ACCOUNTING RULES
Intangible assets
An intangible asset is an identifiable non-monetary asset without physical substance, such as:
- economic rights acquired by the Company and recognised in non-current assets, with an economic useful life exceeding one year, intended to be used by the Company,
- development costs,
- goodwill excluding internally generated goodwill,
- easements for power lines acquired and received free-of-charge,
- intangible assets not commissioned for use.
The initial recognition of intangible assets acquired in a separate transaction will be at the purchase price or cost to manufacture (in the case of development work). Subsequent to initial recognition, an intangible asset is carried at purchase price or cost to manufacture less accumulated amortisation and accumulated impairment losses. The cost of an internally generated intangible asset, excluding development costs, are not capitalized and are recorded in profit or loss for the period when the related cost was incurred.
The Group assesses whether the useful life of an intangible asset is finite or indefinite and, if finite, estimates its useful life based on production volumes or other measure used to determine useful life. The useful life of an intangible asset is assessed as indefinite if, based on an analysis of relevant factors, there is no foreseeable period over which the asset will generate cash flows for the Group.
The amortisable amount of an intangible asset with a definite useful life will be amortised on a systematic basis over its useful life. Amortisation begins on the first day of the month following the month in which the asset is ready for use.
Intangible assets, both intangible assets with indefinite useful lives and intangible assets not yet in use, are periodically (at least annually) tested for impairment.
Other intangible assets are reviewed for impairment only when there is an indication that they may be impaired. If there is an indication that an impairment loss may have occurred and the carrying amount exceeds the estimated recoverable amount, then the carrying amount of those assets or the cash-generating units to which those assets belong is reduced to the recoverable amount. The Group recognises impairment losses on intangible assets in the income statement under costs by nature and by function in accordance with the amortisation reference. This includes impairment losses on intangible assets not put into use and those arising from impairment of the entire CGU.
The amortisation period and the amortisation method are reviewed at least at each balance sheet date. Any changes resulting from the revision are recognised as a change in estimate.
The adopted useful lives for groups of intangible assets are as follows:
| Group | Average remaining amortisation period in years |
Applied total amortisation periods in years |
|---|---|---|
| Acquired patents and licences | 3 | 3 – 10 |
| Cost of finished development works | 4 | 3 – 15 |
| Other | 9 | 3 – 25 |
| As at December 31, 2021 |
As at December 31, 2020 |
|
|---|---|---|
| Cost of finished development works | 2 | 3 |
| Goodwill | 285 | 204 |
| Software | 165 | 166 |
| Other licences and patents | 3 | 10 |
| Other intangible assets | 155 | 162 |
| Intangible assets not commissioned for use | 72 | 101 |
| NET VALUE OF INTANGIBLE ASSETS | 682 | 646 |
Change in intangible assets by type group
| Cost of finished development works | Goodwill | Software | Other licences and patents | Other intangible assets | Intangible assets not commissioned for use | Total | |
| GROSS CARRYING AMOUNT | |||||||
| AS AT JANUARY 1, 2021 | 18 | 204 | 805 | 114 | 250 | 108 | 1,499 |
| Capital expenditures | – | – | 1 | – | – | 67 | 68 |
| Intangible assets not commissioned for use | – | – | 62 | 1 | 7 | (70) | – |
| Transfers between groups | – | – | 1 | (3) | – | 2 | – |
| Liquidation, sale | – | – | (21) | (4) | (1) | – | (26) |
| Changes in Group composition | – | 81 | (1) | (1) | – | – | 79 |
| Other | – | – | (5) | – | 4 | (1) | (2) |
| AS AT DECEMBER 31, 2021 | 18 | 285 | 842 | 107 | 260 | 106 | 1,618 |
| DEPRECIATION AND IMPAIRMENT LOSSES | |||||||
| AS AT JANUARY 1, 2021 | 15 | – | 639 | 104 | 88 | 7 | 853 |
| Depreciation, amortisation, liquidation | 1 | – | 54 | 6 | 18 | – | 79 |
| Impairment | – | – | – | 1 | (1) | 28 | 28 |
| Transfers between groups | – | – | 3 | (3) | – | – | – |
| Liquidation, disposal | – | – | (18) | (2) | (1) | – | (21) |
| Changes in Group composition | – | – | (1) | (2) | – | – | (3) |
| Other | – | – | – | – | 1 | (1) | – |
| AS AT DECEMBER 31, 2021 | 16 | – | 677 | 104 | 105 | 34 | 936 |
| WARTOŚĆ NETTO NA 31 GRUDNIA 2021 | 2 | 285 | 165 | 3 | 155 | 72 | 682 |
| Cost of finished development works | Goodwill | Software | Other licences and patents | Other intangible assets | Intangible assets not commissioned for use | Total | |
|---|---|---|---|---|---|---|---|
| AS AT JANUARY 1, 2020 | 21 | 205 | 796 | 150 | 235 | 153 | 1,560 |
| Capital expenditures | 1 | – | – | – | – | 75 | 76 |
| Intangible assets not commissioned for use | – | – | 50 | 4 | 12 | (66) | – |
| Transfers between groups | – | – | 41 | (39) | (2) | – | – |
| Liquidation, sale | (4) | – | (69) | (1) | – | (61) | (135) |
| Purchase of new subsidiaries | – | 2 | – | – | – | – | 2 |
| Other | – | (3) | (13) | – | 5 | 7 | (4) |
| AS AT DECEMBER 31, 2020 | 18 | 204 | 805 | 114 | 250 | 108 | 1,499 |
| DEPRECIATION AND IMPAIRMENT LOSSES | |||||||
| AS AT JANUARY 1, 2020 | 18 | – | 601 | 118 | 78 | 10 | 825 |
| Amortisation, liquidation and impairment | 1 | – | 85 | 6 | 12 | 61 | 165 |
| Transfers between groups | – | – | 21 | (20) | (1) | – | – |
| Liquidation, disposal | (4) | – | (69) | (1) | – | (61) | (135) |
| Other | – | – | 1 | 1 | (1) | (3) | (2) |
| AS AT DECEMBER 31, 2020 | 15 | – | 639 | 104 | 88 | 7 | 853 |
| NET VALUE AT DECEMBER 31, 2020 | 3 | 204 | 166 | 10 | 162 | 101 | 646 |
Intangible assets not commissioned for use
The presented amounts of intangible assets not commissioned for use as at December 31, 2021 are related mainly to IT implementation programs at the Group.
Goodwill
At reporting period, December 31, 2021, goodwill was allocated to the following segments:
- Other activity – PLN 8 million.
- District Heating – PLN 192 million,
- Renewables – PLN 85 million,
Amortisation periods for intangible assets
The economic useful lives of intangible assets were verified in 2021 and resulted in an increase in amortisation costs for 2021 by approx. PLN 2 million.