At the Supervisory Board meeting held on 10 December 2008, we approved both the Financial Statements and the Consolidated Financial Statements for financial year 2007/2008 and followed the Management Board proposal on the appropriation of net income for financial year 2007/2008.

The Supervisory Board meeting held by teleconference on 14 January 2009 was primarily a discussion of Management Board matters. Then, on 23 February 2009, at the proposal of the General Committee, the Supervisory Board terminated the appointment of Management Board member Mr. Harald J. Joos by mutual consent with effect from midnight on 31 March 2009, appointed Mr. Aloysius Rauen a member of the Management Board with effect from 1 May 2009 and nominated Mr. Rauen Chairman of the Management Board. On 23 February 2009, the Supervisory Board also decided on the changes to the Management Board’s organisational chart and Mr. Aloysius Rauen’s nomination as Management Board member with responsibility for employee relations with effect from 1 May 2009.

As well as receiving the Management Board’s report on current business developments, the Supervisory Board meeting on 3 March 2009 mainly prepared for the Annual General Meeting that was to take place after that Supervisory Board meeting.

Against the backdrop of the financial and economic crisis and its effects on the Demag Cranes Group, the Management Board presented its proposal for a restructuring programme at the Supervisory Board meeting on 13 May 2009. We discussed this proposed restructuring programme with the Management Board in detail and approved its implementation. The Management and Supervisory Boards agreed that, in order to safeguard the Company’s long-term future, it would be necessary to adjust capacity and in particular lower break-even points. Following the Supervisory Board meeting on 13 May 2009, the Management Board kept us informed of the current status of the restructuring programme.

At the meeting on 4 September 2009, we adopted changes being made to the Rules of Procedure for the Supervisory and Management Boards in light of the amendments to various provisions of the German Stock Corporations Act (AktG) and the German Corporate Governance Code. One topic of particular focus in this context was the amended criteria for determining and assessing Management Board remuneration following the introduction of the German Act on the Appropriateness of Management Board Remuneration (VorstAG). At this Supervisory Board meeting, the Management Board also presented a transaction requiring our approval. We endorsed the investment in equipment planned as a result of the site relocation in India and at the same meeting also approved the Annual Budget for 2009/2010. After the meeting, on 9 October 2009, we resolved to approve the rolling multi-year planning.

On 28 September 2009, at the proposal of the General Committee, the Supervisory Board resolved to extend the Management Board mandates and contracts of Mr. Rainer Beaujean and Mr. Thomas H. Hagen, in each case until 30 September 2014. In assessing the appropriateness of the remuneration agreed in those contracts, the Supervisory Board was advised by an independent remuneration expert.

At the first Supervisory Board meeting of the new financial year 2009/2010, held on 4 December 2009, we approved both the Financial Statements and the Consolidated Financial Statements for financial year 2008/2009 and followed the Management Board proposal on the appropriation of net income for financial year 2008/2009. At the same meeting, we received and approved the Management Board proposal regarding the convening of and agenda for the Company’s forthcoming Annual General Meeting and adopted our proposals regarding the resolution of the items on the agenda.

At the Supervisory Board meeting on 10 December 2008, one member of the Supervisory Board sent apologies for his absence. All other Supervisory Board meetings were attended by all members of the Supervisory Board.

There were no conflicts of interest involving members of the Management or Supervisory Boards in financial year 2008/2009.

The Supervisory Board has formed a total of four committees. These primarily prepare topics and resolutions for meetings of the full Supervisory Board. In certain cases, they also exercise decision-making powers transferred to them, insofar as the law permits, by the Supervisory Board. In addition to the Mediation Committee pursuant to Section 27 (3) of the German Co-determination Act (MitbestG), there is the General Committee, the Audit Committee and the Nominations Committee. The Mediation, General and Audit Committees each have four members, of whom two are employee representatives and two are shareholder representatives. The Nominations Committee comprises all six shareholder representatives on the Supervisory Board. With the exception of the Audit Committee, all of the committees are chaired by the Chairman of the Supervisory Board.

The General Committee prepares the personnel-related decisions of the Supervisory Board and, in particular, deals with the terms of the employment contracts of the Management Board members including their remuneration, the appointment and dismissal of Management Board members and the nomination of the Chairman of the Management Board. Following the entry into force of the German Act on the Appropriateness of Management Board Remuneration (VorstAG), issues relating to Management Board remuneration are finally decided by the full Supervisory Board. The General Committee met four times during financial year 2008/2009 and on 23 February 2009 additionally adopted resolutions in writing without meeting.

The Audit Committee under the chairmanship of Prof. Dr. h.c. Karlheinz Hornung is responsible in particular for the preliminary audit of the Financial Statements and Consolidated Financial Statements, the Management Reports and the proposal on the appropriation of net income; it also deals with risk management and compliance issues. The Audit Committee consulted Warth & Klein GmbH Wirtschaftsprüfungsgesellschaft when it required an expert opinion on selected compliance issues. In addition, it discussed the half-yearly and quarterly financial reports with the Management Board. The Audit Committee held a total of five meetings during the reporting period. At the first meeting of financial year 2008/2009, it dealt with the preliminary audit of the 2007/2008 Financial Statements and Consolidated Financial Statements, the corresponding Management Reports and the Management Board proposal on the appropriation of net income. At the same meeting, the Audit Committee received the results of the tax audit for the period 2001 to 2004 and satisfied itself of the independence of the auditors. At the subsequent meetings, the Audit Committee discussed the preliminary quarterly results and obtained information in particular on the current status of risk management and compliance. The meeting on 28 April 2009 dealt with the results of an informal review by Deloitte & Touche GmbH Wirtschaftsprüfungsgesellschaft as at 31 March 2009 and the meeting on 28 August 2009 dealt with the Annual Budget for 2009/2010 and the rolling multi-year planning. The Chairman of the Audit Committee, who has at no time been a member of the Company’s Management Board, is independent and, as a result of his education and professional experience, has expertise in accounting and auditing.

