IBERSOL | Integrated Management Report 2022

STRATEGIC FRAMEWORK Financial Risks Foreign exchange risk In this matter, the Ibersol Group pursues a policy of natural hedging, resorting to financing in local currency. Since it is essentially present in the Iberian market, bank loans are mostly denominated in euros and the volume of purchases, outside the Euro Zone, do not assume relevant proportions. The main source of exposure comes from the investment outside the Eurozone in the operation taking place in Angola, with little weight in the Group’s activity. The imbalances of the Angolan economy have caused the devaluation of the Kwanza which is a risk to be considered. The financing contracted by the Angolan subsidiaries is denominated in local currency, the same currency in which the income is generated. The Group has adopted a policy of monthly monitoring of credit balances in foreign currency and their partial hedging through Treasury Bonds of the Republic of Angola, indexed to the USD. In 2021 and 2022, the monetary policy adopted by the Angolan government allowed the necessary fluidity of access to foreign currency to satisfy the payment commitments abroad and regularise all the situations of delay. Interest rate risk Historically, with the exception of the Angolan State Treasury Bonds, the Ibersol Group has no significant interest-bearing assets. There- fore, the profit and cash flows of the investment activity are sub- stantially independent from changes in the market interest rate. Re- garding the Angolan State Treasury Bonds, indexed to the American Dollar, the interest is fixed, so there is also no risk. As a result of the operation to sell the Burger King restaurants on 30th November, the Group on 31st December had Term Deposits with maturities up to 3 months in the amount of 165 million euros. Until 30 November 2022, the Ibersol Group’s main interest rate risk came from liabilities, namely from long-term borrowings. Loans is- sued with variable rates expose the Group to cash flow risk associat- ed with interest rate. Loans issued with fixed rates expose the Group 68