PV Crystalox Solar plc (PVCS) 2012年年度報告「LSE」.pdf

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1、PV Crystalox Solar PLC Annual Report and Accounts 2012The key to solar powerPV Crystalox Solar is a leading supplier to the worldsmajor photovoltaic companies,producing multicrystalline silicon wafers for use in solar electricitygeneration systems.Overview IFC About us IFC Overview of results1 Chair

2、mans introduction2 Our business4 The current marketBusiness review6 Operational review9 Our strategy10 Financial review14 Principal risks and uncertainties16 Corporate social responsibilityCorporate governance20 Directors22 Corporate governance statement29 Directors report32 Directors remuneration r

3、eportConsolidated financial statements37 Statement of directors responsibilities38 Independent auditors report39 Consolidated statement of comprehensive income40 Consolidated balance sheet41 Consolidated statement of changes in equity42 Consolidated cash flow statement43 Notes to the consolidated fi

4、nancial statementsCompany financial statements66 Independent auditors report67 Accounting policies68 Company balance sheet69 Notes to the company financial statementsShareholder information72 AdvisorsContentsVisit us Revenues46.3m2011:210.4mOperating cash flow67.1m2011:1.6mNet cash(cash less externa

5、l loans)89.4m2011:22.6mEBIT(earnings before interest and taxation)(110.1)m2011:(67.5)mOverview of resultsChairmans introductionPV Crystalox Solar PLC has navigated another extraordinarily challenging year forthe PV industry.Global overcapacity principally in China maintained intense pressure on pric

6、ing which continued to fall through the year across the whole PVvalue chain.Against this background,the Group has continued to work to protect shareholder value.Following the conclusion of a strategic review in the latter part of2012,the Board decided to carry out a radical restructuring in response

7、 to the adverse market conditions.The Group is adjusting its operations to align production with anticipated sustainable short-term market demand so that the ongoing business will be broadly cash neutral in 2013.As part of this programme the Group announced on 13 December 2012 the decision to discon

8、tinue its polysilicon production facility in Bitterfeld,Germany and substantially reduce its production output at its UK ingot and German wafer operations.Regrettably these actions are leading to significant joblosses both in the UK and in Germany.The Group has been operating in cash conservation mo

9、de since November 2011;consequently shipment volumes of 108MW and revenues of 46.3 million in 2012 were substantially lower than the 384MW and 210.4 million achieved in 2011.EBIT loss for the year was 110.1 million.Despite the benefit of a 90.6 million cash settlement received for the cancellation o

10、f a supply contract the Group suffered non-cash losses from inventory writedowns and onerous contract charges,totalling 83.5,million and impairment to fixed assets of 82.5 million.Net cash at the end of the year was 89.4 million as against 22.6 million at the beginning of the year.I took over as Cha

11、irman in May 2012 following Maarten Hendersons decision to stand down at last years Annual General Meeting.Onbehalf of the Board,I thank Maarten for his guidance and leadership as Chairman since our IPO in 2007.Hubert Aulich,Director of German Operations,has informed the Board that he will retire fr

12、om the Group on 31 May 2013 and accordingly will not seek re-election at this years Annual General Meeting.Hubert has served the Board with distinction and I thank him for his very significant contribution to the development of the Group over the last eleven years.In line with the recommendations of

13、 the UK Corporate Governance Code June 2010 concerning the annual re-election of directors,Iconfirm that all other directors are standing for re-election at this years Annual General Meeting.Given our strong net cash position and the challenging market expectations going forward,the Board has decide

14、d to return cash to shareholders.This will be implemented through an issue of Band C shares providing the shareholders with the option to take payments as either income or capital.This cash return will be accompanied by a share consolidation to maintain broad comparability of the share price and ret

15、urn per share of the ordinary shares before and after the creation of the B and C shares.The Board will be recommending that shareholders approve the necessary measures at a General Meeting to be held in Q2 2013 to achieve a cash return in June 2013.The Board continues to believe that our cash conse

16、rvation strategy is a necessary response to current market conditions,enabling us to protect shareholder value whilst preserving the Groups core production capabilities.The Board remains committed to the solar industry and believes that the medium-term outlook for solar installations remains positiv

17、e.John SleemanChairman20 March 2013OPV Crystalox Solar PLC Annual Report and Accounts 20121Our business2.Ingot productionInternal 100%at Crystalox LimitedExternal Nil The Groups ingot production facilities are based inOxfordshire,UK,where four production plants arein operation Multicrystalline silic

18、on ingots are directionally solidified,under carefully controlled conditions,from molten,high-purity polysilicon,in production systems designed and manufactured byCrystaloxLimited Continual innovation and development ensures PVCrystalox Solars leadership in the manufacture ofsuperior quality silicon

19、 ingots1.Solar grade polysilicon Internal None following shutdownofproduction atBitterfeld,GermanyExternal 100%externally suppliedpolysiliconExperts in multicrystalline silicon wafersOur customers,the worlds leading solar cell producers,process these wafers into solar modules to harness the clean,si

20、lent and renewable power from the sun.Weareplaying a central role in making solar power cost competitive with conventional hydrocarbon power generation and,as such,continue to seek to drivedown the cost of production whilst increasing solar cell efficiency.Crystalox Limited Abingdon,UKLeading throug

21、h experience and continual innovationPV Crystalox Solar focuses onsilicon processing technologies,areas in whichwe possess extensive expertise and experience.How we operateFollowing our decision to stop production ofpolysilicon PVCrystalox Solar focuses onitscorestrengths in the ingot/wafer segments

22、 of the PVvalue chain.Our extensive experience inthese areas gives us international recognition asa leading multicrystalline silicon wafermanufacturer.Externally supplied polysiliconOPV Crystalox Solar PLC Annual Report and Accounts 201223.Block productionInternal Crystalox LimitedExternal Japanese

23、subcontractors The sectioning of ingots into blocks iscarried out atthe Groups facilities inthe United Kingdom andby PVCrystalox Solars partners in Japan Quality checks are carried out throughout ingot andblock production resulting in consistent,high performance multicrystalline wafers4.Wafer produc

24、tionInternal PV Crystalox Solar SiliconGmbHExternal Japanese subcontractors Wafering of the blocks takes place atthe Groupswafering facility,PVCrystalox Solar SiliconGmbH inErfurt,Germany,and in Japan byour wafering subcontractors Wafers are manufactured to meet thehigheststandards 5.External salesI

25、nternal Crystalox Limited PV Crystalox SolarSiliconGmbH PVCrystaloxSolar KK PV Crystalox Solar supplies multicrystalline siliconwafers to major PV companies in Europe and Asia from its wafering facilities in Germany and Japan.From these strategic locations,PV Crystalox Solar collaborates closely wit

26、h its customers to ensure standards are maintained and that any technological developments are passed on quicklyJapanese subcontractorsJapanese subcontractorsCrystalox Limited Abingdon,UKPV Crystalox Solar Silicon GmbH Erfurt,Germany22 yearsManufacturing experience in the PV industry750 MW2013 produ

27、ction capacityCrystalox Limited Abingdon,UKPV Crystalox Solar Silicon GmbH,Erfurt,GermanyPV Crystalox Solar KK Tokyo,JapanOPV Crystalox Solar PLC Annual Report and Accounts 20123The current marketManufacturing facilitiesKey and current marketsResponding to a challenging marketModest market growth is

28、 expected in 2013 with industry analysts IHS forecasting installations of 35GW up 9%on 2012.The dominance of Europe is expected to continue todecline as governments reduce incentives.Strong growth in China in particular,which isexpected to overtake Germany as the largest market,and in Japan will ens

29、ure that Asiawill become the most important region in the years ahead.The market is expected to remain extremely challenging with continued pressure on pricing across the value chain.Spot wafer prices started to fall in April 2011 and decreased by 75%during the following 18 months.Accordingly,the Gr

30、oup has adjusted its operations to align with anticipated sustainable short-term market demand so that the ongoing business will be broadly cash neutral in 2013.OPV Crystalox Solar PLC Annual Report and Accounts 20124Formal anti-dumping investigations in USA,China and Europe Interim duties of 18250%

31、levied on Chinese cells inUSA China launches investigation of polysiliconimports fromEurope,USA and South Korea 20 European PV companies file complaint to EU commission accusing Chinese competitors of unfair trade pricesGlobal PV market intransition Incentives in key European markets declining but g

32、rowth inJapan and China expected tocompensateEurope Germany installed 7.5GWin 2012.Monthly degressions aimed at restricting annual installations to 2.53.5GW In Italy PV incentives are expected to be phased out at the end of the current programme.Annual installations are anticipated to be 1GWthereaft

33、erJapan JPY42 FIT agreed for fiscal 2012 installations and 10%reduction expected for 2013 5GW installations forecast for 2013USA Grew by 76%to 3.3GW in2012 Over 5GW expected in2013China PV installation targets raised to 21GW by 2015 and 50GW by 2020 China expected to be largest global market in2013M

34、anufacturing facilitiesKey and current marketsOPV Crystalox Solar PLC Annual Report and Accounts 20125Operational review Market overview 2012 global PV module installations of 32GW up from28GW in 2011.Wafer pricing has fallen by 75%since April 2011.“Following a strategic review of the business,we ar

35、e in the process of carrying out a radical restructuring to align our operations with current market demand.While modest market growth is expected in2013,the pricing environment remains very difficult.”Dr Iain Dorrity Chief Executive OfficerBusiness PV Crystalox Solar PLC Annual Report and Accounts

36、20126SummaryTrading conditions during 2012 were extremely challenging due to the chronic overcapacity in the PV industry.The oversupply,which primarily originates from over investment inChina which took place during 2010-2011,maintained the intense pressure on prices that has developed across the va

37、lue chain during the last 18 months.Spot wafer prices started to fall in April 2011 and continued to decrease throughout 2012.Recent weeks have seen some stabilisation albeit at a level which is 75%below that seen in April 2011 and significantly below industry production costs.Our wafer shipment vol

