Reproduction of the Independent Auditor’s Report

To Wacker Chemie AG, Munich

Report on the Audit of the Consolidated Financial Statements and of the Combined Management Report

Opinions

We have audited the Consolidated Financial Statements of Wacker Chemie AG, Munich, and its subsidiaries (the Group), which comprise the Consolidated Statement of Financial Position as of December 31, 2022, the Consolidated Statement of Income, the Statement of Comprehensive Income, the Statement of Changes in Group Equity and the Statement of Cash Flows for the financial year from January 1 to December 31, 2022, as well as the Notes to the Consolidated Financial Statements, including a summary of important accounting policies. In addition, we have audited the Combined Management Report for the financial year from January 1 to December 31, 2022.

In accordance with German legal requirements, we have not audited the content of those components of the Combined Management Report specified in the “Other Information” section of our auditor’s report.

The Combined Management Report contains cross-references marked as unaudited that are not required by law. In accordance with German legal requirements, we have not audited the content of these cross-references or the information to which they refer.

In our opinion, on the basis of the findings of our audit,

• the accompanying Consolidated Financial Statements comply, in all material respects, with the IFRSs as adopted by the EU, and the additional requirements of German commercial law pursuant to Section 315e (1) HGB [Handelsgesetzbuch: German Commercial Code] and, in compliance with these requirements, give a true and fair view of the net assets and financial position of the Group as of December 31, 2022, and of its earnings for the financial year from January 1 to December 31, 2022, and
• the accompanying Combined Management Report as a whole provides an appropriate view of the Group’s position. In all material respects, this Combined Management Report is consistent with the Consolidated Financial Statements, complies with German legal requirements and appropriately presents the opportunities and risks of future trends. Our opinion on the Combined Management Report does not cover the content of the “Other Information” section of the Combined Management Report. The Combined Management Report contains cross-references marked as unaudited, which are not required by law. Our opinion does not cover these cross-references or the information to which they refer.

Pursuant to Section 322 (3) sentence 1 HGB, we declare that our audit has not led to any reservations relating to the legal compliance of either the Consolidated Financial Statements or the Combined Management Report.

Basis for the Opinions

We conducted our audit of the Consolidated Financial Statements and of the Combined Management Report in accordance with Section 317 HGB and  EU  Audit  Regulation No 537/2014 (hereinafter: “EU Audit Regulation”) and in compliance with German Generally Accepted Standards for Financial Statement Audits promulgated by the Institut der Wirtschaftsprüfer [Institute of Public Auditors in Germany] (IDW). Our responsibilities under those requirements and principles are further described in the “Auditor’s Responsibilities for the Audit of the  Consolidated  Financial  Statements  and of the Combined Management Report” section of our auditor’s report. We are independent of the Group entities in accordance with the requirements of European law and German commercial and professional law, and we have fulfilled our other German professional responsibilities in accordance with these requirements. In addition, in accordance with Article 10 (2)(f) of the EU Audit Regulation, we declare that we have not provided any non-audit services prohibited under Article 5 (1) of the EU Audit Regulation. We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our opinions on the Consolidated Financial Statements and on the Combined Management Report.

Key Matters in the Audit of the Consolidated Financial Statements

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the Consolidated Financial Statements for the financial year from January 1 to December 31, 2022. These matters were addressed in the context of our audit of the Consolidated Financial Statements as a whole, and in forming our opinion thereon, we do not provide a separate opinion on these matters.

Measurement of property, plant and equipment of the WACKER POLYSILICON segment

For further information on the presentation of the WACKER POLYSILICON segment in the reporting year, please refer to “Segment Information by Division” in the Consolidated Financial Statements and “Explanatory Notes on Segment Reporting” in the Combined Management Report. For information on the accounting policies applied, please refer to the description “Estimates and Assumptions Used in Preparing Consolidated Financial Statements” and “Accounting and Valuation Principles” in the Notes to the Consolidated Financial Statements. For information on sales market risks, please refer to the section “Risk Management Report” in the Combined Management Report.

The Financial Statement Risk

The carrying amount of the assets in the WACKER POLYSILICON segment amounted to €992 million  as of  the  reporting date. In financial year 2019, an impairment loss of €760 million was recorded for the property, plant and equipment of this segment. Apart from depreciation, no further impairment loss or reversal was reported either since then or in financial year 2022. The photovoltaic market that is so significant for the segment is characterized by a high level of volatility and competition. As a result, the business performance of the WACKER POLYSILICON segment was influenced by strong price fluctuations in the past. WACKER POLYSILICON segment sales increased by nearly 50 percent during the financial year, while the EBITDA margin declined year-on-year. The reason for this was, on the one hand, the significantly higher price of polysilicon compared to the original forecast for financial 2022, especially for polysilicon for the solar industry. On the other hand, higher raw material prices and, in particular, higher energy prices weighed on the segment margin.

