SELECTED ACCOUNTING PRINCIPLESThe Group’s key fixed assets by segment include:
Items of property, plant and equipment are measured at cost less accumulated depreciation and impairment losses. The cost includes:
All material elements included in an asset but having various useful lives (components) are identified and separated as at the date of acquisition of an item of property, plant and equipment. Components also include costs of overhauls, periodic inspections and costs of replacing the main components. The Company recognises specialised spare parts and servicing equipment as separate items of property, plant and equipment, if their useful life period exceeds one year. Depreciation is calculated by reference to the acquisition price or manufacturing cost of the fixed asset less its residual value. Depreciation of property, plant and equipment takes place based on the depreciation plan determining the estimated useful life of each fixed asset. Items of property, plant and equipment (including components) are depreciated on a straight-line basis over the period of their expected useful lives, except for land and fixed assets under construction, which are not subject to depreciation. Specialised spare parts and service equipment are depreciated over the useful life of the fixed asset to which they relate. External financing costs Borrowing costs are capitalised as part of the manufacturing cost or acquisition price of the qualifying non-current assets. Borrowing costs consist primarily of interest on specific and general financing calculated using the effective interest rate method and foreign exchange differences arising on foreign currency financing to the extent that they are recognised as an adjustment to interest costs. The effective portion of the hedge for contracts that satisfy the hedge accounting criteria and are concluded in connection with financing the development of non-current assets is also capitalised. The amount of general borrowing costs subject to activation is defined through the application of the capitalisation rate to the expenditure incurred for the adjustment of the component of assets. The rate of capitalisation is the average weighted rate of all borrowing costs related to external financing constituting liabilities in a given period, other than specific financing. Fixed assets received free of charge and connection charges and subsidies to assets Fixed assets received free of charge and connection fees are initially recognised at acquisition cost corresponding to the estimated fair value or value of cash received as a subsidy to assets. Revenues from fixed assets received free of charge, funded with subsidies, are disclosed in the statement of financial position as deferred income and recognised as other operating revenues in the manner proportionate to the corresponding depreciation costs of received or purchased components of property, plant and equipment. PROFESSIONAL JUDGEMENT AND ESTIMATES Impairment As at every balance sheet date the Group assesses whether objective indication of impairment occurs in relation to property, plant and equipment. Impairment tests for property, plant and equipment are carried out in line with the accounting policy presented in Note 11 hereto. |
Average remaining useful lives of individual groups of fixed assets
Export to ExcelAsset group | Average remaining depreciation period (number of years) |
---|---|
Buildings, premises, civil and water engineering structures | 20 years |
Plant and machinery | 15 years |
Mining excavations | 2 years |
Other tangible fixed assets | 4 years |
The depreciation method, the depreciation rate and the residual value of fixed assets are reviewed at least at each financial year-end and any adjustments to depreciation charges are applied with effect from the beginning of the reporting period in which the review is completed. The review of the economic useful lives of fixed and intangible assets carried out in 2020 had the most significant impact on depreciation and amortisation expense in the Distribution segment – a decrease in depreciation and amortisation expense of PLN 21,900 thousand. The impact on depreciation expense in other segments was not material.
