11. Intangible assets
ACCOUNTING POLICIES
Intangible assets
An intangible asset is an identifiable non-monetary asset without physical substance, such as:
- acquired, classified as non-current assets, property rights capable of economic exploitation, with an expected economic life of more than one year, intended to be used for the purposes of the Group,
- development costs,
- goodwill excluding internally generated goodwill,
- easements for power lines acquired and received free-of-charge,
- intangible assets not commissioned for use.
The initial recognition of intangible assets acquired in a separate transaction will be at the purchase price or cost to manufacture (in the case of development work).
Subsequent to initial recognition, an intangible asset is carried at purchase price or cost to manufacture less accumulated amortisation and accumulated impairment losses. The cost of an internally generated intangible asset, excluding development costs, are not capitalised and are recorded in profit or loss for the period when the related cost was incurred.
The Group assesses whether the useful life of an intangible asset is finite or indefinite and, if finite, estimates its useful life based on production volumes or other measure used to determine useful life. The useful life of an intangible asset is assessed as indefinite if, based on an analysis of relevant factors, there is no foreseeable period over which the asset will generate cash flows for the Group.
The amortisable amount of an intangible asset with a definite useful life will be amortised on a systematic basis over its useful life. Amortisation begins on the first day of the month following the month in which the asset is ready for use.
The amortisation period and the amortisation method are reviewed at least at each balance sheet date. Any changes resulting from the revision are recognised as a change in estimate.
Intangible assets, both intangible assets with indefinite useful lives and intangible assets not yet in use, are periodically (at least annually) tested for impairment.
Other intangible assets are reviewed for impairment only when there is an indication that they may be impaired. If there is an indication that an impairment loss may have occurred and the carrying amount exceeds the estimated recoverable amount, then the carrying amount of those assets or the cash- generating units to which those assets belong is reduced to the recoverable amount. The Group recognises impairment losses on intangible assets in the income statement under costs by nature and by function in accordance with the amortisation reference. This includes impairment losses on intangible assets not put into use and those arising from impairment of the entire CGU.
The adopted useful lives for the various groups of intangible assets are as follows:
| Group | Average remaining amortisation period in years | Applied total amortisation periods in years |
|---|---|---|
| Acquired patents and licences | 3 | 3 – 11 |
| Cost of finished development works | 3 | 3 – 15 |
| Other | 10 | 3 – 70 |
| (in PLNm) | As at December 31, 2022 | As at December 31, 2021 |
|---|---|---|
| Cost of finished development works | 1 | 2 |
| Goodwill | 276 | 285 |
| Software | 179 | 165 |
| Other licences and patents | 5 | 3 |
| Other intangible assets | 151 | 155 |
| Intangible assets not commissioned for use | 114 | 72 |
| NET VALUE OF INTANGIBLE ASSETS | 726 | 682 |
Change in intangible assets by type group
| (in PLNm) | Cost of finished development works | Goodwill | Software | Other licences and patents | Other intangible assets | Intangible assets not commissioned for use |
Total |
|---|---|---|---|---|---|---|---|
| GROSS CARRYING AMOUNT | |||||||
| AS AT JANUARY 1, 2022 | 18 | 285 | 842 | 107 | 260 | 106 | 1.618 |
| Capital expenditures | – | – | – | – | – | 123 | 123 |
| Intangible assets not commissioned for use | – | – | 64 | 3 | 11 | (78) | – |
| Transfers between groups | – | – | (5) | 5 | – | – | – |
| Liquidation, sale | – | – | (30) | (1) | – | – | (31) |
| Changes in Group composition | (3) | (9) | (2) | 1 | (1) | 1 | (13) |
| Other | 1 | – | (3) | – | 4 | (3) | (1) |
| AS AT DECEMBER 31, 2022 | 16 | 276 | 866 | 115 | 274 | 149 | 1.696 |
| DEPRECIATION AND IMPAIRMENT LOSSES | |||||||
| AS AT JANUARY 1, 2022 | 16 | – | 677 | 104 | 105 | 34 | 936 |
| Depreciation, amortisation, liquidation | 1 | – | 42 | 2 | 10 | – | 55 |
| Impairment | – | – | – | 3 | 8 | – | 11 |
| Transfers between groups | – | – | (3) | 3 | – | – | – |
| Liquidation, disposal | – | – | (29) | (1) | – | – | (30) |
| Changes in Group composition | (2) | – | (2) | – | (1) | 1 | (4) |
| Other | – | – | 2 | (1) | 1 | – | 2 |
| AS AT DECEMBER 31, 2022 | 15 | – | 687 | 110 | 123 | 35 | 970 |
| NET VALUE AT DECEMBER 31, 2022 | 1 | 276 | 179 | 5 | 151 | 114 | 726 |
| (in PLNm) | Cost of finished development works | Goodwill | Software | Other licences and patents | Other intangible assets | Intangible assets not commissioned for use |
Total |
|---|---|---|---|---|---|---|---|
| AS AT JANUARY 1, 2021 | 18 | 204 | 805 | 114 | 250 | 108 | 1.499 |
| Capital expenditures | – | – | 1 | – | – | 67 | 68 |
| Intangible assets not commissioned for use | – | – | 62 | 1 | 7 | (70) | – |
| Transfers between groups | – | – | 1 | (3) | – | 2 | – |
| Liquidation, sale | – | – | (21) | (4) | (1) | – | (26) |
| Changes in Group composition | – | 81 | (1) | (1) | – | – | 79 |
| Other | – | – | (5) | – | 4 | (1) | (2) |
| AS AT DECEMBER 31, 2021 | 18 | 285 | 842 | 107 | 260 | 106 | 1.618 |
| DEPRECIATION AND IMPAIRMENT LOSSES | |||||||
| AS AT JANUARY 1, 2021 | 15 | – | 639 | 104 | 88 | 7 | 853 |
| Depreciation, amortisation, liquidation | 1 | – | 54 | 6 | 18 | – | 79 |
| Impairment | – | – | – | 1 | (1) | 28 | 28 |
| Transfers between groups | – | – | 3 | (3) | – | – | – |
| Liquidation, sale | – | – | (18) | (2) | (1) | – | (21) |
| Changes in Group composition | – | – | (1) | (2) | – | – | (3) |
| Other | – | – | – | – | 1 | (1) | – |
| AS AT DECEMBER 31, 2021 | 16 | – | 677 | 104 | 105 | 34 | 936 |
| NET VALUE AT DECEMBER 31, 2021 | 2 | 285 | 165 | 3 | 155 | 72 | 682 |
Intangible assets not commissioned for use
The presented amounts of intangible assets not commissioned for use as at December 31, 2022 are related mainly to IT implementation programs at the Group.
Goodwill
At the reporting date ended 31 December 2022, goodwill was allocated to the following segments:
- District Heating – PLN 192 million,
- Renewables – PLN 84 million,
Amortisation periods for intangible assets
The review of the economic useful lives of intangible assets carried out in 2022 resulted in a reduction in amortisation expense 2022 of approximately PLN 4 million.