2021 was dominated by the coronavirus crisis and global supply shortages. Even more so than usual, corporate governance under these difficult conditions focussed on flexibly adapting the company to the rapidly changing market and environmental conditions. In 2021, RATIONAL’s employees demonstrated once again their exceptional power and endurance. Customer satisfaction was again given top ratings. Supply shortages for electronics components were the only factor preventing an even better recovery after 2020, the first year of the pandemic.
In fiscal year 2021, we performed the tasks incumbent upon the Supervisory Board by law and by the Articles of Association. We regularly advised the Executive Board on the management of the company and monitored its activities. The Supervisory Board was directly involved in all decisions of strategic importance to the RATIONAL Group. Cooperation between the Executive Board and the Supervisory Board was characterised by comprehensive, timely and regular communication, both written and verbal. The Executive Board also reported on major transactions outside the regular meetings. The Supervisory Board received monthly reports on the effects of the pandemic and the protection measures and on market developments, the competitive situation, and the company’s marketing, sales and profit trends. In addition, the Supervisory Board and the Chairman of the Supervisory Board took steps to ensure that at all times it was informed about the current business situation, significant transactions and important decisions by the Executive Board. With this aim in mind, the Supervisory Board was in close and regular contact with all members of the Executive Board to exchange information and ideas.
Where called for by law, the Articles of Association and rules of procedure, the Supervisory Board voted, following detailed consultation and scrutiny, on the reports and draft resolutions of the Executive Board. All transactions requiring consent were carefully reviewed.
The Supervisory Board held twelve meetings in 2021. In 2022, one further meeting was held before the meeting of the Supervisory Board on 2 March 2022 to adopt the financial statements. The members of the Supervisory Board also consulted each other in writing, by telephone and video conference, and held twelve other internal meetings and four meetings of the Audit Committee in fiscal 2021. The Technology Committee met five times.
With the exception of Mr Erich Baumgärtner and Dr Gerd Lintz, who were each unable to attend one meeting, all members of the Supervisory Board were present at all Supervisory Board meetings. The Supervisory Board regularly meets for consultations without the Executive Board. Where applicable, the Supervisory Board also passed resolutions outside the ordinary meetings. According to a review carried out by the Supervisory Board itself, its members are, as a whole, familiar with the sector in which the company is active.
In the past fiscal year, the consultations with the Executive Board and internal discussions within the Supervisory Board focused primarily on the coronavirus crisis and its impact on all aspects of the performance of the business. The consultations dealt with all relevant aspects of the development of the business, including financial, investment and HR planning, business trends, the economic situation of the company and of the Group, the risk situation, risk management, and last but not least the current cost and earnings position. In addition, numerous individual topics were on the agenda of the Supervisory Board meetings, and were discussed in depth. These included:
At the Supervisory Board meeting to adopt the financial statements on 2 March 2016, the principal topics included not only the audit, adoption and approval of the annual and consolidated financial statements but specifically also the draft resolutions to be proposed to the 2022 General Meeting of Shareholders.
At the recommendation of the Audit Committee, the Supervisory Board proposes Deloitte GmbH Wirtschaftsprüfungsgesellschaft, Munich, as auditors for the 2022 fiscal year. The Supervisory Board also adopted the remaining draft resolutions for the ordinary 2022 General Meeting of Shareholders.
To protect the health of our shareholders and to allow us to plan and conduct the 2022 General Meeting of Shareholders as smoothly as possible, the Executive Board and Supervisory Board decided at an early stage, after weighing up all the different interests, to hold it as a virtual General Meeting of Shareholders in accordance with legal requirements.
Our duties in fiscal year 2021, and in particular at the meeting held on 2 March 2022 to adopt the financial statements, included not only the audit plus the entire accounting process at RATIONAL AG and in the RATIONAL Group but also the monitoring of the internal control system and the risk management system.
The Supervisory Board regularly attends joint training and development measures, which feature topical issues such as changes in the legal framework or digitalisation.
The Audit committee, whose members are Dr Hans Maerz (Committee Chairman), Mr Walter Kurtz and Mr Erich Baumgärtner, met four times in fiscal year 2021. At its meetings, it dealt in particular with the annual and consolidated financial statements, as well as with reviewing the accounting, monitoring the financial reporting process, the effectiveness of the internal control system, the risk management system, the internal audit system, compliance, and the selection and independence of the auditors and the additional services provided by the auditors as well as the amendments to the remuneration report in accordance with the provisions of the Gesetz zur Umsetzung der zweiten Aktionärsrechterichtlinie (ARUG II, German Act Implementing the Second Shareholder Rights Directive). All members of the Audit Committee attended all Audit Committee meetings. The Audit Committee reported regularly to the Supervisory Board.
The Technology Committee, which was established in January 2021 and comprises Dr Georg Sick (Committee Chairman), Mr Walter Kurtz and Dr Johannes Würbser, met five times in fiscal year 2021. At its meetings, it concerned itself with the product development process, product observation and product improvements as well as a future digitalisation strategy. It also considered individual product-specific issues in close consultation with the Executive Board. All members of the Technology Committee attended all of its meetings. The Technology Committee reported regularly to the Supervisory Board.
