IBERSOL | Annual Report 2020

ANNUAL REPORT 2020 2.21 SUBSEQUENT EVENTS Events occurring between the date of the statement of consolidated financial posi- tion and the date of issue of the consolidated financial statements and the consoli- dated financial position (“adjusting events”) are reflected in the consolidated finan- cial statements. Events that occur between the date of the consolidated statement of financial position and the date of issue of the consolidated financial statements that provide information on conditions that occur after the date of the consolidated statement of financial position (“non adjusting events”), if material, are disclosed in note 34. 2.22 DERIVATIVES FINANCIAL INSTRUMENTS The Group uses derivatives financial instruments, such as exchange forwards and interest rate swaps, only to cover the financial risk witch the Group is exposed to. The Group doesn’t use derivatives financial instruments for speculation. Derivatives financial instruments negotiation is performed by the Group, on behalf of their sub- sidiaries, by the financial department under the policies approved by the Board of directors. Derivative financial instruments are initially measured at the transaction date fair value, being subsequently measured at each reporting date fair value. Gains or losses of fair value changes are recognised as follows: Fair value hedge In an operation to hedge the exposure to fair value of an asset or liability (“fair value hedge”) determined as effective hedges, the fair value changes are recognised in the income statement jointly with the fair value changes of the risk component of the hedged item. Cash flow hedge In an operation to hedge the exposure to future cash-flows of an asset or liability (“cash-flow hedge”), the effective part of the fair value changes in the hedging de- rivative are recognizes in equity; the ineffective part of the hedging is recognized in the income statement when it occurs. Net investment hedge Currently there are no foreign operational units (subsidiaries) in currencies other than the euro, therefore the Group is not exposed to foreign currency exchange-rate risks. The Group has well identified the nature of the involved risks, guarantees through 331