Consolidated Financial Statements - L. Possehl & Co. mbH

26
A malfunction of the electronic data processing can have a negative impact
only in subareas due to our widely distributed business segments
and corporate structures. To counteract these IT risks as well, the
Possehl Group has at its disposal data backup systems, authorization
plans and virus and access protections systems, as well as emergency
plans, to name a few.
Classic risk management is supplemented by
credit investigations and accounts receivable
management
As part of its risk management, the Possehl Executive Board monitors
the economic risks of its operating businesses using established
controlling instruments. As a supplement to the monthly reporting,
Possehl uses credit investigations and an active accounts receivable
management system. In accordance with the internal Group guidelines,
purchasing and selling transactions above certain individual business
segment limits must be coordinated with the executive board of the
holding company the same as acquisitions or investments.
We check all yield assumptions centrally in the preparation phase
and during the approval process and monitor their compliance
during realization. For companies with longer production times, central
risk management also focuses on reports concerning incoming orders
and backlog of orders as well as pre-calculation tests above certain
value limits.
The D&O (Directors’ and Offi cers’) insurance assures against any misconduct
by legal representatives or executive staff of the companies of
the Possehl Group that may result in damages to third parties or within
the Possehl Group.
In addition, through its own in-house insurance brokerage company,
Lubeca, Possehl has an instrument for central monitoring and safeguarding
of all insurance contracts. Work has begun on establishing a
worldwide loan insurance program, which already includes a signifi cant
portion of our companies even today.
Risk management | Supplementary report and outlook
Group Management Report
SUPPLEMENTARY REPORT AND OUTLOOK
Growth policy already successfully implemented
in the fi rst quarter
The Possehl Group has continued to further pursue its growth policy at
the beginning of the year 2006 as well:
On January 1, 2006 L. Possehl increased its stake in Hako Holding
GmbH & Co. KG from 30 % to about 56 % of the shares, thereby taking
over corporate leadership. As an independent business division within
the Possehl Group, Hako will further develop its good position on the
market for cleaning and property maintenance machines.
In the Electronics business division, we acquired the remaining shares
in Possehl Electronics N.V. on February 17, 2006, making us the sole
shareholder. This acquisition of shares gives us the opportunity to use
the benefi ts of Asian locations within the Electronics division, but also
in the entire Possehl Group, to further advantage.
Mönchengladbach-based textile machine manufacturer
Monforts acquired
We took another important step in our growth on March 31, 2006 by
acquiring all business shares in A. Monforts Textilmaschinen GmbH &
Co. KG. The Monforts Group is the world market and technology leader
for textile fi nishing systems in the high-quality sector. In addition to
the main company in Mönchengladbach, it encompasses the two subsidiaries
in Austria and Switzerland as well as a joint venture in China.
Excluding the joint venture, the Monforts Group achieved annual sales
of approximately € 110 million during the past fi scal year with a staff
of 375.
By acquiring the Monforts Group, we not only succeeded in continuing
on our course of growth, but also realized a further balancing of risks in
our portfolio at the same time. As with the Hako Group, the Monforts
Group is being managed as an independent business division within the
Production segment.