Goodwill
Goodwill arising on acquisition results from an excess, on the acquisition date, of the sum of payments, non-controlling interests and the fair value of previously held interests in the acquired entities over the net fair value of identifiable assets, liabilities and conditional liabilities of the acquired entity as at the acquisition date.
In the case of a negative value, the Group reviews the fair values of each component of acquired net assets. If as a result of such a review the value continues to be negative, it is immediately recognised in the present period profit or loss.
Goodwill is initially recognised as an asset at cost and is subsequently measured at cost less impairment.
For impairment testing purposes, goodwill is allocated to the Group’s specific cash generating units that should receive the synergy benefits from the merger. The cash generating units to which goodwill is allocated are tested for impairment once a year or more frequently, if it can be reliably expected that impairment has occurred. If the recoverable value of a cash generating unit is smaller than its balance sheet value, an impairment loss is allocated first to reduce the balance sheet value of the goodwill allocated to this cash generating unit and subsequently to this unit’s other assets proportionately to the balance sheet value of specific assets in this unit. An impairment loss on goodwill is irreversible.
Geological information
Purchased geological information is recognised in accordance with IFRS 6 Exploration for and Evaluation of Mineral Resources, in an amount resulting from the agreement executed with the Ministry of the Environment. Until a mining concession is secured, this is not subject to amortisation. Subsequently, capitalised costs are amortised throughout the term of the concession.
Fees
Fees for mining usufruct for hard coal mining areas within the „Bogdanka” deposit are capitalised in the amount of such fees. Capitalised costs are recognised throughout the expected period of mining usufruct (note 41).
Other intangible assets
Other intangible assets include: computer software, licences and other intangible assets. Intangible assets are measured at purchase price or cost to manufacture, less accumulated amortisation and accumulated impairment. Amortisation is calculated on a straight-line basis, using the following estimated period of use.
Costs of R&D work
The costs of research works are recognised in profit or loss in the period in which they are incurred. The costs of development work that meet their capitalisation criteria are measured at purchase price or cost to manufacture, less accumulated amortisation and accumulated impairment. Amortisation is calculated on a straight-line basis, using the following estimated period of use.
Economic life and residual value
The amount of amortisation changes is determined on the basis of expected period of use for intangible assets. The verification conducted this year resulted in changes to amortisation periods. Their impact in 2021 on the amount of amortisation will be PLN (2 thousand).
Each year, the Group verifies the correctness of periods of use for intangible assets. Each change of amortisation period requires agreement and necessitates an adjustment to the amortisation charges in subsequent financial years.
At each balance sheet date ending a financial year, impairment assessments are carried out in compliance with IAS 36. If indications of impairment are identified, an impairment test is carried out in accordance with IAS 36 (section in these financial statements concerning impairment of non-financial assets).
Useful life of intangible assets:
| licences and software | 2 – 10 years |
| geological information | over the mining concession period (note 41) |
| other intangible assets | 2 – 40 years |
Intangible assets
For the financial year ended 31 December 2020:
| Costs of development work | Goodwill | Computer software, licences, concessions, patents | Geological information | Total | |
|---|---|---|---|---|---|
| Gross value | |||||
| As at 1 January 2020 | 10 485 | 229 323 | 624 016 | 40 856 | 904 680 |
| Transfers | – | – | 23 831 | – | 23 831 |
| Purchase | 392 | – | 16 448 | – | 16 840 |
| Transfer to available-for-sale non-current assets | – | – | (8) | – | (8) |
| Liquidation | – | – | (2 506) | – | (2 506) |
| Other | (284) | − | (347) | – | (631) |
| As at 31 December 2020 | 10 593 | 229 323 | 661 434 | 40 856 | 942 206 |
| Accumulated amortisation | |||||
| As at 1 January 2020 | (3 313) | – | (286 084) | (2 598) | (291 995) |
| Amortisation | (867) | – | (52 099) | (1 266) | (54 232) |
| Liquidation | – | – | 2 316 | – | 2 316 |
| Other | – | – | 155 | – | 155 |
| As at 31 December 2020 | (4 180) | – | (335 712) | (3 864) | (343 756) |
| Impairment | |||||
| As at 1 January 2020 | – | (227 517) | (6 144) | – | (233 661) |
| Decreases | – | 124 919 | 47 | – | 124 966 |
| Increases | – | (124 919) | (5 471) | – | (130 390) |
| As at 31 December 2020 | – | (227 517) | (11 568) | – | (239 085) |
| Net value at 1 January 2020 | 7 172 | 1 806 | 331 788 | 38 258 | 379 024 |
| Net value at 31 December 2020 | 6 413 | 1 806 | 314 154 | 36 992 | 359 365 |
No collateral is established on intangible assets. No intangible assets were produced internally in 2020.
