Fiven Annual Report 2020

EBITDA levels: EBITDA level represent the operating profit before depreciation and amortization. Ref. APM definition. Key assump- tions used in estimating value in use and determining the recoverable amount, are sales prices, development in commodity prices, and other relevant information. A forecast is developed for a period of 5 years with projections thereafter. Capital expenditure: A normalized capital expenditure is assumed on a long run. Estimated capital expenditure do not include capital expenditure that significantly enhance the current performance, as such effects generally are not included in the cash flow projections. Discount rates: The rate of return is calculated using the Weighted Average Cost of Capital (WACC) method. The cost of Equity and debt are weighted to reflect the company’s capital structure of 17/83. To the sectorial WACC it is added an implicit specific risk premium to the cost of equity in order to equalize the WACC to the IRR derived from the PPA. IRR corresponds to the return generated by the business on a standalone basis. WACC WACC/IRR Sectorial WACC Special Risk premium Total WACC IRR% PPA Fiven Norge 8,1% 12,0% 20,1% 20,1% Fiven Brazil 13,6% 6,5% 20,1% 20,1% Fiven Belgium 9,8% 10,3% 20,1% 20,1% Impairment - test results and conclusion The first impairment testing was conducted in Q2 2020. In addition, the Group has assessed if there are any indications of impairment as of Dec 31-2020. No indications of impairment were detected. None of the plants were assessed to be impaired, as the recoverable amount exceed the carrying amount for all CGUs. Sensitivity of estimated cash flows An increase of 3 per cent in WACC will not result in an impairment for Fiven. A change of long-term growth rate from 1,8 per cent to 0 per cent, and 2.5 per cent reduction in EBITDA level will not result in an impairment for Fiven. Fiven Annual Report 2020 Financial statements   57