The objectives, principles, tasks, and areas of authority relating to financial management are set out in the mandatory, Group-internal treasury guidelines. These guidelines govern the banking policy, including the issuance of powers of attorney for banking transactions, processing of payments, global liquidity management, management of currency and interest risks, and general financing principles.

Treasury management at the HUGO BOSS Group is centrally organized. Authority to give instructions is held by HUGO BOSS International B.V. At the level of the subsidiaries, the finance managers are responsible for compliance with the treasury principles.

The goal of financial policy at HUGO BOSS is to have sufficient liquidity reserves available at all times to meet the Group’s payment obligations. The most important sources of liquidity for the Group are the operations of the individual Group companies and their resulting contributions. The individual Group companies are financed either by utilizing liquidity surpluses from other corporate units or through Group borrowings. This internal financing mechanism serves to ensure an optimal allocation of liquid funds, to minimize debt financing volumes of the HUGO BOSS Group, and to positively affect the net interest result.

Through the repayment of a borrower’s note for EUR 25 million on December 7, 2007, the HUGO BOSS Group used bilateral credit lines to cover its current financial requirements and as liquidity reserves as of December 31, 2007.

The Group was able to reduce its dependence upon individual banks and country-specific conditions over the past fiscal year by including other banks. The Group has at its disposal total approved credit lines of EUR 299 million, EUR 199 million of which had been utilized as of the end of the year. An additional EUR 99 million was therefore available as liquidity reserves. The conditions for short-term bank credit lines are based on the creditworthiness of the HUGO BOSS Group as established by internal bank ratings. The HUGO BOSS Group has been classified as “investment grade” under this system. HUGO BOSS was able to enjoy favorable conditions in the financial markets over the past fiscal year as well due to this very good to good credit rating. The Group therefore does not currently require verification of its credit rating by external rating agencies.

The effect of interest rate changes on the Group’s net income is minimal due to the low level of debt financing. Nevertheless, interest rate swaps and interest rate caps and floors are generally utilized in long-term financing to limit interest rate risks.

For a presentation of the risk management goals and methods used for hedging all important types of transactions made within the scope of accounting for hedging transactions, as well as interest, exchange rate, and liquidity risks, we refer to the section on risks from financing and assessment in the “Risk Report” and the explanations on “derivative financial instruments” in the notes to the consolidated financial statements.