20. Equity

ACCOUNTING POLICIES

Equity

Equity is stated at nominal value, classified by type and in accordance with legal regulations and the Articles of Association.

Share capital, reserve capital and other capital reserves in the consolidated financial statements are components of the parent company’s equity. Hedging reserve, foreign exchange differences from translation and retained earnings include both the components of the parent company’s equity and respective portion of equity of subsidiaries, established in accordance with the consolidation principles. Declared but outstanding contributions to equity are disclosed under called-up share capital not paid as a negative amount.

In the consolidated statement of financial position, equity is divided into:

• Equity attributable to owners of the parent,
• Equity attributable to non-controlling interests

The objective of equity management is to ensure a secure and effective financing structure that takes into account operational risk, investment expenditures and the interests of shareholders and debt investors. Equity is managed at the PGE Group level.

In accordance with common practice, the Group monitors the net debt to EBITDA ratios at PGE Group level. Net debt is understood as short- and long-term financial debt (interest-bearing credits and loans, bonds and other debt instruments as well as finance lease liabilities), less cash and cash equivalents and short-term deposits. Restricted cash is not included in calculating net debt.

The Group’s aim is to maintain its investment grade credit ratings. The net debt to EBITDA ratio is a central element of the Group’s financial forecasts and plans. Given the on-going investment programme, financial leverage is expected to increase in the coming years.