ANNUAL REPORT 2014 - centrotherm | Innovative Thermal Solutions. | Photovoltaics Semiconductor...

Innovative Thermal Solutions.

ANNUAL REPORT

2014

KEY FIGURES

in TEUR01.01.2014-31.12.2014-

01.06.2013-31.12.2013-

Revenue 189,193 119,408

Total operating performance 184,127 78,955

EBITDA 25,298 -4,613

EBIT 19,565 -7,372

Consolidated net income 1,188 -7,647

Earnings per share in EUR 0.06 -0.36

Weighted average number of shares 21,162 21,162

Total expenses R&D 6,153 1,573

Investments 1,462 634

Order intake 107,391 39,628

31.12.2014 31.12.2013

Total assets 261,909 327,341

Equity 43,113 41,617

Equity ratio in % 16.5 12.7

Number of employees (as of reporting date) 745 762

Order book 150,282 229,132

Key figures for centrotherm photovoltaics Group

centrotherm photovoltaics

Annual Report 2014

1

Chairman‘s Letter 04

centrotherm at a Glance 06

Highlights 2014 08

The Share 10

Supervisory Board Report 12

TO OUR SHAREHOLDERS GROUP MANAGEMENT REPORT

CONSOLIDATED FINANCIAL STATEMENTS

CONTENTS

The centrotherm Group 30

Market Trends and 32 Economic Environment

Group Strategy and Targets 35

Analysis of the Financial Position 36

Net assets 39

Company-Specific 41Performance Indicators

Research and Development 44

Sustainability 46

Report on Opportunities 47and Risks

Outlook 55

Consolidated Income Statement 60

Consolidated Statement of 61Comprehensive Income

Consolidated Balance Sheet 62

Statement of Changes in 64Consolidated Equity

Consolidated Cash Flow 66Statement

Notes to the Consolidated 67 Financial Statements

Independent Auditor‘s Report 132

Glossary 134

Financial Calendar | Imprint 138

INNOVATIVE THERMAL SOLUTIONS

Low-Pressure Boron Diffusion 20

Innovative Monosilane Process 22

Silicon Carbide 24 Power Semiconductors

Functional Layers 26on Flexible Substrates


Contents

2


Annual Report 2014

Chairman‘s Letter 04

centrotherm at a Glance 06

Highlights 2014 08

The Share 10

Supervisory Board Report 12

TO OUR

SHAREHOLDERS

3


Annual Report 2014The centrotherm Management Board (f. l. t. r.)Hans Autenrieth (Speaker)Florian von Gropper (Finance)Peter Augustin (Operations)

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Annual Report 2014

CHAIRMAN‘S LETTER

Dear shareholders,Dear Ladies and Gentlemen,

Photovoltaic trends in 2014 showed that we operate in a very dynamic, but also volatile market of the future. Global demand for solar modules totaled around 46 gigawatts for new instal-lations worldwide last year, reflecting more than 20 percent growth compared with 2013. We anticipate that the module market will continue to report growth of around ten percent every year over the coming years. Such growth nevertheless remains strongly dependent on political factors such as natio-nal support programs and incentives to build energy supplies that are less dependent on conventional energy sources.

What does this mean for centrotherm? centrotherm does not produce any solar cells or modules, but instead supplies the production systems and process technology that enable solar cell manufacturers to produce highly efficient and also competitive solar cells. Global demand was met, and con-tinues to be met, by available production capacities at solar cell and module manufacturers which amounted to some 60 gigawatts in 2014. It is impossible to state reliably whether these factories have been producing on the basis of full capacity utilization, whether product quality has met customer requirements, or whether they even may be no longer competitive on the market due to their cost structures. Especially such factors restrict total available production capacity, however, and will result in the expansion of existing or even new production sites in case of increasing end-market demand for solar modules.

As a supplier of systems and technology to the photovoltaic industry, we experienced a new cycle of investment in production systems for solar cell manufacturing from December 2013 and into the first two quarters of 2014. This is particularly reflected in our new order intake during the first half of the year and in the fourth quarter. Given the example of the intensification of punitive US tariffs on Chinese and Taiwanese solar products in the middle of last year, we nevertheless also experienced how volatile this capital goods

market is. In the third quarter, we encountered a sluggish period in terms of new order intake in the photovoltaic area. To summarize the past financial year, we experienced both highs and lows that required a great deal of flexibility on the part of our employees, the Management Board and the Supervisory Board.

In view of this situation, we can look back with even greater satisfaction on the targets that we reached in the 2014 financial year. Despite the photovoltaic market‘s volatility, we generated around EUR 190 million of revenue, and returned to Group profitability for the first time following insolvency proceedings. Along with our good level of total operating revenue, extraordinary operating income also contributed to our profit. As a consequence, we were consistent in continuing further along our path of efficiency enhancement in the 2014 financial year, implementing measures to further optimize our cost structure. Along with actions to reduce the costs of materials, manufacturing and other non-personnel costs, the overall package that we launched includes further business process optimization in both administration and production. In this context, the socially compatible reduction of 50 jobs, and of a further 30 jobs as a result of natural staff turnover at the headquarters in Blaubeuren proved unavoidable. It was implemented in early 2015 following a social plan that was agreed with the works council.

For centrotherm, efficiency does not mean just cutting costs, however, but also making targeted investments in expanding our product and service portfolio in order to continue to serve internationally leading photovoltaic and semiconductor sector manufacturers with innovative process solutions.

In the „Innovative Thermal Solutions“ section of this annual report, we provide examples of how and where our solutions make a contribution, and their significance for consumers and industry both today and in the future.

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2015 will be an exciting year for centrotherm. Firstly, we will expand our portfolio of services and we will be launching new products and production solutions for the photovoltaic industry on the market, as well as for the semiconductor and microelectronics sector. Secondly, we will set a new course for centrotherm‘s future this year. The insolvency plan envisa-ges majority shareholder Sol Futura Verwaltungsgesellschaft selling its shares to an investor. According to the insolvency plan, the sales proceeds will serve to satisfy creditors‘ insol-vency receivables. We anticipate that an investor will provide us with new impulses for the future. We have prepared the foundation for this step. Fresh capital will strengthen our fi-nancing structure, enabling further investments in promising technologies of the future.

Dear shareholders, I would like to thank you, also on behalf of my Management Board colleagues and all our staff, for the confidence and trust that you have placed in our work.

For the Management Board

Hans AutenriethSpeaker of the Board

>> We achieved the targets that we set for ourselves in 2014, and have, for the first time, returned to generating a positive consolidated result.

We are nevertheless continuing to consistently pursue our path of efficiency enhancement by cutting costs, optimizing internal processes, and making targeted investments in new products.

In 2015, together with a new investor, we aim to position ourselves for the future. <<

To Our Shareholders

Chairman's Letter

6


Annual Report 2014

CENTROTHERM AT A GLANCE

c-Si Solar Cells

Power Semiconductor

Logic | Memory

MEMS | NEMS

Optoelectronics

Sensor Technology

Thick Film

DCB | Packaging

Hybrids

PassivesSilicon & Wafer

Thin Film Ceramics (MLCC | LTCC)

BUSINESS FIELDS

centrotherm has been developing and realizing innovative thermal solutions for over 50 years. As a leading and globally operating technology group, we offer production solutions for the PV, semiconductor and microelectronic industries.

The continuous further development of our successful solutions in thermal processing and coating, such as for manufacturing crystalline solar cells and power semicon-ductors, form the basis for our successful partnerships with industry, research and development.

In this way, we generate valuable competitive advantages for our customers through targeted innovations to processes and production solutions.

PROFILE

Sensor Technology

Innovative Thermal Solutions.

PH

OTO

VOLT

AICS SEMICON

DU

CTO

R

MICROELECTRONICS

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LOCATIONS

centrotherm photovoltaics USA Inc. |Atlanta, USA

centrotherm photovoltaics India Pte. Ltd. |Bangalore, India

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SiTec GmbH is a leading provider of integrated engineering and technology packages along the value chain from producing polysilicon to ingots and wafers.

Our reliable, innovative and low energy consuming production technology guarantees competitive manufacturing cost for semiconductor grade and solar grade silicon.

FHR Anlagenbau is an innovative and recognized company focused on vacuum process technology and special plant con-struction with a global customer base in research and industry.

Founded in 1991 by a group of Dresden-based engineers with many years of experience in thin film technology the company aims to realize both state-of-the-art solutions for thin film applications and tailor-made plant designs.

SUBSIDIARIES

FRONT END

Diffusion CVD | PECVD | LPCVD

Oxidation

Annealing

Film Deposition

PVD | Evaporation *

Silicide Formation

ALD *

Drying Fast Firing | Co-Firing

Annealing

Brazing

Curing Packaging

Hermetic Sealing

Sputtering *

Ion Etching *

Sintering

Bumping

PROCESS COMPETENCE

BACK END

Soldering

* FHR Anlagenbau

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6

7

8

9

1

2

3

centrotherm photovoltaics AG | Blaubeuren, Germany

SiTec GmbH | Burghausen, Germany

FHR Anlagenbau GmbH |Ottendorf-Okrilla, Germany

centrotherm photovoltaics Technology Shanghai Co. Ltd. | Shanghai, China

centrotherm photovoltaics Asia Pte. Ltd. |Singapore

1

2

3

4

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centrotherm photovoltaics Korea Ltd. |Suwon, Korea

centrotherm photovoltaics Asia Pte. Ltd. Taiwan Branch | Zhubei, Taiwan

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To Our Shareholders

centrotherm at a Glance

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Annual Report 2014

HIGHLIGHTS 2014

After the positive developments at the end of 2013, the demand emanating from leading solar manufacturers for single equipment and system packages continues: centrotherm receives orders worth around

EUR 30 MILLIONin December and January alone. These orders include purchases of latest-gene-ration production systems for diffusion and anti-reflective coating (PECVD), and conveyor furnaces for the firing and sintering of metal contacts in the production of highly efficient solar cells.

The Supervisory Board of CT AG restruc-tures its Management Board, appointing

FLORIAN VON GROPPER as CFO. Following the successful reorga-nization of the company in its insolvency protection proceedings in 2012 and 2013, Tobias Hoefer steps down from the Management Board, as planned, on February 17, 2014.

With Supervisory Board approval, the Management Board passes a resolution to seek a switch of the stock market segment of CT AG from the General Standard of the Regulated Market to the

ENTRY STANDARD of the Open Market of the Frankfurt Stock Exchange.

Once the restructuring measures have been completed as part of insolvency protection proceedings, Jan von Schuckmann also steps down from the Management Board by mutual agree-ment with the Supervisory Board.

Founding member

HANS AUTENRIETH

becomes speaker of the management board from May 1.

Subsidiary SiTec presents its innovative monosilane process technology

STARTM

at „Silicon for the Chemical and Solar Industry“ in Trondheim, Norway.

JANUARY

FEBRUARY

MARCH

APRIL

MAY

JUNE

centrotherm enters

BISON-ALLIANCEalong with Constance-based Inter-national Solar Energy Research Center (ISC), offering process and system packages for mass production of bifacial n-type solar cells. They also jointly develop a new low-pressure process for highly efficient boron doping.

Q1 Q2

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centrotherm receives new order for extensive technology and equipment package from China‘s Youser Group. This comprises the

LARGEST SINGLE ORDER during the 2014 financial year.

USA announces expansion of punitive tariffs to solar products from Taiwan.

Agreement signed to sell centrotherm‘s operating and administrative building in

CONSTANCE.

centrotherm responds with extensive package of measures to renewed market weakness in photovoltaic sector that has been triggered particularly by expansion of punitive US tariffs.

At the most important European photovoltaic conference, EU PVSEC in Amsterdam, Netherlands,centrotherm presents its process solution for solar cell

REGENERATION which prevents light-induced degradation.

CT AG shares included in Open Market, Entry Standard of Frankfurt Stock Exchange with effect as of September 30.

centrotherm completes first customer PV project in

JAPAN receiving acceptance for integration of a fully automated low-pressure diffusion system in a production line for latest-generation heterojunction solar cells.

Subsidiary FHR Anlagenbau receives acceptance for its tube coating system

FHR.LINEfor solar thermal absorbers in concentrated solar power plants (CSP) from Taiwan‘s Xxentria.

JULY

AUGUST

SEPTEMBER

OCTOBER

NOVEMBER

DECEMBER

SiTec concludes assembly of CVD reactors in large-scale project in

QATAR .„First silicon out“, in other words, first polysilicon production, follows as next important step.

New order intake improves again after weak third quarter. centrotherm‘s Photovoltaics & Semiconductor segment gains around

EUR 15 MILLIONof new orders in December.

Q3 Q4

To Our Shareholders

Highlights 2014

10


Annual Report 2014

THE SHARE

CENTROTHERM PHOTOVOLTAICS SHARE PRICE PERFORMANCE

The bearer shares with German Securities Identification Number (WKN) A1TNMM and ISIN code DE000A1TNMM9 were listed in the General Standard of the Regulated Mar-ket of the Frankfurt Stock Exchange until September 29, 2014 inclusive. These shares have been included in the Open Market, Entry Standard, of the Frankfurt Stock Exchange since the start of trading on September 30, 2014. This inclusion occurred when the revocation of admission to the Regulated Market became effective. The Management and Supervisory boards had previously infor-med the capital market of the application for the segment switch on March 26, 2014.

This stock market segment switch is intended to reduce the financial and organizational expense entailed in listing the shares on the Regulated Market. The quality Entry Standard segment will continue to provide shareholders with a high degree of transparency. In the Entry Standard, the tradability of the centrotherm share on the Frankfurt Stock Exchange will also be fully retained in its scope to date. The share will also be traded on regional stock ex-changes such as those in Stuttgart and Berlin.

The shares held by Sol Futura Verwaltungsgesellschaft (WKN A1TNMN or ISIN: DE000A1TNMN7) form part of an investment that serves to maintain a controlling influence over the company. For this reason, they will not be listed for stock market trading for the time being. To this extent, the company is utilizing the regulation contained in Section 7 (1) Clause 2 in combination with Section 69 (1) Clause 2 of the German Stock Market Listing Directive (BörsZulV).

With the coming into legal force of the insolvency plan, the creditors of CT AG assigned 70% of their receivables (determined as unconditional and without restriction) to Sol Futura Verwaltungsgesellschaft in mid-May 2013. Sol Futura contributed these receivables as non-cash capital contributions to CT AG in 2013. The insolvency plan makes provision whereby Sol Futura Verwaltungsgesellschaft will sell its shares by the end of 2015 in order to satisfy creditors.

The performance of the centrotherm share was influenced mainly by market fluctuations in the photovoltaic sector during the period under review. The share traded at EUR 4.10 on January 2, 2014, reaching its high for the year of EUR 7.85 on March 14, 2014. This performance was particularly attributable to the recovery in demand for centrotherm production systems from leading Asian solar manufacturers since December 2013. The share fell during the second half of 2014 due to the announcement of the expansion of punitive US tariffs on Chinese and Taiwanese

manufacturers, as well as a related postponement of investment plans. The share closed at EUR 3.10 on December 30, 2014, its low for the year.

Shares in German engineering companies with a focus on the photovoltaic industry underperformed both the DAX index of leading German shares and the TecDAX, as the inception of a new cycle of investment in new solar cell manufacturing systems was slowed or delayed by political factors, especially during the second half the year, and overall demand fell short of expectations. The Photo-voltaic Global 30 Index started 2014 at EUR 32.01, and closed the year on December 30, 2014 at a level of EUR 22.93, thereby relinquishing almost 30% of its value over the course of the year.

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SHARE CAPITAL AND SHAREHOLDER STRUCTURE

The share capital of centrotherm photovoltaics AG amounted to an unchanged volume of EUR 21,162,380 during the 2014 reporting year, and is divided into 21,162,380 ordinary no par bearer shares, each with a notional value of EUR 1.00.

The shareholder structure was also unchanged in 2014, and is as follows:

Shareholder structure as of December 31, 2014

No changes to voting rights were announced and published during the 2014 financial year.

SHAREHOLDERS‘ GENERAL MEETING

The Shareholders‘ General Meeting was held on July 8, 2014 in Ulm, Germany. The Shareholders‘ General Meeting discharged the Management and Supervisory boards for the abbreviated financial year from June 1 to December 31, 2013, and elected RBS RoeverBroennerSusat GmbH & Co. KG Wirtschaftsprüfungsgesellschaft Steuerberatungsgesellschaft, Hamburg, to be the auditor for the separate and consolidated financial statements for the 2014 financial year, and as auditor for an auditor‘s review of interim financial reports, to the extent that these are mandated by the company. The Shareholders‘ General Meeting also passed a resolution to modify Supervisory Board compensation that is to be paid with first-time effect for the 2014 financial year.

CAPITAL MARKET COMMUNICATIONS

centrotherm held no roadshows in the 2014 reporting period, and did not participate in any capital market conferences. Our shareholders were informed frequently through company announcements, financial reports and our website at www.centrotherm.de, within the Investor Relations area. The Chief Financial Officer and the Investor Relations department also engaged in dialog with institutio-nal and private investors.

To Our Shareholders

The Share

TCH GmbH 10%Free float 10%

Sol Futura Verwaltungs-gesellschaft mbH 80%

Number of shares21,162,380

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Annual Report 2014

SUPERVISORY BOARD REPORT

>> The 2014 financial year was marked by a highly volatilePhotovoltaic market and hence for all of us a great challenge.

On behalf of the Board, I thank the Board members and all employees for achieving our goals in 2014.

Furthermore, I would like to thank our shareholders for the confidence and trust that they have placed in us. <<

TOBIAS WAHLSupervisory Board Chairman


Annual Report 2014

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SUPERVISION OF OPERATING ACTIVITIES

We performed with great care the supervisory and con-sultative activities that are incumbent upon us pursuant to the law and the company‘s bylaws, convening monthly with the Management Board for meetings or telephone conferences during 2014. The Management Board fulfilled its information duties, also informing us outside the scope of the fixed calendar of meetings extensively in both written and verbal form about events and measures of relevance for the company. We were directly included in all decisions of fundamental importance. The Supervisory Board passed resolutions at Supervisory Board meetings, and in individual cases also by way of written circular.

After the new elections and expansion of the Supervisory Board to six members that was approved by the Share-holders‘ General Meeting in December 2013, we formed a Chairman‘s committee, an audit committee and a nomination committee from among the board members at the end of January 2014. Establishing an audit committee allows us to boost the efficiency and quality of our super-visory function, especially in relation to a risk management reporting system that is adequate for the company, and greater in-depth review of consolidated and separate annual financial statements.

An extraordinary market and technology day for Super-visory Board members was held in summer 2014, where second level management representatives presented tech-nology fundamentals, market data, and new product and process developments.

In my function as Supervisory Board Chairman, I met with the Works Council Chairmen for two meetings in order to promote constructive communication with the employee representation at centrotherm photovoltaics AG (CT AG). We aim to continue this dialog in the future.

COMMITTEE COMPOSITION

SUPERVISORY BOARD CHAIRS AND COMMITTEES – STATUS AS OF DECEMBER 31, 2014 (UNCHANGED SINCE THE RELATED ELECTIONS AND FORMATION)

Supervisory Board Chairman• Tobias Wahl

Deputy Supervisory Board Chairman• Robert M. Hartung

Chairman‘s committee • Tobias Wahl (Chair) • Robert M. Hartung (Deputy Chair)• Hans-Hasso Kersten• Wolfgang Schmid

Audit committee • Hans-Hasso Kersten (Chair)• Prof. Dr. Brigitte Zürn • Wolfgang Schmid

Nomination committee • Tobias Wahl (Chair) • Robert M. Hartung (Deputy Chair)• Hans-Hasso Kersten• Wolfgang Schmid

To Our Shareholders

Supervisory Board Report

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Annual Report 2014

KEY CONTENTS OF SUPERVISORY BOARD MEETINGS AND RESOLUTIONS

As explained in the management report, centrotherm ope-rates in a very volatile photovoltaic market. Together with the Management Board, we focused in the year under review particularly on securing the company‘s future, the further development of its strategy, and the implementation of the insolvency plan. Subsidiaries and Group investments also formed a regular subject of our consultations with the Management Board. A fixed agenda item of every Supervi-sory Board meeting is the Management Board‘s report on the current market, business and order intake situation, liquidity, the progress of the large-scale silicon project in Qatar, and the status of the current lawsuit relating to the Algeria project. Monthly Group reporting, which the com-pany developed further on several occasions during the financial year under review, forms the basis for this regular Management Board report, which also comprises business trends at the subsidiaries SiTec and FHR Anlagenbau.

A total of 11 Supervisory Board meetings were held in the 2014 financial year, four of which were conducted as telephone conferences. The presence of all of the Supervisory Board members at the meetings stands at almost 100 percent, with only one Supervisory Board member being unable to attend one meeting, and to participate in one telephone conference. The audit committee convened four times in 2014. The Chairman‘s committee and the nomination committee held no meetings in the year under review.

Meetings during the first quarter 2014 covered the review of the rules of business procedure for the Supervisory and Management boards of CT AG. They also included the new appointment of Florian von Gropper to the Management Board, the termination of existing employment contracts with Management Board members Tobias Hoefer and Jan von Schuckmann, as well as the appointment of Hans Autenrieth as Speaker of the Board. The Supervisory Board formed the aforementioned committees on January 29, 2014 with the aim of boosting the efficiency of its super-visory and consultancy work.

On March 26, 2014, the audit committee reported to the Supervisory Board on its meeting to prepare for the review of the consolidated and separate annual financial state-ments by the plenary board. The auditor also informed the Supervisory Board on the type and scope, as well as

results, of its audit. Following in-depth discussion and review, the Supervisory Board approved the separate annual and consolidated financial statements for the June 1 to December 31, 2013 reporting period. At the same meeting, the Supervisory Board also approved the sale of a property in Constance. The Supervisory and Management boards also passed a resolution to seek a switch of the stock market segment of CT AG from the General Standard of the Regulated Market to the Entry Standard of the Open Market of the Frankfurt Stock Exchange. The topic of compliance formed a further agenda item at this meeting.

The Supervisory Board approved its rules of business procedure by way of written circular. These rules of business procedure came into force on April 1, 2014.

The 2015 preview for the Group and its subsidiary SiTec comprised the main agenda items of the Supervisory Board meeting on May 19, 2014. Along with the current business position of SiTec and the large-scale project in Qatar, the centrotherm‘s future orientation, planning, and research and development activities, formed the core of consulta-tions between the Supervisory and Management boards, as well as the management of SiTec. At this meeting, the Supervisory and Management boards approved the invita-tion to the Annual General Meeting on July 8, 2014.

Supervisory Board meetings in the third quarter of 2014 focused on market trends, and the Management Board‘s current appraisal of them. On July 22, 2014, the Supervisory Board approved the new version of the rules of business procedure for the Management Board of CT AG.

As a response to renewed market weakness in the photo-voltaic industry, the Management Board presented a package of measures to the Supervisory Board at the endof August that comprised not only expansion of the productportfolio, but also reductions in the costs of materials, production and equipment, as well as job cuts.

On September 29, 2014, the Supervisory and Managementboards convened for a strategy meeting that focused on reviewed market forecasts, the roadmap for technology and product developments, and the medium-term planning for CT AG.

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Agenda items at Supervisory Board meetings at the end of 2014 included corporate planning and the 2015 budget, as well as medium-term planning. The Supervisory Board approved the planning and budget for the coming financial year at its meeting on December 15, 2014.

COMMITTEE WORK

The audit committee convened in Blaubeuren for four meetings together with the Management Board during the 2014 financial year. The audit committee chair was also in regular contact with the Management Board. Along with handling questions relating to accounting and the supervision of the financial accounting process, committee work focused on the risk management system and the compliance topic.

At its first meeting on March 17, 2014, the committee consulted about the consolidated and separate financial statements for the June 1 to December 31, 2013 financial year, which were forwarded in advance to committee members. The auditor was available as a discussion partner in this context, providing explanations on specific questions relating to accounting, or the presentation and recognition of risks in the consolidated and separate annual financial statements.

At the following meeting on May 26, 2014, the Management Board presented the centrotherm photovoltaics Group‘s risk management system to the audit committee, and discussed possibilities to boost the effectiveness of this important corporate steering tool.

The half-year consolidated financial statements as of June 30, 2014 formed the focus of the audit committee meeting on August 11, 2014. As these financial statements had been subjected to an auditor‘s review, the auditor explained the review‘s results.

The Management Board and the risk manager discussed the current risk report at the fourth audit committee meeting on November 10, 2014. After being appointed by the 2014 Shareholders‘ General Meeting, RBS Roever-Broenner-Susat GmbH & Co. KG Wirtschaftsprüfungsgesellschaft Steuerberatungsgesellschaft, Hamburg, was mandated to audit the separate annual and consolidated financial statements for 2014.

CORPORATE GOVERNANCE AND DECLARATION OF CONFORMITY

With the inclusion of CT AG in the Open Market (Entry Standard) of Deutsche Börse, the company is no longer obligated to issue a declaration of conformity pursuant to Section 161 of the German Stock Corporation Act (AktG). The Management and Supervisory boards last issued this declaration on October 23, 2013. It is reproduced in the annual report for the June 1 to December 31, 2013 period, and is also available from the download center on the website at www.centrotherm.de.

APPOINTMENTS TO THE SUPERVISORY AND MANAGEMENT BOARDS

Following new elections on December 17, 2013, the Super-visory Board of CT AG comprised the following members as of January 1, 2014: Tobias Wahl (Chairman), Robert M. Hartung (Deputy Chairman) and Prof. Brigitte Zürn, thereby consisting initially of three members, in accordance with the bylaws.

The Ordinary Shareholders‘ General Meeting 2013 also elected the following individuals to the Supervisory Board subject to the suspensive condition that the approved amendment to the bylaws be entered in the commercial register (expansion of the number of Supervisory Board members to six individuals): Dr. Christoph Herbst, Hans-Hasso Kersten and Wolfgang Schmid. Since the entry of the amendment to the bylaws in the commercial register on January 23, 2014, the Supervisory Board now consists of the following six members pursuant to the bylaws:

• Tobias Wahl (Chairman)• Robert M. Hartung (Deputy Chairman)• Dr. Christoph Herbst• Hans-Hasso Kersten• Wolfgang Schmid • Prof. Dr. Brigitte Zürn

The composition of the Supervisory Board of CT AG complies with the requirements of Section 100 (5) of the German Stock Corporation Act (AktG). Prof. Zürn, who is a professional auditor and tax adviser, fulfills the requirements of an independent financial expert in the meaning of Section 100 (5) of the German Stock Corporation Act (AktG).

To Our Shareholders


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Annual Report 2014

The Management Board of CT AG consisted of three members as of the balance sheet date.

• Hans Autenrieth, Speaker of the Board, Chief Sales Officer • Peter Augustin, Chief Operating Officer• Florian von Gropper, Chief Financial Officer

The following changes occurred to the Management Board‘s composition during the period under review:

• Florian von Gropper, Chief Financial Officer since February 1, 2014• Tobias Hoefer, Chief Restructuring Officer until February 17, 2014 inclusive• Jan von Schuckmann, Speaker of the Board until April 30, 2014 inclusive• Hans Autenrieth, Chief Sales Officer and Speaker of the Board since May 01, 2014

CONFLICTS OF INTEREST

No conflicts of interest occurred in relation to Management and Supervisory board members which would need to be disclosed immediately to the Supervisory Board, and about which the Shareholders‘ General Meeting is to be informed.

With Supervisory Board assent pursuant to Section 114 (1) of the German Stock Corporation Act (AktG), CT AG con-cluded an agreement with PMDL GmbH on September 16, 2013 on standard market terms that comprises consultancy services within the MENA region. Robert M. Hartung is Managing Director of PMDL.

Supervisory Board member Dr. Brigitte Zürn is, among other positions held, Managing Director of Dr. Horn Unter-nehmensberatung GmbH, Ulm, which regularly renders consultancy services for CT AG and some subsidiaries.

AUDITING OF THE SEPARATE AND CONSOLIDATED ANNUAL FINANCIAL STATEMENTS

The Shareholders‘ General Meeting on July 8, 2014 appointed RBS RoeverBroennerSusat Wirtschaftsprüfungs-gesellschaft Steuerberatungsgesellschaft, Hamburg, as the auditor for the 2014 financial year. RBS audited the separate financial statements and management report for the January 1 to December 31, 2014 financial year, which the Management Board had prepared pursuant to the regulations of the German Commercial Code (HGB), and the consolidated financial statements and Group management report for the afore-mentioned period, which had been prepared pursuant to Section 315a of the German Commercial Code (HGB) on the basis of International Financial Reporting Standards (IFRS).

The auditor issued an unqualified audit certificate for both the separate annual financial statements and the corresponding management report, as well as the consolidated financial statements and Group management report. The auditor participated at the audit committee meeting on March 16, 2015, and at the Supervisory Board accounts meeting on March 23, 2015, which concerned the separate and consolidated financial statements for the financial year as of December 31, 2014, and provided an in-depth report pursuant to Section 171 (1) Clause 2 of the German Stock Corporation Act (AktG). The auditor was also available for additional questions and information during the discussion of the specifics of the financial statements and management reports. No circumstances arose that would suggest bias on the auditor‘s part. Following in-depth analysis, the Supervisory Board determined that no objections were to be raised in relation to the result of the audit as conducted by the auditor, and gave its assent to this result. The Supervisory Board approved the financial statements that had been prepared by the Management Board. The separate and consolidated financial statements of centrotherm photovoltaics AG are adopted as a consequence.

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Pursuant to Section 312 of the German Stock Corporation Act (AktG), the Management Board has prepared a report on relationships with associated companies (dependent companies report) for the January 1 to December 31, 2014 reporting period. This report includes the summary statement by the Management Board that the company received appropriate consideration for each legal transaction accor-ding to the circumstances of which the Management Board was aware at the time when the legal transactions were performed.

The Supervisory Board received the dependent companies report in good time, and examined it. The auditor partici-pated in corresponding negotiations, reported on its key audit findings, and was available to provide extra information. The Supervisory Board shares the opinion of the auditor, RBS RoeverBroennerSusat GmbH & Co. KG Wirtschafts-prüfungsgesellschaft Steuerberatungsgesellschaft, Hamburg, which furnished this report with the following audit certificate on March 23, 2015:

In view of the fact that – following the conclusive result of the audit that is incumbent upon us – no objections are to be raised against the report by the Management Board of centrotherm photovoltaics AG, Blaubeuren, concerning the company‘s relationships with associated companies in the January 1 to December 31, 2014 financial year, we issue the following audit certificate pursuant to Section 313 (3) of the German Stock Corporation Act (AktG):

On the basis of the audit and appraisal that is incumbent upon us, we confirm that

1. the actual disclosures made in the report are correct,

2. in the case of the legal transactions listed in the report, the performance or payment of centrotherm photovoltaics AG was not inappropriately high.

Also following the conclusive result of the Supervisory Board review, no objections are to be raised against the Management Board‘s declaration at the end of the dependent companies report.

On behalf of the entire Supervisory board, I would like to thank the Management Board members as well as all staff members for the work that they have performed in the 2014 financial year. I would like to thank our shareholders for the confidence and trust that they have placed in us.

Blaubeuren, March 23, 2015

On behalf of the Supervisory Board

Tobias Wahl Supervisory Board Chairman

To Our Shareholders


18


Annual Report 2014

Low-Pressure Boron Diffusion 20

Innovative Monosilane Process 22

Silicon Carbide Power Semiconductors 24

Functional Layers on Flexible Substrates 26

INNOVATIVE

THERMAL SOLUTIONS

19


Annual Report 2014

Highlights of the centrotherm Group‘sThermal Process Technology

The FHR.Roll.1600-PVD vacuum coating equipment allows the sputtering of functional layers on flexible substrate materials such as flexible solar cells or flat displays.

Introducing the new, innovative STARTM monosilane process technology, SiTec is offering its customers the possibility of achieving considerable energy savings and productivity gains compared with existing processes.

The c.DIFF LP low-pressure diffusion furnace enables highly efficient boron doping which is applied for emitter formation in n-type solar cell production.

With c.OXIDATOR 150 and c.ACTIVATOR 150 centrotherm has developed two high-temperature furnaces especially for the production of silicon carbide, which find use, for example, in the production of MOSFETs or Schottky diodes.

Innovative Thermal Solutions

Highlights

19

20


Annual Report 2014

COST EFFECTIVEMASS PRODUCTION OF HIGHLY EFFICIENT N-TYPE SOLAR CELLS

The centrotherm c.DIFF LP low-pressure diffusion furnace is used for emitter formation with phosphorus (p-type) or boron (n-type).

The low-pressure process is not only superior to atmospheric diffusion with regard to homogeneity and throughput, but also presents further advantages in terms of higher process flexibility. This enables cell manufacturers to achieve significant cost reductions, while increasing the efficiency of the solar cells at the same time.

1 Quartz process tube of a c.DIFF diffusion furnace

2 c.DIFF LP low-pressure diffusion furnace for mass production

3 Mirror image of a bifacial n-type BiSoN solar cell

1

2

21

Most solar modules contain p-type silicon solar cells, which currently constitute the major share of commercial cell production capacity. The silicon wafers used here are positively conducting and are doped with a thin negatively conducting layer on the surface, in order to provide the p/n junction relevant for electricity generation.

In recent years n-type solar cells have received increasing attention in the solar cell industry on account of their higher potential efficiency and LID (light induced degradation) stability. Here, a positively conducting layer is applied to a negatively doped wafer. A forecast by the International Technology Roadmap for Photovoltaic (ITRPV) anticipates an increase of market share from currently 10% to around 40% in the coming decade. In addition, the efficiency of n-type cells is predicted to rise to over 24% in the next ten years, whereas the potential of monocrystalline p-type cells stands at only 22%.

The BiSoN technology is based entirely on proven pro-duction processes developed on centrotherm equipment and systems. It is designed for the economical and reliable mass production of high performance solar cells and can be integrated into existing p-type production lines with only minor investment and time input by the installation of three additional production steps. BiSoN solar cells are compatible with standard module structure as well as the corresponding production processes.

Emitter formation is one of the key processes in the production of n-type cells since the quality of the p/n junction is decisive for the cell and module power. The most frequently employed procedure here is the thermal diffusion of boron by means of BBr3 which is also used in the framework of BiSoN technology. Based on the results of standard atmospheric boron doping, the ISC and centrotherm are developing a new patented low pressure process on the c.DIFF LP system platform for efficient boron doping. With the integration of up- and downstream process steps and shorter process times, cell manufacturers can significantly reduce the production costs for n-type solar cells and increase the efficiency of their solar cells. In addition, the low pressure process provides more diverse process options thanks to greater flexibility and the more rapid adaptation of the gas atmosphere between two processes.

For the production of highly efficient n-type solar cells, centrotherm is engaged in a cooperative partnership with the International Solar Energy Research Center (ISC) in Constance. With regard to the BiSoN technology (Bifacial Solar Cell on N-type) developed by ISC, technology and systems packages for mass production are being marketed and sold within the framework of the BiSoN Alliance. BiSoN solar cells exhibit efficiencies >20.5 %. In addition, bifacial BiSoN solar modules not only generate current from

sunlight falling directly on the front side, but can also convert incidence of light on the back side. In combination with the higher cell efficiency, they provide up to 30% more energy (KWh/year) than standard modules of the same size.

Compared to conventional p-type cells bifacial n-type solar cells can have a

up to 30% higher energy yield

LOW-PRESSURE BORON DIFFUSION

2

3


Solar Cell Technology

22


Annual Report 2014

Polysilicon is used as raw material for the production of photovoltaic modules as well as in the semiconductor industry. The prevalent method for mass-scale polysilicon production is the Siemens process where raw silicon is first converted in a fluidized bed reactor with gaseous HCl to trichlorosilane (TCS). After some distillation steps, the TCS is thermally deposited on heated ultra-pure silicon rods by using hydrogen. The multiple distillation in combination with the energy intensive deposition results in high production costs in the manufacture of polysilicon.

As a low-cost alternative to this procedure, some of the leading global polysilicon producers have introduced the Fluidized Bed Reactor (FBR) technology for the deposition of monosilane as raw material. With the addition of silicon seed crystals, the gaseous monosilane is fed intothe fluidized bed reactors. Polysilicon is deposited in granu-lar form from the monosilane and can be continuously removed from the reactor.

The high cost pressure on the market means that poly-silicon must be produced as efficiently as possible. This calls for a minimization of energy requirements in connection with the maximization of equipment and system productivity. The innovative SiTec STARTM mono-silane process technology provides the solution.

The energy saving with the STARTM monosilane process technology stands at 30 % per kWh/kg monosilane compared with the conventional process. Among other things, STARTM improves the capacity utilization of the system, reduces the operating expenditure (OpEx) by 11% and reduces investment expenditure (CapEx) in new systems. The proven technology can also be integrated in already existing systems as an upgrade.

The STARTM monosilane process technology starts with metallurgical grade silicon and produces monosilane as an intermediate product for polysilicon or for direct sale. A single-train hydrochlorination reactor delivers 15,000 metric tons of monosilane per year. This innovation reduces the electrical and thermal energy requirement and eliminates the bottlenecks in the monosilane material cycle.

The SiTec STARTM Technology reduces energy demand of monosilane production

by 30% while increasing capacity by more than 20% at the same time

INNOVATIVE MONOSILANE PROCESS

New production systems are regarded as best-in-class solutions in terms of capacity utilization and cost reduction, and deliver up to 20% higher productivity compared with conventionally developed systems of the same size. A new system with the STARTM monosilane process technology requires 25 - 30% less energy in connection with a simultaneous capacity increase of 20%. Here, the thermal energy requirements can be reduced by 25% and electrical power requirements by around 10 - 25%. Depending on the regional energy prices, STARTM allows the achievement of 15% lower operating costs. The investment pays for itself in two to six months. During the upgrade phase with STARTM monosilane technology, the production process can continue running without interruption.

23

WITH STARTM TECHNOLOGY, SITEC IS OFFERING NEW OPTIONS FOR POLYSILICON PRODUCTION

With their new, innovative STARTM mono-silane process technology, SiTec is offering its customers the possibility of achieving considerable energy savings and productivity gains compared with existing processes.

The STARTM technology can be integrated both in new as well as already existing monosilane factories. The investment pays off in two to six months.

H

H

H

H

Si

1 Monosilane structural formula

1


SiTec GmbH

24


Annual Report 2014

HIGH-TEMPERATURE PROCESSING OF SILICON CARBIDE WAFERS

Silicon carbide (SiC) exhibits a dielectric field strength about 10 times that of silicon. This, in combination with its three times higher thermal conductivity, allows the production of significantly smaller and faster components. Consequently, SiC components are significantly more efficient, which leads to increased efficiency in power switching and reduced switch size at the same time.

With c.OXIDATOR 150 and c.ACTIVATOR 150, centrotherm has installed two proven vertical furnaces especially for high-temperature SiC processing at numerous customers.

1 High-temperature process equipment with heat shield and process boat for five 150 mm SiC wafers

2 c.ACTIVATOR 150 high-temperature furnace

3 Processed silicon carbide wafer

2

1

25

Electronic semiconductor components have become an unnoticed part of our daily lives, whether in electrical appliances, electronic devices, power or communication technology or storage technology. Transistors, which are generally integrated into chips by millions on an area of a few square millimeters, are by far the most important “active” components for these applications and devices. Particularly in applications in the power electronics area, besides the decisive factors such as power capacity, reliability and robustness, the factors of higher efficiency and the continuous decline in production costs also play an important role. In this context, the voltage and power limits of silicon components, on which most of the systems mentioned are based, are being reached in the meantime. In order to reduce switching losses and increase efficiency, a basis material is required that is characterized by a broader band gap, high breakdown voltage, higher thermal conductivity and lower leakage currents.

