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Supervisory Board Report |
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| Supervisory Board Report |
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Dear Shareholders,
in fiscal year 2006/07, Norddeutsche Affinerie Aktiengesellschaft
recorded its best results by far in its long history. Apart
from the strong economic growth, this success was due in
particular to the excellent production performance in all
sectors of the group, good revenues from treatment and refining
charges, and the positive results from favourable metal
exchange combinations. Credit is due once again to the Executive
Board, senior staff and employees in all segments for
their performance, which has contributed to this particularly
good business result.
The Supervisory Board was again in constant contact with
the Executive Board in fiscal year 2006/07, gave it advice and
monitored and supervised the main business processes on a
continuous basis. The Supervisory Board supports the group’s
current strategic orientation, which it has approved, and the
management of the Company by the Executive Board.
The Supervisory Board consists of twelve members with equal
representation in accordance with the German Co-determination
Act, six of whom represent the shareholders and six the
employees. During the past fiscal year, the members of the
Supervisory Board were Dr Ernst J. Wortberg (Chairman of the
Supervisory Board), Dr Peter von Foerster, Mr Ulf Gänger,
Mr Rainer Grohe, Prof. Dr Jürgen Hausselt and Prof. Dr Fritz
Vahrenholt, representing the shareholders, and Mr Hans-Jürgen
Grundmann (Deputy Chairman of the Supervisory Board),
Dr Joachim Faubel, Mr Gottlieb Förster, Mr Gerd Körner, Mr Rolf
Schwertz and Mr Helmut Wirtz, representing the employees.
The Supervisory Board performed the functions incumbent
upon it by law and in the articles of association with great
care during the past fiscal year. The Executive Board and the
Supervisory Board cooperated closely, with the common aim
of achieving a sustained increase in corporate value. The Supervisory
Board was involved on a timely basis and in detail in
all decisions of fundamental importance for the Company.
The Executive Board informed the Supervisory Board regularly,
promptly and in detail, in written and verbal reports
about planned business policies, all fundamental aspects of
the corporate planning, including financial, investment and
personnel planning and further strategic development, in
particular with regard to the planned takeover of the Belgian
copper group, Cumerio sa/nv, which was announced to the
public on 24 June 2007. In addition, the Executive Board
reported on the Company’s profitability, the business trends,
the group’s position including the risk situation, risk management
and intragroup compliance. Deviations in the course
of business from the plans and targets were discussed in detail
by the Supervisory Board and examined by it on the basis of
the documents presented. The Executive Board also kept the
Chairman of the Supervisory Board informed – also between
meetings – about events, which are of fundamental importance
for the assessment of the Company’s situation and development
as well as for the management of the Company.
The Executive Board agreed the Company’s strategic orientation
with the Supervisory Board continually and in detail,
especially the planned acquisition of Cumerio sa/nv. The
planned merger with Cumerio sa/nv was discussed in detail
with the Executive Board at the Supervisory Board Meeting
on 18 June 2007, was debated at the Supervisory Board
plenary session and was approved by the Supervisory Board,
after considering in detail all the information received at the
time and the foreseeable consequences, in particular the
pros and cons and the impact on the Company, its net assets,
financial position and results of operations as well as on its
stakeholders. In addition, the current status and progress of
the project accounted for a significant part of all subsequent
Supervisory Board meetings and were debated at them in detail.
Following a detailed discussion and the subsequent consideration
of the existing interests, in particular the interest in the
exclusion of shareholder subscription rights, the Supervisory
Board resolved on 8 November 2007 to approve the increase
of almost 10% in the Company’s subscribed capital, which
had been resolved by the Executive Board that day, by issuing
3,715,430 new shares for a cash contribution under exclusion
of shareholder subscription rights. It was intended that the
proceeds from this increase in capital would be used primarily
to finance the Company’s planned merger with Cumerio sa/nv.
Furthermore, following the receipt of detailed reports from
the Executive Board, all important business transactions were
discussed at length by the Supervisory Board and debated
in the respective committees. The documents required for
making decisions, in particular the financial statements, the
consolidated financial statements and the long-form audit
report, were issued to the members of the Supervisory Board
in good time before the meetings, and reviewed by them.
