Nabaltec_E_GB2016

T R O P E R T N E M E G A N A M D E T A D I L O S N O C 46 REPORT ON OUTLOOK, OPPORTUNITIES AND RISKS Swaps are used as interest rate hedges in the third quarter of 2016, as part of the bankruptcy proceedings. As a result, Nashtec LLC was also compelled to temporarily halt operations. Since then, Nabaltec AG has been supply- ing its US customers from its plant in Schwandorf, Germany. FINANCIAL MARKET When necessary, foreign exchange rate risks are strategically minimized using hedging instru- ments covering risks arising from US dollar exposure. In case of medium-term financing, inter- est risks are hedged using swaps or loan agreements are concluded with fixed interest rates. Nabaltec AG and its US subsidiary have a detailed financial and liquidity forecast which is subjected to routine comparisons of estimates against results. If additional liquidity is deemed necessary, the appropriate financing measures are initiated. The risk of changes in interest rates is countered in part through hedging. Nabaltec AG’s loan agreements are partially subject to covenants which are tied e.g. to leverage coverage ratios as well as the equity ratio. If the covenants are not observed, the lender has the option to increase the interest margin or exer- cise its right of extraordinary termination. Covenants valid as of 31 December 2016 were not breached in the reporting year. Factoring is used to a substantial extent for the financing of accounts receivable. Intensive training/ education and management trainee programs PERSONNEL Particularly the fluctuation of employees in key positions gives rise to personnel risks. Nabaltec minimizes these risks through intensive training/education and management train- ee programs to enhance the qualification of employees, performance-based remuneration, employee substitution arrangements that govern the temporary replacement of key employ- ees, and early advance plans for successors. The company also offers good career opportuni- ties and advancement possibilities. Nabaltec’s market position, the reputation it has earned in the industry, its high reliability and its familiar strong focus on research and development make Nabaltec an attractive employer within its market segments and region. Production-specific risks are limited and manageable PRODUCTION, PROCESSES AND IT Nabaltec has an integrated quality management system with ISO 9001 accreditation that is implemented company-wide. Therefore, Nabaltec considers production-specific risks to be clear and manageable. For IT applications that are critical for the business, Nabaltec AG relies on standard programs and the redundantly designed high-quality hardware. Through regular verification of the access structure, data protection is guaranteed; data security is therefore based on generally well-established procedures. Compliance with data protection policies based on the legal requirements is ensured at all times within the company and is additionally monitored by an external data protection officer. ENVIRONMENTAL PROTECTION Environmental risks can arise from exceeding admissible thresholds for noise and dust pollu- tion or through the emission of hazardous substances. Nabaltec counters these risks by means of extensive environmental management based on ISO 14001, which is accredited and is periodically further developed and audited. Nabaltec uses closed-loop production processes, e.g. for water and lye. TECHNOLOGICAL DEVELOPMENT Potential technological risks could result from customers replacing Nabaltec products due to a change in technology, from the failure to use new technologies and from not recognizing technological developments. As an innovation leader, Nabaltec tries to minimize these risks by engaging in continuous and intensive research and development efforts and by maintain- |||| Nabaltec AG | Annual Report 2016

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