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Note As at
31 December 2016
As at
31 December 2015
ASSETS
Non-current assets
Property, plant and equipment 18
18. Property, plant and equipment
For the year ended 31 December 2016
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Land Buildings, premises and civil engineering structures Plant and machinery Other Assets under construction Property, plant and equipment,
total
COST  
Opening balance 119 536 19 928 399 16 910 428 804 020 2 599 980 40 362 363
Direct purchase 85 253 3 495 992 3 496 330
Borrowing costs 94 018 94 018
Transfer of assets under construction 1 409 1 587 221 1 373 628 79 288 (3 041 546)
Sale, disposal (385) (7 610) (14 329) (24 203) (48) (46 575)
Liquidation (55 360) (124 965) (13 342) (193 667)
Received free of charge 9 16 912 766 17 687
Transfers to/from assets held for sale (43) (11 789) 64 (2 062) (13) (13 843)
Overhaul expenses 60 685 60 685
Items generated internally 38 332 38 332
Acquisition of ZCP Brzeszcze 1 544 165 401 22 429 1 637 14 405 205 416
Cost of disassembly of wind farms and
decommissioning of mines
(31 863) (1 552) (33 415)
Other movements (90) 11 733 (2 520) 4 495 (632) 12 986
Foreign exchange differences from translation of foreign entities 12 16 28
Closing balance 121 980 21 603 044 18 164 046 850 102 3 261 173 44 000 345
ACCUMULATED DEPRECIATION
Opening balance (466) (6 692 656) (8 304 965) (467 731) (13 728) (15 479 546)
Depreciation for the period (802 997) (712 304) (79 674) (1 594 975)
Increase of impairment (30) (540 226) (929 441) (3 964) (19 958) (1 493 619)
Decrease of impairment 47 156 917 546 123 835 29 703 951
Sale, disposal 3 952 12 695 22 662 39 309
Liquidation 47 448 121 256 13 050 181 754
Transfers to/from assets held for sale 16 2 948 (16) 657 3 605
Other movements (1 352) (1 379) (2 890) (5 621)
Foreign exchange differences from translation of foreign entities (7) (7) (14)
Closing balance (433) (7 825 966) (9 268 038) (517 062) (33 657) (17 645 156)
NET CARRYING AMOUNT AT THE BEGINNING OF THE PERIOD 119 070 13 235 743 8 605 463 336 289 2 586 252 24 882 817
NET CARRYING AMOUNT AT THE END OF THE PERIOD 121 547 13 777 078 8 896 008 333 040 3 227 516 26 355 189
of which operating segments:    
Mining 2 774 724 056 612 225 16 706 341 810 1 697 571
Generation 41 303 2 394 113 3 935 303 37 148 2 252 690 8 660 557
Distribution 60 610 10 562 543 4 222 354 260 139 620 819 15 726 465
Other segments and other operations 16 860 96 366 126 126 19 047 12 197 270 596
For the year ended 31 December 2015
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Land Buildings, premises and civil engineering structures Plant and machinery 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 (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 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
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Property, plant and equipment used based
on finance leases
As at
31 December 2016
As at
31 December 2015
Buildings 34 117 33 962
Plant and machinery 17 226 3 715
Motor vehicles 406 870

In the year ended 31 December 2016, the Group purchased property, plant and equipment of PLN 3 590 348 thousand, including capitalized borrowing costs. The major purchases were related to investments in the following operating segments:

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Purchase of property, plant
and equipment by segment
Year ended
31 December 2016
Year ended
31 December 2015
Distribution 1 717 236 1 858 807
Generation 1 560 458 1 750 548
Mining 282 420 210 574

The average capitalization rate of borrowing costs in the year ended 31 December 2016 was 4.10% vs. 4.33% in the year ended 31 December 2015.

The key investment projects carried out by the Group in the 2016 financial year have been discussed in Section 1.5.2. of the Management Board’s report on the activities of the TAURON Polska Energia S.A. Capital Group for the 2016 financial year.

Recognition and reversal of impairment losses on property, plant and equipment had the following impact on operating segment performance:

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Year ended 31 December 2016 Year ended 31 December 2015
Generation Distribution Other Total Generation Distribution Other Total
Increase of impairment (1 487 766) (5 853) (1 493 619) (3 430 917) (18 173) (17) (3 449 107)
Decrease of impairrment 689 181 14 770 703 951 609 9 322 3 9 934
Total impact on the profit (loss) for the period (798 585) 8 917 (789 668) (3 430 308) (8 851) (14) (3 439 173)
26 355 189 24 882 817
Goodwill 19
19. Goodwill
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Year ended
31 December 2016
Year ended
31 December 2015
Opening balance 92 059 195 154
Impairment loss (51 903) (154 998)
Reclassification from disposal group classified as held for sale 51 903
Closing balance, of which operating segments: 40 156 92 059
Mining 13 973 13 973
Distribution 25 602 25 602
Generation 581 52 484

In the year ended 31 December 2016, the Group recognized an impairment loss on the carrying amount of goodwill in the Generation segment, totaling PLN 51 903 thousand. The impairment loss was recognized following the performance of impairment tests as at 30 June 2016. The tests performed as at 31 December 2016 did not identify a necessity to recognize an impairment loss on the carrying amount of goodwill. The performed tests have been described in Note 11.2 hereof.

40 156 92 059
Energy certificates and emission allowances for surrender 20.1
20.1. Long-term energy certificates and gas emission allowances
For the year ended 31 December 2016
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Energy certificate Greenhouse gas emission allowances Total
Opening balance 232 973 277 867 510 840
Direct purchase 110 430 15 830 126 260
Reclassification (232 973) (277 867) (510 840)
Closing balance 110 430 15 830 126 260
For the year ended 31 December 2015
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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
126 260 510 840
Other intangible assets 21
21. Other intangible assets
For the year ended 31 December 2016
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Development expenses Perpetual usufruct Software, concessions, patents, licenses and similar items Other intangible assets Intangible assets not made available for us Intangible assets,
total
COST
Opening balance 5 690 786 504 550 892 188 004 51 885 1 582 975
Direct purchase 38 127 408 127 446
Transfer of intangible assets
not made available for use
184 63 062 22 492 (85 738)
Sale, disposal (2 373) (4) (55) (2 432)
Liquidation (256) (65) (3 996) (89) (4 406)
Acquisition of ZCP Brzeszcze 10 266 95 147 10 508
Transfers to/from assets held for sale (8 728) (8 728)
Other movements 495 449 1 319 (440) 1 823
Foreign exchange differences
from translation of foreign entities
42 42
Closing balance 5 434 786 283 610 578 211 873 93 060 1 707 228
ACCUMULATED AMORTIZATION    
Opening balance (4 893) (13 064) (332 862) (49 391) (400 210)
Amortization for the period (159) (58 046) (15 546) (73 751)
Increase of impairment (403) (23 094) (1 359) (138) (7) (25 001)
Decrease of impairment 79 1 773 1 619 16 3 487
Sale, disposal 3 3
Liquidation 256 3 917 81 4 254
Transfers to/from assets held for sale 8 768 8 768
Other movements (312) (4) (316)
Foreign exchange differences
from translation of foreign entities
(35) (35)
Closing balance (5 120) (25 617) (387 075) (64 982) (7) (482 801)
NET CARRYING AMOUNT AT THE BEGINNING OF THE PERIOD 797 773 440 218 030 138 613 51 885 1 182 765
NET CARRYING AMOUNT AT THE END OF THE PERIOD 314 760 666 223 503 146 891 93 053 1 224 427
For the year ended 31 December 2015
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Development expenses Perpetual usufruct Software, concessions, patents, licenses and similar item 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 (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 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

In the year ended 31 December 2016 an impairment loss on perpetual usufruct of land of PLN 22 734 thousand was recognized relating to land used for storage of waste coming from power generation in Jaworzno II and Jaworzno III Power Plants.

