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v3.23.1

INTANGIBLE ASSETS | 12 Months Ended
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Dec. 31, 2022
Intangible Assets |
INTANGIBLE ASSETS |
| 14. | INTANGIBLE ASSETS
The intangible assets rollforward is set forth below:
The intangible assets rollforward |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Average rate (1) |  | 12.31.21 |  | Additions |  | Disposals |  | Business combination (2) |  | Transfers |  | Monetary correction by Hyperinflation |  | Exchange rate variation | 12.31.22
Cost |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Goodwill |  |  | 3,425,183 |  | - |  | - |  | (4,026) |  | - |  | 171,880 |  | (118,934) | 3,474,103
Trademarks |  |  | 1,733,335 |  | - |  | - |  | - |  | - |  | 203,246 |  | (55,382) | 1,881,199
Non-compete agreement |  |  | 110,208 |  | 19,609 |  | (69,950) |  | - |  | - |  | - |  | (2,441) | 57,426
Outgrowers relationship |  |  | 4,740 |  | - |  | (4,223) |  | - |  | 11 |  | - |  | (11) | 517
Patents |  |  | 3,518 |  | - |  | (1) |  | - |  | - |  | 1,978 |  | (617) | 4,878
Customer relationship |  |  | 1,119,534 |  | - |  | - |  | - |  | - |  | 381,289 |  | (160,572) | 1,340,251
Software |  |  | 770,399 |  | 118 |  | (92,163) |  | - |  | 240,679 |  | 19,111 |  | (8,054) | 930,090
Intangible in progress |  |  | 98,716 |  | 209,007 |  | - |  | - |  | (224,769) |  | 525 |  | (6,216) | 77,263
|  |  | 7,265,633 |  | 228,734 |  | (166,337) |  | (4,026) |  | 15,921 |  | 778,029 |  | (352,227) | 7,765,727
Amortization |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Non-compete agreement | 62.71% |  | (106,749) |  | (5,023) |  | 69,950 |  | - |  | - |  | - |  | 2,486 | (39,336)
Outgrowers relationship | 19.48% |  | (4,425) |  | (145) |  | 4,223 |  | - |  | - |  | - |  | - | (347)
Patents | 8.08% |  | (2,928) |  | (475) |  | - |  | - |  | - |  | (715) |  | 294 | (3,824)
Customer relationship | 6.92% |  | (437,774) |  | (102,727) |  | - |  | - |  | - |  | (147,827) |  | 66,222 | (622,106)
Software | 52.04% |  | (563,943) |  | (175,768) |  | 79,091 |  | - |  | (5,972) |  | (4,925) |  | 6,013 | (665,504)
|  |  | (1,115,819) |  | (284,138) |  | 153,264 |  | - |  | (5,972) |  | (153,467) |  | 75,015 | (1,331,117)
|  |  | 6,149,814 |  | (55,404) |  | (13,073) |  | (4,026) |  | 9,949 |  | 624,562 |  | (277,212) | 6,434,610
| (1) | Weighted average annual rate.
| (2) | The reduction on goodwill reflects the price adjustment on the business combination with Mogiana according to contractual terms of the shares purchase agreement, which has not impacted other assets and liabilities fair values on the transaction which was conclude in December 2021.
| Average rate (1) |  | 12.31.20 |  | Additions |  | Disposals |  | Business combination |  | 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 | 62.71% |  | (97,408) |  | (10,086) |  | 3,182 |  | - |  | - |  | (2,437) | (106,749)
Outgrowers relationship | 19.48% |  | (4,695) |  | (505) |  | 775 |  | - |  | - |  | - | (4,425)
Patents | 8.08% |  | (5,999) |  | (42) |  | 3,723 |  | - |  | (614) |  | 4 | (2,928)
Customer relationship | 6.92% |  | (375,131) |  | (84,010) |  | - |  | - |  | - |  | 21,367 | (437,774)
Software | 52.04% |  | (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.
14.1. 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 2022, the Company used its budget, strategic and financial planning with projections until 2027 and average perpetuity of the cash generating units of 3.5% 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 9.83% p.a. to 13.24% p.a. according to the CGU. The assumptions presented in the table below were also adopted:
Schedule of pre tax rates |  |  |  |  |  |  |  |  |  |
|  | 2023 |  | 2024 |  | 2025 |  | 2026 |  | 2027
Inflation Brazil |  | 5.16% |  | 3.59% |  | 3.93% |  | 3.68% |  | 3.41%
Inflation - United States |  | 1.90% |  | 2.29% |  | 2.22% |  | 2.20% |  | 2.21%
Exchange rate - BRL / USD |  | 5.12 |  | 5.10 |  | 5.18 |  | 5.20 |  | 5.20
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 sensitivity analysis, in which increases and decreases 2 p.p. the operating margin1 (operating income over net sales) and the nominal discount rate and did not identify any scenarios in which an impairment was necessary. 1 The main assumptions contained in the margin include the projected net sales and commodity cost value.

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