Consolidated Financial Statements - L. Possehl & Co. mbH

RISK MANAGEMENT
Based on a system of regular monitoring, no overall risks that could
endanger its continued existence can be identifi ed for the Possehl
Group.
Potential corporate risks always in focus
The Possehl Group management is continuously working on the further
development if its risk management system. In addition to an assessment
of the general risk potential, the Possehl Group also analyzes the
company-specifi c risks. In this way, management and control boards
can detect potential factors that may endanger the continued existence
of the company early on and develop defense strategies. This minimizes
the risks for the individual companies and the Group as a whole.
In addition to risks, the Group management always has its eye on corporate
opportunities: potential opportunities are identifi ed, their risk
potential is analyzed and they are further pursued depending on the
respective valuation.
In order to limit the risks for the entire Possehl Group, we have in the
past conscientiously invested in fi elds with different types of opportunity
and risk profi les when selecting the business divisions. We conscientiously
strive for a situation of no synergies between the individual
business divisions of our Group.
The Group works with an effective system
for risk monitoring
Included among the components of the Possehl risk monitoring system
are the domestic fi nancial clearing system, the accounts receivable reporting
system, the operating and strategic planning with the monthly
reporting system, the regular quarterly meetings between the Executive
Board of the holding company and the managing directors of the
operating companies and the investment controlling. This systematic
and close collaboration with the managing directors of our subsidiaries
enables us to detect unfavorable situations in good time and undertake
suitable corrective measures.
Individual risks within the business segments
are dealt with appropriately
The special operating risks have different characteristics in the individual
business segments:
In the Production division, the optimization of processing times and
thorough quality assurance and monitoring of procurement and manufacturing
are of utmost importance. It is therefore important for the
production business divisions – Precious Metals Processing, Electronics,
Elastomer-Processing and Construction – to recognize, analyze and
appropriately minimize the special manufacturing and processing risks
at an early stage by means of suitable key data. A special risk in the
Electronics segment is that of only being able to partially pass on the
burden of the rising price of copper to our customers.
Specifi c procurement risks are defi nitive for the companies in the Trading
division. On one hand, price fl uctuations for commercial and preliminary
products represent a permanent risk, and on the other hand
the availability of the trade goods and raw materials must be assured
at all times. Especially in times of strong market demand and limited
offerings, the good supplier relations of the Possehl companies pay off,
which as a rule are secured by long-term contractual ties. In addition,
all of the companies watch the market continuously with the help of
their international networks. Taking into account the effects of commitment
of capital, they follow the practice of far sighted stockpiling and
use the broadest possible geographic distribution of sources. Back-toback
transactions are therefore standard in trading.
In addition, the loss of receivables outstanding represents a permanent
business risk across all business divisions. The Group therefore places
special emphasis on the monitoring and safeguarding of outstanding
accounts.
If required, all business divisions safeguard against risks of currency
and interest rate changes resulting from international corporate
activities by using suitable hedging tools. Contingent or non-contingent
derivatives are only concluded within the Group to hedge against physical
inventories or transactions.
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