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Intangible assets
 12 Months Ended
Dec. 31, 2019
Text block [abstract]  
Intangible assets
13.
Intangible assets
 
   
Balance at
12/31/2017
  
Business
combination
  
Additions
  
Disposals
  
Impairment
  
Balance at
12/31/2018
  
Additions
  
Disposals
  
Transfers
  
Balance at
12/31/2019
 
Cost
           
Goodwill - acquisition of subsidiaries
   118,706   24,488   —     —     —     143,194   —     —     —     143,194 
Customer relationship
   97,355   2,103   —     (30)   —     99,428   —     (60)   —     99,368 
Trademark use right
   12,491   —     —     —     —     12,491   —     —     —     12,491 
Trademarks and patents
   45   1,659   —     —     —     1,704   28   —     —     1,732 
Software
   43,063   34,544   22,840   —     (4,764)   95,683   41,363   (25,000)   22,566   134,612 
Licenses for use - payment arrangements
   5,527   —     5,910   —     —     11,437   88   (7)   —     11,518 
Software in progress
   4,486   —     19,701   (7,071)   —     17,116   25,695   (213)   (22,566)   20,032 
Right-of-use
assets - Software (i)
   —     —     —     —     —     —     37,513   —     —     37,513 
Others
   700   —     726   (700)   —     726   —     (726)   —     —   
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
  
 
282,373
 
 
 
62,794
 
 
 
49,177
 
 
 
(7,801
) 
 
 
(4,764
) 
 
 
381,779
 
 
 
104,687
 
 
 
(26,006
) 
 
 
—  
 
 
 
460,460
 
Amortization
           
Customer relationship
   (16,811)   —     (9,760)   —     —     (26,571)   (10,582)   60   —     (37,093) 
Trademark use right
   (12,491)   —     —     —     —     (12,491)   —     —     —     (12,491) 
Trademarks and patents
   —     —     (113)   —     —     (113)   (335)   —     —     (448) 
Software
   (17,030)   (5)   (13,311)   —     —     (30,346)   (19,847)   23,678   —     (26,515) 
Licenses for use - payment arrangements
   (1,236)   —     (2,278)   —     —     (3,514)   (2,533)   1   —     (6,046) 
Right-of-use
assets - Software (i)
   —     —     —     —     —     —     (4,168)   —      (4,168) 
Others
   (717)   —     (370)   —     —     (1,087)   (182)   1,269   —     —   
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
  
 
(48,285
) 
 
 
(5
) 
 
 
(25,832
) 
 
 
—  
 
 
 
—  
 
 
 
(74,122
) 
 
 
(37,647
) 
 
 
25,008
 
 
 
—  
 
 
 
(86,761
) 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Intangible assets, net
  
 
234,088
 
 
 
62,789
 
 
 
23,345
 
 
 
(7,801
) 
 
 
(4,764
) 
 
 
307,657
 
 
 
67,040
 
 
 
(998
) 
 
 
—  
 
 
 
373,699
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
 
(i)
Refers to IFRS 16 adoption. More details on Note 3.20.
 
Impairment of intangible assets
As of December 31, 2019, there were no indicators of impairment of finite-life intangible assets. As of December 31, 2018, the Group has recognized an impairment loss on software, in the amount of R$ 4,764.
The Group performs its goodwill impairment testing at the Group’s single CGU level, which is also a single operating and reportable segment.
The Group performed its annual impairment test as of December 31, 2019 and 2018 which did not result in the need to recognize impairment losses on the carrying value of goodwill.
The recoverable amount of the Group’s single CGU is determined based on a value in use calculation using cash flow projections from financial budgets approved by senior management covering a five-year period. The
pre-tax
discount rate applied to cash flow projections is 9.4% (2018 - 11.8%) and the growth rate applied to perpetuity cash-flow is 5.0% (2018
 -
6.0%) that considers long-term local inflation and long-term real growth.
The key assumptions used in value in use calculation and sensitivity to changes in assumptions are as follows:
 
 • 
Average free cash flow to equity over the five-year forecast period; based on past performance and management’s expectations of market development and on current industry trends and including long-term inflation forecasts for each territory.
 
 • 
Average annual growth rate over the five-year forecast period; based on past performance and management’s expectations of market development and on current industry trends and including long-term inflation forecasts for each territory.
 
 • 
Considered a
pre-tax
discount rate applied to cash flow of 9.4% (2018 - 11.8%), based on long-term interest rate, equity risk premium, industry beta and other variables.
 
 • 
Considered a perpetuity growth rate of 5.0% (2018 -
6.0
%), based on long-term local inflation and real growth.
Therefore, the goodwill impairment testing considered, at once: a decrease of 10.0% of the free cash flow to equity in the first year, a decrease of 10.0% in the growth rate for the second until fifth year, a decrease of 250 basis points in perpetuity rate after the fifth year and an increase of 500 basis points in
pre-tax
discount rate, and it did not result in the impairment of the goodwill.