7.2 Cost by nature and function

Clients

Natural environment

Public affairs

Investors

Local communities

Employees

Social contribution



    Q1 unaudited Q2 unaudited Q3 unaudited Q4 unaudited Year ended December 31, 2016
COST BY NATURE          
Depreciation, amortization and disposal 722 724 749 784 2,979
Impairment losses 9 798 33 165 1,005
Materials and energy 840 655 588 734 2,817
External services 593 617 638 721 2,569
Taxes and charges 811 773 873 868 3,325
Employee benefits expenses 1,117 1,059 1,022 1,039 4,237
Other cost by nature 63 65 66 73 267
TOTAL COST BY NATURE 4,155 4,691 3,969 4,384 17,199
Change in inventories (29) 19 8 4 2
Cost of products and services for the entity’s own needs (264) (269) (251) (223) (1,007)
Distribution and selling expenses (379) (348) (350) (352) (1,429)
General and administrative expenses (183) (216) (163) (415) (977)
Cost of merchandise and materials sold 2,305 2,340 2,304 2,437 9,386
COST OF GOODS SOLD 5,605 6,217 5,517 5,835 23,174
note_7.2_table_1_pge.xlsx
 
    Q1 unaudited Q2 unaudited Q3 unaudited Q4 unaudited Year ended December 31, 2015
COST BY NATURE          
Depreciation, amortization and disposal 812 807 694 635 2,948
Impairment losses 24 8,867 41 107 9,039
Materials and energy 917 730 709 897 3,253
External services 582 618 629 724 2,553
Taxes and charges 762 694 721 726 2,903
Employee benefits expenses 1,121 1,033 1,019 1,036 4,209
Other cost by nature 59 68 78 75 280
TOTAL COST BY NATURE 4,277 12,817 3,891 4,200 25,185
Change in inventories (44) - - 32 (12)
Cost of products and services for the entity’s own needs (307) (372) (378) (435) (1,492)
Distribution and selling expenses (395) (337) (322) (354) (1,408)
General and administrative expenses (208) (194) (181) (242) (825)
Cost of merchandise and materials sold 2,225 2,011 2,130 2,252 8,618
COST OF GOODS SOLD 5,548 13,925 5,140 5,453 30,066
note_7.2_table_2_pge.xlsx

In order to correct presentation of the data for the quarterly periods the Group conducted reclassifications between specific positions.

7.2.1. Depreciation, amortization, disposal and impairment losses

Recognition of depreciation, amortization, disposal and impairment losses of property, plant and equipment, intangible assets and investment property in the financial statement of comprehensive income is presented below:

Year ended December 31, 2016 Depreciation, amortization and disposal Impairment losses
  Property, plant and equipment Intangible assets Investment property TOTAL Property, plant and equipment Intangible assets Investment property TOTAL
Cost of goods sold 2,691 84 1 2,776 489 284 3 776
Distribution and selling expenses 12 5 - 17 - - - -
General and administrative expenses 52 14 - 66 222 7 - 229
TOTAL DEPRECIATION, AMORTIZATION AND IMPAIRMENT LOSSES REFLECTED IN FINANCIAL RESULT 2,755 103 1 2,859 711 291 3 1,005
Change in inventories 1 - - 1 - - - -
Cost of products and services for the entity’s own needs 119 - - 119 - - - -
TOTAL DEPRECIATION, AMORTIZATION AND IMPAIRMENT LOSSES 2,875 103 1 2,979 711 291 3 1,005
note_7.2.1_table_1_pge.xlsx

As described in note 3.2 of these financial statements, impairment allowances were raised mainly due to impairment losses of power generating assets of Renewables segment. In previous period, impairment allowances referred primarily to Conventional Generation segment.

Year ended December 31, 2015 Depreciation, amortization and disposal Impairment losses
  Property, plant and equipment Intangible assets Investment property TOTAL Property, plant and equipment Intangible assets Investment property TOTAL
Cost of goods sold 2,631 74 2 2,707 9,013 16 - 9,029
Distribution and selling expenses 23 4 - 27 8 - - 8
General and administrative expenses 33 11 - 44 2 - - 2
TOTAL DEPRECIATION, AMORTIZATION AND IMPAIRMENT LOSSES REFLECTED IN FINANCIAL RESULT 2,687 89 2 2,778 9,023 16 - 9,039
Change in inventories (12) - - (12) - - - -
Cost of products and services for the entity’s own needs 182 - - 182 - - - -
TOTAL DEPRECIATION, AMORTIZATION AND IMPAIRMENT LOSSES 2,857 89 2 2,948 9,023 16 - 9,039
note_7.2.1_table_2_pge.xlsx
 

7.2.2. Materials and energy

    Year ended December 31, 2016 Year ended December 31, 2015
Cost of production fuel 1,994 2,372
Renovation materials 475 474
Energy 148 156
Other 200 251
TOTAL MATERIALS AND ENERGY 2,817 3,253
note_7.2.2_table_1_pge.xlsx
   

7.2.3. External services

    Year ended December 31, 2016 Year ended December 31, 2015
Transmission services 1,561 1,483
External services – repairs and exploitation 309 311
Logistics services 85 84
Telecommunication services 232 231
Rent and lease 53 56
IT services 85 89
Consulting services 31 45
Other 213 254
TOTAL EXTERNAL SERVICES 2,569 2,553
note_7.2.3_table_1_pge.xlsx
 

7.2.4. Employee benefits expenses and employment structure

    Year ended December 31, 2016 Year ended December 31, 2015
Payroll 3,154 3,173
Social security expenses 606 612
Retirement and pension expenses 11 16
Jubilee awards, coal benefits 102 100
Other post-employment benefits 37 30
Change in provisions for employee benefits (146) (173)
Cost of the Voluntary Leave Program 16 (20)
Other employee benefits 457 471
TOTAL EMPLOYEE BENEFITS EXPENSES 4,237 4,209
Included in costs of goods sold 3,123 2,984
Included in distribution and selling expenses 259 233
Included in general and administrative expenses 504 512
Included in cost of products and services for the entity’s own needs 351 480
note_7.2.4_table_1_pge.xlsx

Employment in the PGE Group (FTE) was as follows:

  Year ended December 31, 2016 Year ended December 31, 2015
Conventional Generation 22,788 23,198
Renewables 509 519
Supply 2,066 2,002
Distribution 10,239 10,298
Other consolidated units 2,869 2,860
TOTAL EMPLOYMENT 38,471 38,877
note_7.2.4_table_2_pge.xlsx