1 224 427 1 182 765
Investments in joint ventures 22
22. Shares in joint ventures
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Elektrociepłownia
Stalowa Wola S.A.
Elektrownia
Blachownia Nowa
Sp. z o.o.
in liquidation
TAMEH HOLDING
Sp. z o.o.*
As at 31 December 2016
Non-current assets 1 126 668 1 479 845 2 606 513
Current assets, including: 5 739 37 056 501 547 544 342
cash and cash equivalents 3 809 37 009 196 442 237 260
Non-current liabilities (-) including: (1 028 954) (664 603) (1 693 557)
debt (980 977) (536 585) (1 517 562)
Current liabilities (-) including: (132 395) (97) (349 101) (481 593)
debt (65 752) (1 647) (67 399)
Total net assets (28 942) 36 959 967 688 975 705
Share in net assets (14 471) 18 479 483 844 487 852
Investment in joint ventures 18 479 442 869 461 348
Share in revenue of joint ventures 6 675 449 559 624 566 748
Share in profit/(loss) of joint
ventures
18 60 022 60 040
Share in other comprehensive income of joint
ventures
(1 040) (1 040)

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.

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Elektrociepłownia
Stalowa Wola S.A.
Elektrownia
Blachownia Nowa
Sp. z o.o.
TAMEH HOLDING
Sp. z o.o.*
As at 31 December 2016
Non-current assets 1 085 917 1 295 743 2 381 660
Current assets, including: 12 387 37 008 341 716 391 111
cash and cash equivalents 91 36 943 14 880 51 914
Non-current liabilities (-) including: (965 514) (378 507) (1 344 021)
debt (963 766) (295 503) (1 259 269)
Current liabilities (-) including: (125 610) (85) (377 432) (503 127)
debt (40 149) (2 134) (42 283)
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.

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 in Stalowa Wola fueled with natural gas, with the gross electrical capacity of 400 MWe and the net thermal capacity of 240 MWt.

On 27 October 2016, a conditional agreement was made among the Company, PGNiG S.A. and Elektrociepłownia Stalowa Wola S.A. to set out the key boundary conditions for project restructuring along with a conditional annex to the electricity sales contract. Furthermore, PGNiG S.A. and Elektrociepłownia Stalowa Wola S.A. executed a conditional annex to the gaseous fuel supply contract, which has been discussed in more detail in Note 35 to these consolidated financial statements.

The agreement reflects the will of the Company and PGNIG S.A. to continue the construction of the gas and steam unit. According to the Management Board of the Company, the aforesaid documents enable completion of the investment in 2019 (preliminary estimate).

TAURON Polska Energia S.A. holds 50% indirect interest in the issued capital of this company and in its governing body through TAURON Wytwarzanie S.A. Due to the fact that in 2015 the accumulated share in losses of the joint venture and the adjustment to “top-down” transactions between the Group companies and the joint venture exceeded the value of the interest in the joint venture, the Company discontinued to recognize its share in any further losses of the joint venture.

Additionally, the Company has receivables due to loans granted to Elektrociepłownia Stalowa Wola S.A. in the amount of PLN 256 067 thousand, which has been discussed in more detail in Note 23, as well as provisions for onerous commercial contracts in the amount of PLN 198 844 thousand, which have been discussed in Note 35.3.

Elektrownia Blachownia Nowa Sp. z o.o. in liquidation

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

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

On 28 July 2016, TAURON Polska Energia S.A., KGHM Polska Miedź S.A. and TAURON Wytwarzanie S.A. signed an agreement pursuant to which they unanimously decided to discontinue the construction of the gas and steam unit in Elektrownia Blachownia Nowa Sp. z o.o. and terminate the shareholders agreement concluded by KGHM Polska Miedź S.A. and TAURON Wytwarzanie S.A., which denotes expiration of all contractual obligations and discontinuation of all works specified in the agreement. KGHM Polska Miedź S.A. and TAURON Wytwarzanie S.A. unanimously decided to commence the liquidation of the company, in line with its articles of association and laws of general application. On 11 October 2016, the Extraordinary General Shareholders’ Meeting dissolved Elektrownia Blachownia Nowa Sp. z o.o. and placed it into liquidation, in addition to appointing a receiver. As Elektrownia Blachownia Nowa Sp. z o.o. in liquidation holds current assets which may be subject to distribution among the partners in the joint venture to a considerable extent, the Group does not recognize any additional impairment losses on its interest in the company.

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. will carry out investment and operational projects related to the industrial power sector. The agreement was concluded for a term of 15 years, which may be further extended. Following the transactions concluded in 2014, each capital group holds 50% of shares in TAMEH HOLDING Sp. z o.o.

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.

On 29 June 2016, the General Shareholders’ Meeting of TAMEH HOLDING Sp. z o.o. decided to allocate PLN 48 000 thousand to pay dividends to the shareholders. The Group’s interest in the joint venture TAMEH HOLDING Sp. z o.o. was reduced by the value of the dividend payable to the Group in the amount of PLN 24 000 thousand.

461 348 418 127
Loans granted to joint ventures 23
23. Loans granted to joint ventures

Loans granted to the joint venture Elektrociepłownia Stalowa Wola S.A. as at 31 December 2016 and 31 December 2015:

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Agreement date Contractual loan amount As at
31 December 2016
As at
31 December 2015
Maturity date Purpose
Principal Interest Principal Interest
Subordinated loan 20 June 2012 177 000 177 000 36 381 177 000 28 922 31.12.2032 Project performance: the borrower
to obtain external funding
Loan for repayment of debt 14 December 2015 15 850 15 850 699 15 850 31 31.12.2027 Repayment of the principal instalment with interest with regard to loans
granted to the borrower by European Investment Bank, European Bank for Reconstruction and Development and Bank Polska Kasa Opieki S.A.
15 December 2016 15 300 11 000 21
Other loans 25 November 2015 2 600 2 600 117 2 100 6 30.06.2017 Financing of current operations
22 January 2016 5 500 5 500 214
22 April 2016 1 200 600 17
27 May 2016 3 100 3 100 65
31 August 2016 3 800 2 875 28
Total loans 218 525 37 542 194 950 28 959
Non-current 203 850 37 101 192 850 28 953
Current 14 675 441 2 100 6

In the year ended 31 December 2016, the interest income on loans granted amounted to PLN 8 583 thousand.

240 951 221 803
Other financial assets 24
24. Other financial assets
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As at
31 December 2016
As at
31 December 2015
Shares 127 698 136 488
Deposits 38 472 39 724
Derivative instruments 56 417 5 684
Investment fund units 27 761 2 405
Loans granted 15 166 2 108
Bid bonds, deposits and collateral transferred 41 818 54 106
Other 14 561 5 034
Total 321 893 245 549
Non-current 227 140 211 215
Current 94 753 34 334

The shares held by the Group are mainly shares in the following entities:

  • SCE Jaworzno III Sp. z o.o., in the amount of PLN 36 283 thousand;
  • Przedsiębiorstwo Energetyki Cieplnej Tychy Sp. z o.o., in the amount of PLN 32 113 thousand;
  • PGE EJ 1 Sp. z o.o., in the amount of PLN 23 046 thousand;
  • Energetyka Cieszyńska Sp. z o.o., in the amount of PLN 15 063 thousand.

