Consolidated statement of comprehensive income

Note Year ended 31 December 2014 Year ended 31 December 2013
Sales revenue 11

11. Sales revenue

Year ended
31 December 2014
‚Year ended
31 December 2013
Sale of goods for resale, finished goods and materials without elimination of excise 12 648 676 13 413 345
Excise (453 850) (448 585)
Sale of goods for resale, finished goods and materials, of which: 12 194 826 12 964 760
Electricity 10 503 015 11 148 161
Heat energy 629 766 657 396
Property rights arising from energy certificates 213 062 156 791
Greenhouse gas emission allowances 4 469 63 608
Compensation for termination of PPAs (18 886)
Coal 470 519 628 091
Furnace blast 159 422 147 565
Compressed air 71 122 70 322
Milling products 31 813 27 654
Gas 23 586 2 710
Other goods for resale, finished goods and materials 88 052 81 348
Rendering of services, of which: 6 193 716 6 114 597
Distribution and trade services 5 816 878 5 701 653
Connection fees 122 594 158 695
Maintenance of road lighting 111 634 98 002
Revenue due to power and heat collisions 20 463 31 928
Charges for illegal electricity consumption 6 618 8 095
Other services 115 529 116 224
Other revenue 52 221 51 765
Total sales revenue 18 440 763 19 131 122
18 440 763 19 131 122
Cost of sales 12

12. Cost of goods, products, materials and services sold

(15 512 063) (15 990 461)
Profit on sale   2 928 700 3 140 661
Other operating income 13

13. Other operating income

Year ended
31 December 2014
Year ended
31 December 2013
Penalties, fines, compensations received or receivable 27 530 51 517
Derecognized provisions for non-contractual use of real estate 46 588 8 297
Reversal of other provisions 61 112 6 077
Subsidies/grants and revenue representing the equivalent of amortization/depreciation charges on subsidies/grants to fixed assets or fixed assets received free of charge 25 335 20 998
Surplus of shares taken up in a joint venture over the value of contributed assets 38 965
Reduction in estimated provisions for existing pensioners and disability pensioners related to a change in benefit payment principles 17 326
Reversal of impairment losses recognised for other assets 4 334 2 107
Court proceedings costs, litigation and enforcement costs received or receivable 2 253 3 674
Statute-barred / forgiven liabilities 7 721 2 886
Other 19 468 14 554
Total other operating income 233 306 127 436
  In the year 2014 the Group recognized considerable revenue due to reversal of other provisions: provision for restoration of land and dismantling and removal of fixed assets, provision for counterparty claims, court disputes and other provisions, as discussed in detail in Note 39.2 to these consolidated financial statements. Following the transaction of taking up shares in a joint venture TAMEH HOLDING Sp. z o.o. with the value of PLN 374 883 thousand in return for contributing assets in the form of Elektrownia Blachownia and Zakład Wytwarzania Nowa with the value of PLN 335 918 thousand, the gain of PLN 38 965 thousand was recognized. The transaction was discussed in detail in Note 21 to these consolidated financial statements.
233 306 127 436
Selling and distribution expenses 12

12. Cost of goods, products, materials and services sold

(549 164) (553 502)
Administrative expenses 12

12. Cost of goods, products, materials and services sold

(664 187) (645 406)
Other operating expenses 14

14. Other operating expenses

Year ended
31 December 2014
Year ended
31 December 2013
Recognition of provisions for non-contractual use of real estate (35 614) (39 263)
Recognition of other provisions (27 414) (27 129)
Loss on the disposal of property, plant and equipment / intangible assets (10 224) (5 274)
Costs of electrical and other damages to non-current assets (7 378) (10 779)
Social activity costs (1 647) (2 048)
Court fees, litigation and enforcement costs (8 561) (6 602)
Penalties, fines, compensations (4 098) (3 998)
Recognition of impairment losses against other assets (1 667) (6 483)
Delegated employees (4 271) (4 142)
Donations (2 439) (2 131)
Membership fees (2 726) (2 252)
Write-off for abandoned investments and production as well as liquidated materials (1 826) (7 297)
Rescue action costs (3 414)
Adjustment of property tax for previous years (1 129) (1 134)
Other (9 548) (13 177)
Total other operating expenses (118 542) (135 123)

