The Supervisory Board is made up of three members. Unless the General Meeting decides on a shorter term for individual members that it appoints or for the Supervisory Board as a whole, members of the Supervisory board are appointed up to the end of the Ordinary General Meeting which is responsible for discharging the same in the fourth fiscal year after the start of the members' terms of office. The year in which the term begins is not counted.
The task of the Supervisory Board is to advise the Executive Board on governing the company and to monitor its activities. It is involved in decisions of substantial significance for the company. In the context of the company's financial statements, the Supervisory Board reports to stockholders. The Supervisory Board has its own defined standing orders.
The membership of the Supervisory Board as of May 22, 2007, is as follows:
Daniele Di Croce (Chairman)
Management consultant
Peter Stier (Deputy Chairman)
Entrepreneur
Rainer Schmidt
Entrepreneur
Remuneration
Remuneration received by the Supervisory Board in fiscal year 2007 totaled EUR 124 thousand (previous year: EUR 138 thousand). The fixed portion was EUR 45 (previous year: EUR 70 thousand), while variable remuneration (including attendance fees and travel expenses) amounted to EUR 79 thousand (previous year: EUR 68 thousand).
von links: Rainer Schmidt, Peter Stier, Daniele Di Croce
Report of the Supervisory Board
Dear shareholders,
Intensive and cooperative communication between the Supervisory Board and Executive Board lays the foundations for efficiently structuring the board’s activities. In the year under review, the Supervisory Board has met its obligations arising both from law and from the Articles of Association. Moreover, it has regularly advised the management of REALTECH AG and monitored its management activities. In particular, the Supervisory Board investigated the company’s risk management and reached the conclusion that it completely meets the necessary requirements.
Collaboration between the Supervisory Board and the Executive Board
The Executive and Supervisory Boards agreed upon the company’s strategic orientation and discussed the status of the company’s development at regular intervals. The Supervisory Board was directly involved in all decisions of substantial significance for the company.
The Executive Board regularly and extensively informed the Supervisory Board in its meetings about the situation of the Group, in particular about developments in the business and financial situation, about the personnel situation and about intended investments. Outside of the meetings, the Executive Board informed the Supervisory Board by means of monthly reports about key financial figures, and submitted issues requiring approval to the Supervisory Board in good time in order for a decision to be reached. Approvals were granted following examination of extensive documents, queries to the Executive Board and intensive discussion with members of the Executive Board. In addition, the Chief Executive Officer held regular individual meetings with the Chairman of the Supervisory Board to report on all important developments and any decisions needing to be reached.
In the year under review, the Supervisory Board also performed an efficiency check, establishing that, thanks to the Executive Board’s prompt and direct communication policy and due to established decision-making processes, the Supervisory Board performs its assigned tasks in an appropriate and efficient manner.
Corporate Governance
The Supervisory Board regularly investigated application of the company’s Corporate Governance principles. The Supervisory Board established that REALTECH AG complied in the past fiscal year with the recommendations of the German Corporate Governance Code as specified in its compliance declaration. Further information on this topic and also the current compliance declaration can be found in the “Corporate Governance” section of this annual report.
Meetings of the Supervisory Board
The Supervisory and Executive Boards came together on five occasions in fiscal year 2007 to discuss the business situation of the Group, the strategic further development of the Group and its fields of business, as well as a range of other individual topics. The Supervisory Board’s constituent meeting was also held following re-election of its members at the shareholder meeting on May 22, 2007. In addition, a meeting was held between representatives of the auditing company elected at this meeting and the Supervisory Board.
Based on the information supplied by the Executive Board, the Supervisory Board analyzed the company's current and future company development. Where the law or Articles of Association required decisions from the Supervisory Board concerning individual business transactions and measures of the Executive Board, the Supervisory Board discussed these issues and reached the necessary decisions.
According to Paragraph 5.3.1 of the German Corporate Governance Code, the Supervisory Board should form appropriately qualified committees in line with the specific circumstances of the company and its number of members. Since fiscal year 2006, in contrast to previous years, the Supervisory Board has had neither a specific accounting audit committee nor a personnel committee. Due to the fact that the number of Supervisory Board members had been reduced in fiscal year 2005 from six to three, it was no longer possible to form appropriate committees. As a result, all members of the Supervisory Board have a say on all issues to be resolved. At the same time, the Supervisory Board has thus complied with the recommendations in the German Corporate Governance Code.
The Supervisory Board meetings held in fiscal year 2007 concentrated in particular on the continuation of the successful corporate strategy established in the company's two business fields of consulting and software. In terms of consulting, REALTECH continued to focus on clearly defined areas of technology consulting, as well as on technology-driven tasks relating to SAP NetWeaver and service-oriented architectures (SOA). In the software segment, the focus was on measures to further improve profitability. In addition to this, topics discussed also included the Group’s regional orientation, the options with regard to inorganic growth, issues regarding capital resources and questions of corporate governance.
