PDF (7.3 MB) - GILDEMEISTER Interim Report 3rd Quarter 2012

Opportunities and Risk Report: Risk Management System (rms) 109and are supported and monitored in this by the group accounting department. In addition,local regulations exist, which also have to be harmonised with the group accounting.This also includes complying with local accounting standards. The internal audit checksthe effectiveness of the internal controls on accounting. Consolidation is carried out centrallyby the group accounting department. If required, gildemeister uses external serviceproviders, for example for the measurement of pension obligations. The employees whoare involved in preparing the financial reports are given regular training. The controlsystem covers both preventive activities and those intended to reveal any inconsistencies;this includes plausibility testing, the separation of functions and dual control. The analysescarried out by risk management complement the elements mentioned above and contributeto identifying risks that may have an effect on financial reporting and to introducingmeasures to minimise these risks. Assessments of effectiveness take place on the basisof self-assessments of the group companies and areas responsible; these are checked ona random sample basis by the internal audit department, and are evaluated. The resultsof the effectiveness checks are reported regularly to the Executive Board and SupervisoryBoard.For gildemeister, Macro-economic risks arise from economic trends. Althoughthere is an increase in order intake in the machine tool sector, the economic climate, inparticular, in the usa and some European countries, is not stable yet. Moreover, theongoing civil unrest in North Africa and Middle East could have a negative effect oneconomic development worldwide. In particular, a rise in the price of oil and gas as aconsequence of political developments may curb global economic growth considerably.Exchange rate changes can also have an effect on our future competitive position (economiccurrency risk). Constant global talks on currency devaluations could also lead to apotential increase in price of gildemeister products in China, Japan and the usa and thuscompromise the competitive position of gildemeister. We counteract this risk with internationalsourcing and an increase in regional production. We consider the probabilityof occurrence of damage from macroeconomic risks as low.Industry-specific risks arise primarily from cyclical developments. We counteractthese with a technological lead and a focus on our customers and markets. The majorsolar orders are subject to special approval procedures, which are costly and time-consumingabroad. The bureaucratic hurdles can cause time delays in the construction of solarplants and thus lead to a delay in sales revenues and possible contractual penalties. Overallwe consider the probability of occurrence of damage from industry-specific risks asslight. Competitive pressure from the Asian region, especially from China, remains at ahigh level. We counteract this competitive pressure through a growing regionalisationof production, through our technological lead and through high service quality.Corporate strategic risks occur from the risk of inaccurate estimates of futuremarket development and erroneous technological developments. In research and developmentthere is a risk of budget excesses, erroneous development, increased start-upcosts for new products and a delay in introducing innovations onto the market.business reportSupplementary / Forecast Report