Business Report 2005 - Interseroh

D. OTHER INFORMATION
1. Transactions of Special Importance After the Close of the Financial Year
On 5 January 2006 the company Isabell Finance Vermögensverwaltungs GmbH (formerly Praetorium
61. VV GmbH) submitted a voluntary public takeover bid to the shareholders of INTERSEROH AG. All
the information necessary according to law was published immediately on the website of
INTERSEROH AG.
2. Risk Management System Updated
INTERSEROH’s risk strategy calls for avoiding, hedging or insuring specific risks. These risks are
operational risks resulting from day-to-day business. The goal is not to avoid all potential risks, but to
establish room for manoeuvre to enable conscious risk-taking based on comprehensive knowledge of
the risks involved and the overall context of the risks.
Further development of the risk management system in order to provide necessary and
successful support to the segments of the INTERSEROH Group was again the goal and responsibility
of group management and the segment directors in fiscal 2005.
Risks and Opportunities from the Market Environment
The dynamic development in raw material markets worldwide with highly volatile prices in 2004
continued as expected in fiscal 2005. Price fluctuations in Germany are still driven to a large extent by
developments in key markets such as the USA and Asia. This high volatility is one of the chief risks in
the complete raw materials segment as well as in the steel and metal recycling segment. The
developments in the Chinese economy and steel industry also play an important role. Chinese
demand and the raw material markets are expected to continue their expansion. Foreign demand,
therefore, continues to be the major driving force behind raw material prices.
The high level of prices in the steel sector underwent adjustments in 2005, to which
INTERSEROH responded with a conservative inventory and sales policy. Although fluctuations in
earnings could not be ruled out as a result, they could be kept at a level corresponding to plan.
Paper prices hovered around almost the same level as the year before. Remedial measures
by some processors, who were affected by empty order books, only had an influence on contract
volumes. The prices for plastic rose again in 2005, before dropping towards the end of the year. The
purchase prices for old wood remained on average at the previous year’s level and were influenced by
the volumes on offer. The volume of old wood available is adequate to meet the needs of the biomass
power stations according to market estimates.
Risks and Opportunities from the Group Environment
Regarding the risks from the original services business of the group, reference is made to the reports
on the individual segments and the section “Foreseeable Development, Possible Chances and
Potential Risks”.
Risk Management System
The risk management system extends to and integrates all operational units of the group, and includes
the following characterising elements:
• strategic planning at segment level;
• detailed short and medium-term planning at individual company level;
• monthly reporting of events and developments (financial, earnings and liquidity position) for all
group companies;
• centralised reporting on receivables based on structure and risk potential;
• assessment of price change risks (value-at-risk analysis) in all raw materials trading segments;
• timely hedging of exchange rate risks;
• IT coordination, management and standardisation;
• coordination of insurance;
• weekly status report on overall group liquidity as basis for short-term and strategic financial
management;
• bank ratings (non public);
• investment procedures and controlling;
• internal audits (assigned directly to the Chairman of the Management Board) with regular audit
reports on routine and extraordinary audits;
28