Cloudberry Annual report 2022 Financial statements 138 Equity accounted companies · The individual associated company or joint venture Intangible assets · Captiva portal and related digital services · Tyde system with related digital services · Krasys system with related power trade agent services Goodwill and intangible assets with an indefinite useful life are not depreciated but are considered for impairment testing once every year and when there are circumstances or indicators implying an impairment test should be performed. Impairment is determined for goodwill by assessing the recoverable amount for each cash-generating unit (CGU) to which the goodwill relates. Impairment losses relating to goodwill cannot be reversed in future periods. Significant estimates and judgement Management have applied significant judgement to decide on and assess relevant impairment indicators. Factors that trigger impairment testing include, but is not limited to, changes in long power price estimates, political changes, underperforming power plants in terms of production, changes in the Groups strategy or macroeconomic fluctuations. For intangible assets impairment indicators may be underperforming sales or negative development in market conditions. Value in use calculation is based on a discounted cash flow model. The future cash flows in the model are based on a number of significant estimates and assumptions such as future market conditions, discount rates and estimated useful life and market price for development projects with construction permit, or sales volume for services. The estimates are based on the Group’s budgets and long-term outlooks approved by management. The Group monitors changes in government legislations and regulations on a continuous basis, changes may impact key assumptions in the value in use calculations in future periods. Impairment test of Goodwill Goodwill For impairment testing of goodwill, the relevant level for impairment testing is the cash generating unit (CGU), this has been identified and defined as the following: NOK million Total Development 37 Production 1 Operations 105 Total 143 The recoverable amount for these assets has been determined estimating the value in use of the assets and comparing against the carrying value of the CGU’s. Goodwill related to Operations origins from the acquisition of Captiva in January 2022. The goodwill was determined to be related to a long record of accomplishments, business know-how, reputation and established business related to development within hydro projects, advisory within asset management and financial services, IT-support and general operational intelligence business systems integrated in the Captiva Group of other companies to benefit from each other, and the competence and experience of consultants within the industry. The goodwill amount was in the purchase price allocation allocated to the operation CGU and segment. The Group applies discounted cash flow model for impairment testing of goodwill and intangible assets. The impairment test is sensitive to the following key assumptions and estimates: · Captiva is currently in a ramp-up phase and a discount rate of 15% on the cash flows has been applied to adjust for the ramp-up risk · Future cash flows estimated for the period FY 2023 – FY 2032. The business plan estimates a ramp up period of three years from Captiva’s business plan, then normal business with 3% annual growth in the scenario. Plans for ramp up years have been assessed and approved by management and the Board. SaaS and ARR multiples are used as impairment indicators and as a valuation method.
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