The Supervisory Board performed the duties incumbent upon it under the law and in accordance with the Articles of Incorporation and the Rules of Procedure with considerable care in the past financial year. We regularly advised the Board of Management on the running of the company and continuously oversaw its activities. The Supervisory Board was involved directly and at an early stage in all decisions of fundamental significance for the company.
The Board of Management reported to us regularly, promptly and comprehensively, both in writing and orally, on the current status of transactions, the business performance and the economic position, the prevailing risks, risk management as well as relevant issues concerning compliance, strategy and planning. The business transactions of significance for technotrans were discussed in the committees and the plenary meetings on the basis of the Board of Management’s reports. Deviations in the business performance from the prepared plans and targets were explained individually to the Supervisory Board and discussed at length by the Supervisory Board. The Board of Management complied fully with the reporting obligations of Section 90 of the German Stock Corporation Act as well as the German Corporate Governance Code. The Supervisory Board granted its consent to transactions that require as much, following thorough examination and consultations. In my capacity as Supervisory Board Chairman, I was moreover in regular contact with the Board of Management. I was informed in a timely manner by the Chief Executive Officer of important occurrences that are of material significance for evaluating the situation, progress and management of the company.
In all, the Supervisory Board met for four regular meetings in the presence of the Board of Management in the 2016 financial year, on March 7, May 11, September 22 and December 9, 2016. The recurring subject matters of the ordinary meetings were the written and oral reports of the Board of Management on the business situation of technotrans AG and the group, in particular the current revenue and earnings performance as well as the financial performance and net worth. The Supervisory Board was informed in detail of and discussed significant business occurrences within the company, as well as its strategy and the implementation thereof, and also its approach to risk management. All members of the Supervisory Board and Board of Management were present at all meetings.
Three extraordinary Supervisory Board meetings were in addition held in 2016, on July 5 and August 11 and 12. These meetings focused exclusively on the acquisition of a majority interest of 98 percent in GWK Gesellschaft Wärme Kältetechnik mbH, Meinerzhagen, and its integration into the technotrans Group, along with all the associated subject areas and resolutions.
At the meetings the Supervisory Board considered in depth the findings of the due diligence conducted, observations on the valuation of the company as well as the transaction structure and the financing of the purchase price.
The Supervisory Board again oversaw the management activities of the Board of Management in the 2016 financial year and regularly advised the Board of Management on the running of the company, as well as approved the transactions that require its consent in accordance with the law and the Articles of Incorporation. These include decisions and measures which are of fundamental significance for the financial position and financial performance of the company.
A hallmark of the past financial year was the methodical development of the business activities of technotrans AG and the operational and strategic development of its participating interests and the divisions. At its scheduled meetings the Supervisory Board considered the reports by the Board of Management on the business situation, the general acquisitions strategy and ongoing M&A projects, the strategic direction of the company, aspects of risk management, preventive compliance work and corporate governance as well as insider law and new legislation.
The first meeting on March 7, 2016 focused on the presentation and discussion of the annual financial statements of technotrans AG, the 2015 Consolidated Financial Statements and the accompanying resolution, as well as approval of the agenda for the Annual General Meeting on May 12, 2016 together with the resolution proposals set forth therein. The appointment of KPMG AG Wirtschaftsprüfungsgesellschaft, Berlin, as the auditors of the annual financial statements and Consolidated Financial Statements for the 2016 financial year, was made on the recommendation of the Audit Committee and pursuant to the resolution of the Annual General Meeting of May 12, 2016. The Supervisory Board also voted in favour of the acquisition of a majority interest of 51 percent in Ovidius GmbH, Berlin, and its integration into the technotrans Group.
The Supervisory Board meeting held on May 11, 2016 before the Annual General Meeting addressed such matters as preparations for the Annual General Meeting on the following day and an update on the motions submitted. As there were no counterproposals, the Supervisory Board considered at length the report on the business performance in the first four months of 2016. The Board of Management also reported on the progress of negotiations with GWK Gesellschaft Wärme Kältetechnik mbH, Meinerzhagen.
