Annual Report 2010 - Frauenthal Holding AG

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134 Annual Report 2010 Consolidated Financial Statements Frauenthal Holding Group 2010 (2009: EUR 8,003,000) had been sold to Nordea Bank. As in the previous year, the interest rate is the three-month Euribor rate plus 115 basis points. There is no significant risk as the transaction involves guaranteed payments by Nordea Bank for the invoices on the due dates. Daily monitoring means that there is ongoing information on the status of the receivables. The budgets of the Automotive Components, Wholesale Plumbing Supplies and Industrial Honeycombs divisions are based on the assumption that they will generate positive cash flows from operating activities. Since no major investments are planned, Group liquidity is expected to be largely unchanged over the year as a whole, though seasonal fluctuations are anticipated. No events likely to result in a major drain on liquidity are foreseen. Default and credit risk In all the divisions, the default and credit risk associated with receivables and the risk of default by counterparties is managed by regular credit checks, active credit management and credit insurance. Specific provisions are recognised up to the maximum default risk associated with receivables. As at the end of the reporting period the maximum default risk at Group level was EUR 5,248,000. Note 18 contains a summary table of impaired receivables. In the automotive component industry it is customary to conclude one- or multi-year contracts that define the products, and establish the terms and conditions, but do not lay down binding supply quantities over the entire contract term. Whether a component supplier can win or extend such contracts depends on its competitiveness. This is primarily a matter of price, but also depends on the supplier’s ability to deliver the products required, the reliability of its logistics and quality standards, and its ability to collaborate with the customer on new developments. Because of this, product quality, timeliness and customer satisfaction are constantly monitored to enable management to react quickly to significant under-performance. The customer risks to which the Frauenthal Group is exposed also include credit and default risks. Truck manufacturers are mostly very large, multinational corporations, but their creditworthiness was eroded by the economic crisis, as it hit the automotive sector particularly hard. Because of this the Group’s debtor management system was reinforced and centralised in 2009. The starting point for this was close observation of all payment delays. The Executive Board is notified of significant irregularities on a monthly basis, and action is taken at all levels of the organisation involved to ensure that every delinquent invoice is tracked by the field sales force. The credit default swap (CDS) spreads of the Group’s key accounts were again monitored on a monthly basis during the reporting period. Credit default swaps are financial instruments that make it possible to buy and sell default risks. The premium (the CDS spread) reflects the market’s assessment of the creditworthiness of the reference entity. This indicator deteriorated markedly as a result of the financial crisis. However, a major improvement began in August 2009, and the spread remained largely stable from late 2009 up to mid-February 2011. The chart below shows the movements in the CDS spreads of some major customers between 1 January 2009 and 16 February 2011.
2000 1800 1600 1400 1200 1000 800 600 400 200 0 Consolidated Financial Statements Frauenthal Holding Group 2010 basis points movements in the CDS spreads 2009–2010 01.01.2009 01.02.2009 01.03.2009 01.04.2009 01.05.2009 01.06.2009 01.07.2009 01.08.2009 01.09.2009 01.10.2009 01.11.2009 01.12.2009 01.01.2010 Despite the collapse of demand for commercial vehicles in 2009 there were no major defaults, and we expect this risk to remain relatively insignificant in future. The business of the Wholesale Plumbing Supplies Division involves a large number of customers in the plumbing trade. The division has ongoing business relationships with over 3,500 Austrian plumbers, and the default risks are typical of a trade in which small businesses predominate. The key success factors for the division are procurement prices, and terms and conditions, efficient warehousing and delivery logistics, and the quality and financing of customer receivables. Where competition between wholesalers gives rise to fierce battles for market shares, this may lead to price erosion. However, other, stabilising aspects of the customer relationship (delivery reliability, finance, technical advice, etc.) mean that the price of the products is not the sole determinant of customers’ decisions, and that the risks associated with price competition can be countered by such means of cementing customer loyalty. The business model of the Industrial Honeycombs Division is project-based, and success depends on contract acquisition skills, prices and product quality, as well as technical references. The clients for power station catalysts are plant engineering companies and power station operators. In the case of export contracts we take the usual precautions in terms of payment guarantees, on the basis of credit ratings. Due to the size of some projects a misjudgement of a business partner’s creditworthiness could have serious implications for the Group as a whole. The prepayments and delivery milestones customary for large projects help to mitigate this risk. The receivables are largely covered by normal payment agreements (prepayments and letters of credit), and this helps reduce default and credit risk. Reference is made to the section of the operating review entitled “Customer risk” for further information on default and credit risk. 01.02.2010 Fiat Renault Volvo Daimler Scania 01.03.2010 01.04.2010 01.05.2010 01.06.2010 01.07.2010 01.08.2010 01.09.2010 01.10.2010 01.11.2010 01.12.2010 01.01.2011 01.02.2011 135
