Reporting on Corporate Governance

Effective and transparent Corporate Governance is very important at secunet Security Networks AG. The Company’s Management Board and Supervisory Board firmly believe that good Corporate Governance is key to the success of the Company. As part of this, the Management Board and Supervisory Board regularly monitor the implementation of the German Corporate Governance Code at secunet Security Networks AG on the basis of statutory requirements and the German Corporate Governance Code issued by the Government Commission.

In financial year 2011, the Management Board and Supervisory Board of secunet Security Networks AG once again carefully deliberated on the recommendations and proposals of the German Corporate Governance Code (in the version in force since 26 May 2010). The declaration of conformity set out below regarding the German Corporate Governance Code was agreed on the basis of these deliberations. This declaration is permanently available on our website and constantly updated to reflect any amendments.

In accordance with Item 3.10 of the German Corporate Governance Code and Article 289a of the German Commercial Code (Handelsgesetzbuch, HGB), the Management Board and Supervisory Board make the following report:

Management and supervisory structure

As a German public limited company, secunet Security Networks AG is subject to German stock corporation law and therefore has a dual management and supervisory structure consisting of a three-member Management Board and a six-member Supervisory Board. The Management Board and Supervisory Board work together closely and on the basis of mutual trust in their management and supervision of the Company.

Supervisory Board

The Supervisory Board supervises and advises the Management Board with regard to the management of the Company. At regular intervals, the Supervisory Board discusses business performance and planning, as well as the strategy and its implementation. It discusses quarterly reports and approves the Annual Financial Statements of secunet Security Networks AG and the consolidated Group, taking into consideration the audit reports prepared by the independent auditors and its own examination. The Supervisory Board monitors the accounting process, the effectiveness of the internal control system, risk management and internal audit, as well as the auditing of the financial statements. Its tasks and responsibilities also include appointing members to the Management Board. Management Board decisions of fundamental importance, such as major acquisitions, disposals and financial measures, require the consent of the Supervisory Board. An extraordinary meeting of the Supervisory Board is convened as and when necessary should significant events arise. The Supervisory Board has drawn up rules of procedure for its work. Its Chairman coordinates the work carried out within the Supervisory Board, chairs its meetings and represents its interests externally.

In accordance with the Articles of Association, the Supervisory Board of secunet Security Networks AG comprises six members. These members were elected individually at the Annual General Meeting held on 27 May 2009, in compliance with the recommendations of the German Corporate Governance Code. The Supervisory Board has a term of office of five years, with the current term of office due to end at the Annual General Meeting in 2014. The knowledge, skills and professional experience required to fulfil the remit are taken into account when drawing up the nominations for election to the Supervisory Board. In addition, at its meeting of 23 November 2011, the Supervisory Board concluded specific targets with regard to its composition. Taking into account the Company’s specific situation, at the next election of its members, the Supervisory Board will strive to achieve diversity among candidates with the requisite professional and personal qualities. Among suitable candidates, the Supervisory Board will look for international experience and an appropriate proportion of female members. At least one seat on the Supervisory Board is intended for a female member. Furthermore, Supervisory Board members should not be older than 70 years of age and the Supervisory Board should have as many independent members as it deems sufficient. The next election of members to the Supervisory Board will be held at the 2014 Annual General Meeting.

The Supervisory Board has formed a Chairman’s Committee. This is made up of the Chairman of the Supervisory Board, the Deputy Chairman of the Supervisory Board and a further member of the Supervisory Board chosen by the Supervisory Board members. The role of the Chairman’s Committee is to discuss Management Board personnel matters and prepare the corresponding resolutions of the Supervisory Board. In particular, the Chairman’s Committee makes proposals for the appointment of Management Board members, including the principles governing the conditions of the employment contracts and the structure and level of Management Board members’ remuneration.

No other committees have been formed by the Supervisory Board. As the Supervisory Board of secunet Security Networks AG consists of six members, it is ensured that the plenary Supervisory Board works efficiently.

Management Board

The Management Board, as the body responsible for managing the Company, conducts the Company’s business under its own responsibility and in the Company’s interests in the aim of increasing its value on a sustainable basis. In particular, it determines the principles of the Company’s policy and is also responsible for developing the Company’s strategy, for planning and setting the Company’s budget, for allocating resources, and for controlling and managing the Company’s business divisions and business units. The Management Board is responsible for preparing the Company’s quarterly financial statements, the Annual Financial Statements of secunet Security Networks AG and the Consolidated Financial Statements.

The Management Board works closely with the Supervisory Board. It informs the Supervisory Board regularly, comprehensively and without delay of all issues important to the Company as a whole with regard to strategy and strategy implementation, planning, business performance, the financial and earnings situation, and entrepreneurial risks.

