| 16 | Intangible assets and goodwill |
| Goodwill | Concession rights |
Operating license |
Trademarks | Customer relationships |
Other | Total | ||||||||||||||||||||||
|
Cost: |
||||||||||||||||||||||||||||
|
At January 1, 2016 |
713,291 | 16,664,047 | 399,350 | 252,474 | 940,470 | 402,378 | 19,372,010 | |||||||||||||||||||||
|
Additions |
— | 382,788 | 26,552 | — | 65,735 | 22,141 | 497,216 | |||||||||||||||||||||
|
Disposals |
— | (189,849 | ) | — | — | (65,694 | ) | (62,548 | ) | (318,091 | ) | |||||||||||||||||
|
Transfers |
— | (1,697 | ) | 9,722 | — | 343 | 17,094 | 25,462 | ||||||||||||||||||||
|
Business combination |
1,968 | 57,217 | — | — | 5,970 | — | 65,155 | |||||||||||||||||||||
|
Discontinued operation |
— | — | — | — | — | (2,396 | ) | (2,396 | ) | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
|
At December 31, 2016 |
715,259 | 16,912,506 | 435,624 | 252,474 | 946,824 | 376,669 | 19,639,356 | |||||||||||||||||||||
|
Additions |
— | 361,946 | — | — | 65,813 | 47,433 | 475,192 | |||||||||||||||||||||
|
Disposals |
— | (182,339 | ) | — | — | (11,554 | ) | (4,221 | ) | (198,114 | ) | |||||||||||||||||
|
Transfers |
— | 341,154 | — | — | (11,696 | ) | (2,232 | ) | 327,226 | |||||||||||||||||||
|
Business combination (i) |
136,626 | — | — | — | — | 9,299 | 145,925 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
|
At December 31, 2017 |
851,885 | 17,433,267 | 435,624 | 252,474 | 989,387 | 426,948 | 20,389,585 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
|
Amortization |
||||||||||||||||||||||||||||
|
At January 1, 2016 |
— | (1,011,806 | ) | (159,004 | ) | (159,789 | ) | (575,411 | ) | (156,311 | ) | (2,062,321 | ) | |||||||||||||||
|
Additions |
— | (483,580 | ) | (11,743 | ) | (22,827 | ) | (151,893 | ) | (60,340 | ) | (730,383 | ) | |||||||||||||||
|
Disposals |
— | 175,435 | — | — | 58,609 | 62,525 | 296,569 | |||||||||||||||||||||
|
Transfers |
— | (29 | ) | (30,129 | ) | — | — | (4,238 | ) | (34,396 | ) | |||||||||||||||||
|
Discontinued operation |
— | — | — | — | — | 614 | 614 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
|
At December 31, 2016 |
— | (1,319,980 | ) | (200,876 | ) | (182,616 | ) | (668,695 | ) | (157,750 | ) | (2,529,917 | ) | |||||||||||||||
|
Additions |
— | (490,025 | ) | (11,740 | ) | (22,827 | ) | (127,584 | ) | (52,266 | ) | (704,442 | ) | |||||||||||||||
|
Disposals |
— | 143,331 | — | — | 8,132 | 4,218 | 155,681 | |||||||||||||||||||||
|
Transfers |
— | (337,983 | ) | — | — | 721 | (35 | ) | (337,297 | ) | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
|
At December 31, 2017 |
— | (2,004,657 | ) | (212,616 | ) | (205,443 | ) | (787,426 | ) | (205,833 | ) | (3,415,975 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
|
At December 31, 2016 |
715,259 | 15,592,526 | 234,748 | 69,858 | 278,129 | 218,919 | 17,109,439 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
|
At December 31, 2017 |
851,885 | 15,428,610 | 223,008 | 47,031 | 201,961 | 221,115 | 16,973,610 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| (i) | On October 13, 2017, Cosan, through its subsidiary Comma, acquired 100% of the common shares of Stanbridge for the price of R$ 204,767, generating an addition to the segment’s goodwill of Lubricants of R$ 136,626. The consideration transferred, net of cash received, totaled R$ 176,540. |
Capitalization of borrowing costs
Capitalized borrowing costs for the year ended December 31, 2017, amounted to R$ 9,799 (R$ 14,625 for the year ended December 31, 2016). The weighted average interest rate used to capitalize borrowing costs on the balance of concession right, was 8.43% p.a. for the year ended December 31, 2017 (11.48% p.a. for the year ended December 31, 2016).
