Annual Report 2009/2010 Geschäftsbericht 2009/2010 ... - biolitec AG

90 Annual Financial Statement Konzern-Jahresabschluss
3.9. Financial risk management
The group is open to various financial risks arising from its business and financial activities. Major risks
arise from the financial standing and solvency of its partners as well as changes in interest rates.
The financial risk management follows principles issued by the Executive Board. They include interest
rate, market, credit, currency exchange and liquidity risks. Principles and guidelines also exist for other
segments such as liquidity management as well as the acquisition of short-term and long-term loans.
The financial risk management aims at hedging, if necessary, against the different risks mentioned
above, thus limiting negative impacts on the income statement and the group’s balance sheet. By observing
the principle of separation of functions, the financial risks to which the group is exposed are
continuously evaluated, controlled and actively managed by various measures.
Default Risk
Business is only conducted with creditworthy partners after a credit assessment. Accounts receivable
are constantly monitored and credit insurances concluded for selected customers. Significant risks cannot
be observed. The non-payment risk for other financial assets is equal to their book value.
Liquidity Risk
The risk of a short-term liquidity shortage is observed by the management via liquidity monitoring.
Therefore the maturity of financial assets, especially accounts receivable and accounts payable as well
as the expected operating cash flow is constantly observed. The group is aiming at a balance between
continuously covering the required financial resources and securing flexibility by use of financial investments
and current account advances.
Interest Risk
The biolitec group minimizes interest rate risks from short-term interest rates changes by switching to
medium-term orientated financing. The majority of the company’s debt is based on interest rates that
are fixed for several years.
If necessary, financial derivatives are introduced for the sake of risk minimization. In 2009/2010, however,
no such derivatives were used.