the consolidated financial statements and the values attributed to assets and liabilities for
tax purposes. Deferred taxes are measured applying the tax rates (and tax regulations) in force, or
which have substantially received legislative approval, on the balance sheet date and which are
expected to apply when the deferred tax asset or liability is realised. Deferred tax assets are stated to
the extent that it is likely that a taxable profit will be available against which the temporary difference
can be applied.
Current Income Tax Liabilities
Current income tax liabilities encompass obligations arising from current income taxes.
Other Provisions
Other provisions result solely from the up to 20-year warranties for solar modules under the general
warranty terms of the Group and the assessment that a liability will arise progressively over the
warranty period (warranty provision). In addition, other provisions also take account of present obligations
towards third parties arising from past events when it is probable that there will be an outflow of
resources and a reliable estimate can be made of the amount of the obligations. Provisions are stated
at the amount required to satisfy the obligation. Non-current provisions are stated at the discounted
amount required to satisfy the obligation as at the balance sheet date. Provisions are not offset against
recourse claims.
As only warranty provisions had to be stated in the previous financial statements, the term has been
used for the corresponding balance sheet line item.
F-12

Liabilities
Non-current liabilities are carried at amortised cost. Differences between historical cost and the repayment
amount are taken into account applying the effective interest rate method.
Current liabilities are stated at the amount required for payment or settlement.
Foreign Currencies
Foreign currency receivables and liabilities are measured at the exchange rate prevailing on the day
when a transaction occurred. Gains and losses on changes in exchange rates are taken into account
until the balance sheet date. There are no pending transactions in connection with exchange rate
hedging measures.
Public Assistance
Investment premiums received as well as tax-free investment grants are recorded as deferred income
from public assistance and released to income over the useful life of the non-current asset for which
the support has been provided.
The deferred liability corresponding to the asset for which assistance has been received is recorded in
the balance sheet under non-current assets.
Recognition of Income and Expenses
Revenue and other operating income are generally recognised when services have been rendered or
when goods or products have been delivered, and thus, when the associated risk has been transferred.
Operating expenses are recognised in income upon performance or at the time of origination.
Interest expenses and income are recognised in income.
Assumptions and Estimates
In preparing the consolidated financial statements, certain assumptions and estimates were made
that have an impact on the disclosure and level of assets, liabilities, income, expenses as well as contingent
liabilities.
These assumptions and estimates generally relate to assessing the value of intangible assets, the
useful lives applied across the Group, the likelihood of receivable being collected, the recognition and
measurement of warranty provisions as well as the realisability of future tax relief.
The premises underlying these assumptions and estimates are based on the knowledge available at a
given time. In individual cases, actual values may deviate from the assumptions and estimates made.
Changes will be taken in account and recognised in the event that the available knowledge improves.
F-13

Recommendation concerning the appropriation of profit for 2003 made in accordance with
commercial law and submitted by the parent company
The recommendation concerning the appropriation of profit submitted by the Group parent company
S. M. D. Solar-Manufaktur Deutschland GmbH & Co KG is as follows:
EUR
From 2003 net income of . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,076,309.71
an allocation was made to the joint reserve account in accordance with § 10 (IV) of
the memorandum of association. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 207,630.99
and the rest distributed in accordance with § 13 (VI) of the memorandum of
association to the capital accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,868,678.72
resulting in profit carried forward of. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.00
F-14

Notes to IFRS balance sheet
F-15

Notes to IFRS balance sheet
(1) Property, plant and equipment and intangible assets
The development and composition of plant, property and equipment and intangible assets compared
with the preceding year was as follows:
Changes in consolidated fixed assets for financial year 2003
Historical cost
01.01.2002 Additions Disposals 31.12.2002
TEUR TEUR TEUR TEUR
I. Intangible assets
1. Software. . . . . . . . . . . . . . .
II. Property, plant and
equipment
1 146 0 147
1. Land and buildings . . . . . . .
2. Technical equipment and
254 2,188 0 2,442
machinery. . . . . . . . . . . . . .
3. Other operating and office
3 2,445 0 2,448
equipment . . . . . . . . . . . . . 1 422 0 423
258 5,055 0 5,313
259 5,201 0 5,460
Historical cost
01.01.2003 Additions Disposals 31.12.2003
TEUR TEUR TEUR TEUR
I. Intangible assets
1. Software. . . . . . . . . . . . . . .
II. Property, plant and
equipment
147 70 0 217
1. Land and buildings . . . . . . .
2. Technical equipment and
2,442 1,217 0 3,659
machinery. . . . . . . . . . . . . .
3. Other operating and office
2,448 174 2,622
equipment . . . . . . . . . . . . . 423 209 28 604
5,313 1,600 28 6,855
5,460 1,670 28 7,102
F-16

Depreciation/amortisation Residual carrying amount
01.01.2002 Additions Disposals 31.12.2002 31.12.2002 31.12.2001
TEUR TEUR TEUR TEUR TEUR TEUR
0 31 0 31 116 1
0 34 0 34 2,408 254
0 119 0 119 2,329 3
1 71 0 72 351 0
1 224 0 225 5,088 257
1 255 0 256 5,204 258
Depreciation/amortisation Residual carrying amount
01.01.2003 Additions Disposals 31.12.2003 31.12.2003 31.12.2002
TEUR TEUR TEUR TEUR TEUR TEUR
31 76 0 107 110 116
34 113 0 147 3,512 2,408
119 196 0 315 2,307 2,329
72 121 23 170 434 351
225 430 23 632 6,253 5,088
256 506 23 739 6,363 5,204
F-17

(2) Inventories
31.12.2003 31.12.2002
TEUR TEUR
Raw materials. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,800 304
Supplies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58 9
Packaging material . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 0
Raw materials and supplies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,896 313
Finished goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,013 622
Merchandise. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56 6
Finished goods and merchandise . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,069 628
Inventories and advance payments made . . . . . . . . . . . . . . . . . . . . 11 0
Inventories. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,976 941
In the breakdown shown above, the photovoltaic modules produced by the Group are classified as
finished goods. Merchandise refers to modules bought, inverters and other photovoltaic system components.
(3) Trade receivables
31.12.2003 31.12.2002
TEUR TEUR
Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,753 1,612
In the past financial year, impairment losses totalling TEUR 100 (previous year TEUR 4) were recognised
for receivables as there were objective indications that the sums due are not fully collectibe.
(4) Other current assets and advance payments made
31.12.2003 31.12.2002
TEUR TEUR
Investment grant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 191 1,113
Advance payments made for construction in progress . . . . . . . . . . . . 140 583
Investment premium . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76 98
VAT refund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 0
Deposit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 18
Creditors in debit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 5
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112 44
574 1,861
Current assets are due within year and are therefore measured at cost. The carrying amounts correspond
to market values.
(5) Cash and cash equivalents
31.12.2003 31.12.2002
TEUR TEUR
Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47 781
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 1
48 782
F-18

Cash held with banks as at the balance sheet date was kept in the form of demand deposits at various
credit institutions.
(6) Capital shares
31.12.2003 31.12.2002
TEUR TEUR
Capital shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,545 2,545
(7) Retaining earnings
31.12.2003 31.12.2002
TEUR TEUR
Retained earnings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 208 0
The disclosure concerns a joint reserve account established in accordance with Article 10(4) of the
memorandum of association. At least 10 % of the net profit for a given year is allocated to this joint,
specific-purpose reserve account unless required to cover the accounts for losses carried forward.
(8) Deferred income from public assistance
31.12.2003 31.12.2002
TEUR TEUR
Investment grants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,266 1,102
Investment premiums . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,845 1,652
3,111 2,754
Applying IAS 20 (Accounting for Government Grants and Disclosure of Government Assistance),
investment assistance received is recognised as deferred income and released to income over the
useful life of the related assets. The resulting income is disclosed under other income.
(9) Financial liabilities
31.12.2003 31.12.2002
TEUR TEUR
Liabilities towards credit institutions, current account . . . . . . . . . . . . . 244 1,000
Liabilities towards credit institutions, loans < 1 year . . . . . . . . . . . . . . 838 1,350
Liabilities towards credit institutions, >1 year to 5 years . . . . . . . . . . . 989 1,064
Liabilities towards credit institutions, > 5 years . . . . . . . . . . . . . . . . . . 1,335 1,582
3,406 4,996
The liabilities towards credit institutions relate to Bremer Landesbank and Volksbank Prenzlau. The
debit rate of interest was 9.00 % (previous year 9.00 %) at Bremer Landesbank and 9.25 % (previous
year 9.25 %) at Volksbank Prenzlau.
The non-current liabilities towards credit institutions as at 31 December 2003 relate to annuity and
instalment loans with rates of interest that vary between 5.00 % and 5.70 %. The difference between
the carrying amounts of the loans and the respective fair values is immaterial as the interest terms
agreed only deviate slightly from the market interest rate levels prevailing on the balance sheet date.
The interest terms apply until redemption. They are shown in more detail in the table below.
F-19

Loan No. 2003 2002 Redemption
TEUR TEUR
6353190014 (BLB; 5.00 %) . . . . . . . . . . . . . . . . . . . . . . . . . . 1,834 1,834 31.05.2014
6353190020 (BLB; 5.69 %). . . . . . . . . . . . . . . . . . . . . . . . . . 490 512 31.07.2012
6353190036 (BLB; 5.70 %). . . . . . . . . . . . . . . . . . . . . . . . . . 0 300 01.03.2004
2,324 2,646
For the purposes of the cash flow statement, overdraft facility liabilities towards credit institutions
were allocated to financial resources.
(10) Deferred taxes
Deferred taxed assets of TEUR 0 (previous year TEUR 231) deriving from anticipated use of loss carryforwards
in subsequent years have been accounted for. They are capitalised when, on the basis of a
business plan, the realisation of the loss carryforwards can be assured with sufficient certainty.
The deferred tax liabilities in the amount of TEUR 40 (previous year TEUR 2) result solely from measurement
differences compared with the accounts prepared for tax purposes.
Deferred tax assets and liabilities are netted if an enforceable right to apply current tax receivables
against current tax liabilities exist and the deferred taxes relate to the same tax authority.
2002/03 deferred taxes can be classified as follows:
F-20
Deferred
tax
assets
31.12.2003 31.12.2002
Deferred
tax
liabilities
Deferred
tax
assets
Deferred
tax
liabilities
TEUR TEUR TEUR TEUR
ASSETS
A. Non-current assets
I. Property, plant and equipment . . . . . . . . . .
II. Intangible assets . . . . . . . . . . . . . . . . . . . .
B. Current assets
2 5
I. Inventories . . . . . . . . . . . . . . . . . . . . . . . . . 2
II. Trade receivables . . . . . . . . . . . . . . . . . . . . 6 2
LIABILITIES
A. Non-current liabilities and deferred income. . .
I. Loss carryforward . . . . . . . . . . . . . . . . . . . 230
II. Deferred income from public assistance . . 1 – 2
III. Other provisions . . . . . . . . . . . . . . . . . . . . . 29 – 2
Deferred taxes before settlement . . . . . . . . . . . . 40 231 2
Deferred taxes after settlement . . . . . . . . . . . . . . 40 229
The great majority of deferred tax assets and deferred tax liabilities are realised after more than
12 months. A current component in the temporary differences as shown above was not determined
for practical reasons.

(11) Warranty provision
The warranty provision developed as follows:
01.01.2003 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
TEUR
12
Release after discounting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Utilisation after discounting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Allocation after discounting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 185
Accumulation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
31.12.2003 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 200
The warranty provision takes account of all identifiable risks and uncertain liabilities. It is recognised in
the amount of the present value of the anticipated outflow of resources. The discount rate applied to
the warranty provision is calculated on the basis of the average annual rate of interest of 3.60 % (previous
year 4.51 %) for financial year 2003. Given the 20-year warranties for solar modules under the
general warranty terms of the Group and the assessment that a liability will arise progressively over
the warranty period, only limited utilisation of the provision is expected over the short term.
(12) Trade payables and other liabilities
In addition to trade payables, this item also includes accruals:
31.12.2003 31.12.2002
TEUR TEUR
Trade payables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,437 1,163
Liabilities from actual other taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 113
Accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 213 82
Liabilities connected with social security . . . . . . . . . . . . . . . . . . . . . . . 76 43
Liabilities towards partners. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,315 657
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 6
4,081 2,064
The carrying amounts of the trade payables correspond to market values. They are due within one
year. The liabilities towards partners comprise loans to atypical silent partners in the amount of TEUR 30
(previous year TEUR 277) and loans to limited partners in the amount of TEUR 680 (previous year
TEUR 233). The loans incur interest of 12.5 % and 9.0 % as of the value date. In addition, there are
clearing accounts for atypical silent partners in the amount of TEUR 121 (previous year TEUR 0) and
clearing accounts for the limited partners in the amount of TEUR 1,294 (previous year TEUR 0) as well
as other liabilities towards limited partners in the amount of TEUR 10 (previous year TEUR 12). In addition,
there are also liabilities towards the general partner in the amount of TEUR 180 (previous year
TEUR 115).
(13) Current income tax liabilities
Current income tax liabilities comprise the following:
31.12.2003 31.12.2002
TEUR TEUR
Trade tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 152 0
Corporate income tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 0
Solidarity surcharge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 0
157 0
F-21

Notes to the income statement
(14) Revenue
Revenue is mainly generated from solar modules. It comprises the following:
2003 2002
TEUR TEUR
Solar modules. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41,026 4,626
Solar module revenue also includes the sale of inverters, assembly units and other equipment.
(15) Change in inventories of finished goods
2003 2002 Change
TEUR TEUR TEUR
Finished goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,013 622 1,391
2002 2001 Change
TEUR TEUR TEUR
Finished goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 622 0 622
(16) Other income
It comprises the following:
2003 2002
TEUR TEUR
Integration premiums BfA and BG other . . . . . . . . . . . . . . . . . . . . . . . 229 90
Release of investment premium deferred income . . . . . . . . . . . . . . . . 163 66
Release of investment grant deferred income . . . . . . . . . . . . . . . . . . . 28 10
Foreign currency exchange rate gains . . . . . . . . . . . . . . . . . . . . . . . . . 14 0
Reversal of specific allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 0
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70 80
508 246
(17) Cost of materials
Cost of materials comprises the following:
2003 2002
TEUR TEUR
Raw materials and supplies, merchandise . . . . . . . . . . . . . . . . . . . . . . 34,868 4,807
Purchased services. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 18
34,900 4,825
F-22

(18) Personnel costs
Personnel costs comprise the following:
2003 2002
TEUR TEUR
Wages and salaries. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,779 633
Contribution-based pension plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115 22
Other social insurance contributions . . . . . . . . . . . . . . . . . . . . . . . . . . 241 97
2,135 752
Expenses related to contribution-based retirement plans relate solely to employer contributions to
statutory pension insurance. The other social insurance contributions thus relate to the employer’s
share of contributions to medical, unemployment and attendance care insurance.
The Group headcount developed as follows:
Annual average Year end
2003 2002 2003 2002
Salaried employees . . . . . . . . . . . . . . . . . . . . . . . 26 13 28 24
Industrial employees . . . . . . . . . . . . . . . . . . . . . . 60 15 79 29
86 28 107 53
(19) Other expenses
The other expenses mainly relate to the costs in the sales field, especially for advertising and representation
as well as delivery costs. The individual expenses are as follows:
2003 2002
TEUR TEUR
Selling expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,066 457
Operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 470 416
Administrative expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 739 321
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 377 26
2,652 1,220
(20) Scheduled depreciation/amortisation expense
The expenditure on planned/scheduled depreciation is as follows:
2003 2002
TEUR TEUR
Scheduled depreciation/amortisation of intangible assets, and
property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . 505 256
F-23

(21) Financial result
The financial result is determined as follows:
2003 2002
TEUR TEUR
Financial income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Finance cost
5 8
Interest on financial obligations. . . . . . . . . . . . . . . . . . . . . . . . . . . . – 383 – 216
Accumulation of warranty provision . . . . . . . . . . . . . . . . . . . . . . . . – 3 0
– 381 – 208
(22) Income taxes
Income taxes encompasses income taxes paid or owed as well as deferred taxes.
2003 2002
TEUR TEUR
Trade tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – 152 0
Corporate income tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – 5 0
Deferred taxes (expense; income previous year) . . . . . . . . . . . . . . . . . – 269 204
– 426 204
The reconciliation of anticipated income tax expense to the actual income tax expense of the S. M. D.
Group is as follows:
Reconciliation of corporate income tax expense 2003 2002
TEUR TEUR
EBIT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,352 – 1,768
Applicable rate of taxation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.0 % 14.0 %
Anticipate tax expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 329 – 248
Non-deductible expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100 45
Tax rate deviations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 0
Tax-free income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – 4 – 1
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 0
Tax expense. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 426 – 204
Effective tax rate in %. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.1 % 11.5 %
Computation of tax rate 2003 2002
in % in %
Taxable assessment base. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100.0 100.0
Average trade tax rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.0 14.0
Corporate income tax 26.5 % (2002 : 25 %) x 86.00
Solidarity surcharge 5.5 % x 22.8 % (2002 : 21.5 %)
86.0 86.0
Tax rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.0 14.0
(23) Earnings per share
The S. M. D. Group intends to make use of the capital market in the near future. In accordance with
IAS 33.2, the Company is therefore obliged to provide information about earnings per share. As the
Company was only transformed into a stock corporation in financial year 2006, it has been assumed,
F-24

for the purposes of determining earnings per share, that the existing share capital can be divided into
no-par shares, each with a notional value of one euro. During the course of financial year 2003, there
was no change in the amount of share capital and thus, no change in the base figure for determining
earnings per share.
As IAS 33 states that the average weighted number of shares in circulation (notional in this case) during
the course of the financial year is to be applied in computing undiluted earnings per share, an average
2,545,000 shares can be assumed.
Undiluted earnings per share (notional in this case) are computed on the basis of the earnings for the
period less minority interest in accordance with IFRS.
Undiluted earnings per share in the share capital = earnings for the period to which the shareholders
are entitled (TEUR 1,926) / weighted average share capital (EUR 2,545,000) = EUR 0.76 (previous year
EUR – 0.61)
Other:
(24) Notes concerning the first-time application of IFRS
Postings recognised in equity or income under IFRS that produce a change in equity or profit when
comparing HGB with IFRS are presented in the following reconciliation of HGB to IFRS as at 1 January
2002 and 31 December 2002.
Property, plant and equipment and intangible assets
In contrast to the statutory rules contained in HGB, the useful lives of low-value items, technical equipment
and machinery as well as of operating and office equipment correspond to the period of time
over which the assets are expected to be used, resulting in a change in the amount of TEUR 1 as at
1 January 2002 (31 December 2002: TEUR 39) under IFRS. In addition, the changeover from the
reducing-balance to straight-line method of depreciation resulted in measurement differences.
Public assistance
Under both HGB and IFRS, investment premiums are recognised as deferred income and released to
income over the useful lives of the related assets. Under HGB, investment grants are recognised in
income on being received. In connection with the changeover to IFRS, the investment grants were
accounted for as deferred income and will now be released to income over the useful lives of the
related assets. This resulted in reduction in other income of TEUR 1,087 for 2002. The resulting income
is disclosed under other income.
Trade receivables
The general allowance for trade receivables under HGB as at 1 January 2002 in the amount of TEUR 0
(31 December 2002: TEUR 14) was eliminated.
Deferred taxes
Deferred tax assets relating to tax reductions from the anticipated utilisation of existing loss carryfowards
in future years in the amount of TEUR 25 (31 December 2002: TEUR 231) were recognised as
at 1 January 2002. The deferred taxes are capitalised when, on the basis of a business plan, the realisation
of the loss carryforwards can be assured with sufficient certainty.
F-25