With c.OXIDATOR 150 and c.ACTIVATOR 150, centrotherm has developed two vertical furnaces especially for the high-temperature processing of silicon carbide. The production systems permit the processing of SiC wafers from 2 inches to 150mm, which are almost entirely used in further processing for application in MOSFETs or Schottky diodes.

c.ACTIVATOR 150 is designed for annealing and activation processes at temperatures up to 2050 °C, and due to its great process flexibility it is suitable both for research and development as well as for mass production. The proven system, which can be used for the processing of gallium nitride (GaN) as well as SiC, has already been installed about 20 times globally and is being continuously further developed by centrotherm. As a result, the throughput time has been further shortened in connection with integrated wafer handling.

c.OXIDATOR 150 is designed for SiC oxidation at temperatures up to 1380 °C and its sophisticated functionalities allow unique possibilities in the formation of oxide layers with a low density of states and high channel mobility. The metal-free heater, together with the double vacuum, offers users the safest ToxGas oxidation furnace currently on the market.

SILICON CARBIDE POWER SEMICONDUCTORS

Silicon carbide (SiC) is one of the semiconductor materials exhibiting a high band gap and meeting the critical requirements of power electronics. SiC is the first choice for high-efficiency fast switching applications, such as those encountered in the energy management of electric vehicles, PV inverters or applications in connection with uninterruptible power supplies. In comparison with silicon semiconductors, SiC components exhibit higher power capacity per unit area, and therefore prove to be more compact, more robust and lower priced. They allow an increase in the switching frequency up to 100 kHz, which enables the more compact and lower priced construction of these systems. The high speed switching process incurs very little power loss, enabling efficiencies of 99% and more.

The energy loss of SiC semiconductors constitutes one-tenth of that of silicon-based semiconductors

3


Semiconductor & Microelectronics

26


Annual Report 2014

It sounds visionary: Smartphones which don’t shatter when dropped; flat TVs that can be rolled up; light emitting wall paper; solar cells woven into T-shirts; thermometers and blood pressure sensors that can be adhered to the skin like a band-aid. A wealth of daily products could experience a revolution if their manufacture could be transferred to flexible substrates. In the place of rigid products made from metal, plastic or glass which are inflexible, heavy or hard to carry, light, almost unbreakable and highly flexible products open entirely new applications and target markets. The essential functionality of all these rigid or flexible products is generally based on incredibly thin functional layers of a few nanometers thickness that are tailored for the specific application in their electrical, optical, magnetic or mechanical properties. The complexity ranges from one to a hundred or so layers on top of each other. An efficient thin film sensor sometimes needs only a single layer, organic LEDs three to ten, anti-reflective optical coatings and microprocessors a dozen layers. Many of these functional layers can be applied in high vacuum by physical vapor phase deposition (PVD).

regard to cost efficiency and environmental impact. In the sputtering process, noble gas ions are accelerated from a high frequency plasma in the direction of a target material (cathode) which they impact with high energy and eject extremely fine material particles (cathode sputtering). This material vapor then condenses as a thin film on the substrate surface and grows, depending on requirement, to several nanometers thickness (typically 10-100 nm). By controlling the temperature of the substrate and other process conditions, the growth of the layer can be influenced so as, for example, to control crystallinity or porosity of the functional layer or the layer stack.

The FHR.Roll product range allows producers to use this technology for the coating of thin foil substrates, for example stainless steel, thin glass or polyimide, up to industrial production scales. The foil width employed and the arrangement of several sputter cathodes can be chosen to optimize the layer thickness and the transit speed for the product to achieve the best possible throughput. FHR covers the entire range of industrial requirements. Depending on applications and purpose the company delivers machines with 300 mm to 2400 mm coating width and, besides sputter deposition, also supports additional thin film technologies such as thermal vaporization and plasma-enhanced chemical vapor deposition (PECVD) in the roll-to-roll process.

The special technical know-how of the FHR.Roll foil coatingsystems lies on the one hand in the mechanics of the windingmechanism where uniform and increased film transport is ensured by film edge guidance and the right tension for the substrate, and on the other hand in the technological process management which guarantees optimal growth of the later functional layers by substrate tempering and in-situmonitoring. In addition, the construction of the FHR.Roll product range impresses with outstanding maintainability to minimize downtime. FHR draws on over 15 years of engineering competence in the area of roll-to-roll vacuum coating machines and ranks among the market leaders serving an international customer roster.

FUNCTIONAL LAYERS ON FLEXIBLE SUBSTRATES

FHR offers an especially suitable procedure with deposition by magnetron sputtering which is characterized by low material requirements and which produces no chemically polluted waste water. This offers significant benefits with

1

27

FHR ENABLES LIGHT-WEIGHT AND FLEXIBLE ELECTRONICS AND OPTICAL APPLICATIONS

The FHR.Roll.1600-PVD vacuum coating equipment enables sputter deposition of thin functional layers on metal or polymer foils up to 1600 mm wide in the roll-to-roll procedure. The equipment is designed for flexible foil substrates, in order to deposit such layers as metal, oxide or nitride, or multiple layers on this material using sputter technology.

The special electrical, optical or other functional characteristics of these thin films lead to applications such as flexible solar cells and flat displays, thermal protection films or diffusion proof packaging foils.

2

3

1 Giant winding mechanism of FHR.Roll.1600

2 Unwinding of polyimid film, that is typically used in flexible sensors or solar cells

3 Flexible solar module


FHR Anlagenbau

28


Annual Report 2014

The centrotherm Group 30

Market Trends and Economic Environment 32

Group Strategy and Targets 35

Analysis of the Financial Position 36

Net Assets 39

Company-Specific Performance Indicators 41

Research and Development 44

Sustainability 46

Report on Opportunities and Risks 47

Outlook 55

GROUP MANAGEMENT

REPORT

30


Annual Report 2014

GROUP MANAGEMENT REPORT

PRELIMINARY REMARK ABOUT REPORTING

The 2014 financial year (January 1 – December 31, 2014) can be compared with the preceding abbreviated financial year (June 1, 2013 – December 31, 2013) to only a limited extent, as these comprise reporting periods of differing du-rations. The abbreviated 2013 financial year comprises just seven months, as the insolvency proceedings of CT AG were discontinued on May 31, 2013, and pursuant to Sec-tions 258 of the German Insolvency Directive (InsO) in combination with 155 (1) InsO, the abbreviated financial year that had been running since the opening of insol-vency proceedings on October 1, 2012 thereby ended. As the date of the discontinuation of insolvency proceedings differed from the calendar year-end, and the financial year generally corresponds to the calendar year pursuant to the regulations in section 1.3 of the bylaws of CT AG, the pre-vious year's reporting period was based on an abbreviated financial year from June 1 to December 31, 2013.

"centrotherm photovoltaics" is abbreviated below as "cen-trotherm" or "CT AG".

THE CENTROTHERM GROUP

GROUP STRUCTURE AND OPERATING ACTIVITIES

centrotherm photovoltaics is a globally leading provider of technology and equipment to the photovoltaic industry. The Group commands a broad and well-founded technol-ogy base, key equipment for the silicon and solar cell value chain, and integration know-how for module production. Since the restructuring and reorganization during 2012 and 2013, the centrotherm Group has realigned itself stra-tegically within its existing business areas, focusing on pro-duction technology for thermal surface processes in crys-talline solar cell manufacturing, as well as for the semicon-ductor and microelectronics industries. The development of new technologies and production solutions is intended to enable centrotherm customers to manufacture at com-petitive prices silicon and highly efficient solar cells, or power semiconductors and microelectronic components for future applications such as e-mobility.

The shares of CT AG have been included in the Open Mar-ket, Entry Standard of the Frankfurt Stock Exchange with effect as of September 30.

Examples providing an insight into our range of products and services, and further information about them, start on page 18 of this annual report.

OPERATING SEGMENTS AND ORGANIZATION

The operating activities of the centrotherm Group are cur-rently divided into the following three segments:

• Silicon • Photovoltaics & Semiconductor • Thin Film & Customized equipment

The Management Board of CT AG is responsible for the strategic steering and development of all operating seg-ments. Along with its strategic tasks, the Group headquar-ters also operates as an interface to various areas of the corporate environment, including the capital market and shareholders, policymakers and the broader interested public, for example. CT AG performs all central Group functions, supported by local service and sales companies, especially in Asia and the USA.

The management teams of the operating segments and lo-cal subsidiaries bear operational responsibility for projects and daily business, thereby allowing rapid and individual responses to customer wishes.

Silicon

In the Silicon segment, the SiTec subsidiary offers engi-neering, technology and services for integrated process and system packages for polysilicon manufacturing. Poly silicon in different purity grades is utilized by both the pho-tovoltaic and semiconductor industries to produce crystal-line solar cells or semiconductors. SiTec delivers process engineering packages to customers who wish to optimize their existing production sites with regard to cost reduc-tion, capacity expansion and product quality. This Group

GROUP MANAGEMENT REPORT

31

subsidiary, which is based in Burghausen, focuses on tech-nology and process engineering for complete production systems, which also comprises special designs for key sys-tems such as CVD reactors and lab CVD reactors.

Along with its proprietary CVD reactor technology based on the Siemens process, SiTec is working on developing fluidized bed reactor (FBR) technology. Compared with the CVD process that is established in the polysilicon industry, FBR enables costs to be reduced considerably due to lower electricity consumption in polysilicon production. SiTec is expanding its product portfolio with its STARTM monosilane process technology, which it presented in 2014.

Photovoltaics & Semiconductor

The Photovoltaics & Semiconductor segment particularly comprises the development, construction, production and sale of single equipment to produce monocrystalline and multicrystalline solar cells. These include production sys-tems for atmospheric and low-pressure diffusion, PECVD and fast firing. Depending on customer requirements, we also offer integrated production solutions for the competi-tive manufacturing of high-performance solar cells with corresponding process, technology and service packages. centrotherm is one of the leading providers of integrated production solutions with a track record of more than 50 projects realized worldwide. The long-term sustainable de-sign of integrated centrotherm production solutions offers maximum flexibility to solar cell producers: new technolo-gies and systems can be integrated into existing produc-tion lines according to requirements, production capacities can be quickly added, and the degree of automation can be boosted. Single equipment can also be retrofitted with upgrade packages. centrotherm thereby enables its cus-tomers to manufacture state-of-the-art solar cells on a ba-sis that is cost-efficient long-term, and respond flexibly to changing market requirements. Thanks to its integration expertise along the value chain, the Group also offers its customers solutions for common module production prob-lems.

The Photovoltaics & Semiconductor segment additionally comprises a range of services relating to the semiconduc-tors and microelectronics area. As one of the leading de-velopers and producers of production systems for the sem-iconductor and microelectronics industries, centrotherm offers a broad process spectrum for various technologies and applications such as logic and memory components (e.g. Flash, DRAM), power semiconductors (e.g. Si, SiC based), LED, SMT, MEMS and sensor technol-ogy. Besides horizontal and vertical furnaces, and single

wafer systems, our product range for the semiconductor industry also includes high-temperature furnaces for silicon carbide processes. Serving the microelectronics industry, we supply vacuum soldering furnaces, as well as conveyor furnaces constructed according to customer requirements.

Thin Film & Customized equipment

The Thin Film & Customized Equipment segment focuses on the development, construction, production and sale of customized system concepts and customized equipment for modern coating technologies. The FHR Anlagenbau GmbH (FHR) subsidiary operates in this segment as an in-novative company in the area of vacuum process technol-ogy and special system construction. FHR's strategic prod-uct focal areas include film coating systems to produce flexible solar cells, organic solar cells, energy-efficient OLED displays and insulation foils, as well as inline systems for small and large series production that are set up to coat wafer substrates, display and solar glasses, and opti-cal and electronic components. FHR has established a lead-ing technology and market position in this area together with renowned industrial partners and research institu-tions. FHR's customer base includes Sunshine PV, Solarion, SoloPower, Heliatek, European universities, and research institutions at the Fraunhofer Society and the Helmholtz Association.

SALES MARKETS AND MARKET POSITION

Recording an export share of 87.2% in the 2014 financial year (June 1 to December 31, 2013: 92.5%), international business remains of central importance to us. Our main sales markets are located in the Asia region with an 84.1% share (prior-year period: 89.3%). Our production solutions and technology in the Photovoltaics & Semiconductor seg-ment enjoyed particular demand from Asia. In the Silicon segment, business focused mainly on Qatar in connection with a large-scale project involving the construction of a polysilicon factory there. In regional terms, we include Qa-tar as part of Asia.

The German market accounted for 12.8% of consolidated revenue (TEUR 16,041), compared with 7.4% in the prior-year period (revenue: TEUR 8,847).

Our customers in the Photovoltaics & Semiconductor seg-ment include renowned international solar cell manufac-turers such as Gintech, Hanwha SolarOne, Jinko Solar, Motech, Neo Solar Power, LG, REC, Solarworld and Trina Solar. In the semiconductor area, they include Ascatron, Bosch, Schott, Siemens, Philips, Vishay and X-FAB, among others.

Group Management Report

The centrotherm Group

32


Annual Report 2014

Qatar Solar Technologies (QST) is our largest and most im-portant customer in our Silicon segment. centrotherm sub-sidiary SiTec GmbH is involved in building a polysilicon fac-tory in Qatar for QST.

centrotherm remains a market leader with more than 50 crystalline solar cell production lines constructed world-wide. In the area of single photovoltaic systems for the production of solar cells, besides some Chinese manufac-turers, Gebr. Schmid GmbH as well as Roth & Rau AG, Ho-henstein, Amtech-Tempress and Despatch Industries rank among our most important competitors. centrotherm is a market leader in PECVD systems.

NATIONAL AND INTERNATIONAL LOCATIONS

ORGANIZATION AND MANAGEMENT STRUCTURE

The Management Board manages the centrotherm Group. At the end of 2014, the Management Board's areas of re-sponsibility were distributed as follows:

The following changes occurred to the Management Board's composition during the 2014 financial year:

• Florian von Gropper, Chief Financial Officer since February 1, 2014

• Tobias Hoefer, Chief Restructuring Officer until February 17, 2014 inclusive

• Jan von Schuckmann, Speaker of the Board until April 30, 2014 inclusive

• Hans Autenrieth, Chief Sales Officer, and Speaker of the Board since May 1, 2014

LEGAL STRUCTURE

CT AG is the parent company of the centrotherm Group. A total of eight consolidated companies were included within the Group as of December 31, 2014, as was also the case as of the prior-year reporting date. No changes occurred to the scope of consolidation during the year un-der review. Section 2.3 of the notes to the consolidated fi-nancial statements provides details about the consolidation scope.

MARKET TRENDS AND ECONOMIC ENVIRONMENT

MACROECONOMIC TRENDS

The global economy is set to grow by 3.7% in 2015 (previ-ous year: 3.4%), according to forecasts published by the Kiel Institute for the World Economy (IfW). Global growth is being hampered primarily by weaker trends in some emerging economies, such as Russia and Brazil.

Economic activity in the Eurozone registered only slight growth of 0.8% in 2014. The EU Commission has recently upgraded its expectations for the Eurozone, now forecast-ing 1.3% growth for 2015, up from 1.1% previously. The low oil price, the weak euro and the bond repurchase pro-gram that the European Central Bank launched in January 2015 brighten Europe's economic prospects.

Europe

North America

Asia

Germany: Blaubeuren (Headquarters), Burghausen (SiTec), Dresden (Service semiconductor), Hanover (Process technology semiconductor), Ottendorf-Okrilla (FHR)

USA: Atlanta (Sales/Service North America),Seattle (R&D SiTec)

China: Shanghai (Sales/Service/Process technology)India: Bangalore (Sales/Service)Korea: Suwon (Sales/Service)Singapore: Singapore (Sales/Service)Taiwan: Zhubei City (Sales/Service/Process technology)

Management board responsibility areas

Hans Autenrieth

Speaker of the Board

Sales and

Marketing

Peter Augustin

Operations

Production, R&D

and Human Resources

Florian von Gropper

Finance

Finance, IT,

Administration and

Legal Department

33

Gross domestic product in Germany registered 1.5% growth in 2014. German economic growth thereby proved stable compared with the previous years' average. German exports were robust despite the difficult international envi-ronment, reaching a new record level of EUR 1.1 billion in 2014. The IfW forecasts 1.7% growth in Germany for 2015.

At 6.6% in 2014, the Asian economy registered growth at the previous year's level. Gross domestic product in our most important market of China was up by 7.4%, alt-hough this was slightly weaker than the previous year's 7.7%. India's economy presented a more dynamic trend, advancing its gross domestic product by 5.9% in 2014, compared with 4.7% in the previous year. The IfW is fore-casting gross domestic product growth of 6.6% in Asia for 2015, including 7.0% for China, and 6.5% for India. Asia remains the most important sales market for the centrotherm Group with an export ratio of more than 87% in the 2014 financial year.

We do not anticipate that our business growth will be af-fected by the Ukraine crisis, and a potential further intensi-fication of economic sanctions against Russia, as our cus-tomer base is located mainly in Asia. Effects on our busi-ness cannot be excluded if this conflict escalates, expand-ing into a global crisis.

SILICON MARKET

With constantly rising demand for photovoltaic modules and newly installed output of around 46 GW worldwide as of the end of 2014, the polysilicon market registered fur-ther growth in the financial year under review. Polysilicon production was up from approximately 220,000 metric tons in 2013 to around 250,000 metric tons in 2014. Pol-ysilicon manufacturers have had to contend with falling prices since 2010, partially resulting in the shutdown of many production sites. The estimated number of produc-ers has more than halved in China alone. The Chinese gov-ernment is currently supporting the remaining manufactur-ers in order to boost capacity by a further 50,000 metric tons, thereby reducing polysilicon imports.

Tier 1 polysilicon producers pushed ahead with expansion plans continuously during 2014 due to higher demand and attendant rising production capacity utilization. Along with the established Siemens process, the industry is focusing increasingly on new technologies, such as fluidized bed re-actor (FBR) technology. FBR technology offers producers the potential to reduce energy consumption costs in the manufacturing process.

Sales opportunities arise for SiTec primarily from the ex-pansion of additional capacities, as well as the optimiza-tion of existing systems in relation to costs and quality.

Further potentials also derive medium- and long-term for SiTec's FBR technology in combination with its innovative STARTM monosilane process technology.

PHOTOVOLTAIC SECTOR

Following the sluggish period during 2012 and 2013, the photovoltaic sector made a return to investing in new solar cell production equipment in 2014. The market recovery in the capital goods area that started in December 2013 reached its high point for the year in the first quarter of 2014, before continuing at a slightly lower level until mid-2014. The expansion of punitive US tariffs to include solar products from Taiwan, and the intensification of punitive tariffs for Chinese and Taiwanese manufacturers that was announced in July, fed through to a collapse in invest-ments in new equipment in the third quarter of the finan-cial year elapsed. The expansion plans of solar and module manufacturers from these important markets were post-poned further, placed under review, and potential scenar-ios to avoid punitive tariffs were examined. These included relocating existing production lines, or setting up new pro-duction capacities in other Asian countries, or in North and South America. Some of these plans were launched over the further course of the year, and are being implemented at present. Demand recovered significantly at the end of the fourth quarter of 2014.

Growing end-market demand worldwide for modules comprised a key factor driving the 2014 market recovery. Around 46 gigawatts (GW) of module capacity were in-stalled globally in 2014, according to initial estimates by the market research firm IHS. Demand thereby grew by 8 GW, or 17%, compared with 2013. Current forecasts as-sume newly installed capacity of between 53 and 57 GW for the current year, a further double-digit percentage in-crease. Leading solar manufacturers' production capacity utilization stood at record levels recently, which should feed through to new investments in production equipment due to anticipated end-market growth. At the same time, cost reductions in photovoltaics are resulting in a further increase in the end-market. Experts anticipate that energy generation costs can be cut further, thereby corresponding to the cost of generating energy from fossil fuel sources by the 2020 to 2030 period. This is already possible today in some countries that enjoy particularly high solar radiation.

The sector remains characterized by very high pricing pres-sure, accompanied by continued market consolidation at


Market Trends and Economic Environment

34


Annual Report 2014

all steps of the value chain. Solar cell and module manu-facturers need to reduce their costs further in this competi-tive situation, such as through optimizing production pro-cesses, or through higher system throughput, or through integrating into existing production new cell concepts such as p-type PERC and bifacial n-type cells. These new cell concepts, such as those that centrotherm develops in co-operation with research institutes, offer significant poten-tial to improve efficiency, and consequently energy yield, compared with widely utilized standard p-type solar cells. Page 20 of this report provides an insight into this cell technology.

Policymakers exert very great influence on photovoltaic market trends. Many countries wish to strengthen photo-voltaics for energy-policy or socio-economic motives. China, for example, has defined the solar industry as a fo-cus industry in its Five-Year Plan, again setting an ambi-tious target of 17 GW of module expansion by the end of 2015. Other countries have declared their intention to pro-mote and further boost photovoltaics' share of their en-ergy mix. "Local content" acts, such as practiced in India, for example, can also promote the creation of new local production sites, as they require a fixed scope of value cre-ation within the country. National expansion targets, sup-port programs for feed-in tariffs, "local content" regula-tions, or import and punitive tariffs exert a significant ef-fect on the sector. Along with positive effects such as worldwide demand growth for solar modules, 2014 also showed how punitive and import tariffs can result in nega-tive effects for some market participants. On the other hand, anti-dumping measures, especially against China and Taiwan, could result in the relocation of production out of such countries, thereby generating additional de-mand for competitive production equipment on other markets. centrotherm can benefit from such develop-ments, especially with its production solutions, and the ex-perience that it has gained from more than 50 successfully installed turnkey solar cell production lines.

Along with China, Taiwan ranks as one of our most im-portant sales markets in Asia. Our main sales markets will continue to be situated in Asia.

The Management Board of CT AG remains convinced that the market for production technology in the photovoltaic area will remain at a stable level over the coming years, although it will not see significant growth, unless the mod-ule market gains additional momentum. Photovoltaics will indisputably make a significant contribution to covering fu-ture global energy demand growth. Significant benefits of-

fered by photovoltaics include the fact that it can be de-ployed flexibly and on a decentralized basis, that the tech-nology is silent, and emission-free. The centrotherm Group can participate in this growth with its diffusion, PECVD and fast-firing process steps, as well as new technologies and process innovations. centrotherm can boost its com-petitiveness and tap additional market shares as the result of the cost reduction measures that it has launched, its new products, and cost-cutting process solutions for the manufacture of highly efficient solar cells.

SEMICONDUCTOR SECTOR

Along with production technology for the photovoltaic in-dustry, the semiconductor sector also comprises a core business for the centrotherm Group, and is to be ex-panded further. The market for production technology for the semiconductor industry is divided into the two seg-ments of power and CMOS. The power segment com-prises power semiconductors for the automotive industry and the engineering sector, and the CMOS segment co-vers semiconductors for the mass and end-customer mar-kets. centrotherm operates and is well-positioned in the power segment based on silicon as a base material. This segment is registering continuous growth as the result of renewable energies and emergent e-mobility. With regard to production solutions for power semiconductors based on silicon carbide and gallium nitride, which are seeing ris-ing demand, centrotherm is fielding an appropriate and ef-fective product portfolio with its c.E series products, c.AC-TIVATOR 150, c.OXIDATOR 150 and c.RAPID 200. Intro-ducing our new c.PLASMOX LT product for nonthermal oxidation, we are addressing a further high-growth mar-ket: the CMOS logic and memory market based on 300 mm wafers.

The global semiconductor market is currently in a healthy growth phase. Studies produced by independent market research institutes forecast 11% growth for 2015 (source: Semiconductor Intelligence), compared with 10% in 2014.

THIN FILM & CUSTOMIZED EQUIPMENT

The core business of FHR Anlagenbau GmbH focuses on building systems for thin film applications, especially for the photovoltaic, optical and electronic segments.

Demand for renewable energies is growing worldwide. With a focus on CIGS/CIS, TCO, as well as promising or-ganic technologies that can be combined with flexible sub-strates, photovoltaics forms a stable market segment for FHR that is exhibiting signs of resumed growth. Serving the thin film solar application area, FHR offers vacuum

35

coating solutions with sputtering and evaporation technol-ogy.

Special system construction for the optical and electronics industries is generating stable revenues. We anticipate mod-erate growth here. The further advance of miniaturization, rising productivity, and growing integration of electro-opti-cal applications among end-users comprise significant mar-ket drivers. FHR is seeing growing demand in the insulation and sensor technology areas.

GROUP STRATEGY AND TARGETS

The centrotherm Group restructured itself in 2012 and 2013, focusing on its strengths in production technology and processes for thermal surface coating for the photo-voltaic, semiconductor and microelectronics industries. We have been further expanding the product and service port-folio consistently since then, investing in new process solu-tions, as well as upgrade and service packages.

Equally, centrotherm is continuing to focus on pursuing the efficiency enhancement path that it started on as part of its restructuring. Along with measures to reduce the costs of materials, production and equipment, business processes are being optimized, especially in administration and production. In order to secure the company's success, profitability and competitiveness, a socially compatible pro-gram of job layoffs at CT AG was approved in 2014, which was implemented in early 2015.

Research and development work remains one of the most important pillars within the Group to maintain and expand our market position, and thereby secure our corporate suc-cess and profitability. We will continue to make targeted investments in research and development as a conse-quence. centrotherm is also involved in several subsidized research programs at national level, with the aim of devel-oping new technologies, and of optimizing processes and related production equipment.

Investments in the Silicon segment are being made in flu-idized bed reactor (FBR) technology. In the semiconductor area, our investments next year will focus mainly on launching new products in the mass production area. In-vestments in the photovoltaic area will be especially con-centrated on developing processes and system concepts, as well as on new upgrade products. Page 44 presents more details about our research and development activi-ties.

centrotherm is positioned successfully along the photovol-taic value chain, from silicon through to crystalline solar

cells. We pursue the objective of reducing our customers' production costs through new product developments and innovations. We aim to provide growth impulses for the photovoltaic sector with these cost-reductions, and drive our own corporate development forward at the same time. Besides this, we also access further sales potentials and new customer groups through a broad range of ser-vices, which, along with new products, also includes up-grade packages and service offerings, for example. cen-trotherm is diversifying its offering further in the Semicon-ductor & Microelectronics area in order to tap new appli-cations for its production solutions. Revenue in this area should help to better smooth future market fluctuations in the photovoltaic industry.

Expanding aftersales business and improving service qual-ity comprise a further important building block of Group strategy. The installed base of more than 50 production lines and more than 2,000 production systems worldwide forms the foundation for this expansion.

As part of our long-term growth strategy, we aim to grow together with existing customers, acquire new customers, and tap growth markets further. We analyze new markets, and develop market entry strategies at an early stage. We are represented with service and sales companies in the most important sales markets such as China, Taiwan, South Korea and India, in order to thereby secure cus-tomer loyalty and market presence. These foreign compa-nies endow us with a strong market position in East Asia, and also form the basis for expanding our service activities, a business area that offers great future potential. Tapping the MENA region, where we have identified strong interest in renewable energies technologies, forms a further focus of our expansion strategy. We are well positioned to ex-ploit this business potential as the result of our early mar-ket entry, and our integrated product and technology portfolio.


Group Strategy and Targets

36


Annual Report 2014

ANALYSIS OF THE FINANCIAL POSITION

IMPORTANT NOTES AND PRELIMINARY REMARKS

The 2014 financial year (January 1 – December 31, 2014) can be compared with the preceding abbreviated financial year (June 1, 2013 – December 31, 2013) to only a limited extent, as these comprise reporting periods of differing du-rations. The abbreviated 2013 financial year comprises just seven months as the insolvency proceedings of CT AG were discontinued on May 31, 2013, and pursuant to Sec-tions 258 of the German Insolvency Directive (InsO) in combination with 155 (1) InsO, the abbreviated financial year that had been running since the opening of insol-vency proceedings on October 1, 2012 thereby ended. As the date of the discontinuation of insolvency proceedings differed from the calendar year-end, and the financial year generally corresponds to the current year pursuant to the regulations in section 1.3 of the bylaws of CT AG, the pre-vious year's reporting period was based on an abbreviated financial year from June 1, 2013 to December 31, 2013.

For improved readability, the June 1 to December 31, 2013 reporting period is also referred to as the "previous year" or "prior year".

No changes occurred to the scope of consolidation during the year under review. Section 2.3 of the notes to the con-solidated financial statements provides details about the consolidation scope.

All figures refer to the centrotherm Group with its consoli-dated subsidiaries. Unless noted otherwise, margins and ratios relate to revenue.

Further information can be found in the notes to the con-solidated financial statements.

NEW ORDER INTAKE TRENDS

The Group received new orders worth a total of TEUR 107,391 in the 2014 financial year. New order intake more than doubled year-on-year.

Our SiTec GmbH subsidiary, which forms part of the Sili-con segment, focused its activities in 2014 on completing the large-scale project involving the construction of polysil-icon production facilities in Qatar, launching a new tech-nology to reduce energy costs on the market, while also boosting productivity in the polysilicon manufacturing pro-cess. We anticipate sales successes in the 2016 financial year. New order intake of TEUR 752 in the 2014 reporting year was attributable to single equipment for Asian cus-tomers.

In its Photovoltaics & Semiconductor segment, CT AG rec-orded, at TEUR 94,221, its highest new order intake since 2012. Although the 2014 new order intake comprises a 12-month period, it reflects a considerable improvement compared with the two previous reporting periods. Specifi-cally, new order intake during the previous 15 months amounted to a total of TEUR 66,119 (October 1, 2012 un-til May 31, 2013 = TEUR 35,381, and June 1 until Decem-ber 31, 2013 = TEUR 30,738). This is mainly attributable to the market recovery in the photovoltaic industry, resulting in solid new order intake in the first half and fourth quar-ter of 2014. Solar cell manufacturers are investing again in new production equipment following the slack investment period during 2012 and 2013. Overall, new order intake in the Photovoltaics & Semiconductor segment fell short of our expectations for the 2014 financial year, however. Triggered by expansion and intensification of punitive US tariffs on solar products from China and Taiwan, invest-ments in new equipment in these important markets plunged at times. Cell and module manufacturers post-poned their expansion plans, and examined potential sce-narios as to how to avoid punitive tariffs.

In the photovoltaic area, we received our first customer or-der for our c.DIFF LP low-pressure diffusion system from Japan in the 2014 financial year, thereby making our entry into the Japanese PV market.

New order intake in the Thin Film & Customized Equip-ment segment amounted to TEUR 12,418 in 2014, com-pared with TEUR 7,744 in the previous year. No change occurred to the order book position when calculated on a monthly average basis. Overall new order intake in this segment fell short of our expectations.

The Group order book position amounted to TEUR 150,282 as of December 31, 2014, compared with TEUR 229,132 as of the previous year's reporting date. The de-cline in the order book position is attributable chiefly to

Order intake by segments

in TEUR

Silicon


Thin film & Customized equipment

Total

01.01.2014-

31.12.2014

752

94,221

12,418

107,391

01.06.2013-

31.12.2013

1,146

30,738

7,744

39,628

37

progress made with the polysilicon factory project in Qa-tar, and the invoicing of several large-scale projects in the Photovoltaics & Semiconductor segment.

REVENUE AND EARNINGS TRENDS

Brief overview

• The Group achieves its forecast revenue target, with TEUR 189,193 coming in at the upper end of the fore-cast range up to TEUR 200,000.

• For the first time since the conclusion of insolvency proceedings, the centrotherm Group returns to profita-bility at the EBIT level, generating TEUR 19,565.

• After extraordinary other operating income, the Group generates a net profit after tax of TEUR 1,188. Here, too, the Group achieves the guidance that it had is-sued for 2014.

Revenue and total operating revenue

In the 2014 financial year, centrotherm achieves TEUR 189,193 of consolidated revenue (previous year: TEUR 119,408), thereby achieving its 2014 revenue target. It lies at the upper end of the stated range of between EUR 150 million and EUR 200 million.

On a regional basis, revenues are largely unchanged in percentage terms. We again generated most of our reve-nue abroad with a 93.1% export ratio (previous year: 92.6%). With an 87.1% revenue share, Asia remains the centrotherm Group's central sales market.

In terms of the split of revenue by product, around 82% derives from single equipment. While taking into account the five-month longer reporting period compared with the previous period, service and replacement parts business revenue registered a marked increase. This product group is to be expanded gradually. Although revenue from turn-key production lines registered growth in absolute terms, it is of somewhat subordinate importance compared with previous financial years. Only a very few solar cell manu-facturers order complete production lines. Instead, they draw on the requisite integration expertise themselves, and buy single equipment or equipment packages.

Due to the only slight year-on-year change of TEUR 5,188 in the inventory of finished goods and work in progress (previous year: TEUR 40,453), consolidated total operating revenue of TEUR 184,127 reflects a considerable increase of TEUR 105,172 in relation to the comparable period

Order book by segments

in TEUR

Silicon


Thin film & Customized equipment

Total

4102.21.13

79,950

64,888

5,444

150,282

31.12.2013

163,804

60,111

5,217

229,132

Extract from consolidated income statement

in TEUR

Revenue

Total operating performance

Earnings before interest, tax,

depreciation and amortization (EBITDA)

Earnings before interest and tax

(EBIT)

Earnings before tax

(EBT)

Consolidated net income

Average number of shares

Earnings per share in EUR

01.01.2014-

31.12.2014

189,193

184,127

25,298

19,565

15,861

1,188

21,162

0.06

01.06.2013-

31.12.2013

119,408

78,955

-4,613

-7,372

-10,835

-7,647

21,162

-0.36

Revenue by regions

in TEUR

Germany

Other Europe

Asia

ROW

Total

01.01.2014-

31.12.2014

13,023

5,777

164,778

5,615

189,193

01.06.2013-

31.12.2013

8,847

2,179

106,690

1,692

119,408

Percentage

GJ 2014

6.9%

3.0%

87.1%

3.0%

100%

RGJ 2013

7.4%

1.8%

89.4%

1.4%

100%

Revenue by products

in TEUR

Turnkey

production lines

Single equipment

Service and

spare parts

Consultancy and

Engineering

Other

revenue

Total

01.01.2014-

31.12.2014

11,016

154,928

19,820

0

3,429

189,193

01.06.2013-

31.12.2013

1,329

105,540

9,643

979

1,917

119,408

Percentage

FY 2014

5.8%

81.9%

10.5%

0.0%

1.8%

1 00%

AFY 2013

1.1%

88.4%

8.1%

0.8%

1.6%

100%


Analysis of the Financial Position

38


Annual Report 2014

(TEUR 78,955). Other operating income amounted to a to-tal of TEUR 36,360 in the 2014 financial year, compared with TEUR 15,499 in the previous year. It includes mainly the derecognition of TEUR 20,403 of contingent insol-vency liabilities due to a modification to an insolvency law appraisal. Other Group operating income also included the release of TEUR 5,526 of provisions and obligations, and additional income of TEUR 5,132 from the disposal of cer-tain assets previously held for sale. The additional income was generated from the disposal of property, as well as production equipment from the former R&D center in Constance.

Expense and earnings trends

In the 2014 financial year, the cost of materials connected with the higher level of total operating revenue (including expenses for purchased services) amounted to TEUR 107,506, compared with TEUR 50,823 in the previous year. The cost of materials includes TEUR 1,891 of provi-sions for warranties. The cost of materials ratio stood at 56.8% (previous year: 42.6%).

Personnel expenses amounted to TEUR 47,506 in the 2014 financial year, and include TEUR 3,340 of provisions for job cuts initiated at the year-end at CT AG at the Blaubeuren site. Personnel expenses stood at TEUR 23,061 in the prior-year period, which was five months shorter (June 1 – De-cember 31, 2014). Personnel expenses increased in abso-lute terms, as the short-time working tool no longer needed to be deployed since the first quarter of 2014 due to the order book position. Due to natural staff turnover, the number of Group employees fell slightly to 745 as of the December 31, 2014 reporting date, compared with 762 as of the previous year's reporting date. The personnel expense ratio increased to 25.1%, compared with 19.3% in the prior-year period.

Other operating expenses amounted to a total of TEUR 40,177 in the 2014 financial year, compared with TEUR 25,183 in the previous year. The related expense ratio stood at 21.2% in relation to revenue, compared with 21.1%. Other operating expenses particularly comprised legal and consulting costs of TEUR 7,889 (prior-year pe-riod: TEUR 6,121). Other operating expenses of TEUR 3,145 were also incurred in connection with the insol-vency. Impairment losses of TEUR 3,091 relating to receiv-ables and construction orders were expensed in the 2014 financial year (previous-year period: TEUR 2,699), which were particularly attributable to the Photovoltaics & Semi-conductor segment. Input taxes of TEUR 2,121 were also

reimbursed for the sale of the property in Constance, and recognized as other operating expenses. The centrotherm Group paid a total of TEUR 1,612 of commissions in the 2014 financial year, including a commission for the afore-mentioned property sale.

For the first time since the conclusion of insolvency pro-ceedings, the centrotherm Group returned to generating a profit at EBITDA level (earnings before interest, tax, depre-ciation and amortization), generating TEUR 25,298 (previ-ous year: EBITDA loss of TEUR -4,613). The EBITDA margin improved from -3.9% to 13.4%. The higher level of con-solidated total operating revenue and other operating in-come in the 2014 financial year made a significant contri-bution to the EBITDA improvement.

Depreciation, amortization and impairment losses stood at TEUR 5,733 in the 2014 financial year (prior-year period: TEUR 2,759), of which TEUR 3,944 was attributable to de-preciation and amortization (previous year: TEUR 2,734), and TEUR 1,789 to impairment losses. The latter related mainly to wear and tear for a building of CT AG at the Blaubeuren site. The ratio of depreciation, amortization and impairment losses to revenue amounted to 3.0%, compared with 2.3% in the previous year.

Operating profit (EBIT) improved from TEUR -7,372 in the prior period to TEUR 19,565 in the 2014 financial year. Due to the aforementioned effects, the EBIT margin in-creased by 16 percentage points year-on-year, from -6.2% to 10.3%.

The financial result amounted to TEUR -3,704 in the 2014 financial year, compared with TEUR -3,463 in the previous year. Financial expenses of TEUR -5,986 particularly com-prised interest from the unwinding of discounts applied to long-term insolvency liabilities, as well as provisions for contingent liabilities arising from the insolvency in an amount of TEUR 5,277. Financial income amounted to TEUR 2,282 compared with TEUR 79 in the previous year, and included mainly income from the discounting of provi-sions for contingent liabilities arising from the insolvency.

In sum, earnings before tax (EBT) improved from TEUR - 10,835 in the previous year to TEUR 15,861 in the 2014 financial year. Taking into account TEUR 14,673 of taxes on income, centrotherm generated TEUR 1,188 of consoli-dated net profit for the period (previous year: TEUR 7,647 consolidated net loss for the period). Given an average number of 21,162,380 shares in issue, earnings per share

39

improved by EUR 0.42 in the 2014 financial year to EUR 0.06 (previous year: EUR -0.36).

SEGMENT REPORTING

centrotherm Group operating activities continued to be di-vided into three segments. Please refer to section 3 of the notes to the consolidated financial statements for an ex-tensive presentation of segment reporting.

Silicon

Revenue in the Silicon segment doubled to TEUR 86,252 in the financial year under review, compared with TEUR 43,724 in the previous year. This higher revenue level arises mainly from progress made with the polysilicon fac-tory project in Qatar.

Proportionate realization of the profit margin from the Qa-tar project resulted in an operating profit in this segment. EBIT improved to TEUR 11,014 (previous year: TEUR 6,080). The EBIT margin in the Silicon segment stood at 12.8%, reflecting a slight fall of 1.1% year-on-year (previ-ous year: 13.9% EBIT margin).


