Consolidated statement
of financial position

Note As at
31 December 2015
As at
31 December 2014
ASSETS
Non-current assets
Property, plant and equipment 18

18. Property, plant and equipment

Year ended 31 December 2015

Land Buildings, premises and
civil engineering structures
Plant and
achinery
Other Assets
under
construction
Property, plant and
equipment,
total
COST
Opening balance 117 142 18 195 456 14 819 091 808 607 1 364 263 35 304 559
Direct purchase 228 401 3 808 063 3 808 692
Borrowing costs 68 656 68 656
Transfer of assets under construction 3 608 1 320 193 1 400 437 102 850 (2 827 088)
Sale, disposal (1 181) (5 172) (8 327) (17 875) (586) (33 141)
Liquidation (64 089) (174 717) (9 238) (4) (248 048)
Received free of charge 19 830 403 3 20 236
Transfers to/from assets held for sale (7) 470 453 793 329 (8 536) 21 192 1 276 431
Overhaul expenses 139 078 139 078
Items generated internally 41 899 41 899
Cost of disassembly of wind farms and decommissioning of mines (10 039) (660) (10 699)
Other movements (26) 1 767 80 637 (72 202) (15 493) (5 317)
Foreign exchange differences from translation of foreign entities 7 10 17
Closing balance 119 536 19 928 399 16 910 428 804 020 2 599 980 40 362 363
ACCUMULATED DEPRECIATION            
Opening balance (458) (5 049 663) (4 957 467) (440 706) (5 323) (10 453 617)
Depreciation for the period (839 414) (837 677) (87 243) (1 764 334)
Increase of impairment (81) (826 976) (2 608 593) (5 036) (8 421) (3 449 107)
Decrease of impairment 51 8 954 143 770 16 9 934
Sale, disposal 1 890 7 290 16 500 25 680
Liquidation 52 057 169 981 8 821 230 859
Transfers to/from assets held for sale 22 (39 254) (43 328) 4 610 (77 950)
Other movements (250) (35 310) 34 557 (1 003)
Foreign exchange differences from translation of foreign entities (4) (4) (8)
Closing balance (466) (6 692 656) (8 304 965) (467 731) (13 728) (15 479 546)
NET CARRYING AMOUNT AT THE BEGINNING OF THE PERIOD 116 684 13 145 793 9 861 624 367 901 1 358 940 24 850 942
NET CARRYING AMOUNT AT THE END OF THE PERIOD 119 070 13 235 743 8 605 463 336 289 2 586 252 24 882 817
 of which operating segments:            
Mining 1 189 582 131 596 130 14 595 161 732 1 355 777
Generation 41 638 2 514 623 3 977 254 38 806 1 662 593 8 234 914
Distribution 59 414 10 037 164 3 892 698 260 861 754 370 15 004 507
Other segments and other operations 16 829 101 825 139 381 22 027 7 557 287 619

 



 

Year ended 31 December 2014

Land Buildings, premises and
civil engineering structures
Plant and
machinery
Other Assets
under
construction
Property, plant and
equipment,
total
COST          
Opening balance 114 112 17 385 870 14 909 785 738 450 1 213 948 34 362 165
Direct purchase 107 32 2 773 427 2 773 566
Borrowing costs 45 524 45 524
Transfer of assets under construction 4 511 1 409 386 1 208 791 96 797 (2 719 485)
Sale, disposal (615) (6 231) (13 159) (13 421) (37) (33 463)
Liquidation (44 419) (196 767) (9 842) (251 028)
Received free of charge 10 14 620 748 72 15 450
Transfers to/from assets held for sale (80) (488 270) (793 781) (868) (21 192) (1 304 191)
Contribution (179 107) (298 531) (2 773) (60 296) (540 707)
Overhaul expenses 205 12 612 91 867 104 684
Items generated internally 47 445 47 445
Cost of disassembly of wind farms and decommissioning of mines 86 061 3 145 89 206
Other movements (796) 17 341 (13 863) 154 (6 938) (4 102)
Foreign exchange differences from translation of foreign entities 4 6 10
Closing balance 117 142 18 195 456 14 819 091 808 607 1 364 263 35 304 559
ACCUMULATED DEPRECIATION            
Opening balance (645) (4 360 059) (4 490 207) (377 855) (5 760) (9 234 526)
Depreciation for the period (802 467) (840 332) (85 093) (1 727 892)
Increase of impairment (135) (50 575) (32 172) (2 115) (22) (85 019)
Decrease of impairment 322 12 794 20 064 1 164 459 34 803
Sale, disposal 2 427 11 361 11 608 25 396
Liquidation 33 287 190 786 8 890 232 963
Transfers to/from assets held for sale 45 919 43 679 836 90 434
Contribution 70 684 136 587 1 989 209 260
Other movements (1 673) 2 769 (129) 967
Foreign exchange differences from translation of foreign entities (2) (1) (3)
Closing balance (458) (5 049 663) (4 957 467) (440 706) (5 323) (10 453 617)
NET CARRYING AMOUNT AT THE BEGINNING OF THE PERIOD 113 467 13 025 811 10 419 578 360 595 1 208 188 25 127 639
NET CARRYING AMOUNT AT THE END OF THE PERIOD 116 684 13 145 793 9 861 624 367 901 1 358 940 24 850 942
of which operating segments:            
Mining 1 076 576 796 552 084 16 828 122 041 1 268 825
Generation 42 476 2 889 200 5 653 879 41 812 549 314 9 176 681
Distribution 57 627 9 573 595 3 533 460 288 292 671 879 14 124 853
Other segments and other operations 15 505 106 202 122 201 20 969 15 706 280 583

 



 

Property, plant and equipment used based
on finance leases
Year ended
31 December 2015
Year ended
31 December 2014
Buildings 45 895 50 857
Plant and machinery 42 651 45 126
Motor vehicles 870 1 691

 



 

In the year ended 31 December 2015, the Group acquired property, plant and equipment for PLN 3 877 348 thousand, including capitalized costs of external financing. Major purchases were related to investments in the following operating segments:

 

Purchase of property, plant and equipment by segment Year ended
31 December 2015
Year ended
31 December 2014
Distribution 1 858 807 1 883 562
Generation 1 750 548 703 604
Mining 210 574 185 682

 



 

Key investment projects carried out by the Group in the 2015 financial year have been presented in item 1.4.1.3. of the Report on the activities of TAURON Polska Energia S.A. Capital Group for 2015.

Recognition and derecognition of impairment losses for property, plant and equipment had the following impact on operating segment performance.

 

 Year ended 31 December 2015  Year ended 31 December 2014
Generation Distribution Other Total Generation Distribution Other Total
Increase of impairment (3 430 917) (18 173) (17) (3 449 107) (72 441) (12 556) (22) (85 019)
Decrease of impairment 609 9 322 3 9 934 33 865 929 9 34 803
Total impact on the profit (loss) for the period (3 430 308) (8 851) (14) (3 439 173) (38 576) (11 627) (13) (50 216)

 



 

Impairment tests

Impairment tests of property, plant and equipment were carried out as at 31 December 2015 considering the following indications:

  • the market value of the Company’s net assets remaining below their carrying amount for a long-term period;

  • long-lasting unfavorable market conditions for power manufacturers and resulting more conservative power price forecasts for the future;

  • power manufacturing volumes to be adjusted in the future (i.e. limited) to the existing unfavorable market situation and pessimistic outlooks;

  • manufacturing units closed sooner than expected.


The tests required estimating the value in use of cash generating units, based on their future cash flows discounted to the current value with the discount rate.

The impairment test for property, plant and equipment and non-current intangible assets was carried out the level of individual companies, except for:

  • TAURON Wytwarzanie S.A., where cash generating units (“CGU”) were identified based on the cost nature and analysis of the applied methods of contracting and allocating generation from particular generation units. Consequently, the test was performed for cash generating units understood as generation units or groups of generation units;

  • TAURON Ekoenergia Sp. z o.o., where water power plants and wind power plants were individually tested for impairment;

  • TAURON Ciepło Sp. z o.o. – where generation of heat and electricity was separated from transmission and distribution of heat (former thermal energetics companies). For the purpose of more detailed cost analysis, additional tests were carried out for individual generation units.


