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ANNUAL REPORT 2011
The exchange rate risk is very small because Ibersol
Group is mainly present in the iberian market,
the bank loans are denominated in euros, and
the purchase volume outside Eurozone does not
assume significant proportions. The investment
and financing in Angola has still a reduced
expression. Regarding future financing outside
Eurozone, Ibersol Group shall proceed a policy of
a natural coverage, using local funding whenever
the conditions of interest rates recommend so.
b) Interest rate risk
As the Group does not have remunerated assets
with significant interests, the profit and cash flows
from financing activity are largely independent of
any changes in the market interest rate.
The Group’s interest rate risk comes from liabilities,
specifically long term loans. Loans issued with
variable rates expose the Group to cash flow risks
linked to interest rates. Loans issued with fixed
rates expose the Group to risk from the fair value
associated to the interest rate. With the current
interest rate levels, the group’s policy, for financing
with longer maturity, is to ensure the total or partial
fixing of interest rates.
In recent years only a small part of the Group’s
financing has considered the possibility of risk
coverage by interest rate variation. It has a swap
operation involving 1,9 million euros in Spain.
Consequently, the remaining unpaid debt bears
interest at a variable rate. Due to the liquidity policy
followed this financial corporate year and that cash
amounted to approximately 50% of the liabilities, it
is understood to be reduced in part the exposure
to interest rate risk. Given the expectations of
evolution of changes in interest rates Euribor in
2011, the Group has decided not to make any
protection on the reference rate of its financing. In
2012 and regarding the expectations of changes in
the medium term, the Group will consider fixing the
interest rate on a 50% share of the debt.
c) Credit risk
The Group’s main activity is carried out with sales
paid in cash or debit/credit card; the Group therefore
has no relevant credit risk concentrations. However,
with increased sales of the catering business, with a
significant proportion of credit sales, the Group has
to monitor more regularly the accounts receivable
in order to:
i) limiting the loans to customers;
ii) analyze with the operations the seniority and
recoverability of receivables;