The Group is exposed to multiple financial risks. The Group's risk management program aims at reducing the negative impact on financial results resulting from the inability to predict financial markets and the fluctuation in cost and sales variables. The risk management policy is implemented by the Group's financial services. The procedure followed is listed below:
The Group continuously monitors its requirements by using, where appropriate, external reports and analyzing existing or potential clients. The Group is not exposed to significant credit risk from trade receivables due to its policy, which focuses on working with reliable customers and on the nature of its activities. In particular, all receivables relate either to the wider public sector regarding both domestic and international operations, or to largely robust customers.
The credit risk concerning cash and other receivables is considered to be limited. However, these receivables as well, are closely monitored and, if needed, the necessary adjustments are made.
The Group operates in Greece, the Middle East, the Balkans, Eastern Europe and the USA. Consequently, it may be exposed to exchange rate risk, which may arise from commercial transactions in foreign currency, from investments in foreign currency and from direct investment in foreign entities. In order to minimize this risk, the financial management department undertakes the relevant actions, so that the Group's assets are protected against the risk of exchange rate fluctuations.
The Group seeks to minimize its exposure to interest rate risk, with emphasis on long-term borrowing. The medium to long-term loans are mainly in euro with fixed spread and floating rates linked to the Euribor. If it is judged that due to the repayment time, the probability of a change in the interest rate is high, then the risk is hedged via Interest Rate Swaps. Consequently, there is no interest rate risk for these loans.
The Group 's short - term borrowings are for their largest part in Euro, with floating interest rates linked to the Euribor. Short-term loans are received either as working capital or in order to finance the Group's investments. The objective of the Group is to continue to convert these loans into long-term with stable spreads, connected to the Euribor, and if deemed necessary due to the repayment time to hedge them via Interest Rate Swaps as well.
The Group manages liquidity needs by carefully monitoring the development of long-term financial liabilities as well as the payments made on a daily basis. Liquidity needs are monitored in different time zones, on a daily and weekly basis, as well as in a rolling 30-day period. Liquidity needs for the next 6 months and the following year are determined monthly. The Company reserves cash and cash equivalents in banks, in order to be able to meet the relevant liquidity needs.
The application of the measures regarding the implementation of the Greek economy’s support program, which was agreed with the institutions, as well as the still unresolved issue regarding the reduction of the banking sector’s NPEs, burdened the existing economic climate. Moreover, the failure to remove capital controls has an impact on international transactions, since the difficulty of repaying contractual obligations to suppliers and creditors entails additional costs, making it more difficult to return to regularity, thereby further weakening investment activity. The unfolding of the effects of the above conditions of uncertainty, adversely affect the cash flow and the Group's results. Despite the existence of risks mainly related to the recovery of assets’ future benefits and sufficient cash liquidity, the Group's activities continue normally. In this context, the Company’s Management constantly assesses the situation in order to ensure that all necessary and effective measures and actions are taken in time to minimize any impact on the Group's activities.
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