The Supervisory Board has defined rights of veto in favour
of the Supervisory Board for transactions of fundamental
importance, in particular those that will have a fundamental
effect on the net assets, financial position and results of
operations. The Supervisory Board or the responsible committees
gave their approval to important business requiring
approval after detailed consultations in each case, such as the
planned acquisition of Cumerio sa/nv or the abandonment
of the construction of the SF power plant that had initially
been planned, and instead of this the acquisition of a virtual
slice of the planned Vattenfall power plant in Hamburg-
Moorburg.
Outside the Supervisory Board meetings, the Chairman of
the Supervisory Board was in regular close contact with the
Executive Board and was always informed on a timely basis
and in detail about the current development of the business
situation and key business issues; he conducted separate
discussions on important questions of Company strategy and
business policy.
Five scheduled Supervisory Board meetings were held in fiscal
year 2006/07, and five further extraordinary Supervisory
Board meetings, above all on account of the fundamental
importance of the acquisition of Cumerio sa/nv. No member
of the Supervisory Board attended less than half of the Supervisory
Board meetings.
Work of the committees
In addition to the Conciliation Committee required by law in
accordance with Section 27 paragraph 3 German Co-dermination
Act, the Supervisory Board again appointed a Preparatory
Committee, a Personnel Committee and an Audit Committee,
as well as a Nomination Committee for the forthcoming
election of shareholder representatives to the Supervisory
Board. Apart from the Nomination Committee, which consists
of three shareholder representatives, all committees have an
equal number of representatives of the shareholders and the
employees. With the exception of the Audit Committee, the
Chairman of the Supervisory Board is also the chairman of the
committees. The Chairman of the Audit Committee, Mr Ulf
Gänger, has specialist knowledge and experience in the application
of accounting principles and internal audit procedures.
The Personnel Committee convened five times in the year
under review, the Audit Committee twice as scheduled and the
Nomination Committee once. The auditors participated in one
meeting of the Audit Committee. The Conciliation Committee
and the Preparatory Committee did not meet in the fiscal year.
A significant focus of the work of the Personnel Committee
was the preparation for the appointment of Mr Peter Willbrandt
as a Deputy Member of the Executive Board and the review
of the appropriateness of the structure and level of the compensation
paid to all members of the Executive Board.
The Audit Committee considered in particular the separate
financial statements of NA AG and consolidated financial
statements for the past fiscal year, accounting questions, risk
management and internal control systems, the appointment
of the auditors, the definition of the main focuses of the
audit and agreeing the fee with the auditors. In addition, it
monitored the independence of the auditors and received
the respective declaration. The Audit Committee, in collaboration
with the auditors, considered the propriety of the automated
processing of invoices and handling of payments in the
materials procurement area as well as the Company’s risk
management, including the tasks of the internal auditors. It
discussed significant risks with the Executive Board.
The Nomination Committee considered the selection criteria
for candidates for election as shareholder representatives on
the Supervisory Board at the 2008 Annual General Meeting.
Following the meetings, the committee chairmen reported to
the Supervisory Board in each case on the work of the committees
and the results achieved.
Main matters considered by the Supervisory Board
Apart from the developments on the metal and foreign
ex change markets, as well as the raw material, energy and
product markets, the consultations at the meetings mainly
considered the Company’s planned merger with Cumerio sa/nv
and associated topics, in particular the financing and the
change in the main shareholder. The resultant impacts on the
Company’s business performance and its individual segments,
including the subsidiaries, were discussed. In addition, the
Supervisory Board considered the planned expansion of the
copper production operations at the Hamburg site.
Furthermore, the Supervisory Board was informed about the
positive progress with the development of CIS solar cells into
a marketable product. The Supervisory Board was informed
at each meeting about ongoing measures to enhance performance
and increase corporate value.
Corporate governance
The Supervisory Board consulted in detail on the appropriateness
of the structure of the Executive Board’s compensation
system and will review this at regular intervals. The
Supervisory Board also regularly reviewed the efficiency of
its activities.
No former members of the Executive Board serve on the
Supervisory Board.
