The Vorwerk Annual Report 2OO8

of the business. Monthly reporting as well as continual monitoring, particularly of productionprocesses, round off this risk management system. The objective is to improve still further theexisting risk structure. Exchange rate fluctuations are an unavoidable element in global business.Being an international operation, the Vorwerk Group takes into account exchange rate risks thatmay ensue from its operative business activities and hedges them.Vorwerk is exposed to financial risks for portfolio management investments madeon international money and capital markets. However, the company also participates in any profitopportunities. The internal Finance Committee regularly monitors the respective net currencystatus and modifies it whenever necessary within the risk strategy parameters. Vorwerk availsitself of derivative financial instruments in some individual cases to limit the financial risk. Onlymarketable instruments with adequate market liquidity are used. The utilisation of derivativefinancial instruments is subject to internal Vorwerk guidelines and control mechanisms.One risk for the future development of Vorwerk consists in the fact that direct salesis dependent upon general legislative conditions which could, in principle, be amended to thedisadvantage of the corporation. When compared with commerce in general, direct sales stillrepresents a relatively low percentage despite its over-proportionate growth. Therefore, there isa latent risk of a lack of awareness among legislative bodies at national and European levels. Tomake decision-makers more conscious of the advantages of direct sales and its positive effectson employment, Vorwerk implements public relations campaigns, is a member of the industryspecificand cross-industry business associations and maintains an information bureau at theEuropean Union in Brussels.From today’s point of view there are no risks that could have a negative impact on thelong-term existence of the Vorwerk Group. In recent years the high proportion of partners' equity,the improvement in the worldwide strategic position and better operating results have led to thecreation of a higher risk-covering volume. Moreover, this broad base on the global market meansthat Vorwerk is generally well protected against implications for the corporation ensuing fromproblems experienced in regional or industry-specific areas.If you’re running in the wrong direction, there’s no point increasing the speed.Dr. Birgit Breuel