The Group generated TEUR 90,637 of revenue in this seg-ment (previous year: TEUR 70,106). In the prior-year pe-riod, which was five months shorter, the complete pro-cessing and final invoicing of some large-scale projects, in particular, resulted in comparatively higher revenue. Some of the revenues that were planned for this segment for 2014 failed to materialize, as new order intake, especially for PV production systems, collapsed in the third quarter due to the intensification of punitive US tariffs on Taiwan-ese and Chinese solar products, failing to recover until the year-end.

EBIT improved from TEUR -13,859 for the June 1 to De-cember 31, 2013 period to TEUR 9,250 in the 2014 finan-cial year. This improvement is chiefly attributable to a total of TEUR 32,642 of extraordinary other operating income in the Photovoltaics & Semiconductor segment. In order to further improve the cost structure, the Management Board of CT AG put in place an extensive package of measures in September 2014 to reduce personnel, materials and other operating expenses, as well as legal and consultancy costs.

Thin Film & Customized Equipment

Revenue in the Thin Film & Customized Equipment seg-ment grew from TEUR 5,578 in the previous year to TEUR

12,304 in the 2014 financial year. This revenue neverthe-less fell short of planning, thereby resulting in a slight EBIT loss of TEUR -699 (previous year: EBIT profit of TEUR 407).

NET ASSETS

BRIEF OVERVIEW

• Total assets fell from TEUR 327,341 (previous year) to TEUR 261,909 as of December 31, 2014

• Positive equity of TEUR 43,113 as of December 31, 2014 (previous year: TEUR 41,617)

SIGNIFICANT BALANCE SHEET EFFECTS IN THE REPORTING PERIOD

Total assets reduced by around 20%, from TEUR 327,341 on December 31, 2013 to TEUR 261,909 on December 31, 2014.

In relation to total assets, the share of non-current assets decreased from 27.8% to 27.6% when comparing the re-spective year-and reporting dates. In absolute terms, non-current assets fell from TEUR 90,990 to TEUR 72,236. This arose particularly from the decline in deferred tax assets, and depreciation applied to property, plant and equip-ment.

Current assets reduced by TEUR 46,678, equivalent to around 20.0%, from TEUR 236,351 as of the previous year's reporting date to TEUR 189,673 on December 31, 2014. They comprised 72.4% of total assets (December 31, 2013: 72.2%). The main factors responsible for the re-duction in current assets included a strong decrease in in-ventories. These reduced by 32.9%, from TEUR 67,385 to

Extract from consolidated balance sheet

in TEUR

Assets

Non-current assets

Current assets

Total assets

Equity and liabilities

Equity

Non-current liabilities

Current liabilities

Total equity and liabilities

4102.21.13

72,236

189,673

261,909

43,113

101,356

117,440

261,909

31.12.2013

90,990

236,351

327,341

41,617

70,781

214,943

327,341


Net Assets

40


Annual Report 2014

TEUR 45,228 – mainly due to the complete processing and invoicing of projects.

Cash and cash equivalents comprise the largest item in value terms on the assets side of the balance sheet, ac-counting for 60.1% of current assets as of the reporting date. They reported a position of TEUR 114,067 as of De-cember 31, 2014, compared with TEUR 99,800 as of the prior-year reporting date. Deposits as of December 31, 2014 include TEUR 26,080 of cash lines arising from insol-vency estate lending agreements (previous year: TEUR 31,106). Due to the continued need for cash deposits for guarantees at individual centrotherm Group companies, as well as a deposit that has been assigned, freely available li-quidity amounted to TEUR 106,474 as of the reporting date (December 31, 2013: TEUR 85,299).

The "non-current assets and disposal groups held for sale" item reduced by TEUR 11,650 as a result of the sale of the operating and administration building in Constance, which was no longer required after the Group restructuring. The amount of TEUR 2,344 reported under this item as of De-cember 31, 2014 arises from the reclassification from property, plant and equipment of an operating and admin-istration building, along with equipment, that is held for sale.

On the equity and liabilities side of the balance sheet, eq-uity increased from TEUR 41,617 as of December 31, 2013 to TEUR 43,113 as of the balance sheet date, mainly due to the consolidated net profit of TEUR 1,188 (previous year: TEUR -7,647). The equity ratio improved to 16.5% (December 31, 2013: 12.7%).

Non-current liabilities amounted to TEUR 101,356 as of the December 31, 2014 reporting date (prior-year report-ing date: TEUR 70,781), comprising 38.7% of total equity and liabilities (December 31, 2013: 21.6%). Of this amount, TEUR 63,196 (December 31, 2013: TEUR 62,364) – and consequently the quite predominant proportion – was attributable to non-current financial liabilities arising from the insolvency proceedings, which were deferred without interest as of December 31, 2015. Non-current as-sets also include TEUR 28,197 of provisions for contingent liabilities arising from the insolvency (prior-year reporting date: TEUR 0). In the previous year, most of these provi-sions were reported among other current non-financial lia-bilities. They were reclassified due to a modification to a legal appraisal.

Current liabilities decreased by TEUR 97,503, from TEUR 214,943 as of December 31, 2013 to TEUR 117,440 as of December 31, 2014. The decline in current liabilities re-flected, firstly, a reduction in liabilities arising from con-struction orders from TEUR 76,487 in the previous year to TEUR 45,194. This change derives predominantly from the progress made with the polysilicon factory construction project in Qatar. Other current non-financial liabilities also reduced, from TEUR 57,181 to TEUR 1,961. This is at-tributable, firstly, to the release of TEUR 20,403 of contin-gent insolvency liabilities for which the statutory limitation has expired, according to appraisals that are available, and, secondly, from the reclassification of provisions for contin-gent liabilities arising from the insolvency. Other current fi-nancial liabilities also reduced from TEUR 18,868 to TEUR 14,634, chiefly reflecting the disposal of the operating and administration building in Constance, along with equip-ment, and the resultant repayment of the loan that had been secured by a mortgage. This was offset by personnel liabilities (see section 5.25 in the notes to the consolidated financial statements).

Other current provisions stood at TEUR 5,326 as of the 2014 year-end, compared with TEUR 6,341 as of Decem-ber 31, 2013.

LIQUIDITY AND FINANCING

Our financial management places a high priority on secur-ing our liquidity and financial flexibility, in order to have at all times sufficient financial scope for maneuver for the Group's further development, and to satisfy all contractual obligations. In doing so, we aim mainly to identify financial risks emanating from the operating business, measure them, and counter them through the development and implementation of strategies. The risk report contains de-tailed information about financial risk management.

The Group had access to guarantee credit lines of TEUR 30,400 as of the December 31, 2014 balance sheet date, which remain in place until today. Of this amount, TEUR 10,400 is attributable to FHR Anlagenbau GmbH, and a further TEUR 20,000 to CT AG and a further subsidiary. The latter can be utilized only against cash deposit. Of these guarantee credit lines, a total of TEUR 5,146 was uti-lized as of the December 31, 2014 balance sheet date.

Cash flow from operating activities amounted to TEUR 15,354 in the 2014 financial year, compared with TEUR - 9,577 in the previous year. The positive operating cash flow in 2014 resulted from the operating breakeven result,

41

combined with a reduction in inventories, future receiva-bles arising from construction orders, and prepayments rendered in an amount of TEUR 26,621, as well as a de-crease in other assets of TEUR 21,568, which are not to be allocated to investing or financing activities. This was off-set, in particular, by a TEUR 30,243 reduction in prepay-ments received and in liabilities arising from construction orders.

Cash flow from investing activities stood at a net amount of TEUR -1,087, compared with TEUR 978 in the prior-year comparable period.

As in the previous year, no cash flow from financing activi-ties was to be reported in the period under review.

Financial resources as of December 31, 2014 exclusively comprised the cash and cash equivalents of TEUR 114,067 reported in the consolidated balance sheet (December 31, 2013: TEUR 99,800). Financial resources in an amount of TEUR 7,593 were subject to restricted availability as of the balance sheet date (December 31, 2013: TEUR 14,501) due to the continued need for cash deposits for guaran-tees at individual centrotherm Group companies, and the assignment of deposits arising from an insolvency estate lending agreement. Freely available liquidity consequently amounted to TEUR 106,474 as of the reporting date (De-cember 31, 2013: TEUR 85,299 million). Deposits as of De-cember 31, 2014 include TEUR 26,080 of cash lines arising from insolvency estate lending agreements (December 31, 2013: TEUR 31,106).

PROFIT FOR THE PERIOD AND APPLICATION OF EARNINGS OF CENTROTHERM PHOTOVOLTAICS AG

As the Group parent company, CT AG reports a net profit of TEUR 14,536 for the year as of December 31, 2014 in its separate financial statements, which are prepared ac-cording to the German Commercial Code (HGB) (Decem-ber 31, 2013: net loss for the year of TEUR 19,618). The entirety of this amount is to be carried forward to the new account.

COMPANY-SPECIFIC PERFORMANCE INDICATORS

VALUE MANAGEMENT AND FINANCIAL PERFORMANCE INDICATORS

The centrotherm Management Board, in coordination with the Supervisory Board, determines Group strategy and the Group targets that derive from it. These targets are moni-tored, steered and developed further at regular meetings

together with the subsidiaries' management teams and managing directors.

Following the discontinuation of insolvency proceedings at CT AG, the creditor committee supervises compliance with the insolvency plan and the sale of shares through Sol Fu-tura for the purpose of satisfying creditors.

centrotherm utilizes revenue and earnings as key financial performance indicators for Group steering purposes. These key indicators are submitted in the context of institutional-ized monthly reports to the Management Board, along with further key indicators such as EBIT, cash flow, liquid-ity, as well as new order intake. A significant focus was again placed on securing liquidity and its further growth in the 2014 financial year.

The order book position, and with it new order intake, were, and remain, central steering metrics for us. These are reported in detail to the Management Board by busi-ness area, as well as by order type and content. We derive our budgeted revenue from the period that is expected to be required to process the existing order book position, and from forecast future new order intake.

NON-FINANCIAL PERFORMANCE INDICATORS

Market and competition

The early identification of opportunities and risks is im-portant to us in order to react promptly and flexibly to market trends, and to actively identify and exploit poten-tials. For this reason, we not only observe macroeconomic indicators, but also utilize company-specific leading indica-tors. In particular, continuous contact with customers, sup-pliers and market research institutions allows us to identify market and competitive structural trends, and to gage their impact on our future sales and earnings positions. We also use international trade fairs as a platform to enter into dialog with policymakers, associations, technology ex-perts and, not least, customers. In doing so, we systemati-cally survey market appraisals, development activities, and cell and module manufacturers' investment plans.

Political influence on market trends forms an important indicator. This includes the approval of solar subsidy programs and feed-in tariffs (FiTs), "local content" regulations, as well as punitive tariffs such as those imposed by the USA on Chinese and Taiwanese solar products. Although we are not directly affected by adjustments to subsidy programs, we integrate any resultant considerations into our international sales strategy.


Company-Specific Performance Indicators

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Annual Report 2014

Employees

Employee numbers and structure

The Group employed a total of 745 individuals as of the December 31, 2014 reporting date. This figure reflected a slight decline compared with 762 employees as of the end of 2013, and is due to natural staff turnover. A total of 91 staff were employed at our international branches as of the reporting date (December 31, 2013: 81 staff). The slight increase in the number of employees abroad is at-tributable to the large-scale project in Qatar. The number of employees is stated by heads.

Number of employees by function

Given renewed market weakness in the photovoltaic sec-tor, the Management and Supervisory boards approved a package of measures in September 2014 to optimize the cost structure and to boost efficiency at CT AG, including the socially acceptable reduction of 50 jobs and a further 30 jobs as a result of natural staff turnover at Group head-quarters in Blaubeuren. Further jobs are also to be discon-tinued at international sites. A labor-management contract was agreed with the Works Council of CT AG in early De-cember 2014, and a social plan was approved. The job cuts were implemented in early 2015.

The sickness rate at CT AG stood at an unchanged level of 5.0% in 2014, as in the previous year.

The short-time working instrument was not deployed in 2014, by contrast with the prior-year period.

Personnel development and trends

As a technology group, the primary objective behind our employee development is to retain our staff members' val-

uable expertise and excellent knowledge within the com-pany, to develop it further, and to secure it for the future. For this purpose, we conduct an annual appraisal of our employees' individual qualification requirements, from which we derive important further-training measures. Our ct academy program generally offers various communica-tion and method-oriented training courses, such as on the topics of project and time management, presentation and speaking skills, English lessons, and Microsoft Office soft-ware training, for example. Managers are offered further trading seminars on employee management and motiva-tion, and mediation skills. They also undergo intensive training in how to handle change processes in order to support our change management process. With these measures, centrotherm has an extensive personnel devel-opment concept in place.

Training and promoting up-and-coming staff

In order to secure our demand for specialist staff, we place a special focus on promoting young and upwardly mobile employees. As of the December 31, 2014 reporting date, we were training a total of 33 apprentices in commercial and technical professions, including four apprentices at the FHR subsidiary. Not least due to their high qualification level, we hired 11 apprentices as permanent employees. In the year under review, our trainees included some individ-uals who qualified as best in class among industrial clerks and electronic technicians.

In order to promote young and up-and-coming staff, cen-trotherm offers training in the following professions:

• Industrial clerks with additional qualification in English language

• Electronic automation technicians with/without Voca-tional College II

• Mechatronics technicians • Technical product designers • IT specialists • Cooperative study course according to the "Ulm

Model", combining traineeship, undergraduate study and financial independence

• Combined studies/vocational training program special-izing in industry, business IT and mechanical engineer-ing

We are also pursuing new paths in apprenticeships: CT AG has entered into a training cooperation venture together with KONTEK GmbH in order to jointly train commercial-technical apprentices. This partnership allows apprentices

Administration 185

Technology and Research 183

Production 249

745 Employees

Apprentices 33

Management Board 3

Sales 92

43

to gain an insight into, and practical experience of, tech-nical professions at two companies, learning different op-erational processes and skills during their internships. The apprentices' workshop skills are strengthened and broad-ened to a greater extent than is possible in an apprentice-ship at just one company.

We also offer internships to schoolchildren, and opportuni-ties to students to write dissertations for their diplomas.

In 2015, we are offering six apprenticeships in the mecha-tronics technician profession, for the industry cooperative study program, and for the "Ulm Model" cooperative study program.

Occupational healthcare management

With our ct fit occupational healthcare management scheme, we aim to continuously improve the working con-ditions and health-related lifestyle of our workforce.

As regular health protection activities, we again offered free flu vaccinations and other health-supporting measures in 2014. A regular, free health check by a company doctor also formed a fixed part of our employee health scheme. In addition, we offer group leisure time courses where we aim to boost our employees' fitness and team spirit. Our staff are also entitled to discounts at many fitness studios, and subsidies for massages.

Works Council

The staff of CT AG elected a new Works Council in the 2014 financial year. The Works Council formed a business committee from among its membership.

Purchasing & procurement

The primary objective of our purchasing and procurement department has been, and will remain, to secure the Group's competitiveness in relation to technology, quality, supplier loyalty and costs within a market environment that is typically cyclical for the photovoltaic, semiconductor and microelectronics industries. We continued to achieve this in 2014 with the consistent application of our "make-and/or-buy process", and supplier management.

As part of supplier management, we are constantly ex-panding our relationships with our long-standing, experi-enced and quality-certified suppliers, and we are also iden-tifying new and very effective suppliers. This also enables us to further develop our products in technological terms. Through second-source and third-source supplies, we not only ensure that supplies of components or component

groups remain uninterrupted by supply bottlenecks or stoppages, but also minimize potential dependency risks. We continuously monitor not only our suppliers but also the quality of the goods that they deliver to us.

The purchasing area is structured organizationally so as to efficiently support dynamic procurement requirements.

Production

The efficiency and flexibility of the operational production area exerts a significant influence on the centrotherm Group's competitiveness. For this reason, we consistently pursue the objective of securing and continuously boosting both quality and supplier loyalty, while keeping production costs as low as possible.

The highly volatile market environment presented major challenges to our production employees again in the 2014 financial year. The make-and/or-buy process that was launched together with the purchasing department in the prior period enabled insourcing and outsourcing in the manufacturing of systems or system components for the photovoltaic or semiconductor industries to be managed in line with capacities. The supply chain management (SCM) that was also launched in the previous year enabled pro-cesses to be run on an optimized basis in 2014. The SCM was further adapted and optimized in mid-2014 on the basis of the knowledge that had been gained from high production utilization during the first and second quarters of 2014.

With the active involvement of our production staff, we pushed ahead further last year with the change and im-provement process that we launched following the 2012/2013 restructuring. Improvement potentials still exist in our materials flows, which we have identified and aim to exploit.

Sales and marketing

Sales structures within the centrotherm Group are oriented to our dominant international business. We are locally rep-resented on all important markets with a network consist-ing of service and sales companies, which allows us to be close to current market activity at all times. This provides optimal customer service through personal consulting, and rapid response and delivery times. We achieve a high de-gree of customer satisfaction as the result of this extensive service network and our spare parts offering. Our sales team was also active on new markets in 2014, such as the


Company-Specific Performance Indicators

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Annual Report 2014

MENA region and South America, as these regions are ex-periencing ever greater interest in the creation of local photovoltaic industries.

Our customer base includes large premium manufacturers from the photovoltaic industry, as well as from the semi-conductor and microelectronics industries, and some large companies that are entering the PV market.

We can respond rapidly and efficiently to our customers' requirements through our flexible sales structures, and ac-tively identify and exploit new business potentials. Sales occur mainly through our local service and sales compa-nies, and are managed centrally from Blaubeuren.

Our marketing and communication activities remain ori-ented to the centrotherm brand, as well as innovative technologies and products for the photovoltaic, semicon-ductor and microelectronics industries. Our presence as ex-hibitors at trade fairs and conferences comprises an im-portant marketing instrument that allows us to present our range of products and services to a broad specialist public, and to enter into direct dialog with potential customers. We were represented at a total of 12 trade fairs and exhi-bitions both in Germany and abroad in 2014, seven of which comprised specialist trade fairs in Asia. We were also present as exhibitors in new markets such as Algeria and Brazil. Along with various upgrade packages for our PECVD systems, we also focused on the new centrotherm low-pressure diffusion furnace, the c.DIFF LP, as well as the regeneration of monocrystalline solar cells to avoid light-induced degradation (LID). In the semiconductor and mi-croelectronics area, we presented, in particular, the c.AC-TIVATOR 150 and c.OXIDATOR 150 high-temperature fur-naces for the high-growth market in silicon carbide appli-cations, as well as our new low temperature plasma oxidi-zation system, the c.PLASMOX LT.

We also offer specialist information about our technolo-gies, products and production solutions through the Inter-net and by way of direct contact with customers. This mix allows us not only to inform potential customers about our company and products, but also to bolster the cen-trotherm brand both nationally and internationally.

RESEARCH AND DEVELOPMENT

Research and development (R&D) work remains one of the most important pillars within the Group to maintain and expand our market position, and thereby secure our cor-porate success and profitability. In this context, our teams both in Germany and abroad focus especially on optimiz-ing our production systems and processes to manufacture

solar cells, semiconductors and microelectronic compo-nents. Our Photovoltaic segment concentrates on the con-sistent efficiency enhancement of solar cells and continu-ous production cost reduction in order to generate solar electricity ever more competitively compared with conven-tional electricity sources. As a pioneer and technology leader, this has been, and remains, our objective.

During the period under review, centrotherm continued to consistently pursue its development objectives with its technology specialists, process engineers and integration experts. The Group invested a total of TEUR 6,153 in re-search & development (prior-year period: TEUR 1,573). The Group employed a total of 183 technology and research staff as of the end of the 2014 financial year.

SILICON

Development activities at our subsidiary SiTec continue to focus on reducing production costs and improving polysili-con quality. In 2014, it continued to work successfully on minimizing energy consumption and boosting the produc-tivity of the CVD reactors for its already established SiTec CVD reactor technology. An important focus lay on further developing the more cost-effective fluidized bed reactor (FBR) technology and related innovative STARTM monosilane process technology that were presented at the end of June 2014 at the international "Silicon for the Chemical and Solar Industry" conference in Trondheim, Norway. Following development of the first prototype in 2013 and successful test runs at the SiTec R&D lab in Seat-tle, the second-generation FBR was constructed to a larger scale in the 2014 financial year. Initial process results from this new reactor will be available during the current finan-cial year. The construction of a pilot plant and migration to volume manufacturing is being examined together with potential customers.

PHOTOVOLTAICS & SEMICONDUCTOR

Our research and development work aims, firstly, to opti-mize existing technologies, processes and production sys-tems. Secondly, we are developing the production pro-cesses of tomorrow for the photovoltaic and semiconduc-tor industries, and implementing them in the respective system concepts.

Our international team of technology specialists and inte-gration experts at our sites abroad support the central re-search and development area at our Blaubeuren location. We also make recourse to collaborative work with estab-lished institutes and research facilities for quick and effi-cient development work.

45

Focal aspects of R&D for the photovoltaic industry

In 2014, centrotherm teamed up with the International So-lar Energy Research Center (ISC) in Constance as part of the "BiSoN" Alliance in order to jointly test and develop new cell concepts for mass production of bifacial n-type solar cells. Compared with p-type silicon solar cells, n-type cells possess greater efficiency potential, and do not un-dergo light-induced degradation. The International Tech-nology Roadmap for Photovoltaic (ITRPV) sees the effi-ciency of n-type cells rising to over 24% over the next the years (p-type mono-Si cells only up to 22%). In the ITRPV forecast that was prepared in March 2014, the share of n-type silicon solar cells will also continue to report growth from below 10% today to around 40% over the coming decade.

centrotherm is also involved in several research programs at national level, with the aim of developing new technol-ogies, and of optimizing processes and related production equipment.

In order to achieve even more competitive solar cell pro-duction, we also implemented new cell concepts, pro-cesses and technologically optimized production systems at selected customers' mass production operations. This al-lows us to rapidly derive meaningful results about our new developments, and optimally fulfill customer requirements.

Together with our industrial cooperation partners, we im-proved efficiencies of centaurus solar cells to averages of 20.2% and to peak values at 20.9% in mass production during the 2014 financial year. centaurus is a PERC cell concept developed by centrotherm that has already been installed at our customers with production capacity of more than 500 MW, and is deployed very successfully in mass production.

As cell and module manufacturers increasingly command expertise of entire production steps and processes, cooper-ation with them provides us with important impulses for our development work. We develop solutions for their problems with our integration expertise at all steps of the value chain for crystalline solar cells and modules. Exam-ples include the development of important process steps in cell manufacturing for downstream module production, such as avoiding PID losses (PID = Potential Induced Degra-dation), where a PV system can suffer reduced perfor-mance as a result of excessively negative voltage. To avoid light-induced degradation (LID), in 2014 we tested a short, further process step following sintering and

drying of the metal contacts, which regenerates the crys-talline solar cells, and prevents performance loss as a result of sunlight. A marketable product is to be created from the previous regeneration prototype in 2015.

With this extensive technology expertise, we are able to not only assist existing customers, but also help new en-trants – to create integrated production lines, for example – and assemble customized state-of-the-art equipment packages for these players.

We have also entered into more in-depth dialog with our customers in the single equipment business, placing a top priority on their requirements in the further development of core processes.

Following the market launch of our c.FIRE fast-firing fur-nace for the drying and firing of solar cell metalization, we launched the latest generation of our c.DIFF diffusion sys-tem on the market in 2014.

With our c.DIFF LP low-pressure diffusion furnace, we have achieved an almost doubling of throughput of more than 140 MW, accompanied by low material consumption, which enables our customers to make cost savings of up to 40% per wafer. European and Asian customers are al-ready successfully deploying centrotherm technology in several production lines with total capacity of more than 1.2 gigawatts, achieving excellent homogeneity at emitter resistances of up to 150 Ω/square. This makes efficiency potentials more achievable, especially allowing new metali-zation pastes (emitter resistance > 100 Ω/square) to be fully exploited.

We are developing a new low-pressure process for highly efficient boron doping together with the ISC in Constance. This process enables efficiency enhancement and produc-tion cost reduction for n-type solar cells.

We offer upgrade packages to optimize processes and sys-tem running times for our c.PLASMA PECVD system. We worked on developing a new PECVD process for aluminum oxide coating (AlOx) in 2014, for example.

centrotherm has the highest installed capacity of PECVD systems worldwide, with an approximately 50% market share. With the integration of N2O process gas, for exam-ple, our customers can already counter PID effects at cell level, or retrofit their PECVD systems for current cell con-cepts, such as centrotherm PERC technology. Our installed base of well over 2,000 production systems generates ma-


Research and Development

46


Annual Report 2014

jor potential overall for centrotherm to replace old sys-tems, or to retrofit them with existing and future upgrade packages.

Focal aspects of R&D for the semiconductor and microelec-tronics industries

In order to expand our semiconductor business, we are fo-cusing on optimizing existing processes and systems, as well as on developing new solutions, for our customers from the semiconductor and microelectronics industries. We conduct development work for these industries at our sites in Blaubeuren and Hannover.

In our cleanroom research lab in Blaubeuren (cleanroom class 100-1000 with a Class 1 mini-environment), we con-duct demonstration test runs for our customers with our new low-temperature c.PLASMOX LT plasma oxidization system. This allows us to demonstrate the system's techno-logical performance and characterize current processes, as well as access further new applications. Leading semicon-ductor manufacturers have already achieved good test re-sults with the c.PLASMOX LT for future top-performing logic and memory elements on 200 and 300 mm wafers.

We also ran demonstrations with our c.ACTIVATOR 150 and c.OXIDATOR 150 high-temperature furnaces for silicon carbide applications in 2014, and further developed the processes.

Following delivery of our c.RAPID 200 (Rapid Thermal Pro-cessing System, RTP) to its first customer in 2013, we transferred the knowledge gained from integrating it into the production process into its further development. We see growing interest for our c.RAPID 200 in the 200 mm semiconductor equipment market.

THIN FILM & CUSTOMIZED EQUIPMENT

In its development work together with the Solar Energy Research Institute of Singapore (SERIS), our subsidiary FHR Anlagenbau GmbH further developed functional films from transparent conductive oxides (TCO) in 2014. As part of this cooperation, FHR is deepening its process expertise in order to exert targeted influence over functional film properties in relation to optical transmission and electrical resistance. This research partnership was concluded at the end of 2013. TCO vacuum deposition plays a key role in the areas of flat screens, touch screens, flexible electronics and renewable energies. With its roll-to-roll systems, FHR already offers industrial partners and research institutions

film coating solutions, and supplies process-optimized sputter targets as consumables.

SUSTAINABILITY

The principle of sustainability is anchored in our vision. With our solutions for the silicon and photovoltaic indus-tries, we can help electricity derived from solar energy to become a viable alternative to electricity generated from conventional energy sources. Serving the semiconductor and microelectronics industries, we offer production solu-tions that enable the new and more complex applications of tomorrow to become possible. These also make a signif-icant contribution to saving resources. A relevant example is presented on page 24.

We regard sustainability as a prerequisite for the successful structuring of the future: for our customers and suppliers, our shareholders, employees, and consequently for cen-trotherm. Our activities are oriented to securing ecologi-cally, economically and socially sustainable growth and de-velopment. We offer environmentally compatible products and solutions that improve our own net ecological impact, and those of our customers. We also consciously take envi-ronmental aspects into account when selecting our tech-nologies.

Sustainable and responsible activity plays a major role in our daily business, whether in the reduction of the CO2 greenhouse gas through technical innovations or process sequences, in the selection of, and cooperation with, busi-ness partners, or in our strong commitment to employees' social concerns. Information about how we support our employees can be found in the "Employees" section on page 42.

OCCUPATIONAL HEALTH & SAFETY

We take due care to ensure a safe working environment for our employees. In the occupational safety area, cen-trotherm has a process to evaluate workplace risks, as well as an accident recording and reporting system. The sys-tematic processing and evaluation of accidents enables us to identify new or previously unidentified risk sources, and reduce accident risk. Depending on the area in which they work, our employees are informed preventatively about potential risk sources, and the safety regulations and measures that are derived from them. We have prepared a handout with safety instructions for visitors to our Blau-beuren site.

47

Our employee healthcare scheme also offers many differ-ent healthcare maintenance opportunities to our work-force. Details about healthcare management are presented on page 43.

Separate safety regulations and instructions that are docu-mented in manuals also apply for the installation, starting, and ongoing operation of production systems at custom-ers' premises. Our systems' safety is inspected and certified by TÜV.

The number of occupational accidents at CT AG of 6.7 per thousand full-time employees during the period under re-view lies significantly below the average for the relevant professional cooperative, the BG-ETEM, of 18.9 for 2013.

SOCIAL RESPONSIBILITY

Due to the business and financial situation in the 2014 fi-nancial year, we again refrained from our long-standing commitment to the cultural and sports sponsoring areas, by way of unanimous agreement with the parties that we had previously sponsored. In the medium- to long-term, centrotherm plans to resume an appropriate level of sup-port for cultural facilities and sports associations at the Blaubeuren location and its immediate vicinity, in particu-lar.

BUSINESS RESPONSIBILITY

Our business activities pursue the principle of responsible activity with respect to future generations. As a provider of technology and equipment to the photovoltaic industry, we make an important contribution to further developing the sector, and are making solar electricity competitive (without subsidies) compared with conventional and other renewable energy sources. centrotherm products and solu-tions support efforts to establish energy supplies that are as CO2 neutral as possible. We must be commercially suc-cessful in order to act responsibly. Close cooperation with our customers and suppliers results in economically effi-cient working methods. With our energy-efficient prod-ucts, we enable our customers to manufacture on an envi-ronmentally compatible basis. We invest in research and development in order to ensure that we will further im-prove our products and processes in the future.

REPORT ON OPPORTUNITIES AND RISKS

The identification and systematic management of opportu-nities and risks makes a considerable contribution to a company's success and profitability. As a consequence, a central importance is given to opportunity and risk man-agement as an integrative component of all core Group processes. In order to identify, measure and consistently handle risks at an early stage, we deploy an effective and standard Group risk management system, which is pre-sented below. The Management Board, supported by technical and specialist staff, managers and legal advisers, assess the risk position, and launch and follow up on risk measures.

Business activity also consists of identifying and exploiting opportunities in order to thereby secure competitiveness and tap market potentials. As part of the strategy process, opportunities for profitable activity within a currently diffi-cult market environment are appraised. Business opportu-nities are not reported within our risk management sys-tem, but are instead reported as part of medium-term budget calculations, and subsequently monitored as part of periodic reporting. Opportunity and development po-tentials are gaged on the basis of market and competitive analyses.

RISK MANAGEMENT SYSTEM

Objectives

The risk management system should enable centrotherm to identify potential strategic and operating risks at an early stage, and to analyze, assess, control and manage them. Prompt communication and early identification of potential risk matters enhances a company's speed of re-sponse. Systematic risk management should also strengthen the perception and awareness of risks within the Group, and enhance the related responsibility of man-agers and employees.

Risk management process

The risk management process consists of three key process steps:

• Risk identification • Risk measurement • Risk steering


Report on Opportunities and Risks

48


Annual Report 2014

Risk identification

Cross-Group risk categories and areas, as well as reporting officers (risk officers), are defined in order to ensure that risks are reported as comprehensively as possible. These categories comprise:

• Environment and sector risks • Corporate strategy risks • Commercial performance risks • Personnel risks • Information technology risks • Financial risks • Political and legal risks • Other risks

The risk officers use a risk reporting form to identify and report risks on a regular basis.

Risk measurement

Risk officers measure risks in the risk reporting question-naires applying an expected value derived from multiplying a potential annual loss value by a potential event risk. Us-ing this expected value, risks are categorized into one of five risk classes (low, medium, high, very high, going con-cern risk). A particular focus is placed on risks that may en-tail going concern risk.

Risk steering

A summary of all risks structured according to risk class is submitted regularly to the Management Board as both a risk list and a graphic risk portfolio in order to allow it to assess the current risk position. To steer risk, the Manage-ment Board, risk managers and divisional heads work to-gether to define, implement and follow up on measures to reduce potential loss level and/or event risk. General Group-internal risk steering measures include reporting, measuring, controlling, and steering, using an internal re-porting system, as well as the limitation of potential claims and liability risks through taking out corresponding insur-ance. This allows us to make the financial effects calcula-ble. The Supervisory Board focused particularly on the risk management process and risk reporting in the 2014 finan-cial year.

Key characteristics of our internal controlling and risk man-agement system in relation to the financial accounting process

The aim of risk management in relation to the financial ac-counting processes is to identify, measure and steer risks

that could have a negative effect on the accounting con-formity of the consolidated financial statements. This is to ensure that accountancy-related matters and their appro-priate transfer to individual accountancy tools are appro-priately reported, compared and assessed. Key structures, processes and controls that are of significance for Group accounting and consolidation are listed below:

• Functions and responsibilities are clearly allocated within all accounting process areas.

• A set of internal guidelines for financial accounting and the preparation of financial statements is in place, which are adapted and expanded as required.

• The Group's individual companies utilize standard IT systems as far as possible. Access is protected through corresponding systems and regulations.

• The individual companies' data that are included in the consolidated financial statements are calculated locally, and checked for completeness and correctness by the Group's central area applying random sample tests and plausibility checks.

• Based on the individual companies' data, the central area prepares the consolidated financial statements through consolidating the legal entities.

OPPORTUNITIES MANAGEMENT SYSTEM

Opportunities and risks are generally monitored separately at centrotherm. We derive our opportunities management system from the overall Group's strategies and objectives. We conduct analyses of the market, our competitors, and cost situation, and we examine potential market scenarios and overall political circumstances. The results provide the basis for the identification and analysis of strategic and op-erational opportunities. The Management Board and divi-sional managers use this as the basis to realize opportunity potentials.

OPPORTUNITIES

The general photovoltaic sector trend generates opportu-nities for centrotherm. Global demand for solar modules is growing continuously, and cell manufacturers have made a return to investing in new production systems since De-cember 2013. Due to continued high cost pressure, solar cell producers also need to invest in highly efficient tech-nologies, in process optimization through upgrades, and in new production equipment, in order to remain competitive and grow market share. In addition, production sites are being relocated to other countries, primarily in Asia, espe-cially as the result of the imposition of punitive US tariffs on Chinese and Taiwanese solar products. This presents an

49

opportunity to us to win new orders for process upgrades, as well as for both replacement and new investments. We occupy a very good market position internationally, and expect that demand will continue in 2015, especially from Asian countries such as China and Taiwan, and will also start in other important sales markets such as India.

The c.ACTIVATOR 150 and c.OXIDATOR 150 high-temper-ature process systems for power semiconductors based on silicon carbide and gallium nitride generate new sales op-portunities for centrotherm as a result of e-mobility growth. With regard to a further high-growth market, the CMOS logic and memory market on 300 mm wafers, cen-trotherm has a product for nonthermal oxidation with its c.PLASMOX LT. Together with pilot customers, cen-trotherm will evaluate this production system for highly different applications in 2015. Successful evaluations open up good sales opportunities for us worldwide for c.PLAS-MOX LT.

Our subsidiary FHR focused on important strategic cus-tomer projects in the 2014 financial year, improving sales opportunities for new products such as roll-to-roll and in-line systems.

RISKS

Preliminary remarks

In our report for the abbreviated financial year from June 1 to December 31, 2013, we already noted sector risks, some of which have already materialized, and some of which continue to exist. These comprise, in particular:

• Greater consolidation activity within the photovoltaic industry;

• Fluctuations in solar cell manufacturers' investments in technological retrofitting of existing production lines or in new lines due to political influences or a lack of their own financial resources;

• Uncertainty relating to governments' solar subsidies, and the effects of punitive tariffs imposed on solar products, as well as the potential expansion of punitive tariffs;

• Greater competition among technology and produc-tion system suppliers;

• High production capacities remain available worldwide to cover most demand for solar cells and modules.

Environment and sector risks

The business growth and trends of centrotherm are signifi-cantly affected by both sector and economic trends on rel-evant sales markets. This is particularly true of the photo-voltaic sector, as centrotherm continues to generate a con-siderable proportion of its revenue with production sys-tems and services. The photovoltaic industry suffered a tough consolidation phase in 2012 and 2013 that was characterized by overcapacities for solar cell production, especially in Asia. Since December 2013, solar cell produc-ers' investments in retrofitting existing production lines or in creating new production capacities have recovered due to strong global demand for modules. Many manufactur-ers' financial positions also recovered in line with the high demand, thereby enabling them to make new invest-ments. As explained in the preliminary remarks, the photo-voltaic sector remains very strongly affected by political factors. Chinese and Taiwanese solar cell manufacturers as far as possible postponed their investment plans in mid-2014 due to the announcement of more intense punitive tariffs. The risk of high volatility in our PV customers' in-vestment activities remains. Pricing pressure continues to be high, along with ongoing market consolidation at all steps of the photovoltaic value chain. Larger competitors are increasingly entering the market as the result of mer-gers and strategic alliances, and existing competitive rela-tionships are undergoing fundamental change. centrotherm counters such environment and sector risks primarily through corporate strategy, operational and fi-nancial measures. The following section covers these and other topics.

Corporate strategy risks

Extremely rapid growth in the past in the photovoltaic area has resulted in the Group being very strongly dependent on this market. Following the collapse in photovoltaic mar-kets, and a sustainable demand recovery that has proved difficult to forecast, the centrotherm Management Board decided to counter this market risk through diversification, and through expanding its Semiconductor & Microelec-tronics area. The risk generally exists that future sales po-tentials will be misjudged.

The company will continue to consistently pursue the cost-cutting measures and sales initiatives that were launched during the past reporting periods. The objective is to grow sustainably and profitably with a streamlined and efficient organizational structure, and a strategic focus on crystal-line silicon. Along with a refocusing on business entailing



50


Annual Report 2014

production systems and technologies to manufacture crys-talline solar cells and to produce silicon, a further signifi-cant component of Group strategy will be the expansion of the Semiconductor & Microelectronics area. The risk ex-ists that these objectives are implemented later than planned, thereby delaying the refocusing.

Rapid technological progress within the sector can lead to research and development risks. Firstly, the risk exists that centrotherm develops products and processes for which no market demand exists in the future. Secondly, it is pos-sible that centrotherm fails to meet market needs. The Group counters such risks through selected investments in research and development, as well as through cooperation ventures with universities, colleges, renowned research in-stitutions and, not least, pilot customers. All product devel-opment programs are also subjected to standardized ap-praisal procedures that constantly review and question the extent to which they are still of strategic and financial worth.

Our strong international presence also requires that we ad-here to relevant political, legal and economic conditions. This may give rise to risks in connection with the non-com-pliance with prevailing regulations and local circumstances. centrotherm counters such risks through engaging experi-enced technical staff and managers locally, and through practical support from external specialists with extensive local market knowledge.

Commercial performance risks

Procurement

centrotherm procures not only components but also com-plete component groups from its suppliers. Some of these items comprise specialty and key equipment that only cer-tain suppliers can provide. Suppliers are continuously mon-itored and appraised as part of supplier management in order to ensure that deliveries are always available in suffi-cient volume and quality as required. Relationships with second-source and third-source suppliers are established consistently in order to ensure that supplies can be main-tained if any supply relationship is interrupted. Ongoing standardization of construction elements and components supports this flexibilization. Suppliers' financial positions could also represent a risk, especially where prepayments are required. We counter such risk through monitoring suppliers' credit ratings and through prepayment guaran-tees. Dependency risks due to long-term procurement agreements with suppliers currently exist to only a minor extent.

