Report of the Supervisory Board

Guido A Krass, Chairman of the Supervisory Board about fiscal 2019

Dear Shareholders,

The Supervisory Board of CENTROTEC SE again performed the tasks resting upon it in accordance with the law, the Articles of Association and the rules of internal procedure with great care in the 2019 financial year, in the course of which it regularly advised the Management Board on the running of the Group and continually monitored its activities.

CENTROTEC fully achieved or slightly exceeded the targets forecast for the 2019 financial year for revenue and earnings. Its even wider international presence along with a healthy position in the German market provide a sound basis for continuing growth in revenue and earnings.

The Annual General Meeting of Shareholders on June 18, 2019 elected Mr Andreas Freiherr von Maltzan as a member of the Supervisory Board. Mr Freiherr von Maltzan had already belonged to the Supervisory Board since July 1, 2018 by court appointment.

With effect from April 1, 2019 the Supervisory Board introduced a stronger functional emphasis for the Management Board and in that connection appointed Mr Günther Wühr as Management Board member. Wühr had already held various functions within the Group since 2015 in the Finance and Controlling areas. Wühr has many years of experience as an executive officer in the photovoltaics and biogas industry. He replaces Dr Traxler, who left the Management Board with effect from March 31, 2019.

The Supervisory Board held a total of four regular meetings in the period under review. The priority topics listed below were discussed at these meetings. All Supervisory Board members attended all meetings. The Management Board regularly informed the Supervisory Board through detailed, prompt written and oral reports on the current business progress of the companies and the Group, and in particular on the development in its revenue, orders, financial performance and financial position, along with the company’s discernible opportunities and risks of future development. The Supervisory Board was involved directly and promptly in all decisions of fundamental importance for the company and discussed important decisions and occurrences at length. Annual financial statements, the Interim Report and quarterly financial communications were discussed with the Board of Management by the Supervisory Board prior to their publication. Decisions of the Management Board requiring approval were examined and discussed thoroughly by the Supervisory Board prior to their approval.

Outside the context of the above meetings, too, the members of the Supervisory Board discussed upcoming projects and matters of material importance with the Management Board and senior management of the company in individual face-to-face meetings and by means of telephone conferences. Written reports were furthermore submitted on specific projects and issues. Through these, the Management Board satisfied the information and reporting requirements laid down by the Supervisory Board in every respect. As the Supervisory Board has only three members, no committees were formed. All matters were discussed by the full board.

In the 2019 financial year there were again no conflicts of interest among Management Board and Supervisory Board members that are to be disclosed to the Supervisory Board without delay and of which the Annual General Meeting is to be informed.

The range of topics discussed at Supervisory Board meetings was very broad, covering fundamental and strategic matters concerning the holding company, the segments and the individual companies. From a Group perspective its further expansion, above all internationally, and the associated construction projects received particular attention. Individual matters of major importance and with far-reaching consequences for the Group were also addressed.
The individual priority topics discussed comprised:

  • The strategic direction and business policy of the Group, the segments and the Group companies
  • The general business performance
  • The content and scope of the financial reports for publication
  • Change of corporate form and name to CENTROTEC SE
  • Major or strategically highly significant investment decisions, in particular supporting the construction of the manufacturing facility in China
  • The risk position, in particular strategic, operating and financial risks as well as risk management
  • The financial reporting process and internal control system
  • The strategic and operational handling of Group financing and of the investments
  • The implementation of the share buyback programme
  • The Group’s budget and medium-term planning
  • Observance and innovations of the Corporate Governance Code and SCR reporting
  • Implementation of the decisions to acquire IVT GmbH and IVT-Industrie-Vertrieb Technik GmbH & Co.KG as well as the assets of Klingenburg GmbH
  • Evaluation of further possible options in the sphere of mergers & acquisitions projects
  • Changes to regulatory and negotiable instruments law
  • Remuneration structures of the Management Board and key management employees
  • Composition of the Management Board
  • The efficiency of the Supervisory Board’s own activities

