PDF, 1.2 MB - Pfleiderer AG

56 being focused: being better
Our insurers already increased the premium in 2002. Apart from a further big increase in
the premium, Pfleiderer and the whole of the particleboard industry expects to see a large rise
in excess charges in 2003. Together with its insurance broker, Pfleiderer is examining the
whole insurance concept within the Group and looking at alternatives, including new insurers.
An environmental manager is to be appointed, based at central services, but with responsibility
for all operating areas. This person will draft guidelines, especially with respect to production
and storage facilities, and will monitor operations to eliminate any weaknesses. In view
of the products and raw materials used, Pfleiderer does not envisage any particular risks here.
Studies for environmental contamination from old wooden mast and sleeper plants, closed
down over a decade ago, have been performed by our staff and by outside specialists. Those
areas affected are being treated on an ongoing basis. The resulting expenditure has been
estimated and accruals set up to cover these costs.
Overall Risk
No risks, seen individually either in terms of damage levels or probability of occurrence, are
recognizable within the Pfleiderer Group which could endanger the Company’s existence.
Similarly, no risks are perceived with a high correlation to other risks which could endanger
the existence of the Group. Nor have any risks been ascertained that could threaten the Company’s
existence within a foreseeable period after 2003. The number of risks reported in the
Group risk report is significantly lower at 45, compared to 68 in the previous year. This is
largely due to the divestiture of the two Business Centers Insulation Technology and Doors and
Windows. The number of risks reported for the remaining operating segments has not changed
compared to the previous year. Around half of those risks determined in the previous year
either no longer exist, or are no longer relevant, and thus have not been included in the risk
portfolio 2003. The potential damage to the remaining business centers arising from those
risks determined is 15 percent lower compared to the previous year. More than one third of
these risks is below one million euros. The damage potential of the highest risk in the 2003
portfolio is 50 percent lower than the highest risk reported for 2002. It is important to note
that the chance of these risks becoming reality is very slight. The number of high-level risks for
the whole Group is down by 75 percent for the same period.
In December 2002, the international rating agency Fitch Ratings lowered Pfleiderer AG’s
rating for senior unsecured debt from BBB- to BB+. This despite the successful sale of the
two Business Centers Insulation Technology and Doors and Windows and a stable cash flow
from the Infrastructure Technology Business Center which is supporting the Group. According
to the rating agency, the business environment for wood-based panels will continue to remain
difficult. The lower rating may mean that taking up new funds could prove more expensive in
future.