In addition to the business performance of the group at August 31, 2016 the meeting on September 22, 2016 focused on technology management and the product developments, as well as on the takeover of the 35 percent remaining shares in KLH Kältetechnik GmbH, KLH Cooling International Pte. Ltd. and Taicang KLH Cooling Systems Co. Ltd. Other major topics were the raising of outside capital (loan financing) in connection with the acquisition of GWK Gesellschaft Wärme Kältetechnik mbH as well as the integration and consolidation process of the company, the disposal of treasury shares by way of a private placement and information on the German Financial Reporting Enforcement Panel (DPR) audit of the 2015 Consolidated Financial Statements. In September 2016 the Supervisory Board and Board of Management submitted the current compliance statement pursuant to Section 161 (1) the German Stock Corporation Act (AktG) and published it on the company’s website.
The final meeting of the Supervisory Board on December 9, 2016 was devoted to planning the forecast and budgeting for the 2017 financial year including revenue, cost, profit, investment and personnel planning, rough planning for the next few years as well as settlement of the target agreements of the Board of Management members for the 2016 financial year and the concluding of new target agreements for the 2017 financial year. The Supervisory Board approved the annual plans submitted by the Board of Management for the 2017 financial year. After suitable discussion the Supervisory Board voted to update the Rules of Procedure for the Board of Management and Supervisory Board. This meeting also featured an extensive discussion on investment options for the expansion of capacity at the Baden-Baden location. Finally, in its meeting on December 9, 2016 the Supervisory Board dealt with the awarding of the special management bonus to the members of the Board of Management for the successful completion of the acquisition of GWK Gesellschaft Wärme Kältetechnik mbH, Meinerzhagen, as well as the appointment of Dr Soest as Board of Management member for a further three years.
As mentioned above, the additional, extraordinary Supervisory Board meetings held on July 5 and August 11 and 12, 2016 were devoted exclusively to the acquisition of the majority interest in GWK Gesellschaft Wärme Kältetechnik mbH, Meinerzhagen, and the issues arising in that connection.
The members of the Supervisory Board are sufficiently independent and have sufficient time to serve as non-executive directors. They always had ample opportunity to assess the reports and resolution proposals of the Board of Management with a critical eye in plenary meetings, and also to contribute their own suggestions. In accordance with the recommendation in the German Corporate Governance Code, the Supervisory Board members of technotrans AG disclose any conflicts of interest to the Supervisory Board without delay. Dr Norbert Bröcker, the Deputy Chairman of the Supervisory Board, is partner in the law firm Hoffmann Liebs Fritsch & Partner. That firm provided legal advice for technotrans AG on a variety of topics in the past financial year. The Supervisory Board of technotrans AG approved the involvement of Hoffmann Liebs Fritsch & Partner as well as the consultancy fees arising. To avoid any conflicts of interest, Dr Bröcker abstained from those votes. No other potential conflicts of interest that are to be disclosed to the Supervisory Board and would need to be reported at the Annual General Meeting arose in the year under review. Pursuant to Article 5.6 of the German Corporate Governance Code, the Supervisory Board conducted an efficiency audit by means of a formalised questionnaire. Its focus included the aspects of cooperation and processes within the Supervisory Board as well as the exercise of oversight and regulatory functions. Other aspects were the information supply and cooperation with the Board of Management as well as the topic of personnel capabilities. No efficiency shortcomings were identified in the last evaluation in December 2016. To enable it to fulfil its duties more efficiently, the Supervisory Board has formed three committees. The Nominating Committee, comprising the shareholder representatives on the Supervisory Board, has the task of proposing suitable candidates for the Supervisory Board to the Supervisory Board for its nominations for election to the Annual General Meeting. The Nominating Committee did not meet in 2016.
