CREDITS, LOANS, BONDS
Borrowings and debt securities
On June 24th 2019, PGNiG entered into an agreement terminating the PLN 7bn and PLN 1bn Note Programmes, replacing them with a PLN 10bn syndicated loan agreement with a five-year availability period. The Company intends to use the facility to finance the day-to-day operations and capital expenditure of PGNiG and other companies the PGNiG Group.
| PGNiG Group’s key credit facility agreements as at December 31st 2019 | |||||
|
Bank
|
Maximum debt amount under the agreement (million)
|
Currency
|
Interest rate type
|
Facility type
|
Maturity date
|
|
Syndicate of eight banks
|
450
|
USD
|
variable
|
working capital/
investment facility
|
Jun 30 2026
|
|
Bank Gospodarstwa Krajowego
|
271
|
PLN
|
variable
|
long-term facility
|
Aug 27 2027
|
|
Bank Gospodarstwa Krajowego
|
45
|
PLN
|
variable
|
investment facility
|
Dec 31 2023
|
|
Pekao S.A.
|
20
|
PLN
|
variable
|
overdraft facility
|
Jun 27 2025
|
|
Deutsche Bank
|
35
|
EUR
|
variable
|
short-term working capital overdraft facility
|
on demand
|
|
PKO Bank Polski
|
20
|
EUR
|
variable
|
short-term working capital overdraft facility
|
Mar 31 2020
|
|
Bank Gospodarstwa Krajowego
Pekao S.A.
ING Bank Śląski S.A.
PKO BP S.A.
Caixa Bank S.A. Polish Branch
BNP Paribas Bank Polska S.A.
Societe Generale S.A.
Santander Bank Polska S.A.
Intesa Sanpaolo S. P. A
|
10,000
|
PLN
|
variable
|
syndicated loan
|
Jun 24 2024
|
For detailed information on loans advanced by PGNiG to its subsidiaries and other related entities, see Note 7.4 to The separate financial statements of PGNiG SA for 2019.
Issues of securities and use of proceeds
In 2019, the PGNiG Group could issue bonds and notes under three programmes. For detailed information on the effective terms and utilisation of the programmes, as well as debt under securities in issue, see Note 5.2 to The consolidated financial statements of the PGNiG Group for 2019.
As at December 31st 2019, PGNIG had no outstanding debt under notes or bonds issued to other PGNiG Group members.
Financial instruments
| Key financial assets by category | |||||||||
|
2019
|
2018
|
||||||||
|
Balance-sheet item
|
Item referenced in Note
|
Financial assets at amortised cost
|
Financial assets at fair value through profit or loss
|
Financial instruments designated for hedge accounting
|
Total
|
Loans and receivables at amortised cost
|
Financial assets at fair value through profit or loss
|
Financial instruments designated for hedge accounting
|
Total
|
|
Receivables
|
Trade receivables
|
4,511
|
-
|
-
|
4,511
|
4,864
|
-
|
-
|
4,864
|
|
Derivative financial instruments
|
|
-
|
1,539
|
1,088
|
2,627
|
-
|
928
|
390
|
1,318
|
|
Cash and cash equivalents
|
|
3,037
|
-
|
-
|
3,037
|
3,925
|
-
|
-
|
3,925
|
|
Total
|
|
7,548
|
1,539
|
1,088
|
10,175
|
8,789
|
928
|
390
|
10,107
|
| Key financial liabilities by category | |||||||||
|
2019
|
2018
|
||||||||
|
Balance-sheet item
|
Item referenced in Note
|
Financial liabilities at amortised cost
|
Financial liabilities at fair value through profit or loss
|
Financial instruments designated for hedge accounting
|
Total
|
Financial liabilities at amortised cost
|
Financial liabilities at fair value through profit or loss
|
Financial instruments designated for hedge accounting
|
Total
|
|
Financing liabilities
|
Bank borrowings
|
4,893
|
-
|
-
|
4,893
|
1,385
|
-
|
-
|
1,385
|
|
Debt securities
|
-
|
-
|
-
|
-
|
2,298
|
-
|
-
|
2,298
|
|
|
Trade and tax payables
|
Trade payables
|
1,608
|
-
|
-
|
1,608
|
1,411
|
-
|
-
|
1,411
|
|
Derivative financial instruments
|
|
-
|
991
|
305
|
1,296
|
-
|
802
|
358
|
1,160
|
|
Total
|
|
6,501
|
991
|
305
|
7,797
|
5,094
|
802
|
358
|
6,254
|
For detailed information on financial instruments, see Note 7.1 to The consolidated financial statements of the PGNiG Group for 2019.
Debt ratios
Net debt/EBITDAearnings before interest, taxes, depreciation and amortization
Net debt is defined as the total amount of existing bank borrowings (both short-term and long-term), debt securities, lease liabilities and liabilities under non-bank borrowings, less cash and cash equivalents and cash classified as non-current assets.
For the purposes of the PGNiG Group’s debt analysis the Management Board uses the net debt/EBITDA ratio. In accordance with the Strategy, this ratio should not exceed 2.0.earnings before interest, taxes, depreciation and amortization
The higher level of the ratio in 2019 was mainly attributable to an increase in lease liabilities (PLN 1.8bn in 2019 vs PLN 19m in 2018) and a significant increase in capital expenditure (PLN 6.6bn in 2019 vs PLN 4.9bn in 2018), with EBITDA down by PLN 1.6bn year on year.earnings before interest, taxes, depreciation and amortization
Debt ratio Debt to equity ratio
Debt ratio: total liabilities to total equity and liabilities
Debt to equity ratio: total liabilities to equity
The growth of the ratios in 2019 was attributable to an 82% year-on-year increase in debt (including lease liabilities), with an 11% increase in equity and liabilities and 4% yoy increase in equity.
Current ratio and quick ratio
Current ratio: current assets to current liabilities (net of employee benefit obligations, provisions and deferred income)
Quick ratio: current assets less inventories to current liabilities (net of employee benefit obligations, provisions and deferred income)
As liabilities grew at a higher rate year on year than current assets, in 2019 the current ratio reached 1.6, compared with 1.8 in 2018, and the quick ratio stood at 1.2, compared with 1.3 in 2018.
The PGNiG Group actively manages its financial resources by optimising both its debt structure and financing costs. PGNiG Group companies adapt the form of financing to its purpose (operating or investing activity) and to its term. The forms of financing available to PGNiG Group companies include credit facilities, finance leases and intra-Group loans advanced by PGNiG.
An important tool improving the efficiency of financial resources management is the liquidity management system in which the balances of specified bank accounts of PGNiG and its subsidiaries can be aggregated (cash pooling). Thanks to the cash pooling system within the Group, cash of entities with excess liquidity is used to finance the operations of entities recording cash deficits. The result is improved efficiency of cash management within the PGNiG Group, but also a material reduction in interest expenses incurred by companies financing their cash deficits through the system.
While assessing the efficiency of financial resources management, a noteworthy fact is the optimum diversification of the portfolio of financial institutions. It should also be noted that, thanks to the diversity of available financing sources and liquidity management tools at the PGNiG Group, the Group companies are able to timely fulfil their financial obligations.
The Group has a stable financial position, with cash flows and available sources of financing enabling it to carry out its planned investment projects. The PGNiG Group manages its capital expenditure structure depending on the market situation, and focuses on the most efficient investment projects. For information on key investment projects planned for the coming years, see Capital expenditure in 2020.