Key assumptions made to estimate the value in use of property, plant and equipment:

  • The adopted price path of power coal, other coal sizes and gaseous fuels. Approximately 5% increase of coal price was assumed until 2025, however it’s been assumed that after 2025 the price level will remain the same as this year (in fixed prices);

  • The adopted electricity wholesale price path for the years 2016 - 2025, taking into account such factors as the effect of the balance of the market supply and demand for electricity, costs of fuel as well as costs of acquiring CO₂ emission allowances; Approximately 22% increase was assumed until 2020, until 2025 more dynamic increase in prices was assumed, however it’s been assumed that after 2025 the price level will remain the same as this year (in fixed prices);

  • Changes in the Polish market model aimed to introduce the capacity market or other incentive mechanisms for production capacity have not been taken into account. The forecast electricity prices take into account the market impact of the new principles governing Operational Power Reserve application and settlements, implemented by PSE S.A. effective from 2014;

  • Emission limits for generating electricity specified in the regulation of the Ministry of Economy, adjusted by capital expenditure incurred and the limits for heat generation compliant with the regulation of the Council of Ministers, adjusted by the level of operations, i.e. generation of heat;

  • The adopted CO2 emission allowance price path for the years 2016-2025. An over twofold rise of the market price is assumed by 2025 with 2025 prices thereafter (fixed);

  • Green, red and yellow energy production volumes depending on the production capacity, along with the price path for individual energy certificates. A rise of ca. 9% is assumed for renewable energy prices by 2020 with a more dynamic growth rate by 2025 and 2025 prices thereafter (fixed);

  • Limited support periods for green energy have been assumed in accordance with the Act on Renewable Energy Sources, which provides for new support mechanisms for renewable energy. The support period has been limited to 15 years as from the date of the first supply of electricity qualifying for an energy certificate to the distribution network. At the same time, hydropower plants with installed capacity of more than 5 MW do not qualify for support;

  • Regulated revenue generated by distribution companies, ensuring coverage of reasonable costs and a reasonable level of return on capital. The return on capital is conditional on the Regulatory Asset Value;

  • The adopted electricity retail price path based on the wholesale price of black energy, taking into account the costs of excise duty, the obligation to surrender energy certificates as well as an appropriate level of margin;

  • Sales volumes taking into account GDP growth and increased market competition;

  • Tariff revenue generated by heat companies, ensuring coverage of reasonable costs and a reasonable level of return on capital;

  • Maintenance of the production capacity of the existing non-current assets as a result of replacement investments;

  • The level of the weighted average cost of capital (WACC) during the projection period, as used in the calculations, ranges from 7.20% - 9.05% in nominal terms before tax.


The impairment test of assets carried out as at 31 December 2015 indicated that an additional impairment loss of PLN 3 410 726 thousand should be recognized for a portion of assets in the Generation segment. The recoverable amount for this group of assets corresponds to the value in use. Impairment loss has been charged to cost of sales, and was related to the following cash-generating units:

 

 

 CGU Company WACC Recoverable amount Impairment loss
recognized
Year ended
31 December 2015
Year ended
31 December 2014
Elektrownia Jaworzno II TAURON
Wytwarzanie S.A.
7.69% 8.25% 431 771 323 765
Elektrownia Jaworzno III 564 698 893 440
Elektrownia Łaziska 288 017 837 253
Elektrownia Siersza 239 350 555 362
Elektrownia Stalowa Wola (7 570) 194 253
Zakład Wytwórczy Bielsko Biała EC 1 TAURON
Ciepło Sp. z o.o.
7.61% 7.86% 374 966 213 204
Zakład Wytwórczy Bielsko Biała EC 2 (411) 153 446
Zakład Wytwórczy Tychy 575 881 240 003
Total         3 410 726

 



 

Results of the sensitivity analysis carried out for individual CGU have indicated that changes in electricity prices and in the weighted average cost of capital have the most significant impact on the value in use of tested assets. The impact of changes in the prices of hard coal and CO2 emission allowances on the measurement is lower. Below please find estimated changes in the impairment losses on assets in the Generation segment as at 31 December 2015, resulting from modification of key assumptions.

 

Parameter Change Impact on impairment loss
in PLN millions
Increase of impairment loss Decrease of impairment loss
Change of electricity prices in the entire forecast period 1% 200
-1% 190
Change of WACC (net) +0.1 p.p. 30
-0.1 p.p. 30
Change of CO2 emission allowances prices in the entire forecast period 1% 40
-1% 40
Change of coal prices in the entire forecast period 1% 80
-1% 80

 



 

 

 

 

 

 

 

 

 

 

 
24 882 817 24 850 942
Goodwill 19

19. Goodwill

Year ended
31 December 2015
Year ended
31 December 2015
Opening balance 195 155 247 057
Impairment loss (154 998)
Reclassification to/from disposal group classified as held for sale 51 902 (51 902)
Closing balance, of which operating segments: 92 059 195 155
Mining 13 973 13 973
Distribution 25 602 25 602
Generation 52 484 155 580

 



 

 

As at 31 December 2015, goodwill of PLN 51 902 thousand regarding the Generation segment, allocated to CGU related to electricity generation in renewable sources has been reclassified from a disposal group since wind-powered assets did not fulfil the requirements of IFRS 5 as at that date and were no longer classified as a disposal group held for sale, as described in detail in Note 30 hereto.

Impairment tests

As at 31 December 2015, an impairment test of the carrying amount of goodwill was performed for the net assets increased by goodwill for individual operating segments, except for the Generation segment, for which impairment tests were conducted individually for each company. In previous periods the test was carried out for operational segments. The approach change results from the fact that in 2015 Heat and Renewable Sources of Energy were no longer distinguished as separate operating segment, as discussed in detail in Note 10 to these consolidated financial statements and the resulting need to ensure comparability of goodwill impairment test approaches adopted in previous periods to TAURON Ciepło Sp. z o.o. and TAURON Ekoenergia Sp. z o.o.

The recoverable amount in each company was determined based on the value in use.

The test was performed based on the present value of estimated operating cash flows. The calculations were based on detailed projections for the period from 2016 to 2025 and the estimated residual value, for the generating units projections cover the entire period of its functioning. Reliance on projections covering a period longer than 5 years results mainly from the fact that investment processes in the power industry are time-consuming. The macroeconomic and sector assumptions serving as the basis for projections are updated as frequently as any indications for their modification are observed on the market. Projections also take into account changes in the legal environment known as at the date of the test.

The values determined reflect the past experience and are consistent with information from external sources.

The discount rate used for calculation reflects the weighted average cost of capital (WACC), taking into account the risk-free rate determined by reference to the yield on 10-year treasury bonds (3.22%) and the risk premium for operations appropriate for the power industry (6%). The growth rate used for extrapolation of projected cash flows beyond the detailed planning period is at the level of 2.5% and it corresponds to the estimated long-term inflation rate.

The key assumptions affecting the estimated value in use and the discount rates adopted for individual companies are:

 

 

Goodwill in the segment (company) Key assumptions Discount rate
(before tax)
Year ended
31 December 2015
Year ended
31 December 2014
Mining • The adopted price path of power coal, other coal sizes and gaseous fuels. By 2025 an increase in prices of coal of approx. 5% has been assumed,  and the 2025 level thereafter (fixed prices);

• The adopted retail price path of electricity based on the wholesale price of black energy including excise costs, cost of energy certificates surrender and a relevant markup;

• Maintaining generation capacity of the existing non-current assets as a result of replacement investments.

9.05% 10.03%
Distribution • Regulated revenue generated by distribution companies, ensuring coverage of reasonable costs and a reasonable level of return on capital. The return level depends on the so-called Regulatory Value of Assets;

• Maintenance of the electricity distribution capacity of the existing non-current assets as a result of replacement investments.

7.50% 8.26%
Generation (TAURON
Ekoenergia
Sp. z o.o.)
• Green, red and yellow energy production volumes depending on the production capacity, along with the price path for individual energy certificates. A rise of approx. 9% in prices of electricity from renewable sources has been assumed by 2020; a more rapid growth has been assumed by 2025, with 2025 prices thereafter (fixed);

• For green energy, limited support periods have been included, in accordance with the provisions of the Act on renewable energy sources determining new mechanisms of supporting generation of electricity from renewable sources. The support period has been limited to 15 years as from the date of the first supply of electricity qualifying for an energy certificate to the distribution network. At the same time, hydropower plants with installed capacity exceeding 5 MW have been excluded from the support.

