IBERSOL Annual Report and Consolidated Accounts 2017

ANNUAL REPORT 2017 a) Market risk i) Currency exchange risk With regard to exchange rate risk, the Group follows a natural hedge policy using financing in local currency. Since the Group is mainly present in the Iberian market, bank loans are mainly denominated in euros and the volume of purchases outside the Euro zone are of irrelevant proportions. The main source of the Group’s exposure arises from the investment outside the euro area of operation that develops in Angola, although it is still small is growing and consequently to gain weight in the group activity. The reduction of oil prices is to lead to a shortage of foreign currency in Angola by the devaluation of the kwanza is a risk to consider. The financing of the Angolan subsidiary in foreign currency in the amount of $ 1.500.000, does not have large ex- posure due to the reduced amount. The remaining financing concerning Angolan subsidiaries are denominated in the local currency, the same in which the income is generated. In 31 December, 2017 and 2016 currency exchange risk was as follows: Year 2017 Kwanzas Equivalent EUR USD Equivalent EUR Financial Assets Cash and Bank deposits 626.211.315 3.377.784 5.523 5.116 Treasury bonds 4.261.524.035 22.986.661 - - Others 24.846.403 134.021 1.938 1.795 4.912.581.753 26.498.466 7.461 6.912 Financial Liabilites Loans 1.981.500.000 10.688.211 1.000.000 926.426 Suppliers 436.005.642 2.351.814 1.764.665 1.634.831 Others 2.798.103 15.093 312.199 289.229 2.420.303.745 13.055.118 3.076.863 2.850.486 225