On 16 January 2008, the Executive Board and Supervisory
Board once again issued a Declaration of Conformity in accordance
with Section 161 Companies Act confirming that the
recommendations of the “Government Commission on the
German Corporate Governance Code” in the version dated
12 June 2006 and the recommendations announced on 20 July
2007 by the “Government Commission on the German Corporate
Governance Code” in the version dated 14 June 2007 were
and will be applied respectively, with the following justified
exception. The consolidated financial statements continue to
be published within 120 days of the end of the fiscal year.
Since the Company’s fiscal year differs from the calendar year,
adherence to the 90 day time limit recommended by Section
7.1.2 sentence 3 of the German Corporate Governance Code
would mean that the consolidated financial statements were
published during the public holiday period at the end of the
calendar year, and would therefore receive insufficient attention.
The Declaration of Conformity is available at www.na-ag.com.
The joint report by the Executive Board and Supervisory Board
in this annual report provides further information on corporate
governance at Norddeutsche Affinerie Aktiengesellschaft.
Audit of the separate and consolidated financial statements
The financial statements for the Company prepared by the
Executive Board in accordance with the HGB (German GAAP)
and the consolidated financial statements prepared in accordance
with IFRS (International Financial Reporting Standards)
for the fiscal year from 1 October 2006 to 30 September 2007
and the management reports for the Company and the group
have been audited by KPMG Deutsche Treuhand-Gesellschaft
Aktiengesellschaft Wirtschaftsprüfungsgesellschaft, Berlin,
together with the bookkeeping system, in accordance with the
resolution passed at the Company’s Annual General Meeting
on 29 March 2007 and their subsequent appointment as auditors
by the Supervisory Board. The auditors have issued an
unqualifi ed auditors’ report. A main focus of the audit was the
propriety of the automated processing of invoices and handling
of payments in the materials procurement area.
The meeting of the Supervisory Board to approve the financial
statements was held on 16 January 2008. All members
of the Supervisory Board received copies of the financial statements
and the audit reports as well as the Executive Board’s
recommendation for the appropriation of the net earnings
and all other documents in good time before this meeting.
These documents were discussed in detail at the meeting of
the Supervisory Board to approve the financial statements.
The auditors participated in this meeting, reported in detail on
how the audit had been performed and their audit main
findings and were available to provide the Supervisory Board
with further information, discuss the documents and make
additional comments.
Following a detailed discussion on the audit and the auditors’
findings and a thorough consideration of the report by the
auditors and the recommendation of the Executive Board on
the appropriation of the net income, and on the basis of its
own review of and discussion on the separate financial statements
of NA AG, the consolidated financial statements, the
management reports for the Company and the group and the
Executive Board’s recommendation on the appropriation of
the unappropriated earnings, the Supervisory Board concurred
with the results of the audit. The Supervisory Board concluded
that no objections need to be raised, based on the results of
its review, and approved at this meeting on 16 January 2008,
the separate financial statements of NA AG, which were thus
adopted, as well as the consolidated financial statements,
the management report for NA AG and the consolidated management
report. The Supervisory Board concurred with the
Executive Board’s recommendation on the appropriation of the
unappropriated earnings.
Changes in the Executive Board
The Supervisory Board appointed Mr Peter Willbrandt a deputy
member of the Executive Board with effect from 1 April 2007.
On 9 November 2007 the Supervisory Board complied with
the request of the Chief Executive Officer and Director of
Labour Affairs, Dr Werner Marnette, to relieve him of his duties
with immediate effect by mutual consent. We wish to thank
Dr Marnette for his achievements on behalf of the Company.
After a transitional period, in which the Chief Financial Officer,
Dr Bernd Drouven, took over the coordination of the work
of the Executive Board at the request of the Supervisory Board
and represented the Executive Board externally, the Supervisory
Board appointed him Chief Executive Officer on 16 January
2008 with immediate effect.
The Supervisory Board would like to thank the Executive Board,
the management, the employees and the employees’ representatives
from all the group subsidiaries for their responsible,
dedicated service and successful work during the year under
review.
Hamburg, 16 January 2008
THE SUPERVISORY BOARD
Dr Ernst J. Wortberg
Chairman
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German
