IBERSOL | 2019 Annual Report

2019 ANNUAL REPORT Based on simulations performed on December 31, 2019, a decrease from 10% to 15% in AOA, concerning EUR and USD currency, keeping everything else constant, would have an impact of 1.408 thousand and 2.015 thousand euros (1.471 thousand euros and 2.065 thousand euros in 2018), respectively, on equity of the group. ii) Price risk The group is not greatly exposed to the merchandise price risk. iii) Interest rate risk (cash flow and fair value) With the exception of the Angola Treasury Bonds, the group has no significant inte- rest bearing assets. Therefore, profit and cash flows from investment activities are substantially independent of changes in market interest rate. Regarding the Angolan State treasury bonds, interest is fixed, so there is also no risk. The group’s interest rate risk follows its liabilities, in particular long-term loans. Loans issued with variable rates expose the group to the cash flow risk associated to in- terest rates. Loans with fixed rates expose the group to the risk of the fair value associated to interest rates. At the current interest rates, in financing of longer ma- turity 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 19 million are subject to interest maturities and repayment plans identical to the terms of the loans. In 2019, 20 million euros of fixed rate debt were contracted. Based on simulations performed on 31 December 2019, an increase of 100 basis points in the interest rate, maintaining other factors constant, would have a negative impact in the net profit of 513,000 euros (730,000 euros in 2018). 235