The Company carries out a centralised finance management policy, allowing effective management in this respect at a level of the entire TAURON Group. The main tools allowing for effective management include the appropriate internal corporate regulations, as well as the TAURON Group’s cash pool service and intra-group loans. In addition, the finance management system is supported by the TAURON Group’s central financial risk management policy and the TAURON Group’s central insurance policy. In these areas, the Company acts as a manager and decides on the direction of activities, enabling it to set appropriate risk exposure limits.
Detailed information concerning finance management are described in section 7.3. of the Management Board’s reports on the activities of TAURON Polska Energia S.A. and TAURON Capital Group for the financial year 2020.
In 2020, the Company and TAURON Group demonstrated full capacity to settle their liabilities on their maturity date. The main objective of the Group’s capital management is to maintain a good credit rating and safe capital ratios that would support the Group’s operations and increase value for its shareholders.
The Group primarily monitors the debt ratio, defined as the ratio of net financial debt to EBITDA.
The TAURON Group’s net financial debt is defined in the individual financing agreements and generally represents the obligation to pay or repay money on account of loans, borrowings and debt securities and on account of financial leases, excluding: subordinated bond liabilities and lease liabilities recognised under IFRS 16 Leases, which would not meet the conditions for classification as lease liabilities under the provisions of IAS 17 Leases, less cash and short-term investments with a maturity of up to 1 year. EBITDA means the TAURON Group’s operating profit or loss plus depreciation and amortisation and write-downs on non-financial assets. The value of the ratio is monitored by the financing institutions of the Group and rating agencies and influences the possibility and cost of obtaining financing as well as the Company credit rating.
As at the balance sheet date, the debt ratio stood at 2.51, which is acceptable to financial institutions.
Table 1
Export to Excel| Year ended 31 December 2020 |
Year ended 31 December 2019 |
|
|---|---|---|
| Loans and borrowings | 4,794,846 | 4,727,633 |
| Bonds 1 | 5,322,625 | 4,254,660 |
| Finance lease 2 | – | – |
| Non-current debt liabilities | 10,117,471 | 8,982,293 |
| Loans and borrowings | 1,197,287 | 2,323,018 |
| Bonds 1 | 201,217 | 88,935 |
| Finance lease 2 | – | – |
| Short-term debt liabilities | 1,398,504 | 2,411,953 |
| Total debt | 11,515,975 | 11,394,246 |
| Cash and cash equivalents 3 | 921,345 | 1,237,952 |
| Short-term investments maturing within one year | 100 | 26,722 |
| Net debt | 10,594,530 | 10,129,572 |
| EBITDA | 4,222,717 | 3,599,367 |
| Operating profit (loss) | (1,731,977) | 295,454 |
| Depreciation/amortization | (1,954,142) | (1,991,733) |
| Impairment | (4,000,552) | (1,312,180) |
| Net debt / EBITDA | 2.51 | 2.81 |
1 Debt does not include liabilities arising from subordinated bonds.
2 Liabilities arising from lease in line with IAS 17 Leases.
3 Cash and cash equivalents include cash of TAURON Ciepło Sp. z o.o. classified as at the balance sheet date as the disposal group.
The change in debt liabilities is shown in the table below.
Export to Excel| Debt | Year ended 31 December 2020 |
Year ended 31 December 2019 |
|---|---|---|
| Opening balance | 14,314,276 | 10,963,377 |
| subordinated bonds | (1,913,427) | (1,541,659) |
| lease indebtedness (except for those meeting the conditions of IAS 17 Leases) | (1,006,603) | – |
| Opening balance – debt in the calculation of debt ratio | 11,394,246 | 9,421,718 |
| Effects of implementing new IFRS | – | 918,115 |
| Proceeds arising from debt taken out | 4,359,573 | 5,645,485 |
| financing received | 4,368,546 | 5,650,000 |
| transaction costs | (8,973) | (4,515) |
| Interest accrued | 427,015 | 450,716 |
| charged to profit or loss | 257,486 | 266,504 |
| capitalized to property, plant and equipment and intangible assets | 169,529 | 184,212 |
| Debt related payments | (4,954,773) | (3,759,175) |
| debt securities redemption | (60,400) | (2,420,000) |
| principal repaid | (4,406,813) | (867,360) |
| lease instalments paid | (102,085) | (75,047) |
| interest paid | (215,946) | (212,556) |
| interest paid, capitalized to investment projects | (169,529) | (184,212) |
| Change in the balance of overdraft facility and cash pool | (16,417) | 21,453 |
| Recognition of new lease agreements and change of lease agreements | 186,932 | 84,474 |
| Business acquisition – recognition of acquired lease liabilities | – | 35,215 |
| Change in debt measurement | 339,126 | (42,619) |
| Reclassification of the Group for sale as for sale | (64,625) | – |
| Other non-monetary changes | (4,108) | (2,765) |
| Closing balance | 14,586,999 | 14,314,276 |
| subordinated bonds | (1,998,367) | (1,913,427) |
| lease debt (except for debt meeting the conditions of IAS 17 Leases) | (1,072,657) | (1,006,603) |
| Closing balance – debt in the calculation of debt ratio | 11,515,975 | 11,394,246 |