• Maintaining generation capacity using the existing non-current assets as a result of replacement investments.

8.39% (for hydropower plants);
8.14% – 8.90% (for wind power plants)
9.10% (for hydropower plants);
8.51% – 9.25% (for wind power plants)
Generation (TAURON
Ciepło
Sp. z o.o.)
• Tariff revenue generated by heat companies, ensuring coverage of reasonable costs and a reasonable level of return on capital;

• The adopted electricity wholesale price path for the years 2016-2025, taking into account such factors as the effect of the balance of the market supply and demand for electricity, costs of fuel as well as costs of acquiring CO2 emission allowances; A rise of ca. 22% is assumed by 2020 with a more dynamic growth rate by 2025 and 2025 prices thereafter (fixed);

• Generation volumes of green, red and yellow energy arising from capacity along with the price path for individual energy certificates.

•  Emission limits for generating electricity and heat in line with regulations of the Council of Ministers.

• The price path for CO2 emission allowances adopted for 2016-2025.  An over twofold rise of the market price is assumed by 2025 with 2025 prices thereafter (fixed);

• Maintaining generation, distribution and sales of heat capacity of the existing non-current assets as a result of replacement investments.

7.61% (heat and electricity generation);
7.82% (heat transmission and distribution)
7.86% (heat and electricity generation);
7.91% (heat transmission and distribution)


 

The assumptions were also used to estimate the value in use of other intangible assets.

Impairment test carried out as at 31 December 2015 indicated impairment of the carrying amount of goodwill allocated to the Generation segment (TAURON Ciepło Sp. z o.o.). As a result, the Group recognized an impairment loss on goodwill of PLN 154 998 thousand. The impairment loss has been charged to cost of sales.

 

CGU Company WACC Recoverable
amount
Impairment loss
recognized
Year ended
31 December 2015
Year ended
31 December 2014
Generation TAURON Ciepło
Sp. z o.o.
7.61%-7.82% 7.86%-7.91% 2 436 239 154 998


 

The recognition of the impairment loss resulted from long-lasting unfavorable market conditions for power manufacturers and the resulting conservative power price forecasts for the future.

Results of the sensitivity analysis carried out for individual CGU have indicated that changes in electricity prices and in the weighted average cost of capital have the most significant impact on the value in use of tested assets.

 

The sensitivity analysis was carried out for the carrying amounts of the assets increased by the goodwill of TAURON Ciepło Sp. z o.o. in the Generation segment. No significant amounts of goodwill have been detected in other segments.

  • Sensitivity to gross WACC changes


The recoverable amounts of assets increased by the goodwill of TAURON Ciepło Sp. z o.o. reaches the carrying amount with the discount rate changing by approx. -15% (-1.2 p.p.)




  • Sensitivity to changes in wholesale electricity prices


The recoverable amounts of assets increased by the goodwill of TAURON Ciepło Sp. z o.o. reaches the carrying amount with the changes in electricity prices by approx. +9%.


 
92 059 195 155
Energy certificates and emission allowances for surrender 20.1

20.1. Non-current energy certificates and gas emission allowances

Year ended 31 December 2015

 

Energy certificates Greenhouse gas
emission allowances
Total
Opening balance 207 397 265 103 472 500
Direct purchase 85 240 129 548 214 788
Reclassification (59 664) (116 784) (176 448)
Closing balance 232 973 277 867 510 840

 



 

Year ended 31 December 2014

 

Energy certificates Greenhouse gas
emission allowances
Total
Opening balance 20 250 34 528 54 778
Direct purchase 203 330 226 566 429 896
Reclassification (16 183) 4 009 (12 174)
Closing balance 207 397 265 103 472 500

 

510 840 472 500
Other intangible assets 21

21. Other intangible assets

Year ended 31 December 2015

 

Development
expenses
Perpetual usufruct Software, concessions,
patents, licenses and
similar items
Other intangible assets Intangible assets not
made available for use
Intangible assets,
total
COST
Opening balance 4 670 789 670 475 291 153 770 53 436 1 476 837
Direct purchase 80 117 065 117 145
Transfer of intangible assets
not made available for use
1 123 89 290 33 451 (123 864)
Sale, disposal (2 132) (8 072) (10 204)
Liquidation (256) (1) (5 925) (433) (6 615)
Other movements 1 276 (2 156) 200 1 216 5 248 5 784
Foreign exchange differences
from translation of foreign entities
28 28
Closing balance 5 690 786 504 550 892 188 004 51 885 1 582 975
ACCUMULATED AMORTIZATION            
Opening balance (3 822) (15 297) (289 949) (35 635) (344 703)
Amortization for the period (474) (53 959) (13 922) (68 355)
Increase of impairment (853) (383) (2 845) (259) (4 340)
Decrease of impairment 2 616 2 616
Sale, disposal 8 072 8 072
Liquidation 256 5 916 430 6 602
Other movements (75) (5) (80)
Foreign exchange differences
from translation of foreign entities
(22) (22)
Closing balance (4 893) (13 064) (332 862) (49 391) (400 210)
NET CARRYING AMOUNT AT THE BEGINNING OF THE PERIOD 848 774 373 185 342 118 135 53 436 1 132 134
NET CARRYING AMOUNT AT THE END OF THE PERIOD 797 773 440 218 030 138 613 51 885 1 182 765

 



 

 

Year ended 31 December 2014

 

Development
expenses
Perpetual
usufruct
Software, concessions,
patents, licenses and
similar items
Other intangible assets Intangible assets not
made available for use
Intangible assets,
total
COST
Opening balance 4 030 810 712 379 236 109 979 84 633 1 388 590
Direct purchase 175 118 198 118 373
Transfer of intangible assets
not made available for use
5 452 105 783 43 677 (154 912)
Sale, disposal (1 389) (1 389)
Liquidation (77) (7 504) (240) (7 821)
Contribution (22 178) (3 704) (25 882)
Other movements 640 (2 850) 1 293 354 5 515 4 952
Foreign exchange differences
from translation of foreign entities
12 2 14
Closing balance 4 670 789 670 475 291 153 770 53 436 1 476 837
ACCUMULATED AMORTIZATION            
Opening balance (3 442) (14 449) (242 012) (23 460) (283 363)
Amortization for the period (380) (56 304) (12 411) (69 095)
Increase of impairment (3 083) (88) (3 171)
Decrease of impairment 2 235 116 2 351
Liquidation 7 454 236 7 690
Contribution 2 051 2 051
Other movements (1 158) (1 158)
Foreign exchange differences
from translation of foreign entities
(8) (8)
Closing balance (3 822) (15 297) (289 949) (35 635) (344 703)
NET CARRYING AMOUNT AT THE BEGINNING OF THE PERIOD 588 796 263 137 224 86 519 84 633 1 105 227
NET CARRYING AMOUNT AT THE END OF THE PERIOD 848 774 373 185 342 118 135 53 436 1 132 134

 



 

 
1 182 765 1 132 134
Investments in joint ventures 22

22. Investments in joint ventures

 Elektrociepłownia Stalowa Wola S.A. Elektrownia Blachownia Nowa
Sp. z o.o.
TAMEH HOLDING
Sp. z o.o. *
As at
31 December 2015
Non-current assets 1 085 917 1 295 743 2 381 660
Current assets 12 387 37 008 341 716 391 111
Non-current liabilities (-) (965 514) (378 507) (1 344 021)
Current liabilities (-) (125 610) (85) (377 432) (503 127)
Total net assets 7 180 36 923 881 520 925 623
Share in net assets 3 590 18 461 440 760 462 811
Investment in joint ventures 18 461 399 666 418 127
Share in revenue of joint ventures 18 490 545 175 545 683
Share in profit/(loss) of joint
ventures
(1 474) (13 644) 23 051 7 933
Share in other comprehensive income of joint ventures (387) (387)

 


*The data presented concern the TAMEH HOLDING Sp. z o.o. capital group. The value of the interest held in TAMEH HOLDING Sp. z o.o. differs from the value of net assets attributable to the Group, because the cost of shares in TAMEH HOLDING Sp. z o.o. was calculated taking into account the fair value of the share contributed to the joint venture by companies from the ArcelorMittal Capital Group.

