Corporate Governance Report
b) Interest rate risk
As the group has no interest-earning assets with significant interest, in addition to
treasury bonds issued by Angola for the purpose of “hedging”, the profit and cash
flows of the financing activities are substantially independent of changes in market
interest rate.
The risk of the Group’s interest rate comes from liabilities, specifically long term
loans. Borrowings issued at fixed rates expose the Group to fair value risk associ-
ated with interest rate. With the current level of interest rates, the group’s policy
is, in more mature financing, proceed to the total or partial fixing of interest rates.
Ibersol resorted to hedging the risk of interest rate to 30% of borrowing.
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 regu-
larly 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 financial markets has given a new
importance to liquidity risk. Systematic financial planning based on cash flow fore-
casting 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 daily adjusted. In line with the dynamics of the underlying
businesses, the Group’s Treasury aims for flexible management of commercial pa-
per and the negotiation of lines of credit that are available at all times. The policy
of open dialogue with all the financial partners has allowed the Group to maintain
high standart of trust relationships. The Group at the expense of the cost favored
maintaining contracted credit lines although little used.
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