Provisions for expenses
The provisions for expenses recognised under HGB in the amount of TEUR 4 as at 1 January 2002
(31 December 2002: TEUR 32) and related to residual uncertainty surrounding time and amount were
eliminated because they were so small that in accordance with IAS 37.11, it would be appropriate to
disclose them under payables or, if there is no obligation towards a third party, to reverse them.
Warranty provision
In 2002, the amount of the warranty provision was set at 1.00 % of the sales covered by warranties. It
covers statutory warranty obligations as well as the up to 20-year warranty for solar modules in accordance
with the general warranty terms of the S. M. D. Group. That is why the warranty provision has
been recognised in amount corresponding to the present value of the anticipated outflow of resources.
The discount rate applied to the warranty provision is calculated on the basis of the annual average
annual rate of interest of 3.60 % (previous year 4.51 %) for financial year 2003.
Reconciliation of equity
A HGB consolidated balance sheet and income statement has been prepared, but not published yet,
for the purpose of reconciling equity from HGB to IFRS as at 1 January and 31 December 2002.
01.01.2003 31.12.2002
TEUR TEUR
Equity (HGB) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Adjustments
2,343 1,672
Property, plant and equipment, and intangible assets . . . . . . . . . . . . . – 1 – 39
Deferred income from public assistance . . . . . . . . . . . . . . . . . . . . . . . 0 – 1,087
Trade receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 14
Warranty provision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 17
Deferred taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 229
Impairment of goodwill (Geschäfts- oder Firmenwert) . . . . . . . . . . . . . 0 – 3
24 – 869
Equity (IFRS) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,367 803
Reconciliation of earnings from HGB to IFRS for 2002:
Net loss (HGB) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Adjustments
2002
TEUR
– 671
Property, plant and equipment and intangible assets. . . . . . . . . . . . . . . . . . . . . . . . . . – 38
Deferred income from public assistance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – 1,087
Deferred taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 204
Trade receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Warranty provision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Revaluation of goodwill (Geschäfts- oder Firmenwert) . . . . . . . . . . . . . . . . . . . . . . . . . – 3
– 893
Net loss (IFRS) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – 1,564
F-26

(25) Other financial commitments and contingencies
S. M. D. Solar-Manufaktur Deutschland GmbH & Co. recognises the following other financial commitments
and contingencies:
31.12.2003 31.12.2002
TEUR TEUR
Obligations under lease agreements . . . . . . . . . . . . . . . . . . . . . . . . . . 41 26
Future payment obligations under office space leases as at 31 December 2003 can be broken down as
follows:
Residual Residual Residual
term term >1 to terms
< 1 year 5 years > 5 years
TEUR TEUR TEUR
Lease agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 48 0
(26) Subsequent events
No events of material importance occurred after the balance sheet date.
(27) Information about related enterprises and persons
Within the meaning of IAS, related persons or enterprises are persons or enterprises that control or
can exercise a significant influence over the Company. In the case of the S. M. D. Group, it should be
noted that no partner can control or exercise a significant influence over the Company. In addition, no
transactions involving the circle of persons named below were conducted in the past financial year.
The liabilities towards partners disclosed in the balance sheet relate to current settlements arising
from profit distribution.
The shareholding breakdown (see the information about the scope of consolidation) shows the nature
of the relationships between S. M. D. Solar-Manufaktur Deutschland GmbH & Co. KG and its subsidiaries
in accordance with IAS 24.12.
The following persons have been appointed general managers of S. M. D. Solar-Manufaktur Deutschland
GmbH & Co. KG.
• Mr. Jakobus Smit, Rastede Strategy, Investor Relations and Technology
• Mr. Marius Eriksen, Oldenburg (until 12 August 2003)
• Mr. Heinrich Willers, Wardenburg Operations and Finance
(as of 12 August 2003)
In accordance with IAS 24.16, the general managers received the following compensation:
Type of remuneration 2003 2002
TEUR TEUR
Compensation for provision of executive management . . . . . . . . . . . . . . 180 33
F-27

(28) Advisory committee
In 2003, S. M. D. Solar-Manufaktur Deutschland GmbH & Co. KG had an advisory committee composed
of the following members:
• Mr. Marius Eriksen, Oldenburg
• Mr. Joosten Connemann, Leer
• Mr. Herbert Straßburg, Goldenstedt
• Mr. Klaas Wachtendorf, Jever
• Mr. Michael Eisenknappl, Bogen
The advisory committee of S. M. D. Solar-Manufaktur Deutschland GmbH & Co. KG received total
emoluments of TEUR 25 for the financial year.
On 30 March 2006, S. M. D. Solar-Manufaktur Deutschland GmbH approved the publication of the consolidated
financial statements of S. M. D. Solar-Manufaktur Deutschland GmbH & Co. KG.
Prenzlau, 30 March 2006
Willers Smit
F-28

Auditors’ Report
We have audited the consolidated financial statements prepared by S. M. D. Solar-Manufaktur Deutschland
GmbH , Prenzlau and consisting of the balance sheet, the income statement the statement of
changes in equity and the cash flow statement as well as the notes to the financial statements for the
financial year from 1 January to 31 December 2003. The preparation and the content of the financial
statements according to the International Financial Reporting Standards (IFRS) of the IASB are the
responsibility of the legal representatives of the partnership. Our responsibility is to express an opinion,
based on our audit, about whether the consolidated financial statements are in accordance with
IFRS.
We conducted our audit of the consolidated financial statements in accordance with German auditing
regulations and generally accepted standards for the audit of financial statements promulgated by the
Institut der Wirtschaftsprüfer in Deutschland (IDW) (German Institute of Certified Public Accountants).
Those standards require that we plan and perform the audit to obtain reasonable assurance about
whether the consolidated financial statements are free of material misstatements. Knowledge of the
business activities and the economic and legal environment of the Group and evaluations of possible
misstatements are taken into account in the determination of audit procedures. The evidence supporting
the amounts and disclosures in the consolidated financial statements is assessed on a test basis
within the framework of the audit. The audit includes assessing the accounting principles used and
significant estimates made by the legal representatives as well as evaluating the overall presentation
of the consolidated financial statements. We believe that our audit provides a reasonable basis for our
opinion.
Our audit has not led to any reservations.
In our opinion, the consolidated financial statements give a true and fair view of the assets, financial
position, results of operations of the Group as well as the cash flows for the financial year.
Oldenburg, 3 April 2006
PricewaterhouseCoopers
Aktiengesellschaft
Wirtschaftsprüfungsgesellschaft
(Menke) (ppa. Engelhardt)
Wirtschaftsprüfer Wirtschaftsprüfer
F-29

F-30
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Consolidated financial statements for financial year 2004
(1 January 2004 to 31 December 2004) of
S.M.D. Solar-Manufaktur Deutschland GmbH, Prenzlau,
according to IFRS
F-31

Consolidated balance sheet of S. M. D. Solar-Manufaktur Deutschland GmbH, Prenzlau,
as at 31 December 2004
Assets Note 31.12.2004 31.12.2003
A. Non-current assets
TEUR TEUR
I. Property, plant and equipment . . . . . . . . . . . . . . . . . . 1 8,440 6,253
II. Intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 79 110
B. Current assets
8,519 6,363
I. Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 7,919 3,976
II. Trade receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 2,406 1,753
III. Other current assets and advance payments made. . 4 3,647 574
IV. Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . 5 787 48
14,759 6,351
23,278 12,714
Equity and Liabilities Note 31.12.2004 31.12.2003
A. Equity
TEUR TEUR
I. Subscribed capital/Capital shares. . . . . . . . . . . . . . . . 6 2,545 2,545
II. Capital reserve . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 208 0
III. Retained earnings. . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 0 208
IV. Loss carried forward. . . . . . . . . . . . . . . . . . . . . . . . . . – 1,034 – 884
V. Consolidated net profit. . . . . . . . . . . . . . . . . . . . . . . . 6,630 1,926
Appropriation of profit . . . . . . . . . . . . . . . . . . . . . . . . 0 – 2,076
B. Non-current liabilities and deferred income
8,349 1,719
I. Deferred income from public assistance . . . . . . . . . . 9 4,549 3,111
II. Financial liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 2,501 2,324
III. Deferred tax liabilities. . . . . . . . . . . . . . . . . . . . . . . . . 11 214 40
IV. Warranty provision . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 636 200
C. Current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7,900 5,675
I. Financial liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 569 1,082
II. Trade payables and other liabilities . . . . . . . . . . . . . . . 13 4,180 4,081
III. Current income tax liabilities . . . . . . . . . . . . . . . . . . . 14 2,280 157
7,029 5,320
23,278 12,714
F-32

CONSOLIDATED INCOME STATEMENT for the period from 1 January 2004 to 31 December 2004
S. M. D. Solar-Manufaktur Deutschland GmbH, Prenzlau
Note 2004 2003
TEUR TEUR
1. Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 80,789 41,026
2. Increase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 229 1,391
3. Other income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 901 508
4. Cost of materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 – 63,021 – 34,900
5. Personnel costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 – 3,481 – 2,135
6. Other expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 – 3,455 – 2,652
7. EBITDA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,962 3,238
8. Scheduled depreciation/amortisation expense. . . . . . . . . . 21 – 1,322 – 505
9. EBIT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,640 2,733
10. Financial income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 24 5
11. Finance cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 – 303 – 386
12. Earnings before taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,361 2,352
13. Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 – 3,731 – 426
14. Consolidated net profit/loss for the year. . . . . . . . . . . .
15. Earnings per based on the consolidated net profit for the
year (in EUR per share)
6,630 1,926
Undiluted earnings per share . . . . . . . . . . . . . . . . . . . . 24 2.61 0.76
F-33

CONSOLIDATED CASH FLOW STATEMENT 2004
S. M. D. Solar-Manufaktur Deutschland GmbH, Prenzlau
Note 2004 2003
TEUR TEUR
I. Cash flow from operating activities
Consolidated net profit/loss for the year after income
taxes and interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,630 1,926
Income taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 3,731 426
Scheduled depreciation/amortisation expense . . . . . . . . . . 21 1,322 505
Change in non-current provisions . . . . . . . . . . . . . . . . . . . . 12 409 185
Losses on the disposal of non-current assets. . . . . . . . . . . 1 9 5
Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 – 24 – 5
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 303 386
Non-cash income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – 710 – 191
Change in trade receivables and other current assets . . . . – 848 – 241
Change in inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 – 3,943 – 3,055
Change in trade payables and other current liabilities . . . . . 13 99 1,008
= Cash flow from operating activities . . . . . . . . . . . . . . 6,978 969
Interest paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – 276 – 383
Interest received . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 5
Income taxes paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – 1,433 0
= Net cash flow from operating activities. . . . . . . . . . .
II. Cash flow from investing activities
5,293 591
Purchase of items of property, plant and equipment. . . . . . 1 – 5,465 – 1,157
Purchase of intangible assets . . . . . . . . . . . . . . . . . . . . . . . 1 – 59 – 70
Inflows from public assistance . . . . . . . . . . . . . . . . . . . . . . 1,306 1,492
= Net cash flow from financing activities . . . . . . . . . . .
III. Cash flow from financing activities(
– 4,218 265
1 )
Inflows from borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 686 0
Repayment of borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . – 838 – 834
= Net cash flow from financing activities . . . . . . . . . . . – 152 – 834
Net changes in cash and cash equivalents (I to III) . . . .
Cash and cash equivalents at the beginning of the financial
923 22
year. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Zahlungsmittel und Zahlungsmitteläquivalente zu
– 196 – 218
Geschäftsjahresende . . . . . . . . . . . . . . . . . . . . . . . . . . 5 727 – 196
( 1 ) For the purposes of the cash flow statement, overdraft facility liabilities towards credit institutions were allocated to financial
resources.
F-34

CONSOLIDATED STATEMENT OF CHANGE IN EQUITY for financial year 2004
S. M. D. Solar-Manufaktur Deutschland GmbH, Prenzlau
Equity attributable to the shareholders of the parent company
Subscribed
capital/
Capital
shares
Capital
reserve
Retained
earnings
Profit/
loss
carried
forward
Consolidated
net
profit/
loss for
the year
Total
equity
Note 6 7 8
TEUR TEUR TEUR TEUR TEUR TEUR
Balance at 1 January 2003 2,545 0 0 – 178 – 1,564 803
Reclassification. . . . . . . . . .
Consolidated net profit for
0 0 0 – 1,564 1,564 0
the year . . . . . . . . . . . . .
Appropriation of profit/
Allocation to retained
0 0 0 0 1,926 1,926
earnings. . . . . . . . . . . . .
Balance at 31 December
0 0 208 858 – 2,076 – 1,010
2003 . . . . . . . . . . . . . . .
Balance as at 1 January
2,545 0 208 – 884 – 150 1,719
2004 . . . . . . . . . . . . . . . 2,545 0 208 – 884 – 150 1,719
Reclassification. . . . . . . . . .
Allocation to capital reserve
resulting from trans-
0 0 0 – 150 150 0
formation . . . . . . . . . . . .
Consolidated net profit for
0 208 – 208 0 0 0
the year . . . . . . . . . . . . .
Balance at 31 December
0 0 0 0 6,630 6,630
2004 . . . . . . . . . . . . . . . 2,545 208 0 – 1,034 6,630 8,349
F-35

Notes 2004
General Information
The parent company S. M. D. Solar-Manufaktur Deutschland GmbH, Prenzlau, was transformed from a
GmbH & Co. KG (limited partnership) into a GmbH (limited liability company) by an appropriate resolution
of 3 August 2004. The transformation of the parent company was entered in the Commercial
Register kept by the District Court at Neuruppin under HR B 7069 OPR on 17 November 2004.
Basis of Preparation
As at 31 December 2004, S. M. D. Solar-Manufaktur Deutschland GmbH & Co. KG, Prenzlau, as
medium-sized corporation with its registered office in the Federal Republic of Germany, voluntarily
applied International Financial Reporting Standards (IFRS) and the interpretations of the International
Financial Reporting Interpretations Committee (IFRIC) in preparing its financial statements, which
were consolidated to include its subsidiary. With the exception of IAS 32 (revised 2003) and IAS 39
(revised 2003), all the binding pronouncements of the International Accounting Standards Board (IASB)
in force on 31 December 2005 were complied with, resulting in the presentation of a true and fair
view of the net assets, financial position and results of operations of the S. M. D. Group.
The consolidated financial statements were prepared in euros, the functional currency of S. M. D.
Solar-Manufaktur Deutschland GmbH. All amounts are shown in thousands of euros (TEUR). The consolidated
financial statements are based on historical cost and have been prepared applying the following
consolidation procedures and accounting policies. The income statement has been prepared
using the total cost of production method.
For the purpose of achieving greater clarity and meaning, individual items of the income statement
and the balance sheet have been aggregated. These items are disclosed separately in the Notes and
explanatory comments provided. The preparation of consolidated financial statements in accordance
with IFRS requires estimates. In addition, the application of company-wide accounting methods
requires assessments to be made by management. Areas where there is greater room of manoeuvre
with regard to assessments and the related assumptions and estimates for which are of material significance
for the consolidated financial statements are set out in the comments on “Assumptions and
Estimates.”
In addition, EBITDA and EBIT are shown separately in the income statement for the purpose of better
presentation and clarity. The term EBITDA (Earnings before Interest, Taxes, Depreciation and Amortisation)
refers to the profit for the year before interest, taxes, depreciation and amortisation as well as
impairment.
The term EBIT (Earnings before Interest and Taxes), by contrast, refers to the profit for the year before
the interest expense and income taxes.
Scope of Consolidation
S. M. D. Solar-Manufaktur Deutschland GmbH with its registered office in Prenzlau (Gewerbegebiet
Nord, 17291 Prenzlau, Deutschland) develops and produces high-grade solar modules for the German
and international photovoltaic market. The modules produced at Prenzlau are essentially distributed
through the wholly owned subsidiary aleo solar GmbH with its registered office in Oldenburg/Germany
under the aleo brand name. In addition to S. M. D. Solar-Manufaktur Deutschland GmbH the
subsidiaries consolidated are essentially those in which S. M. D. Solar-Manufaktur Deutschland GmbH
holds a majority of voting rights, whether directly or indirectly, i. e. they are companies in which, in
accordance with IAS 27 (revised 2003), the Group has control over financial and operating policies and
this usually entails holding more than 50 % of the voting rights. In addition to S. M. D. Solar-Manufaktur
Deutschland GmbH, the scope of consolidation includes one domestic Group company.
F-36

The following subsidiary was included in the scope of consolidation:
Shareholding
Equity
Net profit
2004
% EUR EUR
aleo solar GmbH, Oldenburg . . . . . . . . . . . . . . . . . . . . . . 100 300,000.00 342,747.24
Consolidation Policies
Subsidiaries acquired are accounted for using the purchase method. The acquisition costs correspond
to the fair value of the assets to which they are assigned, the equity instruments issued and the liabilities
arising or assumed on the date of exchange together with the costs directly attributable to acquisition.
Assets, liabilities and contingent liabilities identified in connection with a business combination
are measured at fair value upon first-time consolidation irrespective of the size of minority interests.
The excess of acquisition costs over the shares of the Group in the net assets measured at fair value
is recorded as goodwill. If the acquisition costs are lower than the net assets of the subsidiary acquired
as measured at fair value, the difference is recognised directly in the income statement.
Under IAS 27 (revised 2003) (consolidated and separate single-entity financial statements in accordance
with IFRS), the financial statements of the domestic subsidiaries included in the scope of consolidation
were prepared applying uniform accounting and valuation methods.
In the case of the consolidation of liabilities, the receivables and payables for the consolidated companies
are netted.
Income included in inventories and assets arising from the supply of goods and services among
related companies within the Group are eliminated from net profit. In accordance with IAS 12 (revised
2000), deferred taxes are recognised for differences resulting from consolidation measures recognized
in profit or loss. Income and expenses arising from transactions within the Group, especially
revenue generated between Group companies, is eliminated in the income statement.
Segment Reporting
A business segment is a group of assets and operating activities engaged in providing products or
services and that is subject to risks and returns that differ from other business segments. A geographical
segment provides products or services within a particular economic environment and that is subject
to risks and returns that differ from those in other economic environments.
The S. M. D. Group intends to make use of the capital market in the near future. In accordance with
IAS 14.9, the Company is therefore obliged to provide segment reporting.
However, as the S. M. D. Group is a single product company engaged solely in the production of solar
modules and generates by far the greatest part of its revenue in the Federal Republic of Germany, the
reporting of information on segments is considered redundant.
Accounting Policies
Intangible Assets
In accordance with IAS 38.4 (revised 2004), software licences acquired are capitalised at acquisition
cost plus the costs of making them usable. They are amortised applying the straight-line method over
an estimated useful life of three years.
F-37

In accordance with IAS 38 (revised 2004), research and development costs are reported as a current
expense when they arise unless the requirements for capitalisation are satisfied. Costs that are
incurred directly in connection with generating identifiable individual intangible assets (software products,
development projects) that the Group can dispose of are disclosed under intangible assets insofar
as it is likely that economic benefits will accrue to the Company from them over a period of more
than one year and such benefits will exceed the costs incurred. Costs that can be allocated directly
include personnel costs for the employees engaged in development as well as other costs that can be
allocated directly to software development.
The S. M. D. Group does not make use of the allowed alternative treatment of capitalising interest on
borrowing for eligible assets.
Assets subject to scheduled amortisation are tested for impairment if appropriate events or changes
in circumstances indicate that the carrying amount of an asset may no longer be recoverable. An
impairment loss is recognised in an amount corresponding to the excess of the carrying amount over
the recoverable amount. The recoverable amount is the higher of the asset’s fair value less selling
costs and its value in use.
Property, Plant and Equipment
Items of property, plant and equipment are stated at historical cost less scheduled depreciation and,
where necessary, after adjustment for any impairment. Such cost includes expenses that are directly
attributable to the acquisition. Finance costs are not capitalised as a component of cost. The S. M. D.
Group always begins to depreciate an item of property, plant and equipment when the asset is ready
for use.
Investment premiums received as well as tax-free investment grants are recorded as deferred income
from public assistance and released to income over the useful life of the non-current asset for which
the support has been provided.
Subsequent costs of acquisition/production are only recorded under costs of acquisition/production
when it appears likely that economic benefits will flow to the Group from them in the future and the
costs of the relevant asset can be reliably determined. All other repairs and maintenance are recognised
as an expense in the income statement for the financial year in which they are incurred.
Land is not depreciated. Items of plant, property and equipment are only depreciated applying the
straight-line method. The following useful lives apply across the Group for scheduled depreciation:
Buildings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . up to 33 years
Installations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 – 19 years
Technical equipment and machinery. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 – 25 years
Office equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 – 14 years
Residual carrying amounts and economic useful lives are reviewed on each balance sheet date and
adjusted where necessary. Items of property, plant, and equipment are written down if there are indications
of impairment and if the recoverable amount is lower than amortised cost. The write-downs
are reversed if the reasons for the impairment losses no longer apply.
Profits and losses realised on the disposal of items of property, plant and equipment are determined
as the difference between the proceeds obtained from a sale and the carrying amounts, with the difference
being recognised in income.
F-38

