30. Debt-related liabilities

Financial liabilities, including credit facilities, loans and debt securities

At initial recognition, all credit facilities and loans are recognised at fair value less capital-raising costs.

Subsequent to initial recognition, credit and loan liabilities are measured at amortised cost using the effective interest rate approach. In determining the amortised cost, costs related to obtaining credit or loan and discount or bonuses related to the liability are taken into account. Financial liabilities that include credit facilities, loans and debt securities are classified at initial recognition as:

• financial liabilities at fair value through profit or loss,
• financial assets at amortised cost.

Accounting rules for financial liabilities are described in greater detail in the section concerning financial instruments in the note devoted to financial instruments and fair value (note 35), whereas lease liabilities are described in the note concerning right-of-use assets (note 16).

In accordance with ENEA S.A.’s financing model, in order to secure funding for ENEA Group companies' on-going operations and investment needs, ENEA executes agreements with external financial institutions concerning bond issue programmes and/or credit agreements

Credit facilities and loans

Presented below is a list of the Group’s credit facilities and loans:

Presented below is a short description of ENEA Group’s significant credit and loan agreements:

On 12 May 2020, LW Bogdanka executed an overdraft agreement with BGK for up to PLN 150 000 thousand. Interest is based on WIBOR 1M plus a fixed margin. The credit facility is to be repaid by 12 May 2021. At the balance sheet date, the facility was not used, and the available limit was PLN 150 000.

Presented below is a list of bonds issued by ENEA S.A.

In the 12-month period ending 31 December 2020 ENEA S.A. did not execute new bond issue program agreements.

These transactions are described in notes 38.5 and 38.4.

Financing agreements require ENEA S.A. and ENEA Group to maintain certain financial ratios. As at 31 December 2020 and the date on which these consolidated financial statements were prepared and in the course of 2020 the Group did not breach any credit agreement provisions such as would require early re-payment of long-term debt.

Passenger vehicles were the main object of leases in 2020.

Contracts that are subject to IFRS 16 are leases, rights to perpetual usufruct of land, tenancy agreements that meet the definition of a lease (office space in buildings, stations, underground parts of land). The Group sets the lease term, i.e. an irrevocable lease term, together with: a) term for an option to extend the lease if it is sufficiently certain that the Group will exercise this right; b) term for an option to terminate the lease if it is sufficiently certain that the Group will not exercise the right. In most of its leases, the Group uses a lease term in accordance with the contractual period. For contracts executed for an indefinite period, the Group determines the minimum contractual term for both of the parties. If the Group is unable to determine how long it intends to use the asset and such an estimate could be treated as a lease term in the case of contracts with an indefinite term, the Group assumes that the irrevocable contractual term will be the termination period for that contract. In the case of rights to the perpetual usufruct of land, the Group sets the lease term in line with the period for which such rights are granted. In the case of rights to use underground parts of land, the average lease term is used, based on the period outstanding, as at the date on which the liability is recognised, for depreciation of the infrastructure placed under the ground. In 2020, leases also included cars and the renting of parking spots. There is a buy-out option in the case of cars. Car leases have a three-year term. At LBW, a contract to lease locomotives includes a fixed monthly payment for use. The rent payment may be proportionally reduced for periods in which the lessee does not use locomotives with no fault on the lessee’s part. The contract does not contain provisions concerning extensions or buy-out of the lease object after the lease term.

The present value of future lease payments is calculated using the interest rate implicit in the lease. If the lease rate is unknown, the Group uses a residual interest rate, i.e. a rate that would have to be paid in order to borrow, on similar terms and with similar collateral, funds necessary to purchase an asset similar to the right-of-use asset on similar economic terms.

The Group may use a practical expedient and not apply the lease recognition model in reference to: a) short-term leases (a lease term of 12 months or less; the contract does not include a right to buy out the asset) b) low-asset value leases the initial value of which for new assets does not exceed PLN 10 thousand (even if their aggregate value is material). If the Group decides to use this expedient, it recognises lease payments as cost on a straight-line basis throughout the lease term or using another approach that more closely reflects the Group benefit. This exemption does not apply to situations where the Group transfers the asset under a sub-lease or expects to transfers it.

The Group does not have significant future cash outflows that are not included in measurement of a finance liability and covenants imposed by lessors. The Group was not a party to any leasebacks in 2020.

The recognised annual payments for rent and tenancy contracts other than leases amount to PLN 12 396 thousand.