Responsible risk management

Good Corporate Governance also means that the Company must take a responsible approach to risk. Systematic risk management as part of our value-oriented Group management ensures that risks are identified and evaluated at an early stage, and that risk positions are optimised. Details of risk management at secunet Security Networks AG can be found in the Management Report. It also contains the report required under the German Accounting Law Modernisation Act (Bilanzrechtsmodernisierungsgesetz, BilMoG) on the key characteristics of the internal control and risk management system relating to accounting.

Information for shareholders

secunet Security Networks AG reports to its shareholders four times a year on business performance and on the financial and earnings situation, and makes all reports and information permanently available to shareholders on the Company’s website at www.secunet.com.

The shareholders of secunet Security Networks AG may exercise their rights, including voting rights, at the Annual General Meeting. The Annual General Meeting takes place in the first eight months of the financial year. Ahead of the Annual General Meeting, shareholders receive comprehensive information about the past financial year and about the individual items on the agenda of the upcoming Meeting by way of the Annual Report and invitation to the Meeting. All relevant documents and information on the Annual General Meeting, together with the Annual Report, are also available on our website.

Shareholders are regularly notified about important dates by means of a financial calendar published in the Annual Report, in the quarterly reports and on the Company’s website.

Further detailed information about secunet Security Networks AG is available on our website at www.secunet.com.

Corporate Governance Guidelines

The Articles of Association of secunet Security Networks AG form the basis of our Company. The Company’s Articles of Association, the current declaration of conformity, the declarations of conformity for previous years and further Corporate Governance documents can be found online at www.secunet.com under The Company / Investor Relations / Compliance and Corporate Governance.

In 2008, the Management Board introduced a Code of Conduct for the Company and its employees summarising the business principles of secunet Security Networks AG. These principles are a crucial part of how secunet Security Networks AG sees itself, and of the expectations that it strives to meet. The Code of Conduct is a set of standards for dealing with all the economic, legal and moral challenges that we face in our day-to-day business activities and is intended as a benchmark and guide when working with customers, suppliers and other business partners, and for our conduct towards our competitors. It also governs our conduct in financial matters and trading in secunet shares, their derivatives and other financial instruments. The Company has set up a compliance unit to handle questions arising in connection with the Code of Conduct.

Management Board and Supervisory Board remuneration

secunet Security Networks AG complies with statutory regulations and the recommendations of the German Corporate Governance Code and discloses the remuneration of each individual member of the Management Board. In this Annual Report (more specifically, in the remuneration report, which forms part of the Management Report) we detail the remuneration of the members of the Management Board and of the Supervisory Board.

Notification of transactions under Article 15a of the WpHG (Directors’ Dealings)

Article 15a of the German Securities Trading Law (Wertpapierhandelsgesetz, WpHG) requires members of the Supervisory and Management Boards and comparable executives of secunet Security Networks AG to disclose transactions in secunet shares or related financial instruments, where the sum total of such transactions reaches Euro 5,000 within a single calendar year. Natural persons and legal entities closely related to the above persons are subject to the same reporting obligation. Directors’ Dealings disclosures are also published on our website under Investor Relations. No Directors’ Dealings took place in 2011.

No member of the Management Board or Supervisory Board owns more than 1% of the shares, or financial instruments related to the shares, of the Company. The members of the Management Board and Supervisory Board jointly own no more than 1% of the shares of the Company.

Accounting and auditing of the financial statements

secunet Security Networks AG prepares its Consolidated Financial Statements and Consolidated Interim Financial Statements in accordance with the International Financial Reporting Standards (IFRS). The Annual Financial Statements of secunet Security Networks AG are prepared in accordance with German commercial law (HGB). The Annual and Consolidated Financial Statements are compiled by the Management Board and audited by the auditors and the Supervisory Board. Interim reports and the half-year report are discussed by the Management Board and Supervisory Board prior to their publication.

secunet Security Networks AG’s Consolidated and Annual Financial Statements have been audited by KPMG AG Wirtschaftsprüfungsgesellschaft, Essen branch, the auditors appointed by the 2011 Annual General Meeting. The audits were performed in accordance with Article 317 of the HGB and with due consideration for the generally accepted standards for the audit of financial statements in Germany promulgated by the Institut der Wirtschaftsprüfer (IDW).

It was also contractually agreed with the auditors that they would inform the Supervisory Board without delay of any potential grounds for exclusion or bias and of any findings or occurrences of significance to the Supervisory Board’s remit that came to light during the audit. The Condensed Consolidated Interim Financial Statements and the Interim Group Management Report as at 30 June 2011 were subjected to an auditor’s review by KPMG AG Wirtschaftsprüfungsgesellschaft.