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Annual Report 2015

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Comments to Nelja Energia AS Annual Report 2015 - Goodwill impairment 


In 2015 Nelja Energia produced a record amount - approximately 569 gigawatt-hours (GWh) of electricity in his fifteen wind parks. Nelja Energia owns two biogas plants where energy production also increased in 2015, reaching a total of electricity 16 GWh and heat 4.3 GWh.

On 1 January 2012, Nelja Energia AS (former business name Freenergy AS) acquired all subsidiaries (hereinafter: the Transaction) that were previously owned by Vardar Eurus AS, and as of that date all of the undertakings are subsidiaries. The Transaction was made by non-monetary contributions and the value of non-monetary contributions was determined in accordance with the value assessment test approved by KPMG as an independent advisor. Up to 31 December 2011, in accordance with the agreement concluded between Nelja Energia AS and Vardar Eurus AS on 11 May 2009, all subsidiaries and associates were considered to be companies under joint control.

The Transaction was in scope of IFRS 3 “Business Combinations”, resulting that the difference between the value of each subsidiary (found by the discounted cash flow method) and the amount of the made investment was shown as goodwill. Goodwill at the time of the Transaction was 101 554 thousand euros.

At least once a year the potential impairment of the carrying amount of goodwill created upon acquisition of subsidiaries is written down to the recoverable value according to IAS 36 ”Impairment of Assets”.  In 2015 goodwill impairment was made in amount of 26 457 thousand euros, mostly due to prognosis of low electricity prices. As at 31 December 2015 the remaining balance of goodwill was 60 560 thousand euros. The value assessment test resulting to goodwill impairment does not have impact to cash flows or investments to working windfarms.

In 2015 Nelja Energia AS consolidated EBITDA (EBITDA: Earnings before net financial items, share of profit of equity accounted investees, taxes, depreciation and amortisation) was 37 902 thousand euros (2014: 33 791 thousand euros), Assets 401 378 thousand euros (2014: 382 035 thousand euros), Equity 176 242 thousand euros (2014: 194 581 thousand euros).  As at 31 December 2015 equity ratio (Equity ratio: total equity / total assets) was 43,91% (2014: 50,93%). Due to the revaluation of the goodwill the total loss to equity holders is 17 800 thousand euros.