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In the Group, the hedging relationship between the hedging instrument and the underlying transaction,
the objective of the Group’s risk management and the strategy underlying the hedging transactions
are documented when hedging transactions are concluded. In addition, the estimation as to
whether the derivatives used in the hedging relationship are highly effective in compensating for the
changes in the current value or the underlying transaction’s cash flows is then documented in the
Group at the start of the hedging relationship and continuously thereafter.
Credit risk
The Group has no significant potential credit risk clusters. It has trading rules and regulations and an
efficient receivables management program which ensure that products are sold only to customers
with an appropriate payment history. Contracts involving derivative financial instruments and financial
transactions are restricted to financial institutions with prime creditworthiness. The Group’s business
policy is to limit the amount of credit exposure to the individual financial institution.
Liquidity risk
Prudent liquidity management includes the maintenance of sufficient reserves of cash and marketable
securities, the availability of funding through an adequate amount of committed credit facilities and
the existence of unused credit facilities.
Cash flow and fair value interest rate risk
The Group’s interest rate risk arises from interest-bearing liabilities. Liabilities with variable interest
rates expose the Group to a cash flow interest rate risk which influences interest expenses and interest
income. Fixed-interest liabilities give rise to a fair value interest rate risk, although this has an impact
on the balance sheet only if the financial instruments are reported at current value.
Further information about Salzgitter AG’s risk management is provided in the Risk Report.
Capital Risk Management
The Group manages its capital with the objective of maximizing the earnings from its shareholdings
by optimizing the relationship between equity and debt. This also serves the objective of reducing the
costs of capital procurement. In the process, it is ensured that all of the Group companies can operate
under the principle of going concern principle.
In order to maintain or optimize the capital structure, the Group is obliged to adjust the amount of the
dividend payments, make repayments of capital to the shareholders, issue new shares or dispose of
assets for purposes of debt reduction.
The Group’s capital structure consists of debt, including leverage, cash and cash equivalents (liquid
funds, loans against promissory notes/bonds and securities) and the equity and minority interests due
to SZAG’s equity providers.
Further information is contained in the Group Management Report in Section A.II.8. “Net Assets”.