ANNUAL REPORT 2008 | 2009 - SinnerSchrader AG

34Joint Status Report of SinnerSchrader AGmissioned to subject the specified risk managementsystem to regular internal evaluation and to documentthe results in a risk report to the Management Boardat least once a year. Furthermore, it is the task of therisk commissioner to randomly analyse individualdivisions on behalf of the Management Board withregard to how far the specified measures to limit oravoid risks are being implemented.It is the responsibility of the managers of the individualdivisions to continuously monitor and manage therisks in their own divisions. If there is a significantincrease in the degree of individual risks above aspecified threshold, they are required to report itimmediately to the Management Board.Good risk management depends on quickly andreliably providing information to the managementabout the course of business. To this end, Sinner-Schrader has set up a controlling and reportingsystem which reports on a monthly basis on thedevelopment of key business data in the individualdivisions and on the financial results.As far as the key risk areas are concerned, the riskprofile of the SinnerSchrader Group changed in the2008/2009 financial year in that, as a result of itsdecision to invest in the new business fields of adserving and e-commerce outsourcing, SinnerSchraderbecame involved in areas whose business modelsdiffer from the models in the Group’s traditionalservice areas and in which SinnerSchrader does nothave many years of experience. Furthermore, therelevance of the risks from acquisitions continues torise. In the following, individual risk areas identifiedas being important will be explained in more detail.This selection of risks does not mean that there canbe no significant impact on the asset, financial, andeconomic situation of SinnerSchrader from other risksthat have not been mentioned.The measures for capacity adjustment which arenecessary as a reaction to such a development maybe effective only with a time lag and would lead tocosts for restructuring measures.• CompetitionCompetition in the market for Internet services hasincreased continuously in recent years. In particular,there are providers active in this market – or whoare appearing on this market – who have a broaderportfolio of services, more international business,and some longer and better-established customerrelationships than SinnerSchrader. The future developmentof SinnerSchrader largely depends on how wellSinnerSchrader succeeds in establishing adequateprices on the market for its services as a specialisedservice provider without the means of temporarycross-subsidisation.The extent to which the procurement of programmingservices in emerging nations becomes more importantfor competitiveness in relation to the individualdevelopments offered by SinnerSchrader is alsosignificant in this context. SinnerSchrader does notcurrently have sources for such services and, ifnecessary, could only build them up over time. Biggercompetitors with an international market presencealready have relevant structures or would be able toestablish them more quickly.• Operational RisksSinnerSchrader earns 40 % of its gross revenues and21 % of its net revenues with one customer; the tenbiggest customers together account for slightly under88 % of the gross revenues or a good 84 % of the netrevenues. It would only be possible to compensate forthe loss of the business of these important customersafter a considerable period of time, if at all, duringwhich it would not be possible to reduce costscorrespondingly.• Economic RisksThe general economic development influences thevolume of investments in IT and Internet servicesas well as expenditure on online marketing and supportingservices. A deterioration in the economicsituation could reduce the market volume addressedby SinnerSchrader with regard to quantity and price.Since the revenues from business in the InteractiveMarketing and Interactive Media segments are notusually secured by long-term contracts, but insteadlargely come about on the basis of individual ordersfor a limited period, revenue plans are subject to ahigh degree of uncertainty. Orders on hand do notusually extend beyond one quarter’s revenues.