Investor Presentaiton

19. Intangible assets Accounting policy (i) Goodwill Goodwill represents the excess of the cost of an acquisition over the net fair value of assets and liabilities of the acquired entity. Goodwill on acqui- sitions of subsidiaries is recorded as assets in the consolidated financial statements. Goodwill is tested annually for impairment and carried at cost less accumulated impairment losses. Impairment losses on goodwill are not reversed. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold. Goodwill is allocated to CGUS for the purpose of impairment testing. The allocation is made to those CGUs or groups of CGUs that are expected to benefit from the business combination in which the goodwill arose. Annually, the Company and its subsidiaries review the net book value of goodwill, in order to assess whether there was impairment. The recoverable amounts of CGUS were determined according to the value in use, based on the discounted cash flow model. The recoverable amount is sensitive to the rate used in the discounted cash flow model, as well as the expected future cash receipts and the growth rate used for extrapolation purposes. (ii) Rights over natural resources Costs for the acquisition of rights to explore and develop mineral proper- ties and to explore wind resources are capitalized and amortized using the straight-line method over their useful lives, or, when applicable, based on the depletion of the mines in question. Once the mine or wind farm starts operating, these costs are amortized and considered a cost of production. Depletion of mineral resources and wind farms is calculated based on ex- traction and utilization, respectively, taking into consideration their estima- ted productive lives. (iii) Computer software Costs associated with software maintenance are amortized over their useful lives. (iv) Use of public assets This represents the amounts established in the concession contracts re- garding the rights to hydroelectric power generation (onerous concession) under Use of Public Assets agreements. These transactions are accounted for at the time when the operating permit is awarded, regardless of the disbursement schedule established in the contract. Upon inception, this liability (obligation) and intangible asset (concession right) correspond to the total amount of the future obligations discounted to their present value (present value of cash flow from future payments). The amortization of the intangible asset is calculated on a straight-line ba- sis over the period of the authorization to use the public asset. The financial liability is updated by the effective interest method and reduced by the payments contracted. (v) Contractual customer relationships and non-competition agreements Contractual customer relationships and non-competition agreements acquired in a business combination are recognized at fair value at the ac- quisition date. The contractual customer relations and non-competition agreements have a finite useful life and are carried at cost less accumulated amortization. Amortization is calculated using the straight-line method over the estimated useful lives. = 156

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