Report by the Supervisory Board on the 2014 Fiscal Year
The 2014 fiscal year was once again characterized by a difficult market and continued fierce competition in the solar industry. With the successful closing of its financial restructuring process in February 2014, the SolarWorld Group managed to accomplish a fresh start despite these challenging circumstances. In addition, the acquisition of the solar activities of Bosch Solar Energy AG in March allowed the group to considerably enhance production capacities, thus laying the foundations for the significant increase in groupwide shipments during the past fiscal year.
The Supervisory Board would like to thank the staff, executives and Management Board of the SolarWorld group for their extraordinary efforts and loyalty to the company.
Supervisory Activities of the Supervisory Board
The Supervisory Board once again accompanied the Management Board in an advisory capacity during the past fiscal year and supervised its activities on the basis of written and verbal reports, and meetings with the Management Board. In addition to these meetings, my predecessor, Dr. Claus Recktenwald, and I, were also both in regular contact with the Management Board in our capacity as Supervisory Board Chairman. The Management Board informed the Supervisory Board regularly and without delay on all issues relevant to the company’s planning, including the financial, investment and HR planning; course of business, ongoing revenue, earnings and liquidity development; economic situation of the company and group, including risk situation and management; compliance within the group; strategic realignment within the framework of the restructuring processes developed and implemented by the Management Board; and important decisions and transactions relating to the company and group. As required by law and the rules of procedure for the Management Board, the Supervisory Board was involved in all decisions that were of fundamental importance to the company. This applied particularly in cases where mandatory approvals were required for transactions. The Supervisory Board also consulted external advisors where necessary. In addition, Supervisory Board members also visited production facilities and conducted talks with the responsible parties.
Composition of the Supervisory Board
Until May 30, 2014, the Supervisory Board was composed of Dr. Claus Recktenwald as Chairman, Mr. Marc M. Bamberger and myseIf. In accordance with the resolution adopted by the Annual General Meeting of May 30, 2014, the Supervisory Board is now composed of six shareholder representatives. These are Mr. Heiner Eichermüller, Dr. Khalid Klefeekh Al Hajri, Mr. Faisal M. Alsuwaidi, Dr. Andreas Pleßke, Mr. Jürgen Wild and myself. They are appointed until the end of the General Meeting that will ratify the actions of the members of the Supervisory Board for the 2019 fiscal year. I myself was already appointed in 2013 until the end of the General Meeting that will ratify the actions of the members of the Supervisory Board for the 2018 fiscal year. In the constitutive Supervisory Board meeting that was held immediately after the 2014 General Meeting, the members of the Supervisory Board elected Mr. Eichermüller as Deputy Chairman of the Supervisory Board and myself as its Chairman.
Supervisory Board Meetings
The Supervisory Board held a total of 10 meetings during the reporting period, which took place on January 20, February 26, March 17, May 28, May 30 (constitutive meeting of the newly elected Supervisory Board), June 23, September 16, October 29, November 10 and November 27. The meetings were generally held as physical meetings; the exception being the Supervisory Board meetings to go through the monthly financial reports with the Chief Financial Officer, which occurred as teleconferences as of July. The members of the Supervisory Board attended all of the meetings with the exception of Dr. Al Hajri on October 29 and November 27, Mr. Alsuwaidi on May 30 and November 27, and Mr. Wild on November 10.
Advisory and Auditing Priorities
The ongoing revenue, earnings and liquidity development, as well as the short and medium-term liquidity forecasts for the company, were the subject of all meetings, particularly of the monthly teleconferences for the financial reporting of the Chief Financial Officer. The focus of the advisory and supervisory activities during the year under review was on the critical monitoring of the restructuring and refinancing process in the company. In addition, we also focused on individual issues such as the contracts with silicon suppliers, the integration of SolarWorld Industries Thüringen into the group and the implementation of the measures in accordance with the restructuring plan. Other activities included the discussion of the group’s brand strategy, the planning of human resources, the organization of international sales and the structural changes in global purchasing. The quarterly figures were submitted to the Supervisory Board and approved prior to publication. Finally, the Supervisory Board examined the annual financial statements and consolidated financial statements for the 2014 fiscal year in detail and concluded that there were no doubts concerning the legality and regularity of the Management Board.
