IBERSOL Annual Report 2018

Consolidated Financial Statements 2.19 DIVIDEND PAYMENT Payment of dividends to shareholders is recognised as a liability in the group’s finan- cial statements when the dividends are approved by the shareholders. 2.20 PROFIT PER SHARE Basic The basic profit per share is calculated by dividing the profit payable to shareholders by the weighted mean number of ordinary shares issued during the period, exclud- ing ordinary shares acquired by the company and held as own shares (Note 16). Diluted The profit diluted per share is calculated by dividing the profit payable to sharehold- ers – adjusted by the dividends of convertible preference shares, convertible debt interest and gains and expenses resulting from the conversion – by the average number of ordinary shares issued during the period plus the average number of ordinary shares that may be issued in the conversion of ordinary shares that may be potentially used in the dilution. 2.21 DERIVATIVES FINANCIAL INSTRUMENTS The Group uses derivatives financial instruments, such as exchange forwards and interest rate swaps, only to cover the financial risk witch the Group is exposed to. The Group doesn’t use derivatives financial instruments for speculation. Derivatives financial instruments negotiation is carried out by the Group, on behalf of their sub- sidiaries, by the financial department under the policies approved by the Board of directors. Derivative financial instruments are initially measured at the transaction date fair value, being subsequently measured at each reporting date fair value. Gains or losses of fair value changes are recognised as follows: Fair value hedge In an operation to hedge the exposure to fair value of an asset or liability (“fair value hedge”) determined as effective hedges, the fair value changes are recognised in the income statement jointly with the fair value changes of the risk component of the hedged item. Cash flow hedge In an operation to hedge the exposure to future cash-flows of an asset or liability (“cash-flow hedge”), the effective part of the fair value changes in the hedging de- rivative are recognizes in equity; the ineffective part of the hedging is recognized in the income statement when it occurs. Net investment hedge Currently there are no foreign operational units (subsidiaries) in currencies other than the euro, therefore the Group is not exposed to foreign currency exchange-rate risks. 228