Intangible assets

Intangible assets acquired separately are measured on initial recognition at cost. Intangible assets acquired as a result of a business combination are measured at their fair value as at the date of acquisition. Following initial recognition, intangible assets are carried at cost less any accumulated amortization and accumulated impairment losses.

The Group presents in separate categories the final products of development projects (“internally generated software”) and the products which have not been finished yet (“costs of development projects in progress”). An intangible asset generated internally as a result of development work (or completion of the development phase of an internal project) may be recognized if, and only if, the Group is able to demonstrate: (i) the technical feasibility of completing the intangible asset so that it will be available for use or sale; (ii) the intention to complete the construction of such intangible asset; (iii) the ability to use or sell such intangible asset; (iv) how such intangible asset is going to generate probable future economic benefits; (v) the availability of adequate technical, financial and other resources to complete the development work and to make the intangible asset ready for use or sale; (vi) the ability to reliably measure the expenditure for the development work attributable to such intangible asset.

The cost of an internally generated intangible asset is the sum of expenditures incurred from the date when the intangible asset first meets the above-mentioned recognition criteria. Expenditures previously recognized as expenses cannot be capitalized. The cost of an internally generated intangible asset comprises directly attributable costs necessary to create, produce, and prepare that asset to be capable of operating in the manner intended by management.

Until completion of the development work, accumulated costs directly attributable to such development work are disclosed as “costs of development projects in progress”. Upon completion of the development work, the ready-made product of the development work is reclassified to the category of “Internally generated software” and from that time

the Company begins to amortize such internally generated software. Following initial recognition of the internally generated software, the cost model is applied requiring the asset to be carried at cost less any accumulated amortization and accumulated impairment losses.

The useful lives of intangible assets are assessed as either finite or indefinite. Intangible assets with finite lives are amortized over the useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortization period and the amortization method for an intangible asset with a finite useful life are reviewed at least at the end of each reporting period. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are considered to modify the amortization period or method, as appropriate, and are treated as changes in accounting estimates. The amortization expense on intangible assets with finite lives is recognized in the statement of profit or loss.

All the intangible assets subject to amortization are amortized straight-line basis.

Intangible assets with indefinite useful lives are not amortized, but are tested for impairment annually, either individually or at the cash-generating unit level. The assessment of indefinite life is reviewed annually to determine whether the indefinite life continues to be supportable. If not, the change in useful life from indefinite to finite is made on a prospective basis.

Any gain or loss resulting from derecognition of an intangible asset from the statement of financial position (calculated as the difference between the net cash obtained from sales and the book value of the item) is disclosed in the profit and loss account for the period in which the derecognition was made.

Professional judgments and estimates

Amortisation is normally charged to profit and loss account on straight-line basis over the asset’s economic useful life.

The amortisation rate is set basing on economic useful life of asset. In 2020 there were no significant changes in determination of amortisation rates in the Group.

Intangible assets acquired in acquisitions

As at 31 December 2020, net value of intangible assets recognized as part of purchase price allocations related to the Group’s acquisitions of subsidiaries amounted to EUR 3,090 thousand (2019: EUR 3,928 thousand). The intangibles comprise various categories of assets including customer contracts and related customer relationships and software and licenses recognized in the acquisitions of subsidiaries.

The customer contracts and related customer relationships and software and licenses were initially recognized at fair values. The fair values were estimated using valuation methodologies which require making estimates regarding future cash flows generated by the intangible assets, discount rates to convert the projected cash flows to their present values, replacement or reproduction costs of the intangible assets as well as their normalized useful life and remaining useful life.

Cost of internally generated assets

Cost of an internally generated intangible asset are recognised and capitalised in accordance with Group’s accounting policy. Determination of the moment when cost qualifies for recognition is subject to professional judgement of management whether there is a technical feasibility of completing the intangible asset so that it will be available for use or sale and that the asset will generate probable future economic benefits. This moment is achieved by completing a specified milestone within a project.

The net book value of intangible assets, during the period of twelve months ended 31 December 2020 and in the comparative period, changed as a result of the following transactions:

For 12 months ended 31 December 2020 – tab29

Net book value of intangible assets as at 1

January 2020 (restated) 7,454 2,993 4,223 3,928 18,598

Transfers from the costs of development

projects in progress 3,929 - - - 3,929

Reductions, of which: (3,547) (4,075) (1,556) (794) (9,972)

Amortization charge for the reporting

period (3,547) - (1,536) (794) (5,877)

Disposal and liquidation - (146) (20) - (166)

Net book value of intangible assets as at 31

December 2020 7,395 2,926 4,070 3,090 17,481

Based on the detailed analysis of costs of development projects in progress the Board of Directors of the Parent Company believes the carrying value of costs of development projects in progress do not exceed the recoverable amount.

For 12 months ended 31 December 2019 (restated)

Net book value of intangible assets as at 1

January 2019 2,330 8,148 3,022 3,375 16,875

Additions, of which: 3,969 4,633 2,727 1,108 12,437

Purchases - - 601 - 601

Obtaining control over subsidiaries 164 - 2,126 1,108 3,398

Capitalization of costs of development

projects - 4,633 - - 4,633

Transfers from the costs of development

projects in progress 3,805 - - - 3,805

Net book value of intangible assets as at 31

December 2019 (restated) 7,454 2,993 4,223 3,928 18,598

6.3. Right-to-use assets