38、umes of 108MW in2012 were significantly below the 384MW achieved in 2011 as production output waslowered as part of the Groups cash conservation strategy adopted at the end of2011,in response to the difficult market conditions.At that time,production was suspended at our polysilicon facility in Bitt

39、erfeld and wafer production levels weresignificantly reduced.During 20072008,Group companies entered into a number of long-term agreements with customers to supply wafers at prices which are considerably above todays market levels.Our focus during 2012 has been to secure sales to these long-term con

40、tract customers where it was possible to negotiate prices ata premium to spot prices.However the intensively competitive market environment has also placed our customers under severe financial pressure with several exiting the industry during 2012 either voluntarily or due to insolvency.In one case

41、the Group was successful in negotiating compensation of approximately 91 million for the termination of a long-term wafer supply contract.Wehave been unable to reach a satisfactory agreement with two long-term contract customers who have been amongst the industry leaders in recent years and we arese

42、eking resolution under the jurisdiction of the International Court of Arbitration.While successful judgements in the Groups favour are anticipated,the levels of compensation are not expected to be as significant.Furthermore there is increasing uncertainty as to whether either of these companies will

43、 have the financial resources tofully settle these claims.Despite the very significant customer settlement the Group has incurred substantial losses as a result of inventory writedowns and impairment of assets necessitated by the weak market environment.Market Global PV installations in 2012 showed

44、sequential growth and reached 32GW up from 28GW in 2011 according to market research firm IHS.However falling prices led to an 18%decline in industry revenues.Germany regained its position as the number one market with 7.5GW of installations which was broadly similar to that achieved in 2011.Overall

45、 Europe remained the dominant market but its share at 52%is declining as demand in Asia,particularly from China and Japan,increased.Installations in China were boosted particularly in the second half of the year andmore than doubled to reach over 4GW in2012 as the government provided further support

46、 to its PV industry by raising the 2020 PV installation target from 20GW to 50GW.Japan has been suffering with power shortages since the Fukushima disaster and the Ministry of Economy,Trade,and Industry(“METI”)announced a much anticipated PV feed-in-tariff programme inJune 2012 valid for 20 years wh

47、ich has stimulated installations to 2.5GW.Overall the Japanese government has set a goal ofachieving 28GW of cumulative PV installations by 2020.Operational activity Cash conservation strategy continued throughout 2012.Restructuring announced late 2012 in response to adverse market conditions.Decisi

48、on taken to:discontinue polysilicon facility at Bitterfeld,Germany;and reduce production at UK ingot and German wafer operations.Cash settlements from customers of 90.6m.Board decided to return cash to shareholders:recommending shareholder approval for a cash return tobemade in June 2013.Business PV

49、 Crystalox Solar PLC Annual Report and Accounts 20127The dramatic decline in PV industry pricing has led to claims of unfair trade practices and the initiation of anti-dumping investigations in the USA,China and Europe.In November 2012 the United States International Trade Commission(“USITC”)unanimo

50、usly finalised its initial finding that Chinese photovoltaic imports materially injured theUSA industry.It found that Chinese producers/exporters have sold solar cells inthe USA at dumping margins ranging from 18-250%and that they have received countervailing subsidies.In July 2012 the Chinese Minis

51、try of Commerce(“MOFCOM”)began investigating claims of polysilicon dumping by US and South Korean companies and its scope was later extended to include European producers.A preliminary decision was expected in February 2013 but has now been postponed to a later date.In early September 2012 the Europ

52、ean Commission launched investigations into possible dumping of wafers,cells and modules by Chinese producers into the EU market and claims that Chinese imports also benefit from unfair government subsidies.Exports of PV products from China to the EU totalled 21 billion in 2011,making the case the l

53、argest unfair-trade probe ever started by the EU.The investigations are expected to take 15 months to complete although provisional duties may be imposed in May/June 2013 ifthere is sufficient evidence to support thecomplaints.Operational review of 2012On account of the depressed market prices and o

54、ur cash conservation strategy wafer production output was reduced significantly during 2012 and we operated at around 14%of our maximum 750MW capacity.Although our long term wafer supply contracts provided some protection from the worst of the market pressures,the fall in average sales prices(“ASPs”

55、)and less than optimum production volumes adversely impacted our margins.“The Group continues to believe in the positive long-term outlook for the photovoltaic industry.The Board believes that the adjustment of operations to align with anticipated sustainable short-term demand will enable generation

56、 of positive cash flows during 2013 and leave the Group well positioned should the market begin to recover.”Operational review continuedBusiness PV Crystalox Solar PLC Annual Report and Accounts 20128Operational review of 2012 continuedPolysilicon production remained suspended throughout the year at

57、 the Groups Bitterfeld facility as our reduced polysilicon requirements were more than satisfied by external suppliers and market pricing,which continued to fall throughout the year,remained below our cash costs.In common with most,if not all,PV companies,the Group has long-term contractual commitme

58、nts for the purchase of polysilicon atprices which are incompatible with current market prices for wafers.We were successful in negotiating significantly reduced pricing for deliveries in 2012.As a consequence of the reduced wafer production levels the Group has traded excess polysilicon during the

59、first half of the year in order to avoid excess inventory levels.The Board completed a strategic review of the business in the latter part of 2012 which took account of the adverse market conditions and the Groups strong net cash balance.Asa result the Group will carry out a radical programme of res

60、tructuring while retaining its core production capabilities and also return excess cash to shareholders.As part of this programme the Group has permanently closed its polysilicon production facility in Bitterfeld,Germany.In addition,production output will be reduced at its UKingot and German wafer o

61、perations.Regrettably these actions will lead to very significant job losses both in the UK and inGermany.Cash conservation focus in 2013The Group will continue with its cash conservation strategy while current market conditions persist.The Group has adjusted its operations to align with anticipated

62、 sustainable short term market demand so that the ongoing business will be broadly cash neutral in 2013.Wafer production volumes have been halved from 2012 levels and we continue our focus on cost control and inventory management including trading of excess polysilicon where necessary.The Group has

63、long term contractual commitments for purchase of polysilicon but was successful during 2012 in reaching agreement with its suppliers to adjust volumes and prices.A positive outcome to negotiations has also been concluded for Q1 2013.Price reductions have also been negotiated with other key supplier

64、s including wafering subcontractors which,in combination with the weaker Japanese Yen,will enable further reduction in direct wafer production costs in 2013.OutlookModest market growth is expected in 2013 with industry analysts IHS forecasting installations of 35GW up 9%on 2012.Thedominance of Europ

65、e is expected to continue to decline as governments reduce incentives.Strong growth in both China,which is expected to overtake Germany as the largest market,and Japan,will ensure that Asia will become the most important region in the year ahead.The Group continues to believe in the positive long-te

66、rm outlook for the photovoltaic industry but is mindful of the intensely competitive environment which is likely to persist in the short term and which has already led to many companies leaving the industry,either voluntarily or through insolvency.The Board believes that the adjustment of operations

67、 to align with anticipated sustainable short term demand will enable generation of positive cash flows during 2013 and leave the Group well positioned should the market begin to recover.The market is expected to remain extremely challenging with continued pressure on pricing,although the first two m

68、onths of 2013 have seen some modest improvement from the lows experienced in late 2012.TheEuropean Commission has indicated that it will announce its findings into claims ofdumping of Chinese PV products in June2013 and any decision to impose anti-dumping duties would be expected toprovide some furt

69、her support to pricing andboost demand for the Groups wafers.Dr Iain DorrityChief Executive Officer20 March 2013Our strategyThe Group will continue with its cash conservation strategy while current market conditions persist.Cash conservation focusThe Group will continue with its cash conservation st

70、rategy while current market conditions persist.Our vision is to remain one of the PV industrys cost leaders and to supply quality wafersCash conservationContinued focus on operating cost reductionsRetaining flexibility ofproductionFocus on further developments of the leading silicon processing techn

71、ologyContinued focus on major PV companiesOur long-term strategyCurrent priorities Temporary reduction in production output;and Retain operational capabilities.Trading excess polysilicon;and Working capital management.Negotiate improved polysiliconpricing;Restructuring operations;and Other supplier

72、price reductions.Production efficiencies;and Higher yields.Diversity in sourcing polysiliconsupply.Geographical diversity inwaferproduction.Working with customers to increase product quality and develop the next generation ofwafer technology.Enhanced relationships with existing customers;and Develop

73、ing new customers.Business PV Crystalox Solar PLC Annual Report and Accounts 20129Financial reviewSummary of Financial review Cash settlements totalling 90.6 million received in connection with termination/variation of long-term customercontracts.In 2012 Group revenue decreased by 78.0%to 46.3millio

74、n mainly due to restricting sales to contracted customers rather than selling at below cash cost.Earnings after tax were a loss of 121.4 million producing earnings per share at a loss of0.30.Net cash inflows of 67.1million were generated from operatingactivities.The Groups net cash position atyear e

75、nd was 89.4 million.The base plans indicate that the Group will be able to operate within its net cash reserves forthe foreseeable future.The main part of the loss in theyear related to non-cashwritedowns.An impairment charge has been recognised to reduce thecarrying values of plant by82.5 million.T

76、he Group wrote down its inventories by 41.5 million.An additional onerous contractcharge of 42.0 million was recorded.“The Board believes that its ongoing cash conservation strategy will enable the Group to sustain adequate cash resources for theforeseeable future.”Dr Peter Finnegan Chief Financial

77、OfficerOperating cash flow67.1m67.11.611.3201020112012Capital expenditure(net of grants)1.3m1.320.816.5201020112012Net cash89.4m89.422.654.8201020112012Business PV Crystalox Solar PLC Annual Report and Accounts 201210In 2012 Group revenue decreased by 78.0%to 46.3 million(2011:210.4 million).This fa

78、ll was due to the Groups cash conservation strategy whereby wafer sales were in the main limited to contracted customers where a price could be obtained that was higher than the cash cost of production.Wafer shipments in the year were 108MW(2011:384MW).During the year the Group incurred an EBITloss

