Annual
report 2020
Annual
report 2020
In 2020, the Group changed its accounting policy in respect of the determination of the lease term of cancellable lease (described below) and changed presentation of foreign exchange gains/losses arising on revaluation and settlement of lease liabilities and related hedging instruments (described in Note 33.4). IFRS Interpretation Committee’s decision on Lease Term and Useful Life of Leasehold Improvements In December 2019 the Committee published its decision (the “Decision”) in respect to the lease term. The Committee discussed the concepts of “penalties” and “enforceable period”, which are used in the determination of the lease term and provided guidance on how they should be understood and applied when determining the lease term. The Committee concluded that the contract is enforceable as long as the lessee or the lessor would have to bear more than an insignificant penalty in case of termination of the contract. Therefore, even in the absence of option for the lessee to extend the lease at its discretion, the reasonably certain lease term shall be assessed in order to determine the lease term and, as a result, the amounts of the lease liability and of the right-of-use asset. Furthermore, according to the Committee, the concept of “penalty” should be considered as all economic disincentives and should not be limited only to contractual penalties. As a result of the Decision and the analysis performed in 2020, the Group changed its accounting policy in respect of the determination of the lease term of cancellable leases. The change was applied retrospectively and impacted the consolidated statement of financial position as at 1 January 2019. The Group assessed the reasonably certain lease terms of cancellable lease contracts to be equal to 5 years for all lease contracts, except for 18 years for road occupancy leases where fixed network infrastructure is placed. This change in accounting policy resulted in the recognition of additional right-of-use assets and additional lease liabilities, mainly in respect of leases of premises and ground for fixed and mobile network infrastructure. Adoption of changes described above affected the consolidated statement of financial position as at 1 January 2019 and 31 December 2019, the consolidated income statement, total comprehensive income and consolidated statement of cash flows for the 12 months ended 31 December 2019 as follows: Amendment to IFRS 16 COVID-19-Related Rent Concessions On 28 May 2020, the International Accounting Standards Board has issued an amendment “COVID-19-Related Rent Concessions” to IFRS 16 Leases to make it easier for lessees to account for COVID-19-related rent concessions. The amendment exempts lessees from having to consider individual lease contracts to determine whether rent concessions occurring as a direct consequence of the COVID-19 pandemic are lease modifications and allows lessees to account for such rent concessions as if they were not lease modifications. The amendment has been endorsed by the European Union in October 2020. The adoption of the amendment did not have a significant effect on the Group’s financial statements. Previous topic
CONSOLIDATED INCOME STATEMENT
(in PLN millions)
12 months ended 31 December 2019
Before changes
Impact of changes(1)
After changes
Revenue
11,406
–
11,406
External purchases
(6,514)
97
(6,417)
Other operating expense
(420)
(3)
(423)
Other operating income
238
(3)
235
Depreciation and impairment of right-of-use assets
(300)
(92)
(392)
Operating income
416
(1)
415
Interest expense on lease liabilities
(50)
(16)
(66)
Other interest expense and financial charges
(240)
4
(236)
Foreign exchange gains/(losses)
–
2
2
Finance costs, net
(298)
(10)
(308)
Income tax
(27)
2
(25)
Net income
91
(9)
82
Earnings per share (in PLN)
0.07
(0.01)
0.06
Total comprehensive income
63
(9)
54
(1) Includes changes related to presentation of foreign exchange gains/losses described in Note 33.4.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(in PLN millions)
At 1 January 2019
Before changes
Impact of changes
After changes
ASSETS
Right-of-use assets
1,842
570
2,412
Total non-current assets
20,72
570
21,29
Total current assets
3,969
–
3,969
TOTAL ASSETS
24,689
570
25,259
EQUITY AND LIABILITIES
Total equity
10,503
–
10,503
Lease liabilities
1,261
476
1,737
Total non-current liabilities
7,995
476
8,471
Lease liabilities
311
94
405
Total current liabilities
6,191
94
6,285
TOTAL EQUITY AND LIABILITIES
24,689
570
25,259
(in PLN millions)
At 31 December 2019
Before changes
Impact of changes
After changes
ASSETS
Right-of-use assets
2,101
580
2,681
Deferred tax assets
808
2
810
Total non-current assets
20,847
582
21,429
Total current assets
3,493
–
3,493
TOTAL ASSETS
24,34
582
24,922
EQUITY AND LIABILITIES
Retained earnings
5,884
(9)
5,875
Total equity
10,566
(9)
10,557
Lease liabilities
1,633
492
2,125
Total non-current liabilities
9,682
492
10,174
Lease liabilities
348
99
447
Total current liabilities
4,092
99
4,191
TOTAL EQUITY AND LIABILITIES
24,34
582
24,922
CONSOLIDATED STATEMENT OF CASH FLOWS
(in PLN millions)
12 months ended 31 December 2019
Before changes
Impact of changes(1)
After changes
OPERATING ACTIVITIES
Net income
91
(9)
82
Adjustments to reconcile net income to cash from operating activities
Depreciation, amortisation and impairment of property, plant and equipment, intangible assets and right-of-use assets
2,748
92
2,84
Finance costs, net
298
10
308
Income tax
27
(2)
25
Operational foreign exchange and derivatives gains, net
(7)
6
(1)
Interest paid and interest rate effect paid on derivatives, net
(371)
(15)
(386)
Net cash provided by operating activities
2,776
82
2,858
FINANCING ACTIVITIES
Repayment of lease liabilities
(279)
(82)
(361)
Net cash used in financing activities
(1,064)
(82)
(1,146)
Net change in cash and cash equivalents
(207)
–
(207)
(1) Includes changes related to presentation of foreign exchange gains/losses described in Note 33.4.
2.1. Basis of preparation