100 % FUTURE - ALNO

137
H. MANAGEMENT OF FINANCIAL RISKS
1. RISK MANAGEMENT PRINCIPLES
The essential features of financial policy are laid down annually by the Managing Board, and monitored
by the Supervisory Board. Group Treasury is responsible for implementing financial policy, and
also for day-to-day risk management. Certain transactions require the approval of the Managing
Board, which is, moreover, kept regularly informed about the extent and amount of the current risk
assessment. Group Treasury regards the effective management of market risk as one of its main
responsibilities. In order to be able to assess the effects of different conditions on the market,
simulation calculations are performed using various worst-case and market scenarios.
The Group is exposed to financial risks arising from financial assets and liabilities, and also from
forecast transactions. Financial assets such as trade receivables, and cash and cash equivalents,
result directly from day-to-day business activities. Furthermore, financial assets include the securities
that serve to secure partial retirement entitlements. Financial liabilities particularly include bank
loans and current account overdrafts, as well as trade payables. The main purpose of the financial
liabilities is to finance the Group’s business operations.
The Group’s main risks arising from financial assets and liabilities include interest-rate fluctuations
risks, and also liquidity, foreign currency, and default risks.
The risk of changes in the fair value of securities (price risk) does not represent a material risk from
the Group’s point of view, owing to the low-risk investment strategy.
2. CURRENCY RISKS
Currency risk describes the risk that the fair value or future cash flows of monetary items may be
affected by exchange rate fluctuations.
Currency risks generally arise from investments, financing measures, and operations undertaken in
a currency other than the company’s functional currency. By contrast, the Group Treasury function
generally does not closely follow foreign currency risks that do not affect the Group’s cash flows,
for example, arising from the translation of the assets and liabilities of foreign company units to the
Group’s currency.
There was no major risk in the investment area as of the balance sheet date.
Foreign currency risks in the financing area arise from bank loans and current account overdrafts
denominated in foreign currencies, as well as loans in foreign currency which have been granted
to finance Group companies.
With effect as of January 1, 2010, the plants based in Germany mainly supply and invoice customers
in Switzerland and the United Kingdom directly. Invoices are prepared in euros. For this reason, the
ALNO Group sales area incurs no significant currency risks.