79、of 110.1 million(2011:loss of 67.5 million)driven primarily by non-cash writedowns.Firstly,the Groups production capital equipment was written down by 82.5 million.Secondly,the Group wrote down its inventories by 41.5 million and thirdly,the onerous contract provision in respect oflong-term polysili

80、con supply agreements was increased by 42.0 million.Finally,there was a loss of 9 million in respect of the discontinued polysilicon operation and 22 million in respect of the fall in wafer volume and average selling prices.On the positive side there were cash settlements inrespect of the cancellati

81、on of customer contracts of 90.6 million.In summary the Group generated 67.1 million additional net cash from operating activities in the year despite reporting an EBIT loss of 110.1 million.Net interest expenses were 0.7 million(2011:income 0.5 million).The main reason that there is net interest ex

82、penses is the inclusion of a charge of 1.3 million in respect of unwinding the discount rate used in the calculation of the Groups onerous contract provision.The Groups net cash position at year end was 89.4 million(2011:22.6 million).An income tax charge of 10.6 million(2011:credit of 6.2 million)i

83、s mainly due to the expected income tax credit of 29.1 million at the effective tax rate of 26.3%being more than offset by the writing-off of previously recognised tax losses and unrelieved 2012 tax losses of 40.4 million.The loss attributed to the equity owners in the year was 122.7 million(2011:55

84、.7 million),which equates to a loss per share of 0.299(2011:loss of 0.150).The Group generated net cash inflows fromoperating activities of 67.1 million(2011:1.6 million)and free cash inflow of 65.0 million(2011:outflow of 20.0 million).Free cash flow is defined using the cash flow statement as net

85、cash from operating activities plus cash from/(used in)investing activities less interest received.The net operating cash flow was decreased by the absorption of 7.3 million into working capital(2011:8.6 million).Lower sales in the year had released 21.9 million cash from debtors although this had b

86、een more than offset by an increase in inventories of 33.2 million partially offset by the non-cash writedowns of closing inventories.There was no new capital expenditure authorised during the year due to the Groupscash conservation strategy although capital projects started in prior years have been

87、 completed.Consequently capital expenditure in the year was significantly lower at 1.3million(2011:21.9 million).No material investment grants were received in the year.Investment grants received inprior years were all in respect of the German operations as capital expenditure in the United Kingdom

88、does not qualify for such grants.A large proportion of the loans in the Groups Japanese subsidiary were repaid in the year.The loans had been taken out in Japanese Yen and had been utilised as a hedge against movements in the Japanese Yen and its effect on assets held in that currency(mainly debtors

89、).As the Japanese debtor book was significantly lower,the loans as a form of natural hedge were no longer required to the same degree.In addition the loans had been secured against the Japanese Yen debtor book.Accordingly,42.9 million of these Yen loans were repaid in the year(2011:0.3 million).“The

90、 nature of the Groups operation means that it can vary production levels to match market requirements.As part of the cash conservation measures and the associated planning assumptions,production output has been reduced to match expected demand.”Business PV Crystalox Solar PLC Annual Report and Accou

91、nts 201211Financial review continuedNo dividends were paid in the year(2011:8.1 million).The Groups directors have put in place a cash conservation strategy to enable the Group to manage its operations whilst market conditions remain difficult.The following passage sets out the rationale behind this

92、 strategy and why the Board believes it will enable the Group to sustain adequate cash resources for the foreseeable future.Going concernA description of the market conditions including the continued decline in spot prices of wafers during 2012 and the Groups actions to conserve cash are included in

93、 the Operational Review.As part of its normal business practice,the Group regularly prepares both annual and longer-term plans which are based on the directors expectations concerning key assumptions.The assumptions around contracted sales volumes and prices and contracted purchase volumes and price

94、s are based on managements expectations and are consistent with the Groups experience in the first part of 2013.The Group has three remaining long-term wafer supply contracts and accordingly these should give the Group the ability to sell wafers at prices that are above current market spot prices du

95、ring 2013 despite the difficult market environment.Wafer sales to customers without long-term contracts are assumed in the longer-term plans at values close to spot prices.On the other hand,the Group has long-term contracts with two external suppliers for the purchase of polysilicon,our main raw mat

96、erial,for unexpired periods of between two and three years and for volumes in excess of current reduced production requirements.The Groups management has been successful in reaching accommodation with these suppliers to secure periodic contract amendments and adjust prices and volumes.As a result,th

97、ese amendments have brought the terms more in line with current market pricing.Tomanage inventory levels the Group will sell excess polysilicon and has been successful in this respect during 2012 and the first quarter of 2013.The nature of the Groups operation means that it can vary production level

98、s to match market requirements.As part of the cash conservation measures and the associated planning assumptions,production output has been reduced to match expected demand.In line with the Groups strategy of retaining flexibility in production levels,production can be brought back on stream when ma

99、rket conditions allow.Following the fall in employment costs in 2012 resulting from the reduction in contract labour in Germany and redundancies in the United Kingdom,further cost savings will be obtained in 2013as a result of the announced Group restructuring.The Group expects to reduce other costs

100、 through negotiation with suppliers and by achieving greater efficiencies within the Groups operations.As a result of these actions and based on the above assumptions the base plans indicate that the Group will be able to operate within its net cash reserves for the foreseeable future.On 31 December

101、 2012 there was a net cash balance of 89.4 million,comprising cash or cash equivalents of 94.7 million less short-term loans of 5.3 million.The current borrowings are in Japanese Yen and are subject to certain covenants on the Japanese subsidiary company(including interest cover,profitability and re

102、ceivables cover).The Groups current plans are based on its net cash balance and are not dependent upon these short-term borrowings.Therefore,whilst any consideration of future matters involves making a judgement at a particular point in time about future events that are inherently uncertain,the dire

103、ctors,after careful consideration and after making appropriate enquiries,are of the opinion that“The Group expects to reduce other costs through negotiation with suppliers and by achieving greater efficiencies within the Groups operations.”Business PV Crystalox Solar PLC Annual Report and Accounts 2

104、01212the Group has adequate resources to continue in operational existence for at least twelve months from the date of approval of the financial statements.Thus the Group continues to adopt the going concern basis of accounting in preparing the annual financial statements.ImpairmentThe Board has ass

105、essed the carrying values of the Groups property,plant and equipment for impairment as at 31 December 2012.Asa result of this assessment,an impairment charge has been recognised to reduce the carrying values of plant by 82.5 million(2011:27.9 million).The impairment charge has been recognised in the

106、 Income Statement.As an impairment of fixed assets it had no impact on the Groups cash flow.The Group has impaired the majority of itsproduction capital assets.The main impairment relates to the polysilicon plant at Bitterfeld,which on the grounds that its production has been discontinued,was impair

107、ed to its realisable value,accordingly the recoverable value of Bitterfeld plant is estimated to amount to 8.0 million.This has been derived from a detailed professional valuation of the individual assets.The impairment charges in respect of plant and equipment has been made to writedown the value o

108、f such plant and equipment to realisable value.These writedowns have been accounted for in individual Group companies.Accordingly,any further potential writedowns are restricted to the remaining modest values and will thus be immaterial.Other financial writedowns in the yearIn addition to the above

109、mentioned impairment of 82.5 million(2011:27.9 million),theGroup wrote down its inventories by 41.5million(2011:22.9 million)and made onerous contract charge and provisions of 42.0 million(20.9 million).The inventory writedown was made to adjust inventory carrying values to realisable value.The oner

110、ous contract provision was made in respect of contracts with external suppliers of raw materials.These contracts run for the unexpired period of between two and three years.The provision relates to future losses that are likely to be made if the Group processes or sells the material committed to und

111、er the contracts,although adjustments have been made to purchase prices according to the directors estimates of how contract prices are likely to be renegotiated.Dr Peter FinneganChief Financial Officer20 March 2013Business PV Crystalox Solar PLC Annual Report and Accounts 201213Principal risks and

112、uncertaintiesBusiness PV Crystalox Solar PLC Annual Report and Accounts 201214Price of wafers on the spot market remain below cash cost of productionThe Group has previously sold wafers under long-term contracts and at spot prices.As pricing on thespot market decreased during 2011 and 2012 we cooper

113、ated with our long-term contract customers and offered lower prices but at a premium to spot prices.However,during 2012 spot pricing remained below our production costs and so selling to customers without any contractual commitment was no longer attractive except to reduce inventory levels and free

114、up cash.Limiting production to long term contracted customer demand where the price obtainable is above production cash costs.Selling at spot price to reduce inventory and to release cash.Lowering production costs.We negotiate with our suppliers to achieve polysilicon prices at close tothe spot pric

115、e where possible.Temporary reduction in ingot and wafer production.Continuing cash conservation measures.Restructuring Group operations.Maintaining a strong balance sheet which gives the Group the strength to weather the ongoing price squeeze.Contracted polysilicon feedstock continues toexceed our o

116、wn internalrequirementsThe Group obtains polysilicon feedstock through long term contracts with two polysilicon feedstock suppliers.Due to our reduced wafer production output thecontracted feedstock and is significantly in excess of the Groupsrequirements.Following suspension of our internal polysil

117、icon production in December 2011 we are now in the process of closing that facility atBitterfeld.We look to obtain flexibility in terms of price,volume and timing ofdeliveries by negotiating amendments to the terms of our long-termcontracts with our suppliers.We have and will continue to trade exces

118、s volumes of polysiliconfeedstock.The loss of a major longterm contract customer might adversely impact the Groups financial performanceSales to a small number of customers represent a substantial portion of the Groups wafer sales revenues and the loss of any major customer either to a competitor or

119、 through itsown business circumstances might impact significantly on the Groups financial condition.Where along-term contract is in place theGroup is able to achieve a higherselling price than through sales atspot market prices.Where possible we concentrate on customers that are financially strongwi

120、th a clear strategic vision for the PV industry and accordingly have thepotential to be long-term major players in the industry.However theextremely challenging PV market has led to many customers exiting the industry either voluntarily or through insolvency.We work with our customers to ensure that

