59. Collaterals for repayment of liabilities
As part of its operations, the Group uses a number of instruments to hedge its own liabilities and liabilities of joint ventures under the concluded agreements and transactions. The main types of collateral, in addition to the collateral for the Group’s transactions concluded on the Polish Power Exchange, described due to their materiality later in this note, are presented below.
| Collateral | Collateral amount as at | |
| 31 December 2022 | 31 December 2021 | |
| Declarations of submission to enforcement* | 16 095 | 19 189 |
| Corporate and bank guarantees | 2 117 | 1 456 |
| Surety agreements | 618 | 62 |
| Bank account mandates | 600 | 600 |
| Blank promissory notes | 597 | 499 |
| Pledges on shares | 416 | 1 796 |
| Other | 35 | − |
As at 31 December 2022 and 31 December 2021, the declarations of submission to enforcement constitute the main item of the collaterals. Significant changes in the scope of the collaterals are described below.
- In connection with the timely repayment on 22 March 2022 of the liabilities for the acquisition of non-controlling interests in the subsidiary, Nowe Jaworzno Grupa TAURON Sp. z o.o. to Fundusz Inwestycji Infrastrukturalnych-Kapitałowy FIZAN (the “PFR Fund”), as discussed in more detail in Note 48 of consolidated financial statements, the declaration of submission to enforcement up to PLN 1 380 million, with the enforcement date of 22 September 2023, expired. The Company received a declaration from the PFR Fund of 4 April 2022 that the collateral had expired and that the declaration of submission to enforcement had not been exercised. Moreover, the collateral expired in the form of pledges on 176 000 shares in the share capital of the subsidiary, Nowe Jaworzno Grupa TAURON Sp. z o.o., i.e., the registered pledge with the first priority of satisfying on the shares up to the maximum amount of security of PLN 1 380 million and the ordinary pledge with the first priority of satisfying equal to the priority of the registered pledge. The pledges remained in force until the date of full satisfaction of the secured claims, i.e. by 22 March 2022.
- On 25 August 2022, the Company signed a declaration of submission to enforcement up to the maximum amount of PLN 4 800 million with the effective date to 30 November 2030, in connection with the conclusion of the syndicated loan agreement in the amount of PLN 4 000 million on 15 July 2022, as further described in Note 41.2 of consolidated financial statements.
- On 29 November 2022, the declaration of submission to enforcement up to the amount of PLN 7 284 million expired in connection with the termination of the syndicated loan agreement of 19 June 2019, as further discussed in Note 41.2 of consolidated financial statements. The Company has fully repaid the exposure and received the confirmation of the absence of any liabilities under the syndicated loan in question.
After the balance sheet day, the following events took place:
- on 13 January 2023, the Company signed a declaration of submission to enforcement up to PLN 600 million as security for the overdraft facility, which, pursuant to the annex of 13 January 2023, was increased to PLN 500 million and the term of the overdraft facility was extended to 30 September 2023. On 27 February 2023, the declaration of submission to enforcement up to PLN 300 million originally constituting the security for the bank overdraft was returned;
- on 13 January 2023, the Company signed a declaration of submission to enforcement up to PLN 300 million, securing an agreement for guarantee lines up to PLN 250 million. On 27 February 2023, the declaration of submission to enforcement up to PLN 300 million constituting the original security was returned;
- on 17 February 2023, the Company signed a declaration of submission to enforcement up to PLN 900 million, securing an agreement for working capital facility up to PLN 750 million, as further described in Note 64 of consolidated financial statements;
- on 27 February 2023, a bank guarantee of up to PLN 457 million was issued to secure the receivables of Bank Gospodarstwa Krajowego (“BGK”) under the loan agreement concluded on 8 March 2018 between the borrower, Elektrociepłownia Stalowa Wola S.A. and BGK and PGNiG S.A. The bank guarantee is valid from 12 March 2023 to 11 March 2024. The guarantor’s claim against the Company is secured by a statement of submission to enforcement up to PLN 548 million signed on 7 March 2023. In connection with the issuance of the above guarantee, the existing security in the form of a bank guarantee of up to PLN 300 million and a surety of up to PLN 187 million expired on 11 March 2023;
- on 21 March 2023, the Company signed two statements on submission to enforcement: up to PLN 300 million as collateral for a guarantee facility agreement up to PLN 250 million and up to PLN 675 million as collateral for a subordinated bond issue program up to PLN 450 million, as further described in Note 56.2 of consolidated financial statements.
Collateral for transactions concluded on the Polish Power Exchange [Towarowa Giełda Energii S.A.] in TAURON Group
On 27 October 2022, a declaration of submission to enforcement was signed to secure the Company’s obligations to Izba Rozliczeniowa Giełd Towarowych S.A. (“IRGiT”) up to the amount of PLN 4 000 million, with the effective term to 31 October 2023. This declaration was replaced by a new one signed after the balance sheet date, on 3 January 2023, up to the amount of PLN 6 000 million, with the effective term until 31 December 2023.
