REPORT OF THE SUPERVISORY BOARD
The Supervisory Board of DOUGLAS HOLDING AG dealt extensively with the business and strategic performance of our Group during the fiscal year under review. In the 2009/10 fiscal year, the Supervisory Board fulfilled its duties in accordance with the legal requirements and the company’s statutes, rules of order and Principles of Corporate Governance of DOUGLAS and further monitored and provided advice to the Executive Board. The Executive Board reported to the Supervisory Board regularly, comprehensively and in a timely manner. Beyond these meetings, the Chairmen of the Supervisory and Executive Boards remained in close contact to regularly review strategy options and current policy issues.
Dr. Dr. h.c. Jörn Kreke, Chairman of the Supervisory Board
Focus of deliberations
The Supervisory and Executive Boards held four ordinary meetings to discuss in-depth the business trends in the European retail sector and the financial performance of the DOUGLAS Group’s individual corporate divisions. The Executive Board submitted detailed reports to all Supervisory Board members before the Supervisory Board meetings. Discussions were held and decisions made on numerous issues including, among others:
a) risks and opportunities for the DOUGLAS Group’s corporate divisions arising from E-Commerce and the implementation of own multi-channel concepts for all corporate divisions;
b) intensification of the vertical integration strategy by means of expanding private and exclusive labels;
c) impact of digitalization on the bookselling business;
d) strategically necessary measures in certain countries;
e) further development of the remuneration system for the Executive Board;
f) diverse measures to secure earnings in a tough economic environment;
g) strategic considerations to promote growth of the Douglas Perfumeries outside of Germany.
Given the impact of the global economic crisis, weaknesses in the organization and store network were analyzed and adjusted, processes optimized and services improved in all markets in which the DOUGLAS Group operates. In this respect, pleasing and impressive progress was made in all areas, so that the market position was upheld and expanded.
Under www.douglas-holding.com the declaration of compliance according to the Corporate Governance Code and pursuant to Section 161 of the German Stock Corporation Law (AktG) was updated and publicized on the Internet, together with the DOUGLAS HOLDING AG Principles of Corporate Governance.
For purposes of self-evaluation, the Supervisory Board performs an efficiency audit at regular intervals, which confirms the open communication and constructive work among the Board and Committees.
In addition to holding numerous teleconferences and individual discussions, the Executive Committee convened for one meeting during the period under review. Among other topics, its discussions covered the strategic further development of the DOUGLAS Group in Germany and abroad, significant leases, a range of acquisitions and divestiture projects as well as Executive Board remuneration and issues relating to human resources. Additionally, the form and content of the Supervisory Board’s activities were discussed and reviewed, with both being found efficient and appropriate by the Supervisory Board and its Executive Committee.
The Audit Committee met on three occasions during the 2009/10 financial year. The main focal points of its deliberations were the DOUGLAS HOLDING AG’s separate and consolidated annual financial statements, the current financial structure, the hedging of interest and foreign currency risks and the operational planning for the Group. Moreover, the Executive Board and Audit Committee held three in-depth teleconferences concerning the quarterly financial reports of the fiscal year under review. The Supervisory Board as a whole was kept fully informed of the outcome of the discussions held at all the committee meetings. There was no need to convene the Arbitration Committee (pursuant to Section 27 (3) of the German Codetermination Act).
Human resource issues
1. In the 2009/10 fiscal year, Ms Anke Giesen undertook her duties as a Member of the Executive Board on November 1, 2009, and is responsible for the areas of Human Resources and Legal.
2. Ms Malene Volkers, Trade Union Secretary, resigned from her position on the Supervisory Board as per the end of the Annual Shareholders’ Meeting on March 24, 2010. Mr Johann Rösch, Trade Union Secretary ver.di, was appointed effective April 28, 2010 as the new employee representative on the Supervisory Board.
3. One Supervisory Board member participated in less than half of the Supervisory Board meetings due to illness.
In accordance with a vote at the Annual Shareholders’ Meeting, the Supervisory Board appointed Susat & Partner oHG Wirtschaftsprüfungsgesellschaft, Hamburg, in August 2010 to audit the separate and consolidated annual financial statements for the 2009/10 fiscal year. Prior thereto, the extent and focus of the audit had been defined by the Audit Committee.
The accounting and separate financial statements of DOUGLAS HOLDING AG, the consolidated financial statements for the 2009/10 fiscal year as well as the combined management report covering both the Group and DOUGLAS HOLDING AG, were audited by the auditors, concluded that they comply with legal requirements and the company statutes and issued an unqualified audit report.
On December 7, 2010, the Audit Committee joined the Executive Board to hold full discussions with the auditors on the audit findings, risk management system and organization matters of the Group’s subsidiaries. The auditors were party to the discussions on the agenda items relating to their work at the Supervisory Board’s balance sheet meeting on December 8, 2010, where they also reported on the principal findings of the audit and answered questions. Copies of the auditor’s reports were presented to the Supervisory Board. The Supervisory Board approved the findings of the audit; no objections were raised.
Annual financial statements of DOUGLAS HOLDING AG and the Group
In accordance with legal obligations, the Supervisory Board conducted a review of the separate and consolidated financial statements, the combined management report of the Group and DOUGLAS HOLDING AG, as well as the proposed appropriation of profits – all of which had been submitted in good time – and gave its approval in writing. The annual financial statements are therefore deemed adopted pursuant to Section 172 of the German Stock Corporation Law (AktG). The release of the consolidated financial statements was approved on January 10, 2011. The Supervisory Board approved the proposal for the appropriation of profits as submitted by the Executive Board, including a dividend payout of 1.10 EUR per dividend-bearing share for the 2009/10 fiscal year.
The Supervisory Board would like to thank the Executive Board, the management and all the employees of the DOUGLAS Group in Germany and abroad for their impressive commitment and successful work achieved under challenging economic conditions in the 2009/10 fiscal year.
Hagen, January 2011
On behalf of the Supervisory Board
Dr. Jörn Kreke