ESG Report of the
ENEA Capital Group for 2020

14. Property, plant and equipment

Accounting rules

Property, plant and equipment items are measured at purchase price or cost to manufacture, less accumulated depreciation and impairment.

Subsequent expenditures are included in the book value of a given tangible asset or are recognised as a separate asset (wherever appropriate) only if it is likely that this item will bring economic benefits to the Group and the item’s cost can be reliably measured. All other expenses on repairs and maintenance are recognised as profit or loss in the reporting period in which they are incurred.

Mine closure costs initially recognised in the value of tangible assets are subject to depreciation using the same method as the tangible assets they concern, starting from the moment a given tangible asset is put into service, over a period specified in the mine closure plan within the expected mine closure schedule.

Land is not subject to depreciation. Other tangible assets are depreciated on a straight-line basis throughout the period of use or using the natural method based on the longwall length (in the case of operational excavations). The base for calculating depreciation constitutes the initial value less final value, if significant. Each significant part of a property, plant and equipment item with a different period of use is depreciated separately.

Depreciation begins when an asset is available for use. Depreciation ends when an asset is designated as available for sale in accordance with IFRS 5 or when it is removed from the statement of financial position, depending on which occurs earlier.

Within its activities, the Group receives tangible assets for free, which are initially measured at fair value. Property, plant and equipment received for free, in the form of power infrastructure (connections, lighting grid) is recognised by the Group on a one-off basis in other operating revenue when it is received (except for the receipt of lighting infrastructure in exchange for services – in which case they are accounted for over time).

External financing costs

Costs of external financing that can be directly attributed to an asset purchase, build or manufacture are capitalised as part of the purchase price or cost to manufacture such an asset. Other external financing costs are recognised as a cost in the period in which they are incurred.

The capitalisation of external financing costs begins at the later of the two dates: commencement of investment or commencement of financing. The Group ceases to capitalise external financing costs when the asset is handed over for use. The Group suspends capitalising external financing costs over a longer time period in which it suspended works focused on adapting the asset.

Significant judgements and estimates

Economic life and residual value

The amount of depreciation charges is determined on the basis of expected period of use for tangible assets. The verification conducted this year resulted in changes to depreciation/amortisation periods. Their impact in 2021 on the amount of depreciation is PLN (3 461 thousand).

The residual values and economic life of property, plant and equipment are verified at least once a year. Each change of depreciation period requires agreement and necessitates an adjustment to the depreciation charges in subsequent financial years.

At each balance sheet date ending a financial year, impairment assessments are carried out in compliance with IAS 36. If indications of impairment are identified, an impairment test is carried out in accordance with IAS 36 (section in these financial statements concerning impairment of non-financial assets).

Use periods for property, plant and equipment are as follows:

buildings and structures 10 – 80 years
ncluding power grids 33 years
structures (operational excavations) natural method depreciation based on length of wall
technical equipment and machinery 2 – 50 years
means of transport 3 – 30 years
other property, plant and equipment 3 – 25 years

 

Estimating the useful life of mines and coal resources

The end of the life-cycle of the mine (LWB) is currently estimated to be 2051, and this did not change from the previous annual financial statements, for 2019. The actual deadline for mine closure might be different from the Group’s estimates. This results from the calculation being based on the mine’s estimated life-cycle and only the coal resources being available as at the reporting date. A decline in demand for the Group’s coal might result in production falling below production capacities, which would extend the mine life-cycle.

Property, plant and equipment

For the financial year ended 31 December 2020:

