33. Deferred income

The subsidies received are mainly related to the performance of projects co-financed under the European Union assistance programmes and to co-financing of the costs of development works.

In 2023, the Group received PLN 5,305,000 of subsidy (2022: PLN 1,733,000) for the support of sustainable processes and products manufactured by the subsidiary located in Slovenia. The subsidies are aimed at supporting large investment projects with the aim of increasing productivity and competitiveness in the Republic of Slovenia.

The selected terms and conditions of the said subsidy are as follows:

• Project commencement: 22 April 2022;
• Project completion: 30 November 2024;
• Only new equipment may be purchased;
• The project needs to be carried out in compliance with the application forming an integral part of the agreement, for the amount of at least EUR 10,415,000 (less of VAT), whereas the investment in plant and machinery must represent at least 50% of the investment project.
• The Group committed that the project will continue operations at the site of the subsidy recipient for at least 5 years post the investment completion.
• The Group committed to maintain the headcount of 390 (average headcount in the last 12 months before the month of filing the application) until 30 November 2029.
• The Group committed to maintain the value added of the investment per employee within two years post the project completion which will be higher than EUR 38,889 (value added per employee in the reporting year preceding the year of filing the application).
• The Group committed to prove energy efficiency of the production/service/process by way of reducing energy consumption of manufacturing the existing product/service/process by at least 10%, in compliance with the methodology determined in the application.
• The Group committed to prove material efficiency of the production/service/process, so as to reduce materials consumption in manufacturing the existing product/service/process by at least 10%, in compliance with the methodology determined in the application.
• The Group considers that the aforesaid conditions will be fulfilled.

Moreover, In the previous years, the Group carried out three large projects co-financed from the EU funds, related to the purchase and construction of property, plant and equipment. The Group complied with all of the conditions of the said subsidies.

In March 2017, Aluprof S.A. signed a co-finance agreement for the project entitled: ‘The Construction of the Research and Innovation Centre to Conduct Research and Development Works on the Development of Innovative Systems for the Construction Industry’, under Measure 2.1. ‘Support for Investments in R&D Infrastructure of Enterprises’, within the Smart Growth Operational Programme 2014–2020, subsidised by the European Regional Development Fund. The total cost of the project amounted to PLN 65,939,000, including eligible costs of PLN 43,440,000.  The project was financed from the company own funds and state aid under the EU funds. The total amount of eligible expenditures less the flat-rate percent of income equals PLN 28,093,000.  The maximum co-financing amount is PLN 5,847,000.  The expenditures eligibility period for the project started on 27 April 2016 and ended on 31 December 2019. By the end of 2021, the Group received PLN 5,847,000 of subsidy within the project.

The basic conditions of obtaining the subsidy was the attainment of the project objective, and its maintenance until 31 December 2024. In that time the Group may not dispose of or transfer in any way the ownership title to the non-current assets financed with the subsidy. In addition, the Group is obliged to carry out business activities in the scope specified in the application.

The key measurable indicators of the project are:

• product indicators, i.e. the number of fixed assets and intangible assets purchased, and the value of expenditure on the purchase of scientific and research devices;
• result indicators, i.e. employment increase, the number of R&D projects performed with the use of the co‑financed research infrastructure, and the value of expenditures on R&D activities.

In the opinion of the Group, the aforesaid indicators will be achieved.