IBERSOL | Annual Report 2020

ANNUAL REPORT 2020 in a phase of full recovery in the third year, with the exception of the travel operation in Spain, where full recovery may only occur in 2026 according to data published by the main bodies of the aviation market. With the exception of the results obtained in the analyses of the travel operation in Spain and the Pizza Movil operation in Spain, the remaining impairment tests did not result in significant impairment losses, in line with Management’s expectations, which effectively point out that there are no other permanent losses in its businesses, with a clear expectation of business recovery in the medium term to pre-Covid-19 levels. Sensitivity analyses were also performed on the main assumptions used in the base calculation, with impairment losses only occurring in very conservative scenarios. Methods and assumptions: As at 31 December 2020 and 2019, the methods and main assumptions used in pre- paring the impairment tests for the Group’s goodwill were as follows: WACC (1) Growth rate for residual value Portugal - Quick Service 7,3% 2,0% Portugal - Restaurants and Catering 7,6% 2,0% Spain - Quick Service 6,6% 2,0% Spain - Restaurants 6,9% 2,0% Spain - Travel 8,5% 2,0% (1) According to the business segment, Fast Food (Burger King and KFC), Restaurants and Travel, respectively. The discount rate presented was calculated based on the WACC methodology (Weighted Average Cost of Capital). In 2020, given the impacts of Covid-19 in the catering sectors, impairment tests were performed on Goodwill, with the assumptions for the evolution of the different segments, the most recent market inputs and the evolution of the operation, of the performance in the gradual reopening of the restaurants, as well as local and inter- national entities that operate in the air transport and tourism market, with decisive relevance for the Travel segment. The discount rates adopted correspond to the estimated weighted average cost of capital (WACC) estimated for each of the segments operated in Portugal and Spain with the highest risk in those segments that have a tendency of greater resistance to the recovery from the pandemic crisis. 357