Annual Report and Consolidated Accounts 2015
Financial
Risk management in the financial area is led by the Financial Unit, which focuses on
monitoring the volatility of the financial markets, especially interest rate volatil-
ity. The current situation of the markets has led to liquidity risk taking on greater
importance.
The Group’s policy regarding financial risk management is conservative and cau-
tious when using derivative instruments for hedging does not take positions that
are not strictly related to the activity or positions that have speculative purposes.
The main sources of exposure to financial risk are:
a) Exchange rate risk
This risk increased significantly during the last year, because the subsidiaries in An-
gola saw limited access to foreign exchange, resulting in an extension of the pay-
ment terms, which increased its exposure to the effects of devaluation.
With regard to financing outside the Euro zone the group will pursue a natural
hedge policy, preferably in local currency financing where the interest rate condi-
tions recommend.
In order to ensure adequate protection of Angolan subsidiaries to increase value
of the obligations in foreign currency, proceeded to the purchase of instruments
indexed to the dollar, in order to ensure the “hedging”.
Increased activity in Angola will result in an increased risk of exchange - if they
maintain the current constraints of access to foreign exchange - which will affect
the value of assets and liabilities.
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