The preparation of these consolidated financial statements in accordance with IFRS-EU requires that the Management Board makes certain estimates and assumptions that affect the adopted accounting policies and the amounts disclosed in the consolidated financial statements and notes thereto. The adopted assumptions and estimates are based on the Management Board’s best knowledge of the current and future activities and events. The actual figures, however, can be different from those assumed. The key areas in which the estimates made by the Management Board have a material impact on the consolidated financial statements include:
- employment and post-employment benefits – the provisions for employee benefits are measured using a method which involves determination of the balance of liabilities due to expected future benefit payments as at the end of the reporting period, calculated in line with actuarial methods; a change in the discount rate and a long-term salaries and wages increase rate impact the accuracy of the estimate made (Note 31),
- periods of depreciation of tangible and intangible fixed assets - the amount of depreciation is determined on basis of the estimated economic useful life of property, plant and equipment or intangible assets. Economic periods are reviewed at least once a year. Depreciation periods are presented in Notes 55.5, 55.6, 55.7 and 55.12 of these consolidated financial statements,
- trade and other receivables allowance – allowance is determined as the difference between the carrying amount and the present value of estimated future cash flows, discounted using the original interest rate; a change in estimated future cash flows shall cause a change in estimated allowance on receivables (Note 16),
- uninvoiced sales revenue at the end of a financial year – the amount of uninvoiced energy sales is estimated based on the estimated consumption of electricity in the period from the last meter reading date until the end of the financial period (Note 16),
- compensation for non-contractual use of land – estimation includes the potential payment of compensation for the so called non-contractual use of land and rental fee (Note 32, 47.5),
- provision for land reclamation – the Group, having filled or closed a slag and ash dump, is obliged to reclaim the land. As the Group has large unfilled dumps, land reclamation is planned for 2060. Future estimated costs of land reclamation were discounted to their current value as at 31 December 2016 , using a discount rate of 3.20 % (Note 32),
- recoverable amount of tangible and intangible fixed assets – impairment tests of cash generating units are based on a number of significant assumptions, some of which are outside the control of the Group. Significant changes to the assumptions impact the results of impairment test and consequently the financial position and performance of the Group (Note 6),
- provision for purchasing CO2 emissions rights – the assumptions concern the allocation of free of charge CO2 emission rights for 2016 (Note 32),
- estimating the useful life of mines and coal resources – the useful life of a mine (LWB) is estimated based on operating resources of coal covered by the concession rights and estimated production capacity for the year 2043. The actual date of mine liquidation may differ from estimated by the Group. This results from taking into account in the calculation of the estimated useful life of mines, only recoverable reserves of coal. In 2014 Enea Group received a mining license for K-3 area. The Group also tries to obtain further mining, which may result in a substantial extension of useful life of mines,
- estimating the provision for mine liquidation – Enea Group creates a provision for mines liquidation costs, which is imposed by existing law. Key assumptions used in determining the cost of the liquidation of mines include assumptions regarding the useful life of mines, the expected inflation and long-term discount rates. Any change in these assumptions affect the carrying value of provisions (Note 32).
- provision for the difference from the valuation of shares in Eco-Power Sp. z o.o. – the Group estimated the value of shares in Eco-Power Sp. z o.o. and created provision for the difference between the amount resulting from share purchase agreement, which amounts to PLN 286 500 000,00 and value estimated in the model by Enea S.A. (Note 54).