Year ended December 31st, 2020
Export to ExcelLand | Buildings, premises and civil engineering structures |
Plant and machinery |
Mine workings |
Other | Assets under construction | Property, plant and equipment, total | |
---|---|---|---|---|---|---|---|
COST
Opening balance |
|||||||
140,554 | 25,480,506 | 20,297,298 | 265,001 | 957,959 | 7,777,093 | 54,918,411 | |
Direct purchase | – | – | – | 1,174 | – | 3,214,919 | 3,216,093 |
Borrowing costs | – | – | – | – | – | 226,734 | 226,734 |
Transfer of assets under construction | 1,506 | 4,271,288 | 5,259,603 | – | 41,678 | (9,574,075) | – |
Sale | (401) | (14,134) | (107,667) | – | (7,991) | (335) | (130,528) |
Liquidation | (8) | (70,320) | (281,474) | (146,708) | (11,440) | – | (509,950) |
Received free of charge | 1,043 | 11,476 | – | – | – | – | 12,519 |
Transfers to/from assets held for sale | (2,145) | (1,788,629) | (1,863,727) | – | (55,179) | (100,926) | (3,810,606) |
Overhaul expenses | – | – | – | – | – | 194,987 | 194,987 |
Items generated internally | – | – | – | 138,625 | – | 180,305 | 318,930 |
Cost of disassembly of wind farms and decommissioning of mines |
– | 71,663 | 8,286 | – | – | – | 79,949 |
Revenue from start-up | – | – | – | – | – | (161,834) | (161,834) |
Other movements | 733 | (2,367) | 12,872 | – | (2,626) | 19,726 | 28,338 |
Foreign exchange differences from translation of foreign entity | – | – | 20 | – | 18 | – | 38 |
Closing balance | 141,282 | 27,959,483 | 23,325,211 | 258,092 | 922,419 | 1,776,594 | 54,383,081 |
ACCUMULATED DEPRECIATION
Opening balance |
|||||||
(341) | (10,756,599) | (12,008,192) | (116,238) | (655,060) | (282,910) | (23,819,340) | |
Depreciation for the period | – | (831,008) | (771,850) | (92,210) | (65,278) | (65) | (1,760,411) |
Increase of impairment | (15) | (1,273,941) | (1,806,495) | (76,149) | (5,475) | (149,509) | (3,311,584) |
Decrease of impairment | – | 2,851 | 3,580 | – | 210 | 140,061 | 146,702 |
Sale | 168 | 168 | 104,859 | – | 7,825 | – | 126,226 |
Liquidation | – | 62,191 | 273,578 | 146,708 | 11,432 | – | 493,909 |
Transfers to/from assets held for sale | – | 742,912 | 872,164 | – | 38,410 | 13,874 | 1,667,360 |
Other movements | – | 35 | (1,248) | – | 1,941 | (32) | 696 |
Foreign exchange differences from translation of foreign entity | – | – | (11) | – | (13) | – | (24) |
Closing balance | (188) | (12 ,040,185) | (13,333,615) | (137,889) | (666,008) | (278,581) | (26,456,466) |
NET CARRYING AMOUNT AT THE BEGINNING OF THE PERIOD | 140,213 | 14,723,907 | 8,289,106 | 148,763 | 302,899 | 7,494,183 | 31,099,071 |
NET CARRYING AMOUNT AT THE END OF THE PERIOD | 141,094 | 15,919,298 | 9,991,596 | 120,203 | 256,411 | 1,498,013 | 27,926,615 |
of which operating segments: | |||||||
Mining | 3,144 | 310,588 | 188,256 | 115,469 | 3,534 | 187,483 | 808,474 |
Generation | 40,383 | 2,077,270 | 3,645,017 | – | 6,900 | 104,368 | 5,873,938 |
Renewable Energy Sources | 796 | 885,214 | 1,258,737 | – | 1,184 | 29,670 | 2,175,601 |
Distribution | 79,913 | 12,127,222 | 4,773,285 | – | 221,908 | 1,028,481 | 18,230,809 |
Other segments and other operations | 16,858 | 519,004 | 519,004 | 4,734 | 22,885 | 148,011 | 837,793 |
Year ended December 31st, 2019 (restated figures)
Export to ExcelLand | Buildings, premises and civil engineering structures |
Plant and machinery |
Mine workings |
Other | Assets under construction |
Property, plant and equipment, total |
|
---|---|---|---|---|---|---|---|
COST
Opening balance |
|||||||
125,869 | 23,775,062 | 19,133,480 | 221,074 | 943,340 | 6,376,491 | 50,575,316 | |
Direct purchase | – | – | – | 1,714 | – | 3,251,159 | 3,252,873 |
Borrowing costs | – | – | – | – | – | 183,439 | 183,439 |
Transfer of assets under construction | 14,006 | 1,395,272 | 924,748 | – | 53,706 | (2,387,732) | – |
Sale | (39) | (3,264) | (94,428) | – | (26,460) | (47) | (124,238) |
Liquidation | (10) | (62,965) | (101,672) | (124,816) | (11,285) | – | (300,748) |
Received free of charge | – | 17,107 | 232 | – | – | – | 17,339 |
Transfers to/from assets held for sale | (64) | (13,636) | (46) | – | (175) | – | (13,921) |
