16. Intangible assets and property, plant and equipment

Changes in intangible assets and goodwill

Changes in property, plant and equipment

16.1. Impairment of cash generating units with own goodwill

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 attributable to the cash generating unit “Sales” exceeds the carrying amount by EUR 173.9 million (previous year: EUR 122.2 million). In the event of a decrease in future cash flows by 55.1% (previous year: 51.2%), or an increase in the interest rate by 3.7% (previous year: 2.7%), the carrying amount corresponds to the present value of the future cash flows.

The recoverable amount of the “Waste Management/Austria” cash-generating unit exceeds the carrying amount by EUR 79.8 million (previous year: EUR 26.3 million), while the recoverable amount of CEVAK a.s. exceeds the carrying amount by EUR 146.1 million (previous year: EUR 123.4 million). In the event of a decrease in future cash flows by 28.2% (previous year: 11.8%), or an increase in the interest rate by 1.3% (previous year: 0.5%), 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.

16.2. Impairment of cash generating units without own goodwill

Timelkam CCGT (combined cycle gas-turbine) power plant

Due to the current situation on the market, impairment testing was performed for the Timelkam CCGT 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 2,227 GWh per year (previous year: 1,423 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 65.92 to EUR 82.61 /MWh (previous year: EUR 47.24 to EUR 70.04/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 4.3% (previous year: 4.5%). The planning horizon ends in the 2037/2038 fiscal year. Due to higher market expectations in particular, an impairment reversal of EUR 2.8 million (previous year: impairment of EUR 1.8 million) was recognised. The recoverable amount determined using the DCF method corresponds to the value in use in the amount of EUR 45.3 million (previous year: EUR 45.8 million). Fluctuations in cash flows of 20% resulted in a change of EUR 9.1 million in the recoverable amount. An increase in the interest rate by 0.5% results in a reduction of the recoverable amount by EUR 1.8 million.

Other reversals of impairment

Due to a revised appraisal of the feasibility of the Ebensee pumped-storage power plant, an impairment reversal of EUR 4.4 million was recognised for the Energy Segment. The recoverable amount corresponds to the carrying amount of EUR 4.4 million. Impairment reversals of EUR 4.7 million for waste incineration plants were recognised for the Waste Management Segment, particularly as a result of expected higher proceeds from the utilisation of district heat services.

Impairments in the previous year:

7Fields gas reservoir

In the previous year, an impairment of EUR 7.0 million was recognised for the cash generating unit “7-Fields gas reservoir”. The impairment was based on a new assessment of the future long-term gas prices on the trading market during the summer and winter months (“summer-winter spread”), as well as the possible utilisation of the gas reservoir over the long term. A discount rate of 5.0% was applied (30 September 2019: 5.3%). The recoverable amount (value in use) was EUR 0.0 million.

Waste Management Segment

Due to a fire in a waste sorting plant, an impairment of EUR 1.8 million was recognised in the item property, plant and equipment and a further impairment of EUR 0.6 million was recognised for manufacturing plant and equipment.

Price-regulated heat sales

Moreover, the impairment of the “Price-Regulated Heat Sales” cash-generating unit (Energy Segment) was tested. This unit includes the thermal plants Timelkam/Vöcklabruck, Riedersbach and Kirchdorf, 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 4.5%, the recoverable amount (value in use) was assessed at EUR 6.2 million. The impairment amounted to EUR 2.1 million.

16.3. IFRS 16 (Leases)

For leased assets, a right-of-use asset representing its right to use an underlying asset is capitalised and, at the same time, a lease liability recognised in the amount of the present value of the lease payments. Discounting takes place at the lease-specific interest rate. If the lease-specific interest rate cannot be determined, the incremental borrowing interest rate is applied. Depending on the term, an incremental borrowing interest rate of 0.99% or 1.85% was assumed to apply in the 2020/2021 fiscal year. The right of use asset is then amortised and the lease liability carried forward using the effective interest method.

IFRS 16 is not applied to short-term leases and leases concerning an underlying asset of minor value. In accordance with IFRS 16.4, the company has opted out of voluntary application of IFRS 16 for intangible assets.

The Group has been leasing the property at Böhmerwaldstraße 3, Linz, where Group headquarters is located, from Power Tower GmbH since the year 2008. The Group holds a 1% share in the entity.

The entity is not funded by the Group. The leasing contract is for an indefinite period, cancellation by the lessee is only possible 20 years after the start of the contract at the earliest, under certain circumstances only after 23 years. The Group has the unilateral right, but no obligation, to acquire Power Tower GmbH 15 or 20 years after the commencement of the lease. Leasing payments are linked to interest rate developments. The Group is required to perform the ongoing maintenance of the property and fulfill all legal requirements that could also apply to the owner. There are no other additional risks. Power Tower GmbH is to be considered a structured entity pursuant to IFRS 12, but the lack of control means that it is not to be included as a subsidiary in the Consolidated Financial Statements. In accordance with IFRS 16, a right of use asset in the amount of EUR 37.4 million and a lease liability in the amount of EUR 37.6 million have been recognised as of 30 September 2021.

Additionally, in the 2007/2008 fiscal year, plant and equipment assets were sold and leased back for a term of 15 years (“sale-and-leaseback”) in the Waste Management Segment. 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 right of use assets have a carrying value of EUR 12.8 million (previous year: EUR 15.7 million) as of 30 September 2021 and the corresponding liability amounts to EUR 40.4 million (previous year: EUR 43.4 million).

As of 30 September 2021, the lease liabilities amount to EUR 114.7 million (previous year: EUR 113.1 million) (up to 1 year: EUR 7.6 million; 1-5 years EUR 52.4 million, more than 5 years EUR 54.8 million) (previous year: up to 1 year: EUR 7.2 million, 1-5 years EUR 55.3 million, more than 5 years EUR 50.6 million). The Statement of Financial Position recognises the lease liabilities in the item for financial liabilities.

For fiscal year 2020/2021, the cash outflows for leases amount to EUR 9,847.4 thousand (previous year: EUR 8,719.6 thousand). The expenses for leases not recognised in accordance with IFRS 16 amount to EUR 1,683.1 thousand (of which: current lease expenses: EUR 615.1 thousand, of which marginal lease expenses: EUR 227.7 thousand, of which non-IFRS 16 lease expenses: EUR 840.3 thousand, of which variable lease expenses: EUR 0.0).

The item property, plant and equipment recognises the following right of use assets:

16.4. Further disclosures

Research costs in the amount of EUR 5.5 million (previous year: EUR 4.1 million) were recognised as expenses.

In the 2020/2021 fiscal year, interest on borrowed capital in the amount of EUR 212.0 thousand (previous year: EUR 567.3 thousand) was capitalised. The applied interest rate was 3.8% (previous year 4.1%).

Additions to assets under construction led to outflows of payment instruments in the amount of EUR 65,083.7 thousand (previous year: EUR 52,280.6 thousand). Obligations for the acquisition of property, plant and equipment amount to EUR 47,892.0 thousand (previous year: EUR 32,011.2 thousand).