Annual Report 2007 - Muehlhan AG

36
Muehlhan has an highly advanced inventory of equipment,
which was developed with few manufacturers in the past.
in principle, there is the risk that one of these manufacturers
will cease production. in this case, we can find solutions
at short notice. because we engaged in the development
of the equipment in the past in close collaboration
with our suppliers and performed a significant share of our
own development work, we also have a high degree of
expertise in-house. this makes it possible for us to
produce equipment that is compatible with our existing
inventory of equipment within a short period of time,
even with new suppliers.
Surface protection is quite labour intensive. However,
energy is also required for climate control in large steel
structures while work is performed, for the transportation
of abrasives by compressed air, or for the production of
high pressure water using pumps. Muehlhan is therefore
directly affected by price increases of energy. We can
counter such developments only with a price increase
for our own services. However, Muehlhan uses environmentally-friendly
and energy-saving technologies, so that
an increase of prices of energy tends to improve our
competitiveness.
in general, for companies that use patented or licensed
processes, there exists the risk of terminable patent or
license terms. for the µ-jet process that we use, and for
the other services in the µ-series, we currently have patent
agreements beyond the year 2020. in addition, our licenses
guarantee the exclusive right of use within a 1-mile zone of
coastal locations, rivers and large bodies of water.
Personnel risks
the competition for highly qualified executives and qualityconscious
technical personnel is still high in the industries
in which Muehlhan is active. Examples from the past fiscal
years have shown that Muehlhan works in a “people
business” in its sub-markets, in which individual positions
can affect the success of the Group. our future success
therefore depends in part on the extent to which we are
successful over the long-term in externally recruiting the
required professional personnel, integrating them into the
existing work processes, and linking them to the company
for the long-term.
at the same time, the company wants to make use of its
employees’ extraordinarily high level of identification with
our company and its services in the past, and consistently
prepare appropriate employees from its own ranks for
strategically important tasks within the company.
Information technology risks
Muehlhan protects the entire Group from the risk of data
loss at the level of the individual companies by making daily
data backups. by storing the backups offsite, we ensure
the prompt restoration of all the necessary operational
and corporate data.
Financial risks
the companies of the Muehlhan Group work primarily at
fixed prices and regularly begin providing their services
in advance of payment. as such, there is the risk of customer
bankruptcy, and a credit risk, particularly in the case
of large contracts. for existing customer business relationships,
most of which have been in place for years,
Muehlhan considers these risks to be extremely low. in
order to limit the likelihood of default for important new
customer contracts as well, all companies of the Muehlhan
Group are instructed to evaluate the economic status of
its business partners before finalizing the contracts.
in addition, all companies have accounts receivable
management that functions well.
from the company’s perspective, there are no significant
tax risks. Nevertheless, tax claims could emerge if the
tax authorities’ opinion of the law differs from that of the
taxed company in particular cases.
as already reported in the previous year, a legal dispute
is pending in this regard with the Greek tax authorities.
because a decision has already been issued in favour
of Muehlhan in the initial court proceedings a positive
decision for the entire proceedings can also be expected.
all accounts with credit balances invested in the money
market are subject to the normal risk of interest rate fluctuations.
in addition, for contracts outside of the Euro zone,
in principle there is a currency exchange rate risk, in particular
for the uS dollar, which is currently very weak. in order