Investor Presentaiton
The Company's management determined the budgeted gross margin based 20. Borrowing
on past performance and its expectations of market development. The
discount rates used are pre-tax and reflect specific risks related to the
operating segment or the CGU being tested.
The calculations of the value in use are based on cash flow projections,
before the calculation of income tax and social contribution, and based on
the financial budgets approved by Management for the projected period
for the next five years. The amounts referring to cash flows, for the period
exceeding five years, were extrapolated based on the estimated growth ra-
tes. The growth rate does not exceed the long-term average for the sector.
Cement
CBA
Nexa Resources (i)
Long steels
Holding and other
2021
Discount rate
2020
5.80% to 15.20% 6.50% to 15.80%
7.96%
9.19%
6.22% to 7.33% 7.22% to 7.82%
9.25% to 18.89% 9.66% to 20.03%
9.35% to 10.80% 9.34% to 11.14%
(i) The fair value calculations were based on the discounted cash flow model and are based
on the premise that growth rates take into account independent information about
projections, such as LME quotes (mainly zinc and copper).
Accounting policy
Borrowings are initially recognized at fair value, net of transaction costs
incurred, and subsequently carried at amortized cost. Any difference be-
tween the proceeds (net of transaction costs) and the total amount payable
is recognized in the statement of income over the period of the borrowings
using the effective interest rate method.
Borrowing costs directly related to the acquisition, construction or produc-
tion of a qualifying asset that requires a substantial period of time to get
ready for its intended use or sale are capitalized as part of the cost of that
asset when it is probable that future economic benefits associated with the
item will flow to the Company and costs can be measured reliably. The other
borrowing costs are recognized as finance costs in the period in which they
are incurred.
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