Our results

Provisions for employee benefits

Accounting policy applied

The Group provides its employees with long-term benefits during their employment (jubilee awards) as well as benefits after expiration of the tenure of their employment (pension and disability severance benefits, transportation services and benefits from the Company Social Benefits Fund for retirement and disability pensioners, post-mortem benefits). Jubilee awards are paid out to the employees after working for specified number of years. Pension and disability severance benefits are paid out as lump sum when the employee retires or begins to collect disability benefits. The amount of pension and disability severance benefits and jubilee awards depends on the number of years of service and the employee’s average remuneration. Post-mortem benefits are paid out after the employee’s death. The Group is establishing provisions for future liabilities arising out of the foregoing virtues to assign the costs to the respective periods. The employees are also vested with the right to receive benefits after their employment in the form of social benefits from the Company Social Benefits Fund and train fare discounts. In its statement of financial position, the Group recognizes the foregoing benefits at the current value of the liability as at the date ending the reporting period.

The amount of long-term benefits during the employment period and benefits after the employment period is calculated by an independent actuarial firm using the forecasted individual benefits method. The current value of liability on that account is determined through discounting the estimated future cash expenditures – using the interest rates based on market interest rates for government bonds. The current service cost of the specified benefits program is recognized in the result as costs of employee benefits, except when it is recognized as costs of creating an asset component, and it reflects the growth of liabilities related to employee benefit plans attributable to work performed by the employees in the current period. The costs of past employment are recognized directly in the financial result. Interest expense is calculated using a discount rate to the net value of the liabilities and presented within financial expenses.

Actuarial earnings and losses resulting from adjustments of actuarial assumptions ex post and changes to actuarial assumptions are referred to equity through other comprehensive income in the period in which they arose. In case of jubilee awards, they are referred to the result for the period.

Significant values based on professional judgment and estimates

As at 31 December 2017 and 31 December 2016, the actuarial valuation of provisions for employee benefits for the Polish Group companies was based on the following assumptions:

Data in ths. PLN

 Valuation as at
 31/12/2017 31/12/2016
 % %
Discount rate 3.25 3.50
Assumed average annual growth of the base for calculation of provisions for retirement and disability severance benefits and jubilee awards 0 – 3.5 1.35
Assumed growth of the price of transportation benefits 0 – 2.5 0 – 2.5
Assumed average annual growth of the base for calculation of provisions for Company Social Benefits Fund 3.3 – 5.0 3.5 – 8.4
Weighted average employee mobility ratio 1.1 – 10.0 2.3
Inflation (annual) 2,3 – 2.7 1.3 – 2.5

The actuarial valuation of provisions for employee benefits for the Group companies located beyond Poland was based on assumptions specific to the countries in which they conduct their operations.

The value of provisions for employee benefits is significantly affected by the adopted assumptions for discount rate, the assumed salary growth and the expected average employment growth. The sensitivity analysis for changes in the foregoing assumptions may be found below. The analysis was conducted by changing only one variable while leaving the remaining assumptions unchanged.

Data in ths. PLN

   As at 31/12/2017(audited)Discount rateSalary growth ratioEmployee mobility ratio
  +0.30 pp.-0.30 pp.+0.25 pp.-0.25 pp.+0.25 pp.-0.25 pp.
Jubilee awards274,116(4,303)4,4424,586(3,293)(3,529)3,548
Retirement and disability severance benefits166,898(3,156)3,2683,333(2,502)(2,646)2,619
Post-mortem benefits7,145(146)152147(110)(115)117
Company Social Benefits Fund143,522(5,604)5,9815,245(4,984)(789)786
Transportation benefits33,665(1,289)1,4341,286(1,087)(229)292
Total625,346(14,498)15,27714,597(11,976)(7,308)7,362

Data in ths. PLN

   As at 31/12/2016(audited)Discount rateSalary growth ratioEmployee mobility ratio
  +0.30 pp.-0.30 pp.+0.25 pp.-0.25 pp.+0.25 pp.-0.25 pp.
Jubilee awards268,875(4,257)4,3944,511(3,249)(3,435)3,457
Retirement and disability severance benefits153,230(2,990)3,0973,113(2,381)(2,532)2,499
Post-mortem benefits6,836(139)145140(106)(108)100
Company Social Benefits Fund128,614(5,009)5,3484,695(4,462)(735)727
Transportation benefits33,286(1,290)1,3771,236(1,094)(256)263
Total590,841(13,685)14,36113,695(11,292)(7,066)7,046

