IBERSOL | Annual Report 2021

ANNUAL REPORT 2021 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. Based on simulations performed on 31st December 2021, a decrease from 10% to 15% in AOA, concerning EUR and USD currency, keeping everything else constant, would have an impact of 106 thousand and 905 thousand Euros (1.295 thousand Euros and 1.943 thousand Euros in 2020), respectively, on the Group’s equity. ii) Price risk The Group is not greatly exposed to goods 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 6.4 million Euros are subject to interest maturi- ties and repayment plans identical to the terms of the loans. A loan of 36 million Euros with fixed rate debt is contracted. Based on simulations performed on 31st December 2021, an increase of 100 basis points in the interest rate, maintaining other factors constant, would have a negative impact in the net profit of 522,000 Euros (610,000 Euros in 2020). b) Credit risk The main activity of the Group is performed with sales paid in cash, or debit or credit card, so the Group has no significant credit risk concentrations. Regarding customers, the risk is limited to the Catering business and sales of merchandise to franchisees representing less than 3.8% of the consolidated turnover. The Group has policies to ensure that credit sales are made to customers with an appropriate credit history. The Group has policies that limit the amount of credit that customers have access to, with no information on the rating assigned to these entities. Credit situations in arrears for more than 30 days are subject to an analysis of future losses based on historical information and taking into account the established business relationship 361