In the financial year 2016, the Group raised its earnings compared with the previous year despite the difficult market conditions. A sustainable level over the long-term has, however, not yet been reached. For this reason, emphasis was placed on enhancing efficiency further and focusing even more strongly on high-margin business. The company continued to invest in the quality of its products and in product innovation. Activities in lucrative international markets were stepped up. Various measures were aimed at strengthening customer loyalty and at developing other market segments with a view to products and applications. The endeavors of the European steel industry to protect itself from cheap steel imports achieved notable success. The company's strategic realignment has been updated.
Monitoring and advising the Executive Board in the exercising of its management duties
The Supervisory Board kept itself continuously informed about the situation of the Group and the development of business. It deliberated the current situation, the risks and the prospects with the Executive Board in four meetings. Transactions requiring the approval of the Supervisory Board, as well as discrepancies between the development of business and corporate planning, were questioned in detail and discussed. Furthermore, between meetings, the Chairman of the Supervisory Board was regularly informed by the Executive Board Chairman on current topics.
The attendance rate at the Supervisory Board meetings exceeded 90 %. No conflicts of interest were brought to the attention of the Supervisory Board, neither by the Supervisory Board members nor by members of the Executive Board.
Focus of the consultations of the Supervisory Board
Reports were made to the Supervisory Board on the final stage of implementing the "Salzgitter AG 2015" restructuring program. Along with the current development of the individual business units, the Supervisory Board devoted special attention to the functional capability of the compliance management system, to defining key audit areas for the statutory audit, to corporate planning for the years 2017 through to 2019, as well as to the audit of the 2016 consolidated and annual financial statements. From an operational standpoint, the strategic situation, the alignment as well as the ongoing development of the heavy plate product segment formed the focus of consultations.
Work of the committees
In order to prepare for its consultations and decisions, the Supervisory Board has formed presiding, audit, strategy and nomination committees.
The Presiding Committee met four times in 2016. Topics in these meetings included important questions concerning the course of business, deliberations on the further development of the heavy plate product segment, reviewing the structure of Executive Board remuneration, and investigating the efficiency of the Supervisory Board's activities. In addition, following on from work carried out by the Strategy Committee, the Group's strategic development was discussed thoroughly.
The members of the Audit Committee held four meetings in the period under review. Apart from the proposal for selecting the independent auditor for the annual financial statements as at December 31, 2016, it discussed the interim reports of the company, published on a quarterly basis throughout the year, with the Executive Board and prepared the audit and ratification of the 2016 financial statements at company and at Group level by the Supervisory Board, as well as its dividend proposal. In addition, the committee dedicated special attention to the compliance management system, the structure and security of the Group's information technology, as well as to the need for action owing to reforms under German law on the auditing of financial statements.
The Strategy Committee met once in 2016. Together with the Executive Board, it discussed the Group's strategic development with a view to securing the future, both in its steel and steel-related areas and well as in its other activities.
The Nomination Committee met once and discussed the nomination for a successor on the Supervisory Board.
Audit of the Annual Financial Statements of Salzgitter AG and Consolidated Financial
In its meeting on March 23, 2017, the Supervisory Board examined the financial statements of Salzgitter AG (SZAG) and of the Group, both drawn up as of December 31, 2016, as well as the joint management report on the company and the Group for the financial year 2016. Prior to this meeting, the independent auditor PricewaterhouseCoopers Aktiengesellschaft Wirtschaftsprüfungsgesellschaft, Hanover, Germany, selected by the General Meeting of Shareholders, reviewed both sets of financial statements and issued an unqualified auditor’s opinion. The auditor thereby confirmed that the accounting, valuation and consolidation carried out in the consolidated financial statements complied with the International Financial Reporting Standards (IFRS). Furthermore, as part of its assessment of the early risk detection system, the auditor ascertained that the Executive Board had taken the steps required by the German Stock Corporation Act (AktG) for the early recognition of risks that could endanger the company as a going concern.
The annual financial statements of SZAG, the consolidated financial statements of the Group, the joint management report on the company and the Group, the Executive Board’s proposals for the appropriation of the retained earnings, as well as the auditor’s reports were available to the Supervisory Board for examination. The representatives of the independent auditor took part in the discussions of the annual financial statements and the consolidated financial statements and elaborated on the most important findings of their audit.
The Supervisory Board’s examination of the annual financial statements, the consolidated financial statements and the joint management report did not lead to any objections. The Board therefore approved the findings of the auditor's review and ratified the annual financial statements and the consolidated financial statements. The annual financial statements are thereby adopted. The Supervisory Board gave its approval to the proposal made by the Executive Board on the appropriation of retained earnings.
Changes to the Supervisory Board
Mr. Rainer Thieme, shareholder representative and Chairman of the Supervisory Board, laid down his office as of March 31, 2016 for reasons of age. Similarly, Mr. Bernhard Breemann, employee representative, withdrew from the Supervisory Board effective August 31, 2016. The Supervisory Board thanks these two gentlemen for their dedication to the Group, in particular Mr. Thieme who served many years as Chairman of Supervisory Board with great commitment. Important milestones in the company’s development occurred during his term of office. In place of Mr. Thieme, the District Court of Braunschweig appointed Prof. Dr. Dr.-Ing Birgit Spanner-Ulmer as a new member of the Supervisory Board and representative of the shareholders. Her appointment was ratified by the General Meeting of Shareholders. Ms. Tina Dreßen, also appointed by the District Court of Braunschweig, is to succeed Mr. Breemann. The Supervisory Board elected Mr. Heinz-Gerhard Wente as its new Chairman.
Our thanks go to the Executive Board and all the employees of the Group for their dedicated work and sound commitment throughout the financial year 2016.
Salzgitter, March 23, 2017
The Supervisory Board