Supervisory Board Report

The Supervisory Board of CGM AG has performed the duties required by law and the Articles of Association during the 2013 financial year. The Supervisory Board regularly advised the Management Board in its management of the company and supervised the company’s management team. The Supervisory Board was directly involved in all decisions of major significance to the company.

The Management Board informed the Supervisory Board regularly, comprehensively and promptly by means of verbal and written reports on all issues of relevance to corporate planning and strategic development, the course of business, the general situation of the group including any risks, and risk management.

The Supervisory Board obtained regular reports from the Management Board regarding measures implemented to improve results as well as possible, planned and completed company acquisitions. Opportunities and risks of possible transactions were discussed in detail with the management board. Deviations from the business plans and targets were explained fully.

The Supervisory Board formed an audit committee whose Chairman is the Chairman of the Supervisory board. The audit committee held three meetings in total for the year under review and discussed the interim financial reports of the Management Board as well as prepared the resolutions of the Supervisory Board. The committee submitted its recommendation for the appointment of an auditor for the fiscal year 2013 to the Supervisory Board. The Supervisory Board was regularly informed of the audit committee’s work. In addition to the Chairman Mr. Prof. Klaus Steffens, other committee members include Dr. Klaus Esser, Dr. Daniel Gotthardt and Mr. Ralf Glass.

The Supervisory Board held five ordinary meetings in the year under review. Furthermore, four resolutions were concluded in telephone conferences and written procedures:

March 28, 2013:

In the March 2013 session where the financial position was determined, the annual financial statements of CGM AG 2012, the 2012 consolidated financial statements and the respective management reports were explained in detail to the Supervisory Board by the Management Board in the presence of the auditors. The annual financial statement was determined and group accounts were approved. The proposal presented by the Management Board for the appropriation of earnings was approved and the agenda for the 2013 Annual General Meeting was set. In addition, other activities, plans and funding for fiscal year 2013 the Supervisory Board were presented to the Supervisory Board.

May 15, 2013:

At the meeting, the Management Board reported on the current situation in all business areas. Here, the annual general meeting was also prepared.

July 01, 2013:

The Supervisory Board discussed and agreed upon possible corporate acquisitions in a conference call.

July 24, 2013:

The Supervisory Board discussed and agreed upon possible corporate acquisitions in a conference call.

August 23, 2013:

The Supervisory Board discussed and agreed upon the possible corporate acquisition of a business area in Germany during a conference call.

September 11, 2013:

In this meeting, the Supervisory Board discussed updating the Joint Declaration of Compliance with the Corporate Governance Code. Further topics discussed in this session were, the considerations of the Management Board to have the HCS segment operate as an international business unit, the scheduled efficiency audit for the supervisory Board and updating the rules of procedure for the Supervisory Board.

November 14, 2013:

In this meeting, the Supervisory Board was informed about the latest possible corporate acquisitions. A draft of the 2014 budget was presented and discussed. The Management Board submitted a draft of the interim financial report from 31.10.2013 to the Supervisory Board for consideration. The Supervisory Board also discussed in this session the introduction of an adapted organizational structure for the group.

December 10, 2013:

The Supervisory Board was informed about the current situation of all business areas in this ses-sion. The budget submitted by the Board in 2014 for the CGM Group was explained in detail to the Supervisory Board and then subsequently approved. The Supervisory Board approved the acquisi-tion of a leading software provider in France. Since a portion of the purchase price was to be made by transferring shares of the Company, the Supervisory Board approved the use of the company’s own shares for this purpose.

December 18, 2013:

The Supervisory Board discussed and agreed upon the possible corporate acquisition of a business area in the laboratory information systems segment during a conference call.

There were no conflicts in interest from the Supervisory Board during the reporting time period.

In a session taking place on March 22, 2014 the Supervisory Board provided the financial auditor with the following: annual statement for the 2013 financial year as provided by the Management Board; consolidated financial statements and the management report of the Company and the Group; the Management Board's proposal for the appropriation of accumulated earnings; and the respective audit reports issued by the financial auditor.The documents submitted were reviewed by the Supervisory Board and Audit Committee. In the March 2014 session where the financial position was determined, the employees from the financial auditing firm, PricewaterhouseCoopers AG (PwC) in Frankfurt personally answered all questions posed by the Supervisory Board in detail.

The auditors (PwC) elected by the Annual General Meeting and appointed by the Supervisory Board, audited the annual financial statements for CompuGroup Medical AG, the consolidated financial statements and the respective annual reports of the AG and of the group for the year ending on December 31, 2013, including accounting records, in accordance with statutory provisions and issued an unrestricted audit certificate.

The Supervisory Board took note of the audit’s findings and did not raise any objection.

In accordance with Section 171 of the Stock Corporation Act (AktG), the Supervisory Board has reviewed and adopted the following: annual financial statements of the parent company and the group; the annual reports of CompuGroup Medical AG and the group; the Management Board’s recommended appropriation of net earnings for the year; the risk management report. The financial statements of CompuGroup Medical AG have thus been approved. The consolidated financial statements have also been adopted.

The Management Board has submitted the report stipulated by Section 312 of the Stock Corporation Act (AktG) concerning relationships with related companies (dependency report) to the Supervisory Board together with the declaration required by Section 312 (3) of the Stock Corporation Act (AktG). The aforementioned auditor has checked the dependency report and issued the following certificate confirming the results of the audit:

“Based on our obligatory audit and assessment, we confirm that
1. the actual details in the report are correct,
2. the payments rendered by the company were not unreasonably high for the legal transactions listed in the report.”

The Supervisory Board has noted and approved the audit results and has also reviewed the dependency report. Following the final results of the review conducted by the Supervisory Board, no objections were raised either against it or against the Management Board’s declaration at the end of the dependency report.

The Supervisory Board would like to thank all the members of the Management Board and the employees of CompuGroup Medical AG including those employed with its subsidiaries for their commitment and work performed in the past financial year.

Koblenz, March 22, 2014
The Supervisory Board

Professor Dr. Klaus Steffens
Chairman