In the year ended 31 December 2016, the Parent acquired units in investment funds in the total amount of PLN 25 000 thousand. As at 31 December 2016, the carrying amount of these units measured at fair value was PLN 25 316 thousand.

Deposits constitute financial assets of Mine Decommissioning Fund.

227 140 211 215
Other non-financial assets 25.1
25.1. Other non-current non-financial assets
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As at
31 December 2016
As at
31 December 2015
Prepayments for assets under construction and intangible assets including: 274 301 358 673
related to project realization : Construction of 910 MW Power Unit in Jaworzono III Power Plant 271 667 337 531
Costs of preparing production in hard coal mines 132 862 159 159
Other prepayments 15 237 32 543
Total 422 400 550 375
422 400 550 375
Deferred tax assets 16.3
16.3. Deferred income tax
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As at
31 December 2016
As at
31 December 2015
difference between tax base and carrying amount of fixed and intangible
assets
1 511 102 1 490 408
difference between tax base and carrying amount of financial assets 45 981 29 609
different timing of recognition of sales revenue for tax purposes 49 299 69 064
difference between tax base and carrying amount of energy certificates 15 766 48 817
other 44 156 39 889
Deferred tax liabilities 1 666 304 1 677 787
provisions 638 914 685 405
difference between tax base and carrying amount of fixed and intangible
assets
143 403 6 359
power infrastructure received free of charge and received connection fees 51 811 57 071
difference between tax base and carrying amount of financial assets and financial liabilities 50 387 49 471
valuation of hedging instruments 18 139
different timing of recognition of cost of sales for tax purposes 39 940 58 333
tax losses 12 758 12 758
difference between tax base and carrying amount of emission allowances 26 985
other 19 905 22 274
Deferred tax assets 957 118 936 795
After setting off balances at the level of individual Group companies, deferred tax for the Group is presented as:    
Deferred tax asset 50 382 54 184
Deferred tax liability (759 568) (795 176)

As at 31 December 2016 and 31 December 2015, the deferred tax asset was set off against deferred tax liabilities of companies from the Tax Capital Group (“TCG”) due to the fact that the said companies had filed a combined tax return under the Tax Capital Group agreement for the years 2015-2017, concluded on 22 September 2014.

Based on the forecasts prepared for the TCG, according to which taxable income will be earned in 2017 and in the following 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.

Change in deferred tax liability
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Year ended
31 December 2016
Year ended
31 December 2015
Opening balance 1 677 787 2 187 951
Change in the balance:
corresponding to profit/(loss) (27 405) (529 019)
reclassification from disposal group classified as held for sale 18 910
acquisition of ZCP Brzeszcze 15 239
other changes 683 (55)
Closing balance 1 666 304 1 677 787
Change in deferred tax asset
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Year ended
31 December 2016
Year ended
31 December 2015
Opening balance 936 795 892 902
Change in the balance:
corresponding to profit/(loss) 63 005 60 792
corresponding to other comprehensive income (63 052) (28 587)
reclassification from disposal group classified as held for sale 11 585
acquisition of ZCP Brzeszcze 18 366
other changes 2 004 103
Closing balance 957 118 936 795
50 382 54 184
  29 148 253 28 124 185
  
Current assets
Energy certificates and emission allowances for surrender 20.2
20.2. Short-term energy certificates and gas emission allowances
For the year ended 31 December 2016
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Energy certificates Greenhouse gas emission allowances Total
Opening balance 652 305 153 083 805 388
Direct purchase 283 978 318 127 602 105
Generated internally 102 149 102 149
Cancellation (709 538) (325 230) (1 034 768)
Reclassification 227 607 277 867 505 474
Closing balance 556 501 423 847 980 348
For the year ended 31 December 2015
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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
980 348 805 388
Inventories 26
26. Inventories
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As at
31 December 2016
As at
31 December 2015
Historical cost
Coal, of which: 320 201 324 635
Raw materials 98 759 163 644
Semi-finished goods and work-in-progress 216 831 154 555
Energy certificates 783 1 319
Emission allowances 45 912 3 424
Other inventories 115 591 114 037
Total 482 487 443 415
Write-downs to net realisable value / Revaluation
Emission allowances 13 226
Other inventories (9 593) (10 136)
Total 3 633 (10 136)
Net realisable value / Fair value
Coal, of which: 320 201 324 635
Raw materials 98 759 163 644
Semi-finished goods and work-in-progress 216 831 154 555
Energy certificates 783 1 319
Emission allowances 59 138 3 424
Other inventories 105 998 103 901
Total 486 120 433 279
Movement in write-downs to net realizable value / Revaluation
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Year ended
31 December 2016
Year ended
31 December 2015
Opening balance (10 136) (21 088)
Recognition (5 417) (3 220)
Reversal 2 682 10 392
Utilization 3 278 3 780
Fair value measurement of emission allowances 13 226
Closing balance 3 633 (10 136)

The inventory of emission allowances purchased for resale and generation of profit in the short term due to volatility of market prices is measured at fair value as at the end of the reporting period. The Group recognized a gain on measurement of PLN 13 226 thousand as at 31 December 2016 following an increase in the prices of emission allowances. The measurement the change of the allowances should be analyzed jointly with the measurement change of forward contracts of allowances.

486 120 433 279
Receivables from clients 27
27. Receivables from buyers

Current receivables from buyers as at 31 December 2016 and 31 December 2015 have been presented in the table below.

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As at
31 December 2016
As at
31 December 2015
Value of items before allowance/write-down
Receivables from clients 1 527 921 1 581 863
Receivables from clients – additional assessment of revenue from sales
of electricity and distribution services
425 705 298 805
Receivables claimed at court 146 086 227 739
Total 2 099 712 2 108 407
Allowance/write-down
Receivables from clients (84 036) (74 828)
Receivables claimed at court (121 611) (203 546)
Total (205 647) (278 374)
Value of item net of allowance (carrying amount)
Receivables from clients 1 443 885 1 507 035
Receivables from clients – additional assessment of revenue from sales
of electricity and distribution services
425 705 298 805
Receivables claimed at court 24 475 24 193
Total 1 894 065 1 830 033

Information on allowances/write-downs on receivables from buyers and other financial receivables has been presented in Note 46.1.1. to these consolidated financial statements.

1 894 065 1 830 033
Receivables arising from taxes and charges 28
28. Receivables due to taxes and charges
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As at
31 December 2016
As at
31 December 2015
Corporate Income Tax receivables 83 468 909
VAT receivables 154 181 205 713
Excise duty receivables 24 205 20 314
Other 2 000 1 409
Total 263 854 228 345

As at 31 December 2016, the Group had the following income tax assets and liabilities:

  • income tax receivables of PLN 83 468 thousand, where PLN 83 153 thousand relates to settlements of the Tax Capital Group;
  • income tax liability of PLN 2 371 thousand not included in the settlements of the Tax Capital Group.
Tax Capital Group

A Tax Capital Group (“TCG”) agreement for the years 2015-2017 was concluded on 22 September 2014. The Tax Capital Group was registered by the Head of the First Śląski Tax Office in Sosnowiec under a tax identification number NIP 2050004308 pursuant to a decision of 20 November 2014. The major companies constituting the Tax Capital Group as from 1 January 2015 are TAURON Polska Energia S.A., TAURON Wytwarzanie S.A., TAURON Dystrybucja S.A., TAURON Ciepło Sp. z o.o., TAURON Sprzedaż Sp. z o.o., TAURON Sprzedaż GZE Sp. z o.o., TAURON Obsługa Klienta Sp. z o.o., TAURON Ekoenergia Sp. z o.o., TAURON Wydobycie S.A. and Kopalnia Wapienia Czatkowice Sp. z o.o.