(118 542) (135 123)
Operating profit   1 830 113 1 934 066
Finance income 15

15. Finance income

Year ended
31 December 2014
Year ended
31 December 2013
Income from financial instruments, of which: 78 447 96 696
Interest income 51 315 69 914
Dividends 3 931 18 323
Reversal of write-downs 292 3 014
Gain on the disposal of investments 22 909 4 506
Net revenue from realized derivative instruments 939
Other finance income 7 751 2 561
Total finance income 86 198 99 257
  Gain on disposal of investment results mainly from the sale of shares in Przedsiębiorstwo Świadczeń Zdrowotnych i Promocji Zdrowia ELVITA Jaworzno III Sp. z o.o. – gain on disposal of investment amounted to PLN 22 788 thousand. Transaction details have been presented in Note 49.1 to these consolidated financial statements.
86 198 99 257
Finance costs 16

16. Finance costs

Year ended
31 December 2014
Year ended
31 December 2013
Financial instrument costs, of which: (328 847) (271 402)
Interest costs (285 474) (237 021)
Recognition of impairment losses (2 170) (18 304)
Revaluation of financial instruments (12 236) (1 049)
Foreign exchange losses (14 340) (2 364)
Commission relating to borrowings and debt securities (14 013) (12 664)
Net costs from realized derivative instruments (614)
Other finance costs, of which: (88 313) (75 591)
Interest on employee benefits (64 096) (65 125)
Other finance costs (24 217) (10 466)
Total finance costs (417 160) (346 993)
  Revaluation of financial instruments covers measurement of derivatives held by the Parent. The increase in costs arising from measurement of derivatives results mainly from negative measurement of an interest rate swap (IRS), partially hedging interest cash flows related to Tranche A bonds, which were redeemed on 29 December 2014. Until early redemption, the accounting treatment of the instrument complied with the hedge accounting principles. After closing the hedged item, the IRS was no longer subject to hedge accounting principles and its carrying amount of PLN 13 380 thousand was recognized in profit/loss for the period.
(417 160) (346 993)
Share in profit/(loss) of joint ventures 21

