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B) INTEREST RATE RISK
As the Group has no interest-bearing assets with sig-
nificant interest rates, the gains and cash flows of the
financing activity are substantially independent of
changes in market interest rates.
The interest rate risk for the Group comes from the li-
abilities, namely long-term loans. Fixed-rate borrow-
ings expose the Group to fair value interest rate risk.
With the current level of interest rates, the Group’s
policy in long-term financings is to fully or partly fix
the interest rates.
Ibersol uses interest rate hedges for 30% of the loans
obtained.
C) CREDIT RISK
The Group’s principal activity is carried out with sales
paid in cash or by debit/credit card, so that the Group
has no material credit risk concentrations. However,
with the increase in sales of the catering business,
which has a significant proportion of credit sales, the
Group has started to monitor its accounts receivable
more regularly in order to:
i) control the credit granted to customers;
ii) analyze the age and recoverability of receivables;
iii) analyze the risk profile of customers;
D) LIQUIDITY RISK
As already mentioned, the recent situation of the fi-
nancial markets has lent a new importance to liquid-
ity risk. Systematic financial planning based on cash
flow forecasting in different scenarios and for periods
of more than one year has become an imperative.
Short-term cash management is based on the annual
plan, which is reviewed quarterly and adjusted daily.
In line with the dynamics of the underlying business-
es, the Group’s Treasury aims for flexible management
of commercial paper and the negotiation of lines of
credit that are available at all times. The policy of
open dialogue with all the financial partners has al-
lowed the Group to maintain relationships of trust.
The Group, in detriment of the cost, chose to contract
underused credit lines.
E) CAPITAL RISK
The Company seeks to maintain a level of capital ap-
propriate to its principal business (cash sales and sup-
plier credit) and ensure its continuity and expansion.
The balance of the capital structure is monitored based
on the leverage ratio (defined as: net interest-bearing
debt / (net interest-bearing debt+shareholders’ equi-
ty)), aiming to keep this ratiowithin the 35%-70% range.
In 2014, as ameasure of prudence in view of the current
market constraints, we maintained a ratio of 17%.
Environmental
The environmental risk management area is overseen
by the Quality Unit, whose main concern is the imple-
mentation of the policy deriving from Ibersol’s Sus-
tainability Principles, so that environmental processes
and procedures are applied across the organization.
Adoption of good environmental management prac-
tices is a matter of concern to Ibersol’s Board of Di-
rectors, which promotes a responsible, proactive ap-
proach to resource and waste management.
The procedures set forth in Ibersol’s Standards Manual
as regards environmental matters are focused mainly
on the rational use of electricity and the recycling of
used oil and packaging.