Elektrociepłownia Stalowa Wola
S.A.
Elektrownia Blachownia Nowa
Sp. z o.o.
TAMEH HOLDING
Sp. z o.o. *
As at
31 December 2014
Non-current assets 973 128 27 351 985 875 1 986 354
Current assets 53 283 36 920 319 756 409 959
Non-current liabilities (-) (900 635) (34 085) (934 720)
Current liabilities (-) (92 570) (59) (433 758) (526 387)
Total net assets 33 206 64 212 837 788 935 206
Share in net assets 16 603 32 106 418 894 467 603
Elimination of transactions with Group companies (11 127) (11 127)
Investment in joint ventures 5 476 32 106 377 002 414 584
Share in revenue of joint ventures 54 490 17 446 17 990
Share in profit/(loss) of joint
ventures
(2 183) 42 1 205 (936)

 



 
*The data presented concern the TAMEH HOLDING Sp. z o.o. capital group

 

Elektrociepłownia Stalowa Wola S.A.        

Elektrociepłownia Stalowa Wola S.A. is a special purpose vehicle established in 2010 on the initiative of TAURON Polska Energia S.A. and PGNiG S.A. The entity was registered to carry out an investment project, i.e. construction of a gas and steam unit fuelled with natural gas in Stalowa Wola with the gross maximum electrical capacity of 400 MWe and the net heat capability of 240 MWt.

TAURON Polska Energia S.A. holds an indirect 50% interest in the share capital of this company and in its governing body through TAURON Wytwarzanie S.A. Since as at 31 December 2015 the existing share in losses of a joint venture and the adjustment of performance on top-down transactions concluded between the Group companies and the joint venture exceeded the value of interests held in this joint venture, the Company has ceased recognizing its interests in further losses generated by the joint venture.

Additionally, the Company holds receivables arising from loans originated to Elektrociepłownia Stalowa Wola S.A.
in the amount of PLN 223 909 thousand, as described in detail in Note 23 and provisions for onerous contracts resulting from commercial contracts concluded by the Company in the amount of PLN 182 877 thousand (Note 36).

Elektrownia Blachownia Nowa Sp. z o.o.

On 5 September 2012 TAURON Wytwarzanie S.A., subsidiary, and KGHM Polska Miedź S.A. established a special purpose vehicle named Elektrownia Blachownia Nowa Sp. z o.o. with the registered address in Kędzierzyn Koźle. The Company was set up to perform a comprehensive investment project including preparation, construction and operation of a combined cycle gas and steam unit with the capacity of ca. 850 MWe on the land of TAURON Wytwarzanie S.A. – Oddział Elektrownia Blachownia.

TAURON Polska Energia S.A. holds an indirect 50% interest in the share capital of this company and in its governing body through TAURON Wytwarzanie S.A.

On 30 December 2013 TAURON Polska Energia S.A., KGHM Polska Miedź S.A. and TAURON Wytwarzanie S.A. concluded an agreement, based on which the construction of gas and steam power unit in Elektrownia Blachownia Nowa Sp. z o.o. has been suspended. The decision resulted from the current situation in the electricity and gas market entailing higher investment risk, which made the entities review and optimise the project.

The parties undertook to ensure further business operations of Elektrownia Blachownia Nowa Sp. z o.o., securing deliverables provided thus far, in particular updating project documentation and ensuring on-going monitoring of the energy market and regulatory environment in view of the possibility to restart project performance as soon as possible. The parties agreed that the decision to recommence the project will be adopted in the form of a separate agreement which is expected to be concluded by 31 December 2016.

As at 31 December 2015, following the project analysis, including the probability of its non-performance, recognition of an impartment loss on property plant and equipment has been deemed reasonable based on project documentation. As a result of recognizing the impairment loss, the entity’s profit/loss has been charged with PLN 27 351 thousand.

TAMEH HOLDING Sp. z o.o. and subsidiaries

In 2014 the TAURON Group entered into an agreement with the ArcelorMittal Group. The shareholders agreement states that TAMEH HOLDING Sp. z o.o. shall carry out investment and operational projects related to industrial power sector. The Agreement was concluded for the period of 15 years with possible term extension. Following the transactions concluded last year, both capital groups have held 50% of shares in TAMEH HOLDING Sp. z o.o. each.

TAMEH HOLDING Sp. z o.o. holds 100% of shares in TAMEH POLSKA Sp. z o.o. composed of: Zakład Wytwarzania Nowa and Elektrownia Blachownia contributed in kind by the TAURON Group and Elektrociepłownia in Kraków contributed in kind by the ArcelorMittal Group. Moreover, TAMEH HOLDING Sp. z o.o. holds 100% of shares in TAMEH Czech s.r.o.
418 127 414 584
Loans granted to joint ventures 23

23. Loans granted to joint ventures

As at 31 December 2015 As at 31 December 2014
Principal Interest Principal Interest
Loans originated to EC Stalowa Wola S.A., including: 194 950 28 959 182 850 21 343
Subordinated loan 177 000 28 922 177 000 21 331
Loan for debt repayment 15 850 31
Other loans 2 100 6 5 850 12
Total 194 950 28 959 182 850 21 343
Non-current 192 850 28 953 177 000 21 331
Current 2 100 6 5 850 12

 



 

Under the agreements of 20 June 2012 among PGNiG S.A., TAURON Polska Energia S.A. and Elektrociepłownia Stalowa Wola S.A., TAURON Polska Energia S.A. granted a subordinated loan and a VAT loan to Elektrociepłownia Stalowa Wola S.A. with a view to satisfying the necessary conditions for provision of funding to Elektrociepłownia Stalowa Wola S.A. by the European Bank for Reconstruction and Development and the European Investment Bank. As at the end of the reporting period, the amount disbursed under the subordinated loan agreement was PLN 177 000 thousand, i.e. the maximum contractual amount. The loan with interest due is to be finally repaid no later than by the end of 2032.

On 14 December 2015 the Company entered into a loan agreement with Elektrociepłownia Stalowa Wola S.A., under which the Company extended a loan to Elektrociepłownia Stalowa Wola S.A. with the maximum amount of PLN 15 850 thousand for repayment of the first instalment with accrued interest of credit facilities granted to the borrower by the European Investment Bank, the European Bank for Reconstruction and Development and Bank Polska Kasa Opieki S.A. Subject to the provisions of the subordination agreement, the borrower has agreed to make one-off repayment of the principal amount and interest accrued until 31 December 2027.

On 25 November 2015 the Company entered into a loan agreement with Elektrociepłownia Stalowa Wola S.A., under which the Company has been obliged to extend a short-term loan of PLN 2 600 thousand to Elektrociepłownia Stalowa Wola S.A. for financing current operations of the borrower (as at the balance sheet date the total of PLN 2 100 thousand was used).

In the year ended 31 December 2015, the interest income due to loans granted reached PLN 7 671 thousand. The Group presented interest income due to loans granted of Elektrociepłownia Stalowa Wola S.A. in the portion corresponding to unrelated investors’ interests in the joint venture in the consolidated financial statements.
221 803 198 331
Other financial assets 24

24. Other financial assets

As at 31 December 2015 As at 31 December 2014
Shares 136 488 112 396
Bonds, T-bills and other debt securities 1 890 23 622
Deposits 39 724 35 823
Bid bonds, deposits and collateral transferred 54 106 53 738
Other long-term receivables 4 669 7 000
Other 8 672 26 121
Total 245 549 258 700
Non-current 211 215 179 052
Current 34 334 79 648

 



 

 

Purchase of shares in PGE EJ 1 Sp. z o.o.

On 15 April 2015 the Company, Polska Grupa Energetyczna S.A., KGHM Polska Miedź S.A. and ENEA S.A. concluded an agreement for acquisition of shares in PGE EJ 1 Sp. z o.o., a special purpose vehicle, managing the preparation and performance of an investment project covering construction and operation of the first Polish nuclear power plant with a capacity of ca. 3,000 MWe (“The Project”).The Company, KGHM Polska Miedź S.A., ENEA S.A. acquired 10% of shares in PGE EJ 1 Sp. z o.o. each (the total of 30% of shares) from PGE Polska Grupa Energetyczna S.A. The price paid by the Company for the shares in question was PLN 16 046 thousand.

