Throughout fiscal year 2008, the Supervisory Board performed the tasks required of it by law and the Company's Articles of Association. It oversaw and regularly advised the Executive Board in its management of the Company and in doing so was involved in all decisions of fundamental importance to the Company. The Executive Board provided the Supervisory Board with regular written and verbal reports containing full and timely information on the financial position and development of both the Company and the Group, significant transactions and the current results of operations, including information on the risk position and risk management.
The Supervisory Board held five meetings in fiscal year 2008, including one extraordinary meeting. All members of the Supervisory Board attended at least half of these meetings. The Supervisory Board passed the resolutions required by law and the Articles of Association, with decisions taken on the basis of the Executive Board's reports. Outside of its meetings, the Supervisory Board was kept fully abreast of particularly significant or urgent projects and events and, where necessary, asked to approve actions by way of a circular resolution. The Chairman of the Supervisory Board also maintained regular contact with the Executive Board outside of meetings and kept himself informed of the current status of the business and key transactions.
Notably during the second half of the year, discussions were dominated by the financial and economic crisis and the situation on the financial markets, which affected operations across the different divisions and markets to varying
Turning to other closely related matters, the Supervisory Board discussed the changes to the ownership structure resulting primarily from the departure of a major shareholder and the market rumors regarding the large shareholders' stake, their long-term interests and the repercussions for the Group. The Supervisory Board therefore devoted special attention to the strategic initiatives being pursued by the Group with an eye to optimizing its financial resources, expanding into high-growth markets, setting itself apart through technology leadership, expanding its service business and further networking its divisions along the value chain (life cycle approach). Other key topics were the change in the margins achieved by the various operating companies, both compared with competitors and bearing in mind the different business models, as well as the advantages and consequences for the divisions' increasingly networked approach. The Supervisory Board obtained information on this directly from the management of the operational units at its meetings and from competitive analyses of the different markets.
The medium-term corporate plans based on value-driven management remained a regular topic of discussion, as did the performance and long-term appreciation of the portfolio in the newly established Concessions division (HOCHTIEF AirPort, HOCHTIEF PPP Solutions).
Looking across the Group, the Supervisory Board dealt with business expansion in the Middle East through the
The Americas division focused among other things on Flatiron's integration into the Group and its collaboration with Turner and HOCHTIEF PPP Solutions. The Supervisory Board dealt on a regular basis with the development of the business and the progress being made on the networking front, which exemplifies the cross-selling potential within the Group. It also focused on the effects of the subprime-triggered financial market crisis on Turner's US construction business and its markets and market segments, which nevertheless remain in robust health and on a growth path. Another issue in the spotlight was the provision of bonds as security, particularly for public-sector clients"a practice vital to our business operations. The Supervisory Board devoted special attention to the situation at HOCHTIEF do Brasil and the losses on the construction of small hydroelectric power stations as a result of bad weather.
For the division as a whole, it can be said that the US-led economic crisis has so far had very little impact on the business of Turner and Flatiron; on the contrary, it offers opportunities and a bright outlook for growth, both in the segments of the construction market for healthcare and commercial properties and in the civil engineering market as a result of the infrastructure programs planned by the US government and the related plans in the concessions segment for toll roads and PPP projects.
In the Asia Pacific division, discussions centered on the strong performance sustained by Leighton, which matched the operating records set in 2007 and invested heavily in its infrastructure and contract mining businesses. Another main topic of discussion was the general business trend in the Australian and Asian construction and commodity markets. This led to the stock issue at Leighton Holdings Limited, which is to be used to finance growth initiatives such as expansion into selected Asian and Arab countries, the internationalization of the contract mining business and entry into the Australian market for residential real estate development projects. The Supervisory Board also
The Supervisory Board welcomed the formation of the new Concessions division, which combines the airport and PPP business segments.
The Supervisory Board received regular information on the performance of the individual airport holdings and looked in particular at the possible effects of a drop in passenger numbers in response to the economic crisis. The assumption of responsibility for operations at Budapest Airport and the latter's financial performance received especially close attention. HOCHTIEF AirPort ranks among the leading airport managers worldwide and has strengthened its position as a creator of value for the entire Group.
At HOCHTIEF PPP Solutions, discussions focused on the company's entry into the US PPP market and the benefits in this context of its collaboration with Flatiron. Active portfolio management has already proven its worth as a core element of the business strategy, paving the way for HOCHTIEF PPP Solutions to post its first operating profit.
