2.4.1. MATERIAL RESTRICTIONS OF THE ABILITY TO TRANSFER EARNINGS FROM INTERESTS IN JOINT VENTURES TO THE GROUP

Polska Grupa Górnicza S.A.

Under Polska Grupa Górnicza S.A.’s (PGG) note programme agreement, dividends may be paid only when all of the following conditions are met:

  • A part of notes of individual tranches maturing in the period for which the dividend is to be paid are redeemed before dividend can be distributed;
  • The following ratios are maintained within the permitted limits: net debt/EBITDAear­nings be­fo­re in­te­rest, ta­xes, de­pre­cia­tion and amor­ti­za­tion less replacement capital expenditure (for the last quarter), DSCR (ratio of cash available for debt servicing to mature debt – for the last year) and the Future Cash Flow Ratio (for the last quarter);
  • The forecast values of the ratios will not exceed the permitted limits by the note redemption date as a result of the payment;
  • The dividend will be paid to the shareholders and to the holders of participation notes in the proportion defined in the terms and conditions of participation notes.

Elektrociepłownia Stalowa Wola S.A. (ECSW)

The ECSW construction project is under way. On March 8th 2018, Elektrociepłownia Stalowa Wola S.A. signed a loan agreement with Bank Gospodarstwa Krajowego and PGNiG, under which each of the sponsors granted the company a PLN 450m facility to refinance its debt and finance further capital expenditure. The facility is due for repayment on June 14th 2030.

As at December 31st 2019, the amount drawn under the facility was PLN 900m.

The table below presents equity-accounted investees.

 
2019
2018

 
Joint venture
Joint venture

 
 SGT EUROPOL GAZ S.A.
 Polska Grupa Górnicza S.A.
 Elektro-ciepłownia Stalowa Wola S.A.
 Polimex-Mostostal S.A. Group
 SGT EUROPOL GAZ S.A.
 Polska Grupa Górnicza S.A.
 Elektro-ciepłownia Stalowa Wola S.A.
 Polimex-Mostostal S.A. Group
At beginning of the period
  840
  858
  -  
  108
  840
  674
  -  
  87
Acquisition of shares
  -  
  -  
  -  
  -  
  -  
  90
  -  
  -  
Changes accounted for in  profit/(loss) from equity-accounted  investees, including:
 
 
 
 
 
 
 
 
 Share of net profit/(loss)
  28
  (87)
  (192)
  4
  47
  101
  (21)
  19
 Elimination of unrealised profits  between the Group and the  joint venture
  -  
  4
  -  
  -  
  2
  (8)
  -  
  (1)
 Goodwill write-off
  -  
  (13)
  -  
  -  
  -  
  -  
  -  
  -  
 Reversal of negative value of equity-accounted interests*
  -  
  -  
  192
  -  
  -  
  -  
  21
  -  
 Impairment losses
  (28)
  (143)
  -  
  -  
  (49)
  -  
  -  
  -  
Changes accounted for in other comprehensive income from equity-accounted investees
  -  
  (7)
  -  
  -  
  -  
  1
  -  
  3
At end of the period
  840
  612
  -  
  112
  840
  858
  -  
  108
* Reversal due to the share in the entity’s losses being higher than the value of the interest in the jointly controlled entity as disclosed in the PGNiG Group’s accounts (IAS 28.38).  As at December 31st 2019, the PGNiG Group did not accept any legal or constructive obligation or make any payment on behalf of Elektrociepłownia Stalowa Wola S.A.

 
2019
2018

 
 SGT EUROPOL GAZ S.A.*
 Polska Grupa Górnicza S.A.
 GK Polimex-Mostostal S.A.***
 SGT EUROPOL GAZ S.A.*
 Polska Grupa Górnicza S.A.**
 GK Polimex-Mostostal S.A.***
PGNiG Group’s ownership interest
51.18%
20.43%
16.48%
51.18%
20.43%
16.48%
Description of business
 Transmission of natural gas
 
Production of coal
 Construction
 
Transmission of natural gas
 
Production of coal
 Construction
Key financial data****
 
 
 
 
 
 
Non-current assets
 1,453
 10,220
 809
 1,697
 9,528
 801
Current assets
 2,490
 2,226
 964
 2,223
 2,759
 1,223
 including cash and cash equivalents
 2,284
 555
 -
 2,012
 583
 396
Non-current liabilities
 13
 4,695
 316
 13
 4,435
 535
 including non-current financial liabilities
 -
 2,510
 388
 -
 2,316
 388
Current liabilities
 66
 4,040
 780
 89
 3,679
 828
 including current financial liabilities
 -
 476
 22
 1
 175
 22
Net assets
 3,864
 3,711
 677
 3,818
 4,173
 661
 
 
 
 
 
 
 
Revenue
 875
 9,012
 1,477
 896
 9,371
 1,519
 Depreciation and amortisation expense
 327
 2,193
 32
 312
 1,892
 24
 Interest income
 42
 34
 3
 37
 35
 5
 Interest expense
 -
 137
 23
 3
 100
 26
 Income tax
 13
 55
 (1)
 22
 (131)
 16
Net profit/(loss)
 46
 (427)
 (4)
 85
 493
 (1)
Other comprehensive income
 -
 (36)
 3
 -
 6
 1
 
 
 
 
 
 
 
Carrying amount of the investment
 
 
 
 
 
 
Share of net assets
 1,978
 758
 112
 1,954
 852
 109
Adjustment to ensure consistency of accounting policies with those of the Group
 (39)
 -
 (16)
 (43)
 -
 (17)
Elimination of unrealised profits between the Group and the joint venture
 (182)
 (3)
 (1)
 (182)
 (7)
 (1)
Goodwill
 6
 13
 17
 6
 13
 17
Goodwill write-off
 (6)
 (13)
 -
 (6)
 -
 -
Impairment losses
 (917)
 (143)
 -
 (889)
 -
 -
Carrying amount of the investment in the consolidated statement of financial position
 840
 612
 112
 840
 858
 108

* Resolutions are passed by a majority of three quarters of voting rights represented at the General Meeting. The General Meeting has the authority to pass resolutions if all founding shareholders (each holding 30% or more shares) are represented.

** Indirect interest held through PGNiG TERMIKA S.A., which has the right to appoint one member of the Supervisory Board and can block material decisions.

*** PGNiG S.A.’s interest held indirectly through PGNiG Technologie S.A. which, under the agreement relating to the investment in Polimex, assumes that the parties will reach, by voting, common positions when making key decisions on matters falling within the powers of the Polimex General Meeting and the Supervisory Board, including on the composition of the Polimex Management Board.

**** Financial data for the Polimex-Mostostal Group for 11 months of the year.