Finance

Financial Instruments

Currency, interest, and liquidity risks are subject to active treasury management on the basis of guidelines that apply to the entire group. In this context, the specific requirements for the organisational separation of the operations and auditing of the functional divisions are observed.

Derivative financial instruments are used exclusively for the purpose of hedging basic operational transactions and mission-critical financial transactions in the form of interest swaps.

The financial risk management is characterised by the clear allocation of responsibilities, central rules for the fundamental limitation of financial risks, purposeful alignment of the employed instruments to the requirements of the business activity, and separate monitoring by a centrally controlled treasury management.

Foreign Currencies

Currency risks exist especially in areas in which receivables, debts, funds, and planned transactions exist or will accrue in currencies other than the local currency of the parent company. The foreign currency risk is mainly limited to Swiss francs, as a considerable portion of the international business is generated in Switzerland. Except for Switzerland and Great Britain, procurement mainly takes place in euro countries and hence in euros. Goods are only purchased in US dollars in exceptional cases. One of the currency risk relates to the use of loans in Swiss francs. This risk is hedged indirectly in that payment flows generated in Switzerland in Swiss francs could be used to repay these loans. Additionally, forward transactions were executed in Swiss francs. (See notes to the consolidated financial statements, chapter “Information on the Risk Management of Financial Instruments”, section “Currency Risk”).

Liquidity

Bechtle has a comfortable cash position

To ensure unlimited solvency, the company must have sufficient liquidity at all times. The liquidity situation is managed and monitored by the treasury management as an integral part of the group accounting. In view of the existing financial position of the Bechtle Group as of the end of the year with cash and securities worth 77.6 million euros, unused credit lines amounting to 39.9 million euros, and a positive cash flow from operating activities amounting to 49.9 million euros, the likelihood of a liquidity risk occurring is limited. Moreover, Bechtle AG has authorised capital of up to 10.6 million euros, which can be used to increase the equity base if necessary.

The treasury department of Bechtle AG ensures the liquidity supply for the group divisions and subsidiaries by means of cash pooling. Furthermore, it controls the interest risk and is responsible for the assessment, analysis, and monitoring of positions subject to market risks.

Receivables

The current credit squeeze in the financial markets and the creditworthiness of business customers play an increasingly important role in the assessment of the future risk situation. Bechtle could be more exposed to bad debt losses than in the past, as the financing options have become much more difficult, which means that customers may be unable to meet their payment obligations in due time or in their entirety. Detailed monitoring of customer relationships including ongoing solvency checks and proactive debt management help to avoid risks from bad debt losses.

Potential risks in connection with the investment of cash equivalents are limited by restricting short-term investments to first-class institutions. Bechtle AG reduces credit risks by exclusively executing transactions with banks with an excellent degree of creditworthiness and within the scope of defined limits. In addition, payment transactions are only handled via banks whose creditworthiness is beyond doubt.

Interest

As a matter of principle, financial assets and debts with terms of more than one year involve an interest risk. In recent past years, Bechtle has further reduced long-term financial liabilities. As of the balance-sheet date, there were only a limited number of liabilities with terms of more than one year to maturity. The interest rate risks of the Bechtle Group are centrally analysed, and the resulting measures are actively managed by the group’s finance department. The procedure applied by the department is subject to regular auditing as determined by the management. The risk of interest rate fluctuations of loans with variable interest rates is eliminated by means of interest rate swaps (see notes to the consolidated financial statements, chapter “Information on the Risk Management of Financial Instruments”, section “Interest Rate Risk”).