Management Board Report on the activity of the JSW S.A. for 2012

3.1.2. Financing of assets

In 2012, equity was the primary source of asset financing, and its value increased by 2.3% compared to 2011. In the period under analysis, the Company did not use any financing in the form of bank loans or other funding by financial institutions.

	31 Dec 2012	31 Dec 2011	Growth rate
Equity
Share capital	1,251.9	1,260.9	99.3%
Share premium account	905	905	100.0%
Retained earnings	5,617.7	5,430.5	103.4%
Total equity	7,774.6	7,596.4	102.3%
Liabilities
Long-term liabilities
Employee benefit liabilities	1,943.0	1,663.9	116.8%
Provisions	501.1	434.9	115.2%
Trade liabilities and other liabilities	99.4	102.9	96.6%
	2,543.5	2,201.7	115.5%
Short-term liabilities
Financial derivatives	0.1	-	-
Current income tax liabilities	39.7	-	-
Employee benefit liabilities	247.4	219.7	112.6%
Provisions	203.9	141.9	143.7%
Trade liabilities and other liabilities	1,603.8	1,496.7	107.2%
	2,094.9	1,858.3	112.7%
Total liabilities	4,638.4	4,060.0	114.2%
TOTAL EQUITY AND LIABILITIES	12,413.0	11,656.4	106.5%

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As at the end of 2012 and 2011, the Company’s total equity amounted to PLN 7,774.6 million and PLN 7,596.4 million, respectively, which accounts for 62.6% and 65.2% of total equity and liabilities, respectively. An increase of total equity by PLN 178.2 million, i.e. by 2,3%, was associated with an increase in retained earnings by PLN 187.2 million, i.e. 3,4% in relation to 31 December 2011. A decrease was recorded in share capital by PLN 9.0 million, which was related to the Shareholder Meeting’s decision to retire the surplus of series C shares. This event is described in Items 1.4.3 and 1.4.7 of this report.

As at the end of 2012, liabilities constituted 37.4% of total equity and liabilities, compared to 34.8% as at the end of 2011. The level of long-term liabilities increased during the year by PLN 341.8 million, i.e. 15.5%, including in employee benefit liabilities by PLN 279.1 million, i.e. 16.8%, and in provisions by PLN 66.2 million, i.e. 15.2%. Within long-term liabilities, 76.4% are employee benefit liabilities. Short-term liabilities increased from PLN 1,858.3 million as at 31 December 2011 to PLN 2,094.9 million as at 31 December 2012, i.e. by 12.7%. Increases were recorded in all short-term liabilities items, of which the largest increase occurred in trade liabilities and other liabilities amounting to PLN 107.1 million, mainly due to the increase in the value of trade liabilities (by 37.8%).

In the structure of liabilities as at 31 December 2012, the biggest items were employee benefit liabilities (47.2% of the value of liabilities), including mainly liabilities on account of coal allowances for old age and disability pensioners (PLN 1,358.8 million), trade liabilities and other liabilities (36.7% of liabilities), including primarily trade liabilities (PLN 748.1 million), liabilities for social security and other taxes (PLN 369.9 million), investment liabilities (PLN 220.3 million) and liabilities for payroll (PLN 207.6 million).