IBERSOL | Annual Report 2020

ANNUAL REPORT 2020 governments decreeing additional restrictive measures, some of which are still in force: - curfew; - punctual closing of business; - limitation of opening hours; - restrictions on the mobility of people; - border closure. Ibersol Group, following the indications of the World Health Organization and Gen- eral Health Directorates, activated the contingency plans that allowed the priority to guarantee the safety of all customers and employees and ensure the protection of the entire supply chain. In order to reconcile the abrupt reduction in activity and protect jobs, the Group’s companies joined ERTE (Expediente de Regulación Temporal de Empleo) in Spain and the simplified and normal Lay-off in Portugal, in the months of March and April, respectively. The Group chose, in accordance with IAS 20 - Accounting for Government Grants and Disclosure of Government Support, to deduct these grants from the related expenses (Note 20). In Portugal, the group joined the Extraordinary Incentive to the Standardization of Business Activity, while in Spain as at 31 December it remained with aproximately 1,370 employees in ERTE. At the same time, cost reduction initiatives were taken through the renegotiation of contracts, including the financial rebalancing of lease contracts, which resulted in discounts in the amount of 10.4 million Euros. However during the year the negotiation of airport concession contracts in Spain was not concluded, due to a lack of agreement with the concessionaire AENA. After a long negotiation process in which AENA proposed an adjustment of rents according to the number of passengers, Pansfood found itself faced with a proposal to reduce the income that would result in a reduction of the guaranteed minimum income of aproximately 60% in 2020 and 50% until September 2021, with the obli- gation to waive the request for further income reductions. Since most entities expect that the recovery of air traffic to the levels of 2019 will only occur in 2026, the need to request an adjustment of income until this year, at least, has been determined, which implies the impossibility of denying the renego- tiation of the rent. As a result, the Group initiated a legal proceeding against AENA so that the afore- mentioned economic and financial balance of these contracts was restored. In March 2021, the Group obtained a favourable decision by the Court of El Prat de Llobregat regarding the constraint of AENA to execute bank guarantees (Note 31) and collateral provided by PansFood under these contracts. With regard to the rent negotiation process, the Board of Directors strongly expects, supported also by its legal advisors, that the outcome of the lease will be favourable to it, which will result in a guaranteed minimum rent payable to AENA lower than initially projected in the original contracts of around 95 million Euros, of which 24 million Euros referring to 309