Supervisory Board Report

The Supervisory Board of NORMA Group SE monitored and advised on the activities of the Management Board in fiscal year 2021 in accordance with the legal regulations, the German Corporate Governance Code and NORMA Group SE’s Articles of Association.

Supervisory Board meetings in 2021

The Management Board begins each regular Supervisory Board meeting by reporting on the overall economic situation and sector-specific economic expectations. It reports on the current business performance of NORMA Group and explains the earnings situation based on key indicators and their development compared to the previous year and the budget.

The Management Board presents a detailed risk report at each regular meeting of the Supervisory Board and the Audit Committee. In this context, the risks affecting NORMA Group are assessed in each case at the level of the previous quarter with regard to their probability of occurrence and potential impact, taking into account countermeasures already initiated and any provisions. In 2021, the risk reports and risk management were adapted to the requirements of the amended IDW PS 340. This regular risk reporting provides the Supervisory Board and the Audit Committee with a clear picture of the possible risks that could have a negative impact on the company’s earnings, asset and financial positions.

Work-related accidents and measures implemented to improve occupational safety were also discussed at each Supervisory Board meeting, as were quality issues and aspects related to delivery reliability. Other topics discussed on an ongoing basis by the Supervisory Board and Management Board, in 2021 in particular, included the ongoing effects of the coronavirus pandemic, the status of the “Rightsizing” and “Get on track” programs, the introduction of ERP systems, and measures aimed at improving the development of earnings. The respective Chairmen reported to the Supervisory Board on the committee meetings. Following the meetings with the Management Board, the Supervisory Board held regular internal meetings at which the Management Board was not in attendance.

In 2021, the Supervisory Board held meetings on March 18, May 20, July 15, September 17, October 29, and November 26. Due to the coronavirus pandemic, most of the meetings of the Supervisory Board and its committees were attended by all or several participants via videoconferencing.

The topics discussed at the meeting held on March 18, 2021, included the Consolidated and Separate Financial Statements for 2020 and the Non-financial Group Report, the forecast for fiscal year 2021, the proposal for the appropriation of net income, preparations for the 2021 Annual General Meeting, and the EU taxonomy.

The meeting that took place on May 20, 2021, dealt in particular with the agenda for the 2021 Annual General Meeting, the sale of a building in the United States and the expansion of a site in China.

On July 15, 2021, the Supervisory Board dealt, among other matters, with NORMA Group’s strategy, the personnel structure of the organization, financing topics and another small plant in China.

At the meeting held on September 17, 2021, the newly appointed Executive Vice President HR and Integrity introduced himself and presented the “Human Resources Roadmap”. In addition, the Rules of Procedure for the Management Board were updated.

The meeting on October 29, 2021 focused on the development of the earnings situation and measures to improve operating performance and how to deal with sharply rising purchasing prices. These topics had already been discussed at the meeting held by the Audit Committee on September 24, 2021, that was attended by other members of the Supervisory Board as guests.

At the Supervisory Board meeting held on November 26, 2021, the topics discussed included the budget for 2021 and medium-term planning up to 2026, a new NDS plant in the United States, and M&A matters. The President of the APAC region also introduced himself at this meeting.

Outside of their meetings and conference calls, the Management Board reported to the Supervisory Board on a monthly basis on how the business was developing for NORMA Group SE and the Group and provided an outlook for the current fiscal year. In addition to these monthly reports and the Supervisory Board meetings, the Chairman of the Management Board and the Chairman of the Supervisory Board regularly exchanged views on important topics.

New member of the Supervisory Board

The Supervisory Board of NORMA Group SE is normally comprised of six members. After the former Chairman of the Supervisory Board, Lars Berg, resigned from his position in 2020 and stepped down from the Supervisory Board, Miguel Ángel López Borrego was recruited to serve as a new member of the Supervisory Board. He was first appointed by the court and then elected to the Supervisory Board of NORMA Group SE at the Annual General Meeting on May 20, 2021. Mr. López has also been a member of the Audit Committee since April 1, 2021.

Attendance of meetings, training activities, no conflicts of interest

All members of the Supervisory Board attended five of the six Supervisory Board meetings and conference calls in 2021. Mr. López was unable to attend one meeting because he had been appointed to the Supervisory Board by the court at short notice immediately beforehand and was therefore unable to attend the meeting. The other members of the Supervisory Board attended all of the meetings.

The eight meetings of the Audit Committee in 2021 were attended by all of its members, Dr. Michelberger (Chairman), Mr. Wilhelms and, from April 2021 on, Mr. López as well.

The three meetings of the General and Nomination Committee in 2021 were attended by all of its members, Mr. Hauptmann (Chairman), Mrs. Schulte and Dr. Michelberger.

Similarly, all members of the Strategy Committee, Mrs. Forst (Chairwoman), Mr. Wilhelms and Mrs. Schulte attended the three meetings of the Strategy Committee in 2021.

Educational and training measures in 2021 focused on the new regulatory conditions. In addition, members of the Supervisory Board attended seminars offered by auditing companies and law firms, among other events, on topics related to accounting and auditing, as well as sustainability issues and corporate governance. Most of these training measures took place virtually in 2021. In addition, extensive corporate law documents and strategic information were made available on the occasion of Mr. López’s inauguration.

There were no conflicts of interest between members of the Supervisory Board and the company in fiscal year 2021.

