16.Intangible Assets and Property, Plant and Equipment

Changes in Intangible Assets and Goodwill

Changes in Property, Plant and Equipment

For the purposes of impairment testing, goodwill is allocated to the following cash-generating units and the cash flows of these cash-generating units are discounted at the following discount rates:

The recoverable amount of the “Waste Management Segment/Austria” cash-generating unit exceeds the carrying amount by EUR 20.3 million (previous year: EUR 21.4 million), while the recoverable amount of CEVAK a.s. exceeds the carrying amount by EUR 114.8 million (previous year: EUR 98.5 million). In the event of a decrease in future cash flows by 9.9%, or an increase in the interest rate by 0.53%, the carrying amount of the “Waste Management Segment/Austria” cash-generating unit corresponds to the present value of the future cash flows. A decrease in CEVAK a.s.' future cash flows by 10% would not result in an impairment.

Due to the current situation on the market for power plant for grid reserve management and redispatch, impairment testing was performed for the Timelkam combined cycle gas-turbine power plant (Energy Segment). The maximum output of the power plants amounts to 422 MW, maximum district heating supply is 100 MW. Efficiency was estimated at 55.7%. Annual electricity generation was recognised at up to 1,442 GWh per year (previous year: 1,383 GWh). The assumptions for the future electricity and gas prices are based, where available, on market data; if no market data were available, estimates were made based on market studies. The estimated electricity price is EUR 36.82 to EUR 77.45/MWh (previous year: EUR 28.77 to EUR 78.08/MWh). Expenses for maintenance and repair were recognised according to maintenance plans and contracts. Other material expense items such as personnel costs, insurance and infrastructure costs are annually increased by an estimated increase rate. The discount rate is 4.9% (previous year: 5%). The planning period ends in the 2037/2038 fiscal year. An impairment in the amount of EUR 2.5 million (previous year: impairment reversal in the amount of EUR 20.9 million) was recognised, in particular due to the new contract for grid reserve management, which provides for compensation limited to economic disadvantages. The recoverable amount determined using the DCF method corresponds to the value in use in the amount of EUR 47.3 million (previous year: EUR 53.6 million). Fluctuations in cash flows of 20% resulted in a change of EUR 9.46 million in the recoverable amount. An increase in the interest rate by 0.5% results in a reduction of the recoverable amount by EUR 1.98 million.

The impairment of the “Price Authority Heat Sales” cash-generating unit (Energy Segment) was also tested in the past fiscal year. This unit includes the Timelkam/Vöcklabruck, Riedersbach and Kirchdorf thermal plants, for which the sales prices are jointly set by a price authority. Future revenues are based on an annual output of 236.4 GWh and were planned under the assumption that cost components can be compensated by a higher price for heat over the medium term. Past price approvals by the price authority support this assumption. Using a discount rate of 4.9% (previous year: 5.0%), the recoverable amount (value in use) was assessed at EUR 8.1 million. The impairment amounts to EUR 3.0 million (previous year: EUR 3.7 million).

The impairment of the cash-generating unit “Gas storage 7-Fields” mainly depends on the expected gas prices on the trading markets during the summer and winter months (summer-winter-spread), as well as the interest rate used for discounting the payment streams. A reassessment of the future spreads has resulted in reduced future cash flows. Combined with a discounting rate increase from 5.2% to 5.5%, this resulted in an impairment of EUR 3.2 million (previous year: EUR 6.6 million), with the recoverable amount (value in use) recognised at EUR 8.8 million. A decrease in the future cash flows by 10% would result in a reduction of the recoverable amount by EUR 3.3 million. The increase in the interest rate by 0.5% results in a reduction of the recoverable amount by EUR 1.7 million.

The impairment of the electricity grid (Grid Segment) was also tested in financial year 2016/2017, in particular due to market transactions that resulted in higher proceeds on disposal. The fair value less disposal costs was recognised as the recoverable amount. The fair value was determined using an EBITDA multiplier (8.98x; 30 September 2016: 7.87x) calculated on the basis of available market transactions. The EBITDA was recognised at EUR 62.9 million (previous year: EUR 59.4 million). The disposal costs were estimated at 1% of the transaction value. The recoverable amount was EUR 559.3 million. In fiscal year 2016/2017, this resulted in impairment reversals in the amount of EUR 16.5 million and a carrying amount of EUR 484.7 million, which corresponds to the amortised cost. A reduction of the EBITDA multiplier by 0.5 would in financial year 2016/2017 have resulted in the recoverable amount being reduced by EUR 31.1 million and therefore not have required the recognition of an impairment. Due to changed regulatory framework conditions from 1 January 2019 (IVth Electricity Regulatory Period), the electricity grid CGU was also subjected to impairment testing as of 30 September 2018. The recoverable amount was determined in analogous application of the method used in the previous year and assessed to exceed the carrying amount of the CGU. As of 30 September 2018, a reduction of the multiplier by 0.5 would result in a reduction of the recoverable amount by EUR 28.5 million and an impairment in the amount of EUR 18.9 million.

A reassessment of the market situation and market opportunities for WDL Wasserdienstleistungs GmbH carried out in financial year 2016/2017 confirmed that a lower profit contribution must be expected for new contracts. Combined with higher future capital expenditure, this resulted in the recognition of an impairment of EUR 15.4 million in the previous year, which was based on a discount rate of 4.2%. The recoverable amount (value in use) was EUR 36.9 million.

Research costs in the amount of EUR 3.7 million (previous year: EUR 3.2 million) were recognised as expenses.

In the 2017/2018 fiscal year, interest on borrowed capital in the amount of EUR 1,537.5 thousand (previous year: EUR 473.5 thousand) was capitalised.

Additions to assets under construction led to outflows of payment instruments in the amount of EUR 59,370.5 thousand (previous year: EUR 35,385.6 thousand). Obligations for the acquisition of property, plant and equipment amount to EUR 32,318.3 thousand (previous year: EUR 24,567.6 thousand).

In the 2007/2008 fiscal year, property, plant and equipment assets in the Waste Management Segment were sold and leased back for a period of 15 years “Sale and Lease back”). The assets of this financing lease relationship continue to be capitalised in the balance sheet. The present value of the minimum lease payments is recognised in the same amount on the liabilities side. During and at the end of the contract term, there are options to terminate at certain points against repayment of the outstanding loan amount. At the end of the lease term, the lessor has the right to sell the asset to the lessee at the outstanding loan amount. During the leasing term, subleasing to third parties is not permitted. The carrying amount as of 30 September 2017 is EUR 22,287.5 thousand (previous year: EUR 25,725.1 thousand). The future minimum lease payments for the following year are EUR 2,618.3 thousand (previous year: EUR 2,496.4 thousand), for terms between one and five years EUR 45,929.6 thousand (previous year: EUR 11,275.6 thousand), for terms in excess of five years EUR 0.0 thousand (previous year: EUR 37,285.8 thousand). Leasing payments calculated on the basis of a variable interest rate were recognised as expenses in the amount of EUR -2,387.8 thousand (previous year: EUR -2,671.3 thousand).

The present value of the minimum lease payments is as follows: