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This excerpt taken from the LUX 6-K filed May 12, 2009. price risk refers to the sensitivity of the market
value of assets and liabilities to changes in the level of market interest
rates. The price risk is covered by Fair Value hedge instruments, as defined
below.
As a consequence the objective of interest rate risk management is to reduce the uncertainty of the Group’s net interest result.
This is achieved reducing the volatility of the interest impact in the Group’s income statement and controlling the fluctuation of the net debt market value.
In order to pursue the above risk management objective, the whole Group’s interest rate risk exposure, in term of notional amount, has to be composed as a mix of fixed interest rate and floating interest rate where neither of the two components will be lower than 25% or higher than 75%.
Foreign currency risk is defined as follow:
The objective of foreign currency risk management is to support the Group in minimising the uncertainty and reaching its business objectives set by Group Planning by limiting this uncertainty, e. g. through minimizing the impact on income statement of a random effects of currency rate changes.
Group’s foreign currency position is divided into transaction, translation and competitive position. Positions are managed separately because of their different natures and effects on the Group’s income statement and balance sheet. The total position at Group level consists of all recognised currency dependent items.
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