Sales

On the sales side, risks range from delayed delivery dates through to the cancellation of contracts. This generates an inventory risk relating to systems that have already been produced and components that have been ordered, and a liquidity risk deriving from payment delays or defaults. De-pending on progress achieved with projects, payment plans are defined for all projects and compliance with them is monitored in order to minimize such risk. Credit checks are conducted, and commercial letters of credit are obtained, in order to avoid defaults on receivables.

Further risks in the sales area also emanate from construc-tion, assembly or installation errors in the form of product liability claims and reputational damage. We counter such risks with extensive quality checks when goods are re-ceived, as well as permanent production monitoring as part of quality management. Qualified service technicians and engineers install our production systems locally. We take out corresponding insurance to minimize liability risk, and to provide cover against claims.

Customers' short planning horizons result in them requir-ing very short delivery deadlines, which comprise a deci-sion-making criterion for the awarding of orders. Such risk is countered through standardization, module preproduc-tion, and procurement process optimization.

Large-scale project in Qatar

The large-scale project in Qatar (in the Silicon segment) comprises a total order volume of EUR 270.5 million. The realization of the Qatar project can generate the following risks, in particular, that are characteristic of large-scale plant engineering projects:

• Defects in contract structure; • Errors in order calculation; • Additional costs due to technical modifications and

process experience ("lessons learned"; technology risk);

• Failure to deliver product specifications that have been committed to;

• Risk of project delays on the customer side; • Supplier risk (supply delays, insufficient quality, rising

material costs); • Tax and transfer price risks.

Such risks can delay project completion, triggering high penalties. In order to reduce these risks, centrotherm relies on project organization that systematically identifies and

51

measures such risks, and that implements any counter-measures that are required. This project's liquidity risks are low as a result of agreed payment modalities in the form of an escrow account. The liability risk of the respective subsidiary is limited to an amount equivalent to 45% of the total order volume. To secure the prepayments and the completion of the contract, centrotherm has provided guarantees of TEUR 31,615 through a bank. Potential utili-zation of the guarantees would be included in the regula-tions of the insolvency plan.

Large-scale project for CEEG Algeria

With a letter dated June 13, 2013, CEEG, a subsidiary of Société Nationale de l'Electricité et du Gaz (Sonelgaz), no-tified the consortium consisting of centrotherm and Kinet-ics Germany GmbH that it was terminating the contract to construct a fully integrated solar module factory (Silicon and Photovoltaics & Semiconductor segments) in Algeria. The original project volume amounted to around EUR 290 million. The consortium doubts the legality of this termina-tion, and centrotherm has brought a lawsuit against CEEG for loss compensation. Proceedings are being arbitrated at the International Court of Arbitration (ICC) in Geneva. As experience shows that such proceedings can last several years, centrotherm does not anticipate an ICC ruling be-fore 2016. To secure the TEUR 21,926 of prepayments re-ceived, and the completion of the contract, CT AG has provided guarantees of TEUR 45,471 through EulerHermes Kreditversicherungs-AG. Potential utilization of the guar-antees, and any loss compensation claims brought against centrotherm, would be included in the regulations of the insolvency plan. Such amounts, as well as the 30% share of insolvency liabilities that have already been determined, would be due for payment as of December 31, 2015 at the earliest, assuming that the proceedings would be con-cluded by this date, and if centrotherm were to lose the case.

Personnel risks

centrotherm requires qualified technical and management staff to achieve its objectives. The damage to image arising from the insolvency phase, and continuing uncertainty in relation to the significance and sustainable recovery of the photovoltaic industry, exert a negative effect on the attrac-tiveness of centrotherm as an employer. In addition, the cutting of 80 jobs at the Blaubeuren site that was an-nounced at the end of September 2014 is making it more difficult to recruit qualified candidates on the labor mar-ket. A greater risk of staff turnover continues to exist due to the fact that it is difficult for employees to gage future

prospects. The departure of key individuals would gener-ate the risk of negative effects on business operations and the loss of valuable know-how. In order to counter this trend, centrotherm is, firstly, emphasizing employee com-munication and information in order to involve and moti-vate the workforce in relation to matters of concern to the organization. Secondly, the promotion of up-and-coming and young staff enjoys a particular priority as part of occu-pational training at centrotherm, and the company contin-ues to maintain existing cooperation ventures with local universities and high schools.

Information technology risks

The reliability and security of information technology to support our business processes, as well as internal and ex-ternal communication, are of great significance. A serious disruption to these systems or data loss could result in a disruption of business and communication processes. Po-tential causes could include elementary events, technical problems, criminal influences, and viral or nuisance at-tacks. A central objective of our IT organization is to en-sure data availability and data security at all times. Two re-dundant computing centers are available to minimize and avoid risks, which are adapted constantly to current re-quirements, and which are based on superior market standards. Automated IT system monitoring and emer-gency call systems have been set up. Common security mechanisms such as antivirus software, firewalls and data encryption are utilized and improved constantly.

Financial risks

As a globally operating group, centrotherm is exposed to credit, liquidity, interest-rate, currency and raw materials risks as part of its normal operating activities. Such risks may exert a considerable impact on our net assets, finan-cial position and results of operations.

Financial risk management aims to identify and measure fi-nancial risks emanating from the operating business, and to counter them through the development and implemen-tation of strategies. Where required, centrotherm deploys corresponding financial instruments to compensate risk. The company was deploying no derivative financial instru-ments as of the balance sheet date, and as of the date when these financial statements were released.

Credit risk

Credit risk, also referred to as counterparty risk or default risk, exists when a contractual partner's liquidity position may give rise to the risk of a partial or complete default on



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contractually agreed payments or services. In order to avoid receivables default, we examine our business part-ners' credit ratings before entering into contracts. To pro-vide further cover, we frequently agree payment terms with our customers according to the progress of work and services, which are secured by way of commercial letter of credit. No notable concentration of credit risk exists. The management is consequently convinced that no further risk provisioning is required above and beyond the impair-ment losses that have already been recognized.

Our receivables management function is responsible for supervising open items. Individual positions are monitored at regular meetings between the finance area and sales and project managers, in order to institute receivables col-lection measures at an early stage. Default risk on cash in-vestments and the cash position is reduced by distributing such positions among different financial service-providers. Their credit ratings are monitored regularly.

Liquidity risk

Liquidity risk generally comprises a situation where the Group might be unable to meet its financial obligations – such as the repayment of operating trade payables – on time or sufficiently. Transparency in relation to future cash flows is required in order to counter liquidity bottlenecks at an early juncture through liquidity management measures or appropriate financing activities. Our liquidity requirements are calculated on the basis of our Group-wide, short-term rolling liquidity planning, which is gener-ally updated weekly, and monitored constantly by the risk management function.

In order to secure liquidity during and following the dis-continuation of insolvency proceedings, the Group entered into agreements concerning the extension of so-called arti-ficial insolvency estate loans that regulate control over ex-isting bank deposits. These artificial insolvency estate loans carry a contractual, non-cancellable term until December 31, 2015, which means that no repayment of the secured loans is required until the end of 2015. The same also ap-plies for loans secured through mortgages, which serve to finance real estate. The banks are waiving realization of their collateral until December 31, 2015.

Extensive financial relief for the centrotherm Group was achieved as part of the insolvency plan proceedings, inso-far as 70% of the insolvency receivables of the unsecured creditors of CT AG were converted into the company's eq-uity. To this end, creditors initially assigned 70% of their

claims, which were determined as unconditional and with-out restriction, to Sol Futura in mid-May 2013. The best possible satisfaction of creditors is to be ensured through Sol Futura realizing the shares by way of sale by the end of 2015. On the basis of the capital measure approved in the insolvency plan (commercial register entry on July 19, 2013), Sol Futura in a second step contributed the receiva-bles into CT AG against subscription of 16.9 million new shares. These receivables due from CT AG have thereby been extinguished, and CT AG is consequently largely freed from debt.

In addition, the remaining 30% of insolvency liabilities were deferred without interest until the end of 2015. The repayment can be rendered from the company's liquidity, through refinancing measures, or from the sales proceeds from the shares held by Sol Futura. Under certain precon-ditions, Sol Futura has the possibility to extend the sale pe-riod until December 31, 2017 at the latest. In this instance, the deferral of the insolvency creditors' unsecured claims on CT AG would also be extended. The insolvency estate loans as well as the loans secured through mortgages of the centrotherm Group might then also need to be ex-tended separately. If the company is unable to satisfy its obligations arising from the insolvency plan, a going con-cern risk would arise in relation to both CT AG and the Group. This applies particularly to the extent that the insol-vency liabilities recognized in the balance sheet, which were initially deferred without interest until December 31, 2015, cannot be repaid according to the regulations of the insolvency plan.

When a new order is received, it is frequently necessary to refinance orders of materials and part of the production process. It is currently impossible to enforce short payment targets with suppliers due to a current lack of cover notes from credit insurers. At the same time, customer prepay-ments are required as cash collateral for guarantee credits. A high level of new order intake could create financing gaps which might delay the processing of orders, and which might need to be closed through external working capital financing lines. The Management Board of CT AG assumes that financing institutions would provide funding given this type of positive business trend.

Interest-rate risk

Cash deposits generally carry variable interest, and are consequently subject to risks pertaining to changes in in-terest rates. As we are currently giving greater priority to holding cash that is available at all times, we are giving

53

preference to investing cash at variable interest, rather than seeking higher and fixed rates of interest.

In general, only a minor level of interest-rate risk relates to our financial obligations due to the fact that we are largely debt-free, as mentioned above, and because of the defer-ral without interest of the remaining insolvency liabilities until the end of 2015. Any future external debt financing of new operating business or investment spending on se-lected development projects might nevertheless feed through to new interest-rate risks in the future.

Foreign currency risk

Currency risks arise if receivables, liabilities, debt, cash and cash equivalents, and planned transactions are denomi-nated, or will be denominated, in a currency that is not the company's local currency (the euro). The quite predomi-nant portion of our customer orders outside the Eurozone are also invoiced in euros, while significant components and raw materials are also purchased on the basis of the euro currency. In the case of large-scale projects – as cur-rently with the Qatar project in the Silicon segment – the need exists in some individual cases to purchase materials or services locally, and to pay in a currency other than the euro.

centrotherm frequently monitors local currency trends for large-scale projects, taking them into account in ongoing calculations. Where significant foreign currency risks arise in specific cases, such risks relating to individual projects are hedged by deploying forward currency transactions. No corresponding forward transactions existed as of the reporting date.

Raw materials price risk

centrotherm requires various metals, in particular, copper, iron, silver and platinum, as well as raw materials such as quartz, silicon and energy, for its production processes. Risks arise particularly from the high volatility of energy and raw materials prices. Price changes can affect our manufacturing costs. In order to minimize risks, we con-stantly conduct analyses of raw material price trends and their effects on our value chain. No hedging requirements existed in the past, and our market appraisal suggests that none exist currently.

Political and legal risks

Changes to the political and regulatory environment in countries where we are present, such as regulations relat-ing to import and export controls, customs regulations or

other trade barriers, as well as price and currency controls, could negatively impact our business on various national markets, negatively impact our revenues and profitability, and make it difficult for us to repatriate earnings. Legal uncertainties existing in some countries could also greatly restrict the centrotherm Group's ability to enforce its claims and rights. As an internationally operating Group, we conduct business activities with customers in countries that are subject to export control regulations, sanctions or other forms of trade restrictions that are imposed by the USA, the European Union, or other countries or organiza-tions. We could be exposed to the risk of penalties, sanc-tions or reputational damage as a consequence.

Revenue generated in emerging economies makes a con-siderable contribution to our total revenue. We are assum-ing that this will remain the case in the future. Business ac-tivities in emerging economies entail various risks such as political and economic instability, and the failure to respect cultural differences – such as business practices and work-ing conditions – GDP volatility, the potential nationaliza-tion of private assets, uncertainties surrounding legal and tax systems, and the imposition of currency restrictions. Our operating activities in emerging economies could also be hampered by state support for respective local indus-tries. Especially in China and the MENA region, legal sys-tems are still in development, and are subject to very dif-fering types of change. The occurrence of these or similar risks arising from our international business activities could exert a considerable negative impact on our business posi-tion, net assets, financial position and results of opera-tions.

Complex tax regulations both in Germany and abroad, and potential differing interpretation of them by German and foreign tax authorities, can result in taxation that differs from the Group's expectation. A risk also exists when pro-cessing orders abroad in relation to the appropriate notifi-cation and accounting processing of fiscal operations. Fur-ther tax consequences could also arise from the reorgani-zation remission if – contrary to expectations – not all of the preconditions of the remission that are connected with the tax deferral and tax remission were to be met. In such instances, the actual tax expense would differ from the ac-counting tax expense, and additional provisions or ex-penses that were previously unrecognized in the financial statements would be required for supplementary taxation and penalty payments. We counter such risks through en-gaging German and foreign advisers on all business trans-actions of relevance to taxation. Recourse is made to such advisers at an early stage in order to already integrate tax aspects into contract structures.



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Annual Report 2014

Risks from litigation and regulatory procedures in which we are currently involved, or which might occur in the fu-ture, exist for the centrotherm Group. These include, for example, litigation and/or similar proceedings, regulatory investigations and procedures due to the occurrence of typical corporate and project risks such as, in particular, the non-contractual delivery of goods or services, product liability, product defects, quality problems, the infringe-ment of intellectual property, infringements against envi-ronmental and/or occupational health and safety law regu-lations, non-compliance with tax regulations, and/or al-leged or presumed infringements of prevailing law. We are involved in a legal dispute over determining receivables re-lating to the insolvency schedule, as well as a court case in Taiwan, for instance. We have taken these cases into ac-count through the formation of provisions. In addition, an incident occurred at a customer's production facility where centrotherm systems are also deployed, which has resulted in considerable losses in terms of equipment and opera-tional interruption. The question as to the responsibility and liability for the loss that has occurred has now become a matter of judicial dispute. We are of the current opinion that centrotherm is not responsible for this loss, and not li-able accordingly. Cover under product liability insurance otherwise exists for most of the losses. The remaining re-sidual risk is reflected through a provision. For information about risks relating to the two large-scale projects, Qatar and CEEG, please refer to our remarks in the section "Commercial performance risks".

In general, it cannot be excluded that the results of such litigation and procedures entail considerable damage to our business, reputation or brand. The centrotherm Group forms provisions for obligations arising from litigation and proceedings in line with the likelihood and level of utiliza-tion, to the extent that this can be determined sufficiently precisely. Following the conclusion of the respective litiga-tion proceedings, it might nevertheless be established that our provisions prove insufficient to cover resultant losses or expenses. We might also be required to bear lawyers' fees and other legal defense costs to a considerable extent, de-spite having won the main action in such litigation and proceedings.

Staff members, customers or suppliers gain an insight into technical details and specifications when manufacturing and selling our products. In order to protect our intellec-tual property and know-how, our developments are suffi-ciently patented, and confidentiality agreements are gen-erally concluded with all parties.

Each of these risks could exert considerable disadvanta-geous effects on our business position, net assets, financial position and results of operations.

Other risks

In the systems we manufacture, some hazardous sub-stances are used in production. Our systems incorporate high safety standards to prevent accidents and related in-juries. The TÜV inspection group also certifies our systems. We provide our customers with corresponding system op-erating manuals, including explanations about potential hazards from input materials. We regularly provide our staff with extensive training in the handling of hazardous substances and related risks. We also employ a safety of-ficer. We generally conclude insurance cover against the effects of liability risks or loss claims on the company's net assets, financing position and results of operations.

FINANCIAL MANAGEMENT

The main objective of the centrotherm Group's financial management function is to ensure that the Group contin-ues to enjoy sufficient liquidity backing, and that the Group's intrinsic financial value is preserved. For this pur-pose, in so-called amendment agreements to the insol-vency estate lending agreement, it was agreed with vari-ous banks – which, in the context of the opening of insol-vency proceedings, had asserted bankers' rights of lien for a considerable volume of bank deposits (arising from their general terms and conditions of business) – that they would provide to the Group until the end of 2015 the li-quidity that it required to continue its operating activities.

Liquidity flows and trends, in particular, were followed closely during the period under review as a consequence. Along with revenue and earnings, for steering purposes the Group utilizes further key financial indicators such as cashflow, liquidity, EBIT and new order intake, which are reported regularly to management as part of various insti-tutionalized reports. centrotherm Group financial manage-ment is currently giving priority to short-term cash availa-bility over interest-optimized investment forms.

SIGNIFICANT RELATED PARTIES TRANSACTIONS

Transactions occurred between CT AG and related compa-nies during the reporting period. Section 7.4 of the notes to the consolidated financial statements presents a list of such transactions. Pursuant to Section 312 of the German Stock Corporation Act (AktG), the Management Board has prepared a report on relationships with associated compa-nies (dependent companies report) for the

55

January 1 to December 31, 2014 reporting period. This re-port includes the summary statement by the Management Board that the company received appropriate considera-tion for each legal transaction according to the circum-stances of which the Management Board was aware at the time when the legal transactions were performed.

EVENTS AFTER THE REPORTING DATE

No significant events occurred after the December 31, 2014 balance sheet date.

OUTLOOK

MACROECONOMIC AND SECTOR TRENDS

The global economy is set to grow by 3.7% in 2015 (previ-ous year: 3.4%), according to forecasts published by the Kiel Institute for the World Economy (IfW). Global growth is being hampered primarily by weaker trends in some emerging economies, such as Russia and Brazil. The latter do not rank among our most important sales markets, however. For our primary market of Asia, the IfW contin-ues to forecast 6.6% gross domestic product growth for 2015. Asia remains the most important sales market for the centrotherm Group with an export ratio of more than 87% in the 2014 financial year. We anticipate a similarly high export ratio in this region for the coming financial year.

Following the sluggish period during 2012 and 2013, the photovoltaic sector made a return to investing in new solar cell production equipment in 2014. Growing end-market demand worldwide for solar modules comprised a key fac-tor driving the market recovery. Around 46 gigawatts (GW) of module capacity were installed globally in 2014, according to initial estimates from market research firm IHS. Demand thereby grew by 8 GW, or 17%, compared with 2013. Current forecasts assume newly installed ca-pacity of between 53 and 57 GW for the current year, a further double-digit percentage increase. Leading solar manufacturers' production capacity utilization stood at record levels recently, which should feed through to new investments in production equipment due to anticipated end-market growth.

High pricing pressure in the sector is feeding through to market consolidation at all steps of the value chain. For this reason, cell and module manufacturers need to reduce their costs further, such as through optimizing production processes, or through higher system throughput, or through integrating new cell concepts into existing pro-duction. At the same time, cost reductions in photovoltaics

are resulting in a further increase in the end-market. Ex-perts anticipate that energy generation costs can be cut further, thereby corresponding to the cost of generating energy from fossil fuel sources by the 2020 to 2030 pe-riod. This is already possible today in some countries that enjoy particularly high solar radiation.

Given this, we are assuming that the market for produc-tion technology in the photovoltaic area will remain at a stable level over the coming years, although it will not see significant growth, unless the module market gains addi-tional momentum. This assumption also applies to new sili-con production operations that supply the basic material for the photovoltaic and semiconductor industries.

Given the example of the intensification of punitive US tar-iffs on Chinese and Taiwanese solar products in the middle of last year, we nevertheless also saw how volatile this capital goods market is. Political influence on this sector is, and remains, enormous, including in a positive way, as we explain in detail in the section on market trends in this re-port.

REVENUE AND EARNINGS

We achieved our revenue target in the 2014 financial year. In the Photovoltaics & Semiconductor segment, the recov-ery in demand from the photovoltaic industry for new sys-tems to produce highly efficient solar cells contributed to this outcome. Progress made with the project to construct a polysilicon factory in Qatar (Silicon segment) also made a significant contribution to consolidated revenue.

We anticipate a similar trend at Group level for 2015. As a consequence, our revenue target amounts to between EUR 150 million and EUR 200 million, as in the previous year. We also anticipate that the Group will break even. In order to achieve this, the Management and Supervisory boards launched an extensive package of measures to boost efficiency and reduce costs in 2014, which will feed through to significant savings on the expense side in the 2015 financial year at CT AG. Along with reducing the cost of materials, manufacturing and other non-personnel operating items, this includes further business optimization both in administration and production. In this context, the socially acceptable reduction of 50 jobs, and of a further 30 jobs as a result of natural staff turnover at the head-quarters in Blaubeuren that was implemented in early 2015 following a social plan that was agreed with the works council, proved unavoidable.

Achieving these 2015 Group targets nevertheless contin-ues to depend significantly on completion of the large-scale project in Qatar, and on a continuation of demand from cell manufacturers for new production systems, and


Outlook

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Annual Report 2014

for upgrade and service packages. The 2014 financial year showed how volatile this business is.

FINANCIAL POSITION AND INVESTMENTS

The Group's current financing is secured with the insol-vency plan and the existing liquidity. centrotherm achieved this through agreements relating to the granting of insol-vency estate loans, whose terms were extended until De-cember 31, 2015. This means that the secured loans do not need to be repaid until the end of 2015. The same also applies for loans secured through mortgages. The banks have waived realization of their collateral until De-cember 31, 2015.

The insolvency plan intends for majority shareholder Sol Futura Verwaltungsgesellschaft to sell its interest in CT AG to an investor by December 31, 2015. According to the in-solvency plan, the sales proceeds will serve to satisfy credi-tors' insolvency receivables. Under certain preconditions, the potential sale or realization period can be extended until December 31, 2017 at the latest. The insolvency es-tate loans as well as the loans secured through mortgages of the centrotherm Group might then also need to be ex-tended separately. Please refer to the liquidity risk section of the risk report for more information about meeting obli-gations arising from the insolvency plan.

The Group has cash of EUR 114 million as of December 31, 2014, which is sufficient to finance and secure the op-erating business, as well as for planned investments. In ad-dition to this, centrotherm has access to credit guarantees adjusted to business volumes, which can be adapted flexi-bly through provision of collateral in line with the respec-tive business situation. The Group plans and deploys corre-sponding financing measures in order to respond flexibly to potential risks at an early stage. The financial liabilities from the insolvency proceedings that are reported in the consolidated balance sheet are scheduled to fall due as of the end of December 31, 2015. Repayment can be made from the proceeds from the sale of the shares of Sol Fu-tura, the company's liquidity, or through refinancing measures.

Research and development work remains one of the most important pillars within the Group to maintain and expand our market position, and thereby secure our corporate suc-cess and profitability. We made targeted investments of more than EUR 6 million, equivalent to more than three percent of our revenue, in development work within the Group in the 2014 financial year. An important focus in the Silicon segment was on further developing the more

cost-efficient fluidized bed reactor (FBR) technology, and the related innovative STARTM monosilane process technol-ogy of our subsidiary SiTec. In the Photovoltaics & Semi-conductor segment, we are working together with re-search institutions and customers on new cell concepts, processes, and technologically optimized systems for com-petitive and efficient solar cell and semiconductor produc-tion. In our Thin Film segment, our subsidiary FHR Anla-genbau GmbH has further developed functional films from transparent conductive oxides (TCO). We will continue to make targeted investments in research and development across the Group over the coming years.

OPPORTUNITIES

The general photovoltaic sector trend generates opportu-nities for centrotherm. Global demand for solar modules is growing continuously, and cell manufacturers have made a return to investing in new production equipment since December 2013. Due to continued high cost pressure, so-lar cell and silicon producers also need to invest in highly efficient technologies, in process optimization through up-grades, and in new production equipment in order to re-main competitive and expand market shares. In addition, production sites are being relocated to other countries, pri-marily in Asia, especially as the result of the imposition of punitive US tariffs on Chinese and Taiwanese solar prod-ucts. This presents us with an opportunity to win new or-ders for process upgrades, as well as for both replacement and new investments. We occupy a very good market po-sition internationally, and expect that demand will con-tinue in 2015, especially from Asian countries such as China and Taiwan, and will also start in other important sales markets such as India.

High-temperature process systems for power semiconduc-tors based on silicon carbide and gallium nitride are gener-ating new sales opportunities for centrotherm as a result of growth in e-mobility. With regard to a further high-growth market, the CMOS logic and memory market on 300 mm wafers, centrotherm has a nonthermal oxidation product. Together with pilot customers, centrotherm will evaluate this production system for highly different appli-cations in 2015. Successful evaluations open up good sales opportunities for us worldwide.

Our FHR subsidiary focused on important strategic cus-tomer projects in the 2014 financial year, improving sales opportunities for new products such as roll-to-roll and in-line systems.

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OVERALL STATEMENT

In the 2015 financial year, it is highly likely that the foun-dation will be laid for centrotherm's new future. This is be-cause the insolvency plan intends for majority shareholder Sol Futura Verwaltungsgesellschaft to sell its interest in CT AG to an investor by December 31, 2015. According to the insolvency plan, the sales proceeds will serve to satisfy creditors' insolvency receivables. Under certain precondi-tions, the potential sale or realization period can be ex-tended until December 31, 2017 at the latest.

We anticipate that an investor will provide us with new im-pulses for the future. Fresh capital will strengthen our fi-nancing structure, enabling further investments in promis-ing technologies of the future.

Along with the insolvency plan, existing Group liquidity of EUR 114 million and an order book position of EUR 150 million as of the 2014 year-end form the foundation to se-cure the continuation of the Group and the investments that it needs to make. In order to secure this foundation, we and the Supervisory Board launched an extensive pack-age of measures in September 2014 to boost efficiency and reduce costs, which will feed through this year to sig-nificant savings on the expense side at CT AG, and conse-quently also at Group level. If the company is unable to satisfy its obligations arising from the insolvency plan, a going concern risk would arise in relation to both CT AG and the Group. This applies particularly to the extent that the insolvency liabilities recognized in the balance sheet, which were initially deferred without interest until Decem-ber 31, 2015, cannot be repaid according to the regula-tions of the insolvency plan.

In 2015, we anticipate developments at Group level that are comparable to the previous financial year. As a conse-quence, our revenue target stands at between EUR 150 million and EUR 200 million, as in the previous year. We also anticipate that the Group will break even. As in previ-ous years, attaining our 2015 target depends on complet-ing the large-scale project in Qatar, and continued de-mand from cell manufacturers for new centrotherm pro-duction systems, and for its upgrade and services pack-ages, during the 2015 financial year. In the past year the intensification of punitive US tariffs on Chinese and Tai-wanese solar products demonstrated the considerable vol-atility of the PV capital goods market.

The Management Board of CT AG remains convinced that the market for production technology in the photovoltaic area will remain at a stable level over the coming years,

although it will not see significant growth unless the mod-ule market gains additional momentum. Photovoltaics will indisputably make a significant contribution to covering fu-ture global energy demand growth. A significant target of our strategy is to help to structure this trend technologi-cally, and to advance it further. Above and beyond this, we enjoy a growth potential that we would like to realize with our new innovative products for the power semicon-ductor and microelectronics industries, and with our FHR subsidiary's product range.

As with all forward-looking statements, forecasts are con-nected with known and unknown uncertainties, which may mean that actual results differ significantly from fore-casts.

Blaubeuren, March 2015

centrotherm photovoltaics AG

The Management Board


Outlook

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Annual Report 2014

Consolidated Income Statement 60

Consolidated Statement of Comprehensive Income 61

Consolidated Balance Sheet 62

Statement of Changes in Consolidated Equity 64

Consolidated Cash Flow Statement 66

Notes to the Consolidated Financial Statements 67

Independent Auditor‘s Report 132

Glossary 134

Financial Calendar | Imprint 138

CONSOLIDATED

FINANCIAL STATEMENTS

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Annual Report 2014

CONSOLIDATED INCOME STATEMENT FOR THE FINANCIAL YEAR FROM JANUARY 1 UNTIL DECEMBER 31, 2014

Consolidated income statement

1/1/2014- 6/1/2013-

in TEUR Note 12/31/2014- 12/31/2013-

Revenue 4.1 189,193 119,408

Change in inventory of finished goods and work-in-progress 4.2 -5,188 -40,453

Capitalized services rendered to own account 4.3 122 0

Total operating revenue 184,127 78,955

Other operating income 4.4 36,360 15,499

Cost of materials 4.5 -107,506 -50,823

Personnel expenses 4.6 -47,506 -23,061

Other operating expenses 4.7 -40,177 -25,183

Earnings before interest, tax, depreciation and amortization (EBITDA) 25,298 -4,613

Depreciation, amortization and impairment losses 4.8 -5,733 -2,759

Earnings before income and tax (EBIT) 19,565 -7,372

Financial income 2,282 79

Financial expenses -5,986 -3,542

Net financial result 4.9 -3,704 -3,463

Earnings before tax (EBT) 15,861 -10,835

Income tax 4.10 -14,673 3,188

Earnings after tax (EAT) 1,188 -7,647

Of which attributable to:

Shareholders of CT AG (Consolidated profit/loss) 1,188 -7,647

Average number of shares in '000 21,162 21,162

Earnings per share in EUR 4.11 0.06 -0.36

61

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE FINANCIAL YEAR FROM JANUARY 1 TO DECEMBER 31, 2014

1/1/2014- 6/1/2013- in TEUR Note 12/31/2014 12/31/2013

Earnings after tax (EAT) 1,188 -7,647

Items that can be recycled to profit or loss in future periods

Currency translation difference 308 -175

Other comprehensive income after tax 308 -175

Total comprehensive income after tax 1,496 -7,822

of which attributable to CT AG shareholders 1,496 -7,822

Consolidated Financial Statements

Consolidated Statement of Comprehensive Income

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Annual Report 2014

CONSOLIDATED BALANCE SHEET AS OF DECEMBER 31, 2014

Assets

in TEUR Note 12/31/2014 12/31/2013

Non-current assets

Intangible assets 5.1

Goodwill 637 637

Internally generated intangible assets 60 204

Other intangible assets 2,349 2,756

Property, plant and equipment 5.2 48,795 53,984

Financial assets 5.3 45 344

Non-current income tax receivables 5.4 32 47

Deferred tax assets 20,318 33,018

Total 72,236 90,990

Current assets

Inventories 5.5 45,228 67,385

Receivables relating to construction contracts 5.6 1,618 903

Trade receivables 5.7 9,593 18,768

Other receivables

Receivables due from associates 5.8 225 351

Receivables due from related parties 5.9 5 1,508

Prepayments rendered 5.10 10,757 16,945

Non-current income tax receivables 300 5,025

Other current financial assets 5.11 948 2,380

Other current non-financial assets 5.12 4,588 11,636

Cash and cash equivalents 5.13 114,067 99,800

Non-current assets and groups of assets held for sale 5.14 2,344 11,650

Total 189,673 236,351

Total assets 261,909 327,341

63

Equity and liabilities

in TEUR Note 12/31/2014 12/31/2013

Equity 5.15

Equity attributable to parent company shareholders Subscribed capital 21,162 21,162

Capital reserves 77,777 77,777

Group reserves -57,482 -49,835

Other reserves 468 160

Consolidated net profit/loss 1,188 -7,647

Total 43,113 41,617

Non-current liabilities

Provisions for contingent liabilities arising from the insolvency 5.16 28,197 0

Financial liabilities arising from the insolvency proceedings 5.17 63,196 62,364

Other non-current non-financial liabilities 5.18 648 710

Deferred tax liabilities 9,315 7,707

Total 101,356 70,781

Current liabilities

Tax provisions 5.19 3,159 5,724

Other current provisions 5.20 5,326 6,341

Liabilities arising from construction contracts 5.21 45,194 76,487

Trade payables 5.22 10,072 12,705

Prepayments received 5.23 36,922 35,872

Liabilities to associates 127 344

Liabilities to related parties 5.24 45 1,421

Other current financial liabilities 5.25 14,634 18,868

Other current non-financial liabilities 5.26 1,961 57,181

Total 117,440 214,943

Total equity and liabilities 261,909 327,341


Consolidated Balance Sheet

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Annual Report 2014

STATEMENT OF CHANGES IN CONSOLIDATED EQUITY FROM JANUARY 1, 2014 TO DECEMBER 31, 2014

in TEUR

Note

Subscribed capital Capital reserves

from 6/1/2013 – 12/31/2013 5.15

As of 6/1/2013 21,162 245,003

Earnings after tax (EAT) 0 0

Other comprehensive income after tax 0 0

Total comprehensive income after tax 0 0

Withdrawal from capital reserves1) 0 -284,889

Simplified capital reduction1) -16,930 0

Capital increase through non-cash capital contribution1) 16,930 117,663

Reclassification to Group reserves 0 0

As of 12/31/2013 21,162 77,777

from 1/1/2014 – 12/31/2014 5.15

As of 1/1/2014 21,162 77,777

Earnings after tax (EAT) 0 0

Other comprehensive income after tax 0 0

Total comprehensive income after tax 0 0

Reclassification to Group reserves 0 0

As of 12/31/2014 21,162 77,777

1) Capital measures in separate financial statements as of December 31, 2013 of CT AG 2) Items that can be subsequently recycled to profit or loss

65

Capital surplus from issuing equity

instruments

Group reservesOther

reserves2)

Consolidated net

profit/loss Consolidated

equity

134,593 -274,262 335 -77,392 49,439

0 0 0 -7,647 -7,647

0 0 -175 0 -175

0 0 -175 -7,647 -7,822

0 284,889 0 0 0

0 16,930 0 0 0

-134,593 0 0 0 0

0 -77,392 0 77,392 0

0 -49,835 160 -7,647 41,617

0 -49,835 160 -7,647 41,617

0 0 0 1,188 1,188

0 0 308 0 308

0 0 308 1,188 1,496

0 -7,647 0 7,647 0

0 -57,482 468 1,188 43,113


Statement of Changes in Consolidated Equity

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Annual Report 2014

CONSOLIDATED CASH FLOW STATEMENT FROM JANUARY 1 TO DECEMBER 31, 2014

1/1/2014- 6/1/2013-

in TEUR Note 12/31/2014- 12/31/2013-

Earnings before tax (EBT) 15,861 -10,835

+ Depreciation and amortization 5,733 2,759

+ Losses from disposal of property, plant and equipment 11 24

+ Losses from disposal of intangible assets 1 0

+ Decrease in inventories, future receivables from construction contracts, and prepayments rendered 26,621 41,568

+/- Decrease/increase in trade receivables 9,175 -1,358

+/- Decrease/increase in other assets not allocated to investing or financing activities 21,568 -819

- Decrease in other current provisions -1,015 -4,674

-/+ Decrease in trade payables -2,633 3,961

- Decrease in prepayments received and liabilities relating to construction contracts -30,243 -32,314

- Decrease in other liabilities not allocated to investing or financing activities -13,092 -6,918

- Payments rendered for income taxes -12 -70

- Other non-cash income -16,621 -901

= Cash flow from operating activities 6.1 15,354 -9,577

+ Payments received from disposal of property, plant and equipment 185 538

- Outgoing payments for investments in property, plant and equipment -1,147 -455

- Outgoing payments for investments in intangible assets -315 -179

+ Payments received from disposal of fully consolidated subsidiaries 190 1,074

= Cash flow from investing activities 6.2 -1,087 978

= Cash flow from financing activities 6.3 0 0

= Net change in cash and cash equivalents 14,267 -8,599

- Change in cash and cash equivalents due to scope of consolidation 0 -46

+ Cash and cash equivalents at start of period 99,800 108,445

= Cash and cash equivalents at end of period 6.4 114,067 99,800

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR FROM JANUARY 1 TO DECEMBER 31, 2014

1 GENERAL INFORMATION

centrotherm photovoltaics AG (hereinafter referred to in brief as "CT AG") is a public stock corporation under German law, and was formed on December 28, 2005.

CT AG is headquartered in Blaubeuren, Germany, and is entered in the commercial register of Ulm/Danube under commercial register sheet number 720013. The company's shares were listed in the General Standard of the Regulated Market of the Frankfurt Stock Exchange until September 29, 2014 inclusive. These shares have been included in the Open Market, Entry Standard, of the Frankfurt Stock Exchange since the start of trading on September 30, 2014. The bearer shares are listed under securities code ISIN DE000A1TNMM9, and the unlisted shares arising from the non-cash capital increase that are held by Sol Futura Verwaltungsgesellschaft mbH carry securities code ISIN DE000A1TNMN7.

The centrotherm Group is a globally leading provider of technology and equipment to the photovoltaic industry. The Group has a broad and well-founded technology base, key equipment for the silicon and solar cell value chain, and integration know-how for module production. In its Silicon segment, the Group offers engineering, technology and services for integrated process and system packages for polysilicon manufacturing. The Photovoltaics & Semiconductor segment particularly comprises the development, construction, production and sale of individual systems to produce monocrystalline and multicrystalline solar cells. The Photovoltaics & Semiconductor segment additionally comprises a range of services relating to the semiconductors and microelectronics area. The Thin Film & Customized Equipment segment focuses on the development, construction, production and sale of customized system concepts and special systems for modern coating technologies.

Since acquiring the new shares from the non-cash capital increase on July 19, 2013, Sol Futura Verwaltungsgesellschaft mbH, headquartered in Ulm, is the new majority shareholder and parent company in the meaning of IAS 27 (see section 5.15 Equity). TCH GmbH, Blaubeuren, was the majority shareholder until that date.

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

2.1 BASIS ON WHICH THE FINANCIAL STATEMENTS ARE PREPARED

On July 10, 2012, CT AG submitted an application for the institution of protective insolvency proceedings pursuant to Section 270 b of the German Insolvency Directive (InsO). The proceedings, which transitioned to insolvency plan proceedings under the company's own administration on October 1, 2012, were discontinued by the Ulm District Court with effect as of May 31, 2013. Insolvency proceedings for the subsidiaries centrotherm thermal solutions GmbH & Co. KG and centrotherm SiTec GmbH were discontinued at the same time. With the opening of the insolvency, a new financial year commenced pursuant to Section 155 (2) of the German Insolvency Directive (InsO) on October 1, 2012, which ended with the discontinuation of the insolvency proceedings on May 31, 2013. As, pursuant to its bylaws, the financial year of CT AG corresponds to the calendar year, a further abbreviated financial year from June 1 to December 31, 2013 arose. The consolidated income statement from January 1 until December 31, 2014 can be compared with the previous year to only a limited extent. The comparable prior-year data in the consolidated income statement relate to the June 1, 2013 to December 31, 2013 period.


Notes to the Consolidated Financial Statements

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Annual Report 2014

The financial statements of CT AG, and of the foreign and domestic subsidiaries, have been prepared according to uniform accounting principles, as a matter of principle. Due to the scheduled liquidation of centrotherm SiTec GmbH, some assets are recognized at disposal values.

The reporting dates of the separate financial statements of companies included in the consolidated financial statements are identical with the reporting date of the consolidated financial statements (December 31, 2014).

The income statement has been prepared according to the nature of expense method. Various items in both the income statement and the balance sheet have been summarized in order to provide greater clarity. These items are reported and commented upon separately in the notes to the financial statements.

The balance sheet is categorized by maturity. Assets and liabilities are reported as current if they fall due within one year, or within a business cycle. Assets and liabilities are correspondingly reported as non-current if they remain for longer than one year within the Group, or for longer than one business cycle. Trade accounts payable and receivable, accounts payable and receivable arising from construction contracts, and inventories, are always reported as current items. Deferred tax assets and liabilities are reported as non-current. Assets and liabilities, and income and expenses, are not offset with each other unless IFRS prescribes offsetting.

The liabilities arising from 2013 Supervisory Board compensation (TEUR 214), which were reported under the "other current provisions" item in the previous year, are presented under "other current financial liabilities" in the year under review, as their nature as liabilities predominates.

The previous year's comparable figures were restated.

The consolidated financial statements are based on the historical cost principle, with the exception of financial instruments, such as financial assets held for sale, and derivative financial instruments, which are measured at fair value on the balance sheet date.

