Business Report 2005 - Interseroh

(33) Derivative financial instruments
All foreign currency receivables and liabilities in the INTERSEROH Group resulting from contracts are
hedged without exception (upwards of a volume of more than EUR 0.025 million). Generally hedging
for transactions in foreign currency is effected exclusively by forward exchange transactions. Only
banks of first-class financial standing are used. Hedging is used according to standardised guidelines,
subject to strict control and usually restricted to securing operational business.
In the forward exchange transaction a certain exchange rate is defined for a certain time in the
future at the time of the underlying transaction. This ensures that the maturity date is identical with the
payment date of the underlying receivable or liability and that no outstanding foreign currency or
forward dispositions arise.
They are valued at fair value. “Normal” purchases and sales of financial assets pursuant to
IAS 39 are entered in the balance sheet according to the accounting method on the day of
performance. The aim of the use of derivative financial instruments is mainly to rule out influences on
operational business by exchange rate changes.
As of the closing date the INTERSEROH Group had forward exchange transactions to secure
trade accounts invoiced in foreign currencies, each of which was based on a corresponding underlying
transaction with identical amount and period.
At a nominal amount of USD 1.87 million (corresponds to EUR 1.57 million), the derivative
financial instruments are reported under the short-term financial liabilities with their negative market
value of EUR 0.007 million (previous year: positive EUR 0.029 million under the short-term financial
assets).
There is no own market risk from the forward exchange transactions themselves because the
linked operational business results in a closed item, which ensures that liquidity is available in the
secured currency in the corresponding amount at the agreed date.
Profits and losses from the development of the market values of the fair value hedges are
taken into account directly in the income statement in that the results from the hedge and those from
the underlying transaction are incorporated with effect on net income.
A non-payment risk does not exist.
All the forward exchange transactions entered into to secure currency risks have (as in the
previous year) a remaining term of up to one year.
(34) Original financial instruments
The stock of original financial instruments can be seen in the balance sheet. The explanations on
them are given in the explanations of the respective balance sheet item.
(35) Information on closely related companies and persons
In the course of operational business the companies in the INTERSEROH Group obtain materials,
supplies and services from numerous business partners Europe-wide. Among them are companies in
which INTERSEROH holds an interest as well as companies that have connections with members of
the Supervisory Board of INTERSEROH AG. Business with these companies is transacted on the
same terms as with external third parties. The companies in the INTERSEROH Group were not
involved in any transactions of significance for the Management Board or companies or persons close
to the Management Board that were unusual in type or nature. The organisational guidelines stipulate
that in the case of unusual transactions with closely related persons or companies the prices agreed
must be reviewed by two independent auditors to ensure conformity with market prices.
Expenses and earnings with associated companies or subsidiaries not included in the
consolidated financial statements are only of minor significance for the evaluation of the financial,
earnings and liquidity position and the payment flows of the group.
Two members of the Supervisory Board indirectly held a shareholding of more than one
percent each of the shares issued by the company as of 31 December 2005 (cf. note (42)).
The shareholdings of all other members of the Supervisory Board and Management Board as
of 31 December 2005 were neither directly nor indirectly more than one percent of the shares issued
by the company. The total shareholding of all other members of the Supervisory Board and
Management Board also lay under one percent on the closing date.
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