IBERSOL | Integrated Management Report - 2024

Consolidated Financial Statements When determining the lease term, the Group therefore makes a judgment about the relevant factors that create an economic incentive to exercise the renewal or termina- tion (in cases where such options are of the lessee and the lessor, the Group exercises judgment about the lessor and lessee economic incentives). Among other aspects, the Group takes into account: - the value of the non-transferable investments made in each commercial space and the estimate of the period for recovery and use of such investments; - if the renewal/termination option takes place in a shorter or more distant time horizon (the shorter the non-cancelable period of the contract, the greater the probability that the Group will exercise the renewal option, the opposite being true in the case of contracts with long non-cancellable periods) - conditions for contract renewal – for example with regard to the renewal period or rent conditions - termination penalties - location of assets and existence of viable alternatives for other commercial spaces. In most leases, the Group is not able to readily determine the interest rate implicit in the contracts, so it considers its incremental financing rate to measure lease liabilities. The incremental financing rate is the interest rate that the Group would have to pay to obtain loans with similar terms and guarantees, to acquire an asset identical to the lease asset in a similar economic environment. In this way, the incremental financing rate reflects what the Group would have to pay, which requires an estimate when there are no observable rates available (such as, for example, in subsidiaries that do not carry out financing operations) or when they need to be adjusted to reflect the terms and conditions of the lease (for example when contracts are not in the Group’s functional currency). The Group estimates the incremental funding rate using observ- able information (such as market interest rates) when available, making it necessary to make some specific estimates based on consultations with funding institutions such as banks and investment funds. The average incremental funding rate used by the Group to discount lease liabilities was 5.81% in Portugal and 5.65% in Spain (5.74% and 5.41%, respectively, in Portugal and Spain on 31 December 2023). On 31 December 2024, the company has commitments to third parties arising from lease contracts, namely real estate contracts. The decomposition of future lease rent payments, taking into account their maturity, can be analyzed as follows: 438