The Supervisory Board and Management Board discussed corporate governance within the company at length in the year under review and, most recently in March 2019, jointly issued a Declaration of Compliance in accordance with Section 161 of the German Stock Corporation Act. The most recent Declaration of Compliance was issued in January 2020 and made permanently available on the company’s website. According to Article 3.10. of the German Corporate Governance Code (2017 version), the Management Board simultaneously reports on corporate governance on behalf of the Supervisory Board in the Corporate Governance Report. That report is incorporated into the Annual Report. The key principles of corporate governance are explained by the Management Board in its Corporate Governance Statement pursuant to Section 289f of the German Commercial Code, which can be accessed on the website of the company. Other topics of detailed consultations by the Supervisory Board included issuing the audit mandate to the auditors following their election by the Annual General Meeting, monitoring their independence as well as the services provided by them, and determining their fee. The accounting, annual financial statements, Management Report, Consolidated Financial Statements and Group Management Report at December 31, 2019 have been examined by the auditors PricewaterhouseCoopers AG Wirtschaftsprüfungsgesellschaft, Kassel, who have issued unqualified audit opinions. The above documents and the proposal by the Management Board on the appropriation of the accumulated profit were made available to each member of the Supervisory Board in a timely manner. These were discussed at length with the auditors at the Supervisory Board meeting on March 23, 2020, when the auditors reported on the principal findings of their audit. The auditors of the accounts furthermore reported on their findings on the internal control and risk management system in respect of the financial reporting process and established that the Management Board has set up a suitable internal system of control and risk management. 

The Supervisory Board has considered at length the disclosures made in the Management Report and Group Management Report. Reference is therefore made to the corresponding comments in the Management Report and Group Management Report, which the Supervisory Board has examined and supports.

The Supervisory Board has examined the annual financial statements, Management Report and Consolidated Financial Statements, including Group Management Report, as prepared by the Management Board, together with the dependency report drawn up by the Management Board as a precautionary measure. The Supervisory Board concurs with the findings of the audit of the financial statements. The concluding finding of the examination by the Supervisory Board has revealed no cause for objection. The annual financial statements prepared by the Management Board and the Consolidated Financial Statements at December 31, 2019 were approved by the Supervisory Board. The annual financial statements of CENTROTEC SE are hereby established.

In addition, reporting of disclosures on non-financial aspects has been required since the 2017 reporting year. The management has decided to fulfil that obligation through the publication of a non-financial report outside the framework of the Group Management Report, and to publish it in the Annual Report. The Supervisory Board, which holds responsibility for examining the content of non-financial reporting, has carefully considered the separate Non-Financial Group Report of CENTROTEC prepared by the Management Board at December 31, 2019. On the basis of its own examination, the Supervisory Board raised no objections following explanatory remarks by the Management Board and the auditors. The auditing firm PricewaterhouseCoopers GmbH conducted a limited assurance engagement and issued an unqualified audit opinion.

The Supervisory Board assumes that CENTROTEC SE will be able to extend its position in the worldwide growth market for energy-saving building technology, and serve the interests of the CENTROTEC Group’s stakeholders.

At the same time it must be acknowledged that the global economy faces an unprecedented challenge from the coronavirus pandemic. It is inevitable that CENTROTEC will also be affected. Even if it is not possible to express the impact of the crisis on CENTROTEC's business performance in hard figures, the focus now has to be on protecting the available financial resources so that it can manoeuvre as resolutely as possible through the market upheaval that could lie ahead. In light of this, the Supervisory Board expressly welcomes the proposal of the Management Board on the appropriation of the accumulated profit and approves the decision not to distribute a dividend for 2019.

On behalf of the Supervisory Board I would like to thank the Management Board members as well as the employees of the CENTROTEC Group for their active contribution and efforts in the past financial year.

Best wishes,

Guido A Krass
[Supervisory Board Chairman]

On behalf of the Supervisory Board, Brilon, March 2020

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