Fair value is the price that would be received for the sale of an asset, or would be paid for the transfer of a liability, in a normal transaction between market participants on the measurement date. This applies irrespective of whether the price is directly observable, or estimated applying a measurement method.

When measuring the fair value of an asset or liability, the Group takes certain characteristics of the asset or liability into account (such as condition and location of the asset, or restrictions on sale and utilization), if market participants would also take such characteristics into account when determining the price for the sale of the respective asset or the transfer of the liability on the measurement date. In these consolidated financial statements, fair value is generally measured on this basis for the purposes of measurement and/or disclosure obligations. Exceptions include:

• Leases that fall under the application scope of IAS 17 Leases, and

• Measurement benchmarks that are similar to fair value but do not correspond to it, such as net realizable value in IAS 2 Inventories, or value-in-use in IAS 36 Impairment of Assets.

Fair value is not always available as a market price. It must frequently be measured on the basis of various valuation parameters. Depending on the availability of observable parameters, and the significance of such parameters for fair value measurement overall, fair value is allocated to the Levels 1, 2 or 3. Allocation is performed on the following basis:

• Level 1 – Listed (unadjusted) prices on active markets for similar assets or liabilities,

• Level 2 – Valuation methods where fair value is measured by means of inputs that are directly or indirectly observable, and that do not comprise listed prices in the meaning of Level 1,

• Level 3 – Recognized valuation methods if no fair value measurement is possible according to Level 1 or 2, if this ensures appropriate approximation of market value.

69

The preparation of IFRS consolidated financial statements requires the application of estimates. In addition, the application of standard accounting policies across the company requires management assessments. Section 2.24 lists areas entailing greater scope of discretion in such assessments, or where the related areas are more complex, and where assumptions and estimates are of critical importance to the consolidated financial statements.

The Management Board is required to gauge the entity's going concern capacity when preparing consolidated financial statements. The going concern forecast for the centrotherm Group is based on short- and medium-term planning. The photovoltaic market recovery that started at the end of 2013 was temporarily slowed in May 2014 by the expansion of punitive US tariffs to include solar products from Taiwan, and the subsequent further intensification of punitive tariffs on Chinese cell manufacturers. Demand for new systems recovered at the end of the fourth quarter of 2014, exerting positive effects on new order intake. It is assumed that the prospective revenue targets for 2015 in the core business of Photovoltaics & Semiconductor can be achieved. In other operating segments, too, no indications currently exist that planning cannot be fulfilled. As the photovoltaic market continues to react in a volatile manner to political conditions, a decision was taken in September 2014 to further optimize the cost structure, and to thereby continue with targeted efficiency enhancement in order to secure the company's success and profitability, and to maintain its competitiveness. For this reason, the Management Board assumes that the company comprises a going concern. As a consequence, these consolidated financial statements as of December 31, 2014 have been prepared under the going concern assumption.

These consolidated financial statements have been prepared in euros. Unless stated otherwise, all amounts are commercially rounded up or down to thousands of euros (TEUR).

The following section explains the main accounting policies.

2.2 APPLICATION OF INTERNATIONAL FINANCIAL REPORTING STANDARDS

The consolidated financial statements as of December 31, 2014 have been prepared in accordance with International Financial Reporting Standards (IFRS), which have been published by the International Accounting Standards Board (IASB) and approved by the European Union. All International Financial Reporting Standards (IFRS), which require mandatory application as of the reporting date, as well as all interpretations of the International Financial Reporting Standards Interpretations Committee (IFRS IC) have been complied with.

Pursuant to Section 315a of the German Commercial Code (HGB), these consolidated financial statements are in harmony with Article 4 of the Regulation (EEC) No. 1606/2002 of the European Parliament and Council of July 19, 2002 concerning the application of the International Financial Reporting Standards (IFRS) of the International Accounting Standards Board (IASB). They have been supplemented by certain disclosures, as well as the management report in connection with Section 315a of the German Commercial Code (HGB).

2.2.1 New and amended standards applied for the first time in the January 1 to December 31, 2014 financial year

The IASB has approved new standards and interpretations, as well as amendments to existing standards, which must be applied for financial years commencing on or after January 1, 2014. The following standards and amendments to standards which are to be applied for the first time in the 2014 financial year have no significant effect on the centrotherm Group, however:

• IFRS 10 Consolidated Financial Statements IFRS 10 replaces the regulations of the previous IAS 27 and SIC-12 relating to consolidation. IFRS 10 sets out a standard control concept that is applicable to all companies, including special-purpose entities. Compared with the previous legal position, the amendments introduced with IFRS 10 require considerable discretionary decisions on the part of management regarding which Group companies are controlled, and whether these are to be included by way of full consolidation.

• IFRS 11 Joint Arrangements IFRS 11 replaces the previous regulations of IAS 31 and SIC-13 relating to the accounting treatment of joint ventures. With IFRS 11, the existing option to apply proportionate consolidation to joint ventures is discontinued, in particular. Such



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Annual Report 2014

companies are to be included in the consolidated financial statements solely according to the equity method in the future.

• IFRS 12 Disclosure of Interests in Other Entities This standard provides uniform disclosure requirements for the Group accounting area, and consolidated disclosures for subsidiaries that were previously regulated under IAS 27, disclosures for jointly controlled entities and associates that were previously covered under IAS 31 and IAS 28, and structured entities. New disclosure requirements have also been formulated.

• IAS 27 (revised) Separate Financial Statements IAS 27 (revised 2011) contains regulations about separate financial statements that remain after the adoption of control regulations in IFRS 10.

• IAS 28 (revised) Investments in Associates and Joint Ventures With the approval of IFRS 11 and IFRS 1, IAS 28 was retitled "Investments and Associates and Joint Ventures", and the scope of regulations that was previously restricted to associates was expanded to apply the equity method to joint ventures.

• Amendments to IFRS 10, IFRS 11 and IFRS 12: Consolidated Financial Statements, Joint Arrangements and Disclosures of Interests in Other Entities – Transition Guidance

• Amendments to IFRS 10, IFRS 12 and IAS 27 – Investment Entities: This amendment exempts investment entities in the future from the obligation to be consolidated in the consolidated financial statements of the entity that controls them.

• Amendments to IAS 32 Financial Instruments: Presentation These revisions to IAS 32 and IFRS 7 cover the preconditions for offsetting financial assets and financial liabilities.

• Amendments to IAS 36 Impairment of Assets The amendments relate to disclosure requirements connected with measuring the recoverable amount of impaired assets, which derive from a subsequent amendment in connection with IFRS 13 Fair Value Measurement.

• Amendments to IAS 39 Financial Instruments: Recognition and Measurement According to this amendment, derivatives that have been novated for regulatory reasons can continue to be classified as hedging instruments under certain conditions, thereby allowing continuation of hedge accounting.

2.2.2 Published IFRS that are not yet applicable

Some new standards exist, as well as amendments to standards, that are to be applied as of the earliest for financial years commencing after January 1, 2014. These did not yet require mandatory application in the reporting period, however, or the European Commission had not yet approved them, and they have not been applied voluntarily:

• IFRS 9 Financial Instruments IFRS 9 Financial Instruments replaces the previous regulations of IAS 39 relating to the classification measurement of financial assets and financial liabilities. The final version of IFRS 9 was published in July 2014, and is applicable for reporting periods commencing on or after January 1, 2018. It has yet to be endorsed by the EU.

• IFRS 14 Regulatory Deferral Accounts IFRS 14 A Regulatory Deferral Accounts allows a company that is a first-time adopter of IFRS to continue to recognize regulatory deferral accounts according to the accounting policies that it applied previously in its financial statements, with some limited restrictions. This applies to both the first set of IFRS financial statements and subsequent financial statements. Regulatory deferral accounts and changes to them must be reported separately in the presentation of the financial position and in the income statement, or in other comprehensive income. Certain disclosures are also required. IFRS 14 was published in July 2014, and is applicable for reporting periods commencing on or after January 1, 2016. It has yet to be endorsed by the EU.

71

• IFRS 15 Revenue from Contracts with Customers IFRS 15 prescribed when and in what amount IFRS reporting entities are required to recognize revenue. Preparers of financial statements are also required to provide users of financial statements with more informative and more relevant disclosures than has previously been the case. For this, the standard provides a single, principles-based, five-step model that is to be applied to all contracts with customers. IFRS 15 was published in May 2014, and is applicable for reporting periods commencing on or after January 1, 2017. It has yet to be endorsed by the EU.

• IFRIC 21 Levies IFRIC 21 clarifies, firstly, which government-imposed levies fall into the interpretation's application scope, and, secondly, when corresponding levies are to be recognized. This interpretation will be applicable within the EU for the first time for financial years commencing on or after June 17, 2014.

• Amendments to IAS 1 Presentation of Financial Statements These amendments originate from the Disclosure Initiative Project, and are intended to comprise improvements to financial reporting in relation to disclosures made in the notes to financial statements. The amendments are applicable for financial years commencing on or after January 1, 2016. They have yet to be endorsed by the EU.

• Amendments to IAS 16 Property, Plant and Equipment/IAS 38 Intangible Assets These amendments to IAS 16 clarify that revenue-based depreciation methods are inappropriate for property, plant and equipment. The regulations of IAS 38 were amended in order to include a rebuttable assumption that a revenue-based depreciation method is inappropriate for the same reasons as in IAS 16. The amendments are applicable for financial years commencing on or after January 1, 2016. They have yet to be endorsed by the EU.

• Amendments to IAS 16 Property, Plant and Equipment/IAS 41 Agriculture These amendments bring bearer plants that are utilized only to generate agricultural produce into the application scope of IAS 16, allowing them to be treated in the same way as property, plant and equipment. The amendments are applicable for financial years commencing on or after January 1, 2016. They have yet to be endorsed by the EU.

• Amendments to IAS 19 Employee Benefits The new regulations relating to the accounting treatment of contributions that employees make to pension commitments are to be applied for the first time for financial years commencing on or after February 1, 2015.

• Amendments to IAS 27 These amendments re-allow the application of the equity method as an optional accounting treatment for interests in subsidiaries, joint ventures and associates in separate financial statements. The amendments are applicable for financial years commencing on or after January 1, 2016. They have yet to be endorsed by the EU.

• Amendments to IFRS 10/IAS 28 These new regulations contain clarifications relating to the sale or transfer of assets between an investor and an associate or joint venture. The amendments are applicable for financial years commencing on or after January 1, 2016. They have yet to be endorsed by the EU.

• Amendments to IFRS 10/IFRS 12 and IAS 28 These amendments clarify the application of the consolidation exemption if the parent entity meets the definition of an investment entity. The amendments are applicable for financial years commencing on or after January 1, 2016. They have yet to be endorsed by the EU.

• Amendments to IFRS 11 These amendments to IFRS 11 contain guidelines for the accounting treatment of purchases of interests in jointly controlled operations if they comprises operations in the meaning of IFRS 3. The amendments are applicable for financial years commencing on or after January 1, 2016. They have yet to be endorsed by the EU.

• Annual improvements IFRS 2010 – 2012 The IASB published its annual improvements to the IFRS 2010 to 2012 Cycle on December 12, 2013, including amendments to the following standards: IFRS 3 Business Combinations (accounting for contingent consideration in a business combination), IFRS 13 Fair Value Measurement (current receivables and liabilities), and IAS 24 Related Party



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Disclosures (disclosures about management members). The EU endorsed these in December 2014. The amendments are applicable in the EU for financial years commencing on or after January 1, 2015.

• Annual improvements IFRS 2011– 2013 The IASB published annual improvements to its IFRS 2011 to 2013 Cycle on December 12, 2013, including amendments to the following standards: IFRS 1 First-Time Adoption of International Financial Reporting Standards (meaning of "coming into force" in relation to IFRS), and IFRS 3 (scope exceptions for joint ventures). The EU endorsed these in December 2014. The amendments are applicable in the EU for financial years commencing on or after January 1, 2015.

• Annual improvements IFRS 2012– 2014 The IASB published annual improvements to its IFRS 2012 to 2014 Cycle on September 25, 2014, including amendments to the following standards: IFRS 5 Non-current Assets Held for Sale and Discontinued Operations (changes in methods of disposal), IFRS 7 Financial Instruments: Disclosures (adoption of additional guidelines relating to servicing contracts), and IAS 34 Interim Financial Reporting (disclosures in interim financial statements). The amendments are applicable for financial years commencing on or after January 1, 2016. As of the reporting date, these amendments have yet to be endorsed by the EU.

The centrotherm Group is currently examining what effects the first-time application of the standards will have on the Group's financial position and performance. It is currently still impossible to reliably determine the precise scope of the effects on the Group. The future application of other standards and interpretations will prospectively have no significant effects on the Group's financial position and performance. The Group intends to apply the IFRS on the mandatory date, if corresponding recognition has occurred as part of the endorsement process.

2.3 SCOPE OF CONSOLIDATION

Along with CT AG, the consolidated financial statements generally comprise all entities that CT AG controls. Control exists if the centrotherm Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Inclusion occurs at the time when control becomes possible; it ends when control is no longer possible.

2.3.1 Subsidiaries

No changes have occurred to the consolidation scope compared with December 31, 2013.

Voting rights interest of CT AG in companies included in the consolidated financial statements

12/31/2014 12/31/2013

in % Consolidation scope Direct

interest Indirectinterest

Quota

interest

Quotainterest

centrotherm cell & module GmbH, Blaubeuren 100.00 0.00 100.00 100.00

centrotherm photovoltaics Asia Pte. Ltd., Singapore 100.00 0.00 100.00 100.00

centrotherm photovoltaics technology Shanghai Co. Ltd., Shanghai, China 100.00 0.00 100.00 100.00

centrotherm SiTec GmbH i.L., Blaubeuren 100.00 0.00 100.00 100.00

FHR Anlagenbau GmbH, Dresden/Ottendorf-Okrilla 100.00 0.00 100.00 100.00

Photovoltaics Asia Invest Pte. Ltd., Singapore 0.00 100.00 100.00 100.00

SiTec GmbH (formerly: SiTec SPV GmbH, Munich), Burghausen 100.00 0.00 100.00 100.00

Besides CT AG, the consolidated financial statements as of December 31, 2014 include four German and three foreign subsidiaries in which CT AG directly or indirectly holds the majority of the voting rights.

73

2.3.2 Non-consolidated companies

The following list shows direct or indirect interest of CT AG in the voting rights of companies that were not consolidated as of December 31, 2014:

Voting rights interest of CT AG in companies not included in the consolidated financial statements

12/31/2014 12/31/2013

in % non-consolidated companies Direct

interest Indirectinterest Quota

interest Quotainterest

centrotherm Holding GmbH, Vienna, Austria 0.00 0.00 0.00 100.00

centrotherm management GmbH i.L., Blaubeuren 100.00 0.00 100.00 100.00

centrotherm photovoltaics India Pte. Ltd., Bangalore, India 0.00 99.00 99.00 99.00

centrotherm photovoltaics Korea Ltd., Suwon, Korea 100.00 0.00 100.00 100.00

centrotherm photovoltaics USA Inc., Atlanta, USA 100.00 0.00 100.00 100.00

centrotherm Power Solutions GmbH i.L., Vienna, Austria 0.00 100.00 100.00 100.00

centrotherm Solar Innovations GmbH, Wels, Austria 100.00 0.00 100.00 100.00

centrotherm Solar Innovations GmbH & Co. KG, Wels, Austria 0.00 0.00 0.00 100.00

centrotherm thermal solutions Verwaltungs GmbH i.L., Blaubeuren 100.00 0.00 100.00 100.00

Changers GmbH i.L., Berlin 50.00 0.00 50.00 50.00

cruSible GmbH i.L., Berching 0.00 30.00 30.00 30.00

HQ-Dielectrics GmbH, Dornstadt 0.00 0.00 0.00 22.41

SolMic GmbH, Burghausen 100.00 0.00 100.00 100.00

Sunshine PV Corp., Hsinchu Industrial Park, Taiwan 0.00 21.20 21.20 21.20

TOV photovoltaics industries Ukraine, Zaporozhye, Ukraine 100.00 0.00 100.00 100.00

centrotechnics Automation Equipment Co. Ltd., Suzhhou, China 0.00 15.00 15.00 15.00

Compared with December 31, 2013, no significant changes have occurred to the non-consolidated companies and participating interests.

SolMic GmbH, Burghausen, was merged with centrotherm cell & module GmbH, Blaubeuren, as the result of a contract dated December 16, 2014. Following the registration of the merger, centrotherm cell & module GmbH assumes all of the rights and obligations of SolMic GmbH by way of universal succession. No effects occurred to the Group's financial position and performance in 2014. The transaction was not entered in the commercial register until February 26, 2015.

The shares in HQ-Dielectrics GmbH, Dornstadt, were sold in the year under review.

centrotherm Holding GmbH, Vienna, and centrotherm Solar Innovations GmbH & Co. KG, Wels, were merged with centrotherm Solar Innovations GmbH, Wels, in the year under review.

The non-consolidated companies relate to subsidiaries and interests in companies that strengthen sales and service activities in the relevant regions. We decided not to include the above-listed companies in the consolidated financial statements as of December 31, 2014, due to their immaterial impact on the company's financial position and performance, both individually and considered together.



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2.4 CONSOLIDATION

Subsidiaries

Corporate mergers from January 1, 2010 are accounted for applying the purchase method pursuant to IFRS 3 (2008). In this context, cost is derived from the sum of the consideration transferred, measured at fair value as of the acquisition date, and non-controlling interests' consideration in the acquired company. Non-controlling interests may be measured either at fair value (full goodwill method) or at the proportionate fair value of the identifiable net assets. The centrotherm Group generally applies the second alternative, proportionate fair value. Incidental acquisition costs are expensed as of the date when they arise. Costs are offset with acquired identifiable assets and acquired liabilities. Assets, liabilities, and contingent liabilities are recognized at fair value in this context. Remaining positive differences are recognized in the balance sheet as goodwill. Following a critical review, negative differences are recognized in profit or loss. Any hidden reserves and liabilities that are identified are carried forward in proportion to the related assets and liabilities during subsequent consolidation.

In step acquisitions, shares already held in the acquired company are remeasured at fair value on the acquisition date. Resultant gains or losses are recognized in profit or loss.

Agreed contingent purchase price components are reported as liabilities at fair value on the acquisition date. Adjustments to contingent purchase price components are recognized in profit or loss.

The following divergent measurement principles applied to corporate mergers before January 1, 2010: Transaction costs that were directly attributable to the corporate acquisition represented a portion of acquisition costs. Non-controlling interests were measured at the proportionate fair value of the identifiable net assets of the acquired company. Contingent purchase price components were reported only if a current obligation on the part of the company existed, if an outflow of resources entailing economic benefit to satisfy the obligation was probable, and its fair value could be measured reliably. Subsequent adjustments to contingent purchase price components were reported as part of goodwill.

Intra-group earnings and losses, revenues, expenses and income, as well as receivables and liabilities between consolidated companies, are eliminated. The subsidiaries' accounting policies are modified where required in order to ensure standard Group financial accounting.

The consolidated financial statements include the companies that CT AG controls, as long as their effect on the financial position and performance is not immaterial.

Associates

Associates comprise entities over which the Group exercises significant influence, but where it does not possess control, frequently accompanied by a voting rights interest of between 20% and 50%. The assumption of significant influence is rebuttable. Joint ventures and interests in associates are equity accounted. According to the equity method, interests in associates are to be carried in the consolidated balance sheet at acquisition cost adjusted to reflect changes in the Group's interest in the associates' profit or loss and other comprehensive income following the acquisition date.

Any surplus of the cost of acquiring the interest above the Group's interest in the fair values of the associate's identifiable assets, liabilities and contingent liabilities on the acquisition date is recognized as goodwill. Goodwill is included in the carrying amount of the participating interest, and is neither amortized nor tested separately for impairment.

Unrealized gains and losses on transactions between Group entities and associates are eliminated according to the Group's interest in the associate.

Deriving from the regulations of IAS 39, the Group examines on each balance sheet date whether objective indications exist that the interest in an associate might be impaired. If this is the case, the carrying amount of the participating interest is tested for impairment in accordance with IAS 36 by comparing the recoverable amount of the interest with its carrying amount. Any requirement for impairment that is ascertained comprises part of the carrying amount of the participating interest, and is to be offset against its carrying amount.

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Application of the equity method is to be discontinued given the loss of significant influence over an associate, and the shares are to be measured at fair value according to IAS 39. Such shares are recognized at cost where fair value cannot be calculated reliably.

2.5 CURRENCY TRANSLATION

The euro is the functional currency of CT AG, and of its German subsidiaries, as well as being the Group reporting currency. The financial statements of the foreign subsidiaries included in the consolidated financial statements are not prepared in euros. The financial statements are translated from local currency into the Group currency (the euro) on the reporting date. The financial statements are translated applying the modified reporting date rate method whereby balance sheet items except equity are reported at the rate prevailing on the balance sheet date, and income statement items are translated at the average rate for the reporting period. Equity is translated applying historical rates. Translation differences arising from the currency translation are recognized directly in equity.

In the separate financial statements, foreign currency transactions are measured applying the daily middle rate prevailing on the date of initial recognition. Currency gains and losses that occur until the balance sheet date from the measurement of monetary assets and liabilities denominated in foreign currencies are recognized in profit or loss (within other operating income or other operating expenses) at the daily middle rates applying on the balance sheet date.

No forward transactions for currency hedging purposes existed as of December 31, 2014.

The following comprise the important exchange rates for the centrotherm Group:

Exchange rate to the euro

Reporting date rate

Average rate

1 EUR = 12/31/2014 12/31/20131/1/2014-

12/31/2014- 6/1/2013-12/31/2013-

Chinese renminbi (CNY) 7.54 8.35 8.17 8.18

Qatar riyal (QAR) 4.43 5.01 4.83 4.87

Singapore dollar (SGD) 1.61 1.74 1.68 1.69

Taiwan dollar (TWD) 38.50 41.06 40.23 39.75

US dollar (USD) 1.21 1.38 1.33 1.34

2.6 REVENUE RECOGNITION

Pursuant to IAS 18, revenue is recognized if it is probable that economic benefits will accrue to the Group, and the level of revenue can be determined reliably, independently of the payment date. Revenue is measured at the fair value of the consideration received, or of the consideration demanded, while taking into account contractually determined payment terms, whereby taxes and other deductibles are not included. The Group has analyzed its business relationships in order to determine whether it acts as contractor or mediator. The Group has arrived at the conclusion that it acts as contractor in all its revenue transactions. Revenue recognition also presupposes the satisfaction of the following recognition criteria.

Revenue from the sale of turnkey production lines is recognized with the rendering of the contractually determined performance parameters following final customer acceptance.

In the case of revenue generated from the sale of single equipment, revenue is generally recognized when customers accept related deliveries. As part of product standardization, single equipment orders relate increasingly less to construction contracts in the meaning of IAS 11, but rather to inventories in the meaning of IAS 2.



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Revenue from engineering services is recognized according to contractually-specified milestones.

Sales revenues are reported less discounts, price rebates, customer bonuses, and deductions.

Construction contracts regulated by IAS 11 are reported according to either the percentage of completion method or the zero profit method. If the result from the construction contract can be estimated reliably, income and costs are reported applying the percentage of completion method as of the reporting date. This is calculated by comparing contract costs incurred as of the reporting date with estimated total contract costs. When the outcome of a contract cannot be estimated reliably, but the contract overall is expected to be profitable, revenue is recognized to the extent of recoverable expenses. This is described as the "zero profit method". Contract costs are expensed in the period in which they arise. Construction contracts are reported among receivables and liabilities related to construction contracts.

To the extent that, in specific cases, cumulative performance (contract costs incurred and reported profits) exceeds prepayments received, such construction contracts are reported on the assets side of the balance sheet under receivables from construction contracts. A negative balance remaining after deducting prepayments is reported among liabilities arising from construction contracts. Advances received where no services have been rendered are reported on a gross basis as prepayments received.

Anticipated losses on orders are calculated during the entire production period while taking into account identifiable risks, are immediately fully included in the contract profit or loss, and are adjusted to reflect impairments and obligations carried as liabilities.

2.7 INTEREST INCOME

Interest is recognized applying the effective interest method.

2.8 DIVIDEND INCOME

Dividend income is recognized on the date on which the right to receipt of the payment arises.

2.9 INTANGIBLE ASSETS

Intangible assets include goodwill, capitalized development costs, and purchased patents, software, licenses, and similar rights of limited or indefinite useful life. This item also contains intangible assets that are identified and separable as part of purchase price allocation. This includes acquired know-how and customer relationships.

Goodwill

Goodwill arising from the consolidation (elimination) of the investment account is not amortized. Pursuant to IFRS 3 Business Combinations, goodwill and intangible assets of indefinite useful life, and intangible assets that cannot yet be utilized, are tested annually for impairment. An impairment should be reported if the recoverable amount of the asset is less than its carrying amount. If the asset forms part of a cash-generating unit, the impairment review is performed on the basis of the cash-generating unit (abbreviated as "CGU"). If events or indications suggest that impairment may have occurred, further impairment tests are performed.

At the centrotherm Group, cash-generating units generally comprise its individual companies. Value-in-use is calculated applying the discounted cash flow method. A three-phase measurement model was applied to test the goodwill that is fully attributable to FHR. Accordingly, estimated cash flows until 2019 are based on current budgets for FHR for the next five years, and reflect management estimates. Annual cash flow growth of 2 % p.a. is assumed for the years 2020 to 2021. An annual growth rate of 1 % p.a. is imputed from 2022. The growth rates are derived from sector estimates and external studies, less a risk discount. A pretax weighted average cost of capital of 9.34% was applied. The previous year's measurement model applied a 10.7% pretax weighted average cost of capital. The other parameters were unchanged.

As of the balance sheet date, the goodwill of TEUR 637 is fully attributable to FHR Anlagenbau GmbH.

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Internally generated intangible assets

The centrotherm Group invests in research and development in order to secure its continued existence in the research and technology intensive markets in which the centrotherm Group operates.

For accounting purposes, the Group defines research as an activity that is intended to deliver new scientific or technical knowledge and insight. Research costs are expensed in the period in which they are incurred.

Development is defined as the application of research results or specialist knowledge in production, production processes, and services or goods before the start of commercial production or utilization. According to IAS 38 Intangible Assets, development costs can be capitalized if (1) the development costs can be measured reliably, the product or process can be realized (2) technically and (3) commercially, and (4) future economic benefits are probable. Above and beyond this, the Group must have (5) the intention, and (6) sufficient resources to complete development, and to utilize or sell the asset.

Capitalized development costs are measured at production cost. Production costs comprise all costs incurred from the time when the intangible asset at first satisfies the recognition criteria, and which can be directly attributed to the creation, production, and preparation of the asset for its intended use. Development costs are capitalized until the time when the internally generated intangible asset is ready for operational use for its intended purpose. Straight-line amortization is applied to capitalized development costs over their respective useful life of between three and five years from the time when they become ready for operational use, to the extent that no impairment charges are required. All capitalized development costs have limited useful lives.

Separately purchased intangible assets

Purchased intangible assets are recognized at cost. They are subsequently amortized over their useful lives. With the exception of goodwill and intangible assets of indefinite useful life, intangible assets are amortized straight-line over a period of three to five years, unless the recognition of an impairment loss is required. In the case of intangible assets of indefinite useful life, and intangible assets that are not yet available for use, an impairment test is conducted at least every year, and whenever indications of impairment exist.

Intangible assets arising from purchase price allocations are generally amortized over a ten to twenty year period. With the exception of one brand, all other intangible assets have limited useful lives. The appraisal of the brand is based on permanent utilization of the purchased brand name. A high level of impairment losses were applied in the financial statements for the abbreviated financial year ending on September 30, 2012, due to the market collapse, continued cost pressure, and falling prices, as well as technological change in the photovoltaic sector. The current situation on the photovoltaic market does not yet necessitate a reappraisal of the impairments that have been applied.

Gaging the extent to which the centrotherm brand has retained its value was performed on the basis of value-in-use as measured applying the license price analogy. This calculation was based on a pretax discount rate of 9.34%. A license rate equivalent to 2.0% of revenue was imputed. The growth rate beyond the planning horizon was imputed at 1.0%. The product revenues of CT AG were applied as the revenue base. This asset is allocated to the Photovoltaics & Semiconductor segment.

If actual business trends underperform the assumptions included in the calculation, impairment losses might be required for the brand rights in the future.

2.10 PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment is generally recognized at cost less straight-line depreciation, as well as any requisite impairment losses (cost method).

Purchase costs are composed of the purchase price, incidental purchase costs, and subsequent purchase costs, less any reductions to purchase price received.



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Besides specific costs, production costs include appropriate portions of essential fixed and variable materials and production overhead costs, to the extent that they are incurred in connection with the production process. They also include costs for the operation's social facilities and the company's voluntary social benefits, to the extent that they are allocated to the production area. Administrative costs are also included if they are attributable to the production area.

Only if it is probable that the Group will generate future economic benefits from this asset, and the costs can be measured reliably, can subsequent expenses be included in the assets' carrying amounts, or, if this is appropriate, be reported as separate assets. All other repair or maintenance expenses are to be expensed in the financial year in which they are incurred. Replacement parts, provision materials and service materials relating to property, plant and equipment are capitalized under this item if they themselves are to be classified as property, plant and equipment pursuant to IAS 16.

Costs contain no borrowing costs.

Land is not depreciated, as a matter of principle. The depreciation of all other property, plant, and equipment applies the straight-line method as long as no requirement exists for utilization-related depreciation on the basis of actual use. The Group applies impairment losses if the asset's "recoverable amount" has fallen below its carrying amount.

Given negative trends on the photovoltaic market, experts revalued real estate, as well as technical plant and machinery, in the financial statements for the abbreviated financial year ending on September 30, 2012. For measurement purposes, the assets were generally differentiated according to future utilization: Assets to be utilized further continued to be carried at carrying amounts derived from cost less depreciation. Assets that are no longer to be utilized were written down to their lower fair value based on surveys taking into account an approximately 70% capacity to be utilized by third parties. Overall, a high level of impairment losses were applied to property, plant and equipment in the financial statements as of September 30, 2012. The current situation on the photovoltaic market does not yet necessitate a reappraisal of the impairments that have been applied.

Impairment losses of TEUR 1,630 were applied to real estate which the company utilizes itself, and which is no longer required as a result of the restructuring measures introduced in the financial year under review, in order to reflect the lower fair value deriving from valuation surveys that take into account the possibility for third parties to utilize these assets (assumed 7.5% rental yield).

If property, plant, and equipment is sold, decommissioned, or scrapped, the gain or loss arising from the difference between net disposal proceeds and residual carrying amount is reported among other operating income or expenses.

Depreciation is based on the following Group-standard useful lives:

Useful life applied

in years

Buildings 2 to 55

Outside facilities 2 to 25

Leasehold improvements 2 to 14

Technical plant 3 to 21

Cars 3 to 6

Office equipment 3 to 13

Other operating and business equipment 2 to 18

Residual carrying amounts, useful lives and depreciation methods are reviewed annually, and adjusted at the start of the corresponding reporting period, where required.

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2.11 LEASES

Leases are classified as finance leases as per IAS 17 if the lease agreement essentially transfers opportunities and risks connected with the property to the lessee.

If the opportunities and risks connected with the ownership of the asset essentially remain with the lessor, the lease is classified as an operating lease. Lease installments from operating leases are expensed through the income statement on a straight-line basis over the duration of the lease, unless another systematic basis better corresponds to the progression of utilization for the lessee.

Only operating leases where Group companies act as lessees existed within the centrotherm Group as of the reporting date.

2.12 IMPAIRMENT OF NON-FINANCIAL ASSETS

A review is performed on every reporting date to establish whether indications exist that assets have become impaired in the meaning of IAS 36 (Impairment of Assets). If such indications exist, or if an annual impairment test is required, the recoverable amount of the asset is calculated. An annual impairment test is required for goodwill and intangible assets of indefinite useful life, or intangible assets that cannot yet be utilized.

An impairment exists if the carrying amount of an asset, or of a cash-generating unit, exceeds the recoverable amount. The impairment loss is to be recognized in profit or loss. The Group generally defines each operating company as a separate cash-generating unit.

The recoverable amount is the higher of either net realizable value or value-in-use. Value-in-use comprises the present value of future cash flows expected from the continued utilization of an asset, and from its disposal at the end of the period of use. If no cash flows can be directly attributed to an asset, the recoverable amount of the cash-generating unit to which the asset belongs is measured.

If the assumptions relating to the recoverable amount undergo change, the valuation losses arising from the impairment are neutralized by way of a reversal. Reversals are performed up to the carrying amount that would have resulted if the asset had been depreciated without impairment.

2.13 INVENTORIES

In accordance with IAS 2 (Inventories), inventories include those assets held for sale as part of normal business (finished goods and products), assets in the process of being manufactured for sale (semifinished goods and services), or assets consumed as part of manufacturing or the rendering of services (raw materials and supplies).

Inventories are measured at the lower of cost or net realizable value, in other words, the sales proceeds achievable in the normal course of business less estimated production and sales costs. The cost of raw materials and supplies is calculated applying the average method.

Purchase costs include all costs incurred to deliver inventories to their current location, and in their current condition. Besides specific costs, production costs include appropriate portions of essential fixed and variable materials and production overhead costs, to the extent that they are incurred in connection with the production process. They also include costs for the operation's social facilities and the company's voluntary social benefits, to the extent that they are allocated to the production area. Administrative costs are also included if they are attributable to the production area. Costs contain no borrowing costs.



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2.14 FINANCIAL ASSETS

Classification and measurement

Financial assets are recognized if the Group company becomes the contractual party to a financial instrument.

Financial assets are allocated to the following categories:

• At fair value through profit or loss

• Held to maturity

• Available for sale

• Loans and receivables

Classification depends on the respective purpose for which the financial assets are purchased. The Group determines classification of its financial assets when they are recognized for the first time, and reviews such allocation at the end of each financial year, where permissible and appropriate. Subsequent measurement of financial assets depends on their classification.

Financial assets are measured at fair value on initial recognition. If financial assets are not measured at fair value through profit or loss, transaction costs that are directly attributable to the purchase of the financial asset are also included.

Assets measured at fair value through profit or loss

Assets measured at fair value through profit or loss comprise financial assets that are held for trading, or that are designated as measured at fair value through profit or loss. A financial asset is allocated to this category if it was acquired in principle with the intention to sell it in the short term. Assets in this category are reported as current assets if it is expected that the asset will be realized within twelve months. All other assets are classified as non-current.

The Group has no financial assets held for trading, and has designated no assets as measured at fair value through profit or loss.

Held-to-maturity investments

Held-to-maturity investments comprise non-derivative financial assets with fixed or determinable payments, as well as a fixed term, where the Group has the intention and ability to hold them until maturity. After first-time recognition, held-to-maturity investments are measured at amortized cost applying the effective interest method, less any impairment losses.

The Group has designated no financial assets as held-to-maturity.

Available-for-sale financial assets

Available-for-sale financial assets comprise non-derivative financial assets which are either allocated to this category, or which were not allocated to any of the other categories presented. They are allocated to non-current assets if the Group does not have the intention of selling them within twelve months after the balance sheet date, and the asset is not due within this period.

On initial recognition, they are measured at fair value less incidental purchase costs. Subsequent measurement is at fair value if fair value can be measured reliably. Fair value changes are recognized directly in equity, less any deferred tax. If such an asset is derecognized, the accumulated gain or loss within equity is recycled in profit or loss. If fair value cannot be measured reliably, such assets are recognized at cost. If, when recognizing at cost, an objective indication exists that an available-for-sale asset is impaired (corresponding to IAS 39.59, for example), the impairment amount (difference between the carrying amount and the

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present value of estimated future cash flows) is recognized in profit or loss. Subsequent reversals of impairment losses are not permitted (IAS 39.66).

Financial assets include shares in non-consolidated subsidiaries and interests in companies that are classified as available-for-sale pursuant to IAS 39. These are reported at their respective amortized cost due to a lack of an active market, and as fair value cannot be measured reliably.

When subsidiaries are sold, the difference between sale price and net assets plus cumulative foreign currency differences is recognized in profit or loss.

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted on an active market. Loans and receivables, such as trade receivables, other receivables and cash, are measured at amortized cost applying the effective interest method following first-time recognition. Default risks must be recognized as impairments, and to an appropriate level.

Other assets contain loans, which are measured at amortized cost. Loans bearing a market rate of interest are reported at nominal value. Non-interest-bearing and low-interest-bearing loans are discounted applying a rate of interest appropriate to their risk.

With the exception of current receivables where the discounting effect would be immaterial, interest income is recognized applying the effective interest method.

Receivables and other assets with a term of less than one year are classified as current.

2.15 IMPAIRMENT OF FINANCIAL ASSETS

With the exception of financial assets measured at fair value through profit or loss, financial assets are impairment-tested on each balance sheet date. A financial asset is regarded as impaired if, as a result of one or several events occurring after first-time recognition of the asset, objective indications suggest that expected future cash flows from the financial asset have suffered a negative change.

In the case of equity instruments that have been classified as held for sale, a significant or sustained reduction in the fair value of the assets to below the purchase costs comprises an objective indication of impairment.

In the case of all other financial assets, the following can comprise objective indications of impairment:

• significant financial difficulty of the issuer or counterparty,

• a breach of contract, such as a default or delinquency in interest or principal payments,

• it becoming probable that the borrower will enter bankruptcy or other financial reorganization, or

• the disappearance of an active market for that financial asset because of financial difficulties.

With the exception of derivative financial instruments, receivables and other assets are recognized at amortized cost applying the effective interest method. Requirements for specific value allowances are calculated depending on the receivables' age structure, and information about customer-specific credit and default risk (such as probability of insolvency or significant financial difficulties on the part of the debtor). An itemized provision for doubtful receivables accounts is sufficient to reflect general credit risk. Uncollectible receivables are derecognized.

• An impairment results in a direct reduction of the carrying amount of all affected financial receivables, with the exception of trade receivables whose carrying amounts are reduced through a valuation allowance account. If an impaired trade



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receivable is deemed uncollectible, consumption is applied against the valuation allowance account. Subsequent receipts for amounts that have already been written down are also booked against the valuation allowance account. Changes to the fair value of the valuation allowance account are recognized in profit or loss.

• If the level of the impairment of financial assets measured at amortized cost reduces in one of the subsequent financial years, and if such a reduction can be objectively attributed to an event that occurs after the recognition of the impairment, the previously recognized impairment is reversed in profit or loss. In this context, the reversal of the impairment loss cannot exceed the amortized cost that would have arisen without the impairment loss.

2.16 DERECOGNITION OF FINANCIAL ASSETS

• The Group only derecognizes financial assets if the contractual rights to the cash flows from the financial assets expire, or if it transfers the financial asset, as well as all opportunities and risk connected with ownership of the asset, to a third party.

• When a financial asset is derecognized, the difference between its carrying amount and the sum of payments received or to be received, as well as all cumulative gains or losses that are reported in other comprehensive income and accumulated within equity, is recognized in profit or loss.

2.17 DERIVATIVE FINANCIAL INSTRUMENTS

In the centrotherm Group, financial instruments such as forward currency transactions and interest-rate swaps, which do not form part of hedging relationships, are categorized as held for trading pursuant to IAS 39. Derivative financial instruments are consequently measured at fair value. Fair value changes are recognized in profit or loss. In the case of derivative financial instruments that are classified as hedging instruments, reporting fair value changes depends on whether the derivative financial instrument is deployed to hedge balance sheet assets and liabilities (fair value hedge), or to hedge risks pertaining to fluctuating cash flows (cash flow hedge).

