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 opening 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 32),
- 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 during the year. Depreciation periods are presented in Notes 51.5, 51.6, 51.7 and 51.12 of these consolidated financial statements,
- fair value of acquired assets, liabilities and goodwill – the Group identifies and measures acquired assets, liabilities and goodwill. Valuation consider significant assumptions, such as: selection of the appropriate method of valuation, plans for use of the acquired assets, financial forecasts (including price trends specifying the key items of income and expenses), changes in legislation. Applied assumptions may have a significant impact on determination of fair value of acquired assets and liabilities and calculation of goodwill. The goodwill is tested for impairment together with the cash generating units centers to which it was allocated. Purchase price allocation of acquired assets, liabilities and goodwill is presented in Note 13 to 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 17),
- 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 17),
- compensation for non-contractual use of land – the potential payment of compensation for the so called non-contractual use of land and rental fee is estimated by the technical staff of the Group based on analyses of claims filed on a case-by-case basis (Note 33, 49.5),
- provision for land reclamation – ENEA Wytwarzanie S.A., having filled or closed a slag and ash dump, is obliged to reclaim the land. As the company 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 2014 , using a discount rate of 2,50 % (Note 33),
- compensation for stranded costs – originating from early termination of LTC concerning power and electricity are recognized in the amount of advances due for the given period adjusted by an estimated adjustment amount to be calculated by the President of the Energy Regulatory Office and depending upon a number of factors, including in particular performance of the generator, sales volume and average market price of electricity. Estimates of compensation have been made by the Group based on the applicable interpretations to the Act of 29 June 2007 on coverage of stranded costs resulting at generators in relation to accelerated termination of long-term contracts (DZ.U. 2009 no 130, item 905) ("LTC Act"), predictions as to resolve disputes with the President of the Energy Regulatory Office and on a number of significant assumptions, some of which are outside the control of the Group. An unfavorable outcome of settling disputes as referred in Note 46, in the area of interpretation of the LTC Act and changes in the assumptions can significant impact on the results of the estimates and as a consequence may cause to significant changes in financial position and performance of the Group. At the date of preparation of these consolidated financial statements, the result of disputes with the President of the Energy Regulatory Office is not possible to predict. During the reporting period the Group has updated estimates of LTC compensations. Further details are described in Note 45 to these financial statements.
- 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 7 and 9),
- provision for purchasing CO2 emissions rights – the assumptions concern the allocation of free of charge CO2 emission rights for 2014 (Note 33).