Cloudberry Annual report 2022 Financial statements 152 Right-of-use assets The Group recognises right-of-use assets at the commencement date of the lease, i.e. the date the underlying asset is available for use. Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. The recognised right-of-use assets are depreciated on a straight-line basis over the shorter of its estimated useful life and the lease term. Water right lease agreements Cloudberry enters into water-right lease agreements with owners of water rights, which entitles the company to utilise the water in the rivers. The agreements typically have duration from 40 to 100 years, starting when the power plant is put into commercial operation. The agreement with the owners of the water rights has a variable payment depending on the gross revenue of the power plant and is typically around 10% of the gross revenue. In certain agreements the variable payment depends on the net profit of the power plant (not the gross revenue). In these cases, Cloudberry is secured a minimum return on the investment (typically 4 – 7% p.a.) before owners of the water rights are compensated. Excess return above this minimum return is then split between the owners of the water rights and Cloudberry. When Cloudberry has a commitment to pay rent to the owners of the water rights, we account for this as other operating expenses as the commitment arises. Upon expiration of the agreement the owners have the right to purchase the power plant with all rights and technical installations at a price based on certain specific conditions. Land lease agreements for construction of wind farms Cloudberry enters into lease agreements with land- owners, which entitles the company to utilise the land for construction of wind farms. The agreement typically has a duration from 25 to 35 years dependent on the concession period, starting when the power plant is put into commercial operation. The typical agreement with the landowners has a variable payment depending on the gross revenue of the power plant (around 4%). When Cloudberry has a commitment to pay rent to the landowners, we account for this as other operating expenses as the commitment arises. Fixed amount- agreement: In certain cases, Cloudberry can be obligated to pay landowner a fixed annual amount, in such cases it may be accounted according to IFRS 16 lease agreement. Upon expiration of the agreement the landowner has the right to purchase the powerplant with all rights and technical installations at a price based on book value at the end of the lease agreement. Lease The table shows the reconciliation of lease liability in the beginning of the year and per 31 December: NOK million 2022 2021 Lease liability at 1.1. 5 4 Lease agreements entered into during the year 21 1 Lease agreements from business combinations 24 - Lease agreements terminated during the year (3) - Lease payments during the year (4) (1) Interest expense on lease liability 1 - Lease liability at 31.12. 43 5 Lease payment of which: Payment on lease liabilities - interest (1) - Repayment on lease liabilities (3) (1) Lease payments during the year (3) (1)
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