Grupa LOTOS S.A. - Integrated Annual Report 2012
31. Trade and other payables, other liabilities and provisions
PAGE CONTENTS
PLN '000 | Dec 31 2012 |
Dec 31 2011 (restated) |
Jan 1 2011 (restated) |
---|---|---|---|
Financial liabilities | |||
Non-current financial liabilities | |||
Other financial liabilities: | 1,204 | 15,194 | 26,211 |
Investment commitments | - | 13,296 | 22,874 |
Other | 1,204 | 1,898 | 3,337 |
Total | 1,204 | 15,194 | 26,211 |
Current financial liabilities | |||
Trade and other payables, including: | 2,178,760 | 2,821,742 | 1,832,545 |
- to related parties | 138 | 6,823 | - |
Other financial liabilities: | 286,735 | 224,313 | 189,603 |
Investment commitments | 178,074 | 172,706 | 142,935 |
Liabilities to insurers | 36,580 | 30,259 | 22,201 |
Joint venture liabilities (Norwegian deposits) | 58,077 | - | - |
Other | 14,004 | 21,348 | 24,467 |
Total | 2,465,495 | 3,046,055 | 2,022,148 |
Total financial liabilities | 2,466,699 | 3,061,249 | 2,048,359 |
Non-financial liabilities | |||
Non-current non-financial liabilities | |||
Provisions | 370,486 | 283,190 | 227,752 |
Oil and Gas Facility Decommissioning Fund | 27,481 | 24,491 | 21,668 |
Grants | 13,089 | 14,415 | 13,615 |
Other | - | 271 | 315 |
Total | 411,056 | 322,367 | 263,350 |
Current non-financial liabilities | |||
Provisions | 21,256 | 20,790 | 20,678 |
Liabilities to the state budget other than corporate income tax (1) | 686,520 | 966,530 | 759,184 |
Grants | 26,359 | 24,906 | 26,397 |
Joint venture liabilities (Norwegian deposits) | 55,092 | - | - |
Other | 22,220 | 24,893 | 24,846 |
Total | 811,447 | 1,037,119 | 831,105 |
Total non-financial liabilities | 1,222,503 | 1,359,486 | 1,094,455 |
Total | 3,689,202 | 4,420,735 | 3,142,814 |
including: | |||
non-current | 412,260 | 337,561 | 289,561 |
current | 3,276,942 | 4,083,174 | 2,853,253 |
(1) Including PLN 629,443 thousand in liabilities related to excise duty and fuel charge (December 31st 2011: PLN 728,310 thousand).
Trade and other payables do not bear interest and are, as a rule, settled on a 7–60 day basis. Other liabilities do not bear interest, and their average payment period is one month. The amount resulting from the difference between VAT receivable and VAT payable is paid to the relevant tax authorities on a monthly basis. Interest payable is usually settled on a monthly basis during a financial year.
For sensitivity analysis of trade and other payables and other liabilities with respect to currency risk as at December 31st 2012 and December 31st 2011, see Note 33.3.1.
For maturity analysis of trade and other payables and other liabilities as at December 31st 2012 and December 31st 2011, see Note 33.5.
