Description of the structure of assets and liabilities from the standpoint of Capital Group’s liquidity

The positive cash flows on operating activity generated by the Group in 2012 covered the vast majority of expenditures on the Group’s non-current assets. The Group’s asset financing structure is correct. The structure of assets, including the amount of the most liquid assets, i.e. cash and short-term investments, secures the Group’s ability to settle its liabilities in a timely manner. The Group maintains a safe level of liquidity.

The following table presents selected data from the consolidated cash flow statement for the financial year ended 31 December 2012 and 31 December 2011.

	2012	2011	Growth
Net cash flow on operating activity	2,359.4	2,835.3	83.2%
Net cash flow on investing activity	(2,634.3)	(1,667.2)	158.0%
Net cash flow on financing activity	(821.5)	(436.9)	188.0%
Change in the net balance of cash and cash equivalents	(1,096.4)	731.2	(149.9)%

download table

The Group’s cash flows from the distinct types of activity reflect the high profitability of its business, and the financial surpluses generated are spent on development (investing activity) and repayment of liabilities.

Cash flow on operating activity
The value of cash flow on operating activity amounted to PLN 2,359.4 million in the period from January to December 2012, predominantly as a result of generated pre-tax profit of PLN 1,276.9 million adjusted for such factors such as:

- depreciation,
- change in the balance of trade liabilities and other liabilities, provisions and employee benefit liabilities,
- change in the balance of inventories,
- interest and profit-sharing,
- change in the balance of receivables,
- other adjustments.

The exact impact of changes in the above items is presented in Note 35 of the Consolidated Financial Statements of the Jastrzębska Spółka Węglowa S.A. Capital Group for the financial year ended 31 December 2012.

Cash flow on investing activity
The value of cash used in investing activity amounted to PLN (2,634.3) million, compared to PLN (1,667.2) million in the previous period. The main components of net cash flow on investing activity were expenditures on the acquisition of property, plant and equipment in connection with the ongoing capital expenditure program (PLN 1,804.8 million) and the acquisition of financial assets (PLN 926.9 million), i.e. time deposits with a maturity of more than 3 months. At the same time, interest income was PLN 115.1 million, income from sales of property, plant and equipment was PLN 6.5 million and dividends received amounted to PLN 0.5 million.

Cash flow on financing activity
In 2012, net cash flow on financing activity amounted to PLN (821.5) million, compared to PLN (436.9) million in 2011, which resulted predominantly from the amount of dividends paid to the Parent Company’s shareholders (in 2012: PLN 631.7 million, in 2011: PLN 298.0 million).

As a result of the aforedescribed events, having taken into account foreign exchange differences from the conversion of cash and cash equivalents (PLN 1.9 million), the balance of cash and cash equivalents decreased by PLN 1,098.3 million compared to the 2011 end-of-year balance and as at 31 December 2012 stood at PLN 1,490.7 million, of which PLN 18.8 million is restricted cash, mainly including tender deposits and accrued interest.

Taking into account the amount of other short-term financial assets as at 31 December 2012 (term deposits with a maturity of 3 to 12 months), the level of the Group’s available funds is comparable to that of the previous year.