When fresh elections are about to be held, the Nominations Committee proposes suitable candidates to the Supervisory Board so that the latter can make appropriate proposals to the Annual General Meeting. The Nominations Committee held one meeting during financial year 2008/2009, on 10 December 2008. At this meeting, it resolved on the proposal of Dr. Rudolf Rupprecht as successor to former Supervisory Board member Reinhard Gorenflos. At the same meeting, the Chairman of the Supervisory Board was elected Chairman of the Nominations Committee.

Once again, there was no reason during the past financial year to convene a meeting of the Mediation Committee pursuant to Section 27 (3) of the German Co-determination Act (MitbestG).

In the current financial year 2009/2010, the Audit Committee met on 27 November 2009 and dealt with the preliminary audit of the Company’s Financial Statements and Consolidated Financial Statements for financial year 2008/2009, the corresponding Management Reports and the Management Board’s proposal on the appropriation of net income.

On 3 March 2009, the Annual General Meeting resolved to elect Deloitte & Touche as auditors for financial year 2008/2009. The Supervisory Board issued Deloitte & Touche with the audit engagement and followed the Audit Committee’s recommendations by specifying that audit activities focus on the following: impairment testing of assets (IAS 36) in light of the bleaker economic outlook (including clear documentation, note disclosures); measurement of financial instruments (IAS 39), presentation of measurement methods, disclosures on sources of estimation uncertainty (IAS 1) and note disclosures (IFRS 7); restructuring provisions (IAS 19 and 37); risk reporting in the Management Report; revenue recognition (IAS 18); system review in light of the recognition of costs relating to Mobile Harbour Cranes; receivables management; liquidity management.

Deloitte & Touche audited and issued an unqualified audit opinion on the Financial Statements and Consolidated Financial Statements prepared by the Management Board for the financial year from 1 October 2008 to 30 September 2009 and the corresponding Management Reports.

The financial statement documents and the auditors’ audit reports were submitted to all members of the Supervisory Board in a timely manner. At the Audit Committee meeting on 27 November 2009 and the Supervisory Board meeting on 4 December 2009, the documents were discussed in detail in the presence of the auditors. At both meetings, the auditors reported on the material findings of their audit and were available to provide any further information. The auditors are required to report on material weaknesses in the internal control and risk management system in relation to the financial reporting process; no such weaknesses were identified. Neither were there any circumstances that would call into question the auditors’ impartiality. In addition to performing the financial statement audits, the auditors also conducted an informal review as at 31 March 2009 and provided audit-related services amounting to EUR 47,000 and other services amounting to EUR 40,000 in financial year 2008/2009.

Having thoroughly examined the Financial Statements and Consolidated Financial Statements, the respective Management Reports and the proposal on the appropriation of net income, the Supervisory Board approved the findings of the auditors’ audit. It did not raise any objections on completion of its examination. The Supervisory Board followed the Audit Committee’s recommendation and approved the Financial Statements and Consolidated Financial Statements. The Financial Statements were thus adopted. The Supervisory Board also followed the Management Board’s proposal concerning the appropriation of net income, particularly in light of the current state of business at the Company.

In financial year 2008/2009, there were changes to the membership of both the Management Board and the Supervisory Board.

With effect from midnight on 31 March 2009, Mr. Harald J. Joos resigned from the Management Board of Demag Cranes AG by agreement with the Supervisory Board. We would like to thank Mr. Harald J. Joos for his outstanding work on behalf of the Company. On 23 February 2009, the Supervisory Board, at the proposal of the General Committee, resolved to appoint Mr. Aloysius Rauen a member of the Management Board and nominate him Chairman of the Management Board with effect from 1 May 2009.

After Mr. Reinhard Gorenflos resigned his membership of the Supervisory Board with effect from 15 September 2008, the members of the Nominations Committee proposed Dr. Rudolf Rupprecht as Mr. Reinhard Gorenflos’ successor at their meeting on 10 December 2008. The Supervisory Board followed this proposal at its meeting on 10 December 2008 and arranged to have Dr. Rupprecht appointed by court. In a ruling by the Düsseldorf local court dated 18 December 2008, Dr. Rudolf Rupprecht was appointed a member of the Supervisory Board of Demag Cranes AG until the close of the Annual General Meeting that resolved on the financial year ended 30 September 2008. At the Annual General Meeting held on 3 March 2009, Dr. Rudolf Rupprecht was elected to the Supervisory Board of Demag Cranes AG until the close of the Annual General Meeting that resolves to formally approve the actions of the Supervisory Board for financial year 2012/2013.

Corporate Governance

In financial year 2008/2009, the Supervisory Board continued to devote regular attention to the Company’s corporate governance. We amended the Rules of Procedure for the Management and Supervisory Boards in light of the revision of the German Corporate Governance Code and the amendments to various provisions of the German Stock Corporations Act (AktG). Pursuant to Clause 3.10 of the Corporate Governance Code of 18 June 2009, the Management and Supervisory Boards report on corporate governance within the Demag Cranes Group in the corporate governance report. On 8 December 2009, the Management and Supervisory Boards issued an updated Declaration of Compliance in accordance with Section 161 of the Stock Corporations Act, which the Supervisory Board adopted at its meeting on 4 December 2009.

We would like to thank the members of the Management Board, the employees and the employee representatives of all the Group member companies and associated companies for their personal endeavours and constructive collaboration in a difficult business environment and challenging financial year 2008/2009.

Düsseldorf, 8 December 2009
The Supervisory Board
Burkhard Schuchmann
Chairman