For the financial year ended 31 December 2019:
| Costs of development work | Goodwill | Computer software, licences, concessions, patents | Geological information | Total | Ogółem | |
|---|---|---|---|---|---|---|
| Gross value | ||||||
| As at 1 January 2019 | 6 588 | 229 323 | 588 668 | 71 433 | 40 856 | 936 868 |
| Adjustment due to implementation of IFRS 16 | – | – | – | (71 433) | – | (71 433) |
| As at 1 January 2019, adjusted | 6 588 | 229 323 | 588 668 | – | 40 856 | 865 435 |
| Transfers | – | – | (775) | – | – | (775) |
| Purchase | 983 | – | 50 959 | – | – | 51 942 |
| Liquidation | – | – | (14 158) | – | – | (14 158) |
| Transfer to available-for-sale non-current assets | – | – | (678) | – | – | (678) |
| Other | 2 914 | – | – | – | – | 2 914 |
| As at 31 December 2019 | 10 485 | 229 323 | 624 016 | – | 40 856 | 904 680 |
| Accumulated amortisation | ||||||
| As at 1 January 2019 | (2 417) | – | (255 121) | (8 096) | (1 705) | (267 339) |
| Adjustment due to implementation of IFRS 16 | – | – | – | 8 096 | – | 8 096 |
| As at 1 January 2019, adjusted | (2 417) | – | (255 121) | – | (1 705) | (259 243) |
| Amortisation | (896) | – | (44 661) | – | (893) | (46 450) |
| Liquidation | – | – | 13 572 | – | – | 13 572 |
| Transfer to available-for-sale non-current assets | – | – | 184 | – | – | 184 |
| Other | – | – | (58) | – | – | (58) |
| As at 31 December 2019 | (3 313) | – | (286 084) | – | (2 598) | (291 995) |
| Impairment | ||||||
| As at 1 January 2019 | – | (227 517) | (6 201) | (99) | – | (233 817) |
| Adjustment due to implementation of IFRS 16 | – | – | – | 99 | – | 99 |
| As at January 2019, adjusted | – | (227 517) | (6 201) | – | – | (233 718) |
| Decreases | – | – | 57 | – | – | 57 |
| As at 31 December 2019 | – | (227 517) | (6 144) | – | – | (233 661) |
| Net value at 1 January 2019 | 4 171 | 1 806 | 327 346 | 63 238 | 39 151 | 435 712 |
| Adjustment due to implementation of IFRS 16 | – | – | – | (63 238) | – | (63 238) |
| As at 1 January 2019, adjusted | 4 171 | 1 806 | 327 346 | – | 39 151 | 372 474 |
| Net value at 31 December 2019 | 7 172 | 1 806 | 331 788 | – | 38 258 | 379 024 |
As at 31 December 2020 and 31 December 2019, goodwill covered goodwill at Miejska Energetyka Cieplna Piła Sp. z o.o.
Future contract liabilities related to the purchase of intangible assets incurred as at the reporting date but not yet recognised in the statement of financial position reached PLN 29 173 thousand as at 31 December 2020 (as at 31 December 2019: PLN 29 716 thousand).