The good prospects are based on the all-embracing ... - ALNO AG

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106 ConsoLidatEd FinanCiaL statEmEnts | manaGEmEnt oF FinanCiaL Risks <strong>The</strong> consolidation entries in conjunction with segment assets <strong>are</strong> made up as follows: in '000 EUR 2011 2010 Capital consolidation – 108,443 – 108,367 Debt consolidation – 44,314 – 30,718 At-equity measurement – 4,129 – 1,819 Other consolidation entries – 4,517 – 5,122 Total – 161,403 – 146,026 <strong>The</strong> other consolidation entries refer to deferred taxes in the amount of EUR 4,031 thousand (previous year: EUR 4,479 thousand), the elimination of interim results in inventories and the impairment losses on fixed assets which <strong>are</strong> all netted at Group level. <strong>The</strong> consolidation entries in conjunction with segment liabilities comprise the elimination of intra-Group liabilities and offsetting deferred taxes. Regional sales <strong>are</strong> determined according to the place of delivery. <strong>The</strong>re is no external customer in the ALNO Group with whom 10% or more of the total sales revenue is generated. Total sales according to regions in '000 EUR 2011 2010 Germany 326,397 334,620 Rest of Europe 105,456 108,089 Other foreign countries 20,957 24,588 Total 452,810 467,297 Intangible assets, property, plant and equipment and investments measured at equity in '000 EUR 2011 2010 Germany 80,349 79,536 Rest of Europe 1 11 Total 80,350 79,547 G. management of financial risks 1. rIsK MaNaGeMeNT PrINCIPles <strong>The</strong> basic principles of financial policy <strong>are</strong> defined annually by the Board of Management and monitored by the Supervisory Board. Group Treasury is responsible for implementing the financial policy, as well as for the ongoing risk management. Certain transactions require prior approval by the Board of Management, which is also regularly informed of the scope and magnitude of the current risk appraisal. Effective management of the market risks is one of the main Treasury responsibilities. Simulations using various worst case and market scenarios <strong>are</strong> performed to assess the impacts of different conditions in the marketplace. <strong>The</strong> Group is exposed to financial risks from financial assets and liabilities, as well as from planned transactions. Financial assets, such as trade accounts receivable and liquid assets, <strong>are</strong> the direct result of operating activities. Financial assets also include securities which serve as hedges for claims from pre-retirement part-time working arrangements. <strong>The</strong> financial liabilities primarily comprise bank loans, other financial liabilities and loans on current account, as well as trade accounts payable. <strong>The</strong> main purpose of financial liabilities is to finance the Group's business operations. <strong>The</strong> main risks arising for the Group from the financial assets and liabilities comprise interest rate risks, liquidity risks, currency risks and risk of default. Due to the Group's low-risk investment strategy, the risk of changes in the fair value of securities (price risk) is not a material risk from a Group vantage.
2. CurreNCY rIsKs <strong>The</strong> currency risk refers to the risk of changes in the fair value or future cash flows of monetary items on account of fluctuations in exchange rates. Currency risks basically arise from investments, financing activities and operating activities which <strong>are</strong> undertaken in a currency other than the company's functional currency. However, currency risks without impact on the Group's cash flows, e.g. due to translating foreign corporate entities' assets and liabilities into the Group currency, <strong>are</strong> never considered in further detail by Group Treasury. <strong>The</strong>re was no material risk in the investment sector as at the balance sheet date. Currency risks in the financing sector arise from bank loans and loans on current account in foreign currencies, as well as from foreign currency loans which <strong>are</strong> extended to Group companies for financing purposes. As from 1 January 2010, the German plants basically invoice customers directly in Switzerland and the United Kingdom. Invoices <strong>are</strong> made out in euros. <strong>The</strong>re <strong>are</strong> consequently no major currency risks for the ALNO Group in the sales sector. <strong>The</strong> following table shows the effect of changes in the fair value of monetary foreign currency items on Group profit/ loss before income taxes. <strong>The</strong>re <strong>are</strong> no effects on equity outside profit and loss. Development of exchange rate Effect on result in '000 EUR Income (+)/Expense (-) GBP CHF GBP CHF 2011 10.0 % 10.0 % 482 81 – 10.0 % – 10.0 % – 482 – 81 2010 10.0 % 10.0 % 248 102 – 10.0 % – 10.0 % – 248 – 102 ConsoLidatEd FinanCiaL statEmEnts | manaGEmEnt oF FinanCiaL Risks 3. INTeresT raTe rIsKs <strong>The</strong> interest rate risk refers to the risk of changes in the fair value or future cash flows of financial assets and liabilities on account of changes in current interest rates. <strong>The</strong> Group is primarily exposed to interest rate risks in the eurozone. To minimize the effect of fluctuations in interest rates in these regions, the interest rate risk for net financial liabilities made out in euros is managed by ALNO AG. Financial liabilities in foreign currencies only exist to a subordinate extent. <strong>The</strong>re <strong>are</strong> no financial derivatives as at the balance sheet date. Financial liabilities and the variable-interest factoring volume have been taken into account in the following analysis of sensitivity to interest rate movements. Only financial liabilities with variable interest rates have been included in the analysis. <strong>The</strong> analysis is also <strong>based</strong> on the assumption that the principal amounts and the ratio of fixed to variable interest rates remain unchanged. If the average interest rate were to be increased by 150 (previous year: 150) basis points, the result before taxes on income would decrease by EUR 1,352 thousand (previous year: EUR 1,451 thousand). A reduction of 150 (previous year: 150) basis points would lead to an increase of EUR 1,352 thousand (previous year: EUR 1,451 thousand) in profit/loss before income taxes. 4. rIsK of defaulT <strong>The</strong> risk of default refers to the risk that a contractual partner fails to discharge its payment obligations in conjunction with financial assets. Accounts receivable in operating business <strong>are</strong> continuously monitored at segment level, i.e. decentralized. In conjunction with Group receivables management, minimum requirements as regards creditworthiness and maximum exposure limits <strong>are</strong> defined for all business partners of the ALNO Group. <strong>The</strong>se <strong>are</strong> <strong>based</strong> on a system of specified limits for which compliance is constantly monitored. In addition, the ALNO Group safeguards its trade receivables through domestic credit insurance which, if an account receivable is not paid, will indemnify the loss incurred in the contractually agreed amount. Specific valuation allowances <strong>are</strong> used to take account of the risk of default. Trade receivables <strong>are</strong> secured through domestic credit insurance 107
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2011 annual report
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The Alno brAnds <s
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Enthusiasm and passion Consolidated
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6 histoRy histoRy 1927 1927 Albert
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The good prospects are based on the all-embracing ... - ALNO AG

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