Group’s assets and liabilities structure

The balance-sheet total of the Group was PLN 1.1 billion as at 31 December 2017, a decrease of 0.9% compared to PLN 1.2 billion as at 31 December 2016.

Assets

The Group’s non-current assets stood at PLN 596.4 million representing 52% of total assets as at 31 December 2017 compared to PLN 597.3 million or 52% 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 in the last year as replacement capital expenditures were lower than the annual depreciation and amortisation charges.

The Group’s current assets stood at PLN 550.7 million representing 48% of total assets as at 31 December 2017 compared to PLN 560.6 million or 48% of total assets as at 31 December 2016.

The decrease in current assets in the last year (by 1.8%) was driven by a decrease of the balance of trade receivables. While cash increased by 8.9% year on year, the increase was lower than the decrease of trade receivables, which reduced the current assets.

The strong decrease of trade receivables was mainly due to a decrease of receivables of TGE from PLN 83.1 million at the end of 2016 to PLN 17.5 million at the end of 2017. The decrease of receivables resulted from the payment of receivables from issued correction invoices for VAT in TGE following the change of taxation on certain services provided by TGE. The receivables under the adjusted VAT were PLN 69.7 million. The outstanding balance was PLN 1.2 million as at 31 December 2017.

Following payments by counterparties, cash did not increase substantially as TGE repaid the bank loan it took to pay the outstanding VAT. While GPW generated profits, it paid capital expenditures during the year and paid a dividend to the shareholders at PLN 90.2 million, which reduced GPW’s cash at the year’s end. The increase of cash did not offset the decrease of receivables; as a consequence, current assets decreased year on year in 2017.

Consolidated statement of financial position of GPW Group at the year’s end in 2015 - 2017 (assets)

 As at
PLN'00031 December 2017%31 December 2016%31 December 2015%
Non-current assets596,35452%597,28752%580,64554%
Property, plant and equipment110,78410%119,13010%125,22912%
Intangible assets267,99123%273,81524%261,72824%
Investment in associates207,38918%197,23117%188,57018%
Deferred tax assets3,8030%1,8090%-0%
Available-for-sale financial assets2710%2880%2820%
Non-current prepayments6,1161%5,0140%4,8360%
Current assets550,69948%560,56148%492,45446%
Inventory560%570%1350%
Corporate income tax receivables710%4280%3690%
Trade and other receivables64,0966%113,26210%131,55712%
Cash and cash equivalents486,47642%446,81439%360,39334%
Total assets1,147,053100%1,157,848100%1,073,099100%

Source: Consolidated Financial Statements, Company

Equity and liabilities

The equity of the Group stood at PLN 811.5 million representing 71% of the Group’s total equity and liabilities as at 31 December 2017 compared to PLN 745.3 million or 64% of total equity and liabilities as at 31 December 2016.

Non-controlling interests stood at PLN 0.6 million as at 31 December 2017 compared to PLN 0.5 million as at 31 December 2016.

Non-current liabilities of the Group stood at PLN 260.0 million representing 23% of the Group’s total equity and liabilities as at 31 December 2017 compared to PLN 143.4 million or 12% of total equity and liabilities as at 31 December 2016. The main item of the Group’s non-current liabilities as at 31 December 2017 were GPW’s liabilities under outstanding series C bonds due for redemption on 6 October 2022 and series D and E bonds due for redemption on 31 January 2022. The series D and E bonds were issued on 2 January 2017, which is when the company recognised the liability on the books. The non-current liabilities under the bond issue as at 31 December 2016 included liabilities in respect of the series C bonds.

The non-current liabilities as at 31 December 2017 and as at 31 December 2016 included accruals and deferred income of PLN 5.6 million and PLN 6.2 million, respectively, in relation to deferred income under a refund from PSE in the PCR project. The refund is recognised over time under other income (see Other income for details). Details of the recognition of the cost refund paid by PSE to TGE are presented in Note 18 of the Consolidated Financial Statements of the Giełda Papierów Wartościowych w Warszawie S.A. Group for 2016.

In addition, non-current liabilities include deferred tax liabilities of PLN 7.1 million, employee benefits payable of PLN 1.5 million including retirement benefit provisions of PLN 0.6 million and annual bonus provisions for 2016 – 2017 for the Management Boards under the annual bonus system of the Group’s Management Boards (i.e., bonus bank and phantom shares: PLN 0.4 million in GPW, PLN 0.2 million in BondSpot, PLN 0.2 million in IRGiT), and other liabilities of PLN 2.2 million in respect of payments to Euronext for the derivatives system module.

Current liabilities of the Group stood at PLN 75.6 million representing 7% of the Group’s total equity and liabilities as at 31 December 2017 compared to PLN 269.2 million or 23% of total equity and liabilities as at 31 December 2016.

The decrease of current liabilities of the Group was driven by:

  • redemption of series A and B bonds by GPW on 2 January 2017;
  • decrease in other current liabilities due to the payment of TGE’s VAT liabilities following changes of the tax policy for certain services as of 1 January 2017 and the adjustment of the VAT for the period from December 2011 to December 2016. The decision required the issuance of correction invoices to TGE’s counterparties, requesting them to pay the VAT not previously charged for fees (for the period from December 2011 to December 2016, inclusive) for tax liabilities which were not overdue in the total amount of PLN 69.8 million. At the same time, TGE was required to pay to the account of the tax office an amount of the resulting tax debit under correction invoices issued to TGE’s counterparties plus interest on the tax debit in the amount of PLN 9.9 million as at 31 December 2016. TGE’s tax liabilities were paid in March 2017.

