IBERSOL Annual Report 2018

ANNUAL REPORT 2018 b) Interest rate risk Except for the Angolan State Treasury Bonds, the Ibersol Group has no interest-bearing assets with significant interest. Accordingly, the income and cash flows of the investment activity are substantially independent of changes in the market interest rate. With regard to the Angolan State Treasury Bonds, indexed to the US Dollar, interest is fixed, so there is no risk either. The Ibersol Group’s main interest rate risk arises from liabilities, particu- larly long-term borrowings. Loans issued at variable rates expose the Group to the risk of cash flows associated with the interest rate. Loans issued at fixed rates expose the Group to fair value risk associated with the interest rate. At the current level of interest rates, the Group’s policy is, in mature loans, to fix interest rates up to 50% of the outstanding amount. c) Credit risk In the Group’s main business, sales are paid in cash, or debit or credit card, so the Group does not have relevant credit risk concentrations. In relation to customers, the risk is limited to the Catering and Fran- chisees business, which represents around 6% of consolidated turnover. The Group began to monitor receivables more regularly with the aim of: i) control the credit granted to customers; ii) analyze the age and recoverability of receivables; iii) analyze the risk profile of customers; d) Liquidity risk Liquidity risk management implies the maintenance of sufficient cash and bank deposits, the feasibility of consolidating floating debt through an adequate amount of credit facilities and the ability to liquidate mar- ket positions. The management of cash requirements is based on annual planning, which is reviewed quarterly and adjusted on a daily basis. In accordance with the dynamics of the underlying business, the Ibersol Group has been performing a flexible management of commercial paper and the negotiation of credit lines available at all times. 165