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Goodwill
 12 Months Ended
Dec. 31, 2023
Notes and other explanatory information [abstract]  
Goodwill

Note 18 Goodwill

 

The goodwill movement is detailed as follows:

 

Schedule of goodwill  
  Goodwill
ThCh$
As of January 1, 2022  
Historic cost 131,172,835
Book Value 131,172,835
   
As of December 31, 2022  
Others increases (decreases) (1) 19,526,568
Conversion effect (13,729,969)
Sub-Total 5,796,599
Book Value 136,969,434
   
As of December 31, 2022  
Historic cost 136,969,434
Book Value 136,969,434
   
As of December 31, 2023  
Additions for business combinations (2) 2,100,677
Others increases (decreases) (1) 18,776,632
Conversion effect (30,254,687)
Sub-Total (9,377,378)
Book Value 127,592,056
   
As of December 31, 2023  
Historic cost 127,592,056
Book Value 127,592,056

 

(1)Corresponds to the financial effect of the application IAS 29 "Financial reporting in hyperinflationary economies”.
(2)See Note 1 - General information, letter C), number (12).

 

For the purpose of impairment testing, goodwill acquired in a business combination is allocated as of the acquisition date to each of the CGUs, or groups of CGUs that is expected to benefit from the business combination synergies. The carrying amount of goodwill assigned to the CGUs within the Company’s segments is detailed as follows:

 

     
Segment Cash Generating Unit As of December 31, 2023 As of December 31, 2022
(CGU) ThCh$ ThCh$
Chile Embotelladoras Chilenas Unidas S.A. 25,257,686 25,257,686
  Manantial S.A.                                                  8,879,245 8,879,245
  Compañía Pisquera de Chile S.A.                                                  9,808,550 9,808,550
  Los Huemules S.R.L.                                              509 2,277
  D&D SpA. (1) 2,100,677 –
  Cervecera Guayacán SpA. 456,007 456,007
  Cervecería Szot SpA. 202,469 202,469
  Sub-Total 46,705,143 44,606,234
International Business CCU Argentina S.A. and subsidiaries 27,727,792 39,949,114
  Marzurel S.A., Coralina S.A. and Milotur S.A. 5,155,840 4,815,276
  Bebidas del Paraguay S.A. and Distribuidora del Paraguay S.A. 5,401,679 5,244,087
  Bebidas Bolivianas BBO S.A. 10,185,458 9,938,579
  Sub-Total 48,470,769 59,947,056
Wines Viña San Pedro Tarapacá S.A. 32,416,144 32,416,144
  Sub-Total 32,416,144 32,416,144
Total   127,592,056 136,969,434

 

(1)See Note 1 - General information, letter C), number (12).

 

Goodwill assigned to the CGUs is subject to impairment test on an annually basis or more frequently if there are signs of potential impairment. These signs may include a significant change in the economic environment that could affect the business scenario, new legal provisions, operational performance indicators or the disposal of an important part of a CGU. The impairment loss is recognized for the amount by which the carrying amount of the CGU exceeds its recoverable amount. The recoverable value of each CGU is determined as the highest amount between its value in use and its fair value minus the cost of selling. The management considers that the value in use approach, determined by a discounted cash flows model, is the most reliable method to determine the recoverable values of the CGU.

 

The following table shows the most relevant inputs for each CGU in where there is a relevant Goodwill and / or intangible assets with indefinite useful life assigned:

 

           
  Chile Argentina Uruguay Paraguay Bolivia  
 
Estimated CAPEX for the year 2024 ThCh$ 155,221 28,438 1,990 2,396 2,414  
Perpetual growth 3.00% 2.50% 2.20% 2.20% 4.40%  
Discount rate 8.62% 26.43% 9.64% 11.39% 14.07%  
             

 

The following describes some considerations applied when determining the corresponding values in use of the CGUs that have Goodwill and / or intangible assets with indefinite useful life assigned:

 

Projection period: A five-year horizon is considered for all units / brands. An exceptionally longer period of time (no longer than ten years), is considered for those units / brands that require a longer maturation period.

 

Cash Flows: To determine the value in use, the Company has used cash flows projections in line with the time horizon described above, based on budgets, strategic plans and projections reviewed by management for the same period of time. Given the maturity of our business, these budgets have been historicaly consistent with the results.

 

Management’s cash flows projection included significant judgements and assumptions relating to perpetual growth rates and discount rates.

Perpetual growth: Although the Company expects a higher volume and price growth in the medium and long term, a nominal growth of 3% has been assumed for the perpetuity in Chilean units, which is a conservative assumption considering the historical capacity and nature of the business where the company operates. In the case of Uruguay a perpetuity rate of 2.2% is used, consistent with the expected long-term growth for this country. For Bolivia a perpetuity rate of 4.4% equivalent to long-term inflation of the country plus a percentage of the potential long-term GDP are used, In the case of Argentina, a perpetuity rate of 2.5% are used respectively, which are composed by the average inflation rate of the United States of America mentioned above, plus a percentage of the potential long-term GDP in each country.

 

Discount rate: Corresponds to the nominal WACC (Weighted Average Cost of Capital) rate of each country.

 

According to the calculated sensitivities, the Administration determines that there is no reasonably possible change in the assumptions mentioned above that could cause that the book value exceeds the estimated recoverable value as of December 31, 2023.