|
Intangible assets (excluding goodwill) |
Annual rate of amortization—% |
December 31, 2017 |
December 31, 2016 |
|||||||||
|
Gas distribution concession—Comgás(i) |
Concession term | 8,197,514 | 8,240,521 | |||||||||
|
Concession rights—Rumo(ii) |
Concession term | 7,231,096 | 7,352,005 | |||||||||
|
|
|
|
|
|||||||||
| 15,428,610 | 15,592,526 | |||||||||||
|
Operating license for port terminal(iii) |
4.00 | 223,008 | 234,748 | |||||||||
|
Trademarks |
||||||||||||
|
Mobil |
10.00 | 22,827 | 45,654 | |||||||||
|
Comma |
— | 24,204 | 24,204 | |||||||||
|
|
|
|
|
|||||||||
| 47,031 | 69,858 | |||||||||||
|
Relationship with customers: |
||||||||||||
|
Comgás |
20.00 | 174,458 | 233,971 | |||||||||
|
Lubricants |
6.00 | 27,503 | 44,158 | |||||||||
|
|
|
|
|
|||||||||
| 201,961 | 278,129 | |||||||||||
|
Other |
||||||||||||
|
Software license |
20.00 | 167,520 | 146,210 | |||||||||
|
Other |
53,595 | 72,709 | ||||||||||
|
|
|
|
|
|||||||||
| 221,115 | 218,919 | |||||||||||
|
|
|
|
|
|||||||||
|
Total |
16,121,725 | 16,394,180 | ||||||||||
|
|
|
|
|
|||||||||
| (i) | Refers to the intangible asset for the public gas distribution service concession, which represents the right to charge users for the supply of gas, comprised of: (i) the concession rights recognized in the business combination and (ii) concession assets; |
| (ii) | Refers to the concession right agreement of Rumo Malha Norte, which will be amortized until the end of the concession in 2079; |
| (iii) | Port operating license and customer relationships of Rumo, from the business combinations. |
Impairment testing of cash-generating units (“CGU”) goodwill
| a) | Cosan Logistics |
The Company annually tests recoverable amounts of goodwill arising from business combination operations. Property, plant and equipment and defined-intangible assets that are subject to depreciation and amortization are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.
For the purposes of impairment analysis, concession contracts were defined as cash-generating units. The base date for evaluation and annual testing is September 30.
During the year ended December 31, 2017, we did not identify impairment indicators, so that no impairment test was required for fixed assets and intangible assets with a defined useful life.
The balance of goodwill recorded by the Company is associated with the port lifting operation and terminals, so this cash-generating unit needs to be tested annually.
The recoverable amount of this cash-generating unit was determined by the net sales value of the unit, using the EBITDA multiples technique.
The main assumptions used were (i) EBITDA generated by the cash-generating unit in 2017, and (ii) the average of the multiples practiced by market agents for companies in the Company’s industry.
The calculation resulted in a recoverable amount of R$ 1,709,000, compared to a book value of R$ 811,618, which includes property, plant and equipment and intangible assets.
In the year ended December 31, 2017, no assets and goodwill had their consolidated value reduced by impairment. The determination of the recoverability of the assets depends on certain key assumptions as described above that are influenced by the market, technological, and economic conditions in place at the time this recovery is tested and, therefore, it is not possible to determine whether new losses by recovery will occur in the future and, if they occur, whether these would be material.
| b) | Cosan S.A. |
The Company annually tests recoverable amounts of goodwill (intangible assets with indefinite useful lives) arising from business combinations operations. Property, plant and equipment and defined-intangible assets that are subject to depreciation and amortization are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable, which is not the case for the year.
The combined carrying amounts of goodwill allocated to each cash-generating unit are as follows:
| Consolidated | ||||||||
| December 31, 2017 |
December 31, 2016 |
|||||||
|
Moove cash generating unit |
751,391 | 614,765 | ||||||
|
Cosan cash-generating unit other business |
43 | 43 | ||||||
|
|
|
|
|
|||||
|
Total goodwill |
751,434 | 614,808 | ||||||
|
|
|
|
|
|||||
The recoverable amount is determined based on calculations of the value in use, using the discounted cash flow determined by Management based on budgets that take into account the assumptions related to each business, using information available in the market and previous performance. Discounted cash flows were drawn up over aten-year period and carried forward in perpetuity without considering a real growth rate. Management understands the use of periods greater than five years in the preparation of discounted cash flows as it reflects the estimated time of use of the asset and business groups.
The main assumptions used mainly consider the expectation of growth of the operations based on the Gross Domestic Product segmented, as well as taking into account the levels of average growth experienced in the last years and other macroeconomic aspects, as well as expectation of the price of sales of commodities, using discount rates that reflect specific business-related risks.
All of these future cash flows were discounted at a rate of 10.4% (weighted-average cost of capital) and a growth rate of the final value of 4% from 2027 reflecting specific risks related to the relevant assets in its cash generating unit.
An increase of 6.3 percentage points in the discount rate should change so that the estimated recoverable amount is equal to the book value. The dollar has an impact on projections and, therefore, a fluctuation of in exchange rate would have an effect on the estimate.
As of December 31, 2017 no expense for impairment of assets and goodwill was recognized. The determination of the recoverability of the assets depends on certain key assumptions as described above that are influenced by the market, technological and economic conditions in place at the time that such recovery is tested, and therefore, it is not possible to determine whether new reduction losses of recovery will occur in the future and, if they occur, whether these would be material.