Financial Assets
Financial assets are generally dividend into the following categories:
• financial assets at fair value through profit or loss;
• loans and receivables;
• financial assets held to maturity;
• financial assets available for sale.
The classification depends on the purpose for which the financial assets have been acquired. Management
determines the classification of financial assets upon initial recognition and reviews the classification
on each balance sheet date.
Financial assets at fair value through profit or loss
This category has two sub-categories: Financial assets that have been classified as held for trading
from the inception and those that have been classified as “fair value through profit or loss.” A financial
asset is placed in this category if was principally acquired with it intention of selling it over the short
term or that has been decided by management. Derivatives are also classified as held for trading
unless they should be classified as hedges. Assets that fall into this category are reported as current
assets if they are held for trading or will be realised within 12 months of the balance sheet date. The
S. M. D. Group does not place any financial instruments in this category at the present time.
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed and determinable payments and
which are not quoted on an active market. They are created when the Group provides money, goods
or services directly to a debtor without the intention of trading in the receivables. They are included
under current assets with the exception of those that will not fall due until 12 months after the balance
sheet date. The latter are disclosed as non-current assets. Receivables are carried on the balance
sheet under trade receivables and other current assets.
Held-to-maturity financial assets
Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments
and fixed maturities that the management of the Group intends to and is able to hold until maturity.
The S. M. D. Group does not place any financial instruments in this category at the present time.
Available-for-sale financial assets
Available-for-sale financial assets are non-derivative financial assets that should either be placed in this
category or none of the other categories. They are included under non-current assets insofar as management
does not intend to sell them within 12 months of the balance sheet date. The S. M. D. Group
does not place any financial instruments in this category at the present time.
All purchases and sales of financial assets are recognised on their trading date, i. e. the date on which
the Group gives an undertaking to sell or purchase the assets.
Initial recognition of financial assets that do not fall into the “fair value through profit or loss” category
is at fair value less transaction costs. They are derecognised when the rights to payments from the
investment expire or are transferred and the company has transferred substantially all the risks and
rewards of ownership.
F-39

Loans and receivables are carried at amortised cost applying the effective interest rate method. If their
collection is doubtful, the receivables are carried at the lower recoverable amount (present value of
expected future cash flows). In addition to the required specific allowance, the impairment loss risk for
groups of receivables that do not differ from credit risks is also considered (general itemised allowance
in accordance with IAS 39). In determining the receivables at risk, receivables covered by credit
insurance and value-added tax are removed.
On each balance sheet date, a review is conducted to determine whether there are any objective circumstances
indicating that a particular financial asset or group of financial assets has become
impaired.
Financial Risk Factors
The S. M. D. Group is exposed to various financial risks through its business:
• Foreign currency risk
• Credit risk
• Interest rate risk
In terms of sales, the focus of the S. M. D. Group is on the eurozone. No business is transacted with
customers in countries with high inflation. Foreign currency risks on the procurement side can also be
deemed slight. Deliveries of materials and supplies mainly originate in the eurozone and in Asia.
Invoices are issued in euros or U. S. dollars. The Group does not employ any hedging instruments at
the present time.
Credit risk
Credit reports or historical data relating to existing business relationships are used to avoid the risk of
default. When risks become identifiable, appropriate allowances are recognised for receivables. In
addition, about 70 % of the risk of default is covered by trade credit insurance.
Liquid assets are held with major banks. There is no significant risk of default.
Interest rate risk
The Group holds no interest-bearing assets, with the result that Group profit and cash flow from operating
activities are almost entirely unaffected by changes in market interest rates.
No financial instruments are used to hedge interest rates. Fixed interest rate terms apply to long-term
loans, which are subject to a fair value risk. Short-term overdraft facilities are not used throughout the
year, so that possible increases in interest rates do not pose a significant risk for the Company. The
risk of a change in interest rates does not impact on the balance sheet, as financial liabilities are carried
at amortised cost.
Leases
Leases under which a substantial part of the risks and rewards incident to ownership of the leased
asset remain with the lessor are classified as operating leases. The payments made in connection
with an operating lease are recognised as an expense in the income statement on a straight-line basis
over the duration of the lease term.
The S. M. D. Group is not a party to any finance lease at the present time.
F-40

Inventories
Inventories are stated at the lower of cost and net realizable value. In addition to direct costs, which
are generally measured on a rolling average basis, cost of production also include material and production
overhead costs as well as production-related depreciation that can be assigned directly to the
production process. Administrative and social benefit costs are taken into account insofar as they can
be assigned to production. Inventory risks arising from lower net realisable value, time in storage,
shrinkage etc. are written down. The write-downs are reversed if the reasons that gave rise to them no
longer apply.
Cash and Cash Equivalents
Cash and cash equivalents cover cash and demand deposits.
Equity
In accordance with IAS 32.20 (revised 1998), capital shares that entail a contractual or statutory repayment
obligation are to be disclosed as debt. This requirement does not affect the SMD Group because
of SIC 5.6. It states that a financial instrument is to be reported as equity if, at the time of issuance,
the likelihood of an outflow of liquid assets or another financial asset is remote, so that the possibility
of a resulting diminution of assets is insignificant. Consequently, a liability only arises when the SMD
Group receives an appropriate notice from a partner evidencing his intention of obtaining repayment.
In the absence of such repayment requests, there is nothing to prevent the capital shares of the limited
partner and general partner from being disclosed as equity.
Deferred Taxes
Deferred taxes are determined in accordance with IAS 12 (revised 2000). Tax relief and charges that
are likely to arise in the future are reported for temporary differences between the carrying amounts
shown in the consolidated financial statements and the values attributed to assets and liabilities for
tax purposes. Deferred taxes are measured applying the tax rates (and tax regulations) in force, or
which have substantially received legislative approval, on the balance sheet date and which are
expected to apply when the deferred tax asset or liability is realised. Deferred tax assets are stated to
the extent that it is likely that a taxable profit will be available against which the temporary difference
can be applied.
Current Income Tax Liabilities
Current income tax liabilities encompass obligations arising from current income taxes.
Other Provisions
Provisions are recognised for a present obligation towards a third party arising from past events when
it is probable that there will be an outflow of resources and a reliable estimate can be made of the
amount of the obligations. Provisions are stated at the amount required to satisfy the obligation. Noncurrent
provisions are stated at the discounted amount required to satisfy the obligation as at the balance
sheet date. Provisions are not offset against recourse claims.
As only warranty provisions had to be stated in the previous financial statements, the term has been
used for the corresponding balance sheet line item.
F-41

Liabilities
Non-current liabilities are carried at amortised cost. Differences between historical cost and the repayment
amount are taken into account applying the effective interest rate method.
Current liabilities are stated at the amount required for payment or settlement.
Foreign Currencies
Foreign currency receivables and liabilities are measured at the exchange rate prevailing on the day
when a transaction occurred. Gains and losses on changes in exchange rates are taken into account
until the balance sheet date. There are no pending transactions in connection with exchange rate
hedging measures.
Public Assistance
Investment premiums received as well as tax-free investment grants are recorded as deferred income
from public assistance and released to income over the useful life of the non-current asset for which
the support has been provided.
The deferred liability corresponding to the asset for which assistance has been received is recorded in
the balance sheet under non-current assets.
Recognition of Income and Expenses
Revenue and other operating income are generally recognised when services have been rendered or
when goods or products have been delivered, and thus, when the associated risk has been transferred.
In addition, solar modules are produced for third parties on a contract basis (OEM production).
Only the sums received for the provision of such service is recognised as revenue.
Operating expenses are recognised in income upon performance or at the time of origination.
Interest expenses and income are recognised in income.
Assumptions and Estimates
In preparing the consolidated financial statements, certain assumptions and estimates were made
that have an impact on the disclosure and level of assets, liabilities, income, expenses as well as contingent
liabilities.
These assumptions and estimates generally relate to assessing the value of intangible assets, the
useful lives applied across the Group, the likelihood of receivable being collected, the recognition and
measurement of warranty provisions as well as the realisability of future tax relief.
The premises underlying these assumptions and estimates are based on the knowledge available at a
given time. In individual cases, actual values may deviate from the assumptions and estimates made.
Changes will be taken in account and recognised in the event that the available knowledge improves.
F-42

Recommendation concerning the appropriation of profit for 2004 made in accordance with
commercial law and submitted by the parent company
The recommendation concerning the appropriation of profit submitted by the Group parent company
S. M. D. Solar-Manufaktur Deutschland GmbH is as follows:
Net income for 2004. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
EUR
6,831,044.38
is to be distributed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,000,000.00
and allocated to retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,300,000.00
with profit carried forward amounting to . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,531,044.38
F-43

Notes to IFRS balance sheet
(1) Property, plant and equipment and intangible assets
The development and composition of plant, property and equipment and intangible assets compared
with the preceding year was as follows:
Changes in consolidated fixed assets for financial year 2004
Historical cost
01.01.2003 Additions Disposals 31.12.2003
TEUR TEUR TEUR TEUR
I. Intangible Assets
1. Software. . . . . . . . . . . . . . .
II. Property, Plant and
Equipment . . . . . . . . . . . . . . .
147 70 0 217
1. Land and buildings . . . . . . .
2. Technical equipment and
2,442 1,217 0 3,659
machinery. . . . . . . . . . . . . .
3. Other operating and office
2,448 174 0 2,622
equipment . . . . . . . . . . . . . 423 209 28 604
5,313 1,600 28 6,885
5,460 1,670 28 7,102
Historical cost
01.01.2004 Additions Disposals 31.12.2004
TEUR TEUR TEUR TEUR
I. Intangible Assets
1. Software. . . . . . . . . . . . . . .
II. Property, Plant and
Equipment
217 59 0 276
1. Land and buildings . . . . . . .
2. Technical equipment and
3,659 572 0 4,231
machinery. . . . . . . . . . . . . .
3. Other operating and office
2,622 2,236 0 4,858
equipment . . . . . . . . . . . . . 604 620 85 1,139
6,885 3,428 85 10,228
7,102 3,487 85 10,504
F-44

Depreciation/amortisation Residual carrying amount
01.01.2003 Additions Disposals 31.12.2003 31.12.2003 31.12.2002
TEUR TEUR TEUR TEUR TEUR TEUR
31 76 0 107 110 116
34 113 0 147 3,512 2,408
119 196 0 315 2,307 2,329
72 121 23 170 434 351
225 430 23 632 6,253 5,088
256 506 23 739 6,363 5,204
Depreciation/amortisation Residual carrying amount
01.01.2003 Additions Disposals 31.12.2003 31.12.2003 31.12.2002
TEUR TEUR TEUR TEUR TEUR TEUR
107 90 0 197 79 110
147 121 0 268 3,963 3,512
315 872 0 1,187 3,671 2,307
170 239 76 333 806 434
632 1,232 76 1,788 8,440 6,253
739 1,322 76 1,985 8,519 6,363
F-45

(2) Inventories
31.12.2004 31.12.2003
TEUR TEUR
Raw materials. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,771 1,800
Supplies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83 58
Packaging material . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68 38
Raw materials and supplies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,922 1,896
Finished goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,242 2,013
Merchandise. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 755 56
Finished goods and merchandise . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,997 2,069
Inventories and advance payments made . . . . . . . . . . . . . . . . . . . . . . . . 0 11
Inventories. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,919 3,976
In the breakdown shown above, the photovoltaic modules produced by the Group are classified as
finished goods. Merchandise refers to modules bought, inverters and other photovoltaic system components.
The higher amount for raw materials is connected with the increase in production capacity
and the resulting increase in raw materials held.
(3) Trade receivables
31.12.2004 31.12.2003
TEUR TEUR
Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,406 1,753
In the past financial year, no impairment losses (previous year TEUR 100) were recognised for receivables
as there were objective indications that the sums due are not fully collectible. The carrying
amounts correspond to market values.
(4) Other current assets and advance payments made
31.12.2004 31.12.2003
TEUR TEUR
Investment grant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,109 191
Investment premium . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 76
VAT refund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 22
Creditors in debit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 159 15
Deposit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 18
Receivables from partners/shareholders . . . . . . . . . . . . . . . . . . . . . . . . . 187 0
Advance payments for construction in progress . . . . . . . . . . . . . . . . . . . 2,177 140
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 112
3,647 574
Current assets are due within year and are therefore measured at cost. The carrying amounts correspond
to market values.
The receivables in relation to partners concern the proportionate withdrawal in the amount of
TEUR 1,200 resolved at the partners meeting of 29 June 2004 and which amount was credited on a
proportionate basis to the partners’ capital accounts. This resulted in a negative balance appearing on
the capital accounts of some partners.
F-46

(5) Cash and cash equivalents
31.12.2004 31.12.2003
TEUR TEUR
Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 785 47
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 1
787 48
Cash held with banks as at the balance sheet date was kept in the form of demand deposits at various
credit institutions.
(6) Subscribed capital/Capital shares
31.12.2004 31.12.2003
TEUR TEUR
Subscribed capital/Capital shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,545 2,545
(7) Capital reserve
31.12.2004 31.12.2003
TEUR TEUR
Capital reserve . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 208 0
Pursuant to the transformation resolution of 3 August 2004, the capital reserve was created from the
joint specific-purpose reserve account (retained earnings) of S. M. D. Solar-Manufaktur Deutschland
GmbH & Co. KG in connection with the transformation of the partnership into a limited liability company.
(8) Retaining earnings
Retained earnings developed as follows:
31.12.2004 31.12.2003
TEUR TEUR
Retained earnings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 208
Pursuant to the transformation resolution of 3 August 2004, the specific-purpose reserve account
(retained earnings) of S. M. D. Solar-Manufaktur Deutschland GmbH & Co. KG was reclassified as a
capital reserve in connection with the transformation of the partnership into a limited liability company.
(9) Deferred income from public assistance
31.12.2004 31.12.2003
TEUR TEUR
Investment grants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,967 1,266
Investment premiums . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,582 1,845
4,549 3,111
Applying IAS 20 (Accounting for Government Grants and Disclosure of Government Assistance),
investment assistance received is recognised as deferred income and released to income over the
useful life of the related assets. The resulting income is disclosed under other operating income.
F-47

(10) Financial liabilities
31.12.2004 31.12.2003
TEUR TEUR
Liabilities towards credit institutions, current account . . . . . . . . . . . . . . . 60 244
Liabilities towards credit institutions, loans < 1 year . . . . . . . . . . . . . . . . 509 838
Liabilities towards credit institutions > 1 year to 5 years . . . . . . . . . . . . . 1,413 989
Liabilities towards credit institutions > 5 years. . . . . . . . . . . . . . . . . . . . . 1,088 1,335
3,070 3,406
The liabilities towards credit institutions relate to Bremer Landesbank, Volksbank Prenzlau and Oldenburgische
Landesbank. As at the balance sheet date, the debit balance rate of interest was 9.00 %
(previous year 9.00 %) at Bremer Landesbank, 9.25 % (previous year 9.25 %) at Volksbank Prenzlau
and 7.00 % (previous year 0.00 %) at Oldenburgische Landesbank.
The non-current liabilities towards credit institutions as at 31 December 2004 relate to annuity and
instalment loans with rates of interest that vary between 4.20 % and 5.70 %. The difference between
the carrying amounts of the loans and the respective fair values is immaterial as the interest terms
agreed only deviate slightly from the market interest rate levels prevailing on the balance sheet date.
The interest terms apply until redemption. They are shown in more detail in the table below.
Loan No. 2004 2003
Redemption
TEUR TEUR
6353190014 (BLB; 5.00 %) . . . . . . . . . . . . . . . . . . . . . . . . 1,834 1,834 01.06.2014
6353190020 (BLB; 5.69 %). . . . . . . . . . . . . . . . . . . . . . . . 491 490 01.08.2012
6353190042 (BLB; 4.40 %). . . . . . . . . . . . . . . . . . . . . . . . 565 0 01.04.2009
6353190058 (BLB; 4.20 %). . . . . . . . . . . . . . . . . . . . . . . . 120 0 01.04.2006
3,010 2,324
For the purposes of the cash flow statement, overdraft facility liabilities towards credit institutions
were allocated to financial resources.
(11) Deferred taxes
The deferred tax liabilities in the amount of TEUR 214 resulted exclusively from measurement differences
compared with the accounts for tax purposes.
Deferred tax receivables and liabilities are netted if an enforceable right to apply current tax receivables
against current tax liabilities exist and the deferred taxes relate to the same tax authority.
F-48

2003/2004 deferred taxes can be classified as follows:
Deferred
tax
assets
31.12.2004 31.12.2003
Deferred
tax
liabilities
Deferred
tax
assets
Deferred
tax
liabilities
TEUR TEUR TEUR TEUR
ASSETS
A. Non-current assets
I. Property, plant and equipment . . . . . . . . . . 22 2
II. Intangible assets . . . . . . . . . . . . . . . . . . . .
B. Current assets
1
I. Inventories . . . . . . . . . . . . . . . . . . . . . . . . . 4 2
II. Trade receivables . . . . . . . . . . . . . . . . . . . .
LIABILITIES
B. Non-current liabilities and deferred income
7 6
I. Deferred income from public assistance . . 15 1
II. Other provisions . . . . . . . . . . . . . . . . . . . . . 197 29
Deferred taxes before settlement . . . . . . . . . . . . 16 230 40
Deferred taxes after settlement . . . . . . . . . . . . . . 214 40
The great majority of deferred tax receivables and deferred tax liabilities are realised after more than
12 months. A current component in the temporary differences as shown above was not determined
for practical reasons.
(12) Warranty provision
The warranty provision developed as follows:
Balance as at 1 January 2004. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
TEUR
200
Release after discounting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Utilisation after discounting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Allocation after discounting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 409
Accumulation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Balance as at 31 December 2004 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 636
The warranty provision takes account of all identifiable risks and uncertain liabilities. It is recognised in
the amount of the present value of the anticipated outflow of resources. The discount rate applied to
the warranty provision is calculated on the basis of the average annual rate of interest of 3.14 % (previous
year 3.6 %) for financial year 2004. Given the 20-year warranties for solar modules under the general
warranty terms of the Group and the assessment that a liability will arise progressively over the
warranty period, only limited utilisation of the provision is expected over the short term.
F-49