121、 the quality,specifications and efficiency of our wafers are suitable for their current and futureneeds.As pricing on the spot market has fallen below contract prices wecooperate with our long-term contract customers to offer lowerprices but at a premium to spot prices.PV market development isrelian

122、t on Government incentives,support andlegislation The solar industry is dependent onthe support of individual governments to encourage the installation and use of solar electricity within their territories.Without such support the increased uptake of solar electricity may reduce or be slow to develo

123、p.We focus on supplying those major PV companies which are better equipped,therefore,to sell product into global markets.We ensure that the Group operates internationally thus spreading riskamong several markets.We focus on cost reduction and efficiency enhancement strategies toreduce the need for G

124、overnment support in the long term.Principal risksNature of riskMitigating actionsDuring 2012 the Group was exposed to several risks that had been identified in the 2010 and 2011 Annual Reports.One of the key mitigating strategies was the continuation of the cash conservation measures and the Group

125、restructure described in the Operational Review.The possibility remains that certain of the risks described below which the Group is exposed to will continue or worsen.Business PV Crystalox Solar PLC Annual Report and Accounts 201215Over capacity in the PV industry reduces module prices and adversel

126、y impacts on profitability Since H2 2011 the Group has generated operating losses.With take or pay polysilicon contracts and ever reducing spot wafer prices this situation is worsening.We work with our customers to maintain contract volumes.Where we have long-term contracts we are able to obtain pri

127、ces atapremium to spot prices.In the last resort we can enforce contract terms through arbitration.We focus on cost reduction and efficiency enhancement strategies.We have a strong balance sheet which gives the Group the strength toweather the ongoing price squeeze.Due to the expectation of continue

128、d low prices over the coming twelvemonths we are continuing our cash conservation strategy,arecarrying out a radical organisational restructure and minimising production whilst maintaining core competencies to survive into the medium term.Over capacity in the PV industry hascaused significant reduct

129、ions in module prices during 2011 and 2012.This reduction in module prices has led to a reduction in wafer prices.Itcould be several years before the supply/demand capacity comes into balance.The reduction in price has led to reduced profitability across the value chain.Exchange rate fluctuations mi

130、ght create earnings and balance sheet fluctuationsThe Group reports in Euros but trades internationally and has operating subsidiaries reporting inSterling,Euros and Yen and istherefore subject to currency fluctuations arising on transactional foreign currency exposures and thetranslation of subsidi

131、aries balance sheets.We strive for a natural hedging position at operating level by sourcingraw materials and other direct materials and services(where possible)in the same currencies as sales revenues arederived.We have been working to balance exposure to currency due to debtorbalances by matching

132、these with equivalent liabilities in thesame currencies.The Group has balances in Japanese Yen inrespect of accounts receivable and has taken out borrowings inYento reduce the impact of any changes in the Yen exchange rate.Loss of a key production facility could disrupt our ability to deliver contra

133、cted wafer volumes and to retain core production capabilities The Group sells wafers and excess polysilicon feedstock but has operations at different stages in the value chain.The loss of a facility at any stage would impact the Groups ability to fulfil contracted wafer or to retain core production

134、capabilities.We are currently producing at levels considerably below capacity dueto our cash conservation activities.Ingot manufacturing is carried out in the United Kingdom where theGroup has four separate sites available for production.Wafering is carried out at our internal facility in Germany an

135、d at sub-contractors in Japan.We have health and safety,fire prevention and security procedures inplace at all facilities.We have comprehensive property damage and business interruption insurance in place.Imposition of trade barriers and restrictions may have a significant impact on the PV industryT

136、he ongoing trade disputes between the United States,China and the European Union may have a significant impact on the solar industry.The USA has introduced anti-dumping duties and countervailing duties in relation to government subsidies that contravene international trade lawsagainst Chinese import

137、s.TheChinese Ministry of Commerce and the European Union have both initiated similar investigations,the results of which will be announced and any actions implemented in2013.Any duties imposed on imports of Chinese PV products into Europe isexpected to benefit the Group as demand for our wafers is l

138、ikely toincrease as a result.Principal risksNature of riskMitigating actionsThe Group might be affected by a number of risks,which may have a material adverse effect on our reputation,operations and/or financial performance.Therisks associated with the Groups financial instruments are detailed in no

139、te 30 in the Notes to the Consolidated Financial Statements.The Group is exposed to a number of other risks,some of which may have a material impact on its results.It is not possible to identify or anticipate every risk that may affect the Group,some of which may not be known or may not have been as

140、sessed.Our overall success as a global business depends,in part,upon ourability to succeed in different economic,social and political environments and manage and mitigate such risks.Corporate social responsibility“We recognise the need to establish,formalise and apply an environmental management sys

141、tem at each of our manufacturing sites.The Group has effective environmental management and health and safety systems in place,in support of,and to complement,its quality assurance systems.”The environment Our productThe Group is a leading producer of multicrystalline silicon wafers for the producti

142、on of solar cells.These cells are processed into solar systems used for the generation of renewable electricity with alifetime in excess of 25 years,providing electricity for a known starting cost and with minimal maintenance.Depending on the systems location,it has been estimated that the total ene

143、rgy used in the production of a silicon solar system will be recovered within a period of two to three years.Our focus on our environmental responsibilities is clearly evident,being aproducer of wafers for the PV industry andproviding for power generation,freeofemissions.Our processesIt is the Group

144、s policy to:seek to eliminate and,where this is notpracticable,to minimise negative environmental impacts from the pursuit of all business interests while continuing to produce high quality products which meet customer requirements;comply with all statutory environmental legislation as a minimum and

145、 to aim to improve upon the standards set by the local regulatory authorities;and foster an informed and responsible approach to all environmental concerns and encourage the involvement of employees,customers and suppliers.Regulatory authorities are consulted andinformed at all appropriate times.Foc

146、used on effective environmental management We seek to eliminate and,where this is not practicable,tominimise negative environmental impacts.We comply with all statutory environmental legislation asaminimum and to aim to improve upon the standards setbythe local regulatory authorities.We foster an in

147、formed and responsible approach to all environmental concerns and encourage the involvement ofemployees,customers and suppliers.Business PV Crystalox Solar PLC Annual Report and Accounts 201216Waste and recyclingThe Group has effective environmental management and health and safety systems in place

148、in support of,and to complement,its quality assurance systems.Across all its sites in the United Kingdom and Germany aproactive approach is taken to the pre-treatment of waste as required by the EU Landfill Directive.The purpose of this treatment requirement is to reduce the impact of waste sent to

149、landfill and to increase the amount of waste that is recycled.For instance,within the Group,all silicon carbide used in the sawing of blocks and wafers is continually treated and recovered for reuse.At Crystalox in the United Kingdom,an automated water filtration system has been implemented that all

150、ows for recovery of 90%of process water used during the cutting and grinding of multicrystalline silicon blocks.Silicon fines are removed from the process water which is subsequently reconditioned to allow for recirculation thus significantly reducing waste water discharge volumes.Crystalox is a mem

151、ber of compliance schemes which fulfil local legislation requirements such as The Producer Responsibility Obligations(Packaging Waste)Regulations 2007.This scheme sets targets for British industry for the recovery and recycling of packaging waste,seeking to ensure that discarded products are environ

152、mentally treated through recycling and recovery rather than being disposed of in landfill.A similar scheme exists in Germany where the Erfurt based operation again received an award from the State of Thuringia in 2012 for participating successfully in the sustainability programme“koprofit”:avoluntar

153、y programme carried out by industrial companies that first analyses the impact of their industrial production on the environment and then reduces waste materials,packing materials,consumption of water,use of energy andemissions.All plastics,wood,paper,polythene,cardboard,metals,etc.are recycled,eith

154、er by being sold to recycling companies or under local council arrangements,removed for recycling.The Group endeavours to recycle all recyclable packaging materials to conform to current packaging legislation and thereby minimise waste to landfill across all its sites.During 2012 the operation at Er

155、furt hasintroduced an energy management programme and has received its certification for ISO 50001 Energy Management System.As a result of this we are able to reduce our total energy consumption per wafer by 20%compared to 2011.Environmental management systemsWe recognise the need to establish,forma

156、lise and apply an environmental management system at each of our manufacturing sites.Therefore,in order to further enhance its already effective environmental and health and safety management systems:Crystalox in the United Kingdom continues on its programme to achieve environment and health and saf

157、ety accreditations;and the site in Erfurt,Germany,has been carrying out an environmental audit forthe last five years,focusing on the consumption of water,electricity and onthe emission of waste materials.These high standards complement and consolidate Crystalox and the Erfurt operations EN ISO 9001

158、 status;further fulfilling our responsibility to the environment and health and safety.BitterfeldWith the introduction of environmental andenergy management system targets toreduce waste material,consumption ofwater and energy,the Bitterfeld site in Germany projects have commenced to apply for DIN E

159、N ISO 9001 Quality Management System,DIN EN ISI 14001 Environmental Management System and DIN EN ISO 50001 Energy Management System.During 2012 the plant was maintained in idle mode.This involved maintaining the plant and equipment at a high safety standard with a heightened focus on health and safe

160、ty necessitating cover 24 hours per day and seven days per week.The production of solar-grade polysilicon at Bitterfeld necessitates a heightened focus on health and safety.Regular Hazard and Operability Studies(“HAZOP”)meetings are held by themanagement with an external safety expert,where any issu

161、es are discussed and improvements defined.Bitterfelds focus onsafety and high standards was affirmed by a successful Safety Management System Audit in 2012.The operation of the Bitterfeld plant requires it to comply with the German Emissions Control Act.This requires that every emission source be id

162、entified and that all emissions are monitored periodically by the authorities.Waste,energy and water consumption have to be minimised;waste is recycled or recovered;excess energy from the production process is used for heating and hot water in the office buildings;and coolant used in production(wate

