|SELECTED ACCOUNTING PRINCIPLESThe discontinued activity the Group presents revenues and expenses of a disposal group classified as held for sale if the group
meets the following conditions:
PROFESSIONAL JUDGEMENT AND ESTIMATES
The Group recognizes an impairment loss upon the initial or subsequent revaluation of an asset (or disposal group) to fair value less costs to sell. The Group estimated the fair value of the group for sale, which is discussed in more detail below.
The Group estimates that the transactions concluded by the Group with a subsidiary whose operations are classified as discontinued operations, made as part of the basic operating activities, will continue after the disposal of the subsidiary. Therefore, the revenues and costs of the Group companies resulting from transactions with the disposal group are presented in the result on continuing operations, with an appropriate consolidation adjustment included in discontinued operations. In the Group’s opinion, other income and costs, including financial ones, resulting from the Group’s transactions with discontinued operations will not be continued.
Table 1Export to Excel
31 December 2020
31 December 2019
|Cost of sales||(375,210)||(335,590)|
|Profit on sale on discontinued operations||107,398||110,366|
|Selling and distribution expenses||(5,621)||(3,031)|
|Other operating income and expenses||30,786||13,782|
|Impairment losses due to revaluation to fair value less costs of sale||(825,708)||–|
|Operating profit (loss) on discontinued operations||(717,342)||96,406|
|Finance income and finance costs||(1,113)||970|
|Profit (loss) before tax on discontinued operations||(718,455)||97,376|
|Income tax expense||(35,872)||(14,862)|
|Net profit (loss) on discontinued operations||(754,327)||82,514|
|Actuarial gains (loss)||(3,377)||(3,056)|
|Other comprehensive income on discontinued operations not reclassified to profit or loss||(2,735)||(2,475)|
|Total comprehensive income from discontinued operations||(757,062)||80,039|
|Net profit (loss) on discontinued operations attributable to:||(754,327)||82,514|
|Equity holders of the Parent||(754,327)||82,514|
|Total comprehensive income on discontinued operations attributable to:||(757,062)||80,039|
|Equity holders of the Parent||(757,062)||80,039|
|Profit (loss) per share (in PLN):
basic and diluted net loss from profit (loss) on discontinued operations for the period attributable to
shareholders of the parent company
Discontinued operations represent the activities of the subsidiary TAURON Ciepło Sp. z o.o., which is related to the classification of 100% of its shares in TAURON Ciepło Sp. z o.o. by the Company as held for sale. The allocation of shares in TAURON Ciepło Sp. z o.o. for sale is in line with the update of the strategic directions complementary to the TAURON Group Strategy for 2016-2025 adopted by the Management Board and positively reviewed by the Supervisory Board in May 2019. Given the need to transform the Group’s energy mix, optimise the investment portfolio and maintain financial stability, it was decided to perform a market review of, among others, a strategic option involving making the Group’s asset portfolio more flexible by adjusting mining assets to the Group’s planned fuel demand, reorganisation of the Generation segment and the capital investment portfolio. The above option comprises, inter alia, market verification of the possibility to sell shares of the subsidiary, TAURON Ciepło Sp. z o.o.
As a result of the above events, the Company launched a project aimed at market verification of the possibility to sell shares of the subsidiary, TAURON Ciepło Sp. z o.o. and potential continuation of the sales process. On 16 June 2020, the Company Management Board decided to enter into negotiations of the share purchase agreement in TAURON Ciepło Sp. z o.o. with Polskie Górnictwo Naftowe i Gazownictwo S.A. in exclusivity mode for the period of six weeks, which was subsequently extended to 30 November 2020 and 31 January 2021, respectively. After the balance sheet date, on 29 January 2021, Polskie Górnictwo Naftowe i Gazownictwo S.A. expressed its intention to discontinue negotiations aimed at the acquisition of shares in TAURON Ciepło Sp. z o.o which is described in more detail in Note 60 to these consolidated financial statements.
As at the balance sheet date, the Company assessed that the conditions in the scope of classification of its activity resulting from IFRS 5 Non-current Assets Held for Sale and Discontinued Operations were met in relation to TAURON Ciepło Sp. z o.o. activity. The core business of TAURON Ciepło Sp. z o.o. is the generation, distribution and sale of thermal energy for heating, domestic hot water preparation and ventilation. As at the date of classification of the net assets of TAURON Ciepło Sp. z o.o. to the disposal group classified as held for sale, the Group measured the disposal group at a fair value. The fair value as at the balance sheet date was estimated at a level of PLN 1,342,000 thousand, based on information gathered in the course of the conducted market sale process of shares in TAURON Ciepło Sp. z o.o. Due to the fact that the fair value of the disposal group is lower than its existing carrying amount at the level of PLN 2,167,708 thousand, the Group recognised the impairment loss on non-financial non-current assets in the amount of PLN 825,708 thousand.