Group - L. Possehl & Co. mbH

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Electronics The main focus of Possehl Electronics’ research and development activities is on the development of new products and processes and their implementation in serial or mass production. The most important projects in 2007 were: Increasing the service life and thus the productivity of tools with the help of new coating procedures in the nano domain; The continued development and improvement of cyanide-free galvanization processes to reduce environmental damage; and The development of smart cards coated on both sides. Elastomer Processing Research and development activities in the area of Elastomer Processing remained at a high level last year. The prototype of a newly developed tire building machine with four manufacturing drums was delivered to the first customer. In the area of rubber mixing technology, priority was given to the further development of mixing facility management and basic research into mixing technology. The emphasis of innovation activities in the edible oil product area was on the further development of technologies to improve the oil extraction of screw extrusion presses. Cleaning Machines The Hako Group has increased its development spending from the previous year. The focal point of innovation activities was the development and introduction of new products and improved coordination of development projects at the Hako facilities and the American Minuteman company. The goal is a clear increase in innovation combined with reduced development times. textile finishing Systems The research and development activities in the Textile Finishing Systems division are carried out in close coordination with cus tomers from headquarters in Mönchengladbach. At the International Textile Machinery Association (ITMA) trade show in fall 2007, A. Monforts Textilmaschinen GmbH & Co. KG was able to demonstrate its global innovation leadership with a new shrinkage unit and a completely new ly developed tentering frame for technical textiles. 26 riSK MaNaGEMENt SyStEM aNd riSKS of fUtUrE dEvELoPMENt risk Policy and risk Management Entrepreneurial activity is inseparably linked to opportunities and risks. To a large extent, such activity consists of uncovering and taking advantage of opportunities, which serve to secure and expand the Group’s competitiveness. We have introduced effective management and control systems for the early identification, evaluation, and systematic handling of risks. These systems are constantly undergoing further development. The risk policy of the Possehl Group is aimed at increasing enterprise value continuously and sustainably, minimizing dependencies on developments in individual industries and divisions, and attaining the medium to long-term financial targets. The long-term perspective of our shareholder, the charitable Possehl-Stiftung, does not allow the company to be aligned solely toward short-term goals. Nor may it assume inappropriate risks or conduct speculative trading or other speculative business transactions. For the Possehl Group, the management of opportunities and risks is an integral component of Group-wide governance along with the planning and execution of our corporate strategy. The risk policy for the entire Group and the individual divisions is therefore set by the Executive Board of L. Possehl. The strategic orientation and development of all subsidiaries are monitored extremely closely by the Executive Board of the holding company. In regular conversations and conferences with the management teams of the subsidiaries, business results, opportunities, and risks are discussed and goals and management steps are established. The Possehl Group has a range of coordinated risk management and control systems that make it possible to identify significant risks early and to take suitable countermeasures. Particular importance is attached to corporate planning processes and intra-year controls. Corporate planning helps us assess potential risks before major business decisions are made, while intra-year controls are designed to monitor countermeasures that have been introduced.
The regular reporting is supplemented by credit scoring procedures and an active receivables management. Purchase and sales transactions over certain individual divisional limits must also be approved by the Executive Board of the holding company. Investment controlling covers the annual budget as well as follow- up inspections of the actual investment amounts. All capital expenditures are valued using return calculations based on a uniform methodology and minimum risk-adjusted rates of return, which are reviewed regularly. In divisions with longer production times, the central risk management group also focuses on new orders and order backing and on advance calculation checks above certain thresholds. The transfer of risks to insurers is managed – to the extent feasible and economically responsible – by our insurance broker, Lubeca Versicherungskontor GmbH, in coordination with the Executive Board of the holding company and involves insurance contracts for the whole Group. As an international corporation with a diverse portfolio, the Possehl Group is subject as a rule to multiple risks, the most important of which are described below. Fundamental changes in the structure and assessment of risks have not occurred in comparison to the previous year. financial risks One of L. Possehl’s main responsibilities as holding company is to ensure the Group’s financial independence. As well as optimizing Group financing, this means limiting the financial risks. To ensure liquidity at all times, sufficient cash and cash reserves are maintained to meet all of the Group’s payment obligations when they are due. A reserve is always maintained for unplanned cash stream irregularities. In addition, there are adequate bank credit lines. Liquidity is mainly sourced in Euro and US dollars with varying terms. Interest rate risks are analyzed regularly and any existing risks limited by appropriate hedging transactions. Letter from the Executive Board Company Boards Report of the Controlling Boards Successful over the Long Term Group Management Report Consolidated Financial Statements Further Information Liquid funds are invested exclusively in low-risk and short-term deposits and similar secure investment products. Currency risks Due to the global nature of the Group’s business activities, both business operations and financial transactions are subject to risks from currency exchange rate fluctuations, particularly of the US dollar against the Euro. A currency risk exists when sales are generated in a different currency than associated costs. This applies particularly to the Electronics division. To limit the risks of multiple cash flows in different currencies, foreign currency positions are normally hedged when they arise. This involves the use of conditional and unconditional derivative financial instruments. Transaction risks from the conversion of the net assets of Group subsidiaries outside the Eurozone are fundamentally not hedged. risks from Purchase and Sale of Companies The acquisition of companies and – in exceptional cases – also the sale of subsidiaries or equity investments are important parts of our corporate strategy. With company acquisitions, the fundamental risk exists that the future earnings power of the company was improperly assessed and therefore the purchase price was too high. In any case, the Executive Board of the holding company decides on company purchases and sales. In order to limit the risk associated with company purchases, prior to the investment decision as a rule comprehensive legal, tax, and financial analyses are prepared with the assistance of external advisors. We have extremely strict internal rules for valuing individual potential acquisition targets. 27
Page 1 and 2: Annual Report 2007 Successful over
Page 3 and 4: Possehl - the Entrepreneurs’ Gr C
Page 5 and 6: Table of Contents Letter from the E
Page 7 and 8: Uwe Lüders, Born 1952, Dipl.-Volks
Page 9 and 10: dr. Lutz Peters Letter from the Exe
Page 11 and 12: All of this is essential for the su
Page 13 and 14: The organizational structure of Pos
Page 15 and 16: Possehl initially becomes deeply in
Page 17 and 18: Possehl views each of its companies
Page 19 and 20: ovErviEW of tHE ECoNoMiC CoNditioN
Page 21 and 22: StratEGiC dirECtioN aNd MaNaGEMENt
Page 23 and 24: The increase in net sales came prim
Page 25 and 26: Cleaning Machines: Significant Grow
Page 27 and 28: BALANCE SHEET STRUCTURE Fixed asset
Page 29: Letter from the Executive Board Com
Page 33 and 34: EPort oN SUBSEqUENt EvENtS, oPPortU
Page 35 and 36: Consolidated Balance Sheet as of De
Page 37 and 38: Consolidated Cash flow Statement fr
Page 39 and 40: Cumulative 01/01/2007 Exchange rate
Page 41 and 42: Group shareholders’ equity withou
Page 43 and 44: Equity is consolidated under the eq
Page 45 and 46: The biometric data underlying the m
Page 47 and 48: As per the balance sheet date, the
Page 49 and 50: NotES to tHE CoNSoLidatEd iNCoME St
Page 51 and 52: NotES to tHE CoNSoLidatEd CaSH fLoW
Page 53 and 54: auditors’ report * We have audite
Page 55 and 56: Name Registered in Letter from the
Page 57 and 58: CONTACT AND IMPRINT L. Possehl & Co

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