In accordance with the Shareholders’ Agreement dated 3 September 2014 the parties will jointly finance the initial phase of the Project proportionally to the number of shares held. The initial phase will cover determining project elements, such as selecting potential partners, including the strategic partner, technology providers, EPC (Engineering, Procurement, Construction) contractors, nuclear fuel providers, acquiring funds for Project financing and ensuring appropriate organization and competences of PGE EJ 1 Sp. z o.o. to act as a future nuclear plant operator responsible for its security and efficiency.

On 29 July 2015 the Extraordinary Shareholders' Meeting of PGE EJ 1 Sp. z o.o. adopted a resolution to increase the issued capital of the entity from PLN 205 860 thousand to PLN 275 859 thousand. TAURON Polska Energia S.A. took up 49 645 new shares with the total face value of PLN 7 000 thousand.

The timeframe of further investments in PGE EJ 1 Sp. z o.o. by its shareholders will be determined in subsequent reporting periods.
211 215 179 052
Other non-financial assets 25 550 375 657 943
Deferred tax asset 16.3

16.3. Deferred income tax

 As at
31 December 2015
As at
31 December 2014
– difference between tax base and carrying amount of fixed and intangible
assets
1 490 408 2 037 038
– difference between tax base and carrying amount of financial assets 29 609 21 505
– different timing of recognition of sales revenue for tax purposes 69 064 59 105
– difference between tax base and carrying amount of energy certificates 48 817 47 490
– other 39 889 22 813
Deferred tax liability 1 677 787 2 187 951
– provisions 685 405 667 464
– power infrastructure received free of charge and received connection fees 57 071 62 177
– difference between tax base and carrying amount of financial assets and financial liabilities 49 471 48 003
– valuation of hedging instruments 18 139 34 377
– different timing of recognition of cost of sales for tax purposes 58 333 38 632
– tax losses 12 758 12 758
– other 55 618 29 491
Deferred tax assets 936 795 892 902
After setting off balances at the level of individual Group companies, deferred tax for the Group is presented as:
Deferred tax asset 54 184 62 108
Deferred tax liability (795 176) (1 357 157)

 



 

 

Change in deferred tax liability

 Year ended
31 December 2015
 Year ended
31 December 2014
Opening balance 2 187 951 2 175 471
Change in the balance:
 corresponding to profit/(loss) (529 019) 42 968
contribution (12 397)
reclassification to/from disposal group classified as held for sale 18 910 (18 910)
other changes (55) 819
Closing balance 1 677 787 2 187 951


 

 

Change in deferred tax asset

 Year ended
31 December 2015
 Year ended
31 December 2014
Opening balance 892 902 882 453
Change in the balance:
corresponding to profit/(loss) 60 792 (31 347)
corresponding to other comprehensive income (28 587) 68 172
contribution (16 627)
reclassification to/from disposal group classified as held for sale 11 585 (11 585)
other changes 103 1 836
Closing balance 936 795 892 902

 



Deferred tax asset

Based on the forecasts prepared for the Tax Capital Group (TCG), according to which taxable income will be earned in 2016 and in subsequent years, it has been concluded that there is no risk that the deferred tax asset recognized in these consolidated financial statements will not be realized.

Deferred tax liability

A decrease in deferred tax liability in correspondence with profit or loss is related mostly to impairment losses on property, plant and equipment recognized by the Generation segment companies, as described in detail in Note 18 hereof.

54 184 62 108
28 124 185 28 162 749
Current assets
Energy certificates and emission allowances for surrender 20.2

20.2. Current energy certificates and gas emission allowances

Year ended 31 December 2015

 

Energy certificates Greenhouse gas
emission allowances
Total
Opening balance 724 918 8 130 733 048
Direct purchase 411 854 33 643 445 497
Generated internally 235 484 235 484
Cancellation (781 711) (5 941) (787 652)
Reclassification 61 760 117 251 179 011
Closing balance 652 305 153 083 805 388

 



 

 

Year ended 31 December 2014

 

Energy certificates Greenhouse gas
emission allowances
Total
Opening balance 695 427 461 123 1 156 550
Direct purchase 504 479 22 794 527 273
Generated internally 319 674 319 674
Cancellation (838 186) (463 362) (1 301 548)
Reclassification 43 524 (12 425) 31 099
Closing balance 724 918 8 130 733 048

 



 
805 388 733 048
Inventories 26

26. Inventories

As at 31 December 2015 As at 31 December 2014
Historical cost
Raw materials 273 523 285 135
Semi-finished goods and work-in-progress 155 586 239 426
Finished goods 5 510 1 600
Goods for resale 4 053 707
Energy certificates 1 319 20 055
Emission allowances 3 424 1 761
Total 443 415 548 684
Write-downs to net realisable value
Raw materials (10 097) (7 305)
Finished goods (4) (12)
Goods for resale (35) (21)
Energy certificates (13 750)
Total (10 136) (21 088)
Net realisable value
Raw materials 263 426 277 830
Semi-finished goods and work-in-progress 155 586 239 426
Finished goods 5 506 1 588
Goods for resale 4 018 686
Energy certificates 1 319 6 305
Emission allowances 3 424 1 761
Total 433 279 527 596
Movement in write-downs to net realisable value
Opening balance (21 088) (50 761)
Recognition (3 220) (21 441)
Reversal 10 392 5 633
Utilization 3 780 45 763
Other (282)
Closing balance (10 136) (21 088)

 

433 279 527 596
Receivables from clients 27

27. Receivables from clients

Current receivables from clients as at 31 December 2015 and 31 December 2014 have been presented in the table below.

As at 31 December 2015 As at 31 December 2014
Value of items before allowance/write-down
Receivables from clients 1 581 863 1 738 000
Receivables from clients – additional assessment of revenue from sales
of electricity and distribution services
298 805 232 541
Receivables claimed at court 227 739 228 011
Total 2 108 407 2 198 552
Allowance/write-down
Receivables from clients (74 828) (73 809)
Receivables claimed at court (203 546) (207 683)
Total (278 374) (281 492)
Value of item net of allowance (carrying amount)
Receivables from clients 1 507 035 1 664 191
Receivables from clients – additional assessment of revenue from sales
of electricity and distribution services
298 805 232 541
Receivables claimed at court 24 193 20 328
Total 1 830 033 1 917 060

 



 

 

Detailed information on allowances for receivables from clients and other financial receivables has been presented in Note 49.1.1 hereto.

 

 
1 830 033 1 917 060
Receivables arising from taxes and charges 28

28. Receivables from taxes and charges

 As at 31 December 2015  As at 31 December 2014
Corporate Income Tax receivables 909 26 489
VAT receivables 205 713 106 629
Excise duty receivables 20 314 22 138
Other 1 409 4 188
Total 228 345 159 444

 

228 345 159 444
Other financial assets 24

24. Other financial assets

As at 31 December 2015 As at 31 December 2014
Shares 136 488 112 396
Bonds, T-bills and other debt securities 1 890 23 622
Deposits 39 724 35 823
Bid bonds, deposits and collateral transferred 54 106 53 738
Other long-term receivables 4 669 7 000
Other 8 672 26 121
Total 245 549 258 700
Non-current 211 215 179 052
Current 34 334 79 648

 



 

 

Purchase of shares in PGE EJ 1 Sp. z o.o.

On 15 April 2015 the Company, Polska Grupa Energetyczna S.A., KGHM Polska Miedź S.A. and ENEA S.A. concluded an agreement for acquisition of shares in PGE EJ 1 Sp. z o.o., a special purpose vehicle, managing the preparation and performance of an investment project covering construction and operation of the first Polish nuclear power plant with a capacity of ca. 3,000 MWe (“The Project”).The Company, KGHM Polska Miedź S.A., ENEA S.A. acquired 10% of shares in PGE EJ 1 Sp. z o.o. each (the total of 30% of shares) from PGE Polska Grupa Energetyczna S.A. The price paid by the Company for the shares in question was PLN 16 046 thousand.

In accordance with the Shareholders’ Agreement dated 3 September 2014 the parties will jointly finance the initial phase of the Project proportionally to the number of shares held. The initial phase will cover determining project elements, such as selecting potential partners, including the strategic partner, technology providers, EPC (Engineering, Procurement, Construction) contractors, nuclear fuel providers, acquiring funds for Project financing and ensuring appropriate organization and competences of PGE EJ 1 Sp. z o.o. to act as a future nuclear plant operator responsible for its security and efficiency.

