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3. Impairment tests for property, plant and equipment, intangible assets, rights to use assets and goodwill

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2.3 New standards and interpretations published, not yet effective

2.4 The Management Board’s professional judgement and estimates

In the process of applying the accounting policy to the foregoing issues, the most important element, besides accounting estimates, was the management’s professional opinion, which influences the values disclosed in the consolidated financial statements, including the additional explanatory notes. The assumptions of these estimates are based on the Management Board’s best knowledge of current and future activities and events in the respective areas. Detailed information on the adopted assumptions is presented below or in the relevant notes.

  • During the reporting period, the Group carried out an analysis of the circumstances and subsequent impairment testing of non-current assets. The results of the tests are described in note 3 to these financial statements.
  • The estimate of the recoverable amount of property, plant and equipment is based on a number of significant assumptions, the future realisation of which is uncertain and, for a significant part, beyond the control of the PGE Capital Group. The Group adopted what it believed to be the most appropriate amounts and values; nevertheless, it cannot be ruled out that the realisation of particular assumptions will differ from those adopted by the Group.
  • Provisions are liabilities whose amount or timing of payment is uncertain. During the reporting period, the Group changed its estimates of the reasonableness or amount of certain provisions.
  • In particular, the provision for land rehabilitation costs and the provision for employee benefits were updated during the reporting period due to an increase in the discount rate and inflation rate. Details are set out in note 20 to these consolidated financial statements.
  • Uncertainties related to tax settlements are described in note 29 to these consolidated financial statements.
  • The Group makes significant estimates in respect of recognised contingent liabilities. Relevant details are set out in note 27 to these financial statements.
  • The valuation of financial instruments results from a number of assumptions and estimates based on data available at the time the financial statements were being prepared. Changes in these assumptions and estimates may affect future financial statements of the PGE Capital Group. Note 24.1.2 provides information on the impact of the valuation of financial instruments on profit or loss and other comprehensive income.
  • Due to the crisis situation on the electricity market, a number of legal regulations came into force in 2022 and 2023, which made it necessary on the part of the PGE Capital Group to make estimates of revenue and costs in the field of compensation related to the purchase of coal, compensation and price adjustments resulting from the Act for households and contributions to the Price Difference Payment Fund resulting from the Emergency Measures in 2023 Act. The Group interprets the regulations to the best of its knowledge and with the support of external advisors. Nevertheless, a different interpretation of the regulations cannot be ruled out, which may result in adjustments to the accounts in future reporting periods. A detailed description of these estimates can be found in notes 32.3 and 32.4 to these financial statements.
  • Some of the sales revenue described in detail in note 7.1 to these consolidated financial statements is invoiced based on cyclical readings of metering and billing systems. This results in the necessity to re-estimate sales revenue in respect of supplies for which the PGE Capital Group does not have meter readings at the reporting date.