Repower Furnizare România S.R.L. (formerly S.C. Elcomex EN S.R.L.), a subsidiary of Repower AG, is a company in Romania whose purpose is to sell electricity and natural gas to small- and medium-sized enterprises. Due to indications of impairment, Repower Furnizare România S.R.L. was subjected to an impairment test on 30 June 2011. Repower Furnizare România S.R.L. was identified as a cash generating unit (CGU) for the impairment test.
The CGU consists of the following assets:
• Property, plant and equipment
• Intangible assets (goodwill, customers, software)
• Net current assets
The value of the CGU is provided by the intangible assets, in particular goodwill and customers. The impairment test confirmed the indications. A full impairment loss was recognised for the intangible assets in the amount of TCHF 27,424 arising from the acquisition, since the CGU no longer has any intrinsic value. The impairment loss was recognised in the consolidated statement of comprehensive income under depreciation/amortisation and impairment.
The impairment is mainly attributable to the following events:
• Significant changes on the market, leading to reduced and at times negative margins
• Discontinuation of all gas business operations from May 2011
The carrying amount was compared against the value in use in order to determine the intrinsic value of the CGU. A fair value less costs to sell cannot be determined since at present there are no reference values for the Romanian market. When calculating the value in use, the current plans authorised by management are taken into account. The cash flow forecasts refer to a period of five years. The residual corporate value was extrapolated using a growth rate of 3%. A discount rate of 6.7% before tax (11.4% after tax) was applied. The main assumption on which the cash flows were calculated is a realistic estimate of gross margin, primarily based on the most recent economic developments.
|CGU assets at 30 June 2011||Before impairment||After impairment|
|Property, plant and equipment||115||115|
|Cash and cash equivalents||-4||-4|
|Net current assets||-1,881||-1,881|
Parallel to the impairment, lower expectations have resulted in liabilities in connection with the full takeover of Repower Furnizare România S.R.L. Consequently, the related liability has declined from TCHF 13,450 to TCHF 396. The reduced liability has added TCHF 13,054 to other operating income.