On 29 July 2015 the Extraordinary Shareholders' Meeting of PGE EJ 1 Sp. z o.o. adopted a resolution to increase the issued capital of the entity from PLN 205 860 thousand to PLN 275 859 thousand. TAURON Polska Energia S.A. took up 49 645 new shares with the total face value of PLN 7 000 thousand.

The timeframe of further investments in PGE EJ 1 Sp. z o.o. by its shareholders will be determined in subsequent reporting periods.
34 334 79 648
Other non-financial assets 25 233 059 221 034
Cash and cash equivalents 29

29. Cash and cash equivalents

As at 31 December 2015 As at 31 December 2014
Cash at bank and in hand 353 428 410 082
Short-term deposits (up to 3 months) 10 722 1 009 991
Other 762 836
Total cash and cash equivalents presented in the statement
of financial position, of which:
364 912 1 420 909
restricted cash 206 254 116 568
Bank overdraft (10 206) (11 918)
Cash pool (29 377) (4 481)
Foreign exchange 2 386 3 561
Total cash and cash equivalents presented
in the statement of cash flows
327 715 1 408 071


 

Restricted cash consists mainly of: cash on the account used for settling electricity trading on the Polish Power Exchange, i.e. Towarowa Giełda Energii S.A., of PLN 55 291 thousand held by companies from the Sales segment and cash on a bank account for bid bonds and deposits of PLN 127 567 thousand.
364 912 1 420 909
Non-current assets and assets of a disposal group classified
as held for sale
30

30. Non-current assets and a disposal group classified as held for sale

As at 31 December 2015 As at 31 December 2014
Disposal group 1 320 932
Other non-current assets 17 898 16 773
Non-current assets and assets of a disposal group classified as held for sale 17 898 1 337 705
Liabilities of a disposal group classified as held for sale 84 970


 

As at 31 December 2014 a disposal group included the assets and liabilities of four existing wind farms classified as held for sale in relation to the followed off-balance sheet asset financing policy aimed at selling interest in the existing wind farms to an external investor. The original idea was to sell (with the buy-back option) a majority interest in the existing wind farms to a financial investor and to refinance the existing debt allocated to the wind farms using bank debt when the Company becomes a minority shareholder. Following a failure to reach an agreement on certain conditions regarding the transaction to sell a package of shares in the existing wind farms, the Company has discontinued negotiations with a potential investor. The TAURON Group will continue activities aimed at off-balance sheet funding of the development of wind power generation in the Group. Under current market conditions, works are continued to reach a solution involving commencement of cooperation with an industrial investor. With this respect, on 2 July 2015 the Company and ENEA S.A. concluded a letter of intent concerning partnership in the implementation of a common strategy on the optimal increase in the use of renewable sources of energy and financing acquisition of wind farm assets.

In light of the above, as at 31 December 2015, an analysis was carried out that indicated that the disposal group did not fulfil all criteria allowing its classification as held for sale in accordance with IFRS 5 as at the end of the reporting period.

Following the discontinuation of the classification of the disposal group as held for sale, property, plant and equipment of wind farms were measured at carrying amounts as at the date preceding the classification of the disposal group as held for sale, adjusted by depreciation calculated as of the date of its classification as held for sale, which resulted in a charge on the Group's net profit/loss of PLN 56 227 thousand.
17 898 1 337 705
3 947 248 6 396 444
  
TOTAL ASSETS   32 071 433 34 559 193
 
EQUITY AND LIABILITIES
Equity attributable to equity holders of the parent
Issued capital 31.1

31.1. Issued capital

Issued capital as at 31 December 2015

Class/
issue
Type of shares Number of shares Nominal value of one share
(in PLN)
Value of class/issue at nominal value Method of payment
AA bearer shares 1 589 438 762 5 7 947 194 cash/in-kind contribution
BB registered shares 163 110 632 5 815 553 in-kind contribution
Total 1 752 549 394   8 762 747  

 



 

As at 31 December 2015, the value of issued capital, the number of shares and the par value of shares did not change compared to 31 December 2014.

Shareholding structure as at 31 December 2015 (to the best of the Company’s knowledge)

Shareholder Number of shares Value of shares Percentage of share capital Percentage of total vote
State Treasury 526 848 384 2 634 242 30.06% 30.06%
KGHM Polska Miedź S.A. 182 110 566 910 553 10.39% 10.39%
Nationale – Nederlanden Otwarty Fundusz Emerytalny 88 742 929 443 715 5.06% 5.06%
Other shareholders 954 847 515 4 774 237 54.49% 54.49%
Total 1 752 549 394 8 762 747 100.00% 100.00%
8 762 747 8 762 747
Reserve capital 31.3

31.3. Reserve capital

In the year ended 31 December 2015, the reserve capital was increased by PLN 883 561 thousand. Pursuant to a resolution of the Ordinary General Shareholders’ Meeting of 23 April 2015 on distribution of profit for 2014, the amount in question was allocated to reserve capital.

11 277 247 10 393 686
Revaluation reserve from valuation of hedging instruments 31.5

31.5. Revaluation reserve from valuation of hedging instruments

Year ended
31 December 2015
Year ended
31 December 2014
Opening balance (143 019) (126 651)
Remeasurement of hedging instruments 85 466 (21 171)
Remeasurement of hedging instruments charged to profit or loss 466 964
Deferred income tax (16 327) 3 839
Closing balance (73 414) (143 019)

 



 

As at 31 December 2015 the Company recognized PLN (73 414) thousand of revaluation reserve from valuation of hedging instruments. It represents a liability arising from measurement of interest rate swaps as at the end of the reporting period, totaling to PLN 95 467 thousand, adjusted by a portion of measurement relating to interest accrued on bonds as at the end of the reporting period, including deferred tax.

The profit/loss for the period was charged with PLN 89 380 thousand, where PLN 88 914 thousand was the amount paid in respect of hedges used in relation to closed interest periods and PLN 466 thousand resulted from remeasurement of instruments related to interest on bonds accrued as at the end of the reporting period. The aforementioned costs of hedging IRS transactions increased financial expenses arising from interest on bonds issued in the statement of comprehensive income.
(73 414) (143 019)
Foreign exchange differences from translation of foreign entities (791) (1 386)
Retained earnings/(Accumulated losses) (3 947 461) (1 045 580)
16 018 328 17 966 448
    
Non-controlling interests 31.6

31.6. Non-controlling interest

Year ended
31 December 2015
Year ended
31 December 2014
At the beginning of the period 30 116 466 334
Dividends paid by subsidiaries (2 787) (1 163)
Share in actuarial gains/(losses) related to provisions for
post-employment benefits
60 (370)
Acquisition of non-controlling interests by the Group (407 596)
Mandatory squeeze-out (662) (32 567)
Share in subsidiaries’ net profit or loss 3 102 4 667
Change in non-controlling interests due to mergers 811
At the end of the period 29 829 30 116

 



 

As at the reporting date non-controlling interest were held in the Distribution segment companies only.
29 829 30 116
    
Total equity    16 048 157 17 996 564
   
Non-current liabilities
Debt liabilities 33

33. Debt

As at
31 December 2015
As at
31 December 2014
Loans and borrowings 1 411 776 1 232 032
Bonds issued 6 680 433 6 821 830
Finance lease 46 438 59 904
Total 8 138 647 8 113 766
Current 3 214 520 644 991
Non-current 4 924 127 7 468 775
4 924 127 7 468 775
Derivative instruments 34

34. Derivative instruments

As at 31 December 2015 As at 31 December 2014
Charged to profit or loss Charged to other comprehensive income Total Charged to profit or loss Charged to other comprehensive income Total
Assets Liabilities Assets Liabilities
CCIRS (11 368) 3 055 (14 423) 258 1 499 (1 241)
IRS (4 833) (90 634) (95 467) (17 746) (176 567) (194 313)
Commodity forwards/futures 17 2 225 (2 208) (250) 312 (562)
Currency forwards 393 404 (11)
Total derivative instruments, including: 5 684 (112 109) 1 811 (196 116)
Current 5 668 (96 953) 1 811 (102 615)
Non-current 16 (15 156) (93 501)

 



 

The fair value of individual derivative instruments is determined as follows:

Derivative instrument Methodology of determining fair value hierarchy
IRS, CCIRS Based on discounted future cash flows accounting for the difference between the forward price (calculated based on zero-coupon interest rate curve) and the transaction price.
Forward currency contracts Based on discounted future cash flows accounting for the difference between the forward price (calculated based on NBP fixing and the interest rate curve implied by fx swap transactions) and the transaction price.
Commodity forwards and futures The fair value of forwards for acquisition and sale of power and emission allowances and other commodities is based on prices quoted in an active market.


