Cloudberry Annual report 2022 Financial statements 140 Further, the Norwegian government has informed that they plan to introduce a resource rent tax with an effective tax rate of 40%, and natural resource tax for land-based wind farms (both existing and new) which are subject to license requirement, with effect from 1 January 2023. The high price contribution and the ground rent resource tax is in effect from 01. January 2023, but has not been passed as legislation by the Parliament. The Norwegian government has published a consultation paper in Q4 2022, and official hearings ended 15 of March 2023. A final vote in the Parliament is expected in the summer 2023. If passed it is expected to be in effect from 01.01.2023. Investments in associated companies and joint ventures With application of the equity method, the Group determines whether it is necessary to recognise an impairment loss on its investment in its associated companies. At each reporting date, the Group determines whether there is an impairment indicator observed which indicates the need for impairment testing. If so, the Group calculates the amount of impairment as the difference between the recoverable amount of the associate and the carrying value, and then recognises the loss as “net income/loss” from associated companies and joint ventures in the statement of profit or loss. The same method as for recoverable amount and value in use is used as for producing/ under construction power plants or project inventory is applied. For the investments related to producing power plants, there was no relevant impairment indicator observed, and no further impairment testing was performed. Intangible assets The Groups intangible assets are related to IT systems and customer portfolio. The IT systems are related to the Captiva portal, TYDE science and software developed in Kraftanmelding AS. The valuation model applied for these software systems are SaaS and ARR multiples with future sales estimates and discounted cash flow models. Relevant impairment indicators which would trigger impairment testing include significant fall in observed market multiples, underperformance in sales compared with forecasts, IT system development delays. During the 2022 the mentioned multiples have fallen, and the Group has tested the assets for impairment. The model for impairment testing is based on a multiple valuation for SAAS and ARR. The impairment test is sensitive to the following key assumptions and estimates: · SaaS and ARR multiples are used as impairment indicators and as a valuation method. The multiples are based on a peer of comparable companies. · Applied future sales forecast for 3 years, and the multiple valuations is based on the second year. The Group is of the view that no reasonable possible change in the key assumptions listed above would cause the carrying value to materially exceed the recoverable amount for the CGUs. No impairment loss was recognised as the recoverable amounts exceed the carrying amount. Inventory (development projects) For project inventory impairment is performed if net sales value is less than the carrying value of the asset. The Group has a quarterly routine to go through all projects to secure satisfying progress and attention. If a project does not qualify for internally prioritization, but the projects is put on hold or discontinued, the book value is impairment tested and a sales value is assessed. If the sales value, less cost of disposal is less than book value, an impairment loss classified as a write down is recognized over the profit or loss statement. Net realizable amount for projects with construction permit is set to an estimated market price per MW or per GWh that is reasonable to expect if the projects was to be sold. The price is compared with recent observable market transactions. As per 31 December the Group has an impairment loss of less the NOK 0.5m related to a minor development project due to the prospects of profitability in the project. The impairment loss is classified as cost of goods sold. Projects are reported in the Development segment.
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