Here - RTÃ
Here - RTÃ
Here - RTÃ
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ANNUAL REPORT & GROUP FINANCIAL STATEMENTS 2008<br />
22 Financial Instruments (Group and RTÉ)<br />
(a) Financial risk management<br />
The Group has exposure to the following risks from its use of financial instruments:<br />
• credit risk<br />
• liquidity risk<br />
• market risk<br />
This note presents information about the Group’s exposure to each of the above risks and the Group’s objectives, policies and<br />
processes for measuring and managing risk.<br />
The RTÉ Authority has overall responsibility for the establishment and oversight of the Group’s risk management framework and has<br />
approved policies for the main areas of financial risk faced by the Group.<br />
Group Treasury is responsible for managing all treasury activities, in accordance with the treasury policies, including cash management,<br />
foreign exchange risk and counterparty credit risk.<br />
Credit risk<br />
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual<br />
obligations, and arises principally from the Group’s receivables from customers and deposit investments.<br />
The Group has detailed procedures for monitoring and managing the credit risk related to its trade receivables and other receivables.<br />
The Group has credit insurance and sets credit limits for all customers. Given the nature of the advertising and other markets within<br />
which RTÉ operates, RTÉ had significant exposures to individual advertising agencies and other customers throughout the year. RTÉ’s<br />
policy is to assign limits to the aggregate amount of exposure to each individual customer. These exposures and the related limits are<br />
subject to ongoing review and monitoring.<br />
Cash and short term bank deposits are invested with institutions of an acceptable credit rating with limits on amounts held with<br />
individual banks or institutions at any one time. No amounts greater than 20% of the Group’s cash balances were held with any one<br />
institution at the balance sheet date. The maximum exposure to credit risk is represented by the carrying amount of the financial assets<br />
in the balance sheet.<br />
Liquidity risk<br />
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. RTÉ’s approach to managing<br />
liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its financial liabilities when due, under both<br />
normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group’s reputation.<br />
The Group’s policy is to invest excess cash primarily in term deposit accounts, spread over a number of institutions.<br />
Market risk<br />
Market risk is the risk that changes in market prices, such as foreign exchange rates or interest rates, will affect the Group’s income<br />
or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk<br />
exposures within acceptable parameters, while optimising the return.<br />
The majority of RTÉ’s business is transacted in Ireland. Consequently, operating and investing cash flows are substantially denominated<br />
in Euro. Foreign currency exposures arise primarily from payments for acquired programmes and sports rights in US dollar and Sterling.<br />
RTÉ’s policy is to have the majority of its committed principal foreign currency exposures commercially hedged at the beginning<br />
of each financial year by entering into US dollar and Sterling forward contracts. All forward contracts have a maturity date of less than<br />
18 months from the balance sheet date.<br />
RTÉ decides whether to apply hedge accounting to its derivative financial instruments on a transaction by transaction basis. Hedge<br />
accounting has not been applied to any of the Group’s derivative financial instruments at 31 December 2008 or 31 December 2007.<br />
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