IBERSOL | Integrated Management Report - 2024

INTEGRATED MANAGEMENT REPORT 2024 Financial assets are derecognized when Ibersol contractual rights to receive their fu- ture cash flows expire, when Ibersol has transferred substantially all risks and rewards of ownership or when, despite retaining some but not substantially all of the risks and rewards of ownership, the Group has transferred control over the assets. Other receivables and financial assets For other receivables and financial assets measured at amortised cost, the Company prepares its analyses based on the general model, assessing at each date whether there has been a significant increase in credit risk since the date of initial recognition of such asset. If there has been no increase in credit risk, an impairment is calculated corresponding to the amount equivalent to the expected losses within a period of 12 months. If there has been an increase in credit risk, the impairment calculation consid- ers the expected losses for all contractual cash flows up to the maturity of the asset. A significant increase in credit risk is assumed (and impairment is determined for all contractual flows of the asset up to its maturity date) if the external rating of the debtor is significantly downgraded or if a debtor is more than 90 days late from the contractual payment date. Impairment of clients and other debtors IFRS 9 establishes an impairment model based on “expected losses”, which replaces the previous model based on “incurred losses” under IAS 39. In this sense, Ibersol recognizes impairment losses before there is objective evidence of loss of value aris- ing from a past event. This model is the basis for the recognition of impairment losses on financial instruments held whose measurement is at amortized cost or fair value through other comprehensive income. The impairment model depends on whether there has been a significant increase in credit risk since initial recognition. If the credit risk of a financial instrument has not increased significantly since initial recognition, Ibersol recognizes a cumulative impair- ment equal to the expected loss estimated to occur within the next 12 months. If the credit risk has increased significantly, Ibersol recognizes a cumulative impairment equal to the estimated loss expected to occur until the respective maturity of the asset. For accounts receivable, Ibersol applies the simplified approach to calculating ex- pected credit losses, not taking into account changes in credit risk, but recognizing a provision for losses based on the expected credit losses for the entire life of the asset on each reporting date. To this end, experience with historical credit losses and pro- spective factors are taken into account. Once the loss event has been verified under the terms of IFRS 9 (“objective proof of impairment”, in accordance with the terminology of IAS 39), the accumulated impair- ment is directly imputed to the instrument in question, and its accounting treatment from this moment onwards is similar to that provided for in IAS 39, including treat- ment of the respective interest. The carrying amount of the asset is reduced and the amount of the loss is recognized in the income statement. If, in a subsequent period, 487