31.1 Provisions
Provisions for decommissioning and reclamation costs | Other provisions | Total | |||
---|---|---|---|---|---|
PLN '000 | Provisions for retired refinery installations | Provision for onshore oil and gas facilities | Provision for offshore oil and gas facilities | ||
Jan 1 2012 | 41,641 | 18,916 | 222,586 | 20,837 | 303,980 |
Recognised | 140 | 959 | 68,329 | 16,581 | 86,009 |
Change in provisions for liabilities attributable to the approaching maturity date (discount reversal effect) | 263 | 1,356 | 10,682 | 43 | 12,344 |
Acquisition of control (AB LOTOS Geonafta Group) (1) | - | 4,097 | - | - | 4,097 |
Exchange differences on translating foreign operations | - | (1,424) | (1,740) | (95) | (3,259) |
Used | - | - | (22) | (1,703) | (1,725) |
Released | (274) | (3,588) | (1,886) | (1,908) | (7,656) |
Exclusion from consolidation (AB LOTOS Geonafta Group) (1) | - | (2,048) | - | - | (2,048) |
Dec 31 2012 | 41,770 | 18,268 | 297,949 | 33,755 | 391,742 |
including: | |||||
long-term provisions | 41,497 | 18,268 | 297,949 | 12,772 | 370,486 |
short-term provisions | 273 | - | - | 20,983 | 21,256 |
Jan 1 2011 | 41,116 | - | 186,350 | 20,964 | 248,430 |
Recognised | 421 | 2,270 | 22,006 | 3,831 | 28,528 |
Change in provisions for liabilities attributable to the approaching maturity date (discount reversal effect) | 331 | 759 | 10,814 | 104 | 12,008 |
Acquisition of control (AB LOTOS Geonafta Group) (2) |
- | 14,703 | - | 66 | 14,769 |
Exchange differences on translating foreign operations | - | 1,184 | 5,328 | - | 6,512 |
Used | - | - | (14) | (2,973) | (2,987) |
Released | (227) | - | (1,898) | (875) | (3,000) |
Reclassification to assets held for sale | - | - | - | (280) | (280) |
Dec 31 2011 | 41,641 | 18,916 | 222,586 | 20,837 | 303,980 |
including: | |||||
long-term provisions | 41,408 | 18,916 | 222,586 | 280 | 283,190 |
short-term provisions | 233 | - | - | 20,557 | 20,790 |
(1) Effect of the acquisition of control over UAB Manifoldas by AB LOTOS Geonafta; for more information see Note 2.
(2) Effect of the acquisition of control over AB Geonafta (currently AB LOTOS Geonafta); for more information see Note 2 to the consolidated financial statements for 2011.
Provisions for retired refinery installations are primarily related to the PLN 34,839 thousand (December 31st 2011: PLN 34,792 thousand) provision for land reclamation and the cost of dismantlement and decommissioning of retired installations at LOTOS Czechowice S.A.
Provision for onshore oil and gas facilities relates to the provision for estimated decommissioning costs of Lithuanian oil facilities.
Provision for offshore oil and gas facilities (1) relates to the provision for future costs of decommissioning the oil and gas facilities in the B-3 and B-8 mining areas on the Baltic Sea and at the YME field on the North Sea.
(1) As at December 31st 2012, the Management Board of LOTOS Petrobaltic S.A. analysed the costs of decommissioning of the offshore oil and gas facilities in the B-3 and B-8 mining areas. It was concluded that in 2012 the costs to be incurred in the future on decommissioning of the offshore oil and gas facilities in the B-3 and B-8 mining areas increased due to a change in the expected expenditure caused by price changes - by PLN 11,823 thousand (December 31st 2011: PLN 2,967 thousand), and due to the passage of time and the related change in the time value of money - by PLN 7,358 thousand (December 31st 2011: PLN 8,760 thousand), charged to finance costs in 2012. Another change in the provision resulted from the fact that an amount corresponding to the contributions calculated and transferred to the bank account of the Oil and Gas Facility Decommissioning Fund (created pursuant to the Geological and Mining Law of February 4th 1994 and the Minister of Economy’s Regulation of June 24th 2002) was released from the provision. For 2012, this amount totalled PLN 1,886 thousand (2011: PLN 1,898 thousand). Cash in the bank account of the Oil and Gas Facility Decommissioning Fund amounted to PLN 27,481 thousand as at December 31st 2012 (December 31st 2011: PLN 24,491 thousand). In the consolidated statement of financial position the Oil and Gas Facility Decommissioning Fund is disclosed under other non-current assets. As at December 31st 2012, LOTOS Petrobaltic S.A. also recognised a liability of PLN 27,481 thousand (December 31st 2011: PLN 24,491 thousand) for calculated costs of future decommissioning of oil and gas facilities. In the consolidated statement of financial position the liability is disclosed under other non-current liabilities and provisions. As at December 31st 2012, the provision for decommissioning of the offshore oil and gas facilities in the B-3 and B-8 mining areas totalled PLN 180,817 thousand (December 31st 2011: PLN 163,522 thousand).