 

Hierarchy of fair value of financial derivative instruments is determined as follows:

Classes of financial instruments As at
31 December 2015
As at
31 December 2014
Level 1 Level 2 Level 1 Level 2
Assets
Commodity – related derivatives 2 225 312
Derivate instruments – CCIRS 3 055 1 499
Derivative instruments – currency 404
Liabilities
Commodity – related derivatives 2 208 562
Currency derivatives 11
Derivate instruments – CCIRS 14 423 1 241
IRS derivatives 95 467 194 313

 



 

Derivative instruments used for hedging – IRS


As at 31 December 2015 the Group concluded hedging transactions subject to specific risk management policy. In March 2012 the Company hedged 80% of interest cash flows related to bonds issued under Tranche C and a portion of Tranche A having entered into 5-year IRS contracts. The aforementioned transaction was concluded due to fluctuations in the projected future cash flows from interest payments resulting from the issue of bonds in PLN with a floating interest rate based on WIBOR 6M. These instruments were subject to hedge accounting.

Derivative instruments measured at fair value through profit or loss (FVTPL)


Derivative instruments CCIRS relate to the Coupon Cross Currency Swap contract entered into by the Company on 24 November 2014, which consisted in a swap of interest payments from the nominal value of EUR 168 000 thousand. In accordance with the contract, the Company pays interest accrued based on a floating interest rate in PLN and receives fixed interest-rate payments in EUR. Hedge accounting principles do not apply to the transaction in question. After the balance sheet date, on 12 February 2016 the transaction in question was closed and on 15 February 2016 it was settled in cash, hence the Company received PLN 5 400 thousand.

 
15 156 93 501
Provisions for employee benefits 35

35. Provisions for employee benefits

As at
31 December 2015
As at
31 December 2014
Provision for post-employment benefits and jubilee bonuses 1 850 375 2 044 405
Provision for employment termination benefits 57 336 62 872
Total 1 907 711 2 107 277
Current 172 505 158 954
Non-current 1 735 206 1 948 323

 

 1 735 206 1 948 323
Provisions for disassembly of fixed assets, land restoration and other provisions 36

36. Provisions for dismantling of fixed assets and restoration of land

Year ended 31 December 2015

Provision for mine decommissioning costs Provision for restoration of land and dismantling and removal of fixed assets Provision for onerous contracts with a jointly-controlled entity Provisions, total
Opening balance 120 704 42 774 163 478
Interest cost (discounting) 2 996 961 3 957
Discount rate adjustment (13 308) (675) (13 983)
Recognition/(reversal), net 1 283 (1 205) 182 877 182 955
Reclassification from liabilities of a disposal group classified as held for sale 59 389 59 389
Closing balance 111 675 101 244 182 877 395 796
Current 905 19 428 20 333
Non-current 111 675 100 339 163 449 375 463
Other provisions, long-term portion 1 909
Total 377 372

 



 

Year ended 31 December 2014

Provision for mine decommissioning costs Provision for restoration of land and dismantling and removal of fixed assets Provisions, total
Opening balance 44 620 96 280 140 900
Interest cost (discounting) 1 785 3 826 5 611
Discount rate adjustment 76 282 24 426 100 708
Recognition/(reversal), net (1 983) (23 422) (25 405)
Reclassification to liabilities of a disposal group classified as held for sale (58 336) (58 336)
Closing balance 120 704 42 774 163 478
Current 871 871
Non-current 120 704 41 903 162 607
Other provisions, long-term portion 2 671
Total 165 278

 

377 372 165 278
Accruals, deferred income and government grants 39

39. Accruals, deferred income and government grants

650 364 662 072
Deferred tax liability 16.3

16.3. Deferred income tax

 As at
31 December 2015
As at
31 December 2014
– difference between tax base and carrying amount of fixed and intangible
assets
1 490 408 2 037 038
– difference between tax base and carrying amount of financial assets 29 609 21 505
– different timing of recognition of sales revenue for tax purposes 69 064 59 105
– difference between tax base and carrying amount of energy certificates 48 817 47 490
– other 39 889 22 813
Deferred tax liability 1 677 787 2 187 951
– provisions 685 405 667 464
– power infrastructure received free of charge and received connection fees 57 071 62 177
– difference between tax base and carrying amount of financial assets and financial liabilities 49 471 48 003
– valuation of hedging instruments 18 139 34 377
– different timing of recognition of cost of sales for tax purposes 58 333 38 632
– tax losses 12 758 12 758
– other 55 618 29 491
Deferred tax assets 936 795 892 902
After setting off balances at the level of individual Group companies, deferred tax for the Group is presented as:
Deferred tax asset 54 184 62 108
Deferred tax liability (795 176) (1 357 157)

 



 

 

Change in deferred tax liability

 Year ended
31 December 2015
 Year ended
31 December 2014
Opening balance 2 187 951 2 175 471
Change in the balance:
 corresponding to profit/(loss) (529 019) 42 968
contribution (12 397)
reclassification to/from disposal group classified as held for sale 18 910 (18 910)
other changes (55) 819
Closing balance 1 677 787 2 187 951


 

 

Change in deferred tax asset

 Year ended
31 December 2015
 Year ended
31 December 2014
Opening balance 892 902 882 453
Change in the balance:
corresponding to profit/(loss) 60 792 (31 347)
corresponding to other comprehensive income (28 587) 68 172
contribution (16 627)
reclassification to/from disposal group classified as held for sale 11 585 (11 585)
other changes 103 1 836
Closing balance 936 795 892 902

 



Deferred tax asset

Based on the forecasts prepared for the Tax Capital Group (TCG), according to which taxable income will be earned in 2016 and in subsequent years, it has been concluded that there is no risk that the deferred tax asset recognized in these consolidated financial statements will not be realized.

Deferred tax liability

A decrease in deferred tax liability in correspondence with profit or loss is related mostly to impairment losses on property, plant and equipment recognized by the Generation segment companies, as described in detail in Note 18 hereof.

 795 176 1 357 157
Other financial liabilities 86 549 48 986
  8 583 950 11 744 092
   
Current liabilities
Debt liabilities 33

33. Debt

As at
31 December 2015
As at
31 December 2014
Loans and borrowings 1 411 776 1 232 032
Bonds issued 6 680 433 6 821 830
Finance lease 46 438 59 904
Total 8 138 647 8 113 766
Current 3 214 520 644 991
Non-current 4 924 127 7 468 775
 3 214 520 644 991
Derivative instruments 34

34. Derivative instruments

As at 31 December 2015 As at 31 December 2014
Charged to profit or loss Charged to other comprehensive income Total Charged to profit or loss Charged to other comprehensive income Total
Assets Liabilities Assets Liabilities
CCIRS (11 368) 3 055 (14 423) 258 1 499 (1 241)
IRS (4 833) (90 634) (95 467) (17 746) (176 567) (194 313)
Commodity forwards/futures 17 2 225 (2 208) (250) 312 (562)
Currency forwards 393 404 (11)
Total derivative instruments, including: 5 684 (112 109) 1 811 (196 116)
Current 5 668 (96 953) 1 811 (102 615)
Non-current 16 (15 156) (93 501)

 



 

The fair value of individual derivative instruments is determined as follows:

Derivative instrument Methodology of determining fair value hierarchy
IRS, CCIRS Based on discounted future cash flows accounting for the difference between the forward price (calculated based on zero-coupon interest rate curve) and the transaction price.
Forward currency contracts Based on discounted future cash flows accounting for the difference between the forward price (calculated based on NBP fixing and the interest rate curve implied by fx swap transactions) and the transaction price.
Commodity forwards and futures The fair value of forwards for acquisition and sale of power and emission allowances and other commodities is based on prices quoted in an active market.


