Liquidity, Financial Assets and Financial Risk Management of the Company

The activities of the Company and the Group are exposed to three types of financial risks: market risk, credit risk, and liquidity risk. Details of how financial risks are identified and managed have been described in the Financial Statements.

In 2012, the Group’s liquidity risk, which means inability to timely meet its payment obligations, was minor in view of material financial assets held and positive cash flows from operating activities which exceeded the value of existing liabilities. The current liquidity ratio amounted to 9.6 at 2012 year-end and 11.5 at 2011 year-end. The current liquidity ratio for 2012 was adjusted for the impact of current assets and liabilities of the PolPX Group relating to the clearing guarantee system. The high ratio recorded at the end of 2011 was attributable mainly to the receipts from the issue of series A bonds at PLN 170 million.

WSE manages financial liquidity in accordance with the “Current Assets Allocation Procedure” adopted by the WSE Management Board. Pursuant to this document, the procedures for investing free cash should be handled in view of the due dates of liabilities so as to minimize the liquidity risk for the parent entity and, at the same time, to maximize its financial income. In practical terms, this means that WSE invests its current assets in Treasury bonds and bank deposits and the average duration of a financial asset portfolio was around 0.3 years in 2012.

As of January 1, 2012, WSE applies hedging accounting. Hedging covers cash flows under the agreement concerning the delivery of a new trading system (UTP), the acquisition of licences, and the acquisition of warranties in the first year after implementation.

In the opinion of the Management Board, the Group’s financial assets and financial risk management process is effective and ensures timely meeting of payment obligations.

No threats have been identified to the Group’s liquidity.

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