(13) Trade payables and other liabilities
In addition to trade payables, this item also includes accruals:
31.12.2004 31.12.2003
TEUR TEUR
Trade payables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,234 1,437
Liabilities from actual other taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 996 35
Accruec expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 828 213
Liabilities related to social security. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115 76
Liabilities towards partners/shareholders . . . . . . . . . . . . . . . . . . . . . . . . . 5 2,315
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 5
4,180 4,081
The carrying amounts of the trade payables correspond to market values. They are due within one
year.
The liabilities towards partners in the amount of TEUR 5 relate to compensation payable to the partners
for serving on the advisory committee.
The liabilities towards partners comprise loans from the previous year in relation to atypical silent partners
in the amount of TEUR 30 and loans in relation to limited partners in the amount of TEUR 680. The
loans incur interest of 12.5 % and 9.0 % as of the value date. In addition, there are clearing accounts
for atypical silent partners in the amount of TEUR 121 and clearing accounts for the limited partners in
the amount of TEUR 1,294 (as well as other liabilities towards limited partners in the amount of
TEUR 10. In addition, there are liabilities towards the general partner in the amount of TEUR 180.
(14) Current income tax liabilities
Current income tax liabilities comprise the following:
31.12.2004 31.12.2003
TEUR TEUR
Trade tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 895 152
Corporate income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,313 5
Solidarity surcharge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72 0
2,280 157
Notes to the income statement
(15) Revenue
Revenue is mainly generated from solar modules. It comprises the following:
2004 2003
TEUR TEUR
Solar modules. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79,024 41,026
OEM production . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,765 0
80,789 41,026
Solar module revenue also includes the sale of inverters, assembly units and other equipment.
F-50

(16) Change in inventories of finished goods
2004 2003 Change
TEUR TEUR TEUR
Finished goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,242 2,013 229
2003 2002 Change
TEUR TEUR TEUR
Finished goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,013 622 1,391
(17) Other income
It comprises the following:
2004 2003
TEUR TEUR
Release to income of deferred investment grant . . . . . . . . . . . . . . . . . . . . . . 407 28
Release to income of deferred investment premium. . . . . . . . . . . . . . . . . . . 303 163
Integration premiums BfA and BG other . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57 4
Foreign currency exchange rate gains . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 229
Release of liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 0
Reversal of specific allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 14
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65 70
901 508
(18) Cost of materials
Cost of materials comprises the following:
2004 2003
TEUR TEUR
Raw materials and supplies, merchandise . . . . . . . . . . . . . . . . . . . . . . . . . . . 63,001 34,868
Purchased services. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 32
63,021 34,900
(19) Personnel costs
Personnel costs comprise the following:
2004 2003
TEUR TEUR
Wages and salaries. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,924 1,779
Contribution-based pension plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 187 115
Other social insurance contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 370 241
3,481 2,135
Expenses related to contribution-based retirement plans relate solely to employer contributions to
statutory pension insurance. The other social insurance contributions thus relate to the employer’s
share of contributions to medical, unemployment and attendance care insurance.
F-51

The Group headcount developed as follows:
Annual average Year end
2004 2003 2004 2003
Salaried employees . . . . . . . . . . . . . . . . . . . . . . . 36 26 45 28
Industrial employees . . . . . . . . . . . . . . . . . . . . . . 101 60 134 79
137 86 179 107
(20) Other expenses
The other expenses mainly relate to the costs in the sales field, especially for advertising and representation
as well as delivery costs. The individual expenses are as follows:
2004 2003
TEUR TEUR
Selling expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,571 1,066
Operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 701 470
Administrative expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 809 739
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 374 377
3,455 2,652
(21) Scheduled depreciation/amortisation expense
The expenditure on planned/scheduled depreciation is as follows:
2004 2003
TEUR TEUR
Scheduled depreciation/amortisation of intangible assets and property ,
plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,322 505
(22) Financial result
The financial result is determined as follows:
2004 2003
TEUR TEUR
Financial income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Finance cost
24 5
Interest on financial obligations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – 276 – 383
Accumulation of warranty provision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – 27 – 3
– 279 – 381
F-52

(23) Income taxes
Income taxes encompasses income taxes paid or owed as well as deferred taxes.
2004 2003
TEUR TEUR
Corporate income tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,064 5
Trade tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,379 152
Solidarity surcharge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114 0
Capital gains tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 0
Deferred tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 174 269
3,731 426
The reconciliation of anticipated income tax expense to the actual income tax expense of the S. M. D.
Group is as follows:
Reconciliation of income tax expense 2004 2003
TEUR TEUR
EBIT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,361 2,352
Applicable rate of taxation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36.7 % 14.0 %
Anticipated tax expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,802 329
Non-deductible expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 100
Tax rate deviations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 1
Tax-free income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – 149 – 4
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45 0
Tax expense. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,731 426
Effective tax rate in %. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36.0 % 18.1 %
Computation of tax rate 2004 2003
in % in %
Taxable assessment base. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100 100
Average trade tax rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 14
86 86
Corporate income tax 25 % (2003: S. M. D. GmbH & Co. KG) . . . . . . . . . . . . 21.5
Solidarity surcharge 5.5 % x 21.5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.2
22.7
Tax rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36.7 14.0
(24) Earnings per share
The S. M. D. Group intends to make use of the capital market in the near future. In accordance with
IAS 33.2, the Company is therefore obliged to provide information about earnings per share. As the
Company was only transformed into a stock corporation in financial year 2006, it has been assumed
that, for the purposes of determining earnings per share as at 31 December 2004, the existing share
capital can be divided into no-par shares, each with a notional value of one euro. During the course of
financial year 2004, there was no change in the amount of share capital and thus, no change in the
base figure for determining earnings per share.
As IAS 33 states that the average weighted number of shares in circulation (notional in this case) during
the course of the financial year is to be applied in computing undiluted earnings per share, an average
2,545,000 shares can be assumed.
F-53

Undiluted earnings per share (notional in this case) are computed on the basis of the earnings for the
period less minority interest in accordance with IFRS.
Undiluted earnings per share in the share capital = earnings for the period to which the shareholders
are entitled (TEUR 6,630) / weighted average share capital (2,545,000) = EUR 2.61 (previous year
EUR 0.76).
Other
(25) Other financial commitments and contingencies
S. M. D. Solar-Manufaktur Deutschland GmbH recognises the following other financial commitments
and contingencies:
31.12.2004 31.12.2003
TEUR TEUR
Obligations under lease agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59 41
Future payment obligations under office space leases as at 31 December 2004 can be broken down as
follows:
F-54
Residual
term
< 1 year
Residual
term
> 1 to
5 years
Residual
term
> 5 years
TEUR TEUR TEUR
Lease agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 24 0
(26) Subsequent events
No events of material importance occurred after the balance sheet date.
(27) Information about related enterprises and persons
Within the meaning of IAS, related persons or enterprises are persons or enterprises that control or
can exercise a significant influence over the Company. In the case of the S. M. D. Group, it should be
noted that no partner can control or exercise a significant influence over the Company. In addition, no
transactions involving the circle of persons named below were conducted in the past financial year.
The shareholding breakdown (see the information about the scope of consolidation) shows the nature
of the relationships between S. M. D. Solar-Manufaktur Deutschland GmbH and its subsidiaries in
accordance with IAS 24.12.
The following persons have been appointed general managers of S. M. D. Solar-Manufaktur Deutschland
GmbH.
• Mr. Jakobus Smit, Rastede Strategy, Investor Relations and Technology
• Mr. Heinrich Willers, Wardenburg Operations and Finance

In accordance with IAS 24.16, the general managers received the following compensation:
Type of compensation 2004 2003
TEUR TEUR
Salaries and other current benefits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 240 180
Bonuses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 149 0
389 180
(28) Advisory committee
In 2004, S. M. D. Solar-Manufaktur Deutschland GmbH had an advisory committee composed of the
following members:
• Mr. Joosten Connemann, Leer
• Mr. Michael Eisenknappl, Bogen
• Mr. Marius Eriksen, Oldenburg
• Mr. Herbert Straßburg, Goldenstedt
• Mr. Klaas Wachtendorf, Jever
The advisory committee of S. M. D. Solar-Manufaktur Deutschland GmbH received total emoluments
of TEUR 24 for the financial year.
The executive management of S. M. D. Solar-Manufaktur Deutschland GmbH approved the publication
of the consolidated financial statements on 31 March 2006.
Prenzlau, 31 March 2006
Willers Smit
F-55

F-56
Auditors’ Report
We have audited the consolidated financial statements prepared by S. M. D. Solar-Manufaktur Deutschland
GmbH (formerly S. M. D. Solar-Manufaktur Deutschland GmbH & Co. KG), Prenzlau comprising
the balance sheet, the income statement the statement of changes in equity and the cash flow statement
as well as the notes to the consolidated financial statements for the financial year from 1 January
to 31 December 2004. The preparation and the content of the consolidated financial statements in
accordance with the International Financial Reporting Standards (IFRS) of the IASB are the responsibility
of the general managers of the Company. Our responsibility is to express an opinion, based on our
audit, about whether the consolidated financial statements comply with IFRS.
We conducted our audit of the consolidated financial statements in accordance with German auditing
regulations and generally accepted standards for the audit of financial statements promulgated by the
Institut der Wirtschaftsprüfer in Deutschland (IDW) (German Institute of Certified Public Accountants).
Those standards require that we plan and perform the audit to obtain reasonable assurance about
whether the consolidated financial statements are free of material misstatements. Knowledge of the
business activities and the economic and legal environment of the Group and evaluations of possible
misstatements are taken into account in the determination of audit procedures. The evidence supporting
the amounts and disclosures in the consolidated financial statements is assessed on a test basis
within the framework of the audit. The audit includes assessing the accounting principles used and
significant estimates made by the general managers as well as evaluating the overall presentation of
the consolidated financial statements. We believe that our audit provides a reasonable basis for our
opinion.
Our audit has not led to any reservations.
In our opinion, the consolidated financial statements give a true and fair view of the assets, financial
position, and results of operations of the Group as well as the cash flows for the financial year in
accordance with the IFRS.
Oldenburg, 3 April 2006
PricewaterhouseCoopers
Aktiengesellschaft
Wirtschaftsprüfungsgesellschaft
(Menke) (ppa. Engelhardt)
Wirtschaftsprüfer Wirtschaftsprüfer

Consolidated financial statements for financial year 2005
(1 January 2005 to 31 December 2005) of
S.M.D. Solar-Manufaktur Deutschland GmbH, Prenzlau,
according to IFRS
F-57

Consolidated balance sheet of S. M. D. Solar-Manufaktur Deutschland GmbH, Prenzlau,
as at 31 December 2005
Assets Note 31.12.2005 31.12.2004
A. Non-current assets
TEUR TEUR
I. Property, plant and equipment . . . . . . . . . . . . . 1 15,213 8,440
II. Intangible assets . . . . . . . . . . . . . . . . . . . . . . . 1 52 79
B. Current assets
15,265 8,519
I. Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 14,355 7,919
II. Trade receivables . . . . . . . . . . . . . . . . . . . . . . . 3 4,106 2,406
III. Current income tax receivables . . . . . . . . . . . .
IV. Other current assets and advance payments
4 101 0
made . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 1,724 3,647
V. Cash and cash equivalents . . . . . . . . . . . . . . . . 6 630 787
20,916 14,759
36,181 23,278
Equity and liabilities Note 31.12.2005 31.12.2004
A. Equity
TEUR TEUR
I. Subscribed capital/Capital shares. . . . . . . . . . . 7 2,545 2,545
II. Capital reserves . . . . . . . . . . . . . . . . . . . . . . . . 8 208 208
III. Retained earnings. . . . . . . . . . . . . . . . . . . . . . . 9 2,500 0
IV. Profit/loss carried forward . . . . . . . . . . . . . . . . 1,095 – 1,034
V. Consolidated net profit. . . . . . . . . . . . . . . . . . . 9,335 6,630
B. Non-current liabilities and deferred income
15,683 8,349
I. Deferred income from public . . . . . . . . . . . . . . 10 6,823 4,549
II. Financial liabilities. . . . . . . . . . . . . . . . . . . . . . . 11 2,462 2,501
III. Deferred tax liabilities. . . . . . . . . . . . . . . . . . . . 12 266 214
IV. Warranty provision . . . . . . . . . . . . . . . . . . . . . . 13 578 636
C. Current liabilities
10,129 7,900
I. Financial liabilities. . . . . . . . . . . . . . . . . . . . . . . 14 489 569
II. Trade payables and other liabilities . . . . . . . . . . 15 3,667 4,180
III. Current income tax liabilities . . . . . . . . . . . . . . 16 6,213 2,280
10,369 7,029
36,181 23,278
F-58

CONSOLIDATED INCOME STATEMENT for the period from 1 January 2005 to 31 December 2005
S. M. D. Solar-Manufaktur Deutschland GmbH, Prenzlau
Note 2005 2004
TEUR TEUR
1. Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 106,904 80,789
2. Increase in inventories of finished goods . . . . . . . . . . . . . . 17 166 229
3. Other income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 1,631 901
4. Cost of materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 – 82,876 – 63,021
5. Personnel costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 – 4,868 – 3,481
6. Other expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 – 4,442 – 3,455
7. EBITDA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,515 11,962
8. Scheduled depreciation/amortisation expense. . . . . . . . . . 22 – 1,777 – 1,322
9. EBIT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,738 10,640
10. Financial income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 30 24
11. Finance cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 – 241 – 303
12. Earnings before taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,527 10,361
13. Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 – 5,192 – 3,731
14. Consolidated net profit/loss for the year. . . . . . . . . . . .
15. Earnings per based on the consolidated net profit for the
year (in EUR per share)
9,335 6,630
Unaudited earnings per share . . . . . . . . . . . . . . . . . . . . . . 25 3.67 2.61
F-59

CONSOLIDATED CASH FLOW STATEMENT 2005
S. M. D. Solar-Manufaktur Deutschland GmbH, Prenzlau
Note 2005 2004
TEUR TEUR
I. Cash flow from operating activities
Consolidated net profit/loss for the year after income
taxes and interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,335 6,630
Income taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 5,192 3,731
Scheduled depreciation/amortisation expense . . . . . . . . . . 22 1,777 1,322
Change in non-current provisions . . . . . . . . . . . . . . . . . . . . 13 – 127 409
Gains/losses on the disposal of non-current assets . . . . . . 1 6 9
Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 – 30 – 24
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 241 303
Non-cash income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – 932 – 710
Change in trade receivables and other assets. . . . . . . . . . . – 1,568 – 848
Change in inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 – 6,616 – 3,943
Change in trade payables and other liabilities . . . . . . . . . . . 14 – 513 99
= Cash flow from operating activities . . . . . . . . . . . . . . 6,765 6,978
Interest paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – 172 – 276
Interest received . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 24
Income taxes paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – 1,307 – 1,433
= Net cash flow from operating activities. . . . . . . . . . .
II. Cash flow from investing activities . . . . . . . . . . . . . . . . .
5,316 5,293
Purchase of items of property, plant and equipment. . . . . .
Proceeds from the sale of items of property, plant and
1 – 6,353 – 5,465
equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 0
Purchase of intangible assets . . . . . . . . . . . . . . . . . . . . . . . 1 – 31 – 59
Inflows from public assistance . . . . . . . . . . . . . . . . . . . . . . 2,999 1,306
= Net cash flow from investing activities . . . . . . . . . . .
III. Cash flow from financing activities(
– 3,354 – 4,218
1 )
Inflows from borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 450 686
Repayment of borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . – 509 – 83
Dividend distribution to shareholders . . . . . . . . . . . . . . . . . – 2,000 0
F-60
= Net cash flow from financing activities . . . . . . . . . . . – 2,059 – 152
Net changes in cash and cash equivalents (I to III) . . . .
Cash and cash equivalents at the beginning of the financial
– 97 923
year. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 727 – 196
Cash and cash equivalents at the end of the financial year. 6 630 727
( 1 ) For the purposes of the cash flow statement, overdraft facility liabilities towards credit institutions are allocated to financial
resources.

CONSOLIDATED STATEMENT OF CHANGE IN EQUITY for financial year 2005
S. M. D. Solar-Manufaktur Deutschland GmbH, Prenzlau
Equity attributable to the shareholders of the parent company
Subscribed
capital/
Capital
shares
Capital
reserve
Retained
earnings
Profit/
loss
carried
forward
Consolidated
net
profit/
loss for
the year
Total
equity
Note 7 8 9
TEUR TEUR TEUR TEUR TEUR TEUR
Balance at 1 January 2004. . . 2,545 0 208 – 884 – 150 1,719
Reclassification. . . . . . . . . . . . .
Allocation to capital reserve
resulting from
0 0 0 – 150 150 0
transformation . . . . . . . . . . .
Consolidated net profit for the
0 208 – 208 0 0 0
year . . . . . . . . . . . . . . . . . . . 0 0 0 0 6,630 6,630
Balance at 31 December 2004 2,545 208 0 – 1,034 6,630 8,349
Balance at 1 January 2005. . .
Reclassification/Allocation to
2,545 208 0 – 1,034 6,630 8,349
retained earnings. . . . . . . . . 0 0 2,500 4,130 – 6,630 0
Distributions . . . . . . . . . . . . . . .
Consolidated net profit for the
0 0 0 – 2,000 0 – 2,000
year . . . . . . . . . . . . . . . . . . . 0 0 0 0 9,334 9,334
Balance at 31 December 2005 2,545 208 2,500 1,096 9,334 15,683
F-61

Notes 2005
Basis of Preparation
The consolidated financial statements of S. M. D. Solar-Manufaktur Deutschland GmbH (hereinafter
the S. M. D. Group) as at 31 December 2005 were prepared in accordance with International Financial
Reporting Standards (IFRS) the interpretations of the International Financial Reporting Interpretations
Committee (IFRIC) as they apply within the EU. All the binding pronouncements of the International
Accounting Standards Board (IASB) in were complied with, resulting in the presentation of a true and
fair view of the net assets, financial position and results of operations of the S. M. D. Group.
The consolidated financial statements comply with the EU Directive on consolidated accounts (Directive
83/349/EEC). As of financial year 2005, S. M. D. Solar-Manufaktur Deutschland GmbH as a large
corporation with its registered office in the Federal Republic of Germany is obliged to prepare consolidated
financial states that include its subsidiaries. The S. M. D. Group fulfils this obligation through the
voluntary application of Section 315, paragraph 3 HGB in accordance with IFRS and the supplementary
commercial law rules to be applied in accordance with Section 315a, paragraph 1.
The consolidated financial statements have been prepared in euros. All amounts are shown in thousands
of euros (TEUR). The consolidated financial statements are based on historical cost and have
been prepared applying the following consolidation procedures and accounting policies. The income
statement has been prepared using the total cost of production method.
For the purpose of achieving greater clarity and meaning, individual items of the income statement
and the balance sheet have been aggregated. These items are disclosed separately in the Notes and
explanatory comments provided. The preparation of consolidated financial statements in accordance
with IFRS requires estimates. In addition, the application of company-wide accounting methods
requires assessments to be made by management. Areas where there is greater room of manoeuvre
with regard to assessments and the related assumptions and estimates for which are of material significance
for the consolidated financial statements are set out in the comments on “Assumptions and
Estimates.”
In addition, EBITDA and EBIT are shown separately in the income statement for the purpose of better
presentation and clarity. The term EBITDA (Earnings before Interest, Taxes, Depreciation and Amortisation)
refers to the profit for the year before interest, taxes, depreciation and amortisation.
The term EBIT (Earnings before Interest and Taxes), by contrast, refers to the profit for the year before
the interest expense and income taxes.
New Accounting Rules
The International Accounting Standards Board (IASB) and International Financial Reporting Interpretations
Committee (IFRIC) have approved further standards and interpretations, the application of which
is not yet binding with respect to financial year 2005. The application of these IFRSs requires EU recognition,
which has still not been issued in certain cases.
IFRS 6 “Exploration for and Evaluation of Mineral Resources”
The IASB published IFRS 6 “Exploration for and Evaluation of Mineral Resources” in December 2004.
The standard regulates the accounting treatment of the expenditures that arise in connection with the
exploration for and evaluation of minerals, oil, natural gas and similar non-renewable energy sources ,
before the technical and commercial feasibility of extracting these resources has been demonstrated.
Limited improvements have been attained in accounting for expenditure connected with the exploration
and evaluation of mineral resources without eliminating the need for the comprehensive redrafting
of the standard that is planned. The standard is to be applied for reporting periods beginning on or
F-62

after 1 January 2006. IFRS 6 is not relevant to the consolidated financial statements of the S. M. D.
Group because its application will not be required in the future.
IFRS 7 “Financial Instruments, Disclosure”
In August 2005, the IASB published IFRS 7 “Financial Instruments, Disclosure” as well as a corresponding
change in IAS 1 “Presentation of Financial Instruments – Capital Disclosures” with disclosure
obligations in respect of the goals, guidelines, and procedures relating to an enterprise’s equity
management. These rules are to be applied for financial years beginning on or after 1 January 2007. As
the changes to IAS 1 and IFRS 7 only concern disclosure obligations, they will not have any material
impact on the net assets, financial position and results of operations or cash flows for the S. M. D.
Group’s financial statements.
IAS 19 Amendment (2004) “Actuarial Gains and Losses, Group Plans and Disclosures”
In December 2004, the IASB approved an amendment to International Accounting Standard (IAS) 19
“Employee Benefits.” With the amendment, the IASB has granted the option of recognising in equity
actuarial gains and losses in their full amount in the period in which they arise outside profit or loss.
This option can be exercised for financial years beginning on or after 16 December 2004. This option
will not be used for the financial statements of the S. M. D. Group.
In addition, it regulates how group entities should account for defined benefit group plans in their individual
financial statements and what additional disclosures are required. This rule applies to financial
years beginning on or after 1 January 2006 and is not expected to have any impact on the assets,
financial condition, results of operations or cash flows for the S. M.D Group’s consolidated financial
statements.
IAS 21 Amendment (2005) “The Effects of Changes in Foreign Exchange Rates”
In December 2005, the IASB published an amendment to IAS 21 “The Effects of Changes in Foreign
Exchange Rates.” In accordance with the amendment, translation differences arising from a monetary
item that is part of a reporting entity’s net investment in a foreign operation are reclassified as a separate
component of equity. The rule applies irrespective of the currency in which the monetary item is
denominated as well as the respective group entity that transacts business with the foreign operation.
This amendment to IAS 21 is binding for financial years beginning on or after 1 January 2006. As IAS
21 is not applied, the application of this interpretation will not have any impact on the net assets, financial
position and results of operations or cash flows for the S. M. D. Group’s consolidated financial
statements.
IFRIC 4 “Determining whether an Arrangement contains a Lease”
In December 2004, the IFRIC published interpretation IFRIC 4, “Determining whether an Arrangement
contains a Lease.” IFRIC 4 requires that the decision about whether a lease exists should be
based on the economic content of the contractual arrangement. IFRIC 4 requires an assessment of
whether (a) the fulfilment of the arrangement depends upon the use of a specific asset or several
specific assets and (b) the contractual arrangement conveys an exclusive right to use of the asset or
assets. IFRIC 4 will be applied in the consolidated financial statements of S. M. D. as of financial year
2006. So far, no contractual arrangements have been identified as would contain a finance lease that
is not already treated as such in accordance with IAS 17.
F-63

