6 - Vicat

Risk factors4 4.4. MARKET RISKSThe euro position does not include a loan of 20 millioneuros to Sococim Industries in which the functionalcurrency is the CFA Franc, which has fixedparity with the euro.The net position after risk management in USdollars includes 125 million dollars loan to ourKazakhstan'subsidiary for which there is no hedgingmarket.The hypothetical loss on the net currency positionarising from an unfavorable and uniform change ofone centime of the operating currency against theUS dollar would amount to € 1.1 million euros (including€ 0.9 million for the Kazakhstan loan).However, the Group cannot exclude the fact that anunfavorable change in exchange rates could have amaterial adverse effect on its activities, its financialcondition, its results of operations, its prospects oron its capacity to achieve its objectives.4.4.2. Conversion risksThe financial statements of the Group’s foreign subsidiaries(other than in the Euro zone) as expressed intheir operating currencies are converted into euros,the “presentation currency”, in preparing the Group’sconsolidated financial statements. Fluctuation of theexchange rate of these currencies against the euroresults in a positive or negative variation in the eurovalue of the subsidiaries’ income statements and balancesheets in the consolidated financial statements.The effect of fluctuating exchange rates on the conversionof the financial statements of the Group’sforeign subsidiaries (other than in the Euro zone)on the consolidated balance sheet and the incomestatement is discussed in Sections 9. “Examinationof the financial condition and results” and 10. “Cashflow and equity” of this Registration Document.4.4.3. Interest rate risksThe Group is exposed to an interest rate risk on itsfinancial assets and liabilities and its cash. This exposureto interest rate risk corresponds to two categoriesof risk.4.4.3.1. Exchange rate risks for items in the financialassets and liabilities at a fixed rateWhen the Group incurs a debt at a fixed rate, it is exposedto an opportunity cost in the event of a fall ininterest rates. Interest rate variations have an impacton the market value of fixed rate assets and liabilities,while the corresponding financial income or financialexpense remains unchanged.4.4.3.2. Cash flow risks related to items in the assets andliabilities at variable ratesThe interest rate risk is generated primarily by variableinterest rate items in the assets and liabilities.Interest rate variations have little impact on the marketvalue of variable rate assets and liabilities, butdirectly affect the Group’s future income flows andexpenditure. Exposure to interest rate risks is managedby combining fixed and variable rate debts onthe one hand and on the other hand by limiting therisk of fluctuation of variable rates by recourse tohedging instruments (caps and rate ceilings) and byshort term cash surpluses remunerated at a variablerate. The Group refrains from speculative transactionsin financial instruments. Financial instrumentsare exclusively used for financial hedging purposes.2009 registration document - VICAT 17