Integrated Annual Report 2014

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33. Capital management

The objective of the LOTOS Group financial policy is to maintain long-term liquidity, while using an appropriate level of financial leverage to support the achievement of the principal objective of maximising the return on equity for shareholders.

This is achieved through constant effort to develop the desired capital structure at the Group level.

The LOTOS Group uses the debt to equity ratio, calculated as net debt to equity, to monitor its financing structure.

Net debt comprises borrowings, notes and liabilities under finance leases less cash and cash equivalents. Equity includes equity attributable to owners of the Parent plus non-controlling interests.

PLN '000 Note Dec 31 2014
Dec 31 2013
Non-current liabilities      
Bank borrowings 27.1 4,098,225 4,180,374
Loans 27.2 92,146 3,250
Notes 27.3 195,892 183,171
Finance lease liabilities 27.4 109,299 129,395
Total   4,495,562 4,496,190
Current liabilities      
Bank borrowings 27.1 2,117,387 1,671,435
Loans 27.2 10,637 7,056
Notes 27.3 17,587 15,069
Finance lease liabilities 27.4 22,495 21,636
Total   2,168,106 1,715,196
Restricted cash - issue of shares (1) 18 (996,939) -
Cash and cash equivalents 20 (348,215) (495,839)
Net debt   5,318,514 5,715,547
Equity attributable to owners of the Parent   8,258,288 9,189,307
Non-controlling interests 26 175 289
Total equity   8,258,463 9,189,596
Net debt to equity   0.64 0.62

(1) Cash proceeds from the issue of Series D shares in Grupa LOTOS S.A., deposited in a separate bank account of the Polish National Depository for Securities (see Note 21) until the day of registration of the share capital increase (see Note 37).

The Company monitors its financing structure in order to achieve the goal set in the Strategy for the LOTOS Group for the years 2011–2015, that is to reduce debt in order to achieve a debt to equity ratio of no more than 0.4 at the end of the Strategy term.

The Notes to the consolidated financial statements are an integral part of the statements.
(This is a translation of a document originally issued in Polish)