Management of capital and assets
The Group has access to umbrella overdraft limits under physical cash pooling arrangements and under a multi-purpose credit facility, which may be used by the parent at times of increased demand for funding by the Group companies. The Group also has access to bilateral overdraft limits and multi-purpose credit lines that are available to the Group companies.
The aggregate amount of available overdraft limits and multi-purpose credit facilities available to the Group as at December 31st 2016 was PLN 476,399 thousand.
As at December 31st 2016, the Group had access to available credit limits of PLN 1,030,477 thousand under a set of long-term corporate credit facilities and PLN 4,500 thousand under other borrowings.
In total, as at December 31st 2016 the Group had access to credit facilities totalling approximately PLN 1,511,376 thousand (including approximately PLN 1,104,321 thousand available to the parent).
Importantly, the Group maintains high amounts of free cash, including in bank deposits, which as at December 31st 2016 were PLN 1,220,777 thousand (PLN 326,031 thousand at the parent).
Total limits available under borrowings and the free cash represent financial resources which are sufficient to service current and future liabilities, and therefore the Group’s liquidity risk is very low.
In 2016, the Group increased its borrowings from PLN 1,166,330 thousand to PLN 1,424,081 thousand, of which the parent’s borrowings increased from PLN 984,512 thousand to PLN 1,473,665 thousand (including PLN 308,394 due to related parties).
The Group’s short-term borrowings decreased from PLN 118,880 thousand to PLN 52,034 thousand.
In 2016, none of the Group companies defaulted on any of their liabilities or financial covenants where such default would trigger acceleration of the liabilities. In 2016, the Group was not refused any bank borrowings and none of its credit facility agreements was terminated.
In the opinion of their strategic lenders, the Group and its subsidiaries have a sound liquidity position and enjoy high credit standing. Considering the above, even if the macroeconomic situation deteriorates, the parent believes that there is no threat or risk which could materially adversely affect its liquidity position or lead to loss of liquidity.
Moreover, in 2016 the Group successfully continued its financing strategy, which included:
- using a package of corporate credit facility agreements, as a highly secure source of funding for the Group’s long-term growth strategy and its day-to-day operations, ensuring uniform terms adequate to the Group’s condition and potential;
- maintaining a strong liquidity position while optimising the management of free cash at the Group companies, for instance through the use of the cash-pooling arrangement, umbrella sublimits under current account overdraft facilities and multi-purpose facilities as part of the global limits available to the Group, and flexible adjustment of those sublimits to the needs of the Group companies;
- implementing an efficient mechanism for the redistribution of funds under the intra-group financing agreement with key subsidiaries, in the form of intra-group loans or note issues;
- the parent’s dividend policy with respect to its subsidiaries, adapted to the financing requirements of the Group’s and its subsidiaries’ investment strategies;
- application of mechanisms under the Group Liquidity Management and Financing Policy consistent with the implemented centralised Financing Model.