measure and monitor the processes and report results ... - Refresco.de

In respect of other monetary assets and liabilities denominated
in foreign currencies, the Group ensures that its net exposure
is kept to an acceptable level by buying or selling foreign
currencies at spot rates, as necessary, to address short­term
imbalances.
The Group’s investment in its UK subsidiaries is hedged by a
GBP secured bank loan, which mitigates the currency risk
arising from the subsidiary’s net assets. The investments in
other subsidiaries are not hedged.
Interest rate risk
The Group is exposed to interest rate risk on interest­bearing
long­term and current liabilities. The Group is exposed to the
effects of variable interest rates on receivables and liabilities.
On fixed interest receivables and liabilities, it is exposed to
market value fluctuations.
For certain long­term interest liabilities to financial institutions,
the Group has entered into interest rate swap agreements
through which the Group effectively pays at fixed interest rates
for certain long­term interest liabilities.
3.2 Price risk
The Group is exposed to commodity price risks. To manage
these risks procurement operates within the framework of
centrally specified policies and guidelines and must act in
conformance with the required internal control measures.
The Group contract positions are based on a thorough
understanding of the raw material markets. During 2010 the
Group continued to centralize the procurement of all raw and
packaging materials. Authority levels of local management
have been shifted towards the Group central procurement
organization which is executing and monitoring the main
contracts and important purchase decisions. Commodities are
only purchased locally after approval of the central purchasing
department. Contracts exceeding predefined limits must be
authorized by the Executive Board. Existing contract positions
are closely monitored and, when necessary, corrective actions
are evaluated and implemented.
To enable it to stay abreast of the current situation in the raw
materials markets and maintain its gross margins, the Group
has introduced more pass­on clauses into sales contracts with
customers. In parallel, the quality of management information
has been enhanced by the development of a network enabling
knowledge of markets, suppliers and conditions of raw materials
to be shared at a Group level.
3.3 Capital management
There were no changes in the approach of the Group to capital
management during the year. The policy is to maintain a
sufficient capital base so as to maintain investor, creditor and
market confidence and to sustain future development of the
business. The Executive Board monitors the capital employed,
which consists of the capital in property, plant and equipment,
as well as the net working capital. Furthermore, the Group
monitors its cash positions, both actual and forecasted, on a
monthly basis.
Neither the Company nor any of its subsidiaries are subject to
externally imposed capital requirements.
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