21. Shares in joint ventures

Elektrociepłownia Stalowa Wola S.A.                  Elektrociepłownia Stalowa Wola S.A. is a special purpose vehicle set up in 2010 on the initiative of TAURON Polska Energia S.A. and PGNiG S.A. As a joint venture it is accounted for using the equity method in the consolidated financial statements. TAURON Polska Energia S.A. holds an indirect interest amounting to 50% in the share capital of this company and 50% in its governing body through TAURON Wytwarzanie S.A. Under the agreements of 20 June 2012 among PGNiG S.A., TAURON Polska Energia S.A. and Elektrociepłownia Stalowa Wola S.A., TAURON Polska Energia S.A. granted loans to Elektrociepłownia Stalowa Wola S.A. with a view to satisfying the necessary conditions for provision of funding to Elektrociepłownia Stalowa Wola S.A. by the European Bank for Reconstruction and Development and the European Investment Bank. The outstanding amounts of these loans as at the balance sheet date have been presented below:  
As at 31 December 2014 As at 31 December 2013
Principal Interest Principal Interest
Subordinated loan 177 000 21 331 177 000 12 310
VAT loan 5 850 12
Total loans granted to Elektrociepłownia Stalowa Wola S.A., of which: 182 850 21 343 177 000 12 310
Non-current 177 000 21 331 177 000 12 310
Current 5 850 12
  As at the end of the reporting period, the amount disbursed under the subordinated loan agreement was PLN 177 000 thousand, i.e. the maximum contractual amount. The loan with interest due is to be finally repaid no later than by the end of 2032. In the year ended 31 January 2014, the interest income due to loans granted reached PLN 9 139 thousand. The Group presented interest income due to loans granted of Elektrociepłownia Stalowa Wola S.A. in the portion corresponding to unrelated investors’ interests in the joint venture in the consolidated financial statements. Elektrownia Blachownia Nowa Sp. z o.o. On 5 September 2012 TAURON Wytwarzanie S.A., subsidiary, and KGHM Polska Miedź S.A. established a special purpose vehicle named Elektrownia Blachownia Nowa Sp. z o.o. with the registered address in Kędzierzyn Koźle. The Company was set up to perform a comprehensive investment project including preparation, construction and operation of a combined cycle gas and steam unit with the capacity of ca. 850 MWe on the land of TAURON Wytwarzanie S.A. – Oddział Elektrownia Blachownia. As a joint venture Elektrownia Blachownia Nowa Sp. z o.o. is accounted for in the consolidated financial statements using the equity method. TAURON Polska Energia S.A. holds an indirect interest amounting to 50% in the share capital of this company and 50% in its governing body through TAURON Wytwarzanie S.A. On 30 December 2013 TAURON Polska Energia S.A., KGHM Polska Miedź S.A. and TAURON Wytwarzanie S.A. concluded an agreement, based on which the construction of gas and steam power unit in Elektrownia Blachownia Nowa Sp. z o.o. has been suspended. The decision resulted from the current situation in the electricity and gas market entailing higher investment risk, which made the entities review and optimize the project. In the year ended 31 December 2014 no further developments in the project implementation occurred. The parties undertook to ensure further business operations of Elektrownia Blachownia Nowa Sp. z o.o., securing deliverables provided thus far, in particular updating project documentation and ensuring on-going monitoring of the energy market and regulatory environment in view of the possibility to restart project performance as soon as possible.  The parties agreed that the decision to recommence the project will be adopted in the form of a separate agreement which is expected to be concluded by 31 December 2016.   TAMEH HOLDING Sp. z o.o. and subsidiaries On 9 July 2014, TAURON Polska Energia S.A. established TAMEH HOLDING Sp. z o.o. and TAMEH POLSKA Sp. z o.o., both companies registered in Dąbrowa Górnicza. The entities were set up to carry out a shared project of the TAURON Group and ArcelorMittal Group. On 11 August 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 industrial power sector. The agreement was concluded for the period of 15 years with possible term extension. On 26 November 2014 a resolution concerning an increase in the issued capital of TAMEH POLSKA Sp. z o.o. was adopted. 96.83% of shares in the increased capital of TAMEH POLSKA Sp. z o.o. was taken by the Company and covered with a contribution-in-kind of an organized part of the following enterprises: TAURON Wytwarzanie S.A. (Elektrownia Blachownia) and TAURON Ciepło Sp. z o.o. (Zakład Wytwarzania Nowa). The remaining portion of shares was taken up by companies from the ArcelorMittal Group and covered with a contribution-in-kind in the form an organized part of the enterprise of ArcelorMittal Poland S.A. (Elektrociepłownia Kraków). On 10 December 2014, the spin-off of TAURON Wytwarzanie S.A. and TAURON Ciepło Sp. z o.o. in the form of separation of organized parts of enterprises contributed to TAMEH POLSKA Sp. z o.o. was registered. As a result, the issued capital of TAURON Ciepło Sp. z o.o. was reduced from PLN 1 375 226 thousand to PLN 1 098 349 thousand, i.e. by PLN 276 877 thousand. The spin-off of TAURON Wytwarzanie S.A. did not entail a reduction in the issued capital. On 11 December 2014, the Company sold 50% of shares in TAMEH HOLDING Sp. z o.o. with the value of PLN 41 thousand to ArcelorMittal Poland S.A. On the same day, the Extraordinary Shareholders’ Meeting of TAMEH HOLDING Sp. z o.o. adopted a resolution to increase the issued capital of the entity from PLN 5 thousand to PLN 658 681 thousand. On 19 December 2014, the increase in the issued capital of TAMEH HOLDING Sp. z o.o. was registered. TAURON Polska Energia S.A. took up 50% of shares in the increased capital of TAMEH HOLDING Sp. z o.o. in return for contributing shares held in TAMEH POLSKA Sp. z o.o. At the same time, ArcelorMittal Group companies took up 50% of the shares, having contributed shares held in TAMEH POLSKA Sp. z o.o. and ArcelorMittal Energy Ostrava s.r.o. (currently: TAMEH Czech s.r.o.) The value of shares in TAMEH HOLDING Sp. z o.o. was PLN 374 883 thousand. The purchase price for shares taken up was increased by acquisition costs of PLN 873 thousand. The net assets transferred by the Group amounted to PLN 335 918 thousand. Following the transactions concluded, 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, Elektrownia Blachownia, Elektrociepłownia in Kraków (EC Kraków) and 100% of shares in TAMEH Czech s.r.o. Investments in joint ventures measured using the equity method as at 31 December 2014 and for the year ended 31 December 2014 have been presented below:  
Elektrociepłownia Stalowa Wola S.A. Elektrownia Blachownia Nowa Sp. z o.o. TAMEH HOLDING Sp. z o.o.* As at
31 December 2014
Non-current assets 973 128 27 351 985 875 1 986 354
Current assets 53 283 36 920 319 756 409 959
Non-current liabilities (-) (900 635) (34 085) (934 720)
Current liabilities (-) (92 570) (59) (433 758) (526 387)
Total net assets 33 206 64 212 837 788 935 206
Share in net assets 16 603 32 106 418 894 467 603
Elimination of transactions with Group companies (11 127) (11 127)
Invetment in joint ventures 5 476 32 106 377 002 414 584
Share in revenue of joint ventures 54 490 17 446 17 990
Share in profit/(loss) of joint ventures
(2 183) 42 1 205 (936)
  * The above information about TAMEH HOLDING Sp. z o.o. and its subsidiaries are of a preliminary nature, because the acquisition of subsidiaries by TAMEH HOLDING Sp. z o.o. has not been finally accounted for.   The investment in joint venture TAMEH HOLDING Sp. z o.o. differs from the share in net assets owned by the Group, as a result of the fact that the purchase price of shares in TAMEH HOLDING Sp. z o.o. was calculated considering fair value of the assets contributed to the joint venture by the companies of ArcelorMittal Group.   Investments in joint-ventures measured using the equity method as at 31 December 2013 and for the year ended 31 December 2013 have been presented below:  
Elektrociepłownia Stalowa Wola S.A. Elektrownia Blachownia Nowa Sp. z o.o. As at

