Financial Statements and Management Report ThyssenKrupp ag Fiscal year 08 09 ManageMent report Contents 01 Contents Financial Statements and Management Report 2008/2009 01 Management report P. 02 – 38 02 / Areas of business and organizational structure 11 / New organizational structure 13 / Course of business 18 / Financial position 21 / Business management – goals and strategy 23 / Employees 24 / Compensation report 31 / Risk report 37 / Subsequent events, opportunities and outlook 02 Financial statements P. 39 – 71 39 / Balance sheet 40 / Income statement 41 / Notes 51 / Auditors’ report 52 / Responsibility statement 53 / Executive Board 54 / Supervisory Board 56 / List of equity interests 03 Additional information P. 72 72 / Contact and 2010/2011 dates The business performance of ThyssenKrupp AG as holding company is mainly characterized by the activities of the Group. The management report therefore also reflects the business situation of the Group, whose accounting system is based on the International Financial Reporting Standards (IFRS). The financial statements of ThyssenKrupp AG were prepared according to the accounting regulations for large incorporated enterprises with the legal form of a stock corporation (Aktiengesellschaft) under German commercial law including the generally accepted accounting principles. 02 Areas of business and organizational structure Innovative capabilities, an efficient organizational structure and a forward-looking business strategy – these are the strengths of ThyssenKrupp in the international marketplace. Capabilities and organizational structure Capabilities Tailored materials of all kinds and a comprehensive range of high-end technological goods, backed by a broad portfolio of services, characterize the capabilities that ThyssenKrupp offers customers throughout the world. Whether it’s steel for auto bodies, a petrochemical complex or slewing bearings for wind turbines – the employees of our subsidiaries have a lot to offer. They work in over 80 countries across the globe and speak our customers’ language. Organizational structure Until September 30, 2009 the Group’s operations were organized into five segments: Steel, Stainless, Technologies, Elevator and Services. The segments were run by their own holding companies and decided independently on their activities on the market. The segments consisted of individual business units, organized by product areas or markets. In light of the severe consequences of the financial and economic crisis for the Group, the Executive Board took a critical look at the structure of the Group and decided to modify it. On September 04, 2009 the Supervisory Board of ThyssenKrupp AG approved the plan for the new Group organizational structure, which was subsequently implemented at the beginning of the new fiscal year on October 01, 2009. As a result of the reorganization, operational management is now more decentralized while strategic management is more centralized, allowing the Group to respond even faster to new market developments and customer needs. ManageMent report Areas of business and organizational structure 03 Instead of the five previous segments, the Group’s activities are now combined in eight business areas, bracketed together strategically in two divisions – Materials and Technologies. ThyssenKrupp AG as corporate headquarters performs the strategic management function, while the business areas and the associated Group companies operate on the market independently. Standardized Groupwide services will be the responsibility of the Business Services companies, whose services are available to all Group companies. Founded in 1999, ThyssenKrupp AG is a stock corporation under German law. It is dual domiciled in Duisburg and Essen; most of its head office functions are located in Düsseldorf. In 2010 the corporate headquarters will move to the new ThyssenKrupp Quarter in Essen; the first part of this architecturally challenging campus will be completed in mid-2010. The Group has its own offices or Group representatives in Berlin, Brussels, Beijing and another 29 locations throughout the world, supporting customers and Group companies close to the markets. ThyssenKrupp AG owns, directly or indirectly, more than 850 companies and equity interests worldwide. Management responsibilities and compliance The Executive Board of ThyssenKrupp AG defines the Group’s strategy for business development, is responsible for Groupwide corporate functions and directs the business areas; until the end of September 2009 these were the five segments mentioned above. Value management plays an important role in optimizing the worth of the business. In addition, the Executive Board organizational chart sets outs the responsibilities of individual members for specific world regions. Members’ personal knowledge of products, markets and customers and their expertise in central corporate functions ensure efficient and professional management of the Group. One key task of the Executive Board is to develop outstanding young talent for top management positions. High potentials are gradually given increasing responsibility and trained to take on more challenging tasks. Compliance as a key management duty of the Executive Board Compliance, in the sense of measures to ensure adherence to statutory provisions and internal Company policies and observation of these measures by the Group companies, is a key management duty at ThyssenKrupp. A compliance program was introduced directly after the merger of predecessor companies Thyssen and Krupp in 1999. It has been regularly reviewed and revised as necessary ever since. The Groupwide compliance activities focus on antitrust law and anticorruption policies. The compliance program contains far-reaching measures to ensure adherence to anticorruption and antitrust regulations and the Group policies based on them. The Executive Board of ThyssenKrupp AG has unequivocally expressed its rejection of antitrust violations and corruption in the ThyssenKrupp Compliance Commitment. Antitrust violations and corruption will not be tolerated and will result in sanctions against the persons concerned. All employees are requested to cooperate actively in their areas of responsibility in implementing the compliance program. 04 A compliance unit has been set up to develop, manage and implement the program. Key tasks are performed by full-time compliance officers. For example, they hold regular training sessions to inform employees about the relevant statutory provisions and internal policies and are available to answer individual questions. More than 5,000 employees have received training worldwide. Particular emphasis was placed on training in countries which may have higher compliance risks. Classroom training sessions are supplemented by a Groupwide interactive e-learning program. To supplement the compliance program, ThyssenKrupp has also introduced a whistleblower hotline. It is run for us by an external law firm. The whistleblower hotline is available to employees of the Group and also third parties to report possible infringements of laws or policies at ThyssenKrupp companies. Here again, the focus is on antitrust violations and corruption. The hotline can be contacted from anywhere in the world and is toll-free. Further compliance measures relate among other things to capital market law and adherence to the corresponding Group policies. The statutory provisions prohibiting insider dealing are supplemented by an insider policy, which sets out principles for trading in securities of the Company for directors and employees. In addition, the insider policy and our communications policy ensure the requisite transparency. The Group has a long-established clearing office for ad hoc disclosures in which representatives of various specialist departments carry out assessments to identify any matters subject to ad hoc reporting requirements, with a view to ensuring potential inside information is handled in compliance with the law. All persons who need access to inside information to perform their work at ThyssenKrupp AG are entered in an insider register. Business processes The business processes of the 13 corporate centers (CC) at ThyssenKrupp AG, which cooperate closely with each other and with all areas of the Group led by ThyssenKrupp AG, range from accounting to technology. These corporate departments support the Executive Board with the administration and control of the companies and investments which together form the ThyssenKrupp Group. CC Communications, Strategy & Technology is in charge of the worldwide communication of the capabilities, quality, innovative strength and global activities of the Group. Other areas of activity include the development of the Group’s strategy and organization including innovation policy, a wide variety of marketing tasks including brand maintenance, as well as economic issues including the preparation of economic and market forecasts. The duties of CC Executives Management are to safeguard ThyssenKrupp’s top management potential and thus to organize and conduct successful and sustained management development with state-of-the-art instruments and processes. The CC also supports the management boards of the business areas and the top 250 executives and is responsible for the establishment and management of the ThyssenKrupp Academy, a joint place of learning for all top executives. CC Legal & Compliance is responsible for legal advice, compliance, Group participations and data protection. The CC advises the Executive