Company’s assets and liabilities structure

The balance-sheet total of the Company was PLN 738.3 million as at 31 December 2017, a decrease of 3.5% (PLN 26.4 million) compared to PLN 764.7 million as at 31 December 2016.

Assets

The Company’s non-current assets stood at PLN 462.8 million representing 63% of total assets as at 31 December 2017 compared to PLN 472.9 million or 62% of total assets as at 31 December 2016. The decrease of non-current assets was mainly driven by a decrease of the value of property, plant and equipment as well as intangible assets as a result of depreciation and amortisation charges.

The Company’s current assets stood at PLN 275.5 million representing 37% of total assets as at 31 December 2017 compared to PLN 291.8 million or 38% of total assets as at 31 December 2016. The change of current assets in 2017 was driven by a decrease of cash flows from operating and investing activities. On the other hand, trade receivables and other receivables increased.

Separate statement of financial position of GPW S.A. at the year’s end in 2015 - 2017 (assets)

 As at
PLN'00031 December 2017%31 December 2016%31 December 2015%
Non-current assets462,76063%472,94262%472,25364%
Property, plant and equipment96,26913%101,03413%94,77313%
Intangible assets68,9639%75,91810%81,60111%
Investment in associates36,9595%36,9595%36,9595%
Investment in subsidiaries254,98535%254,98533%254,98535%
Available-for-sale financial assets2710%2880%2820%
Prepayments5,3131%3,7580%3,6530%
Current assets275,53537%291,78838%261,77036%
Inventory560%580%1190%
Trade and other receivables26,2724%23,9413%26,0914%
Cash and cash equivalents249,20734%267,78935%235,56032%
Total assets738,295100%764,730100%734,023100%

Source: Consolidated Financial Statements, Company

Trade receivables and other receivables stood at PLN 26.3 million in 2017 compared to PLN 23.9 million in 2016. The increase of trade receivables and other receivables was mainly driven by an increase of trade receivables by PLN 1.0 million, receivables from subsidiaries in respect of income tax payments within the Tax Group at PLN 0.9 million, and an increase of prepayments by PLN 0.4 million.

Equity and liabilities

The equity of the Company stood at PLN 450.9 million representing 61% of the total equity and liabilities as at 31 December 2017 compared to PLN 472.1 million or 62% of total equity and liabilities as at 31 December 2016.

Non-current liabilities of the Company stood at PLN 253.7 million representing 34% of the Group’s total equity and liabilities as at 31 December 2017 compared to PLN 136.8 million or 18% of total equity and liabilities as at 31 December 2016. The significant year-on-year change of non-current liabilities as at 31 December 2017 was due to the issue (recognition) in January 2017 of series D and E bonds due for redemption on 31 January 2022. Non-current liabilities as at 31 December 2016 decreased following the reclassification as current liabilities of some liabilities under the series A and B bonds due for redemption on 2 January 2017.

Current liabilities of the Company stood at PLN 33.7 million representing 5% of the total equity and liabilities as at 31 December 2017 compared to PLN 155.8 million or 20% of total equity and liabilities as at 31 December 2016. The decrease of current liabilities was driven by the redemption of series A and B bonds in January 2017 and a decrease of the corporate income tax payable. The year-on-year decrease of the corporate income tax payable as at 31 December 2017 was due to a change of the method of payment of taxes in 2017 following the formation of a Tax Group by GPW and its subsidiaries and quarterly payment of current tax liabilities. Income tax payable as at 31 December 2017 is the outstanding current tax payable after Q4 2016. In 2016, GPW used the simplified method of monthly income tax advances equal to 1/12 of the tax due for 2014. As a result, the tax payable as at 31 December 2016 was higher.

Other current liabilities were lower as at 31 December 2017 due to lower investment commitments and accruals, which are presented under trade payables as of 2017.

Separate statement of financial position of GPW S.A. at the year’s end in 2015 - 2017 (equity and liabilities)

 

 As at
PLN'00031 December 2017%31 December 2016%31 December 2015%
Equity450,88761%472,10262%454,88162%
Share capital63,8659%63,8658%63,8659%
Other reserves(125)0%(114)0%(304)0%
Retained earnings387,14752%408,35153%391,32053%
Non-current liabilities253,74434%136,79418%258,24235%
Liabilities under bond issue243,57333%123,45916%243,80033%
Employee benefits payable8830%1,4350%2,3820%
Deferred income tax liability7,0641%9,6761%12,0602%
Other liabilities2,2240%2,224---
Current liabilities33,6645%155,83420%20,9003%
Liabilities under bond issue1,9380%122,88216%6820%
Trade payables *11,9542%4,2971%6,5991%
Employee benefits payable8,4811%6,4901%7,0231%
Corporate income tax payable5,6851%14,4452%1,9760%
Accruals and deferred income *210%1,7120%1,7760%
Provisions for other liabilities and charges2110%3170%-0%
Other current liabilities5,3741%5,6911%2,8440%
Total equity and liabilities738,295100%764,730100%734,023100%

*As at 31 December 2017 accruals are presented under trade payables

Source: Consolidated Financial Statements, Company

Liquidity, financial assets and financial risk management of the company

The activities of the Company and the Group are exposed to three types of financial risks: market risk, credit risk, and liquidity risk. Details of how financial risks are identified and managed have been described in the Separate Financial Statements.

