Dear Shareholders of SolarWorld AG, dear Employees and Friends of the SolarWorld Group!
The fiscal year 2011 was exiting and challenging. The company used savings potentials and competitive edges in production and product know-how at all levels in order to be among the top players in the industry in an increasingly difficult environment. In the present report, the Supervisory Board of SolarWorld AG is providing information about its activities in the 2011 fiscal year. In doing so, it has again subjected itself to an enhanced reporting duty, which in turn means that it has disclosed the complete minutes of all Supervisory Board meetings in the year 2011, including attachments, to the auditors of the company. This was effected on February 8, 2012, including the documents on the annual kick-off meeting on the day before. They had no questions nor did they raise any objections.
The Supervisory Board, which has existed since the inception of the company on December 18, 1998, in its present composition and was reappointed by the Annual General Meeting on May 21, 2008, for another period of office of five years, performed the tasks that it is obligated so to do according to the law, the articles of association and the rules of procedure. It was granted discharge every year, the last time at the Annual General Meeting on May 24, 2011. The Supervisory Board was and is in a continuous dialogue with the Management Board of the company, which it both advised and supervised in the management of the company pursuant to § 111 AktG (German Stock Corporation Act). At the same time, the Supervisory Board dealt with the examination of its own efficiency. On the whole, no objections resulted from its activities and especially from the supervision of the Management Board. For this reason, the Supervisory Board will recommend to the Annual General Meeting that the Management Board be discharged for fiscal year 2011. On a regular basis, at least one member of the Management Board participated in the Supervisory Board meetings, which took place without Management Board attendance in individual cases. The Management Board kept the Supervisory Board informed about all Management Board meetings by way of a written agenda and subsequent minutes of the meeting. The same applies to the Group Committee Meetings that are organized to stimulate a comprehensive exchange of views among the executive staff of the SolarWorld Group. Following the balance sheet meeting on March 14, 2011, there was an international Get Together in Bonn.
The Supervisory Board was directly and on a timely basis involved in all decisions that were of fundamental importance to the company. The Management Board informs the Supervisory Board regularly both orally and in writing, promptly and comprehensively about all relevant issues of corporate planning and strategic development, about the earnings, asset and finance situations as well as about current business policy and the risk management that is in place. In the process, the reporting duties pursuant to § 90 AktG were as much adhered to as the recommendations of the German Corporate Governance Code (GCGC).
In the year 2011, the work of the Supervisory Board of SolarWorld AG dealt with a number of priority issues. These included annual discussions with each member of the Management Board, an annual conference, the audit and final conferences as well as the balance sheet meeting with the auditors covering all consolidated companies, supervision of the accounting process, the effectiveness of the internal control system, of the internal risk management system and of the internal audit system as well as the audit itself, the independence of the auditors and the additional services rendered by the auditors. All quarterly results and reports were discussed with the Chief Financial Officer prior to their publication. The international personnel and marketing strategy was discussed with the Chief Human Resources and Brand Officer, and the route of the product to the customer and its optimum support with the Chief Sales Officer, in each case in the context of an additional individual meeting. Further topics were the strategic inclusion of Solarparc AG in the group business of SolarWorld AG, including the consummation of the take-over and share swap offer of SolarWorld AG to the shareholders of Solarparc AG. The Supervisory Board was also involved in financing issues and in the implementation of the principle of order that the independent executive power of the Management Board is retained centrally by SolarWorld AG and that the subsidiary and sister companies are managed accordingly as GmbHs. The preparation, organization and follow-up of the Annual General Meeting on May 24, 2011 was also one main topic, as well as the further GCGC implementation and the approval of the consulting and representation services rendered to the group by the law firm of Schmitz Knoth Rechtsanwälte, which is close to the Chairman of the Supervisory Board as contemplated by IAS 24. Again, the Supervisory Board experienced no objections in the context of its inclusion in an audit procedure carried out by the Deutsche Prüfstelle für Rechnungslegung. In addition, it was integrated into the combination of international production sites, a bond issue and the implementation of the internal Code of Conduct of the group. Finally, the Supervisory Board dealt with Management Board matters. In all its activities, the Supervisory Board of SolarWorld AG has been guided by the recommendations of the GCGC, which both the Supervisory Board and the Management Board complied with in the year 2011 as well.
