2007 Annual report - Groupe M6

financial accounts
notes to the consolidated financial statements
22.3
Market risk
Market risk is the risk that movements in market prices, such as foreign exchange rates,
interest rates and equity instrument prices may adversely affect the Group’s financial
performance or the value of its financial instruments. The objective of market risk
management is to manage and control exposure to market risks within acceptable limits,
while at the same time optimising the profitability to risk ratio.
n FOREIGN EXCHANGE RISK
The Group is exposed to foreign exchange risk through audiovisual rights purchase
contracts, both for its TV operations programme line-up and the cinema distribution
activity. These purchases are primarily denominated in US dollars.
In order to protect itself from random currency market movements that could adversely
impact its financial income and wealth, the Group decided to hedge all its purchases. The
coverage is undertaken at the signing of supplier contracts and is weighted as a function
of the underlying due date. Commitments to purchase rights over periods exceeding
24 months are partially hedged.
The Group only uses simple products that guarantee the amount covered and a maximum
rate of coverage. These are forward purchases, for the most part.
A report is prepared every month on the movements in exchange exposure in order to
monitor risk management.
Analysis of exposure to foreign exchange risk
(€ millions) USD Total
Assets 3.1 3.1
Liabilities (4.3) (4.3)
Off-Balance Sheet (57.8) (57.8)
Unhedged position (59.0) (59.0)
Forex hedges 54.5 54.5
Net exposed position (4.5) (4.5)
* at closing price: € 1 = USD 1.4417
The full balance sheet is hedged, as well as 90% of off-balance sheet commitments.
The Group’s US dollars net exposed position for all its activities is € 4.5 million, which would
yield a € 0.05 million loss in the event of an unfavourable foreign exchange movement
of € 0.01 against the US dollar.
M6 GROUP - 2007 annual report
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