Current and expected financial position
It is expected that the Group will generate material cash flows from operating activities in the coming years; combined with revenues from financial assets, these will cover the Group’s operating expenses, capital expenditures and debt service costs.
The Group is not planning to use external financing to an extent greater than as at the date of preparation of this Report. Should any unexpected events occur, which will require financing that could not be provided by the Group, the Group will consider obtaining additional external funds in a manner optimal for the Group’s capital expense and structure.
The Group did not publish any financial forecasts for 2017. Consequently, no explanations are provided for the differences between the financial results disclosed in the Annual Report and any previously published forecasts.
Investments and links to other entities
GPW has organisational and equity links to the Group subsidiaries and associates. The description of the Group and associates is to be found in section I.1 of this Report.
In 2017, GPW did not make or divest any equity investments in any entities other than related parties.
Equity links of GPW to the companies from outside the Group as at 31 December 2017 include the investment in InfoStrefa S.A. (formerly Instytut Rynku Kapitałowego WSE Research S.A.) at 19.98 % and the foreign investments in S.C. Sibex - Sibiu Stock Exchange S.A. at 1.3% and INNEX PJSC at 10%.
In addition to the stake in the above-mentioned companies, as well as in the Group subsidiaries and associates, GPW’s major domestic investments as at 31 December 2017 include bank deposits.
Except for the investment in the Romanian stock exchange S.C. Sibex - Sibiu Stock Exchange S.A., INNEX PJSC and Aquis Exchange Ltd, Giełda Papierów Wartościowych w Warszawie S.A. has no other foreign investments. All the above investments were financed with own funds of Giełda Papierów Wartościowych w Warszawie S.A..
Details of the parent entity’s investments were disclosed in the Separate Financial Statements of Giełda Papierów Wartościowych w Warszawie S.A. for the years ended 31 December 2017 and 31 December 2016.
Transactions of the Group with related parties are described in the Consolidated Financial Statements of Giełda Papierów Wartościowych w Warszawie S.A. for the years ended 31 December 2017 and 31 December 2016 and in Note 25 to the Separate Financial Statements of Giełda Papierów Wartościowych w Warszawie S.A. for the years ended 31 December 2017 and 31 December 2016.
Credit and loan agreements signed and terminated during the financial year
In March 2017, Towarowa Giełda Energii S.A. took a loan of PLN 60 million from DNB Polska maturing in March 2018. The interest rate of the loan was equal to WIBOR 1M plus a margin of 1.4%. The loan was taken to pay outstanding VAT liabilities, which were paid in March 2017. Although the maturity of the bank loan was March 2018, the company repaid the loan in full in November 2017.
In May 2017, GPW granted a loan of PLN 10 million to the subsidiary TGE maturing on 31 March 2018. The interest rate of the loan was equal to WIBOR 1M plus a margin of 1.4%. TGE repaid the loan in full in November 2017.
In January 2017, TGE granted a loan of PLN 400 thousand to the subsidiary InfoEngine maturing on 31 December 2017. The interest rate on the loan was 2%. In June 2017, TGE granted a loan of PLN 835 thousand to the subsidiary InfoEngine maturing on 30 June 2022. The interest rate on the loan was 3.3%.
The Group signed and terminated no other credit and loan agreements.
Loans granted in the financial year
Details of loans granted are presented above.
The Group granted no other loans in 2017.
Guaranties and sureties granted and accepted during the financial year
As at 31 December 2017, the subsidiary TGE held a bank guarantee of EUR 7.8 million issued to NordPool by a bank in respect of payments between TGE S.A. and NordPool in Market Coupling from 1 July 2017 to 30 June 2018.
The Company granted and accepted no other guarantees and sureties in 2017.
Material transactions of the issuer and subsidiaries with related parties on terms other than at arm’s length in the financial year
In 2017, GPW and the subsidiaries did not make any significant transactions with related parties on terms other than at arm’s length. The transactions with related parties are presented in detail in Note 25 to the Consolidated Financial Statements.
Contingent liabilities and assets
The Group had no contingent liabilities or contingent assets as at 31 December 2017.
Conditional agreement to sell Aquis shares
On 10 June 2016, GPW and other shareholders of Aquis signed an agreement concerning shares of Aquis Exchange Limited. Under an annex to the shareholders’ agreement, GPW agreed to a conditional sale of the entire block of Aquis shares at GBP 37 per share. The call option could be exercised by Aquis shareholders in the event of GPW’s negative decision concerning an IPO or in the event of GPW’s negative decision concerning potential restructuring of Aquis necessary for an IPO. The call option was valid until 30 November 2017 and then expired. GPW did not exercise the option.
Events after the balance-sheet date which could significantly impact the future financial results of the issuer
Making a decision to sign memorandum of understanding concerning Centrum Giełdowe real estate
On 16 January 2018, Giełda Papierów Wartościowych w Warszawie S.A. and Krajowy Depozyt Papierów Wartościowych S.A. decided to sign a memorandum of understanding with Centrum Bankowo - Finansowe „Nowy Świat” Spółka Akcyjna which is the majority shareholder of Centrum Giełdowe S.A.
Under the memorandum of understanding, the parties intend to enter into talks and negotiations in order to develop a detailed solution resulting in potential divestment of Centrum Bankowo – Finansowe as a shareholder of Centrum Giełdowe or in take-over by GPW and KDPW of the “Centrum Giełdowe” real estate at Książęca 4 St, Warsaw currently held by Centrum Bankowo – Finansowe „Nowy Świat”.
GPW, KDPW and Centrum Bankowo - Finansowe „Nowy Świat” are the owners, co-owners or perpetual users of real estate within “Centrum Giełdowe”. “Centrum Giełdowe” is an eight-storey building with a total floor area (office space and common space) of ca. 35,078 square meters. The space is held by GPW in 36%, KDPW in 22%, and CGSA in 42%. The “Centrum Giełdowe” houses among others the principal offices of GPW, KDPW and their subsidiaries.
The implementation of the memorandum of understanding may be conditional on the corporate approvals of each party required under its articles of association, in particular following relevant future decisions of the GPW Management Board and the corporate approvals including the approval of GPW shareholders. No such decisions or approvals were issued as at the date of approval of the Separate Financial Statements of Giełda Papierów Wartościowych w Warszawie S.A. for 2017 and the Consolidated Financial Statements of the Giełda Papierów Wartościowych w Warszawie S.A. Group for 2017.
There were no other events after the balance-sheet date which could significantly impact the future financial results of the issuer.
Start of negotiations of the boundary conditions of a sale of the stake in an associate
On 19 February 2018, the Exchange Management Board decided to start negotiations of the boundary conditions of a potential sale of the stake in the associate Aquis Exchange (“Aquis”), in which GPW holds 20.31% of votes and economic rights, if Aquis decides to have an IPO.
The terms, conditions and parameters of the potential transaction will be subject to negotiation. The potential agreement will be conditional on satisfactory outcome of the negotiations and required corporate and administrative approvals.