Land Buildings and structures Technical equipment and machinery Means of transport Other tangible assets Tangible assets
under construction
Total
including excavations
Gross value
As at 1 January 2020 120 238 17 537 426 1 669 857 14 710 216 368 826 792 254 1 132 323 34 661 283
Transfers 1 752 1 145 338 279 922 990 211 22 968 112 279 (2 240 001) 32 547
Purchase (42 823) (7 204) 1 500 4 613 2 292 130 2 248 216
Sale (115) (82) (400) (5 750) (18 154) (24 501)
Discontinued investments (12) (12)
Liquidation (214) (139 536) (84 770) (19 347) (4 978) (4 629) (168 704)
Other (3 156) 75 872 2 620 (2 477) 12 412 85 271
As at 31 December 2020 118 505 18 576 195 1 865 009 15 676 096 382 566 883 886 1 196 852 36 834 100
Accumulated depreciation
As at 1 January 2020 (5 995 024) (459 045) (5 140 290) (147 049) (449 694) (2 656) (11 734 713)
Sale 4 73 379 4 321 18 154 22 931
Depreciation (722 661) (163 343) (698 378) (24 981) (58 734) (1 504 754)
Liquidation 101 832 55 678 17 985 6 167 4 598 130 582
Other 153 8 1 154 1 036 2 343
As at 31 December 2020 4 (6 615 627) (566 702) (5 819 150) (161 542) (484 640) (2 656) (13 083 611)
Impairment
As at 1 January 2020 (1 635) (461 429) (965 641) (3 435) (5 006) (18 620) (1 455 766)
Decreases 225 26 242 28 151 94 250 1 050 56 012
Increases (965) (1 023 345) (2 321 304) (10 694) (14 940) (75 765) (3 447 013)
As at 31 December 2020 (2 375) (1 458 532) (3 258 794) (14 035) (19 696) (93 335) (4 846 767)
Net value at 1 January 2020 118 603 11 080 973 1 210 812 8 604 285 218 342 337 554 1 111 047 21 470 804
Net value at 31 December 2020 116 134 10 502 036 1 298 307 6 598 152 206 989 379 550 1 100 861 18 903 722

 

No collateral is established on property, plant and equipment assets. External financing costs capitalised in 2020 were negligible.

For the financial year ended 31 December 2019:

Land Buildings and structures Technical
equipment and
machinery
Means of
transport
Other tangible assets Tangible assets
under
construction
Total
including
excavations
Gross value
As at 1 January 2019 114 786 16 376 934 1 465 088 14 196 007 344 174 674 706 1 336 239 33 042 846
Adjustment due to implementation of IFRS 16 (10 028) (10 028)
As at 1 January 2019, adjusted 114 786 16 376 934 1 465 088 14 196 007 334 146 674 706 1 336 239 33 032 818
Purchase 7 213 229 189 1 409 6 178 1 936 810 2 180 799
Sale (50) (339) (172) (8 540) (43) (9 144)
Transfers 5 528 1 375 054 410 125 320 884 47 444 110 968 (2 137 891) (278 013)
Transfer to available-for-sale non-current assets (35) (35)
Liquidation (305 206) (205 356) (38 122) (5 849) (3 622) (352 799)
Transfer to investment properties (43) (43)
Discontinued investments (120) (120)
Other (26) 83 848 2 430 216 4 067 (2 715) 87 820
As at 31 December 2019 120 238 17 537 426 1 669 857 14 710 216 368 826 792 254 1 132 323 34 661 283
Accumulated depreciation
As at 1 January 2019 (5 514 659) (446 214) (4 502 257) (140 122) (399 340) (2 656) (10 559 034)
Adjustment due to implementation of IFRS 16 2 981 2 981
As at 1 January 2019, adjusted (5 514 659) (446 214) (4 502 257) (137 141) (399 340) (2 656) (10 556 053)
Depreciation (721 026) (176 070) (670 746) (23 817) (54 593) (1 470 182)
Sale 189 121 6 628 6 938
Liquidation 239 057 161 834 32 747 7 371 3 641 282 816
Other 1 415 1 405 (155) (90) 598 1 768
As at 31 December 2019  (5 995 024) (459 045) (5 140 290) (147 049) (449 694) (2 656) (11 734 713)
Impairment
As at 1 January 2019 (1 459) (467 947) (960 022) (3 480) (4 870) (18 641) (1 456 419)
Decreases 12 785 8 022 52 32 260 21 151
Increases (176) (6 267) (13 641) (7) (168) (239) (20 498)
As at 31 December 2019 (1 635) (461 429) (965 641) (3 435) (5 006) (18 620) (1 455 766)
Net value at 1 January 2019 113 327 10 394 328 1 018 874 8 733 728 200 572 270 496 1 314 942 21 027 393
Korekta wynikająca z wdrożenia MSSF 16 (7 047) (7 047)
Net value at 1 January 2019, adjusted 113 327 10 394 328 1 018 874 8 733 728 193 525 270 496 1 314 942 21 020 346
Net value at 31 December 2019 118 603 11 080 973 1 210 812 8 604 285 218 342 337 554 1 111 047 21 470 804

 

Future contract liabilities related to the purchase of property, plant and equipment incurred as at the reporting date but not yet recognised in the statement of financial position amounted to PLN 1 067 174 thousand as at 31 December 2020 (as at 31 December 2019: PLN 1 306 454 thousand).

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