IBERSOL Annual Report and Consolidated Accounts 2017

ANNUAL REPORT 2017 the current interest rates, in financing of longer maturity periods the group has a policy of fixing interest rates of at least 50% of the outstanding amount. The unpaid debt bears variable interest rate, part of which has been the object of an interest rate swap. Interest rate swap contracts to hedge the interest rate risk of part of the loans (commercial paper) of EUR 37 million are subject to interest maturities and repayment plans identical to the terms of the loans. Based on simulations performed on 31 December 2017, an increase of 100 basis points in the interest rate, maintaining other factors constant, would have a negative impact in the net profit of 949.000 euros (390.000 euros in 2016). b) Credit risk The main activity of the Group is carried out with sales paid in cash, or debit or credit card, so the Group has no significant credit risk concentrations. Regarding the customers, the risk is limited to the Catering business and sales of merchandise to franchisees representing less than 4% of the consolidated turnover. The Group has policies to ensure that credit sales are made to customers with an appropriate credit history. The Group has policies that limit the amount of credit that customers have access to. The Group’s cash and cash equivalents include mainly deposits resulting from cash provided by sales and its deposits in current accounts. These amounts excluded, the value of financial investments at December 31, 2017, is not significant, with the exception of the above men- tioned Treasury Bonds of the Republic of Angola in the amount of 23 million euro, subject to country risk. Deposits and other financial investments are spread over several credit institutions; therefore there is not a concentration of these financial assets. 227