When entering into the transaction, the Group documents the hedging relationship between the hedging instrument and the underlying transaction, the objective of the risk management, and the underlying strategy. Both at the start of the hedging relationship and during it, documentation also appraises whether the derivatives deployed in the hedge prove highly effective in compensating for the changes to the fair value or the cash flows of the underlying transactions. Changes to the fair values of derivatives that were allocated to hedge fair value are reported in the income statement together with the fair value changes of the hedged assets and liabilities that are attributed to the hedged risk. If the preconditions for a hedging relationship are no longer satisfied, and the previously designated underlying transaction is measured applying the effective interest method, the outstanding carrying amount adjustment to the underlying transaction should be applied over its residual duration.

The effective part of the changes to the fair values of derivatives that are designated as cash flow hedges is reported in equity. The ineffective portion of such value changes is recognized in profit or loss, by contrast. Amounts that are deferred or accrued in equity are rebooked through the income statement, and reported as income or expense in the period in which the hedged transaction becomes earnings-effective. If a hedging transaction expires, is disposed of, or no longer satisfies hedge accounting criteria, the gains and losses that have accumulated until that point within equity remain within equity, and are not reported through the income statement until the future transaction that was originally hedged occurs, or the occurrence of the expected transaction is no longer anticipated.

No derivative financial instruments existed during the period under review.

2.18 CASH AND CASH EQUIVALENTS

Cash and cash equivalents include cash holdings, bank accounts in credit, and time deposit investments with a residual term on acquisition of up to three months. Cash and cash equivalents are subject as of the balance sheet date to plan short-term availability restrictions due to cash-advanced guarantees of bills in an amount of TEUR 2,593 (previous year: TEUR 9,501), and in an amount of TEUR 5,000 (previous year: TEUR 5,000) arising from pledged deposits for the insolvency state lending agreement for a subsidiary. They are measured at their nominal amounts.

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2.19 NON-CURRENT ASSETS AND GROUPS OF ASSETS HELD FOR SALE

The centrotherm Group classifies non-current assets or groups of assets as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use. This is only the case if the asset or group of assets can be sold immediately in its current condition, and disposal is highly probable. Non-current assets and groups of assets held for sale are measured at the lower of carrying amount and fair value less costs of disposal unless the items presented within the disposal group fall under the measurement rules of IFRS 5. Property, plant and equipment that are held for sale are not depreciated, and intangible assets that are held for sale are not amortized.

An operating and administration building with plants in Constance, which belongs to the Photovoltaics & Semiconductor segment, was no longer utilized due to the restructuring measures. For this reason, it was classified and measured as a non-current asset held for sale pursuant IFRS 5. For this reason, the building, along with the plants, was reported in the previous year's financial statements under the "non-current assets and groups of assets held for sale" item with fair value less costs of disposal of TEUR 11,650. Excess sales revenue less costs of TEUR 2,656 was generated as a result of the complete disposal in the financial year under review.

An operating and administration building, along with equipment, which belongs to the Silicon segment, is to be sold within the twelve months after the balance sheet date. The IFRS 5 criteria for classification and measurement for "non-current assets held for sale" are met as of the balance sheet date. For this reason, this building was reclassified to the "non-current assets and groups of assets held for sale" item with the lower of its carrying amount and fair value less costs of disposal of TEUR 2,344. No impairment losses arose in this context.

2.20 PROVISIONS

Provisions are formed for obligations to third parties resulting from past events that will probably result in an economic burden on the Group, and whose extent can be reliably determined.

Provisions are measured according to IAS 37 (Provisions, Contingent Liabilities and Contingent Assets) applying the best possible estimate of expenses required to satisfy the obligation as of the reporting date. If cash outflows for obligations are not anticipated to occur until after one year after the balance sheet date, provisions are measured applying the present value of prospective cash outflows. The pretax interest rate that is to be applied is calculated according to the specific risk for the liability. Reimbursements by third parties are capitalized separately from provisions if their realization is probable.

If a reduction to the scope of an obligation results from a change to an assessment, the provision is released proportionately, and the income is reported in other operating income.

No pension obligations existed as of the balance sheet date.

2.21 FINANCIAL LIABILITIES

Financial liabilities are recognized if a Group company becomes the contractual party to a financial instrument. They are categorized either as financial liabilities measured at fair value through profit or loss, or as financial liabilities measured at amortized cost.

Financial liabilities are measured at fair value on initial recognition. If financial liabilities are not measured at fair value through profit or loss, transaction costs are also included that are directly attributable to the purchase of the financial liabilities.

Financial liabilities measured at fair value through profit or loss

Financial liabilities are categorized as liabilities measured at fair value through profit or loss if they are either held for trading, or have been designated voluntarily as measured at fair value through profit or loss.

No financial liabilities measured at fair value through profit or loss existed during the period under review.



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Financial liabilities measured at amortized cost

Following initial recognition, financial liabilities that are classified as measured at amortized cost are measured at amortized cost according to the effective interest method. Current liabilities are recognized at their repayment or satisfaction amount.

To the extent that installments liabilities are deferred without interest until December 31, 2015, they were recognized initially at their present value accordingly. Discounting was applied using a debt interest rate of 7.5% p.a., which is derived from a basic interest rate of 2.5% p.a. and an average credit spread of 5.0% p.a.

Derecognition of financial liabilities

Financial liabilities are derecognized if the corresponding obligations have been settled or canceled, or have expired. The difference between the carrying amounts of the derecognized financial liabilities and the considerations received, or to be received, is recognized in profit or loss.

2.22 TAXES

Current tax reimbursement claims and current tax liabilities for current and earlier periods are measured applying the amount at which a reimbursement is expected from the tax authority, or at the amount that is expected to be paid to the tax authority. Calculation of the amount is based on the tax rates and tax laws that are published as of the balance sheet date.

Income tax includes all taxes levied on the taxable earnings of Group companies. The management regularly examines tax declarations, especially in relation to matters that are susceptible to interpretation, forming provisions where required based on the amounts that are anticipated to be paid to the tax authority.

Deferred taxes are formed applying the balance sheet-oriented liability method (IAS 12) to temporary differences existing on the balance sheet date between the value recognized for an asset or liability in the balance sheet, and the fiscal valuation.

The carrying amount of deferred tax assets is reviewed on each balance sheet date, and reduced to the extent that it is no longer probable that sufficient taxable earnings will be available against which the deferred tax assets can be at least partially utilized. Unrecognized deferred tax assets are reviewed on each balance sheet date, and recognized to the extent to which it has become probable that future taxable earnings will enable the deferred tax assets to be realized.

Deferred tax assets and deferred tax liabilities are measured applying the tax rates that are expected to be valid for the period in which the asset is to be realized or the liability satisfied. This is based on the tax rates and tax laws that are published as of the balance sheet date.

Deferred taxes relating to items that are recognized directly in equity are not recognized in profit or loss, but instead directly in equity.

2.23 GOVERNMENT GRANTS

Government grants are only reported if appropriate certainty exists that the company will satisfy the related conditions, and that the grants will be awarded. As far as the accounting treatment of grants is concerned, IAS 20 stipulates that a differentiation should be made between non-monetary grants, grants for assets, and profit-related grants.

Expense-related grants are booked through the income statement in the period in which they are received, and corresponding to the expenses that they are intended to offset. They are reported in the income statement as other operating income. If subsidies are awarded for expenses not incurred until subsequent periods, they are reported as deferred income, and released pro rata temporis.

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Government grants are to be deducted from acquisition or production costs, or are to be recognized as deferred liabilities. At the centrotherm Group, investment subsidies are recognized as deductions from acquisition of production costs. For investment allowances, a deferred liability is formed that is released pro rata temporis.

In the year under review, the centrotherm Group received profit-related subsidies in the form of expense subsidies, and released, pro rata, grants for assets in the form of investment allowances.

2.24 ESTIMATES AND DISCRETIONARY DECISIONS

When preparing consolidated financial statements, the management is required pursuant to IFRS to make discretionary decisions in the application of accounting policies, as well as assessments and estimates, as well as make assumptions, which affect the level and reporting of recognized assets and liabilities, income and expenses, and contingent liabilities. Estimates are based on empirical data and other assumptions that are regarded as appropriate under the given circumstances, which are sustainably characterized by uncertainties about market trends in the photovoltaic sector.

Actual outcomes may differ from estimates. Significant estimates and assumptions are reviewed constantly, and adjusted where required.

Accounting methods are regarded as significant that have a major impact on the presentation of the financial position and performance, as well as the cash flows of the centrotherm Group, and which require an assessment of matters that are by their nature uncertain, which may change in subsequent reporting periods, and whose results are consequently difficult to gage.

The following section explains the main application areas for assumptions and estimates, as well as discretionary decisions, that have a significant impact on the centrotherm Group's financial position and performance.

Going concern

The Management Board is required to gauge the entity's going concern capacity when preparing consolidated financial statements. The going concern forecast for the centrotherm Group is based on short- and medium-term planning. The photovoltaic market recovery that started at the end of 2013 was temporarily slowed in May 2014 by the expansion of punitive US tariffs to include solar products from Taiwan, and the subsequent further intensification of punitive tariffs. Demand for new systems recovered at the end of the fourth quarter of 2014, exerting positive effects on new order intake. It is assumed that the prospective revenue targets for 2015 in the core business of Photovoltaics & Semiconductor can be achieved. In other operating segments, too, no indications currently exist that planning cannot be fulfilled. As the photovoltaic market continues to react in a volatile manner to political conditions, a decision was taken at the end of 2014 to further optimize the cost structure, and to thereby continue with targeted efficiency enhancement in order to secure the company's success and profitability, and to maintain its competitiveness. For this reason, the Management Board assumes that the company comprises a going concern. As a consequence, these consolidated financial statements as of December 31, 2014 have been prepared under the going concern assumption.

Development costs

Development costs are capitalized if the criteria of IAS 38.57 have been met cumulatively. The first-time capitalization of costs requires estimates provided by the technology area and by management. In particular, this entails an examination of the technical viability and future economic benefit of the development project.

Revenue recognition on construction orders

Revenue recognition for construction orders (pursuant to IAS 11) is generally according to the percentage of completion method, whereby revenue and costs are reported in line with the progress of completion as of the balance sheet date. This method requires that completion progress be estimated reliably. Completion progress is calculated by comparing contract costs incurred as of the reporting date with estimated total contract costs. Risks pertaining to orders must also be gaged. When applying the percentage of completion method, such modifications to estimates can also result in an increase or reduction in the revenue for the corresponding reporting period.



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Annual Report 2014

Impairment

Goodwill

The centrotherm Group conducts goodwill impairment tests at least once every year. According to appraisal by the Group, no events exist that indicate a need for the application of further impairment losses to FHR Anlagenbau GmbH above and beyond the impairment losses that have already been applied during previous periods.

Impairment exists if the carrying amount of an asset, or of a cash-generating unit, exceeds its recoverable amount. Determining a CGU's recoverable amount, which is allocated to goodwill, is connected with management estimates. The recoverable amount is the higher of either the net realizable value or value-in-use. The Group calculates value-in-use by applying the discounted cash flow procedure. A three-phase measurement model was applied to test the goodwill that is fully attributable to FHR.

The most important assumptions on which the value-in-use calculations are based include estimated cash flows or growth rates, and weighted average costs of capital.

Property, plant and equipment and other intangible assets

Impairment losses of TEUR 1,788 were applied to real estate which the company utilizes itself, and which is no longer required as a result of the restructuring measures introduced in the financial year under review, in order to reflect the lower fair value deriving from valuation surveys that take into account the possibility for third parties to utilize these assets.

A two-phase measurement model is applied for impairment testing of the purchased brand right that is attributable to CT AG.

Associates

Associates comprise entities over which the Group exercises significant influence, but where it does not possess control – frequently accompanied by a voting rights interest of between 20% and 50%. Despite the Group holding a 21.2% interest, Sunshine PV Corp. is not accounted for as an associate, as significant influence was lost after the discontinuation of the supply and service relationships due to the final acceptance of a joint project during the abbreviated financial year from January 1 to September 30, 2012. No circumstances or events occurred during the financial year under review that would substantiate the re-commencement of significant influence.

Financial assets

By way of exception, interests in non-consolidated subsidiaries and participating interests are recognized at acquisition cost in the consolidated financial statements because these comprise equity instruments that are not traded on an active market, and whose fair value cannot be measured reliably. Impairment losses are applied if substantial indications of impairment exist. Estimation uncertainties can arise especially from uncertainties deriving from the current market environment in relation to cash flow forecasts for the subsidiaries. The shares in HQ-Dielectrics GmbH, Dornstadt, were fully written down, and sold, during the period under review.

Inventories

Due to positive impulses on the photovoltaic market and the resultant order book position at the centrotherm Group, no indications exist currently that any need exists for further impairments to be applied to inventories. This assumption, which takes into account all utilization and sale possibilities for inventories, can be connected with uncertainty.

Receivables

Receivables are impaired if their present value lies below their carrying amount. Determining the extent of need for the application of impairment losses requires extensive evaluation. As part of this evaluation, the Group appraises, along with other factors, the duration and extent of divergence of fair value from acquisition cost. It also appraises the business partner's short-term business prospects taking into account factors such as industry and sector trends.

87

Calculating impairments to doubtful trade and other receivables depends on term structure, as well as estimates and assessments of individual receivables through customer-specific credit and default risk.

Non-current assets and groups of assets held for sale

Non-current assets and groups of assets held for sale are measured at the lower of carrying amount and fair value less costs of disposal unless the items presented within the disposal group fall under the measurement rules of IFRS 5. The measurement of fair value and disposal costs is based on management estimates and assumptions that are connected with a certain degree of uncertainty.

Provisions

Provisions are measured according to IAS 37 (Provisions, Contingent Liabilities and Contingent Assets) using the best possible estimate of expenses required to satisfy the obligation as of the reporting date.

In order to enhance the meaningfulness of estimates, the effects of changes in parameters on reported provisions are assessed for selected key types of provision, which are of particular significance for the Group's financial position and performance.

Insolvency liabilities

The insolvency liabilities deferred without interest until December 31, 2015 are measured at their present value as of the balance sheet date. They are discounted at a debt interest rate of 7.5% p.a. Imprecision in relation to estimates cannot be excluded when calculating this interest rate.

Deferred tax

Deferred tax assets are recognized if the deferred tax item to be recognized can be offset prospectively with tax charges on future earnings. This presupposes a forecast as to whether taxable earnings can be generated with sufficient probability. Uncertainties inherent in forecasting cannot be excluded.

Further information about assumptions and estimates can be found in the remarks about accounting policies, as well as in individual items of the financial statements.

2.25 CASH FLOW STATEMENT

The cash flow statement shows how the cash and cash equivalents position of the centrotherm Group has changed as a result of cash inflows and outflows during the reporting year. In accordance with IAS 7 (Cash Flow Statements), a differentiation is made between cash flows from operating activities, investing activities, and financing activities. The liquidity position reported in the cash flow statement comprises cash holdings, bank accounts, and short-term time deposit investments. These include deposits arising from insolvency estate lending agreements in an amount of TEUR 26,080 (December 31, 2013: TEUR 31,106). Cash and cash equivalents are subject as of the balance sheet date to planned short-term availability restrictions due to cash-advanced guarantees of bills in an amount of TEUR 2,593 (December 31, 2013: TEUR 9,501), and in an amount of TEUR 5,000 (December 31, 2013: TEUR 5,000) arising from pledged deposits for the insolvency estate lending agreement for a subsidiary.



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Annual Report 2014

3 SEGMENT REPORTING

The Group's activities are concentrated on the following operating segments: Segment delineation by product area is applied largely in accordance with the internal reporting and management system, as well as internal organizational structure.

The Silicon segment comprises the planning, design, sale and creation of plants to manufacture silicon, and its related process steps.

The Photovoltaics & Semiconductor segment mainly comprises the development, construction, production and sale of individual systems to produce monocrystalline and multicrystalline solar cells. During the year under review, the planning, design, as well as sale and creation of customized and turnkey production lines remained of only subordinate importance. As in previous years, this segment also includes the range of services relating to the semiconductor area, which is to be expanded further. In the semiconductor area, we develop and produce high-tech production systems to manufacture a broad range of semiconductor components.

The Thin Film & Customized Equipment segment focuses on the development, construction, production and sale of customized system concepts and special systems for modern coating technologies.

According to the requirements of IFRS 8, individual annual financial statement data must be presented by operating segment. Business divisions where separate financial information is available for internal management, and which in turn is reported regularly to the highest management level for resource allocation and evaluation of profitability, are regarded as operating segments. The operating segments of Silicon, Photovoltaics & Semiconductor, and Thin Film & Customized Equipment are presented under segmental reporting in line with this definition.

IFRS 8.23 requires the disclosure of assets and liabilities for each reporting segment, if such items are reported regularly to the uppermost management level. Segment information about assets, liabilities and investments are not reported, as management in these areas occurs only at overall corporate level.

FY 2014 segment reporting

1/1/2014-12/31/2014

in TEUR Silicon Photovoltaics &

Semiconductor


centrothermGroup

Revenue with third parties 86,252 90,637 12,304 189,193

Segment revenue 86,252 90,637 12,304 189,193

EBITDA 11,133 14,152 13 25,298

EBITDA as % of revenue 12.9 15.6 0.1 13.4

Depreciation, amortization and impairment losses -119 -4,902 -712 -5,733

Depreciation and amortization -119 -3,113 -712 -3,944

Impairment losses 0 -1,789 0 -1,789

EBIT 11,014 9,250 -699 19,565

EBIT as % of revenue 12.8 10.2 -5.7 10.3

In its Silicon segment, the Group generated TEUR 86,252 of revenue (2013 abbreviated financial year: TEUR 43,724), which is primarily attributable to the Qatar project in an amount of TEUR 83,920 (2013 abbreviated financial year: TEUR 38,250). EBITDA improved from TEUR 6,196 in the 2013 abbreviated financial year: to TEUR 11,133 in the year under review.

Other operating expenses primarily comprise TEUR 2,359 of legal and consultancy costs (2013 abbreviated financial year: TEUR 1,231). EBIT generated by the Silicon segment amounts to TEUR 11,014 (2013 abbreviated financial year: TEUR 6,080).

89

The Photovoltaics & Semiconductor segment reported an increase in revenue from TEUR 70,106 to TEUR 90,637.

Other operating income of TEUR 34,398 (2013 abbreviated financial year: TEUR 9,474) includes TEUR 20,131 relating to the derecognition of unnotified liabilities due to the plea on grounds of statutes of limitation, TEUR 5,132 of surplus sales revenues from non-current assets and groups of assets previously held for sale, and TEUR 5,095 of income from the release of provisions and obligations.

Changes in the inventory of finished goods and work-in-progress include TEUR 1,357 (2013 abbreviated financial year: TEUR 4,782) of write-downs of work-in-progress and finished products to their lower net realizable value.

Other operating expenses primarily include TEUR 5,412 of legal and consultancy costs, TEUR 3,227 of valuation allowances applied to receivables and loans, as well as TEUR 3,145 of subsequent costs connected with the insolvency.

EBITDA improved from TEUR -11,758 in the 2013 abbreviated financial year: to TEUR 14,152 in the year under review. This was particularly due to higher other operating income.

Impairment losses applied to non-current assets included TEUR 1,789 applied to property, plant and equipment in the period under review (2013 abbreviated financial year: TEUR 0).

The Thin-Film & Customized Equipment segment generated a slight EBIT loss of TEUR -699 (2013 abbreviated financial year: TEUR 407).

Other operating income includes TEUR 405 of income from the release of provisions. Changes in the inventory of finished goods and work-in-progress includes TEUR 152 of impairment losses applied to work-in-progress. Other operating expenses relate mainly to TEUR 740 of valuation allowances applied to receivables and construction contracts, as well as TEUR 118 of legal and consultancy costs.

The following table shows the figures for the previous year:

AFY 2013 segment reporting

6/1/2013-12/31/2013

in TEUR

Silicon Photovoltaics &Semiconductor


centrothermGroup

Revenue with third parties 43,724 70,106 5,578 119,408

Segment revenue 43,724 70,106 5,578 119,408

EBITDA 6,196 -11,758 949 -4,613

EBITDA as % of revenue 14.2 -16.8 17.0 -3.9

Depreciation, amortization and impairment losses -116 -2,101 -542 -2,759

Depreciation and amortization -91 -2,101 -542 -2,734

Impairment losses -25 0 0 -25

EBIT 6,080 -13,859 407 -7,372

EBIT as % of revenue 13.9 -19.8 7.3 -6.2



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Annual Report 2014

Revenue and non-current assets by region for the 2014 financial year and the 2013 abbreviated financial year are as follows according to IFRS 8.33:

Revenue and non-current assets

in TEUR Germany Rest of

Europe Asia

ROW Total

AFY 2013 revenue 8,847 2,179 106,690 1,692 119,408

Non-current assets 2013 57,431 0 197 0 57,628

FY 2014 revenue 13,023 5,777 164,777 5,615 189,193

Non-current assets 2014 51,752 0 121 0 51,873

The regional distribution of revenue reflects the customers' countries of origin. Non-current assets are composed of intangible assets, property, plant and equipment, non-current income tax receivables, and other non-current assets.

Revenues by product are as follows:

Revenue by products

1/1/2014- 6/1/2013-

Share Share

in TEUR 12/31/2014- 12/31/2013- FY 2014 AFY 2013

Turnkey production lines 11,016 1,329 5.8% 1.1%

Single equipment 154,928 105,540 81.9% 88.4%

Service and replacement parts 19,820 9,643 10.5% 8.1%

Consulting and engineering 0 979 0.0% 0.8%

Other revenue 3,429 1,917 1.8% 1.6%

Total 189,193 119,408 100.0% 100.0%

91

4 NOTES TO THE CONSOLIDATED INCOME STATEMENT

Expenses are presented according to the nature of expense method in the consolidated income statement.

A new financial year commenced on June 1, 2013 due to the discontinuation of the insolvency plan proceedings under the company's own administration on May 31, 2013. As, pursuant to the company's bylaws, the financial year of CT AG corresponds to the calendar year, an abbreviated financial year was formed from June 1, 2013 until December 31, 2013. The consolidated income statement from January 1 until December 31, 2014 can be compared with the previous year to only a limited extent as a consequence.

4.1 REVENUE

Revenue amounted to TEUR 189,193 in the 2014 financial year (2013 abbreviated financial year: TEUR 119,408). Of this total, TEUR 116 was attributable to related companies (2013 abbreviated financial year: TEUR 204), and TEUR 794 was attributable to non-consolidated subsidiaries (2013 abbreviated financial year: TEUR 460). Order income pursuant to IAS 11.39 (a) amounted to TEUR 89,467 in the year under review (2013 abbreviated financial year: TEUR 42,677). Of this amount, TEUR 91,876 (2013 abbreviated financial year: TEUR 70,082) is attributable to revenue from the sale of goods. Revenue from the rendering of services amounted to TEUR 4,421 (2013 abbreviated financial year: TEUR 4,732).

4.2 CHANGE IN INVENTORY OF FINISHED GOODS AND WORK-IN-PROGRESS

The reduction in the inventory of finished goods and work-in-progress amounted to TEUR 5,188 (2013 abbreviated financial year: TEUR 40,453). Impairment losses of TEUR 1,509 were applied (2013 abbreviated financial year: TEUR 4,969). No reversals of impairment losses occurred during the period under review (2013 abbreviated financial year: TEUR 187).

4.3 CAPITALIZED SERVICES RENDERED TO OWN ACCOUNT

Capitalized services rendered to own account were recognized in an amount of TEUR 122 in the 2014 financial year (2013 abbreviated financial year: TEUR 0).



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Annual Report 2014

4.4 OTHER OPERATING INCOME

Other operating income in the 2014 financial year is composed as follows:

Other operating income

1/1/2014- 6/1/2013-in TEUR 12/31/2014- 12/31/2013-

Derecognition of unnotified liabilities due to plea on grounds of statutes of limitation 20,403 0

Income from the release of provisions and obligations 5,526 5,914

Rental income from non-current assets and groups of assets previously held for sale 5,132 0

Release of contractual obligations that are no longer probable 1,200 0

Income relating to other accounting periods 780 0

Income from release of specific and general impairments 737 3,593

Foreign currency gains 526 128

Monetary benefit 185 157

Income from government grants 166 88

Management services charged on 112 112

Income from suppliers' liability waivers 28 31

Income from the reversal of impairment losses applied to construction contracts 0 653

Subsequent income connected with the insolvency 0 2,749

Miscellaneous other income 1,565 2,074

Total 36,360 15,499

The liabilities recognized on the date when insolvency plan proceedings were opened, October 1, 2012, which were not notified for the insolvency plan, were derecognized in profit or loss in the period under review due to the statutes of limitation that occurred.

The surplus sales revenue from the non-current assets and groups of assets that were previously held for sale relate to the building, along with equipment, in Constance (see section 5.14), which was sold in the period under review. This disposal generated TEUR 2,476 of expenses (mainly from VAT repayment), which are reported among other operating expenses.

Other operating income includes payments to related parties amounting to TEUR 105 (2013 abbreviated financial year: TEUR 105).

93

4.5 COST OF MATERIALS

Cost of materials was composed as follows in the 2014 financial year:

Cost of materials

1/1/2014- 6/1/2013-in TEUR 12/31/2014- 12/31/2013-

Expenses for raw materials and supplies, and for purchased goods 90,572 40,736

Expenses for purchased services 16,934 10,087

Total 107,506 50,823

The cost of materials includes TEUR 50 of impairment losses (2013 abbreviated financial year: TEUR 795).

Of the expenses for raw materials and supplies, and purchased goods, TEUR 19 (2013 abbreviated financial year: TEUR 50) was attributable to related companies, and TEUR 208 to non-consolidated subsidiaries (2013 abbreviated financial year: TEUR 504).

4.6 PERSONNEL EXPENSES

The following table provides a breakdown of the personal expenses:

Personnel expenses

1/1/2014- 6/1/2013-in TEUR 12/31/2014- 12/31/2013-

Wages and salaries 40,868 19,104

Social contributions and expenses for pensions and benefits 6,330 3,769

of which for pensions 92 74

Other personnel expenses 308 188

Total 47,506 23,061

In the year under review, the wages and salaries item includes TEUR 3,128, and the social contributions and expenses for pensions and benefits item includes TEUR 212, of one-off expenses due to the personnel measures that were approved for the Blaubeuren site, which were necessitated in order to enhance efficiency due to recent market weakness.

Expenses of TEUR 2,440 (2013 abbreviated financial year: TEUR 1,534) arising from defined contribution pension plans were incurred in the period under review.



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Annual Report 2014

The number of employees, and its year-on-year comparison, is as follows:

Employees

Average

Reporting date

1/1/2014-12/31/2014-

6/1/2013-12/31/2013-

12/31/2014 12/31/2013

Management Board 3 4 3 4

Administration 205 205 206 202

Sales 89 90 92 86

Production 262 264 261 258

Technology and research 195 223 183 212

Total 754 786 745 762

95

4.7 OTHER OPERATING EXPENSES

Other operating expenses are composed as follows:

Other operating expenses

1/1/2014- 6/1/2013-in TEUR 12/31/2014- 12/31/2013-

Legal and consultancy costs 7,889 6,121

Freight and packaging 3,766 1,379

Costs connected with the insolvency 3,145 1,599

Impairment losses applied to receivables and construction contracts 3,091 2,699

Travel expenses 2,719 1,695

Third-party services 2,555 1,649

VAT repayment relating to sale of building in Constance 2,121 0

Premises expenses 1,805 1,111

Sales commissions 1,612 907

Insurance and contributions 1,276 922

Impairment losses applied to other assets 1,142 220

Procurement and incidental costs 1,005 148

Storage costs 913 688

Incidental personnel costs 662 526

Foreign currency losses 630 87

Software maintenance 626 381

Temporary help 565 192

Vehicle costs 538 461

Telephone and communications 524 341

Bank charges 460 271

Advertising costs 404 137

Management services 324 146

Asset disposals 83 102

Litigation costs and penalties 19 0

Cost reimbursements connected with customer projects 0 1,494

Miscellaneous operating expenses 2,303 1,907

Total 40,177 25,183



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Annual Report 2014

Other operating expenses include services of related companies of TEUR 53 (2013 abbreviated financial year: TEUR 509) and from non-consolidated subsidiaries in an amount of TEUR 136 (2013 abbreviated financial year: TEUR 320).

Miscellaneous operating expenses of TEUR 2,303 (2013 abbreviated financial year: TEUR 1,907) relate predominantly to TEUR 550 of provisions for litigation risks, as well as TEUR 184 of potential risks arising from an existing supplier agreement.

4.8 DEPRECIATION, AMORTIZATION AND IMPAIRMENT LOSSES

Depreciation, amortization (excluding goodwill amortization) and impairment losses amounted to a total of TEUR 5,733 in the 2014 financial year (2013 abbreviated financial year: TEUR 2,759), of which TEUR 3,944 comprised depreciation and amortization (2013 abbreviated financial year: TEUR 2,734), and TEUR 1,789 comprised impairment losses (2013 abbreviated financial year: TEUR 25). The impairment losses were applied to property, plant and equipment.

Of the amortization and depreciation, TEUR 866 comprises amortization (2013 abbreviated financial year: TEUR 743), and TEUR 3,078 comprises depreciation (2013 abbreviated financial year: TEUR 1,991).

4.9 NET FINANCIAL RESULT

The net financial result is composed as follows:

Net financial result

1/1/2014- 6/1/2013-

in TEUR 12/31/2014- 12/31/2013-

Financial income 2,282 79

Financial expenses -5,986 -3,542

Net financial result -3,704 -3,463

The main items within financial income include TEUR 1,914 (2013 abbreviated financial year: TEUR 0) of income from the discounting of provisions for contingent liabilities arising from the insolvency (see section 5.16), and interest income of TEUR 368 (2013 abbreviated financial year: TEUR 39). The 2013 abbreviated financial year included TEUR 40 of income arising from the discounting of non-current insolvency liabilities that were deferred without interest.

The main items under financial expenses include TEUR 5,277 (2013 abbreviated financial year: TEUR 2,183) of interest arising from the unwinding of discounts applied to non-current liabilities and provisions for contingent liabilities arising from the insolvency, TEUR 360 of utilization payments (2013 abbreviated financial year: TEUR 1,080), which are to be classified financially as interest (see 5.17), TEUR 274 of amortization charges applied to financial assets (2013 abbreviated financial year: TEUR 0), and TEUR 71 of guarantee credit interest payments (2013 abbreviated financial year: TEUR 120).

As in the previous year, no financial income or expenses in relation to related parties occurred.

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4.10 INCOME TAX

The following section contains a presentation of deferred tax items. The following deferred tax items entered in the balance sheet relate to recognition and measurement differences for individual balance sheet items:

Deferred tax positions

in TEUR

12/31/2014 12/31/2013

Deferred tax liabilities

Intangible assets 22 66

Property, plant and equipment 82 88

Construction contracts 8,001 6,462

Provisions and liabilities 604 485

Offsetting 606 606

Total 9,315 7,707

Deferred tax assets

Intangible assets 0 3

Property, plant and equipment 4,979 10,432

Inventories 4,072 10,152

Provisions and liabilities 6,175 10,880

Tax loss carryforwards 14,271 21,431

Reduction due to lack of offsetting possibility -9,785 -20,486

Offsetting 606 606

Total 20,318 33,018

The deferred tax assets are based mainly on impairment losses that were not applied in the tax accounts due to the exercising of a fiscal option. If it is anticipated that an existing deferred tax item cannot be utilized, the deferred tax assets that have been calculated are reduced due to a prospective lack of offsetting possibilities over the subsequent five years.

Deferred tax assets of EUR 11.6 million have been capitalized for existing corporation tax and trade tax loss carryforwards of EUR 38.5 million. No deferred tax assets have been capitalized for corporation tax loss carryforwards of EUR 9.3 million and trade tax loss carryforwards of EUR 8.9 million.

Overall, a surplus of deferred tax assets of EUR 11.0 million exists above the amount of recognized deferred tax liabilities. This relates in an amount of EUR 7.2 million to CT AG, and in an amount of EUR 1.5 million to another company that incurred a tax loss in the period under review. The tax assets are nevertheless regarded as having retained their value, as, following the successful restructuring, it is to be assumed that the companies will generate sufficiently high tax profit over the coming five years.



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Annual Report 2014

No notable deferred tax liabilities due to outside basis differences arose as of December 31, 2014 and December 31, 2013.

Corporation tax plus the Solidarity Surcharge amounts to 15.83 %. Trade tax amounts to approximately 14.0 %, which results in a total tax rate in Germany of approximately 30.0 %. The latter was used for the accrual and deferral of tax in the consolidated financial statements.

Tax income is as follows:

Income tax

1/1/2014- 6/1/2013-in TEUR 12/31/2014- 12/31/2013-

Deferred tax 14,306 -3,970

Current income tax 367 782

Total 14,673 -3,188

The reconciliation between the expected and the current tax expense is as follows:

Income tax

1/1/2014- 6/1/2013-in TEUR 12/31/2014- 12/31/2013-

Net profit/loss for the year before income tax 15,861 -10,835

Expected income tax expense (30%) 4,758 -3,251

Tax relating to other accounting period 6 540

Effects from loss valuation

Recognition of previously unrecognized deferred taxes -1,029 -9,614

Non-recognition of deferred tax assets 10,807 8,233

Tax attributions and deductions 143 822

Other effects -12 82

Total 14,673 -3,188

99

4.11 EARNINGS PER SHARE

In accordance with IAS 33 (Earnings per Share), earnings per share are calculated by dividing consolidated net earnings by the weighted average number of shares.

No measures occurred during the reporting period that resulted in dilution effects.

Earnings per share is calculated as follows:

Earnings per share

1/1/2014- 6/1/2013-

in EUR 12/31/2014- 12/31/2013-

Consolidated net profit/loss 1,187,637 -7,646,953

Weighted average number of shares 21,162,380 21,162,380

Earnings per share 0.06 -0.36



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Annual Report 2014

5 NOTES TO THE CONSOLIDATED BALANCE SHEET

5.1 INTANGIBLE ASSETS

Intangible assets reported the following changes:

Changes in intangible assets:

in TEUR Goodwill

Internally

generated intangible assets

Other intangible assets

Total

Cost

6/1/2013 113,129 1,339 80,931 195,399

Investments 0 0 16 16

Disposals 0 0 -2,500 -2,500

12/31/2013 113,129 1,339 78,447 192,915

Investments 0 0 290 290

Reclassifications 0 0 25 25

Disposals 0 0 -3 -3

12/31/2014 113,129 1,339 78,759 193,227

Amortization and impairment losses

6/1/2013 112,492 1,050 77,533 191,075

Additions 0 85 658 743

Disposals 0 0 -2,500 -2,500

12/31/2013 112,492 1,135 75,691 189,318

Additions 0 144 722 866

Disposals 0 0 -3 -3

12/31/2014 112,492 1,279 76,410 190,181

Net values

12/31/2013 637 204 2,756 3,597

12/31/2014 637 60 2,349 3,046

The goodwill is fully attributable to FHR Anlagenbau GmbH. Other intangible assets primarily include software patents of limited useful life.

Amortization and impairment losses relating to intangible assets comprise only TEUR 866 of amortization (2013 abbreviated financial year: TEUR 743), and no impairment losses. No reversals of impairment losses occurred (see section 2.24).

Patents and other industrial property rights at the FHR subsidiary are assigned.

Expenses for research and development amounted to a total of TEUR 5,094 in the period under review (2013 abbreviated financial year: TEUR 1,573).

101

5.2 PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment reported the following changes:

Changes in property, plant and equipment

in TEUR

Land and buildings

Technical plant

Operating and office equipment

Plant under construction

Total

Cost

6/1/2013 71,128 25,318 14,611 734 111,791

Investments 55 108 188 0 351

Reclassifications 3 0 1 0 4

Disposals -44 -2,845 -1,150 -2 -4,041

12/31/2013 71,142 22,581 13,650 732 108,105

Investments 27 741 678 759 2,205

Reclassifications 0 732 0 -732 0

Reclassified as held for sale -4,414 0 -205 0 -4,619

Disposals -761 -2,034 -774 0 -3,569

12/31/2014 65,994 22,020 13,349 759 102,122

Depreciation and impairment losses

6/1/2013 22,438 20,956 11,594 594 55,582

Additions 879 585 553 0 2,017

Reclassifications 0 0 0 0 0

Disposals -9 -2,449 -1,020 0 -3,478

12/31/2013 23,308 19,092 11,127 594 54,121

Additions 3,143 883 841 0 4,867

Reclassifications 0 594 0 -594 0

Reclassified as held for sale -2,089 0 -186 0 -2,275

Disposals -759 -1,904 -723 0 -3,386

12/31/2014 23,603 18,665 11,059 0 53,327

Net values

12/31/2013 47,834 3,489 2,523 138 53,984

12/31/2014 42,391 3,355 2,290 759 48,795

The additions to property, plant and equipment relate mainly to technical plant, and to operating and business equipment.



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Annual Report 2014

Of the depreciation and impairment losses, TEUR 3,078 comprises depreciation (2013 abbreviated financial year: TEUR 1,991), and TEUR 1,789 comprises impairment losses (2013 abbreviated financial year: TEUR 25). No reversals of impairment losses occurred (see section 2.24).

Land owned by FHR included in property, plant and equipment is encumbered with a land charge. Land charges of TEUR 5,282 (previous year: TEUR 5,282) serve to collateralize the company's guarantee and cash credit lines. Land charges of TEUR 10,000 relating to CT AG land is also reported, which serve to collateralize a specific-purpose real estate loan. The loan that was thereby collateralized carried a value of TEUR 7,143 as of the balance sheet date (previous year: TEUR 7,143).

The due dates of the future minimum lease payments arising from the leased buildings are as follows:

Due dates of rental and lease payments arising from operating leases

in TEUR from 12/31/2014 from 12/31/2013

Up to one year 223 101

Longer than one year and up to five years 171 78

Longer than five years 0 0

5.3 FINANCIAL ASSETS

Financial assets relate exclusively to the carrying amounts of non-consolidated subsidiaries. These are as follows:

Financial assets

in TEUR

12/31/2014 12/31/2013

centrotherm Holding GmbH, Wels, Austria 0 0

centrotherm management GmbH i.L., Blaubeuren 0 0

centrotherm photovoltaics India Pte. Ltd., Bangalore, India 8 8

centrotherm photovoltaics Korea Ltd., Suwon, Korea 29 29

centrotherm photovoltaics USA Inc., Atlanta, USA 1 1

centrotherm Power Solutions GmbH i.L., Vienna, Austria 0 0

centrotherm Solar Innovations GmbH, Wels, Austria 0 0

centrotherm Solar Innovations GmbH & Co. KG, Wels, Austria 0 0

centrotherm thermal solutions Verwaltungs GmbH i.L., Blaubeuren 0 0

Changers GmbH i.L., Berlin 0 0

cruSible GmbH i.L., Berching 0 0

HQ-Dielectrics GmbH, Dornstadt 0 274

SOLMIC GmbH, Burghausen 0 25

Sunshine PV Corp., Hsinchu Industrial Park, Taiwan 0 0

TOV photovoltaics industries Ukraine, Zaporozhye, Ukraine 7 7

Total 45 344

The interest in HQ-Dielectrics GmbH was sold during the period under review.

103

centrotherm Holding GmbH, Vienna, and centrotherm Solar Innovations GmbH & Co. KG, Wels, were merged with centrotherm Solar Innovations GmbH, Wels, in the year under review.