In the Real Estate division – which, following the restructuring, comprises the project development and property management businesses – discussions centered on the activities of aurelis and the solid results from this participating interest, the successful expansion strategy being pursued in new markets (Switzerland, Russia) and product segments (nursing care facilities and healthcare properties) and strict project selection in response to the shocks to the market brought on by the financial crisis. The Supervisory Board also concerned itself with HOCHTIEF Property Management, now one of Germany's leading businesses, with trends in the rental and investment markets as well as with the impact of the economic environment on individual projects.
As in previous years, the Supervisory Board examined the European construction markets from a competitive and comparative perspective and was briefed on the expansion of direct business in the Gulf region.
In the newly formed Services division combining HOCHTIEF Facility Management and HOCHTIEF Energy Management, the Supervisory Board dealt in detail with the division's service range, key financial data and strategic projects. HOCHTIEF Services is the first port of call for companies faced with complex outsourcing decisions. Further topics of discussion included the process of consolidation and pressure on margins in a market that is becoming an oligopoly, resulting in the need to use technical building management as a differentiator, and the expansion of the international business.
In addition, the Supervisory Board received regular updates on the development of claims and variation orders within the Group, the compliance structure and audit activities. Other topics included the sufficient amount of management capacity despite the Group's strong growth and, in the same context, the working group concerned with international recruiting.
The Supervisory Board regularly turned its attention to the development of corporate governance at HOCHTIEF. In accordance with Point 3.10 of the German Corporate Governance Code, the Executive Board provides a joint Executive Board and Supervisory Board report on corporate
The Supervisory Board has formed five committees, whose members are listed in the Boards section. The Audit Committee met three times in 2008. It looked in detail at the quarterly results and annual financial statements and also devoted considerable attention to Internal Auditing's audit findings and the audit plan for 2009. In addition, the Audit Committee discussed compliance organization within the HOCHTIEF Group, the individual divisions' business models, aspects of the internal control system, the motion for the General Shareholders' Meeting regarding the nomination for external auditor, priority areas for auditing and the fee agreement with the external auditor.
The Human Resources Committee met three times. It dealt mainly with the Executive Board compensation system and the amount of Executive Board compensation. It also prepared the Supervisory Board's personnel-related decisions and passed the necessary resolutions regarding the Executive Board members' employment contracts.
The Nomination Committee met twice during the year under review and proposed suitable candidates for the Supervisory Board to include in the nominations it presented to the General Shareholders' Meeting in May 2008.
The Ad hoc Committee that was established for a period of one year did not meet before reaching the end of its term on February 26, 2008.
Once again, there was no reason to convene a meeting of the Mediation Committee pursuant to Section 27 (3) of the Codetermination Act (MitbestG) in fiscal year 2008.
At the meetings of the full Supervisory Board, the committee chairmen reported regularly and in depth on the subject matter and outcome of the committee meetings.
The annual Financial Statements prepared for HOCHTIEF Aktiengesellschaft by the Executive Board in accordance with the German Commercial Code (HGB), the Consolidated
The above-mentioned statements, the Annual Report, the proposal on the use of net profit and the auditor's reports were sent to all members of the Supervisory Board in good time prior to the meeting of the Audit Committee on March 12, 2009 and the Supervisory Board's financial statements meeting on March 18, 2009. The Executive Board also provided verbal explanations at these meetings, while the auditors responsible reported on the main results of the audit and were available to provide further information.
The Audit Committee scrutinized these statements and reports prior to the Supervisory Board's meeting and recommended that the Supervisory Board approve the annual Financial Statements, the Consolidated Financial Statements and the combined Management Report.
The Supervisory Board thoroughly examined the annual Financial Statements, the Consolidated Financial Statements, the combined Company and Group Management Report and the proposal on the use of net profit and concluded on completion of its examination that there were no objections to be raised. Following its own appraisal and taking account of the Audit Committee's report, the Supervisory Board approved the results of the auditor's audit of the annual Financial Statements and Consolidated Financial Statements. The Supervisory Board has approved and thus adopted the annual Financial Statements and approved the Consolidated Financial Statements. It concurs with the proposal on the use of net profit submitted by the Executive Board.
By resolution of Essen Local Court, Mr. Tilman Todenhöfer was appointed a member of the Supervisory Board effective September 10, 2008.
The Supervisory Board appointed Dr. Frank Stieler a member of the Executive Board for a five-year term of office effective March 1, 2009.
The Supervisory Board expresses its thanks and appreciation to the Executive Board, the Group company management teams and all employees for their work in 2008.
Essen, March 18, 2009
On behalf of the Supervisory Board
Dr. rer. pol. h. c. Martin Kohlhaussen