IFRIC 5 “Rights to Interests arising from Decommissioning, Restoration and Environmental
Funds”
In December 2005, the IFRIC published interpretation IFRIC 5 “Rights to Interests arising from Decommissioning,
Restoration and Environmental Funds.” IFRIC 5 regulates the accounting treatment of
interests in funds for financing the decommissioning of assets or environmental restoration and/or
rehabilitation as well as obligations to make additional contributions to such funds. These rules are to
be applied for financial years beginning on or after 1 January 2006. IFRS 5 is not relevant to the consolidated
financial statements of the S. M. D. Group because its application will not be required in the
future.
IFRIC 7 “Applying the Restatement Approach under IAS 29 Reporting in Hyperinflationary
Economies ”
In November 2005, the IFRICS published IFRIC 7 “Applying the Restatement Approach under IAS 29
Reporting in Hyperinflationary Economies.” IFRIC requires that in the period in which the country of an
entity’s functional currency becomes hyperinflationary, such entity is to apply the requirements of IAS
29 as though the country had always been hyperinflationary. The effect of this requirement is that
restatements of non-monetary items carried at historical cost are made from the dates at which those
items were first recognised. For other non-monetary items, the restatements are made from the
dates at which revised carrying amounts for those items were established. IFRIC 7 contains further
requirements regarding deferred taxes. IFRIC 7 is to be applied for financial years beginning on or after
1 March 2006. As IAS 29 is not applied, the application of this interpretation will not have any impact
on the net assets, financial position and results of operations or cash flows for the S. M. D. Group’s
consolidated financial statements.
IFRIC 8 “Scope of IFRS 2”
In January 2005, the IFRIC published IFRIC 8 “Scope of IFRS 2.” The interpretation clarifies that IFRS
2 is applicable to arrangements where an entity makes share-based payments for apparently inadequate
consideration. IFRIC 8 is to be applied for the first time for financial years beginning on or after
1 May 2006. As IAS 2 is not applied, the application of this interpretation will not have any impact on
the net assets, financial position and results of operations or cash flows.
Further Changes to IAS 39
In April 2005, the IASB published an amendment to IAS 39 “Financial Instruments: Recognition and
Measurement-Cashflow Hedge Accounting of Forecast Intragroup Transactions.” This amendment permits
the foreign currency risk of a highly probable future intragroup transaction to qualify as hedging in
the consolidated financial statements provided that the transaction is denominated in a currency other
than the functional currency of the entity concerned and the related foreign currency is recognised in
the consolidated income statement. The amendment to IAS 39 is not relevant to the consolidated
financial statements of the S. M. D. Group because its application will not be required in the future.
In June, the IASB published the amendment to IAS 39 “Financial Instruments: Recognition and Measurement
– The Fair Value Option,” to restrict the use of the option to designate any financial asset or
any financial liability to be measured at fair value through profit and loss. Essentially, this amendment
is to be applied for financial years beginning on or after 1 January 2006. This amendment to IAS 39 is
irrelevant as it is not applied by the S. M. D. Group.
The amendment to IAS 39 “Financial Instruments: Recognition and Measurement” and to IFRS 4,
“Insurance Contracts” “Financial Guarantee Contracts” was published by the IASB in August 2005.
The standard is to be applied for reporting periods beginning on or after 1 January 2006. The amendments
deal with the definition and recognition of financial guarantees. Contrary to what was initially
F-64

contemplated, there has been no change in the recognition of credit insurance contracts. In addition,
the amendments to IAS 39 also clarify that loan commitments may also be measured at fair value and
recognised in profit or loss on a voluntary basis. The aforementioned changes will not impact on the
net assets, financial position and results of operations or cash flows of the S. M. D. Group.
As indicated above, the S. M. D. Group will not elect to apply in advance any of the standards, amendments
and/or interpretations in 2005.
Scope of Consolidation
S. M. D. Solar-Manufaktur Deutschland GmbH with its registered office in Prenzlau (Gewerbegebiet
Nord, 17291 Prenzlau, Deutschland) develops and produces high-grade solar modules for the German
and international photovoltaic market. The modules produced at Prenzlau are essentially distributed
through the wholly owned subsidiary aleo solar GmbH with its registered office in Oldenburg under
the aleo brand name. In addition to S. M. D. Solar-Manufaktur Deutschland GmbH the subsidiaries consolidated
are essentially those in which S. M. D. Solar-Manufaktur Deutschland GmbH holds a majority
of voting rights, whether directly or indirectly, i. e. they are companies in which, in accordance with IAS
27 (revised 2003), the Group has control over financial and operating policies and this usually entails
holding more than 50 % of the voting rights. In addition to S. M. D. Solar-Manufaktur Deutschland
GmbH, the scope of consolidation includes two domestic and two foreign Group companies.
The following subsidiaries were included in the scope of consolidation:
Share-
Net profit/
holding Equity loss
% EUR 2005
aleo solar GmbH, Oldenburg . . . . . . . . . . . . . . . . . . . 10.0 300,000.00 279,844.61
Solar Manufaktur Producción S. L., Barcelona . . . . . . 100 100,000.00 – 33,676.94
aleo solar distribución España S. L., Barcelona . . . . . . 100 20,000.00 – 8,611.69
The two Spanish companies were established in 2005 and will only start operating in 2006.
Consolidation Policies
The consolidated financial statements as at 31 December 2005 according to IFRS were prepared in
euros, the functional currency of S. M. D. Solar-Manufaktur Deutschland GmbH. Under IAS 27 (revised
2003) (consolidated and separate single-entity financial statements in accordance with IFRS), the
financial statements of the domestic subsidiaries included in the scope of consolidation were prepared
applying uniform accounting and valuation methods.
Subsidiaries acquired are accounted for using the purchase method. The acquisition costs correspond
to the fair value of the assets to which they are assigned, the equity instruments issued and the liabilities
arising or assumed on the date of exchange together with the costs directly attributable to acquisition.
Assets, liabilities and contingent liabilities identified in connection with a business combination
are measured at fair value upon first-time consolidation irrespective of the size of minority interests.
The excess of acquisition costs over the shares of the Group in the net assets measured at fair value
is recorded as goodwill. If the acquisition costs are lower than the net assets of the subsidiary acquired
as measured at fair value, the difference is recognised directly in the income statement.
In the case of the consolidation of liabilities, the receivables and payables for the consolidated companies
are netted.
Income included in inventories and assets arising from the supply of goods and services among
related companies within the Group are eliminated from net profit. In accordance with IAS 12 (revised
2000), deferred taxes are recognised for differences resulting from consolidation measures recog-
F-65

nized in profit or loss. Income and expenses arising from transactions within the Group, especially
revenue generated between Group companies, is eliminated in the income statement.
Segment Reporting
A business segment is a group of assets and operating activities engaged in providing products or
services and that is subject to risks and returns that differ from other business segments. A geographical
segment provides products or services within a particular economic environment and that is subject
to risks and returns that differ from those in other economic environments.
The S. M. D. Group intends to make use of the capital market in the near future. In accordance with
IAS 14.9, the Company is therefore obliged to provide segment reporting.
However, as the S. M. D. Group is a single product company engaged solely in the production of solar
modules and generates by far the greatest part of its revenue in the Federal Republic of Germany, the
reporting of information on segments is considered redundant.
Accounting Policies
Intangible Assets
In accordance with IAS 38.4 (revised 2004), software licences acquired are capitalised at acquisition
cost plus the costs of making them usable. They are amortised applying the straight-line method over
an estimated useful life of three years.
In accordance with IAS 38 (revised 2004), research and development costs are reported as a current
expense when they arise unless the requirements for capitalisation are satisfied. Costs that are
incurred directly in connection with generating identifiable individual intangible assets (software products,
development projects) that the Group can dispose of are disclosed under intangible assets insofar
as it is likely that economic benefits will accrue to the Company from them over a period of more
than one year and such benefits will exceed the costs incurred. Costs that can be allocated directly
include personnel costs for the employees engaged in development as well as other costs that can be
allocated directly to software development.
The S. M. D. Group does not make use of the allowed alternative treatment of capitalising interest on
borrowing for eligible assets.
Assets subject to scheduled amortisation are tested for impairment if appropriate events or changes
in circumstances indicate that the carrying amount of an asset may no longer be recoverable. An
impairment loss is recognised in an amount corresponding to the excess of the carrying amount over
the recoverable amount. The recoverable amount is the higher of the asset’s fair value less selling
costs and its value in use.
Property, Plant and Equipment
Items of property, plant and equipment are stated at historical cost less scheduled depreciation and,
where necessary, after adjustment for any impairment. Such cost includes expenses that are directly
attributable to the acquisition. Finance costs are not capitalised as a component of cost. The S. M. D.
Group always begins to depreciate an item of property, plant and equipment when the asset is ready
for use.
Investment premiums received as well as tax-free investment grants are recorded as deferred income
from public assistance and released to income over the useful life of the non-current asset for which
the support has been provided.
F-66

Subsequent costs of acquisition/production are only recorded under costs of acquisition/production
when it appears likely that economic benefits will flow to the Group from them in the future and the
costs of the relevant asset can be reliably determined. All other repairs and maintenance are recognised
as an expense in the income statement for the financial year in which they are incurred.
Land is not depreciated. Items of plant, property and equipment are only depreciated applying the
straight-line method. The following economic useful lives apply across the Group for scheduled depreciation:
Buildings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 years
Instalations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 to 19 years
Technical equipment and machinery. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 to 25 years
Office equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 to 14 years
Residual carrying amounts and economic useful lives are reviewed on each balance sheet date and
adjusted where necessary. Items of property, plant, and equipment are written down if there are indications
of impairment and if the recoverable amount is lower than amortised cost. The write-downs
are reversed if the reasons for the impairment losses no longer apply.
Profits and losses realised on the disposal of items of property, plant and equipment are determined
as the difference between the proceeds obtained from a sale and the carrying amounts, with the difference
being recognised in income.
Financial Assets
Financial assets are generally dividend into the following categories:
• financial assets at fair value through profit or loss;
• loans and receivables;
• financial assets held to maturity;
• financial assets available for sale.
The classification depends on the purpose for which the financial assets have been acquired. Management
determines the classification of financial assets upon initial recognition and reviews the classification
on each reporting date.
Financial assets at fair value through profit or loss
This category has two sub-categories: Financial assets that have been classified as held for trading
from the inception and those that have been classified as “fair value through profit or loss.” A financial
asset is placed in this category if was principally acquired with it intention of selling it over the short
term or that has been decided by management. Derivatives are also classified as held for trading
unless they should be classified as hedges. Assets that fall into this category are reported as current
assets if they are held for trading or will be realised within 12 months of the balance sheet date. The
S. M. D. Group does not place any financial instruments in this category at the present time.
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed and determinable payments and
which are not quoted on an active market. They are created when the Group provides money, goods
or services directly to a debtor without the intention of trading in the receivables. They are included
under current assets with the exception of those that will not fall due until 12 months after the balance
F-67

sheet date. The latter are disclosed as non-current assets. Receivables are carried on the balance
sheet under trade receivables and other current assets.
Held-to-maturity financial assets
Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments
and fixed maturities that the management of the Group intends to and is able to hold until maturity.
The S. M. D. Group does not place any financial instruments in this category at the present time.
Available-for-sale financial assets
Available-for-sale financial assets are non-derivative financial assets that should either be placed in this
category or none of the other categories. They are included under non-current assets insofar as management
does not intend to sell them within 12 months of the balance sheet date. The S. M. D. Group
does not place any financial instruments in this category at the present time.
All purchases and sales of financial assets are recognised on their settlement date, i. e. the date on
which the Group gives an undertaking to sell or purchase the assets.
Initial recognition of financial assets that do not fall into the “fair value through profit or loss” category
is at fair value less transaction costs. They are derecognised when the rights to payments from the
investment expire or are transferred and the company has transferred substantially all the risks and
rewards of ownership.
Loans and receivables are carried at amortised cost applying the effective interest rate method. If their
collection is doubtful, the receivables are carried at the lower recoverable amount (present value of
expected future cash flows). In addition to the required specific allowance, the impairment loss risk for
groups of receivables that do not differ from credit risks is also considered (general itemised allowance
in accordance with IAS 39 (revised 2005)). In determining the receivables at risk, receivables
covered by credit insurance and value-added tax are removed.
On each balance sheet date, a review is conducted to determine whether there are any objective circumstances
indicating that a particular financial asset or group of financial assets has become
impaired.
Financial Risk Factors
The S. M. D. Group is exposed to various financial risks through its business:
• Foreign currency risk
• Credit risk
• Interest rate risk
In terms of sales, the focus of the S. M. D. Group is on the eurozone. No business is transacted with
customers in countries with high inflation. Foreign currency risks on the procurement side can also be
deemed slight. Deliveries of materials and supplies mainly originate in the eurozone and in Asia.
Invoices are issued in euros or U. S. dollars. The Group does not employ any hedging instruments at
the present time.
F-68

Credit risk
Credit reports or historical data relating to existing business relationships are used to avoid the risk of
default. When risks become identifiable, appropriate allowances are recognised for receivables. In
addition, about 70 % of the risk of default is covered by trade credit insurance.
Liquid assets are held with major banks. There is no significant risk of default.
Interest rate risk
The Group holds no interest-bearing assets, with the result that Group profit and cash flow from operating
activities are almost entirely unaffected by changes in market interest rates.
No financial instruments are used to hedge interest rates. Fixed interest rate terms apply to long-term
loans, which are subject to a fair value risk. Short-term overdraft facilities are not used throughout the
year, so that possible increases in interest rates do not pose a significant risk for the Company.
The risk of a change in interest rates does not impact on the balance sheet, as financial liabilities are
carried at amortised cost.
Leases
Leases under which a substantial part of the risks and rewards incident to ownership of the leased
asset remain with the lessor are classified as operating leases. The payments made in connection
with an operating lease are recognised as an expense in the income statement on a straight-line basis
over the duration of the lease term. The S. M. D. Group is not a party to any finance lease at the present
time.
Inventories
Inventories are stated at the lower of cost and net realizable value. In addition to direct costs, which
are generally measured on a rolling average basis, cost of production also include material and production
overhead costs as well as production-related depreciation that can be assigned directly to the
production process. Administrative and social benefit costs are taken into account insofar as they can
be assigned to production. Inventory risks arising from lower net realisable value, time in storage,
shrinkage etc. are written down. The write-downs are reversed if the reasons that gave rise to them no
longer apply.
Cash and Cash Equivalents
Cash and cash equivalents cover cash and demand deposits.
Deferred Taxes
Deferred taxes are determined in accordance with IAS 12 (revised 2000). Tax relief and charges that
are likely to arise in the future are reported for temporary differences between the carrying amounts
shown in the consolidated financial statements and the values attributed to assets and liabilities for
tax purposes. Deferred taxes are measured applying the tax rates (and tax regulations) in force, or
which have substantially received legislative approval, on the balance sheet date and which are
expected to apply when the deferred tax asset or liability is realised. Deferred tax assets are stated to
the extent that it is likely that a taxable profit will be available against which the temporary difference
can be applied.
F-69

Current Income Tax Liabilities
Current income tax liabilities encompass obligations arising from current income taxes.
Other Provisions
Provisions are recognised for present obligations towards third parties arising from past events when
it is probable that there will be an outflow of resources and a reliable estimate can be made of the
amount of the obligations. Provisions are stated at the amount required to satisfy the obligation. Noncurrent
provisions are stated at the discounted amount required to satisfy the obligation as at the balance
sheet date. Provisions are not offset against recourse claims.
Liabilities
Non-current liabilities are carried at amortised cost. Differences between fair value and the repayment
amount are taken into account applying the effective interest rate method.
Current liabilities are stated at the amount required for payment or settlement.
Foreign Currencies
Foreign currency receivables and liabilities are measured at the exchange rate prevailing on the day
when a transaction occurred. Gains and losses on changes in exchange rates are taken into account
until the balance sheet date. There are no pending transactions in connection with exchange rate
hedging measures.
Public Assistance
Investment premiums received as well as tax-free investment grants are recorded as deferred income
from public assistance and released to income over the useful life of the non-current asset for which
the support has been provided.
The deferred liability corresponding to the asset for which assistance has been received is recorded in
the balance sheet under non-current assets. The current component is indicated in the Notes.
Recognition of Income and Expenses
Revenue and other operating income are generally recognised when services have been rendered or
when goods or products have been delivered, and thus, when the associated risk has been transferred.
In addition, solar modules are produced for third parties on a contract basis (OEM production).
Only the sums received for the provision of such service is recognised as revenue.
Operating expenses are recognised in income upon performance or at the time of origination.
Interest expenses and income are recognised in income.
Assumptions and Estimates
In preparing the consolidated financial statements, certain assumptions and estimates were made
that have an impact on the disclosure and level of assets, liabilities, income, expenses as well as contingent
liabilities.
F-70