In the year ended 31 December 2016, the income tax charge of the Tax Capital Group was PLN 217 201 thousand. At the same time, the Tax Capital Group made advance payments relating to income tax of PLN 300 053 thousand and reported receivables arising from tax overpaid by a subsidiary before joining the Tax Capital Group in the amount of PLN 301 thousand.

263 854 228 345
Other financial assets 24
24. Other financial assets
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As at
31 December 2016
As at
31 December 2015
Shares 127 698 136 488
Deposits 38 472 39 724
Derivative instruments 56 417 5 684
Investment fund units 27 761 2 405
Loans granted 15 166 2 108
Bid bonds, deposits and collateral transferred 41 818 54 106
Other 14 561 5 034
Total 321 893 245 549
Non-current 227 140 211 215
Current 94 753 34 334

The shares held by the Group are mainly shares in the following entities:

  • SCE Jaworzno III Sp. z o.o., in the amount of PLN 36 283 thousand;
  • Przedsiębiorstwo Energetyki Cieplnej Tychy Sp. z o.o., in the amount of PLN 32 113 thousand;
  • PGE EJ 1 Sp. z o.o., in the amount of PLN 23 046 thousand;
  • Energetyka Cieszyńska Sp. z o.o., in the amount of PLN 15 063 thousand.

In the year ended 31 December 2016, the Parent acquired units in investment funds in the total amount of PLN 25 000 thousand. As at 31 December 2016, the carrying amount of these units measured at fair value was PLN 25 316 thousand.

Deposits constitute financial assets of Mine Decommissioning Fund.

94 753 34 334
Other non-financial assets 25.2
25.2. Other current non-financial assets
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As at
31 December 2016
As at
31 December 2015
Costs settled over time, including: 78 457 104 251
Costs of preparing production in hard coal mines 36 175 33 411
Property and tort insurance 10 922 15 888
IT, telecom and postal services 17 994 26 367
Other prepayments 13 366 28 585
Other current non-financial assets, including: 106 551 128 808
Advance payments for deliveries 103 601 120 342
Surplus of Social Benefit Fund assets over its liabilities 338 3 984
Other current assets 2 612 4 482
Total 185 008 233 059
Social Benefit Fund

The Group entities offset the Fund assets with their liabilities to the Fund as the assets are not classified as separate assets of the Group. An analysis of the fund is presented in the following table.

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As at
31 December 2016
As at
31 December 2015
Loans granted to employees 30 671 31 087
Cash 17 093 20 144
Other Fund assets and liabilities 2 822 (382)
Social Fund liabilities (50 248) (46 865)
Net balance 338 3 984
Transfers made to the Social Fund during the period (62 180) (60 388)
185 008 233 059
Cash and cash equivalents 29
29. Cash and cash equivalents
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As at
31 December 2016
As at
31 December 2015
Cash at bank and in hand 368 274 353 428
Short-term deposits (up to 3 months) 16 450 10 722
Other 157 762
Total cash and cash equivalents presented in the statement
of financial position, of which:
384 881 364 912
restricted cash 144 404 206 254
Bank overdraft (15 156) (10 206)
Cash pool (16 095) (29 377)
Foreign exchange 1 103 2 386
Total cash and cash equivalents presented
in the statement of cash flows
354 733 327 715

The difference between the balance of cash presented in the statement of financial position and the one in the statement of cash flows results from overdrafts, cash pool loans granted by entities not subject to consolidation due to the overall immateriality and exchange gains and losses on measurement of cash on foreign currency accounts.

As at 31 December 2016, the balance of restricted cash included mainly cash on the accounts for bid bonds of PLN 79 227 thousand and cash on the accounts used for the settlement of electricity and emission allowances traded on the Polish Power Exchange, i.e. Towarowa Giełda Energii S.A., of PLN 49 000 thousand.

384 881 364 912
Non-current assets classified as held for sale   19 612 17 898
  4 308 641 3 947 248
 
TOTAL ASSETS   33 456 894 32 071 433

 

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Note As at
31 December 2016
As at
31 December 2015
EQUITY AND LIABILITIES
Equity attributable to equity holders of the Parent
Issued capital 30.1
30.1. Issued capital
Issued capital as at 31 December 2016
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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 2016, the value of issued capital, the number of shares and the nominal value of shares had not changed as compared to 31 December 2015.

.

Shareholding structure as at 31 December 2016 (to the best of the Company’s knowledge)
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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%

To the best of the Company’s knowledge, the shareholding structure as at 31 December 2016 had not changed as compared to 31 December 2015.

8 762 747 8 762 747
Reserve capital 30.3
30.3. Reserve capital

On 8 June 2016, the Ordinary General Shareholders’ Meeting adopted a resolution to offset the net loss for the 2015 financial year, totaling PLN 3 453 908 thousand, against the reserve capital.

7 823 339 11 277 247
Revaluation reserve from valuation of hedging instruments 30.5
30.5. Revaluation reserve from valuation of hedging instruments
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Year ended
31 December 2016
Year ended
31 December 2015
Opening balance (73 414) (143 019)
Remeasurement of hedging instruments 132 108 85 466
Remeasurement of hedging instruments charged to profit or loss (4 856) 466
Deferred income tax (24 178) (16 327)
Closing balance 29 660 (73 414)

The revaluation reserve from valuation of hedging instruments results from valuation of Interest Rate Swaps (IRS) hedging the interest rate risk arising from bonds issued, which has been discussed in more detail in Note 45.3 to these consolidated financial statements.

The Company applies hedge accounting to hedging transactions covered by the policy for specific risk management in the area of finance.

As at 31 December 2016, the Company recognized PLN 29 660 thousand of revaluation reserve from valuation of hedging instruments. It represents receivables arising from valuation of interest rate swaps as at the end of the reporting period, totaling PLN 36 641 thousand, adjusted by a portion of valuation 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 80 658 thousand, where PLN 85 514 thousand was the amount paid in respect of hedges used in relation to closed interest periods and PLN (4 856) thousand resulted from a change in valuation of instruments related to interest on bonds accrued as at the end of the reporting period. The aforementioned costs of IRS hedging transactions adjusted finance costs arising from interest on bonds issued in the statement of comprehensive income.

29 660 (73 414)
Foreign exchange differences from translation of foreign entities   9 200 (791)
Retained earnings/(Accumulated losses) 30.4
30.4. Retained earnings and accumulated losses and restrictions on dividend payment

Prior year profit/loss arising from settlement of business combinations with subsidiaries and actuarial gains and losses related to provisions for post-employment benefits recognized through other comprehensive income are not distributable.

As at 31 December 2016 and as at the date of approval of these financial statements for publication no other dividend restriction occurred.

The Company’s Management Board recommends the net loss for the year 2016 in the amount of PLN 166 253 thousand to be covered from the Company’s reserve capital.

