13.2 Impairment test

The impairment test is based on the assessment of the recoverable amount of EMC. Based on the impairment test it was concluded that the recoverable amount was not lower than the book value, hence no impairment had occurred.

The recoverable amount was determined on the basis of the fair value estimated using the most recent financial plans and the following assumptions:

  • discount rate – 9.33% – taking into account the risk-free rate of 4.17% (yield on 10-year Treasury bonds), the risk premium, leverage and cost of debt etc.;
  • the period covered by the financial plans – 8 years of the end of the reporting period (until 2021) – adoption of such a long period results from the planned investment expenditure and the time when it is expected to generate a return;
  • increased cash flows after the last period covered by the financial plan, also taking into account higher capital expenditure – at the level of 0.6%.

Considering the assumptions, the surplus of the recoverable amount over the carrying amount is PLN 27,916 thousand. If the discount rate used is increased by 0.5 p.p., the aforementioned surplus will decrease by PLN 16,727 thousand.

The maximum discount rate which will not result in a surplus of the carrying amount over the recoverable amount is 10.19%.