ANNUAL REPORT 2008 | 2009 - SinnerSchrader AG

78NotesConsolidated Financial Statements of SinnerSchrader AG7.2 Credit RiskCredit risks arise for SinnerSchrader in that, after services have been provided, the services are invoicedwith the payment terms agreed with the customer, but customers do not always meet the resulting paymentobligations. SinnerSchrader reduces this risk by carrying out regular credit checks on new customers and byregularly monitoring its customers’ outstanding payment obligations. In the 2008/2009 financial year, as in pastyears, SinnerSchrader had no major bad debt losses to report or reserves for bad debt to form, despite thefinancial and economic crisis.Furthermore, SinnerSchrader faces credit risks from holding free liquid funds in bank balances and frominvesting this liquidity in the capital market. SinnerSchrader reduces this risk through the selection of its bankpartners and cooperation with several different banks and by restricting the credit rating of the investmentinstruments to a minimum rating of BBB, or A3 for short-term investments.The maximum default risk arises from the book values of the financial receivables in the balance sheet.7.3 Market Risks• Currency risksSince SinnerSchrader calculates its revenues exclusively in euros, its suppliers primarily issue invoices in euros,and the Company holds no notable assets in foreign currencies, the Group faces no major foreign currency risks.• Interest risksThe Company does not have any major interest-bearing financial liabilities. Interest risks therefore arise exclusivelyfrom the investment of free liquidity in interest-bearing assets. As of 31 August 2009, SinnerSchraderheld interest-bearing securities in the amount of € 4.8 million.A rise in the market interest rate of 0.5 percentage points would cause the current value of the portfolio todecrease by € 35,000.Due to SinnerSchrader’s investment policy, which is aimed at security and rapid liquidity with short terms, thefinancial crisis had a negative effect on the financial result in the 2008/2009 financial year because of the declinein interest rates, since the reinvestment of freed liquidity was only possible at lower interest rates.• Exchange risksAs of 31 August 2009, SinnerSchrader did not hold any shares of other companies listed on the stock exchange.The Group therefore faced no exchange risks.7.4 Capital ManagementSinnerSchrader fundamentally pursues the goal of securing its shareholders’ equity base for the long term andachieving a suitable return on its capital. A high level of shareholders’ equity is also aimed at because it supportsthe independence and competitiveness of the company. SinnerSchrader’s capital management also aimsto ensure that the operating companies will continue to operate and to finance organic and inorganic growth.As of 31 August 2009, the shareholders’ equity rate of SinnerSchrader was 62 % (previous year: 65 %). Thereturn on shareholders’ equity – the ratio of the share of consolidated income of SinnerSchrader’s shareholdersand the shareholders’ equity on the report date – amounted to 9.8 % and 12.4 % in the 2008/2009and 2007/2008 financial years, respectively.