IBERSOL | Integrated Management Report - 2024

Individual Financial Statements In 2023, the decrease corresponds to the repayment of loans granted, as applicable and as shown in the statement of cash flows. The increases, in 2024, relate to new loans granted, for capitalization, strengthening the equity situation of the subsidiaries and investment. 5.3. Impairment losses on subsidiaries Judgments and estimates The company carries out impairment tests on financial investments in subsidiaries whenever events or changes in the surrounding conditions indicate that the amount at which they are recorded in the financial statements is not recoverable. Impairment losses are calculated by comparing the recoverable amount of the investment, corresponding to the higher of fair value less costs to sell and value in use, with the book value of the financial investments. This estimate is made based on the valuation of the holdings using discounted cash flow models in order to estimate the value in use of these investments. In the case of subsidiaries or joint ventures whose most relevant assets correspond to holdings in real estate companies or real estate assets, the fair value of these holdings is estimated by reference to the market value of the real estate assets they hold. The Board of Directors believes that the methodology described above leads to reliable results on the existence of possible impairment of the investments under analysis, since it considers the best information available at the date of preparation of the financial statements. If, at a subsequent date, it is found that the amount of impairment has decreased, and the decrease is objectively the result of a certain event occurring after the initial recognition of the impairment, the amount then recorded is reversed up to the limit of the amount that would have been recognized if no impairment loss had been recorded. The Board of Directors determines the budgeted gross margin based on past performance and its expectations for market development. The weighted average growth rate used is consistent with the forecasts included in industry reports. The discount rates are applied after tax and reflect specific risks related to the assets. Although no relevant signs of impairment have been identified at the level of the Ibersol SGPS subsidiaries, the group’s policy is to carry out impairment tests on them, and the main conclusions are as follows. 496