|Provision for liabilities and other charges divided into current and non-current portion|
|Non-current||625 388||464 720|
|Current||567 556||304 374|
|Closing balance||1 192 944||769 094|
Change in provisions for liabilities and other charges
|for the period ended 31 December 2015|
|Provision for non-contractual use of land||Provision for other claims||Provision for land reclamation||Provision for certificates of origin||Provision for CO2emissions rights||Mine liquidation||Other||Total|
|Opening balance||172 854||27 362||57 551||164 878||105 758||-||240 691||769 094|
|Acquisition of subsidiaries||-||26 014||5 738||2 202||-||115 744||50 309||200 007|
|Unwinding of discount and discount rate change||(2 266)||-||(8 540)||-||-||850||-||(9 956)|
|Increase in provisions||29 819||10 671||660||227 768||193 412||7 847||45 470||515 647|
|Provisions used||(462)||(2)||-||(144 470)||(105 668)||-||(10 819)||(261 421)|
|Provision reversed||(10 516)||(3 589)||-||(354)||(468)||-||(5 500)||(20 427)|
|Closing balance||189 429||60 456||55 409||250 024||193 034||124 441||320 151||1 192 944|
|for the period ended 31 December 2014|
|Provision for non-contractual use of land||Provision for other claims||Provision for land reclamation||Provision for the environ-mental fee||Provision for certificates of origin||Provision for CO2 emissions rights||Other||Total|
|Opening balance||186 916||22 071||30 464||394||274 643||105 149||226 239||845 876|
|Unwinding of discount and discount rate change||(7 619)||-||2 527||-||-||-||-||(5 092)|
|Increase in provisions||12 871||6 452||24 724||-||413 403||106 678||23 488||587 616|
|Provisions used||(7 993)||-||(164)||-||(522 772)||(105 149)||(6 377)||(642 455)|
|Provision reversed||(11 321)||(1 161)||-||(394)||(396)||(920)||(2 659)||(16 851)|
|Closing balance||172 854||27 362||57 551||-||164 878||105 758||240 691||769 094|
Provisions for liabilities are determined in reasonable, reliably estimated amounts. Individual provisions are recognized for projected losses related to court action brought against the Group. The amount recognized as a provision is the best estimate of the expenditure required to settle a claim. The cost of provisions is recognized under other operating expenses. A description of material claims and the related contingent liabilities has been presented in Notes 50.2, 50.5 and 50.6.
Provisions for liabilities and other charges include mainly:
Provision for non-contractual use of land
Provision for claims of persons holding possession of real properties, arising from non-contractual use of land.
The provision for claims concerning non-contractual use of real properties is measured according to so-called staged approach and weighting, i.e. the probability of losing the dispute and necessity to fulfil the claim. Claims for non-contractual use of real property may be significant for the Group because of the number of properties used, but the Group is not able to estimate the maximum amount of compensation. ENEA Group - in relation to, inter alia, the anticipated Transmission Corridors Act - estimated and included in provisions the compensations for non-contractual use of real properties on which the grid assets are located (power lines), for which no claims have yet been raised as at the reporting date.
Provision for land reclamation
After closing or filling a slag and ash dump, the Group is obliged to carry out appropriate land reclamation. As the Group has large unfilled dumps, land reclamation is planned for 2060. Future estimated costs of land reclamation were discounted to their current value using a discount rate of 2.80% (as at 31 December 2014 – 2.50%).
As at 31 December 2015 the provision amounted to PLN 55 409 thousand (as at 31 December 2014 it was
PLN 57 551 thousand).
Provision for purchasing CO2 emissions rights
As at 31 December 2015 the provision for CO2 emissions rights amounted to PLN 193,034 thousand
(as at 31 December 2014 it was PLN 105 758 thousand).
Provision for mine liquidation
ENEA Group recognizes a provision for mine liquidation expenses, as required under applicable provisions. Key assumptions used to determine the cost of mine liquidation include assumptions regarding the useful life of the mine, the expected rate of inflation and long-term discount rates.The calculated amount of mine liquidation costs on 31 December 2015 amounts to PLN 124 441 thousand.
Other provisions relate mainly:
- potential liabilities related to network assets resulting from differences in law interpretation - PLN 129 197 thousand (as at 31 December 2014 PLN 109 563 thousand),
- costs of forest lands managed by State Forests - PLN 112 680 thousand (as at 31 December 2014 PLN 115 921 thousand),
- real property tax in Lubelski Węgiel Bogdanka S.A. PLN 23 881 thousand – disclosed amount constitutes a provision for real property tax. The Company, when preparing the real property tax declaration, does not take into account (same as other mining entities in Poland) the value of underground mining excavation for the purpose of calculation of the tax, neither the value of the equipment installed there. According to the position of the Constitutional Tribunal, stated in sentence from 13 September 2011, confirmed subsequently in decisions of administrative courts, underground mining excavation understood as empty space in rock mass, formed as a consequence of mining works, is not subject to real property tax. At the same time the Constitutional Tribunal did not exclude that underground mining excavation may contain objects constituting structures that can be subject to taxation within the meaning of The Local Taxes and Fees Act. Determining the taxable base, when underground mining excavations contain objects being structures within the meaning of The Local Taxes and Fees Act, the value of the works on formation of underground mining excavation cannot be included into the base.The above Constitutional Tribunal’s sentence, has not resolved clearly what elements of the underground mining excavation’s equipment are the subject to property tax. Furthermore, until now there is a lack of unified positions of administrative courts,
- ZUS claims arising from accident contribution in Lubelski Węgiel Bogdanka S.A. PLN 18 727 thousand the percentage rate of a contribution for accident insurance, determined by the Social Security Institution based on ZUS IWA documents (Information on data required for calculation of contribution for accident insurance) and an adjustment of ZUS IWA document for 2012 submitted by the LWB, was 3.09% for the settlement period from 1 April 2013 to 31 March 2014 and 2.70% for the settlement period from 1 April 2014 to 31 March 2015. In its Decision No. 7/2014 of 18 June 2014, the Social Security Institution, Branch in Lublin, determined the percentage rate of a contribution for accident insurance for the Parent. Having taken into account ZUS IWA adjustments for the years of 2011 and 2012 (made ex officio), the authority determined the percentage rate of a contribution for accident insurance at 3.47% for the settlement period from 1 April 2013 to 31 March 2014 and at 3.09% for the settlement period from 1 April 2014 to 31 March 2015. In addition, pursuant to Article 34 of the Act on Social Insurance against Accidents at Work and Occupational Diseases and Article 83.1.3 of the Act on Social Insurance System, the Social Security Institution determined for the Parent the percentage rate of a contribution for accident insurance increased by 50% for the above contributory years, i.e. at 5.21% for the contributory year from 1 April 2013 to
- 31 March 2014 and at 4.64% for the contributory year from 1 April 2014 to 31 March 2015. On 25 July 2014 the Parent filed an appeal to the Regional Court in Lublin, against the above decision, requesting that it be cancelled and proceeding be discontinued, or in the alternative that the Court change the decision appealed against and decide that the Company is not required to pay the contribution for accident insurance at the rate increased by 50%, as well as decide that the percentage rate of the contribution for the above contributory years should be 3.09% and 2.7% respectively. Court proceedings is in progress,
- removal of mining damages PLN 8 497 thousand – due to the need to remove mining damages, the Group recognizes a provision for mining damages. The amount mainly relates to planned costs that have to be incurred in connection with the reparation of damaged power lines, acquisition of build-up properties (where damages took place) and compensations for damages to agricultural lands.