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/EBITDA 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)
On March 8th 2018, Elektrociepłownia Stalowa Wola S.A. signed a facility agreement with Bank Gospodarstwa Krajowego (BGK) and PGNiG to refinance its debt and finance the construction of a CCGT unit in Stalowa Wola. The CCGT unit was commissioned on September 30th 2020. The facility is due for repayment by June 14th 2030.
The loan agreement with BGK and PGNiG which is binding on ECSW, as well as the Subordination Agreement between ECSW and PGNiG, PGNiG Termika S.A., Tauron Polska Energia S.A., Tauron Wytwarzanie S.A. and BGK, have the effect of precluding ECSW from:
- declaring or paying any compensation, dividend, fee or other distribution (or interest on any unpaid compensation, dividend, fee or other distribution, whether in cash or in kind) in respect of the shares held;
- repaying or distributing any dividend or retained earnings until the loan to BGK and PGNiG S.A. (senior debt) is repaid.
The table below presents equity-accounted investees
| 2020 | 2019 | |||||||
|---|---|---|---|---|---|---|---|---|
| Equity-accounted entities | Equity-accounted entities | |||||||
| SGT EUROPOL GAZ S.A. | Polska Grupa Górnicza Sp. z o.o. | Elektrociepłownia Stalowa Wola S.A. | GK Polimex-Mostostal S.A. | SGT EUROPOL GAZ S.A. | Polska Grupa Górnicza Sp. z o.o. | Elektrociepłownia Stalowa Wola S.A. | GK Polimex-Mostostal S.A. | |
| At beginning of the period | 840 | 612 | – | 112 | 840 | 858 | – | 108 |
| Changes accounted for in profit/(loss) from equity-accounted investees, including: | ||||||||
| Share of net profit/(loss) | 26 | (375) | (158) | 16 | 28 | (87) | (192) | 4 |
| Elimination of unrealised profits between the Group and the joint venture | 5 | 27 | 42 | (2) | – | 4 | – | – |
| Goodwill write-off | – | (1) | – | – | – | (13) | – | – |
| Reversal of negative value of equity-accounted interests* | – | – | 116 | – | – | – | 192 | – |
| Impairment losses | (31) | (260) | – | – | (28) | (143) | – | – |
| Changes accounted for in other comprehensive income from equity-accounted investees | – | (3) | – | – | – | (7) | – | – |
| At end of the period | 840 | – | – | 126 | 840 | 612 | – | 112 |
* 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 2020, the PGNiG Group did not accept any legal or constructive obligation or make any payment on behalf of Elektrociepłownia Stalowa Wola S.A.
| 2020 | 2019 | |||||
|---|---|---|---|---|---|---|
| SGT EUROPOL GAZ S.A.* | Polska Grupa Górnicza Sp. z o.o.** | GK Polimex-Mostostal S.A.*** | SGT EUROPOL GAZ S.A.* | Polska Grupa Górnicza Sp. z o.o.** | 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 | Przesył gazu | Wydobycie węgla | Budownictwo | Przesył gazu | Wydobycie węgla | Budownictwo |
| Key financial data**** | ||||||
| Non-current assets | 1,039 | 9,423 | 765 | 1,453 | 10,220 | 809 |
| Current assets | 3,064 | 1,770 | 1,390 | 2,490 | 2,226 | 964 |
| including cash and cash equivalents | 318 | 259 | 408 | 2,284 | 555 | 276 |
| Non-current liabilities | 10 | 2,704 | 214 | 13 | 4,695 | 316 |
| including non-current financial liabilities | – | 331 | 134 | – | 2,510 | 388 |
| Current liabilities | 117 | 6,626 | 1,175 | 66 | 4,040 | 780 |
| including current financial liabilities | – | 2,414 | 305 | – | 476 | 22 |
| Net assets | 3,976 | 1,863 | 766 | 3,864 | 3,711 | 677 |
| Revenue | 893 | 7 ,476 | 1,498 | 875 | 9,012 | 1,477 |
| Depreciation and amortisation expense | (328) | (2,043) | (38) | (327) | (2,246) | (32) |
| Interest income | 16 | 24 | 3 | 42 | 34 | 3 |
| Interest expense | – | (130) | (24) | – | (137) | (23) |
| Income tax | (16) | 373 | (10) | (13) | 55 | (1) |
| Net profit/(loss) | 43 | (1,838) | 91 | 46 | (427) | (4) |
| Other comprehensive income | – | (11) | (4) | – | (36) | 3 |
| Carrying amount of the investment | ||||||
| Share of net assets | 2,035 | 381 | 126 | 1,978 | 758 | 112 |
| Adjustment to ensure consistency of accounting policies with those of the Group | (70) | – | (14) | (39) | – | (16) |
| Elimination of unrealised profits between the Group and the joint venture | (177) | 23 | (3) | (182) | (3) | (1) |
| Goodwill | 6 | 13 | 17 | 6 | 13 | 17 |
| Goodwill write-off | (6) | (13) | – | (6) | (13) | – |
| Impairment losses | (948) | (404) | – | (917) | (143) | – |
| Carrying amount of the investment in the consolidated statement of financial position | 840 | – | 126 | 840 | 612 | 112 |
*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-Mostostal S.A., assumes that the parties will reach, by voting, common positions when making key decisions on matters falling within the powers of the Polimex-Mostostal General Meeting and the Supervisory Board, including on the composition of the Polimex-Mostostal Management Board.
****Financial data for the Polimex-Mostostal Group for 11 months of the year. Since 2020, for the 11 months of a given year and December of the previous year
**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-Mostostal S.A., assumes that the parties will reach, by voting, common positions when making key decisions on matters falling within the powers of the Polimex-Mostostal General Meeting and the Supervisory Board, including on the composition of the Polimex-Mostostal Management Board.
****Financial data for the Polimex-Mostostal Group for 11 months of the year. Since 2020, for the 11 months of a given year and December of the previous year