At the meeting at the end of January 2007, the Supervisory Board considered in particular aspects such as the provisional figures for the fourth quarter of 2006 and fiscal year 2006, budget planning for 2007, future orientation in the consulting and software segments, and the situation in the company’s international subsidiaries. The Supervisory Board also discussed the status quo with regard to potential company acquisitions.
The meeting in March focused on the report submitted by the auditors, the approval and adoption of the consolidated financial statements for 2006 and annual financial statements for 2006, the outlook for the first quarter of 2007, and the approval of the agenda for the shareholder meeting in 2007.
Following on from the shareholder meeting held on May 22, 2007, the newly elected Supervisory Board held its constituent meeting, at which Daniele Di Croce was appointed Chairman of the Supervisory Board and Peter Stier was appointed Deputy Chairman. The Supervisory Board then defined the specifics of future collaboration.
At the meeting in June, the Supervisory Board discussed the Group’s development over the first five months of the year, the situation in the consulting and software business segments, and the situation at international subsidiaries. In addition, a particular emphasis was placed on updating the rules of procedure of the Executive and Supervisory Boards, as well as on the status quo of potential acquisitions.
The focus of consultations in September was on the company’s business development over the first eight months of fiscal year 2007, prospects in the software and consulting segments, and prospects at the various international subsidiaries. The Supervisory Board also discussed the current status of acquisition activities and the risk management system.
The points on which the audit was to focus were determined by the Supervisory Board in collaboration with the auditor at the Supervisory Board meeting in mid-November.
The figures as of October 2007 were reviewed at the meeting at the end of November. In addition, the Supervisory Board discussed the outlook for fiscal year 2007 and defined the planning figures for 2008. Other points on the agenda included the decision to pay out a special dividend, definition of the bonus agreement for the Executive Board, approval of the sixth declaration of compliance with the German Corporate Governance Code and definition of dates for Supervisory Board meetings in 2008.
Members of the Executive and Supervisory Boards
The Chief Financial Officer of REALTECH AG, Jürgen Zahn, asked the Supervisory Board to revoke his Executive Board contract on January 31, 2007 for family reasons. Responsibility for finance was taken on by Nicola Glowinski, Chief Executive Officer of REALTECH AG. As Chief Financial Officer (CFO), Jürgen Zahn had been responsible for the areas of Finance, Investor Relations and Human Resources since July 2005. The Supervisory Board and Executive Board thank Jürgen Zahn for his great work.
The term of office of the Supervisory Board members elected and working as shareholder representatives ended with the conclusion of the shareholder meeting on May 22, 2007. Amongst other things, this event included elections for the new Supervisory Board. In accordance with the provisions of Section 96, paragraphs 1 and 4 of the German Stock Corporation Act, as well as Section 9.1 of the Articles of Association, the Supervisory Board is made up of three members to be elected at the General Meeting. The General Meeting elected Daniele Di Croce, Rainer Schmidt and Peter Stier as members of the Supervisory Board up to the end of the General Meeting that reaches a decision on giving discharge for the fiscal year ending on December 31, 2011.
Annual and consolidated financial statements
REALTECH AG’s annual financial statements for 2007 and the management report, including accounting, were audited and issued with an unqualified audit opinion by the external auditing company Grant Thornton GmbH, Heidelberg, which was appointed in the General Meeting on May 22, 2007 and engaged as auditor by the Supervisory Board.
The same applies for the IFRS/IAS consolidated financial statements, to which a group management report has been added. These consolidated financial statements have been prepared in accordance with IFRS rules. According to Section 315a of the German Commercial Code (Handelsgesetzbuch, HGB), these statements exempt the company from the obligation to present consolidated financial statements in line with German law.
All annual accounting documents, the Executive Board’s proposal for the appropriation of net profits, and the auditors' reports were presented to the Supervisory Board in good time. They were intensively viewed and examined, and discussed in the presence of the auditors. The Supervisory Board has approved the result of the audit by the auditors and, in the context of an audit of its own, established that no objections need to be raised.
In its meeting on March 10, 2008, the Supervisory Board approved the consolidated financial statements for 2007, the combined management report for 2007, and REALTECH AG’s annual financial statements for 2007, and agreed to the Executive Board’s proposal for the appropriation of net profits.
The Supervisory Board wishes to take this opportunity to thank all members of the Executive Board, as well as all of the company’s employees, for the successful part they have played and the high degree of personal commitment shown in achieving an ongoing increase in the value of REALTECH AG and all associated companies.
Walldorf, March 2008
The Supervisory Board
Daniele Di Croce
Chairman
Source: Annual Report 2007, pages 32ff.