30. Trade payables, other liabilities and provisions

PLN ’000	Note	Dec 31 2013	Dec 31 2012 (restated)	Jan 1 2012 (restated)
Financial liabilities
Non-current financial liabilities
Other financial liabilities:	31.1	235	1,204	15,194
Investment commitments		235	-	13,296
Other		-	1,204	1,898
Total		235	1,204	15,194
Current financial liabilities
Trade payables. including:	31.1	2,396,086	2,174,451	2,812,259
- including to related entities	36.1	8	138	6,823
Other financial liabilities:	31.1	200,455	253,232	197,725
Investment commitments		158,385	178,074	172,706
- including to related entities	36.1	32	-	-
Liabilities to insurers		3,764	3,077	3,671
Settlements under joint ventures (Norwegian fields)		15,926	58,077	-
Other		22,380	14,004	21,348
- including to related entities	36.1	167	-	-
Total		2,596,541	2,427,683	3,009,984
Total financial liabilities		2,596,776	2,428,887	3,025,178
Non-financial liabilities
Non-current non-financial liabilities
Provisions		698,841	397,967	307,681
Grants		11,987	13,089	14,415
Other		782	-	271
Total		711,610	411,056	322,367
Current non-financial liabilities
Provisions		162,938	21,256	20,790
Liabilities to the state budget other than corporate income tax (1)		720,199	686,520	966,530
Grants		30,582	26,359	24,906
Settlements under joint ventures (Norwegian fields)		721	55,092	-
Prepaid deliveries		32,005	4,509	9,483
Other		23,039	22,020	24,893
Total		969,484	815,756	1,046,602
Total non-financial liabilities		1,681,094	1,226,812	1,368,969
Total		4,277,870	3,655,699	4,394,147
including:
non-current		711,845	412,260	337,561
current:		3,566,025	3,243,439	4,056,586
- trade receivables		2,396,086	2,174,451	2,812,259
- other		1,169,939	1,068,988	1,244,327

Trade payables do not bear interest and are, as a rule, paid in 7-60 days. Other liabilities do not bear interest, and their average payment period is one month. Amounts resulting from the difference between value added tax receivable and value added tax payable are paid to the relevant tax authorities on a monthly basis. Interest payable is usually settled on a monthly basis during a financial year.

For sensitivity analysis of trade payables and other liabilities with respect to currency risk as at December 31st 2013 and December 31st 2012, see Note 32.3.1.

For maturities of trade payables and other liabilities as at December 31st 2013 and December 31st 2012, see Note 32.5.

30.1 Provisions

PLN ’000	Note	Provisions for decommissioning and reclamation costs					Other provisions	Total
		Provisions for retired refinery installations	Provision for onshore oil and gas facilities – Lithuania	Provision for offshore oil and gas facilities – the North Sea	Provision for offshore oil and gas facilities – the Baltic Sea	Baltic Sea Oil and Gas Facility Decommissioning Fund
Jan 1 2013		41,770	18,268	117,132	180,817	27,481	33,755	419,223
Recognised		-	-	265,709	-	-	8,373	274,082
Revaluation of decommissioning costs		-	723	11,995	(1,404)	-	-	11,314
Change in provisions for liabilities attributable to approaching maturity date (discount reversal effect)	9.6	263	895	5,085	9,041	-	-	15,284
Transfer to Oil and Gas Facility Decommissioning Fund		-	-	-	(1,654)	1,654	-	-
Interest on Oil and Gas Facility Decommissioning Fund		-	-	-	-	731	-	731
Exchange differences on translating foreign operations		-	254	(49,975)	-	-	(990)	(50,711)
Estimated costs of removal of the MOPU from the YME field		-	-	281,859	-	-	-	281,859
Used		(828)	-	(69,537)	-	-	(8,067)	(78,432)
Released		(5,077)	(957)	-	-	-	(5,537)	(11,571)
Dec 31 2013		36,128	19,183	562,268	186,800	29,866	27,534	861,779
including:
non-current		35,854	19,183	419,085	186,800	29,866	8,053	698,841
current		274	-	143,183	-	-	19,481	162,938

 

PLN ’000	Note	Provisions for decommissioning and reclamation costs					Other provisions	Total
		Provisions for retired refinery installations	Provision for onshore oil and gas facilities – Lithuania	Provision for offshore oil and gas facilities – the North Sea	Provision for offshore oil and gas facilities – the Baltic Sea	Baltic Sea Oil and Gas Facility Decommissioning Fund
Jan 1 2012		41,641	18,916	59,064	163,522	24,491	20,837	328,471
Recognised		140	-	-	-	-	16,581	16,721
Revaluation of decommissioning costs		-	959	56,506	11,823	-	-	69,288
Change in provisions for liabilities attributable to approaching maturity date (discount reversal effect)	9.6	263	1,356	3,324	7,358	-	43	12,344
Transfer to Oil and Gas Facility Decommissioning Fund		-	-	-	(1,886)	1,886	-	-
Interest on Oil and Gas Facility Decommissioning Fund		-	-	-	-	1,104	-	1,104
Acquisition of control (AB LOTOS Geonafta Group) (1)		-	4,097	-	-	-	-	4,097
Exchange differences on translating foreign operations		-	(1,424)	(1,740)	-	-	(95)	(3,259)
Used		-	-	(22)	-	-	(1,703)	(1,725)
Released		(274)	(3,588)	-	-	-	(1,908)	(5,770)
Deconsolidation (AB LOTOS Geonafta Group) (1)		-	(2,048)	-	-	-	-	(2,048)
Dec 31 2012		41,770	18,268	117,132	180,817	27,481	33,755	419,223
including:
non-current		41,497	18,268	117,132	180,817	27,481	12,772	397,967
current		273	-	-	-	-	20,983	21,256

Provisions for retired refinery installations primarily include a PLN 28,933 thousand (December 31st 2012: PLN 34,839 thousand) provision for land reclamation and the cost of disassembly and decommissioning of retired installations at LOTOS Terminale S.A.