These assumptions and estimates generally relate to assessing the value of intangible assets, the
useful lives applied across the Group, the likelihood of receivable being collected, the recognition and
measurement of warranty provisions as well as the realisability of future tax relief.
The premises underlying these assumptions and estimates are based on the knowledge available at a
given time. In individual cases, actual values may deviate from the assumptions and estimates made.
Changes will be taken in account and recognised in the event that the available knowledge improves.
Recommendation concerning the appropriation of profit for 2005 made in accordance with
commercial law and submitted by the parent company
The recommendation concerning the appropriation of profit submitted by the Group parent company
S. M. D. Solar-Manufaktur Deutschland GmbH is as follows:
Net income for 2005. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
EUR
9,948,518.23
together with the profit carried forward from the previous year . . . . . . . . . . . . . . . 2,531,044.55
is to be distributed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,000,000.00
and allocated to retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,479,562.78
with profit carried forward amounting to . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.00
F-71

Notes to IFRS balance sheet
(1) Property, plant and equipment and intangible assets
The development and composition of plant, property and equipment and intangible assets compared
with the preceding year was as follows:
Changes in consolidated fixed assets for financial year 2005
Historical cost
01.01.2004 Additions Disposals 31.12.2004
TEUR TEUR TEUR TEUR
I. Intangible Assets
1. Software. . . . . . . . . . . . . . .
II. Property, Plant and
Equipment
217 59 0 276
1. Land and buildings . . . . . . .
2. Technical equipment and
3,659 572 0 4,231
machinery. . . . . . . . . . . . . .
3. Other operating and office
2,622 2,236 0 4,858
equipment . . . . . . . . . . . . . 604 620 85 1,139
6,885 3,428 85 10,228
7,102 3,487 85 10,504
Historical cost
01.01.2005 Additions Disposals 31.12.2005
TEUR TEUR TEUR TEUR
I. Intangible Assets
1. Software. . . . . . . . . . . . . . .
II. Property, Plant and
Equipment
276 33 21 288
1. Land and buildings . . . . . . .
2. Technical equipment and
4,232 4,579 0 8,811
machinery. . . . . . . . . . . . . .
3. Other operating and office
4,858 3,337 0 8,195
equipment . . . . . . . . . . . . . 1,138 611 87 1,662
10,228 8,527 87 18,668
10,504 8,560 108 18,956
F-72

Depreciation/amortisation Residual carrying amount
01.01.2004 Additions Disposals 31.12.2004 31.12.2004 31.12.2003
TEUR TEUR TEUR TEUR TEUR TEUR
107 90 0 197 79 110
147 121 0 268 3,963 3,512
315 872 0 1,187 3,671 2,307
170 239 76 333 806 434
632 1,232 76 1,788 8,440 6,253
739 1,322 76 1,985 8,519 6,363
Depreciation/amortisation Residual carrying amount
01.01.2005 Additions Disposals 31.12.2005 31.12.2005 31.12.2004
TEUR TEUR TEUR TEUR TEUR TEUR
197 51 12 236 52 79
269 345 0 614 8,197 3,963
1,187 1,075 0 2,262 5,933 3,671
332 306 59 579 1,083 806
1,788 1,726 59 3,455 15,213 8,440
1,985 1,777 71 3,691 15,265 8,519
F-73

(2) Inventories
31.12.2005 31.12.2004
TEUR TEUR
Raw materials. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,763 4,771
Supplies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 127 83
Packaging material . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49 68
Raw materials and supplies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,939 4,922
Finished goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,407 2,242
Merchandise. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 755
Finished goods and merchandise . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,416 2,997
Inventories. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,355 7,919
In the breakdown shown above, the photovoltaic modules produced by the Group are classified as
finished goods. Merchandise refers to modules bought, inverters and other photovoltaic system components.
The higher amount for raw materials is connected with the increase in production capacity
and the related increase in raw materials held.
(3) Trade receivables
31.12.2005 31.12.2004
TEUR TEUR
Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,106 2,406
In the past financial year, no impairment losses were recognised for receivables as there were no
objective indications that the sums due are not fully collectible. The carrying amounts correspond to
market values.
(4) Current income tax receivables
31.12.2005 31.12.2004
TEUR TEUR
Current income tax receivables. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101 0
The current income tax receivables mainly relate to refund entitlements arising from excessively high
advance payments in the preceding financial year. They are due within one year.
(5) Other current assets and advance payments made
31.12.2005 31.12.2004
TEUR TEUR
Investment grant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,317 1,109
Advance payments on inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . 180 0
Creditors in debit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 139 159
Deposit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 0
Receivables from partners/shareholders . . . . . . . . . . . . . . . . . . . . . . . 0 187
Advance payments for construction in progress . . . . . . . . . . . . . . . . . 0 2,177
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66 15
1,724 3,647
Current assets are due within year and are therefore measured at cost. The carrying amounts correspond
to market values.
F-74

The receivables in relation to partners concern the proportionate withdrawal in the amount of
TEUR 1.200 resolved at the partners meeting of 29 June 2004 and which amount was credited on a
proportionate basis to the partners’ capital accounts. This resulted in a negative balance appearing on
the capital accounts of some partners.
(6) Cash and cash equivalents
31.12.2005 31.12.2004
TEUR TEUR
Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 629 785
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 2
630 787
Cash held with banks as at the balance sheet date was kept in the form of demand deposits at various
credit institutions.
(7) Subscribed capital/Capital shares
31.12.2005 31.12.2004
TEUR TEUR
Subscribed capital/Capital shares . . . . . . . . . . . . . . . . . . . . . . . . . . 2,545 2,545
(8) Capital reserve
31.12.2005 31.12.2004
TEUR TEUR
Capital reserve . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 208 208
Pursuant to the transformation resolution of 3 August 2004, the capital reserve was created from the
joint specific-purpose reserve account (retained earnings) of S. M. D. Solar-Manufaktur Deutschland
GmbH & Co. KG in connection with the transformation of the partnership into S. M. D. Solar-Manufaktur
Deutschland GmbH.
(9) Retaining earnings
Retained earnings developed as follows:
31.12.2005 31.12.2004
TEUR TEUR
Retained earnings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,500 0
According to a shareholders’ resolution of 17 May 2005, TEUR 2.500 was allocated to retained earnings.
(10) Deferred income from public assistance
31.12.2005 31.12.2004
TEUR TEUR
Investment grants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,760 1,967
Investment premiums . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,063 2,582
6,823 4,549
F-75

Applying IAS 20 (Accounting for Government Grants and Disclosure of Government Assistance),
investment assistance received is recognised as deferred income and released to income over the
useful life of the related assets. The resulting income is disclosed under other operating income.
(11) Financial liabilities
31.12.2005 31.12.2004
TEUR TEUR
Liabilities towards credit institutions, current account . . . . . . . . . . . . . 0 60
Liabilities towards credit institutions, loans < 1 year . . . . . . . . . . . . . . 489 509
Liabilities towards credit institutions, > 1 year to 5 < years . . . . . . . . . 1,622 1,413
Liabilities towards credit institutions, > 5 years . . . . . . . . . . . . . . . . . . 840 1,088
2,951 3,070
The non-current liabilities towards credit institutions as at 31 December 2005 relate to annuity and
instalment loans with rates of interest that vary between 4.20 % and 5.70 %. The interest terms apply
until redemption. The carrying amounts correspond to market values. They are shown in more detail in
the table below.
Loan No. 2005 2004
Redemption
TEUR TEUR
6353190014 (BLB; 5.00 %) . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,651 1,834 01.06.2014
6353190020 (BLB; 5.69 %). . . . . . . . . . . . . . . . . . . . . . . . . . . 426 491 01.08.2012
6353190042 (BLB; 4.40 %). . . . . . . . . . . . . . . . . . . . . . . . . . . 424 565 01.04.2009
6353190058 (BLB; 4.20 %). . . . . . . . . . . . . . . . . . . . . . . . . . . 0 120 01.04.2006
1420264264 (OLB; 4.50 %) . . . . . . . . . . . . . . . . . . . . . . . . . . 450 0 30.08.2010
2,951 3,010
For the purposes of the cash flow statement, overdraft facility liabilities towards credit institutions
were allocated to financial resources.
(12) Deferred taxes
The deferred tax liabilities in the amount of TEUR 266 resulted exclusively from measurement differences
compared with the accounts for tax purposes.
Deferred tax receivables and liabilities are netted if an enforceable right to apply current tax receivables
against current tax liabilities exist and the deferred taxes relate to the same tax authority.
F-76

2004/2005 deferred taxes can be classified as follows:
Deferred
tax
assets
31.12.2005 31.12.2004
Deferred
tax
liabilities
Deferred
tax
assets
Deferred
tax
liabilities
TEUR TEUR TEUR TEUR
Assets
A. Non-current assets
I. Property, plant and equipment . . . . . . . . . . 0 136 0 22
II. Intangible assets . . . . . . . . . . . . . . . . . . . .
B. Current assets
1 0 1 0
I. Inventories . . . . . . . . . . . . . . . . . . . . . . . . . 0 11 0 4
II. Trade receivables . . . . . . . . . . . . . . . . . . . .
Liabilities
A. Non-current liabilities and deferred income
0 0 0 7
I. Deferred income from public assistance . . 73 0 15 0
II. Other provisions . . . . . . . . . . . . . . . . . . . . . 0 193 0 197
Deferred taxes before settlement . . . . . . . . . . . . 74 340 16 230
Deferred taxes after settlement . . . . . . . . . . . . . . 266 214
The great majority of deferred tax receivables and deferred tax liabilities are realised after more than
12 months. A current component in the temporary differences as shown above was not determined
for practical reasons.
(13) Warranty provision
The warranty provision developed as follows:
Balance at 1 January 2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
TEUR
636
Release after discounting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 318
Utilisation after discounting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
Allocation after discouinting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 273
Accumulation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
Balance at 1 December 2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 578
The warranty provision takes account of all identifiable risks and uncertain liabilities. It is recognised in
the amount of the present value of the anticipated outflow of resources. The discount rate applied to
the warranty provision is calculated on the basis of the average annual rate of interest of 3.19 % (previous
year 3.14 %) for financial year 2005. Given the 20-year warranties for solar modules under the
general warranty terms of the Group and the assessment that a liability will arise progressively over
the warranty period, only limited utilisation of the provision is expected over the short term.
F-77

(14) Trade payables and other liabilities
In addition to trade payables, this item also includes accruals:
31.12.2005 31.12.2004
TEUR TEUR
Trade receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,455 2,234
VAT refunds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 990 996
Accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 658 828
Advance payments received. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 421 0
Liabilities related to social security. . . . . . . . . . . . . . . . . . . . . . . . . . . . 141 115
Liabilities towards partners/shareholders . . . . . . . . . . . . . . . . . . . . . . . 0 5
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 2
3,667 4,180
The carrying amounts of the trade payables correspond to market values. They are due within one
year. Liabilities towards shareholders in the amount of T€ 5 were disclosed in the previous year, and in
the case too, they relate to the compensation payable to partners for serving on the advisory committee.
(15) Current income tax liabilities
Current income tax liabilities comprise the following:
31.12.2005 31.12.2004
TEUR TEUR
Trade tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,392 895
Corporate income tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,622 1,313
Solidarity surcharge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 199 72
6,213 2,280
Notes to the income statement
(16) Revenue
Revenue is mainly generated from solar modules. It comprises the following:
2005 2004
TEUR TEUR
Solar modules. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101,836 79,024
OEM production . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,068 1,765
106,904 80,789
Solar module revenue also includes the sale of inverters, assembly units and other equipment.
F-78

(17) Change in inventories of finished goods
2005 2004 Change
TEUR TEUR TEUR
Finished goods . . . . . . . . . . . . . . . . . . . . . . . . 2,407 2,242 165
2004 2003 Change
TEUR TEUR TEUR
Finished goods . . . . . . . . . . . . . . . . . . . . . . . . 2,242 2,013 229
(18) Other income
It comprises the following:
2005 2004
TEUR TEUR
Release to income of investment grant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 525 407
Release to income of investment premium . . . . . . . . . . . . . . . . . . . . . . . . . . 408 303
Release of liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 169 0
Foreign currency exchange rate gains . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 3
Integration premiums BfA and BG other . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 43
Proceeds from the disposal of fixed assets . . . . . . . . . . . . . . . . . . . . . . . . . . 10 0
Release of liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 23
Reverals of specific allowances 0 57
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 467 65
1,631 901
(19) Cost of materials
Cost of materials comprises the following:
2005 2004
TEUR TEUR
Raw materials, supplies and merchandise . . . . . . . . . . . . . . . . . . . . . . . . . . . 82,839 63,001
Purchased services. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 20
82,876 63,021
(20) Personnel costs
Personnel costs comprise the following:
2005 2004
TEUR TEUR
Wages and salaries. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,106 2,924
Contribution-based pension plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 333 187
Other social insurance contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 429 370
4,868 3,481
F-79

The Group headcount developed as follows:
Annual average Year end
2005 2004 2005 2004
Salaried employees . . . . . . . . . . . . . . . . . . . . . . . 51 36 59 45
Industrial employees . . . . . . . . . . . . . . . . . . . . . . 141 101 168 134
192 137 227 179
(21) Other expenses
The other expenses mainly relate to the costs in the sales field, especially for advertising and representation
as well as delivery costs. The individual expenses are as follows:
2005 2004
TEUR TEUR
Selling expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,933 1,571
Operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,266 701
Administrative expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,051 809
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 192 374
4,442 3,455
(22) Scheduled depreciation/amortisation expense………….
The expenditure on planned/scheduled depreciation is as follows:
2005 2004
TEUR TEUR
Scheduled depreciation of intangible assets and property, plant and
equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,777 1,322
(23) Financial result
The financial result is determined as follows:
2005 2004
TEUR TEUR
Financial income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Finance cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
30 24
Interest on financial obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – 172 – 276
Accumulation of warranty provision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – 69 – 27
– 211 – 279
F-80

(24) Income taxes ……………………………
Income taxes encompasses income taxes paid or owed as well as deferred taxes.
2005 2004
TEUR TEUR
Trade tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,974 1,379
Corporate income tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,995 2,064
Solidarity surcharge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 165 114
Capital gains tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 0
Deferred tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51 174
5,192 3,731
The reconciliation from the nominal rate of taxation to the effective rate of taxation for the S. M. D.
Group is as follows:
Reconciliation of income tax rate 2005 2004
TEUR TEUR
(EBT). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,527 10,361
Applicable tax rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36.7 % 36.7 %
Anticipated tax expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,331 3,802
Non-deductibel expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 20
Tax rate deviations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 13
Tax-free income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – 192 – 149
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 45
Tax expense. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,192 3,731
Effective tax rate in %. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35.7 % 36.0 %
Computation of tax rate 2005 2004
% %
Taxable assessment base. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100.0 100.0
Average trade tax rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.0 14.0
114.0 114.0
Corporate income tax rate 25 % x 86.00 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21.5 21.5
Solidarity surcharge 5.5 % x 21.50 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.2 1.2
22.7 22.7
Tax rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36.7 36.7
(25) Earnings per share
The S. M. D. Group intends to make use of the capital market in the near future. In accordance with
IAS 33.2, the Company is therefore obliged to provide information about earnings per share. As the
Company was only transformed into a stock corporation in financial year 2006, it has been assumed,
for the purposes of determining earnings per share, that the existing share capital can be divided into
no-par shares, each with a notional value of one euro. During the course of financial year 2005, there
was no change in the amount of share capital and thus, no change in the base figure for determining
earnings per share.
As IAS 33 states that the average weighted number of shares in circulation (notional in this case) during
the course of the financial year is to be applied in computing undiluted earnings per share, an average
2.545.000 shares can be assumed.
F-81

Undiluted earnings per share (notional in this case) are computed on the basis of the earnings for the
period less minority interest in accordance with IFRS.
Undiluted earnings per share in the share capital = earnings for the period to which the shareholders
are entitled (TEUR 9.935) / weighted average share capital (2.545.000) = EUR 3.67 (previous year
EUR 2.61)
Other
(26) Other financial commitments and contingencies
S. M. D. Solar-Manufaktur Deutschland GmbH recognises the following other financial commitments
and contingencies:
31.12.2005 31.12.2004
TEUR TEUR
Obligations under lease agreements . . . . . . . . . . . . . . . . . . . . . . . . . . 107 59
Future payment obligations under office space leases as at 31 December 2005 can be broken down as
follows:
F-82
Residual term
< 1 year
Residual term
>1 to 5 years
Residual term
> 5 years
TEUR TEUR TEUR
Lease agreements . . . . . . . . . . . . . . . . . . . . . . 24 83 0
(27) Subsequent events
No events of material importance occurred after the balance sheet date.
(28) Information about related enterprises and persons
Within the meaning of IAS, related persons or enterprises are persons or enterprises that control or
can exercise a significant influence over the Company. In the case of the S. M. D. Group, it should be
noted that no partner can control or exercise a significant influence over the Company. In addition, no
transactions involving the circle of persons named below were conducted in the past financial year.
Liabilities towards shareholders in the amount of TEUR 5 were disclosed in the previous year, and in
this case too, they relate to the compensation payable to partners for serving on the advisory committee.
The shareholding breakdown (see the information about the scope of consolidation) shows the nature
of the relationships between S. M. D. Solar-Manufaktur Deutschland GmbH and its subsidiaries in
accordance with IAS 24.12.
The following persons have been appointed general managers of S. M. D. Solar-Manufaktur Deutschland
GmbH.
• Mr. Jakobus Smit, Rastede Strategy, Investor Relations and Technology
• Mr. Heinrich Willers, Wardenburg Operations and Finance

In accordance with IAS 24.16, the general managers received the following compensation:
Type of compensation 2005 2004
TEUR TEUR
Salaries and other current benefits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 246 240
Bonuses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 196 149
442 389
(29) Advisory committee
S. M. D. Solar-Manufaktur Deutschland GmbH has an advisory committee composed of the following
members:
Mr. Jörg Friedrich Bätjer, Hillerse
Mr. Helmut Bögershausen, Dötlingen
Mr. Marius Eriksen, Oldenburg
Mr. Claus von Loeper, Hanover
The advisory committee of S. M. D. Solar-Manufaktur Deutschland GmbH received total emoluments
of TEUR 21 for the financial year.
The executive management of S. M. D. Solar-Manufaktur Deutschland GmbH approved the publication
of the consolidated financial statements on 31 March 2006.
Prenzlau, 31 March 2006
Smit Willers
F-83

The following auditors’ report (Bestätigungsvermerk) has been issued in accordance with Article 322
German Commercial Code (Handelsgesetzbuch) in German language on the German version of the
consolidated financial statements as a whole, consisting of the balance sheet, income statement,
statement of changes in equity, cash flow statement and notes as well as the group management
report of S. M. D. Solar-Manufaktur-Deutschland GmbH for financial year 2005. The group management
report is not included in the Prospectus.
F-84
Auditors’ Report
We have audited the consolidated financial statements prepared by S. M. D. Solar-Manufaktur Deutschland
GmbH, Prenzlau , comprising the balance sheet, the income statement the statement of changes
in equity and the cash flow statement as well as the notes to the consolidated financial statements ,
together with the group management report for the financial year from 1 January to 31 December
2005. The preparation of the consolidated financial statements and the group management report in
accordance with IFRS as adopted by the EU and the additional requirements of German commercial
law pursuant to Article 315a, paragraph 1 HGB and supplementary provisions of the memorandum of
association is the responsibility of the general managers of the Company. Our responsibility is to
express an opinion, based on our audit, of the consolidated financial statements and the group management
report.
We conducted our audit of the consolidated financial statements in accordance with Article 317 HGB
and German generally accepted standards for the audit of financial statements promulgated by the
Institut der Wirtschaftsprüfer in Deutschland (IDW) (German Institute of Certified Public Accountants).
Those standards require that we plan and perform the audit so that misstatements materially affecting
the presentation of the net assets, financial position and results of operations in the consolidated
financial statements in accordance with the applicable financial reporting framework and in the group
management report are detected with reasonable assurance. Knowledge of the business activities
and the economic and legal environment of the Group and expectations as to possible misstatements
are taken into account in the determination of audit procedures. The effectiveness of the accountingrelated
internal control system and the evidence supporting the disclosures in the consolidated financial
statements and the group management report are examined primarily on a test basis within the
framework of the audit. The audit includes assessing the annual financial statements of those entities
included in consolidation, the determination of the entities to be included in consolidation, the accounting
and consolidation principles used and significant estimates made by the general managers as well
as evaluating the overall presentation of the consolidated financial statements and the group management
report. We believe that our audit provides a reasonable basis for our opinion.
Our audit has not led to any reservations.
In our opinion, based on the findings of our audit, the consolidated financial statements comply with
the IFRS as adopted by the EU, the additional requirements of German commercial law pursuant to
Article 315a, paragraph 1 HGB and of the memorandum of association and give a true and fair view of
the net assets, financial position and results of operations of the Group in accordance with these
requirements. The group management report is consistent with the consolidated financial statements
and as a whole provides a suitable view of the Group’s position and suitably presents the opportunities
and risks of future development. ”
Oldenburg, 3 April 2006
PricewaterhouseCoopers
Aktiengesellschaft
Wirtschaftsprüfungsgesellschaft
(Menke) (ppa. Engelhardt)
Wirtschaftsprüfer Wirtschaftsprüfer

