ANNUAL REPORT 2010/11 - Schumag AG

16 Group management reportAfter investments amounting to EUR 0.5 million in2010/11 the date of completion of construction ofa new production hall in a size of 5,000 m 2 startedin fiscal year 2009/10 was rescheduled in order tosafeguard liquidity. The planned move of parts of theprecision engineering production to this hall and theconnected optimization of production processes hastherefore not yet been accomplished.In fiscal year 2010/11 the pre-financing requiredfor the extension of our production facilities facedour company with a great challenge. Financing wassecured by various measures such as the extensionof the factoring business, the sale-and-lease-backtransaction relating to our machinery as well asthe receipt of a cash credit amounting to EUR 1.0million.GmbH was not realized, however, because theconnected concepts for this turned out to be notrealizable due to the recent change in the generalpolitical conditions for this branch as well as themarket development.Financing of plant engineering continues to beeffected exclusively via the parent company. Inaddition, a consulting company was instructed inOctober 2010 to work out financing options in theRussian banking market – especially for the financingof projects in the conventional division ofplant engineering. The contract has expired in themeantime and due to missing customer orders acontinuation of these consulting services is nolonger regarded as conducive to our goals.Plant engineeringThe business segment of plant engineering hasso far not measured up to our expectations.Our anticipation of a lengthy development of ourentry in the Eastern European markets has confirmeditself. Although our subsidiary Schumag BR EnergyGmbH successfully established numerous businesscontacts and placed project offers no significanttransactions have come about so far. In 2010/11Schumag BR Energy GmbH was able to realizesales in the conventional area amounting to EUR0.9 million.In the area of regenerative energies Schumagachieved sales of EUR 2.9 million, thereof EUR 2.8million being allotted to the trading business. Themarket entry into the photovoltaics business plannedfor fiscal year 2011/12 via the joint ventureSchumag Green Energy GmbH & Co. KG which wasformed in April 2011 together with Max Walk &Willy Lehmann Kraftfahrzeuge-Landmaschinen