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ANNUAL REPORT 2010 Strength through
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CONSOLIDATION AND SOLID EARNINGS PE
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JuMp in earningS at induStrial hone
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taSk Franz Haring, 47, testing and
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Senior leadership team (Slt) The se
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CORPORATE GOVERNANCE Corporate gove
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volume in the automotive Components
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in 2012, and we’re confident that
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produCt SHT now operates six logist
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CorPorate governanCe PoliCy Frauent
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Honeycombs Division). He is also a
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indePendenCe oF the SuPerviSory Boa
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Governance, and monitored by the au
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ut the market still has much ground
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key Share ratioS Investor Relations
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Strength through diverSitY
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in Toruń, Poland, from Necks Inves
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8 1 2 3 4 5 6 7 Linnemann-Schnetzer
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„in the frauenthal group, pioneer
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solid stabilisers, but up to 15kg l
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FaC has developed a new strategy -
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taSk Bernd Eichelberger, 49, Lothar
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SHT Haustechnik AG is Austria’s l
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positions. This is particularly cru
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operating revieW Operating Review 4
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Business performance All three divi
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taSk Monika Burian, 46, sorting fi
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evenue by geographical markets Prof
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2010 2009 aSSetS EUR ’000 EUR ’
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Shareholder value Operating Review
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produCt SHT Haustechnik AG has six
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eference entity. This indicator imp
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Market riSk Economic conditions in
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In 2010 the impairment review resul
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indicator system supports internal
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at all stages of the goods flow. Th
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Die HR development is crucial to th
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In the power station catalyst busin
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ConSolidated finanCial StateMentS C
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Note 9,27 16 18 19 16 Consolidated
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Note 19 19 19 7,19 19 19 13,20,22 2
Page 83 and 84: Statement of changes in equity tota
Page 85 and 86: ChangeS in Carrying valueS Carrying
Page 87 and 88: ChangeS in Carrying valueS Carrying
Page 89 and 90: Automotive Components Wholesale Plu
Page 91 and 92: new interpretations 1) Consolidated
Page 93 and 94: Consolidated Financial Statements F
Page 95 and 96: IFRIC 19 Extinguishing Financial Li
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Page 121 and 122: [21] Short-term provisions Changes
Page 123 and 124: Liabilities at 31 Dec. 2009 in EUR
Page 125 and 126: Sundry other income Consolidated Fi
Page 129 and 130: Change in deferred tax Consolidated
Page 131 and 132: e. StateMent oF CaSh FloWS Consolid
Page 133: EUR ’000 Consolidated Financial S
Page 139 and 140: Liabilities EUR ’000 non-current
Page 145 and 146: opinion on the group operating revi
Page 147 and 148: CoMpanY finanCial StateMentS
Page 149 and 150: taSk Kamel Navarro, 31, aligning pa
Page 151 and 152: income statement Company Financial
Page 153 and 154: gloSSarY
Page 155 and 156: p.a. Poa PoC PoFa Pln reg. no. roCe
Page 157 and 158: Frauenthal Liegenschaftsverwaltung
Page 159: impressum Financial calender 2011 1
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Annual Report 2010 - Frauenthal Holding AG

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