5.4 NON-CURRENT INCOME TAX RECEIVABLES

With the coming into force of the German Act concerning Accompanying Fiscal Measures to the Introduction of European Companies and the Modification of Further Fiscal Regulations on December 13, 2006, an unconditional claim to the refund of corporation tax credits arising from the period of the fiscal imputation procedure has arisen for the first time since the end of December 31, 2006 (Section 37 of the German Corporation Tax Act [KStG] new version). Since 2008, the credit has been paid out in ten equal annual installments every October. The present value of the corporation tax credit totaled TEUR 50 on the balance sheet date (previous year: TEUR 66), of which TEUR 32 was non-current (previous year: TEUR 47).

5.5 INVENTORIES

The reported inventory is composed as follows:

Inventories

in TEUR 12/31/2014 12/31/2013

Raw materials and supplies 14,452 24,426

Semi-finished goods and services 29,969 41,393

Finished goods 807 1,566

Total 45,228 67,385

The carrying amount of the impaired inventories, which are to be recognized at their lower net realizable value less costs yet to be incurred, totals TEUR 49,861 (previous year: TEUR 94,417). The balance of impairment losses amounted to TEUR 32,557 as of the balance sheet date (previous year: TEUR 73,990).

In the period under review, the previous year's work-in-progress of TEUR 5,984 was offset with prepayments, and an amount of TEUR 1,009 was reclassified to property, plant and equipment.

Inventories of CT AG and FHR have been assigned to collateralize credit claims. These comprise raw materials and supplies, work-in-progress, finished goods, services, and merchandise in segregated warehouses in an amount of TEUR 9,585 (previous year: TEUR 10,987).

5.6 RECEIVABLES RELATING TO CONSTRUCTION CONTRACTS

Receivables from construction contracts amounted to a total of TEUR 271,940 gross (before impairment losses), and before offsetting with prepayments received (previous year: TEUR 216,140). Receivables arising from construction contracts include TEUR 815 of impairments (previous year: TEUR 569), mainly due to adjustments relating to the strained market environment and customers' related liquidity difficulties. Impairment losses expensed in the 2014 financial year amounted to TEUR 732 (2013 abbreviated financial year: TEUR 2,158). Impairment losses relating to receivables arising from construction contracts were consumed in an amount of TEUR 376 in the period under review (2013 abbreviated financial year: TEUR 0).

No reversals of impairment losses occurred in the 2014 financial year (2013 abbreviated financial year: TEUR 613).

Collateral retentions received from customers for construction contracts amounted to TEUR 0 (previous year: TEUR 3,393).



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Annual Report 2014

Under the receivables arising from construction contracts item, incurred order costs including related earnings contributions were offset with respective prepayments where positive balances arose in individual cases. The following list shows receivables from construction contracts both before and after offsetting with prepayments:

Receivables relating to construction contracts

in TEUR 12/31/2014 12/31/2013

Receivables from construction contracts (gross) 77,959 76,549

Impairment losses -815 -569

Offset with prepayments -75,526 -75,077

Total 1,618 903

If the offsetting of contract costs including related earnings contributions results in a negative balance including the advance payments received, the net amounts are reported among liabilities arising from construction contracts (see also section 5.21).

5.7 TRADE RECEIVABLES

Trade receivables

in TEUR 12/31/2014 12/31/2013

Trade receivables (gross) 21,773 29,872

Specific adjustments -12,122 -10,926

General adjustments -58 -178

Total 9,593 18,768

In the 2014 financial year, specific adjustments were form through estimating the respective individual case. General credit risk was reflected through a 1% general itemized valuation allowance.

All trade receivables are due within one year.

No standard payment targets are defined within the centrotherm Group due to the particularities of contractual regulations involved in construction contracts.

105

As of the balance sheet date, no receivables existed beyond their agreed payment targets, but for which no valuation losses had been formed. The age structure of trade receivables as of December 31, 2014 is as follows:

Age structure of trade receivables

Overdue but not impaired

in TEUR

Total Neither overdue nor

impaired 01 to 30

days 31 to 60

days

61 to 90

days More than

90 days

12/31/2014 9,651 5,626 912 443 208 2,462

12/31/2013 18,946 7,762 513 726 551 9,394

As of December 31, 2014, no indications existed that defaults had occurred to trade receivables that were neither overdue nor impaired. The following table presents the changes in both specific and general valuation allowances applied to the trade receivables position:

Changes in valuation allowances

in TEUR

Individual valuation

allowances

General valuation

allowances

Total

As of 6/1/2013 15,845 197 16,042

Recognized valuation allowances -4,919 -19 -4,938

Addition 310 35 345

Reversal -3,439 -54 -3,493

Consumption -1,790 0 -1,790

As of 12/31/2013 10,926 178 11,104

Recognized valuation allowances 1,196 -120 1,076

Addition 2,333 27 2,360

Reversal/consumption -1,137 -147 -1,284

As of 12/31/2014 12,122 58 12,180



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Annual Report 2014

5.8 RECEIVABLES DUE FROM ASSOCIATES

Receivables due for associates relate exclusively to receivables due from subsidiaries that are not included in the consolidation scope. The receivables and valuation allowances are composed as follows as of the reporting date:

Receivables due from associates

in TEUR 12/31/2014 12/31/2013

TOV photovoltaics industries Ukraine, Zaporozhye, Ukraine 564 564

centrotherm photovoltaics Korea Ltd., Suwon, Korea 63 180

centrotherm photovoltaics India Pte. Ltd., Bangalore, India 137 122

Others 25 49

Specific adjustments -564 -564

Total 225 351

Impairment

in TEUR 12/31/2014 12/31/2013

Opening balance 564 315

Addition 0 249

Closing balance 564 564

These primarily relate to receivables arising from clearing transactions. Valuation allowances were applied in the scope of identifiable default risks. Receivables have a residual term of up to one year.

5.9 RECEIVABLES DUE FROM RELATED PARTIES

Receivables due from related parties were composed as follows as of the balance sheet date:

Receivables due from related parties

in TEUR 12/31/2014 12/31/2013

centrotherm Elektrische Anlagen GmbH & Co. KG 0 1,288

centrotherm clean solutions GmbH & Co. KG 1 197

Miscellaneous 4 23

Total 5 1,508

Receivables due from related parties concern trade receivables.

Receivables have a residual term of up to one year.

107

5.10 PREPAYMENTS RENDERED

Prepayments of TEUR 10,757 as of December 31, 2014 (previous year: TEUR 16,945) include TEUR 24 of prepayments to non-consolidated subsidiaries (previous year: TEUR 24). The prepayments were primarily rendered for inventories.

5.11 OTHER CURRENT FINANCIAL ASSETS

Other current financial assets of TEUR 948 (previous year: TEUR 2,380) relate mainly to deposits of TEUR 670 (previous year: TEUR 690) and TEUR 136 of creditor accounts in debit (previous year: TEUR 561).

Valuation adjustments of TEUR 1,500 (previous year: TEUR 689) for identifiable default risks have been applied to TEUR 1,500 of loan receivables.

5.12 OTHER CURRENT NON-FINANCIAL ASSETS

Other current non-financial assets with a residual term of up to one year as of the balance sheet date are composed as follows:

Other current non-financial assets

in TEUR 12/31/2014 12/31/2013

VAT receivables 2,802 5,499

Non-deductible input tax 1,024 1,091

Accruals item 680 688

Receivables due from staff 80 133

Foreign tax receivables 2 7

Trustee accounts credit 0 3,488

Miscellaneous 0 730

Total 4,588 11,636

The non-deductible input tax relates mainly to insolvency liabilities, and cannot be claimed until after the balance sheet date. Valuation allowances relating to input tax amounts based on insolvency liabilities amount to TEUR 816 (previous year: TEUR 857).



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Annual Report 2014

5.13 CASH AND CASH EQUIVALENTS

Cash and cash equivalents

in TEUR 12/31/2014 12/31/2013

Cash and currency holdings 34 22

Bank deposits 77,587 63,935

Short-term cash investments 36,446 35,843

Total 114,067 99,800

Bank deposits as of December 31, 2014 include TEUR 26,080 of cash lines arising from insolvency estate lending agreements (previous year: TEUR 31,106). Cash and cash equivalents are subject as of the balance sheet date to availability restrictions due to cash-advanced guarantees of bills in an amount of TEUR 2,593 (previous year: TEUR 9,501), and in an amount of TEUR 5,000 (previous year: TEUR 5,000) arising from pledged deposits for the insolvency estate lending agreement for a subsidiary. (see 7.1.3 Liquidity risk).

5.14 NON-CURRENT ASSETS AND GROUPS OF ASSETS HELD FOR SALE

An operating and administration building, along with equipment, which belongs to the Silicon segment, is to be sold within the twelve months after the balance sheet date. The IFRS 5 criteria for classification and measurement for "non-current assets held for sale" are met as of the balance sheet date. For this reason, this building was reclassified to the "non-current assets and groups of assets held for sale" item at the lower of its carrying amount and fair value less costs of disposal, which derive from current contractual negotiations, of TEUR 2,344. No impairment losses arose in this context.

An operating and administration building with plants in Constance, which belongs to the Photovoltaics & Semiconductor segment, was no longer utilized due to the restructuring measures. For this reason, it was classified and measured as a non-current asset held for sale pursuant IFRS 5. For this reason, the building, along with the plants, was reported in the previous year's financial statements under the "non-current assets and groups of assets held for sale" item with fair value less costs of disposal of TEUR 11,650. Cumulative income of TEUR 2,656 was generated as a result of the complete disposal in the financial year under review.

5.15 EQUITY

The statement of changes in consolidated equity present the individual components of equity, and their changes during the period under review.

Subscribed capital

The subscribed capital of CT AG amounted to TEUR 21,162 as of December 31, 2014 (previous year: TEUR 21,162). It is split into 21,162,380 no par value ordinary shares (previous year: 21,162,380).

Approved capital

The Management Board is authorized to increase the company's issued share capital by August 17, 2016, with the assent of the Supervisory Board, once or on several occasions by a total of up to EUR 2,837,618 through issuing new ordinary bearer shares against cash or non-cash capital contributions (Approved Capital 2011/I). As a matter of principle, the new shares must be offered to shareholders for subscription (including by way of indirect subscription pursuant to Section 186 (5) Clause 1 of the German Stock Corporation Act [AktG]).

Subject to Supervisory Board approval, the Management Board is also authorized by the bylaws to exclude shareholders' statutory subscription rights in the following cases:

109

1. in the event of a capital increase carried out against cash capital contributions if the amount of the new shares does not substantially fall below the stock exchange price of already quoted shares of the same type and terms of issue within the meaning of Sections 203 (1) and (2), 186 (3) Clause 4 of the German Stock Corporation Act (AktG) at the time of final determination of the issuing amount. This exclusion of subscription rights shall be limited to a maximum total of 10 % of the company's share capital in existence when this authorization becomes effective, or, if this amount is less, when this authorization is exercised. To this limit shall be added shares sold or issued during the term of this authorization in direct or corresponding application of Section 186 (3) Clause 4 of the German Stock Corporation Act (AktG) under exclusion of statutory subscription rights. Also to be added are shares that are issued to service warrant and/or conversion rights arising from convertible bonds or bonds with warrants, or from participation rights, to the extent that these bonds or participation rights are issued during the duration of this authorization in corresponding application of Section 186 Paragraph 3 Clause 4 of the German Stock Corporation Act under exclusion of subscription rights;

2. in the case of a capital increase against non-cash capital contributions, in particular for the purchase of companies, interests in companies or parts of companies;

3. in order to reconcile residual amounts;

4. to grant subscription rights to bearers of conversion or warrant rights arising from debentures to be issued by the company or an associated company; and

5. in order to issue shares as employee shares to staff of the company or its associated companies.

The bylaws also authorize the Management Board, with the approval of the Supervisory Board, to specify the further details of capital increases from approved capital.

The bylaws also authorize the Management Board to increase the company's issued share capital by June 29, 2014, with Supervisory Board assent, once or on several occasions by a total of up to EUR 7,743,573 through issuing new ordinary bearer shares against cash or non-cash capital contributions (Approved Capital II). This authorization expired at the end of June 29, 2014.

Conditional capital

The issued share capital of CT AG is conditionally increased by up to EUR 2,116,238.00, divided into up to 2,116,238 new ordinary bearer shares (Conditional Capital 2010/I).

With an entry in the commercial register of August 4, 2010, the issued share capital of CT AG is conditionally increased by an additional amount of up to TEUR 1,500, split into up to 1,500,000 new ordinary bearer shares (Conditional Capital 2010/II).

Capital reserves

The capital reserves amounted to TEUR 77,777 as of December 31, 2014 (previous year: TEUR 77,777).

Other reserves

The other reserves include items that can be recycled subsequently to the income statement. The other reserves exclusively comprise the currency reserve as of the balance sheet date.

Currency reserve

The currency reserve of TEUR 468 (previous year: TEUR 160) comprises differences arising from the translation of foreign subsidiaries' financial statements.



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Annual Report 2014

Application of the earnings of CT AG

In its separate financial statements prepared according to the German Commercial Code (HGB), CT AG reports net income of TEUR 14,536 for the 2014 financial year, which is to be carried forward to a new account.

The consolidated net loss of CT AG showed the following changes during the period under review:

Change in consolidated net loss (according to German Commercial Code [HGB] accounting)

in TEUR Amount

As of 6/1/2013 -339,853

Net loss for the year -19,618

Transfer to capital reserves pursuant to Section 237 (5) of the German Stock Corporation Act (AktG) 0

Withdrawals from capital reserves 284,889

Withdrawals from retained earnings/statutory reserve 100

Income from capital reduction 16,930

As of 12/31/2013 -57,552

Net profit for the year 14,536

As of 12/31/2014 -43,016

5.16 PROVISIONS FOR CONTINGENT LIABILITIES ARISING FROM THE INSOLVENCY

Due to a modified legal appraisal of contingent liabilities that might need to be serviced as part of the insolvency plans, the underlying items were reclassified to provisions from other current non-financial liabilities. These obligations were measured according to the probability of their utilization, and recognized at present value, as a utilization according to the insolvency plans would become effective at the earliest as of the end of December 31, 2015. When recognizing these contingent liabilities, TEUR 1,914 of interest income from discounting was recognized as a result of recognition at present value. The unwinding of the discount as of the reporting date resulted in TEUR 767 of interest expenses. The present value amounted to TEUR 28,197 as of December 31, 2014 (previous year: TEUR 0).

5.17 FINANCIAL LIABILITIES ARISING FROM THE INSOLVENCY PROCEEDINGS

After the creditors and shareholders accepted the insolvency plans, the Ulm District Court confirmed the plans with legal efficacy of the court ruling on May 14, 2013. The regulations contained in the insolvency plans, separate agreements with individual creditors, as well as other contractual arrangements and restructuring measures are decisive in determining the recognition and measurement of the insolvency liabilities. The non-current portion of the insolvency liabilities was composed as follows in the 2014 financial year:

Non-current liabilities arising from the insolvency

in TEUR 12/31/2014 12/31/2013

Determined insolvency liabilities 39,724 36,472

Liabilities determined for default 23,472 25,892

Total 63,196 62,364

111

Determined insolvency liabilities

The determined insolvency liabilities are deferred without interest until December 31, 2015 inclusive. Liabilities in a nominal amount of TEUR 42,819 (previous year: TEUR 42,382) are discounted applying a 7.5% p.a. debt interest rate, and reported at present value as of the balance sheet date. The TEUR 3,252 increase in the insolvency liabilities primarily reflects the unwinding of discounts applied to the non-interest-bearing deferred liabilities.

Liabilities determined for default

Non-current liabilities determined for default in a nominal amount of TEUR 24,700 relate to liabilities that are to be satisfied separately on the basis of existing collateral. These relate primarily to financial liabilities where the lenders waive assertion of bankers' rights of lien (arising from their general terms and conditions of business) against CT AG until December 31, 2015 inclusive, pursuant to the amendment agreements to the insolvency estate lending agreement dated April 12, 2013. Liabilities due on a non-current basis do not exist as a consequence.

CT AG pays rent to utilize buildings in Blaubeuren that are financed with real estate loans and collateralized through land charges. The rental payments are incurred until the land charges are realized at the latest. In financial terms, the rental payments comprise interests on the financial liabilities that are determined to be in default in an amount of TEUR 7,143.

Financial liabilities of TEUR 17,557 (previous year: TEUR 21,671), which are deferred long-term without interest, are discounted applying a 7.5% p.a. debt interest rate. The present value stood at TEUR 16,329 as of December 31, 2014 (previous year: TEUR 18,750).

Total interest in an amount of TEUR 4,510 was unwound in the period under review (2013 abbreviated financial year: TEUR 2,183). This was reported under financial expenses.

5.18 OTHER NON-CURRENT NON-FINANCIAL LIABILITIES

Other non-current non-financial liabilities relate to government grants in the form of investment allowances that are unwound pro rata temporis.

5.19 TAX PROVISIONS

Tax provisions amounted to TEUR 3,159 as of December 31, 2014 (previous year: TEUR 5,724). These comprise mainly income tax liabilities that have been incurred but not yet paid.



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Annual Report 2014

5.20 OTHER CURRENT PROVISIONS

Other current liabilities are composed as follows:

Other current provisions

in TEUR Follow-up

costs Warranty Litigation costs Impending

losses Total

As of 6/1/2013 1,064 6,807 3,178 180 11,229

Utilization / release AFY 2013 -766 -3,388 -3,054 -180 -7,388

Addition AFY 2013 285 1,893 278 44 2,500

Balance 12/31/2013 / 1/1/2014 583 5,312 402 44 6,341

Utilization / release FY 2014 -474 -4,922 -240 -44 -5,680

Addition FY 2014 411 3,344 902 8 4,665

As of 12/31/2014 520 3,734 1,064 8 5,326

The warranty provisions were generally calculated by applying a rate of between 0.25% and 2.0 % to the guarantee-related revenues over the warranty timeframe, as well as from the measurement of specific risks. Provisions for litigation costs were formed mainly for litigation. The provisions the pending losses arise particularly from already anticipated project losses.

5.21 LIABILITIES ARISING FROM CONSTRUCTION CONTRACTS

All of the costs including related earnings contributions are reported under this item, which are offset with the corresponding prepayments that are received in order to create a net balance on the liabilities side of the balance sheet. Obligations of TEUR 45,194 existed as of December 31, 2014 (previous year: TEUR 76,487).

Liabilities arising from construction contracts

in TEUR 12/31/2014 12/31/2013

Receivables from construction contracts (gross) 193,981 139,591

Impairment 0 0

Offset with prepayments -239,175 -216,078

Total 45,194 76,487

Please refer to note 5.6 concerning receivables relating to construction orders.

5.22 TRADE PAYABLES

Trade payables amounted to TEUR 10,072 as of December 31, 2014 (previous year: TEUR 12,705).

The trade payables have a remaining term of up to one year.

5.23 PREPAYMENTS RECEIVED

Prepayments received of TEUR 36,922 (previous year: TEUR 35,872) relate to prepayments that the Group has received in advance of future rendering of services. As a consequence, no offsetting occurs with the positive or negative balance arising from construction orders.

113

5.24 LIABILITIES TO RELATED PARTIES

Liabilities to related parties were composed as follows as of the balance sheet date:

Liabilities to related parties

in TEUR 12/31/2014 12/31/2013

centrotherm Elektrische Anlagen GmbH & Co. KG 3 1,159

centrotherm clean solutions GmbH & Co. KG 32 219

Miscellaneous 10 43

Total 45 1,421

Liabilities to related parties have a residual term of up to one year, and relate to supply and service relationships.

5.25 OTHER CURRENT FINANCIAL LIABILITIES

Other current financial liabilities are composed as follows:

Other current financial liabilities

in TEUR 12/31/2014 12/31/2013

Current insolvency liabilities

Liabilities determined for default 0 10,306

Determined insolvency liabilities 4,475 4,850

Personnel liabilities 7,676 1,517

Liabilities arising from commissions 1,178 1,470

Guarantee credit interest payments 229 229

Supervisory Board 194 214

Insurance premiums outstanding 193 97

Travel and entertainment expenses 147 125

Debtor accounts in credit 56 59

Miscellaneous 486 1

Total 14,634 18,868

Personal liabilities of TEUR 3,933 relate to current liabilities arising from restructuring measures.

Pursuant to the insolvency plan of CT AG, Sol Futura can make early call on a partial amount of TEUR 5,000 of the determined and deferred receivables in order to cover current costs. As of the balance sheet date, TEUR 525 of this amount had been called upon (December 31, 2013: TEUR 150).

The liabilities have a residual term of up to one year.



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Annual Report 2014

5.26 OTHER CURRENT NON-FINANCIAL LIABILITIES

Other current non-financial liabilities are composed as follows:

Other current non-financial liabilities

in TEUR 12/31/2014 12/31/2013

Non-financial insolvency liabilities

Prepayments received 0 45,119

Other insolvency liabilities 0 7,518

Personnel obligations 1,364 2,290

Value added tax 99 47

Miscellaneous 498 2,207

Total 1,961 57,181

The non-financial insolvency liabilities arising from prepayments, and other insolvency liabilities from the previous year, were derecognized in profit or loss in the period under review in an amount of TEUR 20,403 due to the occurrence of the statutes of limitation that occurred. The remaining amount was reclassified to provisions for contingent liabilities arising from the insolvency due to the modified legal appraisal (see section 5.16).

Personal liabilities primarily comprise obligations arising from vacation entitlements, overtime and social security contributions. The liabilities have a residual term of up to one year.

5.27 ADDITIONAL INFORMATION ABOUT FINANCIAL INSTRUMENTS

The following tables present the carrying amounts and fair value of individual financial assets and liabilities for the various measurement categories as per IAS 39. The tables also show their allocation to corresponding balance sheet items. Apart from the non-current insolvency liabilities, all of the reported carrying amounts of the financial assets and liabilities that are measured at amortized cost and reported in the consolidated balance sheet as of December 31, 2014 are equivalent to their fair values.

115

Measurementcategory

as defined inIAS 39

Carryingamount

31.12.2014Fair Value

31.12.2014

in TEUR Amortized costFair Value

Assets

Investments AfS 45 45 45

Receivables relating to production orders 1,618 1,618

Trade receivables LaR 9,593 9,593 9,593

Receivables due from equity interests LaR 225 225 225

Receivables due from related companiesand persons LaR 5 5 5

Other current financial assets LaR 948 948 948

Cash and cash equivalents LaR 114,067 114,067 114,067

Liabilities

Long-term insolvency liabilities FLAC 63,196 63,196 66,167

Liabilities arising from construction contracts 45,194 45,194

Trade payables FLAC 10,072 10,072 10,072

Liabilities to equity interests FLAC 127 127 127

Liabilities to related companiesand persons FLAC 45 45 45

Other current financial liabilities FLAC 14,634 14,634 14,634

of which aggregated according to IAS 39measurement categories:

Loans and Receivables (LaR) 124,838 124,838 124,838

Available for Sale (AfS) 45 45 45

Financial Liabilities Carried at Amortised Cost (FLAC) 88,074 88,074 91,045

Measurement acc. to IAS 39

recognised in equity

Financial instruments as of 31.12.2014



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Annual Report 2014

Bewertungs-kategorie nach

IAS 39 Buchwert


31.12.2013

in TEURFortgeführte

AnschaffungskostenFair Value

erfolgsneutral

Aktiva

Finanzanlagen AfS 344 344 344

Sonstige langfristige finanzielle Vermögenswerte LaR 0 0 0

Forderungen aus Fertigungsaufträgen 903 903

Forderungen aus Lieferungen und Leistungen LaR 18.768 18.768 18.768

Forderungen gegen verbundene Unternehmen LaR 351 351 351

Forderungen gegen nahe stehende Unternehmen und Personen LaR 1.508 1.508 1.508

Sonstige kurzfristige finanzielle Vermögenswerte LaR 2.380 2.380 2.380

Zahlungsmittel und Zahlungsmitteläquivalente LaR 99.800 99.800 99.800

Passiva

Langfristige Insolvenzverbindlichkeiten FLAC 62.364 62.364 64.726

Verbindlichkeiten aus Fertigungsaufträgen 76.487 76.487

Verbindlichkeiten aus Lieferungen und Leistungen FLAC 12.705 12.705 12.705

Verbindlichkeiten gegenüber verbundenen Unternehmen FLAC 344 344 344

Verbindlichkeiten gegenüber nahe stehenden Unternehmen und Personen FLAC 1.421 1.421 1.421

Sonstige kurzfristige finanzielle Verbindlichkeiten FLAC 18.868 18.868 18.868

Davon aggregiert nach Bewertungskategorien gemäß IAS 39:

Loans and Receivables (LaR) 122.807 122.807 122.807


Financial Liabilities Carried at Amortised Cost (FLAC) 95.702 95.702 98.064

Wertansatz nach IAS 39

Financial instruments as of 31.12.2013

IAS 39 Carrying amount


31.12.2013


Assets


Other non-current financial assets LaR 0 0 0

Receivables related to production orders 903 903



Receivables due from related companiesand persons LaR 1,508 1,508 1,508

Other current financial assets LaR 2,380 2,380 2,380


Liabilities





Liabilities to related companies and persons FLAC 1,421 1,421 1,421








Carrying amount

Measurementcategory

as defined in



31.12.2013


Assets









Liabilities













Carrying amount

Measurementcategory

as defined inIAS 39

Carrying amount 31.12.2013

Fair Value 31.12.2013


Assets









Liabilities













Carrying amount

Measurementcategory

as defined in



31.12.2013


Assets









Liabilities













Carrying amount

Measurementcategory

as defined inIAS 39




Assets









Liabilities













Carrying amount

Measurementcategory

as defined inIAS 39




Assets









Liabilities













Carrying amount

Measurementcategory

as defined in

117

Fair value measurement

No financial instruments that are measured at fair value exist as of the balance sheet date.

The following table shows to which hierarchy level the non-current assets and liabilities belong which are not regularly measured at fair value, but for which fair value is to be additionally stated:

Measurement hierarchy for non-current financial assets and liabilities

in TEUR Level 1 Level 2

Level 3 Total

Insolvency liabilities (FLAC) 12/31/2014 0 66,167 0 66,167

12/31/2013 0 64,726 0 64,726

Level 2

The fair values of financial instruments that are not traded on active market are measured applying valuation methods. These are based on observable inputs such as credit spreads and yield curves. The financial instrument is to be allocated Level 3 if one or several of the significant input is based on non-observable market data.

Of the non-current insolvency liabilities of TEUR 66,167, TEUR 7,143 relate to interest-bearing financial liabilities, and TEUR 59,024 reflect the fair value of discounted financial obligations. Present value was applied as some of the insolvency liabilities are deferred without interest until December 31, 2015. For additional disclosure of fair value on the balance sheet date, discounting was applied with a debt interest rate of 2.23 % p.a., which is derived from a basic interest rate of -0.10 % p.a. and an average credit spread of 2.33 % p.a. The risk-free rate is derived from the average interest rate on listed German government debt instruments with a remaining term of one year. On the first-time recognition of the deferred portion of the insolvency liabilities, measurement was based on a debt interest rate of 7.5% p.a. reflecting a basic rate of 2.5% and a 5.0% credit spread.

Level 3

Level 3 fair values are calculated with the help of valuation methods with non-observable inputs based on management's assumptions about expected future cash flows and appropriate risk-adjusted interest rates.

The TEUR 45 of financial assets classified as "available-for-sale financial assets (AfS)" relate to shares in incorporated entities. These interests are measured at cost as no prices are quoted for them on active markets, as a consequence of which fair value cannot be determined reliably. For this reason, measurement is at the lower of acquisition cost, or the present value of estimated future cash flows (IAS 39.66).

An operating and administration building that was classified under non-current assets and groups of assets held for sale is measured at the lower of carrying amount and fair value less costs of disposal, based on offers arising from current negotiations.

The carrying amounts of the current financial assets and liabilities recognized in the consolidated balance sheet provide a good approximation of their fair values.



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Expenses, income, losses and gains from financial instruments are allocated to the individual IAS 39 measurement categories as follows:

Expenses, income, losses and gains from financial instruments

in TEUR

Arising from interest and

distribution claims Impairment

losses

Reversals of impairment

losses Other net

gains/losses

FY 2014

Loans and receivables (including cash and cash equivalents) 0 -4,190 1,481 0

Assets in the available-for-sale category 0 -274 0 -3

Liabilities measured at amortized cost -4,510 0 821 0

AFY 2013

Loans and receivables (including cash and cash equivalents) 0 -2,870 6,425 0

Assets in the available-for-sale category 0 0 0 -44

Liabilities measured at amortized cost -2,143 0 2,781 0

Pursuant to IFRS 7.20, the expenses, income, losses and gains by category of financial instrument include interest, impairment losses, reversals of impairment losses, and other net gains and losses. The net financial result (see section 4.9) includes the net interest result on loans and receivables, and liabilities that are measured at amortized cost.

Impairments in the available for sale financial assets category relate to associated companies that are not consolidated (see section 5.3 Financial assets).

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6 NOTES TO THE CASH FLOW STATEMENT

6.1 CASH FLOW FROM OPERATING ACTIVITIES

Cash flow from operating activities is derived indirectly from the profit or loss before tax (EBT). This indirect calculation entails making adjustments to balance sheet items in connection with changes to the scope of consolidation. The positive cash flow from operating activities amounts to TEUR 15,354 (2013 abbreviated financial year: negative cash flow of TEUR 9,577).

Cash flow from operating activities includes TEUR 445 of interest paid (2013 abbreviated financial year: TEUR 1,210) and TEUR 55 of interest received (2013 abbreviated financial year: TEUR 39).

6.2 CASH FLOW FROM INVESTING ACTIVITIES

The centrotherm Group applied funds of TEUR 1,462 to acquire property, plant and equipment, and intangible assets (2013 abbreviated financial year: TEUR 634). Payments received from the disposal of property, plant and equipment amounted to TEUR 185 (2013 abbreviated financial year: TEUR 538). Payments received for the disposal of fully consolidated subsidiaries of TEUR 190 relate to a purchase price payment for GP Solar GmbH, which was sold with effect as of April 30, 2013. The negative cash flow from investing activities amounts to TEUR 1,087 (2013 abbreviated financial year: positive cash flow of TEUR 978).

6.3 CASH FLOW FROM FINANCING ACTIVITIES

As in the 2013 abbreviated financial year, no cash flow was to be reported from financing activities during the period under review.

6.4 CASH AND CASH EQUIVALENTS AT END OF PERIOD

Financial resources as of December 31, 2014 exclusively comprised the cash and cash equivalents of TEUR 114,067 as reported in the consolidated balance sheet (previous year: TEUR 99,800). These comprise cash and currency positions, bank deposits and short-term time deposits. Cash and cash equivalents are subject as of the balance sheet date to availability restrictions due to cash-advanced guarantees of bills in an amount of TEUR 2,593 (previous year: TEUR 9,501), and in an amount of TEUR 5,000 (previous year: TEUR 5,000) arising from pledged deposits for the insolvency estate lending agreement for a subsidiary. Cash and cash equivalents include deposits arising from insolvency estate lending agreements in an amount of TEUR 26,080 (previous year: TEUR 31,106) (see section 5.13).

7 OTHER NOTES

7.1 RISK MANAGEMENT REPORT

7.1.1 Management of financial risks

As a globally operating group, centrotherm is exposed to credit, liquidity, interest-rate, currency and raw materials risks as part of its normal operating activities. Such risks may exert a considerable impact on our financial position and performance.

Financial risk management aims, firstly, to identify and measure financial risks emanating from the operating business, and to counter them through the development and implementation of strategies. Where necessary, centrotherm deploys appropriate financial instruments in order to offset risk. No derivative financial instruments existed as of the balance sheet date, and as of the date when these financial statements were released.

The following section considers individual risk, as well as risk management. The risk report included in the management report provides further information about the management of financial risks.



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7.1.2 Foreign currency risk

Currency risks arise if receivables, liabilities, debt, cash and cash equivalents, and planned transactions are denominated, or will be denominated, in a currency that is not the company's local currency (the euro). The quite predominant portion of our customer orders outside the Eurozone are also invoiced in euros, while significant components and raw materials are also purchased on the basis of the euro currency. In the case of large-scale projects – such as currently with the Qatar project in the Silicon segment – the necessity exists in some cases to purchase materials or services locally, and to pay in a currency other than the euro. centrotherm regularly monitors local currency trends for large-scale projects, taking these into account in its ongoing calculations. Where significant foreign currency risks arise in specific cases, such risks relating to individual projects are hedged by deploying forward currency transactions. No corresponding forward transactions existed as of the reporting date.

7.1.3 Liquidity risk

Liquidity risk generally comprises a situation where the Group might be unable to meet its financial obligations – such as the repayment of operating trade payables – on time and sufficiently. Transparency in relation to future cash flows is required in order to counter liquidity bottlenecks at an early juncture through liquidity management measures or appropriate financing activities. Our liquidity requirements are calculated on the basis of Group-wide, short-term rolling liquidity planning, which is generally updated weekly, and monitored constantly by the risk management function.

In the context of the insolvency proceedings of CT AG and its subsidiaries, various banks asserted bankers' rights of lien (arising from their general terms and conditions of business) for existing bank deposits. In order to secure liquidity during and following the discontinuation of insolvency proceedings, the Group entered into agreements concerning the extension of so-called artificial insolvency estate loans that regulate control over bank deposits. These artificial insolvency estate loans carry a non-cancelable term until December 31, 2015, which means that no repayment of the secured loans is required until the end of 2015. The same also applies for loans secured through mortgages, which serve to finance real estate. The banks are waiving realization of their collateral until December 31, 2015.

Extensive financial relief for the centrotherm Group was achieved as part of the insolvency plan proceedings, insofar as the insolvency receivables of the unsecured creditors of CT AG were converted into the company's equity. To this end, creditors of CT AG initially assigned 70% of their claims, which were determined as unconditional and without restriction, to Sol Futura Verwaltungsgesellschaft mbH in mid-May 2013. The best possible satisfaction of creditors is to be ensured through Sol Futura realizing the shares by way of sale. On the basis of the capital measures implemented pursuant to the insolvency plan (commercial register entry on July 19, 2013), Sol Futura in a second step contributed the receivables into CT AG against subscription of 16.9 million new shares. These receivables due from CT AG have thereby been extinguished, and CT AG is largely freed from debt. In addition, the remaining 30% of the determined insolvency liabilities of CT AG were deferred without interest until the end of 2015. The repayment can be rendered from the company's liquidity, through refinancing measures, or from the sales proceeds from the shares held by Sol Futura. Under certain preconditions, Sol Futura has the possibility to extend the sale period until December 31, 2017 at the latest. In this instance, the deferral of the insolvency creditors' unsecured claims on CT AG would also be extended. The insolvency estate loans as well as the loans secured through mortgages of the centrotherm Group might then also need to be extended separately. If the company is unable to satisfy its obligations arising from the insolvency plan, a going concern risk would arise in relation to CT AG and the Group. This applies particularly to the extent that the insolvency liabilities recognized in the balance sheet, which were initially deferred without interest until December 31, 2015, cannot be repaid according to the regulations of the insolvency plan.

When a new order is received, it is frequently necessary to refinance orders of materials and part of the production process. It is currently impossible to enforce short payment targets with suppliers due to a current lack of cover notes from credit insurers. At the same time, customer prepayments are required as cash collateral for guarantee credits. As of the balance sheet date, TEUR 2,593 of the cash was subject to restricted availability due to cash deposits required for guarantees of bills (2013 abbreviated financial year: TEUR 9,501), as well as TEUR 5,000 arising from assigned deposits for the insolvency estate lending agreement for a subsidiary (December 31, 2013: TEUR 5,000). A high level of new order intake could create financing gaps which might delay the processing of orders, and which might need to be closed through external working capital financing lines. The Management Board of CT AG assumes that financial service providers would provide funding given this type of positive business trend.

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The contractual due dates of the Group's financial liabilities are as follows:

Contractual due dates as of 12/31/2014

in TEUR up to 3

months 4 to 12

months

1 to 5 years

more than 5

years

Total

Financial liabilities arising from the insolvency proceedings 0 0 63,196 0 63,196

Trade payables 10,072 0 0 0 10,072

Liabilities to associates 127 0 0 0 127

Liabilities to related parties 45 0 0 0 45

Other current financial liabilities 14,634 0 0 0 14,634

Total 24,878 0 63,196 0 88,074

Contractual due dates as of 12/31/2013

in TEUR up to 3

months 4 to 12

months

1 to 5 years

more than 5

years

Total

Financial liabilities arising from the insolvency proceedings 0 0 62,364 0 62,364

Trade payables 12,705 0 0 0 12,705

Liabilities to associates 344 0 0 0 344

Liabilities to related parties 1,421 0 0 0 1,421

Other current financial liabilities 18,868 0 0 0 18,868

Total 33,338 0 62,364 0 95,702

7.1.4 Interest-rate risk

Cash deposits generally carry variable interest, and are consequently subject to risks pertaining to changes in interest rates. As greater priority is currently being given to holding cash that is available at all times, the Group is giving preference to investing cash at variable interest, rather than seeking higher and fixed rates of interest.

In general, only a minor level of interest-rate risk relates to the financial obligations due to the fact that CT AG is largely debt-free, and because of the deferral without interest of the remaining insolvency liabilities until the end of 2015. Any future external debt financing of new operating business or investment spending on selected development projects might nevertheless feed through to new interest-rate risks.



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7.1.5 Raw materials price risk

centrotherm requires various metals, in particular, copper, iron, silver and platinum, as well as raw materials such as quartz, silicon and energy, for its production processes. Risks arise particularly from the high volatility of energy and raw materials prices. Price changes can affect our manufacturing costs. In order to minimize risks, the centrotherm Group constantly conducts analyses of raw material price trends and their effects on its value chain. No hedging requirements existed in the past, and the market appraisal of the centrotherm Group suggests that none exist currently.

7.1.6 Credit risk

Credit risk, also referred to as counterparty risk or default risk, exists when a contractual partner's liquidity position may give rise to the risk of a partial or complete default on contractually agreed payments or services. In order to avoid receivables default, the centrotherm Group examines its business partners' credit ratings before entering into contracts. To provide further cover, the centrotherm Group frequently agrees payment terms with its customers according to the progress of work and services, which are secured by way of commercial letter of credit. No notable concentration of credit risk exists. The management is consequently convinced that no further risk provisioning is required above and beyond the impairment losses that have already been recognized.

The receivables management function is responsible for supervising open items. Individual positions are monitored at regular meetings between the finance area and sales and project managers, in order to institute receivables collection measures at an early stage. Default risk on cash investments and the cash position is reduced by distributing such positions among different financial service-providers. Their credit ratings are monitored regularly.

The Group's maximum default risk corresponds to the carrying amount of the financial assets on the balance sheet date.

7.1.7 Legal risks

Changes to the political and regulatory environment in countries where the centrotherm Group is present, such as regulations relating to import and export controls, customs regulations or other trade barriers, as well as price and currency controls, could negatively impact the centrotherm Group's business on various national markets, negatively impact its revenues and profitability, and make it difficult for it to repatriate earnings. Legal uncertainties existing in some countries could also greatly restrict the centrotherm Group's ability to enforce its claims and rights. As an internationally operating Group, centrotherm conducts business activities with customers in countries that are subject to export control regulations, sanctions or other forms of trade restrictions that are imposed by the USA, the European Union, or other countries or organizations. The Group could be exposed to the risk of penalties, sanctions or reputational damage as a consequence.

Revenue generated in emerging economies makes a considerable contribution to the total revenue of the centrotherm Group. The Group is assuming that this will remain the case in the future. Business activities in emerging economies entail various risks such as political and economic instability, and the failure to respect cultural differences – such as business practices and working conditions – GDP volatility, the potential nationalization of private assets, uncertainties surrounding legal and tax systems, and the imposition of currency restrictions. The operating activities of the centrotherm Group in emerging economies could also be hampered by state support for respective local industries. Especially in China and the MENA region, legal systems are still in development, and are subject to very differing types of change. The occurrence of legal risks arising from the centrotherm Group's international business activities could exert a considerable negative impact on its business position, financial position and performance.