Despite this overall positive development, the risk of significant overcapacities in the market and the associated further high price volatility are expected to persist in the future. The production plants in Burghausen, Nünchritz and Charleston, which together form a cash-generating unit, are allocated to the segment.

Property, plant and equipment must be tested for impairment if there are specific indications of potential impairment. Furthermore, companies must assess at each reporting date whether there is any indication that an impairment loss recognized for an asset in prior periods may no longer exist or may have decreased. Should such an indication exist or cease to exist, the recoverable amount of the assets of the cash- generating unit is to be estimated, which is equivalent to the higher of fair value less costs to sell and value in use.

Operational planning and, thus, the assessment of whether property, plant and equipment of the WACKER POLYSILICON segment is adequately measured requires judgment and assumptions regarding the discount rate and numerous forward-looking estimates – e.g. regarding the future demand for volumes based on the anticipated further construction of photovoltaic plants and the development of the semiconductor market (which is the main sales market for polysilicon), price trends, global expansion of polysilicon production capacities, and the cash inflows and outflows expected as a result. In view of the above, there is the risk for the Consolidated Financial Statements that the property, plant and equipment of the WACKER POLYSILICON segment recognized at the reporting date was not recorded in an appropriate amount.

Our Audit Approach

Assisted by Corporate Accounting, we obtained an understanding of the Company’s method for identifying the need for impairment or reversal of impairment losses as well as for determining the recoverable amount. We analyzed the need for changes in valuation identified by the Company and evaluated this based on the information obtained in the course of our audit. We were provided with the impairment test prepared by the Company for the WACKER POLYSILICON segment. In discussions with the Executive board, representatives of the WACKER POLYSILICON segment and Corporate Accounting, among others, we received an explanation of the assumptions and parameters used for measurement and obtained an understanding of the planning process. With the involvement of our valuation experts, we evaluated the measurement assumptions and parameters as well as the computational accuracy and the conformity of the Company’s valuation model with IFRS. In addition, we evaluated the appropriateness of the assumptions and parameters underlying the expected cash inflows and outflows by comparison with the corporate planning approved by the Supervisory Board and by comparison with the general and sector-specific market expectations. The latter was based, in particular, on long-term external forecasts regarding photovoltaic installation volumes and the development of the semiconductor market.

Among other approaches, we used information from prior periods as well as current interim results to analyze adherence to budget. In order to take account of forecast uncertainty, we also investigated the impact of potential changes to the discount rate and expected EBITDA on the recoverable amount by recalculating alternative scenarios of the client and comparing these with the Company’s measurements (sensitivity analysis).

Our Observations

The assumptions and parameters used by the  Company  to measure property, plant and equipment in the WACKER POLYSILICON segment, and the conclusions drawn therefrom, are appropriate.

Other Information

Management and/or the Supervisory Board are/is responsible for the other information. The other information comprises the following components of the Combined Management Report which have not been audited as to their content:

• the separate combined non-financial report of the Company and the Group referred to in the Combined Management Report,
• the Declaration on Corporate Management for the Company and the Group referred to in the Combined Management Report, and
• information extraneous to the Combined Management Report and marked as unaudited.

The other information also includes the remaining parts of the annual report. The other information does not include the Consolidated Financial Statements, the Combined Management Report information audited for content nor our auditor’s report thereon.

Our opinions on the Consolidated Financial Statements and on the Combined Management Report do not cover the other information, and consequently we do not express an opinion or any other form of assurance conclusion thereon.

In connection with our audit, our responsibility is to read the above-mentioned other information and, in so doing, to consider whether the other information

• is materially inconsistent with the Consolidated Financial Statements, with the Combined Management Report information audited for content or our knowledge obtained in the audit, or
• otherwise appears to be materially misstated.

Responsibilities of Management and the Supervisory Board for the Consolidated Financial Statements and the Combined Management Report

Management is responsible for preparing Consolidated Financial Statements that comply, in all material respects, with IFRSs as adopted by the EU and the additional requirements of German commercial law pursuant to Section 315e (1) HGB and ensuring that the Consolidated Financial Statements, in compliance with these requirements, give a true and fair view of the Group’s earnings, net assets and financial position. In addition, management is responsible for such internal control as they have determined necessary to enable the preparation of Consolidated Financial Statements that are free from material misstatement due to fraudulent behavior (that is, manipulation of accounts and damage to assets) or error.

In preparing the Consolidated Financial Statements, management is responsible for assessing the Group’s ability to continue as a going concern. They also have the responsibility for disclosing, as applicable, matters related to the going concern. In addition, they are responsible for financial reporting based on the going-concern principle of accounting unless there is an intention to liquidate the Group or to cease operations, or there is no realistic alternative but to do so.

