14.11. PROVISIONS

Provisions
Provisions are recognised for the amount which represents the best estimate of the expenditure required to settle the present obligation at the end of the reporting period.

Environmental provision
The Group creates provisions for future liabilities due to reclamation of contaminated land or water or elimination of harmful substances if there is such a legal or constructive obligation. Environmental provision for reclamation is periodically reviewed on the basis of the degree of contamination. Changes of provision increase or decrease the value of asset causing the obligation of reclamation in the current period. In case decrease of provision is higher than carrying amount of the asset, the amount of that excess is recognised in profit or loss.

Jubilee bonuses and post-employment benefits
Under the remuneration plans employees of the Group are entitled to jubilee bonuses, paid to employees after an elapse of a defined number of years in service as well as retirement and pension benefits, paid once at retirement or pension. The amount of above benefits and jubilee bonuses depends on the number of years in service and an employee’s remuneration.

The jubilee bonuses are other long-term employee benefits, whereas retirement and pension benefits are classified as post-employment defined benefit plans.

Provisions are determined by an independent actuary and revalued if there are any indications impacting their value, taking into account the staff turnover and planned change in wages.

Actuarial gains and losses from post-employment benefits are recognised in components of other comprehensive income and from other employment benefits are recognised in profit or loss.

CO₂ emissions, energy certificates
The Group recognises the estimated CO2 emissions costs during the reporting period in operating activity costs (taxes and charges). Provision is recognised based on the value of allowances taking into account the weighted average method. In case of a shortage of allowances, the provision is created based on the purchase price of allowance concluded in forward contracts or market quotations of allowances at the reporting date.
Energy certificates are property rights to energy and energy efficiency certificates. The Group recognises provisions for the estimated volume of energy rights and energy efficiency certificates to be redeemed in the reporting period, which is recognised as operating costs, i.e. materials and energy in case of purchase of electricity for own needs or taxes and charges in case of sale of energy.
The obligation to submit energy certificates for depreciation or to pay a substitute fee or obtain a statement together with an energy efficiency audit is regulated on the basis of separate regulations.

Other provisions
Other provisions include mainly provisions for on-going legal proceedings and are recognised after consideration of available information, including the opinions of independent experts.
The Group recognises provisions if at the end of the reporting period the Group has an obligation arising from past events that can be reliably estimated and it is probable that fulfilment of this obligation will cause an outflow of resources embodying economic benefits.

Recognition of provisions requires estimates of the probable outflow of resources embodying economic benefits and making the best estimate of the expenditure required to settle the present obligation at the end of the reporting period. Provisions are recognised when the probability of outflow of resources embodying economic benefits is higher than 50%.