Trade payables increased from PLN 6.4 million to PLN 21.3 million and employment benefits payable increased from PLN 8.1 million to PLN 13.0 million in 2017 due to higher provisions for annual bonuses for 2017 of employees and Management Board of the GPW Group. Due to changes of provisions (release or non-formation of some provisions for annual bonuses of Management Board in 2016), provisions were lower at the end of 2016 than at the end of 2017. The increase of trade payables was partly due to the fact that PLN 8.9 million of accruals were presented under trade payables as of 2017. In addition, trade payables as at the end of 2017 included purchase of electricity and gas as well as margins of Nord Pool at PLN 3.5 million.

Consolidated statement of financial position of GPW Group at the year’s end in 2015 - 2017 (equity and liabilities)

 As at
PLN'00031 December 2017%31 December 2016%31 December 2015%
Equity811,48171%745,25264%713,19266%
Share capital63,8656%63,8656%63,8656%
Other reserves1,3470%1,1840%1,4550%
Retained earnings745,69665%679,67859%647,32660%
Non-controlling interests5730%5250%5460%
Non-current liabilities259,95123%143,42212%258,93024%
Liabilities under bond issue243,57321%123,45911%243,80023%
Employee benefits payable1,4540%1,8320%4,0460%
Finance lease liabilities-0%320%840%
Accruals and deferred income5,5920%6,2001%--
Deferred income tax liability7,1081%9,6751%11,0001%
Other liabilities2,2240%2,2240%-0%
Current liabilities75,6217%269,17423%100,9779%
Liabilities under bond issue1,9380%122,88211%6820%
Trade payables *21,3032%6,3871%8,5971%
Employee benefits payable12,9581%8,1141%9,4571%
Finance lease liabilities310%620%550%
Deferred income tax liability6,0121%16,1541%2,8330%
Accruals and deferred income *7,3861%7,1441%7,2631%
Provisions for other liabilities and charges2100%3330%6210%
Other current liabilities25,7832%108,0989%71,4697%
Total equity and liabilities1,147,053100%1,157,848100%1,073,099100%

*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 group

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 Consolidated 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 7.3 as at 31 December 2017 and 2.1 as at 31 December 2016.

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 invests its current assets in bank deposits 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 to the Consolidated Financial Statements of the Giełda Papierów Wartościowych w Warszawie S.A. Group for the year ended 31 December 2017.

Cash flows

The Group generated positive cash flows from operating activities at PLN 155.9 million in 2017 compared to positive cash flows of PLN 205.8 million in 2016.

The cash flows from investing activities were negative at PLN 16.7 million in 2017, mainly driven by GPW’s investments and TGE’s investments. The cash flows from investing activities were negative at PLN 14.5 million in 2016, mainly driven by GPW’s investments in the replacement of the UTP server infrastructure.

The cash flows from financing activities were negative in 2017, mainly due to the payment of dividend by GPW at PLN 90.3 million and interest paid at PLN 8.9 million including interest on bonds at PLN 7.6 million and interest on TGE’s bank loan at PLN 1.3 million. The cash flows from financing activities were negative at PLN 104.9 million in 2016, mainly due to the payment of dividend to the shareholders of GPW at PLN 99.1 million and interest paid on bonds at PLN 5.8 million.

Consolidated cash flows of the Group

 Cash flows for the year
ended 31 December
PLN'000201720162015
Cash flows from operating activities155,924205,81493,090
Cash flows from investing activities(16,719)(14,456)(14,631)
Cash flows from financing activities(99,784)(104,930)(107,163)
Net increase / (decrease) in cash39,42186,428(28,704)
Impact of change of fx rates on cash balances in foreign currencies241(7)55
Cash and cash equivalents - opening balance446,814360,393389,042
Cash and cash equivalents - closing balance486,476446,814360,393

Capital expenditure

The Group’s total capital expenditure in 2017 amounted to PLN 22.7 million including expenditure for property, plant and equipment at PLN 10.3 million and expenditure for intangible assets at PLN 12.4 million. The Group’s total capital expenditure in 2016 amounted to PLN 23.6 million including expenditure for property, plant and equipment at PLN 13.7 million and expenditure for intangible assets at PLN 9.9 million.

The capital expenditure for property, plant and equipment and intangible assets in 2017 included GPW’s capital expenditure for maintenance of IT infrastructure: IT equipment including servers, switches, fixed assets preparing GPW to comply with MiFID2. The capital expenditure for intangible assets included investments in software in GPW: modifications of the AX accounting system, AX budgeting module, WIBIX application, as well as TGE’s capital expenditure for intangible assets related to the implementation of the trading system.

The capital expenditure for property, plant and equipment and intangible assets in 2016 included GPW’s capital expenditure for maintenance of IT infrastructure and IT equipment related to the trading system and the TGE Group’s intangible assets related to the implementation of a trading and clearing system.

The value of contracted future investment commitments for property, plant and equipment was PLN 1,226 thousand as at 31 December 2017 including purchase of CISCO switches at TGE.

The value of contracted future investment commitments for intangible assets was PLN 1,979 thousand as at 31 December 2017, including mainly the trade surveillance system and the purchase of Microsoft licences for the GPW Group.

The value of contracted future investment commitments for property, plant and equipment was PLN 811.0 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 527.0 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 in GPW.