163、r)is re-used.Business PV Crystalox Solar PLC Annual Report and Accounts 201217Corporate social responsibility continued“The Group recognises that a key factor in its successful operations is its personnel.In spite of the headcount reductions at all sites,managements top priority has been to provide

164、a safe and secure work environment for all.”Our staffThe Groups policy is to provide equal opportunities to all existing and prospective employees.The Group recognises that its operation and reputation depends upon the skills and effectiveness of its employees and is committed to the fair and equita

165、ble treatment of all and to prohibit discrimination on the grounds of age,sex,religion,sexual orientation,race,nationality or ethnic origin.It is the Groups policy to give sympathetic consideration to the recruitment,continuing employment,training,career development and promotion of disabled persons

166、.In the event that a person became disabled he or she would continue to be employed,wherever possible,in the same job.If the degree of disablement made this impractical,every effort would be made to find suitable alternative employment and to give any appropriate training.The Groups policy ontrainin

167、g and career progression applies equally to everyone within the Group whether or not disabled.During the last quarter of 2011,in light of the ongoing adverse market conditions,the Board resolved to take appropriate actions to manage the business through the difficult times facing the Group and the i

168、ndustry and to conserve the Groups cash.In the short term this led to reduced production output at its UK ingot and German wafer operations and the Board suspended production at itspolysilicon facility in Bitterfeld,Germany.Regrettably these actions led to significant job losses in the United Kingdo

169、m,with 45redundancies,and short time working inGermany at both Bitterfeld and Erfurt.The Boards actions were a necessary response,designed to preserve the capabilities within the business.In December 2012 the Board announced that following a strategic review of the business it would carry out a radi

170、cal restructuring inresponse to the continuing challenging market conditions.The Group intends to adjust its operations to align with anticipated sustainable short term market demand while retaining its core production capabilities.Aspart of this programme the Group:i)will discontinue its polysilico

171、n production facility in Bitterfeld,Germany;and ii)will reduce substantially its production output at its UKingot and German wafer operations.Regrettably these actions will lead to very significant job losses both in the UK and inGermany.The restructuring of the UK operation was completed by the end

172、 of January 2013 following a consultation process with the staff affected and the Crystalox Limited Employee Forum.The outcome was a 61%reduction in headcount.As at the date of this report negotiations are taking place with the Works Councils in Erfurt and Bitterfeld toagree the terms of the restruc

173、ture.TrainingThe Group recognises that a key factor in itssuccessful operations is its personnel.Inspite of the headcount reductions at all sites managements top priority has been to provide a safe and secure work environment for all.To this end,health and safety training has been of paramount impor

174、tance.Initial in-house health and safety induction training for all personnel joining is supported by external specialist trainers for occupation specific training.During 2012 fire safety training and comprehensive training for fire marshals was undertaken by selected staff at each site.A number of

175、staff were externally trained as first-aiders,thereby helping to ensure maximum first-aid cover to all staff.As part of its ongoing responsibility to comply with health and safety legislation,refresher training was provided to all forklift operators.In Erfurt we introduced a voluntary health managem

176、ent programme for all staff.“The Group is committed to the ongoing training and development of its personnel.Particular skills-based training is provided to individuals when identified and seen as beneficial to the overall operation of theGroup.”Business PV Crystalox Solar PLC Annual Report and Acco

177、unts 201218The Group is committed to the ongoing training and development of its personnel.Particular skills-based training is provided to individuals when identified and seen as beneficial to the overall operation of the Group.The introduction of new technologies and new and efficient working metho

178、ds has resulted in personnel being trained to both develop and hone their knowledge and skills.A flexible work environment has meant that personnel are given the chance to work in different departments,thereby helping them maximise their potential and sense of fulfilment.During 2012 and the early pa

179、rt of 2013 Crystalox Limited has run a multi-module management development training programme for its managers.The Group believes that given the recent changes in production and headcount levels,difficult market conditions and continued period ofuncertainty and challenges faced by the managers,there

180、 is a need for support and development to enable them to perform atthe highest levels possible required to achieve the overall business objectives,in addition to providing them with the opportunity for personal development and growth.In Germany the Group has been running anapprenticeship programme f

181、or a number ofyears.We currently have 16 young people inErfurt and five young people in Bitterfeld enrolled in technical and administrative jobs.The intention of the programme was that after a three year period these apprentices would have the chance to become permanent members of staff.For some of

182、the apprentices the programme enables them to continue with their studies to obtain a degree in Engineering.During 2012 one of our Erfurt apprentices won a scholarship from the government for his excellent exam results.Furthermore,we have been selected for an“Excellent Training Company”award from th

183、e local government.At Bitterfeld four apprentices completed their courses with excellent or very good results.In this difficult time we are committed to ensuring that theapprentices are able to complete their training,either within the Group or at a suitable alternative company.Health and safetyThe

184、Group recognises its responsibilities under health and safety legislation in each country of operation to ensure,so far as it isreasonably practicable,the health,safety and welfare of all its employees.Group policy is to take all reasonable precautions to prevent accidents and dangerous occurrences

185、and for the creation of working conditions which safeguard employees.The Group attaches the greatest importance to health and safety,considering this to be a management responsibility.To this end the Group will allocate the necessary resources and enlist the active support of all employees upon whom

186、 duties are also imposed by health and safety legislation.The Group regards the standards set by the various relevant statutory provisions as the minimum standards which must be achieved and endeavours to improve upon these where reasonably practicable.In the United Kingdom seven safety representati

187、ves were elected and appointed onto the Crystalox Health and Safety Committee.The newly appointed Safety Representatives undertook fully accredited IOSH(Institution of Occupational Safety&Health)training during the course of the year.The total number of reported work-related accidents in the United

188、Kingdom fell from 48 in 2011 to 31 in 2012 with a slight improvement seen in the accident ratio(accidents per employee per worked day)which fell from 0.00166 to 0.00163 which equates to over 600 days worked per accident occurrence.There were no RIDDOR(Reporting of Injuries,Diseases and Dangerous Occ

189、urrences Regulations 1995)related incidences to report in the United Kingdom in 2012.At Bitterfeld there were two work related incidents resulting in three or more days absence in 2012 and two in 2011.Our communityWe have been running local events in Erfurt for several years to demonstrate the possi

190、bilities of solar electricity and again in 2012 we worked with the local power provider to carry out the annual solar car race programme with local students.The FIT which we receive from our 30KW solar system mounted to building in Erfurt,which feeds electricity directly into the local grid,is used

191、to finance these projects.A similar event was held in Bitterfeld during 2012 where PV Crystalox,along with another company from Bitterfeld,held a competition racing solar powered cars.Every student participating received two solar cells and asmall electric motor.The student then participated in the

192、solar car race where the goal was to build a vehicle,using the solar cells on a movable platform.The aim was tocover the distance as quickly as possible to the finish line.Two of our apprentices participated in the competition and won thecompetition in their age group.The Group is an initiator and p

193、articipant inthe five year long project“Solarvalley Mitteldeutschland”.This is a research and development cluster in the German states of Thuringia,Sachsen-Anhalt and Saxony.Dr Hubert Aulich,the Groups Director ofGerman operations,is chairman of the cluster board of the project.It involves 35compani

194、es,five universities and nine research institutes working on the entire crystalline silicon value chain with the aim of reducing the cost of solar electricity to below that of conventional power and accelerating market introduction.This is the largest worldwide PV cluster with 98 projects and an ove

195、rall 150 million budget over five years which is funded 50%by the Government and50%by industry.Business PV Crystalox Solar PLC Annual Report and Accounts 201219DPV Crystalox Solar PLC Annual Report and Accounts 201220Corporate governanceJohn SleemanChairmanDr Iain DorrityChief Executive OfficerDr Pe

196、ter FinneganChief Financial OfficerDr Hubert AulichExecutive Director,German OperationsMichael ParkerNon-executive DirectorCorporate PV Crystalox Solar PLC Annual Report and Accounts 201221John Sleeman ChairmanJohn Sleeman graduated in Physics from the University of Durham and started his career at

197、Deloitte&Touche in 1970,where he qualified as a Chartered Accountant,before moving in 1975 to Samuel Montagu where he qualified as a Chartered Banker and held various corporate and project finance advisory roles,becoming a director in 1989.Following its acquisition by HSBC,heheld directorships with

198、a number of companies within the HSBC Group and from 2000 to 2003 was managing director,head of international team,corporate finance.After that,John was an independent director of OSJC Power Machines(from 2003 to 2008),the Russian power generation equipment manufacturer 25%owned by Siemens AG,an ind

199、ependent director of JSC Open Investments(from 2005 to 2009),the Russian real estate group,and was an advisor for two years to Emerging Markets Group,specialising in structured financial solutions and strategic advice.Since 2006he has been a founding partner of S.P.Angel Corporate Finance LLP.Dr Hub

200、ert Aulich Executive Director,German OperationsHubert Aulich has a PhD in Physical Chemistry from NYU,New York City,USA.Dr Aulich founded PV Silicon GmbH in1997 with his partner DrFriedrich Wilhelm Schulze.In 2002 he became amember of the Board of PV Crystalox Solar GmbH where he had responsibility

201、for the German operations including the production and sales of wafers andwas appointed as a director of the Company on 21 May 2007.In 2008 he became chairman of the five year long project Solarvalley Mitteldeutschland which involves 35 companies,five universities and nine research institutes workin

202、g on theentire crystalline silicon value chain with the aim of reducing the cost of solar electricity to below that of conventional power.Prior to founding PVSilicon GmbH,Dr Aulich worked for Siemens Solar Group.DrAulich joined the Central Research Laboratories of Siemens AG in Munich,Germany,in 197

203、4 where he worked in various positions in the field of optical fibre communication and photovoltaics.From 1988 to 1991 he was managing director atPV Electric,a joint venture of Siemens Solar GmbH,Germany,andArco Solar,USA,where he was responsible for the commercialisation of amorphous silicon thin f

204、ilm technology.In 1992 he became managing director at Siemens Solar GmbH where he was responsible for technology of thin film and crystalline silicon solar cells.He was senior vice president for technology and research for the Siemens Solar Group responsible for research and development in thin film

