The Company values its shares at purchase price,
less impairment losses. In accordance with IFRS,
every year, the Management Board first analyses
the indications of impairment and then, in the
event of the above-mentioned premises, conducts
impairment tests.
Due to the continuing favourable market
conditions, including higher demand for the
products of Arctic Paper Grycksbo AB (which is
the operating company for the activities that are
part of the investment in Arctic Paper Investment
AB), the company continued to achieve high
financial results in 2023. Due to the above, as at
December 31, 2023, the Company conducted an
impairment test of the investment in Arctic Paper
Investment AB and estimated its recoverable
value, which was determined at the level of value
in use (estimated on the basis of the discounted
projected cash flow model).
Identification of impairment indicators, carrying out
an impairment test, as well as correctly
determining the amount of the share revaluation
write-off requires the adoption of a number of
assumptions and judgments by the Company's
Management Board. In particular, the
Management Board's estimates and judgments
concern, among others, the adopted strategy of
the Company, financial plans and cash flow
forecasts for the coming years, as well as
macroeconomic and market assumptions.
Taking into account the significance of the items in
the separate financial statements, as well as the
sensitivity of the results mentioned above,
analyses to the variability of assumptions and
estimates, we decided that this was a key issue
for our audit.
•
assessment of the correctness and
completeness of disclosures regarding
impairment tests in the separate financial
statements;
•
checking the mathematical correctness
and methodological consistency (using
PwC's internal valuation specialists) of the
valuation model prepared by the
Management Board based on discounted
cash flows;
•
a critical assessment of the assumptions
adopted by the Management Board and
the estimates made to determine the
recoverable value of fixed assets,
including:
o
a five-year projection period of future
cash flows and the assumed level of
revenues, operating margin and
projected changes in net working
capital;
o
applied discount rates (based on the
weighted average cost of capital)
using internal PwC specialists;
o
marginal growth rates after the
forecast period;
•
assessment of the sensitivity analysis of
the valuation result to changes in the
assumptions made by the Management
Board.