Furthermore, management is responsible for the preparation of the Combined Management Report that, as a whole, provides an appropriate view of the Group’s position and is, in all material respects, consistent with the Consolidated Financial Statements, complies with German legal requirements, and appropriately presents the opportunities and risks of future developments. In addition, management is responsible for such arrangements and measures (systems) as they have considered necessary to enable the preparation of a Combined Management Report that is in accordance with the applicable German legal requirements, and to be able to provide sufficient appropriate evidence for the assertions made in the Combined Management Report.

The Supervisory Board is responsible for overseeing the Group’s financial reporting process for the preparation of the Consolidated Financial Statements and of the Combined Management Report.

Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements and of the Combined Management Report

Our objectives are to obtain reasonable assurance about whether the Consolidated Financial Statements as a whole are free from material misstatement, whether due to fraudulent activities or error, and whether the Combined Management Report as a whole provides an appropriate view of the Group’s position and, in all material respects, is consistent with the Consolidated Financial Statements and the audit findings, complies with the German legal requirements and appropriately presents the opportunities and risks of future development, as well as to issue an auditor’s report that includes our opinions on the Consolidated Financial Statements and on the Combined Management Report.

Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Section 317 HGB and the EU Audit Regulation and in compliance with German Generally Accepted Standards for Financial Statement Audits promulgated by the Institut der Wirtschaftsprüfer (IDW) will always detect a material misstatement. Misstatements can arise from fraudulent activities or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence economic decisions made on the basis of these Consolidated Financial Statements and this Combined Management Report.

We exercise professional judgment and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement in the Consolidated Financial Statements and in the Combined Management Report, whether due to fraudulent activities or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinions. The risk that material misstatements resulting from fraudulent activities will not be detected is higher than the risk that material misstatements resulting from errors will not be detected, as fraudulent activities may involve collusion, forgery, intentional omissions, misleading representations, or the override of internal controls.
• Obtain an understanding of internal control relevant to the audit of the Consolidated Financial Statements and of preparation and measures (systems) relevant to the audit of the Combined Management Report in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of these systems.
• Evaluate the appropriateness of accounting policies used by management and the reasonableness of estimates made by management and of related disclosures.
• Draw conclusions on the appropriateness of management’s use of the going concern principle of accounting and, based on the audit evidence obtained, determine whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in the auditor’s report to the related disclosures in the Consolidated Financial Statements and in the Combined Management Report or, if such disclosures are inadequate, to modify our respective opinions. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to be able to continue as a going concern.
• Evaluate the overall presentation, structure and content of the Consolidated Financial Statement, including the disclosures, and whether the Consolidated Financial Statements present the underlying transactions and events in a manner that the Consolidated Financial Statements give a true and fair view of the earnings, net assets and financial position of the Group in compliance with IFRSs as adopted by the EU and the additional requirements of German commercial law pursuant to Section 315e (1) HGB.
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the Consolidated Financial Statements and the Combined Management Report. We are responsible for instructing, supervising and conducting the Group audit. We assume sole responsibility for our opinions.
• Evaluate the consistency of the Combined Management Report with the Consolidated Financial Statements, its conformity with [German] law, and the view of the Group’s position it provides.
• Perform audit procedures on the prospective information presented by management in the Combined Management Report. On the basis of sufficient appropriate audit evidence we evaluate, in particular, the significant assumptions used by management as a basis for the prospective information, and evaluate the proper derivation of the prospective information from these assumptions. We do not express a separate opinion on the prospective information nor on the assumptions used as a basis. There is a substantial unavoidable risk that future events will differ materially from the prospective information.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a declaration that we have complied with the relevant independence requirements, and discuss with them any relationships or other matters that may reasonably be thought to bear on our independence, and where applicable, discuss any actions or protective measures taken to eliminate risks to our independence.

From the matters discussed with those charged with governance, we determine which matters were of most significance in the audit of the Consolidated Financial Statements of the current period and that are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter.

Other Legal and Regulatory Requirements

Assurance Report in accordance with Section 317 (3a) HGB on the Electronic Reproductions of the Consolidated Financial Statements and the Combined Management Report Prepared for Publication Purposes

We have performed an assurance engagement in accordance with Section 317 (3a) HGB to obtain reasonable assurance about whether the electronic reproduction of the Consolidated Financial Statements and the combined group management report (hereinafter the “ESEF documents”) contained in the file “ESEF KA 2022.zip” (SHA256-Hashwert: 7cebaf08e76918 221986f520ed5c05db3fd75f27c169e766316bee9b47533ab1) and prepared for publication purposes complies in all material respects with the requirements of Section 328 (1) HGB for the electronic reporting format (“ESEF format”). In accordance with German legal requirements, this assurance engagement only extends to the conversion of the information contained in the Consolidated Financial Statements and the Combined Management Report into the ESEF format and therefore relates neither to the information contained in this reproduction nor any other information contained in the above-mentioned electronic file.

