IBERSOL | Integrated Management Report - 2024

INTEGRATED MANAGEMENT REPORT 2024 period of the contracts and the maximum corresponding to the period during which the contract is enforceable (period after which lessor and lessee have the right to end the lease with no more than a negligible penalty considering the broader economic circumstances). There are no residual value guarantees in the contracts. The main value judgments relating to the future and other sources of uncertainty essentially concern the future profitability prospects of the stores which, as stated above, influence the lease term in cases where there are renewal and/or termination options. Payments related to variable contract components are not considered as lease pay- ments, being recognized as an expense in the year in which they occur. These rents are determined by a percentage of the sales of each space and are incremental compared to the contracted minimum rents. For the year ended 31 December 2024, exposure to variable lease payments is re- duced. For a variation of more than 5% in sales in all the group’s restaurants, an in- crease in total rentals of 0.9% is estimated. After the start date of the contracts, the Group reassesses the term of the leases if there is a significant event or change in circumstances that are within its control and that affect its ability to exercise or not to exercise the option to renew or terminate (for example, local changes in the consumer market and/or carrying out significant improvements or customization in the lease asset). Interest on leases is shown in the consolidated statement of cash flows, in payments relating to cash flows arising from financing activities. To determine whether the transfer of an asset is accounted for as a sale of that asset, the Group applies the requirements of IFRS 15 to determine when a performance obli- gation is satisfied. In cases where this is the case, as seller-lessee, the Group measures the asset under right of use resulting from the lease in proportion to the previous carrying amount of the asset relating to the right of use held by the seller-lessee. In this way, only the amount of any gain or loss related to the rights transferred to the buyer-lessee is recognized. In cases where the transaction does not meet the requirements to be accounted for as a sale, the asset continues to be recognized in the Group’s balance sheet and a finan- cial liability equal to the transfer proceeds is recognized, accounted for as a financial liability in accordance with IFRS 9. Judgments and estimates Lease term and incremental financing rate The Group estimates lease terms and the incremental financing rate. The Group determines the lease term as the non-cancellable period of the lease, tak- ing into account the periods covered by an option to extend the contract, if it is rea- sonable for the Group to exercise it, or any periods covered by an option to terminate. the contract, if it is reasonably certain that the Group will not exercise it. 437