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Notes to the Financial Statements
3. ACCUMULATED PROVISION FOR DECOMMISSIONING, RECLAMATION AND MINING DAMAGES
Decommissioning and Reclamation
The Czech Republic has adopted a series of environmental acts and laws and regulations ("the Acts") concerning reclamation of damaged lands and can impose fines
and penalties for not meeting the requirements of the Acts.
The Company is liable under the Acts for continuing restoration of land damaged by its mining activities. The Company has been restoring areas damaged by mining
since 1950. As of the end of 2001 approximately 28 square kilometers has been fully restored and an additional 20 square kilometers is under restoration. Additional
restoration of land damaged as of December 31, 2001, of approximately 67 square kilometers will be carried out in the future.
The Company has established provisions, as described in Note 2, to recognize its estimated liabilities for decommissioning and reclamation of the areas damaged by
mining. The following is a summary of the provisions for the years ended December 31, 2001 and 2000 (in CZK million):
| Decommissioning and reclamation | |
| Balance at December 31, 1999 | 6,491 |
| Additions made during 2000: | |
| Discount accretion and effect of inflation | 375 |
| Provision | 77 |
| Current cash expenditures | (248) |
| Balance at December 31, 2000 | 6,695 |
| Additions made during 2001: | |
| Discount accretion and effect of inflation | 386 |
| Provision | 43 |
| Effect of change in estimate | 633 |
| Current cash expenditures | (243) |
| Balance at December 31, 2001 | 7,514 |
The provision relates to the extension of the mining area in the respective years. The current cash expenditures reflect the payments for decommissioning and
reclamation works carried out in the year.
In 2001 the Company reassessed the estimated decommissioning and reclamation costs at Mine Bílina resulting in an increase of CZK 633 million in the present value
of best estimate of the expenditures required to settle the present obligation. The change in estimate is reflected in the Statements of Income in other operating
expenses in the current period.
The actual decommissioning and reclamation costs could vary substantially from the above estimates because of new regulatory requirements, changes in technology,
increased costs of labor, materials, and equipment and/or the actual time required to complete all decommissioning and reclamation activities.
Other Damages
The Company is liable to cover the cost of railway track replacement. The railway track connection Prague – Chomutov operated by Czech Railways crosses unopened mining areas of the Company. The total estimated cost of railway track replacement likely to be incurred until May 2004 amounts to CZK 1,247 million. The Company has recorded a provision for such damages in the total amount of CZK 880 and 988 million as of December 31, 2001 and 2000, respectively.
4. PROPERTY, PLANT AND EQUIPMENT, NET
Property, plant and equipment at December 31, 2001 and 2000 is as follows (in CZK million):
| Buildings and constructions | Plant and equipment |
Land and other tangibles |
Accumulated depreciation |
Total | |
| December 31, 1999 | 7,267 | 14,587 | 507 | (12,007) | 10,354 |
| Additions | 558 | 1,943 | 113 | - | 2,614 |
| Retirements | (106) | (187) | (2) | 269 | (26) |
| Depreciation | - | - | - | (1,333) | (1,333) |
| December 31, 2000 | 7,719 | 16,343 | 618 | (13,071) | 11,609 |
| Additions | 452 | 879 | 212 | - | 1,543 |
| Retirements | (78) | (427) | (7) | 497 | (15) |
| Depreciation | - | - | - | (1,354) | (1,354) |
| December 31, 2001 | 8,093 | 16,795 | 823 | (13,928) | 11,783 |
Buildings and constructions include capitalized costs of provisions (see Note 2) in the amount of CZK 2,874 million. At December 31, 2001 and 2000 the accumulated
depreciation of the capitalized costs of provisions was CZK 547 and 479 million, respectively.
At December 31, 2001 and 2000 fully depreciated tangible assets still in active use amounted to CZK 5,176 million and CZK 4,636 million, respectively, at cost.
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