2.6.1. Impact exerted by IFRS 15 on the consolidated financial statements

The Group has decided to implement the standard using the retrospective method with respect to all the contracts, whose performance was not completed as at 1 January 2018, without restating the comparative data. The first application of the standard did not result in an adjustment of retained earnings as at 1 January 2018 (no adjustments that would require an adjustment of retained earnings in the opening balance). Considering the types of transactions concluded by the Group, the application of this standard has no material effect on the previously-applied accounting principles.

The Group mainly fills contracts pertaining to deliveries of coal, coke and hydrocarbons, which account for approx. 97% of total sales revenues. In these contracts, international trade rules, the so-called INCOTERMS (FCA, DAP, FOB) are used to define the delivery terms. The moment of passing control over the promised goods and services to the customer is shown precisely in each delivery rule. Based on the terms of deliveries applicable to most contract, the Group concluded that the moment of passing control to the customer takes place upon delivery of the goods and completion of the transportation service. In such cases, pursuant to IFRS 15, all goods and services (transport services) promised in the contract should be treated as a single performance obligation and the revenue should be recognized once at a specified time. The same approach was used previously under IAS 18.

The Group applies the IFRS 15 rules while incorporating the 5 steps model in reference to the analysis concerning the recognition of revenues from contracts with clients, which was described in detail in Note 4.1.