Liabilities of the subsidiary TAURON Wytwarzanie S.A. against IRGiT were secured with a declaration of submission to enforcement signed on 11 October 2022, up to the amount of PLN 2 000 million, valid until 30 June 2023.
As at 31 December 2022 and 31 December 2021, bank guarantees totalling PLN 176 million and PLN 70 million, respectively, were in force.
After the balance sheet date, bank guarantees were issued in favour of IRGiT as collateral for the liabilities of the Company and the subsidiary, TAURON Wytwarzanie S.A. As at the date of approval of consolidated financial statements for publication, bank guarantees in the total amount of PLN 560 million are in force, with the effective dates from 31 March 2023 to 25 April 2023.
Pursuant to the agreement defining the principles for the establishment of financial collateral for the energy Group concluded with the IRGiT, TAURON Group applies a mechanism for setting off the margins. In terms of the transactions performed, the margins required by the IRGiT are calculated against the positions offset within the Group, which translates into the reduction in the funds involved on a Group-wide basis in maintaining the collateral required by the IRGiT.
In order to secure the liabilities of the Company and its subsidiary, TAURON Wytwarzanie S.A. on account of due margin deposit payments, in the year ended 31 December 2022 the following agreements were concluded with IRGiT for the transfer of CO2 emission allowances and property rights to certificates of origin:
- pursuant to the agreement of 30 June 2022 concluded between the subsidiary, TAURON Wytwarzanie S.A. and IRGiT, on 4 July 2022 the company deposited CO2 emission allowances owned by it in the IRGiT account in the total amount of 266 086 tonnes;
- on 13 October 2022, the Company submitted a declaration to the agreement for the transfer of CO2 emission allowances as a collateral for its liabilities, to transfer the CO2 emission allowances in the total amount of 195 000 tonnes to IRGiT. The allowances were returned to the account in the Company on 19 December 2022;
- pursuant to the agreement of 18 October 2022 concluded between the subsidiary, TAURON Wytwarzanie S.A. and IRGiT, on 28 October 2022 the company submitted an instruction to the Register of Certificates of Origin kept by the Polish Power Exchange (Towarowa Giełda Energii S.A.) to block its property rights in a total amount of 81 000 MWh;
- on 27 December 2022, the Company submitted a declaration to the agreement for the transfer of CO2 emission allowances as a collateral for liabilities, to transfer the CO2 emission allowances in the total amount of 201 000 tonnes to IRGiT.
As at 31 December 2022, the subject matter of the collaterals established in favour of IRGiT relates to the transfer of CO2 emission allowances in the total amount of 467 086 tonnes and the blocking instruction of property rights in the total amount of 81 000 MWh.
After the balance sheet day, the following events took place:
- on 2 January 2023, the Company deposited an additional quantity of CO2 emission allowances, i.e. 75 000 tonnes, in the IRGiT account;
- on 21 February 2023, CO2 emission allowances owned by the Company in the total amount of 201 000 tonnes and the subsidiary in the total amount of 266 086 tonnes were returned to the account of the Company and TAURON Wytwarzanie S.A., respectively, and are no longer the subject of the transfer of ownership;
- on 27 February 2023, the Company deposited the additional quantity of CO2 emission allowances, i.e. 339 000 tonnes, in the IRGiT account;
- on 27 March 2023, part of the allowances in the total amount of 324 000 tonnes was returned to the Company’s account.
As at the date of approval of consolidated financial statements for publication, the subject of the collaterals established relates to the transfer of CO2 emission allowances owned by the Company in the total amount of 414 000 tonnes and the blocking order of property rights owned by TAURON Wytwarzanie S.A. in the total amount of 81 000 MWh.
Carrying amount of assets pledged as a collateral for the repayment of the Group's liabilities
The carrying amounts of assets pledged as a collateral for the repayment of liabilities at each balance sheet date are presented in the table below.
|
As at 31 December 2022 |
As at 31 December 2021 |
|
| Other non-financial assets | 342 | − |
| Other financial receivables | − | 29 |
| Real estate | 2 | 4 |
| Cash | 1 | 1 |
| Total | 345 | 34 |
As at 31 December 2022, the main item comprises other non-financial assets – funds paid in advance for coal deliveries in the amount of PLN 342 million.
Provision of funds to cover future decommissioning costs
As at the balance sheet date, the Mine Liquidation Fund created to secure funds to cover future decommissioning costs relates to the subsidiary, Kopalnia Wapienia Czatkowice Sp. z o.o., as further discussed in Note 43.1 of consolidated financial statements.
On 31 December 2022, TAURON Group lost control over its subsidiary, TAURON Wydobycie S.A., as a result of the disposal transaction of 100% of the shares in TAURON Wydobycie S.A., therefore the Group is no longer under the obligation to decommission mining plants owned by TAURON Wydobycie S.A.