205、 and crystalline silicon solar cells as well as for systems application for Germany,USA and Japan.Dr Iain Dorrity Chief Executive Officer Iain Dorrity has a PhD in Physical Chemistry from Exeter University.Hejoined the Company in 1986 and became responsible for sales and marketing in 1988.He was ame

206、mber of the MBO team that acquired the Crystalox business in 1994 and was appointed to the Boards of both Crystalox Limited and Crystalox Solar Limited at that time.Subsequently,following the merger of PV Silicon GmbH and Crystalox Limited,he became a member of the Board of PVCrystalox Solar GmbH in

207、 2002 and a director ofthe Company on its formation in December 2006.Dr Dorrity has over 25years experience in crystal growth andsemiconductor materials with an emphasis latterly on multicrystalline silicon technology.Prior to joining Crystalox,he spent eight years workingin research and in industry

208、 with General Electric Company.Dr Peter Finnegan Chief Financial OfficerPeter Finnegan has a Doctorate in Corporate Finance from Henley Business School,an MBA from Manchester Business School,is aFellow of the Chartered Institute of Management Accountants andisa Chartered Global Management Accountant

209、.He has been involved in the Groups management since 1985 when he became Company Secretary ofCrystalox whilst hewas financial director of its holding company at that time,Elkem(Holdings)Ltd.He was appointed to the Board of Crystalox Solar Ltd in 1994 andwas a director of Crystalox Ltd from 1994 to 2

210、009.Hewas appointed as a director ofthe Company on its formation in December 2006.DrFinnegan has overall Group responsibility for finance,accounting,planning,financial control,legal matters and investor relations.Prior to joining theGroup he held a number ofsenior managerial positions in large inter

211、national manufacturing companies.Michael Parker Non-executive DirectorMichael Parker was born in Liverpool andreceived a Bachelors degree in Chemical Engineering from the University of Manchester and an MBA fromthe Manchester Business School.Michael began his career with Dow in1968.During his career

212、 with the company heworked in the US,UK,Switzerland andHong Kong.He became President and Chief Executive Officer ofThe DowChemical Company in Midland,Michigan,USA in 2000 andamember ofthe companys Board ofDirectors from1995 to 2003.He wasappointed group chief executive ofBNFL(British Nuclear Fuels)i

213、nAugust 2003;at the endof June 2009 he finished this role following the successful dismantling andprivatisation of the company.Michael joined theInvensys Board asanon-executive director in 2006 andsubsequently became the senior independent director.Until November 2012 Michael waschairman ofLiverpool

214、s new economic development and regeneration company,Liverpool Vision,having been appointed as chairman designate in October 2007.Michael will remain very much involved in Liverpool;chairof BioCampus Board for Royal Liverpool Hospital.He is a non-executive director at PVCrystalox Solar and SNC-Lavali

215、n aswell as being a Trustee of the Royal Society for Prevention of Accidents(“RoSPA”).In 2011 Michael was appointed as chairman of Street League,a national charity that utilises football to engage with inactive 16-25 year olds.He is also the chair of the Energy Institute Strategy Review Group.Michae

216、l is also a member of the Manchester Business School Advisory Board.Corporate PV Crystalox Solar PLC Annual Report and Accounts 201222Corporate governance statementIntroduction from the ChairmanDear ShareholderThe Board is mindful of its responsibilities to the Companys shareholders and key stakehol

217、ders to ensure the Company has the right people,systems and processes in place to manage risk and deliver the Groups agreed strategy.As Chairman,I am responsible for ensuring that the Board operates effectively with well-informed directorsasking the right questions and setting the right tone from th

218、e top.This Corporate Governance Statement describes our approach to governance and highlights a number of the actionswe have taken during the year including the following:Board balance and independenceFollowing the decision by Maarten Henderson not to stand for re-election at the 2012 AGM the Board

219、has consisted oftwo non-executive directors and three executive directors.Only Michael Parker is deemed to be independent in accordance with the UK Corporate Governance Code.Further details are on pages 20 to 21.The Board has discussed its composition which is not compliant.Hubert Aulich has indicat

220、ed that he will stand down atthe 2013 AGM and his position as an executive director on the Board will not be replaced.Following the 2013 AGM thiswill give a Board composition of the Chairman,two executive directors and one independent non-executive director.It is clear that another independent non-e

221、xecutive director is required to be compliant with the UK Corporate Governance Code.The Board believes that until there is more certainty about the long term future for the Group the present composition isthe most appropriate.At the point when there is more certainty the nomination committee will be

222、 instructed to lead the search for a new non-executive director.ComplianceSince January 2012 the Company was considered to be a smaller company under the UK Corporate Governance Code asit was below the FTSE 350 throughout 2011 and 2012.As a smaller company the Company was fully compliant until 24May

223、 2012 when Maarten Henderson stood down from the Board and its committees.From 24 May 2012 onwards the Company did not comply with certain provisions relating to board and committee composition.These are detailed on pages 23 to 24.Performance evaluationI led the 2012 internal Board effectiveness rev

224、iew supported by the Group Secretary.The review found that the Board isoperating effectively.We intend to conduct an external review next year.The performance of the individual directors was evaluated and my performance was evaluated by the Senior Independent Director and the Chief Executive Officer

225、.The performance of the Board,its committees,the individual directors and the Chairman were all found to be effective.Further details are on page 25.John SleemanChairman20 March 2013Corporate PV Crystalox Solar PLC Annual Report and Accounts 201223ComplianceThroughout theyear ended 31 December 2012,

226、the Group complied with the provisions set out in the UK Corporate Governance Code except that the Group did not comply with certain provisions relating to board and committee composition following the resignation of Maarten Henderson on 24May 2012,namely Sections B.1.2,B.2.1,C.3.1 and D.2.1.Under t

227、he UK Corporate Governance Code the Company has been considered to be a smaller company since the start of 2012 as it was below the FTSE 350 throughout the year and the year immediately prior to the reporting year.As a smaller company the Company was fully compliant with the Code until 24May 2012 wh

228、en Maarten Henderson stood down from the Board and its committees.Section B.1.2 states that except for smaller companies,at least half of the Board,excluding the Chairman,should comprise non-executive directors determined by theBoard to be independent.A smaller company should have at least two indep

229、endent non-executive directors.The Group did not have a majority of independent non-executive directors atany point during 2012.As a smaller company the Group was compliant until 24 May 2012 as there were two independent non-executive directors on the Board in addition to three executive directors a

230、nd a non-executive Chairman who was deemed to be independent onappointment.From 24 May 2012 the Group was notcompliant as there was only one independent non-executive director onthe Board.The Board do not consider the current structure to be ideal.The Board believes that until there is more certaint

231、y about the long term future for the Group that the present composition is the most appropriate.At the point when there is more certainty the nomination committee will be instructed to lead the search for a new independent non-executive director.Section B.2.1 states that a majority of members of the

232、 nomination committee should be independent non-executive directors.All non-executive directors are members of the nomination committee.The Group was compliant until 24 May 2012 as there were two independent non-executive directors on the committee and a non-executive Chairman who was deemed to be i

233、ndependent on appointment.From 24 May 2012 the Group was not compliant as,with one independent non-executive director and a non-executive Chairman who was deemed to be independent on appointment,there wasnot a majority of independent non-executive directors on the committee.The Board does not consid

234、er the current structure to be ideal.The Board believes that until there is more certainty about thelong term future for the Group that the present composition is the most appropriate.At the point when there is more certainty the nomination committee will be instructed to lead the search for a new i

235、ndependent non-executive director who,once appointed,will join the committee.Section C.3.1 states that the Board should establish an audit committee of at least three,or in the case of smaller companies two,independent non-executive directors.In smaller companies the company chairman may be a member

236、 of,but not chair,the committee in addition to the independent non-executive directors,provided he or she was considered independent on appointment as chairman.The Board should satisfy itselfthat at least one member of the auditcommittee has recent and relevant financial experience.All non-executive

237、 directors are members of the audit committee,however the Group did not have at least three independent non-executive directors at any point during 2012.As a smaller company the Group was compliant until 24 May 2012 as there were two independent non-executive directors on the committee and a non-exe

238、cutive Chairman who was deemed to be independent on appointment.From 24 May 2012 the Group was notcompliant as there was only one independent non-executive director andanon-executive Chairman who wasdeemed to be independent on appointment on the committee.The Board does not consider the current stru

239、cture to be ideal.The Board believes that until there is more certainty about the long term future for the Group that the present composition is the most appropriate.At thepoint when there is more certainty the nomination committee will be instructed tolead the search for a new independent non-execu

240、tive director who,once appointed,will join the committee.Section D.2.1 states that the Board should establish a remuneration committee of atleast three,or in the case of smaller companies two,independent non-executive directors.In addition the Company Chairman may also be a member of,but not chair,t

241、hecommittee if he or she was considered independent on appointment as Chairman.All non-executive directors are members of the audit committee however the Group did not have at least three independent non-executive directors at any point during 2012.As a smaller company the Group was compliant until

242、24 May 2012 as there were two independent non-executive directors on the committee and a non-executive Chairman who was deemed to be independent on appointment.From 24 May 2012 the Group was notcompliant as there was only one independent non-executive director andanon-executive Chairman who wasdeeme

243、d to be independent on appointment on the committee.The Board does not consider the current structure to be ideal.The Board believes that until there is more certainty about the long term future for the Group that the present composition is the most appropriate.At the point when there is more certai

244、nty the nomination committee will be instructed to lead the search for a new independent non-executive director who,once appointed,will join the committee.Corporate PV Crystalox Solar PLC Annual Report and Accounts 201224Board of directorsThe Board is primarily responsible for the success of the Gro

245、up by providing leadership within a framework of prudent and effective controls which enables risk to be assessed and managed.The Board sets the Groups strategic aims,ensures that the necessary financial and human resources are in place for the Group to meet its objectives and reviews management per

