Matth. Hohner AG

Notes to the Consolidated Financial Statements for Business Year 2010/2011
The table below shows the reconciliation between the income tax expense and the product of the net profit
for the period and the applicable tax rate of the Group for the business years 2010/2011 and 2009/2010:
2010/2011 2009/2010
TEUR TEUR
Result before income taxes 2,003 2,245
Income tax expense at the tax rate in Germany of 28.425 %
(prior year: 28.425 %)
569 638
Adjustments of current income taxes incurred in prior years -289 370
Non-deductible expenses 23 22
Tax-free income, other deductibles and permanent differences -45 -67
Other 16 25
Effect of the local tax rate on the deferred tax rate of the Group
(including follow-on effect in consolidation)
53 78
Non-recognition or adjustment of unused tax losses 191 336
Income tax expenses (+)/income (-) disclosed
in the consolidated income statement
518 1,402
21. Earnings per share
When calculating earnings per share, the net income allocable to the shareholders of the parent entity of
TEUR 1,484 (prior year: TEUR 843) is divided by the weighted average number of common shares outstanding
(3,000,000). The earnings per share for business year 2010/2011 are EUR 0.49 (prior year: EUR 0.28).
There are no dilutive effects.
22. Financial instruments – Risk management
Basic principles of risk management
The hedging strategy and risk factors of the financial instruments are determined by type of risk. Necessary
hedging measures are arranged locally by the individual Group entities and monitored centrally.
The risk policy of HOHNER Group is designed to responsibly and equitably balance the opportunities and risks
of entrepreneurial when acting against each other. The risk management is an integral part of the planning
and controlling process. Our overall goals are to secure the Group’s assets as well as increase of shareholder
value. The strategies of the Group aim at the optimal use of opportunities given and limiting the risks
associated with business activity to the greatest extent possible.
Risk management of HOHNER Group
An extensive risk management system continuously assesses and monitors the development of the company
as well as current weaknesses, risks and chances.
The system of risk management comprises all business areas and includes reporting as a central element.
This enables group management to act fast and effective. There are risk representatives and risk reporters
for every part of the group to ensure the implementation of the reporting process. The reporting process
divides risks into categories, reports by these categories and then assesses the possibilities of occurrence
and the possible outcomes measured in monetary units. The system is based on individual observations,
supported by adequate management processes, and is integrated into the core activities. It starts with
strategical planning and continues with procurement and sales including accounts receivable management. As
extension to the planning process in the business units, the procurement and sales organization as well as the
corporate functions, the system for risk management functions to identify and assess possible deviations from
expected developments. In addition to the identification and assessment of material developments, which
influence business activity, the system is designed to prioritize and implement activities. As a consequence
there is a better way to make use of chances and to reduce risks. The business units provide risk reports
on a regular basis. These risk reports are a core element of the risk management system. The reports are
subject to the assessment of management and the persons in charge of the business units. The systematic
further development of existing and new systems for early warnings significantly contributes to the further
consolidation and to the projected development of the company-wide culture of risks.
The basic principles of the Group’s system for the identification and monitoring of risks, specific to the
company’s business are described in a guideline to risk management, approved by management.
The explanations to the risks are realigned to IFRS 7, which divides risks to credit risks, liquidity risks and
market risks. The explanations are complemented by further risks.
Notes to the CoNsolidated FiNaNCial statemeNts Notes to the CoNsolidated FiNaNCial statemeNts
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