Chapter 10Assets

10.2Intangible assets

10.2.1 Accounting policies relating to intangible assets

Goodwill

Goodwill that arises on the acquisition of subsidiaries is presented with intangible assets.

Goodwill is carried at cost less accumulated impairment losses and is not subject to amortisation, but rather tested annually for impairment or more frequently if events or changes in circumstances indicate a potential impairment.

For purposes of impairment testing, goodwill acquired in a business combination is allocated to each CGU, or group of CGUs, which is expected to benefit from the synergies of the business combination. Each unit or group of units to which the goodwill is allocated represents the lowest level within the entity at which goodwill is monitored for internal management purposes. Goodwill is monitored at the operating segment level.

The carrying value of the CGU containing the goodwill is compared to the recoverable amount, which is the higher of the value in use and the fair value less costs of disposal. Any impairment is recognised immediately as an expense and is not subsequently reversed.

Patents, licences, software and customer contracts

Patents, licences, software and customer contracts are intangible assets with a finite useful life and are carried at cost less accumulated amortisation and accumulated impairment losses.

Amortisation is charged to profit or loss on a straight-line basis over the estimated useful lives of the finite useful life assets from the date available for use. The amortisation method, useful lives and residual values are reviewed at each reporting date and adjusted where appropriate. The estimated useful lives of intangible assets with a finite useful life are:

	2024	2023
Customer contracts	16.3 and 16.4 years	16.3 and16.4 years
Patents and licences	1 to 25 years	1 to 25 years
Software	3 to 10 years	3 to 10 years

Impairment testing is undertaken when circumstances indicate that the carrying amount may not be recoverable.

Intangible assets under development

Intangible assets under development are stated at cost and not amortised but tested annually for impairment. Development expenditure is accumulated separately for each project. Such expenditure comprises costs directly attributable to the development of an asset, including the cost of services, direct labour and an appropriate proportion of overheads. Development costs are capitalised once approval for such development is obtained from management (as determined per project). On completion of development, all assets included in assets under development are reclassified to the appropriate asset class to which it relates.

10.2.2 Significant judgements and assumptions made by management in applying the related accounting policies

Impairment testing of goodwill

In allocating goodwill, the Cennergi group of companies has been identified as a single CGU to which the goodwill of R521 million has been allocated.

The Cennergi CGU was assessed for impairment as at 31 December 2024 and 31 December 2023 as a result of the requirement to test goodwill annually for impairment. There were no indicators of impairment for the Cennergi CGU during the reporting period. No impairment charge was required as the recoverable amount, determined using fair value less costs of disposal, exceeded the carrying amount on 31 December 2024.

The recoverable amount was derived using a DCF model which is a Level 3 valuation technique in terms of the fair value hierarchy. The valuation has been performed in South African rand using the following information:

Approved financial budgets and outlook covering a period up to five years
Project financing models post the five year outlook period up to the end of the contractual life of the power purchase agreements
Extrapolated results for a further post contractual 10 year period, representing the expected additional economic life for which the wind farms are expected to operate.

The key assumptions made by management (expressed in nominal terms) and management's approach to determining these key assumptions is summarised as follows:

Key assumptions	Management's approach used to determine the values	2024	2023
Discount rate	Determined applying a risk free rate of return adjusted for risks inherent to the Cennergi CGU.	10.53%	10.53%
Remaining life of Cennergi CGU	The wind farms are expected to have a further operating capability of an additional 10 years post the existing power purchase agreements in accordance with technical engineering assessments. In addition, given the expected growth in demand for energy in South Africa, coupled with limited supply of energy, and in particular the worldwide drive towards energy supply to be from renewable sources, it is considered that there is a market with value post the existing power purchase agreements.	22.4 years	23.4 years
Gigawatt generation	The gigawatt generation assumption has been determined based on past experience, as well as environmental assessments of wind conditions and capability of the turbines.	668GWh to 725GWh	668GWh to 725GWh
Tariff escalation range	The tariff is based on CPI escalation during the power purchase agreement term which has been determined based on past experience and from economist projected outlooks of CPI. For the post 10 year period the tariff has been set at a reduced constant expected CPI.	4.5%	4.5%

Management considered and assessed reasonably possible changes to the key assumptions and have not identified any instances that could cause the carrying amount of the Cennergi CGU to exceed its recoverable amount.

10.2.3 Intangible assets composition and analysis

		Group
At 31 December 2024	Note	Goodwill Rm	Customer Contracts Rm	Patents and licences Rm	Software Rm	Intangible assets under development Rm	Total Rm
Gross carrying amount
At beginning of the year		521	2 685	41	930	19	4 196
Additions					5	22	27
Disposals					(90)		(90)
Transfer between classes					12	(12)
At end of the year		521	2 685	41	857	29	4 133
Accumulated amortisation
At beginning of the year			(615)	(34)	(757)		(1 406)
Disposals					74		74
Charges for the year	6.1.3		(164)	(1)	(38)		(203)
At end of the year		(779)	(35)	(721)		(1 535)
Net carrying amount at end of the year		521	1 906	6	136	29	2 598

		Group
At 31 December 2023	Note	Goodwill Rm	Customer Contracts Rm	Patents and licences Rm	Software Rm	Intangible assets under development Rm	Total Rm
Gross carrying amount
At beginning of the year		521	2 685	36			3 242
Transfer from property, plant and equipment	10.1.3				930	24	954
Transfer between classes				5		(5)
At end of the year		521	2 685	41	930	19	4 196
Accumulated amortisation
At beginning of the year			(451)	(31)			(482)
Transfer from property, plant and equipment	10.1.3				(749)		(749)
Charges for the year	6.1.3		(164)	(3)	(8)		(175)
At end of the year			(615)	(34)	(757)		(1 406)
Net carrying amount at end of the year		521	2 070	7	173	19	2 790

			Company
At 31 December 2024	Note	Patents and licences Rm	Software Rm	Intangible assets under development Rm	Total Rm
Gross carrying amount
At beginning of the year		27	930	19	976
Additions			5	13	18
Disposals		(2)	(90)		(92)
Transfer between classes			12	(12)
At end of the year		25	857	20	902
Accumulated amortisation
At beginning of the year		(22)	(757)		(779)
Disposals		2	74		76
Charges for the year	6.1.3		(39)		(39)
At end of the year		(20)	(722)		(742)
Net carrying amount at end of the year		5	135	20	160

			Company
At 31 December 2023	Note	Patents and licences Rm	Software Rm	Intangible assets under development Rm	Total Rm
Gross carrying amount
At beginning of the year		22			22
Transfer from property, plant and equipment	10.1.3		930	24	954
Transfer between classes		5		(5)
At end of the year		27	930	19	976
Accumulated amortisation
At beginning of the year		(20)			(20)
Charges for the year	6.1.3	(2)	(8)		(10)
Transfer from property, plant and equipment	10.1.3		(749)		(749)
At end of the year		(22)	(757)		(779)
Net carrying amount at end of the year		5	173	19	197