9.7 Lease disclosures – the Group as a lessee
in PLN millions, unless otherwise stated
As a lessee, the Group identifies leases in usufruct agreements, inter alia, land, perpetual usufruct right to land, and transmission easements, as well as technical equipment, machines, and transport vehicles.
The Group applies a uniform lease accounting model, which assumes that the lessee recognises the right-to-use assets and lease liabilities related to all lease agreements, including exemptions. The Group does not recognise lease assets and liabilities in relation to:
- short-term leases – for agreements without the option to purchase an asset, concluded for a period shorter than 12 months from the commencement of the agreement, including agreements concluded for an indefinite period with a short notice period if there is no reasonable certainty that the Group will not make use of termination.
- leases in respect of which the underlying asset has a low value.
In the case of an agreement that is or includes a lease, the Group recognises each lease component under the agreement as a lease, separately from non-lease components.
The Group defines the lease period as covering the irrevocable period of the lease agreement, including periods for which the lease can be extended if it is reasonably certain that the Group will exercise that right, and the periods for which the lease can be terminated if it is reasonably certain that the Group will not exercise that right.
The right-to-use assets and the measurement policy for these assets are presented in Note 9.1.
The Group initially measures the lease liability at the present value of lease payments due to be paid as at the date of initial recognition, which include: fixed lease payments, variable lease payments which are dependent on an index or rate, amounts which the lessee is expected to pay under the guaranteed residual value, the strike price call option if it is reasonably certain that the lessee will exercise the option, and penalties for terminating the lease if the given lease period was set with the assumption that the lessee will terminate the agreement. In fixed lease payments, the Group also includes payments for the exclusion of land from forestry and agricultural production, if they relate to land used under lease agreements.
The lease payments exclude variable payments made by the lessee to the lessor for the right to use the underlying asset during the lease period, which depend on external factors other than payments based on a rate or index.
After the date the lease began, the Group measures the carrying amount of lease liabilities by:
- an increase due to interest on lease liabilities,
- a decrease due to paid lease payments,
- an update due to reassessment or modification of a lease agreement.
Lease liabilities are presented in Note 8.
Lease rate – lease payments are discounted by the Group using the incremental borrowing rate of the lessee because generally speaking, the interest rate of a lease agreement is not readily determinable.
Identification of non-lease components
In the agreements for the lease of mining machinery, apart from the lease component, the Group identified non-lease components related to the provision of services other than the lease of assets. To separate the lease and non-lease components, the Group made a judgment, respectively allocating the remuneration for a given agreement to both components, based on the relative unit price of the lease component and the total unit price of the non-lease components.
Estimation of the incremental borrowing rate of the lease
For the purpose of calculating the discount rates under IFRS 16, the Group assumes that the discount rate should reflect the cost of financing that would be incurred to purchase the leased item. The Group calculates the incremental borrowing rates, for individual time ranges of lease agreements, on a quarterly basis and this rate is used to measure lease liabilities arising from lease agreements concluded or modified during a given quarter.
The materiality threshold for leases of low-value of underlying assets is set at PLN 20 000.
| from 1 January 2022 to 31 December 2022 | from 1 January 2021 to 31 December 2021 |
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| Note 9.1, Note 9.2 | Depreciation/amortisation cost | 56 | 56 |
| Note 4.3 | Interest cost | 9 | 13 |
| Short-term lease cost | 7 | 6 | |
| Cost associated with leases of low-value of underlying assets not recognised as short-term agreements | 1 | 1 | |
| Cost associated with variable lease payments not recognised in the measurement of lease liabilities | 8 | 11 | |
| Note 8.4.2 | Total cash outflows due to leases | 93 | 100 |
| Note 9.1, Note 9.2 | Increase in right-to-use assets | 165 | 54 |
| As at 31 December 2022 |
As at 31 December 2021 |
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| Note 9.1, Note 9.2 | Carrying amount of right-to-use assets (division by underlying assets in notes, pursuant to references), of which: | 771 | 703 |
| recognised in assets held for sale (disposal group) | – | 32 | |
| recognised as “mining and metallurgical property, plant and equipment and intangible assets” and “other property, plant and equipment and intangible assets” | 771 | 671 | |
| Note 8.4.2 | Carrying amount of right-to-use liabilities, of which: | 744 | 645 |
| recognised in liabilities related to disposal group | – | 16 | |
| recognised as “borrowings, lease and debt securities” | 744 | 629 |
In 2022, the Group did not enter into sales and leaseback transactions (in 2021 the value of such transactions amounted to PLN 11 million). These transactions were entered into in order to obtain funds to finance current operating activities of the Group’s subsidiaries.
As at 31 December 2022, the Group had lease agreements that contained extension options and termination options, and the estimated value of future cash outflows, to which the Group is potentially exposed and are not included in the measurement of lease liabilities amount to PLN 19 million and PLN 37 million respectively (as at 31 December 2021: PLN 19 million and PLN 41 million). The Grou has lease agreements with guaranteed residual values, but they were included in the measurement of lease liabilities. Moreover, the Group has not yet started lease agreements, to which it is obliged as a lessee, and the value of future cash outflows in this respect amounts to PLN 10 million (as at 31 December 2021: PLN 59 million).