Annual financial statements for 2005
(1 January 2005 to 31 December 2005) of
S.M.D. Solar-Manufaktur Deutschland GmbH, Prenzlau,
according to HGB
F-85

S. M. D. Solar-Manufaktur Deutschland GmbH, Prenzlau, Balance Sheet as at 31 December 2005
ASSETS 31.12.2005 31.12.2004
A. Fixed assets
I. Intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
EUR EUR
Trade marks, software . . . . . . . . . . . . . . . . . . . . . . . . . . 45,622.00 70,823.50
II. Tangible fixed assets
1. Land and buildings . . . . . . . . . . . . . . . . . . . . . . . . . . 8,195,265.31 3,953,980.67
2. Technical equipment and machinery . . . . . . . . . . . . . 5,584,638.00 3,614,745.95
3. Other operating and office equipment . . . . . . . . . . . 887,855.00 674,319.23
4. Advance payments made, construction in progress . 0.00 2,176,974.34
III. Financial assets
14,667,758.31 10,420,020.19
Investments in related entities. . . . . . . . . . . . . . . . . . . . 420,000.00 302,704.97
B. Current assets
I. Inventories
15,133,380.31 10,793,548.66
1. Raw materials and supplies. . . . . . . . . . . . . . . . . . . . 11,938,999.67 4,921,704.45
2. Finished goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,377,200.11 2,231,043.59
3. Pre-payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 180,000.00 0.00
II. Receivables and other assets
14,496,199.78 7,152,748.04
1. Trade receivables. . . . . . . . . . . . . . . . . . . . . . . . . . . . 867,154.88 403,074.25
2. Receivables from related entities . . . . . . . . . . . . . . . 2,028,394.82 1,793,994.99
3. Receivables from shareholders . . . . . . . . . . . . . . . . . 0.00 186,936.47
4. Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,499,372.06 1,147,891.58
4,394,921.76 3,531,897.29
III. Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . 458,947.28 482,850.52
19,350,068.82 11,167,495.85
C. Prepaid expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 985.00 5,176.10
34,484,434.13 21,966,220.61
F-86

LIABILITIES 31.12.2005 31.12.2004
A. Equity
EUR EUR
I. Subscribed capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,545,000.00 2,545,000.00
II. Capital reserve . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
III. Retained earnings
207,630.99 207,630.99
other revenue reserves . . . . . . . . . . . . . . . . . . . . . . . . . 2,300,000.00 0.00
IV. Profit carried forward . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,531,044.55 0.00
V. Net income for the year . . . . . . . . . . . . . . . . . . . . . . . . . 9,948,518.23 6,831,044.38
B. Special item for investment premiums relating to
17,532,193.77 9,583,675.37
assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,864,991.09 2,540,114.97
C. Provisions
1. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,213,074.76 2,052,178.00
2. Other provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,310,775.65 1,420,069.15
D. Liabilities
7,523,850.41 3,472,247.15
1. Liabilities towards credit institutions . . . . . . . . . . . . . . . 2,950,737.76 3,069,651.96
2. Trade payables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,411,352.55 2,173,051.89
3. Liabilities towards shareholders . . . . . . . . . . . . . . . . . . . 0.00 4,543.64
4. Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,201,308.55 1,122,935.63
5,563,398.86 6,370,183.12
34,484,434.13 21,966,220.61
F-87

S. M. D. Solar-Manufaktur Deutschland GmbH, Prenzlau
Consolidated Income Statement for the period from 1 January 2005 to 31 December 2005
2005 2004
EUR EUR
1. Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100,992,674.02 67,920,487.42
2. Increase in inventories of finished goods . . . . . . . . . . . . . . 146,156.52 230,273.55
3. Other operating income . . . . . . . . . . . . . . . . . . . . . . . . . . .
4. Cost of materials
2,740,099.09 1,847,590.57
Raw materials, supplies and merchandise . . . . . . . . . . . . .
5. Personnel expense
79,555,623.53 53,185,357.97
a) Wages and salaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,243,149.90 2,285,693.92
b) Social insurance and expenses for retirement pensions
and welfare assistance . . . . . . . . . . . . . . . . . . . . . . . . . 602,381.43 439,392.29
6. Depreciation/amortisation expense for intangible fixed
3,845,531.33 2,725,086.21
assets and property, plant and equipment . . . . . . . . . . . . . 2,006,730.82 1,311,092.28
7. Other operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . 3,353,853.47 2,350,966.28
8. Other interest and similar income . . . . . . . . . . . . . . . . . . . 30,406.12 21,522.35
9. Interest and similar expenses. . . . . . . . . . . . . . . . . . . . . . . 171,387.30 275,003.73
10. Profit from ordinary activities . . . . . . . . . . . . . . . . . . . . . 14,976,209.30 10,172,367.42
11. Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,021,397.75 3,337,507.15
12. Other taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,293.32 3,815.89
13. Net income for the year. . . . . . . . . . . . . . . . . . . . . . . . . . 9,948,518.23 6,831,044.38
F-88

Notes to financial year 2005 of S. M. D. Solar-Manufaktur Deutschland GmbH, Prenzlau
A. INFORMATION ON THE FORM AND PRESENTATION OF THE BALANCE SHEET AND INCOME
STATEMENT
General Information
The Company is a corporation that meets that meets the criteria for recognition as a large corporation
on the basis of the provisions contained in Section 267(3) of the German Commercial Code (HGB) in
conjunction with Section 267(4) HGB.
The annual financial statements for financial year 2005 have been prepared in accordance with the
provisions contained in Sections 264 ff. HGB and the disclosure requirements before profit distribution
specific to the legal form of the Company.
The total cost format (Section 275(2) HGB) was applied to the income statement.
In the interest of clarity and ease of reference, the notes that are to be appended to the line items of
the balance sheet and income statement according to statute have been included in the Notes.
B. ACCOUNTING POLICIES
(1) Recognition and Measurement
The annual financial statements were prepared in compliance with those recognition and measurement
rules contained in Sections 246 and 256 HGB which apply to all businesses and with the special
recognition and measurement rules for corporations (Sections 269–274, 279 to 283 HGB) as well as in
accordance with German principles of proper accounting. Measurement is consistent with tax regulations.
Intangible assets are depreciated applying the straight-line method.
Tangible assets used for business operations are carried at acquisition cost and reduced by scheduled
depreciation. Such items are depreciated over their useful lives on a straight-line and reducing-balance
basis.
The acquisition costs of low-value items within the meaning Section 6(2) of the German Income Tax
Act (EStG) are written off in full in the year of acquisition.
The following standard useful lives apply:
Intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 – 15 years
Buildings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 years
Installations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 – 19 years
Technical equipment and machinery. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 – 25 years
Office equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 – 14 years
Financial assets are measured at acquisition cost.
Raw materials and supplies are measured at purchase prices as at the balance sheet date. Any impairment
losses are accounted for.
Finished goods are measured at production cost on a loss-free measurement basis. In addition to
direct costs, production costs include appropriate components of the necessary material and production
overhead costs as well as the loss of value to fixed assets resulting from production and some
administrative expenses.
F-89

Trade receivables, receivables from related companies and shareholders as well as other assets and
prepaid expenses are carried at their nominal amounts.
Liquid assets are carried at their nominal amounts.
Subscribed capital is carried at its nominal amount.
The special items for investment premiums are carried at their nominal amount, reduced by scheduled
reversals. Investment premiums are reported as a special item and reversed over the useful lives of
the related assets.
Provisions take account of all identifiable risks and uncertain obligations. They are reliably estimated
and set up in an amount dictated by prudent business practice.
In financial year 2005, the amount of the warranty provision was set at 0.5 % of the volume of sales
covered by warranties, rather than 1.0 % as in previous years. The reversal of the provision amounted
to TEUR 547 and is reported under other operating income.
Liabilities are carried at the redemption amount.
Business transactions concluded in foreign currencies outside the eurozone are translated at current
exchange rates over the course of the financial year. At the end of the financial year, foreign currency
receivables are measured at the rate of acquisition or the lower selling rate while foreign liabilities are
measured at the rate of acquisition or the higher buying rate.
Income and expenses are recognised on an accrual basis.
(2) Classification and presentation
The classification system used in the balance sheet and income statement is consistent with the provisions
of Sections 265, 266 and 275 HGB concerning classification and presentation and takes
account of the features specific to the legal form of the corporation and the provisions of the memorandum
of association.
C. BALANCE SHEET INFORMATION AND EXPLANATORY NOTES
(1) Fixed assets – individual line items
The development of fixed assets as well as the depreciation/amortisation charges recognised in the
financial year are shown in the schedule of gross fixed assets that appears below.
(2) Receivables and other assets
F-90
Less than
one year
Receivables and other assets
with a residual term
More than
one year Total
TEUR TEUR TEUR
Trade receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . 867 0 867
Receivables from related entities . . . . . . . . . . . . . . . . 2,028 0 2,028
Other assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,499 0 1,499
4,394 0 4,394
Receivables from related entities include trade receivables in the amount of TEUR 615.

The other assets mainly comprise the investment grant receivable (TEUR 1,317).
(3) Investment premium special item
Premiums granted for assets in connection with the setting up and expansion of the Prenzlau plant are
disclosed under this item. The item is reversed over the customary useful life of the related assets in
line with their depreciation.
(4) Liabilities
Liabilities with a residual term
Between
Up to one and More than
Total one year five years five years
TEUR TEUR TEUR TEUR
Liabilities towards credit institutions 2,951 489 1,622 840
Trade payables . . . . . . . . . . . . . . . . . 1,411 1,411 0 0
Other liabilities . . . . . . . . . . . . . . . . . 1,201 1,201 0 0
The other liabilities include:
Liabilities related to
5,563 3,101 1,622 840
– taxes TEUR 936
(previous year: TEUR 898)
– social security: TEUR 111
(previous year: TEUR 95)
Liabilities towards credit institutions are secured by means of the transfer of ownership by way of
security, the global assignment of receivables, mortgages and guarantees.
(5) Other provisions
The other provisions essentially comprise warranty obligations. In addition, provisions have been set
up for various individual items.
(6) Contingent liabilities
S. M. D. Solar-Manufaktur Deutschland GmbH has assumed direct and unlimited guarantees for loans
granted to aleo solar GmbH, Oldenburg, by Bremer Landesbank Kreditanstalt Oldenburg, Oldenburg,
as well as Oldenburgische Landesbank, Oldenburg. As at 31 December 2004 and 2005, neither loan
had been utilised.
S. M. D. Solar-Manufaktur Deutschland GmbH is jointly liable with aleo solar GmbH for a joint overdraft
facility in the amount of TEUR 3,200. Use of the facility as at 31 December 2005 amounted to
TEUR 0.
D. INCOME STATEMENT INFORMATION AND EXPLANATORY NOTES
(1) S. M. D. Solar-Manufaktur Deutschland GmbH generates most of its revenue in Germany.
(2) The special item for investment premiums was reduced by TEUR 565 during the year under review
as a result of reversals. The resulting income is disclosed under other operating income.
F-91

(3) The plot SMD I was written down from TEUR 150 to TEUR 104 on an extraordinary basis as a result
of a lasting reduction in the local average value of land. The special item recognised in this regard
was reversed (TEUR 76).
(4) Income taxes relate solely to ordinary activities.
E. OTHER INFORMATION
(1) Average number of employees over the year
The average headcount – differentiated by group – over the financial year was as follows:
Salaried employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Industrial employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 141
171
The figure was computed in accordance with Section 267(5) HGB.
(2) Shareholdings
The following shows those companies in which S. M. D. solar-Manufaktur Deutschland GmbH has a
shareholding of more than 20 %:
Name Shares Equity
Net/profit
loss for
previous
year (2005)
% EUR EUR
Aleo solar GmbH, Oldenburg . . . . . . . . . . . . . . . . . . . 100 300,000.00 279,844.61
Solar Manufaktur Producción S. L., Barcelona . . . . . . 100 100,000.00 – 33,676.94
Aleo solar distribución España S. L., Barcelona . . . . . 100 20,000.00 – 8,611.69
(3) Corporate bodies and total emoluments
The following persons have been appointed general managers of S. M. D. Solar-Manufaktur Deutschland
GmbH.
– Mr. Jakobus Smit, Rastede Strategy, Investor Relations and Technology
– Mr. Heinrich Willers, Wardenburg Operations and Finance
No information has been provided about management body total emoluments in reference to
Section 286 HGB.
(4) Advisory committee
The Company has an advisory committee comprising the following members:
– Mr. Jörg Friedrich Bätjer, Hillerse
– Mr. Helmut Bögershausen, Dötlingen
– Mr. Marius Eriksen, Oldenburg
– Mr. Claus von Loeper, Hanover
The total emoluments received by the advisory committee in 2005 amounted to TEUR 21.
F-92

(5) Appropriation of profit recommendation
The net income for 2005 of . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
EUR
9,948,518.23
along with the profit carried forward . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,531,044.55
is to be distributed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,000,000.00
and allocated to retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,479,562.78
with profit carried forward . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.00
Prenzlau, 17 February 2006
S. M. D. Solar-Manufaktur Deutschland GmbH,
Prenzlau
(Jakobus Smith)
– General Manager –
(Heinrich Willers)
– General Manager –
F-93

The following auditors’ report (Bestätigungsvermerk) issued in accordance with Article 322 German
Commercial Code (Handelsgesetzbuch) in German language on the German version of the annual
financial statements as a whole, consisting of the balance sheet, income statement and notes as well
as the management report of S. M. D. Solar-Manufaktur-Deutschland GmbH for financial year 2005.
The management report is not included in the Prospectus.
F-94
Auditors’ Report
We have audited the annual financial statements consisting of the balance sheet, the income statement
and notes to the financial statements, together with the bookkeeping system and the management
report of S.M.D. Solar-Manufaktur Deutschland GmbH, Prenzlau, for the financial year from
1 January to 31 December 2005. The maintenance of the books and records and the preparation of
the annual financial statements and management report in accordance with German commercial law
and the supplementary provisions of the memorandum of association are the responsibility of the
general managers of the Company. Our responsibility is to express an opinion, based on our audit, on
the annual financial statements together with the bookkeeping system and the management report.
We conducted our audit of the annual financial statements in accordance with Article 317 HGB and
generally accepted standards for the audit of financial statements promulgated by the Institut der
Wirtschaftsprüfer (IDW) ( Institute of Certified Public Accountants). Those standards require that we
plan and perform the audit such that misstatements materially affecting the presentation of the net
assets, financial position and results of operations in the annual financial statements in accordance
with the German principles of proper accounting and in the group management report are detected
with reasonable assurance. Knowledge of the business activities and the economic and legal environment
of the Company and evaluations of possible misstatements are taken into account in the determination
of audit procedures. The effectiveness of the accounting-related internal control system and
the evidence supporting the disclosures contained in the books and records, annual financial statements
and management report are assessed primarily on a test basis within the framework of the
audit. The audit includes assessing the accounting principles used and significant estimates made by
the general managers as well as evaluating the overall presentation of the annual financial statements.
We believe that our audit provides a reasonable basis for our opinion.
Our audit has not led to any reservations.
In our opinion, based on the findings of our audit, the annual financial statements comply with the
legal requirements and the supplementary provisions contained in the memorandum of association as
well as give a true and fair view of the net assets, financial position and results of operations of the
Company in accordance with the German principles of proper accounting. The management report is
consistent with the annual financial statements and as a whole provides a suitable view of the Company’s
position and suitably presents the opportunities and risks of future development.”
Oldenburg, 20 February 2006
PricewaterhouseCoopers
Aktiengesellschaft
Wirtschaftsprüfungsgesellschaft
(Menke) (ppa. Engelhardt)
Wirtschaftsprüfer Wirtschaftsprüfer

Unaudited consolidated financial statements
for the first quarter of 2006
(1 January 2003 to 31 March 2006 of
S.M.D. Solar-Manufaktur Deutschland GmbH, Prenzlau,
according to IFRS
F-95

Consolidated balance sheet of S. M. D. Solar-Manufaktur Deutschland GmbH, Prenzlau,
as at 31 March 2006 (unaudited)
Assets 31.03.2006 31.12.2005 31.03.2005
A. Non-current assets . . . . . . . . . . . . . . . . . . . . . . .
TEUR TEUR TEUR
I. Property, plant and equipment . . . . . . . . . . . . . 15,040 15,213 8,212
II. Intangible assets . . . . . . . . . . . . . . . . . . . . . . . 54 54 59
B. Current assets . . . . . . . . . . . . . . . . . . . . . . . . . . .
15,094 15,265 8,271
I. Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,495 14,355 8,742
II. Trade receivables . . . . . . . . . . . . . . . . . . . . . . . 7,428 4,106 5,715
III. Current income tax receivables . . . . . . . . . . . .
IV. Other current assets and advance payments
0 101 0
made . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,516 1,724 4,148
V. Cash and cash equivalents . . . . . . . . . . . . . . . . 1,428 630 1,624
31,867 20,916 20,229
46,961 36,181 28,500
Equity and liabilities 31.03.2006 31.12.2005 31.03.2005
A. Equity
TEUR TEUR TEUR
I. Subscribed capital . . . . . . . . . . . . . . . . . . . . . . 10,180 2,545 2,545
II. Capital reserve . . . . . . . . . . . . . . . . . . . . . . . . . 208 208 208
III. Retained earnings. . . . . . . . . . . . . . . . . . . . . . . 3,345 2,500 0
IV. Profit/loss carried forward . . . . . . . . . . . . . . . . – 2,049 1,095 5,596
V. Consolidated net profit. . . . . . . . . . . . . . . . . . . 2,074 9,335 2,036
B. Non-current liabilities and deferred income
13,758 15,683 10,385
I. Deferred income from public assistance . . . . . 6,552 6,823 4,699
II. Financial liabilities. . . . . . . . . . . . . . . . . . . . . . . 2,294 2,462 2,357
III. Deferred tax liabilities. . . . . . . . . . . . . . . . . . . . 290 266 241
IV. Warranty provision . . . . . . . . . . . . . . . . . . . . . . 625 578 612
C. Current liabilities . . . . . . . . . . . . . . . . . . . . . . . . .
9,761 10,129 7,909
I. Financial liabilities. . . . . . . . . . . . . . . . . . . . . . . 6,955 489 564
II. Trade payables and other liabilities . . . . . . . . . . 9,296 3,667 6,328
III. Current income tax liabilities . . . . . . . . . . . . . . 7,191 6,213 3,314
23,442 10,369 10,206
46,961 36,181 28,500
F-96

Consolidated Income Statement for the period from 1 January 2006 to 31 March 2006 (unaudited)
S. M. D. Solar-Manufaktur Deutschland GmbH, Prenzlau
1.1. –
31.3.2006
1.1. –
31.3.2005
TEUR TEUR
1. Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25,714 21,296
2. Increase in inventories of finished goods . . . . . . . . . . . . . . . . . . . . 6,758 173
3. Other income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 434 293
4. Cost of materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – 26,074 – 16,359
5. Personnel costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – 1,483 – 984
6. Other expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – 1,442 – 734
7. EBITDA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,907 3,685
8. Scheduled depreciation/amortisation expense. . . . . . . . . . . . . . . . – 471 – 338
9. EBIT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,436 3,347
10. Financial income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 5
11. Finance cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – 92 – 41
12. Earnings before taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,344 3,311
13. Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – 1,270 – 1,275
14. Consolidated net profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
15. Earnings per share based on consolidated net profit
2,074 2,036
(in € per share) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.20 0.20
F-97

Consolidated Cash Flow Statement for the first quarter of 2006 (unaudited)
S. M. D. Solar-Manufaktur Deutschland GmbH, Prenzlau
31.03.2006 31.03.2005
TEUR TEUR
I. Cash flow from operating activities
Consolidated net profit/loss after income taxes and interest 2,074 2,036
Income taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,270 1,275
Scheduled depreciation/amortisation expense . . . . . . . . . . 471 338
Change in non-current provisions . . . . . . . . . . . . . . . . . . . . 47 – 24
Gains/losses on the disposal of non-current assets . . . . . . 2 0
Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 – 5
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92 41
Non-cash expenses/income . . . . . . . . . . . . . . . . . . . . . . . . – 252 – 206
Change in trade receivables and other current assets . . . . – 3,874 – 3,625
Change in inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – 7,426 – 1,008
Change in trade payables and other current liabilities . . . . . 5,629 2,148
F-98
= Cash flow from operating activities . . . . . . . . . . . . . . – 1,967 970
Interest paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – 26 – 41
Interest received . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 5
Income taxes paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – 166 – 214
= Net cash flow from operating activities. . . . . . . . . . .
II. Cash flow from investing activities
– 2,159 720
Purchase of items of property, plant and equipment. . . . . .
Proceeds from the sale of items of property, plant and
– 485 – 86
equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 0
Purchase of intangible assets . . . . . . . . . . . . . . . . . . . . . . . – 8 – 4
Inflows from public assistance . . . . . . . . . . . . . . . . . . . . . . 1,178 356
= Net cash flow from investing activities . . . . . . . . . . . . .
III. Cash flow from financing activities(
725 266
1 )
Inflows from borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,180 0
Repayment of borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . – 234 – 174
Dividend distribution to shareholders . . . . . . . . . . . . . . . . . – 4,000 0
= Net cash flow from financing activities . . . . . . . . . . . 946 – 174
Net changes in cash and cash equivalents (I to III) . . . . – 488 812
Cash and cash equivalents at the beginning of the financial
year. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 630 727
Cash and cash equivalents at the end of the quarter . . 142 1,539
( 1 ) For the purposes of the cash flow statement, overdraft facility liabilities towards credit institutions are allocated to financial
resources.