31 December 2013

Non-current assets 728 455 27 710 756 165
Current assets 9 588 36 624 46 212
Non-current liabilities (-) (697  185) (697 185)
Current liabilities (-) (3 203) (64) (3 267)
Total net assets 37 655 64 270 101 925
Share in net assets 18 786 32 064 50 850
Elimination of transactions with Group companies (6 452) (6 452)
Invetment in joint ventures 12 334 32 064 44 398
Share in revenue of joint ventures 110 540 650
Share in profit/(loss) of joint
(2 383) (326) (2 709)
(936) (2 709)
Profit before tax   1 498 215 1 683 621
Income tax expense 17.1

17.1. Tax expense

Key components of the tax expense for the financial years ended 31 December 2014 and 31 December 2013 are as follows:  
Year ended
31 December 2014
Year ended
31 December 2013
Current income tax (238 340) (397 641)
Current income tax expense (258 363) (401 918)
Adjustments to current income tax from previous years 20 023 4 277
Deferred tax (74 315) 60 505
Income tax expense in profit/(loss) (312 655) (337 136)
Income tax expense relating to other comprehensive income 68 172 (10 495)
 
(312 655) (337 136)
Net profit    1 185 560 1 346 485
    
Other comprehensive income subject to reclassification to
profit or loss:
  (16 123) 25 791
Change in the value of hedging instruments   (20 207) 33 397
Foreign exchange differences from translation of foreign entities   245 (1 261)
Income tax 17.1

17.1. Tax expense

Key components of the tax expense for the financial years ended 31 December 2014 and 31 December 2013 are as follows:  
Year ended
31 December 2014
Year ended
31 December 2013
Current income tax (238 340) (397 641)
Current income tax expense (258 363) (401 918)
Adjustments to current income tax from previous years 20 023 4 277
Deferred tax (74 315) 60 505
Income tax expense in profit/(loss) (312 655) (337 136)
Income tax expense relating to other comprehensive income 68 172 (10 495)
 
3 839 (6 345)
Other comprehensive income not subject to reclassification to profit or loss:   (274 261) 17 697
Actuarial gains/(losses) related to provisions for post-employment   (338 594) 21 847
Income tax 17.1

17.1. Tax expense

Key components of the tax expense for the financial years ended 31 December 2014 and 31 December 2013 are as follows:  
Year ended
31 December 2014
Year ended
31 December 2013
Current income tax (238 340) (397 641)
Current income tax expense (258 363) (401 918)
Adjustments to current income tax from previous years 20 023 4 277
Deferred tax (74 315) 60 505
Income tax expense in profit/(loss) (312 655) (337 136)
Income tax expense relating to other comprehensive income 68 172 (10 495)
 
64 333 (4 150)
Other comprehensive income, net of tax   (290 384) 43 488
Total comprehensive income    895 176 1 389 973
   
Net profit:  
Attributable to equity holders of the parent   1 180 893 1 308 318
Attributable to non-controlling interests   4 667 38 167
Total comprehensive income:   
Attributable to equity holders of the parent   890 879 1 349 123
Attributable to non-controlling interests   4 297 40 850
    
Earnings per share (in PLN): 32

32. Earnings per share

Earnings per share (in PLN) Year ended

31 December 2014

Year ended

31 December 2013

Basic and diluted, for profit for the year attributable to equity
holders of the parent
                           0,67                            0,75
  Presented below is information about the earnings and number of shares which served as the basis for calculation of the basic and diluted earnings per share presented in the statement of comprehensive income.  
Year ended 31 December 2014 Year ended 31 December 2013
Net profit for the year attributable to equity holders of the parent 1 180 893 1 308 318
Number of ordinary shares 1 752 549 394 1 752 549 394
   
– basic and diluted, for net profit attributable to equity holders   0.67 0.75

 

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