Main activities of the Audit Committee in 2021

One of the main focuses of the Audit Committee’s activities is the audit of the financial statements, including assessing the quality of the audit. The Audit Committee discussed the focus, procedure and results of the audit of the individual and Consolidated Financial Statements of NORMA Group SE with the auditors and prepared the resolutions of the Supervisory Board. In addition, the Audit Committee decided on certain permissible non-audit services to be provided by the auditors (PwC). The Audit Committee monitored the effectiveness of the internal control system, the risk management system and the internal auditing system, as well as the compliance management system, and approved the audit plan for internal auditing. Furthermore, the Audit Committee discussed the quarterly publications with the Management Board. In 2021, the Audit Committee also dealt in particular with the amendments to IDW PS 340, financing issues and foreign currency hedging, as well as the effects of the Act to Strengthen Financial Market Integrity (Gesetz zur Stärkung der Finanzmarktintegrität, FISG).

Besides Mrs. Stieve, who attended all Audit Committee meetings, senior executives from Accounting & Reporting, Treasury, Compliance, Internal Audit and Risk Management in particular also presented to the Audit Committee.

In addition to the Audit Committee meetings, regular face-to-face and telephone consultations took place between the Committee Chairman and Mrs. Stieve and the auditors; the content of the consultations included possible focal points for the audit of the Annual Financial Statements for 2021 and the main focuses for the work of the Audit Committee in 2022.

Main activities of the General and Nomination Committee

The General and Nominating Committee dealt in particular with the search for a new Supervisory Board member and the compensation of the Management Board and prepared the relevant resolutions of the Supervisory Board.

Main activities of the Strategy Committee

The Strategy Committee dealt in particular with NORMA Group’s long-term orientation towards the various end markets and megatrends. This committee also deals with the effects of climate change on NORMA Group’s business as a key topic. The committee deals with the international expansion of the strategic business units Water Management, Industry Applications, and Mobility and New Energy in the regions. The structures and resources required for this were also discussed. In fiscal year 2021, the committee also dealt with NORMA Group’s innovation process, the strategy process and the status of digitalization, among other topics.

Besides the Chairman of the Management Board, who attended all meetings, the managers responsible also took part in the Strategy Committee meetings on the respective topics.

Information on the auditor

The 2021 Annual Financial Statements of NORMA Group SE presented by the Management Board, along with the Management Report and the respective Consolidated Financial Statements and Group Management Report, were audited by PricewaterhouseCoopers GmbH Wirtschaftsprüfungsgesellschaft (PwC). The audit mandate for the 2021 financial statements was issued on November 26, 2021. In addition, as part of the audit, the auditor also had to assess whether the electronic reproductions of the financial statements and management reports (“ESEF documents”) prepared by the Management Board for disclosure purposes comply in all material respects with the requirements of Section 328 (1) of the German Commercial Code (Handelsgesetzbuch, HGB).

The auditors Stefan Hartwig and Richard Gudd attended three Audit Committee meetings and one Supervisory Board meeting on the respective agenda items relating to the audit of the financial statements and explained the audit.

Adoption of the 2021 Annual Financial Statements and the Separate Non-Financial Statement for the Group

The Consolidated Financial Statements of NORMA Group SE were prepared in accordance with Section 315e HGB on the basis of the International Financial Reporting Standards (IFRS) as applicable in the EU. The auditor issued unqualified audit opinions for the 2021 Annual Financial Statements, including the Management Report, the Consolidated Financial Statements and the Group Management Report of NORMA Group SE. The documents relating to the financial statements and the Management Board’s proposal for the appropriation of profits, as well as the two auditor’s reports, were submitted to the Supervisory Board. The Audit Committee and the Supervisory Board as a whole examined the reports in detail and discussed and scrutinized them at length in the presence and with the participation of the auditor. The Supervisory Board concurred with the results of the audit by the auditor. No objections were raised.

The Supervisory Board then approved the 2021 Annual Financial Statements of NORMA Group SE and the 2021 Consolidated Financial Statements together with their respective Management Reports at its meeting on March 17, 2022. The Supervisory Board approved the proposal on the appropriation of profits by the Management Board. NORMA Group SE’s Annual Financial Statements are thereby adopted in accordance with Section 172 of the German Stock Corporation Act (Aktiengesetz, AktG).

The Audit Committee and the Supervisory Board also dealt with the separate Non-financial Group Report for NORMA Group prepared by the Management Board as of December 31, 2021. PricewaterhouseCoopers GmbH Wirtschaftsprüfungsgesellschaft conducted a limited assurance audit and issued an unqualified audit opinion. The Management Board explained the documents in detail at its meetings, while representatives of the auditor reported on the main findings of their audit and answered further questions from the members of the Supervisory Board. The Supervisory Board had no objections after reviewing these results.

Declaration of Conformity with the German Corporate Governance Code

The Supervisory Board and Management Board dealt with the requirements of the German Corporate Governance Code. The current Corporate Governance Declaration made by NORMA Group SE dated December 17, 2021, as well as the declarations from past years, are available on the company’s website at www.normagroup.com.

The Supervisory Board would like to thank the Management Board and all employees of NORMA Group all over the world for their personal commitment and successful work in this challenging last fiscal year. The Supervisory Board is confident that NORMA Group will develop positively in fiscal year 2022 and wishes the Management Board and employees every success in achieving their goals.

Günter Hauptmann

Chairman of the Supervisory Board