14.4.1. Discount rate
The ORLEN Group determines individual discount rates for each defined cash generating unit (Cash Generating Unit CGU) using the so-called CAPM model – Capital Asset Pricing Model. For each CGU as at the date of impairment tests, i.e. as at 31 December 2021, market risks specific to the country and business segment were taken into account to reflect the current market assessment of the time value of money as at the balance sheet date and the risk associated with a given group of assets corresponding to the return that investors would require when making investment decisions that would generate cash flows in the amount, timing and type of risk corresponding to the flows that the ORLEN Group expects to receive from a given CGU.
The main discount rates estimated by the ORLEN Group as at 31 December 2021 were as follows:
| Country | Segment / CGU | Nominal discount rate | BETA non-leveraged | Cost of equity capital | Cost of debt after tax | D/E |
| Poland | Refining | 8.09% | 87.32% | 10.13% | 3.84% | 48.19% |
| Poland | Petrochemical | 7.65% | 74.14% | 9.02% | 3.84% | 36.20% |
| Poland | Retail | 7.07% | 80.97% | 8.52% | 3.84% | 45.11% |
| Poland | Upstream_OUP | 8.19% | 89.26% | 10.16% | 3.84% | 45.11% |
| Poland | Production Energy & Industrial power engineering | 6.64% | 55.00% | 8.62% | 3.84% | 70.90% |
| Czech Republic | Refining | 7.41% | 87.32% | 9.41% | 3.25% | 48.19% |
| Czech Republic | Petrochemical | 6.96% | 74.14% | 8.30% | 3.25% | 36.20% |
| Czech Republic | Retail | 6.36% | 80.97% | 7.76% | 3.25% | 45.11% |
| Lithuania | Refining | 6.14% | 87.32% | 7.76% | 2.78% | 48.19% |
| Lithuania | Retail | 5.83% | 80.97% | 7.20% | 2.78% | 45.11% |
| Germany | Retail | 3.18% | 80.97% | 4.34% | 0.60% | 45.11% |
| Poland | ENERGA_Group | 6.72% | 47.55% | 9.25% | 3.84% | 87.65% |
| Poland | ENERGA_Distribution | 5.60% | 40.00% | 7.36% | 3.84% | 100.00% |
| Poland | ENERGA_Heat | 6.23% | 47.64% | 7.42% | 3.84% | 50.00% |
| Poland | ENERGA_RES | 6.30% | 45.48% | 8.87% | 3.84% | 104.70% |
| Poland | ENERGA_Sales | 8.15% | 59.31% | 11.35% | 3.84% | 74.35% |
| Poland | ENERGA_Production coal | 7.73% | 55.27% | 8.50% | 3.84% | 20.00% |
The discount rates as at 31 December 2021 for the estimation of value in use of assets were calculated using the peer-to-peer method as the weighted average cost of equity and debt. The sources of macroeconomic indicators necessary to estimate the cost of capital and the cost of debt, such as beta and D/E, were provided by the Bloomberg website and the publications of prof. Aswath Damodaran a (source: http://pages.stern.nyu.edu) and the publications of the Energy Regulatory Office for the scope of the ENERGA Group’s operations and 10-year government bond quotes available as of 31 December 2021. The market risk premium ratio was estimated on the basis of analyzes of the publications of prof. Aswath Damodaran (source: http://pages.stern.nyu.edu) and the available publications of financial institutions.
The discount rates as at 31 December 2021 to determine the fair value less costs to sell the production assets in Canada were set individually for each area and ranged from 11% to 16.4%.
The main discount rates estimated by the ORLEN Group as at 31 December 2020 were as follows:
| Country | Segment / CGU | Nominal discount rate | BETA non-leveraged | Cost of equity capital | Cost of debt after tax | D/E |
| Poland | Refining | 5.61% | 84.00% | 8.12% | 1.87% | 66.92% |
| Poland | Petrochemical | 5.64% | 83.85% | 6.82% | 1.87% | 31.22% |
| Poland | Retail | 5.14% | 71.15% | 8.48% | 1.91% | 103.42% |
| Poland | Upstream_OUP | 7.10% | 113.18% | 9.24% | 1.87% | 41.00% |
| Poland | Production Energy & Industrial power engineering | 4.18% | 54.70% | 5.69% | 1.87% | 65.44% |
| Czech Republic | Refining | 5.64% | 84.00% | 8.15% | 1.89% | 66.92% |
| Czech Republic | Petrochemical | 5.67% | 83.85% | 6.85% | 1.89% | 31.22% |
| Czech Republic | Retail | 3.84% | 52.01% | 6.34% | 1.89% | 128.47% |
| Lithuania | Refining | 6.22% | 84.00% | 8.66% | 2.57% | 66.92% |
| Lithuania | Retail | 4.65% | 52.01% | 7.31% | 2.57% | 128.47% |
| Germany | Retail | 1.98% | 52.01% | 4.09% | 0.34% | 128.47% |
| Poland | ENERGA_Group | 4.52% | 43.83% | 6.85% | 1.87% | 87.96% |
| Poland | ENERGA_Distribution | 3.54% | 40.00% | 5.22% | 1.87% | 100.00% |
| Poland | ENERGA_Heat | 4.16% | 41.68% | 5.31% | 1.87% | 50.00% |
| Poland | ENERGA_RES | 4.18% | 44.10% | 6.81% | 1.87% | 113.89% |
| Poland | ENERGA_Sales | 4.83% | 28.82% | 6.92% | 1.87% | 70.40% |
| Poland | ENERGA_Production coal | 5.03% | 43.36% | 5.67% | 1.87% | 20.00% |
The discount rates as at 31 December 2020 for the estimation of value in use of assets were calculated as the weighted average cost of equity and debt. The sources of macroeconomic indicators necessary to estimate the cost of capital and the cost of debt, such as beta and D/E, were provided by website and the publications of prof. Aswath Damodaran (source: (source: http://pages.stern.nyu.edu) and the publications of the Energy Regulatory Office for the scope of the ENERGA Group’s operations and 10-year government bond quotes available as of 31 December 2020. The market risk premium ratio was estimated on the basis of analyzes of the publications of prof. Aswath Damodaran , (source: http://pages.stern.nyu.edu) and the available publications of financial institutions.
The discount rates as at 31 December 2021 to determine the fair value less costs to sell the production assets in Canada were set individually for each area and ranged from 11% to 16.4%.