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Intangible assets

Goodwill of related companies

The whole amount of 22 164 thousand PLN goodwill recognized in the statement of financial position as at 31 December 2017 and as at 31 December 2016 concerns goodwill of ENERGOTEST sp. z o.o.

Impairment test for goodwill

Irrespective of whether there is an indication of impairment of goodwill, the parent company is required to test goodwill for impairment annually.
As at the acquisition date the acquired goodwill is allocated to each of the CGUs which may benefit from the synergies arising from business combination. An operating segment, defined according to IFRS 8 Operating Segments, was acknowledged the lowest level in the Group to which the goodwill can be allocated and on which goodwill is monitored for internal management needs. The cash generating unit within the Automation segment is the company ENERGOTEST sp. z o.o.

The test for impairment of goodwill was performed on net assets plus goodwill of the operating segment: Automation.

The test was based on the present value of free cash flows which are expected to be generated by ENERGOTEST sp. z o.o. in the future. Calculations were made for cash flows in the years 2018 – 2022. Calculations of cash flows were based on the planned operating result (EBIT) for the years 2018 – 2022 plus amortization for the period. Amounts of EBIT result from the authorized and implemented financial plan for ENERGOTEST sp. z o.o. for 2018 and preliminary financial assumptions made by the subsidiary for the years 2019 – 2022.
Macroeconomic and sectoral assumptions taken for the forecasts are updated each time when there are observable market indications for such updating.

The discount rate taken for calculations reflects the weighted average cost of capital (WACC) on the level of 13.79%, taking into account the risk-free rate representing the current yield of 10-year treasury bonds (on the level of 3.30%) and the premium for the risk of the industry-specific operations (5.86%).
The growth rate used for extrapolation of cash flows forecasts exceeding the particular period covered by the planning was adopted on the level of 2.5%.

Basing on the test results it was decided that there is no need to impair the goodwill nor to impair other intangible assets.

Sensitivity analysis

The performed sensitivity analyses show that the projected discount rate WACC is the most important factor which influences the estimated value in use of the cash generating units. Also, the analysis of sensitivity to the change in the level of EBIT is presented.

The table below presents the analysis of sensitivity of goodwill of ENERGOTEST sp. z o.o. to the key variables determining the obtained result by the income method.

Sensitivity of goodwill of ENERGOTEST sp. z o.o. to the change in the cash flow growth rate and the discount rate WACC (in thousands of PLN)

Sensitivity of goodwill of ENERGOTEST sp. z o.o. to change in EBITDA margin in 2022 and in the residual period and in discount rate WACC (in thousands of PLN)

As the presented calculations show, goodwill of ENERGOTEST sp. z o.o. is moderately sensitive to the change in cash flows growth rate after the period of detail forecast.

Sensitivity of goodwill of ENERGOTEST sp. z o.o. to change in discount rate (WACC) is relatively high. Theoretical impairment loss of fair value of goodwill of ENERGOTEST sp. z o.o. in relation to its book value occurs only if the assumed discount rate rose by mere 0.4 p. p.
Also, sensitivity of fair value of goodwill of ENERGOTEST sp. z o.o.to the change in EBITDA in 2022 and in the residual period is relatively high. Theoretic impairment loss of fair value of goodwill of ENERGOTEST sp. z o.o. in relation to its book value occurs only if the assumed EBITDA decreased by mere 0.3 p. p.

Intangible assets used as security

No liabilities of the Group were secured by the intangible assets as at 31 December 2017 or as at 31 December 2016.

Other disclosures concerning the intangible assets

No impairment losses were recognized for the intangible assets either in 2017 or in 2016.

As at 31 December 2017 and as at 31 December 2016 the Group did not have any intangibles with restricted right of use.

Value of intangible assets 2017
 Cost of
finished
development
works
Concessions, patents, licenses and softwareCost of unfinished development
works
GoodwillIntangible assets not put to useotal intangible assets
Gross value of intangible assets at 1 January  2017  29 759 13 963  3 758  22 164  1 729 71 373 
 Additions, of which: 1 322  901  3 462  2 178  7 863 
purchased  -  901  - 2 178 3 079
internally generated  -   -  4 784 4 784 
taken over from investments  1 322   (1 322)  -  -  -
Changes due to currency translation differences  - (1)     -   -   (1)
Gross value of intangible assets at 31 December 2017  31 081 14 863 7 220 22 164 3 907  79 235
Accumulated amortisation at 1 January 2017  (16 869)  (12 256)  -  -  - (29 125)
Current amortisation charge (2 603)  (1 238)  - (3 841) 
Changes due to currency translation differences - 1 - - - 1
Accumulated amortisation at 31 December  2017 (19 472) (13 493) - - - (32 965)
Net intangible assets at 31 December 2017 11 609 1 370 7 220 22 164 3 907 46 270

File in XLSX format 
Value of intangible assets 2017plik .xlsx6 kB

Value of intangible assets 2016
 Cost of
finished
development
works
Concessions, patents, licenses and softwareCost of unfinished development
works
GoodwillIntangible assets not put to useotal intangible assets
Gross value of intangible assets at 1 January 2016 31 055 12 609 5 036 22 164 1 098 71 962
Additions, of which: 1 947 1 558 1 514 - 631 5 650
purchased - 1 112 - - 1 077 2 189
internally generated - - 3 461 - - 3 461
taken over from investments 1 947 446 (1 947) - (446) -
Reductions (of which) (3 243) (204) (2 792) - - (6 239)
Reductions (of which) (3 243) (204)   - - (3 447)
other - - (2 792) - - (2 792)
Gross value of intangible assets at 31 December 2016 29 759 13 963 3 758 22 164 1 729 71 373
Accumulated amortisation at 1 January 2016 (17 801) (11 371) - - - (29 172)
Current amortisation charge (2 311) (1 038) - - - (3 349)
Other reductions 3 243 153 - - - 3 396
Accumulated amortisation at 31 December  2016 (16 869) (12 256) - - - (29 125)
Net intangible assets at 31 December 2016 12 890 1 707 3 758 22 164 1 729 42 248

File in XLSX format 
Value of intangible assets 2016plik .xlsx6 kB


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