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Report from the Supervisory Board

Dear Sir or Madam,

Over the course of the 2017 business year, the Supervisory Board continuously monitored the company’s management and received regular, comprehensive reports from the Board of Management on the company’s position, all significant events and company performance, both verbally and in writing.

The Supervisory Board thoroughly discussed all matters requiring its approval either by law or the company’s articles of incorporation and made the necessary decisions. In a total of nine meetings in 2017, the Supervisory Board dealt in particular with the annual and consolidated financial statements, the current results of operations (including the risk management system), investments and their financing, and individual transactions of particular importance, and passed resolutions on the matters assigned to it by law or the articles of incorporation. The Supervisory Board provided guidance regarding the company’s strategic focus, regarding its commitment to the Turkish market in light of the current political situation and regarding resolutions on planned investments in the growing field of wind energy. Among other items on its agenda, the Supervisory Board approved the awarding of contracts for permissible non-audit services to the auditor by providing written consent in lieu of holding a meeting.

Additionally, the Supervisory Board received reports on the new statutory requirements regarding non-financial reporting and on how the Board of Management plans to structure the future non-financial statements of EWE AG. In this regard and going beyond its statutory duty, the Supervisory Board decided to have the content of the non-financial statements audited by the audit firm Ernst & Young with limited assurance. Additionally, the Supervisory Board passed resolutions to terminate the appointment and dissolve the employment contract of the Chairperson of the Board of Management Matthias Brückmann. Additionally, the Supervisory Board passed resolutions to fill vacant seats on the Board of Management and appointed Mr Stefan Dohler as Chairperson of the Board of Management. Ms Marion Rövekamp has been appointed Head of Human Resources and Dr Urban Keussen has been appointed Head of Technology. The newly appointed members of the Board of Management all take up office in the 2018 business year as the appointments were made for dates in the 2018 business year. The Group auditing department provided the Supervisory Board with regular reports on the audits carried out. External forensic investigations have been commissioned following anonymous reports of legal violations, especially in connection with donation promises and the illegal awarding of contracts. The results of the investigation were the subject of intense scrutiny by the Supervisory Board.

The Supervisory Board of EWE AG has undergone the following changes since 1 January 2017: Dr Frank Mastiaux, Mr Peter Meiwald and Dr Stephan-Andreas Kaulvers have stepped down as representatives of the shareholders on the Supervisory Board. Mr Bernd-Carsten Hiebing, Mr Henning R. Deters and Mr Jürgen Löcke have been appointed to the Supervisory Board as representatives of the shareholders. Mr Bernhard Bramlage has taken over from the previous Chairperson of the Supervisory Board. Mr Jürgen Löcke has been elected a new member and Chairperson of the finance and audit committee. Additionally, Mr Wolfgang Behnke stepped down from the Supervisory Board as at the end of 31 December 2017.

The Supervisory Board thanks its former members for their committed, constructive work and for their efforts to further the interests of the company.

Together with the Board of Management, the Supervisory Board committees prepared the meetings and the resolutions of the Supervisory Board. All in all, the steering committee met 14 times, the working committee five and the finance and audit committee a total of four times. No meetings of the mediation committee were held pursuant to Section 27 (3) MitbestG.

The annual financial statements of EWE AG prepared by the Board of Management in accordance with the German Commercial Code (HGB), the consolidated financial statements prepared in accordance with IFRS and the combined management report for EWE AG and the Group for the 2017 business year have been audited by the accounting firm Ernst & Young GmbH, which was elected as auditor at the Annual General Meeting on 16 May 2017, and subsequently hired by the Supervisory Board. The auditors’ reports were distributed to the members of the Supervisory Board, officially acknowledged and incorporated into the discussion and review of the annual and consolidated financial statements. The auditors participated in the meeting of the finance and audit committee on 15 March 2018 and the Supervisory Board meeting dealing with the financial statements on 12 April 2018, where they reported on the major findings of their audit and were available to answer questions. Having conclusively examined the annual financial statements and consolidated financial statements prepared by the Board of Management, the management report for EWE AG and the Group management report as well as the proposal for the appropriation of net profit, the Supervisory Board expresses no objections. The Supervisory Board today adopted the annual financial statements, approved the consolidated financial statements and concurred with the Board of Management’s proposal for the appropriation of net profit.

The Board of Management also prepared a report as required by Section 312 AktG on relationships with affiliated companies as per Section 313 AktG. The auditors have audited this report and issued the following auditor’s opinion:

“On the basis of our audit and in our professional opinion, we confirm that:

1. The factual statements of the report are correct

2. The consideration paid by the company for the transactions mentioned was not inappropriately high.”

Each member of the Supervisory Board was provided with a copy of the annual financial statements and management report, the consolidated financial statements and Group management report, as well as the audit reports from the company’s auditor. After our own review of the report, the Supervisory Board concurs with the results of the audit and expressly states that it has no objections to the statements by the Board of Management at the end of the report on transactions with affiliated companies.

The Supervisory Board would like to thank and express its appreciation to the Board of Management, all employees and the members of the works councils for their hard work in the 2017 business year.

Oldenburg, 12 April 2018

The Supervisory Board

Bramlage

Bernhard Bramlage
Chairperson