24 320 (3 947 461)
  16 649 266 16 018 328
Non-controlling interests   30 052 29 829
Total equity    16 679 318  16 048 157
Non-current liabilities  
Debt 33
33. Debt
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As at
31 December 2016
As at
31 December 2015
Loans and borrowings 1 263 553 1 411 776
Bonds issued 7 681 128 6 680 433
Finance lease 34 848 46 438
Total 8 979 529 8 138 647
Non-current 8 759 789 4 924 127
Current 219 740 3 214 520
 
8 759 789 4 924 127
Provisions for employee benefits 34
34. Provisions for employee benefits
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As at
31 December 2016
As at
31 December 2015
Provision for post-employment benefits and jubilee bonuses 1 480 391 1 850 375
Provision for employment termination benefits 51 222 57 336
Razem 1 531 613 1 907 711
Non-current 1 373 385 1 735 206
Current 158 228 172 505
1 373 385 1 735 206
Provisions for disassembly of fixed assets, land restoration and other provisions 35
35. Provisions for dismantling fixed assets, restoration of land and other
For the year ended 31 December 2016
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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 111 675 101 244 182 877 395 796
Interest cost (discounting) 4 904 2 700 11 502 19 106
Discount rate adjustment (35 846) (9 854) 2 257 (43 443)
Recognition/(reversal), net 160 21 212 2 208 23 580
Acquisition of ZCP Brzeszcze 65 992 65 992
Closing balance 146 885 115 302 198 844 461 031
Non-current 146 885 102 984 152 943 402 812
Current 12 318 45 901 58 219
Other provisions, long-term portion 46 498
Total       449 310
For the year ended 31 December 2015
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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 to liabilities of a disposal group classified as held for sale 59 389 59 389
Closing balance 111 675 101 244 182 877 395 796
Non-current 111 675 100 339 163 449 375 463
Current 905 19 428 20 333
Other provisions, long-term portion 1 909
Total 377 372
449 310 377 372
Accruals, deferred income and government grants 38
38. Accruals, deffered income and government grants
554 293 650 364
Deferred tax liabilities 16.3
16.3. Deferred income tax
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As at
31 December 2016
As at
31 December 2015
difference between tax base and carrying amount of fixed and intangible
assets
1 511 102 1 490 408
difference between tax base and carrying amount of financial assets 45 981 29 609
different timing of recognition of sales revenue for tax purposes 49 299 69 064
difference between tax base and carrying amount of energy certificates 15 766 48 817
other 44 156 39 889
Deferred tax liabilities 1 666 304 1 677 787
provisions 638 914 685 405
difference between tax base and carrying amount of fixed and intangible
assets
143 403 6 359
power infrastructure received free of charge and received connection fees 51 811 57 071
difference between tax base and carrying amount of financial assets and financial liabilities 50 387 49 471
valuation of hedging instruments 18 139
different timing of recognition of cost of sales for tax purposes 39 940 58 333
tax losses 12 758 12 758
difference between tax base and carrying amount of emission allowances 26 985
other 19 905 22 274
Deferred tax assets 957 118 936 795
After setting off balances at the level of individual Group companies, deferred tax for the Group is presented as:    
Deferred tax asset 50 382 54 184
Deferred tax liability (759 568) (795 176)

As at 31 December 2016 and 31 December 2015, the deferred tax asset was set off against deferred tax liabilities of companies from the Tax Capital Group (“TCG”) due to the fact that the said companies had filed a combined tax return under the Tax Capital Group agreement for the years 2015-2017, concluded on 22 September 2014.

Based on the forecasts prepared for the TCG, according to which taxable income will be earned in 2017 and in the following 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.

Change in deferred tax liability
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Year ended
31 December 2016
Year ended
31 December 2015
Opening balance 1 677 787 2 187 951
Change in the balance:
corresponding to profit/(loss) (27 405) (529 019)
reclassification from disposal group classified as held for sale 18 910
acquisition of ZCP Brzeszcze 15 239
other changes 683 (55)
Closing balance 1 666 304 1 677 787
Change in deferred tax asset
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Year ended
31 December 2016
Year ended
31 December 2015
Opening balance 936 795 892 902
Change in the balance:
corresponding to profit/(loss) 63 005 60 792
corresponding to other comprehensive income (63 052) (28 587)
reclassification from disposal group classified as held for sale 11 585
acquisition of ZCP Brzeszcze 18 366
other changes 2 004 103
Closing balance 957 118 936 795
759 568 795 176
Other financial liabilities 42
42. Other financial liabilities
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As at
31 December 2016
As at
31 December 2015
Wages, salaries and related charges 174 212 172 660
Bid bonds, deposits and collateral received 79 415 120 890
Insurance contracts 12 560 16 149
Derivative instruments 560 112 109
Other 61 922 20 563
Total 328 669 442 371
Non-current 72 374 101 705
Current 256 295 340 666

Derivative instruments have been discussed in Note 45.3 to these consolidated financial statements.

72 374 101 705
  11 968 719 8 583 950
Current liabilities  
Debt 33
33. Debt
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As at
31 December 2016
As at
31 December 2015
Loans and borrowings 1 263 553 1 411 776
Bonds issued 7 681 128 6 680 433
Finance lease 34 848 46 438
Total 8 979 529 8 138 647
Non-current 8 759 789 4 924 127
Current 219 740 3 214 520
219 740 3 214 520
Liabilities to suppliers 39
39. Liabilities to suppliers

Current liabilities to suppliers as at 31 December 2016 and 31 December 2015 are presented in the table below:

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Liabilities to suppliers in operating segments As at
31 December 2016
As at
31 December 2015
Distribution 294 573 281 839
including from Polskie Sieci Elektroenergetyczne S.A. 200 732 176 859
Sales 247 487 245 424
Mining 144 722 83 111
Generation 100 857 130 606
Other 42 090 49 726
Total 829 729 790 706
829 729 790 706
Capital commitments 40
40. Capital commitments

Short-term capital commitments as at 31 December 2016 and 31 December 2015 are presented in the table below:

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Capital commitments in operating segments As at
31 December 2016
As at
31 December 2015
Generation 511 403 290 916
Distribution 336 624 420 735
Mining 159 138 30 603
Sales and other 26 639 24 589
Total 1 033 804 766 843

An increase in capital commitments in the Generation segment concerned mainly a rise in commitments relating to construction of unit 910 in Jaworzno, which totaled PLN 458 484 thousand as at 31 December 2016 versus PLN 124 690 thousand as at 31 December 2015.

A rise in capital commitments in the Mining segment concerned mainly a commitment relating to development of a longwall system in Zakład Górniczy Brzeszcze in the amount of PLN 89 080 thousand. No such commitment was recognized as at 31 December 2015.

Long-term capital commitments have been presented in the consolidated statement of financial position within other financial liabilities. As at 31 December 2016 and 31 December 2015, the related commitments totaled PLN 299 thousand (Distribution) and PLN 916 thousand (Distribution: PLN 416 thousand, Sales: PLN 500 thousand), respectively.

