Key assumptions used in estimating value in use and determining the recoverable amount, are sales prices, development in commodity prices, production costs and gross margin levels, and other relevant information. A forecast is developed for a period of 3.5 years with projections thereafter. Capital expenditure: Expected cash costs are forecasted based on the historical experience of management and the planned refurbishment 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, reflecting specific risks relating to the relevant segments and the countries in which they operate. The cost of equity and debt are weighted to reflect the company’s optimal capital structure. The WACC is a post-tax measure. Growth WACC Selected key assumptions used 2022 2021 2022 2021 Fiven Norge 1.4% 1.7% 7.6% 11.8% Fiven Brazil 2.0% 1.7% 11.8% 11.9% Fiven Belgium 0.5% 1.7% 8.4% 11.8% The pre-tax discount rates for each of Norway, Brazil and Belgium CGUs in 2022 are 9.8%, 17.9% and 11.3% respectively. Impairment - test results and conclusion The impairment testing was conducted in Q2 2022. In addition, the Group has assessed if there are any indications of impairment as of 31 December 2022. The situation in Fiven Norge for the temporary closure of the 2 uncovered furnace groups in September 2022 until year end have in the Group's view has not triggered any need for impairment of goodwill and intangible assets. Expectations are that gas cleaning systems for remaining uncovered furnace groups will reduce emission levels of the mentioned substances further in 2023 and beyond. 100% of the furnace groups will be covered by mid-Summer 2023. The Fiven Norge plan is to restart SiC furnacing after the implementation of the cover of the two new furnace groups. None of the assets were assessed to be impaired, as the recoverable amount exceeded the carrying amount for all CGUs. Sensitivity of estimated cash flows An increase of 10 percent in WACC will not result in an impairment for Fiven. A change of long-term growth rate down to 0 percent, and 25 percent reduction in operating profit (loss) before depreciation and amortization level will not result in an impairment for Fiven. The directors and management have considered and assessed reasonably possible changes for other key assumptions and have not identified any instances that could cause the carrying amount of the CGUs to exceed their recoverable amount. Fiven Annual Report 2022 Financial statements 59
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