Provision for the Baltic Sea offshore oil and gas facilities is a provision for future costs of decommissioning of the oil and gas facilities in the B-3 and B-8 licences areas.

Provision for the North Sea offshore oil and gas facilities is a provision for future costs of decommissioning of the offshore oil and gas facilities in the YME and Heimdal fields, the latter acquired in 2013.

On March 12th 2013, the operator of the YME field, Talisman Energy Norge AS (“Talisman,” “Operator”) and the supplier of the Mobile Operating and Production Unit (MOPU) to be operated on the YME field, Single Buoy Moorings Inc. (“SBM”), announced that an agreement had been reached to remove the defective MOPU (evacuated in mid-July 2012) from the YME field and to terminate all existing contracts and agreements between the parties in connection with the YME project (see Note 35.1). As a result of the agreement, the Group recognised a provision for future costs of removal of the MOPU from the YME field, of PLN 281,859 thousand (NOK 526,151 thousand), including in current portion, which was partially used (PLN 69,527 thousand (NOK 129,787 thousand)) in 2013.

Prezentowana w sprawozdaniu z sytuacji finansowej na dzień 31 grudnia 2013 roku kwota rezerwy, o której mowa powyżej, w łącznej wysokości 196.319 tys. zł, w tym część długoterminowa: 53.136 tys. zł (107.280 tys. NOK) oraz część krótkoterminowa: 143.183 tys. zł (289.084 tys. NOK) została ustalona przy uwzględnieniu następujących założeń:

• the MOPU will be removed from the YME field not later than in 2015;
• the provision fully covers the unspent, as at December 31st 2013, budget for removing the MOPU, approved by the interest holders of the YME licence.

In connection with the acquisition in 2013 of new production assets on the Norwegian Continental Shelf (Heimdal), a provision for future costs of decommissioning of the acquired production assets was recognised at PLN 265,709 thousand (NOK 496,004 thousand). Decommissioning of the newly acquired non-current assets of the offshore oil and gas facility at the Heimdal field and reclamation work are scheduled for 2014–2035. As at December 31st 2013, a provision of PLN 245,671 thousand (NOK 496,004 thousand; see Note 13 Acquisition of interests in Norwegian production and exploration licences – Heimdal) was presented by the Group in its statement of financial position, under Other liabilities and provisions.

Other provisions

As at December 31st 2013, the Group recognised a provision for contingent payments under the Heimdal assets acquisition agreement, of PLN 5,089 thousand (NOK 10,275 thousand).

The Group recognised a provision for the unavoidable costs under an agreement it made earlier for collection and transport of the crude oil produced from the YME field. This provision was recognised in 2012, in the amount of PLN 12,492 thousand (i.e. NOK 22,500 thousand), and was then partly released as a result of negotiations and the shortening of the contract term. In 2013, the provision amount used was PLN 5,353 thousand (NOK 9,992 thousand) and the amount released was 4,912 thousand (NOK 9,170 thousand). As at December 31st 2013, the provision was PLN 1,653 thousand (NOK 3,338 thousand).

Furthermore, as at December 31st 2013 and December 31st 2012, the Group also disclosed a provision of PLN 15,318 thousand related to court proceedings instigated by WANDEKO, to which LOTOS Paliwa Sp. z o.o. is a party (see Note 35.1).

30.2 Grants

PLN ’000	Note	Year ended Dec 31 2013	Year ended Dec 31 2012
At beginning of the period		39,448	39,321
Received during the year		5,196	2,186
Recognised in consolidated profit or loss	9.3	(2,075)	(2,059)
At end of the period		42,569	39,448
including:
non-current		11,987	13,089
current		30,582	26,359

The grants are primarily related to licences received free of charge and grants from the Eco Fund for the use of waste gas from an offshore oil and gas facility for heating purposes.

The Group receives also government assistance within the meaning of IAS 20 Accounting for Government Grants and Disclosure.

Until April 30th 2011, the Group benefited from tax credit available to producers of bio-components under Art. 19a of the Corporate Income Tax Act of February 15th 1992 (consolidated text: Dz.U. of 2011, No. 74, item 397). The state aid awarded in line with the laws referred to above was approved by virtue of the European Commission’s Decision No. 57/08 of September 18th 2009 concerning authorisation for the grant of state operating aid for biofuels. This relief has enabled biofuel producers to deduct from their payable income tax up to 19% of the surplus value of their produced biofuels, over the value of their produced liquid fuels of the same calorific value, calculated at average prices. European Commission's approval for the tax relief expired on April 30th 2011, and the unsettled amount of the relief is accounted for in current prepayments for corporate income tax. The deferred tax associated with the biocomponent tax credit is presented in Note 10.3., and the related tax effect in Note 10.2.

The Group uses a tax credit available to entities introducing new technologies pursuant to Art. 18b of the Corporate Income Tax Act of February 15th 1992 (consolidated text: Dz.U. of 2011, No. 74, item 397). The credit enables the Group to deduct up to 50% of expenditure incurred on new technologies from the tax base. The effect of the credit on these financial statements of the Group was immaterial.