Commitments to incur capital expenditure

As at 31 December 2016 and 31 December 2015, the Group committed to incur expenditure on property, plant and equipment and intangible assets of PLN 4 368 685 thousand and PLN 5 597 990 thousand, respectively, with the key items presented below:

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Operating segment Agreement/investment project As at
31 December 2016
As at
31 December 2015
Generation Construction of a power-generating unit with the capacity of 910 MW for supercritical parameters in Jaworzno III Power Plant 2 579 313 3 773 520
Commissioning of a part of external coal handling system and an ash removal system for a power-generating unit with the capacity of 910 MW for supercritical parameters in Jaworzno III Power Plant 229 150 144 325
Constructing new cogeneration capacity in Tychy Heat and Power Plant 10 000 98 970
Distribution Redevelopment of the double track overhead line Przybków-Kąty Wrocławskie-Klecina 31 446 73 140
Implementation of Smart City Wrocław, an intelligent measurement system 18 880 91 126
Construction of Grid Management Centre in Kraków and in Wrocław 30 951 55 176
Mining Construction of the „Grzegorz” shaft with the accompanying infrastructure and excavations 16 484 22 105
Construction of the 800 m drift at Janina Mining Plant 19 578 37 986
Investment Program in Brzeszcze Mining Plant 32 731
1 033 804 766 843
Provisions for employee benefits 34
34. Provisions for employee benefits
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As at
31 December 2016
As at
31 December 2015
Provision for post-employment benefits and jubilee bonuses 1 480 391 1 850 375
Provision for employment termination benefits 51 222 57 336
Razem 1 531 613 1 907 711
Non-current 1 373 385 1 735 206
Current 158 228 172 505
158 228 172 505
Provisions for liabilities due to energy certificates and greenhouse gas emission allowances 36
36. Provisions for liabilities due to gas emission and energy certificates

Provisions for liabilities due to gas emission and energy certificates concern the current year. Therefore, they are only short-term provisions.

For the year ended 31 December 2016
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Provision for gas emission obligations Provision for obligation to submit energy certificates Provisions, total
Opening balance 153 083 865 051 1 018 134
Recognition 381 946 743 312 1 125 258
Reversal (63) (3 884) (3 947)
Utilisation (325 230) (849 394) (1 174 624)
Closing balance 209 736 755 085 964 821
For the year ended 31 December 2015
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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
964 821 1 018 134
Other provisions 37
37. Other provisions
For the year ended 31 December 2016
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Provision for use of real estate without contract Provision for counterparty claims, court dispute and other provisions Provisions, total
Opening balance 91 909 67 711 159 620
Recognition/(reversal), net 902 201 928 202 830
Utilisation (642) (7 258) (7 900)
Other changes (26) 211 185
Closing balance 92 143 262 592 354 735
Non-current 46 498 46 498
Current 92 143 216 094 308 237
Current portion of provisions for the costs of disassembly of fixed assets and land restoration and other provisions 58 219
Total current other provisions 366 456
For the year ended 31 December 2015
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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
Non-current 1 909 1 909
Current 91 909 65 802 157 711
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
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 facilities are located. As at 31 December 2016, the relevant provision amounted to PLN 92 143 thousand and was related to the following segments:

  • Generation: PLN 50 196 thousand;
  • Distribution: PLN 41 947 thousand.

In 2012, a third party lodged a claim against TAURON Ciepło S.A. (currently: TAURON Ciepło Sp. z o.o.) related to clarification of the legal status of the transmission equipment located on its property. The Company has questioned both the legitimacy of the claims and of the basis for offsetting their amounts against the current liabilities to the company arising from heat supplies. Consequently, the company went to court to recover its current receivables from the debtor. The amount of the potential claims of the aforesaid entity in respect of clarification of the legal status of the company’s transmission equipment will be reviewed 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, in accordance with IAS 37.92, the Group does not disclose all information regarding the above issue as required by IAS 37.

SR 37.

Provisions for counterparty claims, court disputes and other provisions

Material provisions recognized as other provisions have been discussed below:

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Item Operating segment Description As at 31 December 2016 Effect on gross profit/loss for 2016
Provisions for penalties fixed by the contracts Generation Considering the risk that the two projects listed below will not be continued (their continuity is required under the subsidy contracts):

  • Construction of a biomass boiler in Elektrownia Jaworzno III – Elektrownia II;
  • Construction of a system of power generation from renewable sources in Stalowa Wola,

a provision has been recognised for the costs of returning the subsidy totalling PLN 52,297 thousand. Considering the risk that Polski Fundusz Rozwoju S.A. may terminate the agreement, as a result of TAURON Wytwarzanie S.A. withdrawal from the construction of a gas and steam unit in Elektrownia Łagisza in Będzin and the risk of accruing liquidated damages, a provision totalling PLN 11,250 has been recognised.

63 547 (63 547)
Provision for a fine to the Energy Regulatory Office Distribution The provision concerning the risks of the violation of the Energy Law of 10 April 1997 by providing misleading information to the President of the Energy Regulatory Office. 20 436 (20 436)
Provision for increased transmission easement charges Distribution The provision concerns a risk of increased periodic charges for transmission easement related to energy infrastructure located within the Forestry Commission areas overseen by the Regional State Forest Directorate in Wrocław, following a change in the nature of the land from forestry to business. 21 700 (21 700)
Proceedings before the Office of Competition and Consumer Protection Distribution A provision for fines imposed by the President of the Office of Competition and Consumer Protection for the abuse by ENION S.A. (now TAURON Dystrybucja S.A.) of its dominant position on the electricity distribution market. As at 31 December 2016, the provision was recognized for fines related to proceedings before the Court of Competition and Consumer Protection which had not been closed as at that date. The balance of the provision had not changed as compared to 31 December 2015. 7 302
Provision for real estate tax Mining Provisions for proceedings related to real estate tax on underground mining excavations. 23 008 (20 860)
Provision for VAT Sales The provision was recognized in connection with pending inspection proceedings instituted by the Director of the Tax Inspection Office in Warsaw in relation to the value added tax. The period of the inspection proceedings was prolonged by the Director of the Tax Inspection Office a few times and the new deadline has been set at 28 April 2017. 64 494 (64 494)
366 456 178 044
Accruals, deferred income and government grants 38
38. Accruals, deffered income and government grants
267 662 254 337
Liabilities arising from taxes and charges 41
41. Liabilities due to taxes and charges

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As at
31 December 2016
As at
31 December 2015
Corporate Income Tax 2 371 85 357
Personal Income Tax 51 084 46 841
Excise 41 549 42 467
VAT 98 114 46 787
Social security 170 039 156 635
Environmental charges 40 964 46 889
Other 6 822 4 673
Total 410 943 429 649

A decrease in corporate income tax liabilities was driven by the fact that as at 31 December 2016, the Tax Capital Group had receivables of PLN 83 153 thousand arising from income tax, which has been discussed in more detail in Note 28 to these consolidated financial statements. As at 31 December 2015, the Tax Capital Group had an income tax liability in the amount of PLN 82 944 thousand.

410 943 429 649
Other financial liabilities 42
42. Other financial liabilities
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As at
31 December 2016
As at
31 December 2015
Wages, salaries and related charges 174 212 172 660
Bid bonds, deposits and collateral received 79 415 120 890
Insurance contracts 12 560 16 149
Derivative instruments 560 112 109
Other 61 922 20 563
Total 328 669 442 371
Non-current 72 374 101 705
Current 256 295 340 666

Derivative instruments have been discussed in Note 45.3 to these consolidated financial statements.

