Cash flow volatility risk caused by changes in interest rates

The Group is exposed to the risk of changing cash flows caused by changing interest rates. The risk results primarily from the fact that the value of certain assets and liabilities may change as a result of changes in market interest rates.

In 2012, the Group invested its available cash in financial assets bearing interest on the basis of floating interest rates, but also used external financing. In the case of loans, the risk of changing interest rates was associated mainly with the volatility of the WIBOR 1M reference rate, on which most of the applicable interest rates are based. At the same time, the Group held bank deposits earning interest at floating and fixed interest rates.

The risk of changing cash flows is therefore related to the volatility of interest rates on cash held and on external financing.

The Group does not use derivatives to hedge against interest rate risk.