Overhaul expenses | – | – | – | – | – | 193,955 | 193,955 |
Items generated internally | – | – | – | 184,542 | – | 99,509 | 284,051 |
Business acquisition | 592 | 270,463 | 441,138 | – | – | – | 712,193 |
Cost of disassembly of wind farms and decommissioning of mines |
– | 101,182 | 2,102 | – | – | – | 103,284 |
Other movements | 200 | 1,285 | (8,256) | (17,513) | (1,168) | 60,319 | 34,867 |
Foreign exchange differences from translation of foreign entity | – | – | – | – | 1 | – | 1 |
Closing balance | 140,554 | 25,480,506 | 20,297,298 | 265,001 | 957,959 | 7,777,093 | 54,918,411 |
ACCUMULATED DEPRECIATION
Opening balance |
|||||||
(404) | (9,599,896) | (10,765,131) | (52,458) | (611,258) | (139,502) | (21,168,649) | |
Depreciation for the period | – | (829,750) | (797,235) | (95,837) | (74,362) | (915) | (1,798,099) |
Increase of impairment | – | (426,283) | (698,406) | (92,759) | (6,592) | (148,752) | (1,372,792) |
Decrease of impairment | 65 | 35,438 | 53,208 | – | 102 | 522 | 89,335 |
Sale | – | 2,143 | 91,800 | – | 24,963 | – | 118,906 |
Liquidation | – | 55,449 | 95,937 | 124,816 | 11,249 | – | 287,451 |
Transfers to/from assets held for sale | – | 9,666 | 38 | – | 163 | – | 9,867 |
Other movements | (2) | (3,366) | 11,597 | – | 676 | 5,737 | 14,642 |
Foreign exchange differences from translation of foreign entity | – | – | – | – | (1) | – | (1) |
Closing balance | (341) | (10,756,599) | (12,008,192) | (116,238) | (655,060) | (282,910) | (23,819,340) |
NET CARRYING AMOUNT AT THE BEGINNING OF THE PERIOD | 125,465 | 14,175,166 | 8,368,349 | 168,616 | 332,082 | 6,236,989 | 29,406,667 |
NET CARRYING AMOUNT AT THE END OF THE PERIOD | 140,213 | 14,723,907 | 8,289,106 | 148,763 | 302,899 | 7,494,183 | 31,099,071 |
of which operating segments: | |||||||
Mining | 3,146 | 377,857 | 281,925 | 144,613 | 6,980 | 288,647 | 1,103,168 |
Generation* | 42,477 | 1,373,573 | 1,968,604 | – | 23,488 | 6,167,240 | 9,575,382 |
Renewable Energy Sources | 807 | 917,144 | 1,329,333 | – | 1,511 | 1,511 | 2,250,306 |
Distribution | 76,924 | 11,558,666 | 4,590,377 | – | 252,469 | 1,002,867 | 17,481,303 |
Other segments and other operations | 16,859 | 496,667 | 118,867 | 4,150 | 18,451 | 33,918 | 688,912 |
* Segment data for the comparable period include assets of the subsidiary, TAURON Ciepło Sp. z o.o. reclassified as at 31 December 2020 to assets classified as held for sale.
In the year ended 31 December 2020, the Group purchased property, plant and equipment (including capitalised borrowing costs) in the amount of PLN 3,442,827 thousand.
The major purchases were made in connection with investments in the following operating segments:
Export to ExcelOperating segment | Year ended 31 December 2020 |
Year ended 31 December 2019 (restated figures) |
---|---|---|
Distribution | 1,844,732 | 1,744,031 |
Generation | 1,154,254 | 1,292,561 |
Mining | 190,544 | 285,257 |
The average capitalisation rate of borrowing costs was 4.14% for the year ended 31 December 2020 and 3.28% for the year ended 31 December 2019.
The main investment tasks implemented by the Group in the financial year 2020 are described in section 1.5.1. of the Management Board reports on the activities of TAURON Polska Energia S.A. and TAURON Capital Group for the financial year 2020.
Impairment losses on property, plant and equipment affected the results of the following operating segments:
Year ended 31 December 2020
Export to ExcelGeneration | Mining | Distribution | Other | Total | |
---|---|---|---|---|---|
Increase of impairment | (2,622,138) | (685,382) | (4,056) | (8) | (3,311,584) |
Decrease of impairrment | 4,096 | 140,061 | 2,542 | 3 | 146,702 |
Total impact on the profit (loss) for the period | (2,618,042) | (545,321) | (1,514) | (5) | (3,164,882) |
Year ended 31 December 2019 (restated figures)
Export to ExcelGeneration | Mining | Distribution | Other | Total | |
---|---|---|---|---|---|
Increase of impairment | (694,044) | (676,610) | (2,138) | – | (1,372,792) |
Decrease of impairment | 59,506 | – | 3,867 | 25,962 | 89,335 |
Total impact on the profit (loss) for the period | (634,538) | (676,610) | 1,729 | 25,962 | (1,283,457) |