Due to the limited number of members, neither the former Supervisory Board that served until May 30, nor the new one that has served thereafter, formed any committees. The members are convinced that they can deal with all pending issues comprehensively and efficiently as a group.
Advisory and Auditing Activities on the 2014 Annual and Consolidated Financial Statements
The General Meeting appointed BDO AG Wirtschaftsprüfungsgesellschaft to audit the annual financial statements and consolidated financial statements of SolarWorld AG for the 2014 fiscal year, and the management report for the fiscal year from January 1, to December 31, 2014. The Supervisory Board subsequently discussed the audit mandate, determined the audit priorities and issued the audit assignment. The following audit priorities were agreed upon for the 2014 fiscal year: (i) accounting for the debt-to-equity swap, (ii) purchase price allocation of the new acquisition in Arnstadt and (iii) illustration of legal disputes and the associated litigation cost risks.
The annual financial statements for the fiscal year from January 1 until December 31, 2014, drawn up by the Management Board according to the HGB accounting rules, and the management report, of the SolarWorld AG, reviewed by the auditors, were awarded the unqualified audit opinion. The auditors also awarded an unqualified audit opinion to the consolidated financial statements and group management report, pursuant to § 315a HGB and drawn up on the basis of the international accounting rules IFRS, as required in the European Union. The auditors confirmed that the consolidated financial statements complied with the conditions required for exemption from the preparation of financial statements in accordance with German law. In addition, they also checked the early risk detection system at SolarWorld AG and determined that it fulfils the management responsibilities stipulated in the German Control and Transparency in Business Act (KonTraG).
The financial statements and auditor’s report were presented to the Supervisory Board in good time. They were discussed in detail and checked in the presence of the auditors on February 26, 2015. The auditors reported on the audit procedure and the essential findings of the audit, particularly on the agreed audit priorities. The Supervisory Board recorded notes on the audit reports and discussed these with the Management Board.
Following its examination of the annual financial statements, the consolidated financial statements, the management report and the group management report, the Supervisory Board did not see any reasons for objections. The Supervisory Board approved the audit result and documents presented by the auditors on March 18, 2015. The annual financial statements and consolidated financial statements of SolarWorld AG are therefore now adopted.
Compliance Declaration and Corporate Governance
Corporate governance plays a major role for the Supervisory Board. It presents its report on the topic together with the Management Board in the “Corporate Governance Report” section of the Annual Group Report. On December 15, 2014, the Supervisory Board and Management Board issued the annual declaration of compliance with the German Corporate Governance Code required by § 161 German Stock Corporation Act (AktG) and published it on the company's website.
The remuneration of Supervisory Board members is published in the “Remuneration Report” section of the Annual Group Report. In addition to the remuneration published in the report, Supervisory Board members also each received an expense allowance of € 500 plus any incurred VAT for the Supervisory Board meetings on January 20, February 26, March 17, May 28 and May 30. In an amendment to the Articles of Association adopted by the General Meeting on May 30, the shareholders decided that an expense allowance would no longer be paid and that in the future only actual expenses that were incurred would be reimbursed.
The Supervisory Board did not identify any conflicts of interest among its members during the 2014 fiscal year.
The examination of the efficiency of the Supervisory Board’s own activities recommended by the German Corporate Governance Code was last performed during the 2013 fiscal year.
Changes to the Management Board and Supervisory Board
Mr. Jürgen Stein was appointed to the Management Board as Chief Product Officer with effect from April 1, 2014. The circumstances of his appointment are in line with the tasks at hand and the market, and are in a balanced relation to the employment conditions of the other Management Board members. Mr. Stein is responsible for the areas of product management, product development, quality management, procurement and supply chain management.
Dr. Claus Recktenwald and Mr. Marc M. Bamberger stopped being members of the Supervisory Board at the end of the General Meeting on May 30. The Supervisory Board thanks them for their service to the company. Dr. Recktenwald in particular, as the longstanding Chairman was closely involved in the development of the company and significantly shaped the Supervisory Board’s work.
Bonn, March 18, 2015
The Supervisory Board
Dr. Georg Gansen