Annual report 2012

Financial risks

This section summarises key financial risks and the method used to manage them. The aforementioned risks are defined in detail in the financial report. 

Identified business risks
Risk

Method of management  

Solvency risk
  • Planning and managing cash flows, short-term credit lines at domestic banks, investment of surplus funds at banks in the form of deposits, criteria for monitoring and planning cash flows at other Group companies, short-term financing within the Group and the use of a cash-pooling method, and ensuring an adequate level of working capital and capital adequacy.
Risk of an inappropriate capital structure
  • Maintaining current credit rating, thus ensuring the possibility of raising long-term sources of financing.
  • Ensuring an appropriate debt-to-equity ratio.
Risks associated with securing sources of financing
  • Ensuring an adequate credit rating.
  • Maintaining business partnerships with banks.
  • Identifying needs for sources in a timely manner with the help of cash flow forecasts.
Identifying needs for sources in a timely manner with the help of cash flow forecasts.
  • Taking into account subscriber’s credit ratings in the sales process and the implementation of measures.
  • Regular collection according to a schedule.
  • Monitoring of daily shifts in a subscriber's traffic with regard to average usage, and informing subscribers of increased usage.
  • Collateral for potential claims when concluding agreements with suppliers.
  • Management of customer codes.
Risk of operator default
  • Regular monitoring of receivables and liabilities, and collection under existing regulations.
  • Verification of operators’ credit ratings when concluding new agreements.
  • Introduction of instructions for carrying out procedures in the event of default on the domestic wholesale market.
  • Changes to sample agreements in accordance with the APEK recommendation on the conduct of operators in the event of unreasonable requests for operator access.
Interest-rate risk
  • Continuous monitoring of financial markets and the use of interest-rate hedging instruments for 30% of loans.

 

Significance

Impact

Probability

Degree of risk

Solvency risk 3 1 3
Risk of an inappropriate capital structure 3 1 3
Risks associated with securing sources of financing 3 1 3
Risk of subscriber default 3 3 9
Risk of operator default 3 3 9
Interest-rate risk 1 2 2