With the close of the Annual General Meeting on May 12, 2016 the terms of office of Messrs Schäfer and Ruwisch as Supervisory Board of technotrans AG ended. Mr Ruwisch was not available for re-election as a result of having reached the age limit. At the proposal of the Nominating Committee, the Supervisory Board resolved to put forward Dr Wolfgang Höper and Mr Dieter Schäfer for election as members of the Supervisory Board on May 12, 2016. Dr Wolfgang Höper and Dieter Schäfer were each elected as shareholder representatives by a large majority at the Annual General Meeting.
At the constituent meeting of the Supervisory Board following the Annual General Meeting, Dr. Wolfgang Höper was welcomed as a new member of the Supervisory Board and the Supervisory Board then proceeded to re-elect me as its Chairman. The Supervisory Board would like to thank Mr Ruwisch, who had belonged to the supervisory body of technotrans AG since 2011, for his huge dedication and constructive support for the company’s development over the past five years.
An Audit Committee has in addition been formed (members: Dieter Schäfer, Dr Wolfgang Höper, Heinz Harling) and a Committee for Board of Management Affairs (Personnel Committee members: Heinz Harling, Dr Norbert Bröcker and Dr Wolfgang Höper). The latter met twice (March 7, 2016 and December 9, 2016) and dealt in particular with drawing up the contracts and agreeing the remuneration of the members of the Board of Management. In that context the Committee for Board of Management Affairs in particular also prepared the decisions of the Supervisory Board to grant the members of the Board of Management a special management bonus for the successful completion of the acquisition of GWK Gesellschaft Wärme Kältetechnik mbH, Meinerzhagen, and to appoint Dr Christof Soest as Board of Management member for a further three years.
The Audit Committee met twice in the presence of the auditors and the members of the Board of Management, and concerned itself with matters relating to the annual financial statements, the presentation of the accounts, controlling and risk management. Other aspects included fiscal matters, compliance, assuring the independence of the auditors, commissioning the auditors with the audit mandate and identifying the priority areas for the audit, and agreeing the fee. The interim reports/quarterly communications to be published were discussed in advance by the members of this committee. The Chairman of the Audit Committee also maintained a close, regular exchange of information and views with myself between the committee meetings.
The audit reports and documents for the accounts as well as the Board of Management’s proposal on the appropriation of profit for the 2016 financial year were sent to all Supervisory Board members in good time. These were discussed at length and in detail both by the Audit Committee at its meeting on March 6, 2017 and by the Supervisory Board at its meeting on March 13, 2017. At both meetings, the auditors of the accounts also reported in person on the key findings of their examinations and were available for additional questions and information. No material weaknesses in the internal accounting system were reported. The Chairman of the Audit Committee, too, reported at length to the Supervisory Board on the examinations of the Audit Committee. Both the annual financial statements of technotrans AG for the 2016 financial year prepared by the Board of Management in accordance with the German Commercial Code (HGB) and the Consolidated Financial Statements for the 2016 financial year, which were prepared pursuant to Section 315a of HGB on the basis of the International Financial Reporting Standards (IFRS), as well as the Combined Management Report, were examined by the auditors and were in each case granted an unqualified audit certificate.
Following the conclusion of our own examination of the annual financial statements, the Consolidated Financial Statements and the Combined Management Report, we raised no objections to the findings of the audit and at our meeting on March 13, 2017 signed off the annual financial statements and Consolidated Financial Statements prepared by the Board of Management. The annual financial statements for the 2016 financial year are thus established. Following its own examination the Supervisory Board supports the proposal of the Board of Management on the appropriation of profit.
The Supervisory Board would like to thank the Board of Management and all employees of the group for their commendable dedication. Together they showed great dedication in shaping the company’s development in the 2016 financial year. My particular thanks are due to the employees’ representatives, who yet again cooperated constructively and openly with the company’s corporate bodies, and to the shareholders, many of who have now been involved in technotrans AG for quite a number of years. We on the Supervisory Board will continue to provide constructive support for the Board of Management as it seeks to realise its ambitious goals for the technotrans Group.
On behalf of the Supervisory Board
Chairman of the Supervisory Board