256 295 340 666
Other non-financial liabilities 43
43. Other current non-financial liabilities
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As at
31 December 2016
As at
31 December 2015
Payments from customers relating to future periods, of which: 298 606 273 168
Prepayments for connection fees 21 369 25 366
Amounts overpaid by customers 245 544 240 700
Other 31 693 7 102
Other current non-financial liabilities 2 573 754
Total 301 179 273 922
301 179 273 922
  4 808 857 7 439 326
Total liabilities 16 777 576 16 023 276
TOTAL EQUITY AND LIABILITIES   33 456 894 32 071 433
White certificates white certificates "White" certificates "white" certificates Certificates confirming the saving of a specific quantum of energy as a result of completing investments to enhance energy efficiency.
Biomass biomass Denotes a biodegradable fraction of products, waste and residue from agricultural and forestry production and related branches of industry, including fishing and aquaculture, and biogas and a biodegradable fraction of industrial and communal waste.
Sub peak power generation units sub peak power generation units Power generation units used during a period when the power system has a higher demand for capacity. Power generation units in this class are used from 2000 to 4000 hours a year.
Peak power generation units peak power generation units Power generation units used only during a period when the power system has the highest demand for capacity. Power generation units in this class are used fewer than 2000 hours a year.
Blue certificates blue certificates "Blue" certificates "blue" certificates Certificates confirming the generation of energy from agricultural biomass.
CAPEX Capital expenditures.
Red certificates red certificates "Red" certificates "red" certificates Certificates confirming the generation of energy in highly-efficient coal co-generation.
Net debt net debt Liabilities for loans and borrowings less cash and cash equivalents.
Dividend dividend Portion of a company’s net earnings per share designated for payment to shareholders.
EBITDA Earnings Before Interest, Taxes, Depreciation and Amortization.
Electromobility electromobility Using electric vehicles, both individual vehicles such as an electric car, electric scooter, electric motorcycle and electric bicycle and public transport means: trams, trolleybuses and trains. The assumptions for the Electromobility Development Plan and the domestic framework for the policy of alternative fuel infrastructure development call for there being one million electric vehicles on Polish roads by 2025. TAURON is conducting research and analyses on developing, promoting and disseminating electromobility among Polish nationals, developing the electromobility industry in Poland and in particular collaborating in launching and implementing the findings of scientific and technical work in this area. Moreover, jointly with PGE, Energa and Enea, TAURON has submitted an application to the Office of Competition and Consumer Protection to receive a permit to establish a company called ElectroMobilityPoland to create grounds for developing electromobility.
EMAS EMAS Eco Management and Audit Scheme, an EU instrument to encourage all types of organizations to improve their environmental protection constantly. Functions on the basis of Regulation (EU) no. 1221/2009 of the European Parliament and of the Council of 25 November 2009 on the voluntary participation by organizations in a Community eco-management and audit scheme (EMAS). The EMAS requirements constitute guidelines for organizations to structure their environmental protection duties, optimize costs and effectively manage energy and resources. EMAS is also a system for reporting an organization’s environmental impact making it easier to conduct dialogue in this area with stakeholders. Registration in the EMAS system means that an organization has satisfied the most rigorous environmental requirements.
Prosumer energy prosumer energy Generation of electricity, chiefly for one’s own needs and on a small-scale in installations harnessing renewable energy sources. Households and businesses that do this are called prosumers, meaning that they simultaneously play the role of energy producer and consumer.
Energy from distributed sources energy from distributed sources energii ze źródeł rozproszonych energetyka rozproszona rozproszone wytwarzanie generacja rozproszona energetyki rozproszonej generacji rozproszonej distributed energy Generation of energy by small generation units or facilities connected directly to distribution grids or located in the user’s electrical energy grid that usually generate electricity from renewable energy sources or non-conventional sources, frequently in cogeneration with the generation of thermal energy (distributed cogeneration). The following parties, for instance, may be part of a distributed generation grid: prosumers, energy cooperatives and municipal power plants.
Purple certificates purple certificates "Purple" certificates "purple" certificates Certificates confirming the generation of energy from methane captured in mines.
grid parity Grid parity Signifies the equivalence of the production costs of renewable energy with the energy generated in conventional power plants.
TGE’s FCM Indices Towarowa Giełda Energii (TGE) is the power exchange running the following markets: electricity (Forward Commodity Market - FCM), Day-Ahead Market - DAM, Intraday Market - IDM) and gas (FCMg, DAMg) and the Property Right Market.
smart metering Smart metering Comprehensive and integrated information system encompassing electrical energy smart meters for users of energy, telecommunication infrastructure, central database and management system. Smart metering systems support two-way communication in real time between information systems and electronic electricity meters installed in customers’ locations. Moreover, they may automate the entire billing process for energy users - from obtaining metering data to processing and aggregating them to issuing invoices.
Stakeholder stakeholder stakeholders Natural or legal entity (individual, community, institution, organization, office etc.) which may affect the company or remain under the influence of its actions.
IoT Internet of Things – concept according to which clearly identified objects may directly or indirectly collect, process or exchange data via computer network.
Emergency Cold Reserve IRZ Mechanism introduced by the transmission system operator in 2016. It involves the TSO paying the owners of generation sources which are planned to be withdrawn for keeping them ready to run in response to the operator’s instruction during the anticipated periods of capacity shortage.
ISO 14001 PN-EN ISO 14001:2005 standard PN-EN 14001 standard One of the ISO standards used in managing environmental protection. This standard designated for all organizations regardless of their type and size defines the requirements whose satisfaction supports the achievement of environmental (for instance preventing the emission of pollutants) and economic objectives.
Covenant covenant Contractual clause, order or ban imposed on a borrower to minimize the risk of its invsolvency. Covenents most frequently constitute protection for sources of debt payment to creditors, e.g. by banning further borrowing or disposing of assets.
Aggregate aggregate Bulk organic or mineral material used mainly to produce construction mortar and concrete and build roads.
HV and MV Lines linii WN i SN sieci WN i SN HV - high voltage grid in which the voltage ranges from 110 kV. This grid is used to transmit electrical energy over large distances. MV - medium voltage grid, i.e. an electrical energy grid in which the electrical voltage ranges from 1 kV to 110 kV. Medium voltage is broadly used in electrical energy grids to transmit electrical energy over medium distances and switch energy. It is used as an intermediate voltage between high voltage and low voltage connected to end-users.
Customer loyalization customer loyalization Strategy to acquire and retain customers in this time of growing competition.
Micro-grid micro-grid Electrical energy micro-grid – set of generation equipment, electrical energy storage and receiver units connected in a joint network to ensure the reliable supply of electrical energy and minimize its cost.
Micro-cogeneration micro-cogeneration Technological process involving the cogeneration of thermal and electrical energy based on the utilization of small-scale equipment and medium capacities. Micro-cogeneration may be employed in all facilities in which there is a concurrent need for electrical and thermal energy. The greatest benefits from employing micro-generation are obtained in facilities in which the demand for these two types of energy does not oscillate much or is constant. That is why individual users, hospitals and educational centers, sports centers, hotels and public utilities are usually the most frequent users of cogeneration systems.
MSCI Emerging Markets Europe 10/40 Index Index comprising key companies listed on emerging markets in Europe.
MSCI Poland Index Index comprising more than 20 key companies listed on the Warsaw Stock Exchange.
Best Available Technology BAT The most efficient and sophisticated level of technology development and methods for conducting a given business. BAT are defined for various branches of industry. In the energy sector BAT forms the basis for determining borderline emission quantities, among others, to eliminate, or if that is not practicable, limit emissions and their overall environmental impact.
Sensitive user sensitive user According to the Act entitled Energy Law, a sensitive user is a person to whom a housing allowance has been awarded and who is a party to a comprehensive agreement or electricity sale agreement and who lives in the place where electrical energy is supplied.
Impairment losses impairment losses Losses because of the impairment of non-current assets taken in accordance with the regulations of international accounting IFRS (MSSF) standard.
