IBERSOL | Integrated Management Report 2022

Consolidated Financial Statements Some of the Ibersol Group’s borrowings contracts and commercial paper programs with financial institutions, corresponding to a total amount owed on 31 December 2022 of 14 million euros, include Financial Covenants (i.e. 20% of the total amount of loans outstanding on that date). Such covenants can be summarized as follows: Financial Covenants (consolidated ratios) ND/EBITDA < 4,5x to 5,5x ND/EBITDA (without IFRS16) < 3,5x to 4x ND/EBITDAR < 5x Equity/Assets > 30% Some contracts still have Debt/EBITDA adjusted for the effects of applying IFRS 16 (frozen gaap). In the current financing agreements in Spain, financial covenants were not established. Additionally, there are contracts in which the respective creditors have the possibility to consider the debt overdue in the event of a change in shareholder control, however none of that debt was being used on 31 December 2022. 8.3. Derivative financial instruments Accounting policies Ibersol uses derivative financial instruments, such as option and swap contracts, only to cover the financial risks to which it is exposed. Ibersol does not use derivative financial instruments for speculation. Derivative financial instruments are traded by the Group, on behalf of the individual companies, by the central treasury department, in compliance with rules approved by the respective Board of Directors. Derivative financial instruments are initially recognized in the consolidated statement of financial position at their initial cost and then adjusted to their fair value. Accounting concern- ing to recognition, is done as follows: Fair Value Coverage For hedging relationships classified as fair value hedges and which are determined to belong to an effective hedge, gains or losses resulting from readjusting the hedging instrument to fair value are recognized in profit or loss together with changes in the fair value of the hedged item that are attributable to the risk covered. 454