Every day counts - Deutsche Beteiligungs AG

IV. 5. Appropriation of the distributable profit
The balance sheet profit of Deutsche Beteiligungs AG amounts to 7.8 million euros;
the Group has posted a consolidated balance sheet loss of –2.4 million. In view of the
balance sheet loss at Group level, the Board of Management and Supervisory Board of
Deutsche Beteiligungs AG will recommend to shareholders at the Annual Meeting to
carry forward the balance sheet profit of Deutsche Beteiligungs AG.
V. Financial position
At October 31, 2003, the book value of financial assets declined by 13 million euros
to 257 million euros, down from 270 million euros the previous year. Net liabilities to
banks – i.e. bank borrowings less credit balances on accounts – were reduced to 70.7
million euros, a decrease of 26.5 million euros against the prior year’s 97.2 million
euros. The capital-to-assets ratio improved from the previous year’s 50.7 percent to
54.4 percent.
VI. Risk management
VI. 1. External risk exposure
The difficult economic environment in which Deutsche Beteiligungs AG and its portfolio
companies operated did not noticeably change in comparison with the previous
year. The persistent negative business trend particularly impacted investee businesses
outside Germany, necessitating valuation modifications on several investments. However,
toward the end of the financial year, first signs of a revitalization of the world economy
began to emerge, with new impulses for demand arising particularly in countries outside
Germany.
VI. 2. Company-specific risk exposure
Success in private equity is determined by these factors:
– to invest in promising enterprises in conformity with the portfolio strategy
– to build and sustain the value of existing and new investments
– to realize the value created through current income from investments and capital
gains from the sale of investments.
The prerequisites for this are a highly qualified, motivated team and a network of
contacts in order to solicit a continual stream of investment opportunities. There are
excellent opportunities for high returns on investments. But, by the nature of private
equity, there may also be a need to perform write-offs on investments in certain cases.
For the activities of Deutsche Beteiligungs AG, which comprise the evaluation and
the execution of investment transactions, operational risks play a subordinate role in light
of the relatively low number of total transactions, employees, and the involvement of
several employees in larger transactions.
Deutsche Beteiligungs AG · Annual Report 2002/2003
Management’s Report
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