IBERSOL | Annual Report 2020

CORPORATE GOVERNANCE REPORT 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 30% 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, sales through aggregators and Franchisees, which represents around 6% of consoli- dated turnover. The Group began to monitor receivables more regularly with the aim of: i) control the credit granted to customers; ii) analyse 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. e) Capital risk The Company seeks to maintain a level of own capital appropriate to its principal business (cash sales and supplier credit) and ensure its conti- nuity and expansion. The balance of the capital structure is monitored based on the financial leverage ratio (defined as: net interest-bearing debt / net interest-bear- ing debt + equity) with the aim of placing it between 50% -75%. 252