IBERSOL | Annual Report 2020

ANNUAL REPORT 2020 Additionally, in Angolan subsidiaries, there are debts to suppliers - mainly group companies - denominated in EUR, which, after conversion, generate exchange differ- ences in the consolidated financial statements (other operating costs). On the other hand, the same subsidiaries hold financial assets indexed to the USD in an amount necessary to fully cover foreign currency liabilities. Due to this full coverage and based on the figures as at 31 December 2020, any sim- ulation of a depreciation of the AOA (Kwanzas) against the USD and EUR, keeping everything else constant, would not have a negative impact on Ibersol’s net profit. Based on simulations performed on 31 December 2020, a decrease from 10% to 15% in AOA, concerning EUR and USD currency, keeping everything else constant, would have an impact of 1.295 thousand and 1.943 thousand Euros (1.408 thousand Euros and 2.015 thousand Euros in 2019), respectively, on the Group’s equity. ii) Price risk The Group is not greatly exposed to price risk. iii) Interest rate risk (cash flow and fair value) With the exception of the Angola Treasury Bonds, the Group has no significant in- terest-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 interest 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 30% of the outstanding amount. 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 19 million Euros are subject to interest maturities 335