246、formance.The Board sets the Groups values and standards and ensures that its obligations to its shareholders and others are understood and met.Matters reserved for the BoardThe Board has a formal schedule of matters reserved to it for its decision.This schedule is reviewed annually and includes appr

247、oval of:Group objectives,strategy and policies;business planning;substantial transactions,contracts andcommitments;review of performance;risk assessment;dividends;appointments to the Board and as Group Secretary;and senior management appointments and succession plans.Other specific responsibilities

248、are delegated to Board committees,which operate within clearly defined terms of reference.Details of the responsibilities delegated to Board committees are given on pages 26 to 37.Board balance and independenceUntil 24 May 2012 the Board comprised the non-executive Chairman,who was deemed to be inde

249、pendent on appointment,two independent non-executive directors and three executive directors.Following the AGM on 24 May 2012 the Board comprises the non-executive Chairman,who was deemed to be independent on appointment,one independent non-executive director and three executive directors.With the e

250、xception of the Chairman,who is presumed under the Code not to be independent,the Board considers all the non-executive directors tobe independent.Michael Parker is the recognised Senior Independent Director who is available to shareholders if they haveany relevant issues or concerns.Brief biographi

251、cal details of all members of the Board are set out on page 20 and 21 and further information concerning the appointments is set out in the Directors Report.The non-executive directors bring a wide range of commercial and financial experience andknowledge and are independent of management and any bu

252、siness or other relationship that could interfere with the exercise of their judgement.This provides abalance whereby an individual or small group cannot dominate the Boards decision-making.The non-executive directors entered into arrangements for initial three year periods and their appointments co

253、ntinue subject to re-election at each AGM or six months notice in writing from either party.The terms and conditions of appointment of the non-executive directors can be inspected atthe Companys registered office and will be available for inspection at the AGM.John Sleeman was appointed on 11 June 2

254、007 and Michael Parker was appointed on 1January 2010.The Board has established a separate nomination committee and details of itsresponsibilities and activities are onpages 26 and 27.Board meetingsThe Board meets at least six times per annum and at other times according to business requirements.Dur

255、ing 2012 there were 14meetings,including four meetings in June,July,September and October 2012,where the Board met offsite to consider the Groups strategy and to review key business issues.Meetings are held in central London and at the Groups operating subsidiaries:at Abingdon in the United Kingdom;

256、and atErfurt and Bitterfeld in Germany.When the Board meets at the Groups operating subsidiaries the Board will have a detailed presentation from the subsidiary directors at that location and an opportunity to review the operation and to meet local management.During 2012 the number of Board and comm

257、ittee meetings with individual attendances was as below.Board supportAll directors have access to advice and services from the Group Secretary.The appointment and removal of the Group Secretary is a matter for the Board as a whole.The Group Secretary is responsible for advising the Board on all gove

258、rnance matters,ensuring Board procedures are followed and applicable rules and regulations are complied with.The directors are free toseek any further information they consider necessary and directors can obtainindependent professional advice atthe Groups expense.Information,induction and profession

259、al development The Chairman,assisted by the Group Secretary,is responsible for ensuring that theBoard receives appropriate and timely information onall relevant matters.On appointment to the Board,new directors receive background reading about the Group and details of Board procedures and other gove

260、rnance related matters.In addition,the directors participate in a comprehensive induction programme,including site visits to the Groups operations and meetings withthe executive directors and senior management across the Group.The Chairman regularly reviews and agreeswith each director their trainin

261、g anddevelopment needs as part of the succession planning process.Directors receive ongoing training and updates on relevant issues as appropriate,taking into account their individual qualifications and experience.The Group Secretary helps directors undertake any other professional development they

262、consider necessary to assist them in carrying out their duties.Corporate governance statement continuedBoard meeting attendanceBoardAuditRemunerationNominationHubert Aulich14322Iain Dorrity14322Peter Finnegan14322Maarten Henderson*5121Michael Parker*14322John Sleeman*14322*Non-executive directors.Co

263、rporate PV Crystalox Solar PLC Annual Report and Accounts 201225Chairman and Chief ExecutiveThe roles of Chairman and Chief Executive Officer are separated and their responsibilities are clearly established.The Chairman is responsible for the leadership and workings of the Board and ensuring its eff

264、ectiveness and the Chief Executive Officer together with the executive directors are responsible for the implementation of strategy and policies and the day-to-day decision-making andadministration.Other significant commitments of the Chairman,John Sleeman,are set out in theDirectors section on page

265、s 20 and 21.The Board is satisfied that these commitments do not restrict him from carrying out his duties as Chairman effectively.Performance evaluationThe directors believe that an effective Board is vital to the success of the Group and,as aresult,undertake a thorough evaluation each year in orde

266、r to assess how well the Board,its committees,the directors and theChairman are performing.The aim is toimprove the effectiveness of the Board,its committees and ultimately the Groups performance.The process is led by the Chairman and is supported by the Group Secretary.The Board believes that a com

267、bination of external reviews every third/fourth year with internal reviews intheother intervening years is the mostappropriate method for evaluating effectiveness.The Board conducted an external evaluation for the 2008 Annual Report and had originally intended to carryout an external review for this

268、 Annual Report.The Board decided that,in view of the cash conservation measures being taken throughout the organisation,the external review would be postponed until the Group enters a more normal trading environment.As a result an internal evaluation was undertaken this year.The performance of indiv

269、idual directors wasevaluated by the Chairman and the other non-executive directors.Following thereview process,the Chairman concluded that each director continues to make an effective contribution to the work of the Board,is well prepared and informed concerning items to be considered by the Board,h

270、as a good understanding of the Groups businesses and that their commitment to the role remains strong.The Senior Independent Director together with the Chief Executive Officer evaluated the performance of the Chairman and concluded that the Chairman operated effectively in hisrole.As was highlighted

271、 above,the Board carried out an internal evaluation of its effectiveness by a process which involved the completion of a detailed questionnaire,the compilation of a report based on the answers and a structured discussion on the report at a board meeting in February 2013.The process was led by the Ch

272、airman with the assistance of the Group Secretary.The discussion focused on:the Boards roles and responsibilities;the Boards culture and dynamics;the Boards processes;and the role of the Chairman.The review concluded that the Board was operating in an effective manner.It identified a number of signi

273、ficant strengths and it also identified some areas which were operating effectively but where changes could be madeto improve longer-term effectiveness.Theseareas identified in the review are tobe addressed in 2013 by an action plan developed by the Board.The audit,nomination and remuneration commit

274、tees carried out internal evaluations of their effectiveness at meetings in February and March 2013.The process for each review was similar to that used for the Boards effectiveness review.The reviews concluded that each committee was operating in an effective manner.Each review identified a number

275、of strengths and some areas where the committees were operating effectively but where changes could be made to improve longer-term effectiveness.Relations with shareholdersThe Board values the views of its shareholders and recognises their interest in the Groups strategy and performance,Board member

276、ship and quality of management.The AGM is used to communicate with investors and documents are sent to shareholders at least 20 working days before the meeting.The Chief Executive makes a presentation there on the Groups progress.The Chairman,Chief Executive,Chief Financial Officer,Executive Directo

277、r German Operations and the chairmen of theaudit committee and remuneration committee are available to answer relevant questions.Separate resolutions are proposed on each substantial issue so that they can be given proper consideration and there isaresolution to receive and consider the Annual Repor

278、t and financial statements.The Group counts all proxy votes and will indicate the level of proxies lodged on each resolution,after it has been dealt with by ashow of hands.The totals of proxy votes on each resolution,including details of any votes withheld,areannounced at the meeting after each reso

279、lution has been dealt with on a show ofhands and the full proxy voting results are announced through a regulatory news service and on the Companys website.Inthe event of a close result as indicated bythe proxies held by the chairman of the meeting,the chairman would call a poll but this has not prov

280、ed necessary at any of the AGMs to date.The Board believes that the immediacy of voting on a show of hands with the proxy votes immediately being announced,rather than a laborious process of conducting a formal poll on every resolution,is appreciated by the shareholders who attend the meeting.During

281、 the year the executive directors maintained a regular programme of visits and presentations to major institutional shareholders both in the United Kingdom and overseas.The Chairman and the Senior Independent Director,who participate in this programme as appropriate,met with a number of major shareh

282、olders and reported the views of these shareholders to the Board.All directors receive copies of analysts reports on the Group and are updated by theGroups financial advisors on investors perceptions of PV Crystalox Solar.There were formal presentations following the preliminary and interim results

283、and inaddition the Group released Interim Management Statements in May and November 2012 and a trading update inDecember 2012.Key announcements,financial reports,the presentations referred to above and other information about the Group can be found on the Groups website at .Corporate PV Crystalox So

284、lar PLC Annual Report and Accounts 201226AccountabilityThe Board aims to present a balanced and understandable assessment of the Groups position and prospects in all reports and other price-sensitive disclosures,reports toregulators and information required to bepresented by statute.The responsibili

285、ties of the directors as regards the financial statements are described on page 37 and those of the auditors on page 38.A statement on going concern appears on pages 12 and 13.Remuneration committeeThe Directors Remuneration Report and details of the activities of the remuneration committee are on p

286、ages 32 to 36.It sets out the Groups policy and the full details of all elements of the remuneration package of each individual director.Nomination committeeThe nomination committee of the Board ischaired by John Sleeman.It is appointed bythe Board and is made up of at least two members,where a majo

287、rity of the members shall be non-executive directors.The board shall appoint the committee chairman who should be either the Chairman of the Board or an independent non-executive director.Until May 2012 the committee was made upof three members,the two independent non-executive directors,John Sleema

288、n and Michael Parker,and Maarten Henderson,the Chairman of the Board.Since May 2012 the committee comprises John Sleeman,chairman of the committee,and MichaelParker.The Chief Executive Officer,the Chief Financial Officer,other directors and external advisors may be invited to attend meetings as and

289、when appropriate.The Group Secretary acts as the Secretary of thecommittee.The terms of reference ofthe nomination committee are available tomembers of the public upon request andare available on the Groups website .The nomination committee meets not less than twice a year and is required to report

