Current Report No.14/2016
Belongs to:
- Reports
Date of preparation: 11 April 2016
Subject: Information about taking an impairment charge to wind assets
Legal basis: Article 56 Section 1 Item 1 of the Act on Offerings – confidential information
The ENERGA S.A. Management Board (Company, Issuer) reports that in connection with changes in the market environment, such as the falling prices for the certificates of origin for energy and persistently low electricity prices, certain factors have been identified that may result in a decline in the ENERGA Group’s recoverable assets.
In view of the foregoing, as a result of the impairment tests conducted for Q1 2016, on 11 April 2016 the decision was made to recognize impairment losses in the Generation Segment for property, plant and equipment totaling PLN 187.6 million. Accordingly, it was also necessary to conduct impairment tests on the goodwill coming from the acquisition of wind farms in 2013 and this contributed to recognizing an impairment loss of PLN 117 million. The total impact exerted by these impairment losses on the ENERGA Group’s consolidated financial statements for Q1 2016 is PLN 304.6 million. These operations are non-cash in nature and do not affect the Group’s current and future liquidity position.
These impairment losses chiefly apply to existing and future wind farms. The reasons for taking them do not take into consideration the possible legislative changes associated with the bill on investments in wind power plants and the novation of the act on renewable sources of energy. Work on these legal acts are in progress and at this moment in time it is not possible to give an accurate estimate of their impact on the ENERGA Group’s assets.
These tests have not demonstrated an impairment loss for the ENERGA Group’s existing conventional generation assets.
After taking these impairment losses, the book value of wind farms in the ENERGA Group’s consolidated balance sheet is PLN 892.6 million, including PLN 86.9 million for future wind power plants.