5.2. Financing liabilities
Accounting policies
The Group’s financing liabilities are classified under three main categories: bank borrowings, debt securities and other financing liabilities (including chiefly finance lease liabilities and non-bank borrowings). On initial recognition, all financing liability categories are measured at fair value less transaction costs. As at the reporting date, financing liabilities are measured at amortised cost with the use of the effective interest rate method.
Scrollbar is below the table
| 2016 | In functional currency – PLN | In foreign currency | |
|---|---|---|---|
| EUR | USD | ||
| Bank borrowings | 36 | 715 | 572 |
| Debt securities | 2,698 | 2,286 | – |
| Other | 9 | – | 36 |
| Total, including: | 2,743 | 3,001 | 608 |
| floating-rate | 2,739 | 715 | 608 |
| fixed-rate | 4 | 2,286 | – |
| 2015 | In functional currency – PLN | In foreign currency | |
| EUR | USD | ||
| Bank borrowings | 203 | 747 | 574 |
| Debt securities | 2,579 | 2,193 | – |
| Other | 33 | 1 | 52 |
| Total, including: | 2,815 | 2,941 | 626 |
| floating-rate | 2,813 | 748 | 626 |
| fixed-rate | 2 | 2,193 | – |
Interest on floating-rate debt denominated in the Polish złoty is calculated based on 1M WIBOR, 3M WIBOR or 6M WIBOR rates; USD-denominated debt: 1M LIBOR and 3M LIBOR rates; EUR-denominated debt: EONIA, 1M EURIBOR and 3M EURIBOR rates. Fixed interest rate is applicable only to EUR-denominated debt securities and stands at 4%. The Group’s debt is subject to interest rate risk, currency risk and liquidity risk. For detailed information on these risks, see Note 7.3.
As at December 31st 2016, the Company operated the following debt security issue programmes:
Scrollbar is below the table
| Outstanding debt (PLNbn) | |||||||
|---|---|---|---|---|---|---|---|
| Issue agreement date | Agreement valid until | Subject matter | Banks participating in the issue as at the reporting date | Issue limit | Utilisation (%) as at Dec 31 2016 |
2016 | 2015 |
| Authorised issuer: PGNiG S.A | |||||||
| Jun 10 2010 |
Jul 31 2020 |
Note issuance programme for short-term discount notes and coupon-bearing notes with maturities from one to twelve months | Bank Pekao S.A., ING Bank Śląski S.A., PKO BP S.A., Bank Handlowy w Warszawie S.A., Societe Generale S.A., BGŻ BNP Paribas S.A. Oddział w Polsce, mBank S.A. and Bank Zachodni WBK S.A. | PLN 7bn | – | – | – |
| May 22 2012 |
May 22 2027 |
Note issuance programme | Bank Pekao S.A. and ING Bank Śląski S.A. | PLN 4.5bn | 55.6% | 2.5 | 2.5 |
| Oct 2 2014 |
Sep 30 2024 |
Note issuance programme for notes with maturities of at least 12 months1 | Bank Gospodarstwa Krajowego | PLN 1bn | – | – | – |
| Authorised issuers: PGNiG S.A. i PGNiG Finance AB | |||||||
| Aug 25 2011 |
Feb 14 2017 |
Euro medium-term note programme (notes with maturities of up to ten years) | Societe Generale S.A., BGŻ BNP Paribas S.A. and Unicredit Bank AG | EUR 1.2bn | 41.6% | 2.2 | 2. 1 |
| Authorised issuers: PGNiG TERMIKA S.A. | |||||||
| Jul 4 2012 |
Dec 29 20192 |
Note issuance programme for coupon-bearing notes or discount notes | ING Bank Śląski S.A., PKO Bank Polski S.A., Nordea Bank Polska S.A. and Bank Zachodni WBK S.A. | PLN 1.5bn | – | – | 0.1 |
| Authorised issuers: Spółka Energetyczna „Jastrzębie” S.A. | |||||||
| Oct 17 2013 |
Dec 20 20173Sep 20 20173 |
Note issuance programme | Bank Gospodarstwa Krajowego, Alior Bank S.A. | PLN 0.42bn | 4.8% | 0.2 | – |
1. In accordance with the agreement, the note issue proceeds may only be used to finance capital expenditure, including on maintaining producing capacities, diversification of gas supply sources, oil and gas exploration and appraisal, development of the power segment and ongoing projects involving the construction of storage infrastructure.
2. May be extended until December 29th 2021
3. The Programme provides for multiple note issues in two tranches:
– Tranche A, worth up to PLN 369m, with proceeds allocated to the financing of the Investment Programme, including by transferring the proceeds to the issuer’s group companies carrying out the Investment Programme, and to the refinancing of capital expenditure incurred by the issuer or its group companies to carry out the Investment Programme;
– Tranche B, worth up to PLN 51m, with proceeds allocated to the financing of the objectives of Tranche A and working capital needs (including redemption of Tranche B notes).
As at December 31st 2016, fair value of the liability under Eurobonds issued by PGNiG Finance A.B. was PLN 2,224.8m, and its carrying amount was PLN 2,286.4m (December 31st 2015: PLN 2,204m, carrying amount at PLN 2,193.2m). The fair value was classified as Level 1 of the fair value hierarchy, and was determined based on market prices of the Eurobonds.
As at December 31st 2016 and December 31st 2015, the fair value of the Company’s other financial assets and liabilities measured at amortised cost did not materially differ from their carrying amounts.
Financing liabilities of PLN 3,029m (2015: PLN 1,390m) are secured with property, plant and equipment with a carrying amount of PLN 6,965m (2015: PLN 3,994m).
In the current and comparative periods, the Group repaid its financing liabilities in a timely manner. In the reporting period and as at the date of authorisation of these financial statements for issue, there were no instances of default under material provisions of any credit facility, loan, or debt securities issue agreement that could trigger accelerated repayment.
