20. Equity

Equity is recognised at par value, divided into its types and in accordance with the legal regulations and the provisions of the Company Statutes.

Share capital, reserve capital and other reserves in the consolidated financial statements are the equity of the parent company. Hedging reserve, foreign exchange differences from translation and retained earnings include both the components of the parent company’s equity and respective portions of equity of subsidiaries, established in accordance with the consolidation principles. Declared but unpaid capital contributions are recognised as due capital contributions with a negative value.

In the consolidated statement of financial position, equity is presented broken down into:

• equity attributable to shareholders of the parent company,
• 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, as well as the interests of shareholders and debt investors. Equity is managed at the Group level.

In accordance with common practice, the Group monitors the net debt to EBITDA ratios at the level of the whole PGE Capital 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 financial lease liabilities), less cash and cash equivalents and short-term deposits. Restricted cash is not included in the calculation of 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.