Report
Expert Corporate Governance Service (ECGS)
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Steico – AGM 25 June 2020

General: The AGM is to be held in the form of a virtual AGM in accordance with the German Law to Mitigate the Consequences of the COVID-19 Pandemic. The physical presence of shareholders or their authorised proxies is not possible. The voting rights may therefore be exercised solely by postal vote or by granting authority to the proxies designated by the Company.

 

Steico develops, produces and markets ecological construction products made of renewable raw materials. The Company is the European market leader for wood-fibre insulation materials.

 

Steico SE is listed on the Basic Board segment of the Frankfurt Stock Exchange and the m:access segment of the Munich Stock Exchange, which are not organised markets within the meaning of the German Securities Trading Act. Therefore, the Company is not a capital market-oriented company within the meaning of this legal requirement and subject to reduced statutory obligations as well as less strict admission criteria, follow-on obligations and transparency requirements. Among others, Steico SE is not subject to the obligation to issue an annual declaration detailing the extent to which it follows the recommendations of the German Corporate Governance Code (declaration of conformity). Overall transparency is thus significantly below German market practice.

 

As of 31 December 2019, Chairman/CEO Udo Schramek (via Schramek GmbH) held 61.1% of the Company's shares.

 

In financial year 2019, Group revenues increased by 11.5% to EUR 281m, EBIT increased by 32.3% to EUR 32.5m and Group net income increased by 41.0% to EUR 22.8m.

 

Item 2: The Board of Administration proposes to payout an unchanged dividend of EUR 0.25/share. ECGS believes that dividends should be covered by consolidated earnings and/or free cash flow and supported by a strong balance sheet in terms of solvency and leverage. Furthermore, in view of the recent events relating to COVID-19, ECGS is in favour of postponing decisions on the dividend, reductions or suspensions that would allow companies to avoid liquidity risks or not generate risk for their survival. Due to the fact that the dividend is not covered by free cash flow for a third consecutive year, we consider a dividend payment inappropriate at this time and therefore recommend to oppose the dividend proposal.

 

Item 3: We criticise the insufficient information provided by the Company to outside shareholders. Although we take into account that the shares of Steico are not listed on a regulated market we consider that a decent level of disclosure should be provided to outside investors. We therefore recommend to oppose the discharge of the Board of Administration.

Underlying
Steico SE

Steico SE is a Germany-based company engaged in the construction industry. The Company develops, produces and distributes ecological building products made from renewable raw materials. Its product portfolio consists of insulation solutions for roof, dry walls, ceiling and floor constructions, including STEICOflex, a flexible cavity insulation; STEICOformwork, robust formwork beams for economic formwork solutions; STEICOtherm, a solid heat insulation for roofs, walls and topping elements; STEICOuniversal, a sheathing board for all constructions; STEICOfloor, a floor insulation system protecting from heat and impact sound; STEICOglulam, structural engineered elements; STEICOprotect, removing the need for a ventilated cavity allowing for thinner wall constructions, and STEICOunderfloor, an impact sound insulation, among others. As of December 31, 2011, it operated through seven subsidiaries located in Poland, the United Kingdom and France.

Provider
Proxinvest
Proxinvest

Founded in 1995, Proxinvest is an independent proxy firm supporting the engagement and proxy analysis processes of investors. Proxinvest mission is to analyse corporate governance practices and resolutions proposed at general meetings of listed firms.

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Analysts
Expert Corporate Governance Service (ECGS)

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