 

Hierarchy of fair value of financial derivative instruments is determined as follows:

Classes of financial instruments As at
31 December 2015
As at
31 December 2014
Level 1 Level 2 Level 1 Level 2
Assets
Commodity – related derivatives 2 225 312
Derivate instruments – CCIRS 3 055 1 499
Derivative instruments – currency 404
Liabilities
Commodity – related derivatives 2 208 562
Currency derivatives 11
Derivate instruments – CCIRS 14 423 1 241
IRS derivatives 95 467 194 313

 



 

Derivative instruments used for hedging – IRS


As at 31 December 2015 the Group concluded hedging transactions subject to specific risk management policy. In March 2012 the Company hedged 80% of interest cash flows related to bonds issued under Tranche C and a portion of Tranche A having entered into 5-year IRS contracts. The aforementioned transaction was concluded due to fluctuations in the projected future cash flows from interest payments resulting from the issue of bonds in PLN with a floating interest rate based on WIBOR 6M. These instruments were subject to hedge accounting.

Derivative instruments measured at fair value through profit or loss (FVTPL)


Derivative instruments CCIRS relate to the Coupon Cross Currency Swap contract entered into by the Company on 24 November 2014, which consisted in a swap of interest payments from the nominal value of EUR 168 000 thousand. In accordance with the contract, the Company pays interest accrued based on a floating interest rate in PLN and receives fixed interest-rate payments in EUR. Hedge accounting principles do not apply to the transaction in question. After the balance sheet date, on 12 February 2016 the transaction in question was closed and on 15 February 2016 it was settled in cash, hence the Company received PLN 5 400 thousand.

 
96 953 102 615
Liabilities to suppliers    790 706 916 744
Capital commitments   766 843 595 550
Provisions for employee benefits 35

35. Provisions for employee benefits

As at
31 December 2015
As at
31 December 2014
Provision for post-employment benefits and jubilee bonuses 1 850 375 2 044 405
Provision for employment termination benefits 57 336 62 872
Total 1 907 711 2 107 277
Current 172 505 158 954
Non-current 1 735 206 1 948 323

 

 172 505 158 954
Provisions for liabilities due to energy certificates and greenhouse gas emission allowances 37

37. Provisions for liabilities due to gas emission and energy certificates

Provisions for liabilities due to gas emission and energy certificates are related to the current year, therefore the entire amount of these provisions is considered short-term.

Year ended 31 December 2015

Provision for gas emission obligations Provision for obligation to submit energy certificates Provisions, total
Opening balance 8 130 914 926 923 056
Recognition 153 084 863 210 1 016 294
Reversal (2 290) (2 202) (4 492)
Utilisation (5 841) (910 883) (916 724)
Closing balance 153 083 865 051 1 018 134

 



 

Year ended 31 December 2014

Provision for gas emission obligations Provision for obligation to submit energy certificates Provisions, total
Opening balance 461 123 905 561 1 366 684
Recognition 73 051 917 784 990 835
Reversal (2 783) (2 783)
Utilisation (463 362) (905 636) (1 368 998)
Contribution (62 682) (62 682)
Closing balance 8 130 914 926 923 056

 



 
1 018 134 923 056
Other provisions 38

38. Other provisions

Year ended 31 December 2015

Provision for use
of real estate without contract
Provision for counterparty claims, court dispute and other provisions Provisions, total
Opening balance 93 818 66 341 160 159
Recognition/(reversal), net 3 587 5 840 9 427
Utilisation (5 496) (6 240) (11 736)
Other movements 1 771 1 771
Foreign exchange differences from translation of foreign entities (1) (1)
Closing balance 91 909 67 711 159 620
Current 91 909 65 802 157 711
Non-current 1 909 1 909
Current portion of provisions for the costs of disassembly of fixed assets and land restoration and other provisions 20 333
Total current other provisions 178 044

 



 

Year ended 31 December 2014

Provision for use of real estate without contract Provision for counterparty claims, court dispute and other provisions Provisions, total
Opening balance 104 827 92 016 196 843
Discount rate adjustment 25 25
Recognition/(reversal), net (3 997) (7 079) (11 076)
Utilisation (7 012) (6 625) (13 637)
Contribution (13 033) (13 033)
Other movements 1 024 1 024
Foreign exchange differences from translation of foreign entities 13 13
Closing balance 93 818 66 341 160 159
Current 93 818 63 670 157 488
Non-current 2 671 2 671
Current portion of provision for the costs of disassembly of fixed assets and land restoration 871
Total current other provisions 158 359

 



 

Provision for use of real estate without contract

The Group companies recognize provisions for all claims filed by the owners of the real estate on which distribution systems and heat installations are located. As at 31 December 2015, the relevant provision amounted to PLN 91 909 thousand and covered the following segments:

  • Generation – PLN 50 334 thousand;

  • Distribution – PLN 41 575 thousand.


In 2012 a third party lodged a claim against TAURON Ciepło S.A. (currently: TAURON Ciepło Sp. z o.o.) related to the regulation of legal status of the transmission devices located in its property. The Company has questioned the validity of the claim and of the offset made against the claimant’s current liabilities due to heat supply. Consequently, the Company has claimed its current receivables at court. The amount of claims posed by the entity in relation to regulating the legal status of the company's transmission facilities will be verified further in the course of the proceedings. With regard to the dispute, in light of the adopted accounting policy, a provision has been recognized for the estimated cost of the above claim. Bearing in mind the pending litigation, and in accordance with IAS 37.92, the Group does not disclose all information regarding the above issue as required by IAS 37.
178 044 158 359
Accruals, deferred income and government grants 39

39. Accruals, deferred income and government grants

 254 337 245 520
Liabilities arising from taxes and charges 40

40. Liabilities due to taxes and charges

As at
31 Desember 2015
As at
31 Desember 2014
Corporate Income Tax 85 357 13 518
Personal Income Tax 46 841 47 696
Excise 42 467 45 640
VAT 46 787 37 772
Social security 156 635 164 780
Environmental charges 46 889 43 629
Other 4 673 2 601
Total 429 649 355 636

 

 429 649 355 636
Other financial liabilities   243 713 354 571
Other non-financial liabilities 41

41. Other current non-financial liabilities

As at
31 December  2015
As at
31 December  2014
Payments from customers relating to future periods, of which: 273 168 266 053
prepayments for connection fees 25 366 26 100
amounts overpaid by customers 240 700 224 510
other 7 102 15 443
Other 754 11 518
Total 273 922 277 571

 

273 922 277 571
Liabilities of a disposal group classified
as held for sale
30

30. Non-current assets and a disposal group classified as held for sale

As at 31 December 2015 As at 31 December 2014
Disposal group 1 320 932
Other non-current assets 17 898 16 773
Non-current assets and assets of a disposal group classified as held for sale 17 898 1 337 705
Liabilities of a disposal group classified as held for sale 84 970


 

As at 31 December 2014 a disposal group included the assets and liabilities of four existing wind farms classified as held for sale in relation to the followed off-balance sheet asset financing policy aimed at selling interest in the existing wind farms to an external investor. The original idea was to sell (with the buy-back option) a majority interest in the existing wind farms to a financial investor and to refinance the existing debt allocated to the wind farms using bank debt when the Company becomes a minority shareholder. Following a failure to reach an agreement on certain conditions regarding the transaction to sell a package of shares in the existing wind farms, the Company has discontinued negotiations with a potential investor. The TAURON Group will continue activities aimed at off-balance sheet funding of the development of wind power generation in the Group. Under current market conditions, works are continued to reach a solution involving commencement of cooperation with an industrial investor. With this respect, on 2 July 2015 the Company and ENEA S.A. concluded a letter of intent concerning partnership in the implementation of a common strategy on the optimal increase in the use of renewable sources of energy and financing acquisition of wind farm assets.

In light of the above, as at 31 December 2015, an analysis was carried out that indicated that the disposal group did not fulfil all criteria allowing its classification as held for sale in accordance with IFRS 5 as at the end of the reporting period.

Following the discontinuation of the classification of the disposal group as held for sale, property, plant and equipment of wind farms were measured at carrying amounts as at the date preceding the classification of the disposal group as held for sale, adjusted by depreciation calculated as of the date of its classification as held for sale, which resulted in a charge on the Group's net profit/loss of PLN 56 227 thousand.
 – 84 970
7 439 326 4 818 537
  
Total liabilities   16 023 276 16 562 629
  
TOTAL EQUITY AND LIABILITIES   32 071 433 34 559 193