Complex tax regulations both in Germany and abroad, and potential differing interpretation of them by German and foreign tax authorities, can result in taxation that differs from the company's expectation. A risk also exists when processing orders abroad in relation to the appropriate notification and accounting processing of fiscal operations. Further tax consequences could also arise from the reorganization remission if – contrary to expectations – not all of the preconditions of the remission that are connected with the tax deferral and tax remission were to be met. In such instances, the actual tax expense would differ from the accounting tax expense, and additional provisions or expenses that were previously unrecognized in the financial statements would be required for supplementary taxation and penalty payments. The Group counters such risks through

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engaging German and foreign advisers on all business transactions of relevance to taxation. Recourse is made to such advisers at an early stage in order to already integrate tax aspects into contract structures.

Risks from litigation and regulatory procedures in which the Group is currently involved, or which might occur in the future, exist for the centrotherm Group. These include, for example, litigation and/or similar proceedings, regulatory investigations and procedures due to the occurrence of typical corporate and project risks such as, in particular, the non-contractual delivery of goods or services, product liability, product defects, quality problems, the infringement of intellectual property, infringements against environmental and/or occupational health and safety law regulations, non-compliance with tax regulations, and/or alleged or presumed infringements of prevailing law.

The Qatar project comprises total order volume of EUR 270.5 million. The realization of the Qatar project can generate the following risks, in particular, that are characteristic of large-scale plant engineering projects:

• Defects in contract structure

• Errors in order calculation

• Additional costs due to technical modifications and process experience ("lessons learned"; technology risk)

• Failure to deliver product specifications that have been committed to

• Risk of project delays on the customer side

• Supplier risk (supply delays, insufficient quality, rising material costs)

• Tax and transfer price risks

Such risks can delay project completion, triggering high penalties. To reduce these risks, centrotherm relies on project organization that systematically identifies and measures such risks, and that implements any countermeasures that are required. This project's liquidity risks are low as a result of agreed payment modalities in the form of an escrow account. The liability risk of the respective subsidiary is limited to an amount equivalent to 45% of the total order volume.

With a letter dated June 13, 2013, CEEG, a subsidiary of Société Nationale de l'Electricité et du Gaz (Sonelgaz), has notified the consortium consisting of centrotherm and Kinetics Germany GmbH that it is terminating the contract to construct a fully integrated solar module factory in Algeria. The original project volume amounted to around EUR 290 million. The consortium doubts the legality of this termination, and centrotherm has brought a lawsuit against CEEG for loss compensation. Proceedings are being arbitrated at the International Court of Arbitration (ICC) in Geneva. As experience shows that such proceedings can last several years, centrotherm does not anticipate an ICC ruling before 2016. To secure the prepayments received, and the completion of the contract, CT AG has provided guarantees of around TEUR 45,471 through EulerHermes Kreditversicherungs-AG. Potential utilization of the guarantees, and any loss compensation claims brought against centrotherm, would be included in the regulations of the insolvency plan. Such amounts, as well as the 30% share of insolvency liabilities that have already been determined, would be due for payment as of December 31, 2015 at the earliest, assuming that the proceedings would be concluded by this date, and if centrotherm were to lose the case.

The results of such litigation and proceedings could inflict considerable damage on the company's business, reputation, or on the centrotherm brand. The centrotherm Group forms provisions for obligations arising from litigation and proceedings in line with the likelihood and level of utilization, to the extent that this can be determined sufficiently precisely. Following the conclusion of the respective litigation proceedings, it might nevertheless be established that the Group's provisions prove insufficient to cover all losses or expenses. The Group might also be required to bear lawyers' fees and other legal defense costs to a considerable extent, despite it having won the main action in such litigation and proceedings.

Staff members, customers or suppliers gain an insight into technical details and specifications when manufacturing and selling centrotherm products. In order to protect the intellectual property and know-how of the centrotherm Group, its developments are sufficiently patented, and confidentiality agreements are generally concluded with all parties.



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Each of these risks could exert considerable disadvantageous effects on the business position, financial position and performance of the centrotherm Group.

Please refer to the report on opportunities and risks contained in the management report concerning further risks arising from individual segments.

7.1.8 Capital management

The Group manages its capital with the objective of ensuring that it continues in the future to be able to pay its debts, have sufficient liquidity available, and maintain its intrinsic financial value, as well as grow the company's long-term value. For this purpose, in so-called amendment agreements to the insolvency estate lending agreement, it was agreed with various banks – which, in the context of the opening of insolvency proceedings, had asserted bankers' rights of lien for a considerable volume of bank deposits (arising from their general terms and conditions of business) – that they would provide to the Group until the end of 2015 the liquidity that it required to continue its operating activities. Liquidity flows and trends, in particular, were followed closely during the period under review as a consequence. The centrotherm Group utilizes important key indicators such as the equity ratio and leverage in order to manage the Group. The Group is endeavoring to increase its equity ratio. The Group is currently giving priority to short-term cash availability over interest-optimized investment forms. This entails ensuring that all Group companies can operate under the going concern assumption, as a matter of principle. The overall strategy is unchanged compared with the 2013 abbreviated financial year.

The capital that the Group manages consists of liabilities, cash and cash equivalents, and equity. This is composed of subscribed capital, the capital reserves, the Group reserves, other reserves, and the consolidated net loss. The capital structure can be managed by way of adjusting dividends, capital reductions, issuing new shares, and issuing financial instruments that qualify as equity according to IFRS. The centrotherm Group endeavors to achieve a capital structure that is appropriate to its business risk. Individual Group companies debt positions are monitored by observing the relationship between net debt (total liabilities less cash and cash equivalents) and equity. In certain circumstances, Group land that is not required for operational purposes is sold in order to reduce debt or increase liquidity.

Leverage is calculated as follows:

Leverage

in TEUR 12/31/2014 12/31/2013

Total liabilities 218,796 285,724

Cash and cash equivalents 114,067 99,800

Net debt 104,729 185,924

Equity 43,113 41,617

Net debt to equity ratio 2.43 4.47

The parent company is subject to minimum capital requirements for public stock corporations. The Group constantly monitors compliance with these requirements. These requirements were complied with during the 2014 financial year.

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7.2 CONTINGENT LIABILITIES AND OTHER FINANCIAL OBLIGATIONS

7.2.1 Guarantee credits

As of the reporting date, the Group had access to a guarantee credit facility of TEUR 30,400 as well as a credit line of TEUR 900.

In addition to this, TEUR 76,890 of guarantees of bills existed, mainly guarantees of prepayments and warranties, deriving from the period preceding July 12, 2012, of which TEUR 45,471 relate to the large-scale CEEG project, and TEUR 31,615 to the large-scale project in Qatar.

A total of 82,036 of guarantee credit existed as of December 31, 2014 (previous year: TEUR 88,281).

As of the reporting date, the existing guarantees of bills and other guarantees existed exclusively in relation to third parties.

7.2.2 Rental and lease agreements, order obligations

Other financial obligations arise especially from rental agreements for office premises, as well as car lease agreements. No rental extension or purchase options exist.

The future payments arising from other financial obligations relate mainly to rental and lease agreements for the foreign subsidiaries, and are due as follows:

Due dates of rental and lease payments

in TEUR from 12/31/2014 from 12/31/2013

Up to one year 589 1,167

Longer than one year and up to five years 137 312

Longer than five years 198 110

Rental payments of TEUR 526 were rendered as part of operating leases in the 2014 financial year (2013 abbreviated financial year: TEUR 496).

Order obligations

Order obligations amounted to TEUR 37,992 as of December 31, 2014 (previous year: TEUR 8,243), most of which are attributable to inventories, and in an amount of TEUR 26 to properly, plant and equipment (previous year: TEUR 0). No order obligations exist for intangible assets.

7.2.3 Litigation

Large-scale project in Algeria

With a letter dated June 13, 2013, CEEG, a subsidiary of Société Nationale de l'Electricité et du Gaz (Sonelgaz), has notified the consortium consisting of centrotherm and Kinetics Germany GmbH that it was terminating the contract to construct a fully integrated solar module factory in Algeria. The original project volume amounted to around EUR 290 million. The consortium doubts the legality of this termination. centrotherm has brought a lawsuit against CEEG for compensation of losses. Proceedings are being arbitrated at the International Court of Arbitration (ICC) in Geneva. To secure the prepayments received, and the completion of the contract, CT AG has provided guarantees of around TEUR 45,471 through EulerHermes Kreditversicherungs-AG. Potential utilization of the guarantees, and any loss compensation claims brought against centrotherm, would be included in the regulations of the insolvency plan. Such amounts, as well as the 30% share of insolvency



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liabilities that have already been determined, would be due for payment as of December 31, 2015 at the earliest, assuming that the proceedings would be concluded by this date, and if centrotherm were to lose the case.

Other litigations

An incident occurred at a customer's production facility where centrotherm systems are also deployed, which has resulted in considerable losses in terms of equipment and operational interruption. The question as to the responsibility and liability for the loss that has occurred has now become a matter of judicial dispute. We are of the current opinion that centrotherm is not responsible for this loss, and not liable accordingly. Cover under product liability insurance otherwise exists for most of the losses. The remaining residual risk is reflected through a provision.

In addition, some centrotherm Group companies are involved in litigation due to the determination of receivables relating to the insolvency schedule. In particular, one creditor has brought a lawsuit relating to the determination of disputed receivables in the schedule. The centrotherm Group has taken these cases into account through the formation of provisions.

7.3 AUDITOR'S FEE

The fee rendered for the services of the auditor of the consolidated financial statements, RBS RoeverBroennerSusat GmbH & Co. KG, Wirtschaftsprüfungsgesellschaft, Berlin, was expensed in the reporting year, and is composed as follows:

Auditor's fee

in TEUR FY 2014 AFY 2013

Auditing of financial statements 283 369

of which for previous year 13 32

Certification and valuation services 0 0

Other services 154 124

7.4 RELATED PARTY DISCLOSURES

Materials, inventories, and services are procured from numerous business partners as part of the operating business. These include companies in which CT AG holds shares, as well as companies connected with members of the management and supervisory boards of CT AG. In the balance sheet, transactions with non-consolidated subsidiaries are reported under the items of receivables due from associates and liabilities due to associates. The income statement items include notes relating to transactions with associates. Please refer to section 7.5 the information about total compensation of the Management and Supervisory boards.

The following significant transactions occurred between the centrotherm Group and related parties during the reporting period:

During the 2014 financial year, centrotherm Elektrische Anlagen GmbH & Co. KG, Blaubeuren, and centrotherm clean solutions GmbH & Co. KG, Blaubeuren, delivered no raw materials and supplies to Group companies (2013 abbreviated financial year: TEUR 33).

Rental agreements with indefinite durations exist between CT AG and centrotherm clean solutions GmbH, Blaubeuren. CT AG charged for rents of TEUR 105 during the 2014 financial year (2013 abbreviated financial year: TEUR 81).

The Group generated TEUR 116 of revenue from the rendering of services and the delivery of replacement parts during the 2014 financial year (2013 abbreviated financial year: TEUR 204), mainly with centrotherm clean solutions GmbH & Co. KG, Blaubeuren, and centrotherm Elektrische Anlagen GmbH & Co. KG, Blaubeuren, as well as laflow Reinraumtechnik GmbH + Co. KG, Blaubeuren.

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The Group procured TEUR 31 (2013 abbreviated financial year: TEUR 69) of IC services from centrotherm Elektrische Anlagen GmbH & Co. KG, Blaubeuren, and centrotherm clean solutions GmbH & Co. KG, Blaubeuren, as well as laflow Reinraumtechnik GmbH + Co. KG, Blaubeuren. No expense was incurred in the period under review from the charging on of consultancy costs (2013 abbreviated financial year: TEUR 38).

Revo Besitz GmbH & Co. KG, Blaubeuren, was charged for proportionate electricity costs of TEUR 8 during the period under review (2013 abbreviated financial year: TEUR 10).

Rental agreements with indefinite durations exist between centrotherm clean solutions GmbH, Blaubeuren, and CT AG. CT AG was charged for rents of TEUR 33 during the 2014 financial year (2013 abbreviated financial year: TEUR 0).

In order to cover its operating activities, Sol Futura Verwaltungsgesellschaft mbH, Ulm, called down TEUR 375 from CT AG in the 2014 financial year (2013 abbreviated financial year: TEUR 150) (see section 5.25 Other current financial liabilities).

Dr. Horn Unternehmensberatung GmbH, in which one Supervisory Board member holds an interest, rendered consulting and tax declaration services in an amount of TEUR 86 (2013 abbreviated financial year: TEUR 69).

CT AG concluded an agreement with PMDL GmbH on September 16, 2013 on standard market terms that comprises consultancy services within the MENA region. Robert M. Hartung is Managing Director of PMDL. Consulting fees of TEUR 76 were incurred in the period under review (2013 abbreviated financial year: TEUR 30).

Jan von Schuckmann is a Management Board member of Noerr Consulting AG. Besides the amounts the were invoiced until the end of April 2014 for the Management Board activities of Jan von Schuckmann, no consultancy services were utilized during the reporting period (2013 abbreviated financial year: TEUR 119).

The centrotherm Group participated in no significant transactions for these related parties that were unusual in terms of type or nature, and it will continue to pursue this policy in the future.

7.5 TOTAL COMPENSATION OF THE MEMBERS OF THE MANAGEMENT AND SUPERVISORY BOARDS, INCLUDING ADVANCES AND LOANS

In the reporting year, payments to Management Board members consisted of fixed compensation components of TEUR 1,312 (2013 abbreviated financial year: TEUR 905), and variable components of TEUR 1,324 (2013 abbreviated financial year: TEUR 314). The fixed compensation components consist of fees of TEUR 614 deriving from consultancy agreements drawn by two Management Board members who are not permanent employees (2013 abbreviated financial year: TEUR 677). Non-cash benefits of TEUR 10 were rendered in the period under review (2013 abbreviated financial year: TEUR 0), and no contributions were made to pension plans (2013 abbreviated financial year: TEUR 0).

The Supervisory Board drew TEUR 202 of compensation in the reporting period (2013 abbreviated financial year: TEUR 123) Of this amount, TEUR 202 comprises fixed compensation (2013 abbreviated financial year: TEUR 54). In addition, TEUR 69 of meeting fees were paid during the 2013 abbreviated financial year.

As in previous year, no payments were rendered to former Management Board members during the period under review.

No loans were granted to members of the Management or Supervisory boards during the 2014 financial year.

7.6 EVENTS AFTER THE REPORTING DATE

No events occurred after the balance sheet date that are of key significance for the centrotherm Group, and which could lead to a different assessment of business progress.



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7.7 APPROVAL FOR PUBLICATION

On March 16, 2015, the Management Board of CT AG approved the consolidated financial statements for forwarding to the Supervisory Board of the company. The Supervisory Board has the task of examining the consolidated financial statements, and of declaring whether it approves them.

The consolidated financial statements and the Group management report are being submitted for the financial year ending on December 31, 2014 to the German Federal Gazette (Bundesanzeiger), where they will be published.

7.8 VOTING RIGHTS NOTIFICATIONS PURSUANT TO SECTION 160 (1) NO. 8 OF THE GERMAN STOCK CORPORATION ACT (AKTG), 21 OF THE GERMAN SECURITIES TRADING ACT (WPHG)

In accordance with Section 160 (1) No. 8 of the German Stock Corporation Act (AktG), the following announcements that have been forwarded to the company are reproduced concerning shareholdings in the company requiring mandatory reporting pursuant to Section 21 (1) and (1a) of the German Securities Trading Act (WpHG), to the extent that the shareholding requiring mandatory reporting continues to exist as of the balance sheet date. It should be noted in this respect that all such communications relate to the reporting date mentioned in the announcement. The shareholdings of those entities obliged to make related announcements may have changed as of the balance sheet date without a renewed announcement pursuant to Section 21 (1) of the German Securities Trading Act (WpHG) being required if no relevant announcement threshold has been breached. Further modifications to shareholdings that must be reported may also have occurred following the balance sheet date that are not included in the announcements reproduced below.

7.8.1 Voting rights notification by Sol Futura Verwaltungsgesellschaft mbH, Ulm, on August 6, 2013

On August 6, 2013, Sol Futura Verwaltungsgesellschaft mbH, referring to its voting rights notification of July 19, 2013 relating to the objectives pursued with the purchase of the voting rights in centrotherm photovoltaics AG, additionally informed us pursuant to Section 27a (1) Clauses 1 and 3 of the German Securities Trading Act (WpHG) that the investment as part of implementing the non-cash capital increase planned as part of the legally effective insolvency plan of centrotherm photovoltaics AG had occurred, serving the subsequent best possible satisfaction of the creditors of centrotherm photovoltaics AG through selling the interest acquired by Sol Futura Verwaltungsgesellschaft mbH, and thereby the implementation of strategic objectives,

that Sol Futura Verwaltungsgesellschaft mbH does not intend to acquire, or to otherwise obtain, further voting rights within the next twelve months,

that Sol Futura Verwaltungsgesellschaft mbH was endeavoring to gain influence over the composition of the administrative, executive and supervisory bodies of centrotherm photovoltaics AG, and

that Sol Futura Verwaltungsgesellschaft mbH was not aiming for any significant modification to the capital structure of centrotherm photovoltaics AG, especially concerning the relationship between equity and debt financing, and dividend policy.

Relating to the origin of the funds applied for the acquisition of the voting rights, Sol Futura Verwaltungsgesellschaft mbH informed us pursuant to Section 27a (1) Clauses 1 and 4 of the German Securities Trading Act (WpHG), that Sol Futura Verwaltungsgesellschaft mbH acquired the voting rights as part of a non-cash capital increase at centrotherm photovoltaics AG against the contribution of receivables as non-cash capital contributions. It stated that no other equity or debt funds had been utilized to finance the acquisition of the voting rights.

7.8.2 Voting rights notification by Tobias Wahl on August 6, 2013

On August 6, 2013, Mr. Tobias Wahl, referring to his voting rights notification of July 19, 2013 relating to the objectives pursued with the purchase through Sol Futura Verwaltungsgesellschaft mbH of the voting rights in centrotherm photovoltaics AG that are attributable to him pursuant to Section 22 (1) Clause 1 No. 1 of the German Securities Trading Act (WpHG), additionally informed us pursuant to Section 27a (1) Clauses 1 and 3 of the German Securities Trading Act (WpHG) that the investment through Sol Futura Verwaltungsgesellschaft mbH in the voting rights that are attributable to him pursuant to Section 22 (1) Clause 1 No. 1 of the German Securities Trading Act (WpHG) as part of implementing the non-cash capital increase planned as part of the legally effective insolvency plan of centrotherm photovoltaics AG had occurred, serving the subsequent

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best possible satisfaction of the creditors of centrotherm photovoltaics AG through selling the interest acquired by Sol Futura Verwaltungsgesellschaft mbH, and thereby the implementation of strategic objectives,

that he does not intend to acquire, or to otherwise obtain, further voting rights within the next twelve months,

that through Sol Futura Verwaltungsgesellschaft mbH he was endeavoring to gain influence over the composition of the administrative, executive and supervisory bodies of centrotherm photovoltaics AG, and

that he was not aiming for any significant modification to the capital structure of centrotherm photovoltaics AG, especially concerning the relationship between equity and debt financing, and dividend policy.

Relating to the origin of the funds utilized to purchase the voting rights, Mr. Tobias Wahl informed centrotherm photovoltaics AG pursuant to Section 27a (1) Clauses 1 and 4 of the German Securities Trading Act (WpHG) that the purchase of the voting rights had occurred solely as a result of the attribution of the voting rights through Sol Futura Verwaltungsgesellschaft mbH pursuant to Section 22 (1) Clause 1 No. 1 of the German Securities Trading Act (WpHG), and that he had utilized no funds to finance the acquisition of the voting rights.

7.8.3 Voting right notification by Robert Michael Hartung, Germany, of July 19, 2013

On July 22, 2013, Mr. Robert Michael Hartung, Germany, notified us pursuant to Section 21 (1) in combination with Section 22 (1) Clause 1 No. 1 of the German Securities Trading Act (WpHG), that his percentage of voting rights in centrotherm photovoltaics AG, Blaubeuren, Germany, had fallen below the thresholds of 50%, 30%, 25%, 20% and 15%, and had reached 10% of the voting rights on July 19, 2013. The voting rights interest amounted to 10% on this date (corresponding to 2,116,238 voting rights). These 10 % (2,116,238 voting rights) are to be attributed to Mr. Robert Michael Hartung through TCH GmbH pursuant to Section 22 (1) Clause 1 No. 1 of the German Securities Trading Act (WpHG).

7.8.4 Voting rights notification by TCH GmbH, Blaubeuren, on July 19, 2013

On July 22, 2013, TCH GmbH, Blaubeuren, Germany, notified us pursuant to Section 21 (1) in combination with Section 22 (1) Clause 1 No. 1 of the German Securities Trading Act (WpHG), that its percentage of voting rights in centrotherm photovoltaics AG, Blaubeuren, Germany, had fallen below the thresholds of 50%, 30%, 25%, 20% and 15%, and had reached 10% (corresponding to 2,116,238 voting rights) of the voting rights on July 19, 2013. The voting rights interest amounted to 10% on this date (corresponding to 2,116,238 voting rights).

7.8.5 Voting rights notification by Sol Futura Verwaltungsgesellschaft mbH, Ulm, on July 19, 2013

On July 19, 2013, Sol Futura Verwaltungsgesellschaft mbH, Ulm, Germany, notified us pursuant to Section 21 (1) in combination with Section 22 (1) Clause 1 No. 1 of the German Securities Trading Act (WpHG), that its percentage of voting rights in centrotherm photovoltaics AG, Blaubeuren, Germany, had exceeded the thresholds of 3%, 5%, 10%, 15 %, 20 %, 25%, 30%, 50 % and 75 %, and had reached 80% (corresponding to 16,929,904 voting rights) of the voting rights on July 19, 2013.

7.8.6 Voting rights notification by Tobias Wahl on July 19, 2013

On July 19, 2013, Mr. Tobias Wahl, Germany, notified us pursuant to Section 21 (1) in combination with Section 22 (1) Clause 1 No. 1 of the German Securities Trading Act (WpHG), that his percentage of voting rights in centrotherm photovoltaics AG, Blaubeuren, Germany, had exceeded the thresholds of 3%, 5%, 10%, 15%, 20%, 25%, 30%, 50%, and 75% of the voting rights on July 19, 2013. The voting rights interest amounted to 80 % on this date (corresponding to 16,929,904 voting rights). These 80 % (16,929,904 voting rights) are to be attributed to Mr. Tobias Wahl through Sol Futura Verwaltungsgesellschaft mbH pursuant to Section 22 (1) Clause 1 No. 1 of the German Securities Trading Act (WpHG).



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Annual Report 2014

8 CORPORATE BODIES

8.1 MANAGEMENT BOARD

The Management Board of CT AG consisted of three members as of the balance sheet date.

• Hans Autenrieth, Speaker of the Board, Chief Sales Officer

• Peter Augustin, Chief Operating Officer

• Florian von Gropper, Chief Financial Officer

The following changes occurred to the Management Board's composition during the period under review:

• Florian von Gropper, Chief Financial Officer since February 1, 2014

• Tobias Hoefer, Chief Restructuring Officer until February 17, 2014 inclusive

• Jan von Schuckmann, Speaker of the Board until April 30, 2014 inclusive

• Hans Autenrieth, Chief Sales Officer, and Speaker of the Board since May 1, 2014

Jan von Schuckmann is a Management Board member of Noerr Consulting AG. Tobias Hoefer is the Supervisory Board Chairman of Elumatec AG. Besides this, no other Management Board members were members of other statutory supervisory boards or comparable German or domestic controlling bodies of business entities during the period under review.

8.2 SUPERVISORY BOARD

Following new elections on December 17, 2013, the Supervisory Board of CT AG comprised the following members as of January 1, 2014: Tobias Wahl (Chairman), Robert M. Hartung (Deputy Chairman) and Prof. Brigitte Zürn, thereby consisting initially of three members, in accordance with the bylaws.

The Ordinary Shareholders' General Meeting 2013 also elected the following individuals to the Supervisory Board subject to the suspensive condition that the approved amendment to the bylaws be entered in the commercial register (expansion of the number of Supervisory Board members to six individuals): Dr. Christoph Herbst, Hans-Hasso Kersten and Wolfgang Schmid. Since the entry of the amendment to the bylaws in the commercial register on January 23, 2014, the Supervisory Board now consists of the following six members pursuant to the bylaws:

• Tobias Wahl (Chairman)

• Robert M. Hartung (Deputy Chairman)

• Dr. Christoph Herbst

• Hans-Hasso Kersten

• Wolfgang Schmid

• Prof. Brigitte Zürn

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The Supervisory Board formed the following committees on January 29, 2014. These continued to be composed as follows as of the balance sheet date:

• Chairman's committee: Tobias Wahl (Chair), Robert M. Hartung (Deputy Chair), Hans-Hasso Kersten, Wolfgang Schmid

• Audit committee: Hans-Hasso Kersten (Chair), Prof. Brigitte Zürn, Wolfgang Schmid

• Nomination committee: Tobias Wahl (Chair), Robert M. Hartung (Deputy Chair), Hans-Hasso Kersten, Wolfgang Schmid

Blaubeuren, March 16, 2015


The Management Board

Hans Autenrieth Peter Augustin Florian von Gropper



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Annual Report 2014

9 INDEPENDENT AUDITOR'S REPORT

We have audited the consolidated financial statements, consisting of consolidated income statement, consolidated statement of comprehensive income, consolidated balance sheet, consolidated statement of changes in equity, consolidated cash flow statement and the notes to the consolidated financial statement, as well as the Group management report for the financial year from January 1, 2014 to December 31, 2014, as prepared by centrotherm photovoltaics AG, Blaubeuren. 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 Section 315a (1) of the German Commercial Code (HGB) is the responsibility of the legal representatives of the company. Our responsibility is to express an opinion on the consolidated financial statements and on the Group management report based on our audit.

We conducted our audit of the consolidated financial statements in accordance with Section 317 of the German Commercial Code (HGB) and German generally accepted standards for the audit of financial statements as promulgated by the Institut der Wirtschaftsprüfer (IDW). These standards require that we plan and perform the audit such that misstatements materially affecting the presentation of the financial position and performance 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 accounting-related 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 entities to be included in consolidation, the accounting and consolidation principles used, and significant estimates made by the legal representatives, as well as evaluating the overall presentation of the consolidated financial statements and 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 IFRS, as adopted by the EU, the additional requirements of German commercial law pursuant to Section 315a (1) of the German Commercial Code (HGB) and full IFRS, and provide a true and fair view of the Group's financial position and performance in accordance with these requirements. The Group management report is consistent with the consolidated financial statements and as a whole provides a true and fair view of the Group's position, and appropriately presents the opportunities and risks of future development.

Without qualifying this assessment, we refer to the Management Board's remarks in the Group management report. In the "Liquidity risk" section of the report on opportunities and risks, as well as in the overall statement contained in the outlook, the Management Board remarks that, among other matters, centrotherm photovoltaics AG and the Group would be exposed to going concern risk if the company were to be unable to fulfill its obligations arising from the insolvency plan.

Berlin, March 23, 2015

RBS RoeverBroennerSusat GmbH & Co. KG

Wirtschaftsprüfungsgesellschaft

Steuerberatungsgesellschaft

Udo Heckeler Frank Pannewitz

Certified Public Auditor Certified Public Auditor

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Independent Auditor's Report

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Annual Report 2014

FINANCIAL GLOSSARY

AktG German Stock Corporation Act

BaFin German Federal Financial Supervisory Authority

Capex Capex is an abbreviation of „capital expenditure“. This relates to a company‘s investment expenditure in long-term items of fixed assets such as new machinery, plant, and production buildings.

Cash flow Net inflow of cash and cash equivalents generated from sales and other current activities during a period.

Compliance Compliance relates to actions in harmony with prevailing rules of behavior, laws, and guidelines.

Coverage Coverage of a listed stock corporation with studies and research produced by banks and financial analysts.

CTN Stock exchange abbreviation for the centrotherm photovoltaics share.

DAX German stock market index. It reflects the changes in share prices for the 30 largest German shares in terms of size and turnover.

DAXsubsector The DAXsubsector Renewable Energies index comprises companies that operate in the sector that develops plant for alternative and/or renewable energy sources (solar technology, wind power plants etc).

DCG Code / A set of rules developed by a governmentGerman Corporate commission of the Federal Republic of GermanyGovernance Code primarily that contains recommendations for good corporate governance, in other words, ethical behavior on the part of corporate management and organizations.

EBIT / Earnings Before Operating earnings.Interest and Taxes Key corporate figure corresponds to profit from ordinary business activities after depreciation and amortization, and before interest and tax.

GLOSSARY

EBITDA / Earnings EBITDA comprises a key corporate figure thatBefore Interests, Taxes, shows a company‘s operating profitabilityDepreciation and irrespective of its capital structure or propensity Amortization to invest. It is comprised of profit before tax, the net interest result, and the company‘s depreciation and amortization charges.

ESUG The German Act Relating to the Further Simpli- fication of the Reorganization of Companies, which came into force on March 1, 2012.

General Standard The General Standard is a stock market segment under private law of Deutsche Börse AG, which is based on the statutory Regulated Market.

GEX Index for owner-managed, medium-sized companies in the Prime Standard.

HGB German Commercial Code

HRB Commercial register, Department B (corporations)

IAS International Accounting Standards

IASB International Accounting Standards Board

IFRS / International Firstly, the overall term for all accounting stan-Financial Reporting dards published by the International AccountingStandards Standards Committee. Secondly, accounting standards that the International Accounting Standards Board (IASB) has newly issued since 2003. Stan- dards approved until 2002 are still published under the designation of International Accounting Standards (IAS). Existing IAS are only renamed IFRS if the related standards undergo fundamental amendments.

InsO German Insolvency Directive

InvG German Investment Act

ISIN Abbreviation for „International Security Identifi- cation Number“. The ISIN serves to clearly identify securities on an international basis, and is issued by the relevant national authority.

Lock-up period Period during which a company‘s previous shareholders are not permitted to sell their shares following a share issue.

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Glossary

MENA The MENA acronym is frequently utilized by Wes- tern financial experts and economic specialists to refer to „Middle East & North Africa“.

MEUR Millions of euros

Order book The company allocates an order to its order book as soon as the related agreement has been signed by both parties, and the realization of the agreement is sufficiently likely in the assessment of the company‘s Management Board. This usually requires the rendering of a significant prepayment, and/or the opening of a commercial letter of credit by the contractual partner.

Outside Basis Temporary valuation differences between the taxDifferences valuation of a investment in a participating interest and its net assets or equity carrying amount.

Prime Standard The Prime Standard is a stock exchange segment for listing shares on the Frankfurt Securities Ex- change. Issuers in the Prime Standard must satisfy international transparency requirements going above and beyond the level of the General Stan- dard. The Prime Standard particularly comprises companies that wish to reach not only national but also international investors.

Purchase price Purchase price allocation refers to the processallocation whereby the costs of acquiring a company are allocated to the individually acquired assets and liabilities, which are measured at fair value.

TecDAX Index that reflects the share price development of the 30 largest technology stocks in the Prime Standard below DAX shares.

TEUR Thousands of euros

Total operating Key operating figure derived from sales for a revenue given period, the net balance of changes to stock, and own work capitalized.

ABBREVIATIONS OF NAMES

CT AG centrotherm photovoltaics group

FHR Subsidiary FHR Anlagenbau GmbH

IDW Institute of Public Auditors in Germany, Düsseldorf

IFW Kiel Institute for the World Economy

ISC International Solar Energy Research Center, Constance

SIC Solar Innovation Center, Constance

SiTec Subsidiary SiTec GmbH, Burghausen

Sol Futura Sol Futura Verwaltungsgesellschaft mbH, Ulm

WKN German abbreviation for „Wertpapierkenn- nummer“ (securities identification number). The WKN is a six-figure alphanumeric code to enable a security to be identified clearly. It is issued by the Institut für die Ausgabe und Verwaltung von Wertpapieren in Deutschland (Institute for the Issuance and Administration of Securities in Germany).

WpHG German Securities Trading Act

WpPG German Securities Prospectus Act

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Annual Report 2014

MWp Megawatt peak

PERC solar cells Passivated Emitter Rear Cell; solar cell technology with optimized dielectric passivation layer on the rear side of the solar cell.

PECVD / Plasma Also known as “Plasma Assisted Chemical Vapor Enhanced Chemical Deposition”. Term for a special form of Chemical Vapour Deposition Vapor Deposition (CVD), in which the deposition of thin films results from a chemical reaction. The process is also supported by a plasma. For this a strong electric field is applied between the substrate to be coated and a counter electrode to ignite a plasma. The plasma causes a breakdown of the bonds in the reaction gas and the formation of radicals which precipitate onto the substrate and effect the deposition reaction there. This allows a high deposition rate to be achieved at a low deposition temperature.

Phosphorus diffusion Phosphorus diffusion refers to the equalization of concentration differences up to practically complete mixing, which results from the movement of the phosphorus atoms. This particle movement derives from the energy of the particles and is temperature dependent.

Photovoltaics / PV Photovoltaics refers to the direct conversion of radiant energy, in particular solar energy, into electrical energy. The name is constructed from the components ‘photos’ - the Greek word for light - and ‘Volta’ - after Alessandro Volta, one of the pioneers of electrical technology.

Photovoltaic module Photovoltaic modules are used either singly or wired in group in photovoltaic systems for the generation of electricity by the direct conversion of the sunlight into electrical energy. As important components they contain numerous solar cells wired in series and in parallel.

Polysilicon Please refer to silicon

PVD process The PVD (physical vapor deposition) process refers to a group of coating processes or thin film technologies in which the film is formed directly by the condensation of a material vapor of the source material.

Roadmap Synonym for strategy or project plan often used in research and development.

Semiconductor Solid substance whose electrical conductivity can be changed markedly by the targeted introduction of other atoms (doping). This allows the production of electronic components like diodes, transistors and solar cells.

TECHNICAL GLOSSARY

BiSoN technology Bifacial solar cells developed by ISC Constance with n-doped (n-type) crystalline silicon wafers as basis.

centaurus technology Our centaurus technology is based on back surface passivation with a dielectric layer as well as a local aluminum back surface field (Al-LBSF). This improved cell structure leads to a significant reduction in recombination losses and thus to higher efficiency of the solar cells.

CIGS Abbreviation for Copper Indium Gallium Diselenide.

Crystalline solar cells Solar cells on the basis of crystalline silicon

CVD reactor Reactor for conversion of trichlorosilane into polysilicon with the Siemens process.

Diffusion furnace In a diffusion furnace, the wafers are exposed at 900°C to gas containing phosphorus with the addition of oxygen, which results in the formation of an oxide containing phosphorus on the surface. The n-type emitter is produced from these phosphorus atoms which diffuse into the silicon.

Drying furnace For drying the metal contacts on the wafers, centrotherm offers drying furnaces specially developed for mass production.

EE Renewable energies

EEG Renewable energies law, legislation giving priority to renewable energies in Germany.

Efficiency Ratio between electric power delivered to incident light power.

EUR per Wp VRatio of production costs (in EUR) per cell yield under normal conditions in watt peak (Wp).

Fast firing furnace After the contacts are dried in the drying furnace, they are thermally fired or “sintered” in the fast firing furnace to achieve contact with the silicon.

First silicon out Term for the putting into operation of the first polysilicon equipment and the initial production of polysilicon in own CVD reactors.

Grid Parity The point in time when electricity from a photovoltaic plant can be offered to the end user at the same price as conventional electricity.

GWp Gigawatt peak

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Siemens process Process for the production of high purity silicon for the semiconductor or solar industry. Here, the metallurgic silicon raw material is first converted into trichlorosilane with gaseous hydrogen chloride. After several distillation steps, the trichlorosilane is mixed with hydrogen and thermally decomposed in so-called CVD reactors into silicon and chlorous gases. High purity silicon rods are introduced here on which the silicon is deposited.

Silicon From the Latin silex = flint; silicon is a semi-metal which occurs on Earth in large quantities. However, for the production of solar cells the raw silicon must be purified further to polysilicon.

Silicon, amorphous Non-crystalline form of the semiconductor silicon. When combined with hydrogen (a-Si:H, hydrogenated amorphous silicon) usable as semiconductor material for thin-film solar cells.

Sintering In the production of solar cells, the metallic pastes are sintered. In this process, the organic materials are evaporated out of the metal pastes.

Sputtering High-vacuum-based coating technology for the production of thin-film solar modules.

STC-TCS converter The STC-TCS converter converts the silicon tetrachloride into trichlorosilane, which in turn can be used for the production of polysilicon.

TCO Functional layers made of transparent conducting oxides

Throughput Quantity produced per unit of time, e.g. solar cells per hour

Wafer In the semiconductor and photovoltaic industries, as well as in micromechanics, a wafer means a circular or square thin slice of mono- or poly- crystalline silicon on which electronic or micro- mechanical components or photoelectric coatings can be applies by various technical processes.

Wp Watt peak; unit of measurement for the standardized power (power rating) of a solar cell or a solar module. The value refers to the power in standard test conditions (25 °C module temperature and 1 kW/m² irradiance), which do not directly correspond to everyday operation.

Yield Relation between product output and the material consumed, e.g. number of solar cells produced to the wafers used.


Glossary

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Annual Report 2014

FINANCIAL CALENDAR

23.06.2015

Ordinary Shareholders‘ General Meeting 2015

13.08.2015

Publication of the Interim Report as of June 30, 2015

IMPRINT

PUBLISHER

centrotherm photovoltaics AGJohannes-Schmid-Str. 889143 BlaubeurenT +49 (0)7344 918 0F +49 (0)7344 918 [email protected]

CONCEPT AND DESIGN


PHOTOGRAPHS

centrotherm photovoltaics AG, BlaubeurenFHR Anlagenbau GmbH, Ottendorf-Okrilla103prozent, Berlin Andy Ridder, Stuttgartandreas.graeter, IllerkirchbergJürgen Herschelmann, HamburgRico Hofmann, HoyerswerdaStudio für Photographie, BFF, LandauThomas Kaercher, Neu-Ulm PRINTED BY

MEDIprint Geiselhart GmbH & Co. KG, Blaubeuren


Financial Calendar | Imprint

139

DISCLAIMER

We have exercised utmost care in the preparation of this report. It contains forecasts and/or information relating to forecasts. Forecasts are based on facts, expectations, and/or past figures. As with all forward-looking statements, forecasts are connected with known and unknown uncertainties, which may mean the actual result deviates significantly from the forecast. Forecasts prepared by third parties, or data or evaluations used by third parties and mentioned in this communication, may be inappropriate, incomplete, or falsified. We cannot assess whether information, evaluations, or forecasts made by third parties are appropriate, complete, and not misleading. To the extent that information in this report has been taken from third parties, or these provide the basis of our own evaluations, such use is made known in this report. As a result of the above-mentioned circumstances, we can provide no warranty regarding the correctness, completeness, and up-todate nature of information taken, and declared as being taken, from third parties, as well as for forward-looking statements, irrespective of whether these derive from third parties or ourselves.

Rounding differences may arise.

This annual report is available in German and English, the English version being a translation from the German original document.The German version shall be legally binding.Both versions are available for download on the Internet.

Blaubeuren, March 2015


Johannes-Schmid-Str. 889143 BlaubeurenT +49 (0)7344 918 0F +49 (0)7344 918 [email protected]

www.centrotherm.de

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