Market risk
The
Group
has
an
active
approach
to
managing
its
market
risk
exposure.
The
objectives
of
market risk management are:
•
to limit fluctuations in profit/loss before tax,
•
to increase the probability of meeting budget assumptions,
•
to maintain the healthy financial condition, and
•
to
support
the
process
of
undertaking
strategic
decisions
relating
to
investing
activity,
with attention to sources of capital for this activity.
All
the
market
risk
management
objectives
should
be
considered
as
a
whole,
while
their
realisation is dependent primarily upon the internal situation and market conditions.
The
Group
applies
an
integrated
approach
to
market
risk
management.
This
means
a
comprehensive
approach
to
the
whole
spectrum
of
identified
market
risks,
rather
than
to
each
of
them
individually.
The
primary
technique
for
market
risk
management
is
the
use
in
the
Group
of
hedging
strategies
involving
derivatives.
Apart
from
this,
natural
hedging
is
also
used
to the extent available.
All
of
the
potential
hedging
strategies
and
the
selection
of
those
preferred
reflect
the
following
factors:
the
nature
of
identified
market
risk
exposures
of
the
Group,
the
suitability
of
instruments
to
be
applied
and
the
cost
of
hedging,
current
and
forecasted
market
conditions.
In
order
to
mitigate
market
risk,
derivatives
are
primarily
used.
The
Group
transacts
only
those
derivatives
for
which
it
has
the
ability
to
assess
their
value
internally,
using
standard
pricing
models
appropriate
for
a
particular
type
of
derivative,
and
also
these
which
can
be
traded
without
significant
loss
of
value
with
a
counterparty
other
than
the
one
with
whom
the
transaction
was
initially
entered
into.
In
evaluating
the
market
value
of
a
given
instrument,
the
Group
relies
on
information
obtained
from
particular
market
leading
banks,
brokers
and
information services.
It is permitted to use the following types of instruments:
•
Swaps (IRS/CIRS),
•
Forwards and futures,
•
Options.
Currency risk
One
of
the
main
risks
that
the
Group
is
exposed
to
is
currency
risk
resulting
from
fluctuations
in
exchange
rate
of
the
Polish
zloty
against
other
currencies.
Revenues
generated
by
the
Group
are
denominated
primarily
in
the
Polish
zloty,
while
a
portion
of
operating
costs
and
capital
expenditures
are
incurred
in
foreign
currencies.
The
Parent’s
currency
risk
is
associated
mainly
to
royalties
to
TV
broadcasters
(USD
and
EUR),
transponder
capacity
agreements
(EUR),
fees
for
conditional
access
system
(EUR
and
USD)
and
purchases
of
reception
equipment
and
accessories
for
reception
equipment
(USD
and
EUR).
After
the
purchase
of
Telewizja
Polsat
Sp.
z
o.o.
currency
risk
exposure
is
also
associated
to
purchases
of
foreign
programming
licenses
(USD
and
EUR).
After
the
purchase
of
Metelem
Holding
Company
Ltd.
currency
risk
exposure
is
also
associated
to
agreements
with
suppliers
of
stock,
mainly
mobile
phones,
and
suppliers
of
telecommunication
network
equipment
(EUR
and
USD), roaming and interconnect agreements and rental of office space (various currencies).
In
respect
of
license
fees
and
transponder
capacity
agreements,
the
Group
partly
reduces
its
currency
risk
exposure
by
means
of
an
economic
hedge
as
it
denominates
receivables
from
signal broadcast and marketing services in foreign currencies.
The Group does not hold any assets held for trading denominated in foreign currencies.
