Group - L. Possehl & Co. mbH

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.
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