In the same way as the Supervisory Board in its meeting on August 9, 2010, approved the previous GCGC version of May 26, 2010, as published on July 2, 2010, the Supervisory Board meeting of December 13, 2011, decided to give an unrestricted declaration of compliance for the year just ended and for the current fiscal year and to make it permanently available pursuant to § 161 AktG on the website of the company. This was effected jointly with the Management Board and with the following wording:
"In their respective meetings on December 13, 2012, the members of the Management Board and the Supervisory Board of SolarWorld AG passed a resolution that the recommendations of the "Government Commission of the German Corporate Governance Code" in its current version have been complied with since the last declaration of compliance and shall continue to be complied with."
At the same time, the section "Corporate Governance Report" in the Group Report 2011 contains further details, unless the present report by the Supervisory Board already includes the information as required by section 3.10 GCGC.
Pursuant to section 5.1.2 GCGC the Supervisory Board, which appoints and dismisses the members of the Management Board, has to make sure that there is diversity in the composition of the Management Board with particular emphasis on an adequate representation of women. The Supervisory Board does this by monitoring, pursuant to section 4.1.5 GCGC, that the Management Board, when filling management positions, already strives for an adequate share of women in order to be able to recruit potential female candidates for the Management Board from this pool. Therefore, it was possible to appoint Mrs. Colette Rückert-Hennen as Chief Human Resources and Brand Officer. As far as the composition of the Supervisory Board itself is concerned, it is one of our targets to ensure adequate female representation here as well. This goal and the level of implementation are to be published in the Corporate Governance Report according to section 5.4.1 GCGC. Already at this point, it is made clear on behalf of the Supervisory Board that the implementation has been initiated and is to be completed in such a way that an exchange or an addition of one Supervisory Board member by at least one female board member will be proposed to the Annual General Meeting upon the election to the Supervisory Board.
The last paragraph of section 5.1.4 GCGC provides for members of the Supervisory Board to attend up-skilling and professional development measures under their own responsibility that are necessary for them to perform their tasks. This, too, has been done and also resulted from the legal professional regulations. In addition, events were attended like the IFRS Update for Supervisory Board members by KPMG in Düsseldorf on January 24, 2011, a Compliance Seminar by FGS in Bonn on February 28, 2011, the expert conference for Supervisory Board members by BDO/Handelsblatt/Supervisory Board in Düsseldorf on April 12, 2011, the first Düsseldorf Supervisory Board Symposium on May 31, 2011, the Round Table for Supervisory Board members run by PwC in Düsseldorf on June 9, 2011, or the GCGC conference in Berlin on June 29/30, 2011.
As far as compliance with the GCGC recommendations by the Supervisory Board of SolarWorld AG is concerned, the coordination of the strategic alignment of the company and the regular discussion of the current state of strategy implementation were dealt with within the framework of the consistently practiced exchange of information with the Management Board (section 3.2 GCGC). In this process, the provision of information to the Supervisory Board was and is seen as a joint task of the Management Board and the Supervisory Board (section 3.4 GCGC). Especially, the Chairman of the Management Board was regularly informed by the Supervisory Board of the company about his own activities and integrated into these as much as possible. Conflicts of interest as defined in section 5.5 GCGC were not observed in the process. Also, the Supervisory Board considers itself to be independent as defined in section 5.4.2 GCGC. To the extent that mandatory approvals were required as per section 5.5.4 GCGC these were invariably obtained.