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY for the first quarter of 2006
S. M. D. Solar-Manufaktur Deutschland GmbH, Prenzlau
Equity attributable to the shareholders of the parent company
Subscrib
ed
capital
Capital
reserve
Retained
earnings
Profit/
loss
carried
forward
Consolidated
net
profit/
loss
Total
equity
TEUR TEUR TEUR TEUR TEUR TEUR
Balance at 1 January 2005. . .
Reclassification/Allocation to
2,545 208 0 – 1,034 6,630 8,349
retained earnings. . . . . . . . . 0 0 0 6,630 – 6,630 0
Consolidated net profit . . . . . . . 0 0 0 0 2,036 2,036
Balance as at 31 March 2005 . 2,545 208 0 5,596 2,036 10,385
Balance as at 1 January 2006
Reclassification/Allocation to
2,545 208 2,500 1,096 9,335 15,684
retained earnings. . . . . . . . . 0 0 8,480 – 3,145 – 5,335 0
Capital increase . . . . . . . . . . . . 7,635 0 – 7,635 0 0 0
Distributions . . . . . . . . . . . . . . . 0 0 0 0 – 4,000 – 4,000
Consolidated net profit . . . . . . . 0 0 0 0 2,074 2,074
Balance at 31 Mar. 2006 . . . . . 10,180 208 3,345 – 2,049 2,074 13,758
F-99

Notes for the first quarter of 2006 (unaudited)
1. Basis of Presentation
S. M.D Solar-Manufaktur Deutschland GmbH, Prenzlau, has prepared its consolidated financial statements
for financial year 2005 in accordance with the International Financial Reporting Standards (IFRS)
issued by the International Accounting Standards Board (IASB) and with the interpretations of the
International Financial Reporting Interpretations Committee (IFRIC). Accordingly, these quarterly financial
statements as at 31 March 2006 have also been prepared in accordance with IAS 34.
2. Accounting Policies
In preparing the quarterly consolidated financial statements and determinng the comparative figures
for the first quarter fo 2005, the same consolidation and accounting policies were essentially applied.
A detailed description of these policies is provided in the Notes to the consolidated financial statements
for 2005.
3. Scope of Consolidation
These quarterly consolidated financial statements have been prepared in accordance with IAS 27
(revised 2003). Consequently, the quarterly consolidated financial statements include all significant
companies in which S. M.D Solar-Manufaktur Deutschland GmbH, Prenzlau, has the possibility, whether
directly or indirectly, of influencing financial and operating policies so that benefits accrue to Group
from the operation of these companies (subsidiaries).
The quarterly consolidated financial statements encompass S. M.D Solar-Manufaktur Deutschland
GmbH, Prenzlau, as the parent company, as well as the fully consolidated subsidiaries aleo solar
GmbH, Oldenburg, (hereinafter abbreviated to aleo), Solar Manufaktur Produccion, S. L., Barcelona/
Spain as well as aleo solar distribución España, S. L., Barcelona/Spain. As the Spanish companies were
established in September 2005, no comparative figures for the corresponding period of the previous
year have been included. The subsidiaries are wholly owned.
4. Segment Reporting
A business segment is a group of assets and operating activities engaged in providing products or
services and that is subject to risks and returns that differ from other business segments. A geographical
segment provides products or services within a particular economic environment and that is subject
to risks and returns that differ from those in other economic environments.
S. M.D Solar-Manufaktur Deutschland GmbH, Prenzlau, intends to make use of the capital market in
the near future. In accordance with IAS 14.9, the Company is therefore obliged to provide segment
reporting.
However, as S.M.D Solar-Manufaktur Deutschland GmbH, Prenzlau, is a single product company
engaged solely in the production of solar modules and generates by far the greatest part of its revenue
in the Federal Republic of Germany, the reporting of information on segments is considered redundant.
5. Seasonal and economic factors affecting business
The revenue posted by S. M.D Solar-Manufaktur Deutschland GmbH, Prenzlau, tends to be lower in
the first quarter of the calendar year than in the subsequent three quarters. These seasonal fluctuations
are mainly due to the impact of weather conditions, especially in the main sales area of southern
F-100

Germany, which prevent solar modules from being installed on roofs. The Company assumes that its
results of operations will continue to be subject to seasonal fluctuations in the future.
6. Notes to the quarterly consolidated financial statements
Equity
The annual financial statements of the Company as at 31 December 2005, which have been audited
by PricewaterhouseCoopers AG, Wirtschaftsprüfungsgesellschaft, Oldenburg, and issued with an
unqualified audit report, show a balance sheet total of TEUR 36,181 and net income for the year of
TEUR 9,335.
TEUR 4,000 of the net income for the year was distributed to the shareholders in proportion to their
shareholdings. The remaining sum of TEUR 5,335 was allocated to retained earnings.
On 3 March 2006, the shareholders attending the general shareholders’ meeting unanimously resolved
to increase the subscribed capital to EUR 10,180,000. This resulted in the shares being increased by a
factor of three. In accordance with Section 75c of the German Limited Liability Company Act (GmbHG),
a sum of TEUR 7,635 was converted to share capital (capital increase from company funds). The share
capital of the Company therefore increased by TEUR 7,635 from TEUR 2,545 to TEUR 10,180. The
increase was entered in the Commerce Register by a decision of the District Court at Neuruppin
(HRB 7069 NP) on 17 March 2006.
Earnings per share
The capital increase from company funds (cf. The explanatory comments in the preceding section on
equity) and the planned transformation of the limited liability company into a stock corporation required
the figure for earnings per share to be adjusted in accordance with IAS 33.26 ff. Consequently, earnings
per share for both the first quarter of 2006 and the same period last year, the first quarter of 2005,
were computed with reference to the number of shares following the implementation of the capital
increase and the transformation of the limited liability company into a stock corporation.
7. Significant Transaction
A first advance payment under a long-term solar cell supply contract from 2005 fell due at the be ginning
of 2006. The contract concerns a delivery volume of a maximum 107 MW. Under a further long-term
delivery contract concluded in January 2006 and ensuring delivery of a maximum 135 MW until 2016,
an advance payment in the amount of USD 1,204,000 fell due on 31 January 2006. A third delivery
contract also requires an advance payment of 50 % (EUR 752,066), subject to certain conditions, and
provides for a maximum volume of 55 MW until 2015. All advance payments were remitted from cash
flow. No special credits were required.
8. Related party transactions
Mrs. Silke Friesenborg-Willers
Mrs. Silke Friesenborg-Willers, the wife of Mr. Willers, bought a solar system from the Company for a
price of approximately TEUR 4 in the first quarter of 2006.
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9. Subsequent events
Equity interest in Johanna Solar Technology GmbH
With the signing of an appropriate agreement on 13 April 2006, S. M.D Solar-Manufaktur Deutschland
GmbH, Prenzlau, acquired a 19 % equity interest in Johanna Solar Technology GmbH in Brandenburg
an der Havel, Brandenburg. With the value of the equity interest amounting to EUR 1,907,000 and the
agreed premium amounting to EUR 712,500 the total investment was EUR 2,619,500. Johanna Solar
Technology GmbH implemented a capital increase on 5 May 2006. S. M.D Solar-Manufaktur Deutschland
GmbH, Prenzlau, participated in the capital increase and invested a further EUR 943,000. The
total investment volume currently amounts to EUR 3,562,500. The shareholding remains at 19 %.
Under an agreement of 13 April 2006, S. M.D Solar-Manufaktur Deutschland GmbH, Prenzlau, agreed
with 3E Finanz GmbH, which held a 38.0 % equity interest in Johanna Solar Technology GmbH following
the entering of the capital increase in the Commercial Register at Oldenburg on 23 April 2006, will
have the possibility of requesting of 3E Finanz GmbH that it offer its shares, accounting for at least
31.1 % of all the shares in Johanna Solar Technology GmbH, will be offered to S. M.D Solar-Manufaktur
Deutschland GmbH. This applies for the period from 1 January 2008 to 31 March 2009. If Johanna
Solar Technology’s revenues from the sale of solar modules in 2008 are less than EUR 43, the above
arrangement will be extended for one year. A condition for making such request and acquiring the
shares is that both parties agree to a price for the shares to be transferred, whereby the fixing of a
price is to be based on the principles for conducting company valuations prepared by the Main Specialist
Committee of the Institut der Wirtschaftsprüfer in Deutschland e. V. (IDW Standard S1) and a comparison
with the market valuation of a peer group of comparable listed companies.
If, when exercising the above option, S.M.D Solar-Manufaktur Deutschland GmbH, Prenzlau, still has a
19 % shareholding in Johanna Solar Technology GmbH, it will then hold the majority of the shares in
Johanna Solar Technology GmbH. If S. M.D Solar-Manufaktur Deutschland GmbH, Prenzlau, exercises
this option, the other shareholders of Johanna Solar Technology GmbH will have the right to tender
their shares to S. M.D Solar-Manufaktur Deutschland GmbH, Prenzlau.
Transformation into a stock corporation
Proceeding on the basis of the capital increase of March 2006, the general shareholders’ meeting
resolved to transform the limited liabilty company into a stock corporation on 12 April 2006. Upon
entry in the Commercial Register kept by the District Court at on 4 May 2006 (HRB 7522 NP), the business
name name of Solar-Manufaktur Deutschland GmbH, Prenzlau, has become aleo solar Aktiengesellschaft,
Prenzlau.
The subscribed capital of TEUR 10,180 (31 Dec. 2005: TEUR 2,545) has been divided into 10,180,000
no-par value registered shares representing a notional one euro each, so that each shareholder receives
one registered share for each euro paid in by the shareholder.
Prenzlau, 12 May 2006
Heinrich Willers Jakobus Smit
F-102

LIST OF ABBREVIATIONS
Corp. Corporation
Dipl.-Ing. Diplom-Ingenieur (academic degree)
DVFA Deutsche Vereinigung für Finanzanalyse & Assetmanagement
EEG Gesetz für den Vorrang erneuerbarer Energien (Erneuerbare -Energien -Gesetz)
EU European Union
EUR Euro
EWG Europäische Wirtschaftsgemeinschaft
GmbH Gesellschaft mit beschränkter Haftung – German limited liability company
GmbH & Co. KG German partnership in which the general partner is a limited liability company
HGB German Commercial Code
IAS International Accounting Standards
IFRS International Financial Reporting Standards
Inc. Incorporated Company
KfW Kreditanstalt für Wiederaufbau
KG German limited partnership
kW Kilowatt
kWh Kilowatt hour
kWp Kilowatt (peak)
LLC Limited Liability Company
LTC Long Term Contract
Ltd. Limited
MW Megawatt
MWh Megawatt hour
MWp Megawatt (Peak)
NP Neuruppin
N. V. Naamloze Vennootschap
OEM Original Equipment Manufacturer
OPR Ostprignitz-Ruppin
p. a. per annum
PV Photovoltaic
Q Quarter
S. A. Société Anonyme
S. L. Sociedad Limitada
TEUR Thousand euros
TUSD Thousand US dollars
UR-Nr. Deed no.
USD US dollar
WA-Dipl.-Inh. Wirtschaftsakademie Diplom-Inhaber (academic degree)
Wp Watt (peak)
G-1

Conventional energy
EBIT
EBIT margin
EBITDA
EBITDA margin
EEG, Renewable
Energies Act
Efficiency
Fracture rate
Grid-connected
systems
High efficiency cells
Ingot
International
Financial Reporting
Standards (IFRS)/
International
Accounting
Standards (IAS)
Inverter
Kilowatt (kW)
Kilowatt hour (kW/h)
Megawatt (MW)
Megawatt hour
(MW/h)
Module
G-2
GLOSSARY
Energy obtained from crude oil, natural gas, coal (fossil fuels), nuclear fission
Earnings before Interests, Taxes
Ratio of EBIT to revenue
Earnings before Interests, Taxes, Depreciation and Amortisation
Ratio of EBITDA to revenue
German Act on Granting Priority to Renewable Energies (Erneuerbare-Energien-
Gesetz).
In energy conversion processes, efficiency is defined as the ratio of useable
energy released to energy or power used.
The percentage share of wafters and cells fractured during processing and production.
Photovoltaic systems connected to a public energy supply network.
High efficiency cells are photovoltaic cells with above average levels of efficiency
for special applications. They distinguish themselves from standardized
photovoltaic cells as a result of their high efficiency and higher price and are
used, for example, for applications in outer space.
Blocks made from raw silicon and used to produce silicon wafters.
On the one hand, a general designation for all accounting standards published
by the International Accounting Standards Committee (IASC). On the other
hand the new accounting rules published by the International Accounting Standards
Board (IASB) since 2003. The standards in effect since 2002 continue to
be published as International Accounting Standards (IAS). Only fundamental
changes in the regulations of existing standards are renamed from IAS to
IFRS.
Photovoltaic modules generate direct current (DC), and inverters are used to
convert DC into AC (alternating current). This enables the electricity generated
from solar energy to be utilised by end users at 230 volts AC or to be fed into
the public grid. Central inverters are used in large photovoltaic systems, and
string inverters in small photovoltaic systems.
1,000 Watt. Unit of power used to measure the capacity of photovoltaic systems.
Unit of energy. Electricity consumption is stated in kilowatt hours. 1 kWh =
1,000 watts over a period of one hour.
Unit of energy: 1 MW = 1,000 kW or 1,000,000 Watt.
Unit of energy. Electricity consumption is stated in megawatt hours. 1 MWh =
1000 kilowatts over a period of one hour.
Connected photovoltaic cells. See also “Photovoltaic module”.

Monocrystalline
Peak kilowatt (kWp)
Peak Megawatt
(MWp)
Photovoltaics
Photovoltaic cell
Photovoltaic module
Photovoltaic system
Polycrystalline
Renewable Energy
Silicon
Silicon wafter
Solar cell
Solar energy system
Spot transactions
The term is used to refer to material (e. g. a silicon block) that consist of just one
crystal and therefore possesses a completely regular atomic structure.
Unit used to measure the standardized power output (rated output) of photovoltaic
cells or photovoltaic modules. The rated output of the module reflects the
output produced under testing conditions that do not correspond to normal
conditions. The testing conditions have the purpose to standardize and compare
photovoltaic cells and photovoltaic modules. The electronic results of the
modules under such testing conditions are included in data sheets. The testing
conditions are at 25°C module-temperature and 1,000 W/m 2 solar radiation (STC
conditions; STC stands for standard test conditions).
1 peak megawatt = 1,000 peak kilowatts.
Photovoltaics involves the conversion of radiation, primarily solar radiation, into
electrical power, and has been used to supply energy since 1958 (initially to
satellites). The name is a combination of the Greek word for light, or “photo”,
and “Volta”, after Alessandro Volta, the pioneer of electricity.
Photovoltaic cells are a photovoltaic application that convert light (usually sunlight)
into direct current by using the photovoltaic effect. The photons being
emitted generate an electric voltage which, by connecting an electric loader to
the solar, allow electricity to flow.
Module used to obtain direct current from the sun. A photovoltaic or solar module
is made up of several connected photovoltaic cells that are sandwiched
between two glass or plastic panes in order to make them weatherproof. To
achieve voltages that can be better used, photovoltaic cells are connected to
each other in a solar module. Photovoltaic modules are usually mounted in a
frame on a roof or on a mounting system.
System (power plant) for generating electrical power from solar energy. The
direct current generated by photovoltaic modules can be used to run motors or
charge batteries, for example. If it is fed into the public supply grid or used for
the operation of common electric loaders, an inverter is required to convert
direct current to alternating current.
The term refers to material consists of several individual crystals.
Renewable energy, or sometimes also called regenerative energy, refers to the
supply of energy from sustainable sources that are either regenerated or
– based on human standards – are inexhaustible. Renewable energy is largely
tapped in the form of solar energy, biomass, geothermics, hydropower and
wind energy.
Silicon processed for use in the semi-conductor and solar energy industries.
Silicon disc used to manufacture photovoltaic cells.
See Photovoltaic cell.
See Photovoltaic system.
Individual transactions of delivery quantities, (for example, of silicon).
G-3

Stand-alone system
Watt (W)
Watt-Peak (Wp)
G-4
Photovoltaic energy system that does not feed power into the grid, but instead
provides electricity locally at a particular site.
Unit of power with which the output of photovoltaic systems can be precisely
measured.
Unit used to measure the standardised power output (nominal output) of photovoltaic
cells and photovoltaic modules. Module prices are generally indicated in
€/Wp. 1,000 peak watts = 1 peak kilowatt.

Oldenburg, Frankfurt am Main, 28 June 2006
aleo solar AG
by Jakobus Smit
Member of the Managing Board
COMMERZBANK
Aktiengesellschaft
by Kristina Kürschner
Bayerische Hypo- und
Vereinsbank AG
by Kristina Kürschner
Joh. Berenberg,
Gossler & Co. KG
by Kristina Kürschner
aleo solar AG
by Heinrich Willers
Member of the Manag-ing Board
COMMERZBANK
Aktiengesellschaft
by Arne Frank
Bayerische Hypo- und
Vereinsbank AG
by Arne Frank
Joh. Berenberg,
Gossler & Co. KG
by Arne Frank
G-5