80
2013
Annual Report
16
c)
Market risk, currency risk and interest rate risk
The Company's ambit of operations barely exposes it to currency or price risks, which may arise from
occasional purchases in foreign currency of insignificant amounts.
The Company has also implemented different purchasing and contracting policies to encourage sales in its
ambit of operations, as well as different policies aimed at mitigating, insofar as possible, the concentration of
balances and transactions, and reducing the possibility of concentrating transactions in a limited number
agents.
The Company regularly revises its interest rate hedging policy. Under this policy, the need to contract interest
rate hedges is evaluated.
The Company settles interest on a monthly basis, which allows it to closely monitor the performance of
interest rates in the financial market.
As a result of the interest rate risk analysis performed in 2012 and 2013, the Company has entered into
Financial Operation Framework Contracts (interest-rate swaps) for 75% of the limit of loans signed in 2012 and
2013.
4.2.
Fair value estimates
The fair value of financial instruments not traded on an active market, where applicable, is determined by
applying valuation models and techniques. The Company applies methods and makes assumptions based on
market conditions existing at each reporting date. Quoted market prices or agent quotations are used to
estimate long-term payables. To determine the fair value of the remaining financial instruments, the Company
uses other techniques such as estimated discounted cash flows.
The carrying amounts of trade receivables and payables are assumed to be similar to their fair values. For the
purposes of financial reporting, the fair value of financial liabilities is estimated by discounting contractual
future cash flows at the current market interest rate available to the Company for similar financial
instruments.