Corporate Social Responsibility CSR Corporate Social Responsibility – business philosophy and management strategy calling for an organization to take responsibility for the impact exerted by its decisions and actions on society and the environment. Its foundations are rooted in ethical and transparent conduct, taking into consideration the expectations of stakeholders and cultivating good long-term relations with the overall environment. Corporate social responsibility is one of the key methods of achieving sustainable socio-economic development.
PV cells Photovoltaic cell (PV) – semi-conductor material in which the energy of solar radiation is converted into electrical energy.
omni-channel Omni-channel According to the omni-channel idea, the future of commerce is to conduct online sales while simultaneously encouraging customers to make traditional purchases. Online and offline sales during the digital revolution should fluidly penetrate one another.
Operating Capacity Reserve ORM Mechanism of providing operational reserves by the Centrally Discharged Units (JWCD), where they were able to deliver electricity to the system, but for market reasons were not used. It was implemented in Poland in 2014.
RES Renewable energy sources.
PM-RES Property rights to certificates of energy for electrical energy generated in RES.
Polygeneration polygeneration Parallel generation of energy and chemicals.
RESPECT Index Index consisting of companies listed on the Warsaw Stock Exchange to identify companies managed in a responsible and sustainable manner. It takes into account the quality of reporting, the level of investor relations, corporate governance and liquidity, among others, whereby it simultaneously constitutes a real point of reference to measure the attractiveness of companies as investments.
Balancing market balancing market The balancing market is what is referred to as a technical market. That means it is not a place to sell energy. Its purpose is the physical delivery of the energy purchase/sale agreements executed by participants and balancing the demand for electricity with its generation in real time in the national electrical energy system (KSE). The existence of the balancing market is indispensable for the energy market to function. Entities that buy energy have an obligation to participate in this market.
CATALYST Market Catalyst market Bond market. It is run on the transaction platforms of the Warsaw Stock Exchange and BondSpot.
SAIDI System average interruption duration index in the supply of electricity calculated in minutes per user. It is a reliability index whose value is the sum of the products of interruption duration in energy supply and the number of users affected by the consequences of such an interruption during a year divided by the total number of users connected to a grid.
SAIFI System average interruption frequency index of long interruptions in energy supply. It is a reliability index whose value is the number of users affected by the consequences of all such interruptions during a year divided by the total number of users.
Gangue gangue The rock that is extracted from a deposit of a given mineral that is considered to be unusable waste.
Smart City smart city Smart city is a project involving the implementation of specific solutions exerting a real impact on citizens. One example is supplying tools to urban residents to monitor energy consumption, among others. This is possible thanks to the special platform called eLicznik (eMeter). TAURON supplies smart meters, for instance, under the Smart City Wrocław project.
Smart Home smart home System to control a smart home. SMART HOME technologies control burglar alarms, temperature control and electricity supply systems. This is a real-time power consumption monitoring solution that TAURON offers via a platform to check readings from the smart power meter.
Smart grid smart grid Smart electrical energy grids to facilitate communication between participants on the energy market to supply energy services while cutting costs and enhancing efficiency and integrating distributed sources of energy, including renewable energy.
smart metering Smart metering Smart metering system – electronic system used to measure energy consumption obtaining more information than from a conventional meter, and to send and receive data through electronic communication.
small carbonate sorbent Small carbonate sorbent Fine carbonate sorbent (limestone powder) – is a product derived from the process of dehydrating and profound milling of limestone whose active ingredient is calcium carbonate, CaCO3. Fine carbonate sorbent is used in processes to desulfurize flue gas – to remove SOx.
Enterprise Risk Management System ERM Set of rules, standards and tools to accomplish the fundamental objective of risk management i.e. ensuring the security of the TAURON Group’s operations. This system is regulated by the document entitled Enterprise Risk Management System in the TAURON Group, defining the TAURON Group’s enterprise risk management framework and rules.
Tauronet tauronet TAURON Group’s corporate intranet portal, one of the most important tools of communicating with employees. One of the largest platforms of its type in Poland at the time of publishing this report.
CCS Carbon dioxide capture, transport and geological storage technology.
CCU Capture and use (management) of carbon dioxide, eg. in the the chemical industry.
Smart Technology smart technology Control system in a smart home, among others - it is responsible for the safety and living comfort of residents.
Towarowa Giełda Energii S.A. Polish Power Exchange TGE Towarowa Giełda Energii (TGE) (Polish Power Exchange) is the only licensed power exchange in Poland. Presently, TGE runs the following markets: Day-Ahead Market (DAM), Commodity Forward Market with physical delivery (CFM), Property Rights Market for RES and Cogeneration. TGE also keeps a register of the Certificates of Origin for electrical energy produced in RES and in highly efficient cogeneration sources and the CO2 Emission Allowance Market.
Energy Regulatory Office ERO Government authority regulating the Polish energy market (electricity and gas, among others).
Coal winnings coal winnings The rock material taken from the mine face. It includes the mineral and gangue.
WACC Financial ratio - weighted average cost of capital.
WIBOR Warsaw Inter Bank Offered Rate Warsaw Inter Bank Offered Rate - interest rate used on the Polish interbank market for interbank loans.
WIG Index comprising all the companies listed on the Main Market of the Warsaw Stock Exchange that fulfill the basic criteria for inclusion in its indices.
WIG20 Index comprising the 20 largest and most liquid companies listed on the Main Market of the Warsaw Stock Exchange.
WIG30 Index comprising the 30 largest and most liquid companies listed on the Main Market of the Warsaw Stock Exchange.
WIG-Energy Sectoral index comprising companies participating in the WIG index and simultaneously classified in the energy generation sector.
WIG-Poland National index comprising only the domestic companies listed on the Main Market of the Warsaw Stock Exchange that fulfill the basic criteria for inclusion in its indices.
Underground mining pit underground mining pit Space created as a result of mining works.
Highly-efficient cogeneration high-efficiency cogeneration Generating electrical or mechanical energy and usable thermal energy in cogeneration to save the original energy used in the cogeneration unit in an amount no lower than 10% compared to the generation of electrical energy and thermal energy in separate systems or in a cogeneration unit with an installed electricity capacity under 1 MW compared to the generation of electrical energy and thermal energy in separate systems.
Green certificates green certificates "Green" certificates "green" certificates Certificates of origin, i.e. a document that confirms the generation of electricity with renewable energy sources. The green certificate system has been in force in Poland since 1 October 2005 (and has changed in the new RES Act).
Yellow certificates yellow certificates "Yellow" certificates "yellow" certificates Certificate certifying the origin of energy. Operators of cogeneration units fired with gaseous fuels or with a total installed power source of less than 1 MW may be compensated with yellow certificates.
TPA Third Party Access - TPA is one of the most important principles (besides unbundling) on which the deregulated energy market is founded. TPA gives an energy user the right to buy it from any energy seller of its choosing.
EUA CO2 emission unit.
IFRS International Financial Reporting Standards – standards and their interpretations approved by the International Accounting Standards Board (IASB).
RFX Request for proposal.
Global Reporting Index GRI Independent international organization whose mission is to create a joint global framework for communicating responsibility and sustainable development. The GRI guidelines are an international reporting standard for organizations regardless of size, business sector and venue. Their application gives a guarantee of consistency in terminology and indicators.
International Integrated Reporting Council IIRC The International Integrated Reporting Council is an organization whose purpose is to create globally accepted integrated reporting guidelines based on combining financial, environmental, social and corporate governance reporting in a clear, succinct, coherent and comparable format. It consists of global leaders such as the International Federation of Accountants (IFAC), the International Accounting Standards Board, the United Nations Environmental Program (UNEP), the International Organization of Securities Commissions, the World Business Council for Sustainable Development and the Global Reporting Initiative (GRI).
integrated reporting non-financial reporting standard International integrated reporting standard encompassing financial and non-financial data devised by IIRC.

GRI indicators