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INTANGIBLE ASSETS
 12 Months Ended
Dec. 31, 2021
INTANGIBLE ASSETS

 

13.INTANGIBLE ASSETS

The intangible assets rollforward is set forth below:

  Average rate (1)   12.31.20   Additions   Disposals   Business combination (note 1.2)   Transfers   Exchange rate variation 12.31.21
Cost                            
Goodwill            2,935,577                    -            (6,145)                 468,604                 -           27,147        3,425,183
Trademarks            1,327,738                    -                    -                 474,874                 -         (69,277)        1,733,335
Non-compete agreement              107,162             1,369            (3,182)                    2,246                 -             2,613          110,208
Outgrowers relationship                  5,328                197              (785)                           -                 -                    -              4,740
Patents                  6,205                    -            (3,723)                           -          1,038                  (2)              3,518
Customer relationship            1,067,713                    -                    -                 124,569                 -         (72,748)        1,119,534
Software              657,255             5,220          (64,045)                    1,828      172,107           (1,966)          770,399
Intangible in progress                46,054         178,059                    -                           -     (125,275)              (122)            98,716
             6,153,032         184,845          (77,880)              1,072,121        47,870        (114,355)        7,265,633
                             
Amortization                            
Non-compete agreement 49.02%             (97,408)          (10,086)             3,182                           -                 -           (2,437)         (106,749)
Outgrowers relationship 22.16%               (4,695)              (505)                775                           -                 -                    -             (4,425)
Patents 10.00%               (5,999)                (42)             3,723                           -           (614)                   4             (2,928)
Customer relationship 7.91%           (375,131)          (84,010)                    -                           -                 -           21,367         (437,774)
Software 39.50%           (449,697)        (180,026)           63,920                           -          3,639           (1,779)         (563,943)
              (932,930)        (274,669)           71,600                           -          3,025           17,155      (1,115,819)
             5,220,102          (89,824)            (6,280)              1,072,121        50,895         (97,200)        6,149,814
(1)Weighted average annual rate.

 

  Average rate (1)   12.31.19   Additions   Disposals   Transfers   Exchange rate variation   12.31.20
Cost                          
Goodwill            2,713,602                    -                    -         (6,970)               228,945          2,935,577
Trademarks            1,322,262                    -                    -                 -                  5,476          1,327,738
Non-compete agreement                99,229                413              (379)                 -                  7,899            107,162
Outgrowers relationship                14,604                    -            (9,276)                 -                         -                5,328
Patents                  6,305                    -              (115)                 -                       15                6,205
Customer relationship              892,758                    -                    -                 -               174,955          1,067,713
Software              523,615           73,423          (45,851)        97,117                  8,951            657,255
Intangible in progress                12,151           95,111                    -       (61,434)                     226              46,054
             5,584,526         168,947          (55,621)        28,713               426,467          6,153,032
                           
Amortization                          
Non-compete agreement 23.41%             (74,190)          (18,784)                379                 -                 (4,813)             (97,408)
Outgrowers relationship 12.75%             (12,744)            (1,030)             9,079                 -                         -               (4,695)
Patents 10.00%               (5,626)              (476)                115                 -                      (12)               (5,999)
Customer relationship 7.35%           (242,263)          (79,969)                    -                 -               (52,899)           (375,131)
Software 34.22%           (341,624)        (153,288)           43,718          9,562                 (8,065)           (449,697)
              (676,447)        (253,547)           53,291          9,562               (65,789)           (932,930)
             4,908,079          (84,600)            (2,330)        38,275               360,678          5,220,102
(1)Weighted average annual rate.

 

 

13.1.Impairment test

The impairment test of assets is carried out annually based on the discounted cash flow method, which is prepared in order to determine the value in use of the Company’s cash-generating units (“CGU”). In 2021, the Company used its budget, strategic and financial planning with projections until 2026 and average perpetuity of the cash generating units of 3.10% p.a., based on the history of recent years, as well as in the economic and financial projections of each market in which the Company operates, in addition to official information from independent and governmental institutions.

The discount rate used by Management to prepare discounted cash flows varied from 9.14% p.a. to 11.60% p.a. according to the CGU. The assumptions presented in the table below were also adopted:

    2022   2023   2024   2025   2026
Inflation Brazil   4.13%   3.12%   3.12%   2.99%   3.06%
Inflation - United States   2.40%   2.17%   2.01%   2.01%   2.05%
Exchange rate - BRL / USD   5.45   5.45   5.45   5.45   5.45

 

The rates presented above don’t consider the effects of income taxes.

Based on Management’s analysis, no impairment adjustments were identified.

In addition to the analysis mentioned above, Management prepared a deterministic sensitivity analysis considering the variations in the Earnings Before Interest and Tax (“EBIT”) margin and in the nominal discount rate as shown below:

      Variations    
Apreciation (devaluation) 1.0%   0.0%   (1.0%)
BRAZIL CGU           
Discount rate 12.60%   11.60%   10.60%
Ebit Margin 7.85%   6.85%   5.85%
           
INTERNATIONAL CGU´s           
Discount rate 10.62%   9.62%   8.62%
Ebit Margin 8.40%   7.40%   6.40%

 

The Company, in its sensitivity analysis, did not identify any scenarios in which an impairment was necessary.