The Supervisory Board of RATIONAL AG has seven members and is not subject to co-determination. In fiscal year 2021, the composition of the Supervisory Board of RATIONAL AG fully complied with the German Corporate Governance Code recommendation that the Supervisory Board should include what it considers to be an adequate number of independent members.
No conflicts of interest in respect of individual Supervisory Board members occurred in the 2021 reporting year in connection with consultations, draft resolutions and the audit engagement.
At its meeting on 26 January 2022, the Supervisory Board resolved on the declaration of conformity with the German Corporate Governance Code. Together with the Executive Board, the Supervisory Board then issued the declaration of conformity on 27 January 2022. The declarations of conformity of recent years can also be found under Investor Relations on the RATIONAL website (rational-online.com). Since the last declaration of conformity was submitted on 28 January 2021, RATIONAL AG has complied with most of the recommendations of the Code, as amended, in the relevant period. Finally, together with the Executive Board, the Supervisory Board provided an account for fiscal year 2021 in the Declaration of Corporate Governance pursuant to sections 289f and 315d of the HGB.
As proposed by the Supervisory Board and elected by the General Meeting of Shareholders on 12 May 2021, Deloitte GmbH Wirtschaftsprüfungsgesellschaft, Munich, audited the financial statements of RATIONAL AG and of the Group for fiscal year 2021. The audit contract was awarded by the Supervisory Board. Prior to the proposal for election, the Supervisory Board obtained a declaration of independence from the auditors. No apparent reasons were identified to doubt the independence of the auditors. The auditors were additionally obliged to immediately provide information about any circumstances which could result in a lack of impartiality on their part and, where appropriate, to notify the Supervisory Board of services which they have performed in addition to the audit. With regard to the audit reform, the Supervisory Board is adhering to the existing in-house rule on the strict separation of consulting and auditing services. The Supervisory Board and the Audit Committee reported prior to and during the audit in discussions with the auditor on the latter’s approach to the audit and the progress of the audit.
The annual financial statements for the fiscal year from 1 January to 31 December 2021, prepared by the Executive Board in accordance with the provisions of the German Commercial Code (Handelsgesetzbuch, HGB), and the company’s management report, which also refers to the Declaration of Corporate Governance on the company’s website, were audited by the auditors and given an unqualified audit opinion. The Executive Board prepared consolidated financial statements for the Group in accordance with the International Financial Reporting Standards (IFRS), supplemented by the commercial law provisions applicable under section 315a (1) of the HGB. In addition, a Group management report was prepared. The auditors audited the consolidated financial statements and the Group management report and issued an unqualified audit opinion.
The annual financial statements, the consolidated financial statements, the management reports, the auditors’ reports, and the Executive Board’s proposal on the appropriation of unappropriated profits were forwarded in good time to the Audit Committee and all Supervisory Board members for examination. They were the subject of intensive deliberations at the meeting of the Supervisory Board held on 2 March 2022. In particular, the Supervisory Board concerned itself thoroughly with the findings of the audit by the auditors.
The auditors took part in the discussion of the company’s annual financial statements and the consolidated financial statements. They reported on the results of the audits, in particular on the points on which it was agreed the audit would focus, and were available to the Supervisory Board for questions and supplementary information. Areas on which the auditors’ explanations concentrated included the impact of materials shortages on the accounting and the assessment of the accounting-related internal control and risk management system. Both the Executive Board and the auditors answered all the Supervisory Board’s questions comprehensively and to its satisfaction.
The Supervisory Board raises no further objections to its own final results of the deliberations and its own examination. The Supervisory Board approves the results of the audit. At its meeting held on 2 March 2022 the Supervisory Board approved the annual financial statements, prepared by the Executive Board, for RATIONAL AG as of 31 December 2021, including the certified version, dated 1 March 2022, of the management report for fiscal year 2021, as well as the consolidated financial statements as of 31 December 2021 and the certified version, dated 1 March 2022, of the group management report for fiscal year 2021. The 2021 annual financial statements for RATIONAL AG, including the management report, are thereby adopted in accordance with section 172 sentence 1 of the AktG.
After consideration of the operating environment, the situation on the global financial and capital markets, and the financial position of the company, the Supervisory Board approved the appropriation of profits proposed by the Executive Board.
From RATIONAL AG’s net retained profit of 412.9 million euros for fiscal year 2021, a dividend of 7.50 euros per share and a special dividend of 2.50 euros per share, in other words, a combined 10.00 euros per share amounting to a total of 113.7 million euros, is to be distributed and the remainder carried forward to new account.
The Supervisory Board would like to thank all managers for their close and constructive cooperation, and for the trust they have placed in us. But our special thanks go to all employees. Especially in the difficult environment of the past fiscal year, they again succeeded in providing our customers with the high added value of RATIONAL’s products and services, and thus in making outstanding use of the market opportunities open to us.
Landsberg am Lech, 2 March 2022
Walter Kurtz
Chairman of the Supervisory Board of RATIONAL AG
Corporate governance.