As at December 31st 2012, LOTOS Exploration and Production Norge AS recognised PLN 117,132 thousand (NOK 210,974 thousand, translated at the mid-exchange rate quoted by the National Bank of Poland for that day) provision for future costs of decommissioning of offshore oil and gas facilities at the YME field.. As at December 31st 2011 it was PLN 59,064 thousand (NOK 104,060 thousand, translated at the mid-exchange rate quoted by the National Bank of Poland for that day). The liquidation of the offshore oil and gas facilities at the YME field and land reclamation are scheduled for 2029. In 2012, the provision was increased by an upward adjustment in the estimated future costs amounting to PLN 56,506 thousand (NOK 101,012 thousand, translated at the mid-exchange rate quoted by the National Bank of Poland for the period) and by a discount representing the estimated changes in the time value of money, amounting to PLN 3,324 thousand (NOK 5,942 thousand, translated at the mid-exchange rate quoted by the National Bank of Poland for the period). As at December 31st 2011 this provision was increased by PLN 20,333 thousand (NOK 35,823 thousand, translated at the mid-exchange rate quoted by the National Bank of Poland for the period) and by a discount representing the estimated changes in the time value of money, amounting to PLN 3,193 thousand (NOK 3,864 thousand, translated at the mid-exchange rate quoted by the National Bank of Poland for the period). The amount of the provision also changed due to its actual use – by PLN 22 thousand (NOK 40 thousand, translated at the mid-exchange rate quoted by the National Bank of Poland for the period). As at December 31st 2011 it changed due to its actual use by PLN 15 thousand (NOK 27 thousand, translated at the mid-exchange rate quoted by the National Bank of Poland for the period).
Other provisions include a provision of PLN 15,318 thousand related to the court proceedings instigated by WANDEKO, to which LOTOS Paliwa Sp. z o.o. is a party (for further information, see Note 36.1). As at December 31st 2012, in connection with delays affecting the YME project in Norway, the Group recognised a provision of PLN 12,492 thousand (NOK 22,500 thousand, translated at the mid-exchange rate quoted by the National Bank of Poland for last day of the reporting period ended on December 31st 2012) for unavoidable costs resulting from concluded agreement for offtake and transport of oil produced from the field.
31.2 Grants
PLN '000 |
Year ended Dec 31 2012 |
Year ended Dec 31 2011 |
---|---|---|
At beginning of the period | 39,321 | 40,012 |
Received during the year | 2,186 | 7,431 |
Recognised in consolidated profit or loss | (2,059) | (1,654) |
Other | - | (6,468) (1) |
At end of the period | 39,448 | 39,321 |
including: | ||
non-current | 13,089 | 14,415 |
current | 26,359 | 24,906 |
(1) Licences obtained by Grupa LOTOS S.A. free of charge in connection with the IGCC project, in respect of which impairment losses of PLN 19,352 thousand were recognised in 2011 (see Note 13 ).
The grants are primarily related to licences received free of charge and grants from the Eco Fund for the use of waste gas from an offshore oil and gas facility for heating purposes.
The Group receives also government assistance within the meaning of IAS 20 Accounting for Government Grants and Disclosure.
Until April 30th 2011, the Group benefited from tax credit available to producers of bio-components under Art. 19a of the Corporate Income Tax Act of February 15th 1992 (consolidated text: Dz. U. of 2011, No. 74, item 397). The state aid awarded in line with the laws referred to above was approved by virtue of the European Commission’s Decision No. 57/08 of September 18th 2009 concerning authorisation for the grant of state operating aid for biofuels. The credit enabled producers of biofuels to deduct from the income tax payable an amount representing no more than 19% of the excess of the value of the produced biofuels over the value of the produced liquid fuels of the same calorific value, calculated at average prices. The European Commission’s authorisation for the application of the tax credit expired on April 30th 2011. The outstanding amount of the credit is settled as part of current prepayments for corporate income tax. The tax effect of the bio-component tax credit is presented in Notes 10.2 and 10.3.
The Group operates in the Tarnobrzeg Special Economic Zone, EURO-PARK WISŁOSAN, under Permit No. 158/ARP S.A./2008 of January 23rd 2008. The Permit is valid until November 15th 2017. In connection with the investment project executed in the Tarnobrzeg Special Economic Zone, the Group is entitled to a tax credit, i.e. it may deduct up to 50% of capital expenditure incurred in the Tarnobrzeg Special Economic Zone from its income tax payable. The tax effect of the special economic zone tax credit is presented in Notes 10.2 and 10.3.
The Group benefits from a tax credit available to entities introducing new technologies pursuant to Art. 18b of the Corporate Income Tax Act of February 15th 1992 (consolidated text: Dz.U. of 2011, No. 74, item 397). The credit enables the Group to deduct up to 50% of expenditure incurred on new technologies from the tax base.