Liabilities related to employee benefit plans

Data in ths. PLN

 Retirement and disability severance benefitsCompany Social Benefits FundTransportation benefitsPost-mortem benefitsJubilee awardsOther employee benefitsTotal provisions
Balance as at 1 January 2017 (audited)153,230128,61433,2866,836268,87533,986624,827
Current service cost4,8011,7315169810,478-17,624
Interest expenses5,4084,5351,1792419,321-20,684
Actuarial losses / (gains) – recognized in the statement of profit or loss (1)----29,311-29,311
Actuarial losses / (gains) – recognized in other comprehensive income (1)20,16815,359(260)715--35,982
Recognition of provisions-----26,69026,690
Reversal of provisions-----(18,397)(18,397)
Benefits paid out(16,703)(6,717)(1,056)(745)(43,844)(5,071)(74,136)
FX differences(6)---(25)(1)(32)
Balance as at 31 December 2017 (audited)166,898143,52233,6657,145274,11637,207662,553
Long-term provisions144,741137,79532,3586,342237,311-558,547
Short-term provisions22,1575,7271,30780336,80537,207104,006
Total166,898143,52233,6657,145274,11637,207662,553

(1) Changes in actuarial losses / (gains) in 2017 is mainly caused by effect of salaries increase in Parent Company effective from September 2017.

Data in ths. PLN

 Retirement and disability severance benefitsCompany Social Benefits FundTransportation benefitsPost-mortem benefitsJubilee awardsOther employee benefitsTotal provisions
Balance as at 1 January 2016 (audited)154,828124,11833,65431,660318,23941,505704,004
Current service cost5,1791,30540130113,023-20,209
Interest expenses4,8113,8701,0529079,887-20,527
Actuarial losses / (gains) – recognized in the statement of profit or loss----(15,215)-(15,215)
Actuarial losses / (gains) – recognized in other comprehensive income(12,535)610(2,781)(6,776)--(21,482)
Cost of past employment16,3786,4422,054(18,612)(20,084)-(13,822)
Recognition of provisions5----4,9574,962
Reversal of provisions-----(2,127)(2,127)
Benefits paid out(15,487)(7,731)(1,094)(644)(37,179)(10,645)(72,780)
FX differences51---204296551
Balance as at 31 December 2016 (audited)153,230128,61433,2866,836268,87533,986624,827
Long-term provisions134,261123,42931,9346,098229,849-525,571
Short-term provisions18,9695,1851,35273839,02633,98699,256
Total153,230128,61433,2866,836268,87533,986624,827

Items recognized in the result in reference to employee benefits programs

Data in ths. PLN

 Year ended 31/12/2017(audited) Year ended 31/12/2016(audited)
Costs of employee benefits55,228 (5,993)
Financial expenses20,684 20,527
Total recognized in the result before tax75,912 14,534

Actuarial (earnings) / losses

Data in ths. PLN

Year ended 31/12/2017 (audited)change of demographic assumptionschange of financial assumptionsother changesTotal
Actuarial losses / (gains) – benefits after the employment period    
Retirement and disability severance benefits262,55517,58720,168
Company Social Benefits Fund1,3835,1698,80715,359
Transportation benefits(229)129815715
Post-mortem benefits3481,157(1,765)(260)
Actuarial losses / (gains) – other long-term benefits    
Jubilee awards(487)3,24826,55029,311
Total1,04112,25851,99465,293

Data in ths. PLN

Year ended 31/12/2016 (audited)change of demographic assumptionschange of financial assumptionsother changesTotal
Actuarial losses / (gains) – benefits after the employment period    
Retirement and disability severance benefits11,788(4,293)(20,021)(12,526)
Company Social Benefits Fund4,6009,207(13,197)610
Transportation benefits2,036(1,789)(3,028)(2,781)
Post-mortem benefits(907)(244)(5,634)(6,785)
Actuarial losses / (gains) – other long-term benefits    
Jubilee awards(12,569)(6,546)3,900(15,215)
Total4,948(3,665)(37,980)(36,697)

Analysis of maturities of paid out employee benefits

Data in ths. PLN

Balance as at 31/12/2017(audited)Retirement and disability severance benefitsCompany Social Benefits FundTransportation benefitsPost-mortem benefitsJubilee awardsOther employee benefitsTotal
up to 1 year22,1575,7271,30780336,80537,207104,006
from 1 to 5 years49,88323,7734,9632,728121,577-202,924
over 5 years94,858114,02227,3953,614115,734-355,623
Total166,898143,52233,6657,145274,11637,207662,553

Data in ths. PLN

Balance as at 31/12/2016(audited)Retirement and disability severance benefitsCompany Social Benefits FundTransportation benefitsPost-mortem benefitsJubilee awardsOther employee benefitsTotal
up to 1 year18,9695,1851,35273839,02633,98699,256
from 1 to 5 years44,08521,1315,0532,580111,523-184,372
over 5 years90,176102,29826,8813,518118,326-341,199
Total153,230128,61433,2866,836268,87533,986624,827

Average vesting period of employee benefits in the Parent Company was 8.7 years as at 31 December 2017 and 8.9 years as at 31 December 2016. The Parent Company’s share in the value of the Group’s provisions for employee benefits, valuated by actuarial methods, is more than 90%.