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3. Financial Risk Management
3.1 Financial Risk Factors
The Company is exposed to financial risk, such as market risk (fluctuations in exchange rates and interest
rates and price risk), credit risk and liquidity risk. The general risk management program of the Company
focuses on the unpredictability of the financial markets, and attempts to minimize their potential negative
influence on the financial performance of the Company.
The financial risk management of the Company is processed internally by a qualified Unit, which operates
under specific rules that have been approved by the Board of Directors.
a) Exchange Rate Risk
The main business associates of the Company, including customers, suppliers of goods, service providers and
suppliers of funds, are established in the European Union and therefore the largest part of the transactions
are performed in €. Hence the exchange rate risk of the Company is insignificant and relates only to some
minor services and supplies provided for by entities established outside the European Union.
b) Cash Flow and Fair Value Interest Rate Risk
The Company has significant interest-bearing assets in the form of cash, cash equivalent (short term
time deposits and other highly liquid investments) and blocked deposits, thus profits and cash flows
from investment activities are dependent in market interest rates. During 007 the Company’s cash and
cash equivalent (short term time deposits and other liquid investments) earned an effective interest rate
amounting to ,98% (006: ,80%). The impact from possible future interest rates on the Company’s
financial performance is presented bellow:
2007 2006
Interest rates fluctuation
+1% -1% +1% -1%
Impact on interest receipts
2.370.032 (2.370.032) 1.843.905 (1.843.905)
The Company is also exposed to interest rate risk arising from its long-term borrowings. Borrowings issued
at variable interest rates expose the Company to cash flow interest rate risk while borrowings issued at
fixed interest rates expose the Company to fair value interest rate risk.
The majority of the Company’s borrowings, in the region of 9% of total financing, are in borrowings with
fixed interest rates. Hence the financial performance cannot be affected by fluctuations in interest rates
with respect to such loans. The fair value interest rate risk of such loans is presented in note 4. “Bank
loans and other borrowings”.
During 007 and 006, the Company’s borrowings at variable interest rate were denominated in Euros.
The balance of the Company’s loans subject to floating rates is based on 6 months Euribor plus a pre-
determined spread. The impact from possible future interest rates on the Company’s financial performance
is presented bellow:
2007 2006
Interest rates fluctuation
+1% -1% +1% -1%
Impact on interest payments
782.746 (782.746) 1.174.119 (1.174.119)
9
3.1 Financial Risk Factors
The Company is exposed to financial risk, such as market risk (fluctuations in exchange rates and interest
rates and price risk), credit risk and liquidity risk. The general risk management program of the Company
focuses on the unpredictability of the financial markets, and attempts to minimize their potential negative
influence on the financial performance of the Company.
The financial risk management of the Company is processed internally by a qualified Unit, which operates
under specific rules that have been approved by the Board of Directors.
a) Exchange Rate Risk
The main business associates of the Company, including customers, suppliers of goods, service providers and
suppliers of funds, are established in the European Union and therefore the largest part of the transactions
are performed in €. Hence the exchange rate risk of the Company is insignificant and relates only to some
minor services and supplies provided for by entities established outside the European Union.
b) Cash Flow and Fair Value Interest Rate Risk
The Company has significant interest-bearing assets in the form of cash, cash equivalent (short term
time deposits and other highly liquid investments) and blocked deposits, thus profits and cash flows
from investment activities are dependent in market interest rates. During 007 the Company’s cash and
cash equivalent (short term time deposits and other liquid investments) earned an effective interest rate
amounting to ,98% (006: ,80%). The impact from possible future interest rates on the Company’s
financial performance is presented bellow:
2007 2006
Interest rates fluctuation
+1% -1% +1% -1%
Impact on interest receipts
2.370.032 (2.370.032) 1.843.905 (1.843.905)
The Company is also exposed to interest rate risk arising from its long-term borrowings. Borrowings issued
at variable interest rates expose the Company to cash flow interest rate risk while borrowings issued at
fixed interest rates expose the Company to fair value interest rate risk.
The majority of the Company’s borrowings, in the region of 9% of total financing, are in borrowings with
fixed interest rates. Hence the financial performance cannot be affected by fluctuations in interest rates
with respect to such loans. The fair value interest rate risk of such loans is presented in note 4. “Bank
loans and other borrowings”.
During 007 and 006, the Company’s borrowings at variable interest rate were denominated in Euros.
The balance of the Company’s loans subject to floating rates is based on 6 months Euribor plus a pre-
determined spread. The impact from possible future interest rates on the Company’s financial performance
is presented bellow:
2007 2006
Interest rates fluctuation
+1% -1% +1% -1%
Impact on interest payments
782.746 (782.746) 1.174.119 (1.174.119)
9