In 2017, the Company’s liquidity risk, which means inability to timely meet its payment obligations, was minor in view of material financial assets held and positive cash flows from operating activities which exceeded the value of existing liabilities. The current liquidity ratio amounted to 8.2 following a decrease to 1.9 in 2016. The decrease of the liquidity ratio in 2016 was mainly due to the shorter time to maturity of series A and B bonds under 1 year and the reclassification of liabilities under the bonds as current liabilities. Series A and B bonds were redeemed on January 2017 and paid for with funds raised through the issue of series D and E bonds which are due for redemption in 2022.

GPW manages financial liquidity in accordance with the “Current Assets Allocation Procedure” adopted by the Management Board. Pursuant to this document, the procedures for investing free cash should be handled in view of the due dates of liabilities so as to minimise the liquidity risk for the parent entity and, at the same time, to maximise its financial income. In practical terms, this means that the Company invested its current assets in bank deposits in 2017 and the average duration of a financial asset portfolio was around 68 days in 2017 and ca. 66 days in 2016.

In the opinion of the Management Board, the Company’s financial assets and financial risk management process is effective and ensures timely meeting of payment obligations.

No threats have been identified to the Company’s liquidity.

The risks inherent in financial instruments held are described in Note 3 Financial Risk Management to the Separate Financial Statements.

Cash flows

The Company generated positive cash flows from operating activities at PLN 84.0 million in 2017 compared to positive cash flows of PLN 87.2 million in 2016.

The cash flows from investing activities were negative at PLN 4.6 million in 2017 compared to positive cash flows of PLN 49.8 million in 2016. The negative cash flows from investing activities in 2017 were due to investments of PLN 10.4 million, which was more than the interest received and the dividend paid by BondSpot. The positive cash flows at PLN 49.8 million in 2016 were mainly due to dividends received at PLN 61.6 million and investments of PLN 16.0 million.

The cash flows from financing activities were negative at PLN 98.4 million in 2017, mainly due to the payment of dividend to the shareholders at PLN 90.2 million and interest paid on bonds issued by the Company. The cash flows from financing activities were negative in 2016, mainly due to the payment of dividend to the shareholders of GPW at PLN 99.0 million and interest paid on bonds at PLN 5.8 million.

Separate cash flows of GPW S.A.

 Cash flows for the 12-month
period ended 31 December
PLN'000201720162015
Cash flows from operating activities84,01487,20584,609
Cash flows from investing activities(4,632)49,84249,809
Cash flows from financing activities(98,387)(104,808)(106,944)
Net increase / (decrease) in cash and cash equivalents(19,005)32,23927,473
Impact of change of fx rates on cash balances in foreign currencies423(10)51
Cash and cash equivalents - opening balance267,789235,560208,035
Cash and cash equivalents - closing balance249,207267,789235,560

Source: Consolidated Financial Statements, Company

Capital expenditure

The Company’s total capital expenditure in 2017 amounted to PLN 10.4 million including expenditure for property, plant and equipment at PLN 6.4 million and expenditure for intangible assets at PLN 4.0 million. The Company’s total capital expenditure in 2016 amounted to PLN 16.0 million including expenditure for property, plant and equipment at PLN 13.1 million and expenditure for intangible assets at PLN 2.8 million.

The capital expenditure for property, plant and equipment and intangible assets in 2017 were due to maintenance of IT infrastructure including acquisition of network devices and IT equipment such as servers, as well as the acquisition of licences. Part of the capital expenditure prepared GPW to comply with MiFID2.

The capital expenditure for property, plant and equipment and intangible assets in 2016 included maintenance of IT infrastructure and IT equipment related to the trading system.

The value of contracted future investment commitments for property, plant and equipment was PLN 77.0 thousand as at 31 December 2017, including mainly reconstruction of rooms in the GPW building.

The value of contracted future investment commitments for intangible assets was PLN 1,203 thousand as at 31 December 2017, including mainly Microsoft licences and the trade surveillance system.

The value of contracted future investment commitments for property, plant and equipment was PLN 811 thousand as at 31 December 2016, including reconstruction of rooms in the GPW building.

The value of contracted future investment commitments for intangible assets was PLN 527 thousand as at 31 December 2016, including mainly the implementation of the financial and accounting system’s controlling module and the implementation of a document flow system.