In our opinion, the reproduction of the Consolidated Financial Statements and the combined group management report contained in the above-mentioned file prepared for publication purposes complies in all material respects with the requirements of Section 328 (1) HGB for the electronic reporting format. We do not express any opinion on the information contained in this reproduction nor on any other information contained in the above-mentioned file beyond this reasonable assurance conclusion and our audit opinion on the accompanying Consolidated Financial Statements and the accompanying Combined Management Report for the financial year from January 1 to December 31, 2022, contained in the “Report on the Audit of the Consolidated Financial Statements and of the Combined Management Report” above.

We conducted our assessment of the reproduction of the Consolidated Financial Statements and the Combined Management Report contained in the above-mentioned electronic file, in accordance with Section 317 (3a) HGB and in compliance with the IDW Assurance Standard: Audit of Electronic Reproductions of Financial Statements and Management Reports prepared for Disclosure Purposes in Accordance with Section 317 (3a) HGB (IDW PS 410 (06.2022)). Accordingly, our responsibilities are further described below. Our audit firm has applied the IDW Standard on Quality Management 1: Requirements for Quality Management in Audit Firms (IDW QS 1).

The Company’s management is responsible for the preparation of the ESEF documents including the electronic reproduction of the Consolidated Financial Statements and the Combined Management Report in accordance with Section 328 (1) sentence 4 item 1 HGB and for the tagging of the Consolidated Financial Statements in accordance with Section 328 (1) sentence 4 item 2 HGB.

In addition, the Company’s management is responsible for the internal controls they consider necessary to enable the preparation of ESEF documents that are free from material non-compliance with the requirements of Section 328 (1) HGB for the electronic reporting format, whether due to fraud or error.

The Supervisory Board is responsible for overseeing the preparation of the ESEF documents as part of the financial reporting process.

Our objective is to obtain reasonable assurance about whether the ESEF documents are free from material noncompliance with the requirements of Section 328 (1) HGB, whether due to fraud or error. We exercise professional judgment and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material noncompliance with the requirements of Section 328 (1) HGB, whether due to fraud or error, design and perform assurance procedures responsive to those risks, and obtain assurance evidence that is sufficient and appropriate to provide a basis for our assurance conclusion.
• Obtain an understanding of internal control relevant to the assessment of the ESEF documents in order to design assurance procedures that are appropriate in the circumstances, but not for the purpose of expressing a conclusion on the effectiveness of these controls.
• Evaluate the technical validity of the ESEF documents, i.e. whether the electronic file containing the ESEF documents meets the requirements of Commission Delegated Regulation (EU) 2019/815 as applicable on the reporting date regarding the technical specification for this electronic file.
• Evaluate whether the ESEF documents enable an XHTML reproduction with content equivalent to the audited Consolidated Financial Statements and the audited Combined Management Report.
• Evaluate whether tagging the ESEF documents with Inline XBRL technology (iXBRL), in accordance with Articles 4 and 6 of Commission Delegated Regulation (EU) 2019/815 applicable on the reporting date, provides an appropriate and complete machine-readable XBRL copy of the XHTML rendering.

Further Information pursuant to Article 10 of the EU Audit Regulation

We were appointed as auditors of the Consolidated Financial Statements at the Annual Shareholders’ Meeting on May 20, 2022. We were engaged by the Audit Committee of the Supervisory Board on October 28, 2022. We have audited the Consolidated Financial Statements of Wacker Chemie AG without interruption since financial year 2006.

We declare that the opinions expressed in this auditor’s report are consistent with the additional report to the Audit Committee pursuant to Article 11 of the EU Audit Regulation (long-form audit report).

Other Matters – Use of the Auditor’s Report

Our auditor’s report should always be read in connection with the Consolidated Financial Statements and the audited Combined Management Report as well as the ESEF documents. The Consolidated Financial Statements converted to ESEF format and the Combined Management Report, including the versions to be published in Germany’s Company Register, are merely electronic reproductions of the Consolidated Financial Statements and the Combined Management Report and do not replace them. In particular, the ESEF report and our audit opinion contained therein can only be used in connection with the audited ESEF documents provided in electronic form.

Responsible Auditor

The auditor responsible for the audit is Prof. Dr. Bernd Grottel‌.

Munich, March 2, 2023

KPMG AG
Wirtschaftsprüfungsgesellschaft

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