14.7.1. Loans

14.7.2. Borrowings

14.7.3. Bonds

SELECTED ACCOUNTING PRINCIPLES

Loans, borrowings and bonds
At initial recognition, all loans, borrowings and bonds are recognised at fair value, less transaction costs and discounts or premiums. After initial recognition, loans, borrowings and bonds are measured at amortized cost using the effective interest rate method.

As at 31 December 2022 the increase in debt level of the Group compared to the previous year is mainly the result of merger with the LOTOS Group, whose consolidated debt value at the date of merger amounted to PLN 999 million (PLN 745 million of loans, PLN 2 million of borrowings and PLN 252 million of bonds ) and with the PGNiG Group, whose consolidated debt value at the date of merger amounted to PLN 13,989 million (PLN 13,861 million of loans, PLN 128 million of borrowings).

During the 12-month period of 2022, as a part of cash flows from financing activities the Group has made drawings and repayments of borrowings and loans from available credit lines in the total amount of PLN 11,775 million and PLN (22,373) million.

The change in utilisation of the Group's loans and borrowings results mainly from the change in ORLEN credit exposure of the available syndicated and working capital loans as well as utilisation of the overdraft facilities, which corresponds to the total amount of net cash flows of PLN (10,716) million.

During the 12-month period of 2022, as a part of cash flows from financing activities related to the bonds, the changes results mainly to:

• redemption made by ORLEN of maturing bond series B, C, D and E under the second public retail bond issue program: in June 2022 with a total nominal value of PLN (400) million, in July 2022 in nominal value of PLN (200) million, in December 2022 in nominal value of PLN (200) milion. Together with the redemption of the last active series of bonds in December 2022, ORLEN second public retail bond programme has been completed.
• partial redemption made by B8 Sp.z o.o. Baltic SKA of senior bonds in September 2022 in a value of USD (5.6) million which corresponds to the amount of PLN (26) million.

Also, the liability of issuance was reclassified from the long-term to the short-term part for: the issue of ORLEN Capital's Eurobond with a nominal value of EUR 750 million and the maturity date in June 2023 as well as one series of subordinated bonds of ENERGA Group with a nominal value of EUR 125 million and the maturity date in September 2023.