The tasks related to accounting and auditing are performed by the Supervisory Board as a group. To the extent that the law demands in this context that at least one independent member of the Supervisory Board has expertise in the area of accounting or auditing, each member of the Supervisory Board possesses this expertise individually. The amendment of § 100 Sec. 5 AktG does not demand that one member of the Supervisory Board must be professionally involved in these areas, but only that there should be any involvement and expertise at all, which applies in equal measure to all members of the Supervisory Board of SolarWorld AG. As fully qualified lawyers trained in tax law and with training in banking in the case of the chairman, long years of work in industry in the case of the deputy chairman and an additional international qualification in the case of the third member of the Supervisory Board and who all work primarily in business law there is no need for any further explanations on any of the Supervisory Board members. If we leave out the Chairman of the Supervisory Board because of the legal activities of his law firm for and on behalf of the Group, the explicit nomination as independent Financial Experts of Dr. Georg Gansen and Dr. Alexander von Bossel, LL.M. is still possible. However, by law this is not required before the next election to the Supervisory Board.
The audit company BDO AG Wirtschaftsprüfungsgesellschaft, which was appointed by the Supervisory Board on the instructions of the Annual General Meeting on May 24, 2011, to audit the financial statements and the consolidated financial statements of SolarWorld AG again for fiscal year 2011 first renewed its declaration of independence as defined in section 7.2.1 GCGC. Thus, it is confirmed that no business, financial, personal or other relationships existed between the auditor and his organization and chief auditors on the one hand, and the company and its organization members on the other hand that might give rise to doubts about the auditor's independence. It was also verified that the overall period of seven years of the authorization to issue an auditor's certificate had not been exceeded for any of the auditors involved in the audit – and that applies groupwide.
The report to be given by the Supervisory Board on the results of its own examination should according to § 171 Sec. 2 AktG also include the statement on which committees it has formed. As, however, the Supervisory Board of SolarWorld AG is limited to three members, an extensive formation of committees tended to be largely superfluous again in fiscal year 2011. To the extent that § 175 Sec. 2 AktG requires an explanatory report on the information pursuant to § 289 Sec. 4, § 315 Sec. 4 HGB (German Commercial Code), the Supervisory Board adopts the relevant report by the Management Board fully subscribing to the statements made in it. The management and consolidated management reports affected by this were also audited by BDO AG Wirtschaftsprüfungsgesellschaft, Bonn, which extended the audit to the accounting as well. The annual financial statements for fiscal year ending December 31, 2011, drawn up by the Management Board according to the HGB accounting rules and the management report of SolarWorld AG were awarded the unqualified auditor's certificate on March 9, 2012. At the same time the auditor awarded an unqualified auditor's certificate to the group management report and to the consolidated financial statements of SolarWorld AG, which pursuant to § 315a HGB were again drawn up on the basis of the international accounting rules IFRS.
After its own examination of the annual financial statements, the consolidated financial statements, the management report and the consolidated management report, the Supervisory Board approved the audit result presented by the auditors. It did not see any reasons for objections. Previously, it had discussed the audit priorities with the auditors in a meeting on December 13, 2011, and had met with the auditors for a final conference on February 23, 2012, which in each case took place in the presence of the Chief Financial Officer of SolarWorld AG. In the balance sheet meeting on March 13, 2012, further details following from the auditor's certificates of March 9, 2012, were finally discussed. Here again no doubts concerning the correctness of the results produced by the auditors were raised, which is why any further investigation was not required. In the balance sheet meeting, the Supervisory Board then approved the financial statements and the consolidated financial statements, as a result of which the financial statements are now adopted. The Supervisory Board also adopted the proposal of the Management Board for the appropriation of the balance sheet profit.
The Management Board, the executives and all the employees of the SolarWorld Group again produced outstanding work in fiscal year 2011 and did so worldwide. The Supervisory Board offers its heartfelt thanks together with respect and appreciation for this outstanding achievement.
This report was unanimously approved by the Supervisory Board immediately following the balance sheet meeting on March 13, 2012, and individually signed by all members.
Bonn, March 13, 2012
For the Supervisory Board
Dr. Claus Recktenwald
- Chairman -