PDF, 3.2 MB - Pfleiderer AG

Derivative Financial Instruments
Derivative financial instruments within Pfleiderer Group are only used solely to hedge against
currency and interest rate risks arising from transactions which are part of the Company’s normal
operations. Hedging activities are generally conducted centrally by Pfleiderer AG and Pfleiderer
Finance B.V. on behalf of the group. Further information is given in the notes to the consolidated
Financial Statements.
Net Assets and Earnings of Pfleiderer AG
As holding company, Pfleiderer AG is responsible for the strategy and management of the
Group. This means that the earnings position of Pfleiderer AG is closely related to the success
of the Pfleiderer Group. As in the previous year, the fiscal year for Pfleiderer AG was marked by
the strategic realignment of the Pfleiderer Group and thus by the effects of divesting specific indirect
and direct holdings. As of January 1, 2004, purchase of electricity was performed directly
via Pfleiderer AG. The electricity was then invoiced at cost to the affiliated companies. Investment
earnings were largely defined by consolidated results from affiliated companies in the Business
Segment Infrastructure Technology and were largely due to the disposal of the Group’s North
American Poles & Towers operations.
The net income for the year of 6.3 million euros was offset by losses carried forward of 29.5 million
euros, resulting in a provisional accumulated deficit of 23.2 million euros.
Liabilities to banks increased due to long-term investments. However, this development was offset
by changes to interest-bearing liabilities to affiliated companies, which were considerably reduced.
At the same time, due to a change in affiliated companies’ capital needs, short-term bank balances
decreased, as did interest-bearing receivables from affiliated companies. Interest-bearing liabilities
to affiliated companies relate in particular to Pfleiderer Holzwerkstoffe GmbH, Pfleiderer
Infrastrukturtechnik GmbH & Co. KG and the Dutch financing company Pfleiderer Finance B.V.,
Deventer/Netherlands. The Dutch financing company refinances itself via the capital markets.
Dividend
As a matter of policy, payment of a dividend depends on the state of the Group’s operating
results and cash flow. In fiscal 2004, the Company focused on successfully reducing its net indebtedness.
We therefore propose that no dividend be paid for fiscal 2004. Nevertheless, our
shareholders have benefited from the remarkable increase in the value of the Pfleiderer shares
they hold.
Dependent Company Report
In its dependent company report on relationships with affiliated companies, Pfleiderer AG made
the following statement for fiscal 2004:
“We hereby declare that our Company received adequate compensation for every transaction with
affiliated companies listed in the report in the light of the circumstances known to us at the time.
No actions were undertaken or waived in the interests of Pfleiderer Unternehmensverwaltung
GmbH & Co. KG or companies affiliated to Pfleiderer Unternehmensverwaltung GmbH & Co. KG.
The Company’s relationship to Pfleiderer Unternehmensverwaltung GmbH & Co. KG terminated
on March 21, 2004.”
27
MANAGEMENT REPORT COMPANY REPORT