290、formally to the Board on its proceedings.The main responsibilities of the nomination committee are to:review regularly the structure,size andcomposition(including the skills,knowledge,experience and diversity)required of the Board compared to itscurrent position and make recommendations to the Board

291、 withregard to any changes;give full consideration to succession planning for directors and other senior executives in the course of its work,taking into account the challenges and opportunities facing the Group and what skills and expertise are therefore needed on the Board in the future;be respons

292、ible for identifying and nominating for the approval of the Boardcandidates to fill Board vacanciesas and when they arise;before appointment is made by the Board,evaluate the balance of skills,knowledge,experience and diversity onthe Board and,in the light of this evaluation,prepare a description of

293、 therole and capabilities required for aparticular appointment;for the appointment of a chairman,thecommittee should prepare a job specification,including the time commitment expected.A proposed chairmans other significant commitments should be disclosed to the board before appointment and any chang

294、es tothe chairmans commitments should be reported to the board as they arise;prior to the appointment of a director,theproposed appointee should be required to disclose any other business interests that may result in a conflict of interest and be required to report any future business interests that

295、 could result in a conflict of interest;keep under review the leadership needsof the Group,both executive and non-executive,with a view to ensuring the continued ability ofthe organisation to compete effectively in the marketplace;review the results of the board performance evaluation process that r

296、elate to the composition of the board;keep up to date and fully informed about strategic issues and commercial changes affecting the Group and the market in which it operates;review annually the time required from non-executive directors.Performance evaluation is used to assess whether the non-execu

297、tive directors are spending enough time to fulfil their duties;and ensure that on appointment to the Board,non-executive directors receive a formal letter of appointment setting out clearly what is expected of them in terms of time commitment,committee service and involvement outside Board meetings.

298、The nomination committee is also requiredto make recommendations totheBoard concerning:the formulation of plans for succession for both executive and non-executive directors and in particular for the key roles of Chairman and Chief Executive Officer;suitable candidates for the role of SeniorIndepend

299、ent Director;membership of the audit and remuneration committees,in consultation with the chairmen of those committees;the re-appointment of any non-executive director having given due regard to their performance and ability to continue to contribute to the Board in the light of the knowledge,skills

300、 and experience required;any matters relating to the continuation in office of any director at any time including the suspension or termination of service of an executive director as an employee of the Company subject to the provisions of the law and their service contract;and the appointment of any

301、 director to executive or other office other than to the positions of Chairman and Chief Executive Officer.The nomination committee met twice during the year.Details of attendance are shown inthe Corporate Governance Statement onpage 24.During the year the main items consideredwere:review of the str

302、ucture,size and composition of the Board;organisational changes and senior appointments within the Group;recommending Michael Parker for the role of Senior Independent Director;membership of the audit and remuneration committees;succession planning for directors and senior managers within the Group;

303、the nomination committee effectivenessreview;a review and recommendation of changes to the terms of reference of the nomination committee to the Board;and a review of the knowledge,skills and experience of the directors proposed forannual re-election at the AGM.Corporate governance statement continu

304、edCorporate PV Crystalox Solar PLC Annual Report and Accounts 201227Appointment of the new ChairmanJohn Sleeman was appointed initially as Interim Chairman following the AGM on 24May 2012 at which Maarten Henderson stood down as Chairman.The Board discussed its composition and the need to appoint a

305、permanent chairman at a meeting in August 2012.It decided that until there was more certainty about the long term future for the Group it was inappropriate tochange the size of the Board.As a result the Board resolved to appoint John Sleeman as Chairman without searching for or considering any exter

306、nal candidates.Audit committeeThe audit committee of the Board is chairedbyMichael Parker and is to be madeup of a minimum of two members where a majority of the members shall be non-executive directors,at least one of whom shall have recent and relevant financial experience.The audit committee chai

307、rman shall be anindependent non-executive director.UntilMay 2012 the committee was made up ofthree members,the two independent non-executive directors,John Sleeman andMichael Parker,and Maarten Henderson,the Chairman of the Board,who was considered to be independent on appointment.Since May 2012 the

308、 committee comprises Michael Parker,chairman of the committee,and John Sleeman.John Sleeman is a Chartered Accountant and a Chartered Banker who since 2006 has been a founding partner of S.P.Angel Corporate Finance LLP.The Board considers John Sleeman has recent and relevant financial experience.Mic

309、hael Parker,a former CEO of both The Dow Chemical Company and BNFL,brings many years of international commercial experience to the committee.The Board believes that this combination of professional experience is appropriate to fulfil the duties of the committee.The Chief Financial Officer,the other

310、directors and the external auditors may be invited to attend audit committee meetings as and when appropriate.The Group Secretary actsas the Secretary of the committee.Theterms of reference of the audit committee are available to members of the public upon request and are available on the Groups web

311、site at .The audit committee meets not less than three times a year and is required to report formally to the Board on its proceedings.The main responsibilities of the audit committee include:overseeing the Groups financial reporting process and monitoring the integrity of the financial statements a

312、nd formal announcements relating to the Groups financial performance;reviewing significant financial reporting issues and accounting policies and disclosures in financial reports;reviewing the effectiveness of the Groups internal control procedures and risk management systems;reviewing the Groups ar

313、rangements forwhistleblowing,detecting fraud andpreventing bribery;reviewing the requirement for an internal audit function;overseeing the Boards relationship withthe external auditors;reviewing and monitoring the external auditors independence and objectivity and the effectiveness of the audit proc

314、ess;and making recommendations to the Board on the appointment or re-appointment ofthe Groups external auditors.Independence of the external auditorsThe Groups external auditors are PricewaterhouseCoopers LLP(“PwC”)andthe Committee operates a policy to safeguard the independence and objectivity of t

315、he external auditors.This policy requires approval of non-audit services provided by the external auditors in advance,with the requirement that on an annual basis the total fees for non-audit services do not exceed the total annual fees for audit services;sets out certain disclosure requirements by

316、the external auditors to the Committee;places restrictions on the employment of the external auditors former employees;and partner rotation.During the year,the Committee reviewed the processes that the external auditors have in place to safeguard their independence and received a letter from them co

317、nfirming that,in their opinion,theyremained independent.A breakdown of the fees paid to the external auditors in respect of audit and non-audit related work is included in note 5 of the financial statements.Work undertaken during the yearThe audit committee met three times during the year.Details of

318、 attendance are shown inthe Corporate Governance Statement onpage 24.During the year the main items consideredwere:discussions with the auditors on the audit approach and strategy,the audit process,key issues arising out of the audit and discussions on the Audit Report;approval of the audit fees and

319、 the auditors letter of engagement;approval of non-audit work to be undertaken by the auditors;considering the independence and objectivity of the external auditors;reviewing the internal controls and risk management systems in operation within the Group;consideration of the requirement for the Grou

320、p to have an internal audit function;detailed reviews of the Groups preliminary announcement,Annual Report,Interim Reports and Interim Management Statements;the audit committee effectiveness review;and a review of the terms of reference oftheaudit committee and the whistleblower policy.Internal cont

321、rols and risk management systems The Board has overall responsibility for the Groups system of internal control and risk management systems and for reviewing its effectiveness.The Board delegates to executive management the responsibility for designing,operating and monitoring both the systems and t

322、he maintenance of effective internal control in each of the Groups operating subsidiaries.The internal controls and risk management systems are designed to meet the particular needs of the Group and the risks to which it is exposed and are designed to manage rather than eliminate risk.Accordingly th

323、ey can provide only reasonable and not absolute assurance against material misstatement,losses,fraud or breaches of laws or regulations.Corporate PV Crystalox Solar PLC Annual Report and Accounts 201228Corporate governance statement continuedInternal controls and risk managementsystemscontinuedExecu

324、tive management is responsible for establishing and maintaining adequate internal control and risk management systems relating to the financial reporting process and the Groups process for the preparation of consolidated accounts.The systems and controls in place include policies and procedures that

325、 relate to the maintenance of records that accurately and fairly reflect transactions and accurately record and control the Groups assets;provide reasonable assurance that transactions are recorded as necessary to permit the preparation of financial statements in accordance with International Financ

326、ial Reporting Standards(“IFRS”);require representatives of the operating subsidiaries to confirm that their reported information gives a true and fair view of the state of affairs ofthe subsidiary and the results for the period;and review and reconcile reported results.The key procedures,which exist

327、 to provide effective internal controls and risk management systems,are as follows:clear limits of authority;a comprehensive system for consolidating financial results from Group companies and reporting these financial results to the Board;annual revenue,cash flow and capital forecasts reviewed regu

328、larly during the year,monthly monitoring of management accounts and capital expenditure reported to the Board and monthly comparisons with forecasts;financial controls and procedures;clear guidelines for the authorisation of significant transactions including capital expenditure and disposals under

329、defined levels of authority;regular meetings of the executive directors;an audit committee,which approves audit plans and published financial information and reviews reports from external auditors arising from the audit and deals with significant control matters raised;regular Board meetings to moni

330、tor continuously any areas of concern;annual review of risks and internal controls;and annual review of compliance with the Code.The Board has reviewed the operation and effectiveness of the Groups system of internal control,including financial,operational and compliance controls and risk management

331、 systems which were in place during the financial year ended 31 December 2012 and the period up to the date of approval of the financial statements.The Group Secretary,who is a Chartered Accountant,led the review.The review was summarised into areport which was discussed by the audit committee and t

332、he Board in March 2013.The Board confirmed that no significant weaknesses were identified in relation to the review conducted during the year.It did identify some areas where changes could be made to improve longer-term effectiveness and actions are to be undertaken during 2013 to improve these cont

333、rols.The Board confirms that the an ongoing process for identifying,evaluating and managing the significant risks faced by the Group is regularly reviewed by the Board in accordance with the Turnbull Guidance on internal control.The Board has considered the need for an internal audit function but has decided that the size of the Group does not justify it at present.The Board will keep the decision